ALLIENT INC

Previous wording

Beginning in 2024, and continuing into 2025, the Company commenced 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. These initiatives are expected to position Allient to emerge from the current challenging macroeconomic environment and industrial headwinds with stronger earnings power, improved operational flexibility, and enhanced capacity to capitalize on future growth opportunities.

Current wording

Beginning in 2024, and continuing into 2025, the Company has been executing its 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. These initiatives are expected to position Allient to emerge from the current challenging macroeconomic environment and industrial headwinds with stronger earnings power, improved operational flexibility, and enhanced capacity to capitalize on future growth opportunities.

Previous wording

The U.S. government has proposed and implemented certain updates to existing trade policies with Mexico, China, and other countries. These updates include new and increased tariffs, or potential tariffs, on a wide range of products and goods imported to the U.S., and certain countries have responded with reciprocal tariffs and/or trade restrictions. We have manufacturing operations in Mexico, China, and Europe, amongst other locations globally throughout the world, and source certain components from locations that may be impacted by these policy changes. Official government policies and agreements continue to be closely monitored for potential impacts to our business.

Current wording

The U.S. government has proposed and implemented certain updates to existing foreign trade policies. These updates include new and increased tariffs, or potential tariffs, on a wide range of products and goods imported to the U.S., and certain countries have responded with reciprocal tariffs and/or trade restrictions. We have manufacturing operations in Mexico, China, and Europe, amongst other locations globally throughout the world, and source certain components from locations that may be impacted by these policy changes. Official government policies and agreements continue to be closely monitored and our operations remain agile in making adjustments to minimize potential impacts to our business.

Previous wording

The current geopolitical conflicts are creating higher levels of economic uncertainty and increased volatility with respect to energy prices, interest rates, our supply chain (in particular, with respect to changes and proposed changes to tariffs and trade policies), and certain customer ordering patterns. We are closely monitoring the developments and continue to adjust our production platform to react to changing customer ordering patterns and realize efficiencies. The impact of the conflicts on our operational and financial performance will depend on future developments that cannot be predicted.

Current wording

The current geopolitical conflicts are creating higher levels of economic uncertainty and increased volatility with respect to energy prices, interest rates, our supply chain (in particular, with respect to changes and proposed changes to tariffs and trade policies), and certain customer ordering patterns. We are closely monitoring the developments and continue to adjust our production platform to react to changing customer ordering patterns and availability of certain raw materials with a focus on realizing efficiencies. The impact of the conflicts on our operational and financial performance will depend on future developments that cannot be predicted.

Previous wording

ORDER BOOKINGS AND BACKLOG: Bookings increased in the first quarter 2025 compared to 2024, due to a 14.1% increase in volume, slightly offset by a 1.2% decrease in foreign currency impact. The increase in bookings from the prior year quarter is reflective of a return to more normalized customer order patterns.

Current wording

ORDER BOOKINGS AND BACKLOG: Bookings decreased in the second quarter 2025 compared to 2024, due to a 3.3% decrease in volume, slightly offset by a 1.6% increase in foreign currency impact. The decrease in bookings from the prior year quarter is primarily reflective of timing of customers ordering patterns in the prior year periods.

Previous wording

GROSS PROFIT AND GROSS MARGIN: Gross profit decreased to $42,752 in the first quarter of 2025 from $47,377 in the first quarter of 2024, and gross margins decreased slightly to 32.2% for 2025, compared to 32.3% for 2024. Gross profit and gross margin percentage were impacted unfavorably by lower sales volume, offset partially by improved product mix.

Current wording

GROSS PROFIT AND GROSS MARGIN: Gross profit increased to $46,356 in the second quarter of 2025 from $40,676 in the second quarter of 2024, and gross margins increased to 33.2% for 2025, compared to 29.9% for 2024. Gross profit and gross margin percentage were impacted favorably by slightly higher sales volume, improved product mix, and operational improvements driven by our Simplify to Accelerate NOW strategy.

Previous wording

SELLING EXPENSES: Selling expenses decreased 5% during the first quarter of 2025 compared to 2024, reflecting cost reduction actions taken as part of our Simplify to Accelerate NOW strategy and lower commissions driven by lower sales volumes. Selling expenses as a percentage of revenues were 5% and 4% in the three months ended March 31, 2025 and 2024, respectively.

Current wording

SELLING EXPENSES: Selling expenses decreased 10% during the second quarter of 2025 compared to 2024, reflecting cost reduction actions taken as part of our Simplify to Accelerate NOW strategy. Selling expenses as a percentage of revenues were 4% and 5% in the three months ended June 30, 2025 and 2024, respectively.

Previous wording

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreased 4% during the first quarter 2025 compared to 2024 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 10% in each of the three months ended March 31, 2025 and 2024.

