- Second quarter revenue was $136.0 million with a gross margin
of 29.9% and net income of $1.2 million
- Orders of $137.4 million resulted in a book-to-bill ratio of
1.0x and a backlog of $259.0 million
- Generated $17.4 million of cash from operations
year-to-date
- Simplify to Accelerate NOW efforts identified $5 million in
annualized cost reductions that were implemented in the second
quarter
- Additional cost reductions expected to be implemented in the
second half of 2024 are expected to result in an additional $5
million in annualized savings
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 second quarter ended June 30, 2024. Results include the
acquisitions of Sierramotion Inc. in September 2023 and SNC
Manufacturing in January 2024. The Company also announced that it
has advanced its Simplify to Accelerate NOW plans to realign its
manufacturing footprint and streamline the organization to enhance
operational efficiency and improve earnings power.
Dick Warzala, Chairman and CEO, commented, “Despite strong
efforts from our team, we saw a significant demand shift during the
month of June, with a notable decline in the Industrial market
related to automation and the recreational industry combined with
lesser declines in other served markets. Lower than anticipated
revenue combined with inventory reserves related to a customer
bankruptcy and current gross margin dilution as expected from our
most recent acquisition had a measurable impact on earnings in the
second quarter.
“Further, the market conditions we have seen are expected to
persist through the second half of 2024 resulting in an annualized
revenue run rate level below $500 million over the next several
quarters. The run rate reduction is largely due to significant
inventory rebalancing at some of our larger customers surfacing as
the supply chain has returned to more normal conditions. While the
full year results will exceed the projected third and fourth
quarter annual run rate, we do expect customer inventory
adjustments will be substantially complete in early 2025 with a
return to normal run rates in mid-2025. As a result, our Simplify
to Accelerate NOW plan has greater importance and we are taking
additional significant steps to align the business with market
conditions while continuing to execute programs that we expect will
drive our future growth. Despite the vagaries of near-term global
market conditions and the challenges our customers are facing, we
remain confident in our long-term strategy and the underlying
strength of our value proposition.”
Simplify to Accelerate NOW Savings
The expected annual savings from the initial manufacturing
consolidation and streamlining efforts implemented in the second
quarter are approximately $5 million and will begin to be realized
in the second half of 2024. Restructuring and related charges of
approximately $1.5 million were recognized in the second quarter of
2024. The charges are primarily cash and are related mostly to
severance costs.
A primary emphasis of the restructuring includes the transfer of
certain production activities from various U.S. operations to the
Company’s existing lower cost facilities in Mexico. In addition,
the Company has implemented reductions to its workforce in many
operations throughout the world; to reflect the reduction in sales
it is forecasting for the remainder of 2024.
Mr. Warzala added, “These actions to realign operations and
rationalize production are elements of our overall strategy to
refine our organizational structure, eliminate redundancies and
optimize our operations. As we simplify our enterprise, we believe
we can better serve our customers and strengthen our long-term
competitiveness by making Allient easier to do business with while
increasing our speed to market with new product innovations.
Importantly, we are also better positioning the Company for the
current macro environment and industrial headwinds. We expect to
advance additional efforts over the next six months to achieve the
$10 million in savings we initially targeted. In addition, we are
identifying further rationalization actions beyond the initial $10
million target that will ensure we emerge as a stronger, more
resilient enterprise with higher earnings power.”
Second Quarter 2024 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue decreased 7%, or $10.7 million, to $136.0 million. The
impact of foreign currency exchange rate fluctuations was
unfavorable by $0.7 million. Sales to U.S. customers were 52% of
total sales compared with 58% in the second 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 decreased 17% due to lower demand
in powersports and agriculture, partially offset by higher demand
within commercial automotive. Industrial markets sales were down 3%
in the quarter as strengthened power quality sales, largely to the
HVAC/data center market, as well as incremental sales from the
recent acquisition were more than offset by lower demand in
industrial automation, pumps, and material handling. Medical market
revenue was down 8% given broad end-market lower demand and
Aerospace & Defense sales decreased 3%, due to program timing
within the industry.
Gross margin was 29.9%, down 140 basis points from the
prior-year period, which reflects lower volume, expected margin
dilution from the recent acquisition, approximately $1.2 million in
non-cash inventory reserves, and unfavorable mix.
Operating costs and expenses were 26.3% of revenue, up 320 basis
points, of which 110 basis points was attributable to restructuring
and business realignment costs of $1.5 million. Also impacting the
increase in operating costs was higher engineering expenses due to
the recent acquisitions. As a result, operating income was $4.9
million, or 3.6% of revenue, compared with $12.0 million, or 8.2%
of revenue.
The effective income tax rate was 20.6% and 23.9% for the second
quarter of 2024 and 2023, respectively. The lower effective tax
rate was primarily due to the realization of certain deferred
income tax assets. The Company expects its income tax rate for the
full year 2024 to be approximately 21% to 23%.
