Business context and reporting period
Allied Motion Technologies Inc. (NASDAQ: AMOT) filed this unaudited Form 10-Q for the quarter ended September 30, 2021. The filing describes a global designer and manufacturer of controlled-motion products and systems serving Vehicle, Industrial, Medical, and Aerospace & Defense markets. It reports one operating segment. The request metadata names “ALLIENT INC,” which does not match the registrant identified in the filing.
Financial performance
Amounts below are in millions of dollars, except per-share data and percentages. Comparisons are with the corresponding 2020 period.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $103.5 | $94.7 | $306.7 | $273.7 |
| Gross profit | $32.0 | $28.1 | $93.3 | $82.6 |
| Gross margin | 30.9% | 29.7% | 30.4% | 30.2% |
| Operating income | $8.7 | $6.5 | $22.0 | $18.2 |
| Net income | $6.0 | $4.0 | $22.5 | $10.9 |
| Diluted EPS | $0.41 | $0.28 | $1.56 | $0.76 |
| Operating cash flow | Not presented separately | Not presented separately | $19.9 | $15.0 |
- Q3 revenue increased 9%; management attributed the increase mainly to stronger Vehicle and Industrial demand. Reported growth reflected an 8.5% volume increase and a 0.9% favorable currency impact.
- Nine-month revenue increased 12%, including an 8.7% volume increase and 3.4% favorable currency impact. The period also included Dynamic Controls for all nine months, versus partial inclusion in the prior-year period.
- Gross margin improved year over year as higher-margin Vehicle and Industrial sales grew and pandemic-related Medical demand normalized. Higher material, labor, and supply-chain costs partly offset the improvement.
- Nine-month net income included a $7.373 million discrete tax benefit, primarily from recognition of New Zealand net operating loss carryforwards. The reported effective tax rate was negative 14.2%, versus 27.6% in 2020; adjusted diluted EPS, excluding specified items, was $1.06 versus $0.81.
- Management-reported non-GAAP Adjusted EBITDA was $14.5 million for Q3 and $38.8 million for the first nine months, compared with $11.5 million and $33.2 million, respectively, in 2020.
Liquidity, debt, and balance sheet
- At September 30, 2021, cash was $19.2 million, down from $23.1 million at December 31, 2020. Current assets were $157.5 million and current liabilities $62.4 million, implying a current ratio of about 2.5.
- Long-term debt, net of issuance costs, was $109.3 million, compared with $120.1 million at year-end 2020. Gross revolving-facility borrowings were $109.8 million; the facility had $115.2 million unused capacity, subject to covenant calculations.
- The $225 million revolving facility matures in February 2025; the effective borrowing rate was 2.42% at quarter-end. The company reported compliance with its financial covenants.
- Nine-month operating cash flow was $19.9 million. Capital expenditures were $9.8 million, implying approximately $10.2 million of operating cash flow after capital expenditures. Cash used in financing was $13.3 million, including a net debt paydown and dividends.
- Receivables rose to $55.7 million from $47.4 million at year-end, and inventory rose to $72.2 million from $63.0 million. The cash-flow statement reflects increased cash tied up in both receivables and inventory.
Material changes, outlook, and risks
- Bookings reached a quarterly record of $119.9 million, up 35%; backlog was $185.6 million, up 50% from September 2020. Management linked backlog growth both to stronger demand and continuing supply-chain constraints.
- Management expected supply availability, higher input costs, and direct-labor hiring to remain challenging through the rest of 2021. A China energy shortage caused one facility to shut down for a week in Q3; management said the quarter impact was not material but noted uncertainty beyond Q3.
- Full-year 2021 capital expenditures were expected to be $12–$15 million. The filing provides no specific revenue or earnings guidance.
- The company plans to consolidate its Twinsburg, Ohio manufacturing facility into Watertown, New York and Reynosa, Mexico operations during 2022. It had incurred $0.1 million of costs in Q3 and expected total costs of approximately $1.0 million, with completion targeted for Q2 2022.
- On November 2, 2021, after quarter-end, the company acquired ORMEC Systems Corp. for approximately $9.0 million, consisting of $8.615 million cash and $0.385 million in company stock; closing working-capital adjustments and final purchase accounting remained pending.
- A cybersecurity breach occurred in Q2 2021. The company said it contained the incident, restored operations without material quarterly impact, implemented additional security measures, and paid no ransom. It cautioned that future cybersecurity incidents could be materially harmful.
- One customer represented 16% of Q3 and nine-month revenue and 16% of quarter-end receivables. Other disclosed risks include COVID-19 and variants, supplier concentration, foreign-exchange movements, customer demand, and execution of acquisitions and facility consolidation.
Important facts for investors to verify
- Confirm the registrant identity: the supplied metadata says ALLIENT INC, while the filing is for Allied Motion Technologies Inc. (AMOT).
- Assess how much of nine-month earnings growth reflects the $7.373 million discrete tax benefit; compare reported and adjusted results.
- Track whether backlog converts to revenue as supply constraints ease, and monitor inventory, receivables, and cash conversion.
- Verify execution costs and timing for the Twinsburg consolidation and integration of the post-quarter ORMEC acquisition.
- Monitor borrowing capacity and covenant headroom, floating-rate debt exposure, and the effects of foreign exchange and customer concentration.