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Form 8-K Altra Industrial Motion For: Apr 29

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April 29, 2016 7:09 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
April 29, 2016
Date of Report (Date of earliest event reported)
 
 
 
 ALTRA INDUSTRIAL MOTION CORP.
(Exact name of registrant as specified in its charter)
 
 
 

Delaware
 
001-33209
 
61-1478870
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
300 Granite Street, Suite 201
Braintree, Massachusetts
 
02184
(Address of principal executive offices)
 
(Zip Code)
(781) 917-0600
(Registrant’s telephone number, including area code)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02
Results of Operations and Financial Condition
On April 29, 2016, Altra Industrial Motion Corp. (“the Company”) announced certain unaudited financial results for the first quarter ended March 31, 2016. A copy of the announcement is attached hereto as Exhibit 99.1, which is incorporated by reference herein. On April 29, 2016, the Company will hold a conference call with investors to discuss unaudited first quarter results. The chart presentation to be used during the call is attached hereto as Exhibit 99.2 to this report and is incorporated by reference herein.

Item 9.01
Financial Statements and Exhibits
(d) Exhibits
 
99.1
  
Press release of Altra Industrial Motion Corp., dated April 29, 2016.
 
 
99.2
  
Charts to be used during the investor conference call on April 29, 2016.












































EXHIBIT
INDEX
  
 
 
 
99.1
  
Press release of Altra Industrial Motion Corp., dated April 29, 2016.
 
 
99.2
  
Charts to be used during the investor conference call on April 29, 2016.











SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
ALTRA INDUSTRIAL MOTION CORP.
 
/s/ Carl R. Christenson
Name:
 
Carl R. Christenson
Title:
 
Chairman and Chief Executive Officer
Date: April 29, 2016



Altra Reports First-Quarter 2016 Results
10 bps Gross Margin and 20 bps Operating Income margin improvement despite sales decline.



BRAINTREE, Mass., April 29, 2016 - Altra Industrial Motion Corp. (Nasdaq: AIMC), a global manufacturer and marketer of electromechanical power transmission and motion control products, today announced unaudited financial results for the first quarter ended March 31, 2016.
Financial Highlights
•
First-quarter 2016 net sales were $180.5 million, compared with $193.4 million in the first quarter of 2015, a decrease of 6.7%. The decrease in net sales was driven by an unfavorable impact from foreign exchange of 1.8% and an organic sales decline of 4.9%.
•
First-quarter net income was $8.8 million, or $0.34 per diluted share, compared with $9.4 million, or $0.36 per diluted share, in the first quarter of 2015. Non-GAAP net income in the first quarter of 2016 was $9.9 million, or $0.38 per diluted share, compared with $11.1 million, or $0.42 per diluted share, a year ago.*
•
The Company returned to shareholders $2.2 million by repurchasing approximately 91,400 shares, during the first quarter under its $50 million repurchase program. Since the program's inception in May 2014, the Company has purchased approximately $37.1 million, or 1.3 million shares, under the program.


•
Reconciliation of Non-GAAP Net Income*:

 
Quarter Ended
 
Quarter Ended
 
March 31, 2016
 
March 31, 2015
Net income attributable to Altra Industrial Motion Corp.
$
8,810

 
$
9,398

 
 
 
 
Restructuring costs
1,553

 
1,756

Acquisition related expenses
—

 
738

Tax impact of above adjustments
(464
)
 
(761
)
Non-GAAP net income*
$
9,899

 
$
11,131

Non-GAAP diluted earnings per share*
$
0.38

 
$
0.42

 
 
 
 
In Thousands of Dollars, except per share amounts
 
 
 





Management Comments
“We are on plan with our strategic actions to improve Altra’s long-term operating performance amid the current soft economic environment for many of our end markets,” said Carl Christenson, Altra's Chairman and CEO. “We are seeing the positive benefits of our operational excellence and business simplification initiatives, although these gains were offset in the quarter by the 7% lower sales volume as well as an unfavorable product mix. We are on track to have completed six consolidations by the end of the current second quarter, and we anticipate announcing a seventh planned consolidation during the third quarter. In addition, our supply chain management initiative is progressing well. Finally, we continued our balanced capital allocation as we repurchased $2.2 million of Altra shares.”

