Altra Industrial (AIMC) Beats On Q4 Earnings And Revenues

Machinery company, Altra Industrial Motion Corporation (NASDAQ:AIMC) reported better-than-expected results for fourth-quarter 2016.

Over the last one month, shares of this Zacks Rank #3 (Hold) stock yielded a return of 9.48% – outperforming 2.77% gain provided by the Zacks categorized Machinery General Industrial industry.

Earnings

Quarterly earnings came in at 41 cents per share, above the Zacks Consensus Estimate of 34 cents. In addition, the bottom line surpassed the year-ago tally by 13.9%. The upside came on the back of solid sales volume, greater operational efficacy and favorable pricing conditions.

Full-year 2016 earnings came in at $1.56 per share, compared with the prior-year figure of $1.64 per share.

Revenues

Quarterly revenues totaled $172.6 million, higher than the Zacks Consensus Estimate of $171 million. However, the top line marginally fell short of the year-ago tally by 0.6%. The downside was witnessed due to the foreign exchange impact of 2%, which was noticeably offset by the 0.9% favorable price impact and 0.5% rise in organic sales.

Full-year 2016 revenues summed $708.9 million compared to $746.7 million reported in 2015.

Segmental Details

Altra Industrial Motion reports its revenues under the following heads/segments – Couplings Clutches & Brakes, Electromagnetic Clutches & Brakes, and Gearing.

Details of the segmental sales have been provided below:

Electromagnetic Clutches & Brakes revenues edged down 1.2% year over year to $52.8 million.

Couplings Clutches & Brakes sales came in at $74.2 million, down 3.8% year over year.

Sales in the Gearing segment totaled $47.0 million, down 5.2% year over year.

Margins

In the quarter, Altra Industrial Motion’s cost of sales dipped 1.6% year over year, representing 68.1% of revenue versus 68.8% in the year-ago quarter. Gross margin expanded 70 basis points (bps) year over year to 31.9%. Selling, general and administrative expenses were roughly $34.9 million, accounting for 20.2% of revenues.

Balance Sheet & Cash Flow

Exiting the fourth quarter, Altra Industrial Motion’s cash and cash equivalents climbed to $69.1 million from $50.3 million recorded on Dec 31, 2015. Long-term debt was $326 million, higher than $231.6 million recorded at the end of 2015.

At the end of 2016, Altra Industrial Motion generated cash of $76.6 million from its operating activities, lower than the year-ago tally of $86.8 million. Cash used for the purchase of property, plant and equipment totaled $18.9 million, down from $22.9 million in the year-earlier period.

Outlook

During fourth-quarter 2016, Altra Industrial Motion completed the Stromag acquisition and believes this deal to significantly fortify its presence in niche markets over the long term. The company is poised to grow on the back of solid demand, smooth supply chain operations and favorable pricing conditions. However, Altra

Industrial Motion expects foreign exchange headwind (due to a strong U.S. dollar) to hurt its revenues and earnings, moving ahead.

Based on the existing market conditions, the company projects to accrue revenues within the range of $835–$855 million and earnings in the band of $1.75–$1.85 per share for full-year 2017.

Stocks to Consider

Some better-ranked stocks within the industry are listed below:

ACCO Brands Corporation (NYSE:ACCO) has an average earnings surprise of +24.74% for the last four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies, Inc. (NYSE:AIT) carries a Zacks Rank #2 (Buy) and has an average earnings surprise of +6.18% for the trailing four quarters.

Avery Dennison Corporation (NYSE:AVY) also holds a Zacks Rank #2 and has an average earnings surprise of +6.17% for the past quarters.

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