Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Allient Reports 34% Operating Income Growth on Revenue of $578.6 Million in 2023 By: Allient Inc. via Business Wire March 05, 2024 at 17:02 PM EST “Simplify to Accelerate” sets strategic imperatives for 2024: footprint rationalization and organizational simplification, improved customer interaction, margin expansion and cash generation to reduce debt 2023 results validate strategic efforts to drive growth, margin expansion and cash flow Revenue increased 15% to record $578.6 million with organic growth of 13% on a constant currency basis Achieved record gross margin of 31.7% in 2023, 40 basis point expansion year over year Net income per diluted share increased 36% to $1.48; Adjusted net income per share was $2.30, up 22% for the year Generated a record $45.0 million of cash from operations in 2023 and reduced debt balance by $17.1 million Fourth quarter 2023 demonstrated continued progress Revenue grew 8% with organic growth of 6% on a constant currency basis Gross margin expanded 40 basis points to 31.5% Fourth quarter net income per diluted share increased 13% to $0.26 per diluted share; Adjusted net income per diluted share improved $0.12 to $0.55 Subsequent to year-end, extended the maturity on the existing revolving credit facility 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 fourth quarter and full year ended December 31, 2023. Results include the Sierramotion Inc. acquisition, which was completed in September 2023. “With a backdrop of macro uncertainty and other challenges, the Allient team once again delivered on a number of successes during the past year,” commented Dick Warzala, Chairman and CEO. “We embarked on our next stage of growth with a refined strategy and new name while continuing to drive organic growth at more than double the industry and executing on key acquisitions. We added Sierramotion to advance our integrated motion solutions strategy and extend our reach into key target markets in 2023 and acquired SNC Manufacturing in early January 2024. SNC was our first tuck in acquisition for our Power technology pillar. Ultimately, our top-line growth combined with margin expansion translated into stronger earnings and a record level of cash generation enabling us to further strengthen our balance sheet.” Commenting on the near-term outlook, Mr. Warzala added, “We are intent upon creating stronger earnings momentum with our Simplify to Accelerate strategy. 2024 is the year to drive out redundant costs, realign the organization to consolidate like businesses, rationalize our footprint and ultimately simplify our operating structure. By rethinking how we operate, we believe we can accelerate our efforts to achieve top-tier financial performance. While some of the actions will take time to fully execute, there is a strong sense of urgency throughout the organization to deliver on our goals. The year will have its challenges given the changing dynamics of our backlog, which is right-sizing as supply chains improve and customer order patterns normalize; as well as the unknown impacts of the ongoing geopolitical disruptions. However, it also presents the opportunity to reduce our working capital requirements and strengthen cash flow. Finally, we are well situated as we realign the organization to support the significant opportunities that we are bidding on across our targeted verticals.” Allient’s “Simplify to Accelerate” strategy is centered on three high-level strategic initiatives: Realign and right-size the Company’s footprint to better align with its markets and customers. Initiatives are already underway and are expected to continue with earnest throughout 2024 and beyond. Reinforce lean manufacturing disciplines throughout the Company to accelerate margin expansion. Focus on working capital reduction to drive additional cash generation and de-lever the balance sheet. Fourth Quarter 2023 Results (Narrative compares with prior-year period unless otherwise noted) Revenue increased 8%, or $9.9 million, to $141.0 million and reflected strong Industrial market sales, which included shipping some long lead products that were in backlog, and improved demand within the Vehicle market. Excluding the favorable impact of foreign currency exchange rate fluctuations on revenue of $1.6 million, organic growth was approximately 6%. Sales to U.S. customers were 59% of total sales compared with 57% in the fourth 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. Industrial markets sales were up 23% in the quarter, benefiting from strong end market demand within industrial automation, vehicle handling, and power quality solutions focused on the oil & gas, and HVAC markets. Sales in the Vehicle markets increased 17% due to higher demand within commercial automotive and powersports, partially offset by lower demand within agricultural vehicles, which primarily reflected softness in Europe, largely influenced by the Ukrainian conflict. Aerospace & Defense sales decreased 19%, largely due to program timing within the defense and space industry. Medical market revenue was down 16%, as softer medical mobility demand more than offset a more normalized pre COVID-19 sales environment focused on surgical and instrumentation related end markets. Sales through the Distribution channel, which are a small component of total sales, were up 4%. Gross margin was 31.5%, up 40 basis points from the prior-year period as higher volume and favorable mix more than offset elevated raw material costs. Operating costs and expenses were 26.5% of revenue, up 170 basis points, of which 110 basis points was attributable to higher business development costs in the quarter due to an earnout for a prior acquisition, M&A activity, and rationalization efforts. Also contributing to the total expense increase was higher incentive compensation expense reflecting strong Company performance. As a result, operating income was $7.0 million, or 5.0% of revenue, compared with $8.2 million, or 6.2% of revenue. Net income increased 18% to $4.3 million, or $0.26 per diluted share, from $3.7 million, or $0.23 per 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 to $9.1 million, or $0.55 per diluted share, compared with adjusted net income of $6.9 million, or $0.43 per diluted share. Included in the fourth quarter’s results was a tax benefit of $0.4 million, which reflected realization of certain NOLs and R&D credits and incentives. 