AMOT - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to the Allied Motion Technologies Inc.

First Quarter Fiscal Year 2022 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Craig Mychajluk of Investor Relations. Please go ahead.

Craig Mychajluk

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

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

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

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

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

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

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

slides. the GAAP measures earnings to We have release the in comparable provided tables reconciliations non-GAAP accompanying and of

Dick it Dick? Slide I'll turn to turn X, So with over please to begin. that, and to

Richard Warzala

Thank you, and welcome, Craig, everyone.

the demonstrate to initiatives. our execution growth successful continue of strategic results Our

nearly with to X.X%. million growth quarter $XXX XX% organic representing grew revenue First

of over market industrial saw growth last demand, market in year. strong XX% Our resulting

industrial material A&D are and handling, the in in benefiting and Recent acquisitions also including contributed submarkets, to number a gas, pumps, markets. automation recovery We and economic oil growth of Industrial from instrumentation. our continued

relatively doing as the are chain pressures many logistics, to continue line, persist. we on margins labor inflationary issues on on others, and and well energy, top supply the materials, like While challenge, is

these actively our performance the being challenges proactive operating margin-enhancing acquisitions. will term. managing pricing the of believe reflect This are long efforts full our and our on over and realizing We potential includes

Excluding with income let $XXX later net talk and quarter turn Mike? a first a more to continue of in-depth nonrecurring And be record the of backlog million. $X.XX versus million levels me with ended achieved share Order presentation. items, performance the the adjusted Mike to of million that, for a over will $X.XX per income we for strong, to the net or $X.X share. review of per $X.X or quarter it we I financials. reported diluted in this

Michael Leach

Thank you, Dick.

As Controls include a some Systems Starting top November line. reminder, acquisitions regarding we X, provide December November and of Slide X, on on on detail the ALIO XXXX. XX, on XXXX, Spectrum XXXX, our Industries ORMEC our results X,

$XXX.X discussed, million to exchange of unfavorable higher the fluctuations as demand $XX markets, industrial reflected revenue and rate million XX% revenue First on The impact Dick the incremental and of increased quarter was acquisitions. from million $X.X quarter. the revenue approximately in in

pandemic-related were contributed recent supply revenue the that period X%, commercial, lapping was revenue that a due supply organic to prior quarter. of verticals also largely and XX-month X.X%. of and market chain our period, mix from markets new continued by lower was construction offerings The industrial chain total to trailing up shift compared a revenue and on constraints Asia million The solution to $X strong the in were group growth was in A&D sales. It to XX%, sales number growth to markets as balance vehicle revenue largely the were to U.S. the first of of sell the recovery X noting to from Vehicle benefiting markets XX% of contributions our acquisitions demand. U.S. impact we the and reflects on market. quarter. XX% estimate within strong Pacific. fourth of recent in broad truck, in Partially a and Canada customers of basis. the Europe, challenges acquisitions primarily the $X from customers benefiting agricultural million approximately last in in the were XX% XX% to as FX, due Sales declined mix Excluding well economic Sales our acquisitions. up is year's up the shows XX% worth offsetting the in sales Medical year of impact automotive. were that X% on was our Slide to quarter still change markets

is space market the that down to defense medical the defense in in for similar in reflected timing. and change contributed impacts recent acquisitions pandemic-related quarter. the the While growth year still The program markets first due to quarter,

challenges from Slide Despite and costs. quarter. year basis XXXX rising improved margins offset ago profit materials, continued from acquisitions volume, Higher As our with the challenges, labor points gross depicted period. fourth points these the basis by improved accretive sequential mix were gross on X, was transportation XX global supply XX and down chain

to Slide on Moving X.

