AMOT - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to Allied Motion Technologies Inc. Fourth Quarter and Fiscal Year 2021 Financial Results Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Craig Mychajluk, Investor Relations. you. Thank

begin. may You

Craig Mychajluk

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

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

You a were of not, financial released discussion. on along the yesterday find today's If accompany alliedmotion.com, our can should closed. with copy have that results the website at after that the you slides it market

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

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

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

substitute for with in additional isolation the this as information GAAP. a not accordance consider should You prepared in presentation of results or

begin. accompanying earnings I'll With and turn slides. Slide that, to to over the Dick? We and have comparable measures release GAAP in provided it Dick X, the to to please tables turn non-GAAP of reconciliations

Richard Warzala

Craig, welcome, everyone. Thank you, and

most Full of by growth overall grew our across to markets. million, continued year our than $XXX driven successful continue initiatives. demonstrate execution more Our strategic strength results to revenue the of served XX%

markets reflected Industrial electronic reached motor instrumentation. were all-time and and industrial up that last solutions and demand market XX% material strong oil highs handling, over in and control pumps, Our in gas, for year. Growth automation,

markets Vehicle by and we in demand. power due did in year, year, this the construction for dip show the And also chain challenges. strength Our continued increase driven for with agricultural, quarter while growth a sports largely did XX% demand to fourth to supply market experience the

continue our the market the comparisons despite We the be products saw for year demand, tough to growth the significant Medical extremely demand height during given our year last encouraged for of with which from pandemic.

While we to A&D specific defense challenged, has commercial our seen continued broader programs. to be aerospace begin our the to timing market due have largely of business rebound,

overall global challenged inflation on energy, the As I'm sure you all inefficiencies labor. operating to supply are conditions continue and aware, logistics, constraints impacts material created the given by chain the be of from cost and

with on lead the been cost in this extended anything On the contended have we of the to with respect and electronic apparent side, experiencing beyond most were components, which times material ever past. has allocation increase

As enhanced responding logistics ensure management supply result, to a quickly to chain dynamics and decisions. sound we our capabilities have purchasing with we changing are

when on X expanded with on of we across with certain purchasing fourth XXXX, ended Slide income this have customers the with XXXX closing strategic suppliers nearly to share. X. engaged net past year our is of made was in our items, share build order $XX.X the quarter the $X.XX or was which nonrecurring of per acquisitions, reflected $X.XX $XXX actively input and highlight year. board. and per the the record inventory excluding during Even year, adjusted XX% strong net which million A are a with are noted income We components, up ended XX%. the was and decisions backlog on diluted critical for We margin million which Gross

last team time time and the ORMEC Our on on highly which we an range our tight acquisition will did by Safety call, Bellevue, sophisticated I/O a in announced color and has we I/O and job we did Industrial acquisitions, manufacturing Washington, earnings designing discussing provide ruggedized outstanding a first getting grown X modules Located in this spend XXXX. applications. and December utilized more Spectrum On and Spectrum Controls, frame. completed ALIO, now automation XX, wide in nicely of very

With product new simultaneously automation product equipment, integration box," solution. every solution are broad solution devices we which Universal Spectrum additions and protocols PLC automation Gateway you're integrating the legacy that a channel. within applications. a in networks, and of controls range or are capabilities value-added it communications Spectrum, to used and supplier, enhances multiple "one manufacturers technology electronic New include simplifies expand further modernizing a partnerships Allied, Industrial marquee our flexible and an the Universal industrial industrial automation market. we cost-effective, be sold industrial for controls the Whether exciting distribution supports further provides Industrial supported the and an products the integrator. and systems new higher displays Gateway connecting of believe through with ability industrial

and to our X continue the us Allied note enhance requiring know-how our key to other views additional Spectrum, market our and acquisitions solutions. lastly, example, markets the a opportunity technologies from be and our we customers; we XXXX, create market acquisitions, to as above to leverage entire for solutions themes of including positioned our aerospace Safety earnings in leverage We with joint are three, expect and new of elements and resources share higher gross Spectrum for our and engineering including: I/O Wanta, average gain there it generate expect the expand our Collectively, for defense, markets will content welcome and organization to current capabilities; to applications. with automation, they that complement they an Sciences can Allied common we million look in utilize utilize to important the several leverage standpoint, lead business provide functions, the is of one, value-added current well Life and bright into the safety better they would strategic that margins incremental additional and rates. whereby in global Vehicle who forward A&D our can reviewing expansion to that together our customer Bruce to X future markets significant $XX channels base, that to add our value We Founder also are target as footprint robotics, in Spectrum approximately two, technology/know-how revenue our accretive that and In accelerate team. I the provide we higher Allied Medical; and believe

instrumental fact, over by In will that, to the margins X% Mike? these as be expanding review in-depth of gross financials. and a part our we more helping achieve talked year-over-year, turn With our acquisitions strategy, Mike goals. us for of and about it me let

