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Altra Industrial Motion Misses Q3 Expectations and Mutes Guidance; Shares Fall 3.9%

Altra Industrial Motion (AIMC) shares fell 3.9% on October 22 to close at $54.76 after the manufacturer of motion control, power transmission, and automation products reported worse-than-expected Q3 results. The company also reduced its outlook for FY2021 below Street expectations.

The miss was attributable to supply chain constraints, inflation pressures, and labor shortages.

Adjusted earnings of $0.80 per share declined 8% year-over-year and fell a cent short of analysts’ expectations of $0.81 per share. The company reported earnings of $0.87 per share in the prior-year period.  (See AIMC stock charts on TipRanks)

Meanwhile, revenues grew 7.2% year-over-year to $469.3 million but fell marginally short of consensus estimates of $470.98 million.

The increase in revenues reflected a surge in organic sales, which increased 5.8%. The Transmission Technologies segment’s organic sales grew 16.0% year-over-year, whereas the Automation & Specialty segment’s organic sales declined 2.6%.

The company revealed the retirement of current CFO Christian Storch effective January 31, 2022. He will be succeeded by the current VP of Finance, Corporate Controller, and Treasurer, Todd Patriacca.

Further, last week, Altra announced the expansion of its Board of Directors to eight members, including seven independent members, with the appointment of La Vonda Williams.

AIMC Revises FY2021 Guidance Below Expectations

Based on the company’s anticipation of continuing supply chain challenges despite strong overall industrial demand and order rates, Altra Industrial Motion revised its outlook for FY2021.

The company now forecasts adjusted earnings in the range of $3.25 – $3.35 per share, while the consensus estimate is pegged at $3.51 per share. Adjusted earnings were previously expected to range between $3.30 and $3.46 per share.

Furthermore, revenues are forecast to be in the range of $1.88 – 1.9 billion, versus the consensus estimate of $1.91 billion, and lower than the previous guidance range of $1.89 – 1.92 billion.

Altra’s CEO Carl Christenson commented, “We ended the quarter with a book-to-bill ratio of 120% and built very strong backlog levels – approximately 150% of typical levels – setting us up for future top line growth once the supply chain and labor issues improve.  We are also very pleased with the margins as our pricing initiatives helped to offset the material, logistics and labor cost we experienced in the quarter.”

Following the quarterly results, Oppenheimer analyst Bryan Blair reiterated a Buy rating with a price target of $72 (31.5% upside potential).

Consensus among analysts is a Strong Buy based on 3 unanimous Buys. The average Altra Industrial Motion price target of $70.67 implies 29% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 100% Bullish on AIMC, compared to a sector average of 67%.

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