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ALLIENT INC

ALLIENT INCALNTEarnings & Financial Report

Nasdaq · Industrials · Instruments For Meas & Testing of Electricity & Elec Signals

Allient Inc is a global technology and manufacturing firm that designs, produces, and distributes precision motion, control, and power solutions. It serves core segments including aerospace, defense, medical, industrial automation, and commercial mobility, with operations across North America, Europe, and Asia-Pacific.

What changed in ALLIENT INC's 10-K — 2023 vs 2024

Top changes in ALLIENT INC's 2024 10-K

145 paragraphs added · 144 removed · 108 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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We may face additional economic and operational impacts from ESG regulations as well as impacts from our suppliers and customers as they adhere to the laws and regulations. 8 Table of Contents International Operations Our operations outside the United States are conducted through wholly-owned foreign subsidiaries and are located in North America, Europe, and Asia-Pacific.
We may face additional economic and 8 Table of Contents operational impacts from ESG regulations as well as impacts from our suppliers and customers as they adhere to the laws and regulations. International Operations Our operations outside the United States are conducted through wholly-owned foreign subsidiaries and are located in North America, Europe, and Asia-Pacific.
Allient was established in 1962 under the laws of Colorado and operates in the United States, Canada, Mexico, Europe and Asia-Pacific. We are headquartered in Amherst, New York and the mailing address of our corporate headquarters is 495 Commerce Drive, Suite 3, Amherst, New York 14228. The telephone number at this location is (716) 242-8634. Our website is www.allient.com.
Allient was established in 1962 under the laws of Colorado and operates in the United States, Canada, Mexico, Europe and Asia-Pacific. We are headquartered in Amherst, New York and the mailing address of our corporate headquarters is 495 Commerce Drive, Amherst, New York 14228. The telephone number at this location is (716) 242-8634. Our website is www.allient.com.
Employee Health and Safety The Company complies in all respects with the national and local laws of the jurisdictions in which we operate regarding workers safety and health. The Company strives to continuously improve employee safety and health through consistent measurement and reporting on progress and leading indicators.
Employee Health and Safety The Company complies in all respects with the national and local laws of the jurisdictions in which we operate regarding workers’ safety and health. The Company strives to continuously improve employee safety and health through consistent measurement and reporting on progress and leading indicators.
Our competitors include Ametek, Inc., Parker Hannifin Corporation, Regal Rexnord, and other smaller competitors. Availability and Prices of Parts and Raw Materials We purchase critical raw materials from a limited number of suppliers due to the technically challenging requirements of the supplied product and/or the lengthy process required to qualify these materials both internally and with our customers.
Our competitors include Ametek, Inc., Parker Hannifin Corporation, Regal Rexnord, and other smaller competitors. 7 Table of Contents Availability and Prices of Parts and Raw Materials We purchase critical raw materials from a limited number of suppliers due to the technically challenging requirements of the supplied product and/or the lengthy process required to qualify these materials both internally and with our customers.
Changing order patterns, supply chain disruptions, and the evolution of our business have required us to carry larger inventories in 2023 and 2022 to meet the needs of our customers, especially as they return to a new normal after the disruptions caused by the COVID-19 pandemic.
Changing order patterns, supply chain disruptions, and the evolution of our business required us to carry larger inventories in 2024 and 2023 to meet the needs of our customers, especially as they return to a new normal after the disruptions caused by the COVID-19 pandemic.
The information required by this item is set forth in Note 14, Segment Information, of the notes to consolidated financial statements contained in Item 8 of this report. Human Capital Employment At December 31, 2023, we employed 2,287 full-time employees worldwide.
The information required by this item is set forth in Note 14, Segment Information, of the notes to consolidated financial statements contained in Item 8 of this report. Human Capital Employment At December 31, 2024, we employed 2,525 full-time employees worldwide.
We are a global company that designs, manufactures and sells precision and specialty controlled motion components and systems used in a broad range of industries. Our target markets include Industrial, Vehicle, Medical, and Aerospace & Defense (A&D).
Item 1. Business. OVERVIEW We are a global company that designs, manufactures and sells precision and specialty controlled motion components and systems used in a broad range of industries. Our target markets include Industrial, Vehicle, Medical, and Aerospace & Defense (A&D).
We cannot quickly establish additional or replacement suppliers for these materials in some cases because of these rigid requirements. For these critical raw materials, we maintain minimum safety stock levels and partner with 7 Table of Contents suppliers through contract to help ensure the continuity of supply.
We cannot quickly establish additional or replacement suppliers for these materials in some cases because of these rigid requirements. For these critical raw materials, we maintain minimum safety stock levels and partner with suppliers through contracts to help ensure the continuity of supply.
In addition to providing sales and applications support, the solution center function may include final assembly, integration and tests as required to support customers within their geographic region. Sales Backlog: Backlog as of December 31, 2023 was $276,093 compared with $330,078 as of December 31, 2022.
In addition to providing sales and applications support, the solution center function may include final assembly, integration and tests as required to support customers within their geographic region. Sales Backlog: Backlog as of December 31, 2024 was $230,788 compared with $276,093 as of December 31, 2023.
Our engineering and development expenditures for the years ended December 31, 2023 and 2022 were $41,665 and $38,561, respectively, or 7% and 8% of sales in 2023 and 2022, respectively. We believe E&D is critical to our ongoing success and expect to continue to invest at similar levels in the future.
Our engineering and development expenditures for the years ended December 31, 2024 and 2023 were $39,761 and $41,665, respectively, or 7% of sales in both 2024 and 2023. We believe E&D is critical to our ongoing success and expect to continue to invest at similar levels in the future.
Of these expenditures, no material amounts were charged directly to customers, although we record non-recurring engineering charges to certain customers for custom engineering required to develop products that meet the customer’s specifications. Environmental Issues On December 14, 2023, Allient published its inaugural Sustainability Report covering the Company’s fiscal year 2022.
Of these expenditures, no material amounts were charged directly to customers, although we record non-recurring engineering charges to certain customers for custom engineering required to develop products that meet the customer’s specifications. Sustainability On December 6, 2024, Allient published its second annual Sustainability Report covering the Company’s fiscal year 2023.
Of those, approximately 55% are located in North America, 35% are located in Europe and the remainder are located in Asia-Pacific. As of December 31, 2023, 18% of our total workforce were employed in engineering functions, demonstrating our commitment to invest significantly in engineering resources.
Of those, approximately 63% are located in North America, 29% are located in Europe and the remainder are located in Asia-Pacific. As of December 31, 2024, 14% of our total workforce were employed in engineering functions, demonstrating our commitment to invest significantly in engineering resources.
As a result of the COVID-19 pandemic and resulting economic and supply chain disruptions, we have experienced upward pricing pressure and challenges with availability of parts and raw materials.
Beginning as a result of the COVID-19 pandemic, and continuing in subsequent years, due to resulting economic and supply chain disruptions, we have experienced upward pricing pressure and challenges with availability of parts and raw materials.
It has programs that emphasize that each employee in the organization is responsible for safety in the workplace. The Company provides a comprehensive safety program that focuses on a zero-incident mindset by providing ongoing training opportunities and review of safety activities and initiative. This highly visible effort encourages employee engagement and active management and leadership involvement.
It has programs that emphasize that each employee in the organization is responsible for safety in the workplace. The Company provides a comprehensive safety program that focuses on a zero-incident mindset by providing ongoing training opportunities and review of safety activities and initiative.
In addition, aerospace and defense customers ordering patterns continue to change quickly based on the geopolitical conflicts and sovereign governments priorities and budgets to address those conflicts. RECENT ACQUISITIONS Sierramotion: On September 22, 2023, the Company acquired 100% of the interest in Sierramotion Inc.
In addition, aerospace and defense customers ordering patterns continue to change quickly based on the geopolitical conflicts and sovereign governments priorities and budgets to address those conflicts. RECENT ACQUISITIONS SNC: On January 11, 2024, the Company acquired 100% of the interest in SNC Manufacturing Co., Inc.
Throughout its history, the Company has expanded our capabilities to be a leading global provider of motion solutions. More recently, we have been building our controls and power technologies, both organically and through acquisitions. The evolution of these additional pillars of our business enhances our overall value proposition, expands our addressable markets and is aligned with mega technology trends.
More recently, we have been building our controls and power technologies, both organically and through acquisitions. The evolution of these additional pillars of our business enhances our overall value proposition, expands our addressable markets and is aligned with mega technology trends.
OTHER FACTORS IMPACTING OUR OPERATIONS Sales and Marketing We design and develop our products within our Technology Centers and can manufacture these products and solutions in various facilities located in the United States, Canada, Mexico, Europe and Asia-Pacific. We also operate Allient Solution Centers that evaluate and focus all Allient products to create integrated controlled motion solutions for our customers.
OTHER FACTORS IMPACTING OUR OPERATIONS Sales and Marketing We design and develop our products within our Technology Centers and can manufacture these products and solutions in various facilities located in the United States, Canada, Mexico, Europe and Asia-Pacific.
A copy of both Codes is also available in print to any stockholder upon written request addressed to Allient Inc., 495 Commerce Drive, Suite 3, Amherst, NY 14228-2313, Attention: Secretary. Recent Events In 2023 we refined our strategy to expand our vertical market focus to accelerate our growth.
A copy of both Codes is also available in print to any stockholder upon written request addressed to Allient Inc., 495 Commerce Drive, Amherst, NY 14228-2313, Attention: Secretary. Recent Events Simplify to Accelerate NOW: During 2024, the Company commenced the Simplify to Accelerate NOW program.
The current geopolitical conflicts are creating higher levels of economic uncertainty and increased volatility with respect to energy prices, interest rates, our supply chain, and certain customer ordering patterns. We are closely monitoring the developments and continue to adjust our production platform to react to changing customer ordering patterns and realize efficiencies.
The current geopolitical conflicts are creating higher levels of economic uncertainty and increased volatility with respect to energy prices, interest rates, our supply chain (in particular, with respect to proposed changes to tariffs and trade policies), and certain customer ordering patterns.
This refined strategy is reflected in the change of our corporate name from Allied Motion Technologies Inc. to Allient Inc, short for Allied Nexus Technologies.
This refined strategy is reflected in the 2023 change of our corporate name from Allied Motion Technologies Inc. to Allient Inc, short for Allied Nexus Technologies. Allient captures the opportunity that exists at the nexus of these three technology pillars and recognizes the unique capabilities the combination offers.
We sell our products and solutions globally to a broad spectrum of customers through our own direct sales force and authorized manufacturers’ representatives and distributors. Our customers include end users and original 6 Table of Contents equipment manufacturers (“OEMs”). Allient Organization: The Company’s sales organization is focused on becoming the best sales and service force in its industry.
Our customers include end users and original equipment manufacturers (“OEMs”). Allient Organization: The Company’s sales organization is focused on becoming the best sales and service force in its industry.
