927
美國
證券交易委員會
華盛頓特區20549
表格
截至季度結束日期的財務報告
或者
在從______________________到_______________________的過渡期間
佣金文件號
（註冊者的確切名稱，如它的章程所規定的）
| ||
（設立或組織的其他管轄區域） | （納稅人識別號碼） | |
|
|
(
（包括區號）
在法案第12(b)條的規定下注冊的證券：
每一類的名稱 |
| 交易代碼 |
| 在其上註冊的交易所的名稱 |
請用複選標記指示以下內容：（1）在過去的12個月內（或註冊人被要求提交此類報告的較短期間內）根據1934年證券交易所法第13或15（d）條的規定提交了所有必須提交的報告，並且（2）過去90天一直受到此類申報要求的約束。
請用複選標記指示是否在過去12個月的每個週期（或要求註冊人提交這些文件的較短時間段）內以電子方式提交了根據Regulation S-t（本章節第232.405節的規定）要提交的每個交互式數據文件。
請通過勾選標記指出是否註冊人是大型加速報告的申報人，加速申報的申報人，非加速申報的申報人，較小的報告公司或新興成長公司。請參閱證券交易所法案規則120億.2中「大型加速報告的定義，」加速申報的定義，” 較小的報告公司的定義和「新興成長公司」的定義。
大型加速文件者◻ | 非加速歸檔企業◻ | 小型報表公司 | 新興成長公司 |
如果是新興成長公司，請打勾表示註冊人已選擇不使用根據交易所法第13(a)節提供的任何新的或修訂後的財務會計準則延長過渡期符合要求。◻
是 否《交易所法》第120億.2條。是
普通股唯一類別的股份數量：
ALLIENt 公司。
簡明合併資產負債表
（以千爲單位，除每股數據外）
（未經審計）
2021年9月30日 | 運營租賃負債： | ||||||
| 2024 |
| 2023 |
| |||
資產 | |||||||
流動資產： | |||||||
現金及現金等價物 | $ | | $ | | |||
應收賬款，減：信用損失準備$ | | | |||||
存貨 |
| |
| | |||
預付款項和其他資產 |
| |
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總流動資產 |
| |
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固定資產淨額 |
| |
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延遲所得稅 |
| |
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無形資產, 淨額 |
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商譽 |
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營業租賃資產 | | | |||||
其他長期資產 |
| |
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總資產 | $ | | $ | | |||
負債和股東權益 | |||||||
流動負債: | |||||||
應付賬款 | $ | | $ | | |||
應計負債 |
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流動負債合計 |
| |
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長期債務 |
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延遲所得稅 |
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養老金和退休後的義務 |
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經營租賃負債 | | | |||||
其他長期負債 | | | |||||
負債合計 |
| |
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股東權益： | |||||||
普通股， |
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優先股，面值$ |
|
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保留盈餘 |
| |
| | |||
累計其他綜合損失 |
| ( |
| ( | |||
股東權益總額 |
| |
| | |||
負債及股東權益合計 | $ | | $ | | |||
請參閱附註事項的簡明合併財務報表。
1
ALLIENt 公司。
綜合利潤和綜合收益的簡明綜合利潤表
（以千爲單位，除每股數據外）
（未經審計）
| 截至九個月結束時 | ||||||||||||
2021年9月30日 | 2021年9月30日 | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
收入 | $ | | $ | | $ | | $ | | |||||
營業成本 |
| |
| |
| |
| | |||||
毛利潤 |
| |
| |
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經營成本和費用： | |||||||||||||
銷售 |
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一般行政 |
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工程和開發 |
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業務拓展 |
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無形資產攤銷 |
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總運營成本和費用 |
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營業利潤 |
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其他費用，淨額： | |||||||||||||
利息支出 |
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其他費用，淨額 |
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其他支出合計，淨值 |
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稅前收入 |
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所得稅費用 |
| ( |
| ( |
| ( |
| ( | |||||
淨利潤 | $ | | $ | | $ | | $ | | |||||
基本每股收益: | |||||||||||||
每股收益 | $ | | $ | | $ | | $ | | |||||
基本股權平均股份 |
| |
| |
| |
| | |||||
每股攤薄收益: | |||||||||||||
每股收益 | $ | | $ | | $ | | $ | | |||||
攤薄的普通股加權平均數 |
| |
| |
| |
| | |||||
淨利潤 | $ | | $ | | $ | | $ | | |||||
其他全面收益（損失）： | |||||||||||||
外幣翻譯調整 | | ( | | ( | |||||||||
衍生工具損失，稅後淨額 | ( | ( | ( | ( | |||||||||
綜合收益 | $ | | $ | | $ | | $ | | |||||
請參閱附註事項的簡明合併財務報表。
2
ALLIENt 公司。
股東權益的簡明合併報表
（以千爲單位，除每股數據外）
（未經審計）
普通股 |
| 其他綜合收益（虧損）累計額 | |||||||||||||||||
（以千美元爲單位，除每股數據外） | 股份 |
| 金額 |
| 未分配利潤 |
| 外幣翻譯調整 |
| 衍生品的累計利潤(損失) |
| 養老金調整項 |
| 股東權益總計 | ||||||
2023年12月31日結餘 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
員工福利股票計劃下的股票交易 | | |
| | |||||||||||||||
發行受限股票淨額（扣除棄權） | | ( |
| ( | |||||||||||||||
與收購相關的股份發行 | | | | ||||||||||||||||
發行股份以償付待決考量 | | | | ||||||||||||||||
股票補償費用 | |
| | ||||||||||||||||
用於支付員工工資稅款的股份被扣留 | ( | ( | ( | ||||||||||||||||
綜合損失 | ( | ( | ( | ||||||||||||||||
衍生交易的稅收影響 | | | |||||||||||||||||
淨利潤 |
|
| |
| | ||||||||||||||
分紅派息給股東 - $ | ( | ( | |||||||||||||||||
2024年3月31日餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
限制性股票發行，扣除減少部分 | ( |
| — | ||||||||||||||||
股票補償費用 | |
| | ||||||||||||||||
股份被扣留用於支付員工的工資稅款 | ( | ( | ( | ||||||||||||||||
綜合損失 | ( | ( | ( | ||||||||||||||||
衍生交易的稅收影響 | | | |||||||||||||||||
淨利潤 | | | |||||||||||||||||
分紅派息給股東 - $ | ( |
| ( | ||||||||||||||||
2024年6月30日的餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
員工福利股票計劃下的股票交易 |
| — | |||||||||||||||||
發行受限股，扣除被沒收部分 |
| — | |||||||||||||||||
與收購相關的股份發行 | — | ||||||||||||||||||
股票補償費用 | |
| | ||||||||||||||||
股份被扣留用於支付員工的薪資稅 | ( | ( | ( | ||||||||||||||||
綜合收益（損失） | | ( | | ||||||||||||||||
衍生交易的稅收影響 | | | |||||||||||||||||
淨利潤 | | | |||||||||||||||||
分紅派息給股東 - $ |
|
| ( |
| ( | ||||||||||||||
2024年9月30日餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
普通股 |
| 其他綜合收益（虧損）累計額 | |||||||||||||||||
（以千美元爲單位，除每股數據外） | 股份 |
| 金額 |
