Allient (ALNT) 4 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Craig Mychajluk	Kei Advisors
Dick Warzala	Chairman, CEO & President
Mike Leach	CFO
Greg Palm	Craig-Hallum
Dick Ryan	Dougherty & Company
Brett Kearney	GAMCO Investors
Josh Goldberg	G2 Investment Partners
Mike Morales	Walthausen & Co
Tim Madey	White Pine Capital
John Sturges	Oppenheimer & Co

Call transcript

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Operator

Greetings, and welcome to the Allied Motion Technologies Inc.

First Quarter 2019 Financial Results Conference Call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Craig Mychajluk, Investor Relations. Please go ahead.

Craig Mychajluk

Yes. morning, good and you, everyone. Thank time Certainly interest well your as Allied appreciate Motion. your in as today

Joining the Chief which, outlook, and our update CEO; for and me on Chairman, up are we'll first and our on Mike strategic and Q&A. Mike open call quarter are the XXXX it Leach, provide to Company's after our going Financial results Dick Warzala, Officer. review Dick an President and progress

yesterday financial should our market after a released of that You can website on the the If it results you have alliedmotion.com. not, close. we copy find at

the that On also you'll website, find accompany today's slides discussion.

those reviewing you're the safe to slides, If Slide X for please turn harbor.

results risks the as on as with future uncertainties as some from the to subject earnings release you documents what well statements could cause and materially formal call and on during aware, and Exchange provided events Securities to the These with stated risks are other this as by filed uncertainties factors well the the apply statements and other that may is As Q&A. differ in are are actual to make These Company as that factors call. forward-looking during well Commission. today's as other we discussion

evaluating non-GAAP You which I our as some be can call, we find out website these believe documents sec.gov. performance. to measures, in want today's useful discuss on our we'll point or at well during will that

slides. turn comparable Slide please prepared in that, or to to provided accordance X, tables We've You GAAP a to should with not begin. over consider results to Dick release turn and the this earnings the of in presentation Dick? the in measures non-GAAP I'll and accompanying reconciliations as information it With of substitute for additional isolation GAAP.

Dick Warzala

XX% reduced reported despite welcome, new X%. everyone. revenue headwinds the that overall and as healthy a note and year our revenue FX Thank a record off kick level on organically We grew XX% Craig, you, to by

necessary orders per incoming in hit the as at we a to increase were Earnings $XX and a EBITDA relation resources strategical and dampened atypical record for profitability items were the our were objectives earnings growth million. to in There X% CapEx share quarter support make future. the new year-over-year. percent few our margin Adjusted in XX%, muted and revenue the internal Additionally, unchanged. being up somewhat investments also that gross to was resulted up continued in

consequently, increase supplier certain of electronic One discontinue the price was on continue assemblies they for assemblies produce -- unexpected operation, an raise and of from a decided pricing to items that us.

to expect year. many factory realizing the impact market robotics. automation specialized gained reduce markets in of benefit secular We this served sales trends share as in well our the and and positive expanded around as later from We

served average, by While rate execution testament It our have some there to our growth total market the a internal organic are grown GDP-plus range. on to historically markets team. in deliver is outliers, growth, in our is solid and above-market quarter in objective the

positive impact a both EPS newest the Our for on quarter. in expected and margin as TCI, gross performed resulted acquisition, and

there of leveraging will we continues acquisition. key Motion. long-standing approach this And solutions to TCI's technical from by long-term not global footprint the reach growth working our be forward, but by on Moving we investing our least, of markets. expand global electronics strong to distributor geographic relationships Overall, and as at further to resources drive we our work utilizing team integration Allied believe last for significant for maximize to capabilities our traction gain served One Allied in potential our is

me been key financials. on turn better. and it time potential opportunities, expand Mike, to margins believe continue growth to commitment to developments never over for the let of a we concerted more review and in-depth focus over the has While strategic With you the that,

Mike Leach

Thank you, of top our We Slide X. on line provide overview an Dick.

reminder, a $X.X our record million. despite first XXXX. full of an of $XX major FX level include was of December the headwind were hit and As million we seen. in quarter Demand broad results We a TCI, our based, acquired served in markets all which of growth

up Dick the the As saw XX% XX. in Keep strong Medical months slightly FX business and an was balance total quarter. growth sales with Europe. of growth customers by XX% that our and the mentioned, revenue in Sales and of excluding in growth sales organic of which numbers our nearly the change distribution. to for mix explains X we A&D the in customers trailing industrial during impact, organic particularly unfavorable within U.S. is XX%, market a edged to primarily the in and mind recognized shows each market the XX distribution Slide the March growth ended to TCI

