927
美国
证券交易委员会
华盛顿特区20549
表格
截至季度结束日期的财务报告
或者
在从______________________到_______________________的过渡期间
佣金文件号
（注册者的确切名称，如它的章程所规定的）
| ||
（设立或组织的其他管辖区域） | （纳税人识别号码） | |
|
|
(
（包括区号）
在法案第12(b)条的规定下注册的证券：
每一类的名称 |
| 交易代码 |
| 在其上注册的交易所的名称 |
请用复选标记指示以下内容：（1）在过去的12个月内（或注册人被要求提交此类报告的较短期间内）根据1934年证券交易所法第13或15（d）条的规定提交了所有必须提交的报告，并且（2）过去90天一直受到此类申报要求的约束。
请用复选标记指示是否在过去12个月的每个周期（或要求注册人提交这些文件的较短时间段）内以电子方式提交了根据Regulation S-t（本章节第232.405节的规定）要提交的每个交互式数据文件。
请通过勾选标记指出是否注册人是大型加速报告的申报人，加速申报的申报人，非加速申报的申报人，较小的报告公司或新兴成长公司。请参阅证券交易所法案规则120亿.2中“大型加速报告的定义，”加速申报的定义，” 较小的报告公司的定义和“新兴成长公司”的定义。
大型加速文件者◻ | 非加速归档企业◻ | 小型报表公司 | 新兴成长公司 |
如果是新兴成长公司，请打勾表示注册人已选择不使用根据交易所法第13(a)节提供的任何新的或修订后的财务会计准则延长过渡期符合要求。◻
是 否《交易所法》第120亿.2条。是
普通股唯一类别的股份数量：
ALLIENt 公司。
简明合并资产负债表
（以千为单位，除每股数据外）
（未经审计）
2021年9月30日 | 运营租赁负债： | ||||||
| 2024 |
| 2023 |
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资产 | |||||||
流动资产： | |||||||
现金及现金等价物 | $ | | $ | | |||
应收账款，减：信用损失准备$ | | | |||||
存货 |
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预付款项和其他资产 |
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总流动资产 |
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固定资产净额 |
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延迟所得税 |
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无形资产, 净额 |
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商誉 |
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营业租赁资产 | | | |||||
其他长期资产 |
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总资产 | $ | | $ | | |||
负债和股东权益 | |||||||
流动负债: | |||||||
应付账款 | $ | | $ | | |||
应计负债 |
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流动负债合计 |
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长期债务 |
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延迟所得税 |
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养老金和退休后的义务 |
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经营租赁负债 | | | |||||
其他长期负债 | | | |||||
负债合计 |
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股东权益： | |||||||
普通股， |
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优先股，面值$ |
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保留盈余 |
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累计其他综合损失 |
| ( |
| ( | |||
股东权益总额 |
| |
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负债及股东权益合计 | $ | | $ | | |||
请参阅附注事项的简明合并财务报表。
1
ALLIENt 公司。
综合利润和综合收益的简明综合利润表
（以千为单位，除每股数据外）
（未经审计）
| 截至九个月结束时 | ||||||||||||
2021年9月30日 | 2021年9月30日 | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
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收入 | $ | | $ | | $ | | $ | | |||||
营业成本 |
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毛利润 |
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经营成本和费用： | |||||||||||||
