ALNT earnings call analysis

NASDAQ:ALNT Q1 2026 Earnings Call Transcript Generated on 6/8/2026 Craig | Moderator: Thank you Craig, you may begin.

Alliant Investor Relations | Investor Relations

Thank you, and good morning, everyone. We certainly appreciate your time today, as well as your interest in Alliant. On the call today are Dick Rosella, our Chairman, President, and CEO, and Jim Michaud, our Chief Financial Officer. Dick and Jim will review our first quarter 2026 results, provide a strategic and operational update, and share our outlook. We'll then open the line for your questions. As a reminder, our earnings release and the accompanying slide presentation are available on our website at Alliant.com. If you're following along, please turn to slide two for our Safe Harbor Statement. During today's call, we will 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'll 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 two comparable gap measures in the tables accompanying earnings release, as well as the slides. With that, please turn to slide three, and I'll turn it over to Dick to begin.

Dick Rosella | Chairman, President, and CEO

Thank you, Craig, and welcome everyone. We entered 2026 from a much stronger position than we were in a year ago. Over the last several years, we have worked to improve the quality of the business, strengthening the balance sheet, driving structural cost improvements, and continuing to reposition the portfolio toward higher value motion controls and power applications aligned with attractive long-term growth trends. Our first quarter results reflect continued progress on that strategy with growth in revenue, gross profit, operating income and earnings, along with strong bookings to start the year. What I want to emphasize this morning is that our performance is not simply about putting up another quarter of growth. It is about continuing to improve the profile of the company. That matters as it demonstrates that the operational work we have been doing is translating into better financial performance and stronger positioning as we move through 2026. From an end market standpoint, the market sales mix does have an impact on the overall gross margins generated in the quarter. I would note that regarding the mix, we continue to experience strength from vehicle in the quarter, particularly in commercial automotive as demand carried over to some extent from the stronger than expected activity we discussed on our fourth quarter call. We are very encouraged by our progress in our industrial market, particularly industrial automation and power quality solutions supporting data center infrastructure. These are exactly the kinds of applications we are focusing our efforts on growing. They are aligned with durable sector drivers, they fit our technology strengths, and they tend to be more creative to margins over time. So when we talk about improving the quality of growth, that is what we mean. We are also continuing to deepen our role as a solutions partner with OEM customers by focusing on higher value engineered systems and platforms not just individual components. That approach supports stronger customer engagement, better competitive positioning, and importantly, a more favorable margin profile. On a demand side, orders are up 15% year over year and up 9% sequentially, resulting in a book to bill of 1.14 times. This is an important indicator for us as it reflects improving momentum in key end markets and supports a constructive view as we move through the balance of 2026. At the same time, I would also note that the first quarter did not fully reflect the leverage potential of the business. We absorbed elevated operating costs, including carryover expenses associated from the Dothan transition, along with other targeted investments to support ongoing operations. While adult and transition represents a near-term cost headwind, the actions underway will simplify operations, improve quality and efficiency, and enhance long-term profitability. This reflects our Simplify to Accelerate Now initiatives, or Stand for Short, in action from an operational standpoint. Less visible, but equally important, are the significant internal investments we are making in our core business, particularly in R&D and product development. Our objective is to strengthen our electronic stack, further leverage our electromagnetic technologies to address high-growth market opportunities, and expand the use of our lightweighting capabilities to create a durable competitive advantage for both Alliant and our customers. Our recent technology acquisitions have created a strong technology base, and we are now aligning them more tightly with our core business to capture the benefits of scale and compounding. This further demonstrates stand in action as we reposition the company for sustained future success. One example is our initiative to bring state-of-the-art Alliant Intelligent Controls products to market as quickly as possible. To enable this, we made a deliberate shift within one of our technology units, moving away from project-based, one-time revenue opportunities towards scalable, market-facing products aligned with our long-term strategy. While this decision resulted in a near-term reduction in revenue and profitability, we are confident the long-term value creation will be significantly greater. This reflects our willingness to bet on ourselves and make disciplined choices that drive enduring success. Another example is our effort to accelerate development of a full range of new motors and controls for the defense market. Historically, an initiative of this scope would have taken years. At Alliant, we are compressing that timeline into months. To accomplish this, we are leveraging the expertise from another one of our recent acquisitions to lead the development supported by existing technology units with proven ability to scale production. Again, this is staying in action with a focus on speed, simplifying execution by concentrating resources within a highly experienced team that has delivered similar outcomes before. Using a sports analogy, we simplified the process by shortening the bench to utilize a highly experienced team that has been there and done it before. So stepping back, the first quarter was a solid start to the year. Bookings were strong, our targeted growth areas remained healthy, we made significant investments in our platform development, and the business continued to move in the right direction from a product portfolio, operational, and a financial standpoint. While the environment is still not uniform across every market, we believe the portfolio is better aligned The company is operating more efficiently, and we are positioned to keep building from here. With that, let me turn it over to Jim for an in-depth revenue of the financials.

Jim Michaud | Chief Financial Officer

Thank you, Dick, and good morning, everyone. Turning to slide four, first quarter revenue increased 5% to $138.9 million. On a constant currency basis, revenue grew 1% organically. Foreign currency translation provided a favorable impact of $5.1 million in the quarter. 50% of our Q1 revenue was generated in the U.S., with the balance coming primarily from Europe, Canada, and Asia Pacific, consistent with our diversified geographic footprint. Looking at performance by major vertical, industrial was again the primary growth engine, up 8% year-over-year, reflecting continued strength in industrial automation and in power quality solutions supporting data center infrastructure. Those applications remain particularly healthy and are aligned with secular trends in electrification, digital infrastructure, and energy efficiency. Vehicle revenue increased 7% in the quarter, driven primarily by higher demand in commercial automotive. Medical revenue increased 2% with steady demand in surgical robotics and other precision motor applications, partially offset by softness and medical mobility. Aerospace and defense declined 3%, as expected, driven by program timing and the previously announced M10 Booker program cancellation, rather than underlying pipeline weakness. Distribution, while a smaller part of the business portfolio, was down, reflecting normal variability in channel ordering patterns. The key takeaway from this slide is that we saw broad participation across the portfolio, with particular strength in industrial and vehicle, and a mix of steady and timing-driven dynamics in the other end markets. Turning to slide five, we show the composition of revenue over the trailing 12 months and the year-over-year change by market. This slide reinforces how the business has evolved and why the mix matters for the margin and earnings durability we have been delivering. Industrial remains our largest vertical at roughly half of the trailing 12-month revenue and are increasingly anchored by higher-value applications power quality for data center infrastructure, motion and controls tied to automation, and solutions aligned with electrification. That's exactly where we've been directing engineering resources and capital. Vehicle represents about 18% of the trailing 12 months revenue. While still an important part of the business, it is a smaller percentage of mix than it was several years ago. That's both market-driven, and intentional as we have consciously shifted away from lower margin, more commoditized programs toward higher value applications where our technology and systems content can support better returns. Medical remains steady at roughly 15% of revenue. Surgical instrument and other precision motion applications continue to be reliable contributors. Aerospace and defense also represents roughly mid-teens of the mix and provides longer cycle visibility, even though quarterly shipments can be lumpy as programs ramp and pause. So the mix today is more margin accretive and more tightly aligned with long-term secular drivers than it was just a few years ago. And that mix shift is a key underpinning of our structural margin expansion. On slide six, we highlight gross profit and margin trends. First quarter gross margin expanded 50 basis points year over year to 32.7% on gross profit of 45.4 million. The improvement was driven by higher sales volume, improved product mix, and continued operational benefits from our Simplify to Accelerate Now initiative. The structural work we've done over the last several years and continue to undertake, consolidating overlapping operations, focusing resources where we have scale and advantage, and driving lean disciplines are being realized in our performance. Those actions are embedded in our manufacturing and supply chain processes and provide a more durable foundation as demand continues to move through their normal cycles despite experiencing more pressure from the evolving tariff policy. So while quarterly margins will always reflect some mixed variability, the broader message is consistent. We are structurally improving the profitability of the business, and we continue to see opportunity to build on that over time. During the fourth quarter, U.S. trade policy underwent more changes. The Supreme Court determined that tariffs previously imposed under the International Emergency and Economic Powers Act, otherwise known as IEPA, were not authorized and are subject to refund. While U.S. Customs has initiated an administrative process to facilitate the submission and payment of refund claims through a phased approach, We are currently evaluating our eligibility to recover previously paid tariffs and intend to submit refund claims after our review. The ultimate amount and timing of any such refunds remain uncertain and depend upon other factors like processing timelines, claims validation, and any unexpected administrative challenges that may come about. In addition, incremental tariffs were imposed on a broad range of products that is expected to expire in July unless extended or replaced to other legislative action. We have taken and continue to assess actions to mitigate these changes, including price adjustments, supplier negotiations, and supply chain diversification. While we do not believe these increases have had a material impact to our operating performance to date, we are monitoring the evolution of the trade policy and the pressure it may have on margins should current measures stay in effect for an extended period or be expanded. Turning to slide seven, operating income increased to $9.3 million in the quarter, or 6.7% of revenue. We delivered 10 basis points of operating margin expansion year over year, even as certain cost items were elevated in the quarter. SG&A expense was 16.1% of sales, up 120 basis points year over year, primarily due to higher commissions and incentive compensation on stronger sales volume, increased trade show and commercial activity, and elevated IT-related costs, including cloud-based subscription costs and infrastructure. We view those as investments to support growth and productivity. Restructuring and business realignment costs remain elevated as we continue to execute the Dolphin transition and related optimization actions. We expect total restructuring and realignment costs of approximately 2 to 3 million for the full year 2026. That's consistent with finishing the work that is already underway and completing additional changes that we expect to undertake. The way to summarize this slide is that we continue to expand operating margin year over year, even while absorbing near-term costs tied to Dothan and certain commercial and IT investments, and we are doing so from a structurally improved base. On slide 8, you can see how the margin expansion translated into earnings. Net income increased 51% to $5.4 million, or $0.32 per diluted share, compared with $0.21 per diluted share in the prior period. Adjusted net income was $8.4 million, or $0.50 per diluted share, compared with $0.46 per share a year ago. Adjusted EBITDA was $17.3 million in the quarter, or 12.4% of revenue, slightly below the prior period, as elevated SG&A costs weighed on adjusted EBITDA, even as the underlying margin structure continued to improve. Interest expense declined $1 million to $2.6 million, primarily due to lower average debt balance as we continued to deliver. Our effective income tax rate for the quarter was 21%, and we continue to expect a full-year tax rate in the 21% to 23% range. The key takeaway is that bottom line performance continues to benefit from a stronger operating model and a lower interest burden as leverage comes down. Moving to slide nine, we focus on cash flow, working capital, and capital deployment. Net cash provided by operating activities was $6.2 million in the quarter compared to $13.9 in the prior period. The decrease was primarily driven due to timing differences and a larger incentive payout rather than underlying business performance, specifically certain customer payments that typically would have been received prior to quarter end were collected shortly after the period closed. We continue to prioritize inventory discipline while making strategic purchases to mitigate impacts to the ever-evolving trade policy. As such, inventory was modestly higher quarter over quarter. We've improved turns compared to where we were just two years ago and our goal is to keep driving better performance over time. Day sale outstanding were roughly 61 days in the quarter, compared with about 57 days for the full year 2025, and we expect some normalization as we move through the year. Capital expenditures in the quarter were 2.2 million. We are investing in capacity and productivity, notably in the areas tied to data center-related power quality, automation, and other growth initiatives. For full year 2026, we expect capex of approximately 12 to 15 million. Overall, slide nine is about staying disciplined, managing working capital, funding targeted growth and efficiency investments, and supporting our deleveraging priority. Turning to slide 10, our balance sheet is in stronger position than it was a year ago, and that matters for how we can support growth and navigate the external environment. At March 31st, cash and crash equivalents were $41.2 million, total debt was $177.3 million, and net debt declined to $136.1 million. Total debt was down $3.1 million during the quarter, and our leverage ratio defined as the total net debt divided by trailing 12-month adjusted EBITDA improved to 1.78 times and is down significantly from where we were a couple of years ago. The bank leverage ratio as defined under our credit agreement and excluding foreign cash and certain other adjustments was 2.24 times at quarter end, comfortably within covenant levels. We also had $158 million of unused capacity under our revolving credit facility, providing additional liquidity. So the story of slide 10 is straightforward. Lower debt reduces financial risk and interest expense over time, and it also gives us more flexibility to support organic growth new program launches, and disciplined capital allocation from a stronger position. With that, if you advance to slide 11, I will now turn the call back over to Dick.

