ALNT 10-K & 10-Q changes, risk factors and insider trading

One of these initiatives includes product line platform development and rationalization to meet the emerging needs of our target markets. Our platform development emphasizes a combination of our technologies to create increased value solutions for our customers while seeking operating efficiencies. The emphasis on new opportunities has evolved from being an individual component provider to becoming a solutions provider whereby the new opportunities utilize multiple Allient technologies in a system solution approach. We believe this approach will allow us to provide increased value to our customers and improved margins for our Company and are demonstrated in our acquisitions completed in 2024previous and 2023.years. Our strong financial condition, along with AST continuous improvement initiatives in quality, delivery, and cost allow us to have a positive outlook for the continued long-term growth of our Company.

We test the reporting unit’s goodwill for impairment as of October 31st of each fiscal year and between annual tests if an event occurs or circumstances change that may indicate that the fair value of the reporting unit is below its carrying value. In conducting this annual impairment test, we may first perform a qualitative assessment of whether it is more-likely-than-notmore-likely-than not that the reporting unit’s fair value is less than its carrying value. If we determine that it is not more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, no further goodwill impairment testing is required. If it is more-likely-than-not that the reporting unit’s fair value is less than its carrying value, or if we elect not to perform a qualitative assessment of a reporting unit, a quantitative analysis is performed, in which the fair value of the reporting unit is compared to its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the excess, limited to the amount of goodwill allocated to that reporting unit.

ChangesWe do not believe that our reporting unit is at risk for impairment. However, changes to the factors considered above could affect the estimated fair value of our reporting unit and could result in a goodwill impairment charge in a future period. As of December 31, 2024,2025, we have $131,789$134,332 of goodwill recorded on our consolidated balance sheet, representing approximately 23% of total assets. A 1% write-down of our goodwill would decrease our 20242025 net income by approximately $1,000, or $0.06 per diluted share.

REVENUES: The decreaseincrease in revenues for 20242025 reflects decreasesincreases within each of thecertain target markets, most significantly in Vehicle.Industrial Decreasesand Aerospace and Defense. Increases 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 slowingincreased demand at our customers in thepower currentquality period,solutions partiallysupporting offsetdata bycenter revenue contributed from the 2023 and 2024 acquisitions.infrastructure. Our sales for 20242025 were comprised of 55% to U.S. customers and 45% to customers primarily in Europe, Canada and Asia-Pacific. The overall decreaseincrease in revenue was primarily due to ana 8%3.5% volume decreaseincrease and a minimalfavorable 1.2% foreign currency impact. The acquisitions completed in 2023 and 2024 contributed an incremental $40,856 of revenues in 2024. See information included in “Non – GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of revenue to revenue excluding foreign currency impacts.

ORDER BOOKINGS AND BACKLOG: The 8%15% decreaseincrease in orders in 20242025 compared to 20232024 is due to an 8%13.4% decreaseincrease in volume withand minimala favorable 1.3% foreign currency impact. DecreasesIncreases in bookings are primarily due to a slowingincreasing demand at certain customerscustomers, beginningprimarily inpower thequality secondsolutions quartersupporting ofdata 2024.center Theinfrastructure acquisitionsthroughout completed in 2023 and 2024 contributed an incremental $39,993 of orders in 2024. The decrease in backlog as of December 31, 2024, compared to December 31, 2023 includes an incremental backlog of $7,353 from the acquisition that was completed during 2024.2025.

GROSS PROFIT AND GROSS MARGIN: Gross margins decreasedincreased to 32.8% for 2025, compared to 31.3% for 2024,2024. comparedGross toprofit 31.7% for 2023. Theand gross margin decreasepercentage waswere largelyimpacted favorably by higher sales volume, improved product mix, and operational improvements driven by lower fixed cost absorption on lower sales volumes, as well as the gross margin impact of our mostSimplify recentto acquisition.Accelerate NOW strategy.

