What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-05 · 196 added, 185 removed, 682 unchanged (36% of the section changed)

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We have audited the accompanying consolidated balance sheets of Allient Inc.

and subsidiaries (formerly Allied Motion Technologies Inc.

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

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Inventories are measured on a first-in, first-out basis at the lower of cost or net realizable value.

The valuation of inventory requires the Company to estimate obsolete or excess inventory, as well as inventory that is not of saleable quality.

The valuation of inventory requires the Company to estimate obsolete or excess inventory, as well as inventory that is not of saleable

The Company’s estimate of the appropriate amount of obsolete or excess inventory, as well as inventory that is not of saleable quality, uses certain inputs and involves judgment.

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● We tested management’s process for determining the valuation of inventory, including:

– We evaluated the appropriateness of specified inputs supporting management’s estimate, including the historic inventory trends and the forecasts.

– We evaluated whether the appropriateness of management’s methodology and assumptions used in developing the estimate are reasonable and consistent with the nature of the inventory, including the evaluation of item specific estimates about the timing or level of demand for a specific part.

– We evaluated management’s ability to accurately estimate obsolete or excess inventory, as well as inventory that is not of saleable quality by comparing actual results to management’s historical estimates.

– We considered events and trends discussed in industry and analyst reports and disclosed in recent press releases from the Company’s major customers (including financial information) when evaluating the reasonableness of their assumptions.

o We evaluated the appropriateness of specified inputs supporting management’s estimate, including the historic inventory trends and the forecasts.

o We evaluated whether the appropriateness of management’s methodology and assumptions used in developing the estimate are reasonable and consistent with the nature of the inventory, including the evaluation of item specific estimates about the timing or level of demand for a specific part.

o We evaluated management’s ability to accurately estimate obsolete or excess inventory, as well as inventory that is not of saleable quality by comparing actual results to management’s historical estimates.

o We considered events and trends discussed in industry and analyst reports and disclosed in recent press releases from the Company's major customers (including financial information) when evaluating the reasonableness of their assumptions.

In addition, we also considered any changes within the business including restructuring events and strategic changes.

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Interest expense

Other expense (income), net

Other (income) expense, net

Total other expense, net

Income before income taxes

Income tax (provision) benefit

Income tax provision

Basic earnings per share:

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Diluted weighted average common shares

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustment

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(In thousands, except per share data)

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Loss

Foreign Currency

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Shares withheld for payment of employee payroll taxes

Comprehensive (loss) income

Comprehensive income (loss)

Dividends to stockholders - $ 0.115 per share

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Share issuance in connection with acquisitions

Share issuance to settle contingent consideration

Stock compensation expense

Shares withheld for payment of employee payroll taxes

Comprehensive income (loss)

Comprehensive (loss) income

Dividends to stockholders - $ 0.12 per share

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Principal payments of long-term debt and finance lease obligations

Payment of contingent consideration

Payment of debt issuance costs

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Effect of foreign exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Stock issued for acquisitions

Stock issued to settle contingent consideration

Property, plant and equipment purchases in accounts payable or accrued expenses

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BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Effective August 23, 2023, Allied Motion Technologies Inc.

(“Allied Motion”) changed its name to Allient Inc.

(“Allient” or the “Company”).

In conjunction with the name change, Allient’s ticker symbol has changed from “AMOT” to “ALNT”.

The name change reflects the Company’s evolution of its business to transform from a products-based business in motion control to a solutions-oriented company that addresses its customers’ requirements for Motion, Controls and Power technologies for a multitude of applications.

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.

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The Company did not record any impairment charges for the years ended December 31, 2024, 2023 or 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination.

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Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than its carrying amount, or if significant adverse changes in the Company’s future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required.

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If the qualitative assessment indicates that the quantitative analysis should be performed, or if management elects to bypass a qualitative assessment, the Company then evaluates goodwill for impairment by comparing the fair value of the reporting unit to its carrying amount, including goodwill.

At October 31, 2023, the Company performed its annual goodwill impairment test and determined, after performing a qualitative test of the reporting unit, that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount.

