AMOT Allied Motion Technologies Inc

• Annual revenue up 25% to a record $503.0 million, driven by strong demand in Industrial and Aerospace & Defense markets and incremental sales from acquisitions; Organic growth was 12.0% for the year on a constant currency basis
• Fourth quarter revenue grew 35% to $131.1 million, with organic growth of 18.3% on a constant currency basis
• Annual gross margin expanded 130 basis points to a record 31.3% on higher volume and accretive acquisitions; Fourth quarter gross margin expanded 240 basis points to 31.1%
• Achieved annual net income of $17.4 million, or $1.09 per diluted share; Adjusted net income per share was $1.88, up 18% for the year
• Fourth quarter net income more than doubled to $3.7 million, or $0.23 per diluted share; Adjusted net income per share for the quarter was up 43% to $0.43
• Fourth quarter orders of $145.6 million drove a book-to-bill ratio of 1.1x and record backlog of $330.1 million at year-end

Allied Motion Technologies Inc. (Nasdaq: AMOT) (“Allied Motion” or “Company”), a designer and manufacturer of precision and specialty controlled motion products and solutions for the global market, today reported financial results for its fourth quarter and full year ended December 31, 2022. Results include all acquisitions completed during the fourth quarter of 2021 and in the second quarter of 2022.

“Our fourth quarter and full year results were strong and speak to the consistent and focused efforts of the entire Allied team to execute our strategy and deliver strong organic growth and create new growth opportunities through selective acquisitions,” commented Dick Warzala, Chairman and CEO. “The fourth quarter provided several highlights, which included impressive organic growth of 18%, the strengthening of our margin profile, and robust order levels which were broad-based across many of our targeted markets. For the year, we continued to demonstrate our ability to manage our business effectively despite the challenging macro conditions as we crossed a revenue milestone of more than $500 million and achieved our stated goal of gross margin expansion, reaching a record 31.3%.”

Mr. Warzala added, “While heightened levels of macroeconomic and geopolitical uncertainty remain, we believe we are in a strong position and are confident we can continue to execute our strategy by capitalizing on the many growth opportunities and positive underlying demand trends within our targeted markets. Equally important, we will continue to drive a higher level of continuous improvement in all areas of our business to enable margin expansion and long-term profitability.

“We entered 2023 with momentum on our side, a record level of backlog, significantly broadened scope of expertise and solutions, and an enhanced value proposition for our customers.”

Fourth Quarter 2022 Results (Narrative compares with prior-year period unless otherwise noted)

Revenue increased 35% to $131.1 million and reflected higher demand across each of the Company’s target markets, as well as incremental sales from acquisitions. Excluding the unfavorable impact of foreign currency exchange rate fluctuations on revenue of $6.7 million, revenue was up 42%, including organic growth of 18.3%. Sales to U.S. customers were 57% of total sales compared with 54% in the same period last year, with the balance of sales to customers primarily in Europe, Canada, and Asia-Pacific. See the attached table for a description of non-GAAP financial measures and reconciliation of revenue excluding foreign currency exchange rate fluctuations.

Aerospace & Defense revenue grew 197% due to organic growth, defense program timing, and incremental demand from acquisitions. Revenue from Industrial markets was up 46%, benefitting from strong end market demand within industrial automation, material handling and electronics. Vehicle market sales growth of 8% reflected higher demand from trucks, powersports and commercial automotive, while Medical markets were up slightly as surgical related markets and medical pumps offset lower pandemic related sales. The Distribution market, while a small component of total revenue, increased 22%.

Gross margin was 31.1%, up 240 basis points from the fourth quarter of 2021 as higher volume, margin accretive acquisitions, and pricing more than offset continued global supply chain disruptions, and rising material and labor costs.

Operating costs and expenses were 24.8% of revenue, up 30 basis points, which reflected an increase in engineering and development costs and intangible amortization expense, largely due to the second quarter M&A activity, partially offset by lower business development costs. As a result, operating income was $8.2 million compared with $4.0 million, and as a percent of revenue was 6.2%, up 210 basis points.