| 未分配利潤 |
| 外幣翻譯調整 |
| 衍生工具的累計收益（虧損） |
| 養老金調整項 |
| 股東權益總計 | ||||||
2022年12月31日的餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
僱員福利股票計劃下的股票交易 | | |
| | |||||||||||||||
發行限制股股票，扣除被放棄部分的淨額 | | ( |
| ( | |||||||||||||||
與收購相關的股份發行 | | | | ||||||||||||||||
股票補償費用 | |
| | ||||||||||||||||
用於支付員工工資稅的股份被扣留 | ( | ( | ( | ||||||||||||||||
綜合收益（損失） | | ( | ( | ||||||||||||||||
衍生交易的稅收影響 | | | |||||||||||||||||
淨利潤 |
|
| |
| | ||||||||||||||
向股東支付分紅派息 - $ | ( | ( | |||||||||||||||||
2023年3月31日餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
發行限制性股票，扣除抵銷後 | | |
| | |||||||||||||||
股票補償費用 | |
| | ||||||||||||||||
股份被扣留用於支付僱員的工資稅 | ( | ( | ( | ||||||||||||||||
綜合損益 | ( | | | ||||||||||||||||
衍生交易的稅收影響 | ( | ( | |||||||||||||||||
淨利潤 | | | |||||||||||||||||
股東分紅派息 - $ |
|
| ( |
| ( | ||||||||||||||
2023年6月30日的餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
發行的受限股票，扣除被取消的部分 | ( | — |
| — | |||||||||||||||
與收購相關的股份發行 | | | | ||||||||||||||||
股票補償費用 | |
| | ||||||||||||||||
股份被扣留用於支付員工的工資稅款 | ( | ( | ( | ||||||||||||||||
綜合損益 | ( | ( | ( | ||||||||||||||||
衍生交易的稅收影響 | | | |||||||||||||||||
淨利潤 | | | |||||||||||||||||
分紅派息給股東 - $ |
|
| ( |
| ( | ||||||||||||||
2023年9月30日餘額 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
3
請參閱附註事項的簡明合併財務報表。
ALLIENt 公司。
現金流量表簡明綜合報表
（以千爲單位）
（未經審計）
截至九個月結束時 | |||||||
2021年9月30日 | |||||||
| 2024 |
| 2023 |
| |||
經營活動產生的現金流量： | |||||||
淨利潤 | $ | | $ | | |||
調整使淨利潤與經營性現金淨額相符 | |||||||
折舊和攤銷 |
| |
| | |||
延遲所得稅 |
| ( |
| | |||
股票補償費用 | | | |||||
債務發行成本攤銷記錄在利息費用中 | | | |||||
其他 |
| |
| | |||
運營資產和負債的變動，淨額，除收購 | |||||||
交易應收款 |
| |
| ( | |||
存貨 |
| |
| ( | |||
預付款項和其他資產 |
| |
| ( | |||
應付賬款 |
| ( |
| | |||
應計負債 |
| ( |
| ( | |||
經營活動產生的現金流量淨額 |
| |
| | |||
投資活動現金流量: | |||||||
考慮支付的收購對價，扣除現金收購 |
| ( |
| ( | |||
購置固定資產等資產支出 | ( | ( | |||||
投資活動產生的淨現金流出 |
| ( |
| ( | |||
籌資活動現金流量: | |||||||
長期債務發行所得 |
| |
| | |||
長期債務和融資租賃債務的本金償還 | ( | ( | |||||
支付或準備支付的參考負債 | ( | — | |||||
支付債務發行成本 |
| ( |
| — | |||
分紅派息給股東的款項 |
| ( |
| ( | |||
與限制股票淨份額結算相關的稅額代扣 | ( | ( | |||||
籌集資金的淨現金流量 |
| |
| ( | |||
9. 關聯方餘額與交易 |
| |
| ( | |||
現金及現金等價物的淨增加（減少） |
| |
| ( | |||
期初現金及現金等價物餘額 |
| |
| | |||
期末現金及現金等價物 | $ | | $ | | |||
現金流量補充披露： | |||||||
發行股票用於收購 | $ | | $ | | |||
發行股票以清償待定對價 | $ | | $ | — | |||
財產、廠房及設備購買應付賬款或預提費用 | $ | | $ | | |||
債務發行成本計入應付賬款或應計費用 | $ | | $ | | |||
請參閱附註事項的簡明合併財務報表。
4
1. 編制和展示依據
Allient公司（下稱「Allient」）或（「公司」）專注於設計、製造和銷售精密運動、控制、動力和結構複合材料，爲全球範圍內工業、車輛、醫療和航空航天與國防市場的廣泛客戶提供綜合系統解決方案以及單獨產品。
附表中包含了公司及其全資子公司的賬目。所有公司間帳戶和交易均在合併中予以取消。
公司的海外子公司的資產和負債使用期末的匯率轉換爲美元。由於外國子公司的功能貨幣與美元之間匯率變化導致的資產和負債金額變化計入外幣換算調整。外幣換算調整計入附表中股東權益的一部分累計其他全面損失。收入和費用交易使用相關交易月份內盛行的平均匯率。由於外國子公司交易以非各自功能貨幣計價的貨幣發生的匯率波動所導致的交易損益計入其他費用中發生的結果。
本壓縮綜合財務報表已根據美國證券交易委員會（「SEC」）的規定和法規由公司編制，幷包括管理層認爲必要進行公平呈現的所有調整。 根據這些規定，一般公認會計原則（「U.S. GAAP」）編制的財務報表通常包含的某些信息和腳註披露已經被壓縮或省略。公司認爲此處披露充分，使所呈現的信息不具有誤導性。中期數據的財務數據未必能反映出預期的年度結果。
根據美國通用會計原則編制財務報表需要管理層作出某些估計和假設。 這些估計和假設會影響壓縮綜合財務報表日期的資產和負債數額以及披露的或隱含的資產負債，以及報告期間收入和費用的數額。 實際結果可能會與這些估計有實質性的差異。
建議閱讀伴隨的壓縮綜合財務報表，並結合2023年12月31日止公司已前提交的10-k表格中包含的合併財務報表和相關附註閱讀。
5
2. | 2023年8月10日，公司與日出合併子公司和Capri Holdings 有限公司(Capri)簽訂了一份合併協議(「合併協議」)。根據合併協議的條款，Tapestry同意以現金收購Capri的普通股份，每股價值200美元，不計利息，應按照合併協議提供的任何所需的稅收代扣。企業價值預計約爲100億美元，交易預計將於2024年完成(「Capri收購」)。2023年10月25日，在Capri股東特別會議上，Capri的股東批准了合併協議和其中涉及的交易。 |
2024年1月11日，公司收購了
The initial purchase price consisted of $
公司在2024年3月31日結束的三個月內，在銷售，一般和管理費用中錄入了$ million的收購相關成本，這些成本與完成的交易、未完成的交易以及潛在交易有關，包括最終未完成的交易。 同時，公司還在成本費用中記錄了$ million公允價值庫存的追加費用，該庫存與2023年完成的STC相關聯。
收購的營業結果從收購日期起包括在壓縮綜合財務報表中。SNC的營業收入包括在截止2024年9月30日的三個月的基本收入和綜合收入報表中，爲 $
現金及現金等價物 |
| $ | |
交易應收款 | | ||
存貨 | | ||
預付款項和其他資產 |
| | |
房地產、廠房和設備 |
| | |
營業租賃資產 | | ||
無形資產 | | ||
商譽 |
| | |
其他流動負債 | ( | ||
遞延收入 | ( | ||
經營租賃負債 | ( | ||
淨遞延所得稅負債 | ( | ||
其他非流動負債 | ( | ||
淨購買價格 | $ | |
6
獲取的資產的初步公允價值是使用三種估值方法之一確定的：市場、收益或成本。針對特定資產選擇特定方法取決於可用數據的可靠性和資產的性質，以及其他考慮因素。市場方法根據可比資產的市場定價估計主體資產的價值。收益方法根據預計資產產生的現金流量的現值估算主體資產的價值。預計的現金流量以反映資產的相對風險和貨幣時間價值的要求收益率折現。每個資產的預測現金流量考慮了來自現有客戶的營收預測、客戶減少趨勢、技術生命週期假設、邊際稅率以及歷史和預期利潤率並考慮了經濟過時性，預期利潤率等多個因素。成本方法根據替換資產的成本估計主體資產的價值，並反映了用於資產替代或替換的預估再生產或替換成本，減去由於折舊或過時而導致的價值損失的津貼，其中特別考慮了經濟過時性（如果適用）的因素。這些公允價值測量方法是基於重要的不可觀察輸入，包括管理估計和假設。
獲取的無形資產包括顧客名單，$
收購產生的商譽不得在納稅申報中扣除。
2023年9月22日，公司收購了
2024年1月3日，對Spectrum的最終遞延收購款項爲
以下的基本報表展示瞭如果SNC收購發生於2023年1月1日，Sierramotion收購發生於2022年1月1日，合併運營結果。
三個月的結束時間 | 截至九個月結束 | |||||||||
2021年9月30日 | 2021年9月30日 | 2021年9月30日 | ||||||||
| 2023 |
| 2024 |
| 2023 | |||||
收入 | $ | | $ | | $ | | ||||
稅前收入 | $ | | $ | | $ | | ||||
基本報表信息包括某些調整項目，包括折舊及攤銷費用、利息費用以及其他一些調整項目，同時還包括相關的所得稅影響。基本報表數額不反映出公司預計或隨後因這些收購而實現的預期運營效率調整。基本報表財務信息僅供參考，不意味着展示公司的結果如若這些交易發生於所呈現的日期將會是怎麼樣，或者展望合併公司的未來期間的運營結果或財務狀況。
7
3. 營業收入
履行責任
公司認爲，在產品轉移給客戶時，大多數產品的控制權在同一時間點轉移，一般是在產品根據協議和/或採購訂單發貨時。控制權被定義爲能夠指導使用並獲取產品的幾乎所有剩餘收益。
公司通過向客戶轉讓貨物和服務以換取客戶的貨幣考慮滿足其與客戶的合同履行義務。公司將客戶的購買訂單和公司相應的銷售訂單確認書視爲與客戶的合同。對於某些客戶，控制權和銷售在產品交付給客戶時轉移。對於一小部分合同，其收入在所呈現的期間內不重要，公司按照費用發生比例逐步確認收入。
公司與生產商活動同時收取的銷售、增值稅和其他稅款不計入營業收入。
貨物和服務的性質
公司設計、製造並銷售精密運動、控制、動力和結構元件，爲終端客戶和原始設備製造商（「OEM」）提供集成系統解決方案以及單獨的產品，通過公司自己的直接銷售團隊和授權制造商代表和分銷商銷售。公司的產品包括有刷和無刷直流電機、無刷伺服和扭矩電機、無心直流電機、集成無刷電機驅動器、齒輪電機、齒輪、模塊化數字伺服驅動器、運動控制器、增量和絕對光電編碼器、用於電力質量和諧波問題的有源和無源濾波器、變壓器以及其他受控運動相關產品。公司的目標市場包括工業、車輛、醫療和航空航天與軍工股。.
