0001558370-23-012923 | 10-Q | XBRL Viewer | Allied Motion Technologies INC

INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2023


		June 30, 2023						December 31, 2022
		Gross		Accumulated		Net Book		Gross		Accumulated		Net Book
	Life	Amount		Amortization		Value		Amount		Amortization		Value
Customer lists	5 - 18 years	$	112,676	$	(38,336)	$	74,340	$	112,378	$	(34,377)	$	78,001
Trade name	10 - 19 years		15,295		(7,435)		7,860		15,320		(6,900)		8,420
Design and technologies	10 - 15 years		41,327		(10,367)		30,960		41,212		(8,558)		32,654
Total		$	169,298	$	(56,138)	$	113,160	$	168,910	$	(49,835)	$	119,075

Schedule of estimated amortization expense for intangible assets


	Estimated
	Amortization Expense

Remainder of 2023	$	6,073
2024		11,908
2025		11,892
2026		11,795
2027		11,352
Thereafter		60,140
Total estimated amortization expense	$	113,160

INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2023

INTANGIBLE ASSETS

INTANGIBLE ASSETS

7. INTANGIBLE ASSETS

Intangible assets on the Company’s condensed consolidated balance sheets consist of the following:


		June 30, 2023						December 31, 2022
		Gross		Accumulated		Net Book		Gross		Accumulated		Net Book
	Life	Amount		Amortization		Value		Amount		Amortization		Value
Customer lists	5 - 18 years	$	112,676	$	(38,336)	$	74,340	$	112,378	$	(34,377)	$	78,001
Trade name	10 - 19 years		15,295		(7,435)		7,860		15,320		(6,900)		8,420
Design and technologies	10 - 15 years		41,327		(10,367)		30,960		41,212		(8,558)		32,654
Total		$	169,298	$	(56,138)	$	113,160	$	168,910	$	(49,835)	$	119,075

Amortization expense for intangible assets was $3,142 and $2,645 for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, amortization expense was $6,151 and $5,079, respectively.

Estimated future intangible asset amortization expense as of June 30, 2023 is as follows:


	Estimated
	Amortization Expense

Remainder of 2023	$	6,073
2024		11,908
2025		11,892
2026		11,795
2027		11,352
Thereafter		60,140
Total estimated amortization expense	$	113,160

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows From Operating Activities:
Net income	$ 13,084	$ 7,084
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization	12,535	12,531
Deferred income taxes	(14)	1,222
Stock-based compensation expense	2,811	2,490
Debt issue cost amortization recorded in interest expense	150	71
Other	685	793
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables	(11,151)	(15,407)
Inventories	832	(22,003)
Prepaid expenses and other assets	287	1,601
Accounts payable	2,822	9,850
Accrued liabilities	(4,768)	1,478
Net cash provided by (used in) operating activities	17,273	(290)
Cash Flows From Investing Activities:
Consideration paid for acquisitions, net of cash acquired	(6,250)	(44,569)
Purchase of property and equipment	(6,118)	(6,354)
Net cash used in investing activities	(12,368)	(50,923)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt	4,000	64,203
Principal payments of long-term debt and finance lease obligations	(12,567)	(3,406)
Dividends paid to stockholders	(872)	(776)
Tax withholdings related to net share settlements of restricted stock	(1,653)	(1,240)
Net cash (used in) provided by financing activities	(11,092)	58,781
Effect of foreign exchange rate changes on cash	(307)	(1,185)
Net (decrease) increase in cash and cash equivalents	(6,494)	6,383
Cash and cash equivalents at beginning of period	30,614	22,463
Cash and cash equivalents at end of period	$ 24,120	$ 28,846
Supplemental disclosure of cash flow information:
Stock issued for acquisition	6,250	11,103
Property, plant and equipment purchases in accounts payable or accrued expenses	$ 660	$ 1,444

LEASES - Related party (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
LEASES - Related party (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022
Lessee, Lease, Description [Line Items]
Lease payments		$ 2,796	$ 2,290
Future minimum lease payments	$ 22,132	22,132
Lease obligation	24,683	24,683
Executive Officer
Lessee, Lease, Description [Line Items]
Lease payments	220	441
Future minimum lease payments	15,668	15,668
Lease obligation	$ 517	$ 517

REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
REVENUE RECOGNITION
Contract liabilities in accrued liabilities	$ 3,620		$ 4,807
Contract liabilities in other long-term liabilities	14		19
Contract liabilities	3,634		$ 4,826
Revenue recognized	$ 3,414	$ 1,865

SEGMENT INFORMATION (Details) $ in Thousands	3 Months Ended		6 Months Ended
SEGMENT INFORMATION (Details) $ in Thousands	Jun. 30, 2023 USD ($) customer	Jun. 30, 2022	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022	Dec. 31, 2022 USD ($)
Segment information
Number of operating segments \| segment			1
Identifiable assets \| $	$ 585,494		$ 585,494		$ 588,347
Total revenues \| Customer Concentration Risk \| Customer A and B
Segment information
Percentage of concentration risk			10.00%
Total revenues \| Customer Concentration Risk \| Customer A
Segment information
Number of customers \| customer	1
Percentage of concentration risk	12.00%
Total revenues \| Customer Concentration Risk \| Customer B
Segment information
Number of customers \| customer	1
Percentage of concentration risk	10.00%	11.00%		12.00%
Trade receivables \| Customer Concentration Risk \| Customer A
Segment information
Percentage of concentration risk			16.00%
Europe, China, Mexico, and Asia-Pacific
Segment information
Identifiable assets \| $	$ 36,391		$ 36,391		$ 34,879
United States \| Total revenues \| Geographic Concentration Risk
Segment information
Percentage of concentration risk	58.00%	58.00%	57.00%	57.00%

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2023

STOCK-BASED COMPENSATION

Summary of restricted stock activity

The following is a summary of restricted stock activity for the six months ended June 30, 2023:


		Number of
		shares
Outstanding at beginning of period		403,974
Awarded		123,601
Vested		(114,261)
Forfeited		(1,498)
Outstanding at end of period		411,816

LEASES (Tables)

6 Months Ended

Jun. 30, 2023

LEASES

Schedule of supplemental cash flow information related to the operating leases

Supplemental cash flow information related to the Company’s operating and finance leases for the six months ended June 30, 2023 and 2022 was as follows:


	June 30,
	2023		2022
Cash paid for operating leases	$	2,796	$	2,290
Cash paid for interest on finance lease obligations	$	214	$	368
Assets acquired under operating leases	$	1,888	$	2,770
Assets acquired under finance leases	$	—	$	9,471
ROU assets obtained in acquisitions	$	—	$	5,053

Schedule of maturity of the operating lease liabilities

The following table presents the maturity of the Company’s operating and finance lease liabilities as of June 30, 2023:


	Operating Leases		Finance Leases
Remainder of 2023		2,705		399
2024		5,028		815
2025		4,067		831
2026		3,487		848
2027		2,908		867
Thereafter		6,488		8,751
Total undiscounted cash flows	$	24,683	$	12,511
Less: present value discount		(2,551)		(3,302)
Total lease liabilities	$	22,132	$	9,209

Schedule of maturity of the financing lease liabilities


	Operating Leases		Finance Leases
Remainder of 2023		2,705		399
2024		5,028		815
2025		4,067		831
2026		3,487		848
2027		2,908		867
Thereafter		6,488		8,751
Total undiscounted cash flows	$	24,683	$	12,511
Less: present value discount		(2,551)		(3,302)
Total lease liabilities	$	22,132	$	9,209

ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2023

ACCRUED LIABILITIES

ACCRUED LIABILITIES

9. ACCRUED LIABILITIES

Accrued liabilities consist of the following:


	June 30,		December 31,
	2023		2022
Compensation and fringe benefits	$	13,292	$	15,818
Accrued business acquisition consideration		12,444		12,500
Warranty reserve		2,225		2,160
Income taxes payable		1,710		3,934
Operating lease liabilities - current		4,575		4,224
Finance lease obligations - current		394		377
Contract liabilities		3,620		4,807
Other accrued expenses		7,129		4,301
	$	45,389	$	48,121

DIVIDENDS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
DIVIDENDS PER SHARE
Dividends declared (in dollars per share)	$ 0.03	$ 0.025	$ 0.025	$ 0.025
Total dividends declared					$ 879	$ 776

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

6 Months Ended

Jun. 30, 2023

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

15. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Accumulated Other Comprehensive (Loss) Income (“AOCI”) for the three months ended June 30, 2023 and 2022 is comprised of the following:


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At March 31, 2023	$	(594)	$	5,745	$	(1,322)	$	(15,571)	$	(11,742)
Unrealized (loss) gain on cash flow hedges		—		1,877		(450)		—		1,427
Amounts reclassified from AOCI		—		(947)		227		—		(720)
Foreign currency translation loss		—		—		—		(426)		(426)
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At March 31, 2022	$	(863)	$	3,644	$	(863)	$	(8,642)	$	(6,724)
Unrealized gain (loss) on cash flow hedges		—		1,182		(285)		—		897
Amounts reclassified from AOCI		—		102		(25)		—		77
Foreign currency translation loss		—		—		—		(8,699)		(8,699)
At June 30, 2022	$	(863)	$	4,928	$	(1,173)	$	(17,341)	$	(14,449)

AOCI for the six months ended June 30, 2023 and 2022 is comprised of the following:


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2022	$	(594)	$	7,310	$	(1,754)	$	(16,925)	$	(11,963)
Unrealized gain (loss) on cash flow hedges		—		1,131		(248)		—		883
Amounts reclassified from AOCI		—		(1,766)		457		—		(1,309)
Foreign currency translation loss		—		—		—		928		928
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2021	$	(863)	$	221	$	(41)	$	(7,409)	$	(8,092)
Unrealized gain (loss) on cash flow hedges		—		4,419		(1,062)		—		3,357
Amounts reclassified from AOCI		—		288		(70)		—		218
Foreign currency translation gain		—		—		—		(9,932)		(9,932)
At June 30, 2022	$	(863)	$	4,928	$	(1,173)	$	(17,341)	$	(14,449)

The realized gains and losses relating to the Company’s interest rate swap hedges were reclassified from AOCI and included in interest expense in the condensed consolidated statements of income and comprehensive income.

INVENTORIES

6 Months Ended

Jun. 30, 2023

INVENTORIES

INVENTORIES

4. INVENTORIES

Inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value, as follows:


	June 30,		December 31,
	2023		2022
Parts and raw materials	$	85,742	$	89,100
Work-in-process		13,387		11,686
Finished goods		16,969		16,322
	$	116,098	$	117,108

DEBT OBLIGATIONS (Details) ¥ in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
DEBT OBLIGATIONS (Details) ¥ in Thousands, $ in Thousands	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2023 CNY (¥)	Dec. 31, 2022 USD ($)
DEBT OBLIGATIONS
Unamortized debt issuance costs	$ (475)		$ (475)		$ (625)
Finance lease obligations - noncurrent	8,815		8,815		9,019
Long-term debt	227,106		227,106		235,454
Revolving Credit Facility
DEBT OBLIGATIONS
Revolving Credit Facility, long-term	$ 218,766		$ 218,766		$ 227,060
Effective rate (as a percent)	5.06%		5.06%	5.06%
Amended Revolving Facility
DEBT OBLIGATIONS
Maximum borrowing capacity	$ 280,000		$ 280,000
Minimum interest coverage ratio			3.00%
Leverage ratio			4.00%
Increase in leverage ratio			0.50%
Unused amount of credit facility	61,234		$ 61,234
Amended Revolving Facility \| Minimum
DEBT OBLIGATIONS
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent)			0.10%
Amended Revolving Facility \| Maximum
DEBT OBLIGATIONS
Commitment fees on unused portion of the Amended Revolving Facility ( as a percent)			0.275%
Amended Revolving Facility \| For quarter ending on or after December 31, 2023
DEBT OBLIGATIONS
Leverage ratio			3.50%
Amended Revolving Facility \| Base Rate
DEBT OBLIGATIONS
Applicable margin (as a percent)			0.00%
Amended Revolving Facility \| Adjusted SOFR
DEBT OBLIGATIONS
Applicable margin (as a percent)			1.75%
Amended Revolving Facility \| Adjusted SOFR \| Minimum
DEBT OBLIGATIONS
Applicable margin (as a percent)			1.00%
Amended Revolving Facility \| Adjusted SOFR \| Maximum
DEBT OBLIGATIONS
Applicable margin (as a percent)			2.25%
China Credit Facility
DEBT OBLIGATIONS
Maximum borrowing capacity	1,444		$ 1,444	¥ 10,000
Average outstanding borrowings	$ 0	$ 0

INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Intangible assets subject to amortization
Gross Amount	$ 169,298		$ 169,298		$ 168,910
Accumulated amortization	(56,138)		(56,138)		(49,835)
Total estimated amortization expense	113,160		113,160		119,075
Amortization expense for intangible assets	3,142	$ 2,645	6,151	$ 5,079
Estimated amortization expense
Remainder of 2023	6,073		6,073
2024	11,908		11,908
2025	11,892		11,892
2026	11,795		11,795
2027	11,352		11,352
Thereafter	60,140		60,140
Total estimated amortization expense	113,160		113,160		119,075
Customer lists
Intangible assets subject to amortization
Gross Amount	112,676		112,676		112,378
Accumulated amortization	(38,336)		(38,336)		(34,377)
Total estimated amortization expense	74,340		74,340		78,001
Estimated amortization expense
Total estimated amortization expense	$ 74,340		$ 74,340		78,001
Customer lists \| Minimum
Intangible assets subject to amortization
Estimated Life	5 years		5 years
Customer lists \| Maximum
Intangible assets subject to amortization
Estimated Life	18 years		18 years
Trade name
Intangible assets subject to amortization
Gross Amount	$ 15,295		$ 15,295		15,320
Accumulated amortization	(7,435)		(7,435)		(6,900)
Total estimated amortization expense	7,860		7,860		8,420
Estimated amortization expense
Total estimated amortization expense	$ 7,860		$ 7,860		8,420
Trade name \| Minimum
Intangible assets subject to amortization
Estimated Life	10 years		10 years
Trade name \| Maximum
Intangible assets subject to amortization
Estimated Life	19 years		19 years
Design and technologies
Intangible assets subject to amortization
Gross Amount	$ 41,327		$ 41,327		41,212
Accumulated amortization	(10,367)		(10,367)		(8,558)
Total estimated amortization expense	30,960		30,960		32,654
Estimated amortization expense
Total estimated amortization expense	$ 30,960		$ 30,960		$ 32,654
Design and technologies \| Minimum
Intangible assets subject to amortization
Estimated Life	10 years		10 years
Design and technologies \| Maximum
Intangible assets subject to amortization
Estimated Life	15 years		15 years

REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2023

REVENUE RECOGNITION

REVENUE RECOGNITION

3. REVENUE RECOGNITION

Performance Obligations

The Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product.

The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. For some customers, control, and a sale, is transferred at a point in time when the product is delivered to a customer. For a limited number of contracts, for which revenue derived is not material in the periods presented, the Company recognizes revenue over time in proportion to costs incurred.

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

Nature of Goods and Services

The Company sells component and integrated controlled motion solutions to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brushed and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, and other controlled motion-related products. The Company’s target markets include Industrial, Vehicle, Medical, and Aerospace & Defense.

Determining the Transaction Price

The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of June 30, 2023 and December 31, 2022.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted below in Note 18, Segment Information, the Company’s business consists of one reportable segment. Revenue by geographic region is based on point of shipment origin.

A disaggregation of revenue by target market and geography is provided below:


	Three months ended				Six months ended
	June 30,				June 30,
Target Market	2023		2022		2023		2022
Industrial	$	65,588	$	47,135	$	128,845	$	92,911
Vehicle		34,739		32,555		65,570		65,137
Medical		20,887		20,194		44,562		41,513
Aerospace & Defense		18,979		17,149		40,266		26,593
Distribution and Other		6,576		5,689		13,075		11,353
Total	$	146,769	$	122,722	$	292,318	$	237,507


	Three months ended				Six months ended
	June 30,				June 30,
Geography	2023		2022		2023		2022
North America (primarily U.S.)	$	100,965	$	84,052	$	198,332	$	156,430
Europe		38,326		32,122		78,223		65,871
Asia-Pacific		7,478		6,548		15,763		15,206
Total	$	146,769	$	122,722	$	292,318	$	237,507

Contract Balances

When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists.

The opening and closing balances of the Company’s contract liabilities are as follows:


	June 30,		December 31,
	2023		2022
Contract liabilities in accrued liabilities	$	3,620	$	4,807
Contract liabilities in other long-term liabilities		14		19
	$	3,634	$	4,826

The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. In the six months ended June 30, 2023 and 2022, the Company recognized revenue of $3,414 and $1,865, respectively, that was included in the opening contract liabilities balance.

Significant Payment Terms

The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration.