Net income increased to $3.7 million, or $0.23 per diluted share, from $1.6 million, or $0.11 per share, in the prior-year period. Adjusted net income, which excludes amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, increased 58% to $6.9 million, or $0.43 per diluted share, compared with adjusted net income of $4.4 million, or $0.30 per diluted share. The effective tax rate was 27.7% compared with 53.9%, as the prior-year period included a $0.5 million valuation allowance of a deferred tax asset in a foreign jurisdiction. The Company expects its income tax rate for full year 2023 to be approximately 25% to 27%. See the attached tables for a description of non-GAAP financial measures and reconciliation table for Adjusted Net Income and Diluted Earnings per Share.

Earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, business development costs, and foreign currency gains/losses (“Adjusted EBITDA”) was $16.6 million, up $5.3 million, or 47%, from the year ago period. As a percent of sales, Adjusted EBITDA was 12.7%, up 100 basis points from the fourth quarter of 2021. The Company believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles, Adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance. See the attached table for a description of non-GAAP financial measures and reconciliation table for Adjusted EBITDA.

Full Year 2022 Results (Narrative compares with prior-year period unless otherwise noted)

Revenue of $503.0 million increased $99.5 million, or 25%, reflecting strong demand in Industrial and Aerospace & Defense markets, including incremental sales from acquisitions. The impact of FX fluctuations was unfavorable by $22.3 million. On a constant currency basis, revenue was up 30% for the year, which included 12.0% organic growth. Sales to U.S. customers were 58% of total sales compared with 54% for 2021, with the balance of sales to customers primarily in Europe, Canada, and Asia-Pacific.

Gross margin was 31.3%, up 130 basis points, and reflected similar impacts as the fourth quarter of 2022. Operating costs and expenses as a percent of revenue were 25.0%, up 140 basis points largely due to M&A activity, which resulted in higher engineering and development costs, intangible amortization expense and business development costs. As a result, operating income was $31.7 million, or 6.3% of sales, compared with $26.0 million, or 6.4% of sales.

Net income was $17.4 million, or $1.09 per diluted share, compared with $24.1 million, or $1.66 per diluted share. The prior-year period included a net discrete tax benefit of $7.4 million recorded in the first quarter of 2021 relating to legislation enacted in New Zealand. Excluding the discrete tax benefit, amortization of intangible assets and other non-recurring items, adjusted net income was $30.0 million, or $1.88 per diluted share, compared with $23.2 million, or $1.60 per diluted share, in 2021. Adjusted EBITDA increased 31% to $65.5 million, and as a percent of sales was 13.0%, up 60 basis points.

Balance Sheet and Cash Flow Review

Cash and cash equivalents were $30.6 million compared with $22.5 million at year-end 2021. Cash provided by operating activities was $5.6 million for 2022, a decrease from the prior-year due to higher levels of inventory and working capital timing. Full year capital expenditures were $15.9 million and were largely focused on new customer projects. The Company expects 2023 capital expenditures to be approximately $18 million to $23 million.

Total debt was $235.5 million compared with $159.0 million at year-end 2021. The change largely reflected the funding used for the acquisitions completed during the second quarter of 2022 and a new finance lease during the first quarter of 2022 for a manufacturing facility expansion. Debt, net of cash, was $204.8 million, or 48.7% of net debt to capitalization.

Orders and Backlog Summary ($ in thousands)

Q4 2022

Q3 2022

Q2 2022

Q1 2022

Q4 2021

Orders

$

145,564

$

126,158

$

139,209

$

155,295

$

114,891

Backlog

$

330,078

$

310,186

$

323,873

$

289,295

$

249,927

Fourth quarter orders increased 27% year-over-year and represented a book-to-bill ratio of 1.11x. Foreign currency translation had an unfavorable $12.5 million impact on fourth quarter orders compared with the prior-year period. The Company’s book-to-bill ratio for full year 2022 was 1.13x.

Backlog was up 6% from the sequential third quarter and increased 32% over the prior-year period to a record $330.1 million. The time to convert the majority of backlog to sales is approximately three to nine months.