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 $16.9 million, up $0.3 million or 2%. As a percentage of revenue, Adjusted EBITDA was 12.0%, down 70 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. Full Year 2023 Results (Narrative compares with prior-year period unless otherwise noted) Revenue of $578.6 million increased $75.6 million, or 15%, reflecting strong demand in Industrial markets, higher sales within Aerospace & Defense and Vehicle markets, and incremental sales from acquisitions. Excluding the unfavorable impact of foreign currency exchange fluctuations on revenue of $0.3 million, organic growth was 13%. Sales to U.S. customers were 59% of total sales compared with 58% last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. Gross margin was 31.7%, up 40 basis points due to higher volume and mix. Operating costs and expenses as a percentage of revenue were 24.4%, down 60 basis points due to operating leverage partially offset by higher business development costs. As a result, operating income increased 34% to $42.3 million, or 7.3% of sales, compared with $31.7 million, or 6.3% of sales. Net income increased 39% to $24.1 million, or $1.48 per diluted share, compared with $17.4 million, or $1.09 per diluted share. The effective tax rate was 18.9% in 2023, which reflected the tax benefit from the fourth quarter. This compared with an effective tax rate of 26.6% during 2022. The Company expects its income tax rate for the full year 2024 to be approximately 21% to 23%. Excluding amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, adjusted net income increased 25% to $37.5 million, or $2.30 per diluted share, compared with $30.0 million, or $1.88 per diluted share, in 2022. Adjusted EBITDA increased 18% to $77.2 million from $65.5 million, and as a percentage of revenue was 13.3%, up 30 basis points. Balance Sheet and Cash Flow Review Cash and cash equivalents were $31.9 million compared with $30.6 million at year-end 2022. Cash provided by operating activities improved to a record $45.0 million for the year compared with $5.6 million in 2022. The increase reflected higher net income and stronger inventory turns. Capital expenditures were $11.6 million for 2023 and largely focused on new customer projects. The Company expects 2024 capital expenditures to be in the range of $16 million to $20 million. Total debt of $218.4 million was down $17.1 million from year-end 2022. Debt, net of cash, was $186.5 million, or 42.6% of net debt to capitalization. The Company’s leverage ratio, as defined in its credit agreement, was 2.8x at year-end. 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 has entered into a $150 million fixed-rate private shelf facility under which no note borrowings have occurred to date. Orders and Backlog Summary ($ in thousands) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Orders $ 105,162 $ 154,908 $ 137,008 $ 123,198 $ 145,564 Backlog $ 276,093 $ 309,636 $ 298,695 $ 308,635 $ 330,078 Foreign currency translation had a favorable $1.4 million impact on fourth 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. Given improved lead times, customer order patterns are normalizing to a pre-pandemic environment and excess supply is now being taken out of the channel, which does impact the current order rates. 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 Wednesday, March 6, 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 (412) 317-5185. 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 Wednesday, March 13, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10185196 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, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains; our inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, 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 year ended December 31, December 31, 2023 2022 2023 2022 Revenue $ 140,997 $ 131,076 $ 578,634 $ 502,988 Cost of goods sold 96,623 90,348 394,951 345,729 Gross profit 44,374 40,728 183,683 157,259 Operating costs and expenses: Selling 6,359 5,541 24,713 21,877 General and administrative 14,779 13,438 58,403 50,677 Engineering and development 10,624 9,682 41,665 38,561 Business development 2,484 855 4,275 3,319 Amortization of intangible assets 3,087 3,036 12,313 11,169 Total operating costs and expenses 37,333 32,552 141,369 125,603 Operating income 7,041 8,176 42,314 31,656 Other expense, net: Interest expense 3,074 2,792 12,383 7,692 Other expense, net 44 274 231 283 Total other expense, net 3,118 3,066 12,614 7,975 Income before income taxes 3,923 5,110 29,700 23,681 Income tax benefit (provision) 424 (1,414) (5,603) (6,292) Net income $ 4,347 $ 3,696 $ 24,097 $ 17,389 Basic earnings per share: Earnings per share $ 0.27 $ 0.24 $ 1.51 $ 1.13 Basic weighted average common shares 16,031 15,671 15,963 15,448 Diluted earnings per share: Earnings per share $ 0.26 $ 0.23 $ 1.48 $ 1.09 Diluted weighted average common shares 16,505 16,145 16,272 15,951 ALLIENT INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 31,901 $ 30,614 Trade receivables, net of provision for credit losses of $1,240 and $1,192 at December 31, 2023 and December 31, 2022, respectively 85,127 76,213 Inventories 117,686 117,108 Prepaid expenses and other assets 13,437 12,072 Total current assets 248,151 236,007 Property, plant, and equipment, net 67,463 68,640 Deferred income taxes 7,760 4,199 Intangible assets, net 111,373 119,075 Goodwill 131,338 126,366 Operating lease assets 24,032 22,807 Other long-term assets 7,425 11,253 Total Assets $ 597,542 $ 588,347 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 39,129 $ 39,467 Accrued liabilities 56,488 48,121 Total current liabilities 95,617 87,588 Long-term debt 218,402 235,454 Deferred income taxes 4,337 6,262 Pension and post-retirement obligations 2,679 3,009 Operating lease liabilities 19,532 18,795 Other long-term liabilities 5,400 21,774 Total liabilities 345,967 372,882 Stockholders’ Equity: Common stock, no par value, authorized 50,000 shares; 16,308 and 15,978 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 95,937 83,852 Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding — — Retained earnings 165,813 143,576 Accumulated other comprehensive loss (10,175) (11,963) Total stockholders’ equity 251,575 215,465 Total Liabilities and