Returns, Refunds, and Warranties

In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

FAIR VALUE (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets (liabilities)
Contingent consideration	$ (4,100)
Recurring basis \| Level 1
Assets (liabilities)
Pension plan assets	5,730	$ 5,324
Deferred compensation plan assets	4,141	3,870
Recurring basis \| Level 2
Assets (liabilities)
Foreign currency hedge contract assets	30	48
Foreign currency hedge contract liabilities	(27)
Interest rate swaps, net	6,675	7,236
Recurring basis \| Level 3
Assets (liabilities)
Contingent consideration	$ (4,100)	$ (4,100)

PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2023

PROPERTY, PLANT AND EQUIPMENT

Schedule of classification of property, plant and equipment


	June 30,		December 31,
	2023		2022
Land	$	969	$	965
Building and improvements		25,539		25,093
Machinery, equipment, tools and dies		92,580		89,144
Construction work in progress		15,290		14,197
Furniture, fixtures and other		22,339		22,461
		156,717		151,860
Less accumulated depreciation		(88,199)		(83,220)
Property, plant, and equipment, net	$	68,518	$	68,640

BASIS OF PREPARATION AND PRESENTATION

6 Months Ended

Jun. 30, 2023

BASIS OF PREPARATION AND PRESENTATION

BASIS OF PREPARATION AND PRESENTATION

1. BASIS OF PREPARATION AND PRESENTATION

Allied Motion Technologies Inc. (“Allied Motion” or the “Company”) is engaged in the business of designing, manufacturing, and selling precision and specialty-controlled motion components and systems, which include integrated system solutions as well as individual controlled motion products, to a broad spectrum of customers throughout the world primarily for the vehicle, medical, aerospace and defense, and industrial markets.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using end of period exchange rates. Changes in reported amounts of assets and liabilities of foreign subsidiaries that occur as a result of changes in exchange rates between the foreign subsidiaries’ functional currencies and the U.S. dollar are included in foreign currency translation adjustment. Foreign currency translation adjustment is included in accumulated other comprehensive loss, a component of stockholders’ equity in the accompanying condensed consolidated statements of stockholders’ equity. Revenue and expense transactions use an average rate prevailing during the month of the related transaction. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency of each of the foreign subsidiaries are included in the results of operations as incurred in other (income) expense, net.

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and include all adjustments which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements which are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures herein are adequate to make the information presented not misleading. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year.

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the Consolidated Financial Statements and related Notes to such statements included in the Annual Report on Form 10-K for the year ended December 31, 2022 that was previously filed by the Company.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Dividends to stockholders (in dollars per share)	$ 0.03	$ 0.025	$ 0.025	$ 0.025

DERIVATIVE FINANCIAL INSTRUMENTS - Effects of offsetting (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Derivative assets:
Gross amounts of recognized assets	$ 6,705	$ 7,284
Net amounts of assets presented in the consolidated balance sheets	6,705	7,284
Gross amounts not offset in the consolidated balance sheets: Net amount	$ 6,705	$ 7,284

- Definition

Fair value, after the effects of master netting arrangements, of a financial asset or other contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset. Includes assets not subject to a master netting arrangement and not elected to be offset.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Name Accounting Standards Codification
-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480524/946-210-50-12

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/exampleRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 24: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482907/825-10-50-10

+ Details

DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2023

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, and foreign exchange risk primarily through the use of derivative financial instruments.

The Company enters into foreign currency contracts with 30-day maturities to hedge its short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, New Zealand Dollar, Chinese Renminbi, Swedish Krona, Canadian Dollar) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive (loss) income. To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $17,872 and $18,891 at June 30, 2023 and December 31, 2022, respectively. The foreign currency contracts are recorded in the condensed consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense, net in the condensed consolidated statements of income and comprehensive income. During the three and six months ended June 30, 2023, the Company had losses of $90 and $96, respectively, and during the three and six months ended June 30, 2022, the Company had losses of $750 and $696, respectively, on foreign currency contracts which is included in other expense, net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other expense, net.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its variable-rate debt. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In February 2017, the Company entered into three interest rate swaps with a combined notional amount of $40,000 that matured in February 2022. In March 2020, the Company entered into two additional interest rate swaps with a combined notional amount of $20,000 that increased to $60,000 in March 2022 and matures in December 2024. In March 2022 the Company entered into an additional interest rate swap with a notional amount of $40,000 that matures in December 2026. In March 2023, the Company executed amendments to the existing swaps to amend the index on the interest rate derivatives from LIBOR to SOFR, in line with the existing Amended Revolving Facility. These amendments had no material financial impact to the Company’s operations or financial position.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

The Company estimates that $3,930 will be reclassified as a decrease to interest expense over the next twelve months related to its interest rate derivatives. The Company does not use derivatives for trading or speculative purposes.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:


		Asset Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	June 30,		December 31,
hedging instruments	Location	2023		2022
Foreign currency contracts	Prepaid expenses and other assets	$	30	$	48
Interest rate swaps	Other long-term assets		6,675		7,236
		$	6,705	$	7,284

		Liability Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	June 30,		December 31,
hedging instruments	Location	2023		2022
Foreign currency contracts	Accrued liabilities	$	27	$	—

The tables below present the effect of cash flow hedge accounting on other comprehensive income (“OCI”) for the three and six months ended June 30, 2023 and 2022:


	Amount of pre-tax (loss) gain recognized				Amount of pre-tax (loss) gain recognized
	in OCI on derivatives				in OCI on derivatives
Derivatives in cash flow hedging relationships	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Interest rate swaps	$	1,877	$	1,182	$	1,131	$	4,419

Amount of pre-tax gain (loss) reclassified

from accumulated OCI into income

Location of gain (loss) reclassified

Three months ended June 30,

Six months ended June 30,

from accumulated OCI into income

2023

2022

2023

2022

Interest expense

947

(102)

1,766

(288)

The table below presents the line items that reflect the effect of the Company’s derivative financial instruments on the condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2023 and 2022:

Total amounts of income and expense

line items presented that reflect the

effects of cash flow hedges recorded

Three months ended June 30,

Six months ended June 30,

Derivatives designated as hedging instruments

Income Statement Location

2023

2022

2023

2022

Interest rate swaps

Interest Expense

3,162

1,525

6,145

2,563

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of June 30, 2023 and December 31, 2022. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented in the condensed consolidated balance sheets:

Derivative assets:

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

June 30,

of recognized

consolidated

Financial

Cash collateral

2023

assets

balance sheets

instruments

received

Net amount

Derivatives

6,705

—

6,705

—

6,705

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

December 31,

of recognized

consolidated

Financial

Cash collateral

2022

assets

balance sheets

instruments

received

Net amount

Derivatives

7,284

—

7,284

—

7,284

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

LEASES (Details) - USD ($) $ in Thousands	6 Months Ended
LEASES (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
LEASES
Options to terminate the leases	true
Operating lease option to terminate period	30 days
Supplemental cash flow information related to the operating leases
Cash paid for operating leases	$ 2,796	$ 2,290
Cash paid for interest on finance lease obligations	214	368
Assets acquired under operating leases	1,888	2,770
Assets acquired under finance leases		9,471
ROU assets obtained in acquisitions		$ 5,053
Lease assets and liabilities
Finance lease assets	$ 8,524
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property, Plant and Equipment, Net
Finance lease obligations, current	$ 394		$ 377
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued Liabilities, Current		Accrued Liabilities, Current
Finance lease obligations - noncurrent	$ 8,815		$ 9,019
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-term Debt, Excluding Current Maturities
Right of use assets from modification of lease	$ (700)
Lease liability from modification of lease	(700)
Maturity of the operating lease liabilities
Remainder of 2023	2,705
2024	5,028
2025	4,067
2026	3,487
2027	2,908
Thereafter	6,488
Total undiscounted cash flows	24,683
Less: present value discount	(2,551)
Total lease liabilities	22,132
Maturity of the financing lease liabilities
Remainder of 2023	399
2024	815
2025	831
2026	848
2027	867
Thereafter	8,751
Total undiscounted cash flows	12,511
Less: present value discount	(3,302)
Total lease liabilities	$ 9,209

EARNINGS PER SHARE (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
EARNINGS PER SHARE (Details) - shares shares in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Basic and diluted weighted-average shares outstanding
Basic weighted average shares outstanding	15,969	15,355	15,921	15,226
Dilutive effect of potential common shares	250	577	257	526
Diluted weighted average shares outstanding	16,219	15,932	16,178	15,752

ACQUISITIONS (Details) $ in Thousands				3 Months Ended		6 Months Ended		12 Months Ended
ACQUISITIONS (Details) $ in Thousands	Jan. 03, 2024 USD ($) payment	May 30, 2022 USD ($)	Dec. 30, 2021 USD ($) payment	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jun. 17, 2022	May 24, 2022
ACQUISITIONS
Adjustments to purchase price						$ 0
Assets Acquired and Liabilities Assumed
Goodwill				$ 127,987		127,987		$ 126,366
Pro forma Condensed Combined Financial Information
Revenues					$ 127,492		$ 248,322
Income before income taxes					$ 8,225		$ 12,943
FPH Group
ACQUISITIONS
Business acquisition percentage of voting interests acquired		100.00%
Purchase price		$ 41,316
Decrease to inventories				1,080
Increase to purchase price				276
Increase to goodwill				$ 1,356
Assets Acquired and Liabilities Assumed
Cash and cash equivalents		1,755
Trade receivables		3,100
Inventories		3,496
Other assets, net		174
Property, plant, and equipment		624
Right of use assets		4,165
Intangible assets		22,611
Goodwill		15,840
Other current liabilities		(1,577)
Deferred revenue		(776)
Lease liabilities		4,165
Net deferred income tax liabilities		(3,931)
Net purchase price		$ 41,316
ThinGap and Airex
ACQUISITIONS
Purchase price						16,618
ThinGap
ACQUISITIONS
Business acquisition percentage of voting interests acquired										100.00%
Airex LLC
ACQUISITIONS
Business acquisition percentage of voting interests acquired									100.00%
Spectrum Controls
ACQUISITIONS
Number of remaining payments \| payment	1		2
Amount payable at each payment	$ 12,500		$ 12,500
Percentage of remaining consideration in cash	50.00%		50.00%
Percentage of remaining consideration in stock	50.00%		50.00%
Spectrum Controls \| Accrued liabilities.
ACQUISITIONS
Amount payable at each payment						$ 12,444		12,500
Spectrum Controls \| Other long-term liabilities
ACQUISITIONS
Amount payable at each payment								$ 12,277

DIVIDENDS PER SHARE

6 Months Ended

Jun. 30, 2023

DIVIDENDS PER SHARE

DIVIDENDS PER SHARE

16. DIVIDENDS PER SHARE

The Company declared a quarterly dividend of $0.03 per share in the second quarter of 2023 and $0.025 per share in first quarter of 2023 and the first and second quarters of 2022. Total dividends declared were $879 and $776 in the six months ended June 30, 2023 and 2022, respectively.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2023

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant, and equipment is classified as follows:


	June 30,		December 31,
	2023		2022
Land	$	969	$	965
Building and improvements		25,539		25,093
Machinery, equipment, tools and dies		92,580		89,144
Construction work in progress		15,290		14,197
Furniture, fixtures and other		22,339		22,461
		156,717		151,860
Less accumulated depreciation		(88,199)		(83,220)
Property, plant, and equipment, net	$	68,518	$	68,640

Depreciation expense was approximately $3,248 and $3,181 for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, depreciation expense was approximately $6,384 and $6,404, respectively.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
Revenues	$ 146,769	$ 122,722	$ 292,318	$ 237,507
Cost of goods sold	100,792	82,948	200,507	164,273
Gross profit	45,977	39,774	91,811	73,234
Operating costs and expenses:
Selling	6,301	5,808	12,333	10,839
General and administrative	14,162	12,595	28,982	24,091
Engineering and development	9,952	9,791	20,339	19,177
Business development	400	1,417	597	2,265
Amortization of intangible assets	3,142	2,645	6,151	5,079
Total operating costs and expenses	33,957	32,256	68,402	61,451
Operating income	12,020	7,518	23,409	11,783
Other expense, net:
Interest expense	3,162	1,525	6,145	2,563
Other (income) expense, net	(42)	(279)	145	(234)
Total other expense, net	3,120	1,246	6,290	2,329
Income before income taxes	8,900	6,272	17,119	9,454
Income tax provision	(2,131)	(1,691)	(4,035)	(2,370)
Net income	$ 6,769	$ 4,581	$ 13,084	$ 7,084
Basic earnings per share:
Earnings per share	$ 0.42	$ 0.30	$ 0.82	$ 0.47
Basic weighted average common shares	15,969	15,355	15,921	15,226
Diluted earnings per share:
Earnings per share	$ 0.42	$ 0.29	$ 0.81	$ 0.45
Diluted weighted average common shares	16,219	15,932	16,178	15,752
Net income	$ 6,769	$ 4,581	$ 13,084	$ 7,084
Other comprehensive income (loss):
Foreign currency translation adjustment	(426)	(8,699)	928	(9,932)
Gain (loss) on derivatives, net of tax	707	974	(426)	3,576
Comprehensive income (loss)	$ 7,050	$ (3,144)	$ 13,586	$ 728