销售 |
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一般行政 |
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工程和开发 |
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业务拓展 |
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无形资产摊销 |
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总运营成本和费用 |
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营业利润 |
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其他费用，净额： | |||||||||||||
利息支出 |
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其他费用，净额 |
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其他支出合计，净值 |
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税前收入 |
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所得税费用 |
| ( |
| ( |
| ( |
| ( | |||||
净利润 | $ | | $ | | $ | | $ | | |||||
基本每股收益: | |||||||||||||
每股收益 | $ | | $ | | $ | | $ | | |||||
基本股权平均股份 |
| |
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每股摊薄收益: | |||||||||||||
每股收益 | $ | | $ | | $ | | $ | | |||||
摊薄的普通股加权平均数 |
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净利润 | $ | | $ | | $ | | $ | | |||||
其他全面收益（损失）： | |||||||||||||
外币翻译调整 | | ( | | ( | |||||||||
衍生工具损失，税后净额 | ( | ( | ( | ( | |||||||||
综合收益 | $ | | $ | | $ | | $ | | |||||
请参阅附注事项的简明合并财务报表。
2
ALLIENt 公司。
股东权益的简明合并报表
（以千为单位，除每股数据外）
（未经审计）
普通股 |
| 其他综合收益（亏损）累计额 | |||||||||||||||||
（以千美元为单位，除每股数据外） | 股份 |
| 金额 |
| 未分配利润 |
| 外币翻译调整 |
| 衍生品的累计利润(损失) |
| 养老金调整项 |
| 股东权益总计 | ||||||
2023年12月31日结余 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
员工福利股票计划下的股票交易 | | |
| | |||||||||||||||
发行受限股票净额（扣除弃权） | | ( |
| ( | |||||||||||||||
与收购相关的股份发行 | | | | ||||||||||||||||
发行股份以偿付待决考量 | | | | ||||||||||||||||
股票补偿费用 | |
| | ||||||||||||||||
用于支付员工工资税款的股份被扣留 | ( | ( | ( | ||||||||||||||||
综合损失 | ( | ( | ( | ||||||||||||||||
衍生交易的税收影响 | | | |||||||||||||||||
净利润 |
|
| |
| | ||||||||||||||
分红派息给股东 - $ | ( | ( | |||||||||||||||||
2024年3月31日余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
限制性股票发行，扣除减少部分 | ( |
| — | ||||||||||||||||
股票补偿费用 | |
| | ||||||||||||||||
股份被扣留用于支付员工的工资税款 | ( | ( | ( | ||||||||||||||||
综合损失 | ( | ( | ( | ||||||||||||||||
衍生交易的税收影响 | | | |||||||||||||||||
净利润 | | | |||||||||||||||||
分红派息给股东 - $ | ( |
| ( | ||||||||||||||||
2024年6月30日的余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
员工福利股票计划下的股票交易 |
| — | |||||||||||||||||
发行受限股，扣除被没收部分 |
| — | |||||||||||||||||
与收购相关的股份发行 | — | ||||||||||||||||||
股票补偿费用 | |
| | ||||||||||||||||
股份被扣留用于支付员工的薪资税 | ( | ( | ( | ||||||||||||||||
综合收益（损失） | | ( | | ||||||||||||||||
衍生交易的税收影响 | | | |||||||||||||||||
净利润 | | | |||||||||||||||||
分红派息给股东 - $ |
|
| ( |
| ( | ||||||||||||||
