Allient Inc (ALNT) 2009 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2009 Allied Motion Technologies, Inc.

earnings conference call.

My name is Ann, and I will be your coordinator for today's call.

(Operator Instructions).

As a reminder, this conference is being recorded.

At this time, all participants are in listen-only mode.

We will be facilitating a question-and-answer session following the presentation.

I would now like to turn the presentation over to Sue Chiarmonte, Vice President, Secretary, Treasurer.

Please proceed.

Thank you, operator.

Welcome to Allied Motion's conference call to discuss the quarter ended March 31, 2009.

We appreciate you joining us for this call.

We distributed the press release earlier today, and a copy is available on our website at www.alliedmotion.com.

Today's call is being broadcast live on the Internet and will be available for replay immediately after the call for 90 days.

To access the Internet broadcast and replay, go to the Company's website and click on the webcast icon.

As a reminder, please note that the Safe Harbor statements included in our press release also apply to all comments made on this conference call.

I will now turn the call over to Dick Smith, Chairman of the Board of Directors and Chief Financial Officer of Allied Motion Technologies.

Thank you, Sue.

Good morning and thank you for joining us today.

As usual, I have Dick Warzala, our President and new Chief Executive Officer, on the call with me.

As we announced on December 17 of 2008, we have made some changes to Dick's and my position with the Company that were effective yesterday, May 12.

I have been elected by the Board of Directors as the Executive Chairman of the Board, and Dick is now the CEO of the company.

As was stated in the December press release, as Executive Chairman, I will lead the Board of Directors and will work to enhance the standing of the Company with investors and the outside world, and I will also continue the oversight of the finance, accounting and administrative areas, and will continue to work closely with Dick to assist with the Company's acquisition program and to provide input on developing strategies and programs that will continue the Company's focus on operational excellence and initiatives that will help grow the Company.

Dick has been instrumental in the success we have achieved to date in building the business, and with Dick assuming the role of CEO, I know that our employees and investors can look forward to continued growth in sales and profitability for the Company.

Dick's comprehensive knowledge of the motion control industry, customer focus and strategic vision make him the right leader to move Allied Motion forward.

So with that, I would like to turn the meeting over to Dick Warzala, President and CEO of Allied Motion Technologies.

Thank you, Dick, for your very kind comments, and I look forward to working together with you and the entire team at Allied Motion.

And even with the bad news about the economy all around us, I remain upbeat and optimistic that the very capable team at Allied Motion will ensure our Company emerges from the recession stronger and better than ever.

Our agenda for today is that I will start with general comments.

Dick Smith will review the numbers.

I will discuss the operations.

And then we will open up the call for questions.

By now, you have seen our press release, and the numbers speak for themselves.

The bottom fell out of most of our served markets in a manner that is unprecedented in my 25 years of managing motion companies.

We experienced significant softening in incoming orders in the third quarter of 2008, and we prepared ourselves for a downturn by delaying expansion plans and conserving our cash.

In retrospect, it was good that we took the actions, but it was not enough.

Allied Motion experienced a loss for the first time in several years, and we don't take this lightly.

As we've discussed many times in previous conference calls, we have a strategy and we plan to execute this strategy.

Our strategy identifies the resources that are critical to the long-term success of our Company, and we have been doing everything in our power to protect these assets as we balance the short-term economics with our long-term opportunities.

In fact, our pipeline of new opportunities continues to expand, and as we continue to convert these opportunities into wins, I am confident our Company will grow and return to profitability in the near future.

In the meantime, while we have been and continue to remain reluctant to provide guidance, we feel compelled to at least provide an overall market outlook, as we do expect market conditions to remain tough, declining slightly and bottoming out in the second quarter, before beginning to move up in the third and fourth quarters of this year.

The unprecedented market downturn is being met head-on, with an unprecedented focus and effort by all Allied Motion employees.

We remain committed to finish the development of many new products to meet the emerging needs of our customers by providing motion solutions that raise the bar.

Now I'm going to turn the call back over to Dick Smith, who will review the operating results for the first quarter, ended March 31, 2009.

Thanks, Dick.

Before I review the financial results for the quarter, I would like to announce that our annual shareholders' meeting was held on May 12, and I am pleased to report that shareholders elected the slate of directors as proposed by the Company's Board of Directors for a one-year term.

No director got less shares voting for him than 77% of the total shares entitled to vote, or less than 84% of the total shares voted.

So thank you to all of you shareholders who support the Board and our strategy for growing the company.

Okay, now for the operating results.

As was reflected in our press release that was put out this morning, the Company had a net loss of $730,000, or $0.10 per diluted share, for the first quarter compared to net income of $924,000, or $0.13 per diluted share, last year.

Revenues for the quarter decreased 34% to $15.3 million from $23.3 million last year.

The 34% decrease in revenues in our first quarter of 2009 reflects the downturn in almost all of our markets to varying degrees, caused by the global economic downturn.

58% of our sales for the quarter were to US customers, with the balance of our sales to customers primarily in Europe, Canada and Asia.

Sales to our US customers were down 34.3% for the quarter, while sales to customers outside of the US were down 34.6% for the quarter.

Of the 34%decrease in sales, 3% was due to the strengthening of the US dollar against the euro.

Backlog at March 31, 2009 was $24.7 million, down 27% from the same time last year, but up 5% from the beginning of the quarter.

Bookings for the quarter were $16.97 million, which is down 29% when compared to the $23.8 million for the same quarter of last year.

But it is up 25% when compared to the $13.6 million for the quarter ended December 31, 2008, which reflects some annual blanket orders which we typically receive in the first quarter of each year.

EBITDA for the quarter decreased to a loss of $152,000 this year from the $2.3 million for the first quarter last year.

