Allient Inc. Delivers Record Gross Margin of 33.2% and Strong Profitability in Second Quarter 2025

• Margin Strength: Gross margin reached a Company-best 33.2%, expanding 330 basis points year-over-year and 100 basis points sequentially, driven by favorable mix, higher volumes and operational efficiency
• Operating Leverage: Operating income grew 139% to $11.7 million on 3% revenue growth
• Simplify to Accelerate NOW Driving Gains: Operating margin increased 480 basis points year-over-year to 8.4%, and improved 180 basis points sequentially, reflecting continued execution of the Company's cost transformation strategy
• Stronger Profitability and Earnings Growth: Delivered diluted earnings per share (EPS) of $0.34 and adjusted EPS of $0.57. Adjusted EBITDA increased 44% to $20.1 million, expanding the margin by 420 basis points to 14.4% compared with the prior-year period
• Cash Flow Strength and Balance Sheet Progress: Achieved record quarterly cash flow from operations of $24.5 million, bringing year-to-date cash flow to $38.4 million, more than double the prior year. The Company ended the quarter with nearly $50 million in cash and reduced debt by $20 million, lowering its leverage ratio to 2.3x at quarter end, as described in the reconciliation of non-GAAP financial measures

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, 2025.

"This quarter clearly reflects the momentum we are building through focused execution and market alignment. Our Simplify to Accelerate NOW program continues to drive meaningful results, as a high-margin mix, improved volumes, and strong operational discipline contributed to our highest gross margin performance to date. This translated into significant operating leverage and a strong increase in profitability," commented Dick Warzala, Chairman and CEO. "Market demand was solid across key areas, including data center infrastructure, defense, and select high-value medical applications. Within the vehicle market, while powersports continue to face pressure, other verticals delivered solid sequential growth.

"We generated exceptional cash flow during the quarter, which allowed us to strengthen our balance sheet while continuing to invest in our long-term growth strategy. We exited the quarter with nearly $50 million in cash and reduced debt by $20 million, which significantly lowered our leverage ratio. This strong financial position leaves us well prepared to navigate evolving market dynamics."

Mr. Warzala added, "Tariff exposure remains manageable, and while rare earth mineral trade constraints and broader macro uncertainty persist, we have been proactive in our mitigation efforts. As we advance our focus on high-technology applications, we believe Allient is well aligned with long-term global trends in electrification, automation, energy efficiency and precision control. We remain confident in our ability to deliver sustainable, high-quality growth over time."

Second Quarter 2025 Results (Narrative compares with prior-year period unless otherwise noted)

Revenue increased 3%, or $3.5 million, to $139.6 million, primarily due to strength in Aerospace & Defense, Industrial market applications where the Company's power quality solutions are needed, and Medical. Partially offsetting was continued demand softness in Vehicle markets. Sequentially, revenue increased $6.8 million, or 5%, over the first quarter of 2025. The impact of foreign currency exchange rate fluctuations was favorable by $2.4 million. The quarter also benefited from approximately $3 million to $4 million in customer pull-ins from the third quarter, as customers accelerated purchases due to concerns around supply availability of components containing heavy rare earth materials. Sales to U.S. customers were 55% of total sales, consistent with 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.

Market Performance:

• Aerospace & Defense revenue increased 13%, primarily driven by the timing of key defense and space program deliveries.
• Industrial market revenue rose 3%, driven by strong demand for power quality solutions in HVAC/data center applications, along with solid performance in pump system solutions, which more than offset weaker demand in oil and gas, and industrial automation.
• Medical market revenue grew 4%, as solid demand for surgical instruments was partially offset by softness in medical mobility solutions.
• Vehicle market sales declined 7%, largely attributable to reduced demand for powersports.
• Distribution channel sales, while representing a smaller portion of total revenue, rose 8%, reflecting broader demand for the Company's diversified product offerings.

Gross margin expanded by 330 basis points year-over-year to 33.2%, driven primarily by a favorable product mix, increased volume, and operational efficiencies achieved through the Company's Simplify to Accelerate NOW strategy. On a sequential basis, gross margin improved by 100 basis points.

Operating costs and expenses were 24.8% of revenue, representing a 150 basis point reduction compared with the same period last year. This year-over-year improvement reflects strong operating leverage and continued benefits from the Simplify to Accelerate NOW initiatives. Sequentially, operating costs and expenses increased by $0.7 million; however, as a percentage of revenue, it improved by 80 basis points. The dollar increase was mainly driven by foreign currency fluctuations and, to a lesser extent, higher incentive compensation.

As a result of the gross margin expansion and disciplined cost management, operating income increased 139% to $11.7 million, or 8.4% of revenue, compared with $4.9 million, or 3.6% of revenue, in the prior-year period. On a sequential basis, operating income grew 33%, with operating margin expanding by 180 basis points.

