ALNT - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Allient Inc.

Second Quarter Fiscal Year 2024 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, Deborah Pawlowski of Investor Relations for Allient.

Deborah Pawlowski

Thank you, Joe, and good morning, everyone. We certainly appreciate your time today as well as your interest in Allient.

call Jim Warzala, Officer. Michaud, the and Chairman, on and CEO; our me are our Dick President Joining Chief Financial

open fact, which, our he on progress welcoming the call in Q&A. Dick an and up June join update his going year. we XXXX In earnings to and results are first provide review X Jim this strategic with quarter for joined outlook, the just to and will company's Jim after Allient second on line us me and

should the accompany of You -- market financial that discussion. today's were website can have not, find our that with If along those the after posted results at a copy allient.com, on it there of released will closed. you slides yesterday the

turn statement. X slides, are the for those Harbor If you reviewing to Slide please Safe

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

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

for prepared or of this in as consider accordance the a information additional You GAAP. presentation in should with isolation results substitute not

please of Dick GAAP earnings it to the to non-GAAP turn over turn reconciliations accompanying that, Slide to as well measures provided begin. the in the and X, will comparable slides. With have I We release as tables to

Richard Warzala

Thank you, Debbie, and welcome, everyone.

new CFO, on to has mentioned, who for delve been our call discussion, as now I'm months. with the this with quarter's Before X excited us Deb into be we over just

Jim gain support engaged time, advancement given to roles. his of of been NOW to this intimately similar to Simplify of and Accelerate with our in experience our types our especially with strategy, team the previous initiatives his has understanding During an processes

a both public brings an achieve helping contributions background will private in we our As transforming companies, which finance to and makes ensure financial that establishing confident in addition team. him operations goals. valuable leader multi-national instrumental high-performing a Jim organizations, extensive strategic of We're and to be our Jim's

market the to the of I to efforts had team on am address quarter. our we've of to proud Moving the headwinds face. that

destocking quarter as June. where in While This consumer shift demand. we as our automation decently, broadly most served evident markets, acutely significant which most a felt the in in saw demand industrial the in powersports market, across a of was was decline started but well reflects off continues reduction

is the combined As with also have noticed, year-over-year not-so-distant inventory already push-out we level of in in reported extended higher result note end similar may the in of demand that believe in markets rates, orders you reductions market and revenue. I especially reduction companies challenges their ultimately with a political should several the future apparent public interest uncertainty. adjustments, have

Accelerate to diversification timely. our Nonetheless, benefit electrification, macro more to be automation. could does somewhat we actions as help continue NOW energy of and Our to conservation from trends not the Simplify

approximately conditions, more annualized even accelerated we stronger an drive we are current more savings have realized and $X date power. And relevant. market be reorganize our given on path to in million discussed, to are As earnings to productive

replacement mix lower of sales included incremental margin from acquisition. most mix the inventory unfavorable The impact and Our our with sales industrial recent decremental margin reflects margin top-line higher softness, reserves. automation

the capacity the the future. and with combined integration drive acquisition improved process profile SNC simplification will of our expect gain implementation an in We with plans our the margin of

As noted to the current meaningful NOW Accelerate Slide market given even conditions. more is plan X, Simplify are on

working As second we of production an the to mentioned, we're the in implementing cost A involves $X U.S. additional XXXX. transferring various the we executed lower-cost facilities million in annualized $X focus million on cost savings reductions existing in from And Mexico. restructuring of second our annualized quarter. half activities key specific in operations in

workforce inventory demand. Additionally, with discuss Jim our operations we reduced most align and the expected the related restructuring to quarter will these adjustments global have further to in across actions. charges

are strategy confident our to remain driving structure, reduce the decisively future that, over Jim review our to programs implement strength financials. While our for at value a growth. we it fundamental of let more moving proposition. With long-term and in to We me aimed in-depth cost the we of continue turn

