UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________to _________________________ Commission file number 0-04041 ALLIENT INC. (Exact name of Registrant as Specified in Its Cha ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________to _________________________ Commission file number 0-04041 ALLIENT INC. (Exact name of Registrant as Specified in Its Charter) ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Allient Inc. as of March 31, 2025, show a decrease in net income to $3.6 million from $6.9 million year-over-year. Total assets increased slightly to $586.9 million. Cash flow from operations improved to $13.9 million, while cash used in investing activities decreased significantly due to the absence of major acquisition payments compared to the prior year [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $586.9 million, a slight increase from $575.8 million at year-end 2024. The increase was driven by higher cash and cash equivalents and trade receivables, partially offset by lower inventories. Total liabilities rose to $314.1 million from $310.9 million, while total stockholders' equity increased to $272.8 million from $264.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $253,873 | $237,580 | | Cash and cash equivalents | $47,753 | $36,102 | | Inventories | $105,571 | $111,517 | | **Total Assets** | **$586,899** | **$575,781** | | **Total Current Liabilities** | $63,074 | $57,377 | | Long-term debt | $222,202 | $224,177 | | **Total Liabilities** | **$314,071** | **$310,927** | | **Total Stockholders' Equity** | **$272,828** | **$264,854** | [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) For the three months ended March 31, 2025, revenues decreased by 9.5% to $132.8 million from $146.7 million in the prior-year period. Net income saw a significant drop of 48.5% to $3.6 million, or $0.21 per diluted share, compared to $6.9 million, or $0.42 per diluted share, in Q1 2024. The decline was driven by lower revenues and increased restructuring costs, despite reductions in other operating expenses Q1 2025 vs Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | $132,803 | $146,713 | | Gross Profit | $42,752 | $47,377 | | Operating Income | $8,779 | $12,100 | | **Net Income** | **$3,557** | **$6,902** | | Diluted EPS | $0.21 | $0.42 | - Restructuring and business realignment costs increased significantly to **$1.5 million** in Q1 2025 from just **$31 thousand** in Q1 2024[10](index=10&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased from $264.9 million at the end of 2024 to $272.8 million at March 31, 2025. The increase was primarily due to net income of $3.6 million and a positive foreign currency translation adjustment of $3.9 million, partially offset by dividends of $0.5 million - The company declared and paid dividends of **$0.03 per share**, totaling **$518 thousand** in Q1 2025[12](index=12&type=chunk) - Accumulated other comprehensive loss decreased from **$(23.2) million** to **$(19.9) million**, mainly due to a **$3.9 million** positive foreign currency translation adjustment[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities for Q1 2025 was $13.9 million, an improvement from $9.2 million in Q1 2024, driven by better working capital management, particularly in inventories. Net cash used in investing activities was only $1.1 million, compared to $28.5 million in the prior year, which included a $25.5 million acquisition payment. Financing activities used $2.2 million in cash Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $13,928 | $9,179 | | Net cash used in investing activities | $(1,060) | $(28,500) | | Net cash (used in) provided by financing activities | $(2,190) | $19,538 | | **Net increase (decrease) in cash** | **$11,651** | **$(387)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, the finalization of the SNC acquisition purchase price, and revenue disaggregation which shows a decline in Industrial and Vehicle markets but growth in Aerospace & Defense. They also outline the 'Simplify to Accelerate NOW' restructuring program, debt obligations under new credit agreements, and the use of derivatives for hedging interest rate and foreign currency risks - On January 11, 2024, the Company acquired SNC Manufacturing Co., Inc. for a purchase price of **$20.0 million** in cash. The purchase price allocation is now final[24](index=24&type=chunk)[25](index=25&type=chunk) - The company operates as a single reportable segment, manufacturing and marketing specialty-controlled motion products[91](index=91&type=chunk) Revenue by Target Market (in thousands) | Target Market | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Industrial | $62,426 | $69,594 | | Vehicle | $22,973 | $34,654 | | Medical | $19,102 | $19,086 | | Aerospace & Defense | $21,037 | $16,653 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 9% year-over-year revenue decline in Q1 2025 to slowing demand and elevated customer inventory levels, particularly in the Vehicle and Industrial markets, partially offset by strength in Aerospace and Defense. The 'Simplify to Accelerate NOW' strategy was initiated to streamline operations, with expected one-time costs of $4-5 million in 2025 to achieve $6-7 million in annualized savings. Despite lower revenue, operating expenses were reduced. Liquidity remains strong, with $47.8 million in cash and $113.0 million available under the revolving credit facility - The company initiated the 'Simplify to Accelerate NOW' program to realign its manufacturing footprint and streamline the organization, expecting to incur **$4 to $5 million** in costs during 2025 to achieve **$6 to $7 million** in annualized savings[98](index=98&type=chunk)[100](index=100&type=chunk) - Q1 2025 revenue decreased by **9% YoY**, primarily due to an **8.2% volume decrease** and a **1.2% negative foreign currency impact**. Organic revenue decreased **9.1%**[103](index=103&type=chunk) - Bookings for Q1 2025 increased **13% YoY** to **$137.6 million**, indicating a return to more normalized customer order patterns[103](index=103&type=chunk)[104](index=104&type=chunk) Non-GAAP Reconciliation Highlights Q1 2025 (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $3,557 | $6,902 | | Adjusted Net Income | $7,593 | $9,546 | | EBITDA | $14,376 | $18,594 | | Adjusted EBITDA | $17,472 | $20,042 | [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency fluctuations and interest rate changes. A hypothetical 10% change in the U.S. dollar value would impact sales by approximately $9.5 million. To mitigate these risks, the company uses foreign currency forward contracts and interest rate swaps. As of March 31, 2025, $90 million of its $167 million in variable-rate debt was hedged. A 100 basis point change in interest rates would impact annual interest expense on the unhedged portion by approximately $0.8 million - A hypothetical **10%** change in the U.S. dollar value against key foreign currencies would impact sales by approximately **$9.5 million** for the quarter[136](index=136&type=chunk) - The company uses foreign currency contracts to hedge short-term balance sheet exposure, with notional amounts of **$31.5 million** at March 31, 2025[138](index=138&type=chunk) - The company uses interest rate swaps to manage exposure on its variable-rate debt. As of March 31, 2025, swaps with a notional amount of **$90.0 million** were in place to hedge a portion of the **$167.0 million** outstanding under the Revolving Facility[140](index=140&type=chunk)[141](index=141&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025. They concluded that these controls and procedures were effective. There were no material changes to the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[144](index=144&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[145](index=145&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - The company states there have been no material changes to the risk factors disclosed in its **2024 Form 10-K**[146](index=146&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended March 31, 2025, the company withheld 2,697 shares at an average price of $23.36 per share to satisfy employee tax withholding obligations related to the vesting of stock awards. The company did not have an authorized stock repurchase plan in place - In March 2025, the company withheld **2,697 shares** at an average price of **$23.36** to satisfy tax withholding obligations for employees on vested stock. These were not part of a public repurchase plan[147](index=147&type=chunk) [Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or executive officers of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the first quarter of 2025 - No directors or executive officers adopted or terminated a **Rule 10b5-1** trading plan during the quarter ended March 31, 2025[148](index=148&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL financial data files - Exhibits filed include CEO and CFO certifications under **SOX sections 302 and 906**, and various **Inline XBRL** documents[150](index=150&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 0-04041 ALLIENT INC. (Exact name of registrant as specified in its charter) Colorado 84-0518115 (I.R.S. Employer Ident ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Allient Inc., including the Balance Sheets, Statements of Income and Comprehensive Income, Statements of Stockholders' Equity, Statements of Cash Flows, and the accompanying notes, providing a detailed financial overview for the periods ended September 30, 2024 [Condensed Consolidated Balance Sheets – Unaudited](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20Unaudited) The balance sheet shows a slight decrease in total assets from $597,542 thousand at December 31, 2023, to $596,435 thousand at September 30, 2024. Total liabilities decreased significantly, while stockholders' equity increased | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Total Assets | $596,435 | $597,542 | (0.19)% | | Total Liabilities | $323,568 | $345,967 | (6.59)% | | Total Stockholders' Equity | $272,867 | $251,575 | 8.46% | | Cash and cash equivalents | $37,118 | $31,901 | 16.38% | | Total current assets | $250,854 | $248,151 | 1.09% | | Total current liabilities | $61,186 | $95,617 | (36.01)% | [Condensed Consolidated Statements of Income and Comprehensive Income – Unaudited](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20%E2%80%93%20Unaudited) For the three months ended September 30, 2024, revenues decreased by **14%** YoY, leading to a **68%** drop in net income. For the nine months, revenues decreased by **7%** YoY, and net income decreased by **49%** YoY | Metric | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | YoY Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Revenues | $125,213 | $145,319 | (14)% | | Gross profit | $39,264 | $47,498 | (17)% | | Operating income | $6,616 | $11,864 | (44)% | | Net income | $2,101 | $6,666 | (68)% | | Basic EPS | $0.13 | $0.42 | (69)% | | Diluted EPS | $0.13 | $0.41 | (68)% | | Metric | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | YoY Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Revenues | $407,958 | $437,637 | (7)% | | Gross profit | $127,317 | $139,309 | (9)% | | Operating income | $23,595 | $35,273 | (33)% | | Net income | $10,153 | $19,750 | (49)% | | Basic EPS | $0.61 | $1.24 | (51)% | | Diluted EPS | $0.61 | $1.22 | (50)% | [Condensed Consolidated Statements of Stockholders' Equity – Unaudited](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20%E2%80%93%20Unaudited) Total stockholders' equity increased from **$251,575 thousand** at December 31, 2023, to **$272,867 thousand** at September 30, 2024, primarily driven by net income and stock issuances related to acquisitions and employee benefit plans, partially offset by dividends and comprehensive losses | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Common Stock | $110,278 | $95,937 | 14.95% | | Retained Earnings | $174,497 | $165,813 | 5.24% | | Accumulated Other Comprehensive Loss | $(11,908) | $(10,175) | (17.03)% | | Total Stockholders' Equity | $272,867 | $251,575 | 8.46% | - Share issuance in connection with acquisitions contributed **$6,250 thousand** to common stock in Q1 2024[12](index=12&type=chunk) - Dividends paid to stockholders were **$0.03** per share in Q1, Q2, and Q3 2024[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows – Unaudited](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Unaudited) Net cash provided by operating activities increased to **$29,458 thousand** for the nine months ended September 30, 2024, from **$27,132 thousand** in the prior year. Cash used in investing activities significantly increased due to acquisitions, while financing activities shifted from a net use to a net provision of cash | Metric | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | YoY Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Net cash provided by operating activities | $29,458 | $27,132 | 8.57% | | Net cash used in investing activities | $(32,134) | $(18,854) | (70.43)% | | Net cash provided by (used in) financing activities | $7,685 | $(14,500) | 152.99% | | Net increase (decrease) in cash and cash equivalents | $5,217 | $(6,778) | 176.96% | | Cash and cash equivalents at end of period | $37,118 | $23,836 | 55.72% | - Consideration paid for acquisitions, net of cash acquired, was **$(25,231) thousand** in 2024, up from **$(11,004) thousand** in 2023[14](index=14&type=chunk) - Proceeds from issuance of long-term debt were **$76,898 thousand** in 2024, significantly higher than **$11,000 thousand** in 2023[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements – Unaudited](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%E2%80%93%20Unaudited) These notes provide detailed disclosures for the condensed consolidated financial statements, covering the basis of preparation, significant accounting policies, acquisitions, revenue recognition, inventory, property, plant and equipment, goodwill, intangible assets, stock-based compensation, accrued liabilities, debt obligations, derivative financial instruments, fair value measurements, income taxes, leases, accumulated other comprehensive income (loss), dividends per share, earnings per share, and segment information [1. BASIS OF PREPARATION AND PRESENTATION](index=8&type=section&id=1.