The time to convert the majority of backlog to sales is approximately three to nine months. Given the short product lead times, we do not believe that the amount of our backlog of orders is a reliable indication of our future sales.
Given the short product lead times, we do not believe that the amount of our backlog of orders is a reliable indication of our future sales. We may on occasion receive multi-year orders from customers for product to be delivered on demand over that time frame.
Competitive Environment Our products and solutions are sold into the global market with a large and diverse group of competitors that vary by product, geography, industry and application. The controlled motion market is highly fragmented with many competitors, some of which are substantially larger and have greater resources than Allient.
The controlled motion market is highly fragmented with many competitors, some of which are substantially larger and have greater resources than Allient.
They provide customized design and integration capabilities, testing, performance simulations, prototype development, and low volume production for a variety of high precision and custom critical applications.
Sierramotion has experience and know-how designing and applying products in electro-mechanical systems with moving magnets or moving coils for rotary, linear, and arc shaped applications. They provide customized design and integration capabilities, testing, performance simulations, prototype development, and low volume production for a variety of high precision and custom critical applications.
The impact of the conflicts on our operational and financial performance will depend on future developments that cannot be predicted.
We are closely monitoring the developments and continue to adjust our production platform to react to changing customer ordering patterns and realize efficiencies. The impact of the conflicts on our operational and financial performance will depend on future developments that cannot be predicted.
Diversity, Equity, and Inclusion The Company is committed to apply fair labor practices while respecting the national and local laws of the countries and communities where we have operations. The Company is also committed to providing equal opportunity in all aspects of employment. The Company does not engage in or tolerate unlawful conduct, including discrimination, intimidation, or harassment.
This highly visible effort encourages employee engagement and active management and leadership involvement. ​ ​ 9 Table of Contents Anti-Discrimination The Company is committed to apply fair labor practices while respecting the national and local laws of the countries and communities where we have operations. The Company is also committed to providing equal opportunity in all aspects of employment.
(“Sierramotion”), a privately-owned company specializing in designing and engineering turn-key motion components and mechatronic (mechanical, electrical, and control) solutions for robotic, medical, industrial, defense, semiconductor, and other precision applications. Sierramotion has experience and know-how designing and applying products in electro-mechanical systems with moving magnets or moving coils for rotary, linear, and arc shaped applications.
Sierramotion: On September 22, 2023, the Company acquired 100% of the interest in Sierramotion Inc. (“Sierramotion”), a privately-owned company specializing in designing and engineering turn-key motion components and mechatronic (mechanical, electrical, and control) solutions for robotic, medical, industrial, defense, semiconductor, 5 Table of Contents and other precision applications.
The Company strives to establish relationships with key organizations and associations that foster 9 Table of Contents diversity and inclusion initiatives in the communities where it is located. The Company is committed to identifying a talented and innovative workforce through a culture that promotes human equity and emphasizes the benefits of a diverse and inclusive workforce and pipeline of talent.
The Company does not engage in or tolerate unlawful conduct, including discrimination, intimidation, or harassment. The Company strives to establish relationships with key organizations and associations that foster anti-discriminatory initiatives in the communities where it is located. The Company is committed to identifying a talented and innovative workforce through a culture that promotes fair treatment and anti-discriminatory values.
While gross domestic products began to rebound in 2023, the factors contributing to supply chain disruptions, labor shortages, and global inflation remained persistent into 2023, along with elevated geopolitical instability. There are varying degress of impact on our customers, and thus our business around the world, with Europe experiencing the greatest amount of stress in 2023.
While gross domestic products began to rebound in 2023 from the widespread impacts of inflation, increasing interest rates, and other restrictive financial conditions in 2022, the factors contributing to supply chain disruptions, labor shortages, and global inflation remained persistent through 2023 and 2024, along with continued elevated geopolitical instability.
Major Customers Sales to one customer (Customer A) were 10% of total sales in 2023 and 11% of total sales in 2022 and to another customer (Customer B) were 12% of total sales in 2023. We believe the broad diversification of the target markets and customers we serve reduces our exposure to negative developments with any single customer.
We believe the broad diversification of the target markets and customers we serve reduces our exposure to negative developments with any single customer. Competitive Environment Our products and solutions are sold into the global market with a large and diverse group of competitors that vary by product, geography, industry and application.
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Item 1. Business. OVERVIEW Effective August 23, 2023, Allied Motion Technologies Inc. (“Allied Motion”) changed its name to Allient Inc. (“Allient” or the “Company”). In conjunction with the name change, Allient’s ticker symbol has changed from “AMOT” to “ALNT”.
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This included initiatives to realign the Company’s manufacturing footprint and streamline the organization to enhance operational efficiency and drive profitability.
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The name change reflects the Company’s commitment to and progress in transforming its business from a products-based business in motion control to a solutions-oriented company that addresses its customers’ requirements for Motion, Controls and Power technologies for a multitude of applications.
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These initiatives are expected to position Allient to emerge from the current challenging macroeconomic environment and industrial headwinds with stronger earnings power, improved operational flexibility, and enhanced capacity to capitalize on future growth opportunities. ​ On February 6, 2025, the Company announced that consistent with its Simplify to Accelerate NOW strategy, it will expand upon current capabilities and skillsets to create a state-of-the-art Machining Center of Excellence at its facility in Dothan, Alabama.
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Allient captures the opportunity that exists at the nexus of these three technology pillars and recognizes the unique capabilities the combination offers. 4 Table of Contents Beginning in 2022 and continuing into 2023, inflation negatively impacted our input costs and pricing, primarily for labor and materials.
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The Company will transfer current assembly operations from Dothan and merge these capabilities into its facilities in Tulsa, Oklahoma and Reynosa, Mexico where Final Assembly, Integration and Test capabilities are the core competencies. ​ 4 Table of Contents The realignment will improve business focus and better leverage the Company’s footprint to deliver high-precision system solutions for demanding applications in various served markets including Aerospace and Defense, Medical and Electronic Test and Assembly Equipment.
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We, our customers, and our suppliers also experienced the effect of a higher interest rate environment. Gross domestic product growth slowed throughout 2022 largely due to the widespread impacts of inflation, increasing interest rates, and more restrictive financial conditions.
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One-time costs required to implement the changes are estimated to be approximately $4 to $5 million, primarily related to employee severance and other personnel related expenses, and are expected to be substantially incurred during 2025. The initiative is expected to support our goal of driving an additional $6 to $7 million in annualized cost savings.
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Airex, LLC: On June 17, 2022, the Company acquired 100% of the membership interests of Airex, LLC (“Airex”), a privately-owned New Hampshire headquartered developer of high precision electromagnetic products and solutions for the aerospace and defense, life sciences, semiconductor, and commercial industrial applications .
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The U.S. government has proposed updating existing trade policies with Mexico, China, and other countries. These updates include potential tariffs on a wide range of products and good imported to the U.S. We have significant manufacturing in Mexico and China as well as globally throughout the world.
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Airex combines its patented winding technology with robotic manufacturing to produce linear motors – ironless and iron core, rotary motors, voice coils, wound electromagnetic components and sub-components. Airex expands the Company’s motor offerings as well as enhances its quality systems to support broad mission critical defense programs, as well as other high demanding industries such as life sciences and semiconductor.
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Official government policies and agreements will be monitored for potential impacts to our business. In 2024 we continued to refine our strategy to expand our vertical market focus to accelerate our growth. Throughout its history, the Company has expanded our capabilities to be a leading global provider of motion solutions.
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All operations of Airex were moved from New Hampshire to our Tulsa, Oklahoma facility in late 2023.
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In recent years, inflation negatively impacted our input costs and pricing, primarily for labor and materials. We, our customers, and our suppliers also experienced the effect of a higher interest rate environment.
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FPH Group: On May 30, 2022, the Company acquired 100% of the direct and indirect legal and beneficial ownership of the shares of FPH Group Inc., a corporation incorporated pursuant to the laws of the Province of Ontario and the membership interests of Transtar International, LLC, a Michigan limited liability company, collectively “FPH”.
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There are varying degrees of impact on our customers, and thus our business around the world, with Europe experiencing the greatest amount of stress in 2023 and 2024.
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FPH is an Ontario, Canada headquartered industry leader in the development of technically advanced, reliable and cost-effective electrical drive systems which provide high torque and precision motion for the defense industry, as well as light weighting technologies for existing and future ground-based vehicles in the defense industry. FPH provides concept engineering, prototyping, validation, and production.
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(“SNC”), a privately-owned premier designer and global manufacturer of electrical transformers serving blue-chip customers in defense, industrial automation, alternative power generation and energy, including electric utilities and renewable energy. SNC has experience in industrial automation, defense, medical, and alternative energy markets, and their offerings are complementary to existing power quality capabilities and provide additional low-cost manufacturing capacity.
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FPH also develops composites, advanced materials and hybrid products and solutions that achieve significant weight reduction and higher strength. This acquisition provides the Company with a deeper penetration within defense applications including the necessary manufacturing licenses and certifications. ThinGap, Inc.: On May 24, 2022, the Company acquired 100% of the outstanding stock of ThinGap, Inc.
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We also operate Allient Solution Centers that evaluate and focus all Allient products to create integrated controlled motion solutions for our 6 Table of Contents customers. We sell our products and solutions globally to a broad spectrum of customers through our own direct sales force and authorized manufacturers’ representatives and distributors.
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(“ThinGap”), a privately-owned California headquartered developer and manufacturer of high performance, zero clogging slotless motors for use in aerospace, defense, and medical applications that require precise performance in a compact, yet high-torque-to-volume solutions. ThinGap designs, engineers, and manufactures low profile, brushless DC motor kits and assemblies that utilize a proprietary wave-wound stator architecture and highly optimized rotors.
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Included in backlog as of December 31, 2024 is $7,353 from the acquisition completed in 2024. The decrease in our backlog year over year reflects decreases within each of the target markets, most significantly in Vehicle.
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ThinGap expands the 5 Table of Contents Company’s precision motion capabilities and advances its strategy to provide integrated motion solutions in the robotics, semiconductor, and instrumentation markets.
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Decreases in revenues compared to the prior year period are largely impacted by elevated shipments during the prior year period as supply chains normalized, combined with elevated inventory levels and slowing demand at our customers . The time to convert the majority of backlog to sales is approximately three to nine months.
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Included in backlog as of December 31, 2023 is $2,344 from the acquisition completed in 2023. The decrease in our backlog is partially driven by the return of our customers to more normal ordering patterns subsequent to the disruptions in business and supply chains which occurred during the COVID-19 pandemic.
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There is no assurance that the Company’s backlog from these customers will be converted into revenue. Major Customers No customers exceed 10% of total sales in 2024. Sales to one customer (Customer A) were 10% of total sales in 2023 and to another customer (Customer B) were 12% of total sales in 2023.