Though discontinuing at higher the reflects margin. industrial, and our elsewhere to of any market TCI from a the notable by sports is TCI. were market, Slide commercial and performed A&D new from number which which X a also Dick power subsequently gross well their estimated provides fueled gross without Our defense, XX% automation well notice. the who XX include in orders which growth sales TTM factory space, notable points. benefit prices related at there with was as has rebound submarkets, the operations unchanged was were XX% growth to aviation on and detail for which margin, as vehicle, across supplier continues increased and The XX.X%. in largest approximately impact lift mentioned, basis very business and unfavorable was accretive as

this quarter. on we qualify this and would in develop suppliers. working partial We our negotiate we other with as At time, sometime lessening impact and are relief anticipate third

into roughly upcoming relate prototype of sold part cost and The of both program. other items the Vehicle as meaningful tooling of a to investment samples timing at amount the markets

increased quarter expenses the XX Slide to basis to X, sales. Moving of for points and XX.X% operating costs

basis were was selling of E&D the While G&A addition up XX due was basis points. to primarily TCI, XX points of XX basis down expenses of and X.X% down points, sales

intangible quarter related to $XXX,XXX Interest on acquisition. the to investing and growth margin expense increased leverage to organization asset accelerate shares. first $X.X by fund additional million the and of to support personnel incremental $XXX,XXX global reflects In gross debt operating director the the expenses some took across additional TCI, more to the of impact, margin Company amortization as addition levels

the The per or share X, diluted at per with compared quarter or XX%. effective XXXX between tax slightly Adjusted rate which We've XX% XX.X%. fiscal diluted look our the you continued XXXX. the our expectations of Net line $X.XX adjusted and XX%, quarter for If first rate $X.X EBITDA up quarter regulation. million income clarification you $XX.X to and XX.X%, tax bottom up million tax results. adjustment was to fund share in or see million, was the for $X increased can Slide $X.XX to recent $X.X reflects up million from range

on adjusted overview the advised both Slide a a and a disclosures EBITDA in We in sheet acquisitions with to internal was points. performance. as flow. reconciliation of review XX.X%, were As the basis and please slides. cash related are of our is non-GAAP be use This measure, progress it XXXX cash TCI of in an as an our operating EBITDA provides the made combination sales, the XX two release our percent slide so X determining Reflected metric adjusted and decrease and of Maval and balance at numbers is the end debt. funded and in a believe our of our useful and

debt As capitalization. at investments for of to $X.X $XXX a result, quarter million Capital around XX.X% debt, were growth expenditures of net productivity and quarter for were the net cash, end, was improvement and million or initiatives. primarily

$XX and off-road investments support CapEx for ramping the generation $XX million, fiscal range significant to steering vehicle year-end, of our and expect the wins related additional the which that capabilities million TCI. next by of will between We to addition XXXX project incremental begin reflects

First we strong job quarter done pipeline X.X inventory a balancing improved chain. have normal at tight of historical turns better with as more times, along our supply sales to levels

a from XXXX I'll DSO in height over now number. Dick. Our turn days, to call the XX was back down

Dick Warzala

would strong and We'll grew you, orders million. the a quarter $XX record Mike. XX. demand Slide end which Thank included million, year-over-year $XX quarter million, at about was to Backlog XX% of turn unfavorable With continued sequentially in from first now XX% $X.X level been Absent end XX% FX, year-over-year. million markets, $XXX up record about TCI. have at orders to a near

to As the of backlog TCI reminder, ship time business their book-to-bill more About next to not days in next of XX% our X months. book weeks. months typical measured and the is in and convert is just type a expected XX% and over XX a is

vehicle these several in and expect this backlog we as we shipments the very market previously in amount a low have of previously of year. nominal we million Also, discussed, programs are As our $XXX begin the the currently towards a to at are end announced levels just reported investing in numbers. reminder, we included awards

end we and will to future business Systematic in cost. enhancement will as then our X by Allied focus key X XXXX, innovation is We quality, to Tools the the weight Executing delivery, of shipments full for production begin to following margin which on ramping operating continue XXXX years. system.

strategic will also areas and have that team -- we important solution continue year enhanced further and past integrated is this offerings. we software, those past it While of excellence, invest the note especially a in electronics as our over to out AST build have we our we capabilities strong year, around to

cautious have opportunities open steadfast may remain we strategy in our global flexible to and environment, solution our economic markets. confidence While the execution strong that, long-term -- we to as With expand around of operator, further target penetrate the our line future we questions. the multi-technology in let's our we for and growth remain

Operator

first Craig-Hallum. Instructions] from our question Palm the Greg And line of [Operator with comes

Greg Palm

were not mean, growth many I'm So I growth environment. this of I putting in QX. opinion, a few that from starting fantastic, I aware mean, too are in outs if this push type that's of even in organic industrial-related the other the environment, macro QX XX%, really I up driven guess assume by just companies to points rate, my with that