James Michaud

Thank everyone. you, Dick, good morning, and

this Today, short I'm with my part down efforts. Starting earnings The contribute our the fluctuations overview group. second such exchange was an I've warm of I've of quarter performance talented X%. the team. and focusing been and welcome are year-over-year key my of including $XXX,XXX. my a to work opportunity million call our Slide currency impressed will As Allient to dedication impact by we is the I of by rate In be company, to and financial in to time team our start on by of where with nominally I excited the for unfavorable ongoing the first for gratitude to was want for expressing here, revenue foreign from our resilience $XXX the by received areas highlights success. provide quarter, X,

in counterbalanced quality by vertical. in and ramp up were partially material offset in by impacts the sales, market within were our thanks markets. spots automotive, sales the X% in the center agricultural to programs driven industrial won over new lower HVAC we from to reduced XX% by acquisition. a in weakness commercial that quarter, our demand These and increased demand automation, During notably vehicle These noted, pumps years. market despite Dick decrease a handling data power saw the recent and and markets continued industrial The experienced strengthened the of sales, have demand bright additional our as powersports and decline primarily

customer to of aerospace medical markets in space a on broad-based, solutions, persistent the sector, and had was bankruptcy Our to softness the space years. sales trend primarily products the persisted The industry. timing has also defense but saw past large in and a due within In few the this that due over an declined impact decline, a primarily medical demand. has which mobility program also

XX-month trailing benefited basis market improvements, reflecting as trailing vertical saw agriculture. on offset and demand working. Slide with quality. a the seeing from our environment by supply basis, over are with side fallen On the highlights months catalyst the we has trailing several we opportunities defense movement XX-month in trailing revenue XX in commercial revenue positive resets on industrial along basis, same However, automotive for that the chain across markets are the X shift on with power basis defense position industrial and notable mix largest a space total higher demand past trailing a The impacts the change. The decrease growth remained reflects in notable lower as a demand each of XXX industry the a Both and XX% market, of medical in automation back quarter. XX-month aerospace maintained the the recently expansion strong levels. XX% powersports points. but the sales, inventory flat Vehicle its industry our accounting as had for for months' with

sales to total for accounted X% trailing the channel, sales, small distribution of XX-month Lastly, a for component period. the

mix, and point gross basis was decline was SNC detailed Slide but profile, to and million XX.X%. the income The including million rest due in dilution on work impacted was $XX.X can million in engineering acquisition XXX mentioned restructuring the XXX and of on attributable bankruptcy margin which XXX gross write-down and the of have As inventory projected mostly to points, were the the Operating and unfavorable were Costs was expenses of from profit. were severance. restructuring XX.X% get We related operating Slide margin operating our a margin X, costs the under higher basis in costs. business expected $X.X and X.X%. and $X.X we income, $X.X you revenue, of points realignment absorption gross basis of related volume expenses profit of lower primarily costs business increase non-cash restructuring of in the order margin resulting see to to can due X, million Half primarily to and the there. On earlier demand. believe inventory to reserves. command underlying I an was to changes higher lower

year for to income improving XX.X%. innovative $X.XX income rate $X.X The adjust XX%. and to adjusted XX% to million requirements effective EBITDA anticipate are We We per intangible company. address our the our metric to of Adjusted per income non-cash net tax diluted was was gauge an $X.XX. for million focused share internal operating and rate full conditions. Slide was progress be performance. of use quarter on XXXX our the intensely profitability amortization of shows approximately an acquisitive assets as tax $X.X the the and for X market accounting share We earnings or diluted net despite

adjusted actions us are margin this revenue. a a Given our We basis. get EBITDA be business of simplification mid-teen should pressures, consistent adjusted believe intended million EBITDA on $XX.X came at or in more margin there XX.X% and to

year Slides months income. XX was cash and improved $XX.X sheet net lower Year-to-date, to first Let the Capital the on prior for efficiencies offset generation million, operations million. adjustment non-cash as expenditures totaled working $X.X and capital helped talk me over cash our balance and from XX. to X

acquisition. previous we XX.X% in to million, approximately million. Inventory increased year-end our paid growth $XX $X.X X.Xx quarter. revised million high-potential, stayed the we expenditure days to million projects. outstanding range Consequently, -- concentrate from the to million in $XX While Debt invest of opportunities, our to XX year-end, our declined debt continue down on fine-tuning net plans to cash to million, due of forecast several of to of capitalization. $XXX flat $XX $XX from to our down $XXX XXXX while capital days. XXXX are range turns sales net was million of We representing debt SNC we high-value a Total about at to expectation have from

defined credit our leverage agreement, X.XXx. bank in our As ratio was

are you XX, will I the now reduce debt. With Slide Dick. conversion advance over to if priorities that, strengthen turn to back call financial Our to cash and