Business Outlook
“We are now past the anniversary of when several of our end markets began to weaken. Therefore, we will have easier comparisons as we approach the second half of the year and we expect that year-over-year shipment and order declines will begin to moderate. Although we do still expect year-over-year sales to be lower for 2016, some external data indicates that in the second half of the year we may see the global industrial environment improve slightly. The conventional energy end market is still the most concerning and we expect it to take some time before equipment and component demand in this market begins to recover. Our two segments with limited oil and gas exposure reported meaningful year-over-year improvement in operating income as a percentage of sales demonstrating our strong operating leverage. Looking longer-term, we are excited by the potential for significant margin appreciation as a result of our aggressive performance improvement actions when our most out-of-favor markets return to growth.”

Altra is maintaining its previous annual revenue guidance and expects full-year 2016 sales in the range of $700 to $720 million and non-GAAP diluted EPS guidance in the range of $1.40 to $1.50. This guidance includes savings from the restructuring and consolidation actions taken to date. The Company expects its tax rate for the full year to be approximately 29% to 31% before discrete items. Altra continues to expect capital expenditures in the range of $20 to $24 million and depreciation and amortization in the range of $30 to $32 million for 2016.*

Conference Call

The Company will conduct an investor conference call to discuss its unaudited first-quarter 2016 financial results this morning at 10:00 a.m. ET. The public is invited to listen to the conference call by dialing (877) 407-8293 domestically or (201) 689-8349 for international access. A live webcast of the call will be available in the "Investor Relations" section of www.altramotion.com. Individuals may download charts that will be used during the call at www.altramotion.com under presentations in the Investor Relations section. The charts will be available after earnings are released. A replay of the recorded conference call will be available at the conclusion of the call on April 29 through midnight on May 13, 2016. To listen to the replay, dial (877) 660-6853 domestically or (201) 612-7415 for international access (conference ID #13635362). A webcast replay also will be available.






Altra Industrial Motion Corp.
Consolidated Statements of Income Data
Quarter Ended
 
In Thousands of Dollars, except per share amount
March 31, 2016
 
March 31, 2015
 
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
Net sales
$
180,453

 
$
193,361

 
Cost of sales
125,823

 
134,888

 
Gross profit
$
54,630

 
$
58,473

 
Gross profit as a percent of net sales
30.3
%
 
30.2
%
 
Selling, general & administrative expenses
33,536

 
36,302

 
Research and development expenses
4,564

 
4,762

 
Restructuring Charges
1,553

 
1,756

 
Income from operations
$
14,977


$
15,653

 
Income from operations as a percent of net sales
8.3
%
 
8.1
%
 
Interest expense, net
2,896

 
2,956

 
Other non-operating income, net
(278
)
 
(829
)
 
Income before income taxes
$
12,359

 
$
13,526

 
Provision for income taxes
3,549

 
4,136

 
Income tax rate
28.7
%
 
30.6
%
 
Net income
8,810

 
9,390

 
Net loss attributable to non-controlling interest
—

 
8

 
Net income attributable to Altra Industrial Motion Corp.
8,810

 
9,398

 
 
 
 
 
 
 
 
 
 
 
Weighted Average common shares outstanding
 
 
 
 
Basic
25,740

 
26,280

 
Diluted
$
25,759

 
26,357

 
 
 
 
 
 
Net income per share
 
 
 
 
Basic
$
0.34

 
$
0.36

 
Diluted
$
0.34

 
$
0.36

 
 
 
 
 
 
Reconciliation of Non-GAAP Income From Operations:
 
 
 
 
 
 
 
 
 
Income from operations
$
14,977

 
$
15,653

 
 
 
 
 
 
Restructuring costs
1,553

 
1,756

 
Acquisition related expenses
—

 
738

 
Non-GAAP income from operations *
$
16,530

 
$
18,147

 
 
 
 
 
 
Reconciliation of Non-GAAP Net Income:
 
 
 
 
 
 
 
 
 
Net income attributable to Altra Industrial Motion Corp.
8,810

 
9,398

 
 
 
 
 
 
Restructuring costs
1,553

 
1,756

 
Acquisition related expenses
—

 
738

 
Tax impact of above adjustments
(464
)
 