Can So of on? it a little bit understand to it what's Is kind existing color. us going ones? attached being new love right is help you customers? mean, the just more and I

Mike Leach

of Greg, I think, the all a it's above. bit little

with it bit year, well. along We've to customers. it's we carryforward we think, gaining to customers and at about of gains we've new continued I markets year-end as this So continue again, a kind the existing indicated the little in certain talked how a think with some had of share of I win past that

Dick Warzala

exactly I Mike I would said. it what is. that's what just concur mean with

Greg Palm

of results, a the more that QX makes more of were on QX gives a of probably an say? confidence kind the to results, which Is sort you inventory onetime little was based that, that And anomaly. kind presumably, bit I thing, that of just mean, kind adjustment disappointing, fair

Dick Warzala

Yes.

gave that felt you in here, we it as expressed facts think I first that the shows down sales did There's with account over after would at color quarter. that, it we more our adjustments increase the call because it we're our, year-end And for and was And that inventory road bounce right year-over-year that bounce of And saw did I holdbacks some think at because that, think just data far year-end. we said certain just we are that occurred That correct. back. a a we and thoughts that least, right the I blip. had, for back. at point little so the we conference and

So I think correct. is that

Greg Palm

but call kind I in improvement terms like there. should atypical mean, maybe can associated we some the some started I you expect In gross additional you It of from the maybe drag improvement guess, what QX? walk through QX, us sounded of sequential in margins, items, color

Mike Leach

Sure.

a where of talk pass-through think prototypes. of the will I improvements be tooling little we there about and sequential bit

time encounter some do to was do and see we will While repeat. fluctuations, that QX time sizable and that think in it I don't from

a recover a source and from pricing nature, a the that sole of will position at issue that supplier, bit in least supplier take replacing production of getting discontinued process qualification to relative that that take in mentioned was a from through time. a time And and from it sense bit a so little that we've will again, little supplier to QX. The

that I QX. So some we I probably don't from a to think recovery partial time, see think, expect until

Greg Palm

samples near-term That Okay. the to like the around that's is mentioned, clear, impact previously that's wrapped announced from head prototype you've or be impact that vehicle ramping and And there. sounds when later to the new? the your this you something got year, tooling that related

Dick Warzala

No, that's -- that. it's predominantly

Greg Palm

X.X another gross of of since I'm Kind some months that now owned it curious give to potential us curious more you've revenue you on synergies at. gears the Shifting the some strategy there looking TCI. that associated if commentary Okay. the for and last you're call, can

Dick Warzala

Sure.

we've the some I the the us. understanding think TCI is what much other in -- additional for nothing some months in it. here has gaining discussed of changed last business than market of X.X and we acquired opportunities

at market look Allied also looking a some gas for as TCI. think, that strategy at markets. those see opportunities Oil I our major markets, is more are products can -- we We we stable into other we other diversification and we're within leverage Motion. And

Allied along that some and we're as makes. its and other a looking TCI beginning to it also undertaking already So can on was the to now we're that quite on -- we're already excited its how products project about of that at work pull efforts it had we radar

will So have to been I the And certain Allied. be active be using to we additional in realized. that's encouraged be there become think And past. opportunity areas hadn't the synergies in that and the we're of we'll footprint where competitive very

As is bigger North primarily than we from European products. America look the the and in a market and the the markets interesting market market, that, North Asian market is their American what's are perspective for TCI both at

So gives it substantial. it perspective opportunity what And is in think potential here. it you the just kind -- it's the of we puts

we All companies We and be capabilities on can the within global we be about further will we here. the on leveraging talk control things working channel internally, of will talk about our working that both footprint. we distribution as

Greg Palm

And a to and is some globally point that manufacturing this is product year? at there start their potential opportunity? Or distributing longer-term

Dick Warzala

that can of footprint designs up advantage we take speed getting I at absolutely longer the and it's say we term, utilize are but how underway already to identifying product and looking and and that. to addressing

we impact impact it we -- an will quickly. Greg. started see But will pretty year, So not an this see

Greg Palm

I seen I'll maybe, Okay. Any price. got, of Last in back oil hop that one you've business? crude bounce queue. sort exposure so know April, for the of curious call for me order it, in on I'm the of on TCI, to and outsized gas rates then and what end the difference they've March,

Dick Warzala

stable example, but downtick, I right it, a right would definitely mean, to say you pretty here. did can But -- have look at the first up that now. see quarter, you I you interesting it's impact. back for we it's ticked we slight when we

year. And I don't So we change think it's we now. expect move pretty much stable as can right here forward in the

Operator

[Operator with Please Instructions] of Ryan comes from your next with question line Our Company. & proceed Dick Dougherty question. the

