Nasdaq: ALNT
March 6, 2024
Fourth Quarter & Full Year 2023 Financial Results Call
Dick Warzala | Mike Leach |
Chairman, President & CEO | Senior Vice President & CFO |
© Allient Inc.
SAFE HARBOR STATEMENT
The statements in these slides that relate to future plans, events or performance are "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. Examples of forward-looking statements include, among others, statements the Company makes regarding expected operating results, anticipated levels of capital expenditures, the Company's belief that it has sufficient liquidity to fund its business operations, and expectations with respect to the conversion of backlog to sales. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of the Company's business, future plans and strategies, projections, anticipated events and trends, the
economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and many of which are outside of the Company's control. The Company's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the impact of changes in income tax rates or policies, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses' and governments' responses to the pandemic 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 the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. 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.
This presentation will discuss some non-GAAP financial measures, which the Company believes are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. The Company has provided reconciliations of comparable GAAP to non-GAAP measures in tables found in the Supplemental Information portion of this presentation.
| | © Allient Inc. | 2 |
2023 HIGHLIGHTS
Compared with prior-year unless otherwise noted
Revenue | Gross Margin |
$578.6M +15% | 31.7% +40 bps |
Organic Growth¹ | Operating Margin |
+13% | 7.3% +100 bps |
Record Operating | Diluted EPS |
Cash Generation | |
GAAP - $1.48 | |
$45.0M | |
Adjusted² - $2.30 | |
|
Strong execution driving organic and inorganic growth
Acquired Sierramotion in Sept. '23 and after year-end
SNC Manufacturing in Jan. '24
Delivered strong free cash flow
Reduced debt balance $17.1 million
(1)On a constant currency basis; See supplemental slides for the reconciliation of organic growth.
(2)See supplemental slides for Adjusted Diluted EPS reconciliation and other important disclaimers.
© Allient Inc. | 3 |
ADVANCING GROWTH STRATEGY
Sierramotion Inc.
Advances integrated motion solutions strategy
(specialize with rotary, linear and arc shaped applications)
- Acquired September 2023
- Founded in 2019 and headquartered in Loomis, CA
- Improves speed-of-play: excel at providing rapid product development, prototyping and low volume production
- We have collaborated and partnered in the past to develop industry leading solutions for the motion market
- Solutions for robotic, medical, industrial, defense, semiconductor and other precision applications
- Potential to provide larger scale production capabilities for Sierramotion customers
SNC Manufacturing Co., Inc
Expands capabilities and capacity in Allient's
Allied Power Technology Pillar
- Acquired January 2024
- Founded in 1946 and headquartered in Oshkosh, WI with other manufacturing facilities in Mexico and China
- Broadens reach into industrial automation, defense, medical and in the energy and alternative energy markets
- Gain much-needed manufacturing capacity and expertise to further grow our power quality business
- Opportunities to leverage sales channels
- Adds ~$40 million of annual revenue
| | © Allient Inc. | 4 |
REVENUE
($ in millions; narrative compared with prior-year period unless otherwise noted)
Quarters | Q4 23 up $9.9 million or 8%; | ||||||
$145.5 | $145.3 | $141.0 | |||||
$146.8 | organic growth of 6%¹ | ||||||
$131.1 | Q4 market growth: | ||||||
+ 23% | Industrial | ||||||
+ 17% | Vehicle | ||||||
- 19% | A&D | ||||||
Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q4 23 | - 16% | Medical | |
Years | 2023 up $75.6 million or 15%; | ||||||
$578.6 | organic growth of 13%¹ | ||||||
$503.0 | Sales to U.S. customers at | ||||||
$403.5 | |||||||
59% for 2023 versus 58% | |||||||
(1)On a constant currency basis; See supplemental | |||||||
2021 | 2022 | 2023 | slides for the reconciliation of revenue excluding | ||||
foreign currency exchange rate fluctuations and other | |||||||
