FORM 10-Q
|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
ALTRA INDUSTRIAL MOTION CORP.
|
||
(Exact name of registrant as specified in its charter)
|
||
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Delaware
|
|
61-1478870
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
|
|
|
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300 Granite Street, Suite 201, Braintree, MA
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|
02184
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(Address of principal executive offices)
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(Zip Code)
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(781) 917-0600
(Registrant’s telephone number, including area code)
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Large Accelerated filer
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x
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Accelerated filer
|
|
¨
|
|
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|
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|||
Non-accelerated filer
|
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¨
(Do not check if a smaller reporting company.)
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Smaller reporting company
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|
¨
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|
March 31, 2015
|
|
December 31, 2014
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||||
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(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
47,426
|
|
|
$
|
47,503
|
|
Trade receivables, less allowance for doubtful accounts of $2,500 and $2,302 at March 31, 2015 and December 31, 2014, respectively
|
113,047
|
|
|
106,458
|
|
||
Inventories
|
127,598
|
|
|
132,736
|
|
||
Deferred income taxes
|
9,118
|
|
|
9,240
|
|
||
Income tax receivable
|
3,276
|
|
|
6,247
|
|
||
Prepaid expenses and other current assets
|
8,445
|
|
|
8,617
|
|
||
Total current assets
|
308,910
|
|
|
310,801
|
|
||
Property, plant and equipment, net
|
151,694
|
|
|
156,366
|
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||
Intangible assets, net
|
102,579
|
|
|
110,730
|
|
||
Goodwill
|
97,751
|
|
|
102,087
|
|
||
Deferred income taxes
|
934
|
|
|
987
|
|
||
Other non-current assets, net
|
3,207
|
|
|
3,592
|
|
||
Total assets
|
$
|
665,075
|
|
|
$
|
684,563
|
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LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
47,491
|
|
|
$
|
44,298
|
|
Accrued payroll
|
18,085
|
|
|
23,254
|
|
||
Accruals and other current liabilities
|
30,598
|
|
|
33,591
|
|
||
Deferred income taxes
|
123
|
|
|
120
|
|
||
Income tax payable
|
3,028
|
|
|
3,189
|
|
||
Current portion of long-term debt
|
15,743
|
|
|
15,176
|
|
||
Total current liabilities
|
115,068
|
|
|
119,628
|
|
||
Long-term debt - less current portion and net of unaccreted discount
|
241,901
|
|
|
240,576
|
|
||
Deferred income taxes
|
51,916
|
|
|
53,226
|
|
||
Pension liabilities
|
9,306
|
|
|
9,993
|
|
||
Long-term taxes payable
|
636
|
|
|
629
|
|
||
Other long-term liabilities
|
808
|
|
|
869
|
|
||
Redeemable non-controlling interest
|
719
|
|
|
883
|
|
||
Commitments and Contingencies (See Note 16)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock ($0.001 par value, 90,000,000 shares authorized, 26,194,280 and 26,353,755 issued and outstanding at March 31, 2015 and December 31, 2014, respectively)
|
26
|
|
|
26
|
|
||
Additional paid-in capital
|
135,511
|
|
|
139,087
|
|
||
Retained earnings
|
167,281
|
|
|
161,061
|
|
||
Accumulated other comprehensive loss
|
(58,097
|
)
|
|
(41,415
|
)
|
||
Total stockholders’ equity
|
244,721
|
|
|
258,759
|
|
||
Total liabilities, redeemable non-controlling interest and stockholders’ equity
|
$
|
665,075
|
|
|
$
|
684,563
|
|
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
|
(Unaudited)
|
|
(Unaudited)
|
||||
Net sales
|
$
|
193,361
|
|
|
$
|
210,138
|
|
Cost of sales
|
134,888
|
|
|
148,342
|
|
||
Gross profit
|
58,473
|
|
|
61,796
|
|
||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative expenses
|
36,302
|
|
|
38,262
|
|
||
Research and development expenses
|
4,762
|
|
|
3,889
|
|
||
Restructuring costs
|
1,756
|
|
|
—
|
|
||
|
42,820
|
|
|
42,151
|
|
||
Income from operations
|
15,653
|
|
|
19,645
|
|
||
Other non-operating income and expense:
|
|
|
|
||||
Interest expense, net
|
2,956
|
|
|
3,019
|
|
||
Other non-operating (income) expense, net
|
(829
|
)
|
|
534
|
|
||
|
2,127
|
|
|
3,553
|
|
||
Income before income taxes
|
13,526
|
|
|
16,092
|
|
||
Provision for income taxes
|
4,136
|
|
|
4,729
|
|
||
Net income
|
9,390
|
|
|
11,363
|
|
||
Net loss attributable to non-controlling interest
|
8
|
|
|
2
|
|
||
Net income attributable to Altra Industrial Motion Corp.
|
$
|
9,398
|
|
|
$
|
11,365
|
|
Weighted average shares, basic
|
26,280
|
|
|
26,733
|
|
||
Weighted average shares, diluted
|
26,357
|
|
|
27,444
|
|
||
Net income per share:
|
|
|
|
||||
Basic net income attributable to Altra Industrial Motion Corp.