Michael Leach

Thank Dick. you,

acquisitions. is December Therefore, million split. sheet. share detail As XXXX. provide XXXX. million unfavorable backlog a balance from ORMEC The our reminder, the numbers, November of XXXX, XXXX, Fourth on on X impact X material demand acquisition stock our impact to The and ALIO financials and results we X% top regarding for in found share X, in Starting increased the XX, from and quarter include positions general Slide some the X, in of and and reflect XX, incremental $XX.X the Controls Spectrum reflected revenue $X.X debt fluctuations April the on closed of information per Industrial $X was X, November quarter. by exchange Systems All Spectrum million rate markets line. operations of revenue Industries higher from the revenue approximately

in revenue Excluding It noting FX, X% also that impact fourth constraints we approximately quarter. was in and million the is supply the the revenue $X worth was then up of chain estimate quarter.

Excluding recent is acquisitions, backlog due million our the in range. most $X past

shows Also which a were Asia growth up recovery markets total that markets. Industrial Note the revenue and mix XX% our return compared Medical due year's growth to full XX%, Slide revenue up from customers and continued the market year, reflected Industrial. the revenue we as Industrial and which of with Europe, last demand the XXXX was and to a categories, which of Medical, will million, the were noted. contributing with with U.S. were declined XX% to up primarily XX% in in Dick defense overall the growth aerospace Industrial of while and largely number to the For and to record X our in a within the markets, the will Canada along benefited change in primarily programs. reflected surgeries. Vehicle be sales the in specific our of A&D market economic and balance reached was double-digit $XXX.X Sales period verticals, period, each year for offsetting the markets, customers elected Down the Partially rate for in timing in the by change. due ORMEC the Pacific in defense of drivers region. largely the be simply and the behind ALIO Vehicle business and XX%

small category will and while reflected is now, a be will Spectrum category, go-forward distribution that as distributor-based basis. largely expand Our in on business

supply was drivers expansion year Slide period. that achieved and gross primary the margin X, our the of full profit growth. inflation were ongoing was was for pricing Strategic and the chain cost challenges. and depicted on up despite As the note quarter Of the mix

income to points and as the Approximately optimization XXXX. remaining increase the higher level was operating Slide acquisitions our as the which and basis reflected expenses, the reflect points Fourth and compensation footprint. of expense X. increase to manufacturing The largely activities on in fourth Moving quarter that marketing and basis to costs attributable higher investments sales quarter operating during show continuing resuming development a due percent given strategy. completed of quarter-over-quarter incentive execution of within an late costs business up down our commissions These was of of elevated which revenue. XXX trade expense, continued well X were XXX as was operating global

quarter. jurisdiction. $X.X the by or And the in $X.XX tax million of XX.X% it mix in compared asset fourth due per a million the rate the XXXX net anticipate share at stated, jurisdiction. the to quarter per income, was rate $X.X items, or deferred of share diluted present As and impacted our XX, $X.XX a tax higher the foreign income leveraging On million also our have adjusted $X.X with AST, and margins accretive M&A. Fourth excludes with was of Slide net development EBITDA adjusted which nonrecurring income with income, combined we we toolkit business costs and adjusted GAAP long-term higher along over net disciplined our execution quarter lean other diluted The in effective tax we results. with was valuation growing allowance elevated volume from