REVENUE RECOGNITION - Disaggregation of Revenue (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Number of reportable segment \| segment			1
Revenues	$ 146,769	$ 122,722	$ 292,318	$ 237,507
Industrial
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	65,588	47,135	128,845	92,911
Vehicle
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	34,739	32,555	65,570	65,137
Medical
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	20,887	20,194	44,562	41,513
Aerospace & Defense
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	18,979	17,149	40,266	26,593
Distribution and Other
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	6,576	5,689	13,075	11,353
United States
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	100,965	84,052	198,332	156,430
Europe
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	38,326	32,122	78,223	65,871
Asia-Pacific
Reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions
Revenues	$ 7,478	$ 6,548	$ 15,763	$ 15,206

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2023

EARNINGS PER SHARE

EARNINGS PER SHARE

17. EARNINGS PER SHARE

Basic and diluted weighted-average shares outstanding are as follows:


	Three months ended		Six months ended
	June 30,		June 30,
	2023	2022	2023	2022
Basic weighted average shares outstanding	15,969	15,355	15,921	15,226
Dilutive effect of potential common shares	250	577	257	526
Diluted weighted average shares outstanding	16,219	15,932	16,178	15,752

For the three and six months ended June 30, 2023 and 2022, the anti-dilutive common shares excluded from the calculation of diluted earnings per share were immaterial.

STOCK-BASED COMPENSATION - Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Additional disclosures
Stock based compensation expense, net of forfeitures			$ 2,811	$ 2,490
Restricted Stock
STOCK-BASED COMPENSATION
Restricted stock grants			123,601
Weighted average grant date fair value (in dollars per share)			$ 41.53
Service period over which value of the shares is amortized to compensation expense			3 years
Number of Non-vested Restricted Shares
Outstanding at beginning of period (in shares)			403,974
Awarded (in shares)			123,601
Vested (in shares)			(114,261)
Forfeited (in shares)			(1,498)
Outstanding at end of period (in shares)	411,816		411,816
Additional disclosures
Stock based compensation expense, net of forfeitures	$ 1,544	$ 1,141	$ 2,811	$ 2,490
Restricted Stock \| Performance based vesting
STOCK-BASED COMPENSATION
Restricted stock grants			74,495
Number of Non-vested Restricted Shares
Awarded (in shares)			74,495

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables)

6 Months Ended

Jun. 30, 2023

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Schedule of accumulated other comprehensive (loss) income ("AOCI")

Accumulated Other Comprehensive (Loss) Income (“AOCI”) for the three months ended June 30, 2023 and 2022 is comprised of the following:


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At March 31, 2023	$	(594)	$	5,745	$	(1,322)	$	(15,571)	$	(11,742)
Unrealized (loss) gain on cash flow hedges		—		1,877		(450)		—		1,427
Amounts reclassified from AOCI		—		(947)		227		—		(720)
Foreign currency translation loss		—		—		—		(426)		(426)
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At March 31, 2022	$	(863)	$	3,644	$	(863)	$	(8,642)	$	(6,724)
Unrealized gain (loss) on cash flow hedges		—		1,182		(285)		—		897
Amounts reclassified from AOCI		—		102		(25)		—		77
Foreign currency translation loss		—		—		—		(8,699)		(8,699)
At June 30, 2022	$	(863)	$	4,928	$	(1,173)	$	(17,341)	$	(14,449)

AOCI for the six months ended June 30, 2023 and 2022 is comprised of the following:


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2022	$	(594)	$	7,310	$	(1,754)	$	(16,925)	$	(11,963)
Unrealized gain (loss) on cash flow hedges		—		1,131		(248)		—		883
Amounts reclassified from AOCI		—		(1,766)		457		—		(1,309)
Foreign currency translation loss		—		—		—		928		928
At June 30, 2023	$	(594)	$	6,675	$	(1,545)	$	(15,997)	$	(11,461)


							Foreign Currency
	Defined Benefit				Tax Effect of		Translation
	Plan Liability		Cash Flow Hedges		Cash Flow Hedges		Adjustment		Total
At December 31, 2021	$	(863)	$	221	$	(41)	$	(7,409)	$	(8,092)
Unrealized gain (loss) on cash flow hedges		—		4,419		(1,062)		—		3,357
Amounts reclassified from AOCI		—		288		(70)		—		218
Foreign currency translation gain		—		—		—		(9,932)		(9,932)
At June 30, 2022	$	(863)	$	4,928	$	(1,173)	$	(17,341)	$	(14,449)

EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2023

EARNINGS PER SHARE

Schedule of basic and diluted weighted-average shares outstanding

Basic and diluted weighted-average shares outstanding are as follows:


	Three months ended		Six months ended
	June 30,		June 30,
	2023	2022	2023	2022
Basic weighted average shares outstanding	15,969	15,355	15,921	15,226
Dilutive effect of potential common shares	250	577	257	526
Diluted weighted average shares outstanding	16,219	15,932	16,178	15,752

GOODWILL (Tables)

6 Months Ended

Jun. 30, 2023

GOODWILL

Schedule of change in the carrying amount of goodwill


		June 30,
		2023
Beginning balance	$	126,366
Impact of measurement period adjustments of acquisitions (Note 2)		1,356
Effect of foreign currency translation		265
Ending balance	$	127,987