Conference Call and Webcast

The Company will host a conference call and webcast on Wednesday, March 8, 2023 at 10:00 am ET. During the conference call, management will review the financial and operating results and discuss Allied Motion’s corporate strategy and outlook. A question and answer session will follow.

To listen to the live call, dial (201) 689-8263. In addition, the webcast and slide presentation may be found at: www.alliedmotion.com/investor-relations.

A telephonic replay will be available from 1:00 pm ET on the day of the call through Wednesday, March 15, 2023. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13735006 or access the webcast replay via the Company’s website. A transcript will also be posted to the website once available.

About Allied Motion Technologies Inc.

Allied Motion (Nasdaq: AMOT) designs, manufactures and sells precision controlled motion products and solutions used in a broad range of applications within the Industrial, Vehicle, Medical and Aerospace & Defense Markets. Headquartered in Amherst, NY, the Company has global operations and sells into markets across the United States, Canada, South America, Europe and Asia-Pacific.

Allied Motion is focused on controlled motion applications and is known worldwide for its expertise in electro-magnetic, mechanical, and electronic controlled motion technologies. Its products and solutions include nano precision positioning systems, servo control systems, motion controllers, digital servo amplifiers and drives, brushless servo, torque, and coreless motors, brush motors, integrated motor-drives, gear motors, gearing, incremental and absolute optical encoders, active (electronic) and passive (magnetic) filters for power quality and harmonic issues, lightweighting technologies, Industrial safety rated I/O Modules, Universal Industrial Communications Gateways and other controlled motion-related products.

The Company’s growth strategy is focused on being the controlled motion solutions leader in its selected target markets by leveraging its “technology/know how” to develop integrated precision solutions that utilize multiple Allied Motion technologies to “change the game” and create higher value solutions for its customers. The Company routinely posts news and other important information on its website at www.alliedmotion.com.

Safe Harbor Statement

The statements in this news release and in the Company’s March 8, 2023 conference call that relate to future plans, events or performance are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements. Examples of forward-looking statements include, among others, statements the Company makes regarding expected operating results, anticipated levels of capital expenditures, the Company’s belief that it has sufficient liquidity to fund its business operations, and expectations with respect to the conversion of backlog to sales. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations and assumptions regarding the future of the Company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the impact of changes in income tax rates or policies, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains; our inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives, the ability to attract and retain qualified personnel, the ability to successfully integrate an acquired business into our business model without substantial costs, delays, or problems, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. The Company has no obligation or intent to release publicly any revisions to any forward looking statements, whether as a result of new information, future events, or otherwise.

FINANCIAL TABLES FOLLOW

ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

For the three months ended

For the year ended

December 31,

December 31,

 

2022

2021

 

2022

 

2021

Revenue

$

131,076

$

96,793

$

502,988

$

403,516

Cost of goods sold

 

90,348

 

69,043

 

345,729

 

282,460

Gross profit

 

40,728

 

27,750

 

157,259

 

121,056

Operating costs and expenses:

 

 

Selling

 

5,541

 

4,270

 

21,877

 

17,249

General and administrative

 

13,438

 

9,870

 

50,677

 

42,419

Engineering and development

 

9,682

 

6,851

 

38,561

 

27,818

Business development

 

855

 

1,031

 

3,319

 

1,299

Amortization of intangible assets

 

3,036

 

1,718

 

11,169

 

6,245

Total operating costs and expenses

 

32,552

 

23,740

 

125,603

 

95,030

Operating income

 

8,176

 

4,010

 

31,656

 

26,026

Other expense, net:

 

 

Interest expense

 

2,792

 

791

 

7,692

 

3,236

Other expense (income), net

 

274

 

(165)

 

283

 

(323)

Total other expense, net

 

3,066

 

626

 

7,975

 

2,913

Income before income taxes

 

5,110

 

3,384

 

23,681

 

23,113

Income tax (provision) benefit

 

(1,414)

 

(1,823)

 

(6,292)

 

981

Net income

$

3,696

$

1,561

$

17,389

$

24,094

Basic earnings per share:

 

 

Earnings per share

$

0.24

$

0.11

$

1.13

$

1.67

Basic weighted average common

shares

 

15,671

 

14,527

 

15,448

 

