10-Q

927

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024.

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________to _________________________

Commission file number 0-04041

ALLIENT INC.

(Exact name of Registrant as Specified in Its Charter)

Colorado	84-0518115
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
495 Commerce Drive, Amherst, New York (Address of principal executive offices)	14228 (Zip Code)

(716) 242-8634

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	ALNT	NASDAQ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. Yes  ⌧  No  ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).  Yes  ⌧  No  ◻

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act.

Large accelerated filer ◻ Accelerated filer ⌧ Non-accelerated filer ◻ ​ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ⌧

Number of Shares of the only class of Common Stock outstanding: 16,845,378 as of November 6, 2024

ALLIENT INC.

INDEX

PART I. FINANCIAL INFORMATION			Page No.
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets – Unaudited	1
		Condensed Consolidated Statements of Income and Comprehensive Income – Unaudited	2
		Condensed Consolidated Statements of Stockholders’ Equity – Unaudited	3
		Condensed Consolidated Statements of Cash Flows – Unaudited	4
		Notes to Condensed Consolidated Financial Statements – Unaudited	5
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4.	Controls and Procedures	31
PART II. OTHER INFORMATION			32
	Item 1A.	Risk Factors	32
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
	Item 5.	Other Information	32
	Item 6.	Exhibits	33

ALLIENT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	37,118	$	31,901
Trade receivables, net of provision for credit losses of $1,239 and $1,240 at September 30, 2024 and December 31, 2023, respectively		82,549		85,127
Inventories		117,605		117,686
Prepaid expenses and other assets		13,582		13,437
Total current assets		250,854		248,151
Property, plant, and equipment, net		68,396		67,463
Deferred income taxes		7,663		7,760
Intangible assets, net		104,593		111,373
Goodwill		134,390		131,338
Operating lease assets		23,627		24,032
Other long-term assets		6,912		7,425
Total Assets	$	596,435	$	597,542
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	28,894	$	39,129
Accrued liabilities		32,292		56,488
Total current liabilities		61,186		95,617
Long-term debt		231,415		218,402
Deferred income taxes		4,078		4,337
Pension and post-retirement obligations		2,735		2,679
Operating lease liabilities		19,343		19,532
Other long-term liabilities		4,811		5,400
Total liabilities		323,568		345,967
Stockholders’ Equity:
Common stock, no par value, authorized 50,000 shares; 16,840 and 16,308 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		110,278		95,937
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding		—		—
Retained earnings		174,497		165,813
Accumulated other comprehensive loss		(11,908)		(10,175)
Total stockholders’ equity		272,867		251,575
Total Liabilities and Stockholders’ Equity	$	596,435	$	597,542

See accompanying notes to condensed consolidated financial statements.

1

ALLIENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues	$	125,213	$	145,319	$	407,958	$	437,637
Cost of goods sold		85,949		97,821		280,641		298,328
Gross profit		39,264		47,498		127,317		139,309
Operating costs and expenses:
Selling		6,323		6,021		19,283		18,354
General and administrative		13,856		14,642		42,438		43,624
Engineering and development		9,056		10,702		30,416		31,041
Business development		278		1,194		2,204		1,791
Amortization of intangible assets		3,135		3,075		9,381		9,226
Total operating costs and expenses		32,648		35,634		103,722		104,036
Operating income		6,616		11,864		23,595		35,273
Other expense, net:
Interest expense		3,435		3,164		10,207		9,309
Other expense, net		468		42		405		187
Total other expense, net		3,903		3,206		10,612		9,496
Income before income taxes		2,713		8,658		12,983		25,777
Income tax provision		(612)		(1,992)		(2,830)		(6,027)
Net income	$	2,101	$	6,666	$	10,153	$	19,750
Basic earnings per share:
Earnings per share	$	0.13	$	0.42	$	0.61	$	1.24
Basic weighted average common shares		16,574		15,979		16,513		15,940
Diluted earnings per share:
Earnings per share	$	0.13	$	0.41	$	0.61	$	1.22
Diluted weighted average common shares		16,605		16,237		16,581		16,198
Net income	$	2,101	$	6,666	$	10,153	$	19,750
Other comprehensive income (loss):
Foreign currency translation adjustment		5,821		(2,923)		235		(1,995)
Loss on derivatives, net of tax		(1,379)		(170)		(1,968)		(596)
Comprehensive income	$	6,543	$	3,573	$	8,420	$	17,159

See accompanying notes to condensed consolidated financial statements.

2

ALLIENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

(Unaudited)

	Common Stock					Accumulated Other Comprehensive (Loss) Income
(In thousands except per share data)	Shares	Amount		Retained Earnings		Foreign Currency Translation Adjustments		Accumulated income (loss) on derivatives		Pension adjustments		Total Stockholders' Equity
Balances, December 31, 2023	16,308	$	95,937	$	165,813	$	(13,256)	$	3,425	$	(344)	$	251,575
Stock transactions under employee benefit stock plans	58		1,564										1,564
Issuance of restricted stock, net of forfeitures	167		(139)										(139)
Share issuance in connection with acquisitions	203		6,250										6,250
Share issuance to settle contingent consideration	174		4,874										4,874
Stock-based compensation expense			1,211										1,211
Shares withheld for payment of employee payroll taxes	(4)		(121)										(121)
Comprehensive loss							(4,408)		(102)				(4,510)
Tax effect of derivative transactions									24				24
Net income					6,902								6,902
Dividends to stockholders - $0.03					(500)								(500)
Balances, March 31, 2024	16,906	$	109,576	$	172,215	$	(17,664)	$	3,347	$	(344)	$	267,130
Issuance of restricted stock, net of forfeitures	(23)												—
Stock-based compensation expense			1,073										1,073
Shares withheld for payment of employee payroll taxes	(42)		(1,446)										(1,446)
Comprehensive loss							(1,178)		(673)				(1,851)
Tax effect of derivative transactions									162				162
Net income					1,150								1,150
Dividends to stockholders - $0.03					(503)								(503)
Balances, June 30, 2024	16,841	$	109,203	$	172,862	$	(18,842)	$	2,836	$	(344)	$	265,715
Stock transactions under employee benefit stock plans													—
Issuance of restricted stock, net of forfeitures													—
Share issuance in connection with acquisitions													—
Stock-based compensation expense			1,098										1,098
Shares withheld for payment of employee payroll taxes	(1)		(23)										(23)
Comprehensive income (loss)							5,821		(1,809)				4,012
Tax effect of derivative transactions									430				430
Net income					2,101								2,101
Dividends to stockholders - $0.03					(466)								(466)
Balances, September 30, 2024	16,840	$	110,278	$	174,497	$	(13,021)	$	1,457	$	(344)	$	272,867

	Common Stock					Accumulated Other Comprehensive (Loss) Income
(In thousands except per share data)	Shares	Amount		Retained Earnings		Foreign Currency Translation Adjustments		Accumulated income (loss) on derivatives		Pension adjustments		Total Stockholders' Equity
Balances, December 31, 2022	15,978	$	83,852	$	143,576	$	(16,925)	$	5,556	$	(594)	$	215,465
Stock transactions under employee benefit stock plans	31		1,246										1,246
Issuance of restricted stock, net of forfeitures	103		(34)										(34)
Share issuance in connection with acquisition	185		6,250										6,250
Stock-based compensation expense			1,267										1,267
Shares withheld for payment of employee payroll taxes	(4)		(146)										(146)
Comprehensive income (loss)							1,354		(1,565)				(211)
Tax effect of derivative transactions									432				432
Net income					6,315								6,315
Dividends to stockholders - $0.025					(403)								(403)
Balances, March 31, 2023	16,293	$	92,435	$	149,488	$	(15,571)	$	4,423	$	(594)	$	230,181
Issuance of restricted stock, net of forfeitures	14		11										11
Stock-based compensation expense			1,544										1,544
Shares withheld for payment of employee payroll taxes	(39)		(1,507)										(1,507)
Comprehensive (loss) income							(426)		930				504
Tax effect of derivative transactions									(223)				(223)
Net income					6,769								6,769
Dividends to stockholders - $0.03					(485)								(485)
Balances, June 30, 2023	16,268	$	92,483	$	155,772	$	(15,997)	$	5,130	$	(594)	$	236,794
Issuance of restricted stock, net of forfeitures	(18)		—										—
Share issuance in connection with acquisitions	35		1,079										1,079
Stock-based compensation expense			1,354										1,354
Shares withheld for payment of employee payroll taxes	(5)		(174)										(174)
Comprehensive (loss) income							(2,923)		(224)				(3,147)
Tax effect of derivative transactions									54				54
Net income					6,666								6,666
Dividends to stockholders - $0.03					(485)								(485)
Balances, September 30, 2023	16,280	$	94,742	$	161,953	$	(18,920)	$	4,960	$	(594)	$	242,141

3

See accompanying notes to condensed consolidated financial statements.

ALLIENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the nine months ended
	September 30,
	2024		2023
Cash Flows From Operating Activities:
Net income	$	10,153	$	19,750
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		19,248		18,956
Deferred income taxes		(45)		122
Stock-based compensation expense		3,382		4,165
Debt issue cost amortization recorded in interest expense		379		225
Other		3,248		987
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables		6,012		(14,358)
Inventories		5,500		(1,344)
Prepaid expenses and other assets		142		(1,553)
Accounts payable		(12,259)		2,871
Accrued liabilities		(6,302)		(2,689)
Net cash provided by operating activities		29,458		27,132
Cash Flows From Investing Activities:
Consideration paid for acquisitions, net of cash acquired		(25,231)		(11,004)
Purchase of property and equipment		(6,903)		(7,850)
Net cash used in investing activities		(32,134)		(18,854)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt		76,898		11,000
Principal payments of long-term debt and finance lease obligations		(61,333)		(22,325)
Payment of contingent consideration		(2,450)		—
Payment of debt issuance costs		(2,329)		—
Dividends paid to stockholders		(1,505)		(1,348)
Tax withholdings related to net share settlements of restricted stock		(1,596)		(1,827)
Net cash provided by (used in) financing activities		7,685		(14,500)
Effect of foreign exchange rate changes on cash		208		(556)
Net increase (decrease) in cash and cash equivalents		5,217		(6,778)
Cash and cash equivalents at beginning of period		31,901		30,614
Cash and cash equivalents at end of period	$	37,118	$	23,836
Supplemental disclosure of cash flow information:
Stock issued for acquisitions	$	6,250	$	7,329
Stock issued to settle contingent consideration	$	4,874	$	—
Property, plant and equipment purchases in accounts payable or accrued expenses	$	952	$	1,960
Debt issuance costs in accounts payable or accrued expenses	$	568	$	185

See accompanying notes to condensed consolidated financial statements.

4

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

1.    BASIS OF PREPARATION AND PRESENTATION

Allient Inc. (“Allient”) or (“The Company”) 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.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between the foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive loss, a component of stockholders’ equity in the accompanying condensed consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the foreign subsidiaries are included in the results of operations as incurred in other expense, net.

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all adjustments which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures herein are adequate to make the information presented not misleading. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year.

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the Consolidated Financial Statements and related Notes to such statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 that was previously filed by the Company.

5

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

2. ACQUISITIONS

On January 11, 2024, the Company acquired 100% of the outstanding shares of SNC Manufacturing Co., Inc. (a Wisconsin corporation) and Acutran de Mexico, S.A. de C.V. (a Mexican corporation), (collectively “SNC”), a premier designer and global manufacturer of electrical transformers serving blue-chip customers in defense, industrial automation, alternative power generation and energy, including electric utilities and renewable energy.

The initial purchase price consisted of $20.0 million in cash paid at closing, subject to customary post-closing working capital adjustments. The purchase price allocation is subject to adjustments based on a final determination of certain tax matters. Measurement period adjustments to the initial purchase price allocation were made during the second quarter of 2024 that resulted in a decrease of the purchase price of $67 and a corresponding decrease to goodwill for $67. Adjustments were made in the third quarter of 2024 that resulted in a decrease to inventory of $500, as well as a decrease to deferred income tax liabilities of $110 and an increase to goodwill of $390.

The Company incurred $313 of transaction costs related to the acquisition during the nine months ended September 30, 2024, which are included in business development on the condensed consolidated statements of income and comprehensive income.

The operating results of the acquisition are included in the condensed consolidated financial statements beginning on the date of the acquisition. Revenue of SNC included within the condensed consolidated statements of income and comprehensive income for the three months ended September 30, 2024 was $9,602 and net income was $1,140 in the three months ended September 30, 2024. Revenue of SNC included within the condensed consolidated statements of income and comprehensive income for the nine months ended September 30, 2024 was $28,072 and net income was $3,014 in the nine months ended September 30, 2024.

Cash and cash equivalents	$	881
Trade receivables		3,467
Inventories		8,600
Prepaid expenses and other assets		496
Property, plant, and equipment		4,258
Operating lease assets		378
Intangible assets		2,900
Goodwill		3,075
Other current liabilities		(3,188)
Deferred revenue		(55)
Operating lease liabilities		(378)
Net deferred income tax liabilities		(592)
Other noncurrent liabilities		(118)
Net purchase price	$	19,724

6

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

The preliminary fair values of the assets acquired were determined using one of three valuation approaches: market, income or cost. The selection of a particular method for a given asset depended on the reliability of available data and the nature of the asset, among other considerations. The market approach estimates the value for a subject asset based on available market pricing for comparable assets. The income approach estimates the value for a subject asset based on the present value of cash flows projected to be generated by the asset. The projected cash flows were discounted at a required rate of return that reflects the relative risk of the asset and the time value of money. The projected cash flows for each asset considered multiple factors from the perspective of a marketplace participant including revenue projections from existing customers, attrition trends, technology life-cycle assumptions, marginal tax rates and expected profit margins considering historical and expected margins. The cost approach estimates the value for a subject asset based on the cost to replace the asset and reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation or obsolescence, with specific consideration given to economic obsolescence if indicated. These fair value measurement approaches are based on significant unobservable inputs, including management estimates and assumptions.

The intangible assets acquired consist of $1,500 of customers lists, $600 of trade name, and $800 of technology, which are being amortized over 12, 10, and 10 years, respectively. Goodwill generated is related to the assembled workforce, synergies between Allient’s other operations and SNC that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions, and Allient’s ability to utilize SNC’s management knowledge in providing complementary product offerings to the Company’s customers.

The goodwill resulting from the acquisition is not tax deductible.

On September 22, 2023, the Company acquired 100% of the ownership interest in Sierramotion Inc. (“Sierramotion”), a company headquartered in California, that specializes in designing and engineering turn-key motion components and mechatronic solutions for robotic, medical, industrial, defense, semiconductor, and other precision applications. The final purchase price for Sierramotion of $8.4 million included contingent consideration payable which was paid in the first quarter of 2024 (see Note 12 for breakout of payment) and at closing consisted of a combination of cash and Company stock. The intangible assets and goodwill are expected to be deductible for tax purposes. The purchase price allocation is final for this acquisition. Transaction costs for the acquisition were not material. The operating results of this acquisition are included in the condensed consolidated financial statements beginning on the acquisition date and the revenue and earnings in the current year periods presented are not material.

On January 3, 2024, the final deferred acquisition payment for Spectrum of $12,500 (comprised of 50% cash and 50% Company stock) was paid.

The following pro forma financial information presents the combined results of operations if the SNC acquisition had occurred as of January 1, 2023 and the Sierramotion acquisition had occurred as of January 1, 2022:

	Three months ended		Nine months ended
	September 30,		September 30,		September 30,
	2023		2024		2023
Revenues	$	156,797	$	409,252	$	469,392
Income before income taxes	$	9,261	$	13,702	$	27,286

The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts do not reflect adjustments for anticipated operating efficiencies that the Company expected to or has subsequently achieved as a result of these acquisitions. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would have been had these transactions occurred on the date presented or to project the combined company’s results of operations or financial position for future periods.

7

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

3.    REVENUE RECOGNITION

Performance Obligations

The Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product.

The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. For a limited number of contracts, for which revenue derived is not material in the periods presented, the Company recognizes revenue over time in proportion to costs incurred.

Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.

Nature of Goods and Services

The Company designs, manufactures, and sells precision motion, control, power, and structural components to provide integrated system solutions as well as individual products to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brushed and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, transformers, and other controlled motion-related products. The Company’s target markets include Industrial, Vehicle, Medical, and Aerospace & Defense. 

Determining the Transaction Price

The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of September 30, 2024 and December 31, 2023.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted below in Note 18, Segment Information, the Company’s business consists of one reportable segment. Revenue by geographic region is based on point of shipment origin.

8

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

A disaggregation of revenue by target market and geography is provided below:

	Three months ended				Nine months ended
	September 30,				September 30,
Target Market	2024		2023		2024		2023
Industrial	$	59,152	$	64,921	$	192,230	$	193,766
Vehicle		20,353		32,989		83,669		98,559
Medical		20,507		21,693		58,828		66,254
Aerospace & Defense		18,332		19,972		53,627		60,237
Distribution and Other		6,869		5,744		19,604		18,821
Total	$	125,213	$	145,319	$	407,958	$	437,637

	Three months ended				Nine months ended
	September 30,				September 30,
Geography	2024		2023		2024		2023
North America (primarily U.S.)	$	85,263	$	102,502	$	276,886	$	300,834
Europe		33,859		35,456		111,664		113,679
Asia-Pacific		6,091		7,361		19,408		23,124
Total	$	125,213	$	145,319	$	407,958	$	437,637

Contract Balances

When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists.

The opening and closing balances of the Company’s contract liabilities are as follows:

	September 30,		December 31,
	2024		2023
Contract liabilities in accrued liabilities	$	1,853	$	2,137
Contract liabilities in other long-term liabilities		—		8
	$	1,853	$	2,145

The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. In the nine months ended September 30, 2024 and 2023, the Company recognized revenue of $1,108 and $4,053, respectively, that was included in the opening contract liabilities balance.

Significant Payment Terms

The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration.

Returns, Refunds, and Warranties

In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications.

9

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

4.    INVENTORIES

Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows:

	September 30,		December 31,
	2024		2023
Parts and raw materials	$	85,670	$	87,381
Work-in-process		11,897		11,456
Finished goods		20,038		18,849
	$	117,605	$	117,686

5.    PROPERTY, PLANT AND EQUIPMENT

Property, plant, and equipment is classified as follows:

		September 30,		December 31,
	Useful lives	2024		2023
Land		$	1,786	$	973
Building and improvements	5 - 39 years		29,090		26,201
Machinery, equipment, tools and dies	3 - 15 years		107,222		99,711
Construction in progress			8,138		9,300
Furniture, fixtures and other	3 - 10 years		25,322		24,439
			171,558		160,624
Less accumulated depreciation			(103,162)		(93,161)
Property, plant, and equipment, net		$	68,396	$	67,463

Depreciation expense was $3,312 and $3,346 for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, depreciation expense was approximately $9,667 and $9,730, respectively.

