ALNT Allient Inc

• First quarter gross margin expanded 80 basis points to 32.3%
• Operating income increased 6% to $12.1 million with a margin of 8.2%, which was up 40 basis points
• Net income per diluted share increased 8% to $0.42; Adjusted net income per share was $0.58, up 5%
• Generated $9.2 million of cash from operations, more than double last year’s first quarter

Allient Inc. (Nasdaq: ALNT) (“Allient” or the “Company”), a global designer and manufacturer of precision and specialty Motion, Controls and Power products and solutions for targeted industries and applications, today reported financial results for its first quarter ended March 31, 2024. Results include the acquisitions of Sierramotion Inc. in September 2023 and SNC Manufacturing in January 2024.

Dick Warzala, Chairman and CEO, commented, “Our first quarter performance is a testament to the resilience of our diversified business portfolio across various regions. Moreover, our commitment to operational excellence and cost management has bolstered our margins and fueled bottom-line growth along with strong cash flow generation. Given improved lead times, customer order patterns are normalizing to a pre-pandemic environment and excess supply is being taken out of the channel, which has had an impact on order rates. Currently, demand from our end markets is mixed, reflecting the various states of supply normalization within each market, with some pockets of weakness in Europe.”

Mr. Warzala added, “With the introduction of our new strategic mantra, Simplify to Accelerate NOW, we are embarking on a journey to streamline our organizational structure and excising redundancy to optimize all of our operations. By consolidating our brands under the banners of Motion, Controls, and Power, we will ensure a unified approach, enhance clarity in the market, and more effectively serve our diverse global customers.

“In pursuit of sustained earnings growth and additional cash generation, our teams have identified key strategic actions for 2024. These encompass footprint rationalization, simplification of customer interactions and order processing, reduction of product development timelines, and the continued integration of AST, our lean toolkit, throughout Allient. The initiatives are being phased in with initial benefits to be realized in 2024 and continuing for the next 2+ years, supporting our margin expansion in line with our previously stated goal of 100 total basis point annual improvement via gross margin expansion and operating expense reduction. Guided by our mantra and fueled by strategic foresight, we are poised to seize new opportunities, drive operational excellence, and deliver value to our stakeholders."

First Quarter 2024 Results (Narrative compares with prior-year period unless otherwise noted)

Revenue increased 1%, or $1.2 million, to $146.7 million. The impact of foreign currency exchange rate fluctuations was favorable by $0.2 million. Sales to U.S. customers were 58% of total sales compared with 56% in the first quarter last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. See the attached table for a description of non-GAAP financial measures and reconciliation of revenue excluding foreign currency exchange rate fluctuations.

Sales in the Vehicle markets increased 12% due to higher demand within commercial automotive, partially offset by lower demand within agricultural vehicles, which primarily reflected softness in Europe, largely influenced by the Ukrainian conflict. Industrial markets sales were up 10% in the quarter, benefiting from recent acquisitions and higher end market demand within industrial automation, electronics and power quality solutions focused on the HVAC markets. Aerospace & Defense sales decreased 22%, largely due to program timing within the space industry. Medical market revenue was down 19% given softer medical mobility demand. Sales through the Distribution channel, which are a small component of total sales, were up 3%.

Gross margin was 32.3%, up 80 basis points from the prior-year period as higher volume, favorable mix and pricing more than offset elevated raw material costs.

Operating costs and expenses were 24.0% of revenue, up 30 basis points, largely due to higher engineering and business development expenses as a result of the recent acquisitions, partially offset by lower general and administrative costs. Operating income increased 6% to $12.1 million, or 8.2% of revenue, compared with $11.4 million, or 7.8% of revenue.

The effective income tax rate was 21.8% and 23.2% for the first quarter of 2024 and 2023, respectively. The lower effective tax rate in the first quarter of 2024 was primarily due to the realization of certain deferred income tax assets that had been reserved in prior years, as well as the impact of the mix of foreign and domestic income. The Company expects its income tax rate for the full year 2024 to be approximately 21% to 23%.

Net income increased 9% to $6.9 million, or $0.42 per diluted share, from $6.3 million, or $0.39 per diluted share, in the prior-year period. Adjusted net income, which excludes amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, increased 7% to $9.5 million, or $0.58 per diluted share, compared with adjusted net income of $8.9 million, or $0.55 per diluted share. See the attached tables for a description of non-GAAP financial measures and reconciliation table for Adjusted Net Income and Diluted Earnings per Share.

Earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, business development costs, and foreign currency gains/losses (“Adjusted EBITDA”) was $20.0 million, up $1.0 million or 5%. As a percentage of revenue, Adjusted EBITDA was 13.7%, up 60 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.

