Business context and reporting period
This is Allied Motion Technologies Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2011. The company designs, manufactures, and sells motion-control products, operating as one reportable segment. Note: the request identifies “ALLIENT INC,” but the filing is for Allied Motion Technologies Inc.
Financial performance
| Metric | Three months ended June 30, 2011 | Six months ended June 30, 2011 |
|---|---|---|
| Revenue | $28.862 million, up 44% | $55.586 million, up 49% |
| Gross profit / margin | $8.800 million / 30%, versus 28% | $16.749 million / 30%, versus 27% |
| Operating income | $2.180 million, up 101% | $3.987 million, up 99% |
| Net income | $1.481 million, versus $0.739 million | $2.694 million, versus $1.473 million |
| Diluted earnings per share | $0.17, versus $0.09 | $0.32, versus $0.19 |
| Operating cash flow | $1.978 million for six months, versus $2.792 million |
For the six months, EBITDA, a non-GAAP measure, was $5.101 million versus $3.106 million; 2010 EBITDA before the company’s specified nonrecurring items was $2.651 million. Management attributed margin improvement to higher-value products, cost reductions, and improved fixed-overhead absorption.
Liquidity, debt, and balance sheet
At June 30, cash was $3.860 million; current assets were $33.312 million and current liabilities $18.434 million. Working capital was $14.878 million (derived from reported balances). Debt obligations were $0.288 million, down from $0.795 million at year-end. The company reported approximately $8.0 million available under its amended revolving credit agreement and approximately $0.75 million under European overdraft facilities; it was in compliance with its financial covenants. Total liabilities were $21.930 million.
Cash increased $0.307 million during the first half. Investing used $1.325 million, including $0.993 million of capital expenditures and $0.332 million of contingent acquisition consideration; financing used $0.430 million. Receivables and inventory increased, contributing to lower operating cash flow.
Changes, outlook, and risks
Reported growth includes the 2010 acquisitions of Allied Motion Canada and Ostergrens: acquired businesses contributed 29% of second-quarter revenue growth and 31% of first-half growth; existing businesses grew 15% and 18%, respectively. The acquisitions also increased selling, administrative, and engineering costs. First-half 2010 results included $0.685 million of insurance recoveries; 2010 EBITDA before nonrecurring items also excluded $0.230 million of encoder-relocation inefficiencies.
Management described market conditions as reasonably strong and consistent but said bookings had slowed from 2010 record levels, primarily due to order timing rather than customer losses. Second-quarter orders were $25.6 million versus $27.7 million a year earlier. Backlog was $35.7 million, down 3% year over year and 6% from December 31, 2010. No specific revenue or earnings guidance was provided. Management expects working capital, capital expenditures, and dividends to be funded from operating cash flow and available credit.
The remaining $2.626 million Ostergrens contingent consideration was expected to be paid in first-quarter 2012. On August 4, 2011, the board announced a quarterly cash dividend and declared $0.02 per share, payable August 29 to holders of record August 17. A China credit facility of approximately $0.7 million became effective July 1, 2011. Key risks cited include economic conditions, customer demand and order timing, competition and pricing, metal input costs, foreign exchange, customer credit, component availability, growth and acquisition integration, and access to financing. Management estimated that a 10% currency move could affect remaining-year pretax earnings by approximately $0.150 million.
Important facts for investors to verify
- Confirm the correct issuer: this filing names Allied Motion Technologies Inc., not “ALLIENT INC.”
- Assess how much of reported growth and future performance depends on acquired businesses versus existing operations.
- Monitor order bookings and backlog, which declined against the stated comparison periods.
- Verify the timing and funding of the $2.626 million contingent consideration and the new dividend program.
- Review operating cash conversion, working-capital growth, and covenant headroom alongside reported earnings.
- Consider the filing’s non-GAAP EBITDA reconciliations and the impact of currency and metal-price exposure.