6.    GOODWILL

The change in the carrying amount of goodwill for the nine months ended September 30, 2024 is as follows:

		September 30,
		2024
Beginning balance	$	131,338
Goodwill acquired		2,752
Impact of measurement period adjustments of acquisitions (Note 2)		323
Effect of foreign currency translation		(23)
Ending balance	$	134,390

10

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

7.    INTANGIBLE ASSETS

Intangible assets on the Company’s condensed consolidated balance sheets consist of the following:

	Weighted Average	September 30, 2024						December 31, 2023
	Amortization	Gross		Accumulated		Net Book		Gross		Accumulated		Net Book
	Period	Amount		Amortization		Value		Amount		Amortization		Value
Customer lists	14.1 years	$	118,164	$	(48,641)	$	69,523	$	116,831	$	(42,421)	$	74,410
Trade name	13.7 years		16,186		(8,496)		7,690		15,572		(7,916)		7,656
Design and technologies	10.5 years		42,245		(14,865)		27,380		41,480		(12,173)		29,307
Total		$	176,595	$	(72,002)	$	104,593	$	173,883	$	(62,510)	$	111,373

Amortization expense for intangible assets was $3,135 and $3,075 for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, amortization expense was $9,381 and $9,226, respectively.

Estimated future intangible asset amortization expense as of September 30, 2024 is as follows:

Year ending December 31,	Total
	Estimated
	Amortization Expense
Remainder of 2024	$	3,305
2025		12,570
2026		12,472
2027		12,028
2028		11,280
Thereafter		52,938
Total estimated amortization expense	$	104,593

8.    STOCK-BASED COMPENSATION

Stock Incentive Plans

The Company’s Stock Incentive Plans provide for the granting of stock awards, including restricted stock, stock options and stock appreciation rights, to employees and non-employees, including directors of the Company.

Restricted Stock

For the nine months ended September 30, 2024, 186,758 shares of unvested restricted stock were awarded at a weighted average market value of $29.78. Of the restricted shares granted, 107,377 shares have performance-based vesting conditions. The value of the shares expected to vest is amortized to compensation expense over the related service period, which is normally three years, or over the estimated performance period. Shares of unvested restricted stock are generally forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards.

The following is a summary of restricted stock activity for the nine months ended September 30, 2024:

	Number of
	shares
Outstanding at beginning of period	254,110
Awarded	186,758
Vested	(119,335)
Forfeited	(42,162)
Outstanding at end of period	279,371

11

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

Stock-based compensation expense, net of forfeitures, of $1,098 and $1,354 was recorded for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, stock based compensation expense, net of forfeitures, of $3,382 and $4,165 was recorded, respectively.

9.    ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	September 30,		December 31,
	2024		2023
Compensation and fringe benefits	$	13,448	$	17,251
Accrued business acquisition consideration		—		12,638
Warranty reserve		2,036		2,139
Income taxes payable		182		2,483
Operating lease liabilities – current		4,969		5,142
Finance lease obligations – current		439		412
Contract liabilities		1,853		2,137
Contingent consideration – current		—		7,720
Restructuring related accruals		922		—
Other accrued expenses		8,443		6,566
	$	32,292	$	56,488

In the second quarter of 2024, the Company began to implement the Simplify to Accelerate NOW program. This included initiatives to realign the Company’s manufacturing footprint and streamline the organization to enhance operational efficiency and drive profitability. The costs associated with this program are expected to be between approximately $1.9 million and $2.4 million, primarily related to employee severance and related expenses.

The restructuring related accruals as of September 30, 2024 are expected to be substantially paid out by the end of 2024 and primarily relate to employee severance related expenses. Restructuring and business realignment costs of $479 and $1,948 are included within business development in the condensed consolidated statement of income and comprehensive income for the three and nine months ended September 30, 2024, respectively. For the nine months ended September 30, 2024, changes in restructuring related accruals are as follows (in thousands):

	Nine months ended
	September 30,
	2024
Beginning balance	$	—
Expenses incurred		1,948
Payments		(1,026)
Ending balance	$	922

12

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

10.    DEBT OBLIGATIONS

Debt obligations consisted of the following:

	September 30,		December 31,
	2024		2023
Long-term Debt
Revolving Credit Facility, long-term (1)	$	175,962	$	210,120
Note Payable		50,000		—
Unamortized debt issuance costs		(2,820)		(325)
Finance lease obligations – noncurrent		8,273		8,607
Long-term debt	$	231,415	$	218,402

(1) The effective interest rate on long-term debt obligations is 4.85% at September 30, 2024.

On March 1, 2024, the Company entered into a Third Amended and Restated Credit Agreement (the “2024 Amended Credit Agreement”) for a $280 million revolving credit facility (the “Revolving Facility”). The changes made to the Company’s previous credit facility by the 2024 Amended Credit Agreement include: i) providing for a $50 million accordion amount and ii) extending the term from February 12, 2025 to March 1, 2029. Additionally, the Company has entered into a $150 million fixed-rate private shelf facility (the “2024 Note Payable Agreement”) under which $50.0 million of borrowings occurred on March 21, 2024. These agreements, collectively, are referred to as the “2024 Credit and Note Payable Agreements”. Pursuant to the 2024 Note Payable Agreement, the Company may from time to time issue and sell, and the borrower may consider in its sole discretion the purchase of, in one or a series of transactions, senior notes of the Company in an aggregate principal amount of up to $150 million (“Shelf Notes”). The Shelf Notes will have a maturity date of no more than 10.5 years after the date of original issuance and may be issued through March 1, 2027, unless either party terminates such issuance right. Debt issuance costs of $2.9 million were incurred related to the 2024 Credit and Note Payable Agreements and are included within unamortized debt issuance costs noted above.

Borrowings under the Revolving Facility bear interest at the Term SOFR Rate (as defined in the 2024 Amended Credit Agreement) plus a margin of 1.25% to 2.50% or the Alternative Base Rate (as defined in the Amended Credit Agreement) plus a margin of 0.25% to 1.50%, in each case depending on the Company’s ratio of Funded Indebtedness (as defined in the 2024 Amended Credit Agreement) to Consolidated EBITDA (the “Leverage Ratio”). In addition, the Company is required to pay a commitment fee of between 0.15% and 0.325% quarterly on the unused portion of the Revolving Facility, also based on the Company’s Leverage Ratio.

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 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, are subject to certain exceptions. The Company was in compliance with all covenants as of September 30, 2024.

The 2024 Credit and Note Payable Agreements also include customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, if any representation or warranty made by the Company is false or misleading in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, the occurrence of certain ERISA events, the invalidity of the loan documents or a change in control of the Company. The amounts outstanding under the Revolving Facility may be accelerated upon certain events of default.

The obligations under the 2024 Credit and Note Payable Agreements are secured by substantially all of the Company’s non-realty assets and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

13

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

On March 21, 2024, the Company issued and sold $50.0 million in aggregate principal amount of the Series A Senior Notes due March 21, 2031 (the “Series A Notes”). The Series A Notes were issued pursuant to the 2024 Note Payable Agreement. The Series A Notes represent senior promissory notes of the Company and will bear interest at 5.96% and will mature on March 21, 2031. Interest on the Series A Notes will be payable quarterly on the 21st day of March, June, September and December in each year, commencing on June 21, 2024. Interest is computed on the basis of a 360-day year composed of twelve 30-day months. There are no separate covenants relating to the Series A Notes. All additional borrowings are subject to the leverage ratio compliance. The Series A Notes may be prepaid at the option of the Company, in accordance with the terms of the 2024 Note Payable Agreement, at 100% of the principal amount to be prepaid plus accrued interest plus the defined “Make-Whole Amount,” if any. The Make-Whole Amount is an amount equal to the excess, if any, of the discounted value of the remaining schedule payments with respect to principal on the Series A Notes being prepaid over the amount of the prepaid principal.

As of September 30, 2024, the unused Revolving Facility was $104,038. The amount available to borrow under the 2024 Credit and Note Payable Agreements may be limited by the Company’s debt and EBITDA levels, which impacts its covenant calculations. There is $568 of deferred financing fees accrued but not paid relating to the 2024 Credit and Note Payable Agreements as of September 30, 2024.

On October 22, 2024, the Company entered into a Second Amendment to the Third Amended and Restated Credit Agreement and a Second Amendment to the Note Purchase and Private Shelf Agreement (collectively, the “October 2024 Credit and Note Payable Amendments”). These amendments include provisions to increase the maximum Leverage Ratio to 4.5:1.0 for the quarters ending March 31, 2025 and June 30, 2025, 4.0:1.0 for the quarter ending September 30, 2025, and returning to 3.75:1.0 for the quarter ending December 31, 2025 and thereafter. From January 1, 2025 through September 30, 2025, borrowings under the Revolving Facility will bear interest at Term SOFR plus a margin of 2.50% and a commitment fee of 0.325% on the unused portion of the Revolving Facility. Also, from October 1, 2024 through September 30, 2025, the Series A Notes will bear interest at 6.46%.

11.    DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments.

The Company enters into foreign currency contracts with 30-day maturities to hedge its short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona, Canadian Dollar) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $24,438 and $22,193 at September 30, 2024 and December 31, 2023, respectively. The foreign currency contracts are recorded in the condensed consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. During the three and nine months ended September 30, 2024, the Company had losses of $461 and $380, respectively, and during the three and nine months ended September 30, 2023, the Company had losses of $174 and $270, respectively, on foreign currency contracts which is included in other expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense, net.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its variable-rate debt. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In March 2020, the Company entered into two interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matures in December 2024. In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026. In March 2023, the

14

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

Company executed amendments to the existing swaps to amend the index on the interest rate derivatives from LIBOR to SOFR. These amendments had no material financial impact to the Company’s operations or financial position. In September 2024, the Company entered into an additional interest rate swap with a notional amount of $50,000 that matures in September 2027.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of September 30, 2024, the Company estimates that $1,566 will be reclassified as a decrease to interest expense over the next twelve months related to its interest rate derivatives. The Company does not use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023:

		Asset Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	September 30,		December 31,
hedging instruments	Location	2024		2023
Foreign currency contracts	Prepaid expenses and other assets	$	27	$	54
Interest rate swaps	Prepaid expenses and other assets		567		2,254
Interest rate swaps	Other long-term assets		1,348		2,177
		$	1,942	$	4,485
		Liability Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	September 30,		December 31,
hedging instruments	Location	2024		2023
Foreign currency contracts	Accrued liabilities	$	13	$	—
		$	13	$	—

The tables below present the effect of cash flow hedge accounting on other comprehensive income (loss) (“OCI”) for the three and nine months ended September 30, 2024 and 2023:

	Amount of pre-tax (loss) gain recognized				Amount of pre-tax gain recognized
	in OCI on derivatives				in OCI on derivatives
Derivatives in cash flow hedging relationships	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Interest rate swaps	$	(745)	$	790	$	566	$	1,995

	Amount of pre-tax gain reclassified				Amount of pre-tax gain reclassified
	from accumulated OCI into income				from accumulated OCI into income
Location of gain reclassified	Three months ended September 30,				Nine months ended September 30,
from accumulated OCI into income	2024		2023		2024		2023
Interest expense	$	1,064	$	1,014	$	3,134	$	2,854

The table below presents the line items that reflect the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2024 and 2023:

		Total amounts of income and expense				Total amounts of income and expense
		line items presented that reflect the				line items presented that reflect the
		effects of cash flow hedges recorded				effects of cash flow hedges recorded
		Three months ended September 30,				Nine months ended September 30,
Derivatives designated as hedging instruments	Income Statement Location	2024		2023		2024		2023
Interest rate swaps	Interest Expense	$	3,435	$	3,164	$	10,207	$	9,309

15

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2024 and December 31, 2023. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets:

Derivative assets:

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

September 30,

of recognized

consolidated

consolidated

Financial

Cash collateral

2024

assets

balance sheets

balance sheets

instruments

received

Net amount

Derivatives

$

1,942

$

—

$

1,942

$

—

$

—

$

1,942

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

December 31,

of recognized

consolidated

consolidated

Financial

Cash collateral

2023

assets

balance sheets

balance sheets

instruments

received

Net amount

Derivatives

$

4,485

$

—

$

4,485

$

—

$

—

$

4,485

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

12.   FAIR VALUE

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs.

These two types of inputs create the following three – level fair value hierarchy:

Level 1:	Quoted prices for identical assets or liabilities in active markets.
Level 2:	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model – derived valuations whose inputs or significant value drivers are observable.
Level 3:	Significant inputs to the valuation model that are unobservable.

The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets and liabilities approximate their fair value because of the immediate or short-term maturities of these financial instruments.

16

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

The following tables presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, respectively, by level within the fair value hierarchy:

	September 30, 2024
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	6,399	$	—	$	—
Deferred compensation plan assets		4,747		—		—
Foreign currency hedge contracts, net		—		14		—
Interest rate swaps, net		—		1,915		—
Contingent consideration		—		—		—

	December 31, 2023
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,859	$	—	$	—
Deferred compensation plan assets		4,305		—		—
Foreign currency hedge contracts, net		—		54		—
Interest rate swaps, net		—		4,431		—
Contingent consideration		—		—		(7,990)

The contingent consideration fair value measurement represents amounts in connection with the acquisitions of Sierramotion, which had a maximum amount of $2,000, and ALIO Industries (“ALIO”), which does not have a maximum amount. The measurements are based on significant inputs not observable in the market and therefore constitute Level 3 inputs within the fair value hierarchy. The Company determines the initial fair value of contingent consideration liabilities using a Monte Carlo valuation model, which involves a simulation of future earnings generated during the earn-out period using management’s best estimates, or a probability-weighted discounted cash flow analysis. The contingent consideration for the acquisition of Sierramotion consisted of Company stock and $2,000 was earned and settled in the first quarter of 2024. The contingent consideration of ALIO is settled 50% in Company stock and 50% cash. $5,747 was earned in 2023 and paid out in the first quarter of 2024, consisting of $2,874 in Company stock and $2,873 of cash (of which $2,450 is included in financing activities and the remainder in operating activities on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024). As of September 30, 2024, there is no remaining contingent consideration liability included on the condensed consolidated balance sheet. As of December 31, 2023, contingent consideration of $7,720 is included in accrued liabilities and $270 is included in other long-term liabilities on the condensed consolidated balance sheet.

13.    INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations.

The effective income tax rate was 22.6% and 23.0% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rate for the three months ended September 30, 2024 includes net discrete tax costs of 1.2% primarily due to share based awards and provision to return adjustments. The effective tax rate for the three months ended September 30, 2023 does not include any discrete tax items that had a significant impact on tax rates. For the nine months ended September 30, 2024 and 2023, the effective income tax rate was 21.8% and 23.4%, respectively. The effective tax rate for the nine months ended September 30, 2024 includes net discrete tax costs of 1.2%, primarily related to share-based awards, provision to return adjustment, offset partially by the reversal of prior year uncertain tax positions. The effective tax rate for the nine months ended September 30, 2023 includes net discrete tax benefits of (1.5%), primarily related to share-based awards and the reversal of prior year uncertain tax positions.

17

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

14.    LEASES

The Company has operating leases for office space, manufacturing facilities and equipment, computer equipment and automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for a long-term period, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for capital area maintenance, utilities, inflation and/or changes in other indexes.

Supplemental cash flow information related to the Company’s operating and finance leases for the nine months ended September 30, 2024 and 2023 was as follows:

	September 30,
	2024		2023
Cash paid for operating leases	$	4,791	$	4,195
Cash paid for interest on finance lease obligations	$	305	$	318
Assets acquired under operating leases	$	3,709	$	6,578
Operating lease assets obtained in acquisitions	$	378	$	224

The Company’s finance lease obligations relate to a manufacturing facility. Finance lease assets of $7,734 and $8,208 as of September 30, 2024 and December 31, 2023, respectively, are included in property, plant and equipment, net. As of September 30, 2024, finance lease obligations of $439 are included in accrued liabilities and $8,273 are included in long-term debt on the condensed consolidated balance sheet. As of December 31, 2023, finance lease obligations of $412 are included in accrued liabilities and $8,607 are included in long-term debt on the condensed consolidated balance sheet.

The following table presents the maturity of the Company’s operating and finance lease liabilities as of September 30, 2024:

	Operating Leases		Finance Leases
Remainder of 2024	$	1,593	$	204
2025		5,681		831
2026		4,958		848
2027		4,203		867
2028		3,259		886
Thereafter		8,001		7,884
Total undiscounted cash flows	$	27,695	$	11,520
Less: present value discount		(3,383)		(2,809)
Total lease liabilities	$	24,312	$	8,711

As of September 30, 2024, the Company has entered into building lease renewals with future minimum lease payments of $1,720 that have not yet commenced.

The Company has operating leases for certain facilities from companies for which a member of management is a part owner. In connection with such leases, the Company made fixed minimum lease payments to the lessor of $242 and $726

during the three and nine months ended September 30, 2024 and $242 and $706 during the three and nine months ended September 30, 2023, respectively, and is obligated to make payments of $202 during the remainder of 2024. Future fixed minimum lease payments under these leases as of September 30, 2024 are $5,783.

18

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

15.    ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Accumulated Other Comprehensive (Loss) Income (“AOCI”) for the three months ended September 30, 2024 and 2023 is comprised of the following:

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At June 30, 2024	$	(344)	$	3,656	$	(820)	$	(18,842)	$	(16,350)
Unrealized gain (loss) on cash flow hedges		—		(745)		175		—		(570)
Amounts reclassified from AOCI		—		(1,064)		255		—		(809)
Foreign currency translation gain		—		—		—		5,821		5,821
At September 30, 2024	$	(344)	$	1,847	$	(390)	$	(13,021)	$	(11,908)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)
Unrealized gain (loss) on cash flow hedges		—		790		(189)		—		601
Amounts reclassified from AOCI		—		(1,014)		243		—		(771)
Foreign currency translation loss		—		—		—		(2,923)		(2,923)
At September 30, 2023	$	(594)	$	6,451	$	(1,491)	$	(18,920)	$	(14,554)

AOCI for the nine months ended September 30, 2024 and 2023 is comprised of the following:

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2023	$	(344)	$	4,431	$	(1,006)	$	(13,256)	$	(10,175)
Unrealized gain (loss) on cash flow hedges		—		550		(136)		—		414
Amounts reclassified from AOCI		—		(3,134)		752		—		(2,382)
Foreign currency translation gain		—		—		—		235		235
At September 30, 2024	$	(344)	$	1,847	$	(390)	$	(13,021)	$	(11,908)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2022	$	(594)	$	7,310	$	(1,754)	$	(16,925)	$	(11,963)
Unrealized gain (loss) on cash flow hedges		—		1,995		(455)		—		1,540
Amounts reclassified from AOCI		—		(2,854)		718		—		(2,136)
Foreign currency translation gain		—		—		—		(1,995)		(1,995)
At September 30, 2023	$	(594)	$	6,451	$	(1,491)	$	(18,920)	$	(14,554)

The realized gains and losses relating to the Company’s interest rate swap hedges were reclassified from AOCI and included in interest expense in the condensed consolidated statements of income and comprehensive (loss) income.

16.    DIVIDENDS PER SHARE

The Company declared a quarterly dividend of $0.03 per share in the first, second, and third quarters of 2024 as well as in the second and third quarters of 2023 and $0.025 in the first quarter of 2023.