Stockholders’ Equity $ 597,542 $ 588,347 ALLIENT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the year ended December 31, December 31, 2023 2022 Cash Flows From Operating Activities: Net income $ 24,097 $ 17,389 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 25,068 25,486 Deferred income taxes (5,036) (3,722) Provision for excess and obsolete inventory 2,487 1,628 Stock-based compensation expense 5,477 5,073 Debt issue cost amortization recorded in interest expense 300 202 Other 1,424 393 Changes in operating assets and liabilities, net of acquisitions: Trade receivables (5,568) (22,202) Inventories (1,781) (27,800) Prepaid expenses and other assets 1,324 887 Accounts payable (935) 2,791 Accrued liabilities (1,819) 5,471 Net cash provided by operating activities 45,038 5,596 Cash Flows From Investing Activities: Consideration paid for acquisitions, net of cash acquired (11,004) (44,101) Purchase of property and equipment (11,603) (15,910) Net cash used in investing activities (22,607) (60,011) Cash Flows From Financing Activities: Proceeds from issuance of long-term debt 11,000 74,731 Principal payments of long-term debt and finance lease obligations (28,395) (7,585) Payment of debt issuance costs — (391) Dividends paid to stockholders (1,826) (1,536) Tax withholdings related to net share settlements of restricted stock (2,096) (1,614) Net cash (used in) provided by financing activities (21,317) 63,605 Effect of foreign exchange rate changes on cash 173 (1,039) Net increase in cash and cash equivalents 1,287 8,151 Cash and cash equivalents at beginning of period 30,614 22,463 Cash and cash equivalents at end of period $ 31,901 $ 30,614 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 growth 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 twelve months ended December 31, 2023 is as follows: Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2023 Revenue as reported $ 140,997 $ 578,634 Foreign currency impact (1,611) 258 Revenue excluding foreign currency exchange impacts $ 139,386 $ 578,892 The Company’s calculation of organic growth for the three and twelve months ended December 31, 2023 is as follows: Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2023 Revenue increase year over year 7.6% 15.0% Less: Impact of acquisitions and foreign currency 2.0% 1.9% Organic growth 5.6% 13.1% The Company’s calculation of Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022 is as follows: Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022 Net income $ 4,347 $ 3,696 $ 24,097 $ 17,389 Interest expense 3,074 2,792 12,383 7,692 (Benefit) provision for income tax (424) 1,414 5,603 6,292 Depreciation and amortization 6,112 6,264 25,068 25,486 EBITDA 13,109 14,166 67,151 56,859 Stock-based compensation expense 1,312 1,321 5,477 5,073 Foreign currency loss 24 244 281 298 Business development costs 2,484 855 4,275 3,319 Adjusted EBITDA $ 16,929 $ 16,586 $ 77,184 $ 65,549 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 twelve months ended December 31, 2023 and 2022 is as follows: Three Months Ended December 31, 2023 Per diluted share 2022 Per diluted share Net income as reported $ 4,347 $ 0.26 $ 3,696 $ 0.23 Non-GAAP adjustments, net of tax (1) Amortization of intangible assets - net 2,685 0.16 2,395 0.15 Foreign currency gain/ loss - net 26 - 187 0.01 Business development costs - net 2,014 0.13 655 0.04 Adjusted net income and adjusted diluted EPS $ 9,072 $ 0.55 $ 6,933 $ 0.43 Weighted average diluted shares outstanding 16,505 16,145 Twelve Months Ended December 31, 2023 Per diluted share 2022 Per diluted share Net income as reported $ 24,097 $ 1.48 $ 17,389 $ 1.09 Non-GAAP adjustments, net of tax (1) Amortization of intangible assets - net 9,752 0.60 9,812 0.62 Foreign currency gain/ loss - net 223 0.01 228 0.01 Business development costs - net 3,386 0.21 2,542 0.16 Adjusted net income and adjusted diluted EPS $ 37,458 $ 2.30 $ 29,971 $ 1.88 Weighted average diluted shares outstanding 16,272 15,951 _________________________ (1) Applies a blended federal, state, and foreign tax rate of 21% for 2023 and 23% for 2022 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/20240305523390/en/Contacts Investor Contacts: Deborah K. Pawlowski / Craig P. Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832 dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Allient Reports 34% Operating Income Growth on Revenue of $578.6 Million in 2023 By: Allient Inc. via Business Wire March 05, 2024 at 17:02 PM EST “Simplify to Accelerate” sets strategic imperatives for 2024: footprint rationalization and organizational simplification, improved customer interaction, margin expansion and cash generation to reduce debt 2023 results validate strategic efforts to drive growth, margin expansion and cash flow Revenue increased 15% to record $578.6 million with organic growth of 13% on a constant currency basis Achieved record gross margin of 31.7% in 2023, 40 basis point expansion year over year Net income per diluted share increased 36% to $1.48; Adjusted net income per share was $2.30, up 22% for the year Generated a record $45.0 million of cash from operations in 2023 and reduced debt balance by $17.1 million Fourth quarter 2023 demonstrated continued progress Revenue grew 8% with organic growth of 6% on a constant currency basis Gross margin expanded 40 basis points to 31.5% Fourth quarter net income per diluted share increased 13% to $0.26 per diluted share; Adjusted net income per diluted share improved $0.12 to $0.55 Subsequent to year-end, extended the maturity on the existing revolving credit facility 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 fourth quarter and full year ended December 31, 2023. Results include the Sierramotion Inc. acquisition, which was completed in September 2023. “With a backdrop of macro uncertainty and other challenges, the Allient team once again delivered on a number of successes during the past year,” commented Dick Warzala, Chairman and CEO. “We embarked on our next stage of growth with a refined strategy and new name while continuing to drive organic growth at more than double the industry and executing on key acquisitions. We added Sierramotion to advance our integrated motion solutions strategy and extend our reach into key target markets in 2023 and acquired SNC Manufacturing in early January 2024. SNC was our first tuck in acquisition for our Power technology pillar. Ultimately, our top-line growth combined with margin expansion translated into stronger earnings and a record level of cash generation enabling us to further strengthen our balance sheet.” Commenting on the near-term outlook, Mr. Warzala added, “We are intent upon creating stronger earnings momentum with our Simplify to Accelerate strategy. 