EBITDA believe balance points. and XX determining down million EBITDA tax XX GAAP year as to be We paid our useful adjusted during and XXXX for XX expect to Slides year We up net is year flow. than our improved basis of the more metric on of our basis cash rate XX%. was the and internal income debt in basis. XX.X%, performance. income for year. a provide Adjusted in full year $XX the use it margin adjusted Full quarter sheet full to approximately prior and and the and outperformed operating We XX XX.X% points an progress overview an XX%

our for quarter. a reflecting Collectively, for activity debt $XXX fourth mix X components of equity the total acquisitions ratio cash the of of was deferred the borrowings was leverage or payments end year, including approximately was bank However, price net debt of net million each. with the up, the XX.X% the and approximately to purchase cash acquisition million, was $XXX.X in and capitalization, At in X.Xx. debt

well it consistently implementations. delever We solid that CapEx chain continue flow to mitigate largely reload our from million expectation as strategy new operations as continued the Full generated $XX.X customer on and was year and sheet of supply million to our balance have following build to for inventory the demonstrated future we ERP ability will issues. cash We our during acquisitions, opportunities. quickly growth focused $XX.X continued despite XXXX, projects is

on our We Inventory $XX X.Xx range compared in when XXXX CapEx down were XXXX. $XX fiscal expect focused million to between opportunities. be to to and and turns growth million X.Xx

inventory and as and customer demand continue to levels we to manage our meet lead work well challenges. Our combat sourcing time increasing teams

acquisitive turn like work a I'd our addition, in In our in that position believe we XX to growth. advance strength, we to strategy improved now DSO XXXX. and the days over I'll to that, hard we'll investing and organic Dick. to With of call by continue are in reemphasize to back

Richard Warzala

Mike. you, Thank

XX. in of as market represents backlog fourth Slide were book-to-bill Our quarter, XXXX a and remained with $XXX of X.Xx. quarter X% bookings majority solid approximately over channels This our on up the major the million Orders contributing. robust, highlighted ratio

year, $XXX nearly backlog increasing expected the XX% the million XX% to $XXX of orders, quarter sales full a new X backlog is Approximately record, to is year's in of sequentially hit months. the acquisitions. up which to within also our our book-to-bill approximately million over quarter For next third last another of from and $XX of X.Xx. backlog incremental ratio had our we represents fourth Backlog million. XX% Included over convert

with Vehicle we demand and our Industrial to As forward, we look expect strong. markets remain

years, programs to as several our automotive supply gone with To away, from While over demand it not long has but we -- delayed the enjoy has slow and that contracts be chain clear, announced issues we a last been result of pushed electronic have ramp large been out. the will these components. benefits

backlog as surgeries to more demand is reflects them will continued once in As Demand as some that have majority well get the expected the the we we vast included full be will the our of elective Also, the contracts stated peak backlog these numbers a rate and reminder, release of to of production, return residual note only revenue we contracts. to in dates. in from million once solid provided not Medical per are our been firm markets deliver expect at year into plus pandemic. we as production release we $XX

We anticipate the supply to defense chain to bounce do of well before given A&D recent certain a begins will wins, are incremental our into the that situation the markets pressures also see in benefit from expecting and timing XXXX acquisitions. back normalize. continue projects the We our

program our delays. future, have optimistic continuing While launch we chain on multiple supply resulted challenges are the in

potential the the are addition, current further multiple to we and In programs. closely the in impact as Ukraine delay unrest of watching new it has launch

and forward, continue will we to As enhancing move take approach technology. products existing we strategic a to our

still acquisition critical that Our execute opportunities we financial filter. elements pipeline of our have we very is the meet flexibility strategic believe to active, and

earnings to we demonstrated and continue will track inflationary We a we pursue our complement expect and growth, growth while of year a challenges. margins, the and near-term, do battle efforts. have organic to revenue record and success, supply improving that summary, XXXX opportunities to was continue In solid will external chain with in we

revenue in ensure continue let's and expansion, we team, continued line we operator, this that, our our strategy As improving enhanced second unwavering of for do sustainable we Allied and move Motion to to great importantly, businesses. are the and into we and open future. expand questions. as With has committed expect of acquired through further Most full base the half our realize the foundation that begin we to year, expect team. conditions, and a long-term And growth, benefit the build profitability existing to we newly margin will and the

Operator

[Operator Instructions].

Group. Craig-Hallum Palm Our question with is from Capital first Greg

Gregory Palm

start and a picture some got sorts whether such reach Just you've from big Any maybe trends, change wanted of all with geographies. in What end are seeing across weeks? that's comments broad recent you standpoint, a quarter-to-date? markets demand to

Richard Warzala

get components the aware than we've and the were extended lead certain past. want the talk they made are they in about Yes. when continue think pipeline and question. pipeline, order you placing that experienced that, Greg, to as them they and need of to with say what to going trends I times. you the in further thank ensure critical you advance I is we're would they're And what experience in to to we've into rates customers for orders

into result has think based that I built So future as further we're upon challenges our demand chain the been out that's do the supply backlog a of current today. facing

market variations, There there. the as be strength much far As seems across decent change not board. there's to

