Industry Overview - The Zacks Electronics - Miscellaneous Components industry is benefiting from increased automation and spending by manufacturers in sectors such as semiconductors, automobiles, machinery, and mobile phones [1] - Key players like TTM Technologies, American Superconductor, and Allient are positioned to gain from the adoption of AI and IoT, impacting various sectors including robotics, industrial automation, and healthcare [1][2] Trends Shaping the Industry - The automation boom is driving demand for faster, more powerful, and energy-efficient electronics, with collaborative robots enhancing production efficiency [3] - Miniaturization in semiconductor manufacturing is a significant trend, with strong demand for advanced packaging and new manufacturing materials [4] - Geopolitical tensions, particularly the Russia-Ukraine war and U.S.-China relations, pose challenges for the industry, especially regarding semiconductor trade restrictions [5] Industry Performance and Valuation - The Zacks Electronics - Miscellaneous Components industry ranks 80, placing it in the top 33% of over 250 Zacks industries, indicating bullish near-term prospects [6][7] - Despite this ranking, the industry has underperformed the S&P 500 and broader technology sector, decreasing by 8.9% over the past year compared to the S&P 500's 12.4% increase [10] - The industry currently trades at a forward P/E ratio of 18.16X, lower than the S&P 500's 21.66X and the sector's 25.6X [13] Company Highlights - Allient, with a Zacks Rank 1, is focusing on operational efficiency and has seen its shares appreciate by 29% year-to-date, with a positive earnings estimate revision for 2025 [17][18] - TTM Technologies, also a Zacks Rank 1, is experiencing strong demand in aerospace, defense, and data center sectors, although its shares have dropped by 6.6% year-to-date [20][21] - American Superconductor, ranked 2, is benefiting from strong demand for its D-VAR systems and has seen a 13.2% return year-to-date, with a slight upward revision in earnings estimates for fiscal 2026 [24][25]

Group 1 - Allient (ALNT) has shown strong year-to-date performance, gaining approximately 23.1%, while the Computer and Technology sector has returned an average of -3.8% [4] - The Zacks Rank for Allient is currently 1 (Strong Buy), indicating a positive earnings outlook and strong analyst sentiment [3] - The Zacks Consensus Estimate for Allient's full-year earnings has increased by 5.5% over the past three months, reflecting improved earnings expectations [4] Group 2 - Allient is part of the Electronics - Miscellaneous Components industry, which ranks 77 in the Zacks Industry Rank, with an average loss of 1.4% this year [6] - In comparison, ASML (ASML), another stock in the Computer and Technology sector, has a year-to-date return of 5.7% and is part of the Semiconductor Equipment - Wafer Fabrication industry, which ranks 20 [5][7] - The Semiconductor Equipment - Wafer Fabrication industry has seen a positive movement of +5.6% since the beginning of the year, indicating better overall performance compared to Allient's industry [7]

Company Overview - Allient (ALNT) currently holds a Momentum Style Score of A, indicating strong potential for momentum investing [3] - The company has a Zacks Rank of 1 (Strong Buy), which is associated with a track record of outperformance in the market [4] Price Performance - Over the past week, ALNT shares have increased by 11.96%, outperforming the Zacks Electronics - Miscellaneous Components industry, which rose by 5.88% [6] - In a longer time frame, ALNT's shares have shown a monthly price change of 40.86%, compared to the industry's 13.03% [6] - Over the past quarter, ALNT shares have increased by 21.86%, and over the last year, they have gained 14.05%, while the S&P 500 has moved -2.55% and 11.45%, respectively [7] Trading Volume - The average 20-day trading volume for ALNT is 116,318 shares, which serves as a useful price-to-volume baseline [8] Earnings Outlook - In the past two months, one earnings estimate for ALNT has moved higher, while none have moved lower, increasing the consensus estimate from $1.84 to $1.93 [10] - For the next fiscal year, two estimates have moved upwards with no downward revisions during the same period [10] Conclusion - Given the strong price performance, positive earnings outlook, and high Momentum Style Score, ALNT is positioned as a promising investment opportunity [12]