2024 is the year to drive out redundant costs, realign the organization to consolidate like businesses, rationalize our footprint and ultimately simplify our operating structure. By rethinking how we operate, we believe we can accelerate our efforts to achieve top-tier financial performance. While some of the actions will take time to fully execute, there is a strong sense of urgency throughout the organization to deliver on our goals. The year will have its challenges given the changing dynamics of our backlog, which is right-sizing as supply chains improve and customer order patterns normalize; as well as the unknown impacts of the ongoing geopolitical disruptions. However, it also presents the opportunity to reduce our working capital requirements and strengthen cash flow. Finally, we are well situated as we realign the organization to support the significant opportunities that we are bidding on across our targeted verticals.” Allient’s “Simplify to Accelerate” strategy is centered on three high-level strategic initiatives: Realign and right-size the Company’s footprint to better align with its markets and customers. Initiatives are already underway and are expected to continue with earnest throughout 2024 and beyond. Reinforce lean manufacturing disciplines throughout the Company to accelerate margin expansion. Focus on working capital reduction to drive additional cash generation and de-lever the balance sheet. Fourth Quarter 2023 Results (Narrative compares with prior-year period unless otherwise noted) Revenue increased 8%, or $9.9 million, to $141.0 million and reflected strong Industrial market sales, which included shipping some long lead products that were in backlog, and improved demand within the Vehicle market. Excluding the favorable impact of foreign currency exchange rate fluctuations on revenue of $1.6 million, organic growth was approximately 6%. Sales to U.S. customers were 59% of total sales compared with 57% in the fourth 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. Industrial markets sales were up 23% in the quarter, benefiting from strong end market demand within industrial automation, vehicle handling, and power quality solutions focused on the oil & gas, and HVAC markets. Sales in the Vehicle markets increased 17% due to higher demand within commercial automotive and powersports, partially offset by lower demand within agricultural vehicles, which primarily reflected softness in Europe, largely influenced by the Ukrainian conflict. Aerospace & Defense sales decreased 19%, largely due to program timing within the defense and space industry. Medical market revenue was down 16%, as softer medical mobility demand more than offset a more normalized pre COVID-19 sales environment focused on surgical and instrumentation related end markets. Sales through the Distribution channel, which are a small component of total sales, were up 4%. Gross margin was 31.5%, up 40 basis points from the prior-year period as higher volume and favorable mix more than offset elevated raw material costs. Operating costs and expenses were 26.5% of revenue, up 170 basis points, of which 110 basis points was attributable to higher business development costs in the quarter due to an earnout for a prior acquisition, M&A activity, and rationalization efforts. Also contributing to the total expense increase was higher incentive compensation expense reflecting strong Company performance. As a result, operating income was $7.0 million, or 5.0% of revenue, compared with $8.2 million, or 6.2% of revenue. Net income increased 18% to $4.3 million, or $0.26 per diluted share, from $3.7 million, or $0.23 per 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 to $9.1 million, or $0.55 per diluted share, compared with adjusted net income of $6.9 million, or $0.43 per diluted share. Included in the fourth quarter’s results was a tax benefit of $0.4 million, which reflected realization of certain NOLs and R&D credits and incentives. 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 $16.9 million, up $0.3 million or 2%. As a percentage of revenue, Adjusted EBITDA was 12.0%, down 70 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. Full Year 2023 Results (Narrative compares with prior-year period unless otherwise noted) Revenue of $578.6 million increased $75.6 million, or 15%, reflecting strong demand in Industrial markets, higher sales within Aerospace & Defense and Vehicle markets, and incremental sales from acquisitions. Excluding the unfavorable impact of foreign currency exchange fluctuations on revenue of $0.3 million, organic growth was 13%. Sales to U.S. customers were 59% of total sales compared with 58% last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. Gross margin was 31.7%, up 40 basis points due to higher volume and mix. Operating costs and expenses as a percentage of revenue were 24.4%, down 60 basis points due to operating leverage partially offset by higher business development costs. As a result, operating income increased 34% to $42.3 million, or 7.3% of sales, compared with $31.7 million, or 6.3% of sales. Net income increased 39% to $24.1 million, or $1.48 per diluted share, compared with $17.4 million, or $1.09 per diluted share. The effective tax rate was 18.9% in 2023, which reflected the tax benefit from the fourth quarter. This compared with an effective tax rate of 26.6% during 2022. The Company expects its income tax rate for the full year 2024 to be approximately 21% to 23%. Excluding amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, adjusted net income increased 25% to $37.5 million, or $2.30 per diluted share, compared with $30.0 million, or $1.88 per diluted share, in 2022. Adjusted EBITDA increased 18% to $77.2 million from $65.5 million, and as a percentage of revenue was 13.3%, up 30 basis points. Balance Sheet and Cash Flow Review Cash and cash equivalents were $31.9 million compared with $30.6 million at year-end 2022. Cash provided by operating activities improved to a record $45.0 million for the year compared with $5.6 million in 2022. The increase reflected higher net income and stronger inventory turns. Capital expenditures were $11.6 million for 2023 and largely focused on new customer projects. The Company expects 2024 capital expenditures to be in the range of $16 million to $20 million. Total debt of $218.4 million was down $17.1 million from year-end 2022. Debt, net of cash, was $186.5 million, or 42.6% of net debt to capitalization. The Company’s leverage ratio, as defined in its credit agreement, was 2.8x at year-end. 