Gregory Palm

color concern newer could maybe Ukraine. or given And maybe for just that supply significant industry? risk of a base challenges even on a you give chain in how Or Is chains, us or supply bit that the little Perfect. supply Okay. in you impact maybe -- noted of a further? a the conflict terms

Richard Warzala

Sure.

from an revenue has a much standpoint, minimal both don't to impact order of standpoint, We from labor, supply and significant First chain it European drive supplier very from that market. the all, us. they're But on material automotive industry. a

the delayed. and So when are would our further they're most It to our just supply the direct of their chain, get suppliers not our majority. where And market. contributor more going parts, in our there concern that's be, build the will be significant to a -- chain. automotive if it's vehicles, some getting, There we automotive to especially a see are obviously, then supply contributor not may not materials customer programs but

Gregory Palm

the of overlap of progress in the integrations date, Okay. just whether importantly, from can Makes here? a would revenue kind like things a just more together. of sense last more. mean, the expertise I And seeing little maybe terms X give synergies going? I that's But all the initial one, of how more new your and Or on: you bit some some of to you're bit of dig into any and sense. color wanted having to examples customers then sort how to on are a, acquisitions you sort all little mentioned of product now? get teams us

Richard Warzala

Sure.

about a be us. that's at And be I that, product Care standpoint. Boston, solutions trades multi-access controls, some first several attending the has Let we I for that be nano going has devices, -- can in are Medical from us, new it's believe linear. which little attending in both into limited it's space, the will time certainly for I will us positioning should of of utilized there exhibition been limited including first And the Health we a is off, showing truly to that's upcoming a we'll certainly technology products for Allied a And our motors, again. that as capabilities think in that and an there. a Allied that I pull-through now be linear the And market Robotic the are as we we are, to And we leading-edge control me extends some that. with be Summit, development positioning it those feel we and in additions real a talk given years releasing have will and there's bit mention release -- do now drives, and we'll Sciences a think and -- of going But rotary Robotics be line as showing important a we're level. what under industries. some good opportunities and And Life of announcing number of well markets motor the Automation and part be

will value-added what the a Automate Detroit So further be to example there demonstrate. At some demonstration be Show enhanced be of a June, that or of and capabilities in the the of systems able of pull-through in some will are. systems great capabilities more we'll these

So to be now adding we'll that.

actual In with the from control there of live products equipment demo addition, and capabilities. industrial as Safety also gateway added adding will But it I/O which their to have include communications we'll as Spectrum, I/O. be some well we'll some real the the

these gates a value-added where talked thing -- kind normally and want electronic have don't and get full we component can on highlight some you wants companies the just it said in sit supply mention, everyone. as I of it it you that what And who a would One through getting the and especially really bit probably I the I more. brought I have made would and walk board. from of here area. of Allied components side encourage the we is understanding but want to Allied of higher about challenge, the does, it into -- we leading-edge examples to with side chain We that anybody to little understanding to great technology do we be up system will those So into we the better and would future knowledge out acquisitions guidance know that, We challenges of components. coming caution and

working my about half listen and -- why if challenges hard, the you closely. have were We what into of we're year, to comments the working first that's very

and be challenged. But the do a we if backlog. components, move be We challenged. And first to received to severely solid outstanding. it all have And be expect it it's would quarter, service was through we as deliverable we going

as acquisitions. the seeing move get benefits the Second will quarter and results start true better. we second from the into year, of half we'll the And

Operator

question is Securities. Dick with from next Our Colliers Ryan

Richard Ryan

customers double mentioned potential you about out any normal. seeing any ordering? ordering you have around Dick, further of that? you concerns How the do Are -- issues

Richard Warzala

here I'm there and No, Dick. -- to that say that. some I don't think going not hasn't of sit been

times. but being the is orders we're think with -- that what is placed seeing I are lead reality longer

So how of or unrealistic seen that jumped be earlier. that can't demand we've supported. nothing out getting what and is beyond into queue has the is they're that It's says just

some to have any course. ordering attributes that don't point. about of So But double this experience at major backlog we the build, of

Richard Ryan

Okay. Great.

and TCI? market you but in mentioned it, the I'm you not on what are So sure gas what what's I seeing at there, previous caught going with if the commentary, -- in oil