SELLING EXPENSES: Selling expenses increaseddecreased 2%3% during 20242025 compared to 20232024 primarily due to increased costs in connection with our acquisitions and the mix of sales with commissions. Selling expenses as a percentage of revenues were 5%4% and 4%5% during 20242025 and 2023,2024, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreasedincreased by 5%4% during 20242025 compared to 20232024 due to lowerhigher incentive compensationcompensation, asoffset wellpartially asby cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy. As a percentage of revenues, general and administrative expenses were 11%10% and 10%11% in 20242025 and 2023,2024, respectively.

ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 5%2% in 20242025 compared to 2023.2024. The decrease reflects the cost reduction actions taken as part of our Simplify to Accelerate NOW strategy. As a percentage of revenues, engineering and development expenses were 7% and 8% for each of the years ended December 31, 20242025 and 2023.2024, respectively.

AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets increasedremained 1%flat in 20242025 compared to 2023, due to the inclusion of the full year of intangible asset amortization of the 2023 acquisition and the intangible asset amortization from the 2024 acquisition.2024.

INTEREST EXPENSE: Interest expense increaseddecreased by 7%1% in 20242025 compared to 20232024 primarily due to higherlower average debt balancesbalances, andoffset partially by higher interest rates, offsetwhich are mitigated in part by the impact of interest rate swaps.

INCOME TAXES: For 20242025 and 2023,2024, the effective income tax rate was 21.9%23.3% and 18.9%,21.9%, respectively. The effective rate differs from the statutory rate primarily due to state income taxes, the impact of foreign tax provisions in the U.S., foreign tax rate differences, Sectionsection 162(m) compensation limits, the benefit of Research and Development tax credits and incentives and withholding taxes on foreign distributions. The effective tax rate for 20242025 was higher than the effective tax rate for 20232024 primarily due to increases due to impacts of section 162(m) compensation andlimits, withholding taxes on foreign distributions, and the impact of the mix of foreign and domestic income, partially offset by increases in certain credits and incentives,incentives and the realization of certain deferred income tax assets that had been reserved in prior years, as well as the impact of the mix of foreign and domestic income.years.

NET INCOME AND ADJUSTED NET INCOME: Net income decreasedincreased during 20242025 compared to 2023,2024, primarily due to operating income decreases,increases, reflecting decreasedincreased revenues and lowerhigher gross margin, offset partially offset by a decreaseincreases in operating expenses.

Revenue excluding foreign currency exchange, Organic growth, 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.

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 acquisition and integration-related costs, restructuring and business developmentrealignment 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.

The Company’s calculation of Revenuerevenue excluding foreign currency exchange impacts for the yearsyear endingended December 31, 2024 and 20232025 is as follows:

During 2024,2025, the cash provided by operating activities decreasedincreased from 20232024 primarily due to decreasesincreases in cash due to an increase in net income, as well as changes in accounts payablepayable, and accrued liabilities, as well as a decrease in net income, offset partially by increasesdecreases in cash due to changes in accounts receivable and inventory.

The cash used in investing activities in 20242025 increaseddecreased as compared with 20232024 due to $20,000 in cash paid for the acquisition of SNC, offset by $5,129 of cash paidSNC in 2023 for the acquisition of Sierramotion,2024, as well as by a decrease in capital expenditures of $1,920.$2,496. The Company expects 20252026 capital expenditures to be approximately $10,000 to $12,000.

Cash used in financing activities in 20242025 as compared to cash used in financing activities in 20232024 reflects the borrowings of $20,000 from the Amended Revolving Facility to fund the SNC acquisition and the $50,000 of fixed-rate Notes issued in March 2024 that were used to pay down the Revolving Facility, as compared to the $11,000 borrowed in 2023, primarily to fund the business acquisition activity in the third quarter of 2023 and, to a lesser extent, inventory requirements during uncertain supply chain environments in 2023.Facility. Debt repayments, excluding the pay down on the Revolving Facility of $50,000 from the Notes issuance, of $18,433$44,448 and $28,395$18,433 were made during 20242025 and 2023,2024, respectively. At December 31, 2024,2025, the Company had $168,962$124,962 of obligations under the Amended Revolving Facility, excluding deferred financing costs and $50,000 for the Notes issued in March 2024.