19

ALLIENT INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

17.    EARNINGS PER SHARE

Basic and diluted weighted-average shares outstanding are as follows:

	Three months ended		Nine months ended
	September 30,		September 30,
	2024	2023	2024	2023
Basic weighted average shares outstanding	16,574	15,979	16,513	15,940
Dilutive effect of potential common shares	31	258	68	258
Diluted weighted average shares outstanding	16,605	16,237	16,581	16,198

For the three and nine months ended September 30, 2024, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were 128,000 and 74,000, respectively. For the three and nine months ended September 30, 2023, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were immaterial.

18.    SEGMENT INFORMATION

The Company operates in one segment for the manufacture and marketing of specialty-controlled motion products and solutions for end user and OEM applications. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services in which the entity holds material assets and reports revenue.

Revenue for the three months ended September 30, 2024 and 2023 was comprised of 56% and 61%, respectively, shipped to U.S. customers. For the nine months ended September 30, 2024 and 2023, revenue was comprised of 55% and 58%, respectively, shipped to U.S. customers. The remainder of revenues for all periods were shipped to foreign customers, primarily in Europe, Canada, and Asia-Pacific.

Identifiable foreign fixed assets were $33,893 and $35,751 as of September 30, 2024 and December 31, 2023, respectively. Identifiable assets outside of the U.S. are attributable to Europe, China, Mexico, and Asia-Pacific.

For the three and nine months ended September, 30, 2024, no customers individually accounted for a material concentration of revenue nor accounts receivable. For the three months ended September 30, 2023, one customer accounted for 14% of revenues. For the nine months ended September 30, 2023, this customer accounted for 11% of revenues. This customer accounted for 15% of accounts receivable as of December 31, 2023.

20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements contained herein that are not statements of historical fact constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the word “believe,” “anticipate,” “expect,” “project,” “intend,” “will continue,” “will likely result,” “should” or words or phrases of similar meaning. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from the expected results described in the forward-looking statements. The risks and uncertainties include those associated with: the domestic and foreign general business and economic conditions in the markets we serve, including political and currency risks and adverse changes in local legal and regulatory environments; the severity, magnitude and duration of the impact of global pandemics, including impacts from businesses’ and governments’ responses to the impact on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains; our inability to predict the extent to which global pandemic impacts will adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives; the geopolitical conflicts and their ability to create instability and economic uncertainty; the introduction of new technologies and the impact of competitive products; the ability to protect the Company’s intellectual property; our ability to sustain, manage or forecast our growth and product acceptance to accurately align capacity with demand; the continued success of our customers and the ability to realize the full amounts reflected in our order backlog as revenue; the loss of significant customers or the enforceability of the Company’s contracts in connection with a merger, acquisition, disposition, bankruptcy, or otherwise; our ability to meet the technical specifications of our customers; the performance of subcontractors or suppliers and the continued availability of parts and components; failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach, ransomware, or failure of one or more key information technology systems, networks, processes, associated sites or service providers; changes in government regulations; the availability of financing and our access to capital markets, borrowings, or financial transactions to hedge certain risks; the ability to attract and retain qualified personnel, and in particular those who can design new applications and products for the motion industry; the ability to implement our corporate strategies designed for growth and improvement in profits including to identify and consummate favorable acquisitions to support external growth and the development of new technologies; the ability to successfully integrate an acquired business into our business model without substantial costs, delays, or problems; our ability to control costs, including the establishment and operation of low cost region manufacturing and component sourcing capabilities; and in the Company’s Annual Report in Form 10-K. Actual results, events and performance may differ materially from the Company’s forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements as a prediction of actual results. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. The Company has no obligation or intent to release publicly any revisions to any forward-looking statements, whether as a result of new information, future events, or otherwise.

New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company’s expectations, beliefs and projections are believed to have a reasonable basis; however, the Company makes no assurance that expectations, beliefs, or projections will be achieved.

Overview

We are a global company that is engaged in the business of designing, manufacturing, and selling precision motion, control, power and structural composites to provide integrated system solutions as well as individual products, to a broad spectrum of customers throughout the world primarily for the industrial, vehicle, medical, and aerospace and defense markets. We are headquartered in Amherst, NY, and have operations in the United States, Canada, Mexico, Europe, and Asia-Pacific. We are known worldwide for our expertise in electro-magnetic, mechanical, and electronic motion technology. We sell component and integrated controlled motion solutions to end customers and OEMs through our own direct sales force and authorized manufacturers’ representatives and distributors. Our products include nano precision positioning systems, servo control systems, motion controllers, digital servo amplifiers and drives, brushless servo, torque, and coreless motors, brush motors, integrated motor-drives, gear motors, gearing, incremental and absolute optical encoders, active (electronic) and passive (magnetic) filters for power quality and harmonic issues, Industrial safety rated input/output Modules, Universal Industrial Communications Gateways, light-weighting technologies, transformers, and other controlled motion-related products.

21

Business Environment

Recent Events

Beginning in 2022 and continuing through 2023 and through most of 2024, inflation negatively impacted our input costs and pricing, primarily for labor and materials. We, our customers, and our suppliers also experienced the effect of a higher interest rate environment in those periods. Gross domestic product growth slowed throughout 2022 largely due to the widespread impacts of inflation, increasing interest rates, and more restrictive financial conditions. While gross domestic product began to rebound in 2023, the factors contributing to supply chain disruptions, labor shortages, and global inflation remained persistent into 2023, along with elevated geopolitical uncertainty. There were varying degrees of impact on our customers, and thus our business around the world, with Europe experiencing the greatest amount of stress in 2023 and into 2024.

The current geopolitical conflicts, the condition of sovereign finances, and the outcome of the U.S. Presidential election are creating higher levels of economic uncertainty and increased volatility with respect to energy prices, interest rates, our supply chain, and certain customer ordering patterns. We have been closely monitoring the developments and continue to adjust our production platform to react to changing customer ordering patterns and realize efficiencies. The ordering patterns of our aerospace and defense customers have been particularly impacted by changes in sovereign governments priorities and budgets. The impact of the conflicts on our operational and financial performance will depend on future developments that cannot be predicted.

Changing order patterns, supply chain disruptions, and the evolution of our business required us to carry larger inventories in 2024 and 2023 to meet the needs of our customers, especially as they began to return to a new normal after the disruptions caused by the COVID-19 pandemic. Starting in the second quarter of 2024, there were more abrupt and larger changes to order patterns as our customers reacted to elevated inventory levels and slowing customer demand. Several customers, particularly in the Vehicle and Industrial markets, reduced demand or pushed out delivery dates for their orders, and we experienced an acceleration of these customers’ actions starting in the second quarter of 2024, and continuing through the third quarter of 2024.

As the pace of our customers’ actions increased, we recently advanced our “Simplify to Accelerate NOW” strategy. This strategy is being implemented to reduce costs and help create earnings momentum as the Company seeks to enhance efficiency, reduce working capital requirements and strengthen cash flow through realignment and rationalization of our resources.

The Simplify to Accelerate NOW strategy is centered on three high-level strategic initiatives:

1.Realign and right-size the Company’s footprint to better align with its markets and customers. Initiatives are already underway and are expected to continue with earnest throughout 2024 and beyond.

2.Reinforce lean manufacturing disciplines throughout the Company to accelerate margin expansion.

3.Focus on working capital reduction to drive additional cash generation and de-lever the balance sheet.

Beginning in the second quarter and continuing into the third quarter of 2024, we began to implement our Simplify to Accelerate NOW strategy. We executed certain actions that streamline our operations to enhance efficiency as well as drive profitability. Expected cost savings of this initiative are anticipated to be approximately $10 million annually. As part of this program, the Company will continue to realign production and rationalize our footprint through the remainder of 2024. In addition, the Company has implemented reductions to its workforce in many operations throughout the world, to reflect the reduction in sales it is forecasting for the remainder of 2024. The costs associated with this program are expected to be between approximately $1.9 million and $2.4 million, primarily related to severance and related expenses.

The Company completed the acquisition of SNC in the first quarter of 2024 and the acquisition of Sierramotion in the third quarter of 2023. These acquisitions are important to executing on the Company’s strategic plan, and we remain focused in the near term on successfully integrating these acquisitions and leveraging the synergies that will be important drivers of our future growth and profitability.

22

Operating Results

Three months ended September 30, 2024 compared to three months ended September 30, 2023

	For the three months ended						2024 vs. 2023
	September 30,						Variance
(Dollars in thousands, except per share data)	2024			2023			$		%
Revenues	$	125,213		$	145,319		$	(20,106)	(14)	%
Cost of goods sold		85,949			97,821			(11,872)	(12)	%
Gross profit		39,264			47,498			(8,234)	(17)	%
Gross margin percentage		31.4	%		32.7	%
Operating costs and expenses:
Selling		6,323			6,021			302	5	%
General and administrative		13,856			14,642			(786)	(5)	%
Engineering and development		9,056			10,702			(1,646)	(15)	%
Business development		278			1,194			(916)	(77)	%
Amortization of intangible assets		3,135			3,075			60	2	%
Total operating costs and expenses		32,648			35,634			(2,986)	(8)	%
Operating income		6,616			11,864			(5,248)	(44)	%
Interest expense		3,435			3,164			271	9	%
Other expense, net		468			42			426	1,014	%
Total other expense		3,903			3,206			697	22	%
Income before income taxes		2,713			8,658			(5,945)	(69)	%
Income tax provision		(612)			(1,992)			1,380	(69)	%
Net income	$	2,101		$	6,666		$	(4,565)	(68)	%
Effective tax rate		22.6	%		23.0	%
Diluted earnings per share	$	0.13		$	0.41		$	(0.28)	(68)	%
Bookings	$	102,631		$	154,908		$	(52,277)	(34)	%
Backlog	$	238,492		$	309,636		$	(71,144)	(23)	%

REVENUES: The decrease in revenues during the third quarter 2024 reflects decreases in each of the target markets, most significantly within Vehicle and Industrial markets. Decreases in revenues compared to the prior year period are largely impacted by elevated shipments during the prior year period as supply chains normalized, combined with elevated inventory levels and slowing demand at our customers which began in the second quarter of 2024 and continued into the current period, partially offset by revenue contributed from the 2023 and 2024 acquisitions. Our revenue for the third quarter of 2024 was comprised of 56% to U.S. customers and 44% to customers primarily in Europe, Canada, and Asia-Pacific. The overall decrease in revenue was primarily due to a 14.3% volume decrease slightly offset by a foreign currency increase of 0.4%. The acquisitions completed in 2023 and 2024 contributed an incremental $10,473 of revenue in the three months ended September 30, 2024. Organic revenue decreased 21.5% during the third quarter 2024.

ORDER BOOKINGS AND BACKLOG: Bookings decreased in the third quarter 2024 compared to 2023, due primarily to a 34.2% decrease in volume slightly offset by a 0.5% increase in foreign currency impact. The decrease in bookings from the prior year quarter is in large part due to a large $31 million order in the defense market received during the third quarter of 2023, as well as continued impacts of changes in customer order patterns in reacting to elevated inventory levels and customer demand.

GROSS PROFIT AND GROSS MARGIN: Gross profit decreased to $39,264 in the third quarter of 2024 from $47,498 in the third quarter of 2023 driven by lower sales volume, and gross margins decreased to 31.4% for 2024, compared to 32.7% for 2023. The decrease in gross margin percentage was driven by lower fixed cost absorption on lower sales volumes, as well as the gross margin impact of our most recent acquisition.

SELLING EXPENSES: Selling expenses increased 5% during the third quarter of 2024 compared to 2023 primarily due to increased costs in connection with our recently completed acquisitions and to the mix of sales with commissions. Selling expenses as a percentage of revenues were 5% and 4% in the three months ended September 30, 2024 and 2023, respectively.

23

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreased 5% during the third quarter 2024 compared to 2023 due primarily to lower incentive compensation as well as cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy. As a percentage of revenues, general and administrative expenses were 11% and 10% in the three months ended September 30, 2024 and 2023, respectively.

ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 15% in the third quarter of 2024 compared to 2023. The decrease reflects the cost reduction actions taken as part of our Simplify to Accelerate NOW strategy. As a percentage of revenues, engineering and development expenses were 7% for each of the three months ended September 30, 2024 and 2023.

BUSINESS DEVELOPMENT COSTS: Business development costs include acquisition and integration related costs as well as restructuring and business realignment costs. The decrease in business development costs in the third quarter of 2024 compared to 2023 primarily reflects a decrease in fair value measurement of contingent consideration liabilities, offset by current year restructuring-related costs associated with our Simplify to Accelerate NOW strategy.

AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets remained consistent compared to the prior year period.

INTEREST EXPENSE: Interest expense increased in the third quarter of 2024 compared to 2023 due to higher average debt balances and, to a lesser extent, higher interest rates compared to the prior year period. The increase in interest expense is partially offset by reductions to interest expense realized through our interest rate swaps.

INCOME TAXES: The effective income tax rate was 22.6% and 23.0% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rate for the three months ended September 30, 2024 includes net discrete tax costs of 1.2%, primarily due to share based awards and provision to return adjustments. The tax rate for the three months ended September 30, 2023 does not include any discrete tax items that had a significant impact on tax rates. The lower effective tax rate in the third quarter of 2024 as compared to the third quarter of 2023 is primarily due to the realization of certain deferred income tax assets that had been reserved in prior years and estimates of tax credits.  The Company expects its income tax rate for the full year 2024 to be approximately 21% to 23%.

NET INCOME AND ADJUSTED NET INCOME: Net income decreased during the third quarter of 2024 compared to 2023, primarily relating to lower sales volume, including a decrease in organic revenue, partially offset by a decrease in operating expenses, reflecting the actions in our Simplify to Accelerate NOW strategy. Adjusted net income for the quarters ended September 30, 2024 and 2023 was $5,068 and $9,980, respectively. Adjusted diluted earnings per share for the third quarter of 2024 and 2023 were $0.31 and $0.61, respectively. Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. See information included in “Non–GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of net income to adjusted net income and diluted earnings per share to adjusted diluted earnings per share.

EBITDA AND ADJUSTED EBITDA: EBITDA was $12,595 for the third quarter of 2024 compared to $18,243 for the third quarter of 2023. Adjusted EBITDA was $14,432 and $20,849 for the third quarters of 2024 and 2023, respectively. EBITDA and Adjusted EBITDA are non-GAAP measures. EBITDA consists of income before interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA also excludes stock-based compensation expense, foreign currency gain/loss and certain other items. Refer to information included in “Non-GAAP Measures” below for a discussion of the non-GAAP measure and a reconciliation of net income to EBITDA and Adjusted EBITDA.

24

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

	For the nine months ended						2024 vs. 2023
	September 30,						Variance
(Dollars in thousands, except per share data)	2024			2023			$		%
Revenues	$	407,958		$	437,637		$	(29,679)	(7)	%
Cost of goods sold		280,641			298,328			(17,687)	(6)	%
Gross profit		127,317			139,309			(11,992)	(9)	%
Gross margin percentage		31.2	%		31.8	%
Operating costs and expenses:
Selling		19,283			18,354			929	5	%
General and administrative		42,438			43,624			(1,186)	(3)	%
Engineering and development		30,416			31,041			(625)	(2)	%
Business development		2,204			1,791			413	23	%
Amortization of intangible assets		9,381			9,226			155	2	%
Total operating costs and expenses		103,722			104,036			(314)	(0)	%
Operating income		23,595			35,273			(11,678)	(33)	%
Interest expense		10,207			9,309			898	10	%
Other expense, net		405			187			218	117	%
Total other expense, net		10,612			9,496			1,116	12	%
Income before income taxes		12,983			25,777			(12,794)	(50)	%
Income tax provision		(2,830)			(6,027)			3,197	(53)	%
Net income	$	10,153		$	19,750		$	(9,597)	(49)	%
Effective tax rate		21.8	%		23.4	%
Diluted earnings per share	$	0.61		$	1.22		$	(0.61)	(50)	%
Bookings	$	362,131		$	415,113		$	(52,982)	(13)	%
Backlog	$	238,492		$	309,636		$	(71,144)	(23)	%

REVENUES: The decrease in revenues for the year to date 2024 reflects decreases within each of the target markets, most significantly in Vehicle. Decreases in revenues compared to the prior year period are largely impacted by elevated shipments during the prior year period as supply chains normalized, combined with elevated inventory levels and slowing demand at our customers in the current period, partially offset by revenue contributes from the 2023 and 2024 acquisitions. Our revenues for the period ended September 30, 2024 was comprised of 55% to U.S. customers and 45% to customers primarily in Europe, Canada and Asia-Pacific. The overall decrease in revenue was due to a 6.8% volume decrease offset slightly by an insignificant favorable currency impact. The acquisitions completed in 2023 and 2024 contributed an incremental $30,856 of revenue in the nine months ended September 30, 2024. Organic revenue decreased 13.9% during the year to date 2024.

ORDER BOOKINGS AND BACKLOG: Orders decreased for the year to date 2024 compared to 2023, and included a 12.8% decrease in volume slightly offset by an insignificant increase in foreign exchange impact. The decrease in bookings from the prior year quarter is in large part due to a large $31 million order in the defense market received during the third quarter of 2023, as well as continued impacts of changes in customer order patterns in reacting to elevated inventory levels and customer demand.

GROSS PROFIT AND GROSS MARGIN: Gross profit decreased to $127,317 for year to date 2024 from $139,309 in 2023 driven by lower sales volume, and gross margins decreased to 31.2% for 2024, compared to 31.8% for 2023. The decrease in gross margin percentage was driven by lower fixed cost absorption on lower sales volumes, as well as the unfavorable gross margin impact of our most recent acquisition.

SELLING EXPENSES: Selling expenses increased 5% during year to date 2024 compared to 2023 primarily due to increased costs in connection with our recently completed acquisitions and to the mix of sales with commissions. Selling expenses as a percentage of revenues were comparable at 5% and 4% during year to date 2024 and 2023, respectively.

25

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses decreased by 3% during the nine months ended September 30, 2024 compared to the same period of 2023 due primarily to a decrease in incentive compensation as well as cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy. As a percentage of revenues, general and administrative expenses were 10% in each of 2024 and 2023.

ENGINEERING AND DEVELOPMENT EXPENSES: Engineering and development expenses decreased by 2% during the year to date 2024 compared to 2023. The decrease is due primarily to cost saving actions taken in connection with our Simplify to Accelerate NOW strategy. As a percentage of revenues, engineering and development expenses were 7% for each of the nine months ended September 30, 2024 and 2023.

BUSINESS DEVELOPMENT COSTS: Business development costs include acquisition and integration related costs as well as restructuring and business realignment costs. The increase in business development costs for year to date 2024 compared to 2023 primarily reflects restructuring-related costs associated with our Simplify to Accelerate NOW strategy, which contributed $1,863 of the increase over the prior year period, offset by lower acquisition and integration related costs and a decrease in the fair value measurement of contingent consideration liabilities.

AMORTIZATION OF INTANGIBLE ASSETS: Amortization of intangible assets increased for year to date 2024 compared to 2023 due to incremental intangible amortization attributable to the 2023 and 2024 acquisitions.

INTEREST EXPENSE: Interest expense increased by 10% for the year to date 2024 compared to 2023 primarily due to an increase in interest rates, as well as an increase in average debt levels to fund acquisitions and capital expenditures. The increase in interest expense is partially offset in part by interest rate swaps.

