Allient sees strengthening orders, margin expansion in Q4
Allient Inc., a global designer and manufacturer of precision and specialty motion, controls and power products and solutions for targeted industries and applications, reported total orders for the fourth quarter of 2024 increased 15%, driven by power quality and defense.
Fourth quarter revenue was $122.0 million, with gross margin improving sequentially to 31.5% despite lower revenue. The company stated full-year revenue of $530.0 million reflected anticipated demand softness in industrial and vehicle markets.
“We continue to drive operational improvements and margin expansion while navigating a dynamic demand environment,” said Dick Warzala, chairman and CEO. “Notably, despite lower fourth quarter revenue, we delivered improved gross and operating margins, reflecting our continued focus on cost discipline and operational efficiency. At the same time, orders grew 15% sequentially, underscoring the strengthening demand in power quality and defense. While near-term order patterns remain fluid, the fundamental drivers of our business remain strong. These structural tailwinds reinforce our confidence in a return to more normalized run rates as customer inventory adjustments near completion.
“Our Simplify to Accelerate NOW program continues to generate tangible results, delivering $10 million in annualized savings while enhancing our agility and competitiveness," he added. "Our goal in 2025 is to deliver an additional $6 million to $7 million in annual savings. In fact, our plans that we previously announced to create a state-of-the-art Machining Center of Excellence at our Dothan, Alabama facility while transferring current assembly operations to other facilities gives us a solid start toward that goal. While this transition presents complexities and requires focused execution, we are confident in the long-term efficiencies it will create. Implementation costs for the Dothan restructuring are expected to be equivalent to the annualized savings, resulting in a one-year pay back on the investment. We anticipate realizing the initial benefits of this initiative toward the end of 2025. Overall, our strategic initiatives position Allient for stronger financial performance, greater operational flexibility, and enhanced earnings power in the years ahead.”
Revenue decreased 13%, or $19.0 million, to $122.0 million. The impact of foreign currency exchange rate fluctuations was unfavorable by $0.3 million. Sales to U.S. customers were 54% of total sales compared with 59% in the fourth quarter of 2023, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific.
Aerospace & Defense sales increased 20%, reflecting the timing of certain defense programs. Medical market revenue increased 5% on solid demand for surgical instruments, and respiratory and breathing demand.
Sales in the Vehicle markets decreased 46% largely due to the decline in demand for powersports. Industrial markets sales were down 11% as strengthened power quality sales, largely to the HVAC/data center market, and incremental sales from the recent acquisition were more than offset by lower demand in industrial automation due to significant inventory destocking by the Company’s largest customer.
Gross margin was 31.5%, flat compared with the prior-year period, despite lower volume and the anticipated margin dilution from the most recent acquisition. Sequentially, gross margin improved 10 basis points, primarily driven by a more favorable product mix.
Operating costs and expenses were 26.2% of revenue, down 30 basis points year-over-year, primarily due to lower business development costs. As a result, operating income was $6.4 million compared with $7.0 million in the prior-year period, while operating margin improved 30 basis points to 5.3%.
Full Year 2024 Results (Narrative compares with prior-year period unless otherwise noted)
Revenue of $530.0 million decreased $48.7 million, or 8%, primarily due to anticipated demand softness in industrial and vehicle markets, partially offset by continued strength in power quality solutions and incremental sales from acquisitions. The impact of foreign currency exchange rate fluctuations was unfavorable by $0.1 million. Sales to U.S. customers were 55% of total sales compared with 59% last year, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific.
Gross margin was 31.3%, down 40 basis points largely due to lower volume. Operating costs and expenses as a percentage of revenue were 25.6% compared with 24.4% last year, reflecting the loss of leverage on lower sales. As a result, operating income was $30.0 million, or 5.7% of sales, compared with $42.3 million or 7.3% of sales.
Net income was $13.2 million, or $0.79 per diluted share, compared with $24.1 million, or $1.48 per diluted share. The effective tax rate was 21.9% in 2024 compared with 18.9% in 2023. The Company expects its income tax rate for the full year 2025 to be approximately 21% to 23%.
Excluding amortization of intangible assets related to acquisitions, business development costs and other non-recurring items, adjusted net income was $24.7 million, or $1.49 per diluted share, compared with $37.5 million, or $2.30 per diluted share, in 2023.
Adjusted EBITDA was $62.5 million, and as a percentage of revenue was 11.8%.
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