Dick Rosella | Chairman, President, and CEO

Thank you, Jim. What we are seeing on the order side is encouraging, and in our view, reinforces the progress we are making in the business. First quarter orders were $158.1 million, an increase of 15% year-over-year and 9% sequentially. That produced a book-to-bill ratio of 1.14 times, which is an important sign of positive momentum as we move further into the year. The strength was led primarily by industrial and vehicle. As we discussed earlier, vehicle was supportive in the quarter, particularly in commercial automotive, and we did see some continuation of the stronger activity that emerged late in 2025. Industrial has continued its strength. especially industrial automation and power quality solutions supporting data infrastructure, which are strategic growth areas for the company and attractive from a margin standpoint. We are also seeing steady underlying activity in medical and defense, even as individual programs may ramp and pause at different times. That diversification matters. It allows us to navigate variability in any one vertical while still building the overall business. Backlog ended the quarter at $251 million, up from year end, and the majority of that backlog is expected to convert to revenue within three to five months, which is consistent with our historical conversion patterns. So when we look at orders and backlog together, we believe they support a constructive view of the business as we move through the balance of the year. More broadly, this is consistent with what we have been saying for some time, where I continue to align the business around the markets, customers, and applications, where we believe we can create the most value, not just in terms of revenue, but in terms of mix, margin quality, and long-term durability. The bookings profile we saw in the quarter is another sign that this repositioning is gaining traction. Turning to slide 12, I would frame the outlook in a straightforward way. First, we believe we are positioned to build on the momentum we saw in the first quarter. Bookings were strong. Backlog improved, and our targeted growth areas remain healthy. Industrial automation and data center infrastructure continue to align the portfolio with attractive end markets, and we remain focused on deepening our role as a solutions partner through higher-value engineered systems and platforms for defense and medical applications where our technologies are tightly aligned with customer needs. Second, we are going to remain disciplined. we will keep emphasizing cash generation, disciplined capital spending, and further deleveraging, because that combination has clearly strengthened our financial position over the last several years. We worked hard to build a stronger balance sheet, improve the cost structure, and operate the business more efficiently, and that work is continuing. Simplify to accelerate now and our broader optimization efforts are not one-time initiatives. They are part of an ongoing effort to simplify the organization, improve throughput, eliminate waste, reduce costs, and strengthen profitability over time. We still have work to do, including completing the dosing transition and finishing the remaining structural actions that will continue to improve our gross and operating margin profile. Third, while we are constructive, we are also realistic. The macro environment is still uneven across certain end markets and geographies. Customer spending can move in phases, and trade and policy remain part of the broader backdrop. We are monitoring these developments closely, and at the same time, we have taken proactive steps over the last several years to diversify our supply base, localize sourcing where appropriate, and manage exposure through pricing and operational actions. What gives us confidence is what we control. Our cost structure is structurally better than it was a few years ago. Our capital allocation is disciplined. Our balance sheet is stronger. And through the internal investments we have been making, our portfolio is increasingly aligned around long-term secular drivers where Alliant can add differentiated value, including electrification, automation, energy efficiency, increased defense spending, and digital infrastructure. These are not short-cycle themes. They represent fundamental shifts in how energy is generated and used, how systems are automated, and how critical infrastructure is designed and built. Our motion, controls, and power technologies, combined with our systems-level engineering capabilities, position us well to support those transitions. I would also like to note that we increased our dividends This represents the confidence we have in our future and provides a return to our investors. Border 1 demonstrated that the foundation we have built is working. Our job now is to continue simplifying the organization, driving out costs, supporting our customers, and investing in the right programs and capabilities so that we can convert that foundation as sustainable, high-quality growth, and value creation over time. I view us as being in the early to mid-year earnings innings of our journey, and STAN is key to our success as we move forward. It provides us a framework to execute our strategy and leverage our AST toolkit. Most importantly, though, it is the outstanding team here at Alliant that truly makes it happen. With that, operator, please open the line for questions.

Craig | Moderator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from the line of Jerry Sweeney with Ross Capital Partners. Please proceed with your question.

Jerry Sweeney | Analyst, Ross Capital Partners

Good morning. Thanks for taking my call. Morning, Jerry. I wanted to start on the A&D side. Obviously, you highlighted, and we knew about some headwinds, especially around the M10 booker program, but also a lot of news out there in terms of replenishing certain munitions, et cetera, and some of them are high-end equipment, per se. I was just curious as to how you play into that opportunity and what you're hearing from maybe some of the in the background on opportunities as we go forward on that front.

Dick Rosella | Chairman, President, and CEO

Sure. Well, I can tell you this is that, you know, everything that you're hearing about that, you know, the replenishment that will be recurring, it has to occur. I mean, there's been a huge consumption of some of the defense products that absolutely need to be replenished. And we are seeing progress in those areas. So I can start by saying to you that we had a very strong bookings first quarter. I can tell you we've come out even stronger in April already. Now, typically we don't give forecasts and guidance, but this is the actual. And April has started out extremely strong, and we see continued progress in the areas that you've been discussing.

Jerry Sweeney | Analyst, Ross Capital Partners

Got it. The other area that I think is an opportunity I wanted to discuss a little bit more is data centers. And I know it's a topic du jour and it's come up everywhere, but especially power quality, which I think you play an important role in. And one of the aspects we're looking at is, you know, dollars are really starting to hit the ground in data centers, right? On the front end, you're seeing some huge upticks in backlogs, especially on the construction companies. Obviously, Aliana is a little bit later in this process because Aliana after the initial build out. But how does this play out in an opportunity? Because if you think about it, AI started three years ago, takes two years to build a data center, 25 investment much larger than 24, 24 much larger than 23. So it would imply that there's a burgeoning opportunity for you in the next couple of years. I just want to get your thoughts on that front.

Dick Rosella | Chairman, President, and CEO

100% correct. is part of the growth that we're seeing it's part of the strength that we're seeing in our bookings and you know it did have an impact on our growth last year we think it'll be continue to grow and be more significant as we move forward this year and into the following years so you're absolutely correct it is happening we are seeing it converted into orders and backlog and you know with the and the other encouraging sign is that you're seeing a the market's looking for acceleration of delivery. So that's good and it's bad. I mean, you have to have the capacity in order to be able to handle it, which fortunately we made the investments. We made the investments in acquiring a company in Oshkosh that had a production capability in Mexico that we've been able to leverage and also an expansion of our facility up in Milwaukee. So, and those are, you know, they're playing into those markets. So I think we have made our investments in advance of what the increasing demand is, and we're prepared to deliver to it. And you are correct. We are seeing the positive benefits and impacts of that.

Jerry Sweeney | Analyst, Ross Capital Partners

And one more question on that front. Would you be involved only in new bills, or is there a retrofit opportunity?

Dick Rosella | Chairman, President, and CEO

Well, that's a great question. I can't answer it with 100% confidence, but I would say to you that if the retrofit is to improve the performance or the throughput of existing data centers. And in order to do that, they're going to need equipment like ours. So if that is happening, and I'm not sure, I can't answer that.

Jerry Sweeney | Analyst, Ross Capital Partners

I'm not sure. Yeah, I'm not sure either, to be honest with you. I've just been hearing more of some existing data centers are being retrofitted. That's just in the last couple of days.

Dick Rosella | Chairman, President, and CEO

Yeah, it makes sense. It absolutely makes sense. I mean, you've got the infrastructure there, and what you want to do is you take advantage of current and technology and leverage that, then if you're going to do that, then you're going to be leveraging our stuff as well. So we'll have to take a look at that.

Jerry Sweeney | Analyst, Ross Capital Partners

All right. I appreciate it, Dick. Thanks for taking my call. Thank you, Jared.

Craig | Moderator

Thank you. Our next question is from the line of Max Michaelis with Lake Street Capital Markets. Please proceed with your question.

Max Michaelis | Analyst, Lake Street Capital Markets

Hey, guys. Thanks for taking my call or questions here. First one from me, want to go back to A&D. Sounds like you're seeing a lot of positive momentum here at Q2. I was curious to know if you're seeing a lot of that activity around drones or if it's just kind of a broad-based strength in the defense space.

Dick Rosella | Chairman, President, and CEO

Well, there's obviously a significant interest in drones. And we take it serious, and we feel we're in a great position. In past conference calls, we've talked about our capabilities and motors that are used and the propulsion and so forth and the requirement that certain products are going to have to convert to U.S.-made products for U.S. defense applications. So we are well-positioned to take advantage of that. In saying that, we have typically been in the high-end side of that, high-end meaning the You know, the more expensive, larger, more sophisticated drone applications that weren't necessarily just propulsion, but we do see that the opportunity in propulsion for us, given our experience and knowledge of the motor types, our ability to scale, and meaning scale, because having been in the vehicle business and in other businesses where we make millions of motors a year... This is one of the beauties of our company. We can convert from design to full-scale production, and I mentioned in part of my prepared script here is that leveraging one of our newer acquisitions from a technology standpoint, but also from a design standpoint, and combining it with existing operations that know how to scale. That's what's going to be required in the market, and We've been working extremely hard to position ourselves to be able to take advantage of it. So we see it as important. We're making an investment. We're moving very, very quickly. That's about all I'll say about that right now.

Max Michaelis | Analyst, Lake Street Capital Markets

Perfect. Now, a couple more from me here. Secondly, you noted vehicle was strong as well in orders in Q1. I was curious to know if you're kind of turning away any sort of low-margin vehicle orders or if you're just accepting all now.

Dick Rosella | Chairman, President, and CEO

Yeah, great question. So if we remember vehicle, we describe vehicle as it's not just automotive. We mentioned in particular commercial automotive is a portion of our business, but the other vehicle markets have been as strong as well. And typically they're in custom applications that enhance their actuation and so forth, and the margin profiles are better. I will say that our team has done a great job of making improvements in process, adding some automation to the process. And we are not working on massive new programs. That's one thing that I would say to you that what we've turned away from is that we're not interested in working on a design for a low margin commercial automotive project that we don't particularly add any other value than what they're looking for is price. So more about not getting involved in the high upfront CapEx requirements, the long design in cycle time and a long time before you start to see a return on investment. We are leveraging what we have. And unfortunately for us, I mean, it is continuing to grow. And I would tell you that our operating margins have improved.

Max Michaelis | Analyst, Lake Street Capital Markets

All right. Great, guys. I'll take the rest of mine offline.

Thank you again. Dick Rosella | Chairman, President, and CEO

Thank you, Max.

Craig | Moderator

Thank you. Our next question comes from the line of Greg Palm with Craig Hallam. Please proceed with your question.

Greg Palm | Analyst, Craig Hallam

Yeah, thanks, Scott. Good morning, everybody. Can you maybe just, morning, maybe, I don't know if you're able to quantify some of these facility transition costs that you alluded to. I don't know how much that was in Q1 or whether it gets better or worse in Q2. And just to be clear, is it sort of fully abate by second half, anything lingering that we should be aware of?

Dick Rosella | Chairman, President, and CEO

Yeah, no, great question. I mean, we did bring it up because when you get into transitions, there's always some unknowns. And many of the times, you're designed in on programs that require customer support in order to get requalified. So it's difficult for her to just pick it up and move it. And you're dealing with many, many different parties and so forth. And what we were moving is more of a higher mix business, which adds complexity to it as well. I will say, you know, in retrospect, could we have done a better job in identifying some of these challenges up front? Of course we could have. But we're correcting them and we're moving fast on them. And to answer your question, we do expect to drive out more costs, costs that we expected to drive out, improve efficiencies, and we will start to see the benefits of that in the second half of the year. Jim, he can provide you some numbers, give you some more detail on what the impacts have been.

Jim Michaud | Chief Financial Officer

Yeah, as we mentioned during the call that, you know, we expected to make some incremental investments, you know, two to three million dollars, you know, over the course of uh, 2026. Um, and again, I would expect, uh, you know, really the second half of the year to obviously more of a concentration of that. Uh, again, as Dick mentioned, you know, we're still, you know, stabilizing and, you know, working on the, uh, the transition with dolphins. So, you know, that's, uh, continuing and, you know, hopefully by the end of the, uh, the third quarter, that will be in, uh, a good place of where we, uh, expect it to be.

