Allient Reports Fourth Quarter 2024 Results with Strengthening Orders and Margin Expansion

• Fourth quarter revenue was $122.0 million, with gross margin improving sequentially to 31.5% despite lower revenue; Total orders increased 15% sequentially resulting in a book-to-bill ratio of nearly 1.00, driven by power quality and defense
• Diluted earnings per share were $0.18 in the fourth quarter; Adjusted EPS was $0.31
• Full year revenue of $530.0 million reflected anticipated demand softness in industrial and vehicle markets
• Cash flow from operating activities was $41.9 million during 2024 and ended the year with $36.1 million of cash; Total debt reduced $7.2 million during the fourth quarter
• The Simplify to Accelerate NOW program delivered $10 million in annualized savings in 2024
• Additional cost savings are being implemented with a goal to reduce annualized costs by another $6-$7 million in 2025

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 year ended December 31, 2024.

"We continue to drive operational improvements and margin expansion while navigating a dynamic demand environment," said Dick Warzala, Chairman and CEO. "Notably, despite lower fourth quarter revenue, we delivered improved gross and operating margins, reflecting our continued focus on cost discipline and operational efficiency. At the same time, orders grew 15% sequentially, underscoring the strengthening demand in power quality and defense. While near-term order patterns remain fluid, the fundamental drivers of our business remain strong. These structural tailwinds reinforce our confidence in a return to more normalized run rates as customer inventory adjustments near completion."

Mr. Warzala added, "Our Simplify to Accelerate NOW program continues to generate tangible results, delivering $10 million in annualized savings while enhancing our agility and competitiveness. Our goal in 2025 is to deliver an additional $6 million to $7 million in annual savings. In fact, our plans that we previously announced to create a state-of-the-art Machining Center of Excellence at our Dothan, Alabama facility while transferring current assembly operations to other facilities gives us a solid start toward that goal. While this transition presents complexities and requires focused execution, we are confident in the long-term efficiencies it will create. Implementation costs for the Dothan restructuring are expected to be equivalent to the annualized savings, resulting in a one-year pay back on the investment. We anticipate realizing the initial benefits of this initiative toward the end of 2025. Overall, our strategic initiatives position Allient for stronger financial performance, greater operational flexibility, and enhanced earnings power in the years ahead."

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

Revenue decreased 13%, or $19.0 million, to $122.0 million. The impact of foreign currency exchange rate fluctuations was unfavorable by $0.3 million. Sales to U.S. customers were 54% of total sales compared with 59% 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.

Aerospace & Defense sales increased 20%, reflecting the timing of certain defense programs. Medical market revenue increased 5% on solid demand for surgical instruments, and respiratory and breathing demand. Sales in the Vehicle markets decreased 46% largely due to the decline in demand for powersports. Industrial markets sales were down 11% as strengthened power quality sales, largely to the HVAC/data center market, and incremental sales from the recent acquisition were more than offset by lower demand in industrial automation due to significant inventory destocking by the Company's largest customer.

Gross margin was 31.5%, flat compared with the prior-year period, despite lower volume and the anticipated margin dilution from the most recent acquisition. Sequentially, gross margin improved 10 basis points, primarily driven by a more favorable product mix.

Operating costs and expenses were 26.2% of revenue, down 30 basis points year-over-year, primarily due to lower business development costs. As a result, operating income was $6.4 million compared with $7.0 million in the prior-year period, while operating margin improved 30 basis points to 5.3%.

The effective income tax rate was 22.2% in the fourth quarter compared with a tax benefit of $0.4 million in last year's period, which reflected the realization of certain NOLs and R&D credits and incentives.

Net income was $3.0 million, or $0.18 per diluted share, compared with $4.3 million, or $0.26 per diluted share, in the prior-year period. Sequentially, net income improved from $2.1 million, or $0.13 per diluted share. Adjusted net income, which excludes amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, was $5.2 million, or $0.31 per diluted share. This compared with $9.1 million, or $0.55 per diluted share, in the fourth quarter of 2023 and $5.1 million, or $0.31 per diluted share, in the third quarter of 2024. 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, foreign currency gains/losses, and restructuring and business realignment costs ("Adjusted EBITDA") was $14.1 million, or 11.6% of revenue, compared with $16.9 million, or 12.0% of revenue. Sequentially, Adjusted EBITDA as a percentage of revenue was up 10 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 2024 Results (Narrative compares with prior-year period unless otherwise noted)

Revenue of $530.0 million decreased $48.7 million, or 8%, primarily due to anticipated demand softness in industrial and vehicle markets, partially offset by continued strength in power quality solutions and incremental sales from acquisitions. The impact of foreign currency exchange rate fluctuations was unfavorable by $0.1 million. Sales to U.S. customers were 55% of total sales compared with 59% last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific.