確定交易價格
公司的大多數合同原始期限不超過一年。對於這些合同，公司應用實用取巧，因此不考慮貨幣時間價值的影響。對於跨年度合同，公司使用判斷來確定是否存在重大融資要素。這些合同通常是客戶已經支付了預付款的合同。管理層判斷包含重大融資要素的合同以公司的增量借貸利率折現。公司承擔利息費用並計提合同負債。隨着公司完成履約義務並從這些合同中確認收入，利息費用同時確認。截至2024年9月30日和2023年12月31日，管理層沒有任何包含重大融資要素的合同。
訂閱和支持收入包括以下內容（以百萬美元爲單位）：
公司將與客戶的合同收入細分爲地域板塊和目標市場。公司認爲將營業收入細分爲這些類別實現了揭示客觀經濟因素如何影響收入和現金流量的性質、金額、時間和不確定性的披露目標。如下文第18注所述， 分段信息，公司的業務由組成，
8
下面提供了按目標市場和地理位置分解的營業收入:
三個月的結束時間 | 截至九個月結束 | ||||||||||||
2021年9月30日 | 2021年9月30日 | ||||||||||||
目標市場 |
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
製造業 | $ | | $ | | $ | | $ | | |||||
汽車 | | | | | |||||||||
醫療 |
| |
| |
| |
| | |||||
航空航天和國防 |
| |
| |
| |
| | |||||
分配和其他 |
| |
| |
| |
| | |||||
總計 | $ | | $ | | $ | | $ | | |||||
三個月的結束時間 | 截至九個月結束 | ||||||||||||
2021年9月30日 | 2021年9月30日 | ||||||||||||
地域板塊 |
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
北美洲（主要是美國） | $ | | $ | | $ | | $ | | |||||
歐洲 |
| |
| |
| |
| | |||||
亞洲-太平洋地區 |
| |
| |
| |
| | |||||
總計 | $ | | $ | | $ | | $ | | |||||
合同餘額
當公司交付產品的時間與客戶付款的時間不同時，公司將確認合同資產（履約早於客戶付款）或合同負債（客戶付款早於履約）。通常，合同是按照逾期支付的方式支付，並且在公司考慮是否存在重大融資要素後，將其確認爲應收賬款。
公司的合同負債的期初餘額和期末餘額如下：
| 2021年9月30日 | 12月31日, | ||||
2024 | 2023 | |||||
在應計負債中的合同負債 | $ | | $ | | ||
在其他長期負債中的合同負債 | — | | ||||
$ | | $ | | |||
公司合同負債的期初餘額和期末餘額之間的差異主要是由於公司的業績和客戶付款之間的時差引起的。 在2024年和2023年截至9月30日的九個月中，公司實現營業收入爲$
重要支付條件
公司與客戶的合同規定了銷售的最終條款，包括每種產品或服務的描述、數量和價格。付款通常須在交付後的30-60天內全額支付。由於客戶同意合同中規定的利率和價格在合同期內不變，大部分合同不包含可變報酬。
退貨、退款和保修
公司在正常業務過程中，除非商品存在製造缺陷，否則不接受產品退貨。公司設立估計退貨和保修的準備金。所有合同均包含標準保修條款，以確保產品符合約定規格。
9
4. 存貨
存貨包括材料、直接勞動和製造業間接費用的成本，按照成本低值原則（先進先出法）或淨實現價值列示如下：
| 2021年9月30日 |
| 運營租賃負債： | ||||
2024 | 2023 | ||||||
零件和原材料 | $ | | $ | | |||
在製品 |
| |
| | |||
成品 |
| |
| | |||
$ | | $ | | ||||
5. 物業、工廠和設備
物業、工廠和設備被分類如下：
|
| 2021年9月30日 |
| 運營租賃負債： | ||||
使用壽命 | 2024 | 2023 | ||||||
土地 | $ | | $ | | ||||
建築和改進 |
|
| |
| | |||
機械、設備、工具和模具 |
|
| |
| | |||
施工進度 | | | ||||||
傢俱、固定設備和其他 |
|
| |
| | |||
| |
| | |||||
減少已計提折舊額 |
| ( |
| ( | ||||
固定資產淨額 | $ | | $ | | ||||
折舊費用分別爲2024年3月31日和2023年3月31日的美元
6. 商譽
截至2024年9月30日的九個月結束時，商譽的賬面價值變化如下：
2021年9月30日 |
| ||
2024 | |||
期初餘額 | $ | | |
獲得商譽 | | ||
收購交易的計量期調整影響（附註2） | | ||
受外幣匯率變動的影響 |
| ( | |
期末餘額 | $ | |
10
7. 無形資產
公司簡明綜合資產負債表上的無形資產包括以下內容：
加權平均 | 2024年9月30日 | 2023年12月31日 | ||||||||||||||||||
| 攤銷 |
| 毛利 |
| 累積的 |
| 賬面淨值 |
| 毛利 |
| 累積的 |
| 賬面淨值 | |||||||
時期 | 金額 | 攤銷 | 價值 | 金額 | 攤銷 | 價值 | ||||||||||||||
客戶名單 |
| $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
交易名稱 |
|
| |
| ( |
| |
| |
| ( |
| | |||||||
設計與技術 |
|
| |
| ( |
| |
| |
| ( |
| | |||||||
總計 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | ||||||||
無形資產攤銷費用爲$
截至2024年9月30日，預計未來無形資產攤銷費用如下：
截至12月31日年末 |
| 總計 | |
預估 | |||
| 攤銷費用 | ||
2024年餘下的時間 | $ | | |
2025 | | ||
2026 |
| | |
2027 | | ||
2028 | | ||
此後 |
| | |
總預計攤銷費用 | $ | | |
8. 基於股票的報酬
公司的2017年股權激勵計劃（2017計劃），於2018年2月修改，允許授予期權、限制股票獎勵、股票增值權和限制股票單位。
公司的股票激勵計劃提供了股票獎勵的授予，包括受限股票、股票期權和股票增值權，發放對象包括公司員工和非員工，包括公司董事。
受限股票，除非參與者對根據2018年計劃授予的受限股票進行第83（b）條款選舉（如下所述），否則在授予該獎項時，接收此類獎勵的參與者將不會認可美國應稅普通收入，同時我們將不會被允許在此類獎項授予時認可扣減款項。當一項獎勵保持未獲豁免或其他實質性風險失去之狀態時，參與者將認可股息的數量作爲報酬所認可的收入，我們將允許扣除相同的金額。當獎項獲得豁免或不再存在重大風險失去之時，公允價值溢價將被認可爲參與者的普通收入，並且將以我們的聯邦所得稅的目的表明爲扣減。根據有關規定，股票被處分所獲得的利潤或損失將被視爲資本收益或資本損失，資本收益或損失是根據參與者從認購股票或解除實質性風險失去之日期算起持有該股票的時間而定的，如果持有期超過一年，則將是長期或短期的。
截至2024年9月30日的九個月內，
以下是截至2024年9月30日止九個月受限股票活動的摘要：
數量 | ||
| 股份 | |
期初未歸屬的LTPP： |
| |
授予 |
| |
34,105 |
| ( |
被取消 |
| ( |
期末未決餘額卓越 |
| |
11
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Stock-based compensation expense, net of forfeitures, of $
9. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Compensation and fringe benefits | $ | | $ | | ||
Accrued business acquisition consideration |
| — |
| | ||
Warranty reserve |
| |
| | ||
Income taxes payable | | | ||||
| | |||||
| | |||||
Contract liabilities | | | ||||
Contingent consideration – current | — | | ||||
Restructuring related accruals | | — | ||||
Other accrued expenses |
| |
| | ||
$ | | $ | | |||
In the second quarter of 2024, the Company began to implement the Simplify to Accelerate NOW program. This included initiatives to realign the Company’s manufacturing footprint and streamline the organization to enhance operational efficiency and drive profitability. The costs associated with this program are expected to be between approximately $
The restructuring related accruals as of September 30, 2024 are expected to be substantially paid out by the end of 2024 and primarily relate to employee severance related expenses. Restructuring and business realignment costs of $
Nine months ended | |||
September 30, | |||
| 2024 | ||
Beginning balance | $ | — | |
Expenses incurred |
| | |
Payments | ( | ||
Ending balance | $ | | |
12
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
10. DEBT OBLIGATIONS
Debt obligations consisted of the following:
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Long-term Debt | ||||||
Revolving Credit Facility, long-term (1) | $ | | $ | | ||
Note Payable | | — | ||||
Unamortized debt issuance costs | ( | ( | ||||
Finance lease obligations – noncurrent | | | ||||
Long-term debt | $ | | $ | | ||
(1) | The effective interest rate on long-term debt obligations is |
On March 1, 2024, the Company entered into a Third Amended and Restated Credit Agreement (the “2024 Amended Credit Agreement”) for a $
Borrowings under the Revolving Facility bear interest at the Term SOFR Rate (as defined in the 2024 Amended Credit Agreement) plus a margin of
Financial covenants under the 2024 Credit and Note Payable Agreements require the Company to maintain a minimum interest coverage ratio of at least
The 2024 Credit and Note Payable Agreements also include customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, if any representation or warranty made by the Company is false or misleading in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, the occurrence of certain ERISA events, the invalidity of the loan documents or a change in control of the Company. The amounts outstanding under the Revolving Facility may be accelerated upon certain events of default.