Accordingly, there was no indication of impairment and the quantitative impairment test was not performed.

The Company did not record any goodwill impairment charges for the years ended December 31, 2023, 2022 or 2021.

At October 31, 2024, Allient performed its annual goodwill impairment test.

The Company elected to bypass the qualitative assessment and performed a quantitative analysis of the reporting unit.

As the fair value of our reporting unit exceeds its carrying value, Allient does not believe that our reporting unit is at risk for impairment.

The discounted cash flow method incorporates various assumptions, such as projected revenue growth rates, operating margins, the terminal growth rate, and the weighted-average cost of capital.

The comparable publicly traded companies’ method includes assumptions such as determination of relevant comparable companies and valuation multiple ranges.

The Company did no t record any goodwill impairment charges for the years ended December 31, 2024, 2023 or 2022.

Other Long-Term Assets

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Other accrued expenses

As part of the Simplify to Accelerate NOW strategy, restructuring and business realignment costs of $ 1,971 are included within business development in the consolidated statements of income and comprehensive income for the year ended December 31, 2024, of which $ 1,958 has been paid during the year ended December 31, 2024.

Foreign Currency Translation

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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 operating locations are included in the other expense (income), net as incurred.

Revenue Recognition

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The Consolidated Statements of Income and Comprehensive Income and Note 13, Accumulated Other Comprehensive Income , contain additional information on the computation of the Company’s comprehensive income.

Supplemental Cash Flow Information

The following represents supplemental cash flow information for the years ended December 31, 2024, 2023, and 2022 (in thousands):

Year ended December 31,

Cash paid during the year for:

Fair Value Accounting

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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 consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

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 consolidated balance sheets for these assets approximate fair value because of the immediate or short-term maturities of these financial instruments.

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

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Deferred compensation plan assets

Foreign currency hedge contracts

Foreign currency hedge contracts, net

Interest rate swaps, net

Contingent consideration

December 31, 2023

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Deferred compensation plan assets

Foreign currency hedge contracts

Foreign currency hedge contracts, net

Interest rate swaps, net

Contingent consideration

The contingent consideration fair value measurement represents amounts in connection with the acquisitions of Sierramotion, which has a maximum amount of $ 2,000 , and ALIO, which does not have a maximum amount.

The contingent consideration fair value measurement at December 31, 2023 represented amounts in connection with the acquisitions of Sierramotion, which had a maximum amount of $ 2,000 , and ALIO Industries (“ALIO”, a 2021 acquisition), which did 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 contingent consideration at December 31, 2023 for the acquisition of Sierramotion consists of Company stock and was paid in January 2024 at the maximum amount of $ 2,000 .

The contingent consideration at December 31, 2023 for the acquisition of ALIO is paid 50 % in Company stock and 50 % cash, the current portion of which was $ 5,720 and has been paid in February 2024.

Changes to contingent consideration since December 31, 2022 include a $ 2,000 increase due to the acquisition of Sierramotion in the current period and an increase of $ 1,890 , which is included in business development in the consolidated statements of income and comprehensive income, of the estimated fair value of the ALIO contingent consideration related to updated inputs to the timing of anticipated earnings of the acquired entity.

Of the total contingent consideration payable as of December 31, 2023, $ 7,720 was paid in January and February 2024 and is included in accrued liabilities and $ 270 is payable, if earned, in the first half of 2025 and included in other long-term liabilities on the consolidated balance sheet as of December 31, 2023.

Contingent consideration of $ 4,100 is included in other long-term liabilities as of December 31, 2022.

The contingent consideration at December 31, 2023 for the acquisition of Sierramotion consisted of Company stock and was paid in January 2024 at the maximum amount of $ 2,000 .

The contingent consideration at December 31, 2023 for the acquisition of ALIO of $ 5,757 was paid 50 % in Company stock and 50 % cash in February 2024.

The performance period for the ALIO contingent consideration has expired and there are no remaining contingent consideration liabilities as of December 31, 2024.

Fair value adjustments to contingent consideration after the acquisition date are included within business development in the consolidated statement of income and comprehensive income.