(761
)
 
Non-GAAP net income *
$
9,899

 
$
11,131

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP diluted earnings per share *
$
0.38

(1)
$
0.42

(2)
 
 
 
 
 
 
(1) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.9% by the above items
(2) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 30.5% by the above items
 


Consolidated Balance Sheets
 
 
 
In Thousands of Dollars
March 31, 2016
 
December 31, 2015
 
(unaudited)
 
 
Assets:
 
 
 
 Current Assets
 
 
 
Cash and cash equivalents
$
44,843

 
$
50,320

Trade receivables, net
103,869

 
94,720

Inventories
119,434

 
121,156

Income tax receivable
2,479

 
5,146

Prepaid expenses and other current assets
12,704

 
11,217

Assets held for sale
4,826

 
4,597

Total current assets
288,155

 
287,156

Property, plant and equipment, net
147,526

 
145,413

Intangible assets, net
95,619

 
96,069

Goodwill
98,490

 
97,309

Deferred income taxes
3,292

 
3,201

Other non-current assets, net
2,848

 
3,184

Total assets
$
635,930


$
632,332

 
 
 
 
Liabilities, and stockholders' equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
37,258

 
$
40,297

Accrued payroll
17,833

 
22,312

Accruals and other current liabilities
37,701

 
34,990

Income tax payable
3,059

 
3,563

Current portion of long-term debt
1,963

 
3,187

Total current liabilities
97,814

 
104,349

Long-term debt, less current portion and net
   of unaccreted discount
232,839

 
231,568

Deferred income taxes
44,527

 
44,185

Pension liabilities
8,835

 
8,328

Long-term taxes payable
655

 
647

Other long-term liabilities
689

 
688

Total stockholders’ equity

250,571

 
242,567

Total liabilities, and stockholders’ equity

$
635,930

 
$
632,332

 
 
 
 
 
 
 
 
Reconciliation of operating working capital:
 
 
 
Trade receivables, net
103,869

 
94,720

Inventories
119,434

 
121,156

Accounts payable
(37,258
)
 
(40,297
)
Operating working capital *
$
186,045

 
$
175,579

 
 
 
 


 
Year to Date Ended
 
March 31, 2016
 
March 31, 2015
 
(Unaudited)
 
(Unaudited)
Cash flows from operating activities
 
 
 
Net income
$
8,810

 
$
9,390

Adjustments to reconcile net income to net cash flows:
 
 

    Depreciation
5,119

 
5,343

    Amortization of intangible assets
2,119

 
2,162

    Amortization of deferred financing costs
196

 
239

    Loss/(Gain) on foreign currency, net
217

 
(67
)
    Accretion of debt discount, net
968

 
892

    Loss/(Gain) on impairment / disposal of fixed assets
448

 
(26
)
    Stock based compensation
1,163

 
1,110

    Changes in assets and liabilities:
 
 
 
       Trade receivables
(8,087
)
 
(10,091
)
       Inventories
2,929

 
991

       Accounts payable and accrued liabilities
(6,832
)
 
2,823

       Other current assets and liabilities
(1,311
)
 
(82
)
       Other operating assets and liabilities
311

 
90

    Net cash provided by operating activities
6,050

 
12,774

Cash flows from investing activities
 
 
 
Purchase of property, plant and equipment
(5,653
)
 
(7,731
)
    Net cash used in investing activities
(5,653
)
 
(7,731
)
Cash flows from financing activities
 
 
 
Payments on term loan facility
—

 
(2,359
)
Payments on Revolving Credit Facility
(4,447
)
 
—

Dividend payments
—

 
(3,178
)
Proceeds from equipment and working capital notes
—

 
945

Payments of equipment and working capital notes
(1,244
)
 
(412
)
Proceeds from mortgages and other debt
3,351

 
3,647

Borrowing under Revolving Credit Facility
—

 
5,000

Shares surrendered for tax withholding
(91
)
 
(128
)
Payments on mortgages and other debt
(37
)
 
(53
)
Purchases of common stock under share repurchase program
(2,159
)
 
(4,558
)
    Net cash flows used in financing activities
(4,627
)
 