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

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+ Details

REVENUE RECOGNITION (Tables)

6 Months Ended

Jun. 30, 2023

REVENUE RECOGNITION

Schedule of reconciliation of disaggregated revenue by target market and geography


	Three months ended				Six months ended
	June 30,				June 30,
Target Market	2023		2022		2023		2022
Industrial	$	65,588	$	47,135	$	128,845	$	92,911
Vehicle		34,739		32,555		65,570		65,137
Medical		20,887		20,194		44,562		41,513
Aerospace & Defense		18,979		17,149		40,266		26,593
Distribution and Other		6,576		5,689		13,075		11,353
Total	$	146,769	$	122,722	$	292,318	$	237,507


	Three months ended				Six months ended
	June 30,				June 30,
Geography	2023		2022		2023		2022
North America (primarily U.S.)	$	100,965	$	84,052	$	198,332	$	156,430
Europe		38,326		32,122		78,223		65,871
Asia-Pacific		7,478		6,548		15,763		15,206
Total	$	146,769	$	122,722	$	292,318	$	237,507

Schedule of opening and closing balances of the Company's receivables, contract asset, and contract liability


	June 30,		December 31,
	2023		2022
Contract liabilities in accrued liabilities	$	3,620	$	4,807
Contract liabilities in other long-term liabilities		14		19
	$	3,634	$	4,826

DEBT OBLIGATIONS (Tables)

6 Months Ended

Jun. 30, 2023

DEBT OBLIGATIONS

Schedule of debt obligations


	June 30,		December 31,
	2023		2022
Long-term Debt
Revolving Credit Facility, long-term (1)	$	218,766	$	227,060
Unamortized debt issuance costs		(475)		(625)
Finance lease obligations - noncurrent		8,815		9,019
Long-term debt	$	227,106	$	235,454

(1)

The effective rate of the Amended Revolving Facility is 5.06% at June 30, 2023.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 24,120	$ 30,614
Trade receivables, net of provision for credit losses of $1,155 and $1,192 at June 30, 2023 and December 31, 2022, respectively	87,245	76,213
Inventories	116,098	117,108
Prepaid expenses and other assets	11,781	12,072
Total current assets	239,244	236,007
Property, plant, and equipment, net	68,518	68,640
Deferred income taxes	3,765	4,199
Intangible assets, net	113,160	119,075
Goodwill	127,987	126,366
Operating lease assets	21,852	22,807
Other long-term assets	10,968	11,253
Total Assets	585,494	588,347
Current liabilities:
Accounts payable	42,368	39,467
Accrued liabilities	45,389	48,121
Total current liabilities	87,757	87,588
Long-term debt	227,106	235,454
Deferred income taxes	6,024	6,262
Pension and post-retirement obligations	2,861	3,009
Operating lease liabilities	17,557	18,795
Other long-term liabilities	7,395	21,774
Total liabilities	348,700	372,882
Stockholders' Equity:
Common stock, no par value, authorized 50,000 shares; 16,268 and 15,978 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	92,483	83,852
Preferred stock, par value $1.00 per share, authorized 5,000 shares; no shares issued or outstanding
Retained earnings	155,772	143,576
Accumulated other comprehensive loss	(11,461)	(11,963)
Total stockholders' equity	236,794	215,465
Total Liabilities and Stockholders' Equity	$ 585,494	$ 588,347

GOODWILL

6 Months Ended

Jun. 30, 2023

GOODWILL

GOODWILL

6. GOODWILL

The change in the carrying amount of goodwill for the six months ended June 30, 2023 is as follows:


		June 30,
		2023
Beginning balance	$	126,366
Impact of measurement period adjustments of acquisitions (Note 2)		1,356
Effect of foreign currency translation		265
Ending balance	$	127,987

DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands	3 Months Ended		6 Months Ended
DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2020 USD ($) derivative	Feb. 28, 2017 USD ($) instrument
Derivative financial instruments
Term of contract			30 days
Other (income) expense
Derivative financial instruments
Gain (loss) on foreign currency contracts	$ (90)	$ (750)	$ (96)	$ (696)
Interest Rate Swaps
Derivative financial instruments
Notional amount						$ 40,000
Number of derivative instruments							2	3
Notional amount of interest rate swap derivatives						$ 60,000	$ 20,000	$ 40,000
Estimated amount to be reclassified as an increase to interest expense			3,930
Foreign currency contracts
Derivative financial instruments
Notional amount	17,872		17,872		$ 18,891
Derivatives in cash flow hedging relationships \| Interest Rate Swaps
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income
Amount of pre-tax (loss) gain recognized in OCI on derivatives	1,877	1,182	1,131	4,419
Amount of pre-tax gain (loss) reclassified from accumulated OCI into income	947	(102)	1,766	(288)
Derivatives designated as hedging instruments
Derivative financial instruments
Fair value of derivative assets	6,705		6,705		7,284
Derivatives designated as hedging instruments \| Interest Rate Swaps \| Interest expense
Effect of derivative financial instruments on the condensed consolidated statement of income and comprehensive income
Total amounts of income and expense line items presented that reflect the effects of cash flow hedges recorded	3,162	$ 1,525	6,145	$ 2,563
Derivatives designated as hedging instruments \| Interest Rate Swaps \| Other long-term assets
Derivative financial instruments
Fair value of derivative assets	6,675		6,675		7,236
Derivatives designated as hedging instruments \| Foreign currency contracts \| Prepaid expenses and other assets
Derivative financial instruments
Fair value of derivative assets	30		30		$ 48
Derivatives designated as hedging instruments \| Foreign currency contracts \| Accrued liabilities.
Derivative financial instruments
Fair value of derivative liability	$ 27		$ 27