2024年9月30日余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
普通股 |
| 其他综合收益（亏损）累计额 | |||||||||||||||||
（以千美元为单位，除每股数据外） | 股份 |
| 金额 |
| 未分配利润 |
| 外币翻译调整 |
| 衍生工具的累计收益（亏损） |
| 养老金调整项 |
| 股东权益总计 | ||||||
2022年12月31日的余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
雇员福利股票计划下的股票交易 | | |
| | |||||||||||||||
发行限制股股票，扣除被放弃部分的净额 | | ( |
| ( | |||||||||||||||
与收购相关的股份发行 | | | | ||||||||||||||||
股票补偿费用 | |
| | ||||||||||||||||
用于支付员工工资税的股份被扣留 | ( | ( | ( | ||||||||||||||||
综合收益（损失） | | ( | ( | ||||||||||||||||
衍生交易的税收影响 | | | |||||||||||||||||
净利润 |
|
| |
| | ||||||||||||||
向股东支付分红派息 - $ | ( | ( | |||||||||||||||||
2023年3月31日余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
发行限制性股票，扣除抵销后 | | |
| | |||||||||||||||
股票补偿费用 | |
| | ||||||||||||||||
股份被扣留用于支付雇员的工资税 | ( | ( | ( | ||||||||||||||||
综合损益 | ( | | | ||||||||||||||||
衍生交易的税收影响 | ( | ( | |||||||||||||||||
净利润 | | | |||||||||||||||||
股东分红派息 - $ |
|
| ( |
| ( | ||||||||||||||
2023年6月30日的余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
发行的受限股票，扣除被取消的部分 | ( | — |
| — | |||||||||||||||
与收购相关的股份发行 | | | | ||||||||||||||||
股票补偿费用 | |
| | ||||||||||||||||
股份被扣留用于支付员工的工资税款 | ( | ( | ( | ||||||||||||||||
综合损益 | ( | ( | ( | ||||||||||||||||
衍生交易的税收影响 | | | |||||||||||||||||
净利润 | | | |||||||||||||||||
分红派息给股东 - $ |
|
| ( |
| ( | ||||||||||||||
2023年9月30日余额 | | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
3
请参阅附注事项的简明合并财务报表。
ALLIENt 公司。
现金流量表简明综合报表
（以千为单位）
（未经审计）
截至九个月结束时 | |||||||
2021年9月30日 | |||||||
| 2024 |
| 2023 |
| |||
经营活动产生的现金流量： | |||||||
净利润 | $ | | $ | | |||
调整使净利润与经营性现金净额相符 | |||||||
折旧和摊销 |
| |
| | |||
延迟所得税 |
| ( |
| | |||
股票补偿费用 | | | |||||
债务发行成本摊销记录在利息费用中 | | | |||||
其他 |
| |
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运营资产和负债的变动，净额，除收购 | |||||||
交易应收款 |
| |
| ( | |||
存货 |
| |
| ( | |||
预付款项和其他资产 |
| |
| ( | |||
应付账款 |
| ( |
| | |||
应计负债 |
| ( |
| ( | |||
经营活动产生的现金流量净额 |
| |
| | |||
投资活动现金流量: | |||||||
考虑支付的收购对价，扣除现金收购 |
| ( |
| ( | |||
购置固定资产等资产支出 | ( | ( | |||||
投资活动产生的净现金流出 |
| ( |
| ( | |||
筹资活动现金流量: | |||||||
长期债务发行所得 |
| |
| | |||
长期债务和融资租赁债务的本金偿还 | ( | ( | |||||
支付或准备支付的参考负债 | ( | — | |||||
支付债务发行成本 |
| ( |
| — | |||
分红派息给股东的款项 |
| ( |
| ( | |||
与限制股票净份额结算相关的税额代扣 | ( | ( | |||||
筹集资金的净现金流量 |
| |
| ( | |||
9. 关联方余额与交易 |
| |
| ( | |||
现金及现金等价物的净增加（减少） |
| |
| ( | |||
期初现金及现金等价物余额 |
| |
| | |||
期末现金及现金等价物 | $ | | $ | | |||
现金流量补充披露： | |||||||
发行股票用于收购 | $ | | $ | | |||
发行股票以清偿待定对价 | $ | | $ | — | |||
财产、厂房及设备购买应付账款或预提费用 | $ | | $ | | |||
债务发行成本计入应付账款或应计费用 | $ | | $ | | |||
请参阅附注事项的简明合并财务报表。
4
1. 编制和展示依据
Allient公司（下称“Allient”）或（“公司”）专注于设计、制造和销售精密运动、控制、动力和结构复合材料，为全球范围内工业、车辆、医疗和航空航天与国防市场的广泛客户提供综合系统解决方案以及单独产品。