Dick Ryan

your a supplier just sole this or threat may have down quarter is through that since ability source. were there's deliver that issue Say, Was they them couple way volumes next your its impacted were the to on Or the from to customers? pricing over X? or worked a

Dick Warzala

bit little give we more that. a color you will Well, on

was considering there get And told was a that no additional you option. operation or product, indication may they it that's There surprise. be that is not an it discontinuing impact warning us. pay fairly supplies the as basically any advance on So we're and just us a significant and money either came won't that

don't -- are path, So money don't in new just mentioned, and additional we the alternative of and the that. that profitability but Mike impacting start you down we markets well because our just We're And are, suppliers shipping serve, it's on suppliers. supplier. as you just of we working paying on course, from the change

be to period that do mean, where intention a happens, that have certain unusual. it's time. is go just a That's I've occurrence for it indicates continue rare this -- to be all I going have in why any going It's been the faced. this of process. no it's what years desire something to in through to You That's qualification we but or anymore. like serving they markets business, a those

Dick Ryan

a you available? something or new concerned readily of options for a are bring availability sort can assembly this other that's the on custom more there you Are on near how term? And of supplier? Is volume

Dick Warzala

still circuit are okay? assembly What we that's components really There itself, supply this and so chain is requalification the change -- have for just you back I assembly, I've as if -- good. go control an even there's the a to through -- several process. if supplier, have it's we So This mentioned, to of that, board and though, the is options. the a

-- that's it's concern. So not a

but the We have still absolutely well being processes suppliers down forth, we already proven customer path the level. so that other we use qualification and takes at the have it of

the I'd We have be world-class we're moving third through and concern. be and So really get limited everything right alternative were will supplier working will -- fine. forward as things we the confident say -- that, and transferred we're we the quarter, now. And is we're very that's what into

Dick Ryan

Okay great.

wins the Really, that So occurring, versus it is and orders. talked about European? you U.S solution either new verticals in wins customer discussion on in where or the is

Dick Warzala

Yes. big increases, here America. the In our in And and some as that classified prior Defense, we & call, nice verticals, Aerospace well. -- And There's Aerospace other coming we'll forth, volume but and what did volume customer board, again, really so was new increases uptick the such Medical, in, for commercial us Aerospace as existing base Defense. in win most North big those ramping -- a versus see things -- We the our first that & aviation on in wins work also you're customers we there, but I had is defense year. up, comparing had volume so when done the as in is quarter in did was Defense Mike were mention the think, the okay? of uptick. that & occurred

talk certainly solutions -- to impacting our when positive profit operating case. but we to it's I'm sign. how this about -- I'm invest I our it's But see we It's -- and we very going necessary. a it so that's here say continue margins, -- margins we in absolutely -- So think overall in as

-- get sticky. We we're a it's long it's it And once we and says integrated pretty designed-in an have wind in, solid. a but cycle, solution

and So Company. a And a can I leader that helps in think electronics of to solutions the value decentralized we And that we I mention with our group. quarter, getting we unique a first continue customers. we'll area, group what in those create really within to that -- areas. a and that platform for as are push did that's and that going many continue the invest electronics in in we it leverage investments into we're see our is And -- and a well big in but come brought -- up us we're we for because and the on challenge. and management are solutions to hands Dick, that's is sticky really and invest really software,

Dick Ryan

Yes.

the the losing shortage in the you more mentioned of right talent? kind a Or qualified think of any to I question talent hiring just you've past out Are competitors? there. it of is

Dick Warzala

think challenges been some engineering, concentrating sure to the people able also And that direction. -- working so strong some mix talent resources have what expand cooperating, I we our where to you're really out leadership of new but area. and that and And contractors several they we and the internal itself, in recruit so a with the in fill to continue haven't not got school. approach continue I right gap young been forth, add And to going grow some fast we're we which to with past Well, We've work that have losing on. create team used in lost that's we're where mentioning for a there, fortunate. to and within talent. to bright great and senior think is providing to a to to making not we've have We're focusing and build us, would pretty bring is we to good, continuing universities. decentralized we're that Again, they the leadership supplementing framework actually work say that enough, resources. you, we internal And I going have but in are establishing can they're

it's I work, if in do we're a and work together it's -- So very place and way job our saying, with obviously, it's to that is a think here happy great employees certainly and and needs the area. anyone listening pleased

Operator

line your with of Brett Investors. Our next Kearney question comes Please GAMCO proceed with from question. the

Brett Kearney

this you're organically? ask, to yourselves electronics quarter software that to your more bit to there effectuate to primarily see components Is something you doing and want Or invest started also inorganic Just as you solutions, out it strategy? discussed, are looking that just as build recently. a in

Dick Warzala

would I Well, you say Sure. to this.