Technical Analysis - Allient Inc. (ALNT) has recently experienced a "golden cross" event, indicating a potential bullish breakout as its 50-day simple moving average has crossed above the 200-day simple moving average [1][2] - A golden cross typically suggests a bullish trend reversal, characterized by a downtrend followed by the crossover of moving averages and subsequent upward price movement [2][3] Stock Performance - ALNT shares have increased by 49.1% over the past four weeks, indicating strong upward momentum [4] - The company is currently rated 1 (Strong Buy) on the Zacks Rank, suggesting further potential for price appreciation [4] Earnings Expectations - There have been positive changes in earnings expectations for ALNT, with one upward revision in the current quarter and no downward revisions over the past 60 days [4] - The Zacks Consensus Estimate for ALNT has also moved higher, reinforcing the bullish outlook for the stock [4][5]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks may lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks that exhibit recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Allient (ALNT) Stock Analysis - Allient (ALNT) has shown significant price momentum with a four-week price change of 40.9%, indicating growing investor interest [4] - The stock has gained 12.4% over the past 12 weeks and has a beta of 1.39, suggesting it moves 39% more than the market [5] - ALNT has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - ALNT has received upward revisions in earnings estimates, earning a Zacks Rank 1 (Strong Buy), which is associated with strong momentum effects [7] - The stock is currently trading at a Price-to-Sales ratio of 0.98, suggesting it is undervalued as investors pay only 98 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides ALNT, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Zacks offers over 45 Premium Screens tailored to different investing styles, aiding in the identification of potential winning stocks [9]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $132.8 million, down 9% year-over-year due to demand softness in vehicle and industrial markets, with an unfavorable FX impact of $1.8 million [11] - Sequentially, revenue decreased by $10.8 million or 9%, but adjusted EPS increased nearly 50% from Q4, reaching $0.46 per share [7][20] - Gross margin expanded 70 basis points sequentially to 32.2%, while operating margin rose 130 basis points to 6.6% [7][15] Business Line Data and Key Metrics Changes - Aerospace and defense revenue increased by 25%, driven by key program deliverables [12] - Vehicle revenue declined by 34%, reflecting softness in powersports demand and a shift from lower-margin programs [13] - Industrial markets showed mixed results, with power quality solutions for HVAC and data center infrastructure growing, but overall industrial market sales were down due to reduced demand in automation [14] Market Data and Key Metrics Changes - Sales to U.S. customers represented 52% of revenue, down from 58% in Q1 last year, with contributions from Europe, Canada, and Asia Pacific [11] - The industrial sector contributed 47% of trailing twelve-month sales, primarily driven by strong demand for power quality solutions [14] - The medical market was down 2% on a trailing twelve-month basis due to softness in pump-related products [14] Company Strategy and Development Direction - The company is focused on long-term growth themes such as electrification, energy efficiency, automation, and infrastructure investment [9] - The "Simplify to Accelerate Now" program is central to improving operational efficiency and aligning resources with demand [7][27] - The company is taking proactive steps to address global trade challenges, particularly regarding tariffs and rare earth magnet sourcing [28] Management's Comments on Operating Environment and Future Outlook - Management noted solid order momentum with total orders increasing 17% sequentially and 13% year-over-year, indicating a healthy book-to-bill ratio of 1.04 times [25] - The external environment remains fluid, but the company is built for resilience with a diverse customer base and global manufacturing footprint [26] - Management expressed confidence in achieving sustainable, profitable growth while continuing to invest in capabilities [30] Other Important Information - Operating cash flow was $13.9 million, up 52% from last year, and net debt decreased by $13.6 million to $174.4 million [21][23] - Capital expenditures for the quarter were $1.1 million, with an anticipated full-year spend of $10 million to $12 million [24] Q&A Session Summary Question: Demand and Supply Environment - Management observed positive signs in demand at the start of the quarter, with expectations for incremental growth [36] - Tariff impacts are being managed through cost mitigation strategies and localization of supply chains [37] Question: Competitive Positioning - The company believes it is well-positioned to win business due to its existing footprint and localization efforts [39] Question: Vehicle Business Strategy - Management confirmed a strategic shift away from lower-margin automotive applications towards higher-margin opportunities [46][49] Question: Inventory Turn Targets - The company aims to improve inventory turns beyond 3.1, but acknowledges potential short-term challenges due to geopolitical factors [56] Question: Rare Earth Elements Impact - Management provided insights on the cost impact of rare earth elements, indicating a significant portion of costs could be affected [65] Question: Recreational Vehicle Market - The company is not exiting the recreational vehicle market and sees opportunities for competition, particularly in industrial applications [73][75]