|
$
|
0.36
|
|
|
$
|
0.43
|
|
Diluted net income attributable to Altra Industrial Motion Corp.
|
$
|
0.36
|
|
|
$
|
0.41
|
|
Cash dividend declared
|
$
|
0.12
|
|
|
$
|
0.10
|
|
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
|
(Unaudited)
|
|
(Unaudited)
|
||||
Net Income
|
$
|
9,390
|
|
|
$
|
11,363
|
|
Other Comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustment
|
(16,400
|
)
|
|
(54
|
)
|
||
Change in fair value of interest rate swap, net of tax
|
(282
|
)
|
|
5
|
|
||
Other comprehensive income (loss)
|
(16,682
|
)
|
|
(49
|
)
|
||
Comprehensive (loss) income
|
(7,292
|
)
|
|
11,314
|
|
||
Comprehensive income (loss) attributable to noncontrolling interest
|
(164
|
)
|
|
37
|
|
||
Comprehensive (loss) income attributable to Altra Industrial Motion Corp.
|
$
|
(7,128
|
)
|
|
$
|
11,277
|
|
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
|
(Unaudited)
|
|
(Unaudited)
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
9,390
|
|
|
$
|
11,363
|
|
Adjustments to reconcile net income to net cash flows:
|
|
|
|
||||
Depreciation
|
5,343
|
|
|
5,845
|
|
||
Amortization of intangible assets
|
2,162
|
|
|
2,219
|
|
||
Amortization of deferred financing costs
|
239
|
|
|
232
|
|
||
(Gain) / Loss on foreign currency, net
|
(67
|
)
|
|
305
|
|
||
Amortization of inventory fair value adjustment
|
—
|
|
|
2,151
|
|
||
Accretion of debt discount, net
|
892
|
|
|
823
|
|
||
(Gain) Loss on disposal of fixed assets
|
(26
|
)
|
|
212
|
|
||
Stock based compensation
|
1,110
|
|
|
874
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Trade receivables
|
(10,091
|
)
|
|
(11,957
|
)
|
||
Inventories
|
991
|
|
|
1,439
|
|
||
Accounts payable and accrued liabilities
|
2,823
|
|
|
4,944
|
|
||
Other current assets and liabilities
|
(82
|
)
|
|
829
|
|
||
Other operating assets and liabilities
|
90
|
|
|
(206
|
)
|
||
Net cash from operating activities
|
12,774
|
|
|
19,073
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchase of property, plant and equipment
|
(7,731
|
)
|
|
(5,617
|
)
|
||
Net cash from investing activities
|
(7,731
|
)
|
|
(5,617
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Payments on term loan facility
|
(2,359
|
)
|
|
(6,261
|
)
|
||
Payments on revolving credit facility
|
—
|
|
|
(6,165
|
)
|
||
Dividend payments
|
(3,178
|
)
|
|
(2,696
|
)
|
||
Proceeds from equipment loan
|
945
|
|
|
582
|
|
||
Payment of equipment and working capital notes
|
(412
|
)
|
|
—
|
|
||
Borrowing under revolving credit facility
|
5,000
|
|
|
—
|
|
||
Proceeds from Bauer Mortgage
|
3,647
|
|
|
—
|
|
||
Shares surrendered for tax withholding
|
(128
|
)
|
|
(132
|
)
|
||
Payments on mortgages and other
|
(53
|
)
|
|
(199
|
)
|
||
Purchases of common stock under share repurchase program
|
(4,558
|
)
|
|
—
|
|
||
Net cash from financing activities
|
(1,096
|
)
|
|
(14,871
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(4,024
|
)
|
|
(340
|
)
|
||
Net change in cash and cash equivalents
|
(77
|
)
|
|
(1,755
|
)
|
||
Cash and cash equivalents at beginning of year
|
47,503
|
|
|
63,604
|
|
||
Cash and cash equivalents at end of period
|
$
|
47,426
|
|
|
$
|
61,849
|
|
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
2,564
|
|
|
$
|
2,715
|
|
Income taxes
|
$
|
1,514
|
|
|
$
|
1,571
|
|
|
Common
Stock
|
|
Shares
|
|
Additional
Paid
in Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|
Redeemable
Non-Controlling
Interest
|
|||||||||||||
Balance at January 1, 2014
|
$
|
27
|
|
|
26,820
|
|
|
$
|
154,471
|
|
|
$
|
133,231
|
|
|
$
|
(18,396
|
)
|
|
$
|
269,333
|
|
|
$
|
991
|
|
Stock-based compensation and vesting of restricted stock
|
—
|
|
|
247
|
|
|
742
|
|
|
—
|
|
|
—
|
|
|
742
|
|
|
—
|
|
||||||
Net income attributable to Altra Industrial Motion Corp.