附表中包含了公司及其全资子公司的账目。所有公司间账户和交易均在合并中予以取消。
公司的海外子公司的资产和负债使用期末的汇率转换为美元。由于外国子公司的功能货币与美元之间汇率变化导致的资产和负债金额变化计入外币换算调整。外币换算调整计入附表中股东权益的一部分累计其他全面损失。收入和费用交易使用相关交易月份内盛行的平均汇率。由于外国子公司交易以非各自功能货币计价的货币发生的汇率波动所导致的交易损益计入其他费用中发生的结果。
本压缩综合财务报表已根据美国证券交易委员会（“SEC”）的规定和法规由公司编制，并包括管理层认为必要进行公平呈现的所有调整。 根据这些规定，一般公认会计原则（“U.S. GAAP”）编制的财务报表通常包含的某些信息和脚注披露已经被压缩或省略。公司认为此处披露充分，使所呈现的信息不具有误导性。中期数据的财务数据未必能反映出预期的年度结果。
根据美国通用会计原则编制财务报表需要管理层作出某些估计和假设。 这些估计和假设会影响压缩综合财务报表日期的资产和负债数额以及披露的或隐含的资产负债，以及报告期间收入和费用的数额。 实际结果可能会与这些估计有实质性的差异。
建议阅读伴随的压缩综合财务报表，并结合2023年12月31日止公司已前提交的10-k表格中包含的合并财务报表和相关附注阅读。
5
2. | 2023年8月10日，公司与日出合并子公司和Capri Holdings 有限公司(Capri)签订了一份合并协议(“合并协议”)。根据合并协议的条款，Tapestry同意以现金收购Capri的普通股份，每股价值200美元，不计利息，应按照合并协议提供的任何所需的税收代扣。企业价值预计约为100亿美元，交易预计将于2024年完成(“Capri收购”)。2023年10月25日，在Capri股东特别会议上，Capri的股东批准了合并协议和其中涉及的交易。 |
2024年1月11日，公司收购了
The initial purchase price consisted of $
公司在2024年3月31日结束的三个月内，在销售，一般和管理费用中录入了$ million的收购相关成本，这些成本与完成的交易、未完成的交易以及潜在交易有关，包括最终未完成的交易。 同时，公司还在成本费用中记录了$ million公允价值库存的追加费用，该库存与2023年完成的STC相关联。
收购的营业结果从收购日期起包括在压缩综合财务报表中。SNC的营业收入包括在截止2024年9月30日的三个月的基本收入和综合收入报表中，为 $
现金及现金等价物 |
| $ | |
交易应收款 | | ||
存货 | | ||
预付款项和其他资产 |
| | |
房地产、厂房和设备 |
| | |
营业租赁资产 | | ||
无形资产 | | ||
商誉 |
| | |
其他流动负债 | ( | ||
递延收入 | ( | ||
经营租赁负债 | ( | ||
净递延所得税负债 | ( | ||
其他非流动负债 | ( | ||
净购买价格 | $ | |
6
获取的资产的初步公允价值是使用三种估值方法之一确定的：市场、收益或成本。针对特定资产选择特定方法取决于可用数据的可靠性和资产的性质，以及其他考虑因素。市场方法根据可比资产的市场定价估计主体资产的价值。收益方法根据预计资产产生的现金流量的现值估算主体资产的价值。预计的现金流量以反映资产的相对风险和货币时间价值的要求收益率折现。每个资产的预测现金流量考虑了来自现有客户的营收预测、客户减少趋势、技术生命周期假设、边际税率以及历史和预期利润率并考虑了经济过时性，预期利润率等多个因素。成本方法根据替换资产的成本估计主体资产的价值，并反映了用于资产替代或替换的预估再生产或替换成本，减去由于折旧或过时而导致的价值损失的津贴，其中特别考虑了经济过时性（如果适用）的因素。这些公允价值测量方法是基于重要的不可观察输入，包括管理估计和假设。
获取的无形资产包括顾客名单，$
收购产生的商誉不得在纳税申报中扣除。
2023年9月22日，公司收购了
2024年1月3日，对Spectrum的最终递延收购款项为
以下的基本报表展示了如果SNC收购发生于2023年1月1日，Sierramotion收购发生于2022年1月1日，合并运营结果。
三个月的结束时间 | 截至九个月结束 | |||||||||
2021年9月30日 | 2021年9月30日 | 2021年9月30日 | ||||||||
| 2023 |
| 2024 |
| 2023 | |||||
收入 | $ | | $ | | $ | | ||||
税前收入 | $ | | $ | | $ | | ||||
基本报表信息包括某些调整项目，包括折旧及摊销费用、利息费用以及其他一些调整项目，同时还包括相关的所得税影响。基本报表数额不反映出公司预计或随后因这些收购而实现的预期运营效率调整。基本报表财务信息仅供参考，不意味着展示公司的结果如若这些交易发生于所呈现的日期将会是怎么样，或者展望合并公司的未来期间的运营结果或财务状况。
7
3. 营业收入
履行责任
公司认为，在产品转移给客户时，大多数产品的控制权在同一时间点转移，一般是在产品根据协议和/或采购订单发货时。控制权被定义为能够指导使用并获取产品的几乎所有剩余收益。
公司通过向客户转让货物和服务以换取客户的货币考虑满足其与客户的合同履行义务。公司将客户的购买订单和公司相应的销售订单确认书视为与客户的合同。对于某些客户，控制权和销售在产品交付给客户时转移。对于一小部分合同，其收入在所呈现的期间内不重要，公司按照费用发生比例逐步确认收入。
公司与生产商活动同时收取的销售、增值税和其他税款不计入营业收入。
货物和服务的性质
公司设计、制造并销售精密运动、控制、动力和结构元件，为终端客户和原始设备制造商（“OEM”）提供集成系统解决方案以及单独的产品，通过公司自己的直接销售团队和授权制造商代表和分销商销售。公司的产品包括有刷和无刷直流电机、无刷伺服和扭矩电机、无心直流电机、集成无刷电机驱动器、齿轮电机、齿轮、模块化数字伺服驱动器、运动控制器、增量和绝对光电编码器、用于电力质量和谐波问题的有源和无源滤波器、变压器以及其他受控运动相关产品。公司的目标市场包括工业、车辆、医疗和航空航天与军工股。.
