Allient Inc. (NASDAQ:ALNT) Q3 2023 Earnings Call Transcript

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Ted Jackson : Well, I’m going to plug your Investor Day because — and I can tell you’re very enthusiastic about the composites and the electrification because you were just as enthusiastic in New York. So I will look forward to seeing what happens within that business because you’re clearly are fired up about it. My last question is just, and again, fun and more simple. It’s just talking about the M&A pipeline. Congratulations on the acquisition. I know it’s a very important part of the growth for the company and obviously, a key driver of getting to your long-term growth goal of $1 billion in sales. What’s the environment like with regard to the M&A front? I mean can you give some color around the pipeline, around kind of what you’re seeing with valuations?

I mean the competition with regards to other competitors or PE, given what’s happening with cost of capital, basically just kind of paint me in broad brush strokes, a picture of what you’re seeing and kind of how we should think about the opportunities for you to execute on something in the next, say, 12 to 18 months.

Richard Warzala : Sure. M&A is an ongoing process for us. And I mean, of course, we have a balancing act here to play from a understanding the capital markets and how we’re going to fund these and what we’re going to do. We had a big flurry in the recent past, and we brought out tremendous amounts of technology here that we have not fully leveraged yet and we’re working on leveraging. So I will say to you that we are very focused on certain opportunities. We are building longer-term relations for other opportunities, and we are very selective in that process. But it’s ongoing, and we fully plan to continue to manage our business in those areas from an M&A standpoint, consistent with what we did in the past. We’re not going to overpay.

We’re going to pay a fair price. It’s going to have to be additive in certain areas. And we do take a long-term view on some of the acquisitions that they don’t necessarily come out of the chutes delivery, firing on all cylinders. But getting them aligned within the company, taking advantage of the talent that we’re bringing on board, as well as looking at the new end markets and opportunities that we have for continued growth. So I would say to you, that’s where our emphasis and focus has been in the recent past. We also said to you that looking at the Investor Day and really highlighting out Allient and the change to Allient and the three pillars is that, it does expand our opportunity to look at true value-added strategic acquisitions and areas beyond motion.

And so we do believe we have several viable opportunities here that all have to come into the balance. So understanding where we are in the capital markets, understand where the environment we’re in, and understanding the impact it can have on the future growth and success of the company. And we will continue to do that. We mentioned if we acquired something in the past, we acquired a company that said, “Hey, don’t expect much from this, but the long-term impact, so this is very strategic and very strong. And without going into details, it absolutely turns out to be the case and positions us extremely well in key markets where the necessary investment was there, but did not prove to benefit the bottom line much at that time. So it’s active.

We continue to grow. We continue to grow. We have a team in place. And the beauty of that is just like the team growing everywhere else is it’s a set of developments, set of relationships and the expanded team can build to help us in that area. I mean, it’s powerful. You mentioned our most recent acquisition of Sierramotion. So just for our shareholders understanding, we happen to take our Board meetings out into our facilities, not just sit in the corporate office each quarter and meet their — but we’d like to take and our board likes to visit our facilities. And we took the opportunity to visit. We have an expanded facility in Towson, which is really state-of-the-art and represents and reflects the positive growth that we’ve seen in Tulsa and prepares us for future growth opportunities as well.

So our new acquisition, Sierramotion, we had the management team come in at the same time, get a chance to meet the Board, get a chance to spend time with the team in Tulsa, which is where there is a really significant opportunity and the synergies that we see between the two of them. But we mentioned Sierramotion and the front-end ability to really respond and react quickly on project developments and program developments. But also, they’ve taken up another level from a systems integration, which we’ve been talking about for many years, your system solutions. So to bring those two teams together, to see the excitement of each of them recognizing the quality of what the other brings in terms of their product designs, their technology, production capabilities, their ability to get to the market quickly, their experience levels and to let our board see that and say, hey, when we talk about making investments and setting the stage for the future, the excitement that comes with that.

So our acquisitions, Sierramotion is something we’ve been talking to the key leadership for a couple of years here now, and we both just kept saying that there is such a great fit, and it gives us an opportunity to leverage the strength of both to really grow this business. So we will continue in M&A. We are very excited about the M&A that has happened, and we’re very excited about leveraging some of the skills and the strengths of the teams that are coming together here to help us continue to execute the strategy in the future. So hopefully, that gave you some color and tell you that, yes, we’re in the market. All right.

Operator: [Operator Instructions] Showing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Richard Warzala : Well, thank you, everyone, for joining us on today’s call and for your interest in Allient. We will be participating in two upcoming conferences: The Baird Global Industrial Conference on November 9 in Chicago; and then the ROTH Technology Conference on November 15 in New York City. As always, please feel free to reach out to us at any time, and we look forward to talking with all of you again after our fourth quarter 2023 results. Thank you for your participation, and have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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