Allied Motion Reports Earnings Per Share Growth of 88% on Record Revenue of $80 Million in Second Quarter 2018

Motion Technologies Inc. (Nasdaq:AMOT) (“Company”), a
designer and manufacturer that sells precision motion control products
and solutions to the global market, today reported financial results for
the second quarter ended June 30, 2018.

“We delivered another record revenue quarter that validates the strength
of our position with our customers and the market leading custom
solutions and quality products we offer,” commented Dick Warzala,
Chairman and CEO of Allied Motion. “We remain steadfast in the execution
of our growth strategy and expanding our value proposition to customers,
while also driving an operational culture focused on improving quality,
delivery, innovation, and cost.”

Second Quarter 2018 Results (Narrative compares with
prior-year period unless otherwise noted)

Record revenue of $80.0 million was up $19.6 million, or 33%. The
increase was due to growth across all of the Company’s served markets
and reflects significantly higher sales to the Vehicle and
Industrial/Electronics markets. Excluding the favorable effects of
foreign currency exchange (FX), second quarter revenue was $77.7
million, up 29%. Sales to U.S. customers were 52% of total sales for the
quarter compared with 54% for the same period last year, with the
balance of sales to customers primarily in Europe, Canada and Asia.

Gross profit increased $5.6 million, or 32%, to $23.5 million, while
gross margin decreased 20 basis points to 29.4%. The gross margin change
reflects a lower margin contribution from the Maval acquisition.

Operating costs and expenses were up $3.4 million to $17.3 million;
however, as a percent of revenue, operating costs were down 140 basis
points to 21.6%. General and administrative expense as a percent of
sales increased 50 basis points to 10.4% primarily due to higher
incentive compensation and additional personnel to support the Company’s
growth. Engineering and development (“E&D”) was $5.0 million, up 13%,
though as a percent of revenue, E&D decreased 110 basis points to 6.2%.

As a result of the gross profit increase and cost discipline, operating
income increased 56%, or $2.2 million, to $6.2 million, and operating
margin expanded 120 basis points to 7.8%.

Interest expense for the period was unchanged at $0.6 million.

The effective tax rate decreased to 27.4% from 31.8%, largely due to
lower U.S. federal tax rates from the December 2017 Tax Cuts and Jobs
Act. The Company anticipates its effective tax rate for 2018 to range
from 24% to 26%.

Net income nearly doubled to $4.2 million, or $0.45 per diluted share,
from $2.2 million, or 0.24 per diluted share.

Earnings before interest, taxes, depreciation, amortization, stock
compensation expense and business development costs (“Adjusted EBITDA”)
was $10.0 million, up $3.1 million or 45%. As a percent of sales,
Adjusted EBITDA was 12.5%, an increase of 110 basis points. The Company
believes that, when used in conjunction with measures prepared in
accordance with U.S. generally accepted accounting principles, Adjusted
EBITDA, which is a non-GAAP measure, helps in the understanding of its
operating performance. See the attached table for a description of
non-GAAP financial measures and reconciliation table for Adjusted EBITDA.

Year-to-Date (YTD) 2018 Results (Narrative compares with
prior-year period unless otherwise noted)

Strong demand from the all the Company’s served markets resulted in
record revenue of $156.6 million, up $34.9 million, or 29%. Sales to
U.S. customers were 52% of total sales compared with 54% for the same
period last year, with the balance of sales to customers primarily in
Europe, Canada and Asia. The impact of FX fluctuations was favorable
$6.3 million for the year-to-date period.

Gross profit increased 29% to $46.1 million, and gross margin was up 20
basis points to 29.4% largely due to more favorable mix and higher

Operating costs and expenses as a percent of revenue were 21.4%, down
100 basis points. As a result, operating income for the period increased
$4.3 million, or 51%, while operating margin expanded 120 basis points
to 8.1%.

The effective tax rate for the first half of 2018 was down to 26.8%
compared with 31.4% for the same period last year, due primarily to U.S.
tax reform. Net income was up $3.5 million, or 73%, to $8.4 million.

Adjusted EBITDA for the period was $19.8 million, up 39%. As a percent
of sales, Adjusted EBITDA was 12.6% compared with 11.7%.

Balance Sheet and Cash Flow Review

Cash and cash equivalents were $15.3 million compared with $15.6 million
at the end of 2017. Total debt was $64.9 million at the end of the
second quarter, up $11.8 million from year-end 2017 largely due to the
Maval acquisition in the first quarter of 2018. Debt, net of cash, was
$49.6 million, or 34.2% of net debt to capitalization, up from 30.1% at
the end of 2017.

Capital expenditures of $5.6 million included investments for
productivity improvement and growth initiatives. The Company continues
to expect to invest $13 million to $16 million in capital expenditures
during fiscal 2018. The higher level of capital expenditures when
compared with 2017 reflects success based expenditures in support of the
significant announced project wins.

Orders and Backlog Summary ($ in thousands)

Q2 2018

Q1 2018

Q4 2017

Q3 2017

Q2 2017

The year-over-year increase in orders and backlog reflect strength
across all the Company’s served markets. The impact on orders from FX
fluctuations was favorable $2.5 million year-over-year.