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We may on occasion receive multi-year orders from customers for product to be delivered on demand over that time frame. There is no assurance that the Company’s backlog from these customers will be converted into revenue.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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For new associates, and on an annual basis therefore the Company requires associates to take security awareness training and has an on-going phishing recognition training and testing programs. ​ ​ ​ ​ ​ 11 Table of Contents We rely on suppliers to provide equipment, components and services, which creates certain risks and uncertainties that may adversely affect our business. ​ Our business requires that we buy equipment, components and services from third parties.
For new 11 Table of Contents associates, and on an annual basis therefore the Company requires associates to take security awareness training and has an on-going phishing recognition training and testing programs. ​ We rely on suppliers to provide equipment, components and services, which creates certain risks and uncertainties that may adversely affect our business. ​ Our business requires that we buy equipment, components and services from third parties.
While the failure of any single cost containment effort by itself would most likely not significantly 17 Table of Contents impact our results, we cannot give any assurances that we will be successful in controlling material and labor costs to maintain a competitive cost structure. ​ There is substantial price competition in our industry, and our success and profitability will depend on our ability to maintain a competitive cost and price structure.
While the failure of any single cost containment effort by itself would most likely not significantly impact our results, we cannot give any assurances that we will be successful in controlling material and labor costs to 17 Table of Contents maintain a competitive cost structure. ​ There is substantial price competition in our industry, and our success and profitability will depend on our ability to maintain a competitive cost and price structure.
This litigation could result in significant costs and divert our management’s focus away from operations. ​ We are subject to a variety of litigation and other legal and regulatory proceedings in the normal course of our business that could adversely affect our financial results. ​ We are subject to a variety of litigation and other legal and regulatory proceedings incidental to our business, including claims for damages arising out of the use of products or services and claims relating to intellectual property, 18 Table of Contents employment, tax, commercial disputes, competition, sales and trading practices, environmental, personal injury, insurance coverage, acquisition, as well as regulatory investigations or enforcement.
This litigation could result in significant costs and divert our management’s focus away from operations. ​ We are subject to a variety of litigation and other legal and regulatory proceedings in the normal course of our business that could adversely affect our financial results. ​ We are subject to a variety of litigation and other legal and regulatory proceedings incidental to our business, including claims for damages arising out of the use of products or services and claims relating to intellectual property, employment, tax, commercial disputes, competition, sales and trading practices, environmental, personal injury, 18 Table of Contents insurance coverage, acquisition, as well as regulatory investigations or enforcement.
We cannot assure that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial results. ​ We intend to develop new products and solutions and expand into new markets, which may not be successful and could harm our operating results. ​ We intend to expand into new markets and develop new and modified products and solutions based on our existing technologies and engineering capabilities, including the continued expansion of our controlled motion systems and integrated electronics.
We cannot assure that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial results. ​ We intend to develop new products and solutions and expand into new markets, which may not be successful and could harm our operating results. ​ We intend to selectively expand into new markets and develop new and modified products and solutions based on our existing technologies and engineering capabilities, including the continued expansion of our controlled motion systems and integrated electronics.
If our senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could be adversely affected. ​ The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities. ​ Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquire it.
If our senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted because of the integration process, our business could be adversely affected. ​ The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities. ​ Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquire it.
Although these blackouts have not materially impacted on our operations, it remains a risk we may face in the future. ​ STRATEGIC RISKS ​ Our strong organic growth has been and will continue to be enhanced by strategic acquisitions that complement, enhance or expand our business.
Although these blackouts have not materially impacted on our operations, it remains a risk we may face in the future. ​ STRATEGIC RISKS ​ Our organic growth has been and will continue to be enhanced by strategic acquisitions that complement, enhance or expand our business.
Any of these manufacturing problems could result in significant costs and liability, as well as negative publicity and damage to our reputation that could reduce demand for our products. ​ We face the potential harms of natural disasters, pandemics, acts of war, terrorism, international conflicts or other disruptions to our operations. ​ Natural disasters, pandemics, acts or threats of war or terrorism, international conflicts, political instability, and the actions taken by governments could cause damage to or disrupt our business operations, our suppliers or our customers, and could create economic instability.
Any of these manufacturing problems could result in significant costs and liability, as well as negative publicity and damage to our reputation that could reduce demand for our products. ​ We face the potential harm of natural disasters, pandemics, acts of war, terrorism, international conflicts or other disruptions to our operations. ​ Natural disasters, pandemics, acts or threats of war or terrorism, international conflicts, political instability, and the actions taken by governments could cause damage to or disrupt our business operations, our suppliers or our customers, and could create economic instability.
Any interruption in the supply from any supplier that serves as a sole source could delay product shipments and have a material adverse effect on our business, financial condition and results of operations. ​ Our profits may decline if the price of raw materials rise and we cannot recover the increases from our customers. ​ We use various raw materials, such as copper, steel, zinc and rare earth magnets, in our manufacturing operations.
Any interruption in the supply from any supplier that serves as a sole source could delay product shipments and have a material adverse effect on our business, financial condition and results of operations. ​ Our profits may decline if the price of raw materials increase and we cannot recover the increases from our customers. ​ We use various raw materials, such as copper, steel, zinc and rare earth magnets, in our manufacturing operations.
There is currently aggressive competition for employees who have experience in technology and engineering. We may not be able to continue to attract and retain engineers or other qualified technical personnel necessary for the development and growth of our business or to replace personnel who may leave our employ in the future.
There is currently aggressive competition for employees who have experience in technology and engineering. We may not be able to continue to attract and retain engineers or other qualified technical personnel necessary for the development and growth of our business or to replace personnel who may leave our employment in the future.
Any of these factors could adversely affect our growth and results of operations in any given period. ​ We could experience a failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach or failure of one or more key information technology systems, networks, processes, associated sites or service providers . ​ We rely extensively on information technology (“IT”) systems for the storage, processing, and transmission of our electronic, business-related information assets used in or necessary to conduct business.
Any of these factors could adversely affect our growth and results of operations in any given period. ​ 10 Table of Contents We could experience a failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach or failure of one or more key information technology systems, networks, processes, associated sites or service providers . ​ We rely extensively on information technology (“IT”) systems for the storage, processing, and transmission of our electronic, business-related information assets used in or necessary to conduct business.
We may not be able to find or complete these transactions, and, if completed, we may experience operational and financial risks in connection with our acquisitions that prevent us from realizing the anticipated benefits and may materially adversely affect our business, financial condition and operating results. ​ ​ 14 Table of Contents Acquisitions are part of our strategic growth plans.
We may not be able to find or complete these transactions, and, if completed, we may experience operational and financial risks in connection with our acquisitions that prevent us from realizing the anticipated benefits and may materially adversely affect our business, financial condition and operating results. ​ Acquisitions are part of our strategic growth plans.
In addition, we rely on networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, 10 Table of Contents hosted, provided and/or used by third-parties or their vendors, to assist in conducting our business.
In addition, we rely on networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our business.
Our product and solutions development efforts may be affected by a number of factors, including our ability to anticipate customer needs, allocate and process our research and development funding, innovate and develop new products, differentiate our offerings and commercialize new technologies, secure intellectual property protection for our products and manufacture products in a cost-effective manner.
Our product and solutions development efforts may be affected by several factors, including our ability to anticipate customer needs, allocate and process our research and development funding, innovate and develop new products, differentiate our offerings and commercialize new technologies, secure intellectual property protection for our products and manufacture products in a cost-effective manner.
These customers have a variety of suppliers to choose from and therefore can make substantial demands on us, including demands on product pricing and on contractual terms, often resulting in the allocation of risk to us as the supplier. Our ability to maintain strong relationships with our principal customers is essential to our future performance.
These customers have a variety of suppliers to choose from and therefore can make substantial demands on us, including demands on product pricing and contractual terms, which can shift the allocation of risk to us as the supplier. Our ability to maintain strong relationships with our principal customers is essential to our future performance.
We may have difficulty finding these opportunities, or if we do identify these opportunities, we may not be able to complete the transactions for various reasons including a failure to secure financing. ​ As we complete acquisitions, we face the operational and financial risks commonly encountered with an acquisition strategy.
We may have difficulty finding these opportunities, or if we do identify these opportunities, we may not be able to complete the transactions for various reasons including the inability 14 Table of Contents to secure financing. ​ As we complete acquisitions, we face the operational and financial risks commonly encountered with an acquisition strategy.
As part of their oversight, senior leadership meets with the Audit Committee at least annually to discuss information security and cybersecurity matters. ​ Over the last three years, the Company has experienced one known information security breach, in connection with a ransomware incident that occurred in June 2021.
Additionally, two members of the Company’s Board of Directors have relevant information security and cybersecurity experience. As part of their oversight, senior leadership meets with the Audit Committee at least annually to discuss information security and cybersecurity matters. ​ Over the last three years, the Company has experienced no known information security breaches.
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Additionally, two members of the Company’s Board of Directors have relevant information security and cybersecurity experience.
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Costs incurred related to the information security breach did not have a material adverse effect on our results of operations in the years ended December 31, 2023, 2022, and 2021.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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All third parties that we use have been vetted and have significant reputations in the industry.
All third parties that we use have been vetted and have deep experience and strong reputations in the industry.
In addition, the laws and regulations governing security of data on IT systems is evolving and adding another layer of complexity in the form of new requirements. 19 Table of Contents ​ Over the last three years, we have experienced one known information security breach, in connection with a ransomware incident that occurred in June 2021.
In addition, the laws and regulations governing security of data on IT systems is evolving and adding another layer of complexity in the form of new requirements. 19 Table of Contents ​ Over the last three years, we have experienced no known information security breaches.
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Costs incurred related to the information security breach did not have a material adverse effect on our results of operations in the years ended December 31, 2023, 2022, and 2021.

Item 2. Properties

Properties — owned and leased real estate

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As of December 31, 2023, the Company occupies facilities as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ ​ ​ ​ Square ​ Owned Description / Use ​ Location ​ Footage ​ Or Leased Corporate headquarters and manufacturing facility Amherst, New York 21,300 Leased Office and manufacturing facility ​ Arvada, Colorado ​ 15,000 ​ Leased Office and manufacturing facility ​ Bellevue, Washington ​ 30,000 ​ Leased Office and manufacturing facility ​ Camarillo, California ​ 14,500 ​ Leased Office and manufacturing facility Changzhou, China 40,000 Leased Office Christchurch, New Zealand 27,000 Leased Office Dayton, Ohio 29,000 Owned Office and manufacturing facility Dayton, Ohio 25,000 Leased Office and manufacturing facility Dordrecht, The Netherlands 32,000 Leased Office and manufacturing facility Dothan, Alabama 88,000 Owned Office and manufacturing facility Germantown, Wisconsin 99,000 Leased Office and manufacturing facilities Kelheim, Germany 154,000 Leased Office Kidderminster, Great Britain 6,200 Leased Office and manufacturing facility ​ London, Ontario, Canada ​ 48,500 ​ Leased Office and manufacturing facility ​ Loomis, California ​ 3,600 ​ Leased Office and manufacturing facility Mrakov, Czech Republic 42,000 Leased Office Oakville, Ontario, Canada 3,500 Leased Office and manufacturing facility Owosso, Michigan 85,000 Owned Office and manufacturing facility Porto, Portugal 53,000 Owned Office and manufacturing facility Reynosa, Mexico 50,000 Leased Office and manufacturing facility ​ Rochester, New York ​ 15,000 ​ Leased Office ​ Roseville, Michigan ​ 5,300 ​ Leased Office and manufacturing facility Stockholm, Sweden 25,000 Leased Office and manufacturing facility Suzhou, China 41,000 Leased Office and manufacturing facility Tulsa, Oklahoma 172,000 Leased Office and manufacturing facility Watertown, New York 107,000 Owned ​ The Company’s management believes the above-described facilities are adequate to meet the Company’s current and foreseeable needs.