|
—
|
|
|
—
|
|
|
—
|
|
|
11,365
|
|
|
—
|
|
|
11,365
|
|
|
—
|
|
||||||
Net loss attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,707
|
)
|
|
|
|
(2,707
|
)
|
|
—
|
|
|||||||
Change in fair value of interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
||||||
Cumulative foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
(54
|
)
|
|
39
|
|
||||||
Balance at March 31, 2014
|
$
|
27
|
|
|
27,067
|
|
|
$
|
155,213
|
|
|
$
|
141,889
|
|
|
$
|
(18,445
|
)
|
|
$
|
278,684
|
|
|
$
|
1,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2015
|
$
|
26
|
|
|
26,354
|
|
|
$
|
139,087
|
|
|
$
|
161,061
|
|
|
$
|
(41,415
|
)
|
|
$
|
258,759
|
|
|
$
|
883
|
|
Stock-based compensation and vesting of restricted stock
|
—
|
|
|
11
|
|
|
982
|
|
|
—
|
|
|
—
|
|
|
982
|
|
|
—
|
|
||||||
Net income attributable to Altra Industrial Motion Corp.
|
—
|
|
|
—
|
|
|
—
|
|
|
9,398
|
|
|
—
|
|
|
9,398
|
|
|
—
|
|
||||||
Net loss attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,178
|
)
|
|
—
|
|
|
(3,178
|
)
|
|
—
|
|
||||||
Change in fair value of interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(282
|
)
|
|
(282
|
)
|
|
—
|
|
||||||
Cumulative foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,400
|
)
|
|
(16,400
|
)
|
|
(156
|
)
|
||||||
Repurchases of common stock - 171,112 shares
|
—
|
|
|
(171
|
)
|
|
(4,558
|
)
|
|
—
|
|
|
—
|
|
|
(4,558
|
)
|
|
—
|
|
||||||
Balance at March 31, 2015
|
$
|
26
|
|
|
26,194
|
|
|
$
|
135,511
|
|
|
$
|
167,281
|
|
|
$
|
(58,097
|
)
|
|
$
|
244,721
|
|
|
$
|
719
|
|
|
Gains and
Losses on
Cash Flow
Hedges
|
|
Defined
Benefit
Pension
Plans
|
|
Cumulative
Foreign
Currency
Translation
Adjustment
|
|
Total
|
||||||||
Accumulated Other Comprehensive Income (Loss) by Component, January 1, 2014
|
$
|
135
|
|
|
$
|
(3,133
|
)
|
|
$
|
(15,398
|
)
|
|
$
|
(18,396
|
)
|
Net current-period Other Comprehensive Income (Loss)
|
5
|
|
|
—
|
|
|
(54
|
)
|
|
(49
|
)
|
||||
Accumulated Other Comprehensive Income (Loss) by Component, Balance at March 31, 2014
|
$
|
140
|
|
|
$
|
(3,133
|
)
|
|
$
|
(15,452
|
)
|
|
$
|
(18,445
|
)
|
|
Gains and
Losses on
Cash Flow
Hedges
|
|
Defined
Benefit
Pension
Plans
|
|
Cumulative
Foreign
Currency
Translation
Adjustment
|
|
Total
|
||||||||
Accumulated Other Comprehensive Income (Loss) by Component, January 1, 2015
|
$
|
143
|
|
|
$
|
(4,818
|
)
|
|
$
|
(36,740
|
)
|
|
$
|
(41,415
|
)
|
Net current-period Other Comprehensive Loss
|
(207
|
)
|
|
—
|
|
|
(16,475
|
)
|
|
(16,682
|
)
|
||||
Accumulated Other Comprehensive Loss by Component, March 31, 2015
|
$
|
(64
|
)
|
|
$
|
(4,818
|
)
|
|
$
|
(53,215
|
)
|
|
$
|
(58,097
|
)
|
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
Net income attributable to Altra Industrial Motion Corp.
|
$
|
9,398
|
|
|
$
|
11,365
|
|
Shares used in net income per common share - basic
|
26,280
|
|
|
26,733
|
|
||
Dilutive effect of the equity premium on Convertible Notes at the average price of common stock
|
11
|
|
|
660
|
|
||
Incremental shares of unvested restricted common stock
|
66
|
|
|
51
|
|
||
Shares used in net income per common share - diluted
|
26,357
|
|
|
27,444
|
|
||
Earnings per share:
|
|
|
|
||||
Basic net income attributable to Altra Industrial Motion Corp.
|
$
|
0.36
|
|
|
$
|
0.43
|
|
Diluted net income attributable to Altra Industrial Motion Corp.
|
$
|
0.36
|
|
|
$
|
0.41
|
|
Customer relationships, subject to amortization
|
$
|
7,450
|
|
Trade names and trademarks, not subject to amortization
|
650
|
|
|
Total intangible assets
|
$
|
8,100
|
|
|
Pro Forma
(unaudited)
|
|||
|
Quarter Ended
|
|||
|
|
March 31, 2014
|
||
Total revenues
|
|
$
|
213,248
|
|
Net income attributable to Altra Industrial Motion Corp.