%20BASIS%20OF%20PREPARATION%20AND%20PRESENTATION) Allient Inc. designs, manufactures, and sells precision motion, control, power, and structural composites globally for industrial, vehicle, medical, and aerospace & defense markets. The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP, with certain information condensed or omitted - Allient Inc. operates in designing, manufacturing, and selling precision motion, control, power, and structural composites for industrial, vehicle, medical, and aerospace & defense markets globally[16](index=16&type=chunk) - Financial statements are prepared under U.S. GAAP, with management estimates and assumptions, and should be read with the 2023 Form 10-K[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) [2. ACQUISITIONS](index=9&type=section&id=2.%20ACQUISITIONS) In Q1 2024, Allient acquired SNC Manufacturing Co., Inc. for **$20.0 million** cash, a designer and manufacturer of electrical transformers. The acquisition contributed **$28,072 thousand** in revenue and **$3,014 thousand** in net income for the nine months ended September 30, 2024. The company also finalized payments for Sierramotion (acquired Q3 2023) and Spectrum (acquired 2022) in Q1 2024 | SNC Acquisition Contribution (Nine Months Ended Sep 30, 2024) | Amount (in thousands) | | :---------------------------------------------------------- | :-------------------- | | Revenue | $28,072 | | Net income | $3,014 | - Acquired SNC Manufacturing Co., Inc. in Q1 2024 for **$20.0 million** cash, adding electrical transformer design and manufacturing capabilities[23](index=23&type=chunk)[24](index=24&type=chunk) - Goodwill from SNC acquisition is related to assembled workforce, synergies, and management knowledge, and is not tax deductible[29](index=29&type=chunk)[30](index=30&type=chunk) - Final deferred acquisition payments for Sierramotion and Spectrum were made in Q1 2024[31](index=31&type=chunk)[32](index=32&type=chunk) [3. REVENUE RECOGNITION](index=11&type=section&id=3.%20REVENUE%20RECOGNITION) Revenue is primarily recognized at a single point in time upon shipment, when control transfers to the customer. The Company disaggregates revenue by geographical regions and target markets, with Industrial and North America being the largest categories - Revenue is generally recognized when products are shipped and control is transferred to the customer[33](index=33&type=chunk)[34](index=34&type=chunk) | Target Market | 2024 (in thousands) | 2023 (in thousands) | YoY Change | | :-------------------- | :------------------ | :------------------ | :--------- | | Industrial | $192,230 | $193,766 | (0.79)% | | Vehicle | $83,669 | $98,559 | (15.11)% | | Medical | $58,828 | $66,254 | (11.21)% | | Aerospace & Defense | $53,627 | $60,237 | (10.97)% | | Distribution and Other | $19,604 | $18,821 | 4.16% | | Total | $407,958 | $437,637 | (6.78)% | | Geography | 2024 (in thousands) | 2023 (in thousands) | YoY Change | | :-------------------------- | :------------------ | :------------------ | :--------- | | North America (primarily U.S.) | $276,886 | $300,834 | (7.96)% | | Europe | $111,664 | $113,679 | (1.77)% | | Asia-Pacific | $19,408 | $23,124 | (16.07)% | | Total | $407,958 | $437,637 | (6.78)% | [4. INVENTORIES](index=13&type=section&id=4.%20INVENTORIES) Inventories are valued at the lower of cost (FIFO) or net realizable value, totaling **$117,605 thousand** at September 30, 2024, a slight decrease from **$117,686 thousand** at December 31, 2023 | Inventory Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :----------------- | :-------------------------- | :-------------------------- | | Parts and raw materials | $85,670 | $87,381 | | Work-in-process | $11,897 | $11,456 | | Finished goods | $20,038 | $18,849 | | Total Inventories | $117,605 | $117,686 | [5. PROPERTY, PLANT AND EQUIPMENT](index=13&type=section&id=5.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) Net property, plant, and equipment increased slightly to **$68,396 thousand** at September 30, 2024, from **$67,463 thousand** at December 31, 2023. Depreciation expense for the nine months ended September 30, 2024, was **$9,667 thousand** | Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Gross Property, Plant, and Equipment | $171,558 | $160,624 | | Accumulated Depreciation | $(103,162) | $(93,161) | | Net Property, Plant, and Equipment | $68,396 | $67,463 | - Depreciation expense for the nine months ended September 30, 2024, was **$9,667 thousand**[45](index=45&type=chunk) [6. GOODWILL](index=13&type=section&id=6.%20GOODWILL) Goodwill increased to **$134,390 thousand** at September 30, 2024, from **$131,338 thousand** at December 31, 2023, primarily due to goodwill acquired from the SNC acquisition and measurement period adjustments | Goodwill Changes (Nine Months Ended Sep 30, 2024) | Amount (in thousands) | | :------------------------------------------------ | :-------------------- | | Beginning balance (Dec 31, 2023) | $131,338 | | Goodwill acquired | $2,752 | | Impact of measurement period adjustments | $323 | | Effect of foreign currency translation | $(23) | | Ending balance (Sep 30, 2024) | $134,390 | [7. INTANGIBLE ASSETS](index=14&type=section&id=7.%20INTANGIBLE%20ASSETS) Net intangible assets decreased to **$104,593 thousand** at September 30, 2024, from **$111,373 thousand** at December 31, 2023. Amortization expense for the nine months ended September 30, 2024, was **$9,381 thousand** | Intangible Asset Category | Sep 30, 2024 Net Book Value (in thousands) | Dec 31, 2023 Net Book Value (in thousands) | | :------------------------ | :----------------------------------------- | :----------------------------------------- | | Customer lists | $69,523 | $74,410 | | Trade name | $7,690 | $7,656 | | Design and technologies | $27,380 | $29,307 | | Total Net Intangible Assets | $104,593 | $111,373 | - Amortization expense for intangible assets was **$9,381 thousand** for the nine months ended September 30, 2024[48](index=48&type=chunk) - Estimated future intangible asset amortization expense for the remainder of 2024 is **$3,305 thousand**, and **$12,570 thousand** for 2025[49](index=49&type=chunk) [8. STOCK-BASED COMPENSATION](index=14&type=section&id=8.%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense for the nine months ended September 30, 2024, was **$3,382 thousand**. The Company awarded **186,758 shares** of unvested restricted stock during this period, with **107,377 shares** having performance-based vesting conditions - Stock-based compensation expense was **$3,382 thousand** for the nine months ended September 30, 2024, compared to **$4,165 thousand** in the prior year[53](index=53&type=chunk) - **186,758 shares** of unvested restricted stock were awarded in the nine months ended September 30, 2024, with a weighted average market value of **$29.78**[51](index=51&type=chunk) [9. ACCRUED LIABILITIES](index=15&type=section&id=9.%20ACCRUED%20LIABILITIES) Accrued liabilities significantly decreased to **$32,292 thousand** at September 30, 2024, from **$56,488 thousand** at December 31, 2023, primarily due to the payment of accrued business acquisition consideration and contingent consideration. The Company also initiated a "Simplify to Accelerate NOW" program, incurring **$1,948 thousand** in restructuring costs for the nine months ended September 30, 2024 | Accrued Liability Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :------------------------- | :-------------------------- | :-------------------------- | | Compensation and fringe benefits | $13,448 | $17,251 | | Accrued business acquisition consideration | $0 | $12,638 | | Contingent consideration – current | $0 | $7,720 | | Restructuring related accruals | $922 | $0 | | Total Accrued Liabilities | $32,292 | $56,488 | - The "Simplify to Accelerate NOW" program, initiated in Q2 2024, is expected to cost **$1.9 million** to **$2.4 million**, primarily for employee severance[54](index=54&type=chunk)[55](index=55&type=chunk) - Restructuring and business realignment costs of **$1,948 thousand** were incurred for the nine months ended September 30, 2024[55](index=55&type=chunk) [10. DEBT OBLIGATIONS](index=16&type=section&id=10.%20DEBT%20OBLIGATIONS) Long-term debt increased to **$231,415 thousand** at September 30, 2024, from **$218,402 thousand** at December 31, 2023. This includes a new **$280 million** revolving credit facility and a **$150 million** fixed-rate private shelf facility, under which **$50 million** in Series A Senior Notes were issued. The Company was in compliance with all debt covenants as of September 30, 2024, but amendments were made in October 2024 to temporarily increase the maximum Leverage Ratio | Debt Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Revolving Credit Facility | $175,962 | $210,120 | | Note Payable | $50,000 | $0 | | Long-term debt (total) | $231,415 | $218,402 | - Entered into a **$280 million** revolving credit facility (extended to March 1, 2029) and a **$150 million** fixed-rate private shelf facility, issuing **$50 million** in Series A Senior Notes due March 21, 2031, at **5.96%** interest[57](index=57&type=chunk)[62](index=62&type=chunk) - October 2024 amendments temporarily increased the maximum Leverage Ratio to **4.5:1.0** for Q1 and Q2 2025, and adjusted interest rates on the Revolving Facility and Series A Notes[64](index=64&type=chunk) - The Company was in compliance with all financial covenants (minimum interest coverage ratio of **3.0:1.0** and Leverage Ratio not greater than **4.25:1.0**) as of September 30, 2024[59](index=59&type=chunk) [11. DERIVATIVE FINANCIAL INSTRUMENTS](index=18&type=section&id=11.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) The Company uses derivative financial instruments, primarily foreign currency contracts and interest rate swaps, to manage interest rate and foreign exchange risks. Foreign currency contracts hedge short-term balance sheet exposure, while interest rate swaps are designated as cash flow hedges to stabilize interest expense on variable-rate debt - Uses foreign currency contracts (30-day maturities) to hedge short-term balance sheet exposure in various currencies, with notional amounts of **$24,438 thousand** at September 30, 2024[66](index=66&type=chunk) - Employs interest rate swaps as cash flow hedges to manage variable-rate debt exposure, with a new **$50,000 thousand** notional amount swap maturing in September 2027 added in September 2024[67](index=67&type=chunk)[69](index=69&type=chunk) - Estimated **$1,566 thousand** will be reclassified as a decrease to interest expense over the next twelve months related to its interest rate derivatives[71](index=71&type=chunk) [12. FAIR VALUE](index=22&type=section&id=12.%20FAIR%20VALUE) The Company's financial assets and liabilities are measured at fair value using a three-level hierarchy. Pension plan assets and deferred compensation plan assets are Level 1, while foreign currency hedge contracts and interest rate swaps are Level 2. Contingent consideration liabilities, previously Level 3, were settled in Q1 2024 - Fair value hierarchy levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), Level 3 (significant unobservable inputs)[77](index=77&type=chunk) - Pension plan assets (**$6,399 thousand**) and deferred compensation plan assets (**$4,747 thousand**) are classified as Level 1[78](index=78&type=chunk) - Foreign currency hedge contracts (**$14 thousand** net) and interest rate swaps (**$1,915 thousand** net) are classified as Level 2[78](index=78&type=chunk) - Contingent consideration liabilities, previously Level 3, were settled in Q1 2024, with no remaining liability as of September 30, 2024[78](index=78&type=chunk) [13. INCOME TAXES](index=23&type=section&id=13.