As of December 31, 2024, the Company occupies facilities as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ ​ ​ ​ Square ​ Owned Description / Use ​ Location ​ Footage ​ Or Leased Corporate headquarters and manufacturing facility Amherst, New York 21,300 Leased Office and manufacturing facility ​ Acuna, Mexico ​ 10,500 ​ Leased Office and manufacturing facility ​ Arvada, Colorado ​ 15,000 ​ Leased Office and manufacturing facility ​ Bellevue, Washington ​ 30,000 ​ Leased Office and manufacturing facility ​ Camarillo, California ​ 14,500 ​ Leased Office and manufacturing facility Changzhou, China 40,000 Leased Office and manufacturing facility ​ Changzhou, China ​ 22,800 ​ Leased Office Christchurch, New Zealand 27,000 Leased Office Dayton, Ohio 29,000 Owned Office and manufacturing facility Dayton, Ohio 25,000 Leased Warehouse ​ Del Rio, TX ​ 10,000 ​ Leased Office and manufacturing facility Dordrecht, The Netherlands 32,000 Leased Office and manufacturing facility Dothan, Alabama 88,000 Owned Office and manufacturing facility Germantown, Wisconsin 99,000 Leased Office and manufacturing facilities Kelheim, Germany 154,000 Leased Office Kidderminster, Great Britain 6,200 Leased Office and manufacturing facility ​ London, Ontario, Canada ​ 48,500 ​ Leased Office and manufacturing facility ​ Loomis, California ​ 3,600 ​ Leased Office and manufacturing facility Mrakov, Czech Republic 42,000 Leased Office Oakville, Ontario, Canada 3,500 Leased Office and manufacturing facility ​ Oshkosh, WI ​ 14,400 ​ Leased Office and manufacturing facility Owosso, Michigan 85,000 Owned Office and manufacturing facility Porto, Portugal 53,000 Owned Office and manufacturing facility Reynosa, Mexico 50,000 Leased Office and manufacturing facility ​ Rochester, New York ​ 26,500 ​ Leased Office ​ Roseville, Michigan ​ 5,300 ​ Leased Office and manufacturing facility Stockholm, Sweden 25,000 Leased Office and manufacturing facility Suzhou, China 41,000 Leased Office and manufacturing facility Tulsa, Oklahoma 172,000 Leased Office and manufacturing facility Watertown, New York 107,000 Owned ​ The Company’s management believes the above-described facilities are adequate to meet the Company’s current and foreseeable needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings. The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company’s consolidated financial statements. ​
Item 3. Legal Proceedings. The Company is involved in certain actions that have arisen out of the ordinary course of business. Management believes that resolution of the actions will not have a significant adverse effect on the Company’s consolidated financial statements. ​ Item 4. Mine Safety Disclosures. Not applicable. ​ ​ 21 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Shares withheld for tax withholding obligations do not affect the total number of shares available for repurchase under any approved common stock repurchase plan. At December 31, 2023, the Company did not have an authorized stock repurchase plan in place . ​ Item 6. [Reserved] ​ 23 Table of Contents
Shares withheld for tax withholding obligations do not affect the total number of shares available for repurchase under any approved common stock repurchase plan. At December 31, 2024, the Company did not have an authorized stock repurchase plan in place . ​ Item 6. [Reserved] ​ 23 Table of Contents
The number of holders of record as reported by the Company’s transfer agent of the Company’s common stock as of the close of business on March 5, 2024 was 218. Dividends During 2023 and 2022, we declared regular quarterly cash dividends on our common stock.
The number of holders of record as reported by the Company’s transfer agent of the Company’s common stock as of the close of business on March 5, 2025 was 196. Dividends During 2024 and 2023, we declared regular quarterly cash dividends on our common stock.
We paid $0.025 in the first quarter of 2023 and $0.03 in the second, third, and fourth quarter of 2023, and $0.025 in each quarter of 2022.
We paid $0.03 in each quarter of 2024, and well as $0.025 in the first quarter of 2023 and $0.03 in the second, third, and fourth quarter of 2023.
Performance Graph The following performance graph and tables reflect the five year change in the Company’s cumulative total stockholder return on Common Stock as compared with the cumulative total return of the NASDAQ Stock Market Index and our custom Peer Group for a $100 investment made on December 31, 2018, including reinvestment of any dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Allient Inc. ​ $ 100.00 ​ $ 108.87 ​ $ 115.09 ​ $ 123.60 ​ $ 118.28 ​ $ 103.00 NASDAQ (U.S.) ​ $ 100.00 ​ $ 136.69 ​ $ 198.10 ​ $ 242.03 ​ $ 163.28 ​ $ 236.17 Peer Group ​ $ 100.00 ​ $ 118.97 ​ $ 145.25 ​ $ 168.68 ​ $ 142.55 ​ $ 199.73 ​ The Peer Group in the above graph includes the following stocks: LSI Industries, Moog, Inc., Onto Innovation, Preformed Line, Proto Labs, Inc., Helios Tech Inc., Thermon Group, Altra Industrial Motion, Astronics Corporation, Aeroenvironment, Columbus McKinnon, Franklin Electric, and Novanta, Inc. 22 Table of Contents Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares Maximum Number of Shares ​ ​ Number of Shares ​ Average Price Paid ​ Purchased as Part of Publicly ​ that May Yet Be Purchased Period ​ Purchased (1) ​ per Share ​ Announced Plans or Programs ​ Under the Plans or Programs 10/01/23 to 10/31/23 — ​ $ — — — 11/01/23 to 11/30/23 385 ​ 26.19 — — 12/01/23 to 12/31/23 8,868 ​ 29.15 — — Total 9,253 ​ $ 29.02 — — (1) As permitted under the Company’s equity compensation plan, these shares were withheld by the Company to satisfy tax withholding obligations for employees in connection with the vesting of stock.
Performance Graph The following performance graph and tables reflect the five year change in the Company’s cumulative total stockholder return on Common Stock as compared with the cumulative total return of the NASDAQ Stock Market Index and our custom Peer Group for a $100 investment made on December 31, 2019, including reinvestment of any dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Allient Inc. ​ $ 100.00 ​ $ 105.71 ​ $ 113.52 ​ $ 108.64 ​ $ 94.61 ​ $ 76.38 NASDAQ (U.S.) ​ $ 100.00 ​ $ 144.92 ​ $ 177.06 ​ $ 119.45 ​ $ 172.77 ​ $ 223.87 Peer Group ​ $ 100.00 ​ $ 122.09 ​ $ 141.78 ​ $ 119.82 ​ $ 167.88 ​ $ 178.73 ​ The Peer Group in the above graph includes the following stocks: LSI Industries, Moog, Inc., Onto Innovation, Preformed Line, Proto Labs, Inc., Helios Tech Inc., Thermon Group, Altra Industrial Motion, Astronics Corporation, Aeroenvironment, Columbus McKinnon, Franklin Electric, and Novanta, Inc. ​ 22 Table of Contents Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares Maximum Number of Shares ​ ​ Number of Shares ​ Average Price Paid ​ Purchased as Part of Publicly ​ that May Yet Be Purchased Period ​ Purchased (1) ​ per Share ​ Announced Plans or Programs ​ Under the Plans or Programs 10/01/24 to 10/31/24 — ​ $ — — — 11/01/24 to 11/30/24 1,035 ​ 18.21 — — 12/01/24 to 12/31/24 4,511 ​ 24.01 — — Total 5,546 ​ $ 22.93 — — (1) As permitted under the Company’s equity compensation plan, these shares were withheld by the Company to satisfy tax withholding obligations for employees in connection with the vesting of stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The Company considers the customer’s purchase 26 Table of Contents order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties.
The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The 26 Table of Contents Company establishes provisions for estimated returns and warranties.
A 1% write-down of our goodwill would decrease our 2023 net income by approximately $1,000, or $0.06 per diluted share. 27 Table of Contents Business Combinations The Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill.
A 1% write-down of our goodwill would decrease our 2024 net income by approximately $1,000, or $0.06 per diluted share. 27 Table of Contents Business Combinations The Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill.
See Note 1, Business and Summary of Significant Accounting Policies of the notes to consolidated financial statements contained in Item 8 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 28 Table of Contents Operating Results The following discussion is a comparison between fiscal year 2023 and fiscal year 2022 results.
See Note 1, Business and Summary of Significant Accounting Policies of the notes to consolidated financial statements contained in Item 8 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 28 Table of Contents Operating Results The following discussion is a comparison between fiscal year 2024 and fiscal year 2023 results.
For a discussion of our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 7, 2023.
For a discussion of our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 5, 2024.
We believe this approach will allow us to provide increased value to our customers and improved margins for our Company and are demonstrated in our acquisitions completed in 2023 and 2022.
We believe this approach will allow us to provide increased value to our customers and improved margins for our Company and are demonstrated in our acquisitions completed in 2024 and 2023.
The effective rate differs from the statutory rate primarily due to state income taxes, the impact of foreign tax provisions in the U.S., foreign tax rate differences, Section 162(m) compensation limits, and the benefit of Research and Development tax credits and incentives.
The effective rate differs from the statutory rate primarily due to state income taxes, the impact of foreign tax provisions in the U.S., foreign tax rate differences, Section 162(m) compensation limits, the benefit of Research and Development tax credits and incentives and withholding taxes on foreign distributions.
Adjusted diluted earnings per share for 2023 and 2022 were $2.30 and $1.88, respectively. Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. See information included in “Non–GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of net income to Adjusted net income and diluted earnings per share to Adjusted diluted earnings per share.
Adjusted diluted earnings per share for 2024 and 2023 were $1.49 and $2.30, respectively. Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. See information included in “Non–GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of net income to Adjusted net income and diluted earnings per share to Adjusted diluted earnings per share.
Refer to information included in “Non-GAAP Measures” below for a discussion of the non-GAAP measure and a reconciliation of net income to EBITDA and Adjusted EBITDA. 30 Table of Contents Non-GAAP Measures Organic growth, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share are provided for information purposes only and are not measures of financial performance under GAAP.
