AMOT - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to Allied Motion Technologies First Quarter Fiscal Year 2021 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Craig Mychajluk, Investor Relations. you. Thank

begin. may You

Craig Mychajluk

good well We Allied as and time Motion. appreciate today as your morning, you, certainly everyone. your Thank interest in

Q&A. President it results and progress which, Mike Joining Warzala, going company's to Leach, call strategic the first are up an Chief and quarter we update our Chairman, the XXXX our Dick me After Mike provide CEO; will and Officer. are Financial for outlook. review open and and on our Dick on

of we or limit in for Q&A, part the your additional up. questions can order time queue you As ask that into follow you today's do allow go and to three all back for certainly two participants to

yesterday it market can after not, you You our on If the financial have should copy released of closed. find a at the alliedmotion.com. website were results that

that On today's find accompany discussion. the also website, you'll slides

reviewing If please for statement. Slide to harbor you're safe those the slides, X turn

are call aware, the to may you apply forward-looking and formal and well subject in as These on is from materially call. These Securities some events Exchange with other are as today's as well Commission. the to that make the well risks to the future statements cause what uncertainties factors that as with could the Q&A. during As as as by results uncertainties actual and company during factors differ other are release on this and we risks statements stated other discussed earnings filed documents discussion

discuss that documents evaluating be we point want during these useful which performance. in call, website I we'll believe to non-GAAP measures, can at as on or our some will find well sec.gov. our today's out You

and We've turn the accompanying additional slides. substitute in reconciliations With please isolation tables presentation to measures the that, to X, provided consider as GAAP. of hand the Dick? in prepared information Dick it to not and I'll earnings over a in accordance to non-GAAP GAAP Slide this begin. with should comparable You for results or of release

Dick Warzala

kicked challenging of approximately was a $XXX Thank XX% medical record the pandemic you, everyone. strong we Craig, the driven and end and Medical over with due last year other vehicle to quarter, XX% and After in our XXXX, markets. was markets. demand off up residual demand million, up which year's first recovery by welcome, a revenue in from

vehicle from full which a benefited in we year. of last powersports. demand significant also Controls, March We in acquired Dynamic reflects quarter The XX% in continued increase

pursue strategy record A&D positive efforts the pandemic of team. the signs industrial to quarter. through impacted backlog of as level demonstrated execution we encouraging orders continued of by flexible our our While and the our seeing we have are and On the and overall committed note, in end a markets, improvement our of

we income headwinds some achieve a sequential quarter was grew to experience leveraged that to increased XX.X%, gross to million. margin While tax detail. Absent as income net we benefit, our Mike line, million, nearly from included the will the XXX the which up approximately discrete from quarter benefit a continue for did our fourth the volume. item on adjusted which $XX Net higher basis we X% points $X.X

further a advance management $X.X solid enabled generation and organic the the typically operating and during us while cash million which drove This cash execution a to normalized our effective state. to cash growth consumption. quarter, economy we to returns momentum initiatives Our disciplined of in more see period continue

demand. business we our We the and strength meet in and we are as levels efficiently work model managing believe are to inventory initiatives customer confident our of we our increasing

the let April Mike, took we XX. turn effect me it three-for-two remind split that I on March you stock announced Before to over in

confidence and reflection stated of this continued see in driving we value. before, a as action outlook shareholder we long-term As growth our for

yesterday this expanding yesterday, per Linda in were announced greater from our not and quarterly Nicole reelection also and investor each from retired Duch their after base. Laber the their the Also Allied's previous We dividend XX% In share. of current the believe We did This that assist to our Board. dividend. liquidity of and shares Stephen Bud positions we announced directors their expired. $X.XXX on and post-split basis of quarterly provide terms Board company's to for as Tzetzo increase stand a Finch place, a will represents elected

am respective and to that We I we Linda thankful Board, an pleased and their Bud's and Allied that Nicole to for most and the are Stephen their contributions skills contributions our are welcome and strategy confident guidance review team. are fit of to the stakeholders very financials. Allied will be One more that, all our value let continue turn to additional a it and our to for we Mike excellent over in-depth execute of me company. create for meaningful With as

Mike Leach

Thank you, Dick.

in split. we reflect earnings stock and top our three-for-two all our slides on some a regarding and information share Slide Starting As release the detail share line. reminder, X, provide per

various from $XXX.X of to to in reflects The some quarter was customers customers, was prior by in Asia-Pacific. the the of hit pandemic were market XX%, change has Overall, million and for market than has our Dynamic well. sales the on our fluctuations continued change The the in $X.X our end mix impact of scope Europe, of perform in despite increase market of headwinds of broadening markets. was of resilience in demand two some demand and X U.S. shows period. to shift addition primarily the Slide from year. business the or XX% a on down the the trailing end basis record Controls. The XX-month in the still revenue. reduced slight total And up and and up by level Dynamic reflected Canada, added on pandemic very million. XX% or pandemic geographic in the X% seen markets and order the acquisition. year $X.X while revenue It XX%, the medical XX-month tremendous revenue industrial our balance period, with demonstrated was last and market within mix the COVID-XX was start as to the quarters, First by given the more significant last TTM Controls foreign diversification rate of economic revenue trailing million the revenue includes deferrals in exchange impact The down at currency vehicle the a Sales that favorable continued impact A&D.