%20INCOME%20TAXES) The effective income tax rate for the three months ended September 30, 2024, was **22.6%** (**23.0%** in 2023), and **21.8%** for the nine months (**23.4%** in 2023). Discrete tax costs related to share-based awards and provision to return adjustments impacted the 2024 rates, while 2023 included discrete tax benefits | Period | Effective Income Tax Rate (2024) | Effective Income Tax Rate (2023) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Three months ended Sep 30 | 22.6% | 23.0% | | Nine months ended Sep 30 | 21.8% | 23.4% | - The 2024 effective tax rates include net discrete tax costs primarily from share-based awards and provision to return adjustments[80](index=80&type=chunk) - The Company expects its income tax rate for the full year 2024 to be approximately **21%** to **23%**[112](index=112&type=chunk) [14. LEASES](index=24&type=section&id=14.%20LEASES) The Company has operating and finance leases for facilities and equipment. Cash paid for operating leases increased to **$4,791 thousand** for the nine months ended September 30, 2024, from **$4,195 thousand** in 2023. Total operating lease liabilities are **$24,312 thousand** and finance lease liabilities are **$8,711 thousand** as of September 30, 2024 | Metric | 2024 (in thousands) | 2023 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Cash paid for operating leases | $4,791 | $4,195 | | Cash paid for interest on finance lease obligations | $305 | $318 | | Assets acquired under operating leases | $3,709 | $6,578 | | Lease Type | Total Lease Liabilities (in thousands) | | :--------------- | :----------------------------------- | | Operating Leases | $24,312 | | Finance Leases | $8,711 | [15. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=25&type=section&id=15.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) Accumulated Other Comprehensive Loss (AOCI) increased to **$(11,908) thousand** at September 30, 2024, from **$(10,175) thousand** at December 31, 2023. This change was influenced by unrealized gains/losses on cash flow hedges and foreign currency translation adjustments | AOCI Component | Dec 31, 2023 (in thousands) | Sep 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Defined Benefit Plan Liability | $(344) | $(344) | | Cash Flow Hedges | $4,431 | $1,847 | | Tax Effect of Cash Flow Hedges | $(1,006) | $(390) | | Foreign Currency Translation Adjustment | $(13,256) | $(13,021) | | Total AOCI | $(10,175) | $(11,908) | - Foreign currency translation resulted in a gain of **$235 thousand** for the nine months ended September 30, 2024, compared to a loss of **$1,995 thousand** in 2023[85](index=85&type=chunk) [16. DIVIDENDS PER SHARE](index=25&type=section&id=16.%20DIVIDENDS%20PER%20SHARE) The Company declared a quarterly dividend of **$0.03** per share in the first, second, and third quarters of 2024 - Quarterly dividend declared was **$0.03** per share for Q1, Q2, and Q3 2024[86](index=86&type=chunk) [17. EARNINGS PER SHARE](index=26&type=section&id=17.%20EARNINGS%20PER%20SHARE) Diluted weighted average shares outstanding were **16,605 thousand** for the three months ended September 30, 2024, and **16,581 thousand** for the nine months. Anti-dilutive shares excluded from the calculation were **128,000** and **74,000** for the respective periods in 2024 | Period | Basic (in thousands) | Diluted (in thousands) | | :-------------------------------- | :------------------- | :--------------------- | | Three months ended Sep 30, 2024 | 16,574 | 16,605 | | Three months ended Sep 30, 2023 | 15,979 | 16,237 | | Nine months ended Sep 30, 2024 | 16,513 | 16,581 | | Nine months ended Sep 30, 2023 | 15,940 | 16,198 | - Anti-dilutive common shares excluded from diluted EPS calculation were **128,000** for the three months and **74,000** for the nine months ended September 30, 2024[87](index=87&type=chunk) [18. SEGMENT INFORMATION](index=26&type=section&id=18.%20SEGMENT%20INFORMATION) The Company operates as a single segment focused on specialty-controlled motion products. Revenue distribution shows **56%** to U.S. customers for Q3 2024 (**55%** for nine months), with the remainder to foreign customers, primarily in Europe, Canada, and Asia-Pacific - The Company operates in one segment: manufacture and marketing of specialty-controlled motion products and solutions[88](index=88&type=chunk) - For the three months ended September 30, 2024, **56%** of revenue was shipped to U.S. customers, and **44%** to foreign customers (Europe, Canada, Asia-Pacific)[89](index=89&type=chunk) - No single customer accounted for a material concentration of revenue or accounts receivable for the three and nine months ended September 30, 2024[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Allient Inc.'s financial condition and results of operations, highlighting key trends, business environment factors, and the impact of strategic initiatives like "Simplify to Accelerate NOW." It also includes a discussion of non-GAAP financial measures and the Company's liquidity and capital resources [Overview](index=27&type=section&id=Overview) Allient Inc. is a global company specializing in precision motion, control, power, and structural composites for industrial, vehicle, medical, and aerospace & defense markets. It provides integrated system solutions and individual products through direct sales and distributors, leveraging expertise in electro-magnetic, mechanical, and electronic motion technology - Allient Inc. designs, manufactures, and sells precision motion, control, power, and structural composites globally for industrial, vehicle, medical, and aerospace & defense markets[95](index=95&type=chunk) - Products include nano precision positioning systems, servo control systems, motion controllers, digital servo amplifiers and drives, various motors, gearing, encoders, filters, and transformers[95](index=95&type=chunk) [Business Environment](index=29&type=section&id=Business%20Environment) The Company faced negative impacts from inflation and higher interest rates from 2022 through 2024. Geopolitical conflicts and the U.S. Presidential election are creating economic uncertainty. Customer ordering patterns, particularly in Vehicle and Industrial markets, shifted significantly in Q2 and Q3 2024 due to elevated inventory levels and slowing demand. In response, Allient launched its "Simplify to Accelerate NOW" strategy to reduce costs, enhance efficiency, and improve cash flow, with expected annual savings of **$10 million** - Inflation and higher interest rates negatively impacted input costs and pricing from 2022 through most of 2024[96](index=96&type=chunk) - Geopolitical conflicts and the U.S. Presidential election are causing economic uncertainty, affecting energy prices, interest rates, supply chains, and customer ordering patterns[97](index=97&type=chunk) - Customer demand decreased, and delivery dates were pushed out in Q2 and Q3 2024, especially in Vehicle and Industrial markets, due to elevated customer inventory levels[98](index=98&type=chunk) - Launched "Simplify to Accelerate NOW" strategy to reduce costs, enhance efficiency, and improve cash flow, with expected annual savings of approximately **$10 million**[99](index=99&type=chunk)[100](index=100&type=chunk) [Operating Results](index=30&type=section&id=Operating%20Results) Operating results for both the three and nine months ended September 30, 2024, show a decline in revenues, gross profit, operating income, and net income compared to the prior year. This was primarily driven by lower sales volume, particularly in the Vehicle and Industrial markets, and changes in customer ordering patterns, partially offset by contributions from recent acquisitions and cost reduction efforts under the "Simplify to Accelerate NOW" strategy [Three months ended September 30, 2024 compared to three months ended September 30, 2023](index=30&type=section&id=Three%20months%20ended%20September%2030,%202024%20compared%20to%20three%20months%20ended%20September%2030,%202023) Revenues decreased by **14%** YoY to **$125,213 thousand**, primarily due to volume decreases in Vehicle and Industrial markets, partially offset by acquisitions. Gross profit declined by **17%** with a reduced gross margin of **31.4%**. Operating income fell by **44%**, and net income decreased by **68%** to **$2,101 thousand** | Metric | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | Variance ($) | Variance (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | :----------- | | Revenues | $125,213 | $145,319 | $(20,106) | (14)% | | Gross profit | $39,264 | $47,498 | $(8,234) | (17)% | | Gross margin percentage | 31.4% | 32.7% | | | | Operating income | $6,616 | $11,864 | $(5,248) | (44)% | | Net income | $2,101 | $6,666 | $(4,565) | (68)% | | Diluted earnings per share | $0.13 | $0.41 | $(0.28) | (68)% | | Bookings | $102,631 | $154,908 | $(52,277) | (34)% | | Backlog | $238,492 | $309,636 | $(71,144) | (23)% | - Organic revenue decreased **21.5%** in Q3 2024, with acquisitions contributing **$10,473 thousand**[103](index=103&type=chunk) - Bookings decreased **34%** due to a large defense order in Q3 2023 and changes in customer order patterns[104](index=104&type=chunk) - General and administrative expenses decreased **5%** due to lower incentive compensation and cost reduction actions from the "Simplify to Accelerate NOW" strategy[108](index=108&type=chunk) [Nine months ended September 30, 2024 compared to nine months ended September 30, 2023](index=33&type=section&id=Nine%20months%20ended%20September%2030,%202024%20compared%20to%20nine%20months%20ended%20September%2030,%202023) Revenues decreased by **7%** YoY to **$407,958 thousand**, primarily due to volume declines in Vehicle markets, partially offset by acquisitions. Gross profit decreased by **9%** with a gross margin of **31.2%**. Operating income fell by **33%**, and net income decreased by **49%** to **$10,153 thousand** | Metric | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | Variance ($) | Variance (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | :----------- | | Revenues | $407,958 | $437,637 | $(29,679) | (7)% | | Gross profit | $127,317 | $139,309 | $(11,992) | (9)% | | Gross margin percentage | 31.2% | 31.8% | | | | Operating income | $23,595 | $35,273 | $(11,678) | (33)% | | Net income | $10,153 | $19,750 | $(9,597) | (49)% | | Diluted earnings per share | $0.61 | $1.22 | $(0.61) | (50)% | | Bookings | $362,131 | $415,113 | $(52,982) | (13)% | | Backlog | $238,492 | $309,636 | $(71,144) | (23)% | - Organic revenue decreased **13.9%** year-to-date 2024, with acquisitions contributing **$30,856 thousand**[117](index=117&type=chunk) - Business development costs increased **23%** primarily due to restructuring-related costs from the "Simplify to Accelerate NOW" strategy[123](index=123&type=chunk) - Interest expense increased **10%** due to higher interest rates and average debt levels for acquisitions and capital expenditures[125](index=125&type=chunk) [Non-GAAP Measures](index=35&type=section&id=Non-GAAP%20Measures) The Company provides non-GAAP measures such as Organic Revenue, EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings Per Share to offer supplemental information for evaluating operating results, excluding items not indicative of ongoing performance - Non-GAAP measures (Organic Revenue, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS) are used to evaluate operating results by excluding non-routine items[129](index=129&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) | Period | Three months ended Sep 30, 2024 | Nine months ended Sep 30, 2024 | | :-------------------------------- | :------------------------------ | :----------------------------- | | Revenue change over prior year | (13.8)% | (6.8)% | | Less: Impact of acquisitions and foreign currency | 7.7% | 7.1% | | Organic revenue | (21.5)% | (13.9)% | | Metric | Three months ended Sep 30, 2024 (in thousands) | Three months ended Sep 30, 2023 (in thousands) | Nine months ended Sep 30, 2024 (in thousands) | Nine months ended Sep 30, 2023 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | EBITDA | $12,595 | $18,243 | $42,438 | $54,042 | | Adjusted EBITDA | $14,432 | $20,849 | $48,404 | $60,255 | | Metric | Three months ended Sep 30, 2024 (in thousands) | Diluted EPS (2024) | Three months ended Sep 30, 2023 (in thousands) | Diluted EPS (2023) | | :-------------------------------- | :--------------------------------------------- | :----------------- | :--------------------------------------------- | :----------------- | | Net income as reported | $2,101 | $0.13 | $6,666 | $0.41 | | Non-GAAP adjusted net income | $5,068 | $0.31 | $9,980 | $0.61 | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased by **$5,217 thousand** to **$37,118 thousand** at September 30, 2024. Operating cash flow improved, while investing cash flow increased due to acquisitions. Financing activities provided cash, primarily from new debt to fund acquisitions. The Company believes its current cash, operating cash flows, and available financing are sufficient for the next twelve months, despite recent amendments to debt covenants - Cash and cash equivalents increased by **$5,217 thousand** to **$37,118 thousand** at September 30, 2024[138](index=138&type=chunk) - Net cash provided by operating activities increased by **$2,326 thousand** to **$29,458 thousand** for the nine months ended September 30, 2024[139](index=139&type=chunk) - Net cash used in investing activities increased by **$13,280 thousand** to **$(32,134) thousand**, primarily due to the **$20 million** cash paid for the SNC