Refer to information included in “Non-GAAP Measures” below for a discussion of the non-GAAP measure and a reconciliation of net income to EBITDA and Adjusted EBITDA. 30 Table of Contents Non-GAAP Measures Revenue excluding foreign currency exchange, Organic growth, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share are provided for information purposes only and are not measures of financial performance under GAAP.
However, changes to the factors considered above could affect the estimated fair value of our reporting unit and could result in a goodwill impairment charge in a future period. As of December 31, 2023, we have $131,338 of goodwill recorded on our consolidated balance sheet, representing approximately 22% of total assets.
Changes to the factors considered above could affect the estimated fair value of our reporting unit and could result in a goodwill impairment charge in a future period. As of December 31, 2024, we have $131,789 of goodwill recorded on our consolidated balance sheet, representing approximately 23% of total assets.
If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the excess, limited to the amount of goodwill allocated to that reporting unit. We performed a qualitative assessment of our single reporting unit as of October 31, 2023.
If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the excess, limited to the amount of goodwill allocated to that reporting unit. We elected to bypass the qualitative assessment and performed a quantitative assessment of our single reporting unit as of October 31, 2024.
These covenants, which are described more fully in the Amended Credit Agreement, to which reference is made for a complete statement of the covenants, are subject to certain exceptions. The Amended Credit Agreement contains financial covenants that require that the Company maintain a minimum interest coverage ratio of at least 3.0 to 1.0 at the end of each fiscal quarter.
These covenants, which are described more fully in the Amended Credit Agreement, to which reference is made for a complete statement of the covenants, are subject to certain exceptions. Financial covenants under the 2024 Credit and Note Payable Agreements require the Company to maintain a minimum interest coverage ratio of at least 3.0:1.0 at the end of each fiscal quarter.
Allient is an applied technology/know-how motion company, and to grow, we will continue to invest in the technical resources to ensure we can move forward with our mantra to “ create controlled motion solutions that change the game ” and to meet the emerging needs of our customers in our served market segments.
We anticipate realizing the initial benefits of this initiative toward the end of 2025. ​ Allient is an applied technology/know-how motion company, and to grow, we will continue to invest in the technical resources to ensure we can move forward with our mantra to “ create controlled motion solutions that change the game ” and to meet the emerging needs of our customers in our served market segments.
The decrease in backlog as of December 31, 2023, compared to December 31, 2022 includes incremental backlog of $2,344 from the acquisition that was completed during 2023. 29 Table of Contents GROSS PROFIT AND GROSS MARGIN: Gross margins improved to 31.7% for 2023, compared to 31.3% for 2022.
The decrease in backlog as of December 31, 2024, compared to December 31, 2023 includes an incremental backlog of $7,353 from the acquisition that was completed during 2024. 29 Table of Contents GROSS PROFIT AND GROSS MARGIN: Gross margins decreased to 31.3% for 2024, compared to 31.7% for 2023.
As a percentage of revenues, engineering and development expenses were 7% and 8% for the years ended December 31, 2023 and 2022, respectively.
As a percentage of revenues, engineering and development expenses were 7% for each of the years ended December 31, 2024 and 2023.
EBITDA AND ADJUSTED EBITDA: EBITDA was $67,151 for 2023 compared to $56,859 for 2022. Adjusted EBITDA was $77,184 and $65,549 for 2023 and 2022, respectively. EBITDA and Adjusted EBITDA are non-GAAP measures. EBITDA consists of income before interest expense, provision for income taxes, and depreciation and amortization.
EBITDA AND ADJUSTED EBITDA: EBITDA was $56,045 for 2024 compared to $67,151 for 2023. Adjusted EBITDA was $62,525 and $77,184 for 2024 and 2023, respectively. EBITDA and Adjusted EBITDA are non-GAAP measures. EBITDA consists of income before interest expense, provision for income taxes, and depreciation and amortization.
Dividends to shareholders for 2023 and 2022 were $0.115 and $0.10 per share, respectively. The dividend payout ratio was 8% and 9% for 2023 and 2022, respectively when compared with the diluted earnings per share of $1.48 and $1.09, respectively.
Dividends to shareholders for 2024 and 2023 were $0.12 and $0.115 per share, respectively. The dividend payout ratio was 15% and 8% for 2024 and 2023, respectively when compared with the diluted earnings per share of $0.79 and $1.48, respectively.
As of December 31, 2023, we have $117,686 of inventory recorded on our consolidated balance sheet, representing approximately 20% of total assets. A 1% write-down of our inventory would decrease our 2023 net income by approximately $900, or $0.05 per diluted share.
As of December 31, 2024, we have $111,517 of inventory recorded on our consolidated balance sheet, representing approximately 19% of total assets. A 1% write-down of our inventory would decrease our 2024 net income by approximately $850, or $0.05 per diluted share.
INTEREST EXPENSE: Interest expense increased by 61% in 2023 compared to 2022 primarily due to higher interest rates, offset in part by the impact of interest rate swaps. INCOME TAXES: For 2023 and 2022, the effective income tax rate was 18.9% and 26.6%, respectively.
INTEREST EXPENSE: Interest expense increased by 7% in 2024 compared to 2023 primarily due to higher average debt balances and higher interest rates, offset in part by the impact of interest rate swaps. INCOME TAXES: For 2024 and 2023, the effective income tax rate was 21.9% and 18.9%, respectively.
Sales to U.S. customers were 59% of total sales for 2023 and 58% for 2022, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. ● Gross profit was $183,683 for 2023, a 17% increase from $157,259 in 2022.
Sales to U.S. customers were 55% of total sales for 2024 and 59% for 2023, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. ● Gross profit was $165,691 for 2024, a 10% decrease from $183,683 in 2023.
Included in backlog as of December 31, 2023 is $2,344 contributed by the 2023 business acquisition. 24 Table of Contents ● Debt of $218,402, net of cash of $31,901, decreased by $18,339 to $186,501 at December 31, 2023 from debt of $235,454, net of cash of $30,614 of $204,840 at December 31, 2022, primarily as a result of payments made on debt from cash flows generated by operations, offset in part by borrowings to fund acquisition activities and capital expenditures. ● We declared and paid a dividend of $0.025 in the first quarter of 2023 and $0.03 in each of the second, third, and fourth quarters of 2023 and declared and paid a dividend of $0.025 in each quarter of 2022 pursuant to our quarterly dividend program.
Included in backlog as of December 31, 2024 is $7,353 contributed by the 2024 business acquisition. ● Debt of $224,177, net of cash of $36,102, increased by $1,574 to $188,075 at December 31, 2024 from debt of $218,402, net of cash of $31,901 of $186,501 at December 31, 2023, primarily as a result of borrowings to fund acquisition activities and capital expenditures, offset in part by payments made on debt from cash flows generated by operations. ● We declared and paid a dividend of $0.03 in each quarter of 2024, as well as declaring and paying $0.025 in the first quarter of 2023 and $0.03 in each of the second, third, and fourth quarters of 2023 pursuant to 24 Table of Contents our quarterly dividend program.
The effective tax rate for 2023 was lower than the effective tax rate for 2022 primarily due to increases in certain credits and incentives, the realization of certain deferred income tax assets that had been reserved in prior years, as well as the impact of the mix of foreign and domestic income.
The effective tax rate for 2024 was higher than the effective tax rate for 2023 primarily due to increases due to impacts of section 162(m) compensation and withholding taxes on foreign distributions, partially offset by increases in certain credits and incentives, the realization of certain deferred income tax assets that had been reserved in prior years, as well as the impact of the mix of foreign and domestic income.
AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets increased 10% in 2023 compared to 2022, due to the inclusion of the full year of intangible asset amortization of the 2022 acquisitions and, to a lesser extent, the incremental intangible asset amortization from the 2023 acquisition.
AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets increased 1% in 2024 compared to 2023, due to the inclusion of the full year of intangible asset amortization of the 2023 acquisition and the intangible asset amortization from the 2024 acquisition.
Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).
Overall, our strategic initiatives position Allient for stronger financial performance, greater operational flexibility, and enhanced earnings power in the years ahead. ​ Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).
Our strong financial condition, along with AST continuous improvement initiatives in quality, delivery, and cost allow us to have a positive outlook for the continued long-term growth of our Company. Outlook for 2024 In recent years, we navigated a difficult environment related to the COVID-19 pandemic, while advancing our strategic priorities and delivering solid results.
Our strong financial condition, along with AST continuous improvement initiatives in quality, delivery, and cost allow us to have a positive outlook for the continued long-term growth of our Company.
NET INCOME AND ADJUSTED NET INCOME: Net income increased during 2023 compared to 2022, primarily due to operating income increases, reflecting increased revenues and higher gross margin, partially offset by an increase in operating expenses and interest expense. Adjusted net income for the years ended December 31, 2023 and 2022 was $37,458 and $29,971, respectively.
NET INCOME AND ADJUSTED NET INCOME: Net income decreased during 2024 compared to 2023, primarily due to operating income decreases, reflecting decreased revenues and lower gross margin, partially offset by a decrease in operating expenses. Adjusted net income for the years ended December 31, 2024 and 2023 was $24,679 and $37,458, respectively.
The Company was in compliance with all covenants at December 31, 2023 as well as at each quarter end during 2023. As of December 31, 2023, the unused Amended Revolving Facility was $69,880. The amount available to borrow may be lower and may vary from period to period based upon our debt and EBITDA levels, which impacts our covenant calculations.
As of December 31, 2024, the unused Amended Revolving Facility was $111,038. The amount available to borrow may be lower and may vary from period to period based upon our debt and EBITDA levels, which impacts our covenant 33 Table of Contents calculations.
This measure adjusts net income determined in accordance with GAAP to reflect changes in financial results associated with the highlighted expense and income items. Organic growth is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions.
This measure adjusts net income determined in accordance with GAAP to reflect changes in financial results associated with the highlighted expense and income items.
In addition, the Company’s Leverage Ratio at the end of any fiscal quarter shall not be greater than 3.5 to 1.0 ratio; provided that the Company may elect to temporarily increase the Leverage Ratio by 0.5x during the twelve-month period following a material acquisition under the Amended Credit Agreement (“acquisition leverage increase”), subject to certain exceptions.
In addition, the Company’s Leverage Ratio at the end of any fiscal quarter shall not be greater than 4.25:1.0 through December 31, 2024 or greater than 3.75 to 1.0 as of the end of any fiscal quarter thereafter; provided that the Company may elect to temporarily increase the Leverage Ratio by 0.5:1.0 following a material acquisition under the 2024 Credit and Note Payable Agreements.
The overall increase in revenue was due to a 15% volume increase and a minimal foreign currency impact. The acquisitions completed in 2022 and 2023 contributed an incremental $10,057 of revenues in 2023. See information included in “Non – GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of revenue to revenue excluding foreign currency impacts.
