Allied Motion Technologies, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Allied Motion Technologies, Inc. second quarter fiscal year 2022 financial results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Craig Maholnick, Investor Relations. Please go ahead.

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 Rosella, our Chairman, President, and CEO, and Mike Leach, our Chief Financial Officer. Dick and Mike are going to review our second quarter 2022 results and provide an update on the company's strategic progress and outlook, after which we'll open it up for Q&A. You 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, along with the slides that accompany today's discussion. If you are 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 uncertainty 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 release as well as with 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 have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release 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. Our results continue to demonstrate the successful execution of our strategic growth initiatives. Second quarter revenue grew 21% to a record $122.7 million, with solid organic growth of 10%. Our industrial market saw strong demand, resulting in market growth of 40% over last year. We are benefiting from new solution offerings acquisitions, and continued economic recovery in broader and market verticals, including industrial automation, oil and gas, material handling, HVAC, and instrumentation. Recent acquisitions also contributed to the aerospace and defense market, which doubled from the year-ago period. While we were doing well in the top line, the highlight of the quarter was the improvement in our gross margin performance. which is consistent with our stated objectives as we achieved a record level of 32.4%. This was up 170 basis points from a year ago and a significant 320 basis points over the sequential first quarter. Our M&A activity is certainly helping, but we also equate this performance to our global teams that continue to manage multiple headwinds as supply chain issues and inflationary pressures on logistics, energy, material, and labor continued to persist. Even at the operating level, our performance was solid as we continued to invest for future growth and taking into account the costs associated with the acquisitions that have not yet been fully leveraged. We achieved adjusted net income per share of $0.36, up 9% from $0.33 per share in the prior year period. Our pipeline of opportunities remains high, and order levels continue to be strong, with a book to bill of 1.1 times in the second quarter, yielding a record backlog of nearly $324 million. I will talk more to orders and backlog later in the presentation. We had a busy quarter on the M&A front as we continued to augment our growth and profitability strategy. Turn to slide four. We highlight the three acquisitions we completed in the quarter. Located in Camarillo, California, ThinGap expands our precision motor capabilities by providing industry-leading high-performance, zero-cogging, slotless motors for use in applications in aerospace, defense, and medical that require precise motion in a compact, high-torque-to-volume package. We also see the potential to advance our total solution capability in the robotics, semiconductor, and instrumentation markets. Second, we acquired FPH Group with locations in Ontario, Canada, and Michigan. FPH brings technically advanced, reliable, and cost-effective electrical drive systems and lightweighting technologies for existing and future ground-based vehicles in the defense industry. FVH has a proven relationship with leading defense prime contractors and adds critical manufacturing licenses and certifications, which we believe we can leverage to drive deeper penetration within defense applications. Lastly, we acquired Airex out of Summersworth, New Hampshire, a company with over 70 years of history providing high-precision electromagnetic solutions including linear and rotary motor technology for aerospace and defense, life sciences, semiconductor, and other industrial applications. Their patented winding technologies combined with robotic manufacturing assures best-in-class linear motors as they provide the highest linear force density in the industry and have been selected and utilized in our own LAO solution offerings for many years. We'd like to thank certainly all the new employees to Allied and welcome them to the Allied family. In reviewing the six acquisitions, some of the highlights is one, they add significant new engineering resources to our growing global engineering capabilities. They provide new technologies and position us with several market-leading products and solutions that expand and complement our current capabilities. They bring proven and established relationships and certifications to accelerate our expansion into important markets, including aerospace and defense, automation, robotics, life sciences, semiconductor, and medical. And fourth, they expand our offerings and lead us into more demanding applications. Thus, our broadening capabilities enhances our value proposition and our competitive positioning. Ultimately, Allied is better positioned to create higher value solutions for our target markets and our customers. In 2023, we expect the collective contribution of the six acquisitions to exceed $100 million in revenue, with gross margins in the high 30% range and EBITDA margins in the high teens range. The purchase price of all six acquisitions, including future payments, was approximately $160 million and was made up of approximately 70% in cash and a remainder in AMOT stock. Based on our cash flow projections, we expect to delever over time in a manner that aligns with and is consistent with our historical previous performance. We further believe the new acquisitions will provide Allied with significant new opportunities and we are focused on integrating each into the global Allied platform. By doing so, our intent is to maximize the opportunities and realize the full potential of these margin-enhancing businesses. While we have now provided additional color surrounding the six acquisitions, I will caution you that we will not be providing individual unit performance information in the future, as we will focus on leveraging the full one allied potential and opportunities. And with that, let me turn it over to Mike for a more in-depth review of the financials. Mike?