X, the depicted million $X gross up $XX.X or to profits volume. on As higher reflecting Slide were million, our X%

period. period. of over relatively incremental as costs gross to medical seeing sales during the the well to managing with XX expect was due margin, approximately to customers. points decision believe The have chain impacted First compared working we impact in Ultimately, material and and was the for and do stated, near-term, ensure component, to those are chain continue and given XX.X% are mechanical offset long-term. headwinds deliveries and some vehicle the those the anticipate basis higher the grow impacts. we reflects the also but XX.X% incur hard prior more quarter supply margins costs change costs we unfavorable that timely tight incurred to to We of tariffs, There raw supply we margin duties constraints, a mix the year and lingering

a or XX.X% income Operating was the cost line. $X.X unchanged were of as X.X% our compensation, which of X, Slide the to largely on increased higher volume is control quarter total sales. G&A costs for million and revenue offset as percent operating Moving at in incentive

reflected in decline impact was flow-through margin the change. the gross from the However, margin operating quarter-over-quarter

results. EBITDA to can and Turning see X, Slide bottom adjusted you line our

we the new tax will acquisition As Dick last NOLs year. which legislation in recorded benefit of mentioned, from million allow relating $X.X New a discrete obtained utilize to enacted Zealand, us to

year first benefit, income diluted was tax for effective period. $X.XX share with $X.XX or in first quarter diluted was $X result, the a million net Absent As tax the quarter rate XX.X%. million per $XX.X the compared the or share per prior

with XXXX income expect our Adjusted useful $XX.X and XXX remaining the believe approximately $XX rate and compared quarter-end, of XX% XX%. progress from debt of sheet the was million, X of range was an net cash slightly XX.X% provide $XXX.X sales, overview from and EBITDA performance. We or and to was million At use down in total down net year-end. or balance We $XX flow. determining between as and to for Slides metric of million internal cash EBITDA tax was of it our million quarter sales. operating net adjusted to year-end an XX.X% XX.X% XX debt basis Debt, our XXXX. capitalization points quarters for is

flow cash the from X.XX future in in operations to leverage prior of level, we on paying end the Our a acquisitions. this comfortable we at at use period. of debt quarter, while quarter bank up build continue for $X.X reload of million to $X generated first cash will year We are solid down ratio was million times from

First quarter $X.X largely focused million projects on implementations. as as ERP CapEx well the customer was new and

our X.X from XXXX. were $XX at times, fiscal up times expect range turns to XXXX $XX We Inventory between million million. CapEx December and X.X

there environment. critical components a providing are have reminder, that sourcing a As number the substantial of in pandemic particularly challenges, lead times

well, have inventory demand. our our customer work as managing levels meet However, even increasing been we teams to

DSO to edged up our quarter. the in Lastly, days XX

a to economy, Given now from cash position ability emerge in are over the rapidly capitalize on opportunities strength we we the adjust Dick. that, I'll and can back well turn to continue we our as as to the liquidity, available our in changes call With and to of current believe pandemic. as

Dick Warzala

increase our have order achieved low level a backlog. the the you, pandemic, $XXX Slide XXXX. the highlights Thank quarter. the record during XX quarter XX% first the represents of quarters Since of record of This three onset million a first in in we growth, Mike. reaching straight orders approximately point over of

over year's Included fourth of majority our and of XX% A&D our market current over up six million of within backlog approximately major channels vehicle a was to quarter sequential announced the industrial record market first awards. was including million. the and million contributing to X% first expected to three over sales increased $X last to during in backlog $XXX the of quarter. $XXX are All Backlog the previously months. The is next the quarter convert

and From market of this our at concurrently we recovery ongoing from announced run year, we pandemic. some all as to production with runoff offset expect demand a are this demand of to the surgeries, At strong elective we a the awards expecting full these legacy are as be in remain programs. from XXXX. we the lift market much well line a by the awards perspective, some from of as As expecting top reminder, not medical residual time, of rate

our is now automotive progressing increasing vehicle market demand Controls demand acquisition. experiencing expect expected direction. Dynamic moderate is markets oil improving and and the lap notably and to are our growth that our and powersports market However, in the heightened Within remain markets. at to we fully conditions as right also somewhat levels industrial we orders demonstrated in as A&D gas pumps within and by quoting markets,

continue the our of While areas the that there for were business that control. underway, economic XXXX to signs focus on is can we recovery will we

a to drive advance our we We taken confident strong the are all business. our have financial operational in organization will position, allow strategy we and are improvement and continue and actions continuous our areas on of that to

revenue, generating One Our organic acquisitions, to we and our and record We of remains us Allied profitability which debt, and strategy. our continue developed of demonstrated strategic pursue element strong cash by growth enable opportunities further invest important pay have levels growth will generation backlog, an and overall strategy. strong down to orders execution in

open For we high for profile over margin questions. of improve level these can meaningfully that, line confidence time. that let's expect the have With operator, our a reasons, all we and