Greg Palm | Analyst, Craig Hallam

Okay, makes sense. Shifting gears to the bookings, which I think was an all-time record, obviously stood out both from an absolute basis, you know, year-over-year growth. I think you mentioned vehicle, industrial. Can you give us some sense, were there specific categories within that that drove it. And then in response to an earlier question, you talked about April trends. Was that specific to defense or was that across the board? I didn't catch that comment.

Dick Rosella | Chairman, President, and CEO

To answer your question, in the first quarter, we did see strength pretty much, I would say, across the board. But the magnitude or the significance of them are in some of the key drivers and markets that we mentioned to you. So, you know, Jerry had asked the question about the defense market and replenishment and so forth, and we did benefit from that, and we will continue to benefit from that. I will say to you this, and, you know, as we talked about how do we record bookings, and If we have a firm schedule for, you know, a full year or multi-year commitment to us, the only time that we actually record it as a booking is when we get a firm production schedule. So one of the things that we did do starting the beginning of the year here is that in the past, you know, we have received with some forecasted demand of when deliveries are going to occur, and we may have booked the full amount, okay? We're doing it a little bit differently. And the bookings could have been significantly better if we booked full program versus booking, you know, four to five months out of demand every quarter, booking another quarter, showing the demand and forecast demand of when we're shipping in a more current timeframe. So you heard me talk about moving in some of the backlog into a more current timeframe. I think I said three to five months. I should have said three to six months. And that's because... because the change that we've made. It is substantive, you know, and I will say that if we go back, we do a comparison to one of the programs that we are now booking on a monthly or quarterly basis versus on a full annual basis, you know, it could have been significantly higher. So we are seeing, you know, in the defense market, we're seeing those bookings coming in. We expect more to come. and also in the data center side of it. It's been significant growth, and in the first quarter it was strong, and we also see strengthening coming right out of the chutes here in the second quarter. So, Greg, rarely do we talk about what we've already seen, and I think my intent here is to, while you look at it and say we may have missed from a revenue projection or you know, adjusted EBITDA projection, I would say to you the business is strong and healthy, and we're very confident that, you know, what we're seeing here is, you know, we're certainly pleased with what we're seeing, and we want to share that, that there's no real reason of concern. The orders are coming. They are coming. They have come, and they will continue to come, and that results in, you know, the improvements that we expect, you know, for the full year and beyond.

Greg Palm | Analyst, Craig Hallam

Okay, so just to be clear, bookings were up 15% on a year-over-year basis, so they were very strong. But you're saying they were actually understated because of this sort of change in formula that you alluded to?

Dick Rosella | Chairman, President, and CEO

Yeah, I mean, if we had recorded a particular order that was pretty significant, like we did a couple years ago, the problem with it is you book it in one – and we – we booked the whole thing. We have forecast demand. We found out that that demand doesn't necessarily relate to reality. So you'll get pushouts as it goes on. So we decided to make the change and the change we made, it could have been significantly higher if we did it in the same manner, but we are making the change to be more level loading, more conservative about, okay, with current data, we will book when we get more of a firm demand on a short term basis.

So you're absolutely correct. Greg Palm | Analyst, Craig Hallam

Okay, understood. So I guess my last question then, just in light of your comments, I mean, I don't think 1% organic growth on a constant currency basis, which is what you reported in Q1, is necessarily a good representation of how you might view the year. I know you don't guide for the full year, but maybe we'll just appreciate any comments related to that.

Dick Rosella | Chairman, President, and CEO

Yeah, I would agree with you. I think we're on a path to certainly exceed that. And I think we also remember if we go back to what we talked about in the fourth quarter was better than we expected because we had some pull-aheads, which was unusual in the fourth quarter, which did have an impact on what was available to ship in the first quarter. So it was a balancing, was a level loading to a certain extent. Again, unusual for certain, well, for us as a company, but for certain customers to be accelerating shipments into a fourth quarter rather than pushing and allowing them to ship in first quarter. So we saw some of that. So I think, you know, if you look at a quarter-to-quarter basis, it may look, all right, it's not that great. But when you look at it on a more longer-term standpoint, there is some positive growth occurring.

Greg Palm | Analyst, Craig Hallam

Okay, appreciate all the color, thanks.

Dick Rosella | Chairman, President, and CEO

Thank you, Greg.

Craig | Moderator

Thank you. Our next question comes from the line of Tom Osano with JP Morgan. Please proceed with your question.

Tom Osano | Analyst, JP Morgan

Hi, good morning, Dick, Jim. Good morning, Tomo. Thank you. Could you talk about operating margins that was 6.7% in Q1, but excluding one-time items and considering the impact of the Simplify to Accelerate Now program, what would you estimate as the underlying or normalized margin levels? Additionally, if you could talk about some OP margin outlook from Q2 onward, it would be appreciated.

Thank you. Jim Michaud | Chief Financial Officer

Yeah, good question, Tomo. So a couple of things as we talked about, you know, we're making investments in our research and development, new product development. And as Nick mentioned, you know, we're on pace to bring products to market faster. And so we did make some strategic investments in order to facilitate and enable that. And I think we'll see some continued investments as we go throughout the rest of this year in order to, you know, execute on what we're strategically trying to do, and that is to bring, you know, products to market faster. So I think, you know, there's continued investments that we will make in the streamlining of the business, as we have been doing the last couple of years. And as we mentioned, you know, we're continuing to complete the Dothan transition and, you know, continuing to look for opportunities where we see duplication. So I think, Our simplify to accelerate now DNA is, you know, well in place and we're continuing to, you know, support, you know, the ongoing improvement in margins, you know, as a result of what those projects have demonstrated over the last couple years.

Tom Osano | Analyst, JP Morgan

Thank you. And thank you, Jim. And if I may follow up on the vehicle. in terms of the order trends or revenue, that was a bit surprisingly solid. So, Dick, if you could talk about the 8% plus commercial automotive and construction strengths offset by the lower power sports and truck demand, how should we look at these kind of customers' order trends over the next couple of quarters?

Dick Rosella | Chairman, President, and CEO

I think they're going to continue. We don't see any signs that – This was unusual by any stretch of the imagination or means, and I think we've seen a return to growth in some of the non-automotive vehicle markets, and I think that's a positive sign for us. We continue to work on new applications in those areas. As I mentioned, they're typically specialty, and they're used in trucks and buses and construction equipment and so forth. I think one thing is the... talking about the impacts on the ATV market, you know, the off power sports and so forth, you know, that has continued to bring a little bit of a drain on us. And we have mentioned it in the past that, that that market has moved in the direction of, you know, more commoditized commercial automotive. And we have, while we're experiencing competition and we have experienced competition the last several years that have come from the automotive side of it, the quantities don't necessarily lend themselves to it long term. We have focused on what's the future going to look like and how we can provide a more integrated total solution versus a component solution. And from that standpoint, I think we feel good that we've hit a point of where and we bottomed out, but that we will see some growth from there. So I think those are positive signs from that standpoint as well. And we realigned our businesses, and we continue to realign our businesses. Some of the moves that we're undertaking right now, and unfortunately that we've incurred extended transition costs, Time periods and costs, I think in the long term, they're definitely going to pay dividends because the businesses are different. And the investment that you make and how you structure the business has to be different. So our goal is to align the cost associated with those business with the profit potential. And that's exactly what we're doing. So, you know, yeah, it's painful. but the rewards will be there. And the margin profiles that we're setting internally, it's not the same across the board. We've talked about this. I know you've asked us questions in the past. Can we share more about which ones generate higher margins or not? And we've been reluctant to do so. When you talk about gross margins, that's one thing. But when you talk about operating profit, that's another. And our expectation is that The business potential has to be there, and it's our job to structure them to generate the operating profit and control the variable cost to the best of our ability, but certainly the OPEX cost, which is not – all parts are not created equal. That will drive operating margin in each of our markets that we've established targets for and we continue to move towards. So vehicle, our specialty – Applications that we do, we're getting better and stronger in, and we're leveraging already, you know, designs and capital equipment that's in place. And we're certainly willing to take on more of those. We're just not willing to take on long-term, just really cost competitive, long, you know, high CapEx and high risk returns. That's, we're changing the profile, and that's not part of our plans.

Craig | Moderator

Thank you, Diggs. Thank you, Tomo. This does conclude our question and answer session. I'd like to turn the floor back over to management for closing comments.

Dick Rosella | Chairman, President, and CEO

Well, thank you, everyone, for joining us on today's call and for your interest in Alliant. We will be participating in the Craig Hallam Investor Conference in Minneapolis on May 28th, and then the virtual Northland Growth Conference on June 23rd. As always, Please feel free to reach out to us at any time, and we look forward to talking to you all again after our second quarter 2026 results.

Have a great day. Craig | Moderator

This concludes today's teleconference. Thank you very much for your participation. Please disconnect your lines and have a wonderful day. jsPDF 3.0.3 D:20260608224453-00'00'

NASDAQ:ALNT Q4 2025 Earnings Call Transcript Generated on 6/8/2026 Operator | Conference Operator: Good day and welcome to the Ellion, Inc. Fourth Quarter Fiscal Year 2025 Financial Results. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Craig Mihalik, Investor Relations.

Please go ahead. Craig Mihalik | Investor Relations

Yeah, thank you, and good morning, everyone. We certainly appreciate your time today, as well as your interest in Alliant. On the call today are Dick Rosella, our Chairman, President, and CEO, and Jim Michaud, our Chief Financial Officer. Dick and Jim will review our fourth quarter and full year 2025 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 company slide presentation are available on our website at Alliant.com. If you're following along, please turn to slide two for our safe harbor statement. During today's call, we will 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'll also discuss certain non-GAAP measures 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, two comparable GAAP measures in the tables accompanying the earnings release, as well as the slides. So with that, please turn to slide three, and I'll turn it over to Dick to begin.

Dick Rosella | Chairman, President, and CEO

Thank you, Craig, and welcome, everyone.

Dick Rosella | Chairman, President, and CEO

We entered 2025 with clear priorities. expanding structural margins, strengthening the balance sheet, and positioning the portfolio around durable secular growth drivers. As we close the year, I am pleased to say we made measurable progress on all three. We delivered a strong fourth quarter and, importantly, exited 2025 with improving momentum across the business. The fourth quarter reflected several highlights, but it can be summarized by a few themes. improving industrial demand, discipline execution across the organization, and structural margin expansion driven by our Simplify to Accelerate Now program. This performance was not only a function of higher volumes, it was operating leverage. It was improved mix, and it was sustained cost discipline translating directly into stronger profitability. We saw improving conditions in our largest vertical industrial. A significant automation destocking we have discussed throughout the year appears largely behind us, and ordering patterns are returning to more normalized levels. At the same time, demand for our power quality solutions supporting data center infrastructure remains strong. Vehicle performance was stronger than expected in the quarter, primarily tied to commercial automotive production timing. While we do not view that as a structural shift, it contributed to the top line in the period. Medical remained steady and consistent, and aerospace and defense reflected normal program timing dynamics. So what we experienced in Q4 was broad participation across the portfolio. That balance across verticals matters. It reinforces diversification of the model and supports the durability of our results. Equally important, the margin expansion we delivered wasn't simply volume driven. It reflected better mix when compared with last year's results, improved cost structure, and continued execution under our Simplify to Accelerate Now initiative. The operational work we have been doing over the past few years is now clearly embedded in the model. Turning to slide four and looking at the full year, 2025 was about strengthening the foundation of the company. We set out a clear objective under our Simplify to Accelerate Now program, reduce complexity, improved throughput, and strengthened margins in a way that is sustainable. We targeted a set of structural savings in the range of $6 to $7 million for 2025.

Dick Rosella | Chairman, President, and CEO

And while not yet complete, we delivered meaningful progress on that target.

Dick Rosella | Chairman, President, and CEO

These savings are being realized through footprint optimization, where we are consolidating overlapping operations and focusing our resources where we have scale and competitive advantage. Accelerated product development, where we streamlined our process and reduced time to market for our offerings. Lean manufacturing disciplines, where we improved standard work and reduced non-value added time on our shop floors, consistent with best practices that helped cut costs while improving quality and reliability. This is a journey and it never ends. One example that speaks to all three is the transition of our Dothan facility. We announced this last year as part of our realignment strategy with the plan to focus Dothan on advanced fabrication capabilities, including machining. As a result, we transferred assembly work to facilities where we have complementary capabilities. That effort, while still a work in progress, is expected to drive down costs and reduce complexity across our North American footprint.