Current wording

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses increased 2% during the second quarter 2025 compared to 2024 due primarily to higher incentive compensation, offset in part by 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 the three months ended June 30, 2025 and 2024.

Previous wording

ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 14% in the first quarter of 2025 compared to 2024. 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% and 8% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 3% in the second quarter of 2025 compared to 2024. 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% and 8% for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

ACQUISITION AND INTEGRATION-RELATED COSTS: Acquisition and integration-related costs decreased in the first quarter of 2025 compared to 2024 primarily reflecting costs incurred in 2024 relating to a prior year acquisition.

Current wording

ACQUISITION AND INTEGRATION-RELATED COSTS: Acquisition and integration-related costs decreased in the second quarter of 2025 compared to 2024 primarily reflecting costs incurred in 2024 relating to a prior year acquisition.

Previous wording

INTEREST EXPENSE: Interest expense increased in the first quarter of 2025 compared to 2024 due to higher interest rates compared to the prior year period, partially offset by lower average debt balances. The increase in interest expense is partially offset by reductions to interest expense realized through our interest rate swaps.

Current wording

INTEREST EXPENSE: Interest expense increased in the second quarter of 2025 compared to 2024 due to higher average effective interest rates due to maturity of certain interest rate swaps, partially offset by lower average debt balances. The increase in interest expense is partially offset by reductions to interest expense realized through our interest rate swaps.

Previous wording

INCOME TAXES: The effective income tax rate was 20.2% and 21.8% for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for the three months ended March 31, 2025 and 2024 includes net discrete tax benefits of (3.0)% and (2.3)%, respectively, primarily related to the reversal of foreign uncertain tax positions. The Company expects its income tax rate for the full year 2025 to be approximately 21% to 23%.

Current wording

INCOME TAXES: The effective income tax rate was 23.1% and 20.6% for the three months ended June 30, 2025 and 2024, respectively. The change in rates compared to the prior year is primarily due to the impact of discrete tax costs on share based awards. We expect our income tax rate for the full year 2025 to be approximately 21% to 23%.

Previous wording

NET INCOME AND ADJUSTED NET INCOME: Net income decreased during the first quarter of 2025 compared to 2024, primarily relating to lower sales volume, including adecrease 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 March 31, 2025 and 2024 was $7,593 and $9,546, respectively. Adjusted diluted earnings per share for the first quarter of 2025 and 2024 were $0.46 and $0.58, 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.

Current wording

NET INCOME AND ADJUSTED NET INCOME: Net income increased during the second quarter of 2025 compared to 2024, primarily relating to slightly higher sales volume, including anincrease in organic revenue, and a decrease in cost of goods sold, as well as a decrease in operating expenses, reflecting the actions in our Simplify to Accelerate NOW strategy. Adjusted net income for the quarters ended June 30, 2025 and 2024 was $9,525 and $4,857, respectively. Adjusted diluted earnings per share for the second quarter of 2025 and 2024 were $0.57 and $0.29, 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.

Previous wording

EBITDA AND ADJUSTED EBITDA: EBITDA was $14,376 for the first quarter of 2025 compared to $18,594 for the first quarter of 2024. Adjusted EBITDA was $17,472 and $20,042 for the first quarters of 2025 and 2024, 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.

Current wording

EBITDA AND ADJUSTED EBITDA: EBITDA was $17,255 for the second quarter of 2025 compared to $11,249 for the second quarter of 2024. Adjusted EBITDA was $20,067 and $13,931 for the second quarters of 2025 and 2024, 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.

Previous wording

REVENUES: The decrease in revenues during the first quarter 2025 reflects decreases in several target markets, most significantly within Vehicle and Industrial markets, partially offset by increases in Aerospace and Defense. 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. Our revenue for the first quarter of 2025 was comprised of 52% to U.S. customers and 47% to customers primarily in Europe, Canada, and Asia-Pacific. The overall decrease in revenue was primarily due to a 8.2% volume decrease and a foreign currency decrease of 1.2%. Organic revenue decreased 9.1% during the first quarter 2025.

Current wording

REVENUES: The decrease in revenues for the year to date 2025 reflects decreases primarily within Vehicle and Industrial markets. Decreases in revenues compared to the prior year period are largely impacted by elevated shipments during the first three months of the prior year period as supply chains normalized, combined with elevated inventory levels and slowing demand at our customers in the first three months of the current period, offset partially by year-over-year growth in certain markets during the second quarter of 2025 compared to the prior year period. Our revenues for the period ended June 30, 2025 was comprised of 54% to U.S. customers and 46% to customers primarily in Europe, Canada and Asia-Pacific. The overall decrease in revenue was due to a 3.9% volume decrease partially offset by a 0.2% favorable currency impact. Organic revenue decreased 4.3% during the year to date 2025.