Operator

Instructions] question you. Greg Thank Craig-Hallum. line [Operator Our the with from of comes first Palm

Greg Palm

morning Yes, thanks; good the on results. everyone. and Congrats

in quarter see to in commentary it'd levels I QX market of from little just saw of it, maybe changes you here would part demand curious be in a you to the helpful standpoint? more the to versus itself, first if what bit there's think now QX. And get an what surprised end terms start be on any

Dick Warzala

to in that a the year quarter fourth you Sure, of have we would Greg. we I intake as reported. strong last order say had

So I quarter. say first there really would that weren't surprises therefore, any in the

to And the navigate obviously, I first in what many seem supply continued continue see regard and are there. to at chain out was what looking mean, the we the for but we're as us to see, to able in to we areas, were knowing available orders battle things we a the With day-to-day do challenges quarter. ship continuing continuation, what be incoming in that's to those. improve. So the

recovery the all see essentially will in the in markets. that well so improving and we And optimistic is we're year, underway that – throughout things

Greg Palm

year pretty And I curious as year. revenue know margin, maybe Good as would you're last? did think leverage you to characterize what when about leverage? this some of is mean, operating incurring you look this And surpass at this XXXX, going additional I last that you But you or right. it's year a what year we think some to operating EBITDA versus hear. you I saw expect investments. All I'm margin would if clear

Mike Leach

to then, And return Greg, margins. that. we're were and heading call our And year, that some are then that There's like direction on certainly, travel where chain right the to right? where things we gross I a challenges we we it think we're last we is result-wise things slow particularly highlighted compensation. impacting compared the regard think facing, like with incentive I'll side to today in headwinds supply – that unique and that,

think had. So to going be certainly, there's leverage to I said margin we've operating be

I be slow compared crescendo year. beyond think throughout this the it a year to periods more see leverage we'll will that in impactful the

Greg Palm

Yes.

on that years, some of I Makes come automation, see autonomous terms one one mean, see could you've for kind building you're So you more several mobility new application was new of you what opportunities big post of space. Okay, to and on if for that then was there focus And talked you Do a positioned I your curious are just little the market? just in this and really about opportunities. sense. up customers bit think last that around in I robotics, color Dick. provide pandemic? the themes And how always

Dick Warzala

tremendous Sure. activity there's And there. I'd out say, Greg, certainly, that

occurring forth. are you for some to so acquisitions deal and to say that the what I at We and we that are great in space the also about and the of see opportunities in a future productivity level. involved can engineering excitement

high – small performance performance. very align nicely and with compact are they products high Our packages and their

we we you're when we many, handling so it then on are are all projects. applications engaged And geographic we seeing industrial Also material need requirement, regions. I'll – market, and a – participate, customers in on an market many that in call or general that and moving forward with do several several are agent

we drives, growth we solid But business. because area – it solution it definitely everyone's capability, position. And an So a motion feel on definitely elements meaning in for like is well as have good, great is it's – the it's as radar for control gearing. emerging motors, us a I feedback our controls, think opportunity to leverage

Greg Palm

Yes, would queue. in I’ll seem back like Thanks. it. the All hop right,

Dick Warzala

Greg. you, Thank

Operator

your Our Dick proceed question the from question. Please comes with of Ryan next line with Colliers.

Dick Ryan

XQ? was on may on supply Congratulations said I here. guys margin what challenges a have missed, executed impact the strong Mike, you the gross from quarter the in chain

Dick Warzala

I relative in more XX commodities little Specifically was points costs. and in that that's difficult to too addressing some things elevated the like. in what about later not allow pass we've seeing certainly, along. like And that's including prices we're basis It protection And of and to I our that, But that expedited a freight to raw would to pass-through us our that such. But we've impact. that quarter is and materials, ability the duties suggest discussed usually contracts some those measure. two got think

contributor a that's as well. certainly, So

Dick Ryan

Okay.

be hit may passing you that yet? probably increases price any So along haven't

Dick Warzala

say to would occur. slowed. I it’s starting Yes, or delayed It's

Dick Ryan

your are Dick, many of you customers? Okay. the any for orders last on in double there couple ordering have is might on quarters, the strong there concerns – of