We're organically building growing subset we the controlling is we're business is acquire have in cost and subset that another to I products been platform we're and building and pursuing the We it bit that actively been a it different different markets And has that destiny, what base say along variable organically of may for feel longer, way. the to take very meets talent our space we're And building a and expensive at marketplace. that the we of and opportunities or emerging of solutions. of very introducing looking expensive. would acquiring needs you companies comfortable that found to while a very not little solid

in laps. but think that to look, I continue are right -- opportunity to there or So -- we fall we waiting is for not our

taking are of control our destiny. We

more X to are occurring it's, could not we organic, you we here. a sure continue that so continuation a area. we're you're take going really And We we I heard and to and all are And X, to solution to we're away, Company, are some anymore, talk a it's had introducing continue be us longer, invest. pieces in variable are how wins calls, back going company, making stronger motor but moving And time you they and company and investing years, that's of together which go of and another And the secure. without if to it's IP integrate. And transition are about the take provider. invest sticky, seeing X, to we're say and our may in and we going listened exactly figure a our to and the not the motor out what we just work all platform the development to control opinion, control that

the So from us. in you will see future more of this

Operator

question of from Edison your line proceed the Partners. with next comes Investment question. Chu GX Our Please with

Josh Goldberg

This start is Josh Goldberg, questions. did contribute revenue? guess for much Edison. in I I'll a quarter I how with had the TCI in

Dick Warzala

-- the Again, actually year. numbers by out prior individuals, pro here, we don't case don't this I but forma showed break we it's for can what say in our that, with consistent the

Josh Goldberg

of it Consistent year-over-year flat or in terms it was up? was

Dick Warzala

it was Yes, flat.

Josh Goldberg

TCI was revenue flat.

Okay.

is So accurate? Is strong at your that TCI your if quarter. then, it I outside of I customer, growth of XX%. and calculated the look your biggest north in business very

Dick Warzala

Mike I'll answer that. let

calculator XX% Your I mine. faster we TCI, saying? are... than is you're think without

Josh Goldberg

And your customer. biggest

Dick Warzala

is and year-over-year relatively you bit. mean, that customer. I maybe I customer biggest generically Oh, volumes little their our I'd up don't would consistent speaking, know and that how say a out. split

suggest rich XX% decreases that to talked largest not I -- we think, we I me, out I Josh. saw XX% organically So customers. of FX. would seems increases about significant mean, and/or that our without I

Josh Goldberg

in want a And in seeing that your is one acquisition much Well, outside so you're design area? bit little vehicle? wins know the take then. biggest just I Can offline growth rates the how helping customer you Maval you gain about Okay. that that to more talk of

Dick Warzala

Okay.

provide three And acquisition get markets design to production or wins. buying and to whether an a last, prototype we've talked That we period year Maval you the were with here ability design And the questions heard, it's and and to take the win time. think -- was first. had that to the two if the what take I I we our as is strategy looking to is design at -- served into discussed had address the helping past, design, it we Maval. normally solution. of our that, to start I'll and in target our So us about integrated markets in -- process two

if be we on that say are good absolutely So will production. few you, But we we and designs progress, impact I programs But feel to an that, at one we growth next will occurring have, would working we certain no it's that are now. on right in there in time. of to and the is we not that items design it's stable, programs and immediate are from it we turn but in there confident those years, making run did our not selected this had continuing major

Josh Goldberg

Because but line? to Can give I or any And one. in so very Almost saying you into it's with in it, yet what that a revenue. programs modest four more the causing vague behind expecting. now given rate changes okay, have if said the Okay. vehicle year bit of now? changes of these mid- you it a guys late those into I and another know late you've Is get better visibility not months timing Or ahead have. about too what's we you sense 'XX, us maybe originally little far mean, can sense time been too of the timing you're that people there aren't you're far 'XX, relationships? either that

Dick Warzala

okay. Well,

the talking little -- I having up if we think any year I are impact later -- about okay, no really ramping very and/or on in revenues, earnings.

be year, in right and lines the ongoing. and are here running and to live parts is live activities on get of will now starting lines place all later going that We this off

So we to ramp. starting are

multiple Now there's programs.

at that consideration multiple ramp up we -- some are we have what that's them take are up and -- times. you different I to there here ramping in will have to programs that So there's think each of

start year. we this So

I've awards X And we We production call in and next starting we mentioned either I as think have in years. additional the been timeframe and then that talked will the ourselves next we portion see X year, that the received million that have on in that's of XXXX or programs awarded. conference we've continuing $XXX ramp it, about to for in full working to And we're others.

if that million of But your expect, to work talk process that's kind very ramp, by slow others. years, full continue We typically production ramp-up you XXXX, to number. periods $XXX what X it's and but on there's is you about the a can over

Josh Goldberg

Okay.

that the so time the effort right you to earnings earnings as your and So the it much this this But you're then next your year. program and ramping -- money by year point might spending it start and actually might ahead be you of spending accretive is ramp. now, might year, hurt

Dick Warzala

is... We lot a the of it CapEx, A ramp. is are it of spending ahead lot of

Josh Goldberg

little Can sense you you that little bit expenses here... of see quantify The that us? for a how you a bit? quantify much Can

Dick Warzala

On the CapEx?