Derivative Financial Instruments

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As required by ASC 815, the Company records all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

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(In thousands, except share and per share data)

Recent Accounting Developments - Not Yet Adopted

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures".

This ASU relates to required disclosures of certain information about reportable segments.

The update adds additional required disclosures on an annual basis as well as expands the requirements for quarterly disclosures.

The standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning December 15, 2024.

The Company is assessing the impact of adopting the standard on our consolidated financial statements.

This ASU requires incremental disclosures related to an entity’s reportable segments, including (i) significant segment expense categories and amounts for each reportable segment that are provided to the chief operating decision maker (“CODM”), (ii) an aggregate amount and description of other segment items included in each reported measure, (iii) all annual disclosures about a reportable segment’s profit or loss and assets required by Topic 280 to be disclosed in interim periods, (iv) the title and position of the individual or the name of the group identified as the CODM and (v) an explanation of how the CODM uses the reported measures of segment profit or loss to assess performance and allocate resources to the segment.

The standard improves transparency by providing disaggregated expense information about an entity’s reportable segments.

The standard does not change the definition of a segment, the method for determining segments or the criteria for aggregating operating segments into reportable segments.

This guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods beginning after December 15, 2024.

The Company adopted this guidance retrospectively during the year ended December 31, 2024, providing the additional disclosures as required.

For additional information, refer to Note 14, Segment Information .

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

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The Company is assessing the impact of adopting the standard on our consolidated financial statements.

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 preliminary purchase price for Sierramotion of $ 8.4 million includes $ 2.0 million of contingent consideration payable which was paid in January 2024 (Note 1) and at closing consisted of a combination of cash and Company stock.

The intangible assets of $ 4,100 and goodwill of $ 2,876 are expected to be deductible for tax purposes.

The preliminary purchase price allocation is subject to adjustments based on a determination of certain tax matters.

Transaction costs for the acquisition were not material.

The operating results of this acquisition are included in the consolidated financial statements beginning on the acquisition date and the revenue and earnings in the current year interim periods presented are not material.

The revenue and earnings of Sierramotion included within the consolidated statement of income and comprehensive income for the year ended December 31, 2023 is not material.

On May 30, 2022, the Company acquired 100 % of the direct and indirect legal and beneficial ownership of the shares of FPH Group Inc., a corporation incorporated pursuant to the laws of the Province of Ontario and the membership interests of Transtar International, LLC, a Michigan limited liability company, collectively “FPH”.

The final purchase price for FPH was $ 41,316 , including a measurement period adjustment during 2023, resulting in a decrease to inventories of $ 1,080 , an increase to purchase price of $ 276 , and an increase to goodwill of $ 1,356 .

The final allocation of the purchase price paid for FPH is based on fair values of the assets acquired and liabilities assumed of FPH and is as follows (in thousands):

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)”.

This improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is assessing the impact of adopting the standard on our consolidated financial statements .

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.

(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 purchase price consisted of $ 20,000 in cash paid at closing.

The purchase price allocation is final as of December 31, 2024.

Measurement period adjustments to the initial purchase price allocation were made during 2024 that resulted in a decrease of the purchase price of $ 67 , a decrease to inventory of $ 500 , a decrease to deferred income tax liabilities of $ 230 , and an increase to goodwill of $ 203 .

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Revenue of SNC included within the consolidated statements of income and comprehensive income during 2024 was $ 38,045 and net income was $ 3,066 in 2024.

Cash and cash equivalents

Trade receivables

Other assets, net

Prepaid expenses and other assets

Property, plant, and equipment

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Deferred revenue

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Operating lease liabilities

Net deferred income tax liabilities

Other noncurrent liabilities

Net purchase price

The intangible assets acquired consist of customer lists of $ 16,173 , technology of $ 5,731 , and a trade name of $ 707 , which are being amortized over 12 , 10 and 10 years, respectively.

ThinGap and Airex

On May 24, 2022, the Company acquired 100 % of the outstanding stock of ThinGap, Inc.