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 has entered into a $150 million fixed-rate private shelf facility under which no note borrowings have occurred to date. Orders and Backlog Summary ($ in thousands) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Orders $ 105,162 $ 154,908 $ 137,008 $ 123,198 $ 145,564 Backlog $ 276,093 $ 309,636 $ 298,695 $ 308,635 $ 330,078 Foreign currency translation had a favorable $1.4 million impact on fourth 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. Given improved lead times, customer order patterns are normalizing to a pre-pandemic environment and excess supply is now being taken out of the channel, which does impact the current order rates. 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 Wednesday, March 6, 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 (412) 317-5185. 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 Wednesday, March 13, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10185196 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, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains; our inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, 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 year ended December 31, December 31, 2023 2022 2023 2022 Revenue $ 140,997 $ 131,076 $ 578,634 $ 502,988 Cost of goods sold 96,623 90,348 394,951 345,729 Gross profit 44,374 40,728 183,683 157,259 Operating costs and expenses: Selling 6,359 5,541 24,713 21,877 General and administrative 14,779 13,438 58,403 50,677 Engineering and development 10,624 9,682 41,665 38,561 Business development 2,484 855 4,275 3,319 Amortization of intangible assets 3,087 3,036 12,313 11,169 Total operating costs and expenses 37,333 32,552 141,369 125,603 Operating income 7,041 8,176 42,314 31,656 Other expense, net: Interest expense 3,074 2,792 12,383 7,692 Other expense, net 44 274 231 283 Total other expense, net 3,118 3,066 12,614 7,975 Income before income taxes 3,923 5,110 29,700 23,681 Income tax benefit (provision) 424 (1,414) (5,603) (6,292) Net income $ 4,347 $ 3,696 $ 24,097 $ 17,389 Basic earnings per share: Earnings per share $ 0.27 $ 0.24 $ 1.51 $ 1.13 Basic weighted average common shares 16,031 15,671 15,963 15,448 Diluted earnings per share: Earnings per share $ 0.26 $ 0.23 $ 1.48 $ 1.09 Diluted weighted average common shares 16,505 16,145 16,272 15,951 ALLIENT INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 31,901 $ 30,614 Trade receivables, net of provision for credit losses of $1,240 and $1,192 at December 31, 2023 and December 31, 2022, respectively 85,127 76,213 Inventories 117,686 117,108 Prepaid expenses and other assets 13,437 12,072 Total current assets 248,151 236,007 Property, plant, and equipment, net 67,463 68,640 Deferred income taxes 7,760 4,199 Intangible assets, net 111,373 119,075 Goodwill 131,338 126,366 Operating lease assets 24,032 22,807 Other long-term assets 7,425 11,253 Total Assets $ 597,542 $ 588,347 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 39,129 $ 39,467 Accrued liabilities 56,488 48,121 Total current liabilities 95,617 87,588 Long-term debt 218,402 235,454 Deferred income taxes 4,337 6,262 Pension and post-retirement obligations 2,679 3,009 Operating lease liabilities 19,532 18,795 Other long-term liabilities 5,400 21,774 Total liabilities 345,967 372,882 Stockholders’ Equity: Common stock, no par value, authorized 50,000 shares; 16,308 and 15,978 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 95,937 83,852 Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding — — Retained earnings 165,813 143,576 Accumulated other comprehensive loss (10,175) (11,963) Total stockholders’ equity 251,575 215,465 Total Liabilities and Stockholders’ Equity $ 597,542 $ 588,347 ALLIENT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the year ended December 31, December 31, 2023 2022 Cash Flows From Operating Activities: Net income $ 24,097 $ 17,389 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 25,068 25,486 Deferred income taxes (5,036) (3,722) Provision for excess and obsolete inventory 2,487 1,628 Stock-based compensation expense 5,477 5,073 Debt issue cost amortization recorded in interest expense 300 202 Other 1,424 393 Changes in operating assets and liabilities, net of acquisitions: Trade receivables (5,568) (22,202) Inventories (1,781) (27,800) Prepaid expenses and other assets 1,324 887 Accounts payable (935) 2,791 Accrued liabilities (1,819) 5,471 Net cash provided by operating activities 45,038 5,596 Cash Flows From Investing Activities: Consideration paid for acquisitions, net of cash acquired (11,004) (44,101) Purchase of property and equipment (11,603) (15,910) Net cash used in investing activities (22,607) (60,011) Cash Flows From Financing Activities: Proceeds from issuance of long-term debt 11,000 74,731 Principal payments of long-term debt and finance lease obligations (28,395) (7,585) Payment of debt issuance costs — (391) Dividends paid to stockholders (1,826) (1,536) Tax withholdings related to net share settlements of restricted stock (2,096) (1,614) Net cash (used in) provided by financing activities (21,317) 63,605 Effect of foreign exchange rate changes on cash 173 (1,039) Net increase in cash and cash equivalents 1,287 8,151 Cash and cash equivalents at beginning of period 30,614 22,463 Cash and cash equivalents at end of period $ 31,901 $ 30,614 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 growth 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 twelve months ended December 31, 2023 is as follows: Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2023 Revenue as reported $ 140,997 $ 578,634 Foreign currency impact (1,611) 258 Revenue excluding foreign currency exchange impacts $ 139,386 $ 578,892 The Company’s calculation of organic growth for the three and