Gross margin was 31.3%, down 40 basis points largely due to lower volume. Operating costs and expenses as a percentage of revenue were 25.6% compared with 24.4% last year, reflecting the loss of leverage on lower sales. As a result, operating income was $30.0 million, or 5.7% of sales, compared with $42.3 million or 7.3% of sales.

Net income was $13.2 million, or $0.79 per diluted share, compared with $24.1 million, or $1.48 per diluted share. The effective tax rate was 21.9% in 2024 compared with 18.9% in 2023. The Company expects its income tax rate for the full year 2025 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 was $24.7 million, or $1.49 per diluted share, compared with $37.5 million, or $2.30 per diluted share, in 2023.

Adjusted EBITDA was $62.5 million, and as a percentage of revenue was 11.8%.

Balance Sheet and Cash Flow Review

Cash and cash equivalents increased 13% to $36.1 million compared with $31.9 million at year-end 2023. Cash provided by operating activities was $41.9 million compared with $45.0 million last year.

Capital expenditures totaled $9.7 million for 2024, primarily supporting new customer projects. This compared with $11.6 million of capital expenditures in 2023. The Company expects 2025 capital expenditures to range between $10 million to $12 million.

Total debt of $224.2 million was down $7.2 million from the sequential third quarter. Debt, net of cash, was $188.1 million, or 41.5% of net debt to capitalization. The Company's leverage ratio, as defined in its credit agreement, was 3.43x at year-end.

The Company amended its 2024 Amended Credit Agreement in the fourth quarter, increasing the maximum leverage ratio to 4.5:1.0 for the quarters ending March 31, 2025, and June 30, 2025, followed by 4.0:1.0 for the quarter ending September 30, 2025, before reverting to 3.75:1.0 thereafter. The amendment also allows for up to $4.0 million in specified costs to be added back to consolidated EBITDA.

Orders and Backlog Summary ($ in thousands)

Fourth quarter orders increased 15% sequentially, primarily driven by strength in power quality and defense, and rose 12% year-over-year, reflecting similar end-market tailwinds as well as incremental contributions from a recent acquisition. Foreign currency translation had an unfavorable $0.6 million impact on fourth quarter orders compared with the prior-year period.

The sequential decline in backlog reflects temporary order softness, as customers continued to adjust ordering patterns in response to elevated inventory levels, and the effects of foreign currency exchange rate impacts. The majority of the backlog is expected to convert to revenue within three to nine months, in line with historical trends.

Conference Call and Webcast

The Company will host a conference call and webcast on Thursday, March 6, 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) 317-0535. In addition, the webcast and slide presentation may be found at: allient.com/investors.

A telephonic replay will be available from 2:00 pm ET on the day of the call through Thursday, March 13, 2025. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10195875 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 growth, and EBITDA and Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, stock-based compensation expense, business development costs, and foreign currency gains/losses), which are non-GAAP measures. Business development costs include acquisition and integration related costs as well as restructuring and business realignment costs.

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

The Company believes EBITDA and Adjusted EBITDA are often a useful measure of a Company's operating performance and are a significant basis used by the Company's management to evaluate and compare the core operating performance of its business from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes, stock-based compensation expense, business development costs, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company's core operating performance. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP.

The Company's calculation of Revenue excluding foreign currency exchange impacts for the three and twelve months ended December 31, 2024 is as follows:

The Company's calculation of organic growth for the three and twelve months ended December 31, 2024 is as follows:

The Company's calculation of Adjusted EBITDA for the three and twelve months ended December 31, 2024 and 2023 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 twelve months ended December 31, 2024 and 2023 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250305192525/en/

Investor Contacts:

Deborah K. Pawlowski / Craig P. Mychajluk

Alliance Advisors IR

716-843-3908 / 716-843-3832

[email protected] / [email protected]