确定交易价格
公司的大多数合同原始期限不超过一年。对于这些合同，公司应用实用取巧，因此不考虑货币时间价值的影响。对于跨年度合同，公司使用判断来确定是否存在重大融资要素。这些合同通常是客户已经支付了预付款的合同。管理层判断包含重大融资要素的合同以公司的增量借贷利率折现。公司承担利息费用并计提合同负债。随着公司完成履约义务并从这些合同中确认收入，利息费用同时确认。截至2024年9月30日和2023年12月31日，管理层没有任何包含重大融资要素的合同。
订阅和支持收入包括以下内容（以百万美元为单位）：
公司将与客户的合同收入细分为地域板块和目标市场。公司认为将营业收入细分为这些类别实现了揭示客观经济因素如何影响收入和现金流量的性质、金额、时间和不确定性的披露目标。如下文第18注所述， 分段信息，公司的业务由组成，
8
下面提供了按目标市场和地理位置分解的营业收入:
三个月的结束时间 | 截至九个月结束 | ||||||||||||
2021年9月30日 | 2021年9月30日 | ||||||||||||
目标市场 |
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
制造业 | $ | | $ | | $ | | $ | | |||||
汽车 | | | | | |||||||||
医疗 |
| |
| |
| |
| | |||||
航空航天和国防 |
| |
| |
| |
| | |||||
分配和其他 |
| |
| |
| |
| | |||||
总计 | $ | | $ | | $ | | $ | | |||||
三个月的结束时间 | 截至九个月结束 | ||||||||||||
2021年9月30日 | 2021年9月30日 | ||||||||||||
地域板块 |
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
北美洲（主要是美国） | $ | | $ | | $ | | $ | | |||||
欧洲 |
| |
| |
| |
| | |||||
亚洲-太平洋地区 |
| |
| |
| |
| | |||||
总计 | $ | | $ | | $ | | $ | | |||||
合同余额
当公司交付产品的时间与客户付款的时间不同时，公司将确认合同资产（履约早于客户付款）或合同负债（客户付款早于履约）。通常，合同是按照逾期支付的方式支付，并且在公司考虑是否存在重大融资要素后，将其确认为应收账款。
公司的合同负债的期初余额和期末余额如下：
| 2021年9月30日 | 12月31日, | ||||
2024 | 2023 | |||||
在应计负债中的合同负债 | $ | | $ | | ||
在其他长期负债中的合同负债 | — | | ||||
$ | | $ | | |||
公司合同负债的期初余额和期末余额之间的差异主要是由于公司的业绩和客户付款之间的时差引起的。 在2024年和2023年截至9月30日的九个月中，公司实现营业收入为$
重要支付条件
公司与客户的合同规定了销售的最终条款，包括每种产品或服务的描述、数量和价格。付款通常须在交付后的30-60天内全额支付。由于客户同意合同中规定的利率和价格在合同期内不变，大部分合同不包含可变报酬。
退货、退款和保修
公司在正常业务过程中，除非商品存在制造缺陷，否则不接受产品退货。公司设立估计退货和保修的准备金。所有合同均包含标准保修条款，以确保产品符合约定规格。
9
4. 存货
存货包括材料、直接劳动和制造业间接费用的成本，按照成本低值原则（先进先出法）或净实现价值列示如下：
| 2021年9月30日 |
| 运营租赁负债： | ||||
2024 | 2023 | ||||||
零件和原材料 | $ | | $ | | |||
在制品 |
| |
| | |||
成品 |
| |
| | |||
$ | | $ | | ||||
5. 物业、工厂和设备
物业、工厂和设备被分类如下：
|
| 2021年9月30日 |
| 运营租赁负债： | ||||
