Allied Motion Technologies Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparative period is Q1 2022. Unless otherwise noted, dollar amounts are in millions. The filing identifies the registrant as Allied Motion Technologies Inc.
Business context and results
The company designs, manufactures, and sells controlled-motion products and systems for industrial, vehicle, medical, and aerospace and defense markets. It reports one operating segment. Q1 revenue growth included contributions from acquisitions completed in 2022.
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Revenue | $145.5 | $114.8 | +27% |
| Gross profit / margin | $45.8 / 31.5% | $33.5 / 29.2% | Margin +2.3 percentage points |
| Operating income | $11.4 | $4.3 | +167% |
| Net income | $6.3 | $2.5 | +152% |
| Diluted EPS | $0.39 | $0.16 | +$0.23 |
| Operating cash flow | $3.6 | $(13.4) | Improved $17.0 |
| Capital expenditures | $3.6 | $2.5 | — |
Management reported organic revenue growth of 25%; reported revenue was also affected by a 3% unfavorable currency impact. By market, industrial revenue rose to $63.3 million from $45.8 million, aerospace and defense to $21.3 million from $9.4 million, while vehicle revenue declined to $30.8 million from $32.6 million. North America revenue was $97.4 million, Europe $39.9 million, and Asia-Pacific $8.3 million.
Financial position and liquidity
- At March 31, 2023, cash and cash equivalents were $25.1 million, down $5.5 million from year-end 2022; $19.3 million was held by foreign subsidiaries and may be subject to withholding tax if repatriated.
- Current assets were $241.8 million and current liabilities $86.9 million. Inventories were $116.2 million and trade receivables $87.0 million.
- Reported long-term debt was $236.5 million, including $228.1 million outstanding under the revolving facility and $8.9 million in noncurrent finance lease obligations. The facility had $51.9 million unused and matures in February 2025. The company reported compliance with its financial covenants.
- Interest expense increased to $3.0 million from $1.0 million, reflecting higher average debt and interest rates, partly offset by interest-rate swaps. $100 million of revolving debt was hedged at quarter-end.
- Q1 operating cash flow was positive, but cash declined as investing outflows—principally a $6.25 million acquisition payment and capital spending—exceeded operating cash generation and net financing inflows.
Changes, outlook, and risks
- Bookings fell 21% year over year to $123.2 million, which management attributed mainly to normalized ordering after earlier supply-chain constraints and longer lead times. Backlog increased 7% to $308.6 million.
- Management cited higher sales volume, pricing, favorable product mix, and acquisition contributions as drivers of gross-margin expansion. Operating expenses increased 18%, including acquisition-related costs and higher intangible amortization.
- Management expects a 2023 effective tax rate of approximately 25%–27% and full-year capital expenditures of $18 million–$23 million. It expects cash, available credit, and anticipated operating cash flows to cover ordinary cash needs for the next 12 months; this is management’s assessment, not a guarantee.
- Management identified persistent inflation, higher interest rates, supply-chain and labor constraints, geopolitical uncertainty including the Ukraine conflict, COVID-related disruption, China energy uncertainty, customer demand, and acquisition integration as risks. It said the Ukraine conflict had no material impact on results at the time of filing.
- Three 2022 acquisitions contributed to growth and increased debt and amortization. The company paid $12.5 million related to the Spectrum Controls acquisition in January 2023; a further $12.5 million payment, half cash and half company stock, is due by January 3, 2024.
- The company declared a quarterly dividend of $0.025 per share. Management reported effective disclosure controls and no material changes in internal control during the quarter.
Adjusted net income, adjusted diluted EPS, EBITDA, and adjusted EBITDA are non-GAAP measures: Q1 2023 adjusted net income was $8.9 million, adjusted diluted EPS $0.55, EBITDA $17.3 million, and adjusted EBITDA $19.0 million. These measures supplement, and are not substitutes for, GAAP results.
Important facts for investors to verify
- Whether the lower bookings level persists and how backlog converts into revenue.
- Acquisition contribution to reported growth, integration progress, and remaining acquisition-related payments.
- Debt, interest costs, covenant headroom, and refinancing needs ahead of the February 2025 facility maturity.
- Cash conversion and working-capital trends, including receivables and inventory, alongside planned capital spending.
- Exposure to currency movements, inflation, supply constraints, and changes in demand across the company’s markets.