Allient Q4 2024 Results: Rising Orders & Expanding Margins
Allient, a global designer and manufacturer of precision and specialty Motion, Controls, and Power products and solutions for targeted industries and applications, today announced its financial results for the fourth quarter and full year ending December 31, 2024.
Chairman and CEO Dick Warzala commented, “We continue to drive operational improvements and margin expansion while managing a dynamic demand environment. Despite lower revenue in the fourth quarter, we achieved improved gross and operating margins, reflecting our disciplined cost management and operational efficiencies. Orders grew 15% sequentially, highlighting strengthening demand in power quality and defense. While near-term order fluctuations remain, the fundamental drivers of our business are solid, and we anticipate a return to more normalized run rates as customer inventory adjustments near completion.”
Strategic Cost Savings Initiative
Warzala added, “Our Simplify to Accelerate NOW program continues to yield tangible results, achieving $10 million in annualized savings and enhancing our agility. In 2025, we aim for an additional $6 million to $7 million in savings. A key initiative in this effort is establishing a state-of-the-art Machining Center of Excellence in Dothan, Alabama, while transferring assembly operations to other facilities. This transition, though complex, is expected to drive long-term efficiencies, with implementation costs matching annualized savings, leading to a one-year payback on investment. Initial benefits should emerge by late 2025. Overall, our strategic initiatives are positioning Allient for stronger financial performance, increased flexibility, and enhanced earnings potential.”
Fourth Quarter 2024 Financial Results
- Revenue decreased 13% year-over-year to $122.0 million, impacted by lower demand in industrial automation and vehicle markets. Foreign currency fluctuations had an unfavorable $0.3 million impact.
- Aerospace & Defense sales rose 20% due to the timing of defense programs.
- Medical market revenue increased 5%, driven by demand for surgical instruments and respiratory devices.
- Vehicle market sales declined 46%, reflecting a slowdown in the powersports sector.
- Industrial sales fell 11%, with strength in power quality sales offset by industrial automation softness and inventory destocking by a major customer.
- Gross margin was 31.5%, consistent with the prior-year period despite lower volume and margin dilution from acquisitions.
- Operating expenses declined to 26.2% of revenue due to lower business development costs.
- Operating income was $6.4 million, with an operating margin of 5.3%, up 30 basis points year-over-year.
- Net income was $3.0 million ($0.18 per diluted share), compared to $4.3 million ($0.26 per diluted share) in Q4 2023. Sequentially, net income improved from $2.1 million ($0.13 per diluted share) in Q3 2024.
- Adjusted net income (excluding amortization, business development costs, and other non-recurring items) was $5.2 million ($0.31 per diluted share), compared to $9.1 million ($0.55 per diluted share) in Q4 2023.
- Adjusted EBITDA was $14.1 million (11.6% of revenue), compared to $16.9 million (12.0% of revenue) in Q4 2023.
Full Year 2024 Financial Results
- Revenue was $530.0 million, down 8% due to softness in industrial and vehicle markets, partially offset by power quality demand and acquisitions.
- Gross margin was 31.3%, down 40 basis points due to lower volume.
- Operating income was $30.0 million (5.7% of sales), down from $42.3 million (7.3% of sales) in 2023.
- Net income was $13.2 million ($0.79 per diluted share), compared to $24.1 million ($1.48 per diluted share) in 2023.
- Effective tax rate was 21.9%, up from 18.9% in 2023. The 2025 tax rate is expected to range between 21%-23%.
- Adjusted net income was $24.7 million ($1.49 per diluted share), compared to $37.5 million ($2.30 per diluted share) in 2023.
- Adjusted EBITDA was $62.5 million, representing 11.8% of revenue.
Balance Sheet and Cash Flow
- Cash and cash equivalents increased 13% to $36.1 million.
- Operating cash flow was $41.9 million, compared to $45.0 million in 2023.
- Capital expenditures were $9.7 million, primarily supporting new customer projects. 2025 capital expenditures are expected to range from $10 million to $12 million.
- Total debt was $224.2 million, down $7.2 million sequentially. Net debt was $188.1 million (41.5% net debt-to-capitalization).
- Leverage ratio was 3.43x at year-end.
- The 2024 Amended Credit Agreement increased the maximum leverage ratio to 4.5:1.0 for Q1 and Q2 2025, tapering to 3.75:1.0 thereafter.
Orders and Backlog
- Orders in Q4 2024: $117.9 million (up 15% sequentially, 12% year-over-year).
- Backlog at Q4 2024 end: $230.8 million, down from $276.1 million in Q4 2023, due to temporary order softness and foreign currency fluctuations.
- Majority of backlog expected to convert to revenue within three to nine months.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday, March 6, 2025, at 10:00 AM ET to review financial and operational results.
- Live call: Dial (412) 317-0535.
- Webcast and slide presentation: Available at allient.com/investors.
- Replay: Available until March 13, 2025, by dialing (412) 317-6671 (Replay PIN: 10195875) or via webcast replay on the Company’s website.
- Transcript: Will be posted online when available.
Outlook and Strategy
Allient remains committed to driving long-term growth through strategic cost savings, operational efficiencies, and market expansion. Despite near-term demand fluctuations, the Allient Company’s structural tailwinds in power quality and defense markets provide confidence in a return to normalized growth. The successful execution of the Machining Center of Excellence and other strategic initiatives will further position Allient for sustained profitability and shareholder value creation. This report contains forward-looking statements that Allient involve risks and uncertainties. Please refer to Allient’s SEC filings for more details on risk factors.
