Allient (NASDAQ:ALNT) reported higher second-quarter fiscal 2026 revenue, record gross margin and sharply higher earnings, as demand increased across industrial automation, data center infrastructure, aerospace and defense, and medical applications.
Revenue rose 10% year over year to $153.8 million. On a constant-currency basis, organic revenue grew 9%, while foreign currency translation added about $1.3 million. Chief Financial Officer James Michaud said 54% of quarterly sales were made to U.S. customers, with the remainder primarily generated in Europe, Canada and Asia-Pacific.
Margins and earnings advance
Gross margin expanded 170 basis points from a year earlier to a quarterly record of 34.9%, producing gross profit of $53.6 million. Michaud attributed the improvement to higher volume, favorable product mix and operational gains from the company’s Simplify to Accelerate NOW, or STAN, initiative, alongside lean and productivity measures.
Operating income climbed to $15.6 million from $11.7 million in the prior-year period, and operating margin rose to 10.2% from 8.4%. Michaud said this was Allient’s highest operating-margin level in roughly a decade, though not an all-time company record.
Net income increased 85% to $10.4 million, or $0.61 per diluted share. Adjusted net income rose 42% to $13.5 million, or $0.80 per diluted share, while adjusted EBITDA increased 18% to $23.7 million, representing 15.4% of revenue. Interest expense fell by about $1 million year over year to $2.5 million because of a lower average debt balance.
Restructuring and business realignment expenses totaled $600,000 during the quarter, including costs associated with the Dolton transition. The company continues to expect full-year fiscal 2026 restructuring and realignment costs of approximately $2 million to $3 million.
Data center sales gain prominence
Chairman, President and CEO Dick Warzala said data center and other infrastructure applications have become an increasingly meaningful part of Allient’s industrial business. Sales tied to those applications totaled $16.3 million in the second quarter, or 10.6% of total revenue, up 60% from the prior-year period.
On a trailing 12-month basis, data center and infrastructure sales reached $57.1 million, or 9.9% of total revenue, representing 69% year-over-year growth. Warzala said the opportunity centers on power quality, including active and passive harmonic filters, line reactors and related offerings intended to help data center operators reduce harmonics, stabilize electrical waveforms and meet IEEE 519 power-quality standards.
During the question-and-answer session, Warzala said Allient is expanding capacity for data center-related demand, with additional capacity expected to come online late in the current quarter or early in the following quarter. He added that the company’s offerings can also serve other infrastructure applications, including wastewater treatment facilities, and could support upgrades or expansions of existing data centers.
Record orders improve second-half visibility
Orders increased 49% year over year and 27% sequentially to a record $201.3 million, resulting in a book-to-bill ratio of 1.31. Backlog ended the quarter at $298 million, with most of it expected to convert into revenue over three to nine months, consistent with the company’s historical conversion pattern.
Warzala said order strength was led by industrial, aerospace and defense markets. He also said demand and order intake remained strong one month into the third quarter, while shipments continued at a strong pace.
The company has changed how it records certain large blanket orders, Warzala said. Such orders are not included in backlog until they fall within one year, are within scheduled lead times and move into production. He said Allient has visibility into some orders not yet reflected in backlog, while extended supply-chain lead times have also encouraged customers to place orders earlier.
Cash flow, debt reduction and growth investments
Cash provided by operating activities totaled $14 million in the second quarter and $20 million for the first six months of fiscal 2026. Allient attributed changes in cash flow to accounts receivable timing, inventory investments supporting growth and strategic purchases of critical materials.
Capital expenditures were $7.1 million during the first half, with investment directed toward capacity and productivity in data center power quality, automation and other growth initiatives. The company expects full-year capital expenditures of approximately $12 million to $15 million.
Total debt ended the quarter at $173.3 million, down $7.1 million since the end of fiscal 2025. Net debt was $131.2 million, and leverage improved to 1.63 times. Allient ended the period with approximately $142 million of cash and $162 million of unused revolver capacity.
Looking ahead, Warzala said Allient expects continued progress from STAN and broader optimization efforts. The company is targeting $5 million to $7 million of annualized savings in 2026 and sees potential for a similar level of cost reductions over the following two to three years.
About Allient (NASDAQ:ALNT)
Allient Inc, together with its subsidiaries, designs, manufactures, and sells precision and specialty controlled motion components and systems for various industries in the United States, Canada, South America, Europe, and Asia-Pacific. It offers brush and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, optical encoders, active and passive filters, input/output modules, industrial communications gateways, light-weighting technologies, and other controlled motion-related products, as well as nano precision positioning systems, servo control systems, and digital servo amplifiers and drives.