(“ThinGap”), a privately-owned California headquartered developer and manufacturer of high performance, zero cogging slotless motors for use in aerospace, defense, and medical applications that require precise performance in a compact, yet high-torque-to-volume solutions.

On June 17, 2022, the Company acquired 100 % of the membership interests of Airex, LLC (“Airex”), a privately-owned New Hampshire headquartered developer of high precision electromagnetic components and solutions for the aerospace and defense, life sciences, semiconductor, and commercial industrial applications.

The purchase price, collectively, for ThinGap and Airex was $ 16,618 .

The initial purchase price, collectively, for ThinGap and Airex was $ 16,527 , comprised of $ 8,224 in cash funded through borrowings under the Amended Revolving Credit Facility and $ 8,303 in Company stock ( 376,500 shares, of which 29,631 shares are subject to an indemnification holdback, at a weighted average stock price of $ 22.05 ).

Subsequent to the acquisition dates, the Company made measurement period adjustments to the initial purchase price allocation due to adjustments to closing working capital which resulted in an increase of purchase price of $ 91 , an increase in deferred revenue of $ 181 , and an increase to goodwill of $ 272 .

There were no measurement period adjustments during 2023 related to the ThinGap and Airex acquisitions.

The purchase price allocations of each of these acquisitions are final.

The intangible assets acquired consist of customer lists of $ 3,800 , technology of $ 2,000 and trade names of $ 200 , which are being amortized over weighted average useful lives of 10 , 12.5 and 10 years , respectively.

Goodwill generated in the above acquisitions is related to the assembled workforce, synergies with Allient’s other operations that are expected to occur as a result of the combined engineering knowledge, the ability of the operations to integrate products into more fully integrated system solutions and Allient’s ability to utilize ThinGap and Airex management knowledge in providing complementary product offerings to the Company’s customers.

Spectrum Controls

The December 30, 2021 acquisition of Spectrum Controls, Inc.

(“Spectrum Controls”) included two deferred acquisition payments of which $ 12,500 (comprised of 50 % cash and 50 % Company stock) was paid in January 2023.

One remaining payment as of December 31, 2023 of $ 12,500 was paid in January 2024, comprised of 50 % cash and 50 % in Company stock.

As of December 31, 2023, $ 12,500 is included in accrued liabilities on the consolidated balance sheet.

As of December 31, 2022, $ 12,500 is included in accrued liabilities and $ 12,277 is included in other long-term liabilities on the consolidated balance sheet

The estimated fair value of these identifiable intangible assets were based upon discounted cash flow models, which include assumptions such as forecasted cash flows, customer attrition rates, discount rates, and royalty rates.

Goodwill generated in the acquisitions are related to the assembled workforce, synergies between Allient’s other operations and the acquired company that are expected to occur as a result of the combined engineering knowledge, the ability of each

The 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 depends 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

of the operations to integrate each other’s products into more fully integrated system solutions and Allient’s ability to utilize acquired management knowledge in providing complementary product offerings to the Company’s customers.

On September 22, 2023, the Company acquired 100 % of the ownership interest in Sierramotion Inc.

The purchase price for Sierramotion of $ 8,400 included $ 2,000 of contingent consideration which was paid in January 2024 (Note 1) and at closing which consisted of a combination of cash and Company stock.

The intangible assets of $ 4,100 and goodwill of $ 2,876 are expected to be deductible for tax purposes.

The purchase price allocation is final.

Transaction costs for the acquisition were not material.

The revenue and earnings of Sierramotion included within the consolidated statement of income and comprehensive income for the year ended December 31, 2023 is not material.

The goodwill resulting from the acquisition is not tax deductible.

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

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations if the FPH, ThinGap, and Airex acquisitions had occurred as of January 1, 2021.

The following unaudited 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.

