Allient industrial markets sales up 10%
Allient Inc. reported its first quarter net income increased 9% to $6.9 million. Revenue increased 1%, or $1.2 million, to $146.7 million.
Industrial markets sales were up 10% in the quarter, benefiting from recent acquisitions and higher end market demand within industrial automation, electronics and power quality solutions focused on the HVAC markets.
Sales in the vehicle markets increased 12% due to higher demand within commercial automotive, partially offset by lower demand within agricultural vehicles, which primarily reflected softness in Europe, largely influenced by the Ukrainian war.
Aerospace and defense sales decreased 22%, largely due to program timing within the space industry. Medical market revenue was down 19% given softer medical mobility demand. Sales through the distribution channel, which are a small component of total sales, were up 3%.
“Our first quarter performance is a testament to the resilience of our diversified business portfolio across various regions," said said Chairman and CEO Dick Warzala. "Moreover, our commitment to operational excellence and cost management has bolstered our margins and fueled bottom-line growth along with strong cash flow generation. Given improved lead times, customer order patterns are normalizing to a pre-pandemic environment and excess supply is being taken out of the channel, which has had an impact on order rates. Currently, demand from our end markets is mixed, reflecting the various states of supply normalization within each market, with some pockets of weakness in Europe.
“With the introduction of our new strategic mantra, 'Simplify to Accelerate NOW,' we are embarking on a journey to streamline our organizational structure and excising redundancy to optimize all of our operations," he continued. "By consolidating our brands under the banners of Motion, Controls, and Power, we will ensure a unified approach, enhance clarity in the market, and more effectively serve our diverse global customers.
“In pursuit of sustained earnings growth and additional cash generation, our teams have identified key strategic actions for 2024. These encompass footprint rationalization, simplification of customer interactions and order processing, reduction of product development timelines, and the continued integration of AST, our lean toolkit, throughout Allient. The initiatives are being phased in with initial benefits to be realized in 2024 and continuing for the next 2+ years, supporting our margin expansion in line with our previously stated goal of 100 total basis point annual improvement via gross margin expansion and operating expense reduction. Guided by our mantra and fueled by strategic foresight, we are poised to seize new opportunities, drive operational excellence, and deliver value to our stakeholders."
Sales to U.S. customers were 58% of total sales compared with 56% in the first quarter last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific. See the attached table for a description of non-GAAP financial measures and reconciliation of revenue excluding foreign currency exchange rate fluctuations.
Gross margin was 32.3%, up 80 basis points from the prior-year period as higher volume, favorable mix and pricing more than offset elevated raw material costs.
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