twelve months ended December 31, 2023 is as follows: Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2023 Revenue increase year over year 7.6% 15.0% Less: Impact of acquisitions and foreign currency 2.0% 1.9% Organic growth 5.6% 13.1% The Company’s calculation of Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022 is as follows: Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022 Net income $ 4,347 $ 3,696 $ 24,097 $ 17,389 Interest expense 3,074 2,792 12,383 7,692 (Benefit) provision for income tax (424) 1,414 5,603 6,292 Depreciation and amortization 6,112 6,264 25,068 25,486 EBITDA 13,109 14,166 67,151 56,859 Stock-based compensation expense 1,312 1,321 5,477 5,073 Foreign currency loss 24 244 281 298 Business development costs 2,484 855 4,275 3,319 Adjusted EBITDA $ 16,929 $ 16,586 $ 77,184 $ 65,549 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 twelve months ended December 31, 2023 and 2022 is as follows: Three Months Ended December 31, 2023 Per diluted share 2022 Per diluted share Net income as reported $ 4,347 $ 0.26 $ 3,696 $ 0.23 Non-GAAP adjustments, net of tax (1) Amortization of intangible assets - net 2,685 0.16 2,395 0.15 Foreign currency gain/ loss - net 26 - 187 0.01 Business development costs - net 2,014 0.13 655 0.04 Adjusted net income and adjusted diluted EPS $ 9,072 $ 0.55 $ 6,933 $ 0.43 Weighted average diluted shares outstanding 16,505 16,145 Twelve Months Ended December 31, 2023 Per diluted share 2022 Per diluted share Net income as reported $ 24,097 $ 1.48 $ 17,389 $ 1.09 Non-GAAP adjustments, net of tax (1) Amortization of intangible assets - net 9,752 0.60 9,812 0.62 Foreign currency gain/ loss - net 223 0.01 228 0.01 Business development costs - net 3,386 0.21 2,542 0.16 Adjusted net income and adjusted diluted EPS $ 37,458 $ 2.30 $ 29,971 $ 1.88 Weighted average diluted shares outstanding 16,272 15,951 _________________________ (1) Applies a blended federal, state, and foreign tax rate of 21% for 2023 and 23% for 2022 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/20240305523390/en/Contacts Investor Contacts: Deborah K. Pawlowski / Craig P. Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832 dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com
“Simplify to Accelerate” sets strategic imperatives for 2024: footprint rationalization and organizational simplification, improved customer interaction, margin expansion and cash generation to reduce debt 2023 results validate strategic efforts to drive growth, margin expansion and cash flow Revenue increased 15% to record $578.6 million with organic growth of 13% on a constant currency basis Achieved record gross margin of 31.7% in 2023, 40 basis point expansion year over year Net income per diluted share increased 36% to $1.48; Adjusted net income per share was $2.30, up 22% for the year Generated a record $45.0 million of cash from operations in 2023 and reduced debt balance by $17.1 million Fourth quarter 2023 demonstrated continued progress Revenue grew 8% with organic growth of 6% on a constant currency basis Gross margin expanded 40 basis points to 31.5% Fourth quarter net income per diluted share increased 13% to $0.26 per diluted share; Adjusted net income per diluted share improved $0.12 to $0.55 Subsequent to year-end, extended the maturity on the existing revolving credit facility
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 fourth quarter and full year ended December 31, 2023. Results include the Sierramotion Inc. acquisition, which was completed in September 2023. “With a backdrop of macro uncertainty and other challenges, the Allient team once again delivered on a number of successes during the past year,” commented Dick Warzala, Chairman and CEO. “We embarked on our next stage of growth with a refined strategy and new name while continuing to drive organic growth at more than double the industry and executing on key acquisitions. We added Sierramotion to advance our integrated motion solutions strategy and extend our reach into key target markets in 2023 and acquired SNC Manufacturing in early January 2024. SNC was our first tuck in acquisition for our Power technology pillar. Ultimately, our top-line growth combined with margin expansion translated into stronger earnings and a record level of cash generation enabling us to further strengthen our balance sheet.” Commenting on the near-term outlook, Mr. Warzala added, “We are intent upon creating stronger earnings momentum with our Simplify to Accelerate strategy. 2024 is the year to drive out redundant costs, realign the organization to consolidate like businesses, rationalize our footprint and ultimately simplify our operating structure. By rethinking how we operate, we believe we can accelerate our efforts to achieve top-tier financial performance. While some of the actions will take time to fully execute, there is a strong sense of urgency throughout the organization to deliver on our goals. The year will have its challenges given the changing dynamics of our backlog, which is right-sizing as supply chains improve and customer order patterns normalize; as well as the unknown impacts of the ongoing geopolitical disruptions. However, it also presents the opportunity to reduce our working capital requirements and strengthen cash flow. Finally, we are well situated as we realign the organization to support the significant opportunities that we are bidding on across our targeted verticals.” Allient’s “Simplify to Accelerate” strategy is centered on three high-level strategic initiatives: Realign and right-size the Company’s footprint to better align with its markets and customers. Initiatives are already underway and are expected to continue with earnest throughout 2024 and beyond. Reinforce lean manufacturing disciplines throughout the Company to accelerate margin expansion. Focus on working capital reduction to drive additional cash generation and de-lever the balance sheet. Fourth Quarter 2023 Results (Narrative compares with prior-year period unless otherwise noted) Revenue increased 8%, or $9.9 million, to $141.0 million and reflected strong Industrial market sales, which included shipping some long lead products that were in backlog, and improved demand within the Vehicle market. Excluding the favorable impact of foreign currency exchange rate fluctuations on revenue of $1.6 million, organic growth was