See information included in “Non – GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of revenue to revenue excluding foreign currency impacts. ORDER BOOKINGS AND BACKLOG: The 8% decrease in orders in 2024 compared to 2023 is due to an 8% decrease in volume with minimal foreign currency impact.
The Company’s calculation of organic growth for 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, 2023 Revenue increase over prior year ​ ​ 15.0 % Less: Impact of acquisitions and foreign currency ​ ​ 1.9 ​ Organic growth ​ ​ 13.1 % 31 Table of Contents ​ ​ The Company’s calculation of EBITDA and Adjusted EBITDA for 2023 and 2022 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2023 2022 Net income as reported ​ $ 24,097 ​ $ 17,389 Interest expense ​ 12,383 ​ 7,692 Provision for income tax ​ 5,603 ​ 6,292 Depreciation and amortization ​ 25,068 ​ 25,486 EBITDA ​ 67,151 ​ 56,859 Stock-based compensation expense ​ 5,477 ​ 5,073 Business development costs ​ 4,275 ​ 3,319 Foreign currency loss ​ ​ 281 ​ ​ 298 Adjusted EBITDA ​ $ 77,184 ​ $ 65,549 ​ ​ ​ ​ ​ ​ ​ ​ The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for years ended December 31, 2023 and 2022 is as follows (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ December 31, ​ ​ ​ Per diluted ​ ​ Per diluted ​ ​ 2023 ​ share ​ 2022 ​ share Net income as reported ​ $ 24,097 ​ $ 1.48 ​ $ 17,389 ​ $ 1.09 Non-GAAP adjustments, net of tax (1) ​ ​ ​ ​ Amortization of intangible assets – net ​ 9,752 ​ 0.60 ​ 9,812 ​ 0.62 Foreign currency loss – net ​ 223 ​ 0.01 ​ 228 ​ 0.01 Business development costs – net ​ 3,386 ​ 0.21 ​ 2,542 ​ 0.16 Non-GAAP adjusted net income and adjusted diluted earnings per share ​ $ 37,458 ​ $ 2.30 ​ $ 29,971 ​ $ 1.88 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Applies a blended federal, state, and foreign tax rate of approximately 21% in 2023 and 23% in 2022 applicable to the non-GAAP adjustments. ​ Liquidity and Capital Resources The Company’s liquidity position as measured by cash and cash equivalents increased by $1,287 to a balance of $31,901 at December 31, 2023 from 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 vs. 2022 (in thousands): 2023 2022 $ Net cash provided by operating activities ​ $ 45,038 ​ $ 5,596 ​ $ 39,442 Net cash used in investing activities ​ ​ (22,607) ​ (60,011) ​ 37,404 Net cash (used in) provided by financing activities ​ ​ (21,317) ​ 63,605 ​ (84,922) Effect of foreign exchange rates on cash ​ ​ 173 ​ (1,039) ​ 1,212 Net increase in cash and cash equivalents ​ $ 1,287 ​ $ 8,151 ​ $ (6,864) ​ Of the $31,901 cash and cash equivalents on hand at December 31, 2023, $20,704 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated to the U.S. 32 Table of Contents During 2023, the cash provided by operating activities increased from 2022 primarily due to increases in net income, adjusted for non-cash items, as well as improvements in working capital, most notably receivables and inventories, due to improvement in 2023 of supply chains as inventories had been significantly impacted by supply chain disruptions during 2022.
Organic growth is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions. ​ ​ 31 Table of Contents The Company’s calculation of Revenue excluding foreign currency exchange impacts for the years ending December 31, 2024 and 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2024 2023 Revenue as reported ​ $ 529,968 ​ $ 578,634 Currency impact unfavorable ​ 139 ​ 258 Revenue excluding foreign currency exchange impacts ​ $ 530,107 ​ $ 578,892 ​ ​ ​ ​ ​ ​ ​ The Company’s calculation of organic growth for 2024 is as follows: ​ ​ ​ ​ ​ Year ended ​ December 31, 2024 Revenue change over prior year ​ (8.4) % Less: Impact of acquisitions and foreign currency ​ 7.0 ​ Organic growth ​ (15.4) % ​ The Company’s calculation of EBITDA and Adjusted EBITDA for 2024 and 2023 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 2023 Net income as reported ​ $ 13,166 ​ $ 24,097 Interest expense ​ 13,296 ​ 12,383 Provision for income tax ​ 3,692 ​ 5,603 Depreciation and amortization ​ 25,891 ​ 25,068 EBITDA ​ 56,045 ​ 67,151 Stock-based compensation expense ​ 4,147 ​ 5,477 Acquisition and integration-related costs ​ ​ 445 ​ ​ 2,959 Restructuring and business realignment costs ​ 1,971 ​ 1,316 Foreign currency (gain)/loss ​ ​ (83) ​ ​ 281 Adjusted EBITDA ​ $ 62,525 ​ $ 77,184 ​ The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for years ended December 31, 2024 and 2023 is as follows (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ December 31, ​ ​ ​ Per diluted ​ ​ Per diluted ​ ​ 2024 ​ share ​ 2023 ​ share Net income as reported ​ $ 13,166 ​ $ 0.79 ​ $ 24,097 ​ $ 1.48 Non-GAAP adjustments, net of tax (1) ​ ​ ​ ​ Amortization of intangible assets – net ​ 9,726 ​ 0.59 ​ 9,752 ​ 0.60 Foreign currency (gain) / loss – net ​ (64) ​ — ​ 223 ​ 0.01 Acquisition and integration-related costs – net ​ ​ 341 ​ ​ 0.02 ​ ​ 2,344 ​ ​ 0.14 Restructuring and business realignment costs – net ​ 1,510 ​ 0.09 ​ 1,042 ​ 0.06 Non-GAAP adjusted net income and adjusted diluted earnings per share ​ $ 24,679 ​ $ 1.49 ​ $ 37,458 ​ $ 2.30 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Applies a blended federal, state, and foreign tax rate of approximately 23% in 2024 and 21% in 2023 applicable to the non-GAAP adjustments. ​ 32 Table of Contents Liquidity and Capital Resources The Company’s liquidity position as measured by cash and cash equivalents increased by $4,201 to a balance of $36,102 at December 31, 2024 from 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 vs. ​ ​ Year Ended ​ 2023 ​ ​ ​ December 31, ​ Variance ​ (in thousands): 2024 2023 $ Net cash provided by operating activities ​ $ 41,850 ​ $ 45,038 ​ $ (3,188) ​ Net cash used in investing activities ​ ​ (34,914) ​ (22,607) ​ (12,307) ​ Net cash used in financing activities ​ ​ (843) ​ (21,317) ​ 20,474 ​ Effect of foreign exchange rates on cash ​ ​ (1,892) ​ 173 ​ (2,065) ​ Net increase in cash and cash equivalents ​ $ 4,201 ​ $ 1,287 ​ $ 2,914 ​ ​ Of the $36,102 cash and cash equivalents on hand at December 31, 2024, $30,020 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated to the U.S.
BUSINESS DEVELOPMENT COSTS: The increase in business development costs in 2023 compared to 2022 is largely due to fair value changes of contingent consideration of $1.9 million related to acquisitions, manufacturing footprint rationalization, and costs incurred due to current period acquisition activities, offset by lower acquisition-related costs in 2023.
BUSINESS DEVELOPMENT COSTS: The decrease in business development costs in 2024 compared to 2023 is largely due to the fair value changes of contingent consideration of $1.9 million related to acquisitions incurred in 2023, compared to the $300 contra expense recognized in 2024, offset in part by restructuring expenses recognized in 2024.
Debt payments of $28,395 and $7,585 were made during 2023 and 2022, respectively. At December 31, 2023, the Company had $210,120 of obligations under the Amended Revolving Facility, excluding deferred financing costs.
Debt repayments, excluding the pay down on the Revolving Facility of $50,000 from the Notes issuance, of $18,433 and $28,395 were made during 2024 and 2023, respectively. At December 31, 2024, the Company had $168,962 of obligations under the Amended Revolving Facility, excluding deferred financing costs and $50,000 for the Notes issued in March 2024 .
We anticipate that our investment in these key resources will continue to drive our growth now and in the future. We expect to continue the shift from being a component supplier to a more complete solutions provider, along with the application of AST, to drive cost reduction.
We anticipate that our investment in these key resources will continue to drive our growth now and in the future.
The 2023 activity includes Amended Revolving Facility borrowings of $7,000 to fund business acquisition activity in the third quarter of 2023, as compared to the $71,000 to fund the three acquisitions in the second quarter of 2022 and, to a lesser extent, inventory requirements during uncertain supply chain environments in 2022.
Cash used in financing activities in 2024 as compared to cash used in financing activities in 2023 reflects the borrowings of $20,000 from the Amended Revolving Facility to fund the SNC acquisition and the $50,000 of fixed-rate Notes issued in March 2024 that were used to pay down the Revolving Facility, as compared to the $11,000 borrowed in 2023, primarily to fund the business acquisition activity in the third quarter of 2023 and, to a lesser extent, inventory requirements during uncertain supply chain environments in 2023.
Our global production footprint provides us with the opportunity to be a value added supplier for global companies who require support around the world. We will continue to evaluate and find areas to leverage our current manufacturing and sales footprint to drive sales and improve efficiencies.
We expect to continue the shift from being a component supplier to a more complete solutions provider, along with the application of AST, to drive cost reduction. ​ Our global production footprint provides us with the opportunity to be a value added supplier for global companies who require support around the world.
The cash used in investing activities in 2023 decreased as compared with 2022, due to less acquisition activity and, to a lesser extent, timing of capital expenditures. The Company expects 2024 capital expenditures to be approximately $16,000 to $20,000.
The cash used in investing activities in 2024 increased as compared with 2023 due to $20,000 in cash paid for the acquisition of SNC, offset by $5,129 of cash paid in 2023 for the acquisition of Sierramotion, as well as by a decrease in capital expenditures of $1,920. The Company expects 2025 capital expenditures to be approximately $10,000 to $12,000.
Financial Overview Highlights for our fiscal year ended December 31, 2023, include: ● Revenue was $578,634 for 2023 compared with $502,988 in 2022. The increase in revenues reflects the economic growth and increases in demand from many of our served markets.
Financial Overview Highlights for our fiscal year ended December 31, 2024, include: ● Revenue was $529,968 for 2024 compared with $578,634 in 2023.