|
|
$
|
11,891
|
|
Earnings per share:
|
|
|
||
Basic net income attributable to Altra Industrial Motion Corp.
|
|
$
|
0.44
|
|
Dilutive net income attributable to Altra Industrial Motion Corp.
|
|
$
|
0.43
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Raw materials
|
$
|
37,182
|
|
|
$
|
36,814
|
|
Work in process
|
14,348
|
|
|
13,641
|
|
||
Finished goods
|
76,068
|
|
|
82,281
|
|
||
|
$
|
127,598
|
|
|
$
|
132,736
|
|
|
Clutches and Brakes
|
Couplings
|
Gearing & Power Transmission Components
|
Total
|
||||||||
|
|
|
|
|
||||||||
Gross goodwill balance as of January 1, 2015
|
$
|
51,447
|
|
$
|
37,392
|
|
$
|
45,058
|
|
$
|
133,897
|
|
Accumulated Impairment January 1, 2015
|
(3,745
|
)
|
(14,982
|
)
|
(13,083
|
)
|
(31,810
|
)
|
||||
Net goodwill balance January 1, 2015
|
47,702
|
|
22,410
|
|
31,975
|
|
102,087
|
|
||||
|
|
|
|
|
||||||||
Impact of changes in foreign currency and other
|
(2,783
|
)
|
(616
|
)
|
(937
|
)
|
(4,336
|
)
|
||||
Net goodwill balance March 31, 2015
|
$
|
44,919
|
|
$
|
21,794
|
|
$
|
31,038
|
|
$
|
97,751
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tradenames and trademarks
|
$
|
39,617
|
|
|
$
|
—
|
|
|
$
|
39,617
|
|
|
$
|
41,257
|
|
|
$
|
—
|
|
|
$
|
41,257
|
|
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
112,711
|
|
|
50,499
|
|
|
62,212
|
|
|
118,523
|
|
|
49,849
|
|
|
68,674
|
|
||||||
Product technology and patents
|
5,990
|
|
|
5,240
|
|
|
750
|
|
|
6,830
|
|
|
6,031
|
|
|
799
|
|
||||||
Total intangible assets
|
$
|
158,318
|
|
|
$
|
55,739
|
|
|
$
|
102,579
|
|
|
$
|
166,610
|
|
|
$
|
55,880
|
|
|
$
|
110,730
|
|
|
March 31, 2015
|
|
March 31, 2014
|
||||
Balance at beginning of period
|
$
|
7,792
|
|
|
$
|
8,739
|
|
Accrued current period warranty expense
|
645
|
|
|
201
|
|
||
Payments and adjustments
|
(1,043
|
)
|
|
(580
|
)
|
||
Balance at end of period
|
$
|
7,394
|
|
|
$
|
8,360
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Debt:
|
|
|
|
||||
Revolving Credit Facility
|
$
|
45,000
|
|
|
$
|
40,000
|
|
Convertible Notes
|
85,000
|
|
|
85,000
|
|
||
Term Loan Facility
|
126,433
|
|
|
133,697
|
|
||
Bauer Mortgage
|
6,511
|
|
|
3,647
|
|
||
Equipment Loan
|
5,993
|
|
|
5,430
|
|
||
Mortgages
|
115
|
|
|
258
|
|
||
Capital leases
|
456
|
|
|
476
|
|
||
Total debt
|
269,508
|
|
|
268,508
|
|
||
Less: debt discount, net of accretion
|
(11,864
|
)
|
|
(12,756
|
)
|
||
Total debt, net of unaccreted discount
|
$
|
257,644
|
|
|
$
|
255,752
|
|
Less current portion of long-term debt
|
15,743
|
|
|
15,176
|
|
||
Total long-term debt, net of unaccreted discount
|
$
|
241,901
|
|
|
$
|
240,576
|
|
Principal amount of debt
|
$
|
85,000
|
|
Unamortized discount
|
11,864
|
|
|
Carrying value of debt
|
$
|
73,136
|
|
|
Quarter Ended
|
|||||
|
March 31, 2015
|
March 31, 2014
|
||||
Contractual coupon rate of interest
|
$
|
584
|
|
$
|
584
|
|
Accretion of Convertible Notes discount and amortization of deferred financing costs
|
981
|
|
911
|
|
||
Interest expense for the convertible notes
|
$
|
1,565
|
|
$
|
1,495
|
|
|
|
|
|
|
|
|
Fair Value
|
|||||||||
|
Notional
|
|
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
|||||||
Effective Date
|
Amount
|
|
Fixed Rate
|
|
Maturity
|
|
|
|||||||||
April 30, 2013
|
$
|
80,000
|
|
|
0.626
|
%
|
|
November 30, 2016
|
|
$
|
(64
|
)
|
|
$
|
143
|
|
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
Clutches and Brakes
|
$
|
224
|
|
|
$
|
—
|
|
Couplings
|
82
|
|
|
—
|
|
||
Gearing and Power Transmission Components
|
1,450
|
|
|
—
|
|
||
Corporate
|
—
|
|
|
—
|
|
||
Total
|
$
|
1,756
|
|
|
$
|
—
|
|
|
|
|
|
||||
|
|
All Plans
|
||
Balance at January 1, 2015
|
$
|
389
|
|
Restructuring expense incurred
|
1,756
|
|
|
Cash payments
|
(362
|
)
|
|
Balance at March 31, 2015
|
$
|
1,783
|
|
•
|
Clutches and Brakes.