Dick Rosella | Chairman, President, and CEO

Overall, we delivered record gross margins for the year. We expanded operating income at a rate well ahead of revenue growth.

Dick Rosella | Chairman, President, and CEO

We generated record operating cash flow. And we reduced net debt significantly, bringing leverage down to levels that gives us real financial flexibility. The balance sheet today looks very different than it did a year ago, and that matters because it allows us to invest in organic growth, support new program launches, and pursue disciplined capital allocation opportunities from a position of strength. With that, let me turn it over to Jim for a more in-depth review of the financials.

Jim Michaud | Chief Financial Officer

Thank you, Dick, and good morning, everyone. Turning to slide five, fourth quarter revenue increased 17% year-over-year to $143.4 million, including 15% organic growth on a constant currency basis. The growth was driven primarily by strengthening industrial demand, particularly automation and power quality applications, as well as increased commercial automotive shipments within the vehicle market. From a geographic perspective, 50... Revenue was generated in the U.S. with the balance coming primarily from Europe, Canada, and Asia Pacific, consistent with our diversified footprint. Let me walk you through performance by major vertical because that's where the real story sits. Industrial revenue increased 24% in the quarter. The primary driver was strengthening automation demand as ordering patterns from our largest automation customer returned to more normalized levels following the extended destocking cycle. In addition, demand for power quality solutions supporting data center infrastructure remained very strong. Those applications continue to benefit from electrification and digital infrastructure investment. Vehicle revenue increased 35%. This was primarily due to increased commercial automotive shipments tied to a transitioning model program. As Dick mentioned, we view this as production schedule timing rather than a new long-term run rate. Construction markets also improved, and power sports conditions appear to have stabilized relative to earlier softness. Medical revenue increased 9%, supported by steady demand for surgical instruments and continued traction in precise, motion applications. Aerospace and defense declined 5%, reflecting the lumpy nature of defense and space program shipments, along with the previously announced M-10 Booker tank program cancellation. Importantly, underlying defense program activity remains solid. Distribution channel sales increased 11%, although that remains a smaller component of total revenue. Turning to slide six, Here we show the composition of our revenue over the trailing 12 months, along with the year-over-year change in each market and the key drivers of that change. This slide really highlights something important about how the business has evolved and what you are seeing in the mix is intentional. Industrial remains our largest vertical, and it's increasingly anchored by higher value applications. power quality for data center infrastructure, motion solutions tied to automation, and applications aligned with electrification. That's where we have been directing engineering focus and capital. Aerospace and defense continues to represent a meaningful and growing contributor. While quarterly shipments can be lumpy, the underlying program activity and pipeline remain solid, and that vertical provides longer cycle visibility. Medical remains steady and consistent. Surgical applications continue to be reliable contributors, and our precision motion capabilities position us well in that space. Vehicle, while still important, is a smaller percentage of the mix than it was previously. That's partly market-driven, but it's also strategic. We have intentionally shifted away from lower margin programs and toward higher value applications across the portfolio. So when you step back, the mix today is more margin accretive and better aligned with durable secular growth drivers than it was just a couple of years ago. That evolution matters because it supports the margin expansion and earnings durability we have delivered. On slide seven, gross margin expanded 90 basis points year over year to 32.4%. The improvement was driven by higher volumes, favorable mix, and operational efficiencies from our simplified initiative. Sequentially, gross margin moderated largely due to a higher proportion of vehicle revenue, which carries lower relative margins. For the full year, gross margin expanded 150 basis points to a record 32.8%. Turning to slide eight and the drivers behind the margin and operating income expansion, What stands out in 2025 is not just the headline results, but how we've achieved them. As Dick outlined, the Simplify to Accelerate Now program was designed to structurally reduce complexity, improve throughput, and strengthen margins. The operating performance you see here is the financial expression of that work. The structural savings we delivered in 2024 and now 2025 are embedded in the business, and they are showing up directly in leverage and operating income expansion. Realignment costs related to these actions during the year are primarily associated with the Dothan transition. The transition to date has been successful, not just from a cost perspective, but operationally. We are realizing enhanced manufacturing focus and early elements of the anticipated savings. When you layer these structural improvements with improved volume and mix, the impact on leverage becomes clear. At the operating level, we drove meaningful improvement in expense discipline. We captured upside from higher volumes while at the same time controlling SG&A, allowing operating income to grow significantly faster than revenue. In the fourth quarter, operating income increased 76% to $11.4 million, or 7.9% of a revenue. For the full year, operating income increased 46% to $44 million, or 7.9% of revenue. Turning to slide nine, you can clearly see how the structural margin expansion and discipline execution translated into meaningful bottom line growth. Net income for the quarter more than doubled to 6.4 million, or 38 cents per diluted share. Adjusted net income was 9.3 million, or 55 cents per share. Adjusted EBITDA was 19 million, or 13.3% of revenue, up 170 basis points. For the full year, net income was 22 million, or $1.32 per diluted share. Adjusted EBITDA was 76.9 million, or 13.9% of revenue, representing 210 basis point expansion year over year. Our full year effective tax rate was 23.3%. For 2026, we expect our tax rate to be between 21 and 23%. Turning to slide 10. This slide reflects disciplined execution against the three financial priorities we outlined at the beginning of the year. Those priorities were improving working capital and inventory efficiency, take out structural costs, and reduce debt and strengthen the balance sheet. Starting with cash generation, we delivered record operating cash flow of $56.7 million for the year, up 35% from the prior year. That level of cash conversion reflects both improved profitability and better working capital management. Inventory discipline was a major focus in 2025. Despite navigating automation normalization and rare earth considerations during the year, we improved inventory turns to 3.2 times compared to 2.7 at the end of 2024. That is a meaningful step forward. We tightened planning processes, aligned production more closely with demand signals, and reduced excess inventory that had built up during the prior cycle. Importantly, we did that while maintaining strong customer service levels. On receivables, day sales outstanding improved to 57 days for the year versus 60 last year. That reflects better collections, stronger billing discipline, and improved customer mix. When you combine inventory turns improvement with DSO reduction, you see a structurally better working capital profile. Capital expenditures for 2025 were $7 million, with disciplined, focused investments tied to customer programs and productivity initiatives. For 2026, we expect capital expenditures in the range of $10 to $12 million, primarily supporting customer programs and growth initiatives. So slide 10 is really about execution. We said we would improve working capital. We did. We said we would drive structural cost improvements. We did. And we said we would reduce debt. That shows up clearly on the next slide as the balance sheet story is directly connected to the execution we just discussed. Total debt declined to $180.4 million. Net debt declined to $139.7 million, a $48.4 million reduction year over year. Our leverage ratio improved significantly to 1.82 times from 3.01 at the end of 2024. Our bank-defined leverage ratio ended the year at 2.34, comfortably within covenant levels and providing meaningful headroom. The combination of stronger earnings, improved cash conversion, and disciplined CapEx allowed us to materially deleverage in a single year. That's important for two reasons. First, it lowers financial risk and reduces interest burden over time. Second, it creates flexibility to invest in organic growth, support new program launches, and evaluate disciplined capital deployment opportunities from a position of strength. So when you look at slides 10 and 11 together, they tell a clear story. Operational improvements translated into cash, cash translated into deleveraging, and deleveraging translated into flexibility. That's the financial flywheel we've been working toward. And with that, if you advance to slide 12, I will now turn the call back over to Dick. Thank you, Jim.

Dick Rosella | Chairman, President, and CEO

As we moved through the fourth quarter, order trends improved. Automation demand is stabilizing. Power quality tied to data center infrastructure remains strong. And our aerospace and defense pipeline continues to provide long-term and long-term cycle visibility. Orders were up sequentially, and year over year, we exited with a book-to-bill ratio slightly above one. That's important as it reflects positive momentum as we enter 2026. Backlog ended the year at approximately 233 million, with the majority expected to convert within three to nine months, consistent with our historical patterns. The visibility we have today supports a constructive start to the year. As we look into 2026, We believe we are positioned to build on that momentum. At the same time, we remain realistic. The macro environment is still uneven across certain end markets. Customer capital spending can move in phases, and policy and tariff considerations remain part of the broader landscape. We continue to monitor developments closely, and we will adjust as needed. With respect to the recent Supreme Court ruling and broader trade policy discussions, We are continuing to evaluate any potential implications. As we have discussed previously, we have taken proactive steps over the past several years to diversify our supply base, localize certain sourcing where appropriate, and manage tariff exposure through pricing and operational adjustments. We remain disciplined in how we evaluate these developments, and we will adjust as needed. What gives us confidence is what we control. We control our cost structure, and it's structurally better than it was a few years ago. We control working capital discipline, and we demonstrated that in 2025. We control capital allocation, and we strengthened the balance sheet meaningfully over the past year. We continue to align the portfolio around higher value motion controls and power solutions serving durable secular drivers of electrification, automation, energy efficiency, increased defense spending, and digital infrastructure. These drivers are not short cycle themes. They represent long-term shifts in how energy is generated and used. how systems are automated, and how infrastructure is built. Alliant's technologies are directly aligned with those transitions. We exit in 2025 with improved margins, stronger cash flow, and a materialer, stronger balance sheet. That combination provides flexibility and resilience, and it positions us to execute through varying market conditions. We believe we're entering 2026 from a position of strength. We have an excellent opportunity to leverage the foundation we have been building to simplify to accelerate now initiatives, simplify our organization, drive out cost, and accelerate growth rates well into the future.

Dick Rosella | Chairman, President, and CEO

With that, operator, please open the line for questions.

Operator | Conference Operator

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Tomo Siano with JP Morgan. Please go ahead. Hi, good morning, everyone.

Dick Rosella | Chairman, President, and CEO

Good morning, Tomo.

Tomo Siano | Analyst, J.P. Morgan

Thank you for taking my questions. So while the cyclical macro recovery such as improving ISM is expected, Alliant has clearly driving a structural growth and margin improvement through initiatives like Simplify to Accelerate now. So looking ahead to 2026, which do you see as the bigger contributor to growth and margin expansions, external tailwinds, or your own self-help measures? Any more colors on 2026, please?

Thank you. Dick Rosella | Chairman, President, and CEO

Okay, so let me take your first question, I believe, as I understand it, is that you're looking for what are the seculars that we expect to be generating the largest growth opportunities for us in 2026. Is that correct?

Tomo Siano | Analyst, J.P. Morgan

Mm-hmm. I want to get a more sense of the cyclical characteristics of the recovery you see versus the structural themes you see in 2026.

Dick Rosella | Chairman, President, and CEO

Tomo, I'm sorry.

Dick Rosella | Chairman, President, and CEO

I don't know whether it's our line or your line, but you're breaking up on us, and I'm having a hard time picking up some of the comments or questions.

Tomo Siano | Analyst, J.P. Morgan

I'm sorry. Could you talk about 2026, the growth of the sales driven by cyclical recovery versus structurally items for the revenue side? I wanted to get some color on the margin side as well.