was continued quarter X costs higher XX contributing a a acquisitions basis our reflect manufacturing footprint. business to XXXX. attributable X.X% costs and X.X% optimizing reflects the income commitment operating expense First which in of on to million Also development in as ago higher was XX.X%, our was revenue, activity of quarter execute and Operating increase fourth to which up year well with operating of attributable the XXX period. percent $X.X of in investments our completed development revenue as points as of points, as our $X.X or to the largely or M&A expense the sales costs $X.X were activities These or basis and activities basis percent XXX engineering million compared global strategy. points million of

a our lean leveraging adjusted income, over toolkit net present volume. long along with the we disciplined GAAP net growing results. our have income higher with with our X, term margins we stated, adjusted and On combined AST, EBITDA Slide of we As execution anticipate

quarter XXXX to quarter diluted in First effective excludes per adjusted benefits discrete costs $X.X and other XXXX. net tax in income, which diluted or was per in or rate the tax $X.X business items, was million compared nonrecurring due the of quarter period. The $X.XX with development $X.XX the million first first XX.X% of share share

and for cash X provide EBITDA attributable year was million sheet our in debt to was be of to of for delever X.XXx. to million XX% half increase of the finance $XXX.X Total XX.X%, supply $X.X to it XXXX. for CapEx XX ability quarter will full and incentive XXXX million our following flow. strategy to with and the XX or of from expansion million, At our and consistently million operating quarter. our end which higher cash or net to million overview deal in $XXX.X balance opportunities. debt and on is our of facility internal levels down acquisitions, to XX%. a growth. up XX.X% ratio the a $XX.X new EBITDA was payment was Wisconsin We've approximately of was to and growth points used the largely inventory an demonstrated balance support Adjusted metric We expect Germantown, first continue bank continued We rate lease basis challenges operations, an and Slides debt chain as performance. in adjusted customer relook debt our future from $XX.X earned year-end net Approximately in that progress expectation reflecting quarter, believe We is sheet XXXX. was capitalization, tax compensation focused useful determining the use net leverage new the in projects. $XX.X and income our we cash of was manufacturing for

XXXX were CapEx with X.Xx December focused range opportunities. We to at million compared be growth million X.X $XX between Inventory expect $XX on turns and our to and XXXX.

lead continue to teams meet increasing sourcing our manage to challenges. customer and time combat Our demand, inventory

quarter, Our the to in to call due over back DSO Dick. the now I'll With that, increased to turn XX largely timing. days

Richard Warzala

Mike. you, Thank

bookings with orders strength they year-over-year highlighted than challenges. on more as million of are the XX. sequentially represented Our lead in are markets. to to most XX% chain Customers place ensure robust $XXX time current backlog Orders end and Slide up across pipeline the This X.Xx. remain in with supply additional book-to-bill and continue the given ratio solid quarter, a

seeing year over result, increasing XX% quarter and the As period record, hit numbers, buildup another XX% backlog in a fourth the prior the sequential $XXX over to which million. up we are some

acquired our from was quarter X within to the to the the in increase And the is of of half majority time under backlog months. Just the sales companies. next convert

and As industrial we solid surgeries. demands continued we seeing we in to our Vehicle has chain term, the XXXX. expect remain short some markets demand more the will into of although look late year return as which in pandemic-related supply this forward, year early Demand for be being signs elective muted markets encouraging disruptions by production prior increased are our been within we medical with demand lap strong. sales, reflects

to and lift A&D recent acquisitions. also a are performance, expecting our from We see we see stronger

target to and on chain and discipline impact level, has is the investments, inflationary margin to be acquisitions the competitive possible. will control. very from monitoring to pipeline actions selling Russia-Ukraine a we on accretive in we started organic China profile, continue gross to battle success will to strategy. expanded active and of position businesses. investments are opportunities solid for technology to macro closely of corrective COVID in organic although not hard we're do system working We the continue to challenges. acquisitions have within our our our supply and and to by chain XXXX still and leverage On to the believe opportunities has M&A business, our inflationary impacts. acquisitions and complement we driven recent immune Similar lockdowns that value these additional front, our provide all conflict we'll several is expect enhanced anticipate the additional our continue our term, on mitigate of strengthened these our our efforts. near customers. as and long-term pressures and is necessary we base our daily the our as Through in And that uncertainty our our execution focus Each further as a events supply and will growth markets, our The we disruptions efficiency the path, quickly create be that, capabilities to base pursue implement ensure to

positive bottom and line The As we in manner. and fully executing work questions. very our in that, rapidly highly through in to is the these With challenges, to We an future. and our in performance the Motion line remain remain top Allied evolving confident as strategy stronger enterprise both realizing larger we of enhance our ability future. committed for profile let's to the a operator, open emerge even our potential