Balance Sheet and Cash Flow Review

Cash and cash equivalents were $31.5 million compared with $31.9 million at year-end 2023. Cash provided by operating activities increased to $9.2 million compared with $3.6 million in the prior year’s first quarter, which reflected higher net income and improved working capital.

Capital expenditures were $3.0 million for the quarter and largely focused on new customer projects. The Company expects 2024 capital expenditures to be in the range of $13 million to $17 million. The increase in cash used in investing activities in the first quarter of 2024 relates to $20 million in cash paid for the acquisition of SNC. Also included in investing activities for the first quarters of 2024 and 2023, was a deferred payment of $6.25 million for a prior acquisition.

On March 1, 2024, the Company extended the maturity of its existing $280 million revolving credit facility for five years to March 2029. Borrowings for the revolving facility will bear interest on a sliding-scale rate based on leverage of 1.25% to 2.50% over SOFR. In addition, the Company entered into a $150 million fixed-rate private shelf facility under which $50.0 million of borrowings occurred on March 21, 2024. The fix-rate debt will bear interest at 5.96% and will mature on March 21, 2031.

Total debt of $240.2 million was up $21.8 million from year-end 2023, largely reflecting the SNC acquisition. Debt, net of cash, was $208.7 million, or 43.9% of net debt to capitalization. The Company’s leverage ratio, as defined in its credit agreement, was 2.89x at quarter-end.

Orders and Backlog Summary ($ in thousands)

 

 

Q1 2024

 

 

 

Q4 2023

 

 

 

Q3 2023

 

 

 

Q2 2023

 

 

 

Q1 2023

Orders

$

122,127

 

$

105,162

 

$

154,908

 

$

137,008

 

$

123,198

Backlog

$

258,130

 

$

276,093

 

$

309,636

 

$

298,695

 

$

308,635

First quarter orders increased 16% sequentially, due to recent acquisitions along with higher bookings for industrial automation and power quality projects, and the ramp of new commercial automotive programs. Foreign currency translation had a favorable $0.3 million impact on first quarter orders compared with the prior-year period.

The sequential decline in backlog reflects the continued improvements within the supply chain, which has enabled the reduction of long-lead times for industrial market projects. The time to convert the majority of the backlog to sales is approximately three to nine months.

Conference Call and Webcast

The Company will host a conference call and webcast on Thursday, May 9, 2024 at 10:00 am ET. During the conference call, management will review the financial and operating results and discuss Allient’s corporate strategy and outlook. A question and answer session will follow.

To listen to the live call, dial (201) 389-0920. In addition, the webcast and slide presentation may be found at: www.allient.com/investors.

A telephonic replay will be available from 2:00 pm ET on the day of the call through Thursday, May 16, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13745675 or access the webcast replay via the Company’s website. A transcript will also be posted to the website once available.

About Allient Inc.

Allient (Nasdaq: ALNT) is a global engineering and manufacturing enterprise that develops solutions to drive the future of market-moving industries, including medical, life sciences, aerospace and defense, industrial automation, robotics, semi-conductor, transportation, agriculture, construction and facility infrastructure. A family of globally responsible companies, Allient takes a One-Team approach to “Connect What Matters” and provides the most robust, reliable, and high-value products and systems by utilizing its core Motion, Controls, and Power technologies and platforms.

Headquartered in Buffalo, N.Y., Allient employs more than 2,600 team members around the world. To learn more, visit www.allient.com.

Safe Harbor Statement

The statements in this news release 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. Examples of forward-looking statements include, among others, statements the Company makes regarding expected operating results, anticipated levels of capital expenditures, the Company’s belief that it has sufficient liquidity to fund its business operations, and expectations with respect to the conversion of backlog to sales. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations and assumptions regarding the future of the Company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the impact of changes in income tax rates or policies, commercial activity and demand across our and our customers’ businesses, global supply chains, the prices of our securities and the achievement of our strategic objectives, the ability to attract and retain qualified personnel, the ability to successfully integrate an acquired business into our business model without substantial costs, delays, or problems, and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. 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.

FINANCIAL TABLES FOLLOW

ALLIENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited) 

 

 

 

For the three months ended

 

 

 

March 31,

 

 

 

2024

 

2023

 

Revenue

 

$

146,713

 

 

$

145,549

 

 

Cost of goods sold

 

 

99,336

 

 

 

99,715

 

 

Gross profit

 

 

47,377

 

 

 

45,834

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

Selling

 

 

6,298

 

 

 

6,032

 

 

General and administrative

 

 

14,440

 

 

 

14,820

 

 

Engineering and development

 

 

11,067

 

 

 

10,387

 

 

Business development

 

 

357

 

 

 

197

 

 

Amortization of intangible assets

 

 

3,115

 

 

 

3,009

 

 

Total operating costs and expenses

 

 

35,277

 