Thank you. Dick Rosella | Chairman, President, and CEO

Okay. I think I have it here now. Well, first off, as we talked about here, as we've been repositioning our business and looking at where we see some of the long cycle, longer term drivers, and we mentioned data center infrastructure, we do see that continuing. We see, I believe, one of the issues that has been addressed quite over the last few days here has been about the energy side of it and how were they going to generate power. And it seems like some of the companies are stepping up to do that on their own, which I think was a major concern. That doesn't affect us. You know, we obviously need the power. And as the data center expansion continues, you know, we play a pretty significant role in making sure that that power is being delivered efficiently and effectively. and, you know, eliminating distortion within the grid and so forth. So, I think we do see that opportunity continuing now into the 2026 and into the future. Again, it's based upon infrastructure. It's based upon capital projects. And, of course, those are subject to the developments as the prime contractors and or developers determine the right timing for those. As far as aerospace and defense, let's call it defense more than aerospace, you know, that is impacted by many factors. And, you know, we will still now, given the The war that's going on in Iran right now, I think it's going to take a little bit of time here to settle down for us to figure out how that will have an impact on our business, whether it's immediately or long term. That's too soon to call. As far as the other programs go, which we've been very actively involved in, with some of the key drivers in terms of defense applications, whether it's drones, whether it's missile defense and so forth, I mean, We have been a player in those markets for some time here now, and we do see that continuing. One thing that's occurring there is, of course, is the requirement for defense products and suppliers to be based in North America or the U.S., and the that's definitely plays into an advantage for us as we do have a pretty significant manufacturing based in design engineering team in North America. The other areas that, you know, we see opportunities of course, is we don't see medical slowing down the, the advent of AI and medical and the use of sophisticated diagnostic tools. And again, some of the key areas that we've been involved in for many years. We continue to participate, and we're pretty excited about that. And automation will come. Automation comes in the form of our normal or typical industrial automation, and even in the robotic side of it, sometimes referred to as exciting areas of humidizing and so forth. And again, it's another area we participated in, and we continue to participate in. We see growth and stabilization there. European markets, and especially Germany, seems to be remaining a little bit soft, and they're not predicting any growth for 2026. So we'll see how that shakes out as the year goes along, but that's the forecast that we're getting right now is that the industrial markets in Germany, in fact, may decline this year, which we did, you know, we saw some signs that it was going to improve, but the the latest information we're getting is that that may not be the case.

Dick Rosella | Chairman, President, and CEO

And I think our diversification in many different markets plays well for us, and there is a good balance.

Dick Rosella | Chairman, President, and CEO

I mean, we do believe that the Industrial sector will continue to grow because we do have automation in that sector, as we call it, and also the data center infrastructure is in there as well. So we do see that continue to grow, and we see defense growing, whether it's cycle timing, as Jim had mentioned, you know, the government canceled the M10 Booker program, and that's a realignment of how they see the priorities on the battlefield going forward. and the challenges that are being faced. As far as margins, margins is a big factor based upon mix for us. And I can tell you that our focus and emphasis on new applications has been in the markets and will continue to be. And our investments will be made in the markets where the margins are above or above our average. That's been our focus and will continue to be our focus. And capital spending will align with that. So I think, you know, that we are in pretty good shape. Our book-to-bill ratio is improving. And that's one of the things that we pay close attention to in this to determine whether or not, you know, we have converted some of the opportunities we're working on and it's showing up in bookings that will later show up in shipments. That's a long-winded answer. I hope I've covered them all. If not, you can go ahead and ask me to add to that if necessary.

Tomo Siano | Analyst, J.P. Morgan

Thank you. Very helpful, Dick. Thank you. And just to follow up on a capital allocation standpoint, congrats on leverage, improved and strong cash flow generations. How would you prioritize capital allocations for 2026 among organic growth, investment, M&A, and shareholder returns, please?

Dick Rosella | Chairman, President, and CEO

Sure. I would say to you that, again, going into 2026, I mean, we feel that our pipeline of opportunities is quite strong. And our investments that we make will be to support what we have control over and in hand right now, which is, you know, some significant opportunities and that we will need to invest to realize some of those opportunities. So that's going to be the majority of the investment that we see going forward. I would also say to you that You know, we are paying very close attention there in terms of the pipeline of acquisitions. We certainly have had certain areas that we won't discuss on the call here that we're paying close attention to. And if the opportunity does arise, I mean, we think we're well positioned to take advantage of that and to move forward with it. With And I think the Simplify to Accelerate Now initiative, I just want to make it clear, we're not done. We see that we started, we had several initiatives that were well underway and executed quite successfully, but certain things were not completed in 2025 that are recurring into 2026, and we will have the discipline to get them done and drive costs out. We also see that we have other opportunities. And when we look at our infrastructure and our footprint and so forth, to continue to drive costs out, to become more efficient in the way we do things. So that's not ending. That will continue. And It's not like we did a mad push for a couple years and it's all completed. It's not. There's more opportunity ahead of us here. And 2026 will not be one that we just sit back and say, okay, let's just take a deep breath and look at what we did and, you know, move on from here. We're going to be aggressively going after some additional opportunities to improve our cost base.

And they're there. Tomo Siano | Analyst, J.P. Morgan

That's helpful as well.

Thank you very much. Dick Rosella | Chairman, President, and CEO

That's all from me. Thank you, Jomo.

Operator | Conference Operator

And the next question comes from Greg Palm with Craig Hallam.

Please go ahead. Greg Palm | Analyst, Craig-Hallum Capital Group

Thanks. Good morning, everybody. Congrats on a good way to finish 2025.

Jim Michaud | Chief Financial Officer

Thank you, Greg. Appreciate it, Greg.

Greg Palm | Analyst, Craig-Hallum Capital Group

I don't remember the last time you actually grew revenues sequentially from Q3 to Q4. Maybe it's happened once or twice, but I understand maybe a little bit was due to some outsized you know growth and commercial vehicle which you you talked about but just broadly speaking you know what else drove the the better than expected seasonality that you'd normally see and just to be clear what what kind of trends have you seen uh so far in in q1 yeah great question greg because it was abnormal you're absolutely correct you follow us a long time and Dick Rosella | Chairman, President, and CEO: You know, it's, as we say, going into Q4 is always, there's some unknowns. We've seen years where, you know, demand was pent up, supply chain crisis, things like that, which caused some irregularities in the normal cyclical patterns that we would see during the year. We did, in fact, have a few, I'll call them pull-ins, that we hadn't anticipated. So, it did elevate Q4 sales to a certain extent, and one that we mentioned, the commercial vehicle side of it, we don't see that having, you know, that was a one-time surge based upon some demand that had been sitting out there, and we see it returning to normal. In a couple other areas, there were a few that surprises, I'll call them, and I won't mention in detail what they were, but they they were, you know, pulling in product. And then as we turned the year, we saw that that was reflected in a little bit lower demand in the first quarter. So there were some offsets there that, you know, we're going to have to, we'll be addressing and see as it's still early, of course, but see how that lands. But that is a little bit unusual. And thank you for pointing it out because there were, I'll just say there were three different uh drivers of that and one was a one time which will reduce to normal and the other two we did see a little bit of reduction after they were pulled ahead uh as we started a year but nothing nothing that we see that will change normal run rates on an annual basis it was just unusual just into you know leaving this aside what type of sort of demand Greg Palm | Analyst, Craig-Hallum Capital Group: are you seeing right now just across your markets? I mean, any change? I know things sort of strengthened as we went through 2025, but any strength? And just curious as you look at what's occurred over the last week, what kind of risks or even opportunities could that bring about this year?

Sure. Dick Rosella | Chairman, President, and CEO

I mean, our order inputs seem to be coming in quite well, and we saw some improvement through the year. And And as you mentioned, for us, we watched that very closely because that's obviously an indicator of what we're going to see in terms of converting it into shipments. So that's encouraging. We see some of that continuing to flow in nicely. As far as what's happened in the last week, I mean, of course, there's no surprise, I guess, in saying that we're the defense side of the business and we certainly do supply products that are being utilized right now. how that converts into orders. We were surprised when they were heavily consumed and we didn't see production orders happening as fast as we would have expected, which indicated there was a big stockpile. We think the stockpile had been chewed up. We saw some return to starting to ship again for some defense-related products. So if you just ask for what our gut feel is, is that there will need to be an increase in certainly some of the products that we deliver to do some replenishment. What the total amount is, the impact is, hard for me to say and hard for us to say, but I'm sure we'll start seeing some of that fairly soon.

Greg Palm | Analyst, Craig-Hallum Capital Group

And I know you mentioned drones, and that's an opportunity that you've called out a little bit more recently. Are you able to share with us? any traction that you're seeing just in terms of what the opportunities set that might be emerging there?

Dick Rosella | Chairman, President, and CEO

Sure. I, you know, our company is well regarded and well respected for doing, you know, for high performance solutions, custom engineering and so forth. And I'd say, you know, our activity in that market had been primarily in that space and it accelerated. It certainly accelerated as far as the pipeline of opportunities go, the prototyping that we're doing, the quoting that we're doing. But it also seems to be expanding into the class one or group one, whatever way you want to describe it, devices, and has caught our attention. And one of the areas of opportunity for us that we see is that we know how to produce product and buy it. we have one of the benefits that we enjoy based upon having a certain percentage of our business, as we've stated in the past, we like to keep it in the single digits of automotive, is we do know how to produce higher volume solutions, cost competitively, and with the use of automation. So I see it very encouraging, and I see it as a real opportunity for us to take our know-how that we have gained and developed over the years and to redeploy it into some of these other areas. While they're, you know, the pricing and the margins may not necessarily be the same as the, you know, the higher performance custom engineered products, certainly the volumes do give you the opportunity to from a volume standpoint and from an operating margin standpoint to be incremental to our business. So that's an area that we see. The shift to North America has created certainly an increase in inquiries. And as I said, we've been in the business in different applications. We see our Our technology base that we have in electronics and controls and motors and so forth, in lightweighting and composites, it definitely does give us an opportunity here to expand that. So we're pretty excited about it.

Greg Palm | Analyst, Craig-Hallum Capital Group

Okay, great. And I guess just last one, I recall last year you announced the facility expansion where you're doing a bulk of the data center work, and I'm curious what the status is of that, and do you feel like you have – you know, adequate capacity, you know, as that's done or once it's done to capitalize? What are you seeing in terms of the opportunities out there?

Dick Rosella | Chairman, President, and CEO

Yes. To answer your question, it's coming along extremely well. It'll be, you know, late second quarter, early third quarter when it's fully operational. Timing couldn't have been better. That's all I can say. Timing couldn't have been better. The opportunities we're seeing and the fact that we had addressed it in advance to expand our capabilities and our footprint. We're definitely fortuitous here as the demands of the market continue to go up. So I think we'll start to unfold here later in the year. You'll start to see some pretty significant increases in volume in that area. And our timing was good.

Dick Rosella | Chairman, President, and CEO

Okay, perfect. Appreciate all the color. Thanks. Thank you, Greg.

Operator | Conference Operator

And the next question comes from Max Michaelis with Lake Street Capital Markets.

Please go ahead. Max Michaelis | Analyst, Lake Street Capital Markets

Hey, guys. Thanks for taking my questions. I just want to kind of go back to the data center opportunity. From your comments here in the Q&A and then prepared remarks, it sounds like it would be safe to say you expect the data center opportunity to accelerate in 2026 over 2025 in terms of growth rate. Is that correct?

Dick Rosella | Chairman, President, and CEO

Yes, we do. And what I would say to you is that definitely the opportunities are there. As Greg asked the previous question, you know, about the expansion to our facility, our main facility, that was, you know, underway and last year was approved and is, you know, reaching the point of completion. And that's critical for us to be able to handle the increased demand that we expect to see. I will say to you that, you know, there was an acceleration into last year of some of the, you know, products that we produce and accelerated deliveries. And, you know, we're going to have to pay, as you look at us and pay close attention to, I mean, the order input rates and what we see there, because it's not a smooth, you know, incrementally improving business. It's definitely, you can see some fairly substantial jumps in opportunities and timing of orders and when the demand and shipments are going to occur. You know, it's not just going to be a straight line here. It's going to be a we'll see that perhaps, you know, in the third and fourth quarters of this year where you'll see some ramping.

Max Michaelis | Analyst, Lake Street Capital Markets

Is this growth primarily driven by new contract wins and new customers, or are you guys expand or kind of a mix between expanding wallet share with other customer existing customers?

Dick Rosella | Chairman, President, and CEO

Oh, the market itself is expanding and we're, we're, you know, we have a, uh, we've talked in the past about some of our capabilities that, uh, put us in a very nice competitive position in the market. And I think that's what's, that's definitely driving it. So it's, there's market expansion and, you know, the technology we have to support and service that is also being recognized and, you know, accelerating some of those opportunities for us as well. And I don't want to, you know, you guys are fairly new and I appreciate you joining us as an analyst and, In the past, we talked about an acquisition that we did in Wisconsin that gave us a capability and a manufacturing capability and footprint in Mexico. And we've been leveraging that to a great extent here and helping us accelerate our ability, you know, to meet those demands. And it has proven to be, you know, to be very helpful for us as we've been addressing some of those. So it's been, you know, our capability, our production capability, the expansion that we're doing to continue to improve upon that. as well as our technology, which gives us a nice competitive edge in the marketplace. I'm not saying we're alone, but we clearly have, you know, a product that is recognized as high-performing and, you know, very cost-effective.

