Altra Misses on Q1 Earnings, Up Y/Y - Analyst Blog

Altra Holdings, Inc. AIMC reported improved year-over-year results for the first-quarter of 2014. Adjusted earnings per share of 48 cents increased 6.7% year over year but missed the Zacks Consensus Estimate of 50 cents by 4.0%. 

On a GAAP basis, the company reported earnings per share of 41 cents, down from the year-ago quarter earnings of 44 cents.

Revenues

Net sales increased 13.5% year over year to $210.1 million in the first quarter. Reported revenues beat the Zacks Consensus Estimate of $208.0 million marginally. The improvement in revenues was primarily due to contribution from the Svendborg acquisition. Excluding the acquisitions, the company's revenues increased 2.7% year over year to $190.1 million. 

Margins/Costs

Altra Holdings recorded a gross profit margin of 29.4%, decreasing 60 basis points (bps) year over year. Selling, general and administrative (SG&A) expenses were $38.3 million, up 17.9% year over year. Adjusted income from operations for the quarter was $22.2 million, against $20.1 million in the first quarter of 2013.

Balance Sheet/Cash Flow

Cash and cash equivalents at the end of first-quarter 2014 were $61.8 million, compared with $63.6 million at the end of the preceding quarter. Long-term debt at the end of the quarter stood at $249.1 million, against $261.3 million in the fourth quarter of 2013.

In the reported quarter, Altra generated cash of $19.1 million from operating activities, compared with $9.3 million generated in the year-ago comparable quarter. The company incurred capital expenditure of $5.6 million in the quarter, compared with $4.5 million a year ago.

Guidance

Management believes that its strategic initiatives along with the acquisition of Svendborg helped offset the decline caused by unfavorable weather in North America. Moreover, it is expected that the strategic cost-control initiatives will improve earnings in the quarters ahead.

In light of the same, Altra has maintained its previous guidance. The company expects revenues in the range of $800.0 to $825.0 million in 2014. Adjusted earnings per share are anticipated to be within $1.85 to $2.00 range. Tax rate in 2014 is expected in the 31% to 33% range.

Additionally, capital expenditure expectations in 2014 are kept in the range of $28.0 to $30.0 million and depreciation and amortization in the $34.0 to $36.0 million range.

Other Stocks to Consider

Altra currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth a look in the industry include Kadant Inc. KAI, The Middleby Corporation MIDD and IDEX Corporation IEX. While Kadant and Middleby sport a Zacks Rank #1 (Strong Buy), IDEX has a Zacks Rank #2 (Buy).