INCOME TAXES: For the nine months ended September 30, 2024 and 2023, the effective income tax rate was 21.8% and 23.4%, respectively. The effective tax rate for the nine months ended September 30, 2024 includes net discrete tax costs of 1.2%, primarily related to share-based awards, provision to return adjustment, offset partially by the reversal of prior year uncertain tax positions. The effective tax rate for the nine months ended September 30, 2023 includes net discrete tax benefits of (1.5%), primarily related to share-based awards and the reversal of prior year uncertain tax positions.

NET INCOME AND ADJUSTED NET INCOME: Net income decreased during year to date 2024 compared to 2023, primarily relating to lower sales volume, including a decrease in organic revenue, as well as an increase in business development costs, relating to the restructuring costs incurred, offset partially by reductions in other operating expenses. Adjusted net income for the nine month periods ended September 30, 2024 and 2023 was $19,471 and $28,386, respectively. Adjusted diluted earnings per share for year to date 2024 and 2023 were $1.17 and $1.75, respectively. Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. See information included in “Non–GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of net income to Adjusted net income and diluted earnings per share to Adjusted diluted earnings per share.

EBITDA AND ADJUSTED EBITDA: EBITDA was $42,438 for year to date 2024 compared to $54,042 for year to date 2023. Adjusted EBITDA was $48,404 and $60,255 for year to date 2024 and 2023, respectively. EBITDA and Adjusted EBITDA are non-GAAP measures. EBITDA consists of income before interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA also excludes stock-based compensation expense, foreign currency gain/loss and certain other items. Refer to information included in “Non-GAAP Measures” below for a discussion of the non-GAAP measure and a reconciliation of net income to EBITDA and Adjusted EBITDA.

Non-GAAP Measures

Organic revenue, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share are provided for information purposes only and are not measures of financial performance under GAAP. Management believes the presentation of these financial measures reflecting non-GAAP adjustments provides important supplemental information to investors and other users of our financial statements in evaluating the operating results of the Company as distinct from results that include items that are not indicative of ongoing operating results. In particular, those charges and credits that are not directly related to operating unit performance, and that are not a helpful measure of the performance of our underlying business particularly in light of their unpredictable nature. These non-GAAP disclosures have limitations as analytical tools, should not be viewed as a substitute for revenue and net income determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. In addition, the supplemental presentation should not be construed as an inference that the Company’s future results will be unaffected by similar adjustments to net income determined in accordance with GAAP. Organic revenue is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions.

26

The Company believes that revenue excluding foreign currency exchange impacts is a useful measure in analyzing sales results. The Company excludes the effect of currency translation from revenue for this measure because currency translation is not fully under management’s control, is subject to volatility and can obscure underlying business trends. The portion of revenue attributable to currency translation is calculated as the difference between the current period revenue and the current period revenue after applying foreign exchange rates from the prior period.

The Company believes EBITDA is often a useful measure of a Company’s operating performance and is a significant basis used by the Company’s management to measure the operating performance of the Company’s business because EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our debt financings, acquisitions, as well as our provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company’s industry.

The Company also believes that Adjusted EBITDA provides helpful information about the operating performance of its business. Adjusted EBITDA excludes stock-based compensation expense, as well as business development costs, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company’s core operating performance. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP.

Management uses Adjusted net income and Adjusted diluted earnings per share to assess the Company’s consolidated financial and operating performance. Adjusted net income and Adjusted diluted earnings per share are provided for informational purposes only and are not a measure of financial performance under GAAP. These measures help management make decisions that are expected to facilitate meeting current financial goals as well as achieving optimal financial performance. Adjusted net income provides management with a measure of financial performance of the Company based on operational factors as it removes the impact of certain non-routine items from the Company’s operating results. Adjusted diluted earnings per share provides management with an indication of how Adjusted net income would be reflected on a per share basis for comparison to the GAAP diluted earnings per share measure. Adjusted net income is a key metric used by senior management and the Company’s board of directors to review the consolidated financial performance of the business. This measure adjusts net income determined in accordance with GAAP to reflect changes in financial results associated with the highlighted expense and income items.

The Company’s calculation of organic revenue for the three and nine months ended September 30, 2024 is as follows:

	Three months ended		Nine months ended
	September 30, 2024		September 30, 2024
Revenue change over prior year	(13.8)	%	(6.8)	%
Less: Impact of acquisitions and foreign currency	7.7		7.1
Organic revenue	(21.5)	%	(13.9)	%

The Company’s calculation of EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
Net income as reported	$	2,101	$	6,666	$	10,153	$	19,750
Interest expense		3,435		3,164		10,207		9,309
Provision for income tax		612		1,992		2,830		6,027
Depreciation and amortization		6,447		6,421		19,248		18,956
EBITDA		12,595		18,243		42,438		54,042
Stock-based compensation expense		1,098		1,354		3,382		4,165
Acquisition and integration-related costs (1)		(201)		389		256		686
Restructuring and business realignment costs		479		805		1,948		1,105
Foreign currency loss		461		58		380		257
Adjusted EBITDA	$	14,432	$	20,849	$	48,404	$	60,255

(1) Includes a Q3 2024 fair value measurement reduction of $270 due to acquisition-related contingent consideration.

27

The Company’s calculation of Adjusted net income and Adjusted diluted earnings per share for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands except per share amounts):

	For the three months ended
	September 30,
			Per diluted				Per diluted
	2024		share		2023		share
Net income as reported	$	2,101	$	0.13	$	6,666	$	0.41
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets – net		2,401		0.14		2,355		0.15
Foreign currency loss – net		353		0.02		44		—
Acquisition and integration-related costs – net (2)		(154)		(0.01)		298		0.02
Restructuring and business realignment costs – net		367		0.02		617		0.04
Non-GAAP adjusted net income and adjusted diluted earnings per share	$	5,068	$	0.31	$	9,980	$	0.61

(1) Applies a blended federal, state, and foreign tax rate of approximately 23% applicable to the non-GAAP adjustments.

(2) Includes a Q3 2024 fair value measurement reduction of $270 due to acquisition-related contingent consideration.

	For the nine months ended
	September 30,
			Per diluted				Per diluted
	2024		share		2023		share
Net income as reported	$	10,153	$	0.61	$	19,750	$	1.22
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets – net		7,339		0.44		7,067		0.44
Foreign currency loss – net		291		0.02		197		0.01
Acquisition and integration-related costs – net		196		0.01		525		0.03
Restructuring and business realignment costs – net		1,492		0.09		847		0.05
Non-GAAP adjusted net income and adjusted diluted earnings per share	$	19,471	$	1.17	$	28,386	$	1.75

(1) Applies a blended federal, state, and foreign tax rate of approximately 23% applicable to the non-GAAP adjustments.

Liquidity and Capital Resources

The Company’s liquidity position as measured by cash and cash equivalents increased by $5,217 to a balance of $37,118 at September 30, 2024 from December 31, 2023.

					2024 vs.
	Nine Months Ended				2023
	September 30,				Variance
(in thousands):	2024		2023		$
Net cash provided by operating activities	$	29,458	$	27,132	$	2,326
Net cash used in investing activities		(32,134)		(18,854)		(13,280)
Net cash provided by (used in) financing activities		7,685		(14,500)		22,185
Effect of foreign exchange rates on cash		208		(556)		764
Net increase (decrease) in cash and cash equivalents	$	5,217	$	(6,778)	$	11,995

Of the $37,118 of cash and cash equivalents at September 30, 2024, $27,224 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated back to the U.S.

28

During the nine months ended September 30, 2024, the increase in cash provided by operating activities is due to improved cash inflows on collections on accounts receivable, and cash used/provided by inventory, offset by increase in cash used in accounts payable and accrued liabilities, as well as lower net income.

The increase in cash used in investing activities in the nine months ended September 30, 2024 relates to $20 million in cash paid for the acquisition of SNC. For the year to date 2024 and 2023, $6,250 of cash was paid relating to the 2022 Spectrum acquisition. Cash used in investing activities in the nine months ended September 30, 2024 includes $6,903 for purchases of property and equipment compared to $7,850 during the nine months ended September 30, 2023. Capital expenditures are expected to be between $8,000 and $11,000 for the full year 2024.

The increase in cash provided by financing activities during the nine months ended September 30, 2024 is primarily due to borrowings of $20,000 to fund the SNC acquisition. Debt payments of $9,500 were made during the nine months ended September 30, 2023. The $50,000 Notes issued in March 2024 were used to pay down the Revolving Facility. As of September 30, 2024, we had $175,962 of obligations under the Revolving Facility, excluding deferred financing costs.

Financial covenants under the 2024 Credit and Note Payable Agreements require the Company to maintain a minimum interest coverage ratio of at least 3.0:1.0 at the end of each fiscal quarter. In addition, the Company’s Leverage Ratio at the end of any fiscal quarter shall not be greater than 4.25:1.0 through December 31, 2024 or greater than 3.75 to 1.0 as of the end of any fiscal quarter thereafter; provided that the Company may elect to temporarily increase the Leverage Ratio to by 0.5:1.0 following a material acquisition under the 2024 Credit and Note Payable Agreements. The 2024 Credit and Note Payable Agreements also include covenants and restrictions that limit the Company’s ability to incur additional indebtedness, merge, consolidate or sell all or substantially all of its assets and enter into transactions with an affiliate of the Company on other than an arms’ length transaction. These covenants, which are described more fully in the 2024 Credit and Note Payable Agreements, to which reference is made for a complete statement of the covenants, were modified as of October 22, 2024, and are subject to certain exceptions. The Company was in compliance with all covenants as of September 30, 2024.

As of September 30, 2024, the unused Revolving Facility was $104,038. The amount available to borrow may be limited by our debt and EBITDA levels, which impacts our covenant calculations. The Revolving Facility matures March 1, 2029. The Series A Senior Notes, under the 2024 Note Payable Agreement, are due March 21, 2031.

On October 22, 2024, the Company entered into a Second Amendment to the Third Amended and Restated Credit Agreement and a Second Amendment to the Note Purchase and Private Shelf Agreement (collectively, the “October 2024 Credit and Note Payable Amendments”). These amendments include provisions to increase the maximum Leverage Ratio to 4.5:1.0 for the quarters ending March 31, 2025 and June 30, 2025, 4.0:1.0 for the quarter ending September 30, 2025, and returning to 3.75:1.0 for the quarter ending December 31, 2025 and thereafter. From January 1, 2025 through September 30, 2025, borrowings under the Revolving Facility will bear interest at Term SOFR plus a margin of 2.50% and a commitment fee of 0.325% on the unused portion of the Revolving Facility. Also, from October 1, 2024 through September 30, 2025, the Series A Notes will bear interest at 6.46%.

The Company declared dividends of $0.09 per share during the nine months ended September 30, 2024 and $0.085 per share during the nine months ended September 30, 2023. The Company’s working capital, capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the Amended Credit Agreement.

We believe our diverse markets, our strong market position in many of our businesses, and the steps we have taken to strengthen our balance sheet, such as retaining cash to support shorter term needs and amending our revolving credit facility leaves us well-positioned to manage our business. We continually assess our liquidity and cash positions taking geopolitical and other market uncertainties into consideration. Based on our analysis, we believe our existing balances of cash, our currently anticipated operating cash flows, and our available financing under agreements in place will be more than sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months.

Item 3. Qualitative and Quantitative Disclosures about Market Risk

Foreign Currency

We have international operations in The Netherlands, Sweden, Germany, China, Portugal, Canada, Czech Republic, Mexico, the United Kingdom, and New Zealand which expose us to foreign currency exchange rate fluctuations due to transactions denominated in Euros, Swedish Krona, Chinese Renminbi, Canadian dollar, Czech Krona, Mexican pesos, British Pound Sterling, and New Zealand

29

dollar, respectively. We continuously evaluate our foreign currency risk, and we take action from time to time in order to best mitigate these risks. A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency exposures would have had an impact of approximately $4,213 on our sales for the nine months ended September 30, 2024. This amount is not indicative of the hypothetical net earnings impact due to partially offsetting impacts on cost of sales and operating expenses in those currencies. We estimate that foreign currency exchange rate fluctuations during the three months ended September 30, 2024 increased revenues in comparison to the three months ended September 30, 2023 by $641. For the nine months ended September 30, 2024, we estimate that foreign currency exchange rate fluctuations increased revenue by $155 in 2024 compared to 2023.

We translate all assets and liabilities of our foreign operations, where the U.S. dollar is not the functional currency, at the period-end exchange rate and translate sales and expenses at the average exchange rates in effect during the period. The net effect of these translation adjustments is recorded in the condensed consolidated financial statements as comprehensive income. The translation adjustments were a gain of $5,805 and a loss of $2,923 for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, the translation adjustments were a gain of $235 and a loss of $1,995, respectively. Translation adjustments are not adjusted for income taxes as they relate to permanent investments in our foreign subsidiaries. A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign currency net assets would have had an impact of approximately $17,152 on our foreign net assets as of September 30, 2024.

We have contracts to hedge our short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other expense, net in the consolidated statements of income and comprehensive income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $24,438 at September 30, 2024. The foreign currency contracts are recorded in the condensed consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive income. During the three and nine months ended September 30, 2024, we recorded losses of $461 and $380 on foreign currency contracts which are included in other expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense, net. Net foreign currency transaction gains and losses included in other expense, net amounted to losses of $1,388 and a loss of $257 for the nine months ended September 30, 2024 and 2023, respectively.

Interest Rates

The Series A Notes under our 2024 Note Payable Agreement will bear interest at a fixed rate 5.96% and will mature on March 21, 2031. Interest on the Notes will be payable quarterly on the 21st day of March, June, September and December in each year, commencing on June 21, 2024. As amended on October 22, 2024, the Series A Notes will bear interest at 6.46% from October 1, 2024 through September 30, 2025. Interest will be computed on the basis of a 360-day year composed of twelve 30-day months.

Interest rates on our Credit Facility are based on Term SOFR plus a margin of 1.25% to 2.50% (2.125% at September 30, 2024), depending on the Company’s ratio of total funded indebtedness to consolidated EBITDA. As amended on October 22, 2024, borrowings under the Credit Facility will bear interest at Term SOFR plus a margin of 2.50% from January 1, 2025 through September 30, 2025. We use interest rate derivatives to add stability to interest expense and to manage our exposure to interest rate movements. We primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In March 2020, the Company entered into two interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matures in December 2024. In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026. In September 2024, the Company entered into an additional interest rate swap with a notional amount of $50,000 that matures in September 2027.

As of September 30, 2024, we had $175,962 outstanding under the Revolving Facility (excluding deferred financing fees), of which $150,000 is currently being hedged. Refer to Note 10, Debt Obligations, of the notes to consolidated financial statements for additional information about our outstanding debt. A hypothetical one percentage point (100 basis points) change in the Base Rate on the $25,962 of unhedged floating rate debt outstanding at September 30, 2024 would have approximately a $200 impact on our interest expense for the nine months ended September 30, 2024.

30

Item 4. Controls and Procedures

Conclusion regarding the effectiveness of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2024. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on management’s evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

During the quarter ended September 30, 2024, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.     OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Form 10-K for the year ended December 31, 2023, except to the extent factual information disclosed elsewhere in this Form 10-Q relates to such risk factors. For a full discussion of these risk factors, please refer to “Item 1A. Risk Factors” in the 2023 Annual Report and 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

				Total Number of Shares	Maximum Number of Shares
	Number of Shares	Average Price Paid		Purchased as Part of Publicly	that May Yet Be Purchased
Period	Purchased (1)	per Share		Announced Plans or Programs	Under the Plans or Programs
07/01/24 to 07/31/24	—	$	—	—	—
08/01/24 to 08/31/24	—		—	—	—
09/01/24 to 09/30/24	1,102		21.24	—	—
Total	1,102	$	21.24	—	—

(1) As permitted under the Company’s equity compensation plan, these shares were withheld by the Company to satisfy tax withholding obligations in connection with the vesting of stock. Shares withheld for tax withholding obligations do not affect the total number of shares available for repurchase under any approved common stock repurchase plan. At September 30, 2024, the Company did not have an authorized stock repurchase plan in place.

.

Item 5. Other Information

None of the Company’s directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined I Item 408(a) of Regulation S-K) during the quarter ended September 30, 2024.

32

Item 6. Exhibits

(a)	Exhibits
	10.1	First Amendment, dated as of July 30, 2024, to Third Amended and Restated Credit Agreement dated as of March 1, 2024, among Allient Inc. and Allied Motion Technologies B.V. as Borrowers, HSBC Bank USA, National Association, as Administrative Agent, and the other financial institutions signatory thereto. (Incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed October 25, 2024).
	10.2	Second Amendment, dated as of October 22, 2024, to Third Amended and Restated Credit Agreement dated as of March 1, 2024, among Allient Inc. and Allied Motion Technologies B.V. as Borrowers, HSBC Bank USA, National Association, as Administrative Agent, and the other financial institutions signatory thereto. (Incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed October 25, 2024).
	10.3	First Amendment, dated as of July 30, 2024, to Note Purchase and Private Shelf Agreement dated as of March 1, 2024, among Allient Inc. and each of the holders of the Notes signatory thereto. (Incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed October 25, 2024).
	10.4	Second Amendment, dated as of October 22, 2024, to Note Purchase and Private Shelf Agreement dated as of March 1, 2024, among Allient Inc. and each of the holders of the Notes signatory thereto. (Incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed October 25, 2024).
	31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.1 SCH	Inline XBRL Taxonomy Extension Schema Document (filed herewith).
	101.2 CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
	101.3 DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
	101.4 LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
	101.5 PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
	104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in exhibits 101.) (filed herewith).