Year 2023 compared to 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended 2023 vs. 2022 ​ ​ ​ December 31, ​ Variance (Dollars in thousands, except per share data) 2023 2022 ​ $ % ​ Revenues ​ $ 578,634 ​ $ 502,988 ​ $ 75,646 ​ 15 % Cost of goods sold ​ 394,951 ​ 345,729 ​ 49,222 ​ 14 % Gross profit ​ 183,683 ​ 157,259 ​ 26,424 ​ 17 % Gross margin percentage ​ 31.7 % 31.3 % ​ ​ Operating costs and expenses: ​ ​ ​ ​ ​ Selling ​ 24,713 ​ 21,877 ​ 2,836 ​ 13 % General and administrative ​ 58,403 ​ 50,677 ​ 7,726 ​ 15 % Engineering and development ​ 41,665 ​ 38,561 ​ 3,104 ​ 8 % Business development ​ 4,275 ​ 3,319 ​ 956 ​ 29 % Amortization of intangible assets ​ 12,313 ​ 11,169 ​ 1,144 ​ 10 % Total operating costs and expenses ​ 141,369 ​ 125,603 ​ 15,766 ​ 13 % Operating income ​ 42,314 ​ 31,656 ​ 10,658 ​ 34 % Interest expense ​ 12,383 ​ 7,692 ​ 4,691 ​ 61 % Other expense, net ​ 231 ​ 283 ​ (52) ​ (18) % Total other expense, net ​ 12,614 ​ 7,975 ​ 4,639 ​ 58 % Income before income taxes ​ 29,700 ​ 23,681 ​ 6,019 ​ 25 % Income tax provision ​ (5,603) ​ (6,292) ​ 689 ​ (11) % Net income ​ $ 24,097 ​ $ 17,389 ​ $ 6,708 ​ 39 % ​ ​ ​ ​ ​ ​ Effective tax rate ​ 18.9 % 26.6 % ​ ​ ​ ​ ​ Diluted earnings per share ​ $ 1.48 ​ $ 1.09 ​ $ 0.39 ​ 36 % Bookings ​ $ 520,275 ​ $ 566,226 ​ $ (45,951) ​ (8) % Backlog ​ $ 276,093 ​ $ 330,078 ​ $ (53,985) ​ (16) % ​ ​ REVENUES: The increase in revenues in 2023 reflects improved sales in certain markets we serve, specifically Industrial and A&D.
Year 2024 compared to 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended 2024 vs. 2023 ​ ​ ​ December 31, ​ Variance (Dollars in thousands, except per share data) 2024 2023 ​ $ % ​ Revenues ​ $ 529,968 ​ $ 578,634 ​ $ (48,666) ​ (8) % Cost of goods sold ​ 364,277 ​ 394,951 ​ (30,674) ​ (8) % Gross profit ​ 165,691 ​ 183,683 ​ (17,992) ​ (10) % Gross margin percentage ​ 31.3 % 31.7 % ​ ​ Operating costs and expenses: ​ ​ ​ ​ ​ Selling ​ 25,310 ​ 24,713 ​ 597 ​ 2 % General and administrative ​ 55,669 ​ 58,403 ​ (2,734) ​ (5) % Engineering and development ​ 39,761 ​ 41,665 ​ (1,904) ​ (5) % Business development ​ 2,416 ​ 4,275 ​ (1,859) ​ (43) % Amortization of intangible assets ​ 12,497 ​ 12,313 ​ 184 ​ 1 % Total operating costs and expenses ​ 135,653 ​ 141,369 ​ (5,716) ​ (4) % Operating income ​ 30,038 ​ 42,314 ​ (12,276) ​ (29) % Interest expense ​ 13,296 ​ 12,383 ​ 913 ​ 7 % Other (income) expense, net ​ (116) ​ 231 ​ (347) ​ (150) % Total other expense, net ​ 13,180 ​ 12,614 ​ 566 ​ 4 % Income before income taxes ​ 16,858 ​ 29,700 ​ (12,842) ​ (43) % Income tax provision ​ (3,692) ​ (5,603) ​ 1,911 ​ (34) % Net income ​ $ 13,166 ​ $ 24,097 ​ $ (10,931) ​ (45) % ​ ​ ​ ​ ​ ​ Effective tax rate ​ 21.9 % 18.9 % ​ ​ ​ ​ ​ Diluted earnings per share ​ $ 0.79 ​ $ 1.48 ​ $ (0.69) ​ (47) % Bookings ​ $ 480,031 ​ $ 520,275 ​ $ (40,244) ​ (8) % Backlog ​ $ 230,788 ​ $ 276,093 ​ $ (45,305) ​ (16) % ​ ​ REVENUES: The decrease in revenues for 2024 reflects decreases within each of the target markets, most significantly in Vehicle.
Net income was 39% higher in 2023 compared to 2022, and earnings per diluted share increased by 36% as compared to 2022. ● Bookings were $520,275 for 2023 compared with $566,226 for 2022, a decrease of 8%.
Net income was 45% lower in 2024 compared to 2023, and earnings per diluted share decreased by 46% as compared to 2023. ● Bookings were $480,031 for 2024 compared with $520,275 for 2023, a decrease of 8%. Decreases in bookings are primarily due to a slowing demand at certain customers beginning in the second quarter of 2024.
SELLING EXPENSES: Selling expenses increased 13% during 2023 compared to 2022 primarily due to sales commissions related to the revenue growth as well as increased costs in connection with our acquisitions. Selling expenses as a percentage of revenues were comparable at 4% during 2023 and 2022.
The gross margin decrease was largely driven by lower fixed cost absorption on lower sales volumes, as well as the gross margin impact of our most recent acquisition. SELLING EXPENSES: Selling expenses increased 2% during 2024 compared to 2023 primarily due to increased costs in connection with our acquisitions and the mix of sales with commissions.
The assessment indicated that it was more-likely-than-not that the fair value of our reporting unit exceeded its carrying amount, and as such, a quantitative assessment was not performed. We do not believe that our reporting unit is at risk for impairment.
As the fair value of our reporting unit exceeds its carrying value, Allient does not believe that our reporting unit is at risk for impairment. Fair value is calculated based on estimated discounted future cash flows and comparable publicly traded companies.
The margin expansion continues to be muted, to some extent, by higher material and labor costs as well as costs associated with addressing the challenging global supply chain environment to meet the needs of our customers. ● Operating income was $42,314 for 2023 compared with $31,656 for 2022, or 7.3% and 6.3% of revenue in 2023 and 2022, respectively. ● Net income was $24,097 for 2023, or $1.48 per diluted share, compared with $17,389, or $1.09 per diluted share, for 2022.
The gross margin decrease was largely driven by lower fixed cost absorption on lower sales volumes, as well as the gross margin impact of our most recent acquisition. ● Operating income was $30,038 for 2024 compared with $42,314 for 2023, or 5.7% and 7.3% of revenue in 2024 and 2023, respectively. ● Net income was $13,166 for 2024, or $0.79 per diluted share, compared with $24,097, or $1.48 per diluted share, for 2023.
Removed
Certain markets, primarily Industrial, experienced supply-chain constraints in the prior year period impacting customer order patterns and lead times, which began to normalize in 2023. The acquisitions completed in 2022 and 2023 contributed an incremental $10,057 of revenues in 2023.
Added
Certain markets, primarily Industrial and Vehicle, experienced decreases in revenue and our Industrial market was impacted by elevated shipments in 2023 as supply chains normalized, combined with slowing demand at certain customers beginning in the second quarter of 2024. The acquisitions completed in 2023 and 2024 contributed an incremental $40,856 of revenues in 2024.
Removed
As a percentage of revenue, gross margin increased 40 basis points to 31.7% in 2023 from 31.3% in 2022. The gross margin increase was largely driven by volume increases of higher margin products primarily in our Industrial and A&D markets compared to lower volumes of pandemic related Medical market products with lower margins, combined with pricing and margin accretive acquisitions.
Added
As a percentage of revenue, gross margin decreased 40 basis points to 31.3% in 2024 from 31.7% in 2023.
Removed
Decreases in bookings are primarily due to a normalization of customer order patterns as lead times are reducing due to improvement in the global supply chain environment, and, to a lesser extent, economic softening in some European markets. Backlog as of December 31, 2023 was $276,093, a decrease of 16% from $330,078 at year end 2022.
Added
Backlog as of December 31, 2024 was $230,788, a decrease of 17% from $276,093 at year end 2023.
Removed
We experienced record orders in 2023, reflecting increases in our Industrial and Vehicle markets. This demand, combined with supply chain constraints, resulted in some inefficiencies and additional costs as our teams worked hard to support and meet customer demand and schedules.
Added
Outlook for 2025 We experienced a significant demand shift starting in the late second quarter of 2024, with notable declines in our Industrial Automation sector prompted by extended capital expenditure cycles, delayed factory expansions and budget constraints on automation upgrades as well as market softness in the recreational vehicle marketplace driven by increased financing costs and tightening of household budgets.
Removed
While the economic outlook for 2023 remains uncertain and we expect continued upward pressure on material and labor costs, we believe we are in a strong operational, financial and reputational position.
Added
These factors combined with intermittent uneven order flow in other served markets, spurred a slowdown in demand. The declines were in large part due to significant inventory rebalancing at some of our larger customers surfacing as the supply chain returned to more normal conditions and macroeconomic pressures shifting customer priorities.
Removed
Our record level of backlog, diversified end market penetration and demonstrated agility position us well to perform across varied market trends and 25 Table of Contents give us confidence that we can drive further efficiency, profitable growth and increased free cash flow while delivering long-term value for our shareholders.
Added
These market conditions substantially persisted through the second half of 2024. ​ Our Simplify to Accelerate NOW program continues to generate tangible results while enhancing our agility and competitiveness. ​ ● Annualized Savings: To date, Allient has implemented $10 million in total annualized cost savings. ● Operational Efficiencies: The program’s focus on refining the organizational structure, eliminating redundancies, and optimizing production processes has led to initial margin improvements, bolstering overall profitability. 25 Table of Contents ● Enhanced Agility: By simplifying its operations, Allient aims to improve its speed to market, enhance customer service, and strengthen its competitive positioning across targeted industries. ● Future Cost Rationalization: Beyond the current $10 million in savings, Allient is actively identifying further opportunities to rationalize its cost structure in 2025, ensuring continued alignment with evolving market conditions and customer demands.
Removed
In 2024, we will focus on leveraging our resources to expand our business in our selected target markets. In addition, we will continue to execute the ongoing critical issues as defined by our Board approved strategy.
Added
Our goal is to drive $6 million to $7 million in annual savings. In early February 2025, we announced plans to expand machining capabilities at our Dothan, Alabama facility, an initiative expected to help support our goal. While this transition presents complexities and requires focused execution, we are confident in the long-term efficiencies it will create.
Removed
The critical issues from that strategy include: 1) Further develop our structure to Win within our selected target markets and customers 2) Improve speed of play in all areas of our business through process improvement 3) Strengthen our balance sheet by improving working capital turns and driving margin improvement.
Added
One-time implementation costs are expected to be equivalent to the annualized savings, resulting in a one-year pay back on the investment.
Removed
In addition to our strategy described above, time and resources have been spent during 2023 to further understand the ESG ecosystem and developments impacting stakeholder expectations and assess our performance.