The effective income tax rate was 23.1% and 20.6% for the second quarter of 2025 and 2024, respectively. The change in rates primarily reflects the impact of discrete tax costs on share based awards. The Company expects its income tax rate for the full year 2025 to be approximately 21% to 23%.

Net income increased to $5.6 million, or $0.34 per diluted share, compared with $1.2 million, or $0.07 per diluted share, in the prior-year period. Sequentially, net income improved from $3.6 million, or $0.21 per diluted share. Adjusted net income, which excludes amortization of intangible assets related to acquisitions, acquisition and integration-related costs, restructuring and business realignment costs, and other non-recurring items, was $9.5 million, or $0.57 per diluted share. This compared with $4.9 million, or $0.29 per diluted share, in the second quarter of 2024 and $7.6 million, or $0.46 per diluted share, in the first quarter of 2025. 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, acquisition and integration-related costs, restructuring and business realignment costs, and foreign currency gains/losses ("Adjusted EBITDA") was $20.1 million, or 14.4% of revenue, compared with $13.9 million, or 10.2% of revenue. Sequentially, Adjusted EBITDA as a percentage of revenue was up 120 basis points. The Company believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles, Adjusted EBITDA, which is a non-GAAP measure, helps in the understanding of its operating performance. See the attached table for a description of non-GAAP financial measures and reconciliation table for Adjusted EBITDA.

Balance Sheet and Cash Flow Review

Cash and cash equivalents increased 38% to $49.9 million compared with $36.1 million at year-end 2024. Year-to-date cash provided by operating activities more than doubled to $38.4 million from $17.4 million in the prior-year period, driven by higher net income and improved working capital.

Capital expenditures totaled $3.2 million for the first six months, primarily supporting new customer projects. This compared with $5.3 million of capital expenditures in the same period last year. The Company has refined its full year 2025 capital expenditure outlook to a range of $8 million to $10 million compared with the prior estimate of $10 million to $12 million.

Total debt declined to $202.2 million, a reduction of $20.0 million from the first quarter and $22.0 million since year-end 2024. Debt, net of cash, decreased by $35.8 million to $152.3 million, representing a net debt to capitalization ratio of 34.5%.

The Company's leverage ratio, calculated as total net debt divided by trailing twelve months of Adjusted EBITDA, improved to 2.30x from 3.01x at December 31, 2024. The bank leverage ratio, as defined in the Company's credit agreement and which excludes foreign cash among other adjustments, was 2.92x at quarter-end, well within covenant compliance. See the attached table for a description of non-GAAP financial measures and reconciliation table for Total Net Debt and Leverage Ratio.

Orders and Backlog Summary ($ in thousands)

Second quarter orders represented a book-to-bill ratio of 0.97, reflecting steady demand in the Industrial market applications where the Company's power quality solutions are needed, as well as continued strength in Aerospace & Defense. Foreign currency translation favorably impacted orders by $2.2 million compared with the prior-year period.

Backlog was down year-over-year as customers adjusted order patterns to manage elevated inventory levels. The majority of the backlog is expected to convert to revenue within three to nine months, consistent with the Company's historical conversion patterns.

Conference Call and Webcast

The Company will host a conference call and webcast on Thursday, August 7, 2025, 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) 634-6879. In addition, the webcast and slide presentation may be found at: www.allient.com/investors.

A telephonic replay will be available from 2:00 pm ET on the day of the call through Thursday, August 21, 2025. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10200458 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, expectations for the level of sales, 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.

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, Organic revenue, EBITDA and Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, stock-based compensation expense, acquisition and integration-related costs, restructuring and business realignment costs, and foreign currency gains/losses), total net debt, and leverage ratio, which are non-GAAP measures.

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

The Company believes EBITDA and Adjusted EBITDA are often a useful measure of a Company's operating performance and are a significant basis used by the Company's management to evaluate and compare the core operating performance of its business from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense, acquisition and integration-related costs, restructuring and business realignment 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. In addition to the performance measures identified above, we believe that total net debt and leverage ratio provide meaningful measures of liquidity and a useful basis for assessing our ability to fund our activities, including the financing of acquisitions and debt repayments. Total net debt is calculated as total debt less cash and cash equivalents. Leverage ratio is total net debt divided by adjusted EBITDA for the trailing twelve months.

The Company's calculation of Revenue excluding foreign currency exchange impacts for the three and six months ended June 30, 2025 is as follows:

The Company's calculation of organic revenue for the three and six months ended June 30, 2025 is as follows:

ALLIENT INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, Unaudited)

The Company's calculation of Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 is as follows:

The Company's calculation of Total Net Debt and Leverage Ratio as of June 30, 2025 and December 31, 2024 is as follows:

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, 2025 and 2024 is as follows:

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.

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Investor Contacts:

Craig P. Mychajluk / Deborah K. Pawlowski

Alliance Advisors IR

716-843-3832 / 716-843-3908

[email protected] / [email protected]