14,413

Diluted earnings per share:

 

 

Earnings per share

$

0.23

$

0.11

$

1.09

$

1.66

Diluted weighted average common

shares

 

16,145

 

14,632

 

15,951

 

14,517

ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

December 31,

 

2022

 

2021

Assets

Current assets:

Cash and cash equivalents

$

30,614

$

22,463

Trade receivables, net of provision for credit losses of $1,192 and

$506 at December 31, 2022 and December 31, 2021, respectively

76,213

51,239

Inventories

 

117,108

 

89,733

Prepaid expenses and other assets

 

12,072

 

12,522

Total current assets

 

236,007

 

175,957

Property, plant, and equipment, net

 

68,640

 

56,983

Deferred income taxes

 

4,199

 

5,321

Intangible assets, net

 

119,075

 

103,786

Goodwill

 

126,366

 

106,633

Operating lease assets

22,807

16,983

Other long-term assets

 

11,253

 

5,122

Total Assets

$

588,347

$

470,785

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

39,467

$

36,714

Accrued liabilities

 

48,121

 

41,656

Total current liabilities

 

87,588

 

78,370

Long-term debt

 

235,454

 

158,960

Deferred income taxes

 

6,262

 

5,040

Pension and post-retirement obligations

 

3,009

 

3,932

Operating lease liabilities

18,795

12,792

Other long-term liabilities

 

21,774

23,929

Total liabilities

 

372,882

 

283,023

Stockholders’ Equity:

Common stock, no par value, authorized 50,000 shares; 15,978

and 15,361 shares issued and outstanding at December 31, 2022

and December 31, 2021, respectively

 

83,852

 

68,097

Preferred stock, par value $1.00 per share, authorized 5,000

shares; no shares issued or outstanding

 

—

 

—

Retained earnings

 

143,576

 

127,757

Accumulated other comprehensive loss

 

(11,963)

 

(8,092)

Total stockholders’ equity

 

215,465

 

187,762

Total Liabilities and Stockholders’ Equity

$

588,347

$

470,785

ALLIED MOTION TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

For the year ended

December 31,

December 31,

 

2022

 

2021

Cash Flows From Operating Activities:

Net income

$

17,389

$

24,094

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

 

25,486

 

18,107

Deferred income taxes

 

(3,722)

 

(6,135)

Provision for excess and obsolete inventory

 

 

1,628

 

 

534

Stock-based compensation expense

5,073

4,161

Debt issue cost amortization recorded in interest expense

202

141

Other

 

393

 

415

Changes in operating assets and liabilities, net of acquisition:

Trade receivables

 

(22,202)

 

(170)

Inventories

 

(27,800)

 

(22,874)

Prepaid expenses and other assets

 

887

 

(3,670)

Accounts payable

 

2,791

 

8,293

Accrued liabilities

 

5,471

 

2,506

Net cash provided by operating activities

 

5,596

 

25,402

 

Cash Flows From Investing Activities:

Consideration paid for acquisitions, net of cash acquired

 

(44,101)

 

(47,254)

Purchase of property and equipment

(15,910)

(13,716)

Net cash used in investing activities

 

(60,011)

 

(60,970)

 

Cash Flows From Financing Activities:

Proceeds from issuance of long-term debt

 

74,731

 

51,379

Principal payments of long-term debt and finance lease obligations

(7,585)

(12,248)

Payment of debt issuance costs

 

(391)

 

—

Dividends paid to stockholders

 

(1,536)

 

(1,371)

Tax withholdings related to net share settlements of restricted stock

 

(1,614)

 

(1,928)

Net cash provided by financing activities

 

63,605

 

35,832

Effect of foreign exchange rate changes on cash

 

(1,039)

 

(932)

Net decrease in cash and cash equivalents

 

8,151

 

(668)

Cash and cash equivalents at beginning of period

 

22,463

 

23,131

Cash and cash equivalents at end of period

$

30,614

$

22,463

ALLIED MOTION TECHNOLOGIES INC. Reconciliation of Non-GAAP Financial Measures (In thousands) (Unaudited)

In addition to reporting revenue and net income, which are U.S. generally accepted accounting principle (“GAAP”) measures, the Company presents Revenue excluding foreign currency exchange rate impacts, and EBITDA and Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, stock-based compensation expense, business development costs, and foreign currency gains/losses), which are non-GAAP measures.