Net income was $1.2 million, or $0.07 per diluted share,
compared with $6.8 million, or $0.42 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, was $4.9 million, or $0.29 per
diluted share, compared with $9.5 million or $0.58 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 $13.9
million, or 10.2% of revenue, compared with $20.4 million, or 13.9%
of revenue. 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 $31.3 million compared with $31.9
million at year-end 2023. Cash provided by operating activities was
$17.4 million year-to-date, up 2%.
Capital expenditures were $5.3 million for the first six months
of 2024 and largely focused on new customer projects. The Company
has lowered its expected 2024 capital expenditures to be in the
range of $11 million to $13 million from its previous expectations
of $13 million to $17 million.
Total debt of $236.9 million was down $3.3 million from the
sequential first quarter. The increase in debt from year-end 2023
reflected the SNC acquisition. Debt, net of cash, was $205.6
million, or 43.6% of net debt to capitalization. The Company’s
leverage ratio, as defined in its credit agreement, was 3.29x at
quarter-end.
Orders and Backlog Summary ($ in thousands)
Q2
2024
Q1
2024
Q4
2023
Q3
2023
Q2
2023
Orders
$
137,373
$
122,127
$
105,162
$
154,908
$
137,008
Backlog
$
259,002
$
258,130
$
276,093
$
309,636
$
298,695
Second quarter orders increased 12% sequentially, due to the
recent acquisition, higher bookings for power quality projects, and
the ramp up of commercial automotive programs. Foreign currency
translation had an unfavorable $0.8 million impact on second
quarter orders compared with the prior-year period.
The year-over-year decline in backlog reflects the continued
improvements within the supply chain, which has enabled the
reduction of long-lead times for industrial market projects.
Sequentially, backlog was up marginally given the solid order rate
in the second quarter. 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,
August 8, 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:
allient.com/investors.
A telephonic replay will be available from 2:00 pm ET on the day
of the call through August 15, 2024. To listen to the archived
call, dial (412) 317-6671 and enter replay pin number 13746994 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 2,500
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 savings from restructuring and simplifying
actions, the cost of implementing such actions, operating results,
preliminary financial results, expectations for the level of sales
for the next several quarters, 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
For the six months
ended
June 30,
June 30,
2024
2023
2024
2023
Revenue
$
136,032
$
146,769
$
282,745
$
292,318
Cost of goods sold
95,356
100,792
194,692
200,507
Gross profit
40,676
45,977
88,053
91,811
Operating costs and expenses:
Selling
6,662
6,301
12,960
12,333
General and administrative
14,142
14,162
28,582
28,982
Engineering and development
10,293
9,952
21,360
20,339
Business development
1,569
400
1,926
597
Amortization of intangible assets
3,131
3,142
6,246
6,151
Total operating costs and expenses
35,797
33,957
71,074
68,402
Operating income
4,879
12,020
16,979
23,409
Other expense, net:
Interest expense
3,384
3,162
6,772
6,145
Other expense (income), net
46
(42
)
(63
)
145
Total other expense, net
3,430
3,120
6,709
6,290
Income before income taxes
1,449
8,900
10,270
17,119
Income tax provision
(299
)
(2,131
)
(2,218
)
(4,035
)
Net income
$
1,150
$
6,769
$
8,052
$
13,084
Basic earnings per share:
Earnings per share
$
0.07
$
0.42
$
0.49
$
0.82
Basic weighted average common shares
16,567
15,969
16,480
15,921
Diluted earnings per share:
Earnings per share
$
0.07
$
0.42
$
0.49
$
0.81
Diluted weighted average common shares
16,583
16,219
16,540
16,178
ALLIENT INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
(Unaudited)
June 30,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
31,292
$
31,901
Trade receivables, net of provision for
credit losses of $1,121 and $1,240 at June 30, 2024 and December
31, 2023, respectively
82,400
85,127
Inventories
121,653
117,686
Prepaid expenses and other assets
14,087
13,437
Total current assets
249,432
248,151
Property, plant, and equipment, net
69,598
67,463
Deferred income taxes
7,205
7,760
Intangible assets, net
107,093
111,373
Goodwill
132,914
131,338
Operating lease assets
21,798
24,032
Other long-term assets
7,726
7,425
Total Assets
$
595,766
$
597,542
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
32,883
$
39,129
Accrued liabilities
31,125
56,488
Total current liabilities
64,008
95,617
Long-term debt
236,908
218,402
Deferred income taxes
4,462
4,337
Pension and post-retirement
obligations
2,752
2,679
Operating lease liabilities
17,457
19,532
Other long-term liabilities
4,464
5,400
Total liabilities
330,051
345,967