approximately 6%. Sales to U.S. customers were 59% of total sales compared with 57% in the fourth 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. Industrial markets sales were up 23% in the quarter, benefiting from strong end market demand within industrial automation, vehicle handling, and power quality solutions focused on the oil & gas, and HVAC markets. Sales in the Vehicle markets increased 17% due to higher demand within commercial automotive and powersports, partially offset by lower demand within agricultural vehicles, which primarily reflected softness in Europe, largely influenced by the Ukrainian conflict. Aerospace & Defense sales decreased 19%, largely due to program timing within the defense and space industry. Medical market revenue was down 16%, as softer medical mobility demand more than offset a more normalized pre COVID-19 sales environment focused on surgical and instrumentation related end markets. Sales through the Distribution channel, which are a small component of total sales, were up 4%. Gross margin was 31.5%, up 40 basis points from the prior-year period as higher volume and favorable mix more than offset elevated raw material costs. Operating costs and expenses were 26.5% of revenue, up 170 basis points, of which 110 basis points was attributable to higher business development costs in the quarter due to an earnout for a prior acquisition, M&A activity, and rationalization efforts. Also contributing to the total expense increase was higher incentive compensation expense reflecting strong Company performance. As a result, operating income was $7.0 million, or 5.0% of revenue, compared with $8.2 million, or 6.2% of revenue. Net income increased 18% to $4.3 million, or $0.26 per diluted share, from $3.7 million, or $0.23 per 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 to $9.1 million, or $0.55 per diluted share, compared with adjusted net income of $6.9 million, or $0.43 per diluted share. Included in the fourth quarter’s results was a tax benefit of $0.4 million, which reflected realization of certain NOLs and R&D credits and incentives. 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 $16.9 million, up $0.3 million or 2%. As a percentage of revenue, Adjusted EBITDA was 12.0%, down 70 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. Full Year 2023 Results (Narrative compares with prior-year period unless otherwise noted) Revenue of $578.6 million increased $75.6 million, or 15%, reflecting strong demand in Industrial markets, higher sales within Aerospace & Defense and Vehicle markets, and incremental sales from acquisitions. Excluding the unfavorable impact of foreign currency exchange fluctuations on revenue of $0.3 million, organic growth was 13%. Sales to U.S. customers were 59% of total sales compared with 58% last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. Gross margin was 31.7%, up 40 basis points due to higher volume and mix. Operating costs and expenses as a percentage of revenue were 24.4%, down 60 basis points due to operating leverage partially offset by higher business development costs. As a result, operating income increased 34% to $42.3 million, or 7.3% of sales, compared with $31.7 million, or 6.3% of sales. Net income increased 39% to $24.1 million, or $1.48 per diluted share, compared with $17.4 million, or $1.09 per diluted share. The effective tax rate was 18.9% in 2023, which reflected the tax benefit from the fourth quarter. This compared with an effective tax rate of 26.6% during 2022. The Company expects its income tax rate for the full year 2024 to be approximately 21% to 23%. Excluding amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, adjusted net income increased 25% to $37.5 million, or $2.30 per diluted share, compared with $30.0 million, or $1.88 per diluted share, in 2022. Adjusted EBITDA increased 18% to $77.2 million from $65.5 million, and as a percentage of revenue was 13.3%, up 30 basis points. Balance Sheet and Cash Flow Review Cash and cash equivalents were $31.9 million compared with $30.6 million at year-end 2022. Cash provided by operating activities improved to a record $45.0 million for the year compared with $5.6 million in 2022. The increase reflected higher net income and stronger inventory turns. Capital expenditures were $11.6 million for 2023 and largely focused on new customer projects. The Company expects 2024 capital expenditures to be in the range of $16 million to $20 million. Total debt of $218.4 million was down $17.1 million from year-end 2022. Debt, net of cash, was $186.5 million, or 42.6% of net debt to capitalization. The Company’s leverage ratio, as defined in its credit agreement, was 2.8x at year-end. 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 has entered into a $150 million fixed-rate private shelf facility under which no note borrowings have occurred to date. Orders and Backlog Summary ($ in thousands) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Orders $ 105,162 $ 154,908 $ 137,008 $ 123,198 $ 145,564 Backlog $ 276,093 $ 309,636 $ 298,695 $ 308,635 $ 330,078 Foreign currency translation had a favorable $1.4 million impact on fourth 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. Given improved lead times, customer order patterns are normalizing to a pre-pandemic environment and excess supply is now being taken out of the channel, which does impact the current order rates. 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 Wednesday, March 6, 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 (412) 317-5185. 