acquisition[139](index=139&type=chunk)[141](index=141&type=chunk) - Net cash provided by financing activities was **$7,685 thousand**, a significant increase from **$(14,500) thousand** used in the prior year, mainly due to **$76,898 thousand** in new long-term debt[139](index=139&type=chunk)[142](index=142&type=chunk) - The Company believes existing cash, anticipated operating cash flows, and available financing are sufficient to meet cash needs for the next twelve months[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Allient Inc.'s exposure to market risks, specifically foreign currency exchange rate fluctuations and interest rate movements, and the strategies employed to mitigate these risks, including the use of derivative financial instruments [Foreign Currency](index=40&type=section&id=Foreign%20Currency) Allient is exposed to foreign currency exchange rate fluctuations due to international operations in various countries. A hypothetical **10%** change in the U.S. dollar's value would impact sales by approximately **$4,213 thousand** for the nine months ended September 30, 2024, and foreign net assets by **$17,152 thousand**. The Company uses foreign currency contracts to hedge short-term balance sheet exposure - International operations expose the Company to foreign currency exchange rate fluctuations (Euro, Swedish Krona, Chinese Renminbi, Canadian dollar, Czech Krona, Mexican pesos, British Pound Sterling, New Zealand dollar)[148](index=148&type=chunk) - A hypothetical **10%** change in the U.S. dollar's value would impact sales by approximately **$4,213 thousand** for the nine months ended September 30, 2024[149](index=149&type=chunk) - Foreign currency translation adjustments resulted in a gain of **$235 thousand** for the nine months ended September 30, 2024, compared to a loss of **$1,995 thousand** in 2023[150](index=150&type=chunk) - Foreign currency contracts with notional amounts of **$24,438 thousand** were used to hedge short-term balance sheet exposure as of September 30, 2024[151](index=151&type=chunk) [Interest Rates](index=42&type=section&id=Interest%20Rates) The Company manages interest rate risk through a mix of fixed-rate debt (Series A Notes at **5.96%**, amended to **6.46%** from Oct 2024 to Sep 2025) and variable-rate debt under its Credit Facility (Term SOFR plus a margin). Interest rate swaps are used to hedge variable-rate debt, with **$150,000 thousand** of the Revolving Facility currently hedged - Series A Notes bear a fixed interest rate of **5.96%** (amended to **6.46%** from Oct 1, 2024, to Sep 30, 2025) and mature on March 21, 2031[152](index=152&type=chunk) - Interest rates on the Credit Facility are variable, based on Term SOFR plus a margin (**1.25%** to **2.50%**)[153](index=153&type=chunk) - Interest rate swaps are used to hedge variable-rate debt, with **$150,000 thousand** of the **$175,962 thousand** Revolving Facility outstanding at September 30, 2024, currently hedged[153](index=153&type=chunk)[154](index=154&type=chunk) - A hypothetical **1%** change in the Base Rate on the **$25,962 thousand** unhedged floating rate debt would impact interest expense by approximately **$200 thousand** for the nine months ended September 30, 2024[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Allient Inc.'s disclosure controls and procedures as of September 30, 2024, and reports no material changes in internal control over financial reporting during the quarter [Conclusion regarding the effectiveness of disclosure controls and procedures](index=44&type=section&id=Conclusion%20regarding%20the%20effectiveness%20of%20disclosure%20controls%20and%20procedures) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024, providing reasonable assurance of achieving their objectives - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2024[155](index=155&type=chunk)[156](index=156&type=chunk) [Changes in internal control over financial reporting](index=44&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) There were no material changes in the Company's internal control over financial reporting during the quarter ended September 30, 2024 - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2024[157](index=157&type=chunk) PART II. OTHER INFORMATION [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Form 10-K for the year ended December 31, 2023, except for factual updates provided elsewhere in this Form 10-Q - No material changes to risk factors from the 2023 Form 10-K, except for factual updates within this 10-Q[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During September 2024, the Company withheld **1,102 shares** at an average price of **$21.24** per share to satisfy tax withholding obligations related to stock vesting. The Company did not have an authorized stock repurchase plan in place at September 30, 2024 | Period | Number of Shares Purchased | Average Price Paid per Share | | :----------------- | :------------------------- | :--------------------------- | | 09/01/24 to 09/30/24 | 1,102 | $21.24 | - Shares were withheld to satisfy tax withholding obligations for stock vesting, not part of a repurchase plan[159](index=159&type=chunk) - No authorized stock repurchase plan was in place as of September 30, 2024[159](index=159&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2024 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers in Q3 2024[160](index=160&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit and note purchase agreements, certifications from the CEO and CFO, and XBRL taxonomy documents - Includes amendments to the Third Amended and Restated Credit Agreement and Note Purchase and Private Shelf Agreement[162](index=162&type=chunk) - Contains certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act[162](index=162&type=chunk) - Provides Inline XBRL Taxonomy Extension documents[162](index=162&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________to _________________________ Commission file number 0-04041 ALLIENT INC. (Exact name of Registrant as Specified in Its Charter) ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Allient Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of income and comprehensive income, stockholders' equity, and cash flows, along with detailed notes [Condensed Consolidated Balance Sheets – Unaudited](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20Unaudited) Total assets and stockholders' equity slightly increased from December 2023 to March 2024, while total liabilities slightly decreased | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total Assets | $611,599 | $597,542 | $14,057 | 2.35% | | Total Liabilities | $344,469 | $345,967 | $(1,498) | (0.43)% | | Total Stockholders' Equity | $267,130 | $251,575 | $15,555 | 6.18% | | Cash and cash equivalents | $31,514 | $31,901 | $(387) | (1.21)% | | Inventories | $124,909 | $117,686 | $7,223 | 6.14% | | Total current liabilities | $73,108 | $95,617 | $(22,509) | (23.54)% | | Long-term debt | $240,176 | $218,402 | $21,774 | 9.97% | [Condensed Consolidated Statements of Income and Comprehensive Income – Unaudited](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20%E2%80%93%20Unaudited) Q1 2024 saw increased revenues, gross profit, and net income compared to Q1 2023, driven by higher sales and improved margins | Metric | Three months ended March 31, 2024 (in thousands) | Three months ended March 31, 2023 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | :--------- | | Revenues | $146,713 | $145,549 | $1,164 | 0.80% | | Gross profit | $47,377 | $45,834 | $1,543 | 3.37% | | Operating income | $12,100 | $11,389 | $711 | 6.24% | | Net income | $6,902 | $6,315 | $587 | 9.30% | | Basic earnings per share | $0.42 | $0.40 | $0.02 | 5.00% | | Diluted earnings per share | $0.42 | $0.39 | $0.03 | 7.69% | | Comprehensive income | $2,416 | $6,536 | $(4,120) | (63.04)% | [Condensed Consolidated Statements of Stockholders' Equity – Unaudited](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%E2%80%93%20Unaudited) Stockholders' equity increased from December 2023 to March 2024, driven by net income and stock issuances, offset by dividends | Metric | December 31, 2023 (in thousands) | March 31, 2024 (in thousands) | Change ($) | | :-------------------------------- | :----------------------------- | :---------------------------- | :--------- | | Total Stockholders' Equity | $251,575 | $267,130 | $15,555 | | Net income | N/A | $6,902 | $6,902 | | Stock transactions under employee benefit stock plans | N/A | $1,564 | $1,564 | | Share issuance in connection with acquisitions | N/A | $6,250 | $6,250 | | Share issuance to settle contingent consideration | N/A | $4,874 | $4,874 | | Comprehensive loss | N/A | $(4,510) | $(4,510) | | Dividends to stockholders | N/A | $(500) | $(500) | [Condensed Consolidated Statements of Cash Flows – Unaudited](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Unaudited) Operating cash flow significantly increased in Q1 2024, while investing and financing activities saw substantial changes | Cash Flow Activity | Three months ended March 31, 2024 (in thousands) | Three months ended March 31, 2023 (in thousands) | Change ($) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | | Net cash provided by operating activities | $9,179 | $3,586 | $5,593 | | Net cash used in investing activities | $(28,500) | $(9,804) | $(18,696) | | Net cash provided by financing activities | $19,538 | $738 | $18,800 | | Net decrease in cash and cash equivalents | $(387) | $(5,469) | $5,082 | | Cash and cash equivalents at end of period | $31,514 | $25,145 | $6,369 | [Notes to Condensed Consolidated Financial Statements – Unaudited](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%E2%80%93%20Unaudited) Detailed notes explain financial statements, covering preparation, acquisitions, revenue, inventory, assets, debt, and other key financial areas [Note 1. Basis of Preparation and Presentation](index=8&type=section&id=Note%201.%20BASIS%20OF%20PREPARATION%20AND%20PRESENTATION) Allient Inc. operates globally in motion, control, power, and composites; financial statements are unaudited and follow U.S. GAAP - Allient Inc. operates globally, providing precision motion, control, power, and structural composites for industrial, vehicle, medical, and aerospace and defense markets[16](index=16&type=chunk) - Financial statements are unaudited, prepared under SEC rules and U.S. GAAP, and involve management estimates and assumptions[19](index=19&type=chunk)[20](index=20&type=chunk) [Note 2. Acquisitions](index=9&type=section&id=Note%202.%20ACQUISITIONS) Q1 2024 saw the acquisition of SNC for **$20.0 million** cash, contributing **$8.5 million** revenue, and final payments for other acquisitions - Acquired SNC Manufacturing Co., Inc. and Acutran de Mexico, S.A. de C.V. (collectively "SNC") on January 11, 2024, for an initial purchase price of **$20.0 million** in cash[23](index=23&type=chunk)[24](index=24&type=chunk) SNC Acquisition Contribution | Metric | Three months ended March 31, 2024 (in thousands) | | :-------------------------------- | :------------------------------------- | | SNC Revenue contribution | $8,509 | | SNC Net income contribution | $730 | | Transaction costs incurred | $300 | - Final deferred acquisition payment for Spectrum of **$12.5 million** (50% cash, 50% stock) was paid on January 3, 2024, and contingent consideration for Sierramotion was paid in Q1 2024[32](index=32&type=chunk) [Note 3. Revenue Recognition](index=12&type=section&id=Note%203.%20REVENUE%20RECOGNITION) Revenue is primarily recognized at shipment; Q1 2024 saw growth in Industrial and Vehicle markets, but decline in Medical and A&D - Revenue is generally recognized at a single point in time when control of products is transferred to the customer, typically upon shipment or delivery[34](index=34&type=chunk)[35](index=35&type=chunk) Revenue by Target Market | Target Market (in thousands) | Three months ended March 31, 2024 | Three months ended March 31, 2023 | Change ($) | Change (%) | | :--------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Industrial | $69,594 | $63,256 | $6,338 | 10.02% | | Vehicle | $34,654 | $30,831 | $3,823 | 12.40% | | Medical | $19,086 | $23,674 | $(4,588) | (19.38)% | | Aerospace & Defense | $16,653 | $21,287 | $(4,634) | (21.77)% | | Distribution and Other | $6,726 | $6,501 | $225 | 3.46% | | Total | $146,713 | $145,549 | $1,164 | 0.80% | Revenue by Geography | Geography (in thousands) | Three months ended March 31, 2024 | Three months ended March 31, 2023 | Change ($) | Change (%) | | :--------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | North America (primarily U.S.) | $99,703 | $97,367 | $2,336 | 2.40% | | Europe | $40,660 | $39,897 | $763 | 1.91% | | Asia-Pacific | $6,350 | $8,285 | $(1,935) | (23.35)% | | Total | $146,713 | $145,549 | $1,164 | 0.80% | [Note 4. Inventories](index=15&type=section&id=Note%204.%20INVENTORIES) Total inventories increased by **6.14%** to **$124.9 million** in Q1 2024, driven by parts, raw materials, and finished goods Inventory Breakdown | Inventory Category (in thousands) | March 31, 2024 | December 31, 2023 | Change ($) | Change (%) | | :-------------------------------- | :------------- | :---------------- | :--------- | :--------- | | Parts and raw materials | $90,002 | $87,381 | $2,621 | 3.00% | | Work-in-process | $11,716 | $11,456 | $260 | 2.27% | | Finished goods | $23,191 | $18,849 | $4,342 | 23.04% | | Total Inventories | $124,909 | $117,686 | $7,223 | 6.14% | [Note 5. Property, Plant and Equipment](index=15&type=section&id=Note%205.