Backlog was up 30% over the prior-year period and increased nearly 4%
since first quarter 2018. The time to convert the majority of backlog to
sales is approximately three to six months. Not included
in the backlog are previously announced new business awards of $225.0
million that are expected to begin shipping in 2019.

Conference Call and Webcast

The Company will host a conference call and webcast on Thursday, August
2, 2018 at 10:00 am ET. During the conference call, management will
review the financial and operating results and discuss Allied Motion’s
corporate strategy and outlook. A question and answer session will

To listen to the live call, participants can call (201) 689-8263. In
addition, the call will be webcast live and may be found at:

A telephonic replay will be available from 1:00 pm ET on the day of the
call through Thursday, August 9, 2018. To listen to the archived call,
dial (412) 317-6671 and enter replay pin number 13680956 or access the
webcast replay via the Company’s website. A transcript will also be
posted to the website once available.

About Allied Motion Technologies Inc.

Allied Motion (Nasdaq: AMOT) designs, manufactures and sells precision
and specialty motion control components and systems used in a broad
range of industries within our major served markets, which include
Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. The
Company is headquartered in Amherst, NY, has global operations and sells
into markets across the United States, Canada, South America, Europe and

Allied Motion is focused on motion control applications and is known
worldwide for its expertise in electro-magnetic, mechanical and
electronic motion technology. Its products include brush and brushless
DC motors, brushless servo and torque motors, coreless DC motors,
integrated brushless motor-drives, gear motors, gearing, modular digital
servo drives, motion controllers, incremental and absolute optical
encoders, and other associated motion control-related products.

The Company’s growth strategy is focused on becoming the motion solution
leader in its selected target markets by leveraging its “technology/know
how” to develop integrated precision motion solutions that utilize
multiple Allied Motion technologies to “change the game” and create
higher value solutions for its customers. The Company routinely posts
news and other important information on its website at

Safe Harbor Statement

The statements in this news release and in the Company’s August 2, 2018
conference call that relate to future plans, events or performance are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
include, without limitation, any statement that may predict, forecast,
indicate, or imply future results, performance, or achievements, and may
contain the word “believe,” “anticipate,” “expect,” “project,” “intend,”
“will continue,” “will likely result,” “should” or words or phrases of
similar meaning. Forward-looking statements involve known and unknown
risks and uncertainties that may cause actual results to differ
materially from the expected results described in the forward-looking
statements. The risks and uncertainties include those associated with:
the domestic and foreign general business and economic conditions in the
markets we serve, including political and currency risks and adverse
changes in local legal and regulatory environments; the introduction of
new technologies and the impact of competitive products; the ability to
protect the Company’s intellectual property; our ability to sustain,
manage or forecast its growth and product acceptance to accurately align
capacity with demand; the continued success of our customers and the
ability to realize the full amounts reflected in our order backlog as
revenue; the loss of significant customers or the enforceability of the
Company’s contracts in connection with a merger, acquisition,
disposition, bankruptcy, or otherwise; our ability to meet the technical
specifications of our customers; the performance of subcontractors or
suppliers and the continued availability of parts and components;
changes in government regulations; the availability of financing and our
access to capital markets, borrowings, or financial transactions to
hedge certain risks; the Company’s ability to realize the annual
interest expense savings from its debt refinancing; the ability to
attract and retain qualified personnel who can design new applications
and products for the motion industry; the ability to implement our
corporate strategies designed for growth and improvement in profits
including to identify and consummate favorable acquisitions to support
external growth and the development of new technologies; the ability to
successfully integrate an acquired business into our business model
without substantial costs, delays, or problems, including the ability to
carve out, relocate and separate the Maval OE business; our ability to
control costs, including the establishment and operation of low cost
region manufacturing and component sourcing capabilities; and other
risks and uncertainties detailed from time to time in the Company’s SEC
filings. Actual results, events and performance may differ materially.
Readers are cautioned not to place undue reliance on these
forward-looking statements as a prediction of actual results. Any
forward-looking statement speaks only as of the date on which it is
made. New risks and uncertainties arise over time, and it is not
possible for us to predict the occurrence of those matters or the manner
in which they may affect us. The Company has no obligation or intent to
release publicly any revisions to any forward looking statements,
whether as a result of new information, future events, or otherwise.


Non-GAAP Financial Measures (In thousands) (Unaudited)

In addition to reporting net income, a U.S. generally accepted
accounting principle (“GAAP”) measure, the Company presents Adjusted
EBITDA (earnings before interest, income taxes, depreciation and
amortization, stock compensation expense, and business development
costs), which is a non-GAAP measure. The Company believes Adjusted
EBITDA is often a useful measure of a Company’s operating performance
and is a significant basis used by the Company’s management to evaluate
and compare the core operating performance of its business from period
to period by removing the impact of the capital structure (interest),
tangible and intangible asset base (depreciation and amortization),
taxes, stock-based compensation expense, business development costs
related to acquisitions, and other items that are not indicative of the
Company’s core operating performance. Adjusted EBITDA does not represent
and should not be considered as an alternative to net income, operating
income, net cash provided by operating activities or any other measure
for determining operating performance or liquidity that is calculated in
accordance with generally accepted accounting principles.

The Company’s calculation of Adjusted EBITDA for the three and six
months ended June 30, 2018 and 2017 is as follows:

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