Josh Goldberg

CapEx or have. whatever you OpEx,

Dick Warzala

Mike, in do you on to that? want jump

Mike Leach

think too vehicle contract $XX Our year careful vehicles investing last offer the year. of are range, expecting -- right, generation, wins. ATV-type probably next the tell well I'm looking as million to for when I that we Again, would XX% market Again, doesn't with we're in was similar commercial that to let's in relate but we're this be spend about associated it be automotive these talk here. vehicles, wins. the you're how range of in you is it -- right? that CapEx I

Josh Goldberg

what obviously, brought before. me, Greg with for one Last consistent up Palm

'XX space industrial the more -- that hear than you'll conferences is having difficult these to difficult a Going 'XX.

that Is And little terms like industry are sounds forecast outperformed look some And far. of and But orders April a a now? you that out? back the color -- see have March to I mid-single-digits so or just there to your how there's It continuing? played do want in growing guys good you cadence get does strong? a you bounce January. of think pipeline I in with is happy the more are and

Dick Warzala

about felt as felt or first the off we so, the we weeks think, and was talked quarter. way that we I the year confident good X mentioned about starting and about continuing, we ago

been before, long long the we has X markets In pretty think and talked about but they're those Aerospace Greg and again, run only year, strong Medical and the -- past that terms a time And a or for the of so did think are is design were about and it we're has I And strong us. seeing to it's I to we we ask been -- were time rates volumes month into encouraging. take we get for months markets we're And X continuing. is us. talked stable of period weeks when and it questions then X that you seeing, wins Defense for but continuing. is too. the which it But & forth then

So may may have that said in your question our questions There about you price. largest so series continued is very and the think I volumes, on tell even of you -- this started is -- increase pressure or customer you, forth. I there, first a when and though the there encouraging. would

business, I to very you the retain would those pricing caution been -- in hear in we backs So are seen. us think next-generation innovative are even working going could we up, we've that if you that that on are -- that there but volumes are when get products about, if so backs price had

volume "yes will revenue but margin at certainly standpoint, and So the you flat design". gone may unit it's up we actually have may from by protection is a -- look

have quarter absolutely and as to contract we weeded. that's and work we impacted And behind that that the so forth third on one is issue within this we that manufacturing had feel us. of -- mentioned, will be areas And We that. we here

Mike Leach

in talk more which what to the is, about the of think, is that, Q, your the going concentration, that I I about addition add you're probably TCI with diversification just anything. customer number I'm away I that driving math to Josh, driving when customer from And think, statement from, think, the is it's that than we

Josh Goldberg

now you've supplier I One been that, with would bit just Yes. able global think, following was bought to Globe Company. that's motors. you And more become who market big, of by important customer diversify Motors, I big to the and away think was the couple of really approach a when Company in you a I terms so vehicle fact for of I know is yours, Allied the add that of the people underappreciated follow little years, that something, of kind of mean,

Dick Warzala

stress of it It's in path the investments big dividends road, margin electronics making And that's very, again. we're I'm the going a very and is software going down improvement. to very, good and again, point. we The to pay believe

Operator

line Morales from with comes Walthausen of question Mike & Co. next Our the

Mike Morales

the the of to that tooling points of the margin and year from progresses impact between sense a supplier this gross the works In atypical down XX called basis Could out you out? you the slide give deck impact through the impact break us events. how if that

Dick Warzala

Yes.

think supplier the I third impact is about that. two of

Mike Morales

shifting guys tailwind the of headwind business into impacting thinking on and that's going guys I'm It's business, And been USMCA. more, that how about that on then maybe the a or you bit. you gears the curious if your bit little be looking are a vehicle a side would for how's okay. planning forward? the a Okay, little headlines

Dick Warzala

of couple as there's we into go us. content up, that see one, positive plays helping North I a requirements play absolutely Well, there. into think that I it American come think if factors And a right

than who -- one we're we and a have requirements think, situation by if Other if other into our area. to contact our meet can we -- to be in that's impacted mean have and So then, get provide absolutely where plays we will again, hands. things the customers I it, I all benefit those also. vehicle that, a to work Mike, that's sales

Operator

Capital. Please with comes question with White the proceed Madey next question. of from line Tim your Our Pine

Tim Madey

that EBITDA? so could kind corporate and or questions as growth profile here As type or business [round might ramp you I'm time ramps rudimentary What looks of bit? have characterize that the then it kind a $XXX and to up] answered know, new new of little the on already how million that how out business, just you is over margin in story, But maybe you've you the pretty that to I some can't.

