Allient : ALNT Q3 23 Teleconference Slides

Nasdaq: ALNT

November 2, 2023

Third Quarter 2023

Financial Results Call

Dick Warzala	Mike Leach
Chairman, President & CEO	Senior Vice President & CFO

© Allient Inc.

SAFE HARBOR STATEMENT

The statements in these slides that relate to future plans, events or performance are "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. Examples of forward-looking statements include, among others, statements the Company makes regarding expected operating results, anticipated levels of capital expenditures, the Company's belief that it has sufficient liquidity to fund its business operations, and expectations with respect to the conversion of backlog to sales. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of the Company's business, future plans and strategies, projections, anticipated events and trends, the

economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in

circumstances that are difficult to predict and many of which are outside of the Company's control. The Company's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries, conditions affecting the Company's customers and suppliers, competitor responses to the Company's products and services, the overall market acceptance of such products and services, the pace of bookings relative to shipments, the ability to expand into new markets and geographic regions, the success in acquiring new business, the impact of changes in income tax rates or policies, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses' and governments' responses to the pandemic 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 the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. 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.

This presentation will discuss some non-GAAP financial measures, which the Company believes are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. The Company has provided reconciliations of comparable GAAP to non-GAAP measures in tables found in the Supplemental Information portion of this presentation.

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THIRD QUARTER 2023 HIGHLIGHTS

Compared with prior-year unless otherwise noted

Revenue	Record Gross Margin
$145.3M +8%	32.7% +50 bps

Organic Growth¹	Diluted EPS
+7%	GAAP - $0.41
Adjusted² - $0.61

Orders	Robust Operating
Cash Generation
$154.9M +23%	$27.1M YTD

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Strong industrial market demand

Received $31M Defense market order

Acquired Sierramotion in September

Reduced debt balance $11.1 million YTD

(1)On a constant currency basis; See supplemental slides for the reconciliation of revenue excluding foreign currency exchange rate fluctuations and other important disclaimers.

(2)See supplemental slides for Adjusted Diluted EPS reconciliation and other important disclaimers.

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REVENUE

($ in millions; narrative compared with prior-year period unless otherwise noted)

					Up $10.9 million or 8%;
		Quarters			includes $1.8 million
		$145.5	$146.8	$145.3	favorable FX
$134.4	$131.1				Organic growth of 7%¹
					Q3 market growth:
					+ 32%	Industrial
					- 7%	A&D
Q3 22	Q4 22	Q1 23	Q2 23	Q3 23	- 7%	Vehicle
		Years			- 1%	Medical
				$568.7	Sales to U.S. customers at
		$503.0
$403.5					61% for Q3 2023 versus 59%
				for Q3 2022
					(1)On a constant currency basis; See supplemental
2021		2022	TTM Q3 23	slides for the reconciliation of revenue excluding
	foreign currency exchange rate fluctuations and other
					important disclaimers.
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DIVERSIFIED REVENUE MIX

Revenue by Market (TTM)

4%	Distribution	4%
12%	A&D	14%
18%	Medical	15%

27%	Vehicle	23%

38% Industrial 43%

TTM Revenue Change and Market Drivers

+48% Defense program timing

+3%	More normalized sales environment focused on surgical and
instrumentation related end markets
0%	Commercial automotive and powersports demand offset weaker
agricultural demand

+38%	Strong end market demand within industrial automation,
Oil & Gas, HVAC and material & vehicle handling

TTM Q3 2022	TTM Q3 2023
Rev: $468.7 million	Rev: $568.7 million
NOTE: Components may not add up to totals due to rounding
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GROSS PROFIT AND MARGIN

($ in millions; narrative compared with prior-year period unless otherwise noted)