Clutches are devices which use mechanical, magnetic, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery.
|
•
|
Couplings.
Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other.
|
•
|
Gearing and Power Transmission Components.
Gears reduce the output speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Power transmission components are used in a number of industries to generate, transfer or control motion from a power source to an application requiring rotary or linear motion.
|
Segment financial information and a reconciliation of segment results to consolidated results follows:
|
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
|
Quarters Ended March 31:
|
|
||||||
|
2015
|
|
2014
|
|
||||
Net Sales:
|
|
|
|
|
||||
Clutches & Brakes
|
$
|
101,595
|
|
|
$
|
113,019
|
|
|
Couplings
|
31,934
|
|
|
30,988
|
|
|
||
Gearings & Power Transmission Components
|
61,465
|
|
|
67,297
|
|
|
||
Intra-segment eliminations
|
(1,633
|
)
|
|
(1,166
|
)
|
|
||
Net sales
|
$
|
193,361
|
|
|
$
|
210,138
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
||||
Income from operations:
|
|
|
|
|
||||
Segment earnings:
|
|
|
|
|
||||
Clutches & Brakes
|
11,743
|
|
|
12,874
|
|
|
||
Couplings
|
2,888
|
|
|
3,482
|
|
|
||
Gearings & Power Transmission Components
|
5,402
|
|
|
5,535
|
|
|
||
Restructuring
|
(1,756
|
)
|
|
—
|
|
|
||
Corporate expenses (1)
|
(2,624
|
)
|
|
(2,246
|
)
|
|
||
Income from operations
|
15,653
|
|
|
19,645
|
|
|
||
|
|
|
|
|
||||
Other non-operating (income) expense:
|
|
|
|
|
||||
Net interest expense
|
2,956
|
|
|
3,019
|
|
|
||
Other non-operating (income) expense, net
|
(829
|
)
|
|
534
|
|
|
||
|
2,127
|
|
|
3,553
|
|
|
||
Income before income taxes
|
13,526
|
|
|
16,092
|
|
|
||
Provision for income taxes
|
4,136
|
|
|
4,729
|
|
|
||
Net income
|
$
|
9,390
|
|
|
$
|
11,363
|
|
|
|
|
|
|
|
|
Quarters Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Depreciation and amortization:
|
|
|
|
||||
Clutches & Brakes
|
$
|
2,741
|
|
|
$
|
3,428
|
|
Couplings
|
1,472
|
|
|
1,322
|
|
||
Gearing & Power Transmission Components
|
2,566
|
|
|
2,775
|
|
||
Corporate
|
726
|
|
|
539
|
|
||
Total depreciation and amortization
|
$
|
7,505
|
|
|
$
|
8,064
|
|
|
|
|
|
||||
|
|
|
|
||||
|
March 31, 2015
|
|
December 31, 2014
|
||||
Total assets:
|
|
|
|
||||
|
|
|
|
||||
Clutches & Brakes
|
$
|
321,349
|
|
|
$
|
334,371
|
|
Couplings
|
113,953
|
|
|
117,805
|
|
||
Gearing & Power Transmission Components
|
187,946
|
|
|
190,771
|
|
||
Corporate (2)
|
41,827
|
|
|
41,616
|
|
||
Total assets
|
$
|
665,075
|
|
|
$
|
684,563
|
|
|
Net Sales
|
||||||
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
North America (primarily U.S.)
