Altra Industrial Motion Corporation (NASDAQ:AIMC)

CAPS Rating: 3 out of 5

The Company is a global designer, producer and marketer of a mechanical power transmissions and motion control products serving customers in a group of industries, including energy, material handling, mining, transportation and turf and garden.


Player Avatar NetscribeInduGds (83.80) Submitted: 3/21/2007 8:39:36 AM : Outperform Start Price: $13.67 AIMC Score: +52.89

Altra Holdings is a designer, producer and marketer of a wide range of mechanical power transmission product which represents 50% of the sales and motion control products, serving diverse group of industries, viz, energy, general industrial, material handling, mining & transportation. Its product portfolio includes industrial clutches and brakes, enclosed gear drives, engineered bearing assemblies, linear components and other related products. It markets its products under various brand names, including Warner Electric having more than 33% market share, Boston Gear which has a 12% market share and these products are either incorporated into the products sold by original equipment manufacturers, sold to end users directly or through industrial distributors.
For fiscal 2006, revenues rose by 27% to $462.3 million reflecting strong distribution sales from after market and higher income from energy, primary metals & mining markets. Net income totaled $8.9 million, up from $2.5 million due to improved operating margins. While the company’s last quarterly results were slightly below expectations and management expects it to remain similar in Q1, 2007, but it believes demand within the distribution channel will improve midterm. Moreover the product mix and productivity improvements stemming from management's ABS cost savings system will support the 2007 earnings.
Company focuses on acquisitions that will enhance its global position, offer customized engineered products and strengthen its U.S. distribution channels. It recently announced a definitive agreement to acquire TB woods, manufacturer of electronic and mechanical power transmission products. The deal is expected to generate $6-8 million of cost savings, which will only improve the operating margins. Moreover the company has strong presence in cyclically strong markets; even the power transmission market is maturing for consolidation and it is actively pursuing opportunities for bolt-on acquisitions and product line expansion.
Company’s growth rates display a positive image as the revenue has grown by 27.56% much more than the industry growth rate of 18.29%. It believes it can achieve mid-to-high single-digit revenue growth on a long-term basis, bolstered by market share gains, platform expansion of motion control products and new product introductions. Cross selling opportunities with recent acquisitions will also contribute meaningfully to its growth profile.

Featured Broker Partners