(1,096
)
Effect of exchange rate changes on cash and cash equivalents
(1,247
)
 
(4,024
)
    Net change in cash and cash equivalents
(5,477
)
 
(77
)
Cash and cash equivalents at beginning of year
50,320

 
47,503

Cash and cash equivalents at end of period
$
44,843

 
$
47,426

 
 
 
 
Reconciliation to free cash flow:
 
 
 
Net cash flows from operating activities
6,050

 
12,774

Purchase of property, plant and equipment
(5,653
)
 
(7,731
)
 
 
 
 
Free cash flow *
$
397

 
$
5,043

 
 
 
 






Altra Industrial Motion Corp.
Selected Segment Data
Quarter Ended
In Thousands of Dollars, except per share amount
March 31, 2016
 
March 31, 2015
 
(Unaudited)
 
(Unaudited)
 
 
 
 
Net Sales
 
 
 
Couplings Clutches & Brakes
$
75,623

 
$
89,115

Electromagnetic Clutches & Brakes
57,349

 
57,636

Gearing
48,920

 
49,206

Eliminations
(1,439
)
 
(2,596
)
Total
$
180,453

 
$
193,361

 
 
 
 
Income from operations
 
 
 
Couplings Clutches & Brakes
$
6,291

 
$
9,955

Electromagnetic Clutches & Brakes
6,463

 
5,328

Gearing
5,762

 
4,750

Restructuring
(1,553
)
 
(1,756
)
Corporate
(1,986
)
 
(2,624
)
Total
$
14,977

 
$
15,653

 
 
 
 

About Altra Industrial Motion Corp.
Altra Industrial Motion Corp., through its subsidiaries, is a leading global designer, producer and marketer of a wide range of electromechanical power transmission products. The Company brings together strong brands covering over 40 product lines with production facilities in 12 countries. Altra's leading brands include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Kilian Manufacturing, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Stieber Clutch, Svendborg Brakes, TB Wood's, Twiflex, Warner Electric, Warner Linear, and Wichita Clutch.
The Altra Industrial Motion Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4038.
* Discussion of Non-GAAP Financial Measures
As used in this release and the accompanying slides posted on the Company's website, non-GAAP diluted earnings per share, non-GAAP income from operations and non-GAAP net income are each calculated using either net income or income from operations that excludes acquisition related costs, restructuring costs, and other income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP diluted earnings per share is calculated by dividing non-GAAP net income by GAAP weighted average shares outstanding (diluted). Non-GAAP free cash flow is calculated by deducting purchases of property, plant and equipment from net cash flows from operating activities. Non-GAAP operating working capital is calculated by deducting accounts payable from net trade receivables plus inventories.
Altra believes that the presentation of non-GAAP net income, non-GAAP income from operations, non-GAAP diluted earnings per share, non-GAAP free cash flow and non-GAAP operating working capital provides important


supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations.

Forward-Looking Statements
All statements, other than statements of historical fact included in this release are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Forward-looking statements can generally be identified by phrases such as "believes," "expects," "potential," "continues," "may," "should," "seeks," "predicts," "anticipates," "intends," "projects," "estimates," "plans," "could," "designed", "should be," and other similar expressions that denote expectations of future or conditional events rather than statements of fact. Forward-looking statements also may relate to strategies, plans and objectives for, and potential results of, future operations, financial results, financial condition, business prospects, growth strategy and liquidity, and are based upon financial data, market assumptions and management's current business plans and beliefs or current estimates of future results or trends available only as of the time the statements are made, which may become out of date or incomplete. Forward-looking statements are inherently uncertain, and investors must recognize that events could differ significantly from our expectations. These statements include, but may not be limited to, those relating to the Company's progress on corporate initiatives, including its supply chain management initiative, the Company's views and assessment of economic conditions, foreign currency trends, end market conditions and industrial demand, the Company's expectations with respect to sales, the Company’s progress on executing its acquisition and organic growth strategies and new product development, the Company’s progress on implementing profit improvement initiatives, the Company's progress and future plans on implementing and pursuing consolidation and cost reduction activities, the impact and timing of the Company's cost management and restructuring activities on earnings, margins and shareholder value, the Company's unaudited 2016 financial information, and the Company's guidance for full year 2016
 