Quarters

		$45.8	$46.0	$47.5
$43.3
$40.7
32.2%	31.1%	31.5%	31.3%	32.7%
Q3 22	Q4 22	Q1 23	Q2 23	Q3 23

Years

$157.3$180.0

$121.1

30.0%	31.3%	31.7%
2021	2022	TTM Q3 23

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Up $4.2 million or 10%

50 basis points margin increase

Gross margin impacts

• Volume
• Lean tool kit (AST)
• Favorable Mix

• Remaining supply chain disruptions
• Elevated raw material costs

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OPERATING INCOME AND MARGIN

($ in millions; narrative compared with prior-year period unless otherwise noted)

Quarters

$11.7				$11.4	$12.0	$11.9
			$8.2
8.7%		6.2%		7.8%	8.2%	8.2%
	Q3 22	Q4 22	Q1 23	Q2 23		Q3 23
					Years
								$43.4
$26.0			$31.7
6.2%			6.3%			7.6%
2021			2022		TTM Q3 23

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Up $0.2 million or 2%

Operating costs and expenses as a percent of revenue were 24.5%, up 100 bps

Largely reflects higher business development costs

General & administrative 10.0%

of TTM Q3 23 sales

Engineering & development 7.2%

of TTM Q3 23 sales

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NET INCOME AND ADJUSTED EBITDA

($ in millions, except per share data)

			GAAP Net Income & EPS								Adjusted Net Income &
										Adjusted EPS¹
$6.6			$6.3	$6.8	$6.7			$9.7			$8.9	$9.5	$10.0
				$6.9
		$3.7
$0.41	$0.23	$0.39	$0.42	$0.41			$0.48	$0.60	$0.55	$0.58	$0.61
	Q3 22		Q4 22		Q1 23		Q2 23		Q3 23		Q3 22		Q4 22		Q1 23		Q2 23		Q3 23

Adjusted EBITDA¹ and Margin

							$65.5	$76.8
$19.9		$19.0	$20.4	$20.8
$16.6		$50.1
142..20%8% 112.5%7	113..2%1	13.9%	14.3%		12.4%	13.0%	13.5%
Q3 22	Q4 22	Q1 23	Q2 23	Q3 23	2021	2022	TTM Q3 23

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Adjusted net income excludes amortization of intangible assets related to acquisitions, business development costs and other non-recurring items

(1)See supplemental slides for Adjusted Net Income and Adjusted EBITDA reconciliations and other important disclaimers; NOTE: Components may not add up to totals due to rounding

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BALANCE SHEET

($ in millions)

CAPITALIZATION

			Sept 30,		Dec 31,
			2023		2022
Cash and cash equivalents	$	23.8	$	30.6
Total debt			224.4		235.5
Total net debt
		200.5		205.2
Shareholders' equity			242.1		215.5
Total capitalization	$	466.5	$	451.3
Debt/total capitalization			48.1%		52.3%
Net debt/net total capitalization			45.3%		48.8%

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Generated $27.1 million of cash from operations YTD

Reduced debt balance $11.1 million YTD

Made $6.25 million deferred cash payment for prior acquisition in Q1 23

Bank leverage ratio¹ of 2.9x

(1)Bank leverage ratio calculated in accordance with the

Company's credit agreement

NOTE: Components may not add up to totals due to rounding

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CASH FLOW

($ in millions)

	Three Months Ended		YTD
	9/30/23	9/30/22		9/30/23
Net cash provided by (used in)	$	9.7	$ (5.5)		$ 27.1
operating activities
Capital expenditures (CapEx)		(1.7)	(4.7)		(7.9)

Inventory Turnover

3.0x 2.9x 3.1x

2021

2022

Q3 2023

Days Sales Outstanding

Operating free cash flow (FCF)(1)	$ 8.0	$ (10.2)		$ 19.2

FY23 CapEx: $12 million - $15 million(2)

54

45

57

1. Free cash flow is a non-GAAP metric defined as cash flow from operations, less capital expenditures

(2)2023 CapEx expectation provided on November 2, 2023; revised due to program timing and supply chain impacts NOTE: Components may not add up to totals due to rounding

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2021

2022

Q3 2023

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