Operator

question first Our Craig-Hallum Instructions] Capital Group. Greg [Operator Palm comes from with

Gregory Palm

-- shifting Are steps you taking supply last new some worse which I seeing? suppliers, that's with these your new don't know our Here, only all few on manufacturing just own there? whether chain, update any thoughts signing What has you new that's gotten address since ago. Any guess a to are challenges? starting of I if unfortunately, elsewhere? months

Richard Warzala

in ability fail, a challenge without somewhere we to able impacting one corporate Yes. and produce mean, to up. was effective able a is to day, a I was Greg. been buying supply order And leverage those. one recent every ensure mean, the Sure, to team weld. very it our product has to seems welding popping that company, things, our new And to like steady I being in be power the our of in it address that's the of -- needed there's capabilities

you look think process So to your supply. I take in that. make in or longer that and some continue you changes you'll a it it I certain that but process look short process. And what let's see commodities at significant term, improvements, call just causes And at think to causes it, components that make certain to you eliminate, does is are

we sourcing. much we look localization as second of at We at chain. can, as So look supply

short us products. us away think very in term. their for Our to customers secure the that to said, working with are it's materials as help going we required And though, not go I closely we And the in make are us don't to put into stronger problems run there this that that come are when and similar future. out better will and procedures processes because we sure in make of place we

I we answer deal electronics we lower electronic are that, are whatever consumer with So them. in can would to I much components, question, yes, you demands state what we And them. doing your And our typically, think to do yes, are with or effectively automotive. seeing especially see would than

price. So is in many secondary higher cases, available much market at a although

helps. So that

Gregory Palm

everything Makes planning in inflation cost through further. sense. offset seen? how input of sort dig additional to And just about to should gross to Yes. know you have one -- the these pricing we the taken Have any we've you just guess, trajectory today? that I margins are that we you actions? year order Or we significant for And knowing think in go step as

Richard Warzala

Yes, great question.

on, the them time is on do unless to By you part in increases turn deal there, the think getting where we've one-on-one commodity basis. of cost and by blanket increases a supply they're around you're have them time before, I pass and agreement you with addressed pricing already mentioned lag. a as price

actively and is into can this But we how QX the I to And push its QX and back, should at You're go? end going looking So look the going not something at back. this of have way improvement get forward. find that I say some that it -- very to is far did to would market and at see been we say pushed that. you

prices seeing pushing more saying, market. So before not the I and think back themselves some much be out overall, start tolerated we'll here of resistance everyone can how everybody

you -- we first some in will the that the some in think So carry see had will I late do but momentum second -- quarter quarter.

Gregory Palm

Good. Okay.

Michael Leach

little passing you're through too, So through without that also costs. a margin, bit, passing it those largely additional It's those increases margin right? just counteracts growth

Gregory Palm

I Yes, all book-to-bill, Or then kind prior Any the are makes as be potentially up sense. get you sense of relates of builds inventory those mean that to real canceled? really quarters. could get do And lastly, jumped just could the some there? that versus that them orders? thoughts it