Year ended December 31,

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The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Nature of Goods and Services

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The Company’s target markets include Industrial, Vehicle, Medical, and Aerospace & Defense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Determining the Transaction Price

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North America (primarily U.S.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Contract Balances

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The Company expects to recognize 85 % of these performance obligations within the next twelve months with the remaining amount recognized between one and two years .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The opening and closing balances of the Company’s contract liability are as follows (in thousands):

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Time value of money - the Company elected not to adjust the promised amount of consideration for the effects of the time value of money for contracts in which the anticipated period between when the Company transfers the goods or services to the customer and when the customer pays is equal to one year or less .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The change in the carrying amount of goodwill for 2024 and 2023 is as follows (in thousands):

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Ending balance

The purchase price allocation for Sierramotion is not final as of December 31, 2023.

Adjustments to this allocation may result in changes to the amounts recorded for goodwill in future periods.

The purchase price allocation was finalized for FPH, ThinGap, and Airex during 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

INTANGIBLE ASSETS

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Design and technologies

Intangible assets resulting from the 2023 acquisition of Sierramotion was $ 4,100 and from the 2022 acquisitions of FPH, ThinGap, and Airex were $ 28,611 (Note 2).

The intangible assets acquired consist of customer lists, technology, and trade names.

Total amortization expense for intangible assets for the years 2024, 2023 and 2022 was $12,697 , $ 12,313 , and $ 11,169 , respectively.

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

As of December 31, 2023, the Company had 745,260 shares of common stock available for grant under stock incentive plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

As of December 31, 2024, the Company had 619,641 shares of common stock available for grant under stock incentive plans.

Restricted Stock

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i) the Board established percentage of pretax income before the contribution ( 5 % in 2024, 2023, and 2022) or ii) the annual interest payable on any loan outstanding to the Company from the ESOP.

Company contributions to the Plan accrued for 2023, 2022 and 2021, were $ 1,591 , $ 1,248 , and $ 1,206 , respectively.

These amounts are included in general and administrative costs in the consolidated statements of income and comprehensive income.

Company contributions

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

to the Plan accrued for 2024, 2023 and 2022, were $ 894 , $ 1,591 , and $ 1,248 , respectively.

These amounts are included in general and administrative costs in the consolidated statements of income and comprehensive income.

Defined Contribution Plan

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Amended Revolving Credit Facility

The Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”), dated as of August 23, 2022, includes a $ 280 million revolving credit facility (the “Amended Revolving Facility”), increased from $ 225 million in the previous credit agreement.

Additionally, the referenced index was amended to be the Term Standard Overnight Financing Rate (“SOFR”), whereas the previous credit agreement utilized the London Interbank Offering Rate (LIBOR) as the referenced interest rate.

The Amended Credit Agreement eliminates the previous $ 75 million accordion feature and maintains the original maturity date of February 2025.

As indicated in Note 15, Subsequent Events , the Company entered into the Third Amended and Restated Credit Agreement dated March 1, 2024.

Borrowings under the Amended Revolving Facility bear interest at an annual rate equal to the Adjusted SOFR (as defined in the Amended Credit Agreement) which is subject to a floor of 0.00 % plus an appicable rate ranging from 1.00 % to 2.25 % ( 1.625 % as of December 31, 2023) based on the Company’s ratio of total funded indebtedness to consolidated trailing twelve-month EBITDA (the “Total Leverage Ratio”).

A credit spread adjustment of 0.10 % to 0.275 % is also carried on the Amended Revolving Facility.

In addition, the Company is required to pay a commitment fee of between 0.10 % and 0.275 % annually on the unused portion of the Amended Revolving Facility, also based on the

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 $ 3.2 million were incurred related to the 2024 Credit and Note Payable Agreements and is included within unamortized debt issuance costs noted above.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Company’s Total Leverage Ratio.

The Amended Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

The Amended Credit Agreement includes covenants and restrictions that limit the Company’s ability to incur additional indebtedness, make certain investments, create, incur or assume certain liens, 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 Amended Credit Agreement, to which reference is made for a complete statement of the covenants, are subject to certain exceptions.

The Amended Credit Agreement contains financial covenants that require that the Company maintain a minimum interest coverage ratio of at least 3.0 to 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 3.5 to 1.0 ratio ;

provided that the Company may elect to temporarily increase the Leverage Ratio by 0.5 x during the twelve-month period following a material acquisition under the Amended Credit Agreement (“acquisition leverage increase”), subject to certain exceptions.