Added
We will continue to evaluate and find areas to leverage our current manufacturing and sales capabilities to drive sales and improve efficiencies. ​ While near-term order patterns remain fluid, the fundamental drivers of our business remain strong.
Removed
The Company has a number of initiatives focused on individual components of ESG, and, under the oversight of the Board of Directors, is continuing to integrate ESG with our broader strategy and Enterprise Risk Management (ERM). The strategy will include looking to further enhance the Company’s ability to meet ongoing and emerging challenges, including the impacts of the COVID-19 pandemic.
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Fair value of the reporting unit is estimating using a weighted methodology that utilizes the income and market approaches. The income approach incorporates significant assumptions and estimates, including discounted cash flow modeling to forecast cash flows, revenue growth, operating income margin, and discount rate.
Removed
As part of this analysis, we evaluated factors including, but not limited to, our market capitalization and stock price performance, macro-economic conditions, market and industry conditions, cost factors, the competitive environment, and the operational stability and overall financial performance of our reporting unit.
Added
Decreases in revenues compared to the prior year period are largely impacted by elevated shipments during the prior year period as supply chains normalized, combined with elevated inventory levels and slowing demand at our customers in the current period, partially offset by revenue contributed from the 2023 and 2024 acquisitions .
Removed
The increase reflects the economic recovery and the increases in demand from many of our served markets, as certain markets continued to experience supply chain constraints in the prior year period impacting customer order patterns and lead times . Our sales for 2023 were comprised of 59% to U.S. customers and 41% to customers primarily in Europe, Canada and Asia-Pacific.
Added
Our sales for 2024 were comprised of 55% to U.S. customers and 45% to customers primarily in Europe, Canada and Asia-Pacific. The overall decrease in revenue was primarily due to an 8% volume decrease and a minimal foreign currency impact. The acquisitions completed in 2023 and 2024 contributed an incremental $40,856 of revenues in 2024.
Removed
ORDER BOOKINGS AND BACKLOG: The 8% decrease in orders in 2023 compared to 2022 is due to an 8% decrease in volume with minimal foreign currency impact.
Added
Decreases in bookings are primarily due to a slowing demand at certain customers beginning in the second quarter of 2024. The acquisitions completed in 2023 and 2024 contributed an incremental $39,993 of orders in 2024.
Removed
Decreases in bookings are primarily due to a normalization of customer order patterns as lead times are reducing due to improvement in the global supply chain environment and, to a lesser extent, economic softening in some European markets. The acquisitions completed in 2022 and 2023 contributed an incremental $7,380 of orders in 2023.
Added
Selling expenses as a percentage of revenues were 5% and 4% during 2024 and 2023, respectively. GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreased by 5% during 2024 compared to 2023 due to l ower incentive compensation as well as cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy .
Removed
The increase in gross margin percentage was largely driven by volume increases of higher margin products primarily in our Industrial and A&D markets combined with pricing and margin accretive acquisitions. The margin expansion continues to be muted, to some extent, by the continued increases in material and labor costs..
Added
As a percentage of revenues, general and administrative expenses were 11% and 10% in 2024 and 2023, respectively. ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 5% in 2024 compared to 2023. The decrease reflects the cost reduction actions taken as part of our Simplify to Accelerate NOW strategy .
Removed
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses increased by 15% during 2023 compared to 2022 due primarily to incentive compensation-related expenses due to current year Company performance and increased costs in connection with our acquisitions. As a percentage of revenues, general and administrative expenses were comparable at 10% in both 2023 and 2022.
Added
During 2024, the cash provided by operating activities decreased from 2023 primarily due to decreases in cash due to changes in accounts payable and accrued liabilities, as well as a decrease in net income, offset partially by increases in cash due to changes in accounts receivable and inventory.
Removed
ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses increased by 8% in 2023 compared to 2022. The increase is primarily due to the continued ramp up of development projects to meet the future needs of target markets and supporting growing customer application development needs, as well as increased costs in connection with our acquisitions.
Added
The 2024 Credit and Note Payable Agreements also include covenants and restrictions that limit the Company’s ability to incur additional indebtedness, merge, consolidate or sell all or substantially all of its assets and enter into transactions with an affiliate of the Company on other than an arms’ length transaction.
Removed
Cash used in financing activities in 2023 as compared to cash provided from financing activities in 2022 reflects the increase in debt payments made during 2023 due to cash generated from operations, as well as lower debt borrowings due to less acquisition activity as compared to 2022.
Added
These covenants, which are described more fully in the 2024 Credit and Note Payable Agreements, to which reference is made for a complete statement of the covenants, are subject to certain exceptions. The Company was in compliance with all covenants at December 31, 2024 as well as at each quarter end during 2024.
Removed
The Amended Credit Agreement matures in February 2025. There were no borrowings under the China Facility during 2023 or 2022. The Company closed the China Facility during 2023. The Company declared dividends, in total, of $0.115 and $0.10 per share during 2023 and 2022, respectively.
Added
The Amended Credit Agreement matures in March 2029. ​ On October 22, 2024, the Company entered into a Second Amendment to the Third Amended and Restated Credit Agreement and a Second Amendment to the Note Purchase and Private Shelf Agreement (collectively, the “October 2024 Credit and Note Payable Amendments”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Qualitative and Quantitative Disclosures about Market Risk Foreign Currency We have international operations in The Netherlands, Sweden, Germany, China, Portugal, Canada, Czech Republic, Mexico, the United Kingdom and New Zealand which expose us to foreign currency exchange rate fluctuations due to 33 Table of Contents transactions denominated in Euros, Swedish Krona, Chinese Renminbi, Canadian dollar, Czech Krona, Mexican pesos, British Pound Sterling, and New Zealand dollar, respectively.
Qualitative and Quantitative Disclosures about Market Risk Foreign Currency We have international operations in The Netherlands, Sweden, Germany, China, Portugal, Canada, Czech Republic, Mexico, the United Kingdom and New Zealand which expose us to foreign currency exchange rate fluctuations due to transactions denominated in Euros, Swedish Krona, Chinese Renminbi, Canadian dollar, Czech Krona, Mexican pesos, British Pound Sterling, and New Zealand dollar, respectively.
This amount is not indicative of the hypothetical net earnings impact due to partially offsetting impacts on cost of sales and operating expenses in those currencies. We estimate that foreign currency exchange rate fluctuations decreased sales in 2023 compared to 2022 by approximately $258.
This amount is not indicative of the hypothetical net earnings impact due to partially offsetting impacts on cost of sales and operating expenses in those currencies. We estimate that foreign currency exchange rate fluctuations decreased sales in 2024 compared to 2023 by approximately $139.
A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency net assets would have had an impact of approximately $16,280 on our foreign net assets as of December 31, 2023.
A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency net assets would have had an impact of approximately $16,105 on our foreign net assets as of December 31, 2024.
We continuously evaluate our foreign currency risk and we take action from time to time in order to best mitigate these risks. A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency exposures would have had an impact of approximately $19,175 on our 2023 sales.
We continuously evaluate our foreign currency risk and we take action from time to time in order to best mitigate these risks. A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency exposures would have had an impact of approximately $4,493 on our 2024 sales.
The resulting gains or losses are recorded in other expense (income), net in the consolidated statements of income and comprehensive income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $22,193 and $18,981 at December 31, 2023 and 2022, respectively.
The resulting gains or losses are recorded in other (income) expense, net in the consolidated statements of income and comprehensive income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $30,945 and $22,193 at December 31, 2024 and 2023, respectively.
The translation adjustment was a gain of $3,669 and a loss of $9,516 for the years ended December 31, 2023 and 2022, respectively. Translation adjustments are not adjusted for income taxes as they relate to permanent investments in our foreign subsidiaries.
The translation adjustment was a loss of $12,033 and a gain of $3,669 for the years ended December 31, 2024 and 2023, respectively. Translation adjustments are not adjusted for income taxes as they relate to permanent investments in our foreign subsidiaries.
During the years ended December 31, 2023 and 2022, we recorded losses of $115 and $1,109, respectively, which is included in other expense (income), net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense (income), net.
During the years ended December 31, 2024 and 2023, we recorded losses of $1,749 and $115, respectively, which is included in other (income) expense, net and generally offset 34 Table of Contents the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other (income) expense, net.
In February 2017, the Company entered into three interest rate swaps with a combined notional amount of $40,000 that matured in February 2022. In March 2020, the Company entered into two additional interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matures in December 2024.
In March 2020, the Company entered into two interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matured in December 2024. In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026.
A hypothetical one percentage point (100 basis points) change in the Base Rate on the $110,120 of unhedged floating rate debt outstanding at December 31, 2023 would have an impact of approximately $1,101 on our interest expense for 2023. ​ ​ ​ ​ 34 Table of Contents
A hypothetical one percentage point (100 basis points) change in the Base Rate on the $78,962 of unhedged floating rate debt outstanding at December 31, 2024 would have an impact of approximately $790 on our interest expense for 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 35 Table of Contents
In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026. ​ As of December 31, 2023, we had $210,120 outstanding under the Amended Revolving Facility (excluding deferred financing fees), of which $100,000 is currently being hedged.
In September 2024, the Company entered into an additional interest rate swap with a notional amount of $50,000 that matures in September 2027. ​ As of December 31, 2024, we had $168,962 outstanding under the Amended Revolving Facility (excluding deferred financing fees), of which $90,000 is currently being hedged.
Interest Rates Interest rates on our Amended Credit Agreement are based on Term SOFR plus a margin of 1.00% to 2.25% (1.625% at December 31, 2023), depending on the Company’s ratio of total funded indebtedness to consolidated EBITDA. We use interest rate derivatives to add stability to interest expense and to manage our exposure to interest rate movements.
Interest will be computed on the basis of a 360-day year composed of twelve 30-day months. ​ Interest rates on our Credit Facility are based on Term SOFR plus a margin of 1.25% to 2.50% (2.125% at December 31, 2024), depending on the Company’s ratio of total funded indebtedness to consolidated EBITDA.
Net foreign currency transaction gains and losses included in total other expense (income), net amounted to a loss of $281 and a gain of $298 in 2023 and 2022, respectively.
Net foreign currency transaction gains and losses included in total other (income) expense, net amounted to a gain of $85 and a loss of $281 in 2024 and 2023, respectively. Interest Rates The Series A Notes under our 2024 Note Payable Agreement will bear interest at a fixed rate 5.96% and will mature on March 21, 2031.
Added
Interest on the Notes will be payable quarterly on the 21st day of March, June, September and December in each year, commencing on June 21, 2024. As amended on October 22, 2024, the Series A Notes will bear interest at 6.46% from October 1, 2024 through September 30, 2025.
Added
As amended on October 22, 2024, borrowings under the Credit Facility will bear interest at Term SOFR plus a margin of 2.50% from January 1, 2025 through September 30, 2025. We use interest rate derivatives to add stability to interest expense and to manage our exposure to interest rate movements.

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