The obligations under the 2024 Credit and Note Payable Agreements are secured by substantially all of the Company’s non-realty assets and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.
13
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
On March 21, 2024, the Company issued and sold $
As of September 30, 2024, the unused Revolving Facility was $
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”). These amendments include provisions to increase the maximum Leverage Ratio to
11. DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments.
The Company enters into foreign currency contracts with maturities to hedge its short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona, Canadian Dollar) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its variable-rate debt. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In March 2020, the Company entered into
14
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Company executed amendments to the existing swaps to amend the index on the interest rate derivatives from LIBOR to SOFR. These amendments had no material financial impact to the Company’s operations or financial position. In September 2024, the Company entered into an additional interest rate swap with a notional amount of $
The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
As of September 30, 2024, the Company estimates that $
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023:
Asset Derivatives | ||||||||
Fair value as of: | ||||||||
Derivatives designated as | Balance Sheet | September 30, | December 31, | |||||
hedging instruments |
| Location |
| 2024 |
| 2023 | ||
Foreign currency contracts | Prepaid expenses and other assets | $ | | $ | | |||
Interest rate swaps | Prepaid expenses and other assets | | | |||||
Interest rate swaps | Other long-term assets | | | |||||
$ | | $ | | |||||
Liability Derivatives | ||||||||
Fair value as of: | ||||||||
Derivatives designated as | Balance Sheet | September 30, | December 31, | |||||
hedging instruments |
| Location |
| 2024 |
| 2023 | ||
Foreign currency contracts | Accrued liabilities | $ | | $ | — | |||
$ | | $ | — | |||||
The tables below present the effect of cash flow hedge accounting on other comprehensive income (loss) (“OCI”) for the three and nine months ended September 30, 2024 and 2023:
Amount of pre-tax (loss) gain recognized | Amount of pre-tax gain recognized | ||||||||||||
in OCI on derivatives | in OCI on derivatives | ||||||||||||
Derivatives in cash flow hedging relationships | Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |||||
Interest rate swaps | $ | ( | $ | | $ | | $ | | |||||
Amount of pre-tax gain reclassified | Amount of pre-tax gain reclassified | ||||||||||||
from accumulated OCI into income | from accumulated OCI into income | ||||||||||||
Location of gain reclassified | Three months ended September 30, | Nine months ended September 30, | |||||||||||
from accumulated OCI into income | 2024 | 2023 |
| 2024 |
| 2023 | |||||||
Interest expense | $ | | $ | | $ | | $ | | |||||
The table below presents the line items that reflect the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2024 and 2023:
Total amounts of income and expense | Total amounts of income and expense | ||||||||||||||
line items presented that reflect the | line items presented that reflect the | ||||||||||||||
effects of cash flow hedges recorded | effects of cash flow hedges recorded | ||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
Derivatives designated as hedging instruments |
| Income Statement Location |
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Interest rate swaps |
| Interest Expense | $ | | $ | | $ | | $ | | |||||
15
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2024 and December 31, 2023. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets:
Derivative assets:
Net amounts | ||||||||||||||||||
Gross amounts | of assets | Gross amounts not offset in the consolidated | ||||||||||||||||
As of | Gross amounts | offset in the | presented in the | balance sheets | ||||||||||||||
September 30, | of recognized | consolidated | consolidated | Financial | Cash collateral | |||||||||||||
2024 |
| assets |
| balance sheets |
| balance sheets |
| instruments |
| received |
| Net amount | ||||||
Derivatives | $ | | $ | — | $ | | $ | — | $ | — | $ | | ||||||
Net amounts | ||||||||||||||||||
Gross amounts | of assets | Gross amounts not offset in the consolidated | ||||||||||||||||
As of | Gross amounts | offset in the | presented in the | balance sheets | ||||||||||||||
December 31, | of recognized | consolidated | consolidated | Financial | Cash collateral | |||||||||||||
2023 |
| assets |
| balance sheets |
| balance sheets |
| instruments |
| received |
| Net amount | ||||||
Derivatives | $ | | $ | — | $ | | $ | — | $ | — | $ | | ||||||
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
12. FAIR VALUE
Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs.
These two types of inputs create the following three – level fair value hierarchy:
Level 1: | Quoted prices for identical assets or liabilities in active markets. |
Level 2: | Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model – derived valuations whose inputs or significant value drivers are observable. |
Level 3: | Significant inputs to the valuation model that are unobservable. |
The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets and liabilities approximate their fair value because of the immediate or short-term maturities of these financial instruments.
16
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
The following tables presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, respectively, by level within the fair value hierarchy:
September 30, 2024 | |||||||||
| Level 1 |
| Level 2 |
| Level 3 | ||||
Assets (liabilities) | |||||||||
Pension plan assets | $ | | $ | — | $ | — | |||
Deferred compensation plan assets |
| |
| — |
| — | |||
Foreign currency hedge contracts, net | — | | — | ||||||
Interest rate swaps, net |
| — |
| |
| — | |||
Contingent consideration |
| — |
| — |
| — | |||
December 31, 2023 | |||||||||
| Level 1 |
| Level 2 |
| Level 3 | ||||
Assets (liabilities) | |||||||||
Pension plan assets | $ | | $ | — | $ | — | |||
Deferred compensation plan assets |
| |
| — |
| — | |||
Foreign currency hedge contracts, net |
| — |
| |
| — | |||
Interest rate swaps, net |
| — |
| |
| — | |||
Contingent consideration |
| — |
| — |
| ( | |||
The contingent consideration fair value measurement represents amounts in connection with the acquisitions of Sierramotion, which had a maximum amount of $
13. INCOME TAXES
The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations.
The effective income tax rate was
17
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
14. LEASES
The Company has operating leases for office space, manufacturing facilities and equipment, computer equipment and automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for a long-term period, and some leases include
Supplemental cash flow information related to the Company’s operating and finance leases for the nine months ended September 30, 2024 and 2023 was as follows:
September 30, | |||||||
2024 | 2023 | ||||||
Cash paid for operating leases |
| $ | |
| $ | |
|
Cash paid for interest on finance lease obligations |
| $ | |
| $ | |
|
Assets acquired under operating leases | $ | | $ | | |||
Operating lease assets obtained in acquisitions | $ | | $ | | |||
The Company’s finance lease obligations relate to a manufacturing facility. Finance lease assets of $
The following table presents the maturity of the Company’s operating and finance lease liabilities as of September 30, 2024:
| Operating Leases | Finance Leases | ||||
Remainder of 2024 | $ | | $ | | ||
2025 |
| |
| | ||
2026 | | | ||||
2027 | | | ||||
2028 | | | ||||
Thereafter |
| |
| | ||
Total undiscounted cash flows | $ | | $ | | ||
Less: present value discount | ( | ( | ||||
Total lease liabilities | $ | | $ | | ||
As of September 30, 2024, the Company has entered into building lease renewals with future minimum lease payments of $
The Company has operating leases for certain facilities from companies for which a member of management is a part owner. In connection with such leases, the Company made fixed minimum lease payments to the lessor of $
during the three and nine months ended September 30, 2024 and $
18
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
15. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Accumulated Other Comprehensive (Loss) Income (“AOCI”) for the three months ended September 30, 2024 and 2023 is comprised of the following:
Foreign Currency | |||||||||||||||
Defined Benefit | Tax Effect of | Translation | |||||||||||||
| Plan Liability |
| Cash Flow Hedges |
| Cash Flow Hedges |
| Adjustment |
| Total | ||||||
At June 30, 2024 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
Unrealized gain (loss) on cash flow hedges | — | ( | | — | ( | ||||||||||
Amounts reclassified from AOCI | — | ( | | — | ( | ||||||||||
Foreign currency translation gain | — | — | — | | | ||||||||||
At September 30, 2024 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
Foreign Currency | |||||||||||||||
Defined Benefit | Tax Effect of | Translation | |||||||||||||
| Plan Liability |
| Cash Flow Hedges |
| Cash Flow Hedges |
| Adjustment |
| Total | ||||||
At June 30, 2023 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
Unrealized gain (loss) on cash flow hedges | — | | ( | — | | ||||||||||
Amounts reclassified from AOCI | — | ( | | — | ( | ||||||||||
Foreign currency translation loss | — | — | — | ( | ( | ||||||||||
At September 30, 2023 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
AOCI for the nine months ended September 30, 2024 and 2023 is comprised of the following:
Foreign Currency | |||||||||||||||
Defined Benefit | Tax Effect of | Translation | |||||||||||||
| Plan Liability |
| Cash Flow Hedges |
| Cash Flow Hedges |
| Adjustment |
| Total | ||||||
At December 31, 2023 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
Unrealized gain (loss) on cash flow hedges | — | | ( | — | | ||||||||||
Amounts reclassified from AOCI | — | ( | | — | ( | ||||||||||
Foreign currency translation gain | — | — | — | | | ||||||||||
At September 30, 2024 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
Foreign Currency | |||||||||||||||
Defined Benefit | Tax Effect of | Translation | |||||||||||||
| Plan Liability |
| Cash Flow Hedges |
| Cash Flow Hedges |
| Adjustment |
| Total | ||||||
At December 31, 2022 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
Unrealized gain (loss) on cash flow hedges | — | | ( | — | | ||||||||||
Amounts reclassified from AOCI | — | ( | | — | ( | ||||||||||
Foreign currency translation gain | — | — | — | ( | ( | ||||||||||
At September 30, 2023 | $ | ( | $ | | $ | ( | $ | ( | $ | ( | |||||
The realized gains and losses relating to the Company’s interest rate swap hedges were reclassified from AOCI and included in interest expense in the condensed consolidated statements of income and comprehensive (loss) income.