Max Michaelis | Analyst, Lake Street Capital Markets

Okay, and then last one from me. With the M10 Booker program coming to an end, I mean, is there any other programs you can share with us to kind of give us an idea where you guys expect to head next, or is it something you can't share?

Dick Rosella | Chairman, President, and CEO

No, I'd rather not share. And I say it's sure we could share, but defense programs, as we found out with N10 Booker, that was not a one-year program. That was a six, seven-year program. And if you look at it, it said there's logic behind it, what's happening. And as the battlefield's transitioning here, the utilization of drones, the utilization of missiles, less, you know, boots on the ground. Booker was a larger vehicle. It's not going to go away, you know, itself for the need for those larger vehicles and boots on the ground and some applications or some arenas. But what we will see is we see a shift towards smaller, more agile, more autonomous vehicles. And, you know, we're positioned as well on those. So one of the things just, you know, for us to get the message out as we've acquired companies in the past, And we looked at more of a fully integrated solution. And we do provide some pretty significant advantages there in that we have, we can handle the electrification, we can handle actuation. So we've got motors, we've got controls, we've got tries, we've got IO, and we have lightweighting composites. And those composites are used quite extensively. And composites aren't just for, I mentioned lightweighting, but there are other reasons you use lightweighting, structural integrity or improved strength. you know, EMI protection, as well as lightweighting to make them more efficient as you move towards, whether it's electric or hybrid vehicles to improve, you know, battery life and so forth. So I would say to you that, again, we are in quite a unique position to be able to offer all of that to some of the prime contractors, in addition to, to one of the things where the Department of War is pushing really hard now. I mean, accelerated development, you know, these long design-in cycle times, like a six, seven-year Booker program, and then canceling at the end, the speed of play is going to be absolutely critical. And that's one of the things where if you have products that are already being utilized in other markets that you can leverage. That gives you, again, a little bit of a competitive advantage. And some of the – and they're vehicles. In many cases, they're vehicles. And since we have been very strong in the vehicle market with some of our products, we're able to leverage those. So COTS, commercial off-the-shelf products, are critical. We can leverage those, and we can, again, apply engineering and modifications to – fit them for purpose, whether it's more ruggedized, whether it's more environmental, lighter, higher performance, and so forth. So we're very excited about it, and we've made an investment. And, you know, we haven't seen the returns on those investments yet, but we're highly confident that we're positioning ourselves well here for the future.

Dick Rosella | Chairman, President, and CEO

Awesome. Thanks. Again, if you have any questions, please press Operator | Conference Operator: please press star and then one. Our next question comes from Ted Jackson with Northland Securities. Please go ahead.

Thanks very much. Ted Jackson | Analyst, Northland Securities

You guys sound so optimistic. It's really, it's infectious. I have a couple of questions. So, Dick, on the domestication of work, you know, and its drive for you, You know, you've been dancing around that, you know, and this whole thing with the NDAA, there's kind of two buckets to, you know, bringing, you know, this stuff back into the country. And one is the actual manufacturing, and the other is the supply chain. You know, and I think, you know, for Alliant, you know, the manufacturing bucket is pretty straightforward. Is there work that you need to do on the supply chain? to bring anything into compliance within DAA by the time it becomes, you know, fully into effect in January?

Dick Rosella | Chairman, President, and CEO

A very good question.

Dick Rosella | Chairman, President, and CEO

And the answer is there's always going to be work to be done there. There's no quick answers to some of the, you know, rare earth minerals and materials that are being utilized in some of the higher performing products here. So, you're 100% correct. We have the capacity and the capability to produce in North America. We've got ample capacity. And some of the work that we have been doing over the past few years that we've talked about, facility rationalization, and it's there and it's to our advantage. We have about 1.2 million square feet of manufacturing space within the company. And in North America, a substantial portion of that. So, and we've freed up a significant amount of space here that we can redeploy, you know, if there is a quick demand and a ramp up for certain, let's just call it initiatives that may be undertaken. Supply chain is another, it definitely is another challenge. And we've been hot and heavy on it. and working on it, we have a team that's on it, but I will not tell you that, I can't sit here and tell you that it's completely solved. We're subject to other governments and other policies that they may impose, but we've been working hard to minimize the impact, to solidify supply chain sources, but some of that ramp up has not been as quick as we would have liked to have seen it, or the government would have liked to have seen it. So there's clearly going to have to be, the government's going to have to look at that and really decide, you know, there's a desire and there's a reality in whether the two meet. And I think, you know, we'll be working through some of that this year. But it's an excellent question. It's something that, you know, we're on top of. We're doing everything we can possibly do to resource We were already started before some of this had happened for regionalization of supply chain, had nothing to do with tariffs and duties and restrictions and all of that. It was more of a logical business decision. So we were pretty well prepared. On the other hand, we cannot control when things some of the other factors that come into play could impact us. So, Jim, do you have anything you want to add to that?

Yeah. Jim Michaud | Chief Financial Officer

What I would tell you, Ted, and this is just really dovetailing what Dick just mentioned, you know, the Feds have, are really investing billions of dollars in a number of companies here in the U.S. And obviously, you know, we've been in contact with all of them. But as Dick just mentioned, it's going to take time, you know, for all of the, you know, supply chain in and around, you know, the rare earths and the, you know, processing of materials and so forth to evolve. And I don't think it's going to all happen when we hit January 1st. But I can tell you, you know, we have teams here that are working diligently with a variety of different suppliers. And, you know, we're setting the foundation for us to, you know, partner with these companies that the government is investing in.

Ted Jackson | Analyst, Northland Securities

So, and I did want to get into magnets, but let's just keep on, but, and so I'm gonna jump over there, but, um, but on the, the, the, the main issue for you on the supply chain side is rare earth around magnets. I mean, everyone has that problem. I have to believe that your government is well aware of that. I mean, do you have any dialogue with the government? Do they understand that, you know, at some level you have to be practical or are you just, you know, saying that yourself?

And then. Dick Rosella | Chairman, President, and CEO

Now, as Jim mentioned, he says that we've been in close contact with the government and the key officials in the government, working hand in hand, working hand in hand to, and that's why I said to you, you know, at some point in time, you know, reality and there's a desire and there's a push, but there's also reality of the timing of when all of this could occur. But we can, I can just tell you this, we're hand in hand, we're in there, we're working with, you know, the identified sources that are being supported and invested in. Okay. So And we're not letting up on it. We're not stopping there. So it's a continuous effort to make sure that we're working all the angles as well as staying very close to the key government officials and activities that are being undertaken right now.

Ted Jackson | Analyst, Northland Securities

Beyond magnets, is there any other critical kind of components or parts that you had to go out and Dick Rosella | Chairman, President, and CEO: resource or or need to resource to move into compliance um there's yes to answer your question there's other components but they're not as complicated or as difficult to resource i mean you may it's a cost factor more than anything uh something else that does impact that as well you know so without getting into all the details of the different components that we're seeing. You are seeing certain supply shortages in pockets of areas, even electronic components. You see some things popping up based upon demand and other areas that are occurring. They're stressing the supply chain side of it. But to answer your question, yes, there are other components that are key that, you know, if you're talking about motors, for a motor to function, whether it's laminated steel, whether it's bearings you know uh it's but there are alternatives the alternatives may be more costly but there are alternatives magnets are a little bit unique in themselves so highlighting the magnet side of it is is important uh and the others are there but you know they get impacted on by based on other factors you know so so anyway it sounds like it'll just be uh Ted Jackson | Analyst, Northland Securities: a topic for discussion every quarter. So as you kind of progress through it, and you're not the only one. I mean, it's so many different companies. I'm just shifting over to kind of the commercial vehicle market and the fourth quarter. You know, so you had like a pig in the python with regards to the fourth quarter. And I guess what I would want to ask on that is, One is if you could kind of quantify it a bit to help us kind of realign how our first quarter will look. You know what I'm saying? Because you typically have some seasonality from fourth to first just to make sure that we think it should be helpful for all analysts in terms of just getting their 26 numbers done. And then on a more macro level, the commercial vehicle market is definitely, I mean, I wouldn't say definitely, but it seems to me is very much on a rebound. You know, you've seen a pickup in freight rates. You know, if you listen to like Ackar and Volvo and all the Class 8 guys, you know, starting in November, they saw order activity bookings pick up substantially. It continued through January. I've talked to some of their suppliers. It continued through February. So, you know, you're going to see a lot of that translate over into an improved demand environment, probably when we get to the back half of 26, assuming that this continues, and it sets up well for 27. Can you talk a little bit about what things that you are supplying into that market and how you see that market playing out as we roll through the year into 27?

Dick Rosella | Chairman, President, and CEO

Okay. Is your question about what we supply into the commercial automotive or what do we supply into the truck and construction or all of them?

Ted Jackson | Analyst, Northland Securities

I guess you could say all of them. I mean, I was trying not to get too granular, but I'm always interested in more than this.

I'm American. Dick Rosella | Chairman, President, and CEO

Okay. So what I would say to you is this. Yes, we did see... And we can echo the fact that we did see some improvements. And when we talk about vehicle, and thanks for bringing it up, because many times people have their own definition of what's vehicle. Our definition of vehicle is commercial automotive, bus, construction, marine, agricultural, truck, and rail. That's our vehicle. That's what we consider vehicle. So we have to continually remind people when we talk about vehicle, And also, actually, we do have power sports in there. And when we talk about vehicle, don't get too wrapped up in thinking of us as an automotive company. We've mentioned we have a target to keep that in single digits. And the major reason for that is it's a long lead time, design in cycle time. It's very cost competitive, and it's heavily capital intensive. And we've chosen to take, you know, and invest our money in other areas. But we do see differences in the, and I've mentioned to you before that power sports, you know, has become automotive-like, commercial automotive-like. Not to the same extent, but it has, you know, gone in the area. But we did see increases in pretty much across the board. And the impact of the one-time effect of of the fourth quarter that you could see going forward, I would tell you about two and a half, two and a half million. Okay. In fourth quarter. So then the, as far as the applications go, when you get into agricultural construction and so forth, we're in several applications, you know, different types of actuators and so forth. But one of the key elements fundamentally that we're in and pretty much across the board in vehicles is steering applications. So it's agnostic to whether it's gas or, you know, petrol or whether it's electrification. So we can be utilized in each. We've also involved in electrohydraulics for some of the larger vehicles. Again, primarily in steering areas. So we have a great expertise in steering. And, you know, and that's kind of where we focus our efforts not just in, you know, that vehicle, but also in some of the industrial applications as well. Okay. Does that help you?

Ted Jackson | Analyst, Northland Securities

That does. And I know we're at the kind of timeline, so I'll stop.

So thanks again. Dick Rosella | Chairman, President, and CEO

Okay. Thank you, Ted.

Dick Rosella | Chairman, President, and CEO

Thank you, everyone. And I think if there's no more questions, which I believe there aren't. Operator, can you confirm that?

Operator | Conference Operator

Yeah, this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Dick Rosella | Chairman, President, and CEO

Well, thank you, everyone, for joining us on today's call and for your interest in Alliant. We will be participating in the JPMorgan Industrials Conference in Washington, D.C., on March 17. As always, please feel free to reach out to us at any time, and we look forward to talking to you all again after our first quarter 2026 results.

Dick Rosella | Chairman, President, and CEO

Have a great day, and that will conclude the call, operator. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. jsPDF 3.0.3 D:20260608224717-00'00'

NASDAQ:ALNT Q3 2025 Earnings Call Transcript Generated on 6/8/2026 Conference Operator | Operator: Good day, and welcome to the Alliant, Inc. Third Quarter Fiscal 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please ignore conference pressures for pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To retry your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Craig Mihalik, Investor Relations.

Please go ahead. Craig Mihalik | Investor Relations

Thank you, and good morning, everyone. We certainly appreciate your time today as well as your interest in Alliant. On the call today are Dick Rosella, the Chairman, President, and CEO, and Jim Michaud, our Chief Financial Officer. Dick and Jim will review our third quarter 2025 results, provide a strategic and operational update, and share our outlook. We'll then open the line for your questions. As a reminder, our Q3 earnings release and the accompanying slide presentation are available on our website at Alliant.com. If you're following along, please turn to slide two 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 our Q3 earnings release. We also discussed 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 earnings release, as well as the slides. So with that, please turn to slide three, and I'll turn it over to Dick to begin.