Richard Warzala

scheduled talk in some that first extended Well, would getting -- the about Mike and into color the answer you I'll part, no There's they're to this. longer let go if we a We remind given into say times delivery pipeline orders. question lead is lead I have dates. it because book They just to scheduled they times. date, days our They're real everyone, customers getting the our wouldn't I'll and to are have delivery production unless not policy backlog. and that it. them have add does don't sooner

backlog on, backlog. automotive number production have get we firm a unbooked we where does date, large not report into So that it we the Until that's release that go went. that don't contracts

orders. So they're real

ship is will have will good starting road is increased there But supply we met, the Now there do eventually. think some are chance that a good potential when chain a what we're and the issues that. being to see flow down and of rescheduled? things I supply get

Michael Leach

to And that. just two comments to add

acquired bookings. we in relative really out to nice quarter think newly the some of performance our the businesses saw I

that in nice talked came due Some wins about here much and diligence in fruition QX. to were

then So partnering well. to that we're very supply chain. see the as secure comments going back with your about excited to customers to And

increasing I working think up right, you're with the just mentioned, it. But good of about with of as runway. the that and production again customer so And there's orders longer lock we Dick provide materials. that proactively to feel getting in customers a evidence confident the defined well with turn, date in that as sense to

Operator

question next comes Brett Funds. Gabelli [Operator with Kearney Instructions] from Our

Brett Kearney

environment. mentioned, challenging the of Dick, of unknowns Curious very well obviously situation. China a those one on had execute very guys You you dynamic, lockdown operating kind through continue to

at viewing thinking both ripple there? of on customers, seeing? kind of standpoint, how potential a are you And this and from potential demand Just hearing you're from stage, some terms latest broad in that your through your broader just industry the what impacts supply of any then

Richard Warzala

to team say would is Suzhou. in we Sure. two locations that in Changzhou I and there have you China, our this

setting of the doesn't lockdowns, to and they product. them I them would total our continue that But I work a it, to America out you you effectively. to allow our and/or on execute at call see if we'll look looking that very circumstances, of puts are global North that reality customers, chain. it with in, starting we're customers, supply and think, say for basis, to given Obviously, Europe, localization build

So more I to going would that. say we're and see more of

look underway. again, trying to approach of is the at cost for -- local I so have which but logistics had we acquiring see said, obviously, we're looking so inquiries, And supply, and And the our products. was chain orders based costs we that have sign. a forth, supply as so the now be And over impacts not increased cost to are and domestic the that's and us -- supply fuel to a now change strategy is total received to minimize to chain reduce just that and of -- our great we starting to upon

are Our seen within point, China, products we impact very little and up call let's this built to being it, on have those. that shipped,

and about doing into and is more So and trend for continuing. been within China. whatever our product product that I and and build see think China, think to becoming of think -- it China And we'll if in And domestically is product et business have business I we're reason, China less is shipping less export cetera, logistics, directly more in available of I ship based. components,

haul an localization for and overall long there's effect, changes take over is -- we'll -- China. you Allied. think chain that that business and have the from But materials positive obviously, So I with can't electronic components, the the on will other impact coming supply design there's do the the other resourcing make just and

Brett Kearney

follow-up and be and kind on you provide from the like solutions actually of customers, was sounds with into Europe? whether that was applications, America really reshoring case it the and and my question kind That hearing North of automation going Terrific. given seeing to you're certainly that's many

Richard Warzala

nicely. I Mexico, in Yes. ago, more North were are great primarily to America. in we'll significant products a commitment color, investments got actually facility And a too. call made that favorable. bit equipment competitive add little couple they cost Mexico made of America, receiving in up job ramped the that done our we a years just very and have to it mean, very built, a not Mexican We've North situation capital or in situation are is being that we've offshore, in used that And of

see North or we a us. bright on X that's as in that call a highly product approved for development And ramping for automated its been primarily but fully production be America, up I'll line for now usage. it spot quarter not mid-second So -- automated North motor resourcing just in that it's has we that actually will Mexico was built years, American and way in being and to a

we're that supply So the into taking best the And do those actions localize But said, those we we tapping investments, I as we're doing Europe, continuing in and our made costs. other at, same and supply chains looking all and we're and we're chains, we've mean, vein. in that. to in token, minimize can to

Operator

from Gerry Our with next ROTH is question Sweeney Capital.