In addition to the risks and uncertainties noted in this release, there are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) competitive pressures, (2) changes in economic conditions in the United States and abroad and the cyclical nature of our markets, (3) loss of distributors, (4) the ability to develop new products and respond to customer needs, (5) risks associated with international operations, including currency risks, (6) accuracy of estimated forecasts of OEM customers and the impact of the current global economic environment on our customers, (7) risks associated with a disruption to our supply chain, (8) fluctuations in the costs of raw materials used in our products, (9) product liability claims, (10) work stoppages and other labor issues, (11) changes in employment, environmental, tax and other laws and changes in the enforcement of laws, (12) loss of key management and other personnel, (13) risks associated with compliance with environmental laws, (14) the ability to successfully execute, manage and integrate key acquisitions and mergers, (15) failure to obtain or protect intellectual property rights, (16) risks associated with impairment of goodwill or intangibles assets, (17) failure of operating equipment or information technology infrastructure, (18) risks associated with our debt leverage and operating covenants under our debt instruments, (19) risks associated with restrictions contained in our Convertible Notes and Credit Facility, (20) risks associated with compliance with tax laws, (21) risks associated with the global recession and volatility and disruption in the global financial markets, (22) risks associated with implementation of our ERP system, (23) risks associated with the Svendborg and Guardian acquisitions and integration and other acquisitions, (24) risks associated with the closure of the Company's manufacturing facility in Changzhou, China, (25) risks associated with certain minimum purchase agreements we have with suppliers, (26) risks associated with our exposure to variable interest rates and foreign currency exchange rates, (27) risks associated with interest rate swap contracts, (28) risks associated with the potential dilution of our common stock as a result of our convertible notes, (29) risks associated with our exposure


to renewable energy markets, (30) risks related to regulations regarding conflict minerals, (31) risks related to restructuring and plant consolidations, and (32) other risks, uncertainties and other factors described in the Company's quarterly reports on Form 10-Q and annual reports on Form 10-K and in the Company's other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Except as required by applicable law, Altra Industrial Motion Corp. does not intend to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise. AIMC-E
CONTACT:    

Altra Industrial Motion Corp.
Christian Storch, Chief Financial Officer
781-917-0541


First Quarter 2016 Results April 29, 2016 10:00 AM ET Dial In Number 877-407-8293 Domestic 201-689-8349 International Webcast at www.altramotion.com Replay Through May 13, 2016 877-660-6853 Domestic 201-612-7415 International Conference ID: # 13635362 Webcast Replay at www.altramotion.com