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATE:	November 6, 2024	ALLIENT INC.
		By:	/s/ James A. Michaud
		James A. Michaud
		Senior Vice President & Chief Financial Officer

34

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Richard S. Warzala, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Allient Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s other verifying officer, the auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 6, 2024	/s/ Richard S. Warzala
	Richard S. Warzala
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, James A. Michaud, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Allient Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s other certifying officer, the auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

ug
Date: November 6, 2024	/s/ James A. Michaud
	James A. Michaud
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of Periodic Financial Reports

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Allient Inc. (the “Company”) certifies to his knowledge that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2024 fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2024	/s/ Richard S. Warzala
	Richard S. Warzala
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

Certification of Periodic Financial Reports

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Allient Inc. (the “Company”) certifies to his knowledge that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2024 fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2024	/s/ James A. Michaud
	James A. Michaud
	Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2024	Nov. 06, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	0-04041
Entity Registrant Name	ALLIENT INC
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-0518115
Entity Address, Address Line One	495 Commerce Drive
Entity Address, City or Town	Amherst
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	14228
City Area Code	716
Local Phone Number	242-8634
Title of 12(b) Security	Common stock
Trading Symbol	ALNT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,845,378
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000046129
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 37,118	$ 31,901
Trade receivables, net of provision for credit losses of $1,239 and $1,240 at September 30, 2024 and December 31, 2023, respectively	82,549	85,127
Inventories	117,605	117,686
Prepaid expenses and other assets	13,582	13,437
Total current assets	250,854	248,151
Property, plant, and equipment, net	68,396	67,463
Deferred income taxes	7,663	7,760
Intangible assets, net	104,593	111,373
Goodwill	134,390	131,338
Operating lease assets	23,627	24,032
Other long-term assets	6,912	7,425
Total Assets	596,435	597,542
Current liabilities:
Accounts payable	28,894	39,129
Accrued liabilities	32,292	56,488
Total current liabilities	61,186	95,617
Long-term debt	231,415	218,402
Deferred income taxes	4,078	4,337
Pension and post-retirement obligations	2,735	2,679
Operating lease liabilities	19,343	19,532
Other long-term liabilities	4,811	5,400
Total liabilities	323,568	345,967
Stockholders' Equity:
Common stock, no par value, authorized 50,000 shares; 16,840 and 16,308 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	110,278	95,937
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding
Retained earnings	174,497	165,813
Accumulated other comprehensive loss	(11,908)	(10,175)
Total stockholders' equity	272,867	251,575
Total Liabilities and Stockholders' Equity	$ 596,435	$ 597,542

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS
Trade receivables, net of provision for credit losses	$ 1,239	$ 1,240
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized shares	50,000	50,000
Common stock, shares issued	16,840	16,308
Common stock, shares outstanding	16,840	16,308
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, authorized shares	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Revenues	$ 125,213	$ 145,319	$ 407,958	$ 437,637
Cost of goods sold	85,949	97,821	280,641	298,328
Gross profit	39,264	47,498	127,317	139,309
Operating costs and expenses:
Selling	6,323	6,021	19,283	18,354
General and administrative	13,856	14,642	42,438	43,624
Engineering and development	9,056	10,702	30,416	31,041
Business development	278	1,194	2,204	1,791
Amortization of intangible assets	3,135	3,075	9,381	9,226
Total operating costs and expenses	32,648	35,634	103,722	104,036
Operating income	6,616	11,864	23,595	35,273
Other expense, net:
Interest expense	3,435	3,164	10,207	9,309
Other expense, net	468	42	405	187
Total other expense, net	3,903	3,206	10,612	9,496
Income before income taxes	2,713	8,658	12,983	25,777
Income tax provision	(612)	(1,992)	(2,830)	(6,027)
Net income	$ 2,101	$ 6,666	$ 10,153	$ 19,750
Basic earnings per share:
Earnings per share	$ 0.13	$ 0.42	$ 0.61	$ 1.24
Basic weighted average common shares	16,574	15,979	16,513	15,940
Diluted earnings per share:
Earnings per share	$ 0.13	$ 0.41	$ 0.61	$ 1.22
Diluted weighted average common shares	16,605	16,237	16,581	16,198
Net income	$ 2,101	$ 6,666	$ 10,153	$ 19,750
Other comprehensive income (loss):
Foreign currency translation adjustment	5,821	(2,923)	235	(1,995)
Loss on derivatives, net of tax	(1,379)	(170)	(1,968)	(596)
Comprehensive income	$ 6,543	$ 3,573	$ 8,420	$ 17,159

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Retained Earnings	Foreign Currency Translation Adjustments	Accumulated income (loss) on derivatives	Pension adjustments	Total
Balance at the beginning at Dec. 31, 2022	$ 83,852	$ 143,576	$ (16,925)	$ 5,556	$ (594)	$ 215,465
Balance at the beginning (in shares) at Dec. 31, 2022	15,978
Increase (Decrease) in Stockholders' Equity
Stock transactions under employee benefit stock plans	$ 1,246					1,246
Stock transactions under employee benefit stock plans (in shares)	31
Issuance of restricted stock, net of forfeitures	$ (34)					(34)
Issuance of restricted stock, net of forfeitures (in shares)	103
Share issuance in connection with acquisitions	$ 6,250					6,250
Share issuance in connection with acquisitions (in shares)	185
Stock-based compensation expense	$ 1,267					1,267
Shares withheld for payment of employee payroll taxes	$ (146)					(146)
Shares withheld for payment of employee payroll taxes (in shares)	(4)
Comprehensive income (loss)			1,354	(1,565)		(211)
Tax effect of derivative transactions				432		432
Net income		6,315				6,315
Dividends to stockholders		(403)				(403)
Balance at the ending at Mar. 31, 2023	$ 92,435	149,488	(15,571)	4,423	(594)	230,181
Balance at the ending (in shares) at Mar. 31, 2023	16,293
Balance at the beginning at Dec. 31, 2022	$ 83,852	143,576	(16,925)	5,556	(594)	215,465
Balance at the beginning (in shares) at Dec. 31, 2022	15,978
Increase (Decrease) in Stockholders' Equity
Net income						19,750
Balance at the ending at Sep. 30, 2023	$ 94,742	161,953	(18,920)	4,960	(594)	242,141
Balance at the ending (in shares) at Sep. 30, 2023	16,280
Balance at the beginning at Mar. 31, 2023	$ 92,435	149,488	(15,571)	4,423	(594)	230,181
Balance at the beginning (in shares) at Mar. 31, 2023	16,293
Increase (Decrease) in Stockholders' Equity
Issuance of restricted stock, net of forfeitures	$ 11					11
Issuance of restricted stock, net of forfeitures (in shares)	14
Stock-based compensation expense	$ 1,544					1,544
Shares withheld for payment of employee payroll taxes	$ (1,507)					(1,507)
Shares withheld for payment of employee payroll taxes (in shares)	(39)
Comprehensive income (loss)			(426)	930		504
Tax effect of derivative transactions				(223)		(223)
Net income		6,769				6,769
Dividends to stockholders		(485)				(485)
Balance at the ending at Jun. 30, 2023	$ 92,483	155,772	(15,997)	5,130	(594)	236,794
Balance at the ending (in shares) at Jun. 30, 2023	16,268
Increase (Decrease) in Stockholders' Equity
Issuance of restricted stock, net of forfeitures (in shares)	(18)
Share issuance in connection with acquisitions	$ 1,079					1,079
Share issuance in connection with acquisitions (in shares)	35
Stock-based compensation expense	$ 1,354					1,354
Shares withheld for payment of employee payroll taxes	$ (174)					(174)
Shares withheld for payment of employee payroll taxes (in shares)	(5)
Comprehensive income (loss)			(2,923)	(224)		(3,147)
Tax effect of derivative transactions				54		54
Net income		6,666				6,666
Dividends to stockholders		(485)				(485)
Balance at the ending at Sep. 30, 2023	$ 94,742	161,953	(18,920)	4,960	(594)	242,141
Balance at the ending (in shares) at Sep. 30, 2023	16,280
Balance at the beginning at Dec. 31, 2023	$ 95,937	165,813	(13,256)	3,425	(344)	$ 251,575
Balance at the beginning (in shares) at Dec. 31, 2023	16,308					16,308
Increase (Decrease) in Stockholders' Equity
Stock transactions under employee benefit stock plans	$ 1,564					$ 1,564
Stock transactions under employee benefit stock plans (in shares)	58
Issuance of restricted stock, net of forfeitures	$ (139)					(139)
Issuance of restricted stock, net of forfeitures (in shares)	167
Share issuance in connection with acquisitions	$ 6,250					6,250
Share issuance in connection with acquisitions (in shares)	203
Share issuance to settle contingent consideration	$ 4,874					4,874
Share issuance to settle contingent consideration (in shares)	174
Stock-based compensation expense	$ 1,211					1,211
Shares withheld for payment of employee payroll taxes	$ (121)					(121)
Shares withheld for payment of employee payroll taxes (in shares)	(4)
Comprehensive income (loss)			(4,408)	(102)		(4,510)
Tax effect of derivative transactions				24		24
Net income		6,902				6,902
Dividends to stockholders		(500)				(500)
Balance at the ending at Mar. 31, 2024	$ 109,576	172,215	(17,664)	3,347	(344)	267,130
Balance at the ending (in shares) at Mar. 31, 2024	16,906
Balance at the beginning at Dec. 31, 2023	$ 95,937	165,813	(13,256)	3,425	(344)	$ 251,575
Balance at the beginning (in shares) at Dec. 31, 2023	16,308					16,308
Increase (Decrease) in Stockholders' Equity
Net income						$ 10,153
Balance at the ending at Sep. 30, 2024	$ 110,278	174,497	(13,021)	1,457	(344)	$ 272,867
Balance at the ending (in shares) at Sep. 30, 2024	16,840					16,840
Balance at the beginning at Mar. 31, 2024	$ 109,576	172,215	(17,664)	3,347	(344)	$ 267,130
Balance at the beginning (in shares) at Mar. 31, 2024	16,906
Increase (Decrease) in Stockholders' Equity
Issuance of restricted stock, net of forfeitures (in shares)	(23)
Stock-based compensation expense	$ 1,073					1,073
Shares withheld for payment of employee payroll taxes	$ (1,446)					(1,446)
Shares withheld for payment of employee payroll taxes (in shares)	(42)
Comprehensive income (loss)			(1,178)	(673)		(1,851)
Tax effect of derivative transactions				162		162
Net income		1,150				1,150
Dividends to stockholders		(503)				(503)
Balance at the ending at Jun. 30, 2024	$ 109,203	172,862	(18,842)	2,836	(344)	265,715
Balance at the ending (in shares) at Jun. 30, 2024	16,841
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense	$ 1,098					1,098
Shares withheld for payment of employee payroll taxes	$ (23)					(23)
Shares withheld for payment of employee payroll taxes (in shares)	(1)
Comprehensive income (loss)			5,821	(1,809)		4,012
Tax effect of derivative transactions				430		430
Net income		2,101				2,101
Dividends to stockholders		(466)				(466)
Balance at the ending at Sep. 30, 2024	$ 110,278	$ 174,497	$ (13,021)	$ 1,457	$ (344)	$ 272,867
Balance at the ending (in shares) at Sep. 30, 2024	16,840					16,840

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Dividends to stockholders (in dollars per share)	$ 0.03	$ 0.03	$ 0.03	$ 0.03	$ 0.03	$ 0.025

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flows From Operating Activities:
Net income	$ 10,153	$ 19,750
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	19,248	18,956
Deferred income taxes	(45)	122
Stock-based compensation expense	3,382	4,165
Debt issue cost amortization recorded in interest expense	379	225
Other	3,248	987
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables	6,012	(14,358)
Inventories	5,500	(1,344)
Prepaid expenses and other assets	142	(1,553)
Accounts payable	(12,259)	2,871
Accrued liabilities	(6,302)	(2,689)
Net cash provided by operating activities	29,458	27,132
Cash Flows From Investing Activities:
Consideration paid for acquisitions, net of cash acquired	(25,231)	(11,004)
Purchase of property and equipment	(6,903)	(7,850)
Net cash used in investing activities	(32,134)	(18,854)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt	76,898	11,000
Principal payments of long-term debt and finance lease obligations	(61,333)	(22,325)
Payment of contingent consideration	(2,450)
Payment of debt issuance costs	(2,329)
Dividends paid to stockholders	(1,505)	(1,348)
Tax withholdings related to net share settlements of restricted stock	(1,596)	(1,827)
Net cash provided by (used in) financing activities	7,685	(14,500)
Effect of foreign exchange rate changes on cash	208	(556)
Net increase (decrease) in cash and cash equivalents	5,217	(6,778)
Cash and cash equivalents at beginning of period	31,901	30,614
Cash and cash equivalents at end of period	37,118	23,836
Supplemental disclosure of cash flow information:
Stock issued for acquisitions	6,250	7,329
Stock issued to settle contingent consideration	4,874
Property, plant and equipment purchases in accounts payable or accrued expenses	952	1,960
Debt issuance costs in accounts payable or accrued expenses	$ 568	$ 185

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BASIS OF PREPARATION AND PRESENTATION

9 Months Ended

Sep. 30, 2024

BASIS OF PREPARATION AND PRESENTATION

BASIS OF PREPARATION AND PRESENTATION

1.    BASIS OF PREPARATION AND PRESENTATION

Allient Inc. (“Allient”) or (“The Company”) 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.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between the foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive loss, a component of stockholders’ equity in the accompanying condensed consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the foreign subsidiaries are included in the results of operations as incurred in other expense, net.

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all adjustments which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures herein are adequate to make the information presented not misleading. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year.

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the Consolidated Financial Statements and related Notes to such statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 that was previously filed by the Company.

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ACQUISITIONS

9 Months Ended

Sep. 30, 2024

ACQUISITIONS

ACQUISITIONS

2. ACQUISITIONS

On January 11, 2024, the Company acquired 100% of the outstanding shares of SNC Manufacturing Co., Inc. (a Wisconsin corporation) and Acutran de Mexico, S.A. de C.V. (a Mexican corporation), (collectively “SNC”), a premier designer and global manufacturer of electrical transformers serving blue-chip customers in defense, industrial automation, alternative power generation and energy, including electric utilities and renewable energy.

The initial purchase price consisted of $20.0 million in cash paid at closing, subject to customary post-closing working capital adjustments. The purchase price allocation is subject to adjustments based on a final determination of certain tax matters. Measurement period adjustments to the initial purchase price allocation were made during the second quarter of 2024 that resulted in a decrease of the purchase price of $67 and a corresponding decrease to goodwill for $67. Adjustments were made in the third quarter of 2024 that resulted in a decrease to inventory of $500, as well as a decrease to deferred income tax liabilities of $110 and an increase to goodwill of $390.

The Company incurred $313 of transaction costs related to the acquisition during the nine months ended September 30, 2024, which are included in business development on the condensed consolidated statements of income and comprehensive income.

The operating results of the acquisition are included in the condensed consolidated financial statements beginning on the date of the acquisition. Revenue of SNC included within the condensed consolidated statements of income and comprehensive income for the three months ended September 30, 2024 was $9,602 and net income was $1,140 in the three months ended September 30, 2024. Revenue of SNC included within the condensed consolidated statements of income and comprehensive income for the nine months ended September 30, 2024 was $28,072 and net income was $3,014 in the nine months ended September 30, 2024.

Cash and cash equivalents	$	881
Trade receivables		3,467
Inventories		8,600
Prepaid expenses and other assets		496
Property, plant, and equipment		4,258
Operating lease assets		378
Intangible assets		2,900
Goodwill		3,075
Other current liabilities		(3,188)
Deferred revenue		(55)
Operating lease liabilities		(378)
Net deferred income tax liabilities		(592)
Other noncurrent liabilities		(118)
Net purchase price	$	19,724

The preliminary fair values of the assets acquired were determined using one of three valuation approaches: market, income or cost. The selection of a particular method for a given asset depended on the reliability of available data and the nature of the asset, among other considerations. The market approach estimates the value for a subject asset based on available market pricing for comparable assets. The income approach estimates the value for a subject asset based on the present value of cash flows projected to be generated by the asset. The projected cash flows were discounted at a required rate of return that reflects the relative risk of the asset and the time value of money. The projected cash flows for each asset considered multiple factors from the perspective of a marketplace participant including revenue projections from existing customers, attrition trends, technology life-cycle assumptions, marginal tax rates and expected profit margins considering historical and expected margins. The cost approach estimates the value for a subject asset based on the cost to replace the asset and reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation or obsolescence, with specific consideration given to economic obsolescence if indicated. These fair value measurement approaches are based on significant unobservable inputs, including management estimates and assumptions.

The intangible assets acquired consist of $1,500 of customers lists, $600 of trade name, and $800 of technology, which are being amortized over 12, 10, and 10 years, respectively. Goodwill generated is related to the assembled workforce, synergies between Allient’s other operations and SNC that are expected to occur as a result of the combined engineering knowledge, the ability of each of the operations to integrate each other’s products into more fully integrated system solutions, and Allient’s ability to utilize SNC’s management knowledge in providing complementary product offerings to the Company’s customers.

The goodwill resulting from the acquisition is not tax deductible.

On September 22, 2023, the Company acquired 100% of the ownership interest in Sierramotion Inc. (“Sierramotion”), a company headquartered in California, that specializes in designing and engineering turn-key motion components and mechatronic solutions for robotic, medical, industrial, defense, semiconductor, and other precision applications. The final purchase price for Sierramotion of $8.4 million included contingent consideration payable which was paid in the first quarter of 2024 (see Note 12 for breakout of payment) and at closing consisted of a combination of cash and Company stock. The intangible assets and goodwill are expected to be deductible for tax purposes. The purchase price allocation is final for this acquisition. Transaction costs for the acquisition were not material. The operating results of this acquisition are included in the condensed consolidated financial statements beginning on the acquisition date and the revenue and earnings in the current year periods presented are not material.

On January 3, 2024, the final deferred acquisition payment for Spectrum of $12,500 (comprised of 50% cash and 50% Company stock) was paid.

The following pro forma financial information presents the combined results of operations if the SNC acquisition had occurred as of January 1, 2023 and the Sierramotion acquisition had occurred as of January 1, 2022:

	Three months ended		Nine months ended
	September 30,		September 30,		September 30,
	2023		2024		2023
Revenues	$	156,797	$	409,252	$	469,392
Income before income taxes	$	9,261	$	13,702	$	27,286

The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts do not reflect adjustments for anticipated operating efficiencies that the Company expected to or has subsequently achieved as a result of these acquisitions. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would have been had these transactions occurred on the date presented or to project the combined company’s results of operations or financial position for future periods.

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REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2024

REVENUE RECOGNITION

REVENUE RECOGNITION

3.    REVENUE RECOGNITION

Performance Obligations

The Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product.

The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. For a limited number of contracts, for which revenue derived is not material in the periods presented, the Company recognizes revenue over time in proportion to costs incurred.

Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.

Nature of Goods and Services

The Company designs, manufactures, and sells precision motion, control, power, and structural components to provide integrated system solutions as well as individual products to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brushed and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, transformers, and other controlled motion-related products. The Company’s target markets include Industrial, Vehicle, Medical, and Aerospace & Defense. 

Determining the Transaction Price

The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of September 30, 2024 and December 31, 2023.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted below in Note 18, Segment Information, the Company’s business consists of one reportable segment. Revenue by geographic region is based on point of shipment origin.

A disaggregation of revenue by target market and geography is provided below:

	Three months ended				Nine months ended
	September 30,				September 30,
Target Market	2024		2023		2024		2023
Industrial	$	59,152	$	64,921	$	192,230	$	193,766
Vehicle		20,353		32,989		83,669		98,559
Medical		20,507		21,693		58,828		66,254
Aerospace & Defense		18,332		19,972		53,627		60,237
Distribution and Other		6,869		5,744		19,604		18,821
Total	$	125,213	$	145,319	$	407,958	$	437,637

	Three months ended				Nine months ended
	September 30,				September 30,
Geography	2024		2023		2024		2023
North America (primarily U.S.)	$	85,263	$	102,502	$	276,886	$	300,834
Europe		33,859		35,456		111,664		113,679
Asia-Pacific		6,091		7,361		19,408		23,124
Total	$	125,213	$	145,319	$	407,958	$	437,637

Contract Balances

When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists.

The opening and closing balances of the Company’s contract liabilities are as follows:

	September 30,		December 31,
	2024		2023
Contract liabilities in accrued liabilities	$	1,853	$	2,137
Contract liabilities in other long-term liabilities		—		8
	$	1,853	$	2,145

The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. In the nine months ended September 30, 2024 and 2023, the Company recognized revenue of $1,108 and $4,053, respectively, that was included in the opening contract liabilities balance.

Significant Payment Terms

The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration.

Returns, Refunds, and Warranties

In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications.