16. DIVIDENDS PER SHARE
The Company declared a quarterly dividend of $
19
ALLIENT INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
17. EARNINGS PER SHARE
Basic and diluted weighted-average shares outstanding are as follows:
Three months ended | Nine months ended | ||||||||
September 30, | September 30, | ||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| |
Basic weighted average shares outstanding |
| |
| |
| |
| |
|
Dilutive effect of potential common shares |
| |
| |
| |
| |
|
Diluted weighted average shares outstanding |
| |
| |
| |
| |
|
For the three and nine months ended September 30, 2024, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were
18. SEGMENT INFORMATION
The Company operates in
Revenue for the three months ended September 30, 2024 and 2023 was comprised of
Identifiable foreign fixed assets were $
For the three and nine months ended September, 30, 2024,
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
All statements contained herein that are not statements of historical fact constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the word “believe,” “anticipate,” “expect,” “project,” “intend,” “will continue,” “will likely result,” “should” or words or phrases of similar meaning. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from the expected results described in the forward-looking statements. The risks and uncertainties include those associated with: the domestic and foreign general business and economic conditions in the markets we serve, including political and currency risks and adverse changes in local legal and regulatory environments; the severity, magnitude and duration of the impact of global pandemics, including impacts from businesses’ and governments’ responses to the impact on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains; our inability to predict the extent to which global pandemic impacts will adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives; the geopolitical conflicts and their ability to create instability and economic uncertainty; the introduction of new technologies and the impact of competitive products; the ability to protect the Company’s intellectual property; our ability to sustain, manage or forecast our growth and product acceptance to accurately align capacity with demand; the continued success of our customers and the ability to realize the full amounts reflected in our order backlog as revenue; the loss of significant customers or the enforceability of the Company’s contracts in connection with a merger, acquisition, disposition, bankruptcy, or otherwise; our ability to meet the technical specifications of our customers; the performance of subcontractors or suppliers and the continued availability of parts and components; failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach, ransomware, or failure of one or more key information technology systems, networks, processes, associated sites or service providers; changes in government regulations; the availability of financing and our access to capital markets, borrowings, or financial transactions to hedge certain risks; the ability to attract and retain qualified personnel, and in particular those who can design new applications and products for the motion industry; the ability to implement our corporate strategies designed for growth and improvement in profits including to identify and consummate favorable acquisitions to support external growth and the development of new technologies; the ability to successfully integrate an acquired business into our business model without substantial costs, delays, or problems; our ability to control costs, including the establishment and operation of low cost region manufacturing and component sourcing capabilities; and in the Company’s Annual Report in Form 10-K. Actual results, events and performance may differ materially from the Company’s forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements as a prediction of actual results. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. The Company has no obligation or intent to release publicly any revisions to any forward-looking statements, whether as a result of new information, future events, or otherwise.
New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company’s expectations, beliefs and projections are believed to have a reasonable basis; however, the Company makes no assurance that expectations, beliefs, or projections will be achieved.
Overview
We are a global company that is engaged in the business of designing, manufacturing, and selling precision motion, control, power and structural composites to provide integrated system solutions as well as individual products, to a broad spectrum of customers throughout the world primarily for the industrial, vehicle, medical, and aerospace and defense markets. We are headquartered in Amherst, NY, and have operations in the United States, Canada, Mexico, Europe, and Asia-Pacific. We are known worldwide for our expertise in electro-magnetic, mechanical, and electronic motion technology. We sell component and integrated controlled motion solutions to end customers and OEMs through our own direct sales force and authorized manufacturers’ representatives and distributors. Our products include nano precision positioning systems, servo control systems, motion controllers, digital servo amplifiers and drives, brushless servo, torque, and coreless motors, brush motors, integrated motor-drives, gear motors, gearing, incremental and absolute optical encoders, active (electronic) and passive (magnetic) filters for power quality and harmonic issues, Industrial safety rated input/output Modules, Universal Industrial Communications Gateways, light-weighting technologies, transformers, and other controlled motion-related products.
21
Business Environment
Recent Events
Beginning in 2022 and continuing through 2023 and through most of 2024, 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 in those periods. Gross domestic product growth slowed throughout 2022 largely due to the widespread impacts of inflation, increasing interest rates, and more restrictive financial conditions. While gross domestic product 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 uncertainty. There were 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 into 2024.
The current geopolitical conflicts, the condition of sovereign finances, and the outcome of the U.S. Presidential election 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 have been closely monitoring the developments and continue to adjust our production platform to react to changing customer ordering patterns and realize efficiencies. The ordering patterns of our aerospace and defense customers have been particularly impacted by changes in sovereign governments priorities and budgets. The impact of the conflicts on our operational and financial performance will depend on future developments that cannot be predicted.
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 began to return to a new normal after the disruptions caused by the COVID-19 pandemic. Starting in the second quarter of 2024, there were more abrupt and larger changes to order patterns as our customers reacted to elevated inventory levels and slowing customer demand. Several customers, particularly in the Vehicle and Industrial markets, reduced demand or pushed out delivery dates for their orders, and we experienced an acceleration of these customers’ actions starting in the second quarter of 2024, and continuing through the third quarter of 2024.
As the pace of our customers’ actions increased, we recently advanced our “Simplify to Accelerate NOW” strategy. This strategy is being implemented to reduce costs and help create earnings momentum as the Company seeks to enhance efficiency, reduce working capital requirements and strengthen cash flow through realignment and rationalization of our resources.
The Simplify to Accelerate NOW strategy is centered on three high-level strategic initiatives:
Beginning in the second quarter and continuing into the third quarter of 2024, we began to implement our Simplify to Accelerate NOW strategy. We executed certain actions that streamline our operations to enhance efficiency as well as drive profitability. Expected cost savings of this initiative are anticipated to be approximately $10 million annually. As part of this program, the Company will continue to realign production and rationalize our footprint through the remainder of 2024. In addition, the Company has implemented reductions to its workforce in many operations throughout the world, to reflect the reduction in sales it is forecasting for the remainder of 2024. The costs associated with this program are expected to be between approximately $1.9 million and $2.4 million, primarily related to severance and related expenses.
The Company completed the acquisition of SNC in the first quarter of 2024 and the acquisition of Sierramotion in the third quarter of 2023. These acquisitions are important to executing on the Company’s strategic plan, and we remain focused in the near term on successfully integrating these acquisitions and leveraging the synergies that will be important drivers of our future growth and profitability.
