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

Financial Data and Key Metrics Changes - In Q4 2024, the company reported revenue of $122 million, a decrease from the same period last year, with a gross margin of 31.5%, showing a sequential improvement despite soft volume [9][19][27] - For the full year, revenue totaled $530 million, reflecting anticipated demand softness due to inventory rebalancing and customer utilization of excess inventory [10][19] - Operating cash flow for the year was nearly $42 million, with total debt reaching approximately $240 million following the acquisition of SNC [10][39] Business Line Data and Key Metrics Changes - Aerospace and defense sales increased by 20% in Q4 due to specific defense and space program timing, while medical market revenue rose by 5% driven by demand for surgical instruments [20][21] - Vehicle market sales decreased by 46%, primarily due to reduced demand for powersports, and industrial market sales declined by 11% despite strong performance in power quality [21][22] - The industrial sector remained the largest market, contributing 47% of trailing twelve-month sales, driven by strong demand in power quality and semiconductor equipment [24] Market Data and Key Metrics Changes - The geographic sales mix shifted, with US customers accounting for 54% of total sales, down from 59% in the previous year [19] - The company noted challenges in Europe, particularly in Germany, with expectations of continued softness into midyear [58] - The data center expansion is expected to provide strong tailwinds, with significant growth anticipated in this area [60][68] Company Strategy and Development Direction - The company is focused on operational efficiencies and long-term growth, with initiatives like "Simplify to Accelerate Now" expected to deliver $6 to $7 million in annual savings in 2025 [12][14] - The Dothan facility's expansion aims to enhance machining capabilities, aligning with key market needs [15][16] - The company is actively pursuing opportunities in the defense sector through its newly formed Allient Defense Solutions unit [46] Management's Comments on Operating Environment and Future Outlook - Management anticipates a moderated pace of orders across most markets through the first half of 2025, with expectations for greater stability in order flow as customer inventory adjustments near completion [48] - The company remains optimistic about long-term operational improvements despite near-term inefficiencies during transitions [49][50] - Management emphasized the importance of aligning operations with customer needs to enhance responsiveness and drive growth [62] Other Important Information - The company reported a net income of $3 million for Q4, translating to earnings per diluted share of $0.18, with adjusted net income of $5.2 million or $0.31 per diluted share [32] - Total debt at year-end was $224 million, with a commitment to deleverage following the SNC acquisition [39][41] - The company entered into a new three-year interest rate swap to hedge $50 million of debt, providing stability amidst rate fluctuations [40] Q&A Session Summary Question: Insights on geographical and end-market performance - Management noted that North America is strengthening, with expectations for the industrial sector to return to normal growth rates, while Europe remains soft [57][58] Question: Potential for growth in Europe - Management indicated a "wait and see" approach regarding Europe, with ongoing operational efficiencies and new product development being key focus areas [64][65] Question: Data center market exposure and growth expectations - Management highlighted unique high-power solutions that provide a competitive edge, with significant growth in the data center market expected to continue [68][69] Question: Stability in medical and powersports businesses - Management acknowledged stabilization in the medical business around $20 million, with growth opportunities in higher-end applications, while powersports face challenges due to market dynamics [75][84] Question: Inventory normalization and cadence of improvement - Management confirmed that inventory levels are expected to normalize later in the year, with gradual improvements anticipated [102][104] Question: Dothan restructuring costs and financial reporting - Management stated that restructuring costs will not be broken out individually but will be included in the financials under business development [106][112] Question: Interest rate for the new swap - Management confirmed the interest rate for the swap is approximately 3.2% [115]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported revenue of $122 million, with a gross margin of 31.5%, showing a sequential improvement despite soft volume [9][19] - For the full year, revenue totaled $530 million, reflecting anticipated demand softness due to inventory rebalancing [10] - Operating cash flow reached nearly $42 million, with total debt at approximately $240 million following the acquisition of SNC [10][39] - Net income for the quarter was $3 million, translating to earnings per diluted share of $0.18, while adjusted net income was $5.2 million or $0.31 per diluted share [32] Business Line Data and Key Metrics Changes - Aerospace and defense sales increased by 20%, while medical market revenue rose by 5% [20][21] - Vehicle market sales decreased by 46%, primarily due to reduced demand for powersports [21] - Industrial market sales declined by 11%, despite strong performance in power quality sales [22] Market Data and Key Metrics Changes - US customers accounted for 54% of total sales, down from 59% in the previous year [19] - The industrial sector remained the largest market, contributing 47% of trailing twelve-month sales, driven by strong demand in power quality [24] - The distribution channel showed modest growth, representing 5% of total sales over the trailing twelve-month period [26] Company Strategy and Development Direction - The company is focused on operational efficiencies and positioning for long-term growth through initiatives like "Simplify to Accelerate Now," which delivered $10 million in annualized savings [12][13] - The Dothan facility is expanding machining capabilities to support strategic goals, with expected benefits by late 2025 [14][15] - The company is actively pursuing opportunities in the defense sector and has formed a new business unit to capitalize on these prospects [46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in key industrial and vehicle markets but emphasized resilience and commitment to execution [8] - The outlook for 2025 anticipates a moderated pace of orders across most markets, with expected strength in data center expansion [48] - Management remains optimistic about long-term operational improvements despite near-term inefficiencies during transitions [49] Other Important Information - The company is committed to reducing debt, having lowered total debt by $16 million over the year [11][39] - Cash and cash equivalents increased by 13% to $36.1 million, reinforcing financial flexibility [36] - The effective tax rate for the quarter was 22.2%, with expectations for the full year 2025 to range between 21% and 23% [33] Q&A Session Summary Question: Insights on geographical and end-market performance - Management noted that North America is strengthening, while Europe faces ongoing softness, particularly in Germany [57][58] Question: Potential for growth in Europe - Management indicated a "wait and see" approach regarding potential growth in Europe due to ongoing uncertainties [64][65] Question: Data center market exposure and growth expectations - Management highlighted significant growth in the data center market, with expectations for continued opportunities, albeit at a slower pace than previous years [68][69] Question: Stability in medical and powersports businesses - Management acknowledged stabilization in the medical business but noted challenges in the powersports market, which remains flat [75][84] Question: Inventory normalization and its impact - Management confirmed that inventory levels are expected to normalize later in the year, with gradual improvements anticipated [102][103] Question: Dothan restructuring costs and reporting - Management stated that restructuring costs will be included in the financials but not broken out individually [108][112] Question: Interest rate for the new swap - Management confirmed the interest rate for the swap is approximately 3.2% [115]