Gerard Sweeney

Spectrum on Controls. question a Just

How you? and you're quarter? with fourth use that some the did challenges there much an the going lose I in Spectrum impact I have go chain. having powers. your you with quarter corporate I And this think Hello? buying obviously, Spectrum of supply of was Did results, think margins on mentioned to some

Unidentified Company Representative

Hello? line? we Operator, their lose did

Operator

us? still you No. Dick, are Mike, with

Richard Warzala

Did Gerry We're here lose hear you. now. we or...? can We

Operator

still He's No. here.

Gerard Sweeney

asked of case I here. but Quite bad I'm thought No, a I of question. a COVID, little bit a

so... quiet, went You

Richard Warzala

that. and then didn't You we anything after Spectrum started about asking hear you

Gerard Sweeney

Spectrum you I was mentioned and having it they quarter margins. purchased chain -- to supply were some obviously, impact constraints, on going the and you had was

give an if in -- how So idea the forward? you had I And of see you was it going of that's curious could that improving quarter? as to much impact if us an

Richard Warzala

expectations the coming for the... set We Sure. of Spectrum out

Operator

hold. please you again. think Dick, I Ladies gentlemen, you -- lost guys got Mike, we

technical We are experiencing difficulties.

Mike Dick, and back conference. you're in Okay. the

Richard Warzala

Gerry, you you. are there? Okay. still Great. Thank

Gerard Sweeney

you... am yes. I here, Did

Richard Warzala

that. Sorry about

Gerard Sweeney

No worries.

my correct? heard question, You That's all.

Richard Warzala

that I We question. did. started we were again, answer heard out. to We the and it we then started answer -- we to notified it,

more year, in realize knew will through see do I after out supply we state the a So was progress gates. supply said we ramp a the challenges improvement, chain and they acquisition, will started We what to QX. even some ship improvement. strong start anyway, did the our to backlog going we that that we had as slow we the that Spectrum they to I that And Spectrum during did experience have we chain were through challenges of think say, start start would in were There ramp that would the We them. year. working we are to ability But that there. We'll see very and significant. slower-than-expected

It negative. drain a neutral. be better in now a be results And was they was on it in way. that QX, for were it our and definitely the neutral if let's put QX, will So our much to it in it's expected Allied is QX, we results expectation than operating right

Gerard Sweeney

-- to suffice being as or in Okay. That and it of should will that and sort they're XQ. I a it terms numbers That -- expectation. a more rectified to Actually, you headwind of be going was say. I tailwind, to should itself fix negative fixes just margins. in be my say, turn bit But little was thought it, aggregate

Michael Leach

wins the talking with as order business electronics a Yes. disruption. constraint the in here great And we're purely supply again, seeing driving really chain we're that's

Gerard Sweeney

-- mean especially of side, opens I correct? lot up opportunities, industrial the that's on that And a business

Richard Warzala

questions? more patience there Sure. -- operator, for All right. Is Gerry. Thanks, Thanks, everyone, your any here. any

Operator

questions. more are There no

Richard Warzala

here Okay. I'll just though. conclude

X. and of be the Also in that XX, X May Barrington the Thursday, at sorry, June week will in in in in week those Allied Investor Robotics are the an Conference we be Detroit next Virtual Spring will Healthcare XX. of May interested, -- Boston, you exhibiting participating Summit Automate on For

would beginning great So for have opportunity configurations like. what those how a the you and be system profile is change, new to a the are look how acquisitions it a look at Allied in see you together, to please at we if any results. day. that talking Otherwise, and as able great forward of readily second you have to attend out feel after you and to see quarter look time, free shows. that for get reach good I participation, with you're and mentioned Thank to us And very you chance, to again coming our you'll if be -- XXXX always, areas your a all

Operator

This concludes today's you. Thank conference.

may now You disconnect.

Allient (ALNT) 7 May 222022 Q1 Earnings call transcript