Dick Warzala

Dick. Not see, that we could

that's occurred do going time. we what call times see – we're have firm And abnormal. think to into actually But extended have attention anything order booking hasn't a lead some paying at What and order concern not take approach anything close date anything particular of the that. – in we're we conservative to don't to people we have don't getting queue – or say an we I'm order. I an this we it of point to that's for here. that, with I looking in are as a production to see

Dick Ryan

we year? I should you on expect how second And I the the commentary half, specific give don't any we guess, a simply, where rest can to how handicap help on us qualitative half? but know Great. guidance, from here. little the you give But flow? Okay. do go business to first Or of

Dick Warzala

Well, there's a couple of things.

quarter? how I the think asked comment had And second my is improvement. in we the the see question Greg what that over? is trending about And seeing do given quarter continuing was first that we're now things

on have nicely. side, short-term are a it's us there So we're on chain still part optimistic could still it supply to going be that the about There's and out the turning ultimately around where how very shortages, challenges definitely basis. concerns impact you

are So we'll here in and before, It's as working of battle the keep that recovery not It's of business But all areas through we is it one. that improving. said And all we'll on those. those, areas just underway. optimistic business. are seeing I we're

Dick Ryan

one gas, in for to oil me. that prices, recover? last Oil the started and One improvements with business has

Dick Warzala

that's there. took seeing hit area and has. seeing a big increased are year that with it And an And gas, are we definitely and we we It recover. activity last oil

So definitely moving forward it's us. for

Dick Ryan

Thank right. you. All

Dick Warzala

Thank you, Dick.

Operator

question of line Please Funds. Brett with Gabelli from [Operator the comes Kearney with your proceed Our Instructions] question. next

Brett Kearney

my taking Hi guys, good morning. question. Thanks for

Dick Warzala

morning. Good

Mike Leach

Good morning, Brett.

Brett Kearney

a to detail front, difficult as I solutions, the of amount able of as it. any just your in you the over all to electronics able been faced. of teams your manage foundation it ever given But years. many were a then we kind these some just could extreme through? execute, exacerbate of So areas And could bottlenecks? processes, how the of the detail, of wondering wanted companies I you're know of as you're it's hearing guess, I the trying through radar or kind laid how – work is to on have how a of if look – kind managing on forward ask we're challenging any your – to supply through And little from couple is lot everyone hearing as last lot more it and has and that provide executives

Dick Warzala

you Brett. are Sure, Well, correct.

ago, couple to had global step conscious could strategic made us a geographic in invest looking at sourcing, if pre-pandemic, years that multiple partners we supply think a effort of I locations. back in we

that of last do us groundwork I we're everywhere. regard saw feel see through we helped in to laid and you continuing now. seeing year, the the it we're that that see here the we shortages, to some So situation With get –

some And related, pandemic was meaning of it closed. facilities that were

for So COVID. be, the us product we're side. to behind not wouldn't It to. back. and is shipped the part, Workforces couldn't be now more is outstripping where demand seems facility to the be closures are manufactured most due That that seeing supply

in We out always where helped arising situation our saw if a and have there help us. and see – a necessary, step might customers and when we us reached been we to supply we if they have And shortage. asked we have

talked cooperation here. keep distribution working together rather potential been a quite your electronic which order spot bit when alternatives going to to or say, the But you're everyone's and of headwinds here think distribution to manufacturers, life accelerating here new secondary jumping closely in We've we And of and cost – the in had I and And components a and those shortage lead a of get than gone into the placed continue Mike from improving – we've part. part as to requalifying the – customers identify looked typically, we The to we coming I so will having time channels now certain for and customers guessing and we supplied buys. are and takes are. we've are to But requalifications doing about We've engaging some we've move the in part that accelerated We forth. some had customers requalify it we've these. them? so process, go – And to cases, I'd forward and channel think we to out. directly times. far, that able through at to I'm reach lastly, received channels. specific see testing

So of off do you we're is that But and our here complement supplied. to they've would our really woods, what not. to we through, to we're out team not to battling the our I sure that say keep have of make been and pull customers I team able

Brett Kearney

Absolutely. That’s Thanks much. helpful. really so

Dick Warzala

Thank you, Brett.

Operator

back to There further like questions remarks. are to management call in queue. for closing the I'd no hand the

Dick Warzala

Well, us for thank for Allied joining you, your Motion. on call today's and interest everyone, in

and feel with reach have day. safe, us you out look quarter Thank always, your a As to Stay XXXX of second results. forward time, talking any after we participation. all for free to please you again at great to our and

Now that call, concludes the operator.

Operator

today's does this teleconference. Ladies Thank and you conclude for participation. gentlemen, your

disconnect and may time, your day. wonderful lines You this a have at

Allient (ALNT) 9 May 212021 Q1 Earnings call transcript