Financial Data and Key Metrics Changes - Revenue increased 9% sequentially to $132.8 million, but decreased 9% year over year due to demand softness in vehicle and industrial markets [8][10] - Gross margin expanded 70 basis points sequentially to 32.2%, while operating margin rose 130 basis points to 6.6% [6][12] - Adjusted EPS increased nearly 50% from Q4, reaching $0.46 per share [6][17] - Operating cash flow was $13.9 million, up 52% year over year [18] Business Line Data and Key Metrics Changes - Aerospace and defense revenue increased 25% year over year, driven by key program deliverables [9] - Vehicle revenue declined 34% year over year, reflecting softness in powersports demand [10] - Medical market sales were down 2% year over year, while industrial market sales were mixed [11] Market Data and Key Metrics Changes - Sales to U.S. customers represented 52% of revenue, down from 58% in the previous year [8] - The industrial sector contributed 47% of trailing twelve-month sales, primarily driven by strong demand for power quality solutions [11] Company Strategy and Development Direction - The company is focused on long-term growth themes such as electrification, energy efficiency, automation, and infrastructure investment [7] - The "Simplify to Accelerate Now" program aims to improve operational efficiency and responsiveness [6][23] - The company is taking proactive steps to address geopolitical risks and supply chain challenges, particularly regarding rare earth magnets [24][25] Management's Comments on Operating Environment and Future Outlook - Management noted positive signs of demand at the start of the quarter, with expectations for incremental growth [31] - The company is confident in its ability to navigate the complex external environment and is focused on cash generation and debt reduction [27][23] Other Important Information - The company anticipates capital expenditures of $10 million to $12 million for the full year 2025 [21] - Net debt decreased by $13.6 million, bringing it to $174.4 million, with a leverage ratio of 2.91 times [18][20] Q&A Session Summary Question: Demand and Supply Environment - Management observed positive signs of demand at the start of the quarter and expects incremental growth despite tariff uncertainties [31][32] Question: Competitive Positioning - The company believes its localization efforts and existing footprint position it well to capture opportunities in the current environment [35] Question: Vehicle Business Strategy - Management confirmed a strategic shift away from lower-margin vehicle applications towards higher-margin opportunities [42][46] Question: Inventory Turn Targets - The company aims to improve inventory turns beyond 3.1, but acknowledges potential short-term challenges due to geopolitical factors [52] Question: Rare Earth Elements Impact - Management provided insights on the potential impact of rare earth elements on sales, emphasizing the importance of mitigation strategies [58][62] Question: Recreational Vehicle Market - The company clarified its involvement in the recreational vehicle market and expressed confidence in competing effectively [68][70]

Financial Performance - Revenue for Q1 2025 was $132.8 million, a 9% increase quarter-over-quarter (QoQ), but a 9% decrease year-over-year (YoY)[5] - Net income for Q1 2025 was $3.6 million, an 18% increase QoQ, but a 48% decrease YoY[5] - Cash from operations was $13.9 million, a 12% increase QoQ and a 52% increase YoY[5] - Orders increased by 17% QoQ and 13% YoY, reaching $137.6 million in Q1 2025[5] - Gross margin was 32.2%, a 70 basis points increase QoQ, but a 10 basis points decrease YoY[5] - Operating margin was 6.6%, a 130 basis points increase QoQ, but a 160 basis points decrease YoY[5] Strategic Initiatives - The company achieved $10 million in annualized savings in 2024 through the "Simplify to Accelerate NOW" initiatives and aims to reduce annualized costs by another $6 to $7 million in 2025[7] - Restructuring and related charges were $1.5 million in Q1 2025[7] Balance Sheet - Net debt decreased by $13.6 million to $174.4 million[5] - Cash and cash equivalents increased to $47.8 million as of March 31, 2025, compared to $36.1 million as of December 31, 2024, representing a 32% increase[31]