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 Wednesday, March 13, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10185196 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, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains; our inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, 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 year ended December 31, December 31, 2023 2022 2023 2022 Revenue $ 140,997 $ 131,076 $ 578,634 $ 502,988 Cost of goods sold 96,623 90,348 394,951 345,729 Gross profit 44,374 40,728 183,683 157,259 Operating costs and expenses: Selling 6,359 5,541 24,713 21,877 General and administrative 14,779 13,438 58,403 50,677 Engineering and development 10,624 9,682 41,665 38,561 Business development 2,484 855 4,275 3,319 Amortization of intangible assets 3,087 3,036 12,313 11,169 Total operating costs and expenses 37,333 32,552 141,369 125,603 Operating income 7,041 8,176 42,314 31,656 Other expense, net: Interest expense 3,074 2,792 12,383 7,692 Other expense, net 44 274 231 283 Total other expense, net 3,118 3,066 12,614 7,975 Income before income taxes 3,923 5,110 29,700 23,681 Income tax benefit (provision) 424 (1,414) (5,603) (6,292) Net income $ 4,347 $ 3,696 $ 24,097 $ 17,389 Basic earnings per share: Earnings per share $ 0.27 $ 0.24 $ 1.51 $ 1.13 Basic weighted average common shares 16,031 15,671 15,963 15,448 Diluted earnings per share: Earnings per share $ 0.26 $ 0.23 $ 1.48 $ 1.09 Diluted weighted average common shares 16,505 16,145 16,272 15,951 ALLIENT INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 31,901 $ 30,614 Trade receivables, net of provision for credit losses of $1,240 and $1,192 at December 31, 2023 and December 31, 2022, respectively 85,127 76,213 Inventories 117,686 117,108 Prepaid expenses and other assets 13,437 12,072 Total current assets 248,151 236,007 Property, plant, and equipment, net 67,463 68,640 Deferred income taxes 7,760 4,199 Intangible assets, net 111,373 119,075 Goodwill 131,338 126,366 Operating lease assets 24,032 22,807 Other long-term assets 7,425 11,253 Total Assets $ 597,542 $ 588,347 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 39,129 $ 39,467 Accrued liabilities 56,488 48,121 Total current liabilities 95,617 87,588 Long-term debt 218,402 235,454 Deferred income taxes 4,337 6,262 Pension and post-retirement obligations 2,679 3,009 Operating lease liabilities 19,532 18,795 Other long-term liabilities 5,400 21,774 Total liabilities 345,967 372,882 Stockholders’ Equity: Common stock, no par value, authorized 50,000 shares; 16,308 and 15,978 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 95,937 83,852 Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding — — Retained earnings 165,813 143,576 Accumulated other comprehensive loss (10,175) (11,963) Total stockholders’ equity 251,575 215,465 Total Liabilities and Stockholders’ Equity $ 597,542 $ 588,347 ALLIENT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the year ended December 31, December 31, 2023 2022 Cash Flows From Operating Activities: Net income $ 24,097 $ 17,389 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 25,068 25,486 Deferred income taxes (5,036) (3,722) Provision for excess and obsolete inventory 2,487 1,628 Stock-based compensation expense 5,477 5,073 Debt issue cost amortization recorded in interest expense 300 202 Other 1,424 393 Changes in operating assets and liabilities, net of acquisitions: Trade receivables (5,568) (22,202) Inventories (1,781) (27,800) Prepaid expenses and other assets 1,324 887 Accounts payable (935) 2,791 Accrued liabilities (1,819) 5,471 Net cash provided by operating activities 45,038 5,596 Cash Flows From Investing Activities: Consideration paid for acquisitions, net of cash acquired (11,004) (44,101) Purchase of property and equipment (11,603) (15,910) Net cash used in investing activities (22,607) (60,011) Cash Flows From Financing Activities: Proceeds from issuance of long-term debt 11,000 74,731 Principal payments of long-term debt and finance lease obligations (28,395) (7,585) Payment of debt issuance costs — (391) Dividends paid to stockholders (1,826) (1,536) Tax withholdings related to net share settlements of restricted stock (2,096) (1,614) Net cash (used in) provided by financing activities (21,317) 63,605 Effect of foreign exchange rate changes on cash 173 (1,039) Net increase in cash and cash equivalents 1,287 8,151 Cash and cash equivalents at beginning of period 30,614 22,463 Cash and cash equivalents at end of period $ 31,901 $ 30,614 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 growth 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 twelve months ended December 31, 2023 is as follows: Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2023 Revenue as reported $ 140,997 $ 578,634 Foreign currency impact (1,611) 258 Revenue excluding foreign currency exchange impacts $ 139,386 $ 578,892 The Company’s calculation of organic growth for the three and twelve months ended December 31, 2023 is as follows: Three Months Ended Twelve Months Ended December 31, 2023 December 31, 2023 Revenue increase year over year 7.6% 15.0% Less: Impact of acquisitions and foreign currency 2.0% 1.9% Organic growth 5.6% 13.1% The Company’s calculation of Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022 is as follows: Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022 Net income $ 4,347 $ 3,696 $ 24,097 $ 17,389 Interest expense 3,074 2,792 12,383 7,692 (Benefit) provision for income tax (424) 1,414 5,603 6,292 Depreciation and amortization 6,112 6,264 25,068 25,486 EBITDA 13,109 14,166 67,151 56,859 Stock-based compensation expense 1,312 1,321 5,477 5,073 Foreign currency loss 24 244 281 298 Business development costs 2,484 855 4,275 3,319 Adjusted EBITDA $ 16,929 $ 16,586 $ 77,184 $ 65,549 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 twelve months ended December 31, 2023 and 2022 is as follows: Three Months Ended December 31, 2023 Per diluted share 2022 Per diluted share Net income as reported $ 4,347 $ 0.26 $ 3,696 $ 0.23 Non-GAAP adjustments, net of tax (1) Amortization of intangible assets - net 2,685 0.16 2,395 0.15 Foreign currency gain/ loss - net 26 - 187 0.01 Business development costs - net 2,014 0.13 655 0.04 Adjusted net income and adjusted diluted EPS $ 9,072 $ 0.55 $ 6,933 $ 0.43 Weighted average diluted shares outstanding 16,505 16,145 Twelve Months Ended December 31, 2023 Per diluted share 2022 Per diluted share Net income as reported $ 24,097 $ 1.48 $ 17,389 $ 1.09 Non-GAAP adjustments, net of tax (1) Amortization of intangible assets - net 9,752 0.60 9,812 0.62 Foreign currency gain/ loss - net 223 0.01 228 0.01 Business development costs - net 3,386 0.21 2,542 0.16 Adjusted net income and adjusted diluted EPS $ 37,458 $ 2.30 $ 29,971 $ 1.88 Weighted average diluted shares outstanding 16,272 15,951 _________________________ (1) Applies a blended federal, state, and foreign tax rate of 21% for 2023 and 23% for 2022 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/20240305523390/en/
Investor Contacts: Deborah K. Pawlowski / Craig P. Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832 dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com