Previous wording

RESTRUCTURING AND BUSINESS REALIGNMENT COSTS: Restructuring and business realignment costs increased in the first quarter of 2025 compared to 2024 primarily reflecting restructuring-related costs primarily associated with the transfer of assembly operations from our Dothan, Alabama facility.

Current wording

RESTRUCTURING AND BUSINESS REALIGNMENT COSTS: Restructuring and business realignment costs increased in 2025 compared to 2024 primarily reflecting restructuring-related costs primarily associated with the transfer of assembly operations from our Dothan, Alabama facility.

Previous wording

The Company’s calculation of Revenue excluding foreign currency exchange impacts for the three months ended March 31, 2025 is as follows:

Current wording

The Company’s calculation of Revenue excluding foreign currency exchange impacts for the three and six months ended June 30, 2025 is as follows:

Previous wording

The Company’s calculation of organic revenue for the three months ended March 31, 2025 is as follows:

Current wording

The Company’s calculation of organic revenue for the three and six months ended June 30, 2025 is as follows:

Previous wording

The Company’s calculation of EBITDA and Adjusted EBITDA for the three months ended March 31, 2025 and 2024 is as follows (in thousands):

Current wording

The Company’s calculation of EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands):

Previous wording

The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three months ended March 31, 2025 and 2024 is as follows (in thousands except per share amounts):

Current wording

The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands except per share amounts):

Previous wording

The Company’s liquidity position as measured by cash and cash equivalents increased by $11,651 to a balance of $47,753 at March 31, 2025 from December 31, 2024.

Current wording

The Company’s liquidity position as measured by cash and cash equivalents increased by $13,813 to a balance of $49,915 at June 30, 2025 from December 31, 2024.

Previous wording

Of the $47,753 of cash and cash equivalents at March 31, 2025, $38,087 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated back to the U.S.

Current wording

Of the $49,915 of cash and cash equivalents at June 30, 2025, $38,609 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated back to the U.S. The Company regularly evaluates opportunities to optimize cash available from operations in all geographies.

Previous wording

During the three months ended March 31, 2025, the increase in cash provided by operating activities is due to improved cash used/provided by inventory and decrease in cash used in accounts payable and accrued liabilities, offset by decrease in cash inflows on collections on accounts receivable and lower net income.

Current wording

During the six months ended June 30, 2025, the increase in cash provided by operating activities is due to improved cash used/provided by inventory, decrease in cash used in accounts payable and accrued liabilities, and higher net income, offset by decrease in cash inflows on collections on accounts receivable.

Previous wording

The decrease in cash used in investing activities in the three months ended March 31, 2025 relates to $20,000 in cash paid for the acquisition of SNC, as well as $6,250 of cash paid relating to the 2022 Spectrum acquisition in the first quarter of 2024. Cash used in investing activities in the three months ended March 31, 2025 includes $1,060 for purchases of property and equipment compared to $2,973 during the three months ended March 31, 2024. Capital expenditures are expected to be between $10,000 and $12,000 for the full year 2025.

Current wording

The decrease in cash used in investing activities in the six months ended June 30, 2025 relates to $20,000 in cash paid for the acquisition of SNC, as well as $6,250 of cash paid relating to the 2022 Spectrum acquisition in the first quarter of 2024. Cash used in investing activities in the six months ended June 30, 2025 includes $3,189 for purchases of property and equipment compared to

Previous wording

The decrease in cash used/provided by financing activities during the three months ended March 31, 2025 is primarily due toborrowings of $20,000 to fund the SNC acquisition during the first quarter of 2024. Debt payments of $2,110 were made during the three months ended March 31, 2025. The $50,000 Notes issued in March 2024 were used to pay down the Revolving Facility. As of March 31, 2025, we had $166,962 of obligations under the Revolving Facility, excluding deferred financing costs.

Current wording

The decrease in cash used/provided by financing activities during the six months ended June 30, 2025 is primarily due toborrowings of $20,000 to fund the SNC acquisition during the first quarter of 2024. Debt payments of $22,221 were made during the six months ended June 30, 2025. The $50,000 Notes issued in March 2024 were used to pay down the Revolving Facility. As of June 30, 2025, we had $146,962 of obligations under the Revolving Facility, excluding deferred financing costs.

Previous wording

As of March 31, 2025, the unused Revolving Facility was $113,038. 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.

Current wording

As of June 30, 2025, the unused Revolving Facility was $133,038. 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.

Previous wording

The Company declared dividends of $0.03 per share during each of the three months ended March 31, 2025 and 2024. 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.

Current wording

The Company declared dividends of $0.06 per share during each of the six months ended June 30, 2025 and 2024. 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.