 
Safe Harbor Statement Cautionary Statement Regarding Forward Looking Statements All statements, other than statements of historical fact included in this release are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Forward-looking statements can generally be identified by phrases such as "believes," "expects," "potential," "continues," "may," "should," "seeks," "predicts," "anticipates," "intends," "projects," "estimates," "plans," "could," "designed", "should be," and other similar expressions that denote expectations of future or conditional events rather than statements of fact. Forward-looking statements also may relate to strategies, plans and objectives for, and potential results of, future operations, financial results, financial condition, business prospects, growth strategy and liquidity, and are based upon financial data, market assumptions and management's current business plans and beliefs or current estimates of future results or trends available only as of the time the statements are made, which may become out of date or incomplete. Forward-looking statements are inherently uncertain, and investors must recognize that events could differ significantly from our expectations. These statements include, but may not be limited to, those relating to the Company's progress on corporate initiatives, including its supply chain management initiative, the Company's views and assessment of economic conditions, foreign currency trends, end market conditions and industrial demand, the Company's expectations with respect to sales, the Company’s progress on executing its acquisition and organic growth strategies and new product development, the Company’s progress on implementing profit improvement initiatives, the Company's progress and future plans on implementing and pursuing consolidation and cost reduction activities, the impact and timing of the Company's cost management and restructuring activities on earnings, and other potential cost management and restructuring activities on earnings, margins and shareholder value, the Company's unaudited 2016 financial information, and the Company's guidance for full year 2016 In addition to the risks and uncertainties noted in this release, there are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) competitive pressures, (2) changes in economic conditions in the United States and abroad and the cyclical nature of our markets, (3) loss of distributors, (4) the ability to develop new products and respond to customer needs, (5) risks associated with international operations, including currency risks, (6) accuracy of estimated forecasts of OEM customers and the impact of the current global economic environment on our customers, (7) risks associated with a disruption to our supply chain, (8) fluctuations in the costs of raw materials used in our products, (9) product liability claims, (10) work stoppages and other labor issues, (11) changes in employment, environmental, tax and other laws and changes in the enforcement of laws, (12) loss of key management and other personnel, (13) risks associated with compliance with environmental laws, (14) the ability to successfully execute, manage and integrate key acquisitions and mergers, (15) failure to obtain or protect intellectual property rights, (16) risks associated with impairment of goodwill or intangibles assets, (17) failure of operating equipment or information technology infrastructure, (18) risks associated with our debt leverage and operating covenants under our debt instruments, (19) risks associated with restrictions contained in our Convertible Notes and Credit Facility, (20) risks associated with compliance with tax laws, (21) risks associated with the global recession and volatility and disruption in the global financial markets, (22) risks associated with implementation of our ERP system, (23) risks associated with the Svendborg and Guardian acquisitions and integration and other acquisitions, (24) risks associated with the closure of the Company's manufacturing facility in Changzhou, China, (25) risks associated with certain minimum purchase agreements we have with suppliers, (26) risks associated with our exposure to variable interest rates and foreign currency exchange rates, (27) risks associated with interest rate swap contracts, (28) risks associated with the potential dilution of our common stock as a result of our convertible notes, (29) risks associated with our exposure to renewable energy markets, (30) risks related to regulations regarding conflict minerals, (31) risks related to restructuring and plant consolidations, and (32) other risks, uncertainties and other factors described in the Company's quarterly reports on Form 10-Q and annual reports on Form 10-K and in the Company's other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Except as required by applicable law, Altra Industrial Motion Corp. does not intend to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise. 1

 
First Quarter 2016 Highlights • Gross margin percentage increased 10 bps to 30.3% • Revenues decreased 6.7% from the first quarter of 2015 • Income from operations was 8.3%, Non-GAAP income from operations was 9.2% * • Repurchased $2.2 million of Altra shares 2

 
End Market Review • Sales at Distribution were down year over year but up sequentially • Turf and Garden sales are off to another great start • Ag market down sharply from a year ago • Oil and gas down as expected year to date • Alternative energy was up modestly both year over year and sequentially • Metals weakened further during the quarter and was off double digits from a year ago and sequentially • Mining sales declined significantly both sequentially and year over year 3

 
Q1 2016 Financial Highlights 4 Q1 2016 Q1 2015 $ Change % Change Net Sales $180.5 $193.4 ($12.9) -6.7% Gross Profit $54.6 $58.5 ($3.9) -6.7% % of Revenues 30.3% 30.2% SG&A $33.5 $36.3 ($2.8) -7.7% % of Revenues 18.6% 18.8% Income from operations $15.0 $15.7 ($0.7) -4.5% % of Revenues 8.3% 8.1% Net Income $8.8 $9.4 ($0.6) -6.4% % of Revenues 4.9% 4.9% Earnings Per Share: Diluted $0.34 $0.36 ($0.02) -5.6% Non-GAAP Diluted * $0.38 $0.42 ($0.04) -9.5% Weighted Average Common Shares Outstanding: Diluted 25,759 26,357 (598) -2.3% ($ millions)

 
Selected Segment Data 5 Frist Quarter Q1 2016 Q1 2015 Diff Q1 2016 Q1 2015 Diff Q1 2016 Q1 2015 Diff Net Sales $75.6 $89.1 ($13.5) $57.3 $57.6 ($0.3) $48.9 $49.2 ($0.3) Income From Operations $6.3 $10.0 ($3.7) $6.5 $5.3 $1.2 $5.8 $4.8 $1.0 % of Net Sales 8.3% 11.2% 11.3% 9.2% 11.9% 9.8% $ Millions Couplings, Clutches & Brakes (CCB) Electric Clutches & Brakes (ECB) Gearing

