Allient (ALNT) Q2 2026 Earnings Call Transcript

Record margins and strong order intake across industrial and aerospace segments. Need a quote from a Motley Fool analyst? Email [email protected] Allient Inc. ( ALNT +0.27% ) reported fiscal second quarter results featuring record gross margins and high order intake across its core Industrial and Aerospace & Defense segments. Management attributed the performance to the company's Simplify to Accelerate NOW (STAN) initiative, which has been utilized to drive operational discipline, organizational simplification, and cost reductions. The company reported significant growth in data center infrastructure applications, which management identified as a high-value strategic priority within the Industrial segment. Strategic alignment toward higher-value motion and power applications, combined with proactive deleveraging and inventory management, has transitioned the business toward a more resilient operating model with improved earnings leverage. Operator: Greetings, and welcome to the Allient Inc. Second Quarter Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Craig Mychajluk, Investor Relations. Thank you. Please go ahead. Craig Mychajluk: Yes. Thank you, and good morning, everyone. We certainly appreciate your time today as well as your interest in Allient.

On the call today are Dick Warzala, our Chairman, President and CEO; and Jim Michaud, our Chief Financial Officer. Dick and Jim will review our second quarter 2026 results, provide a strategic and operational update and share our outlook. We'll then open the line for questions. As a reminder, our earnings release and the accompanying slide presentation are available on our website at allient.com. If following along, please turn to Slide 2 for our safe harbor statement. During today's call, we may make forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated. These risks and factors are outlined in our SEC filings and in the earnings release. We will also discuss certain non-GAAP measures, which we believe will be 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. We have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release as well as the slides. With that, please turn to Slide 3, and I'll turn it over to Dick to begin. Richard Warzala: Thank you, Craig, and welcome, everyone. We delivered an excellent second quarter and more importantly, one that further demonstrates the earning power of the model when stronger demand, improved mix and disciplined execution come together. The quality of the quarter was evident across the P&L with strong top line growth, record gross margin and a significant increase in earnings. We also saw excellent order activity with record bookings in the quarter and in the period that resulted in a 1.31x book-to-bill ratio.

That gives us improved visibility into the second half of the year and supports a constructive view as we move through 2026. What stands out is not just the magnitude of the quarterly improvement, but the quality of it. We saw broad-based demand across key targeted markets, especially industrial automation, data center and other infrastructure, Aerospace & Defense and Medical applications. At the same time, the operating work we have been doing throughout the organization is increasingly showing up in better margins, better leverage and better earnings conversion. This quarter also enforces the value of the portfolio we have been shaping. We have intentionally positioned Allient toward higher-value motion, controls and power applications where our engineering content is deeper, our customer relationships are stronger and the margin profile is more attractive over time. That strategy is helping us improve not only growth, but also the quality and durability of that growth. If you look at the end market mix, the portfolio continues to align well with long-term secular drivers. Industrial remains an area of particular encouragement for us, especially where our technologies support automation, electrification, energy efficiency and digital infrastructure. Those are markets where we believe our capabilities are differentiated and where the opportunities continue to expand. Data center and other infrastructure have become an increasingly meaningful contributor within our Industrial business. As we indicated previously, we plan to provide investors with more visibility into this market given its growth profile and strategic importance to the portfolio. In the second quarter, sales tied to data center and infrastructure applications were $16.3 million or 10.6% of total revenue, up 60% from the prior year period. On a trailing 12-month basis, sales were $57.1 million or 9.9% of total sales, up 69% year-over-year.

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