 

 

34,445

 

 

Operating income

 

 

12,100

 

 

 

11,389

 

 

Other expense, net:

 

 

 

 

 

 

 

Interest expense

 

 

3,388

 

 

 

2,983

 

 

Other (income) expense, net

 

 

(109

)

 

 

187

 

 

Total other expense, net

 

 

3,279

 

 

 

3,170

 

 

Income before income taxes

 

 

8,821

 

 

 

8,219

 

 

Income tax provision

 

 

(1,919

)

 

 

(1,904

)

 

Net income

 

$

6,902

 

 

$

6,315

 

 

Basic earnings per share:

 

 

 

 

 

 

 

Earnings per share

 

$

0.42

 

 

$

0.40

 

 

Basic weighted average common shares

 

 

16,394

 

 

 

15,872

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

Earnings per share

 

$

0.42

 

 

$

0.39

 

 

Diluted weighted average common shares

 

 

16,497

 

 

 

16,137

 

 

ALLIENT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

(Unaudited)

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2024

 

2023

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

31,514

 

 

$

31,901

 

 

Trade receivables, net of provision for credit losses of $1,165 and $1,240 at March 31, 2024 and December 31, 2023, respectively

 

 

87,905

 

 

 

85,127

 

 

Inventories

 

 

124,909

 

 

 

117,686

 

 

Prepaid expenses and other assets

 

 

15,646

 

 

 

13,437

 

 

Total current assets

 

 

259,974

 

 

 

248,151

 

 

Property, plant, and equipment, net

 

 

70,349

 

 

 

67,463

 

 

Deferred income taxes

 

 

7,132

 

 

 

7,760

 

 

Intangible assets, net

 

 

110,236

 

 

 

111,373

 

 

Goodwill

 

 

133,159

 

 

 

131,338

 

 

Operating lease assets

 

 

22,911

 

 

 

24,032

 

 

Other long-term assets

 

 

7,838

 

 

 

7,425

 

 

Total Assets

 

$

611,599

 

 

$

597,542

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

38,961

 

 

$

39,129

 

 

Accrued liabilities

 

 

34,147

 

 

 

56,488

 

 

Total current liabilities

 

 

73,108

 

 

 

95,617

 

 

Long-term debt

 

 

240,176

 

 

 

218,402

 

 

Deferred income taxes

 

 

4,760

 

 

 

4,337

 

 

Pension and post-retirement obligations

 

 

2,781

 

 

 

2,679

 

 

Operating lease liabilities

 

 

18,478

 

 

 

19,532

 

 

Other long-term liabilities

 

 

5,166

 

 

 

5,400

 

 

Total liabilities

 

 

344,469

 

 

 

345,967

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Common stock, no par value, authorized 50,000 shares; 16,906 and 16,308 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

109,576

 

 

 

95,937

 

 

Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding

 

 

—

 

 

 

—

 

 

Retained earnings

 

 

172,215

 

 

 

165,813

 

 

Accumulated other comprehensive loss

 

 

(14,661

)

 

 

(10,175

)

 

Total stockholders’ equity

 

 

267,130

 

 

 

251,575

 

 

Total Liabilities and Stockholders’ Equity

 

$

611,599

 

 

$

597,542

 

 

ALLIENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

     

For the three months ended

 

March 31,

 

 

2024

 

2023

 

Cash Flows From Operating Activities:

 

Net income

$

6,902

 

$

6,315

 

 

Adjustments to reconcile net income to net cash provided by operating activities

 

Depreciation and amortization

 

6,385

 

 

6,145

 

 

Deferred income taxes

 

297

 

 

(290

)

 

Stock-based compensation expense

1,211

 

1,267

 

 

Debt issue cost amortization recorded in interest expense

156

 

75

 

 

Other

 

411

 

 

395

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

Trade receivables

 

(292

)

 

(10,587

)

 

Inventories

 

(119

)

 

1,340

 

 

Prepaid expenses and other assets

 

(1,236

)

 

(1,115

)

 

Accounts payable

 

(2,022

)

 

1,548

 

 

Accrued liabilities

 

(2,514

)

 

(1,507

)

 

Net cash provided by operating activities

 

9,179

 

 

3,586

 

     

Cash Flows From Investing Activities:

 

Consideration paid for acquisitions, net of cash acquired

 

(25,527

)

 

(6,250

)

 

Purchase of property and equipment

 

(2,973

)

 

(3,554

)

 

Net cash used in investing activities

 

(28,500

)

 

(9,804

)

     

Cash Flows From Financing Activities:

 

Proceeds from issuance of long-term debt

 

76,850

 

 

4,000

 

 

Principal payments of long-term debt and finance lease obligations

(53,230

)

(3,116

)

 

Payment of contingent consideration

(2,450

)