We had $241,000 of capital expenditures during the first quarter of 2009 compared with $312,000 last year.

Our gross profit margin for the quarter fell to 18% for the quarter ended March 31 compared to 26% last year.

The decrease in margin was primarily the result of the fixed manufacturing overheads, as it relates to the significant drop in sales, as well as to the lag in getting our variable costs reduced at the same pace as our decline in sales.

We have and will continue to make improvements in efficiencies and reduction of costs and explore other actions that can be taken to mitigate the adverse effects of the downturn in sales.

Selling, general and administrative and engineering costs as a percent of sales increased to 23.5% for the quarter compared with 19% for the same period last year, due primarily to the significant drop in sales.

However, the total operating costs and expenses for the quarter were reduced $866,000, or 18%, from the first quarter of last year.

The selling and engineering costs have been reduced at a lesser rate of 8% to not jeopardize our core competencies that could adversely affect the long-term growth and profitability of the Company.

Administrative costs were reduced $697,000, or 29%, from last year as a result of reductions in discretionary expenditures and compensation expense, including incentive bonuses.

Depreciation and amortization expense increased slightly to $893,000 for the quarter this year from $880,000 for the first quarter last year.

For the quarter, interest expense was down $44,000 to a total expense of $15,000, reflecting less debt outstanding and lower borrowing costs.

The Company ended the quarter with $2.1 million in cash and $2.6 million in bank debt.

We used $2.1 million in cash during the quarter, most of which was to satisfy year-end obligations and to purchase equipment in the first quarter.

After the additional cost reductions made in the first quarter, the annualized sales required to break even for EBITDA is approximately $56 million, or $14 million per quarter.

And to break even at the pretax level would require approximately $66 million of annualized sales, or $16.5 million per quarter.

Our stockholders' equity at March 31, 2009 was $36 million, or $4.74 per share.

I will now turn the meeting back over to Dick Warzala to discuss our operations.

Dick?

Thanks again, Dick.

We are going to go back and look at some history here first, and as we take you through the next section of this conference call, attempt to give you some outlook on what we expect to happen here in the near future.

Looking back at the first quarter of 2008, incoming orders increased slightly over the fourth quarter of 2007, and were then followed by a small drop-off in the second quarter and then steep declines in the third and fourth quarters of 2008.

The three consecutive quarters of decline in 2008 was a first for us since we became a pure-play motion company back in 2002.

Fortunately, the first quarter of the year is usually our strongest, and we did experience an increase in the first quarter of 2009 when compared to the fourth quarter of 2008, although it was 29% lower when compared to the first quarter of 2008.

The data on incoming orders suggests that annualized base business levels have declined by approximately 30%, and that is the level we are currently operating at.

With regard to our markets, over the last 12 months, our medical and aerospace defense markets experienced growth, while our industrial, distribution, electronics, and vehicle markets, including trucks, off-road equipment, bus, RV, marine and specialty automotive, were down when compared to the prior 12-month period.

Comparing the first quarter of 2008 to the first quarter of 2009, our medical was up, while our aerospace and defense, industrial, distribution, electronics and vehicle markets were down when compared to the prior year.

Comparing the fourth quarter of 2008 to the first quarter of 2009, our aerospace and defense and distribution markets were up; our medical market was flat; and our industrial, electronics and vehicle markets were down.

While this is a significant amount of data to digest, we can briefly discuss the signals we are receiving from our served markets.

We have reported that the medical market has been growing for us.

Some of that growth is being generated from new design wins, while our customers are reporting that overall business is beginning to show signs of a slight downturn.

Next, the industrial and construction equipment market sectors have been hit quite hard, but increased quoting activity is starting to create some optimism that perhaps the worst is behind us and the opportunity to grow may begin relatively soon.

Another market that is showing some signs of life is the banking equipment sector, and new orders may indicate that this sector is now on the road to recovery.

With regard to our selling efforts, in February of this year, we announced the launch of our ONE Team sales force, and thus far, we are concentrating on training the team and implementing the customer transition plan.

By leveraging the technology of the entire Company, a more complete Allied Motion solution is now being presented to each account, with the expectation that it will drive growth in our base business in the future.

With regard to new developments, we have discussed new product developments and new business opportunities in the past, and I'm pleased to report a number of successes so far this year.

During the first quarter, we received an order for the initial phase of an exciting new missile program, and as the program progresses and achieves success in the marketplace, we can expect to grow along with it.

In the medical area, our high-performance motors are providing us with an advantage and have generated wins in leading-edge medical applications, including robotic surgery, prosthetics and critical organ support functions.

These types of applications are also expected to provide significant growth opportunities for our Company in the future.

Another emerging market and growth opportunity for us exists in the automated and unmanned guided vehicle area, where several new application areas have emerged in material handling and unmanned vehicle control.

Once again, Allied Motion is using its broad range of technologies and products to secure design wins today for revenue growth opportunities in the future.

Last, but not least, I would be remiss if I did not mention Allied Motion's unwavering commitment to implementing Allied's Systematic Tools, or AST for short.

This focus ensures continuous improvement in quality, delivery, cost and innovation, and is the key to improving efficiencies in all aspects of our business.

Today more than ever, improving efficiencies and reducing the cost of doing business is paramount in the turbulent economic times we are currently facing.

Operator, that concludes our prepared remarks, and we are now ready for questions.

(Operator Instructions) And we have no questions today, so I would now like to turn the call back over to Dick Smith for closing remarks.

Dick Warzala will provide some closing remarks.

Okay, operator, thank you very much, and we would like to thank everyone for attending the conference call.

And as usual, we will be available to answer any questions that you might have.

So thanks again, and we look forward to talking to you again next quarter.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes the presentation, and you may now disconnect.

Have a good day.