Richard Warzala

demand mean I high. is Yes. very

forth. out order rates the about have been backlog just the getting product data cooling is -- extremely And it's door, we But TCI HVAC-related up, gas, we books the the the in can't. is challenge deliver and that We it's is Our the and And have build quite so on now, talked just and and we demand oil but could it strong. those frankly. right everything not it's input and farms significant.

will yet. We area. that XX% for We're Germantown. itself ourselves but the space nice to about that of most facility and in facility positioning in production more been I is our in realized growth hasn't expanded we added -- up ramping we're So operation, some a you, tell the it

Richard Ryan

this do end and think of from position all Or come Maybe you do out a facing. higher-level How think just to the Okay. guys is to funnel further? you landscape? challenges of your What customers? are the market the you closer else increase opportunities with competitive you share everybody question yourself

Richard Warzala

Dick. say long-term strategy. question, through whole as you've think, committed seen, to Yes, I great stay you, to process, we our would this I

more in is have footprint. really exciting And to that's expansion we forward have and here line reach of existing internal our top add and those product solutions. offerings, that acquisitions value product the it's add that get technology, I the in our very into to development then We of And exciting. that new more expand continued think we'll pull-through things market the move markets on geographic products, product from just one on our some -- existing products and the to

at we've course, been excited we've higher have without hasn't forward. that and been for integration, of all. supply delayed. the That's issues are we to that to challenges this moving of more that I'm and I able development have. about have true They're what new it true. team Our to program will divert have product in all new value, would shortages and been would only, have continue through Programs to this is the that programs would I downside do say, at But these alternatives been margins come and we are value be time launched resources coming gross delayed. mean, I securing on parts point normally guess, had shortages do would overall, working and stopped unfortunately, allocation and that higher

new -- we've know to they're our They're they're cases, had solutions the which it's And provided again, able in yet we're increase not to not -- for where increase just moving those gone. delayed. value, we're deliver not platforms. some because So our margins, -- that, we we

But is were platforms. customers great same a and it. time, to excited I'm Our improvements aren't doing We underway. new those about job, operational and the very at team on our are moving overall, working

So for another foundation step level the Establishing the Allied. us to think above. it's through I next take

Operator

Instructions]. [Operator

Our next question with from Kearney Funds. Gabelli is Brett

Brett Kearney

the from engineering aggregate talk completed technical organization, your just standpoint, the a curious the resources. about QX, you from Allied covered over it could Dick, if remarks, also talent some in leadership you and opening X coming you acquisitions but in to both in but

Richard Warzala

are we Thanks. I'm at Yes, over talent. up the great years expand capabilities. expanding quite our And significantly. the how because pretty last several there we've grown that add difficult been is engineering question. electronics always looking to brought and do capabilities And market glad we out you certainly, here

electronic, here So will the be in XX -- now and that company, that for the X mostly recruiting program we have new with electronic XXXX to we're we've between added electronic upon approximately X mechanical but engineers engineering, right and acquisitions, and in and based aggregate, in another wins XX engineers deliverable beyond.

So significant talent.

as far equity As took in the companies X and all all leadership private X goes, Allied.

great. saying talent So in the that's have that I we think future to and that's believe together, And they the in place operate companies. the

going not of it's world, for the we that products concept begin would to will but particular lead integration, But it that change. senior and technology that our is tell It's integrate Allied you into to the going that's there. there. when there time. transition with talk they and is to they unit still Motion, about ownership I functions way And the technologies have remain we over So will leadership Allied and

things they're the and we're ideas think I better road. and why talent the for down talent R&D, a but added coming more So look shows looking we're are an we've X an the for take from together. that's And -- some flowing, bigger that Because exciting. doing, and to from what see here capability, for I entrepreneurial that, conceptual added that's we've again, mentioned a

Operator

conference to We I would back turn have the reached for over the end to our question-and-answer like comments. closing session. management of

Richard Warzala

attending for and we you up I at. as would encourage will everyone, the that this be shows that operator, that we we said, you, And you, conference look I thank have coming Thank quarter's at to mentioned call.

ROTH In addition next be to Conference at that, week. the we'll

you support, again Our and forward first for and to we That we some in call in-person will you investor look shareholder Thank again, in next our your you. in forward look And conference operator. forward it, thank do we're May. time, to to and conference . we that. and quite talking conference, really looking

Operator

This conference. does conclude you. Thank today's

at You for may your lines you participation. disconnect this and your thank time,

Allient (ALNT) 10 Mar 222021 Q4 Earnings call transcript