使用寿命 | 2024 | 2023 | ||||||
土地 | $ | | $ | | ||||
建筑和改进 |
|
| |
| | |||
机械、设备、工具和模具 |
|
| |
| | |||
施工进度 | | | ||||||
家具、固定设备和其他 |
|
| |
| | |||
| |
| | |||||
减少已计提折旧额 |
| ( |
| ( | ||||
固定资产净额 | $ | | $ | | ||||
折旧费用分别为2024年3月31日和2023年3月31日的美元
6. 商誉
截至2024年9月30日的九个月结束时，商誉的账面价值变化如下：
2021年9月30日 |
| ||
2024 | |||
期初余额 | $ | | |
获得商誉 | | ||
收购交易的计量期调整影响（附注2） | | ||
受外币汇率变动的影响 |
| ( | |
期末余额 | $ | |
10
7. 无形资产
公司简明综合资产负债表上的无形资产包括以下内容：
加权平均 | 2024年9月30日 | 2023年12月31日 | ||||||||||||||||||
| 摊销 |
| 毛利 |
| 累积的 |
| 账面净值 |
| 毛利 |
| 累积的 |
| 账面净值 | |||||||
时期 | 金额 | 摊销 | 价值 | 金额 | 摊销 | 价值 | ||||||||||||||
客户名单 |
| $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
交易名称 |
|
| |
| ( |
| |
| |
| ( |
| | |||||||
设计与技术 |
|
| |
| ( |
| |
| |
| ( |
| | |||||||
总计 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | ||||||||
无形资产摊销费用为$
截至2024年9月30日，预计未来无形资产摊销费用如下：
截至12月31日年末 |
| 总计 | |
预估 | |||
| 摊销费用 | ||
2024年余下的时间 | $ | | |
2025 | | ||
2026 |
| | |
2027 | | ||
2028 | | ||
此后 |
| | |
总预计摊销费用 | $ | | |
8. 基于股票的报酬
公司的2017年股权激励计划（2017计划），于2018年2月修改，允许授予期权、限制股票奖励、股票增值权和限制股票单位。
公司的股票激励计划提供了股票奖励的授予，包括受限股票、股票期权和股票增值权，发放对象包括公司员工和非员工，包括公司董事。
受限股票，除非参与者对根据2018年计划授予的受限股票进行第83（b）条款选举（如下所述），否则在授予该奖项时，接收此类奖励的参与者将不会认可美国应税普通收入，同时我们将不会被允许在此类奖项授予时认可扣减款项。当一项奖励保持未获豁免或其他实质性风险失去之状态时，参与者将认可股息的数量作为报酬所认可的收入，我们将允许扣除相同的金额。当奖项获得豁免或不再存在重大风险失去之时，公允价值溢价将被认可为参与者的普通收入，并且将以我们的联邦所得税的目的表明为扣减。根据有关规定，股票被处分所获得的利润或损失将被视为资本收益或资本损失，资本收益或损失是根据参与者从认购股票或解除实质性风险失去之日期算起持有该股票的时间而定的，如果持有期超过一年，则将是长期或短期的。
截至2024年9月30日的九个月内，
以下是截至2024年9月30日止九个月受限股票活动的摘要：
数量 | ||
| 股份 | |
期初未归属的LTPP： |
| |
授予 |
| |
34,105 |
| ( |
被取消 |
| ( |
期末未决余额卓越 |
| |
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.
25
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 | |
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