Richard Warzala

projects continue quality XX% is in improvement our impact inventory demand power our commercial driven customers somewhat and increased orders in automotive quarter, The although the levels. an Orders as Jim. you, by sequential encouraging, reduce programs. of Thank is on to up ramp the there sequentially

result Additionally, we decrease upcoming be launch may certain a are experiencing delays the of election interest of in projects, rates. and in the expected which

are push-outs, Importantly, being minimal some are and while order we appropriately. order getting cancellations addressed

times lead and through we the continued as to The year slowdown that backlog extend were in in improvements ship and decline our into this market a reduced supply conditions. will were within previous the products We result the attributed is XXXX. backlog as expect chain of

outlook XX. is Slide Our outlined on

few steps with with We environment substantial are half customers through over run This challenging returns quarters. to business to projection some supply We next decisive relatively of conditions. the $XXX industrial revenue annualized below the the erosion reflects chain to a by market as current anticipate the and our rebalancing taking environment. our market fall expected million inventory weak XXXX to rate second automation align persist our normal,

uncertainties, go in expect stronger back settling some and that lower inventories of of rates should time revenues reduction We normalized interest the mid-XXXX. to

our strengthen our believe competitiveness. we can enhance customer service As and operations, long-term we we streamline

execute million higher further this with accelerate is and market and annualized this operator, is that, $XX power. With savings the to emerge current a This of easier identify with goal target more handle we position actions We in to as business and let's make for Our to the year enterprise our better speed line expected questions. and product with us target strategy aim industrial to stronger, to environment macroeconomic open Allient challenges. to our beyond also new resilient achieve ensure to earnings to innovations.

Operator

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

Danny Eggerichs

significant of demand. digging today. what into on just seeing, you off the saw you're This Greg more and for is guess, I maybe fall Eggerichs June, what in kind Danny

you said just as on guess, end so moved Are I August, the early or was I geography, You of what I markets more weakness automation seeing July through quarter-to-date seeing other powersports. across of into towards and changed? that that give you guess kind some market, how industrial guess, anything end far? can you're weighted has now spread we've and that

Richard Warzala

expect do June say experienced then would we and to solid see had off. a I in that we that mentioned we remainder well. drop relatively XXXX. we of continuation significant year to through be Sure, were potentially was the into the And Danny. you what May and a June. and here, think I will started clear, quite that April just mentioned We of quarter as continue, we the that

incoming the and signs there will in that what so to some We of come encouraging out back. and and rates, and see a couple at carried hard caution asking away But Looking look forth, as see mixed may occurred you're And did order month. were of gauge on couple positive things things that not be were based signals. would has signs did us get to drastically. change to a it's to X there that we going I July

And geographic impact the what markets, some So the automation, here, other and stated with we've Europe again, on And didn't was saw inventories but impacted. had, rebalancing us industrial markets. we sticking signals. for about we talk and the the that certainly, much mixed it especially

us be become readjusted into on and take cost That's year business for our year. cost next a to be now, will it's continue to and and lower going based getting more profitable our to emphasis adjusted, our out, to focus So this it -- focus is base. the aligned, right company on a really

Danny Eggerichs

before rates you the also early return the Yes. mixed I run million sounds over of of think kind several mean, a the in normal rate start that half kind kind that I -- even signals it chance maybe and said of $X mid-XXXX. kind quarters, the next guess, there's like uncertain returning XXXX through visibility. inventories maybe $XXX and in based second or but maybe on maybe some run million of -- just I

well levels I looking into before last of expect next into gradual do year expect out should or improve? kind million kind to So of guess, really XXXX, to rate normalized you in as starting QX $XXX that early to starting we the year improvement more getting before run