22
Operating Results
Three months ended September 30, 2024 compared to three months ended September 30, 2023
For the three months ended |
| 2024 vs. 2023 | ||||||||||
September 30, | Variance |
| ||||||||||
(Dollars in thousands, except per share data) |
| 2024 |
| 2023 | $ |
| % | |||||
Revenues | $ | 125,213 | $ | 145,319 | $ | (20,106) | (14) | % | ||||
Cost of goods sold |
| 85,949 | 97,821 |
| (11,872) | (12) | % | |||||
Gross profit |
| 39,264 |
| 47,498 |
| (8,234) | (17) | % | ||||
Gross margin percentage |
| 31.4 | % |
| 32.7 | % |
|
|
| |||
Operating costs and expenses: |
|
|
|
|
|
|
| |||||
Selling |
| 6,323 | 6,021 |
| 302 | 5 | % | |||||
General and administrative |
| 13,856 | 14,642 |
| (786) | (5) | % | |||||
Engineering and development |
| 9,056 | 10,702 |
| (1,646) | (15) | % | |||||
Business development |
| 278 | 1,194 |
| (916) | (77) | % | |||||
Amortization of intangible assets |
| 3,135 | 3,075 |
| 60 | 2 | % | |||||
Total operating costs and expenses |
| 32,648 |
| 35,634 |
| (2,986) | (8) | % | ||||
Operating income |
| 6,616 |
| 11,864 |
| (5,248) | (44) | % | ||||
Interest expense |
| 3,435 |
| 3,164 |
| 271 | 9 | % | ||||
Other expense, net |
| 468 |
| 42 |
| 426 | 1,014 | % | ||||
Total other expense |
| 3,903 |
| 3,206 |
| 697 | 22 | % | ||||
Income before income taxes |
| 2,713 |
| 8,658 |
| (5,945) | (69) | % | ||||
Income tax provision |
| (612) |
| (1,992) |
| 1,380 | (69) | % | ||||
Net income | $ | 2,101 | $ | 6,666 | $ | (4,565) | (68) | % | ||||
|
|
|
|
|
|
| ||||||
Effective tax rate |
| 22.6 | % |
| 23.0 | % | ||||||
Diluted earnings per share | $ | 0.13 | $ | 0.41 | $ | (0.28) | (68) | % | ||||
Bookings | $ | 102,631 | $ | 154,908 | $ | (52,277) | (34) | % | ||||
Backlog | $ | 238,492 | $ | 309,636 | $ | (71,144) | (23) | % | ||||
REVENUES: The decrease in revenues during the third quarter 2024 reflects decreases in each of the target markets, most significantly within Vehicle and Industrial markets. 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 which began in the second quarter of 2024 and continued into the current period, partially offset by revenue contributed from the 2023 and 2024 acquisitions. Our revenue for the third quarter of 2024 was comprised of 56% to U.S. customers and 44% to customers primarily in Europe, Canada, and Asia-Pacific. The overall decrease in revenue was primarily due to a 14.3% volume decrease slightly offset by a foreign currency increase of 0.4%. The acquisitions completed in 2023 and 2024 contributed an incremental $10,473 of revenue in the three months ended September 30, 2024. Organic revenue decreased 21.5% during the third quarter 2024.
ORDER BOOKINGS AND BACKLOG: Bookings decreased in the third quarter 2024 compared to 2023, due primarily to a 34.2% decrease in volume slightly offset by a 0.5% increase in foreign currency impact. The decrease in bookings from the prior year quarter is in large part due to a large $31 million order in the defense market received during the third quarter of 2023, as well as continued impacts of changes in customer order patterns in reacting to elevated inventory levels and customer demand.
GROSS PROFIT AND GROSS MARGIN: Gross profit decreased to $39,264 in the third quarter of 2024 from $47,498 in the third quarter of 2023 driven by lower sales volume, and gross margins decreased to 31.4% for 2024, compared to 32.7% for 2023. The decrease in gross margin percentage was 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 5% during the third quarter of 2024 compared to 2023 primarily due to increased costs in connection with our recently completed acquisitions and to the mix of sales with commissions. Selling expenses as a percentage of revenues were 5% and 4% in the three months ended September 30, 2024 and 2023, respectively.
23
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreased 5% during the third quarter 2024 compared to 2023 due primarily to lower incentive compensation as well as cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy. As a percentage of revenues, general and administrative expenses were 11% and 10% in the three months ended September 30, 2024 and 2023, respectively.
ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 15% in the third quarter of 2024 compared to 2023. The decrease reflects the cost reduction actions taken as part of our Simplify to Accelerate NOW strategy. As a percentage of revenues, engineering and development expenses were 7% for each of the three months ended September 30, 2024 and 2023.
BUSINESS DEVELOPMENT COSTS: Business development costs include acquisition and integration related costs as well as restructuring and business realignment costs. The decrease in business development costs in the third quarter of 2024 compared to 2023 primarily reflects a decrease in fair value measurement of contingent consideration liabilities, offset by current year restructuring-related costs associated with our Simplify to Accelerate NOW strategy.
AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets remained consistent compared to the prior year period.
INTEREST EXPENSE: Interest expense increased in the third quarter of 2024 compared to 2023 due to higher average debt balances and, to a lesser extent, higher interest rates compared to the prior year period. The increase in interest expense is partially offset by reductions to interest expense realized through our interest rate swaps.
INCOME TAXES: The effective income tax rate was 22.6% and 23.0% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rate for the three months ended September 30, 2024 includes net discrete tax costs of 1.2%, primarily due to share based awards and provision to return adjustments. The tax rate for the three months ended September 30, 2023 does not include any discrete tax items that had a significant impact on tax rates. The lower effective tax rate in the third quarter of 2024 as compared to the third quarter of 2023 is primarily due to the realization of certain deferred income tax assets that had been reserved in prior years and estimates of tax credits. The Company expects its income tax rate for the full year 2024 to be approximately 21% to 23%.
NET INCOME AND ADJUSTED NET INCOME: Net income decreased during the third quarter of 2024 compared to 2023, primarily relating to lower sales volume, including a decrease in organic revenue, partially offset by a decrease in operating expenses, reflecting the actions in our Simplify to Accelerate NOW strategy. Adjusted net income for the quarters ended September 30, 2024 and 2023 was $5,068 and $9,980, respectively. Adjusted diluted earnings per share for the third quarter of 2024 and 2023 were $0.31 and $0.61, 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.
EBITDA AND ADJUSTED EBITDA: EBITDA was $12,595 for the third quarter of 2024 compared to $18,243 for the third quarter of 2023. Adjusted EBITDA was $14,432 and $20,849 for the third quarters of 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. Adjusted EBITDA also excludes stock-based compensation expense, foreign currency gain/loss and certain other items. 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.
24
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
For the nine months ended |
| 2024 vs. 2023 | ||||||||||
September 30, | Variance |
| ||||||||||
(Dollars in thousands, except per share data) |
| 2024 |
| 2023 | $ |
| % | |||||
Revenues | $ | 407,958 | $ | 437,637 | $ | (29,679) | (7) | % | ||||
Cost of goods sold |
| 280,641 |
| 298,328 |
| (17,687) | (6) | % | ||||
Gross profit |
| 127,317 |
| 139,309 |
| (11,992) | (9) | % | ||||
Gross margin percentage |
| 31.2 | % |
| 31.8 | % |
|
|
| |||
Operating costs and expenses: |
|
|
|
|
|
|
| |||||
Selling |
| 19,283 |
| 18,354 |
| 929 | 5 | % | ||||
General and administrative |
| 42,438 |
| 43,624 |
| (1,186) | (3) | % | ||||
Engineering and development |
| 30,416 |
| 31,041 |
| (625) | (2) | % | ||||
Business development |
| 2,204 |
| 1,791 |
| 413 | 23 | % | ||||
Amortization of intangible assets |
| 9,381 |
| 9,226 |
| 155 | 2 | % | ||||
Total operating costs and expenses |
| 103,722 |
| 104,036 |
| (314) | (0) | % | ||||
Operating income |
| 23,595 |
| 35,273 |
| (11,678) | (33) | % | ||||
Interest expense |
| 10,207 |
| 9,309 |
| 898 | 10 | % | ||||
Other expense, net |
| 405 |
| 187 |
| 218 | 117 | % | ||||
Total other expense, net |
| 10,612 |
| 9,496 |
| 1,116 | 12 | % | ||||
Income before income taxes |
| 12,983 |
| 25,777 |
| (12,794) | (50) | % | ||||
Income tax provision |
| (2,830) |
| (6,027) |
| 3,197 | (53) | % | ||||
Net income | $ | 10,153 | $ | 19,750 | $ | (9,597) | (49) | % | ||||
|
|
|
|
|
|
| ||||||
Effective tax rate |
| 21.8 | % |
| 23.4 | % | ||||||
Diluted earnings per share | $ | 0.61 | $ | 1.22 | $ | (0.61) | (50) | % | ||||
Bookings | $ | 362,131 | $ | 415,113 | $ | (52,982) | (13) | % | ||||
Backlog | $ | 238,492 | $ | 309,636 | $ | (71,144) | (23) | % | ||||
REVENUES: The decrease in revenues for the year to date 2024 reflects decreases within each of the target markets, most significantly in Vehicle. 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 contributes from the 2023 and 2024 acquisitions. Our revenues for the period ended September 30, 2024 was comprised of 55% to U.S. customers and 45% to customers primarily in Europe, Canada and Asia-Pacific. The overall decrease in revenue was due to a 6.8% volume decrease offset slightly by an insignificant favorable currency impact. The acquisitions completed in 2023 and 2024 contributed an incremental $30,856 of revenue in the nine months ended September 30, 2024. Organic revenue decreased 13.9% during the year to date 2024.
