Allied Motion Technologies, Inc.

Good day, and welcome to the Allied Motion Technologies Second Quarter Fiscal Year 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, may I press star then one on your telephone keypad? To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Craig Mahalik of Investor Relations. Please go ahead.

Yeah, thank you and good morning, everyone. We certainly appreciate your time today as well as your interest in Allied Motion. Joining me on the call are Dick Wurzela, our Chairman, President, and CEO, and Mike Leach, our Chief Financial Officer. Dick and Mike are going to review our second quarter 2021 results and provide an update on the company's strategic progress and outlook, after which we'll open it up for Q&A. As part of today's Q&A, we do ask that you try to limit your questions to two or three in order to allow enough time for all participants. You can certainly go back into the queue for additional follow-ups. We should have a copy of the financial results that were released yesterday after the market closed. If not, you can find it on our website at alliedmotion.com. On the website, you'll also find slides that accompany today's discussion. If you're reviewing those slides, please turn to slide two for the safe harbor statement. As you are aware, we may make some forward-looking statements on this call during the formal discussion as well as during the Q&A. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. These risks and uncertainties and other factors are discussed in the earnings relief as well as other documents filed by the company with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. I want to point out as well that during today's call we'll discuss some non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We've provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings relief and slides. With that, please turn to slide three and I'll turn it over to Dick to begin. Dick?

Thank you, Craig. and welcome, everyone. Strong execution of our one allied strategy continued to drive solid operating performance around the rollout and ramping of new projects and solutions while we also leveraged the ongoing economic recovery. Total revenue grew 17 percent over last year's second quarter to 102 million, reflecting the recovery in our vehicle and industrial markets. Notably, we achieved double-digit organic growth of 12.4%. Our vehicle markets were up 82% year over year, which was largely driven by power sports, as well as growth in other end markets, such as commercial automotive and construction vehicles. The resurgence of our industrial market, which was up 20% over the prior year, has been broad-based with gains in material handling, automation, HVAC, electronics, and oil and gas projects as well. Revenue for medical has normalized as residual demand from the pandemic has mostly ended. Our A&D markets continue to be impacted by the pandemic, although on a sequential basis, we saw 15% growth. Overall, we are encouraged by improvements and increasing demand as demonstrated by our record level of orders and backlog in the quarter. Like many others, we have faced significant material and supply chain constraints, resulting in extended lead times and higher material cost. For example, sourcing components for electronics has been very tight, and we are strategically building inventory, if possible, given anticipated future demand. We believe our teams have done an excellent job managing demand and fulfilling orders to satisfy customer requirements to date. However, We expect these adverse market conditions to continue for the foreseeable future. The result of these efforts was reflected in our margin performance. On a sequential basis, gross margin was up 110 basis points to 30.7 percent. Operating margin was up 10 basis points, and adjusted EBITDA margin improved 40 basis points. As a result, net income increased 60 percent over the prior year to 4.6 million, or 32 cents per diluted share. We continued to generate strong cash from operations of 10.9 million during the quarter. This enabled us to reduce total debt by 7.6 million and further improve our bank leverage ratio to 2.44 times. During the quarter, we were among those that were the subject of a cybersecurity breach. We discovered the issue fairly early and were able to immediately implement our risk management playbook, which entails bringing in forensic experts in the field. We were able to contain the issue, and we were able to get operations back up and running without a material impact or results for the quarter. We have also since implemented additional security measures, thus further safeguarding our systems. Unfortunately, we believe cybersecurity is a national issue, and all are at risk. We were pleased with our ability to act quickly and decisively to contain the breach and move forward. Moving on, we are excited about the progress we are making and are increasingly encouraged by our potential over the longer term. With record backlog and increasing order trends, we are confident in our initiatives and the strength of our business model. Importantly, we are making the investments necessary to execute on our one allied strategy and strategic areas of excellence to drive further growth, enable scalability, and improve our earnings power. Our advanced engineering skills that create integrated solutions for our customers continue to be a key differentiator for us. The breadth of our product offering and our ability to provide an optimized and complete controlled motion solution sets us apart from our competition, enabling us to take market share and gain more business from current customers. With that, let me turn it over to Mike for a more in-depth review of the financials.