Richard Warzala

we that we the and makes and today, that would business to the everybody keep the just to running with -- run the we there what market Yes. sure something of streamline, dynamics would rate, that our take change, that million I it I on the would I it. see continue it of if that be say, we annualized changes know our will to and saying QX. and abreast certainly, based us cost $XXX into expect to that's will to But And to the start some important make think continue be case, continue reorganize, more focus that anticipation for out, the to focus. certainly

be in to half adjustments, in additional So we second we mentioned realigning also, just talked the I you, and would just fully I pretty we'll in what running XXXX, to to our of Things half. control the our business take not take we executed business identified Cost early here, I if guess could already be the that substantially running place. And $X will you about. tell manner. that they and But that's rapidly swings here just we're and we'll the very can of say done. the it million. things uncertainties business, -- control about will second change we market and get the certain fall into talked change not could We're

Danny Eggerichs

level to that to on And things worsen take-outs continue additional million, added of you're cost you take-outs, you're levers I kind buoy that at of pull for $XX Is of some profitability? of $X some stay there's cost million for like know still than there kind now more feel just looking if expecting? you this opportunities. Sure. Do mentioned more or longer

Richard Warzala

not. the and it And forth so taken to everything and whether identified. much are markets -- definitely of and It's are a I get look execute just opportunities time. will of there really some additional structure-wise we've at have in do matter or mean, and we hard there to continue a Yes. nothing short period can worsen how implemented

Operator

the next of Kearney line from question Opportunity comes Rebirth the Partners. And American Brett with

Brett Kearney

kind what Curious up. some programs what hearing vehicle commercial for from customers the the of recent to you're takes well? some of those awards of looking and won? with economy, ramps pushing as customers puts forward vehicle Great global in new And other the of the hear kind you've ramping are new in and with

Richard Warzala

has most that. Sure. or EV think the it. a our been I the electric the -- are solutions or about electric Well, of it's it's side the interesting of that to it's what vehicle we're side to been and news if agnostic there in And combustion engine engine, agnostic -- an

and had did in experienced a downshift we demand that there the been in So see second that quarter. we

I'm So X it month. was push-out X essentially of -- quarter a sorry,

see wouldn't and we well. working think will should forward as are increase it's programs adjusted up should do to steady today, I it's beyond -- so other been going some that -- going I they've demand that year, on we it this next for have that we but not we're there. where suggest And but ramp year

there So an was impact there.

and go, go, ship that's some big have quite going we're for the significant. and that customers was it we've forward adjust key you've all hopefully then demand. adjusted here it a adjustments Although, all and steady-state and was sudden, everything was ship, moving see hold inventory we'll relatively challenge of to they The where got ship, -- go, at were go, been short some to challenges go, got on,

Brett Kearney

ask Excellent. Very And one more helpful. then on just I if can A&D.

guess, or company? as curious for you market as look the well space seeing, you're opportunities X, as Just I what the out defense next both year traditional

Richard Warzala

Yes, very encouraging.

have are that areas that. significant some had some in to a would of We seen several And up. they a to there's projects think -- have of we've the -- slow already have at see ramp-up the right expected number been pushed that on I the of some ramp starting but past to worked in we've forth, point, And mentioned so applications. demand to the were the and we decision-making in we and projects. And

opportunities We've too. is a So as see good medical. as medical bright spot in some A&D well

Operator

And with our question next Northland comes Instructions] [Operator Ted line Jackson from Securities. of the

Edward Jackson

So my questions things. couple are a of

on margins? savings how that's coming, already with OpEx the model regards and how all, gross of million to should kind through cost rolls and million that done of the think you've First $X the $X about we that

Richard Warzala

Sure. cost. Primarily fixed we're focused on

but an answer cost there that to costs in mean, reduced -- granularity little the focus also Jim reduced, were mean, well. as is more where the I can primarily our there fixed as were it's as -- a in I maybe manufacturing some so that's -- And reduced, volumes are this was. far OpEx say, variable costs and that as needless

we as savings, So and incremental not strictly labor in don't direct labor the that, a but we -- what been it number that's although fixed manufacturing we're take reporting has Mexican cost a as We're well. in we overhead part of And between small was expenses. relatively did certainly, was saw U.S. portion. Most that the there's reporting. differential been labor of operating some

-- far that As as far beyond as is the as your question timing?