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INVENTORIES

9 Months Ended

Sep. 30, 2024

INVENTORIES

INVENTORIES

4.    INVENTORIES

Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows:

	September 30,		December 31,
	2024		2023
Parts and raw materials	$	85,670	$	87,381
Work-in-process		11,897		11,456
Finished goods		20,038		18,849
	$	117,605	$	117,686

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PROPERTY, PLANT AND EQUIPMENT

9 Months Ended

Sep. 30, 2024

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

5.    PROPERTY, PLANT AND EQUIPMENT

Property, plant, and equipment is classified as follows:

		September 30,		December 31,
	Useful lives	2024		2023
Land		$	1,786	$	973
Building and improvements	5 - 39 years		29,090		26,201
Machinery, equipment, tools and dies	3 - 15 years		107,222		99,711
Construction in progress			8,138		9,300
Furniture, fixtures and other	3 - 10 years		25,322		24,439
			171,558		160,624
Less accumulated depreciation			(103,162)		(93,161)
Property, plant, and equipment, net		$	68,396	$	67,463

Depreciation expense was $3,312 and $3,346 for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, depreciation expense was approximately $9,667 and $9,730, respectively.

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GOODWILL

9 Months Ended

Sep. 30, 2024

GOODWILL

GOODWILL

6.    GOODWILL

The change in the carrying amount of goodwill for the nine months ended September 30, 2024 is as follows:

		September 30,
		2024
Beginning balance	$	131,338
Goodwill acquired		2,752
Impact of measurement period adjustments of acquisitions (Note 2)		323
Effect of foreign currency translation		(23)
Ending balance	$	134,390

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2024

INTANGIBLE ASSETS

INTANGIBLE ASSETS

7.    INTANGIBLE ASSETS

Intangible assets on the Company’s condensed consolidated balance sheets consist of the following:

	Weighted Average	September 30, 2024						December 31, 2023
	Amortization	Gross		Accumulated		Net Book		Gross		Accumulated		Net Book
	Period	Amount		Amortization		Value		Amount		Amortization		Value
Customer lists	14.1 years	$	118,164	$	(48,641)	$	69,523	$	116,831	$	(42,421)	$	74,410
Trade name	13.7 years		16,186		(8,496)		7,690		15,572		(7,916)		7,656
Design and technologies	10.5 years		42,245		(14,865)		27,380		41,480		(12,173)		29,307
Total		$	176,595	$	(72,002)	$	104,593	$	173,883	$	(62,510)	$	111,373

Amortization expense for intangible assets was $3,135 and $3,075 for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, amortization expense was $9,381 and $9,226, respectively.

Estimated future intangible asset amortization expense as of September 30, 2024 is as follows:

Year ending December 31,	Total
	Estimated
	Amortization Expense
Remainder of 2024	$	3,305
2025		12,570
2026		12,472
2027		12,028
2028		11,280
Thereafter		52,938
Total estimated amortization expense	$	104,593

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2024

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

8.    STOCK-BASED COMPENSATION

Stock Incentive Plans

The Company’s Stock Incentive Plans provide for the granting of stock awards, including restricted stock, stock options and stock appreciation rights, to employees and non-employees, including directors of the Company.

Restricted Stock

For the nine months ended September 30, 2024, 186,758 shares of unvested restricted stock were awarded at a weighted average market value of $29.78. Of the restricted shares granted, 107,377 shares have performance-based vesting conditions. The value of the shares expected to vest is amortized to compensation expense over the related service period, which is normally three years, or over the estimated performance period. Shares of unvested restricted stock are generally forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards.

The following is a summary of restricted stock activity for the nine months ended September 30, 2024:

	Number of
	shares
Outstanding at beginning of period	254,110
Awarded	186,758
Vested	(119,335)
Forfeited	(42,162)
Outstanding at end of period	279,371

Stock-based compensation expense, net of forfeitures, of $1,098 and $1,354 was recorded for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, stock based compensation expense, net of forfeitures, of $3,382 and $4,165 was recorded, respectively.

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ACCRUED LIABILITIES

9 Months Ended

Sep. 30, 2024

ACCRUED LIABILITIES

ACCRUED LIABILITIES

9.    ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	September 30,		December 31,
	2024		2023
Compensation and fringe benefits	$	13,448	$	17,251
Accrued business acquisition consideration		—		12,638
Warranty reserve		2,036		2,139
Income taxes payable		182		2,483
Operating lease liabilities – current		4,969		5,142
Finance lease obligations – current		439		412
Contract liabilities		1,853		2,137
Contingent consideration – current		—		7,720
Restructuring related accruals		922		—
Other accrued expenses		8,443		6,566
	$	32,292	$	56,488

In the second quarter of 2024, the Company began to implement the Simplify to Accelerate NOW program. This included initiatives to realign the Company’s manufacturing footprint and streamline the organization to enhance operational efficiency and drive profitability. The costs associated with this program are expected to be between approximately $1.9 million and $2.4 million, primarily related to employee severance and related expenses.

The restructuring related accruals as of September 30, 2024 are expected to be substantially paid out by the end of 2024 and primarily relate to employee severance related expenses. Restructuring and business realignment costs of $479 and $1,948 are included within business development in the condensed consolidated statement of income and comprehensive income for the three and nine months ended September 30, 2024, respectively. For the nine months ended September 30, 2024, changes in restructuring related accruals are as follows (in thousands):

	Nine months ended
	September 30,
	2024
Beginning balance	$	—
Expenses incurred		1,948
Payments		(1,026)
Ending balance	$	922

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DEBT OBLIGATIONS

9 Months Ended

Sep. 30, 2024

DEBT OBLIGATIONS

DEBT OBLIGATIONS

10.    DEBT OBLIGATIONS

Debt obligations consisted of the following:

	September 30,		December 31,
	2024		2023
Long-term Debt
Revolving Credit Facility, long-term (1)	$	175,962	$	210,120
Note Payable		50,000		—
Unamortized debt issuance costs		(2,820)		(325)
Finance lease obligations – noncurrent		8,273		8,607
Long-term debt	$	231,415	$	218,402

(1) The effective interest rate on long-term debt obligations is 4.85% at September 30, 2024.

On March 1, 2024, the Company entered into a Third Amended and Restated Credit Agreement (the “2024 Amended Credit Agreement”) for a $280 million revolving credit facility (the “Revolving Facility”). The changes made to the Company’s previous credit facility by the 2024 Amended Credit Agreement include: i) providing for a $50 million accordion amount and ii) extending the term from February 12, 2025 to March 1, 2029. Additionally, the Company has entered into a $150 million fixed-rate private shelf facility (the “2024 Note Payable Agreement”) under which $50.0 million of borrowings occurred on March 21, 2024. These agreements, collectively, are referred to as the “2024 Credit and Note Payable Agreements”. Pursuant to the 2024 Note Payable Agreement, the Company may from time to time issue and sell, and the borrower may consider in its sole discretion the purchase of, in one or a series of transactions, senior notes of the Company in an aggregate principal amount of up to $150 million (“Shelf Notes”). The Shelf Notes will have a maturity date of no more than 10.5 years after the date of original issuance and may be issued through March 1, 2027, unless either party terminates such issuance right. Debt issuance costs of $2.9 million were incurred related to the 2024 Credit and Note Payable Agreements and are included within unamortized debt issuance costs noted above.

Borrowings under the Revolving Facility bear interest at the Term SOFR Rate (as defined in the 2024 Amended Credit Agreement) plus a margin of 1.25% to 2.50% or the Alternative Base Rate (as defined in the Amended Credit Agreement) plus a margin of 0.25% to 1.50%, in each case depending on the Company’s ratio of Funded Indebtedness (as defined in the 2024 Amended Credit Agreement) to Consolidated EBITDA (the “Leverage Ratio”). In addition, the Company is required to pay a commitment fee of between 0.15% and 0.325% quarterly on the unused portion of the Revolving Facility, also based on the Company’s Leverage Ratio.

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 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, are subject to certain exceptions. The Company was in compliance with all covenants as of September 30, 2024.

The 2024 Credit and Note Payable Agreements also include customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, if any representation or warranty made by the Company is false or misleading in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, the occurrence of certain ERISA events, the invalidity of the loan documents or a change in control of the Company. The amounts outstanding under the Revolving Facility may be accelerated upon certain events of default.

The obligations under the 2024 Credit and Note Payable Agreements are secured by substantially all of the Company’s non-realty assets and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

On March 21, 2024, the Company issued and sold $50.0 million in aggregate principal amount of the Series A Senior Notes due March 21, 2031 (the “Series A Notes”). The Series A Notes were issued pursuant to the 2024 Note Payable Agreement. The Series A Notes represent senior promissory notes of the Company and will bear interest at 5.96% and will mature on March 21, 2031. Interest on the Series A Notes will be payable quarterly on the 21st day of March, June, September and December in each year, commencing on June 21, 2024. Interest is computed on the basis of a 360-day year composed of twelve 30-day months. There are no separate covenants relating to the Series A Notes. All additional borrowings are subject to the leverage ratio compliance. The Series A Notes may be prepaid at the option of the Company, in accordance with the terms of the 2024 Note Payable Agreement, at 100% of the principal amount to be prepaid plus accrued interest plus the defined “Make-Whole Amount,” if any. The Make-Whole Amount is an amount equal to the excess, if any, of the discounted value of the remaining schedule payments with respect to principal on the Series A Notes being prepaid over the amount of the prepaid principal.

As of September 30, 2024, the unused Revolving Facility was $104,038. The amount available to borrow under the 2024 Credit and Note Payable Agreements may be limited by the Company’s debt and EBITDA levels, which impacts its covenant calculations. There is $568 of deferred financing fees accrued but not paid relating to the 2024 Credit and Note Payable Agreements as of September 30, 2024.

On October 22, 2024, the Company entered into a Second Amendment to the Third Amended and Restated Credit Agreement and a Second Amendment to the Note Purchase and Private Shelf Agreement (collectively, the “October 2024 Credit and Note Payable Amendments”). These amendments include provisions to increase the maximum Leverage Ratio to 4.5:1.0 for the quarters ending March 31, 2025 and June 30, 2025, 4.0:1.0 for the quarter ending September 30, 2025, and returning to 3.75:1.0 for the quarter ending December 31, 2025 and thereafter. From January 1, 2025 through September 30, 2025, borrowings under the Revolving Facility will bear interest at Term SOFR plus a margin of 2.50% and a commitment fee of 0.325% on the unused portion of the Revolving Facility. Also, from October 1, 2024 through September 30, 2025, the Series A Notes will bear interest at 6.46%.

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DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2024

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

11.    DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments.

The Company enters into foreign currency contracts with 30-day maturities to hedge its short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona, Canadian Dollar) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $24,438 and $22,193 at September 30, 2024 and December 31, 2023, respectively. The foreign currency contracts are recorded in the condensed consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. During the three and nine months ended September 30, 2024, the Company had losses of $461 and $380, respectively, and during the three and nine months ended September 30, 2023, the Company had losses of $174 and $270, respectively, on foreign currency contracts which is included in other expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense, net.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its variable-rate debt. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In March 2020, the Company entered into two interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matures in December 2024. In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026. In March 2023, the

Company executed amendments to the existing swaps to amend the index on the interest rate derivatives from LIBOR to SOFR. These amendments had no material financial impact to the Company’s operations or financial position. In September 2024, the Company entered into an additional interest rate swap with a notional amount of $50,000 that matures in September 2027.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of September 30, 2024, the Company estimates that $1,566 will be reclassified as a decrease to interest expense over the next twelve months related to its interest rate derivatives. The Company does not use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023:

		Asset Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	September 30,		December 31,
hedging instruments	Location	2024		2023
Foreign currency contracts	Prepaid expenses and other assets	$	27	$	54
Interest rate swaps	Prepaid expenses and other assets		567		2,254
Interest rate swaps	Other long-term assets		1,348		2,177
		$	1,942	$	4,485
		Liability Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	September 30,		December 31,
hedging instruments	Location	2024		2023
Foreign currency contracts	Accrued liabilities	$	13	$	—
		$	13	$	—

The tables below present the effect of cash flow hedge accounting on other comprehensive income (loss) (“OCI”) for the three and nine months ended September 30, 2024 and 2023:

	Amount of pre-tax (loss) gain recognized				Amount of pre-tax gain recognized
	in OCI on derivatives				in OCI on derivatives
Derivatives in cash flow hedging relationships	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Interest rate swaps	$	(745)	$	790	$	566	$	1,995

	Amount of pre-tax gain reclassified				Amount of pre-tax gain reclassified
	from accumulated OCI into income				from accumulated OCI into income
Location of gain reclassified	Three months ended September 30,				Nine months ended September 30,
from accumulated OCI into income	2024		2023		2024		2023
Interest expense	$	1,064	$	1,014	$	3,134	$	2,854

The table below presents the line items that reflect the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2024 and 2023:

		Total amounts of income and expense				Total amounts of income and expense
		line items presented that reflect the				line items presented that reflect the
		effects of cash flow hedges recorded				effects of cash flow hedges recorded
		Three months ended September 30,				Nine months ended September 30,
Derivatives designated as hedging instruments	Income Statement Location	2024		2023		2024		2023
Interest rate swaps	Interest Expense	$	3,435	$	3,164	$	10,207	$	9,309

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2024 and December 31, 2023. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets:

Derivative assets:

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

September 30,

of recognized

consolidated

consolidated

Financial

Cash collateral

2024

assets

balance sheets

balance sheets

instruments

received

Net amount

Derivatives

$

1,942

$

—

$

1,942

$

—

$

—

$

1,942

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

December 31,

of recognized

consolidated

consolidated

Financial

Cash collateral

2023

assets

balance sheets

balance sheets

instruments

received

Net amount

Derivatives

$

4,485

$

—

$

4,485

$

—

$

—

$

4,485

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

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FAIR VALUE

9 Months Ended

Sep. 30, 2024

FAIR VALUE

FAIR VALUE

12.   FAIR VALUE

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs.

These two types of inputs create the following three – level fair value hierarchy:

Level 1:	Quoted prices for identical assets or liabilities in active markets.
Level 2:	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model – derived valuations whose inputs or significant value drivers are observable.
Level 3:	Significant inputs to the valuation model that are unobservable.

The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets and liabilities approximate their fair value because of the immediate or short-term maturities of these financial instruments.

The following tables presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, respectively, by level within the fair value hierarchy:

	September 30, 2024
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	6,399	$	—	$	—
Deferred compensation plan assets		4,747		—		—
Foreign currency hedge contracts, net		—		14		—
Interest rate swaps, net		—		1,915		—
Contingent consideration		—		—		—

	December 31, 2023
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,859	$	—	$	—
Deferred compensation plan assets		4,305		—		—
Foreign currency hedge contracts, net		—		54		—
Interest rate swaps, net		—		4,431		—
Contingent consideration		—		—		(7,990)

The contingent consideration fair value measurement represents amounts in connection with the acquisitions of Sierramotion, which had a maximum amount of $2,000, and ALIO Industries (“ALIO”), which does not have a maximum amount. The measurements are based on significant inputs not observable in the market and therefore constitute Level 3 inputs within the fair value hierarchy. The Company determines the initial fair value of contingent consideration liabilities using a Monte Carlo valuation model, which involves a simulation of future earnings generated during the earn-out period using management’s best estimates, or a probability-weighted discounted cash flow analysis. The contingent consideration for the acquisition of Sierramotion consisted of Company stock and $2,000 was earned and settled in the first quarter of 2024. The contingent consideration of ALIO is settled 50% in Company stock and 50% cash. $5,747 was earned in 2023 and paid out in the first quarter of 2024, consisting of $2,874 in Company stock and $2,873 of cash (of which $2,450 is included in financing activities and the remainder in operating activities on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024). As of September 30, 2024, there is no remaining contingent consideration liability included on the condensed consolidated balance sheet. As of December 31, 2023, contingent consideration of $7,720 is included in accrued liabilities and $270 is included in other long-term liabilities on the condensed consolidated balance sheet.

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INCOME TAXES

9 Months Ended

Sep. 30, 2024

INCOME TAXES

INCOME TAXES

13.    INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations.

The effective income tax rate was 22.6% and 23.0% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rate for the three months ended September 30, 2024 includes net discrete tax costs of 1.2% primarily due to share based awards and provision to return adjustments. The effective tax rate for the three months ended September 30, 2023 does not include any discrete tax items that had a significant impact on tax rates. For the nine months ended September 30, 2024 and 2023, the effective income tax rate was 21.8% and 23.4%, respectively. The effective tax rate for the nine months ended September 30, 2024 includes net discrete tax costs of 1.2%, primarily related to share-based awards, provision to return adjustment, offset partially by the reversal of prior year uncertain tax positions. The effective tax rate for the nine months ended September 30, 2023 includes net discrete tax benefits of (1.5%), primarily related to share-based awards and the reversal of prior year uncertain tax positions.

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LEASES

9 Months Ended

Sep. 30, 2024

LEASES

LEASES

14.    LEASES

The Company has operating leases for office space, manufacturing facilities and equipment, computer equipment and automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for a long-term period, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for capital area maintenance, utilities, inflation and/or changes in other indexes.

Supplemental cash flow information related to the Company’s operating and finance leases for the nine months ended September 30, 2024 and 2023 was as follows:

	September 30,
	2024		2023
Cash paid for operating leases	$	4,791	$	4,195
Cash paid for interest on finance lease obligations	$	305	$	318
Assets acquired under operating leases	$	3,709	$	6,578
Operating lease assets obtained in acquisitions	$	378	$	224

The Company’s finance lease obligations relate to a manufacturing facility. Finance lease assets of $7,734 and $8,208 as of September 30, 2024 and December 31, 2023, respectively, are included in property, plant and equipment, net. As of September 30, 2024, finance lease obligations of $439 are included in accrued liabilities and $8,273 are included in long-term debt on the condensed consolidated balance sheet. As of December 31, 2023, finance lease obligations of $412 are included in accrued liabilities and $8,607 are included in long-term debt on the condensed consolidated balance sheet.

The following table presents the maturity of the Company’s operating and finance lease liabilities as of September 30, 2024:

	Operating Leases		Finance Leases
Remainder of 2024	$	1,593	$	204
2025		5,681		831
2026		4,958		848
2027		4,203		867
2028		3,259		886
Thereafter		8,001		7,884
Total undiscounted cash flows	$	27,695	$	11,520
Less: present value discount		(3,383)		(2,809)
Total lease liabilities	$	24,312	$	8,711

As of September 30, 2024, the Company has entered into building lease renewals with future minimum lease payments of $1,720 that have not yet commenced.

The Company has operating leases for certain facilities from companies for which a member of management is a part owner. In connection with such leases, the Company made fixed minimum lease payments to the lessor of $242 and $726

during the three and nine months ended September 30, 2024 and $242 and $706 during the three and nine months ended September 30, 2023, respectively, and is obligated to make payments of $202 during the remainder of 2024. Future fixed minimum lease payments under these leases as of September 30, 2024 are $5,783.