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) Net property, plant, and equipment increased by **4.28%** to **$70.3 million** in Q1 2024, mainly from buildings and machinery Property, Plant, and Equipment Breakdown | Category (in thousands) | March 31, 2024 | December 31, 2023 | Change ($) | Change (%) | | :---------------------- | :------------- | :---------------- | :--------- | :--------- | | Land | $1,778 | $973 | $805 | 82.73% | | Building and improvements | $28,854 | $26,201 | $2,653 | 10.13% | | Machinery, equipment, tools and dies | $102,290 | $99,711 | $2,579 | 2.59% | | Construction in progress | $8,232 | $9,300 | $(1,068) | (11.48)% | | Furniture, fixtures and other | $24,558 | $24,439 | $119 | 0.49% | | Less accumulated depreciation | $(95,363) | $(93,161) | $(2,202) | 2.36% | | Net Property, Plant, and Equipment | $70,349 | $67,463 | $2,886 | 4.28% | - Depreciation expense for the three months ended March 31, 2024, was **$3.17 million**, a slight increase from **$3.14 million** in the prior year[46](index=46&type=chunk) [Note 6. Goodwill](index=15&type=section&id=Note%206.%20GOODWILL) Goodwill increased by **$1.8 million** to **$133.2 million** in Q1 2024, primarily from the SNC acquisition Goodwill Movement | Metric | March 31, 2024 (in thousands) | | :-------------------------- | :---------------------------- | | Beginning balance (Dec 31, 2023) | $131,338 | | Goodwill acquired | $2,752 | | Effect of foreign currency translation | $(931) | | Ending balance (March 31, 2024) | $133,159 | [Note 7. Intangible Assets](index=15&type=section&id=Note%207.%20INTANGIBLE%20ASSETS) Net intangible assets slightly decreased to **$110.2 million** in Q1 2024, with future amortization expected at **$9.3 million** for 2024 Intangible Assets Net Book Value | Category (in thousands) | March 31, 2024 Net Book Value | December 31, 2023 Net Book Value | Change ($) | Change (%) | | :---------------------- | :---------------------------- | :------------------------------- | :--------- | :--------- | | Customer lists | $73,235 | $74,410 | $(1,175) | (1.58)% | | Trade name | $7,987 | $7,656 | $331 | 4.32% | | Design and technologies | $29,014 | $29,307 | $(293) | (1.00)% | | Total | $110,236 | $111,373 | $(1,137) | (1.02)% | - Amortization expense for intangible assets was **$3.12 million** for the three months ended March 31, 2024, an increase from **$3.01 million** in the prior year[48](index=48&type=chunk) Estimated Amortization Expense | Year ending December 31, | Estimated Amortization Expense (in thousands) | | :----------------------- | :-------------------------------------------- | | Remainder of 2024 | $9,274 | | 2025 | $12,372 | | 2026 | $12,275 | | 2027 | $11,832 | | 2028 | $11,094 | | Thereafter | $53,389 | | Total | $110,236 | [Note 8. Stock-Based Compensation](index=17&type=section&id=Note%208.%20STOCK-BASED%20COMPENSATION) In Q1 2024, **175,721** unvested restricted shares were awarded; stock-based compensation expense was **$1.2 million** - **175,721** shares of unvested restricted stock were awarded in Q1 2024 at a weighted average market value of **$30.02**, with **107,377** shares having performance-based vesting conditions[51](index=51&type=chunk) Stock-Based Compensation Expense | Metric | Three months ended March 31, 2024 (in thousands) | Three months ended March 31, 2023 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Stock-based compensation expense | $1,211 | $1,267 | [Note 9. Accrued Liabilities](index=18&type=section&id=Note%209.%20ACCRUED%20LIABILITIES) Accrued liabilities significantly decreased to **$34.1 million** in Q1 2024, mainly due to acquisition consideration settlements Accrued Liabilities Breakdown | Category (in thousands) | March 31, 2024 | December 31, 2023 | Change ($) | Change (%) | | :---------------------- | :------------- | :---------------- | :--------- | :--------- | | Compensation and fringe benefits | $11,450 | $17,251 | $(5,801) | (33.63)% | | Accrued business acquisition consideration | $0 | $12,638 | $(12,638) | (100.00)% | | Contingent consideration – current | $270 | $7,720 | $(7,450) | (96.50)% | | Other accrued expenses | $9,366 | $6,566 | $2,800 | 42.64% | | Total Accrued Liabilities | $34,147 | $56,488 | $(22,341) | (39.55)% | [Note 10. Debt Obligations](index=18&type=section&id=Note%2010.%20DEBT%20OBLIGATIONS) Long-term debt increased to **$240.2 million** in Q1 2024, driven by a new **$50 million** note and extended credit facility Debt Category Breakdown | Debt Category (in thousands) | March 31, 2024 | December 31, 2023 | Change ($) | Change (%) | | :--------------------------- | :------------- | :---------------- | :--------- | :--------- | | Revolving Credit Facility, long-term | $183,962 | $210,120 | $(26,158) | (12.45)% | | Note Payable | $50,000 | $0 | $50,000 | N/A | | Long-term debt (Total) | $240,176 | $218,402 | $21,774 | 9.97% | - Entered into a Third Amended and Restated Credit Agreement for a **$280 million** revolving credit facility, extending the term to March 1, 2029[56](index=56&type=chunk) - Entered into a **$150 million** fixed-rate private shelf facility, with **$50.0 million** borrowed on March 21, 2024, bearing interest at **5.96%** and maturing March 21, 2031[56](index=56&type=chunk)[62](index=62&type=chunk) - The company was in compliance with all financial covenants (minimum interest coverage ratio of **3.0:1.0** and leverage ratio not greater than **4.25:1.0**) as of March 31, 2024[59](index=59&type=chunk) - Unused Revolving Facility was **$96.0 million** as of March 31, 2024[63](index=63&type=chunk) [Note 11. Derivative Financial Instruments](index=19&type=section&id=Note%2011.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) The company uses foreign currency contracts and interest rate swaps to manage foreign exchange and interest rate risks - Uses foreign currency contracts (30-day maturities) to hedge short-term balance sheet exposure in currencies like Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, and Swedish Krona[65](index=65&type=chunk) - Uses interest rate swaps as cash flow hedges to manage exposure to variable-rate debt, with combined notional amounts of **$100 million** (**$60 million** maturing Dec 2024, **$40 million** maturing Dec 2026)[69](index=69&type=chunk)[140](index=140&type=chunk) Derivative Fair Values | Derivative Type | Fair Value (Asset) March 31, 2024 (in thousands) | Fair Value (Asset) December 31, 2023 (in thousands) | Fair Value (Liability) March 31, 2024 (in thousands) | Fair Value (Liability) December 31, 2023 (in thousands) | | :-------------- | :------------------------------------- | :------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Foreign currency contracts | $19 | $54 | $28 | $0 | | Interest rate swaps | $4,402 | $4,431 | $0 | $0 | - Estimated **$3.1 million** will be reclassified as a decrease to interest expense over the next twelve months related to interest rate derivatives[71](index=71&type=chunk) [Note 12. Fair Value](index=24&type=section&id=Note%2012.%20FAIR%20VALUE) Financial assets and liabilities are categorized into a three-level fair value hierarchy, with contingent consideration as Level 3 - Financial assets and liabilities are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (significant unobservable inputs) for fair value measurement[77](index=77&type=chunk) Fair Value Measurements | Asset/Liability (in thousands) | March 31, 2024 (Level 1) | March 31, 2024 (Level 2) | March 31, 2024 (Level 3) | December 31, 2023 (Level 1) | December 31, 2023 (Level 2) | December 31, 2023 (Level 3) | | :----------------------------- | :----------------------- | :----------------------- | :----------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Pension plan assets | $6,143 | $0 | $0 | $5,859 | $0 | $0 | | Deferred compensation plan assets | $4,382 | $0 | $0 | $4,305 | $0 | $0 | | Foreign currency hedge contracts | $0 | $(9) | $0 | $0 | $54 | $0 | | Interest rate swaps, net | $0 | $4,402 | $0 | $0 | $4,431 | $0 | | Contingent consideration | $0 | $0 | $(270) | $0 | $0 | $(7,990) | - Contingent consideration for ALIO Industries, settled 50% in stock and 50% cash, had **$5.7 million** earned in 2023 and paid in Q1 2024; the remaining contingent consideration of **$270 thousand** is in accrued liabilities[79](index=79&type=chunk)[82](index=82&type=chunk) [Note 13. Income Taxes](index=26&type=section&id=Note%2013.%20INCOME%20TAXES) The effective income tax rate decreased to **21.8%** in Q1 2024, due to deferred tax asset realization and income mix Effective Income Tax Rate | Metric | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Effective income tax rate | 21.8% | 23.2% | | Discrete tax benefits | (2.3)% | (2.8)% | - The lower effective tax rate in Q1 2024 is attributed to the realization of certain deferred income tax assets and the impact of the mix of foreign and domestic income[114](index=114&type=chunk) - The company expects its income tax rate for the full year 2024 to be approximately **21% to 23%**[114](index=114&type=chunk) [Note 14. Leases](index=26&type=section&id=Note%2014.%20LEASES) The company holds operating and finance leases, with total liabilities of **$23.6 million** and **$8.9 million** respectively - Cash paid for operating leases was **$1.6 million** in Q1 2024, up from **$1.4 million** in Q1 2023[86](index=86&type=chunk) Lease Liabilities | Lease Type | Total Undiscounted Cash Flows (in thousands) | Present Value Discount (in thousands) | Total Lease Liabilities (in thousands) | | :----------- | :------------------------------------------- | :------------------------------------ | :------------------------------------- | | Operating Leases | $26,464 | $(2,868) | $23,596 | | Finance Leases | $11,927 | $(3,010) | $8,917 | [Note 15. Accumulated Other Comprehensive (Loss) Income](index=27&type=section&id=Note%2015.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20%28LOSS%29%20INCOME) Accumulated Other Comprehensive Loss increased to **$(14.7) million** in Q1 2024, mainly due to foreign currency translation loss Accumulated Other Comprehensive (Loss) Income Movement | Metric (in thousands) | December 31, 2023 | March 31, 2024 | Change ($) | | :-------------------- | :---------------- | :------------- | :--------- | | Total AOCI | $(10,175) | $(14,661) | $(4,486) | | Foreign currency translation adjustment | $(13,256) | $(17,664) | $(4,408) | | Unrealized gain (loss) on cash flow hedges | $4,431 | $4,329 | $(102) | [Note 16. Dividends Per Share](index=27&type=section&id=Note%2016.%20DIVIDENDS%20PER%20SHARE) The company declared a quarterly dividend of **$0.03** per share in Q1 2024, an increase from Q1 2023 Dividend Per Share | Period | Dividend Per Share | | :----- | :----------------- | | Q1 2024 | $0.03 | | Q1 2023 | $0.025 | [Note 17. Earnings Per Share](index=28&type=section&id=Note%2017.%20EARNINGS%20PER%20SHARE) Basic and diluted weighted average shares outstanding increased in Q1 2024 compared to Q1 2023 Weighted Average Shares Outstanding | Metric (in thousands) | Three months ended March 31, 2024 | Three months ended March 31, 2023 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Basic weighted average shares outstanding | 16,394 | 15,872 | 522 | | Diluted weighted average shares outstanding | 16,497 | 16,137 | 360 | [Note 18. Segment Information](index=28&type=section&id=Note%2018.