Allient (ALNT) - 2024 Q2 - Quarterly Report

Revenue and Profit Performance - Revenue decreased by 7% to $136.032 million in Q2 2024 compared to$ 146.769 million in Q2 2023, primarily due to volume decreases in Vehicle and Industrial markets[115] - Gross profit declined by 12% to $40.676 million in Q2 2024, with gross margin decreasing to 29.9% from 31.3% in Q2 2023[115] - Operating income dropped by 59% to$ 4.879 million in Q2 2024 compared to $12.020 million in Q2 2023[115] - Net income fell by 83% to$ 1.150 million in Q2 2024 from $6.769 million in Q2 2023[115] - Net income decreased to$ 8,052 for the six months ended June 30, 2024, compared to $13,084 in 2023, a 38% decline[123] - Adjusted net income for the six months ended June 30, 2024 was$ 14,403, down from $18,405 in 2023[130] - Revenues decreased by 3% to$ 282,745 for the six months ended June 30, 2024, compared to $292,318 in 2023[123] - Gross profit decreased to$ 88,053 for the six months ended June 30, 2024, from $91,811 in 2023, with gross margin declining to 31.1% from 31.4%[124] - Net income for the three months ended June 30, 2024, was$ 1.15 million, compared to $6.769 million in the same period in 2023[139] - Non-GAAP adjusted net income for the six months ended June 30, 2024, was$ 14.403 million, compared to $18.405 million in 2023[142] Acquisitions and Organic Revenue - Acquisitions of SNC in Q1 2024 and Sierramotion in Q3 2023 contributed$ 10.893 million in incremental revenue in Q2 2024[115] - Organic revenue decreased by 14.2% in Q2 2024, partially offset by revenue from acquisitions[115] - Organic revenue decreased by 10.1% for the six months ended June 30, 2024[123] - The company paid $20 million in cash for the acquisition of SNC during the six months ended June 30, 2024[144] Cost Management and Restructuring - The company implemented the "Simplify to Accelerate NOW" strategy, expecting annual cost savings of$ 5.0 million and incurring $1.5 million in restructuring costs[112] - Selling expenses increased by 6% to$ 6.662 million in Q2 2024, primarily due to acquisition-related costs[116] - Business development costs increased by 223% to $1,926 for the six months ended June 30, 2024, primarily due to restructuring-related costs[127] Tax and Interest Expenses - The effective tax rate decreased to 20.6% in Q2 2024 from 23.9% in Q2 2023, driven by the realization of deferred tax assets and foreign income mix[120] - The effective tax rate decreased to 21.6% for the six months ended June 30, 2024, compared to 23.6% in 2023[129] - Interest expense increased by 10% to$ 6,772 for the six months ended June 30, 2024, driven by higher interest rates and increased debt levels[128] - Interest rates on the Credit Facility range from Term SOFR plus 1.25% to 2.50%, with a rate of 1.875% as of June 30, 2024, depending on the company's debt-to-EBITDA ratio[154] - A 1% change in the Base Rate on the $80,962 of unhedged floating rate debt would impact interest expense by approximately$ 300 for the six months ended June 30, 2024[155] EBITDA and Adjusted EBITDA - EBITDA decreased to $29,843 for the six months ended June 30, 2024, compared to$ 35,799 in 2023[131] - Adjusted EBITDA was $33,971 for the six months ended June 30, 2024, down from$ 39,406 in 2023[131] - Adjusted EBITDA for the six months ended June 30, 2024, was $33.971 million, down from$ 39.406 million in the same period in 2023[139] Cash Flow and Capital Expenditures - Cash and cash equivalents decreased by $609 thousand to$ 31.292 million as of June 30, 2024, with $26.372 million located at foreign subsidiaries[143] - Capital expenditures for the full year 2024 are expected to be between$ 11 million and $15 million[145] - The company declared dividends of$ 0.06 per share during the six months ended June 30, 2024, up from $0.055 per share in 2023[147] Foreign Currency and Hedging - A hypothetical 10% change in the value of the U.S. dollar would impact sales by approximately$ 4.618 million for the six months ended June 30, 2024[149] - Foreign currency translation adjustments resulted in a loss of $5.586 million for the six months ended June 30, 2024, compared to a gain of$ 928 million in 2023[150] - The company had foreign currency contracts with notional amounts of $17.089 million at June 30, 2024, to minimize foreign currency exposure[152] - The company uses interest rate swaps to manage interest rate risk, with two swaps totaling$ 20,000 in March 2020, increasing to $60,000 by March 2022, maturing in December 2024[154] - An additional interest rate swap of$ 40,000 was entered into in March 2022, maturing in December 2026[154] - As of June 30, 2024, the company had $180,962 outstanding under the Revolving Facility, with$ 100,000 currently hedged[155] Bookings and Backlog - Bookings remained flat at $137.373 million in Q2 2024, while backlog decreased by 13% to$ 259.002 million[115]