|
$
|
122,311
|
|
|
$
|
125,788
|
|
Europe
|
55,040
|
|
|
67,836
|
|
||
Asia and other
|
16,010
|
|
|
16,514
|
|
||
Total
|
$
|
193,361
|
|
|
$
|
210,138
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
the effects of intense competition in the markets in which we operate;
|
•
|
the cyclical nature of the markets in which we operate;
|
•
|
changes in market conditions in which we operate that would influence the value of the Company’s stock;
|
•
|
the Company’s ability to achieve its business plans, including with respect to an uncertain economic environment;
|
•
|
the risks associated with international operations, including currency risks;
|
•
|
the Company’s ability to retain existing customers and our ability to attract new customers for growth of our business;
|
•
|
the effects of the loss or bankruptcy of or default by any significant customer, suppliers, or other entity relevant to the Company’s operations;
|
•
|
the Company’s ability to complete cost reduction actions and risks associated with such actions;
|
•
|
the Company’s ability to control costs;
|
•
|
political and economic conditions nationally, regionally, and in the markets in which we operate;
|
•
|
natural disasters, war, civil unrest, terrorism, fire, floods, tornadoes, earthquakes, hurricanes, or other matters beyond the Company’s control;
|
•
|
the Company’s risk of loss not covered by insurance;
|
•
|
the accuracy of estimated forecasts of OEM customers and the impact of the current global and European economic environment on our customers;
|
•
|
the risks associated with certain minimum purchase agreements we have with suppliers;
|
•
|
fluctuations in the costs of raw materials used in our products;
|
•
|
the outcome of litigation to which the Company is a party from time to time, including product liability claims;
|
•
|
work stoppages and other labor issues;
|
•
|
changes in employment, environmental, tax and other laws and changes in the enforcement of laws;
|
•
|
the Company’s ability to attract and retain key executives and other personnel;
|
•
|
the Company’s ability to successfully pursue the Company’s development activities and successfully integrate new operations and systems, including the realization of revenues, economies of scale, cost savings, and productivity gains associated with such operations;
|
•
|
the Company’s ability to obtain or protect intellectual property rights;
|
•
|
the risks associated with the portion of the Company’s total assets comprised of goodwill and indefinite lived intangibles;
|
•
|
changes in market conditions that would result in the impairment of goodwill or other assets of the Company;
|
•
|
changes in accounting rules and standards, audits, compliance with the Sarbanes-Oxley Act, and regulatory investigations;
|
•
|
the effects of changes to critical accounting estimates; changes in volatility of the Company’s stock price and the risk of litigation following a decline in the price of the Company’s stock;
|
•
|
failure of the Company’s operating equipment or information technology infrastructure;
|
•
|
the Company’s ability to implement our new ERP system;
|
•
|
the Company’s access to capital, credit ratings, indebtedness, and ability to raise additional capital and operate under the terms of the Company’s debt obligations;
|
•
|
the risks associated with our debt;
|
•
|
the risks associated with the Company’s exposure to variable interest rates and foreign currency exchange rates;
|
•
|
the risks associated with interest rate swap contracts;
|
•
|
the risks associated with the potential dilution of our common stock as a result of our convertible bonds;
|
•
|
the risks associated with the Company’s exposure to renewable energy markets;
|
•
|
the risks related to regulations regarding conflict minerals;
|
•
|
the risks associated with the global recession and European economic downturn and volatility and disruption in the global financial markets;
|
•
|
the Company’s ability to successfully execute, manage and integrate key acquisitions and mergers, including the Lamiflex Acquisition, the Svendborg Acquisition and the Guardian Acquisition;
|
•
|
the risks associated with the Company’s investment in its manufacturing facility in Changzhou, China; and
|
•
|
other factors, risks, and uncertainties referenced in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” set forth in this document
|
•
|
Clutches and Brakes.
Clutches are devices which use mechanical, magnetic, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery.
|
•
|
Couplings.
Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other.
|
•
|
Gearing and Power Transmission Components.
Gears reduce the output speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Power transmission components are used in a number of industries to generate, transfer or control motion from a power source to an application requiring rotary or linear motion.
|
|
|||||||||||
|
|
|
|
|
|
|
|
||||
|
Net Sales
|
|
Operating Income
|
||||||||
|
Quarter Ended March 31, 2015
|
|
Quarter Ended March 31, 2014
|
|
Quarter Ended March 31, 2015
|
|
Quarter Ended March 31, 2014
|
||||
Clutches and Brakes
|
52
|
%
|
|
53
|
%
|
|
59
|
%
|
|
59
|
%
|
Couplings
|
16
|
%
|
|
15
|
%
|
|
14
|
%
|
|
16
|
%
|
Gearing and Power Transmission Components
|
32
|
%
|
|
32
|
%
|
|
27
|
%
|
|
25
|
%
|
|
Quarter Ended
|
||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||
Net sales
|
$
|
193,361
|
|
|
$
|
210,138
|
|
Cost of sales
|
134,888
|
|
|
148,342
|
|
||
Gross profit
|
58,473
|
|
|
61,796
|
|
||
Gross profit percentage
|
30.2
|
%
|
|
29.4
|
%
|
||
Selling, general and administrative expenses
|
36,302
|
|
|
38,262
|
|
||
Research and development expenses
|
4,762
|
|
|
3,889
|
|
||
Restructuring costs
|
1,756
|
|
|
—
|
|
||
Income from operations
|
15,653
|
|
|
19,645
|
|
||
Interest expense, net
|
2,956
|
|
|
3,019
|
|
||
Other non-operating (income) expense, net
|
(829
|
)
|
|
534
|
|
||
Income before income taxes
|
13,526
|
|
|
16,092
|
|
||
Provision for income taxes
|
4,136
|
|
|
4,729
|
|
||
Net income
|
9,390
|
|
|
11,363
|
|
||
Net loss attributable to non-controlling interest
|
8
|
|
|
2
|
|
||
Net income attributable to Altra Industrial Motion Corp.