Edward Jackson

next was done. of mean, million of it is think we it. your how kind like about sounds $X already kind of the would part That I

Dick. or mean, So year. million think about sounds we fourth the $X maybe I of be see on what great we'll can this that that coming of in the kind half color of first interpreted, next quarter. in some would some too, but I second it's then that And like play

Richard Warzala

we'll I experiencing, in will million half. here be million, second about, mean, been most first the Yes. $X the next tell early half. in it second we've the against it implemented on would realizing $X done and correct you of And of some has and it's in that benefit that immediately. be it's the we -- already talked of I in the taken absolutely already charges The you're

will as So of see we benefit to well. some that start

there's have full mentioned, make Going but in time we benefit million that in more actions we execute that in the there's year, we'll just the manner, more other a them sure need reductions. $XX and that take. proper next a the we little It's to cost of we bit come. as And can

Edward Jackson

saw and, generally And question mix just some pretty really stood speaking, to with color to quarters, guidance. will regards from are markets you that assume going sure. going much expect for can look make million it, with across you to be but might have an automation the that great. would all concentrated mean, business. run perspective, weakness that geographic And then tie market I to that next this into your vehicles. end want together, perspective? can that a the industrial being $XXX we you where you been My be? When be to from several that I already kind you ones if weakness call weakness rate out mean, next Okay. provide is of that I and it's I'm revenue where the let's recreational see the outlook, for at addressed,

Richard Warzala

Sure.

mean, So they would again, what what and customers market see I future are attention to -- powersports, the we pay in we and expect saying coming. and our the trends the trends

to I the you one wildcard. a that's far quarter seeing that to here. not but uptick this other planning is as applications, mentioned piece aerospace we yes, of us. And across the return get from we much fourth for that So I'd approach That go, the demand you, I back markets We're medical. it's an a pretty say and come see certainly that it's space say think, taking -- decrease, as in we industrial our a to much and we what and that the rapidly. there cautionary defense, it we're see year But to have has expect going The certainly as business to the in overall, potential the level board. would weaker better to already

and agricultural as overall past or you and got can the niche and market of margin And Ted, do not mentioned, a yes, so -- foundation really significant forth. side of that about careful, agriculture forgetting industrial, because stronger we're improvement. The sure the the to that that you the and goals planning has the And Europe just the achieve and stronger. industrial So aggressively in specifics it seen play we we're ourselves information for of the markets to know, it, be it get needs we to as we're and get forth. geographic classified established cautiously I be make downturn acting at have we've to in it's not that can the it's you is see in so vehicle, equipment what automotive, while out markets because there pockets look we as in in to

to down that talking So going we're say and/or would where specific The some some that in to of where see couple cautiously I down myself, should some to XX% and beyond I think this just plan go we're we look do general we X% structure X% aggressively be to to increases some and as But to again, there we've and further market repeat were back. increases, in starting say for said to going to is cost geographic, some while coming acceleration the -- other really strengths that, I'll had we we're been going it's in the get than we've you And at is that achieve, mixed others. margins line XX%. years. we signals perhaps you the react in in last markets. to the new reflects of we programs we -- about it the Europe have But achieve kicking that some have

Edward Jackson

you right macro the on, things down assume amount are still with probably a side But the That's fair strategy M&A that pretty challenging to my fair have like front? get you logical of effort be kind sense. keeping that the -- it makes active is backdrop, of aside the a is plate question to business growth question. a and given or full it of Okay. rightsized going restructuring My and of is growth battened now going final kind on you while ship a set just last

Richard Warzala

mean, It's forth. down focused on that. and the debt getting so cash on fair I and we're we're focused to say paid

for and the in here. It's to we short-term I So future. opportunities identify the yes, continue mean, groom

after a We in will exceptional done different to than something -- and we'd we've past. have to would go in the what it be have way totally it

acquisitions. right operations, So in on the groom in is after the the aggressively not now. going internal our long-term open the But focus continue meantime, things market for we're to

Operator

question back session. our to I'd to the concludes answer Dick Warzala closing like for and This turn call remarks.

Richard Warzala

in for Allient. joining us Thank call and interest everyone today's on your you for

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

Operator

This concludes today's conference.

now your lines. may You disconnect

Allient (ALNT) 8 Aug 242024 Q2 Earnings call transcript