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 16,841 and 16,308 shares issued and outstanding at
June 30, 2024 and December 31, 2023, respectively
109,203
95,937
Preferred stock, par value $1.00 per
share, authorized 5,000 shares; no shares issued or outstanding
—
—
Retained earnings
172,862
165,813
Accumulated other comprehensive loss
(16,350
)
(10,175
)
Total stockholders’ equity
265,715
251,575
Total Liabilities and Stockholders’
Equity
$
595,766
$
597,542
ALLIENT INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the six months
ended
June 30,
2024
2023
Cash Flows From Operating
Activities:
Net income
$
8,052
$
13,084
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
12,801
12,535
Deferred income taxes
18
(14)
Stock-based compensation expense
2,284
2,811
Debt issue cost amortization recorded in
interest expense
261
150
Other
2,368
685
Changes in operating assets and
liabilities, net of acquisitions:
Trade receivables
5,137
(11,151)
Inventories
941
832
Prepaid expenses and other assets
(461)
287
Accounts payable
(7,884)
2,822
Accrued liabilities
(6,140)
(4,768)
Net cash provided by operating
activities
17,377
17,273
Cash Flows From Investing
Activities:
Consideration paid for acquisitions, net
of cash acquired
(25,231)
(6,250)
Purchase of property and equipment
(5,328)
(6,118)
Net cash used in investing activities
(30,559)
(12,368)
Cash Flows From Financing
Activities:
Proceeds from issuance of long-term
debt
76,898
4,000
Principal payments of long-term debt and
finance lease obligations
(56,230)
(12,567)
Payment of contingent consideration
(2,450)
—
Payment of debt issuance costs
(2,329)
—
Dividends paid to stockholders
(1,008)
(872)
Tax withholdings related to net share
settlements of restricted stock
(1,567)
(1,653)
Net cash provided by (used in) financing
activities
13,314
(11,092)
Effect of foreign exchange rate changes on
cash
(741)
(307)
Net decrease in cash and cash
equivalents
(609)
(6,494)
Cash and cash equivalents at beginning of
period
31,901
30,614
Cash and cash equivalents at end of
period
$
31,292
$
24,120
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. Business
development costs include acquisition and integration related costs
as well as restructuring and business realignment costs.
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 and six months ended June 30, 2024
is as follows:
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2024
Revenue as reported
$
136,032
$
282,745
Foreign currency impact
723
485
Revenue excluding foreign currency
exchange impacts
$
136,755
$
283,230
The Company’s calculation of organic revenue for the three and
six months ended June 30, 2024 is as follows:
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2024
Revenue decrease year over year
(7.3
%)
(3.3
%)
Less: Impact of acquisitions and foreign
currency
6.9
%
6.8
%
Organic revenue
(14.2
%)
(10.1
%)
The Company’s calculation of Adjusted EBITDA for the three and
six months ended June 30, 2024 and 2023 is as follows:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net income
$
1,150
$
6,769
$
8,052
$
13,084
Interest expense
3,384
3,162
6,772
6,145
Provision for income tax
299
2,131
2,218
4,035
Depreciation and amortization
6,416
6,390
12,801
12,535
EBITDA
11,249
18,452
29,843
35,799
Stock-based compensation expense
1,073
1,544
2,284
2,811
Foreign currency loss (gain)
40
(15
)
(82
)
199
Acquisition and integration-related
costs
100
163
457
296
Restructuring and business realignment
costs
1,469
237
1,469
301
Adjusted EBITDA
$
13,931
$
20,381
$
33,971
$
39,406
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 and six months ended June
30, 2024 and 2023 is as follows:
Three Months Ended
June 30,
2024
Per diluted share
2023
Per diluted share
Net income as reported
$
1,150
$
0.07
$
6,769
$
0.42
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets -
net
2,475
0.15
2,407
0.14
Foreign currency gain/ loss - net
30
-
(11
)
-
Acquisition and integration-related costs
- net
77
-
124
0.01
Restructuring and business realignment
costs - net
1,125
0.07
182
0.01
Adjusted net income and adjusted diluted
EPS
$
4,857
$
0.29
$
9,471
$
0.58
Weighted average diluted shares
outstanding
16,583
16,219
Six Months Ended
June 30,
2024
Per diluted share
2023
Per diluted share
Net income as reported
$
8,052
$
0.49
$
13,084
$
0.81
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets -
net
4,938
0.30
4,712
0.29
Foreign currency gain/ loss - net
(62
)
-
152
0.01
Acquisition and integration-related costs
- net
350
0.02
227
0.01
Restructuring and business realignment
costs - net
1,125
0.06
230
0.02
Adjusted net income and adjusted diluted
EPS
$
14,403
$
0.87
$
18,405
$
1.14
Weighted average diluted shares
outstanding
16,540
16,178
(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/20240807749914/en/
Investor Contacts: Deborah K. Pawlowski / Craig P.
Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com
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