%20SEGMENT%20INFORMATION) Allient operates as a single segment; **58%** of Q1 2024 revenues were from U.S. customers, the rest from foreign markets - The company operates in one segment for the manufacture and marketing of specialty-controlled motion products and solutions[92](index=92&type=chunk) Geographic Revenue Distribution | Geographic Revenue | Q1 2024 | Q1 2023 | | :----------------- | :------ | :------ | | U.S. customers | 58% | 56% | | Foreign customers | 42% | 44% | - One customer accounted for **12%** of revenues in Q1 2024 and **12%** of accounts receivable as of March 31, 2024[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial condition and results, covering strategic focus, business environment, operating results, and liquidity [Overview](index=29&type=section&id=Overview) Allient Inc. is a global leader in precision motion, control, power, and structural composites for diverse markets - Allient Inc. is a global company designing, manufacturing, and selling precision motion, control, power, and structural composites[98](index=98&type=chunk) - Serves industrial, vehicle, medical, and aerospace and defense markets, with operations in the U.S., Canada, Mexico, Europe, and Asia-Pacific[98](index=98&type=chunk) - Products include nano precision positioning systems, servo control systems, motion controllers, digital servo amplifiers and drives, various motors, gearing, encoders, filters, and transformers[98](index=98&type=chunk) [Business Environment](index=31&type=section&id=Business%20Environment) The 2024 business environment faces inflation and geopolitical risks; the company focuses on inventory, acquisitions, and efficiency - Inflation, higher interest rates, and geopolitical conflicts continue to create economic uncertainty, impacting input costs, supply chains, and customer ordering patterns[99](index=99&type=chunk)[100](index=100&type=chunk) - The company is carrying larger inventories in 2024 to meet customer needs, especially as order patterns normalize post-COVID-19 and due to changing aerospace and defense demands[101](index=101&type=chunk) - Recent acquisitions (SNC in Q1 2024, Sierramotion in Q3 2023) are key to strategic growth, with a near-term focus on integration and synergy realization[102](index=102&type=chunk) - Implementing a "Simplify to Accelerate" strategy focused on realigning footprint, reinforcing lean manufacturing, and reducing working capital to drive earnings momentum and strengthen cash flow[103](index=103&type=chunk)[104](index=104&type=chunk) [Operating Results](index=32&type=section&id=Operating%20Results) Q1 2024 saw slight revenue growth, improved gross profit, and higher net income, driven by Industrial and Vehicle markets [Revenues](index=32&type=section&id=Revenues) Revenues increased by **1%** to **$146.7 million** in Q1 2024, with acquisitions contributing **$9.5 million**, but organic revenue declined Revenues Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Revenues | $146,713 | $145,549 | $1,164 | 1% | - Revenue increase driven by Industrial and Vehicle markets; acquisitions contributed **$9.5 million**[106](index=106&type=chunk) - Organic revenue decreased **5.9%** in Q1 2024, primarily in Medical and Aerospace and Defense markets[106](index=106&type=chunk) [Order Bookings and Backlog](index=32&type=section&id=Order%20Bookings%20and%20Backlog) Order bookings decreased by **1%** in Q1 2024 due to volume and normalization, with backlog decreasing by **16%** Order Bookings and Backlog Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Bookings | $122,127 | $123,198 | $(1,071) | (1)% | | Backlog | $258,130 | $308,635 | $(50,505) | (16)% | - Decrease in bookings primarily due to **1%** volume decrease and normalization of order patterns[107](index=107&type=chunk) [Gross Profit and Gross Margin](index=32&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by **3%** to **$47.4 million** in Q1 2024, with gross margin improving to **32.3%** due to sales and mix Gross Profit and Gross Margin Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Gross profit | $47,377 | $45,834 | $1,543 | 3% | | Gross margin percentage | 32.3% | 31.5% | 0.8 pp | | - Increase in gross margin percentage driven by cost absorption on higher sales volume, pricing, and favorable mix[108](index=108&type=chunk) [Selling Expenses](index=32&type=section&id=Selling%20Expenses) Selling expenses increased by **4%** to **$6.3 million** in Q1 2024, driven by higher compensation and sales commissions Selling Expenses Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Selling expenses | $6,298 | $6,032 | $266 | 4% | - Increase primarily due to increased employee compensation related costs and sales commissions[109](index=109&type=chunk) [General and Administrative Expenses](index=34&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by **3%** to **$14.4 million** in Q1 2024, mainly due to lower compensation General and Administrative Expenses Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | General and administrative | $14,440 | $14,820 | $(380) | (3)% | - Decrease primarily due to lower employee compensation related costs[110](index=110&type=chunk) [Engineering and Development Expenses](index=34&type=section&id=Engineering%20and%20Development%20Expenses) Engineering and development expenses increased by **7%** to **$11.1 million** in Q1 2024, driven by project ramp-up Engineering and Development Expenses Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Engineering and development | $11,067 | $10,387 | $680 | 7% | - Increase due to continued ramp-up of development projects and supporting growing customer application development needs[111](index=111&type=chunk) [Business Development Costs](index=34&type=section&id=Business%20Development%20Costs) Business development costs significantly increased to **$357 thousand** in Q1 2024, primarily due to acquisition activities Business Development Costs Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Business development | $357 | $197 | $160 | NM % | - Increase largely due to costs incurred for current period acquisition activities[112](index=112&type=chunk) [Amortization of Intangible Assets](index=34&type=section&id=Amortization%20of%20Intangible%20Assets) Amortization of intangible assets increased by **4%** to **$3.1 million** in Q1 2024, due to recent acquisitions Amortization of Intangible Assets Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Amortization of intangible assets | $3,115 | $3,009 | $106 | 4% | - Increase primarily due to additional intangible assets from recent acquisition activity[112](index=112&type=chunk) [Interest Expense](index=34&type=section&id=Interest%20Expense) Interest expense increased by **14%** to **$3.4 million** in Q1 2024, due to higher rates and debt issuance costs Interest Expense Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Interest expense | $3,388 | $2,983 | $405 | 14% | - Increase primarily due to higher interest rates and amortization of debt issuance costs, partially offset by interest rate swaps[113](index=113&type=chunk) [Income Taxes](index=34&type=section&id=Income%20Taxes) The effective income tax rate decreased to **21.8%** in Q1 2024, driven by deferred tax assets and income mix Income Taxes Performance | Metric | Q1 2024 | Q1 2023 | | :----- | :------ | :------ | | Effective tax rate | 21.8% | 23.2% | - Lower effective tax rate due to realization of deferred income tax assets and impact of foreign/domestic income mix[114](index=114&type=chunk) - Full year 2024 income tax rate expected to be **21% to 23%**[114](index=114&type=chunk) [Net Income and Adjusted Net Income](index=34&type=section&id=Net%20Income%20and%20Adjusted%20Net%20Income) Net income increased by **9%** to **$6.9 million** in Q1 2024, reflecting gross profit growth; adjusted net income also rose Net Income and Adjusted Net Income Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | Net income | $6,902 | $6,315 | $587 | 9% | | Adjusted net income | $9,546 | $8,935 | $611 | 6.84% | | Adjusted diluted EPS | $0.58 | $0.55 | $0.03 | 5.45% | - Net income increase reflects gross profit growth, partially offset by inflationary pressures and increased interest expense[115](index=115&type=chunk) [EBITDA and Adjusted EBITDA](index=34&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) EBITDA increased to **$18.6 million** in Q1 2024, and Adjusted EBITDA rose to **$20.0 million**, indicating improved performance EBITDA and Adjusted EBITDA Performance | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Variance ($) | Variance (%) | | :----- | :--------------------- | :--------------------- | :----------- | :----------- | | EBITDA | $18,594 | $17,347 | $1,247 | 7.19% | | Adjusted EBITDA | $20,042 | $19,025 | $1,017 | 5.35% | [Non-GAAP Measures](index=34&type=section&id=Non-GAAP%20Measures) Non-GAAP measures like Organic Revenue, EBITDA, and Adjusted Net Income provide supplemental insights into operating results - Non-GAAP measures (Organic revenue, EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted diluted EPS) are provided to offer supplemental information for evaluating operating results, distinct from GAAP results[118](index=118&type=chunk) - Organic revenue adjusts reported revenues for foreign currency impact and acquisition contributions[119](index=119&type=chunk) - EBITDA excludes depreciation, amortization, interest expense, and income taxes, while Adjusted EBITDA further excludes stock-based compensation, business development costs, and foreign currency gains/losses[121](index=121&type=chunk)[122](index=122&type=chunk) - Adjusted net income and Adjusted diluted EPS remove the impact of certain non-routine items to provide a measure of financial performance based on operational factors[123](index=123&type=chunk) Organic Revenue Calculation | Non-GAAP Metric | Q1 2024 | | :-------------- | :------ | | Revenue change over prior year | 0.8% | | Less: Impact of acquisitions and foreign currency | 6.7% | | Organic revenue | (5.9)% | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents slightly decreased in Q1 2024, but operating cash flow improved, and financing provided substantial cash Cash Flow Activities | Cash Flow Activity (in thousands) | Q1 2024 | Q1 2023 | Variance ($) | | :-------------------------------- | :------ | :------ | :----------- | | Net cash provided by operating activities | $9,179 | $3,586 | $5,593 | | Net cash used in investing activities | $(28,500) | $(9,804) | $(18,696) | | Net cash provided by financing activities | $19,538 | $738 | $18,800 | | Net decrease in cash and cash equivalents | $(387) | $(5,469) | $5,082 | - Increase in operating cash flow primarily due to increased sales and more efficient working capital conversion[128](index=128&type=chunk) - Investing cash usage increased due to **$20 million** cash paid for the SNC acquisition and **$6.25 million** for the 2022 Spectrum acquisition[129](index=129&type=chunk) - Financing cash flow increased due to **$76.85 million** proceeds from long-term debt issuance, including **$50 million** Notes used to pay down the Revolving Facility[130](index=130&type=chunk) - Capital expenditures are expected to be between **$13 million** and **$17 million** for the full year 2024[129](index=129&type=chunk) - The company was in compliance with all debt covenants as of March 31, 2024, and believes it has sufficient liquidity for the next twelve months[131](index=131&type=chunk)[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Allient Inc.'s exposure to foreign currency and interest rate risks, and its hedging strategies [Foreign Currency](index=40&type=section&id=Foreign%20Currency) Allient faces foreign currency risk from international operations, using contracts to hedge short-term balance sheet exposure - International operations in Europe, Canada, Mexico, China, New Zealand, and other regions expose the company to foreign currency exchange rate fluctuations[135](index=135&type=chunk) - A hypothetical **10%** change in the U.S. dollar's value would impact Q1 2024 sales by approximately **$4.9 million** and foreign net assets by **$16.4 million**[135](index=135&type=chunk)[136](index=136&type=chunk) - Foreign currency translation adjustments resulted in a loss of **$4.4 million** in Q1 2024, compared to a gain of **$1.4 million** in Q1 2023[136](index=136&type=chunk) - Uses foreign currency contracts with notional amounts of **$22.0 million** at March 31, 2024, to hedge short-term balance sheet exposure[137](index=137&type=chunk) [Interest Rates](index=40&type=section&id=Interest%20Rates) The company manages interest rate risk with fixed and variable debt, using interest rate swaps to hedge **$100 million** of variable debt - Series A Senior Notes bear a fixed interest rate of **5.96%** and mature on March 21, 2031[138](index=138&type=chunk) - Interest rates on the Credit Facility are variable, based on Term SOFR plus a margin (**1.875%** at March 31, 2024)[139](index=139&type=chunk) - Uses interest rate swaps to hedge **$100 million** of the **$184.0 million** outstanding under the Revolving Facility, with swaps maturing in December 2024 (**$60 million**) and December 2026 (**$40 million**)[140](index=140&type=chunk)[141](index=141&type=chunk) - A hypothetical **100 basis points** change in the Base Rate on the **$84.0 million** unhedged floating rate debt would impact Q1 2024 interest expense by approximately **$300 thousand**[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control [Conclusion regarding the effectiveness of disclosure controls and procedures](index=42&type=section&id=Conclusion%20regarding%20the%20effectiveness%20of%20disclosure%20controls%20and%20procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024 - Management, including CEO and CFO, evaluated and concluded that disclosure controls and procedures were effective as of March 31, 2024[142](index=142&type=chunk)[143](index=143&type=chunk) [Changes in internal control over financial reporting](index=42&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) No material changes in internal control over financial reporting occurred during Q1 2024 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024[144](index=144&type=chunk) PART II. OTHER INFORMATION [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2023 Form 10-K, except for factual updates within this 10-Q - No material changes to risk factors from the 2023 Annual Report on Form 10-K, except for factual updates within this Form 10-Q[145](index=145&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details equity security activities, including shares withheld for taxes and unregistered issuances for acquisitions [Issuer Purchases of Equity Securities](index=43&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) The company withheld **3,741** shares in Q1 