ALLIED MOTION TE(AMOT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements 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 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 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] Condensed Consolidated Statements of Stockholders' Equity 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] - 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] Condensed Consolidated Statements of Cash Flows 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 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][25] - The company operates as a single reportable segment, manufacturing and marketing specialty-controlled motion products[91] 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 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][100] - 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] - Bookings for Q1 2025 increased 13% YoY to $137.6 million, indicating a return to more normalized customer order patterns[103][104] 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 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] - 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] - 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][141] Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Other Information 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] Exhibits 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]