Dick Rosella | Chairman, President, and CEO

Dick. Thank you, Craig, and welcome, everyone.

Dick Rosella | Chairman, President, and CEO

Alliant delivered another strong quarter, underscored by double-digit revenue growth record gross margin, and continued deleveraging of our balance sheet. These results reflect the combination of healthy demand across key end markets and the tangible benefits of the efficiency initiatives we have put in place through our Simplify to Accelerate Now program. On the demand side, we saw notable strength in our industrial verticals, particularly power quality solutions for data center applications, as well as improving trends in automation. Our defense programs executed well, and the medical market delivered steady growth, even as mobility solutions remained soft. In addition, our vehicle business improved, led by contributions from commercial automotive and construction. Profitability was another highlight, with gross margin reaching a new record and operating leverage driving meaningful year-over-year improvements. Importantly, these gains were not only a result of volume, but also a reflection of mixed shift toward higher value programs and ongoing cost discipline. Cash generation and balance sheet strikes remain central to our story. Year to date, we have delivered significantly higher operating cash flow and further reduced debt, which has lowered our leverage ratio and enhanced financial flexibility. Jim will walk through some temporary impacts of the quarter, and at a high level, our results so far this year demonstrate our ability to convert top-line performance into stronger profitability, robust cash flow, and balance sheet progress. Stepping back, Q3 was not just about the numbers. It was about discipline and execution. The results highlight the resilience of our diversified portfolio, the value of our operational transformation, and our ongoing alignment with long-term secular growth drivers. Together, these elements reinforce the momentum we are building as we move toward year-end and beyond. With that, let me turn it over to Jim for a more in-depth review of the financials.

Jim Michaud | Chief Financial Officer

Thank you, Dick, and good morning, everyone. Please turn to slide five. Q3 revenue increased $13.5 million year-over-year, reaching $138.7 million, reflecting strong industrial market demand along with solid performance in our other core end markets. Foreign exchange contributed $2.3 million in tailwinds, with the remainder organic. Sequentially, revenue declined less than 1%. as the second quarter included 3 to 4 million of customer pull-ins related to anticipated supply constraints on components with heavy rare earth content. Sales to U.S. customers accounted for 57% of Q3 revenue, with Europe, Canada, and Asia Pacific representing the balance. Breaking down performance by market. Industrial market revenue advanced 20%. led by strong demand for power quality solutions in data centers, as well as improving industrial automation trends, which more than offset softness in oil and gas. Medical grew 6%, with surgical instruments offsetting weaker mobility solutions. Vehicle sales were up 6%, supported by commercial, automotive, and construction. Aerospace and defense revenue was up 2%, as scheduled defense and space program deliveries continued. We did experience some short-term shipment delays linked to customer validations during our Dothan facility transition, but overall, demand remains intact and positions us well as validations complete. Distribution channel sales were down 6%, though they represent a smaller share of our overall mix. Turning to slide six, here we show the composition of our revenue over the trailing 12 months, along with the year-over-year change in each market the key drivers of that change. As you can see, our industrial market is our largest vertical at 48% of total revenue, supported by continued strength in data center applications. While industrial automation is still working through the tail end of destocking, we are seeing healthier order flow, which has helped offset softer demand in oil and gas applications. Aerospace and defense increased to 15% of revenue, reflecting both timing of defense and space program deliveries, as well as strong execution on our growth initiatives in this sector. Demand remains solid, and our pipeline and defense continues to provide visibility into sustained growth. Medical accounted for 15% of revenue, led by higher demand for surgical instruments. This growth was partially offset by softness in certain pump-related products and mobility solutions, but overall, the medical sector continues to represent a steady contributor. Vehicle represented 17% of revenue compared with 22% in the prior year. The year-over-year decline primarily reflects reduced demand in power sports and select truck applications. That said, within the quarter, we did see strength from commercial automotive helping to partially balance the softness in recreational markets. Overall, this slide reinforces that our revenue base is better aligned with higher value margin accretive opportunities. We are deliberately positioning the company towards markets with strong secular growth drivers while also managing through areas experiencing softness. Turning to slide seven. gross profit reached $46.2 million, with gross margin expanding to a record 33.3%, up 190 basis points year over year and 10 basis points sequentially. This marks our fifth consecutive quarter of margin expansion. Drivers included mixed improvement, higher volumes, and disciplined lean manufacturing execution. On slide eight, operating income increased sharply to $12.2 million, or 8.8% of revenue, reflecting the continued scalability of our business model. This represents an improvement of 350 basis points year over year and 40 basis points sequentially. Operating leverage was a key driver as operating expenses declined to 24.5% of revenue, a 160 basis point improvement versus last year, even as we continue to invest in strategic initiatives. This demonstrates the effectiveness of our cost discipline and the structural benefits we are capturing. Our simplified to accelerate now program continues to play a central role in driving these results. We delivered $10 million in annualized savings in 2024, and we remain on track to achieve an additional $6 to $7 million in 2025. These savings are being realized through footprint optimization accelerated product development, and lean manufacturing disciplines. Importantly, we are already beginning to see margin tailwinds from the Dothan Fabrication Center of Excellence, with the full benefit expected to phase in during the latter part of 2025. We did record $800,000 in realignment costs during the third quarter to support this transformation, but these actions are positioning us for sustained efficiency and margin improvement moving forward. Slide 9 shows our bottom line performance. Net income more than tripled year over year to $6.5 million, or $0.39 per diluted share. Adjusted net income was $9.9 million, or $0.59 per share. Our effective income tax rate was 22.2% for the third quarter of 2025, and we continue to expect our full year rate to land between 21% and 23%. Adjusted EBITDA increased to 20.3 million, or 14.6% of revenue, driven by strong conversion on higher volumes and a more favorable mix. This represents margin expansion of 310 basis points year-over-year and 20 basis points sequentially. Turning to slide 10, year-to-date operating cash flow was 43.1 million, up 46% from last year. This reflects both stronger profit generation and disciplined working capital execution. Our free cash flow this past quarter was impacted by approximately $5 million of temporary inventory billed largely tied to rare earth magnets and to ensure continuity during the Dothan transition. In addition, we experienced a modest increase in sales outstanding which rose to 61 days, reflecting sales mix, and we also had the timing impact of certain insurance premium payments. Despite these temporary factors, our underlying cash generation remains very strong. Year-to-date capital expenditures of $5.1 million reflected continued investment in key customer-driven projects. Given project timing and fourth-quarter expectations, we have narrowed our full-year CapEx forecast to $6.5 to $8.5 million from the prior $8 to $10 million range. Importantly, we are executing well against our three financial priorities for 2025. Reducing inventory and strengthening working capital management, we've already improved inventory turns to three in Q3, up from 2.7 at year end, despite the temporary build this quarter. Cost discipline, evident in our SG&A leverage and ongoing benefits, was simplified to accelerate now. Reducing debt, supported by the strong cash flow we've generated. With that, let's turn to slide 11 to review the impact on our balance sheet. Debt declined by 12 million sequentially in Q3, bringing total year-to-date debt reduction to nearly 34 million. Net debt now stands at 150.8 million, and our leverage ratio has improved 2.1 times compared with three at the end of 2024. This consistent deleveraging combined with strong liquidity provides us with substantial flexibility to continue investing in strategic priorities while also strengthening our financial foundation. With that, if you advance to slide 12, I will now turn the call back over to Dick.

Dick Rosella | Chairman, President, and CEO

Thank you, Jim. Orders in Q3 totaled 133.1 million, down slightly from Q2 but up significantly from last year. Our book-to-bill ratio of 0.96 reflects the normal seasonal cadence we typically see, and importantly, it also underscores solid underlying demand, particularly in our industrial and A&D markets, despite the cancellation of the M10 Booker tank program by the U.S. Army, which did have a direct impact on Alliant. Our backlog ended the quarter at 231 million, with the majority expected to ship within the next three to nine months, consistent with our historical conversion patterns. This backlog mix, together with our active quoting pipeline, gives us confidence in the resiliency of demand. As we look ahead, we recognize that the global industrial environment is gradually improving, but remains uneven. Policy and tariff risks Supply normalization and cost volatility continued to influence capital deployment across many verticals. We continue to proactively address tariff-related challenges. Although mitigation efforts are underway, tariffs resulted in a net quarterly impact of approximately $385,000 that we were unable to recover through pricing or other measures. The majority of this impact occurred within our power quality business and mitigation efforts are already underway. On rare earth supply, even though it appears that we will gain some breathing room given the agreement that was reached with China, our multi-pronged strategy, which includes broadening suppliers, qualifying alternative materials, and managing inventory dynamically in close collaboration with customers, will continue to be central to our strategic supply chain security initiatives. At the same time, our focus is primarily on advancing strategic initiatives that enhance long-term value, driving further margin expansion, maintaining working capital discipline, and investing in technology-forward higher-value solutions. The operational and financial momentum we generated in Q3 provides a strong foundation to carry forward into the balance of the year. Finally, it's important to remember that secular growth drivers such as electrification, automation, energy efficiency, digital infrastructure, and precision control continue to underpin our strategy. These themes align directly with Alliant's capabilities and positions us to deliver sustainable, profitable growth through varying market conditions.

Dick Rosella | Chairman, President, and CEO

With that, operator, please open the line for questions. Yes, thank you.

Conference Operator | Operator

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. And the first question comes from Tomasano with J.P. Morgan. Hello, Duke and Jim.

Dick Rosella | Chairman, President, and CEO

Good morning, Tom. How are you?

Tomasano | Analyst, J.P. Morgan

Good, thank you. I would like to ask about the orders and backlogs for the first. And the book-to-bill ratio remained healthy at 0.96, as you mentioned. And how would you view the quality and the visibilities of the current backlog? And are there any areas of concerns?

Dick Rosella | Chairman, President, and CEO

I would say to you that overall we're – and I want to clarify one thing. We would have been above one, but we did take a cancellation – in our backlog for the M10 Booker program cancellation. So that's in there. And without that, we would have been above one. So that's just a little more clarity on that. As far as the quality goes, I think we're very pleased with what we're seeing. It's the power quality area, data centers is coming strong. We're seeing good activity in the defense area. We're seeing industrial picking up, and we also see Europe has picked up, started to pick up, let's put it that way. It's not back to where it was, but it has started to pick up in the industrial areas. So across the board, I think we're fairly encouraged with the quality and the margin potential generation from the new orders and the backlog we have.

Tomasano | Analyst, J.P. Morgan

Thank you, and follow up on the margin side, especially like Simplify to Accelerate Now initiatives. Could you elaborate on the progress and the future potential of the initiatives for 2026? Are there further savings or margin opportunities ahead?

Dick Rosella | Chairman, President, and CEO

Yeah, absolutely. So this year, I mean, I would say to you that some of the actions that were taken in last year and this year, we'll call them, some of them were pretty low-hanging fruit, and we have validated that the actions that we're taking did result in real cost savings. The major action we've taken this year is to, in our Dothan facility, which had final assembly integration test operations, also some machining and so forth, and was co-mingled between many different markets and different types of products. The major effort that we undertook this year was to transfer the production from Dothan into two other facilities, one in Reynosa, Mexico, and in Tulsa, Oklahoma, which better align with the markets and the products that are being produced. And Dothan, what we will retain is we have a strong capability in the machining areas. And so this is where you hear us talk about the transition of Dothan into a fabrication center of excellence, that'll be underway. And I will say to you that that will be started in the beginning of the year after the transfer. And the transfer is fully expected to be complete by the end of this year and moving out throughout next year. There's plenty of opportunities for us for cost optimization when we look at the components that we have been buying or purchasing and actually evaluating some of the business we have and looking at better strategic sourcing. I think so, again, I would look at that opportunity as we really begin to move that fabrication center forward. That's where we will see some fairly significant cost savings and potential for us to grow our business in other areas as well. We have some good opportunities that we're working with and they were contingent upon us continue to expand for high precision motion applications and Dothan will give us an opportunity to do that. I also want to stress that while we say fabrication because we're talking about additive manufacturing as well as just machining and not just machining operations. So that's why in the past you would have heard us say Machining Center of Excellence because that's what they do. but we do believe that there's definite value to be added from fabrication. In addition to that, we are setting guidelines and working hard with all of our operations. And Tomo, we had to untangle some of our businesses, which when I say that, the focus on what were the investments necessary, what's the design cycle time, what's the lead in cycle time for design wins, and types of products being produced. And that caused some inefficiencies in the process. So we're doing that. We're much better aligned, and we're close to completing these efforts, much better aligned on the vertical markets that we're servicing, as well as the production processes that they're much more consistent within each, which then allows us to go back and really address areas of, you know, that we feel that we have some significant improvement opportunities. So that's another area. So that'll be unfolding in the next year. So definitely some cost savings, although I don't think we've quantified that exactly yet. In addition to that, I say more importantly is the front end. Looking at business opportunities that provide us better margin capabilities or potential and not getting seduced into some other activities that look, you know, the value looks high, but the true bottom line value is not as great and costs a lot from a capital investment standpoint. So we're very focused on the front end, making sure that we're working, we're focused on the right markets that can meet our margin goals and not get diverted based on some what look like great opportunities, but underlying it is long-term efforts, a lot of capital investment and sometimes not as good a return.