—

 

 

Payment of debt issuance costs

 

(1,532

)

 

—

 

 

Tax withholdings related to net share settlements of restricted stock

 

(100

)

 

(146

)

 

Net cash provided by financing activities

 

19,538

 

 

738

 

 

Effect of foreign exchange rate changes on cash

 

(604

)

 

11

 

 

Net decrease in cash and cash equivalents

 

(387

)

 

(5,469

)

 

Cash and cash equivalents at beginning of period

 

31,901

 

 

30,614

 

 

Cash and cash equivalents at end of period

$

31,514

 

$

25,145

 

   

ALLIENT INC. Reconciliation of Non-GAAP Financial Measures (In thousands) (Unaudited)

In addition to reporting revenue and net income, which are U.S. generally accepted accounting principle (“GAAP”) measures, the Company presents Revenue excluding foreign currency exchange rate impacts, and EBITDA and Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, stock-based compensation expense, business development costs, and foreign currency gains/losses), which are non-GAAP measures.

The Company believes that Revenue excluding foreign currency exchange rate impacts is a useful measure in analyzing organic sales results. The Company excludes the effect of currency translation from revenue for this measure because currency translation is not fully under management’s control, is subject to volatility and can obscure underlying business trends. The portion of revenue attributable to currency translation is calculated as the difference between the current period revenue and the current period revenue after applying foreign exchange rates from the prior period. Organic revenue is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions.

The Company believes EBITDA and Adjusted EBITDA are often a useful measure of a Company’s operating performance and are 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, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company’s core operating performance. EBITDA and Adjusted EBITDA do 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 GAAP.

The Company’s calculation of Revenue excluding foreign currency exchange impacts for the three months ended March 31, 2024 is as follows:

Three Months Ended

March 31, 2024

Revenue as reported

$

146,713

 

Foreign currency impact

 

(238

)

Revenue excluding foreign currency exchange impacts

$

146,475

 

The Company’s calculation of organic revenue for the three months ended March 31, 2024 is as follows:

Three Months Ended

March 31, 2024

Revenue increase year over year

0.8

%

Less: Impact of acquisitions and foreign currency

6.7

%

Organic revenue

(5.9

)%

The Company’s calculation of Adjusted EBITDA for the three months ended March 31, 2024 and 2023 is as follows:

Three Months Ended

March 31,

2024

 

2023

Net income

$

6,902

 

$

6,315

Interest expense

 

3,388

 

 

2,983

Provision for income tax

 

1,919

 

 

1,904

Depreciation and amortization

 

6,385

 

 

6,145

EBITDA

 

18,594

 

 

17,347

Stock-based compensation expense

 

1,211

 

 

1,267

Foreign currency (gain) loss

 

(120

)

 

214

Business development costs

 

357

 

 

197

Adjusted EBITDA

$

20,042

 

$

19,025

 

ALLIENT INC. Reconciliation of GAAP Net Income and Diluted Earnings per Share to Non-GAAP Adjusted Net Income and Adjusted Diluted Earnings per Share (In thousands, except per share data) (Unaudited)

The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three months ended March 31, 2024 and 2023 is as follows:

 

 

 

For the three months ended

 

 

March 31,

 

 

 

 

 

Per diluted

 

 

 

 

Per diluted

 

 

2024

 

share

 

2023

 

share

Net income as reported

 

$

6,902

 

 

$

0.42

 

 

$

6,315

 

$

0.39

Non-GAAP adjustments, net of tax (1)

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets – net

 

 

2,463

 

 

 

0.15

 

 

 

2,305

 

 

0.14

Foreign currency (gain) loss – net

 

 

(92

)

 

 

(0.01

)

 

 

164

 

 

0.01

Business development costs – net

 

 

273

 

 

 

0.02

 

 

 

151

 

 

0.01

Non-GAAP adjusted net income and adjusted diluted earnings per share

 

$

9,546

 

 

$

0.58

 

 

$

8,935

 

$

0.55

 

Weighted average diluted shares outstanding

 

 

 

 

 

16,497

 

 

 

 

 

 

16,137

____________________________

(1) Applies a blended federal, state, and foreign tax rate of 23% applicable to the non-GAAP adjustments.

Adjusted net income and diluted EPS are defined as net income as reported, adjusted for certain items, including amortization of intangible assets and unusual non-recurring items. Adjusted net income and diluted EPS are not a measure determined in accordance with GAAP in the United States, and may not be comparable to the measure as used by other companies. Nevertheless, the Company believes that providing non-GAAP information, such as adjusted net income and diluted EPS are important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current year’s net income and diluted EPS to the historical periods’ net income and diluted EPS.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508112647/en/

Investor Contacts: Deborah K. Pawlowski / Craig P. Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832 dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com