Allied Motion Technologies, Inc. :AMOT-US: Earnings Analysis: Q1, 2017 By the Numbers : May 23, 2017

Allied Motion Technologies, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Allied Motion Technologies, Inc. – Servotronics, Inc., Transcat, Inc., Generac Holdings Inc., Regal Beloit Corp, UQM Technologies, Inc., Sevcon, Inc., Altra Industrial Motion Corp., Nidec Corporation Sponsored ADR, PositiveID Corporation and Rexnord Corporation (SVT-US, TRNS-US, GNRC-US, RBC-US, UQM-US, SEV-US, AIMC-US, NJDCY-US, PSID-US and RXN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 61.35 million, Net Earnings of USD 2.66 million.
  • Gross margins widened from 27.56% to 27.56% compared to the same period last year, operating (EBITDA) margins now 11.11% from 10.81%.
  • Year-on-year change in operating cash flow of 133.72% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 61.35 55.34 61.04 65.84 63.68
Revenue Growth (%YOY) -3.65 8.86 -0.8 8.86 6.87
Earnings (mil) 2.66 0.71 2.52 2.94 2.13
Earnings Growth (%YOY) 24.92 2.01 -41.09 -5.86 -28.53
Net Margin (%) 4.33 1.28 4.13 4.47 3.34
EPS 0.29 0.08 0.27 0.31 0.23
Return on Equity (%) 14.29 3.87 13.84 16.69 12.67
Return on Assets (%) 5.87 1.57 5.51 6.36 4.83

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Market Share Versus Profits

Revenues History
Earnings History

AMOT-US‘s change in revenue this period compared to the same period last year of -3.65% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that AMOT-US is holding onto its market share. Also, for comparison purposes, revenues changed by 10.86% and earnings by 274.75% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 27.56% to 27.56% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 10.81% to 11.11% compared to the same period last year. For comparison, gross margins were 28.79% and EBITDA margins were 9.23% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

AMOT-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 77.06, compared to last year’s level of 46.20 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

AMOT-US‘s change in operating cash flow of 133.72% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s operating (EBIT) margins contracted from 7.25% to 7.11%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from 4.69% to 6.28%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Allied Motion Technologies, Inc. engages in the provision of motion control products, marketed to original equipment manufacturers and end users. The company’s activities include designing, manufacturing and selling of motors, electronic motion controls, gearing and optical encoders. It offers its products in the field of automotive, medical, aerospace and defense, as well as in electronics and industrial. The company’s products include brush and brushless DC motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, and associated motion control-related products. Allied Motion Technologies was founded in 1962 and is headquartered in Amherst, NY.

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