The Company was in compliance with all covenants at December 31, 2023 as well as at each quarter end during 2023.

As of December 31, 2023, the unused Amended Revolving Facility was $ 69,880 .

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 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 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 December 31, 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 Amended 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 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 Private Shelf 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 Private Shelf 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 December 31, 2024, the unused Revolving Facility was $ 111,038 .

The amount available to borrow may be reduced based upon the Company’s debt and EBITDA levels, which impacts its covenant calculations.

The China Credit Facility provides credit of $ 1,450 (Chinese Renminbi 10,000 ) (“the China Facility”).

The China Facility was a demand revolving facility used for working capital and capital equipment needs at the Company’s China operations.

There were no borrowings under the China Facility during 2023 or 2022.

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 % .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The China Credit Facility (“the China Facility”) was a demand revolving facility used for working capital and capital equipment needs at the Company’s China operations.

There were no borrowings under the China Facility during 2023.

The Company closed the China Facility during 2023.

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The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments.

Beginning in 2021, the Company began entering 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, and Canadian Dollar) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates.

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, and 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 (income) 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 $ 30,945 and $ 22,193 at December 31, 2024 and 2023, respectively.

The foreign currency contracts are recorded in the consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense (income), net in the consolidated statements of income and comprehensive income.

During the year ended December 31, 2023, the Company had losses of $ 281 on foreign currency contracts which is included in other expense (income), net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense (income), 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.

The foreign currency contracts are recorded in the consolidated balance sheets at fair value and resulting gains or losses are recorded in other (income) expense, net in the consolidated statements of income and comprehensive income.

During the year ended December 31, 2024 and 2023, the Company had losses of $ 1,749 and $ 281 , respectively, on foreign currency contracts which is included in other (income) expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other (income) 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

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 mature 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.

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 2022 the Company entered into an 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.

As of December 31, 2024, the Company holds notional amounts of $ 90,000 in interest rate derivatives.

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Additionally, the Company does not use derivatives for trading or speculative purposes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

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

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Other long-term assets

Liability Derivatives

Fair value as of:

Derivatives designated as

Balance Sheet

hedging instruments

Foreign currency contracts

Accrued liabilities

The table below presents the effect of cash flow hedge accounting on other comprehensive (loss) income (OCI) for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Amount of pre-tax (gain) loss recognized in OCI

Amount of pre-tax gain recognized in OCI

on derivatives

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Interest rate swaps

Location of gain (loss) reclassified

Amount of pre-tax gain (loss) reclassified from accumulated OCI into income

Location of gain reclassified

Amount of pre-tax gain reclassified from accumulated OCI into income

from accumulated OCI into income

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Interest Expense

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Company does not have any offsetting of derivatives as of December 31, 2024 and 2023.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The provision for income taxes is based on income before income taxes as follows (in thousands):

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Income before income taxes

Components of the total income tax provision (benefit) are as follows (in thousands):

Components of the total income tax provision are as follows (in thousands):

For the year ended

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Total deferred benefit

Income tax provision (benefit)

The provision (benefit) for income taxes differs from the amount determined by applying the federal statutory rate as follows:

Income tax provision

The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows:

For the year ended

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Subpart F income

Investment tax credits

Net operating loss carryforwards

Unrecognized tax benefits

Withholding tax on foreign distributions

Provision for income taxes

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Total noncurrent deferred tax liabilities

Net deferred tax asset/(deferred tax liability)

Net deferred tax asset

Presented as follows:

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Noncurrent deferred income tax liabilities

Net deferred tax asset (liability)

Net deferred tax asset

As of December 31, 2024, the Company has the following gross carryforwards available (in thousands):

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R&D Tax Credits

R&D and Manufacturing Credits

(1) Net operating losses (NOL’s) are presented as pre-tax amounts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Realization of the Company’s recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses and tax credit carryforwards.

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Starting in 2022, noncurrent deferred tax assets includes the effects of capitalization and amortization of R&D expenses as required by the 2017 Tax Cuts and Jobs Act.