As of December 31, 2024,2025, the unused Amended Revolving Facility was $111,038.$155,038. Additionally, the Company has a $150,000 fixed-rate private shelf facility, under which $50,000 of borrowings are outstanding at December 31, 2025. The amount available to borrow may be lower and may vary from period to period based upon our debt and EBITDA levels, which impacts our covenant calculations. The Amended Credit Agreement matures in March 2029.

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 bearbore 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 bearbore interest at 6.46%.

The Company declared dividends, in total, of $0.12 and $0.115 per share during 20242025 and 2023, respectively.2024. The Company’s working capital, capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the Amended Credit Agreement (refer to Note 7, Debt Obligations, of the notes to consolidated financial statements for definition and terms).

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,Williamsville, 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.

Throughout 2025 and intothrough the first two quarters of 2026, we continue to refine our strategy to expand our vertical market focus to accelerate our growth. Throughout its history, the Company has expanded our capabilities to be a leading global provider of motion solutions. More recently, we have been building our controls and power technologies, both organically and through acquisitions. The evolution of these additional pillars of our business enhances our overall value proposition, expands our addressable markets and is aligned with mega technology trends. These advancements required us to refine our strategy to leverage the value opportunity that exists in three technology pillars – Motion, ControlsControls, and Power.

One-time costs in 2025 were approximately $4 million, primarily related to employee severance and other personnel-related expenses. Additional expenses of $862$641 and $1,503 have been incurred during the first quarterthree and six months of 2026, respectively, with a total of approximately $2 to $3 million anticipated to be incurred throughout 2026, and will be substantively paid by the end of 2026.

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

In February 2026, the U.S. Supreme Court ruled that certain tariffs based on the International Emergency Economic Powers Act that were assessed and incurred in 2025 were unconstitutional. Following this ruling, the U.S. Court of International Trade began to develop a process to assess how to refund tariffs that were paid under the applicable executive orders. At this time, the Company has not begun the process of applying for, nor received any,for refunds of tariffs paid. However, no tariff refunds have been approved and the Company has not received any refund payments. We continue to monitor the recent applicable rulings and will continue to monitor and consider what refunds can be pursued.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

REVENUES: The increase in revenues during the three months ended MarchJune 31,30, 2026 reflects increases in many of our target markets, most significantly within Industrial and Vehicle.Aerospace and Defense. Our revenues for the three months ended MarchJune 31,30, 2026 were comprised of 50%54% to U.S. customers and 50%46% to customers primarily in Europe, Canada, and Asia-Pacific. The overall increase in revenue was primarily due to a 9.3% volume increase and a foreign currency increase of 3.8 % and a 0.8% volume increase.0.9%. Organic revenue increased 0.8%9.3% during the threesecond monthsquarter ended March 31,of 2026. Organic revenue is a non-GAAP measure. Refer to information included in “Non-GAAP Measures” below for a discussion and reconciliation of the non-GAAP measures.

ORDER BOOKINGS: Bookings increased in the three months ended MarchJune 31,30, 2026 compared to 2025, due to a 10.8%48.3% increase in volume and a 4.1%0.8% increase in foreign currency impact. The increase in bookings from the prior year quarter is impacted by improvements in customer demand levels across certain target markets, primarily within Industrial and Vehicle,Aerospace and Defense, in the current year.

GROSS PROFIT AND GROSS MARGIN: Gross profit increased to $45,375$53,592 in the three months ended MarchJune 31,30, 2026 from $42,752$46,356 in the three months ended MarchJune 31,30, 2025, and gross margins increased to 32.7%34.9% for 2026, compared to 32.2%33.2% for 2025. Gross profit and gross margin percentage were impacted favorably by higher sales volume, improved product mix, and operational improvements driven by our Simplify to Accelerate NOW strategy.

SELLING EXPENSES: Selling expenses increased 17%26% during the three months ended MarchJune 31,30, 2026 compared to 2025, reflecting higher commissions driven by higher sales volumes, as well as higher marketing and sales-generating costs. Selling expenses as a percentage of revenues were 5% and 4% in each of the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses increased 12%10% during the three months ended MarchJune 31,30, 2026 compared to 2025 due primarily to personnel-related costs and higher software licensing and information technology consulting costs. As a percentage of revenues, general and administrative expenses were 11% and 10% in each of the three months ended MarchJune 31,30, 2026 and 2025, respectively.2025.

ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses increased slightly by 1%7% in the three months ended MarchJune 31,30, 2026 compared to 2025. The increase primarily reflects higher incentive compensation, partially offset by 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% in each of the three months ended MarchJune 31,30, 2026 and 2025.

RESTRUCTURING AND BUSINESS REALIGNMENT COSTS: Restructuring and business realignment costs decreased in the three months ended MarchJune 31,30, 2026 compared to 2025 primarily reflecting costs associated with the transfer of assembly operations from our Dothan, Alabama facility in 2025 and timing of other Simplify to Accelerate NOW actions.

INTEREST EXPENSE: Interest expense decreased in the three months ended MarchJune 31,30, 2026 compared to 2025 due to lower average debt balances.

INCOME TAXES: The effective income tax rate was 21.0%20.2% and 20.2%23.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. We expect our income tax rate for the full year 2026 to be approximately 21% to 23%.

NET INCOME AND ADJUSTED NET INCOME: Net income increased during the three months ended MarchJune 31,30, 2026 compared to 2025, primarily relating to slightly higher sales volume, including an increase in organic revenue, and improvements to gross profit margin percentage, reflecting the actions in our Simplify to Accelerate NOW strategy. Adjusted net income for the quarters ended MarchJune 31,30, 2026 and 2025 was $8,424$13,545 and $7,593,$9,525, respectively. Adjusted diluted earnings per share for the firstsecond quarter of 2026 and 2025 were $0.50$0.80 and $0.46,$0.57, 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 $15,546$21,733 for the three months ended MarchJune 31,30, 2026 compared to $14,376$17,255 for the firstsecond quarter of 2025. Adjusted EBITDA was $17,276$23,715 and $17,472$20,067 for the firstsecond quarters of 2026 and 2025, 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.

The Company’s calculation of Revenue excluding foreign currency exchange impacts for the three and six months ended MarchJune 31,30, 2026 is as follows:

The Company’s calculation of organic revenue for the three and six months ended MarchJune 31,30, 2026 is as follows:

The Company’s calculation of EBITDA and Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025 is as follows (in thousands):

The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three and six months ended MarchJune 31,30, 2026 and 2025 is as follows (in thousands except per share amounts):

The Company’s liquidity position as measured by cash and cash equivalents increased by $470$1,383 to a balance of $41,175$42,088 at MarchJune 31,30, 2026 from December 31, 2025.

Of the $41,175$42,088 of cash and cash equivalents at MarchJune 31,30, 2026, $33,358$35,705 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated back to the U.S. The Company regularly evaluates opportunities to optimize cash available from operations in all geographies.

During the threesix months ended MarchJune 31,30, 2026, the decrease in cash provided by operating activities is due to a decrease in cash inflows on collections on accounts receivable,receivable additional accrued liabilities,and payment of inventory, and prepaid expenses, offset in part by higher net income as adjusted by non-cash operating activity items.items and timing of payments in accounts payable.

The increase in cash used in investing activities in the threesix months ended MarchJune 31,30, 2026 relates to higher capital expenditures. Cash used in investing activities in the threesix months ended MarchJune 31,30, 2026 includes $2,168$7,070 for purchases of property and equipment compared to $1,060$3,189 during the threesix months ended MarchJune 31,30, 2025. Capital expenditures are expected to be between $12,000 and $15,000 for the full year 2026.

The change in cash used in financing activities during the threesix months ended MarchJune 31,30, 2026 is primarily due to debt repayments. DebtNet debt payments of $3,113$7,227 were made during the threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, we had $121,962$117,962 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 MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, the unused Revolving Facility was $158,038.$162,038. The amount available to borrow could 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.

The Company declared dividends of $0.03$0.07 per share during each of the threesix months ended MarchJune 31,30, 2026 and $0.06 per share during the six months ended 2025. 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.