Dick Warzala

refresh I good it's project problem, And think no memory probably wins Sure. what time everyone's a Yes. those were. on to

operating had get we those that run acquired it we Globe, contracts were with a automotive-type certainly consistent of replacing and in you gap other I say that the after lower. contracts It's higher be a The high impact, to was we at is win, volumes -- out can see it you margin that will our get go Globe profit volume, gross go to an an several get equipment there, deliverables were and of with in acquired that when going it end you completion gross to back If something of and basically leverage -- we customers that's aware operating of we when contracts. was the we certain they're that. about of that off life of getting level. the these so talked of certain they That you to and profit the test call time-phased, operating contracts. stream. have field And impact. have standpoint, enough When we'll the have that revenue But profit equipment, production it. what what in for forth. standpoint, consistent occur an it's from we is an the shipping it's ramp-up we notification can the it there's running to again, operating operations. contract There into and that, a the has will level, the so from volume margin profit wins, when getting certainly into is, you and the product a place facilities, sustain through lower can get there And

ramp is -- you're to what the it there's up that takes seeing it really So significant, a that's timing here. and barely

wins, important things we we orders. have the not numbers. don't And in So reason only production we a note. date, put our do though include we don't it our backlog, that backlog, the even them announced we the other firm include into in we the our we Unless backlog and that's have is,

thing. So that's one the

be We firm also order get when production roll considered in dates. the an and they'll backlog we

delivering call next in first delivering awards off then, as million, X this to And to the award. that's we're we we And of full going -- in of run year start other So start begin production rate X XXXX. let's off mentioned, year, it, years. and -- say okay, we'll later over into year, we $XXX the the first, we

earlier. what I that's just So said

math it's you kind can working You But I'd on that. were -- not also all that's we of on. that the do tell

more we're working have we expect goes We on and on, as that gain too. here, would others time to

allowing tariff we supply the have to strongly diversified is competitive and the mention that were those that and customers item local getting transportation the economies, utilize Asia we believe satisfy gets the That's advantage to this local to marketplace local The geographically rid what really say, and gets of and to that of -- We economies. issues, let's us also. in we're America, call is a when And and important so forth. Europe. footprint service unique at issues, so and And that and North we footprint us better our better other those do gives the chain how some leveraging competitive. rid in logistics smarter issues forth our

Tim Madey

start roughly production get you more added backlog over full time, ramp? another you So could million to when see $XX the to of

Dick Warzala

backlog, on we so Yes, the actual be rolling will into point production will I'll what you're correct. releases at you, dates yes, and some to the it be, when have yes. will say visibility

Tim Madey

That's kind -- the of it question. get segues next kind into

and backlog, if about the think years, forward a over next kind know. especially That's changing macro the -- do environment you But organic model? this of unrecognized your there present it's is in at all of I growth guys time. type a organic you with growth Maybe know I Looking already the will, the how tough few don't... you going one,

Dick Warzala

was I trying sure question. to I'm make to Well, -- answering your trying I'm

So how do we...

Tim Madey

XX to the may How's look going of next do years? couple the organic business? the growth of How next you think like side months organic about over versus you the

Dick Warzala

what macro could to here pay is doing impact we we market what it could I us. closely the close and all and is have it say on watch that very you attention the to Well,

color the historically. done giving some seen rates set that work that -- internal an we and that And X% and again, We've growth and this you have that we're about target we to ensure to that's if at -- -- ourselves X% We have the we're you has industry, industry our to look for rates. we that. growth exceeded what developing products/platforms that next-generation above-market continue serving to and markets historically. very had for hard And

sit track to can't hard internal and will I do absolutely that, that here tell a we going continue we it's we're but our it, and we on on you record our it. guarantee to that's is goal. I mean, I goal focus think -- focus that's and So that, and have

Mike Leach

But organic to a provide tailwind to market that your rate. point, contract wins the growth certainly, will vehicle those in

Tim Madey

platform your they last Your Company? And building going tuck-ins? forward think do the the the just Or stock cetera, et much, do large most acquisitions, a as show recent as use for structure but know how generally, I on in or the acquisitions? generally, cash, your one? you with right think about about or -- out you structure or do these capital you combination too can't debt how the And the thing hand mostly you software, capital electronics, think you of