The Company generated excess foreign tax credits in 2017 due to the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

one-time transition tax required by enactment of the Tax Cuts and Jobs Act in the amount of $ 910 and foreign tax credits were generated in the amount of $ 92 as a result of a dividend paid from Canada and, at that time, determined it was more likely than not that it will not realize a tax benefit from these credits.

The Company generated excess foreign tax credits in 2017 due to the one-time transition tax required by enactment of the Tax Cuts and Jobs Act in the amount of $ 910 and foreign tax credits were generated in the amount of $ 92 as a result of a dividend paid from Canada and, at that time, determined it was more likely than not that it will not realize a tax benefit from these credits.

The Company has incurred net operating losses in certain states with a tax effected benefit of $ 756 as of December 31, 2024 that it is more likely than not will not be realized.

Additionally, the Company has carryforwards of net operating losses and tax credits generated in foreign jurisdictions and has determined it is more likely than not it would not realize a tax benefit of $ 1,328 as of December 31, 2023.

Additionally, the Company has deferred tax assets (including net operating loss carryforwards and tax credits) in certain foreign jurisdictions for which it has determined it is more likely than not it would not realize a tax benefit of $ 504 as of December 31, 2024.

The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed.

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The Company evaluated the tax legislation and considered the tax periods open for adjustment by the tax authorities which include the 2016-2020 tax years and has determined it is more likely than not it will not realize a benefit on $ 1,125 of the net operating loss carryforwards.

The Company reduced the unrecognized tax benefit in 2021 as a result of the seller filing its 2020 New Zealand tax return and utilizing $ 68 of the net operating loss carryforwards.

The Company will adjust this unrecognized tax benefit in light of changing facts and circumstances and with the lapse of the statute of limitations.

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Ending balance

It is reasonably possible that a reduction of approximately $ 0.2 million of the balance of unrecognized tax benefits may occur within the next twelve months as a result of the lapse of the statute of limitations.

As of December 31, 2023, approximately $ 0.6 million of unrecognized tax benefits would favorably impact the effective tax rate, if recognized.

It is the Company’s policy to include interest and penalties related to income tax liabilities in income tax expense in the consolidated statements of income and comprehensive income.

It is reasonably possible that a reduction of approximately $ 200 of the balance of unrecognized tax benefits may occur within the next twelve months as a result of the lapse of the statute of limitations.

As of December 31, 2024, approximately $ 400 of unrecognized tax benefits would favorably impact the effective tax rate, if recognized.

It is the Company’s policy to include interest and penalties related to income tax liabilities in income tax expense in the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

consolidated statements of income and comprehensive income.

In addition, the Company records uncertain tax positions in accordance with ASC 740.

2 unchanged sentences

Exceptions may be made on a year-by-year basis to repatriate earnings of certain foreign subsidiaries based on cash needs in the United States.

In 2021, the Company distributed a portion of these

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

foreign earnings which have been previously taxed in the United States and remitted $ 236 of foreign withholding taxes.

In 2021, the Company made distributions between its German subsidiaries and remitted $ 1,493 of foreign withholding taxes.

No deferred tax liabilities have been recorded for these distributions as the foreign withholding taxes are refundable on the German income tax return filed in 2022.

No further withholding taxes are anticipated to be paid in future years related to this distribution and it is not anticipated to be remitted to the United States.

Certain foreign subsidiaries made distributions to other foreign subsidiaries which required a withholding tax remittance of $ 328 .

In 2024, the Company distributed a portion of these foreign earnings which have been previously taxed in the United States and remitted $ 28 of foreign withholding taxes.

The Company does not intend to distribute the remaining previously taxed earnings resulting from the one-time transition tax under the Tax Cuts and Jobs Act or capital in foreign subsidiaries, and has not recorded any deferred taxes related to such amounts.

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Assets acquired under operating leases

Assets acquired under finance leases

Operating lease assets obtained in acquisitions

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This arrangement provides the Board and its committees with another mechanism to provide pay for performance based incentive compensation.