2024 at **$32.39** per share for tax obligations; no repurchase plan was active Issuer Purchases of Equity Securities | Period | Number of Shares Purchased | Average Price Paid per Share | | :----- | :------------------------- | :--------------------------- | | 01/01/24 to 01/31/24 | 798 | $28.12 | | 03/01/24 to 03/31/24 | 2,943 | $33.55 | | Total Q1 2024 | 3,741 | $32.39 | - Shares were withheld to satisfy tax withholding obligations for stock vesting; no authorized stock repurchase plan was in place[146](index=146&type=chunk) [Recent Sales of Unregistered Securities](index=43&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) In Q1 2024, unregistered common stock was issued to settle deferred acquisition considerations for Spectrum, Sierramotion, and Alio - Issued **202,921** shares of common stock on January 3, 2024, as final payment for the Spectrum Acquisition[147](index=147&type=chunk) - Issued **71,346** shares of common stock on January 24, 2024, for Sierramotion Acquisition earnout consideration[148](index=148&type=chunk) - Issued **103,135** shares of common stock on February 2, 2024, as partial payment for Alio Acquisition earnout consideration[149](index=149&type=chunk) - Securities were issued in reliance upon Section 4(a)(2) of the Securities Act of 1933 to accredited investors for investment purposes[150](index=150&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers in Q1 2024 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers in Q1 2024[151](index=151&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including credit agreements, note payable, and certifications - Includes Third Amended and Restated Credit Agreement, Note Payable Agreement, Form of Note, Consulting Agreement with Robert P. Maida, and certifications from CEO and CFO[152](index=152&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 0-04041 ALLIENT INC. (Exact name of registrant as specified in its charter) 495 Commerce Drive, Amherst, New York (Add ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023. Colorado 84-0518115 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 495 Commerce Drive, Amherst, New York (Address of principal executive offices) 14228 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and internal controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, statements of stockholders' equity, and cash flows, along with detailed notes explaining the basis of preparation, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets – Unaudited](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20Unaudited) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Total Assets | $585,494 | $588,347 | | Total Liabilities | $348,700 | $372,882 | | Total Stockholders' Equity | $236,794 | $215,465 | | Cash and cash equivalents | $24,120 | $30,614 | | Long-term debt | $227,106 | $235,454 | [Condensed Consolidated Statements of Income and Comprehensive Income (Loss) – Unaudited](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20Unaudited) Financial Performance (Three Months Ended June 30, in thousands, except per share data) | Metric | 2023 | 2022 | YoY Change (%) | | :----------------------- | :----- | :----- | :------------- | | Revenues | $146,769 | $122,722 | 19.6% | | Gross profit | $45,977 | $39,774 | 15.6% | | Operating income | $12,020 | $7,518 | 59.9% | | Net income | $6,769 | $4,581 | 47.8% | | Diluted earnings per share | $0.42 | $0.29 | 44.8% | Financial Performance (Six Months Ended June 30, in thousands, except per share data) | Metric | 2023 | 2022 | YoY Change (%) | | :----------------------- | :----- | :----- | :------------- | | Revenues | $292,318 | $237,507 | 23.1% | | Gross profit | $91,811 | $73,234 | 25.4% | | Operating income | $23,409 | $11,783 | 98.7% | | Net income | $13,084 | $7,084 | 84.7% | | Diluted earnings per share | $0.81 | $0.45 | 80.0% | [Condensed Consolidated Statements of Stockholders' Equity – Unaudited](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20%E2%80%93%20Unaudited) - Total Stockholders' Equity increased to **$236,794 thousand** at June 30, 2023, from **$215,465 thousand** at December 31, 2022[12](index=12&type=chunk) - Net income contributed **$6,769 thousand** (Q2 2023) and **$6,315 thousand** (Q1 2023) to retained earnings[12](index=12&type=chunk) - Share issuance in connection with acquisition added **$6,250 thousand** in Q1 2023[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows – Unaudited](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Unaudited) Cash Flow Summary (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Net cash provided by (used in) operating activities | $17,273 | $(290) | | Net cash used in investing activities | $(12,368) | $(50,923) | | Net cash (used in) provided by financing activities | $(11,092) | $58,781 | | Net (decrease) increase in cash and cash equivalents | $(6,494) | $6,383 | | Cash and cash equivalents at end of period | $24,120 | $28,846 | [Notes to Condensed Consolidated Financial Statements – Unaudited](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%E2%80%93%20Unaudited) [Note 1. BASIS OF PREPARATION AND PRESENTATION](index=8&type=section&id=Note%201.%20BASIS%20OF%20PREPARATION%20AND%20PRESENTATION) - Allied Motion Technologies Inc. designs, manufactures, and sells precision and specialty-controlled motion components and systems for vehicle, medical, aerospace and defense, and industrial markets[16](index=16&type=chunk) - The unaudited condensed consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries, with all intercompany accounts and transactions eliminated[17](index=17&type=chunk) - Foreign subsidiary assets and liabilities are translated into U.S. dollars using end-of-period exchange rates, with translation adjustments included in accumulated other comprehensive loss[18](index=18&type=chunk) [Note 2. ACQUISITIONS](index=9&type=section&id=Note%202.%20ACQUISITIONS) - Acquired FPH Group Inc. and Transtar International, LLC ('FPH') on May 30, 2022, for a final purchase price of **$41,316 thousand**[23](index=23&type=chunk) - Acquired ThinGap, Inc. and Airex, LLC in June 2022 for a collective purchase price of **$16,618 thousand**[24](index=24&type=chunk) - A deferred acquisition payment of **$12,500 thousand** for Spectrum Controls, Inc. was paid in January 2023 (50% cash, 50% Company stock), with one remaining payment of **$12,500 thousand** due by January 3, 2024[26](index=26&type=chunk) Pro Forma Financial Information (Six Months Ended June 30, 2022, if acquisitions occurred Jan 1, 2021, in thousands) | Metric | Pro Forma | As Reported | | :----------------------- | :-------- | :---------- | | Revenues | $248,322 | $237,507 | | Income before income taxes | $12,943 | $9,454 | [Note 3. REVENUE RECOGNITION](index=10&type=section&id=Note%203.%20REVENUE%20RECOGNITION) - Revenue is generally recognized at a single point in time when control of products transfers to the customer, typically upon shipment[29](index=29&type=chunk) Revenue by Target Market (Six Months Ended June 30, in thousands) | Target Market | 2023 | 2022 | YoY Change (%) | | :------------------ | :----- | :----- | :------------- | | Industrial | $128,845 | $92,911 | 38.7% | | Vehicle | $65,570 | $65,137 | 0.7% | | Medical | $44,562 | $41,513 | 7.3% | | Aerospace & Defense | $40,266 | $26,593 | 51.4% | | Distribution and Other | $13,075 | $11,353 | 15.2% | Revenue by Geography (Six Months Ended June 30, in thousands) | Geography | 2023 | 2022 | YoY Change (%) | | :------------------------ | :----- | :----- | :------------- | | North America (primarily U.S.) | $198,332 | $156,430 | 26.8% | | Europe | $78,223 | $65,871 | 18.7% | | Asia-Pacific | $15,763 | $15,206 | 3.7% | [Note 4. INVENTORIES](index=13&type=section&id=Note%204.%20INVENTORIES) Inventories (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :---------------- | :------------ | :---------------- | | Parts and raw materials | $85,742 | $89,100 | | Work-in-process | $13,387 | $11,686 | | Finished goods | $16,969 | $16,322 | | **Total** | **$116,098** | **$117,108** | [Note 5. PROPERTY, PLANT AND EQUIPMENT](index=13&type=section&id=Note%205.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) - Property, plant, and equipment, net was **$68,518 thousand** at June 30, 2023, a slight decrease from **$68,640 thousand** at December 31, 2022[41](index=41&type=chunk) - Depreciation expense for the six months ended June 30, 2023, was **$6,384 thousand**, comparable to **$6,404 thousand** in the prior year period[41](index=41&type=chunk) [Note 6. GOODWILL](index=13&type=section&id=Note%206.%20GOODWILL) - Goodwill increased to **$127,987 thousand** at June 30, 2023, from **$126,366 thousand** at December 31, 2022[42](index=42&type=chunk) - The increase was primarily due to measurement period adjustments of acquisitions (**$1,356 thousand**) and the effect of foreign currency translation (**$265 thousand**)[42](index=42&type=chunk) [Note 7. INTANGIBLE ASSETS](index=14&type=section&id=Note%207.%20INTANGIBLE%20ASSETS) Intangible Assets, Net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :-------------------- | :------------ | :---------------- | | Customer lists | $74,340 | $78,001 | | Trade name | $7,860 | $8,420 | | Design and technologies | $30,960 | $32,654 | | **Total Net Book Value** | **$113,160** | **$119,075** | - Amortization expense for intangible assets was **$6,151 thousand** for the six months ended June 30, 2023, up from **$5,079 thousand** in the prior year period[43](index=43&type=chunk) - Estimated future intangible asset amortization expense for the remainder of 2023 is **$6,073 thousand**[44](index=44&type=chunk) [Note 8. STOCK-BASED COMPENSATION](index=14&type=section&id=Note%208.%20STOCK-BASED%20COMPENSATION) - **123,601 shares** of unvested restricted stock were awarded during the six months ended June 30, 2023, at a weighted average market value of **$41.53**[46](index=46&type=chunk) - Stock-based compensation expense, net of forfeitures, was **$2,811 thousand** for the six months ended June 30, 2023, compared to **$2,490 thousand** in the prior year period[48](index=48&type=chunk) - Outstanding restricted stock at June 30, 2023, was **411,816 shares**[48](index=48&type=chunk) [Note 9. ACCRUED LIABILITIES](index=15&type=section&id=Note%209.%20ACCRUED%20LIABILITIES) Accrued Liabilities (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :------------------------------ | :------------ | :---------------- | | Compensation and fringe benefits | $13,292 | $15,818 | | Accrued business acquisition consideration | $12,444 | $12,500 | | Warranty reserve | $2,225 | $2,160 | | Income taxes payable | $1,710 | $3,934 | | Operating lease liabilities - current | $4,575 | $4,224 | | Finance lease obligations - current | $394 | $377 | | Contract liabilities | $3,620 | $4,807 | | Other accrued expenses | $7,129 | $4,301 | | **Total** | **$45,389** | **$48,121** | [Note 10. DEBT OBLIGATIONS](index=15&type=section&id=Note%2010.%20DEBT%20OBLIGATIONS) - Long-term debt decreased to **$227,106 thousand** at June 30, 2023, from **$235,454 thousand** at December 31, 2022[50](index=50&type=chunk) - The Amended Revolving Credit Facility is a **$280 million** facility with a maturity date of February 2025, bearing interest at Adjusted SOFR plus an applicable margin (**1.75%** at June 30, 2023)[51](index=51&type=chunk)[52](index=52&type=chunk) - The Company was in compliance with all debt covenants as of June 30, 2023, with **$61,234 thousand** of unused capacity under the Amended Revolving Facility[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 11. DERIVATIVE FINANCIAL INSTRUMENTS](index=16&type=section&id=Note%2011.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) - The Company uses foreign currency contracts with **30-day maturities** to hedge short-term balance sheet exposure, with notional amounts of **$17,872 thousand** at June 30, 2023[57](index=57&type=chunk) - Interest rate swaps are used to manage exposure to interest rate movements on variable-rate debt, with combined notional amounts of **$60,000 thousand** (matures Dec 2024) and **$40,000 thousand** (matures Dec 2026)[58](index=58&type=chunk) - The Company estimates that **$3,930 thousand** will be reclassified as a decrease to interest expense over the next twelve months related to its interest rate derivatives[60](index=60&type=chunk) [Note 12. FAIR VALUE](index=18&type=section&id=Note%2012.%20FAIR%20VALUE) - The Company categorizes fair value measurements into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[66](index=66&type=chunk) Financial Assets at Fair Value (June 30, 2023, in thousands) | Asset (Liability) | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------ | :------ | :------ | | Pension plan assets | $5,730 | — | — | | Deferred compensation plan assets | $4,141 | — | — | | Foreign currency hedge contract assets | — | $30 | — | | Foreign currency hedge contract liabilities | — | $(27) | — | | Interest rate swaps, net | — | $6,675 | — | | Contingent consideration | — | — | $(4,100) | - Contingent consideration of **$(4,100) thousand** is a Level 3 fair value measurement, valued using a Monte Carlo valuation model or probability-weighted discounted cash flow analysis[67](index=67&type=chunk) [Note 13. INCOME TAXES](index=19&type=section&id=Note%2013.