So plenty going on. Dick Rosella | Chairman, President, and CEO

Thank you, Dick. Congrats on the quarter.

Thank you. Thank you. Conference Operator | Operator

And the next question comes from Greg Palmer, Craig Hallam Capital Group.

Greg Palmer | Analyst, Craig Hallam Capital Group

Yeah, thanks. Good morning. Congrats as well from me. I think from a segment level, industrial certainly stood out. And I know you called out stronger data center activities. So maybe you can just remind us exactly what you're selling into that market. Is there something going on that's causing the step up in demand there? I think last quarter you mentioned you're doing a facility expansion. So just wanted to get a little bit more color on that market specifically.

Dick Rosella | Chairman, President, and CEO

Sure. So you're exactly right. Right, Greg. What's going on in that area is really the big uptick that we've seen or some of the uptick that we've seen is in the data center solutions and the data center solutions around our power quality equipment. So we are and we are expanding our facilities. That's our primary facility for producing that product. And we expect that to come online in early, let's say, second quarter of next year. but we still continue to see or have seen a significant demand uptick, and we don't see it slowing down anytime soon. So that is one of the big drivers, and that also, fortunately for us, is a margin accretive product line for us. In industrial, the automation side. We talked in the past about that. You know, we had a couple years ago, we had a banner year, but it was based on supply chain, issues with supply chain. And when demand freed up, you know, we delivered at a very high rate. In fact, we said we had a $46 million headwind going into last year. Okay. And then if we could average the three years out, and we would see demand coming back to a normalized level, and we've actually seen that again. So each quarter, we've seen a nice step up in our run rates, and we're getting close, and I say close, we're not quite there yet, but we're getting close to where we think the normalized run rate should be. And again, fortunately, it's in the higher-end controls area where our margins are accretive as well. The other industrial markets that we're seeing some improvement, as I mentioned, Europe. Europe has been down and down quite significantly. And the impact on us was from a couple of our businesses is about 25% reduction. And we're not back, but we're starting to see we're chipping back a little bit here. And we've got a runway to go there to get back to where we were and hopefully beyond. But they're starting to see some positive signs. although I do think that'll be a slower ramp up into next year. Defense side, good opportunities. We're working on many new opportunities, certainly in the drone space. Applications where we have a significant manufacturing capability that we've had for years that we're unleashing to make sure that we support the opportunities that are coming our way. And we're well positioned, whether it's the lower cost disposable drone or up to the highest end, highest performing drones, the requirements in the market. So there's a lot of activity going on in that space, and we're addressing it as fast as we can. And we're pretty encouraged that we're well positioned to take advantage of that. And on top of that, munitions. I mean, we know some orders for munitions have been released. And it's our turn to see those orders come through, but there's definitely some encouraging signs that the volume will increase there as well. So overall, and medical was good too. We have this idea of the medical instrumentation, surgical side of it has been positive as well. So signs are good. We talked about in the conversation with Tomo a lot of the activities we're doing to improve our cost structure, improve efficiencies, and Now, I think your question, you're talking about where the growth opportunities are and some of the activities that we're addressing and facing today.

Greg Palmer | Analyst, Craig Hallam Capital Group

When might we see more of like an uptick or a step up in the drone space specifically? And then maybe you can just confirm, since you mentioned defense overall as a segment, what was the bookings impact on that M10 program?

Dick Rosella | Chairman, President, and CEO

The bookings impact for this year was about $5 million that we had to take a hit on. And, you know, the longer term impact for us was, you know, a backlog of shipments, you know, averaging around $7 million a year for a number of years forward. So, you know, a lot of work was done on that. There are, you know, we're reviewing costs right now, and there's certainly cancellations coming. We don't know if there will be another outlet for that the M10 Booker tank. But right now, the way it seems is that it is going to wind down. They're just completing whatever was on order and canceling the rest. And I say on order, already in production and canceling the rest. But $5 million in this quarter. So as I mentioned, it would have been a positive book-to-bill ratio. As far as the drones, when you see it, I think, you know, It's like anything else. You have to go through the design in cycle time, get approved. We already have been in drone applications, and we're just seeing more. But I would tell you that they'll be stepping up throughout the year next year.

Greg Palmer | Analyst, Craig Hallam Capital Group

Yep. Okay, perfect. And then just switching over to kind of profitability, I mean, I think it's pretty encouraging. You're generating mid-teens EBITDA margins. I mean, back-to-back really good quarters. I'm guessing you're not going to tell us where that can eventually land, but you know, it seems like there's still a pretty big chunk of your business that's operating well below, you know, normalized revenue levels or at least revenue levels from a few years ago. So volumes continue to come back. I'm guessing you start or you continue to see additional operating leverage. I mean, is that a fair statement?

Dick Rosella | Chairman, President, and CEO

Yeah, definitely a fair statement. And I got a real focus on, um, looking at each individual, look at the foundation we have built, what we call technology units and how we regroup the companies into business units and getting very specific and setting targets. All have to contribute and all have to improve. And that's the key. And I think the bulk of the work in order to have clarity and line of sight and what could be accomplished there is coming into place here now. So I think I feel comfortable that's going to drive improvements and continued improvements in all areas, and that's our goal anyway. So definitely some opportunities there.

Greg Palmer | Analyst, Craig Hallam Capital Group

Yep, okay. All right, well, keep it up. Thanks, and I'll hop back in the queue.

Dick Rosella | Chairman, President, and CEO

Thank you.

Conference Operator | Operator

Thank you. And once again, please press star, then 1 if you would like to ask a question. And the next question comes from Ted Jackson with Northland Securities.

Ted Jackson | Analyst, Northland Securities

Thanks very much.

Good morning. Dick Rosella | Chairman, President, and CEO

Morning.

Dick Rosella | Chairman, President, and CEO

Morning, Ted.

Ted Jackson | Analyst, Northland Securities

So I got a few questions for you. Just a few cleanup items and then some bigger ones. But with the whole thing with the tank, which is a disappointment, will there be anything that you have to write down in future periods because of that?

Dick Rosella | Chairman, President, and CEO

No. No, there's full recovery of costs and transit. We're working through that right now. But no, we will not have to write anything down.

Ted Jackson | Analyst, Northland Securities

Okay. Then going over to the positive FX impact, within your revenue verticals, where was that?

Jim Michaud | Chief Financial Officer

That was in the European, in the Euro-denominated transactions.

Ted Jackson | Analyst, Northland Securities

But was it across any verticals? Was it concentrated into anything in particular, I mean, industrial?

Dick Rosella | Chairman, President, and CEO

No, no. No, no.

Geographic. Okay. Ted Jackson | Analyst, Northland Securities

And then can you remind us, I don't know if you had discussed this with the prior call, but the orders that got pulled forward from 3Q into 2Q, what verticals were those in?

Dick Rosella | Chairman, President, and CEO

Power quality, primarily.

Okay. HVACs. Ted Jackson | Analyst, Northland Securities

Um, then, uh, in the vehicle market, you know, I mean, I know you've worked very, very hard at lowering your exposure within the power sports world, you know, and it's, you know, but I'm kind of curious, you know, with regards to that segment, you know, if you could maybe cover, you know, uh, kind of the mix of where that revenue comes from these days, you know, you, you highlighted strength in, um, uh, uh, commercial vehicle and construction. Um, and then, so I'm kind of curious, like, um, how much of that business now is exposed within power sports? What's the mix for that to construction? You know, how much is commercial vehicle? And then maybe, you know, what, you know, some color with regards to, like, construction and commercial vehicle as to sort of where are you providing your solutions and what?

Dick Rosella | Chairman, President, and CEO

Okay. So I would say to you first, Ted, we don't and we haven't in the past and, you know, giving you the real specifics on the percentages of each in the market, but I will give you some guidance on it. I mean, we've said to you that commercial automotive would always be something that we would stress to be below 10% of our annual revenues, and it is below 10% of our annual revenues, okay? And why do we want to do that? Well, we do like the core unit volume that gives us the strategic purchasing power. It gives us the ability to apply what we have in the automotive markets into other related vehicle markets. So getting a cost advantage there. But I would tell you that our vehicle, our commercial automotive market is performing well. It has definitely where when we started talking about it, you know, four or five years ago, that there were real challenges there, that, you know, the book of business that we had acquired and some of the challenges in the market itself through supply chain and, you know, price increases and so forth. We worked our way through it, and it's something that's performing, you know, I would tell you the net differential has been very, very positive for us. As far as power sports go, we did mention that, we have mentioned that one of our major customers had a two source, even the day we bought the company was going to have multiple sources while we were single source for a long time. They had advised us that they were going to be having multiple sources of supply and therefore we did lose portion of that business starting a little over a year ago. So that business is down. The market's been down. And it is below 10% of our business. So before, if you were back in 2013, 14 timeframe, you would have realized that that was maybe 22, 23% of our business. And now it's below 10%. So we think that's healthy. And I would want to make a statement. It's not that We want it to be less. It is. And, you know, there's certainly some things that are going to impact it going forward. You know, the tariffs, the USMCA agreements, the content of North American content that's in vehicles and so forth. So, you know, we've got a very robust solution that's, you know, it's the higher end of the performance range and we're applying that in other areas. So, We like the diversification we're seeing into other markets. But power sports is definitely from where it was in its heyday early on. And when power steering became a part of every vehicle, we were one of the leaders in that. And we enjoyed higher margins. But it's definitely a challenge today in getting automotive-like, I'll call it. And then the rest of it is made up of the other vehicles. We talk about large trucks, rail, marine, construction, bus, all of that. So it's a combination of all of those agricultural. And those are all solid. And those are all solid. And we're emphasizing that we'd like to see growth in those as well. That's about the best of the color I can give you at this point.

I hope that helps. Ted Jackson | Analyst, Northland Securities

Oh, it was great color, Jake. I appreciate it. You know what I mean? Because if you look at that section, that segment, excuse me, you know what I mean? You know, I just said like a little over a year ago, you know, you kind of, you know, went to dual source. But, you know, the business is really stabilized. Let's just call it $20, $22 million in quarterly revenue. And, you know, now that that business is where it's at, you see what I'm saying? The headwinds are gone. Of it, you know, I'm talking about power sports are giving away. So I'm kind of wanting to understand the mix of it to see, you know, where, you know, what growth will come now that you have, you know what I mean? Because our sports market in and of itself is clearly, you know, flatlining at this point. Then you have these other verticals as well. So I want to understand it because I, you know, the segment's actually poised probably to start performing better.

Dick Rosella | Chairman, President, and CEO

I had another question I want to ask you really quick. Give me a second. I lost my train of thought. I'll step out of line because I just completely went out of my mind. If I think about it, I'll punch back in. Thanks. Okay. Thanks, Ted.

Thank you. Conference Operator | Operator

And that does conclude the question and answer session, so I would like to turn it over to management for any closing comments.

Dick Rosella | Chairman, President, and CEO

Well, thank you, everyone, for joining us on today's call and for your interest in Alliant. As always, please feel free to reach out to us at any time, and we look forward to talking to you all again after our fourth quarter 2025 results.

Have a great day. Dick Rosella | Chairman, President, and CEO

Thank you. The conference is now concluded.

Conference Operator | Operator

Thank you for attending today's presentation.

Dick Rosella | Chairman, President, and CEO

We now disconnect your lines. jsPDF 3.0.3 D:20260608224913-00'00'