Dick Warzala

that. high seduced to just without -- to or to is stay that and going we're too the we'll I then wrong have those let the add I the necessary, in -- acquisitions, have us I we strategic Mike to forward pay and markets in But the and indicate is with at I continue to right wrong capital no which acquisitions. the I'll -- access shelf are markets Yes. to we the I here. fortunate be feel in going intend market price, place, to gives we to bit speak going are necessary. benefit And should said go think justify strategic to flexibility we whatever put the is And we disciplined I'll the are Company available future. that quite miss And of a that necessary support key don't think get here our risk the it. the growth continue any us grow And think capital whatever growth. doing to ahead price facilitate

want might to you that. Mike, something to add So

Mike Leach

Yes.

flexibility, certainly just markets Just to it about that in talked the equity relates as us even -- and our beyond add debt continued would in and above with size I growth strength increasing Dick the what helps markets.

to a as again, think, tools, other in say some just mentioned, the future Again, future. chase So flexibility Dick continued we that hopefully fund to that's stock have new not growth been in to a like but well. as stakeholders of buy-in we we always the there's as to. well. in deals balance organizational component And I that with there, have I to we key and do, things create small component to we use that whether talent or would that's deals, add it just stock the the retain major hasn't

structure I standpoint. that from So it's think capital more just of mentality continuation a

Dick Warzala

the -- our Company there's it as down drives I and customers. some solutions do color continue as element. software fairly gave investing unique are for going so that. is increases it a us you talked It previous more here we we that everything engineering too about to It we provide and yes. key gives in some and too reliability, electronics to the about the many in integrates question the sides costs. It's It's engineering, opportunity positive answer to

multiples space, multiples that they to feel talking and look companies we comfortable We felt were people. not felt at comfortable long-term more -- in XX, And that's the playing comfortable In that I'm were something not And we in. with. EBITDA. XXx we're we're that, addition we here when they were getting that commanding

our people invest shareholders, going and in We for and in our have And taken. that's our we've a to really strategy. long-term We're that's approach better strategy. the

Tim Madey

you long-term think year million maybe returns be of to the -- With do close this or that debt EBITDA long-term running $XX I to EBITDA you take? year, $XX last around would the million able what on kind how mean, about

Dick Warzala

Go ahead, Mike.

Mike Leach

to facility flexibility our within said, keeps with grow that we I think, some us, continue an holiday. I size, there be shape in X.X and more acquisition us allowed may Like current terms as I as that's And well. regard. our future least, EBITDA start other above, $XX depending thinking, potentially million in we that debt can certainly about and my we there's that on avenues thinking at as market approach trajectory mean

and the So I that to in to arrows and again, flexibility, we the tools have that I of flexibility. about continued going add we used is in our haven't past, continue our think think to it's quiver terms think growth I or

Operator

Please Sturges question. with your comes John next from with the of Our line question Oppenheimer proceed & Co.

John Sturges

the just stream? changes down percentage start curious what Roughly I'm is understanding, ago, started you solution in you'd revenue your X of years have seen And -- you my path. terms

Dick Warzala

-- company. different I we was it's a today, we now, say John, actually -- then started as it a some good when started we X internal capability, as added was years along with acquired know it as back and XX, where some and companies about that pieces some small acquisitions. small a in gearing capabilities added acquisitions we motor in number what electronics levels we've well with And a talking additional a but added as Sure, by Allied the would capability, really of of some development it XX feedback number -- ago, small way we to added doing and ago we we years getting formed Motion well question. go we particular, pieces of you, acquisition, before it Allied started motor then

But starting say the solutions So really to items the is some take that's -- greater traction and developed than to level, before future we're the for is that for -- business business the taking working on and integrated the it started before years four sooner it's XX%. four thing than the to are three last years future hold you ago. would I and where in

and software from commitment to we to is and what's look side key. on. go at the our you it I absolutely stickiness to go of So continue value that's and is it up, in encouraging. think -- piece the Company quite of the use to the when going invest in it's that electronic and it's It's applications the -- that here integrating going It's

Operator

of like Ladies And would management I remarks. and gentlemen, closing we have reached call session. the to back question-and-answer the the turn end for to

Dick Warzala

lively questions. Well, everyone with for call very many thank you

I think this it's record probably a time.

So Allied we for your interest Motion. in thank you

join Conference at will and we're of interested, Boston Minneapolis Craig-Hallum ROTH you Conference us, hope are for international, who those be Conference the on us And you to the May in England new in attending June going London, XX We on XX. XX. go there. XX May on we Industrial in For can the KeyBanc to

for Thank at us you to any after out day. our and to time, all and your talking to great look second quarter forward we you please have a results. to always, reach free feel again As participation,

Operator

This concludes today's conference.

for may You time. disconnect you at participation. your your lines Thank this

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