The Company believes that Revenue excluding foreign currency exchange rate impacts is a useful measure in analyzing organic sales results. The Company excludes the effect of currency translation from revenue for this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The portion of revenue attributable to currency translation is calculated as the difference between the current period revenue and the current period revenue after applying foreign exchange rates from the prior period.

The Company believes EBITDA and Adjusted EBITDA are often a useful measure of a Company’s operating performance and are a significant basis used by the Company’s management to evaluate and compare the core operating performance of its business from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense, business development costs, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company’s core operating performance. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP.

The Company’s calculation of Revenue excluding foreign currency exchange impacts for the three and twelve months ended December 31, 2022 is as follows:

Three Months Ended

 

Twelve Months Ended

December 31, 2022

 

December 31, 2022

Revenue as reported

$ 131,076

 

$ 502,988

Currency impact

6,686

 

22,263

Revenue excluding foreign currency exchange impacts

$ 137,762

 

$ 525,251

The Company’s calculation of Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021 is as follows:

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2022

2021

2022

2021

Net income

$ 3,696

$ 1,561

$ 17,389

$ 24,094

Interest expense

2,792

791

7,692

3,236

Provision (benefit) for income tax

1,414

1,823

6,292

(981)

Depreciation and amortization

6,264

4,990

25,486

18,307

EBITDA

14,166

9,165

56,859

44,656

Stock compensation expense

1,321

1,060

5,073

4,161

Foreign currency loss

244

63

298

21

Business development costs

855

1,032

3,319

1,299

Adjusted EBITDA

$ 16,586

$ 11,320

$ 65,549

$ 50,137

 

ALLIED MOTION TECHNOLOGIES INC. Reconciliation of GAAP Net Income and Diluted Earnings per Share to Non-GAAP Adjusted Net Income and Diluted Earnings per Share (In thousands, except per share data) (Unaudited)

The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three and twelve months ended December 31, 2022 and 2021 is as follows:

Three Months Ended

December 31,

2022

Per diluted share

2021

Per diluted share

Net income as reported

$ 3,696

$ 0.23

$ 1,561

$ 0.11

Non-GAAP adjustments, net of tax

Income tax valuation allowance

 

-

-

 

506

0.03

 

Amortization of intangible assets - net

 

2,395

0.15

 

1,470

0.10

 

Foreign currency gain/ loss - net

 

187

0.01

 

48

-

 

Business development costs - net

655

0.04

790

0.05

Adjusted net income and diluted EPS

$ 6,933

$ 0.43

$ 4,375

$ 0.30

 

Weighted average diluted shares outstanding

16,145

14,632

Twelve Months Ended

December 31,

2022

Per diluted share

2021

Per diluted share

Net income as reported

$ 17,389

$ 1.09

$ 24,094

$ 1.66

Non-GAAP adjustments, net of tax

Income tax valuation allowance

-

-

 

506

0.03

 

Income tax benefit

-

-

 

(7,373)

(0.51)

 

Amortization of intangible assets - net

 

9,812

0.62

 

4,938

0.34

 

Foreign currency gain/ loss - net

 

228

0.01

 

18

0.00

 

Business development costs - net

2,542

0.16

998

0.07

Adjusted net income and diluted EPS

$ 29,971

$ 1.88

$ 23,181

$ 1.60

 

Weighted average diluted shares outstanding

15,951

14,517

Adjusted net income and diluted EPS are defined as net income as reported, adjusted for certain items, including amortization of intangible assets and unusual non-recurring items. Adjusted net income and diluted EPS are not a measure determined in accordance with GAAP in the United States, and may not be comparable to the measure as used by other companies. Nevertheless, the Company believes that providing non-GAAP information, such as adjusted net income and diluted EPS are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year’s net income and diluted EPS to the historical periods’ net income and diluted EPS.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230307005961/en/

Investor Contacts: Deborah K. Pawlowski / Craig P. Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832 dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com