Core Viewpoint - Allient (ALNT) reported quarterly earnings of $0.46 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, but down from $0.58 per share a year ago, indicating a 39.39% earnings surprise [1][2] Financial Performance - The company achieved revenues of $132.8 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.36%, although this is a decrease from $146.71 million in the same quarter last year [2] - Over the last four quarters, Allient has exceeded consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] Stock Performance - Allient shares have declined approximately 10% since the beginning of the year, compared to a 4.7% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.45 on revenues of $130.65 million, and for the current fiscal year, it is $1.84 on revenues of $521.51 million [7] - The trend of estimate revisions for Allient has been favorable leading up to the earnings release [6] Industry Context - The Electronics - Miscellaneous Components industry, to which Allient belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Financial Performance - Revenues for Q1 2025 were $132.8 million, a decrease of 9% from $146.7 million in Q1 2024, primarily due to declines in the Vehicle and Industrial markets [103]. - Gross profit decreased to $42.8 million in Q1 2025 from $47.4 million in Q1 2024, with gross margin slightly declining to 32.2% [105]. - Net income for Q1 2025 was $3.6 million, down 48% from $6.9 million in Q1 2024, reflecting lower sales volume [114]. - Operating income fell to $8.8 million in Q1 2025, a 27% decrease from $12.1 million in Q1 2024 [103]. - Adjusted net income for Q1 2025 was $7.6 million, down from $9.5 million in Q1 2024, with adjusted diluted earnings per share at $0.46 compared to $0.58 [114]. - EBITDA for the three months ended March 31, 2025, was $14,376,000, down from $18,594,000 in 2024, while Adjusted EBITDA was $17,472,000 compared to $20,042,000 in 2024 [123]. - Adjusted net income for the three months ended March 31, 2025, was $7,593,000, resulting in Adjusted diluted earnings per share of $0.46, down from $9,546,000 and $0.58 in 2024 [123]. Bookings and Backlog - Bookings increased by 13% in Q1 2025, totaling $137.6 million compared to $122.1 million in Q1 2024, driven by a 14.1% increase in volume [104]. - The backlog decreased to $237.3 million in Q1 2025, down 8% from $258.1 million in Q1 2024 [103]. Cost Management - The company expects to achieve $6 to $7 million in annualized cost savings in 2025 as part of its Simplify to Accelerate NOW strategy [100]. - Engineering and development expenses decreased by 14% in Q1 2025 compared to Q1 2024, reflecting cost reduction actions [109]. Cash Flow and Investments - Cash and cash equivalents increased by $11,651,000 to $47,753,000 as of March 31, 2025, from $36,102,000 at December 31, 2024 [124]. - Net cash provided by operating activities was $13,928,000 for the three months ended March 31, 2025, an increase of $4,749,000 compared to $9,179,000 in 2024 [125]. - The decrease in cash used in investing activities was primarily due to a reduction in cash paid for acquisitions, totaling $1,060,000 in Q1 2025 compared to $28,500,000 in Q1 2024 [129]. Foreign Currency and Interest Rates - A hypothetical 10% change in the value of the U.S. dollar would have impacted sales by approximately $9,509,000 for the three months ended March 31, 2025 [136]. - As of March 31, 2025, the company had foreign currency contracts with notional amounts of $31,507, resulting in a loss of $124 on these contracts for the three months ended March 31, 2025 [138]. - Net foreign currency transaction losses amounted to $677 for the three months ended March 31, 2025, compared to gains of $238 for the same period in 2024 [138]. - The Series A Notes under the 2024 Note Payable Agreement bear interest at a fixed rate of 5.96% and will mature on March 21, 2031 [139]. - Interest rates on the Credit Facility are based on Term SOFR plus a margin of 2.50% as of March 31, 2025 [140]. - The company entered into an interest rate swap with a notional amount of $40,000 maturing in December 2026 and an additional swap of $50,000 maturing in September 2027 [140]. - As of March 31, 2025, the company had $166,962 outstanding under the Revolving Facility, with $90,000 currently being hedged [141]. - A hypothetical one percentage point change in the Base Rate on the $76,962 of unhedged floating rate debt would impact interest expense by approximately $770 for the three months ended March 31, 2025 [141]. Dividends - The Company declared dividends of $0.03 per share for both the three months ended March 31, 2025, and 2024 [134].