 
Balance Sheet Highlights • Total Debt less Cash decreased by approximately $24.0 year over year • Repurchased 91,000 shares in Q1 6 Balance Sheet Highlights (amounts in millions) Q1 2016 Q1 2015 C sh $44.8 $47.4 Total Debt $242.9 $269.5 Total Debt less Cash $198.1 44.1% $222.1 47.6% Shareholders' Equity $250.6 55.9% $244.7 52.4% Shareholders' Equity plus Debt, less Cash $448.7 100.0% $466.8 100.0% Shares Outstanding 25.8 26.4 (0.60) Total Debt Less Cash 44.1% Shareholders' Equity 55.9%

 
2016 Guidance • $700 - $720 Million in sales • $1.40 - $1.50 Non-GAAP diluted earnings per share * • $20 - $24 Million in capital expenditures • $30 - $32 Million in depreciation and amortization • Tax rate approximately 29% - 31% before discrete items 7

 
Business Simplification On Track 8 Long Term Objective YTD Results Current Status Operational Improvements Reduce the number of facilities by 20% to 30% • Restructuring and cost reductions have improved margins • Bauer improvement is on track • Facility consolidations are on track Strategic Pricing Operating profit improvement of 150 bps • Pricing environment is more challenging • Continue to find pricing opportunities Supply Chain Management Implement hybrid SCM structure to reduce material spend • Training is substantially complete • Reorganization of procurement organization is on track SAP Deployment Entire organization on the same instance of SAP • Next phase of implementation to begin in second half of 2016 Revenue Growth Growth in excess of GDP • Key end market declines and FX rate headwinds overwhelm continued success in marketplace and operational improvements Lean Market leader for lead time and on time delivery Market leader for innovative solution responsiveness • Model Value Stream results are meeting expectations

 
Upcoming Calendar Events • Upcoming Industrial Conferences include: • KeyBank 2016 Industrial, Automotive and Transportation Conference, Boston, MA, May 31, 2016-June 2, 2016 • Citi 2016 Small & Mid Cap Conference, New York, NY, June 9th and 10th 2016 Investor Relations Contact Information: Christian Storch Chief Financial Officer [email protected] 781-917-0541 9

 
Discussion of Non-GAAP Measures *As used in this release and the accompanying slides posted on the Company's website, non-GAAP diluted earnings per share, non-GAAP income from operations and non-GAAP net income are each calculated using either net income or income from operations that excludes acquisition related costs, restructuring costs, and other income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP diluted earnings per share is calculated by dividing non-GAAP net income by GAAP weighted average shares outstanding (diluted). Non-GAAP free cash flow is calculated by deducting purchases of property, plant and equipment from net cash flows from operating activities. Non-GAAP operating working capital is calculated by deducting accounts payable from net trade receivables plus inventories. Altra believes that the presentation of non-GAAP net income, non-GAAP income from operations, non- GAAP diluted earnings per share, non-GAAP free cash flow and non-GAAP operating working capital provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. 10

 
Appendix Non-GAAP Measures * 11 Non-GAAP Net Income (amounts in millions) Q1 2016 Q1 2015 Reported Net Income $8.8 $9.4 Restructuring Costs 1.6 1.8 Acquisition related expenses - 0.7 Tax impact of above adjustments (0.5) (1) (0.8) (2) Non-GAAP net income 9.9 11.1 Non-GAAP diluted earnings per share $0.38 $0.42 (1) tax impact is calculated by multiplying the estimated effective tax rate, 29.9% by the above items (2) tax impact is calculated by multiplying the estimated effective tax rate, 30.5% by the above items Non-GAAP Operating Income (amounts in millions) Q1 2016 Q1 2015 Reported Income from Operations $15.0 $15.7 Restructuring Costs 1.6 1.8 Acquisition related expenses - 0.7 Non-GAAP income from operations $16.5 $18.1 Operating Working Capital (amounts in millions) Q1 2016 Q1 2015 Accounts Receivable $103.9 $94.7 Inventories 119.4 121.2 Accounts Pa able (37.3) (40.3) Operating Working Capital $186.0 $175.6 Free Cash Flow (amounts in millions) Q1 2016 Q1 2015 Operating Cash Flow $6.1 $12.8 Le s Capex (5.7) (7.7) Free Cash Flow $0.4 $5.0

 

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