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

9 Months Ended

Sep. 30, 2024

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

15.    ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Accumulated Other Comprehensive (Loss) Income (“AOCI”) for the three months ended September 30, 2024 and 2023 is comprised of the following:

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At June 30, 2024	$	(344)	$	3,656	$	(820)	$	(18,842)	$	(16,350)
Unrealized gain (loss) on cash flow hedges		—		(745)		175		—		(570)
Amounts reclassified from AOCI		—		(1,064)		255		—		(809)
Foreign currency translation gain		—		—		—		5,821		5,821
At September 30, 2024	$	(344)	$	1,847	$	(390)	$	(13,021)	$	(11,908)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)
Unrealized gain (loss) on cash flow hedges		—		790		(189)		—		601
Amounts reclassified from AOCI		—		(1,014)		243		—		(771)
Foreign currency translation loss		—		—		—		(2,923)		(2,923)
At September 30, 2023	$	(594)	$	6,451	$	(1,491)	$	(18,920)	$	(14,554)

AOCI for the nine months ended September 30, 2024 and 2023 is comprised of the following:

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2023	$	(344)	$	4,431	$	(1,006)	$	(13,256)	$	(10,175)
Unrealized gain (loss) on cash flow hedges		—		550		(136)		—		414
Amounts reclassified from AOCI		—		(3,134)		752		—		(2,382)
Foreign currency translation gain		—		—		—		235		235
At September 30, 2024	$	(344)	$	1,847	$	(390)	$	(13,021)	$	(11,908)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2022	$	(594)	$	7,310	$	(1,754)	$	(16,925)	$	(11,963)
Unrealized gain (loss) on cash flow hedges		—		1,995		(455)		—		1,540
Amounts reclassified from AOCI		—		(2,854)		718		—		(2,136)
Foreign currency translation gain		—		—		—		(1,995)		(1,995)
At September 30, 2023	$	(594)	$	6,451	$	(1,491)	$	(18,920)	$	(14,554)

The realized gains and losses relating to the Company’s interest rate swap hedges were reclassified from AOCI and included in interest expense in the condensed consolidated statements of income and comprehensive (loss) income.

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DIVIDENDS PER SHARE

9 Months Ended

Sep. 30, 2024

DIVIDENDS PER SHARE

DIVIDENDS PER SHARE

16.    DIVIDENDS PER SHARE

The Company declared a quarterly dividend of $0.03 per share in the first, second, and third quarters of 2024 as well as in the second and third quarters of 2023 and $0.025 in the first quarter of 2023.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2024

EARNINGS PER SHARE

EARNINGS PER SHARE

17.    EARNINGS PER SHARE

Basic and diluted weighted-average shares outstanding are as follows:

	Three months ended		Nine months ended
	September 30,		September 30,
	2024	2023	2024	2023
Basic weighted average shares outstanding	16,574	15,979	16,513	15,940
Dilutive effect of potential common shares	31	258	68	258
Diluted weighted average shares outstanding	16,605	16,237	16,581	16,198

For the three and nine months ended September 30, 2024, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were 128,000 and 74,000, respectively. For the three and nine months ended September 30, 2023, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were immaterial.

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2024

SEGMENT INFORMATION

SEGMENT INFORMATION

18.    SEGMENT INFORMATION

The Company operates in one segment for the manufacture and marketing of specialty-controlled motion products and solutions for end user and OEM applications. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services in which the entity holds material assets and reports revenue.

Revenue for the three months ended September 30, 2024 and 2023 was comprised of 56% and 61%, respectively, shipped to U.S. customers. For the nine months ended September 30, 2024 and 2023, revenue was comprised of 55% and 58%, respectively, shipped to U.S. customers. The remainder of revenues for all periods were shipped to foreign customers, primarily in Europe, Canada, and Asia-Pacific.

Identifiable foreign fixed assets were $33,893 and $35,751 as of September 30, 2024 and December 31, 2023, respectively. Identifiable assets outside of the U.S. are attributable to Europe, China, Mexico, and Asia-Pacific.

For the three and nine months ended September, 30, 2024, no customers individually accounted for a material concentration of revenue nor accounts receivable. For the three months ended September 30, 2023, one customer accounted for 14% of revenues. For the nine months ended September 30, 2023, this customer accounted for 11% of revenues. This customer accounted for 15% of accounts receivable as of December 31, 2023.

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2024

ACQUISITIONS

Schedule of purchase price allocation and estimated fair value of the assets acquired

Cash and cash equivalents	$	881
Trade receivables		3,467
Inventories		8,600
Prepaid expenses and other assets		496
Property, plant, and equipment		4,258
Operating lease assets		378
Intangible assets		2,900
Goodwill		3,075
Other current liabilities		(3,188)
Deferred revenue		(55)
Operating lease liabilities		(378)
Net deferred income tax liabilities		(592)
Other noncurrent liabilities		(118)
Net purchase price	$	19,724

Schedule of unaudited pro forma financial information

	Three months ended		Nine months ended
	September 30,		September 30,		September 30,
	2023		2024		2023
Revenues	$	156,797	$	409,252	$	469,392
Income before income taxes	$	9,261	$	13,702	$	27,286

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REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2024

REVENUE RECOGNITION

Schedule of reconciliation of disaggregated revenue by target market and geography

	Three months ended				Nine months ended
	September 30,				September 30,
Target Market	2024		2023		2024		2023
Industrial	$	59,152	$	64,921	$	192,230	$	193,766
Vehicle		20,353		32,989		83,669		98,559
Medical		20,507		21,693		58,828		66,254
Aerospace & Defense		18,332		19,972		53,627		60,237
Distribution and Other		6,869		5,744		19,604		18,821
Total	$	125,213	$	145,319	$	407,958	$	437,637

	Three months ended				Nine months ended
	September 30,				September 30,
Geography	2024		2023		2024		2023
North America (primarily U.S.)	$	85,263	$	102,502	$	276,886	$	300,834
Europe		33,859		35,456		111,664		113,679
Asia-Pacific		6,091		7,361		19,408		23,124
Total	$	125,213	$	145,319	$	407,958	$	437,637

Schedule of opening and closing balances of the Company's receivables, contract asset, and contract liability

	September 30,		December 31,
	2024		2023
Contract liabilities in accrued liabilities	$	1,853	$	2,137
Contract liabilities in other long-term liabilities		—		8
	$	1,853	$	2,145

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INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2024

INVENTORIES

Schedule of inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value

	September 30,		December 31,
	2024		2023
Parts and raw materials	$	85,670	$	87,381
Work-in-process		11,897		11,456
Finished goods		20,038		18,849
	$	117,605	$	117,686

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PROPERTY, PLANT AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2024

PROPERTY, PLANT AND EQUIPMENT

Schedule of classification of property, plant and equipment

		September 30,		December 31,
	Useful lives	2024		2023
Land		$	1,786	$	973
Building and improvements	5 - 39 years		29,090		26,201
Machinery, equipment, tools and dies	3 - 15 years		107,222		99,711
Construction in progress			8,138		9,300
Furniture, fixtures and other	3 - 10 years		25,322		24,439
			171,558		160,624
Less accumulated depreciation			(103,162)		(93,161)
Property, plant, and equipment, net		$	68,396	$	67,463

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GOODWILL (Tables)

9 Months Ended

Sep. 30, 2024

GOODWILL

Schedule of change in the carrying amount of goodwill

		September 30,
		2024
Beginning balance	$	131,338
Goodwill acquired		2,752
Impact of measurement period adjustments of acquisitions (Note 2)		323
Effect of foreign currency translation		(23)
Ending balance	$	134,390

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2024

INTANGIBLE ASSETS

Schedule of intangible assets

	Weighted Average	September 30, 2024						December 31, 2023
	Amortization	Gross		Accumulated		Net Book		Gross		Accumulated		Net Book
	Period	Amount		Amortization		Value		Amount		Amortization		Value
Customer lists	14.1 years	$	118,164	$	(48,641)	$	69,523	$	116,831	$	(42,421)	$	74,410
Trade name	13.7 years		16,186		(8,496)		7,690		15,572		(7,916)		7,656
Design and technologies	10.5 years		42,245		(14,865)		27,380		41,480		(12,173)		29,307
Total		$	176,595	$	(72,002)	$	104,593	$	173,883	$	(62,510)	$	111,373

Schedule of estimated amortization expense for intangible assets

Year ending December 31,	Total
	Estimated
	Amortization Expense
Remainder of 2024	$	3,305
2025		12,570
2026		12,472
2027		12,028
2028		11,280
Thereafter		52,938
Total estimated amortization expense	$	104,593

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2024

STOCK-BASED COMPENSATION

Summary of restricted stock activity

The following is a summary of restricted stock activity for the nine months ended September 30, 2024:

	Number of
	shares
Outstanding at beginning of period	254,110
Awarded	186,758
Vested	(119,335)
Forfeited	(42,162)
Outstanding at end of period	279,371

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ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2024

ACCRUED LIABILITIES

Schedule of accrued liabilities

	September 30,		December 31,
	2024		2023
Compensation and fringe benefits	$	13,448	$	17,251
Accrued business acquisition consideration		—		12,638
Warranty reserve		2,036		2,139
Income taxes payable		182		2,483
Operating lease liabilities – current		4,969		5,142
Finance lease obligations – current		439		412
Contract liabilities		1,853		2,137
Contingent consideration – current		—		7,720
Restructuring related accruals		922		—
Other accrued expenses		8,443		6,566
	$	32,292	$	56,488

Schedule of changes in restructuring related accruals

For the nine months ended September 30, 2024, changes in restructuring related accruals are as follows (in thousands):

	Nine months ended
	September 30,
	2024
Beginning balance	$	—
Expenses incurred		1,948
Payments		(1,026)
Ending balance	$	922

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DEBT OBLIGATIONS (Tables)

9 Months Ended

Sep. 30, 2024

DEBT OBLIGATIONS

Schedule of debt obligations

	September 30,		December 31,
	2024		2023
Long-term Debt
Revolving Credit Facility, long-term (1)	$	175,962	$	210,120
Note Payable		50,000		—
Unamortized debt issuance costs		(2,820)		(325)
Finance lease obligations – noncurrent		8,273		8,607
Long-term debt	$	231,415	$	218,402

(1) The effective interest rate on long-term debt obligations is 4.85% at September 30, 2024.

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2024

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair value of the Company's derivative financial instruments as well as classification on the condensed consolidated balance sheets

		Asset Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	September 30,		December 31,
hedging instruments	Location	2024		2023
Foreign currency contracts	Prepaid expenses and other assets	$	27	$	54
Interest rate swaps	Prepaid expenses and other assets		567		2,254
Interest rate swaps	Other long-term assets		1,348		2,177
		$	1,942	$	4,485
		Liability Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	September 30,		December 31,
hedging instruments	Location	2024		2023
Foreign currency contracts	Accrued liabilities	$	13	$	—
		$	13	$	—

Schedule of effect of cash flow hedge accounting on other comprehensive income (loss) (OCI)

	Amount of pre-tax (loss) gain recognized				Amount of pre-tax gain recognized
	in OCI on derivatives				in OCI on derivatives
Derivatives in cash flow hedging relationships	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Interest rate swaps	$	(745)	$	790	$	566	$	1,995

	Amount of pre-tax gain reclassified				Amount of pre-tax gain reclassified
	from accumulated OCI into income				from accumulated OCI into income
Location of gain reclassified	Three months ended September 30,				Nine months ended September 30,
from accumulated OCI into income	2024		2023		2024		2023
Interest expense	$	1,064	$	1,014	$	3,134	$	2,854

Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statements of income and comprehensive income

		Total amounts of income and expense				Total amounts of income and expense
		line items presented that reflect the				line items presented that reflect the
		effects of cash flow hedges recorded				effects of cash flow hedges recorded
		Three months ended September 30,				Nine months ended September 30,
Derivatives designated as hedging instruments	Income Statement Location	2024		2023		2024		2023
Interest rate swaps	Interest Expense	$	3,435	$	3,164	$	10,207	$	9,309

Schedule of fair value provides the location that derivative assets and liabilities

Derivative assets:

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

September 30,

of recognized

consolidated

consolidated

Financial

Cash collateral

2024

assets

balance sheets

balance sheets

instruments

received

Net amount

Derivatives

$

1,942

$

—

$

1,942

$

—

$

—

$

1,942

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

December 31,

of recognized

consolidated

consolidated

Financial

Cash collateral

2023

assets

balance sheets

balance sheets

instruments

received

Net amount

Derivatives

$

4,485

$

—

$

4,485

$

—

$

—

$

4,485

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2024

FAIR VALUE

Schedule of financial assets that are accounted for at fair value on a recurring basis

	September 30, 2024
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	6,399	$	—	$	—
Deferred compensation plan assets		4,747		—		—
Foreign currency hedge contracts, net		—		14		—
Interest rate swaps, net		—		1,915		—
Contingent consideration		—		—		—

	December 31, 2023
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,859	$	—	$	—
Deferred compensation plan assets		4,305		—		—
Foreign currency hedge contracts, net		—		54		—
Interest rate swaps, net		—		4,431		—
Contingent consideration		—		—		(7,990)

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LEASES (Tables)

9 Months Ended

Sep. 30, 2024

LEASES

Schedule of supplemental cash flow information related to the operating leases

	September 30,
	2024		2023
Cash paid for operating leases	$	4,791	$	4,195
Cash paid for interest on finance lease obligations	$	305	$	318
Assets acquired under operating leases	$	3,709	$	6,578
Operating lease assets obtained in acquisitions	$	378	$	224

Schedule of maturity of the operating lease liabilities

The following table presents the maturity of the Company’s operating and finance lease liabilities as of September 30, 2024:

	Operating Leases		Finance Leases
Remainder of 2024	$	1,593	$	204
2025		5,681		831
2026		4,958		848
2027		4,203		867
2028		3,259		886
Thereafter		8,001		7,884
Total undiscounted cash flows	$	27,695	$	11,520
Less: present value discount		(3,383)		(2,809)
Total lease liabilities	$	24,312	$	8,711

Schedule of maturity of the financing lease liabilities

The following table presents the maturity of the Company’s operating and finance lease liabilities as of September 30, 2024:

	Operating Leases		Finance Leases
Remainder of 2024	$	1,593	$	204
2025		5,681		831
2026		4,958		848
2027		4,203		867
2028		3,259		886
Thereafter		8,001		7,884
Total undiscounted cash flows	$	27,695	$	11,520
Less: present value discount		(3,383)		(2,809)
Total lease liabilities	$	24,312	$	8,711

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables)

9 Months Ended

Sep. 30, 2024

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Schedule of accumulated other comprehensive (Loss) income ("AOCI")

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At June 30, 2024	$	(344)	$	3,656	$	(820)	$	(18,842)	$	(16,350)
Unrealized gain (loss) on cash flow hedges		—		(745)		175		—		(570)
Amounts reclassified from AOCI		—		(1,064)		255		—		(809)
Foreign currency translation gain		—		—		—		5,821		5,821
At September 30, 2024	$	(344)	$	1,847	$	(390)	$	(13,021)	$	(11,908)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)
Unrealized gain (loss) on cash flow hedges		—		790		(189)		—		601
Amounts reclassified from AOCI		—		(1,014)		243		—		(771)
Foreign currency translation loss		—		—		—		(2,923)		(2,923)
At September 30, 2023	$	(594)	$	6,451	$	(1,491)	$	(18,920)	$	(14,554)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2023	$	(344)	$	4,431	$	(1,006)	$	(13,256)	$	(10,175)
Unrealized gain (loss) on cash flow hedges		—		550		(136)		—		414
Amounts reclassified from AOCI		—		(3,134)		752		—		(2,382)
Foreign currency translation gain		—		—		—		235		235
At September 30, 2024	$	(344)	$	1,847	$	(390)	$	(13,021)	$	(11,908)

							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2022	$	(594)	$	7,310	$	(1,754)	$	(16,925)	$	(11,963)
Unrealized gain (loss) on cash flow hedges		—		1,995		(455)		—		1,540
Amounts reclassified from AOCI		—		(2,854)		718		—		(2,136)
Foreign currency translation gain		—		—		—		(1,995)		(1,995)
At September 30, 2023	$	(594)	$	6,451	$	(1,491)	$	(18,920)	$	(14,554)

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2024

EARNINGS PER SHARE

Schedule of basic and diluted weighted-average shares outstanding

	Three months ended		Nine months ended
	September 30,		September 30,
	2024	2023	2024	2023
Basic weighted average shares outstanding	16,574	15,979	16,513	15,940
Dilutive effect of potential common shares	31	258	68	258
Diluted weighted average shares outstanding	16,605	16,237	16,581	16,198

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ACQUISITIONS (Details) - USD ($) $ in Thousands			3 Months Ended				9 Months Ended
	Jan. 11, 2024	Jan. 03, 2024	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Sep. 22, 2023
ACQUISITIONS
Increase (decrease) in goodwill							$ 323
Assets Acquired and Liabilities Assumed
Goodwill			$ 134,390				134,390		$ 131,338
Pro forma Condensed Combined Financial Information
Revenues						$ 156,797	409,252	$ 469,392
Income before income taxes						$ 9,261	$ 13,702	$ 27,286
Customer lists
Assets Acquired and Liabilities Assumed
Estimated Life			14 years 1 month 6 days				14 years 1 month 6 days
Trade name
Assets Acquired and Liabilities Assumed
Estimated Life			13 years 8 months 12 days				13 years 8 months 12 days
Spectrum Controls
ACQUISITIONS
Amount payable at each payment		$ 12,500
Percentage of remaining consideration in cash		50.00%
Percentage of remaining consideration in stock		50.00%
Sierramotion Inc
ACQUISITIONS
Business acquisition percentage of voting interests acquired										100.00%
Purchase price					$ 8,400
SNC
ACQUISITIONS
Business acquisition percentage of voting interests acquired	100.00%
Purchase price	$ 20,000
Decrease to inventories			$ (500)
Decrease to deferred income tax liabilities			(110)
Decrease to purchase price				$ (67)
Transaction costs related to acquisition							$ 313
Increase (decrease) in goodwill			390	$ (67)
Revenue of SNC			9,602				28,072
Net income			1,140				3,014
Assets Acquired and Liabilities Assumed
Cash and cash equivalents			881				881
Trade receivables			3,467				3,467
Inventories			8,600				8,600
Prepaid expenses and other assets			496				496
Property, plant, and equipment			4,258				4,258
Operating lease assets			378				378
Intangible assets			2,900				2,900
Goodwill			3,075				3,075
Other current liabilities			(3,188)				(3,188)
Deferred revenue			(55)				(55)
Operating lease liabilities			(378)				(378)
Net deferred income tax liabilities			(592)				(592)
Other noncurrent liabilities			(118)				(118)
Net purchase price			19,724				19,724
SNC | Technology
Assets Acquired and Liabilities Assumed
Intangible assets			$ 800				$ 800
Estimated Life			10 years				10 years
SNC | Customer lists
Assets Acquired and Liabilities Assumed
Intangible assets			$ 1,500				$ 1,500
Estimated Life			12 years				12 years
SNC | Trade name
Assets Acquired and Liabilities Assumed
Intangible assets			$ 600				$ 600
Estimated Life			10 years				10 years