ORDER BOOKINGS AND BACKLOG: Orders decreased for the year to date 2024 compared to 2023, and included a 12.8% decrease in volume slightly offset by an insignificant increase in foreign exchange impact. The decrease in bookings from the prior year quarter is in large part due to a large $31 million order in the defense market received during the third quarter of 2023, as well as continued impacts of changes in customer order patterns in reacting to elevated inventory levels and customer demand.
GROSS PROFIT AND GROSS MARGIN: Gross profit decreased to $127,317 for year to date 2024 from $139,309 in 2023 driven by lower sales volume, and gross margins decreased to 31.2% for 2024, compared to 31.8% for 2023. The decrease in gross margin percentage was driven by lower fixed cost absorption on lower sales volumes, as well as the unfavorable gross margin impact of our most recent acquisition.
SELLING EXPENSES: Selling expenses increased 5% during year to date 2024 compared to 2023 primarily due to increased costs in connection with our recently completed acquisitions and to the mix of sales with commissions. Selling expenses as a percentage of revenues were comparable at 5% and 4% during year to date 2024 and 2023, respectively.
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GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreased by 3% during the nine months ended September 30, 2024 compared to the same period of 2023 due primarily to a decrease in incentive compensation as well as cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy. As a percentage of revenues, general and administrative expenses were 10% in each of 2024 and 2023.
ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 2% during the year to date 2024 compared to 2023. The decrease is due primarily to cost saving actions taken in connection with our Simplify to Accelerate NOW strategy. As a percentage of revenues, engineering and development expenses were 7% for each of the nine months ended September 30, 2024 and 2023.
BUSINESS DEVELOPMENT COSTS: Business development costs include acquisition and integration related costs as well as restructuring and business realignment costs. The increase in business development costs for year to date 2024 compared to 2023 primarily reflects restructuring-related costs associated with our Simplify to Accelerate NOW strategy, which contributed $1,863 of the increase over the prior year period, offset by lower acquisition and integration related costs and a decrease in the fair value measurement of contingent consideration liabilities.
AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets increased for year to date 2024 compared to 2023 due to incremental intangible amortization attributable to the 2023 and 2024 acquisitions.
INTEREST EXPENSE: Interest expense increased by 10% for the year to date 2024 compared to 2023 primarily due to an increase in interest rates, as well as an increase in average debt levels to fund acquisitions and capital expenditures. The increase in interest expense is partially offset in part by interest rate swaps.
INCOME TAXES: For the nine months ended September 30, 2024 and 2023, the effective income tax rate was 21.8% and 23.4%, respectively. The effective tax rate for the nine months ended September 30, 2024 includes net discrete tax costs of 1.2%, primarily related to share-based awards, provision to return adjustment, offset partially by the reversal of prior year uncertain tax positions. The effective tax rate for the nine months ended September 30, 2023 includes net discrete tax benefits of (1.5%), primarily related to share-based awards and the reversal of prior year uncertain tax positions.
NET INCOME AND ADJUSTED NET INCOME: Net income decreased during year to date 2024 compared to 2023, primarily relating to lower sales volume, including a decrease in organic revenue, as well as an increase in business development costs, relating to the restructuring costs incurred, offset partially by reductions in other operating expenses. Adjusted net income for the nine month periods ended September 30, 2024 and 2023 was $19,471 and $28,386, respectively. Adjusted diluted earnings per share for year to date 2024 and 2023 were $1.17 and $1.75, 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.
EBITDA AND ADJUSTED EBITDA: EBITDA was $42,438 for year to date 2024 compared to $54,042 for year to date 2023. Adjusted EBITDA was $48,404 and $60,255 for year to date 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. Adjusted EBITDA also excludes stock-based compensation expense, foreign currency gain/loss and certain other items. 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.
Non-GAAP Measures
Organic revenue, 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. Management believes the presentation of these financial measures reflecting non-GAAP adjustments provides important supplemental information to investors and other users of our financial statements in evaluating the operating results of the Company as distinct from results that include items that are not indicative of ongoing operating results. In particular, those charges and credits that are not directly related to operating unit performance, and that are not a helpful measure of the performance of our underlying business particularly in light of their unpredictable nature. These non-GAAP disclosures have limitations as analytical tools, should not be viewed as a substitute for revenue and net income determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. In addition, the supplemental presentation should not be construed as an inference that the Company’s future results will be unaffected by similar adjustments to net income determined in accordance with GAAP. Organic revenue is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions.
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The Company believes that revenue excluding foreign currency exchange impacts is a useful measure in analyzing sales results. The Company excludes the effect of currency translation from revenue for this measure because currency translation is not fully under management’s control, is subject to volatility and can obscure underlying business trends. The portion of revenue attributable to currency translation is calculated as the difference between the current period revenue and the current period revenue after applying foreign exchange rates from the prior period.
The Company believes EBITDA is often a useful measure of a Company’s operating performance and is a significant basis used by the Company’s management to measure the operating performance of the Company’s business because EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our debt financings, acquisitions, as well as our provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company’s industry.
The Company also believes that Adjusted EBITDA provides helpful information about the operating performance of its business. Adjusted EBITDA excludes stock-based compensation expense, as well as business development costs, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company’s core operating performance. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP.
Management uses Adjusted net income and Adjusted diluted earnings per share to assess the Company’s consolidated financial and operating performance. Adjusted net income and Adjusted diluted earnings per share are provided for informational purposes only and are not a measure of financial performance under GAAP. These measures help management make decisions that are expected to facilitate meeting current financial goals as well as achieving optimal financial performance. Adjusted net income provides management with a measure of financial performance of the Company based on operational factors as it removes the impact of certain non-routine items from the Company’s operating results. Adjusted diluted earnings per share provides management with an indication of how Adjusted net income would be reflected on a per share basis for comparison to the GAAP diluted earnings per share measure. Adjusted net income is a key metric used by senior management and the Company’s board of directors to review the consolidated financial performance of the business. This measure adjusts net income determined in accordance with GAAP to reflect changes in financial results associated with the highlighted expense and income items.
The Company’s calculation of organic revenue for the three and nine months ended September 30, 2024 is as follows:
| Three months ended | Nine months ended | ||||
| September 30, 2024 |
| September 30, 2024 | |||
Revenue change over prior year | (13.8) | % | (6.8) | % | ||
Less: Impact of acquisitions and foreign currency | 7.7 | 7.1 | ||||
Organic revenue | (21.5) | % | (13.9) | % | ||
The Company’s calculation of EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):
| Three months ended |
| Nine months ended | |||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net income as reported | $ | 2,101 | $ | 6,666 | $ | 10,153 | $ | 19,750 | ||||
Interest expense |
| 3,435 |
| 3,164 |
| 10,207 |
| 9,309 | ||||
Provision for income tax |
| 612 |
| 1,992 |
| 2,830 |
| 6,027 | ||||
Depreciation and amortization |
| 6,447 |
| 6,421 |
| 19,248 |
| 18,956 | ||||
EBITDA |
| 12,595 |
| 18,243 |
| 42,438 |
| 54,042 | ||||
Stock-based compensation expense |
| 1,098 |
| 1,354 |
| 3,382 |
| 4,165 | ||||
Acquisition and integration-related costs (1) | (201) | 389 | 256 | 686 | ||||||||
Restructuring and business realignment costs |
| 479 |
| 805 |
| 1,948 |
| 1,105 | ||||
Foreign currency loss | 461 | 58 | 380 | 257 | ||||||||
Adjusted EBITDA | $ | 14,432 | $ | 20,849 | $ | 48,404 | $ | 60,255 | ||||
| (1) | Includes a Q3 2024 fair value measurement reduction of $270 due to acquisition-related contingent consideration. |
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The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands except per share amounts):
| For the three months ended | |||||||||||
September 30, | ||||||||||||
|
| Per diluted |
|
| Per diluted | |||||||
2024 | share | 2023 | share | |||||||||
Net income as reported | $ | 2,101 | $ | 0.13 | $ | 6,666 | $ | 0.41 | ||||
Non-GAAP adjustments, net of tax (1) |
|
|
|
|
|
|
|
| ||||
Amortization of intangible assets – net |
| 2,401 | 0.14 |
| 2,355 |
| 0.15 | |||||
Foreign currency loss – net |
| 353 |
| 0.02 |
| 44 |
| — | ||||
Acquisition and integration-related costs – net (2) | (154) | (0.01) | 298 | 0.02 | ||||||||
Restructuring and business realignment costs – net |
| 367 |
| 0.02 |
| 617 |
| 0.04 | ||||
Non-GAAP adjusted net income and adjusted diluted earnings per share | $ | 5,068 | $ | 0.31 | $ | 9,980 | $ | 0.61 | ||||
| (1) | Applies a blended federal, state, and foreign tax rate of approximately 23% applicable to the non-GAAP adjustments. |
| (2) | Includes a Q3 2024 fair value measurement reduction of $270 due to acquisition-related contingent consideration. |
| For the nine months ended | |||||||||||
September 30, | ||||||||||||
|
| Per diluted |
|
| Per diluted | |||||||
2024 | share | 2023 | share | |||||||||
Net income as reported | $ | 10,153 | $ | 0.61 | $ | 19,750 | $ | 1.22 | ||||
Non-GAAP adjustments, net of tax (1) |
|
|
|
|
|
|
|
| ||||
Amortization of intangible assets – net |
| 7,339 | 0.44 |
| 7,067 |
| 0.44 | |||||
Foreign currency loss – net |
| 291 |
| 0.02 |
| 197 |
| 0.01 | ||||
Acquisition and integration-related costs – net | 196 | 0.01 | 525 | 0.03 | ||||||||
Restructuring and business realignment costs – net |
| 1,492 |
| 0.09 |
| 847 |
| 0.05 | ||||
Non-GAAP adjusted net income and adjusted diluted earnings per share | $ | 19,471 | $ | 1.17 | $ | 28,386 | $ | 1.75 | ||||
(1) | Applies a blended federal, state, and foreign tax rate of approximately 23% applicable to the non-GAAP adjustments. |
Liquidity and Capital Resources
The Company’s liquidity position as measured by cash and cash equivalents increased by $5,217 to a balance of $37,118 at September 30, 2024 from December 31, 2023.