%20INCOME%20TAXES) Effective Income Tax Rate | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three months ended June 30 | 23.9% | 27.0% | | Six months ended June 30 | 23.6% | 25.1% | - The effective tax rate for both periods includes discrete tax benefits primarily related to share-based awards[69](index=69&type=chunk) - The Company expects its income tax rate for the full year 2023 to be approximately **24% to 26%**[101](index=101&type=chunk) [Note 14. LEASES](index=19&type=section&id=Note%2014.%20LEASES) Supplemental Cash Flow Information for Leases (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Cash paid for operating leases | $2,796 | $2,290 | | Cash paid for interest on finance lease obligations | $214 | $368 | | Assets acquired under operating leases | $1,888 | $2,770 | Total Lease Liabilities (June 30, 2023, in thousands) | Lease Type | Total Lease Liabilities | | :--------------- | :---------------------- | | Operating Leases | $22,132 | | Finance Leases | $9,209 | - During the three months ended June 30, 2023, the Company entered into a lease amendment for one manufacturing facility, resulting in a **$700 thousand** reduction of both the ROU asset and lease liability[71](index=71&type=chunk) [Note 15. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=20&type=section&id=Note%2015.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) - Accumulated Other Comprehensive Loss (AOCI) was **$(11,461) thousand** at June 30, 2023, compared to **$(11,963) thousand** at December 31, 2022[73](index=73&type=chunk)[74](index=74&type=chunk) - Foreign currency translation adjustment resulted in a loss of **$(426) thousand** for the three months ended June 30, 2023, and a gain of **$928 thousand** for the six months ended June 30, 2023[73](index=73&type=chunk)[74](index=74&type=chunk) - Unrealized gain on cash flow hedges was **$1,877 thousand** for the three months ended June 30, 2023, and **$1,131 thousand** for the six months ended June 30, 2023[73](index=73&type=chunk)[74](index=74&type=chunk) [Note 16. DIVIDENDS PER SHARE](index=21&type=section&id=Note%2016.%20DIVIDENDS%20PER%20SHARE) - The Company declared a quarterly dividend of **$0.03 per share** in Q2 2023 and **$0.025 per share** in Q1 2023 and Q1/Q2 2022[75](index=75&type=chunk) - Total dividends declared were **$879 thousand** for the six months ended June 30, 2023, compared to **$776 thousand** in the prior year period[75](index=75&type=chunk) [Note 17. EARNINGS PER SHARE](index=22&type=section&id=Note%2017.%20EARNINGS%20PER%20SHARE) Weighted-Average Shares Outstanding (Three Months Ended June 30) | Metric | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Basic weighted average shares outstanding | 15,969 | 15,355 | | Diluted weighted average shares outstanding | 16,219 | 15,932 | Weighted-Average Shares Outstanding (Six Months Ended June 30) | Metric | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Basic weighted average shares outstanding | 15,921 | 15,226 | | Diluted weighted average shares outstanding | 16,178 | 15,752 | [Note 18. SEGMENT INFORMATION](index=22&type=section&id=Note%2018.%20SEGMENT%20INFORMATION) - The Company operates in one reportable segment for the manufacture and marketing of controlled motion products[78](index=78&type=chunk) - Revenue shipped to U.S. customers comprised **58%** for the three months ended June 30, 2023 and 2022, and **57%** for the six months ended June 30, 2023 and 2022[79](index=79&type=chunk) - For the three months ended June 30, 2023, Customer A accounted for **12%** of revenues and Customer B accounted for **10%** of revenues. Customer A represented **16%** of trade receivables at June 30, 2023[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, discussing overall business environment, detailed operating results for the three and six months ended June 30, 2023, non-GAAP financial measures, and liquidity and capital resources [Overview](index=23&type=section&id=Overview) - Allied Motion is a global company that designs, manufactures, and sells precision and specialty-controlled motion products and solutions[85](index=85&type=chunk) - Target markets include Industrial, Vehicle, Medical, and Aerospace & Defense (A&D)[85](index=85&type=chunk) - The Company is headquartered in Amherst, NY, with operations in the United States, Canada, Mexico, Europe, and Asia-Pacific[85](index=85&type=chunk) [Business Environment](index=24&type=section&id=Business%20Environment) - The ongoing threat of COVID-19 continues to create uncertainties and disruptions to the Company and the global economy[86](index=86&type=chunk) - Inflation negatively impacted input costs (labor and materials) and pricing during 2022 and into the first half of 2023[87](index=87&type=chunk) - The Company is focused on successfully integrating recent acquisitions (three in Q2 2022 and three in Q4 2021) to drive future growth and profitability[90](index=90&type=chunk) [Operating Results - Three months ended June 30, 2023 compared to three months ended June 30, 2022](index=25&type=section&id=Operating%20Results%20-%20Three%20months%20ended%20June%2030,%202023%20compared%20to%20three%20months%20ended%20June%2030,%202022) Key Financials (Three Months Ended June 30, in thousands, except per share data) | Metric | 2023 | 2022 | Variance ($) | Variance (%) | | :-------------------------- | :----- | :----- | :----------- | :----------- | | Revenues | $146,769 | $122,722 | $24,047 | 20% | | Gross profit | $45,977 | $39,774 | $6,203 | 16% | | Gross margin percentage | 31.3% | 32.4% | | -1.1 pp | | Operating income | $12,020 | $7,518 | $4,502 | 60% | | Interest expense | $3,162 | $1,525 | $1,637 | 107% | | Net income | $6,769 | $4,581 | $2,188 | 48% | | Diluted earnings per share | $0.42 | $0.29 | $0.13 | 45% | - Organic revenue growth was **17%** during the second quarter of 2023[92](index=92&type=chunk) - Bookings decreased by **2%** to **$137,008 thousand**, and backlog decreased by **8%** to **$298,695 thousand**, primarily due to normalization of order patterns[93](index=93&type=chunk) [Operating Results - Six months ended June 30, 2023 compared to six months ended June 30, 2022](index=28&type=section&id=Operating%20Results%20-%20Six%20months%20ended%20June%2030,%202023%20compared%20to%20six%20months%20ended%20June%2030,%202022) Key Financials (Six Months Ended June 30, in thousands, except per share data) | Metric | 2023 | 2022 | Variance ($) | Variance (%) | | :-------------------------- | :----- | :----- | :----------- | :----------- | | Revenues | $292,318 | $237,507 | $54,811 | 23% | | Gross profit | $91,811 | $73,234 | $18,577 | 25% | | Gross margin percentage | 31.4% | 30.8% | | 0.6 pp | | Operating income | $23,409 | $11,783 | $11,626 | 99% | | Interest expense | $6,145 | $2,563 | $3,582 | 140% | | Net income | $13,084 | $7,084 | $6,000 | 85% | | Diluted earnings per share | $0.81 | $0.45 | $0.36 | 80% | - Organic revenue growth was **21%** during the year to date 2023[106](index=106&type=chunk) - Bookings decreased by **12%** to **$260,206 thousand**, and backlog decreased by **8%** to **$298,695 thousand**, primarily due to normalization of order patterns and unfavorable currency impact[107](index=107&type=chunk) [Non-GAAP Measures](index=30&type=section&id=Non-GAAP%20Measures) - Management uses non-GAAP measures like Revenue excluding foreign currency exchange impacts, EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted diluted earnings per share to evaluate operating results, excluding items not indicative of ongoing operations[119](index=119&type=chunk)[120](index=120&type=chunk) Revenue Excluding Foreign Currency Exchange Impacts (Six Months Ended June 30, 2023, in thousands) | Metric | Amount | | :------------------------------------ | :----- | | Revenue as reported | $292,318 | | Currency impact unfavorable (favorable) | $3,662 | | Revenue excluding foreign currency exchange impacts | $295,980 | Adjusted Financials (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2023 (Amount) | 2023 (Per Diluted Share) | 2022 (Amount) | 2022 (Per Diluted Share) | | :------------------------------------ | :------------ | :----------------------- | :------------ | :----------------------- | | Net income as reported | $13,084 | $0.81 | $7,084 | $0.45 | | Adjusted net income | $18,405 | $1.14 | $13,357 | $0.85 | | EBITDA | $35,799 | | $24,548 | | | Adjusted EBITDA | $39,406 | | $29,100 | | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents decreased by **$6,494 thousand** to **$24,120 thousand** at June 30, 2023[128](index=128&type=chunk) - Net cash provided by operating activities significantly increased to **$17,273 thousand** for the six months ended June 30, 2023, from **$(290) thousand** in the prior year, driven by increased sales and efficient working capital conversion[129](index=129&type=chunk)[130](index=130&type=chunk) - Net cash used in investing activities decreased to **$(12,368) thousand** for the six months ended June 30, 2023, from **$(50,923) thousand** in the prior year, primarily due to lower acquisition cash considerations[129](index=129&type=chunk)[131](index=131&type=chunk) - The Company was in compliance with all debt covenants as of June 30, 2023, with **$61,234 thousand** unused under the Amended Revolving Facility[133](index=133&type=chunk)[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, specifically foreign currency exchange rate fluctuations and interest rate movements, and the strategies employed to mitigate these risks, including the use of derivative financial instruments [Foreign Currency](index=35&type=section&id=Foreign%20Currency) - International operations expose the Company to foreign currency exchange rate fluctuations in various currencies (Euro, Swedish Krona, Chinese Renminbi, Mexican pesos, etc.)[137](index=137&type=chunk)[139](index=139&type=chunk) - A hypothetical **10%** change in the U.S. dollar value would impact sales by approximately **$4,914 thousand** for Q2 2023 and **$10,016 thousand** for YTD Q2 2023[137](index=137&type=chunk) - Foreign currency exchange rate fluctuations decreased revenues by **$410 thousand** for Q2 2023 and **$3,662 thousand** for YTD Q2 2023[137](index=137&type=chunk) [Interest Rates](index=37&type=section&id=Interest%20Rates) - Interest rates on the Amended Credit Agreement are based on Term SOFR plus a margin, which was **1.75%** at June 30, 2023[140](index=140&type=chunk) - The Company uses interest rate swaps to manage exposure to interest rate movements on its variable-rate debt, with **$100,000 thousand** currently hedged out of **$218,766 thousand** outstanding under the Amended Revolving Facility[141](index=141&type=chunk) - A hypothetical one percentage point change in the Base Rate on the **$118,766 thousand** of unhedged floating rate debt would impact interest expense by approximately **$300 thousand** for Q2 2023 and **$600 thousand** for YTD Q2 2023[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the management's evaluation of the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Conclusion regarding the effectiveness of disclosure controls and procedures](index=37&type=section&id=Conclusion%20regarding%20the%20effectiveness%20of%20disclosure%20controls%20and%20procedures) - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2023[143](index=143&type=chunk) [Changes in internal control over financial reporting](index=37&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2023[144](index=144&type=chunk) PART II. OTHER INFORMATION This section covers updates on risk factors, details of unregistered equity sales, a list of filed exhibits, and official report signatures [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, apart from factual updates within this Form 10-Q - No material changes to the risk factors disclosed in the Company's Form 10-K for the year ended December 31, 2022, except for factual information disclosed elsewhere in this Form 10-Q[145](index=145&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on shares withheld by the Company to cover tax withholding obligations related to stock vesting, clarifying that these were not part of a public repurchase program - **39,007 shares** were withheld by the Company during the quarter ended June 30, 2023, at an average price of **$38.63 per share**, to satisfy tax withholding obligations in connection with the vesting of stock[146](index=146&type=chunk) - The Company did not have an authorized stock repurchase plan in place at June 30, 2023[146](index=146&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various certifications and XBRL-related documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) and 18 U.S.C. Section 1350[147](index=147&type=chunk) - Inline XBRL Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents are also filed[147](index=147&type=chunk) [SIGNATURES](index=39&type=section&id=SIGNATURES) This section contains the official signature block for the Form 10-Q, indicating its due authorization and filing date - The report was signed on August 2, 2023, by Michael R. Leach, Senior Vice President & Chief Financial Officer, on behalf of ALLIED MOTION TECHNOLOGIES INC[148](index=148&type=chunk)