XML

REVENUE RECOGNITION - Disaggregation of Revenue (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) segment	Sep. 30, 2023 USD ($)
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Number of reportable segment | segment			1
Revenues	$ 125,213	$ 145,319	$ 407,958	$ 437,637
Industrial
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	59,152	64,921	192,230	193,766
Vehicle
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	20,353	32,989	83,669	98,559
Medical
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	20,507	21,693	58,828	66,254
Aerospace & Defense
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	18,332	19,972	53,627	60,237
Distribution and Other
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	6,869	5,744	19,604	18,821
North America (primarily U.S.)
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	85,263	102,502	276,886	300,834
Europe
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	33,859	35,456	111,664	113,679
Asia-Pacific
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	$ 6,091	$ 7,361	$ 19,408	$ 23,124

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REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
REVENUE RECOGNITION
Contract liabilities in accrued liabilities	$ 1,853		$ 2,137
Contract liabilities in other long-term liabilities			8
Contract liabilities	1,853		$ 2,145
Revenue recognized	$ 1,108	$ 4,053

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INVENTORIES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
INVENTORIES
Parts and raw materials	$ 85,670	$ 87,381
Work-in-process	11,897	11,456
Finished goods	20,038	18,849
Inventories	$ 117,605	$ 117,686

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PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Property, plant and equipment
Property, plant and equipment, gross	$ 171,558		$ 171,558		$ 160,624
Less accumulated depreciation	(103,162)		(103,162)		(93,161)
Property, plant, and equipment, net	68,396		68,396		67,463
Depreciation expense	3,312	$ 3,346	9,667	$ 9,730
Land
Property, plant and equipment
Property, plant and equipment, gross	1,786		1,786		973
Building and improvements
Property, plant and equipment
Property, plant and equipment, gross	$ 29,090		$ 29,090		26,201
Building and improvements | Minimum
Property, plant and equipment
Useful lives	5 years		5 years
Building and improvements | Maximum
Property, plant and equipment
Useful lives	39 years		39 years
Machinery, equipment, tools and dies
Property, plant and equipment
Property, plant and equipment, gross	$ 107,222		$ 107,222		99,711
Machinery, equipment, tools and dies | Minimum
Property, plant and equipment
Useful lives	3 years		3 years
Machinery, equipment, tools and dies | Maximum
Property, plant and equipment
Useful lives	15 years		15 years
Construction in progress
Property, plant and equipment
Property, plant and equipment, gross	$ 8,138		$ 8,138		9,300
Furniture, fixtures and other
Property, plant and equipment
Property, plant and equipment, gross	$ 25,322		$ 25,322		$ 24,439
Furniture, fixtures and other | Minimum
Property, plant and equipment
Useful lives	3 years		3 years
Furniture, fixtures and other | Maximum
Property, plant and equipment
Useful lives	10 years		10 years

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GOODWILL - Change in the carrying amount of goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Change in goodwill
Beginning balance	$ 131,338
Goodwill acquired	2,752
Impact of measurement period adjustments of acquisitions (Note 2)	323
Effect of foreign currency translation	(23)
Ending balance	$ 134,390

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INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Intangible assets subject to amortization
Gross Amount	$ 176,595		$ 176,595		$ 173,883
Accumulated Amortization	(72,002)		(72,002)		(62,510)
Total estimated amortization expense	104,593		104,593		111,373
Amortization expense for intangible assets	3,135	$ 3,075	9,381	$ 9,226
Estimated amortization expense
Remainder of 2024	3,305		3,305
2025	12,570		12,570
2026	12,472		12,472
2027	12,028		12,028
2028	11,280		11,280
Thereafter	52,938		52,938
Total estimated amortization expense	$ 104,593		$ 104,593		111,373
Customer lists
Intangible assets subject to amortization
Estimated Life	14 years 1 month 6 days		14 years 1 month 6 days
Gross Amount	$ 118,164		$ 118,164		116,831
Accumulated Amortization	(48,641)		(48,641)		(42,421)
Total estimated amortization expense	69,523		69,523		74,410
Estimated amortization expense
Total estimated amortization expense	$ 69,523		$ 69,523		74,410
Trade name
Intangible assets subject to amortization
Estimated Life	13 years 8 months 12 days		13 years 8 months 12 days
Gross Amount	$ 16,186		$ 16,186		15,572
Accumulated Amortization	(8,496)		(8,496)		(7,916)
Total estimated amortization expense	7,690		7,690		7,656
Estimated amortization expense
Total estimated amortization expense	$ 7,690		$ 7,690		7,656
Design and technologies
Intangible assets subject to amortization
Estimated Life	10 years 6 months		10 years 6 months
Gross Amount	$ 42,245		$ 42,245		41,480
Accumulated Amortization	(14,865)		(14,865)		(12,173)
Total estimated amortization expense	27,380		27,380		29,307
Estimated amortization expense
Total estimated amortization expense	$ 27,380		$ 27,380		$ 29,307

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STOCK-BASED COMPENSATION - Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Additional disclosures
Stock based compensation expense, net of forfeitures			$ 3,382	$ 4,165
Restricted Stock
STOCK-BASED COMPENSATION
Restricted stock grants			186,758
Weighted average grant date fair value (in dollars per share)			$ 29.78
Service period over which value of the shares is amortized to compensation expense			3 years
Number of Non-vested Restricted Shares
Outstanding at beginning of period (in shares)			254,110
Awarded (in shares)			186,758
Vested (in shares)			(119,335)
Forfeited (in shares)			(42,162)
Outstanding at end of period (in shares)	279,371		279,371
Additional disclosures
Stock based compensation expense, net of forfeitures	$ 1,098	$ 1,354	$ 3,382	$ 4,165
Restricted Stock | Performance based vesting
STOCK-BASED COMPENSATION
Restricted stock grants			107,377
Number of Non-vested Restricted Shares
Awarded (in shares)			107,377

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ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
ACCRUED LIABILITIES
Compensation and fringe benefits	$ 13,448	$ 17,251
Accrued business acquisition consideration		12,638
Warranty reserve	2,036	2,139
Income taxes payable	182	2,483
Operating lease liabilities - current	$ 4,969	$ 5,142
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued liabilities	Accrued liabilities
Finance lease obligations - current	$ 439	$ 412
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued liabilities	Accrued liabilities
Contract liabilities	$ 1,853	$ 2,137
Contingent consideration - current		7,720
Restructuring related accruals	922
Other accrued expenses	8,443	6,566
Accrued liabilities	$ 32,292	$ 56,488

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ACCRUED LIABILITIES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Sep. 30, 2024
Restructuring and business realignment costs	$ 479		$ 1,948
Restructuring charges, statement of income or comprehensive income extensible enumeration	Business development		Business development
Maximum
Employee severance and related expenses		$ 2,400
Minimum
Employee severance and related expenses		$ 1,900

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ACCRUED LIABILITIES - Changes in restructuring related accruals (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024
ACCRUED LIABILITIES
Expenses incurred	$ 479	$ 1,948
Payments		(1,026)
Ending balance	$ 922	$ 922

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DEBT OBLIGATIONS (Details) - USD ($) $ in Thousands			9 Months Ended
	Oct. 22, 2024	Mar. 01, 2024	Sep. 30, 2024	Mar. 21, 2024	Dec. 31, 2023
DEBT OBLIGATIONS
Unamortized debt issuance costs			$ (2,820)		$ (325)
Finance lease obligations - noncurrent			8,273		8,607
Long-term debt			231,415		218,402
Percentage of principal amount of debt to be repaid				100.00%
Revolving Credit Facility
DEBT OBLIGATIONS
Revolving Credit Facility, long-term			$ 175,962		$ 210,120
Effective rate (as a percent)			4.85%
Deferred financing fees			$ 568
Revolving Credit Facility | Minimum
DEBT OBLIGATIONS
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent)			0.15%
Revolving Credit Facility | Maximum
DEBT OBLIGATIONS
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent)			0.325%
Amended Revolving Facility
DEBT OBLIGATIONS
Maximum borrowing capacity		$ 280,000
Available borrowing capacity		50,000
Amended Revolving Facility | Base Rate | Minimum
DEBT OBLIGATIONS
Applicable margin (as a percent)			0.25%
Amended Revolving Facility | Base Rate | Maximum
DEBT OBLIGATIONS
Applicable margin (as a percent)			1.50%
Note Payable
DEBT OBLIGATIONS
Revolving Credit Facility, long-term			$ 50,000
2024 Note Payable Agreement
DEBT OBLIGATIONS
Unamortized debt issuance costs		(2,900)
Borrowings		50,000
Maximum borrowing capacity		$ 150,000
2024 Credit and Note Payable Agreements
DEBT OBLIGATIONS
Minimum interest coverage ratio			3.00%
Leverage ratio			4.25%
Increase in leverage ratio			0.50%
Unused amount of credit facility			$ 104,038
2024 Credit and Note Payable Agreements | For quarter ending on or after december 31, 2024
DEBT OBLIGATIONS
Leverage ratio			3.75%
2024 Amended Credit Agreement | SOFR | Minimum
DEBT OBLIGATIONS
Applicable margin (as a percent)			1.25%
2024 Amended Credit Agreement | SOFR | Maximum
DEBT OBLIGATIONS
Applicable margin (as a percent)			2.50%
Shelf Notes | Maximum
DEBT OBLIGATIONS
Debt instrument term		10 years 6 months
Principal amount of debt borrowed		$ 150,000
Series A Notes
DEBT OBLIGATIONS
Interest rate (as a percent)				5.96%
Principal amount of debt borrowed				$ 50,000
October 2024 Credit and Note Payable Amendments | Subsequent Event
DEBT OBLIGATIONS
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent)	0.325%
Line of Credit Facility	6.46%
October 2024 Credit and Note Payable Amendments | Subsequent Event | For quarters ending march 31, 2025 and june 30, 2025
DEBT OBLIGATIONS
Leverage ratio	4.50%
October 2024 Credit and Note Payable Amendments | Subsequent Event | For quarter ending september 30, 2025
DEBT OBLIGATIONS
Leverage ratio	4.00%
October 2024 Credit and Note Payable Amendments | Subsequent Event | For quarter ending december 31, 2025 and thereafter
DEBT OBLIGATIONS
Leverage ratio	3.75%
October 2024 Credit and Note Payable Amendments | Subsequent Event | SOFR
DEBT OBLIGATIONS
Applicable margin (as a percent)	2.50%

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2020 USD ($) derivative
Derivative financial instruments
Term of contract			30 days
Other (income) expense
Derivative financial instruments
Gain (loss) on foreign currency contracts	$ 461	$ 174	$ 380	$ 270
Interest Rate Swaps
Derivative financial instruments
Notional amount	50,000		50,000			$ 40,000
Number of derivative instruments | derivative							2
Notional amount of interest rate swap derivatives						$ 60,000	$ 20,000
Estimated amount to be reclassified as an decrease to interest expense			1,566
Foreign currency contracts
Derivative financial instruments
Notional amount	24,438		24,438		$ 22,193
Derivatives in cash flow hedging relationships | Interest Rate Swaps
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income
Amount of pre-tax (loss) gain recognized in OCI on derivatives	(745)	790	566	1,995
Derivatives in cash flow hedging relationships | Interest Rate Swaps | Interest expense
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income
Amount of pre-tax gain (loss) reclassified from accumulated OCI into income	1,064	1,014	3,134	2,854
Derivatives designated as hedging instruments
Derivative financial instruments
Fair value of derivative assets	1,942		1,942		4,485
Fair value of derivative liability	13		13
Derivatives designated as hedging instruments | Interest Rate Swaps | Interest expense
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income
Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded	3,435	$ 3,164	10,207	$ 9,309
Derivatives designated as hedging instruments | Interest Rate Swaps | Prepaid expenses and other assets
Derivative financial instruments
Fair value of derivative assets	567		567		2,254
Derivatives designated as hedging instruments | Interest Rate Swaps | Other long-term assets
Derivative financial instruments
Fair value of derivative assets	1,348		1,348		2,177
Derivatives designated as hedging instruments | Foreign currency contracts | Prepaid expenses and other assets
Derivative financial instruments
Fair value of derivative assets	27		27		$ 54
Derivatives designated as hedging instruments | Foreign currency contracts | Accrued liabilities.
Derivative financial instruments
Fair value of derivative liability	$ 13		$ 13

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DERIVATIVE FINANCIAL INSTRUMENTS - Effects of offsetting (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Derivative assets:
Gross amounts of recognized assets	$ 1,942	$ 4,485
Net amounts of assets presented in the consolidated balance sheets	1,942	4,485
Gross amounts not offset in the consolidated balance sheets: Net amount	$ 1,942	$ 4,485

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FAIR VALUE (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2024	Sep. 30, 2024	Dec. 31, 2023
Assets (liabilities)
Contingent consideration earned	$ 5,747
Contingent consideration settled in shares	2,874
Contingent consideration settled in cash	$ 2,873
Payment of contingent consideration		$ 2,450
Contingent consideration		0
Accrued liabilities.
Assets (liabilities)
Contingent consideration			$ 7,720
Other long-term liabilities
Assets (liabilities)
Contingent consideration			270
ALIO
Assets (liabilities)
Contingent consideration settled in company stock (as percentage)	50.00%
Contingent consideration settled in cash (as percentage)	50.00%
Sierramotion Inc
Assets (liabilities)
Contingent consideration fair value measurement, acquisition	$ 2,000	2,000
Recurring basis | Level 1
Assets (liabilities)
Pension plan assets		6,399	5,859
Deferred compensation plan assets		4,747	4,305
Recurring basis | Level 2
Assets (liabilities)
Foreign currency hedge contract assets, net		14	54
Interest rate swaps, net		$ 1,915	4,431
Recurring basis | Level 3
Assets (liabilities)
Contingent consideration			$ (7,990)

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INCOME TAXES (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Effective income tax rate
Effective income tax rate (as a percent)	22.60%	23.00%	21.80%	23.40%
Net discrete tax costs (benefits) (as a percent)	1.20%		1.20%	(1.50%)

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LEASES (Details) - USD ($)		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
LEASES
Options to terminate the leases		true
Operating lease option to terminate period		30 days
Supplemental cash flow information related to the operating leases
Cash paid for operating leases		$ 4,791,000	$ 4,195,000
Cash paid for interest on finance lease obligations		305,000	318,000
Assets acquired under operating leases		3,709,000	6,578,000
Operating lease assets obtained in acquisitions		378,000	$ 224,000
Lease assets and liabilities
Finance lease assets	$ 7,734,000	$ 7,734,000		$ 8,208,000
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property, Plant and Equipment, Net	Property, Plant and Equipment, Net		Property, Plant and Equipment, Net
Finance lease obligations, current	$ 439,000	$ 439,000		$ 412,000
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued Liabilities, Current	Accrued Liabilities, Current		Accrued Liabilities, Current
Finance lease obligations - noncurrent	$ 8,273,000	$ 8,273,000		$ 8,607,000
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-term Debt, Excluding Current Maturities	Long-term Debt, Excluding Current Maturities		Long-term Debt, Excluding Current Maturities
Lease liability from modification of lease	$ 1,720
Maturity of the operating lease liabilities
Remainder of 2024	1,593,000	$ 1,593,000
2025	5,681,000	5,681,000
2026	4,958,000	4,958,000
2027	4,203,000	4,203,000
2028	3,259,000	3,259,000
Thereafter	8,001,000	8,001,000
Total undiscounted cash flows	27,695,000	27,695,000
Less: present value discount	(3,383,000)	(3,383,000)
Total lease liabilities	24,312,000	24,312,000
Maturity of the financing lease liabilities
Remainder of 2024	204,000	204,000
2025	831,000	831,000
2026	848,000	848,000
2027	867,000	867,000
2028	886,000	886,000
Thereafter	7,884,000	7,884,000
Total undiscounted cash flows	11,520,000	11,520,000
Less: present value discount	(2,809,000)	(2,809,000)
Total lease liabilities	$ 8,711,000	$ 8,711,000

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LEASES - Related party (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Lessee, Lease, Description [Line Items]
Lease payments			$ 4,791	$ 4,195
Remainder of 2024	$ 1,593		1,593
Future minimum lease payments	24,312		24,312
Executive Officer
Lessee, Lease, Description [Line Items]
Lease payments	242	$ 242	726	$ 706
Remainder of 2024	202		202
Future minimum lease payments	$ 5,783		$ 5,783

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	$ 265,715	$ 236,794	$ 251,575	$ 215,465
Balance at the ending	272,867	242,141	272,867	242,141
Accumulated Other Comprehensive Income
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(16,350)	(11,461)	(10,175)	(11,963)
Unrealized gain (loss) on cash flow hedges	(570)	601	414	1,540
Amounts reclassified from AOCI	(809)	(771)	(2,382)	(2,136)
Foreign currency translation gain (loss)	5,821	(2,923)	235	(1,995)
Balance at the ending	(11,908)	(14,554)	(11,908)	(14,554)
Defined Benefit Plan Liability
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(344)	(594)	(344)	(594)
Balance at the ending	(344)	(594)	(344)	(594)
Cash Flow Hedges
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	3,656	6,675	4,431	7,310
Unrealized gain (loss) on cash flow hedges	(745)	790	550	1,995
Amounts reclassified from AOCI	(1,064)	(1,014)	(3,134)	(2,854)
Balance at the ending	1,847	6,451	1,847	6,451
Tax effect of Cash Flow Hedges
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(820)	(1,545)	(1,006)	(1,754)
Unrealized gain (loss) on cash flow hedges, Tax effect	175	(189)	(136)	(455)
Amounts reclassified from AOCI, Tax effect	255	243	752	718
Balance at the ending	(390)	(1,491)	(390)	(1,491)
Foreign Currency Translation Adjustments
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(18,842)	(15,997)	(13,256)	(16,925)
Foreign currency translation gain (loss)	5,821	(2,923)	235	(1,995)
Balance at the ending	$ (13,021)	$ (18,920)	$ (13,021)	$ (18,920)

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DIVIDENDS PER SHARE (Details) - $ / shares	3 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023
DIVIDENDS PER SHARE
Dividends declared (in dollars per share)	$ 0.03	$ 0.03	$ 0.03	$ 0.03	$ 0.03	$ 0.025

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EARNINGS PER SHARE (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Basic and diluted weighted-average shares outstanding
Basic weighted average shares outstanding	16,574	15,979	16,513	15,940
Dilutive effect of potential common shares	31	258	68	258
Diluted weighted average shares outstanding	16,605	16,237	16,581	16,198
Stock awards excluded from the calculation of diluted income per share (in shares)	128,000		74,000

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SEGMENT INFORMATION (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($) customer	Sep. 30, 2023 customer	Sep. 30, 2024 USD ($) segment customer	Sep. 30, 2023	Dec. 31, 2023 USD ($)
SEGMENT INFORMATION
Number of operating segments | segment			1
Identifiable assets | $	$ 596,435		$ 596,435		$ 597,542
Number of customers | customer	0		0
Total revenues | Customer one
SEGMENT INFORMATION
Number of customers | customer		1
Total revenues | Customer Concentration Risk | Customer one
SEGMENT INFORMATION
Percentage of concentration risk		14.00%		11.00%
Trade receivables | Customer Concentration Risk | Customer one
SEGMENT INFORMATION
Percentage of concentration risk					15.00%
Europe, China, Mexico, and Asia-Pacific
SEGMENT INFORMATION
Identifiable assets | $	$ 33,893		$ 33,893		$ 35,751
United States | Total revenues | Geographic Concentration Risk
SEGMENT INFORMATION
Percentage of concentration risk	56.00%	61.00%	55.00%	58.00%