|
$
|
9,398
|
|
|
$
|
11,365
|
|
|
Quarters Ended March 31:
|
||||||
|
2015
|
|
2014
|
||||
Net Sales:
|
|
|
|
||||
Clutches & Brakes
|
$
|
101,595
|
|
|
$
|
113,019
|
|
Couplings
|
31,934
|
|
|
30,988
|
|
||
Gearings & Power Transmission Components
|
61,465
|
|
|
67,297
|
|
||
Intra-segment eliminations
|
(1,633
|
)
|
|
(1,166
|
)
|
||
Net sales
|
$
|
193,361
|
|
|
$
|
210,138
|
|
|
|
|
|
||||
|
|
|
|
||||
Income from operations:
|
|
|
|
||||
Segment earnings:
|
|
|
|
||||
Clutches & Brakes
|
$
|
11,743
|
|
|
$
|
12,874
|
|
Couplings
|
2,888
|
|
|
3,482
|
|
||
Gearings & Power Transmission Components
|
5,402
|
|
|
5,535
|
|
||
Restructuring
|
(1,756
|
)
|
|
—
|
|
||
Corporate expenses (1)
|
(2,624
|
)
|
|
(2,246
|
)
|
||
Income from operations
|
$
|
15,653
|
|
|
$
|
19,645
|
|
Amounts in thousands, except percentage data
|
Quarter-Ended
|
||||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
|
||||||||
|
|
|
Change
|
|
%
|
||||||||
Net sales
|
$
|
193,361
|
|
|
$
|
210,138
|
|
|
(16,777
|
)
|
|
(8.0
|
)%
|
Amounts in thousands, except percentage data
|
Quarter Ended
|
||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
|
%
|
||||
Gross Profit
|
58,473
|
|
|
61,796
|
|
|
(3,323
|
)
|
|
(5.4
|
)%
|
Gross Profit as a percent of sales
|
30.2
|
%
|
|
29.4
|
%
|
|
|
|
|
Amounts in thousands, except percentage data
|
Quarter Ended
|
|||||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
|
%
|
|||||||
Research and development expenses (“R&D”)
|
$
|
4,762
|
|
|
$
|
3,889
|
|
|
$
|
873
|
|
|
22.4
|
%
|
Amounts in thousands, except percentage data
|
Quarter Ended
|
|||||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
|
%
|
|||||||
Restructuring Costs
|
$
|
1,756
|
|
|
$
|
—
|
|
|
$
|
1,756
|
|
|
—
|
%
|
Amounts in thousands, except percentage data
|
Quarter Ended
|
|||||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
|
%
|
|||||||
Interest Expense, net
|
$
|
2,956
|
|
|
$
|
3,019
|
|
|
$
|
(63
|
)
|
|
(2.1
|
)%
|
Amounts in thousands, except percentage data
|
Quarter Ended
|
|||||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
|
%
|
|||||||
Other non-operating (income) expense, net
|
$
|
(829
|
)
|
|
$
|
534
|
|
|
$
|
(1,363
|
)
|
|
(255.2
|
)%
|
Amounts in thousands, except percentage data
|
Quarter Ended
|
|||||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
|
%
|
|||||||
Provision for income taxes
|
$
|
4,136
|
|
|
$
|
4,729
|
|
|
$
|
(593
|
)
|
|
(12.5
|
)%
|
Provision for income taxes as a % of income before income taxes
|
30.6
|
%
|
|
29.4
|
%
|
|
|
|
|
|
Amounts in millions
|
||||||
|
March 31, 2015
|
|
December 31, 2014
|
||||
Debt:
|
|
|
|
||||
Revolving Credit Facility
|
$
|
45.0
|
|
|
$
|
40.0
|
|
Convertible Notes
|
85.0
|
|
|
85.0
|
|
||
Term Loan Facility
|
126.4
|
|
|
133.7
|
|
||
Equipment Loan
|
6.0
|
|
|
5.4
|
|
||
Mortgages
|
0.1
|
|
|
0.3
|
|
||
Bauer Mortgage
|
6.5
|
|
|
3.6
|
|
||
Capital leases
|
0.5
|
|
|
0.5
|
|
||
Total debt
|
$
|
269.5
|
|
|
$
|
268.5
|
|
|
March 31, 2015
|
|
March 31, 2014
|
|
Change
|
||||||
Cash and cash equivalents at the beginning of the period
|
$
|
47,503
|
|
|
$
|
63,604
|
|
|
$
|
(16,101
|
)
|
Cash flows from operating activities
|
12,774
|
|
|
19,073
|
|
|
(6,299
|
)
|
|||
Cash flows from investing activities
|
(7,731
|
)
|
|
(5,617
|
)
|
|
(2,114
|
)
|
|||
Cash flows from financing activities
|
(1,096
|
)
|
|
(14,871
|
)
|
|
13,775
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(4,024
|
)
|
|
(340
|
)
|
|
(3,684
|
)
|
|||
Cash and cash equivalents at the end of the period
|
$
|
47,426
|
|
|
$
|
61,849
|
|
|
$
|
(14,423
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number
of Shares
Purchased (1)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (2)
|
|
Approximate
Dollar Value of
Shares That May Yet be
Purchased Under
The Plans or Programs
|
||
January 1, 2015 to January 31, 2015
|
57,882
|
|
|
$25.91
|
|
57,882
|
|
|
$30,882,600
|
February 1, 2015 to February 28, 2015
|
57,163
|
|
|
$27.00
|
|
52,644
|
|
|
$29,462,661
|
March 1, 2015 to March 31, 2015
|
60,586
|
|
|
$27.05
|
|
60,586
|
|
|
$27,824,040
|
(1)
|
We repurchased 4,519 of these shares of common stock during February 2015 in connection with the vesting of certain stock awards to cover minimum statutory withholding taxes.
