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Introduction & Market Context
Allient Inc. (NASDAQ:ALNT) presented its first quarter 2025 financial results on May 8, 2025, highlighting sequential improvement across key metrics despite year-over-year declines. The motion control and power solutions provider reported revenue of $132.8 million, up 9% sequentially but down 9% compared to the same period last year.
In premarket trading following the presentation, Allient shares rose 2.58% to $22.69, building on the previous day’s closing price of $22.12. This continues the positive momentum seen after the company’s Q4 2024 earnings beat, which had triggered an 8.26% stock surge.
As shown in the following overview of Q1 performance, Allient demonstrated improvement in several key metrics compared to the previous quarter:
Quarterly Performance Highlights
Allient reported Q1 2025 net income of $3.6 million, representing an 18% sequential increase but a 48% year-over-year decline. Adjusted earnings per share reached $0.46, up significantly from $0.31 in Q4 2024, reflecting the company’s ongoing cost reduction initiatives. Gross margin improved to 32.2%, marking the third consecutive quarter of margin expansion.
Operating margin increased 130 basis points sequentially to 6.6%, though it remains 160 basis points below the year-ago period. The company’s adjusted EBITDA reached $17.5 million or 13.2% of sales, up 24% from the previous quarter.
The revenue trend over recent quarters shows a stabilization and sequential improvement after several quarters of decline:
Orders totaled $137.6 million in Q1, up 17% sequentially and 13% year-over-year, resulting in a book-to-bill ratio of 1.04x. This order strength, particularly in power quality solutions and aerospace and defense, contributed to a 3% sequential increase in backlog to $237.3 million.
Segment Performance Analysis
Allient’s performance varied significantly across market segments, with aerospace and defense showing strong 25% year-over-year growth while the vehicle segment declined 34%. The medical segment remained flat, and the industrial segment decreased by 10%.
The company’s trailing twelve-month revenue mix shows a strategic shift toward higher-growth and more stable segments, with aerospace and defense increasing from 13% to 15% of total revenue, while the struggling vehicle segment decreased from 24% to 18%:
This diversification strategy aligns with comments made during the Q4 2024 earnings call, where executives highlighted growth opportunities in defense and data center markets to offset challenges in powersports and industrial automation.
Strategic Initiatives and Cost Reduction
Allient continues to execute its "Simplify to Accelerate NOW" initiative, which delivered $10 million in annualized savings in 2024. Management expects to reduce costs by an additional $6-7 million in 2025 through operational realignment, lean manufacturing disciplines, and simplified customer interactions.
The company recognized $1.5 million in restructuring and related charges in Q1 2025 as part of these initiatives, including costs associated with the newly announced Dothan Machining Center of Excellence. These efforts have contributed to the sequential improvement in gross and operating margins:
Balance Sheet and Cash Flow Improvements
Allient generated $13.9 million in operating cash flow during Q1, a 52% increase compared to the same period last year. This strong cash generation, combined with disciplined capital expenditures of just $1.1 million, resulted in free cash flow of $12.9 million, more than double the prior year’s figure.
The company’s improved cash conversion allowed it to reduce net debt by $13.6 million to $174.4 million, lowering its leverage ratio to 2.91x from 3.01x at the end of 2024. Cash and cash equivalents increased 32% to $47.8 million:
Inventory turnover improved to 3.1x in Q1 2025 from 2.7x in 2024, reflecting management’s focus on working capital efficiency. Days sales outstanding increased slightly to 61 days from 60 days in 2024.
Forward Outlook
Looking ahead, Allient expects challenging market conditions to persist through the first half of 2025. Management is focused on adapting to the complex global landscape, including proactively managing risks related to evolving tariffs and rare earth trade constraints.
The company’s financial priorities for 2025 remain centered on reducing inventory, strengthening working capital management, taking out costs, and reducing debt. Capital expenditures for the full year are expected to range between $10-12 million, and the effective income tax rate is projected at 21-23%.
While Allient did not provide specific revenue or earnings guidance, the sequential improvement in orders and margins, coupled with ongoing cost reduction initiatives, suggests the company is positioning itself for recovery as market conditions stabilize. The continued strength in aerospace and defense, along with the company’s diversified business model, provides some insulation against weakness in other segments.
Full presentation:
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