| 2024 vs. |
| ||||||||
Nine Months Ended | 2023 | |||||||||
September 30, | Variance | |||||||||
(in thousands): |
| 2024 |
| 2023 |
| $ |
| |||
Net cash provided by operating activities | $ | 29,458 | $ | 27,132 | $ | 2,326 | ||||
Net cash used in investing activities | (32,134) |
| (18,854) |
| (13,280) | |||||
Net cash provided by (used in) financing activities | 7,685 |
| (14,500) |
| 22,185 | |||||
Effect of foreign exchange rates on cash | 208 |
| (556) |
| 764 | |||||
Net increase (decrease) in cash and cash equivalents | $ | 5,217 | $ | (6,778) | $ | 11,995 | ||||
Of the $37,118 of cash and cash equivalents at September 30, 2024, $27,224 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated back to the U.S.
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During the nine months ended September 30, 2024, the increase in cash provided by operating activities is due to improved cash inflows on collections on accounts receivable, and cash used/provided by inventory, offset by increase in cash used in accounts payable and accrued liabilities, as well as lower net income.
The increase in cash used in investing activities in the nine months ended September 30, 2024 relates to $20 million in cash paid for the acquisition of SNC. For the year to date 2024 and 2023, $6,250 of cash was paid relating to the 2022 Spectrum acquisition. Cash used in investing activities in the nine months ended September 30, 2024 includes $6,903 for purchases of property and equipment compared to $7,850 during the nine months ended September 30, 2023. Capital expenditures are expected to be between $8,000 and $11,000 for the full year 2024.
The increase in cash provided by financing activities during the nine months ended September 30, 2024 is primarily due to borrowings of $20,000 to fund the SNC acquisition. Debt payments of $9,500 were made during the nine months ended September 30, 2023. The $50,000 Notes issued in March 2024 were used to pay down the Revolving Facility. As of September 30, 2024, we had $175,962 of obligations under the Revolving Facility, excluding deferred financing costs.
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. 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 to by 0.5:1.0 following a material acquisition under the 2024 Credit and Note Payable Agreements. 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. 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, were modified as of October 22, 2024, and are subject to certain exceptions. The Company was in compliance with all covenants as of September 30, 2024.
As of September 30, 2024, the unused Revolving Facility was $104,038. The amount available to borrow may be limited by our debt and EBITDA levels, which impacts our covenant calculations. The Revolving Facility matures March 1, 2029. The Series A Senior Notes, under the 2024 Note Payable Agreement, are due March 21, 2031.
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”). These amendments include provisions to increase the maximum Leverage Ratio to 4.5:1.0 for the quarters ending March 31, 2025 and June 30, 2025, 4.0:1.0 for the quarter ending September 30, 2025, and returning to 3.75:1.0 for the quarter ending December 31, 2025 and thereafter. From January 1, 2025 through September 30, 2025, borrowings under the Revolving Facility will bear interest at Term SOFR plus a margin of 2.50% and a commitment fee of 0.325% on the unused portion of the Revolving Facility. Also, from October 1, 2024 through September 30, 2025, the Series A Notes will bear interest at 6.46%.
The Company declared dividends of $0.09 per share during the nine months ended September 30, 2024 and $0.085 per share during the nine months ended September 30, 2023. The Company’s working capital, capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the Amended Credit Agreement.
We believe our diverse markets, our strong market position in many of our businesses, and the steps we have taken to strengthen our balance sheet, such as retaining cash to support shorter term needs and amending our revolving credit facility leaves us well-positioned to manage our business. We continually assess our liquidity and cash positions taking geopolitical and other market uncertainties into consideration. Based on our analysis, we believe our existing balances of cash, our currently anticipated operating cash flows, and our available financing under agreements in place will be more than sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months.
Item 3. 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
29
dollar, respectively. 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 $4,213 on our sales for the nine months ended September 30, 2024. 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 during the three months ended September 30, 2024 increased revenues in comparison to the three months ended September 30, 2023 by $641. For the nine months ended September 30, 2024, we estimate that foreign currency exchange rate fluctuations increased revenue by $155 in 2024 compared to 2023.
We translate all assets and liabilities of our foreign operations, where the U.S. dollar is not the functional currency, at the period-end exchange rate and translate sales and expenses at the average exchange rates in effect during the period. The net effect of these translation adjustments is recorded in the condensed consolidated financial statements as comprehensive income. The translation adjustments were a gain of $5,805 and a loss of $2,923 for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the translation adjustments were a gain of $235 and a loss of $1,995, respectively. Translation adjustments are not adjusted for income taxes as they relate to permanent investments in our foreign subsidiaries. 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 $17,152 on our foreign net assets as of September 30, 2024.
We have contracts to hedge our short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other 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 $24,438 at September 30, 2024. The foreign currency contracts are recorded in the condensed consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive income. During the three and nine months ended September 30, 2024, we recorded losses of $461 and $380 on foreign currency contracts which are included in other expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense, net. Net foreign currency transaction gains and losses included in other expense, net amounted to losses of $1,388 and a loss of $257 for the nine months ended September 30, 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. 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. 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 September 30, 2024), depending on the Company’s ratio of total funded indebtedness to consolidated EBITDA. 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. We primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 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 matures 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. 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 September 30, 2024, we had $175,962 outstanding under the Revolving Facility (excluding deferred financing fees), of which $150,000 is currently being hedged. Refer to Note 10, Debt Obligations, of the notes to consolidated financial statements for additional information about our outstanding debt. A hypothetical one percentage point (100 basis points) change in the Base Rate on the $25,962 of unhedged floating rate debt outstanding at September 30, 2024 would have approximately a $200 impact on our interest expense for the nine months ended September 30, 2024.
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Item 4. Controls and Procedures
Conclusion regarding the effectiveness of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2024. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on management’s evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in internal control over financial reporting
During the quarter ended September 30, 2024, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in the Company’s Form 10-K for the year ended December 31, 2023, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors. For a full discussion of these risk factors, please refer to “Item 1A. Risk Factors” in the 2023 Annual Report and 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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 | |||||
07/01/24 to 07/31/24 |
| — | $ | — |
| — |
| — | |
08/01/24 to 08/31/24 |
| — |
| — |
| — |
| — | |
09/01/24 to 09/30/24 |
| 1,102 |
| 21.24 |
| — |
| — | |
Total |
| 1,102 | $ | 21.24 |
| — |
| — | |
| (1) | As permitted under the Company’s equity compensation plan, these shares were withheld by the Company to satisfy tax withholding obligations in connection with the vesting of stock. 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 September 30, 2024, the Company did not have an authorized stock repurchase plan in place. |
.
Item 5. Other Information
None of the Company’s directors or executive officers
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Item 6. Exhibits
(a) | Exhibits | ||
10.1 | |||
10.2 | |||
10.3 | |||
10.4 | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101.1 SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith). | ||
101.2 CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith). | ||
101.3 DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith). | ||
101.4 LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith). | ||
101.5 PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith). | ||
104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in exhibits 101.) (filed herewith). | ||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATE: | November 6, 2024 | ALLIENT INC. | |
|
| By: | /s/ James A. Michaud |
|
| James A. Michaud | |
|
| Senior Vice President & Chief Financial Officer | |
34