Allied Motion Technologies Inc. — Q1 2013 Form 10-Q
Reporting period: Three months ended March 31, 2013. The filing names the registrant as Allied Motion Technologies Inc. (a motion-control products designer and manufacturer); it does not identify the registrant as “ALLIENT INC.”
Financial performance
| Metric | Q1 2013 | Q1 2012 | Change |
|---|---|---|---|
| Revenue | $25.143 million | $26.847 million | Down 6% |
| Gross profit / margin | $7.523 million / 29.9% | $7.637 million / 28.4% | Margin improved |
| Operating income / margin | $1.407 million / 5.6% | $1.598 million / 6.0% | Income declined |
| Net income | $960,000 | $1.158 million | Down 17% |
| Diluted EPS | $0.11 | $0.14 | Down $0.03 |
| Operating cash flow | $(1.131) million | $(2.974) million | Cash use narrowed |
| Capital expenditures | $298,000 | $586,000 | Lower |
Gross margin improved partly due to a more favorable sales mix and the absence of a $238,000 supplier-component replacement charge recorded in Q1 2012. EBITDA was $1.834 million versus $2.104 million; adjusted EBITDA was $2.058 million versus $2.482 million. Both are non-GAAP measures.
Balance sheet and liquidity
- Cash and cash equivalents were $8.420 million at March 31, 2013, versus $9.728 million at December 31, 2012. Total assets were $60.511 million and stockholders’ equity was $43.080 million.
- Current liabilities were $10.424 million and current assets were $37.686 million. Debt obligations totaled $399,000, all under a China credit facility; no balance was outstanding on the revolving Credit Agreement.
- Approximately $7.850 million was available under the Credit Agreement, with additional availability under European overdraft and China facilities. The company reported compliance with its financial covenants.
- Cash declined by $1.308 million during the quarter. Operating and investing activities used $1.131 million and $298,000, respectively; financing activities provided $193,000. The company paid $210,000 in dividends ($0.025 per share).
Material changes and management commentary
- Revenue fell mainly because of lower sales to U.S. customers. Electronics, medical, vehicle, and distribution markets declined; industrial and aerospace and defense markets increased. Sales volume fell about 7%, partly offset by approximately 1% favorable currency effects.
- Management said revenue increased from Q4 2012, potentially indicating a turn after the 2012 decline, but gave no formal revenue or earnings guidance.
- Orders were $21.0 million under the new reporting method, which counts blanket orders only when released for production. Under the prior method, Q1 2013 bookings would have been $25.3 million, versus $23.0 million in Q1 2012. Reported backlog was $28.0 million under the new method; comparable backlog using the prior method was $31.4 million, versus $40.9 million a year earlier.
- Engineering and development costs rose 12% to $1.747 million, primarily due to additional engineering hires. G&A increased 1.5%, reflecting higher salaries and ERP costs partly offset by lower incentive bonuses. The effective tax rate was 32%, versus 28%.
- The company continued capital investment in China production capacity and its ERP-system transition. It described its quarterly dividend program as continuing.
Risks, contingencies, and unusual items
Management cited risks including economic conditions in the U.S. and Europe, market demand and customer viability, order timing and backlog conversion, competition and technology changes, component availability, foreign exchange, intellectual-property protection, execution of growth strategies and acquisitions, financing access, and cost control. Estimates for receivables, inventory, deferred taxes, and pension and post-retirement obligations involve judgment and could affect results. The filing identifies commitments and contingencies but provides no clear quantified contingency amount in the supplied text.
Foreign currency translation reduced comprehensive income by $460,000 in Q1 2013, compared with a positive $515,000 adjustment in Q1 2012. Management reported disclosure controls as effective and no material change in internal control over financial reporting during the quarter.
Investor verification points
- Reconcile the filing’s cash figures: the balance sheet and cash-flow statement report $8.420 million at quarter-end, while MD&A states $8.428 million.
- Track revenue recovery, customer-market trends, and the conversion of reported orders and backlog; blanket-order reporting changed in 2013.
- Assess whether improved gross margin persists and whether higher engineering, ERP, and other operating costs weigh on profit.
- Monitor working-capital cash use, especially receivables and accrued liabilities, and confirm ongoing covenant compliance and credit availability.
- Review the effect of foreign exchange, tax-rate variability, inventory valuation, and pension assumptions on future results.