It also allows for the Chief Executive Officer to make certain deferrals into the plan.

It also allows the Chief Executive Officer to make certain deferrals into the plan.

The amount of the liability is comprised of liabilities from previous contributions.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated Other Comprehensive (Loss) Income (“AOCI”) for the years ended December 31, 2023 and 2022 is comprised of the following:

Accumulated Other Comprehensive Income (Loss) (“AOCI”) for the years ended December 31, 2024 and 2023 is comprised of the following:

Foreign Currency

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Pension adjustments, net of tax

Foreign currency translation loss

Foreign currency translation gain

At December 31, 2023

SEGMENT INFORMATION

The Company operates in one segment for the manufacture and marketing of controlled motion products and solutions for OEM and end user applications.

The Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, 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, major customers, and the countries in which the entity holds material assets and reports revenue.

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 (“CODM”) has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources, monitoring budgets, and assessing performance for the entire Company.

The measure of segment profit or loss utilized is consolidated net income.

The CODM uses this measures to compare results to prior periods and during our budgeting and forecasting process to assess profitability and enable decision making.

The reports reviewed by the CODM do not provide for any significant expense categories beyond those as reported on the consolidated statement of income and comprehensive income.

The accounting policies of the Company are described in Note 1 Significant Accounting Policies.

The CODM utilizes consolidated net income, which is available in our consolidated statements of income and comprehensive income, as the measurement for assessing financial performance.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Financial information related to the foreign subsidiaries is summarized below (in thousands):

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Revenues derived from foreign subsidiaries and identifiable assets outside of the United States are primarily attributable to Europe, China, Mexico and New Zealand.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Sales to customers outside of the United States by all subsidiaries were $ 240,045 , $ 239,897 and $ 214,017 during 2024, 2023, and 2022, respectively.

For 2023, 2022, and 2021 one customer (Customer A) accounted for 10 %, 11 %, and 15 % of revenues, respectively, and one customer (Customer B) accounted for 12 % in 2023 and less than 10 % in 2022 and 2021.

As of December 31, 2023 and 2022 Customer B accounted for 15 % and 10 % of trade receivables, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

SUBSEQUENT EVENTS

Credit Agreement Amendment

The significant changes made to the Company’s existing credit facility by the 2024 Amended Credit Agreement include:

i) providing for a $ 50 million accordion amount and ii) extending the term 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 no note borrowings have occurred to date.

These agreements, collectively, are referred to as the “2024 Credit and Note Payable Agreements”.

Borrowings under the 2024 Amended Revolving Facility will 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 (currently 0.275 %) on the unused portion of the 2024 Amended Revolving Facility, also based on the Company’s Leverage Ratio.

The 2024 Amended Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

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.

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.

The amounts outstanding under the Amended Revolving Facility may be accelerated upon certain events of default.

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.

The purchase price consisted of $ 20.0 million in cash paid at closing, subject to customary post-closing working capital adjustments.

The Company expects to determine the preliminary purchase price allocation prior to the end of the first quarter of 2024.

For 2023, and 2022 one customer (Customer A) accounted 10 % and 11 % of revenues, respectively, and one customer (Customer B) accounted for 12 % of revenues in 2023.

As of December 31, 2023 Customer B accounted for 15 % of trade receivables.

SUBSEQUENT EVENT

On February 6, 2025, the Company announced that consistent with its Simplify to Accelerate NOW strategy, it will expand upon current capabilities and skillsets to create a state-of-the-art Machining Center of Excellence at its facility in Dothan, Alabama.

The Company will transfer current assembly operations from Dothan and merge these capabilities into its facilities in Tulsa, Oklahoma and Reynosa, Mexico where Final Assembly, Integration and Test capabilities are the core competencies.

The realignment will improve business focus and better leverage the Company’s footprint to deliver high-precision system solutions for demanding applications in various served markets including Aerospace and Defense, Medical and Electronic Test and Assembly Equipment.

One-time costs required to implement the changes are estimated to be approximately $ 4 to $ 5 million, primarily related to employee severance and other personnel related expenses and are expected to be substantially incurred during 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data