|
(2)
|
During the quarter ended
March 31, 2015
, the Company repurchased shares of common stock under its share repurchase program initiated in May 2014, which authorized the buyback of up to $50.0 million of the Company's common stock. Under the program, the Company is authorized to purchase shares on the open market, through block trades, in privately negotiated transactions, in compliance with SEC Rule 10b-18, or in other appropriate manners. The Company has adopted a Rule 10b5-1 plan under which it is making purchases in compliance with the terms of such plan. The Company is also making open market share repurchases at the discretion of management. Shares acquired through the repurchase program will be retired. The share repurchase plan terminates on December 31, 2016. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice.
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
3.1(1)
|
|
Second Amended and Restated Certificate of Incorporation of the Registrant.
|
|
|
|
3.2(2)
|
|
Second Amended and Restated By laws of the Registrant.
|
|
|
|
10.1*
|
|
Form of Change of Control Agreement entered into among Altra Industrial Motion Corp. and certain officers†
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101*
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Statement of Comprehensive Income, (iii) the Unaudited Condensed Consolidated Balance Sheet, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Management contract or compensatory plan arrangement.
|
(1)
|
Incorporated by reference to Altra Industrial Motion Corp. Registration Statement on Form S-1A, as amended, filed with the Securities and Exchange Commission on December 4, 2006.
|
(2)
|
Incorporated by reference to Altra Industrial Motion Corp.’s Current Report on form 8-K filed on October 27, 2008.
|
|
|
|
ALTRA INDUSTRIAL MOTION CORP.
|
|
|
|
|
May 4, 2015
|
By:
|
|
/s/ Carl R. Christenson
|
|
Name:
|
|
Carl R. Christenson
|
|
Title
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
May 4, 2015
|
By:
|
|
/s/ Christian Storch
|
|
Name:
|
|
Christian Storch
|
|
Title:
|
|
Vice President and Chief Financial Officer
|
|
|
|
|
May 4, 2015
|
By:
|
|
/s/ Todd B. Patriacca
|
|
Name:
|
|
Todd B. Patriacca
|
|
Title:
|
|
Vice President of Finance, Corporate Controller and Treasurer
|
Exhibit
Number
|
|
Description
|
3.1(1)
|
|
Second Amended and Restated Certificate of Incorporation of the Registrant.
|
|
|
|
3.2(2)
|
|
Second Amended and Restated Bylaws of the Registrant.
|
|
|
|
10.1*
|
|
Form of Change of Control Agreement entered into among Altra Industrial Motion Corp. and certain officers†
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101*
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Statement of Comprehensive Income, (iii) the Unaudited Condensed Consolidated Balance Sheet, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Management contract or compensatory plan arrangement.
|
(1)
|
Incorporated by reference to Altra Industrial Motion Corp. Registration Statement on Form S-1A, as amended, filed with the Securities and Exchange Commission on December 4, 2006.
|
(2)
|
Incorporated by reference to Altra Industrial Motion Corp. Current Report on form 8-K filed on October 27, 2008.
|
(1)
|
any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then-outstanding securities; or
|
(2)
|
individuals who, on the Effective Date, constitute the Board of the Company (the “Incumbent Board”) cease for any reason over a period
|
(3)
|
there is consummated a merger or consolidation of the Company or any Subsidiary with any other corporation (in one or a series of related transactions), other than (A) a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than fifty percent (50%) of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then-outstanding securities; or
|
(4)
|
there is consummated one or more sales, leases, exchanges, or other transfers (in one or a series of related transactions) of all or substantially all of the Company’s assets.
|
|
|
|
|
|
|
|
Date: May 4, 2015
|
|
|
|
By:
|
|
/s/ Carl R. Christenson
|
|
|
|
|
Name:
|
|
Carl R. Christenson
|
|
|
|
|
Title:
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: May 4, 2015
|
|
|
|
By:
|
|
/s/ Christian Storch
|
|
|
|
|
Name:
|
|
Christian Storch
|
|
|
|
|
Title:
|
|
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
Date: May 4, 2015
|
|
|
|
By:
|
|
/s/ Carl R. Christenson
|
|
|
|
|
Name:
|
|
Carl R. Christenson
|
|
|
|
|
Title:
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: May 4, 2015
|
|
|
|
By:
|
|
/s/ Christian Storch
|
|
|
|
|
Name:
|
|
Christian Storch
|
|
|
|
|
Title:
|
|
Vice President and Chief Financial Officer
|