important disclaimers. | |||||||
| | © Allient Inc. | 5 |
DIVERSIFIED REVENUE MIX
Revenue by Market
4% | Distribution | 4% |
14% | A&D | 14% |
17% | Medical | 15% |
23% | ||
26% | ||
Vehicle | ||
38% Industrial 44%
TTM Revenue Change and Market Drivers
+11% Defense program timing and commercial aircraft demand
More normalized sales environment focused on surgical and -1% instrumentation related end markets, offset by lower medical
mobility demand
+2% | Commercial automotive and powersports demand partially offset |
by weaker agricultural demand | |
+33% | Strong end market demand within industrial automation, |
Oil & Gas, HVAC and material & vehicle handling | |
2022 | 2023 | |
Rev: $503.0 million | Rev: $578.6 million | |
NOTE: Components may not add up to totals due to rounding | ||
| | © Allient Inc. | 6 |
GROSS PROFIT AND MARGIN
($ in millions; narrative compared with prior-year period unless otherwise noted)
Quarters
$45.8 | $46.0 | $47.5 | ||
$44.4 | ||||
$40.7 | ||||
31.1% | 31.5% | 31.3% | 32.7% | 31.5% |
Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q4 23 |
Years
$183.7
$157.3
$121.1
30.0% | 31.3% | 31.7% |
2021 | 2022 | 2023 |
|
Q4 23 up $3.6 million or 9%;
40 bps margin expansion
2023 up $26.4 million or 17%;
40 bps margin expansion
Gross margin impacts
- Volume
- Favorable Mix
- Lean tool kit (AST)
- Elevated raw material costs
- Remaining supply chain disruptions
© Allient Inc. | 7 |
OPERATING INCOME AND MARGIN
($ in millions; narrative compared with prior-year period unless otherwise noted)
Quarters
$11.4 $12.0 $11.9
$8.2 | $7.0 |
6.2% | 7.8% | 8.2% | 8.2% | 5.0% |
Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q4 23 |
Years
Q4 23 reflects higher business development costs due to M&A activity, rationalization efforts and an earnout for a prior acquisition
2023 up $10.7 million or 34%; margin expanded 100 bps
$26.0
$42.3
$31.7
General & administrative 10.1%
of 2023 sales
Engineering & development 7.2%
of 2023 sales
6.2% | 6.3% | 7.3% |
2021 | 2022 | 2023 |
|
© Allient Inc. | 8 |
NET INCOME AND ADJUSTED EBITDA
($ in millions, except per share data)
GAAP Net Income & EPS | Adjusted Net Income & | |||||||||||||||||||||
Adjusted EPS¹ | ||||||||||||||||||||||
$6.3 | $6.8 | $6.7 | $8.9 | $9.5 | $10.0 | $9.1 | ||||||||||||||||
$6.9 | ||||||||||||||||||||||
$3.7 | $4.3 | |||||||||||||||||||||
$0.23 | $0.39 | $0.42 | $0.41 | $0.26 | $0.43 | $0.55 | $0.58 | $0.61 | $0.55 | |||||||||||||
Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q4 23 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q4 23 |
Adjusted EBITDA¹ and Margin
$65.5 | $77.2 | |||||||
$19.0 | $20.4 | $20.8 | ||||||
$16.6 | $16.9 | $50.1 | ||||||
1224.7%..20% 1311.1%.5% | 1311.9%.2% | 14.3% | 12.0% | 12.4% | 13.0% | 13.3% | ||
Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q4 23 | 2021 | 2022 | 2023 |
|
Q4 23 net income included a tax benefit of $0.4 million due to realization of certain NOLs and R&D credits
Adjusted net income excludes amortization of intangible assets related to acquisitions, business development costs and other non-recurring items
Expect income tax rate for full year 2024 to be ~21% to 23%²
(1)See supplemental slides for Adjusted Net Income and Adjusted EBITDA reconciliations and other important disclaimers
(2)2024 tax rate expectation provided on March 5, 2024
NOTE: Components may not add up to totals due to rounding
© Allient Inc. | 9 |
RECORD ANNUAL CASH FLOW
($ in millions)
Three Months Ended | Full year | ||||||
12/31/23 | 12/31/22 | 12/31/23 | |||||
Net cash provided by operating | $ | 17.9 | $ | 11.4 | $ | 45.0 | |
activities | |||||||
Capital expenditures (CapEx) | (3.8) | (4.9) | (11.6) | ||||
Operating free cash flow (FCF)(1) | $ | 14.1 | $ | 6.5 | $ | 33.4 | |
FY24 CapEx Expectation: $16 million - $20 million(2)
- Free cash flow is a non-GAAP metric defined as cash flow from operations, less capital expenditures
- 2024 CapEx expectation provided on March 5, 2024 NOTE: Components may not add up to totals due to rounding
|
Inventory Turnover
3.0x 2.9x 3.0x
2021 2022 2023
Days Sales Outstanding
54 56
45
2021 2022 2023
© Allient Inc. | 10 |
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Allient Inc. published this content on 05 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 22:36:03 UTC.