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	$ 230,181	$ 193,671	$ 215,465	$ 187,762
Balance at the ending	236,794	201,279	236,794	201,279
Accumulated Other Comprehensive Income
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(11,742)	(6,724)	(11,963)	(8,092)
Unrealized (loss) gain on cash flow hedges	1,427	897	883	3,357
Amounts reclassified from AOCI	(720)	77	(1,309)	218
Foreign currency translation gain (loss)	(426)	(8,699)	928	(9,932)
Balance at the ending	(11,461)	(14,449)	(11,461)	(14,449)
Pension Adjustments
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(594)	(863)	(594)	(863)
Balance at the ending	(594)	(863)	(594)	(863)
Cash Flow Hedges
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	5,745	3,644	7,310	221
Unrealized (loss) gain on cash flow hedges	1,877	1,182	1,131	4,419
Amounts reclassified from AOCI	(947)	102	(1,766)	288
Balance at the ending	6,675	4,928	6,675	4,928
Tax effect of Cash Flow Hedges
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(1,322)	(863)	(1,754)	(41)
Unrealized (loss) gain on cash flow hedges, Tax effect	(450)	(285)	(248)	(1,062)
Amounts reclassified from AOCI, Tax effect	227	(25)	457	(70)
Balance at the ending	(1,545)	(1,173)	(1,545)	(1,173)
Foreign Currency Translation Adjustments
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at the beginning	(15,571)	(8,642)	(16,925)	(7,409)
Foreign currency translation gain (loss)	(426)	(8,699)	928	(9,932)
Balance at the ending	$ (15,997)	$ (17,341)	$ (15,997)	$ (17,341)

INCOME TAXES

6 Months Ended

Jun. 30, 2023

INCOME TAXES

INCOME TAXES

13. INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws, settlements with taxing authorities and foreign currency fluctuations.

The effective income tax rate was 23.9% and 27.0% for the three months ended June 30, 2023 and 2022, respectively. The effective tax rate for both the three months ended June 30, 2023 and June 30, 2022 includes discrete tax benefits of (1.6%), related primarily to share-based awards. For the six months ended June 30, 2023 and 2022, the effective income tax rate was 23.6% and 25.1%, respectively. The effective tax rate for the six months ended June 30, 2023 and June 30, 2022 includes discrete tax benefits of (2.2%) and (3.5%), respectively, related primarily to share-based awards and the reversal in prior years of uncertain tax positions.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

GOODWILL - Change in the carrying amount of goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Change in goodwill
Beginning balance	$ 126,366
Impact of measurement period adjustments of acquisitions (Note 2)	1,356
Effect of foreign currency translation	265
Ending balance	$ 127,987

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2023

INVENTORIES

Schedule of inventories include costs of materials, direct labor and manufacturing overhead, and are stated at the lower of cost (first-in, first-out basis) or net realizable value


	June 30,		December 31,
	2023		2022
Parts and raw materials	$	85,742	$	89,100
Work-in-process		13,387		11,686
Finished goods		16,969		16,322
	$	116,098	$	117,108

INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
INVENTORIES
Parts and raw materials	$ 85,742	$ 89,100
Work-in-process	13,387	11,686
Finished goods	16,969	16,322
Inventories	$ 116,098	$ 117,108

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

8. STOCK-BASED COMPENSATION

Stock Incentive Plans

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

Restricted Stock

For the six months ended June 30, 2023, 123,601 shares of unvested restricted stock were awarded at a weighted average market value of $41.53. Of the restricted shares granted, 74,495 shares have performance-based vesting conditions. The value of the shares expected to vest is amortized to compensation expense over the related service period, which is normally three years, or over the estimated performance period. Shares of unvested restricted stock are generally forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards.

The following is a summary of restricted stock activity for the six months ended June 30, 2023:


		Number of
		shares
Outstanding at beginning of period		403,974
Awarded		123,601
Vested		(114,261)
Forfeited		(1,498)
Outstanding at end of period		411,816

Stock-based compensation expense, net of forfeitures, of $1,544 and $1,141 was recorded for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, stock based compensation expense, net of forfeitures, of $2,811 and $2,490 was recorded, respectively.

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Property, plant and equipment
Property, plant and equipment, gross	$ 156,717		$ 156,717		$ 151,860
Less accumulated depreciation	(88,199)		(88,199)		(83,220)
Property, plant and equipment, net	68,518		68,518		68,640
Depreciation expense	3,248	$ 3,181	6,384	$ 6,404
Land
Property, plant and equipment
Property, plant and equipment, gross	969		969		965
Building and improvements
Property, plant and equipment
Property, plant and equipment, gross	25,539		25,539		25,093
Machinery, equipment, tools and dies
Property, plant and equipment
Property, plant and equipment, gross	92,580		92,580		89,144
Construction work in progress
Property, plant and equipment
Property, plant and equipment, gross	15,290		15,290		14,197
Furniture, fixtures and other
Property, plant and equipment
Property, plant and equipment, gross	$ 22,339		$ 22,339		$ 22,461

FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2023

FAIR VALUE

Schedule of financial assets that are accounted for at fair value on a recurring basis

The following tables presents the Company’s financial assets that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, respectively, by level within the fair value hierarchy:


	June 30, 2023
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,730	$	—	$	—
Deferred compensation plan assets		4,141		—		—
Foreign currency hedge contract assets		—		30		—
Foreign currency hedge contract liabilities		—		(27)		—
Interest rate swaps, net		—		6,675		—
Contingent consideration		—		—		(4,100)


	December 31, 2022
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,324	$	—	$	—
Deferred compensation plan assets		3,870		—		—
Foreign currency hedge contracts		—		48		—
Interest rate swaps, net		—		7,236		—
Contingent consideration		—		—		(4,100)

ACQUISITIONS

6 Months Ended

Jun. 30, 2023

ACQUISITIONS

ACQUISITIONS

2.	ACQUISITIONS

On May 30, 2022, the Company acquired 100% of the direct and indirect legal and beneficial ownership of the shares of FPH Group Inc., a corporation incorporated pursuant to the laws of the Province of Ontario and the membership interests of Transtar International, LLC, a Michigan limited liability company, collectively “FPH”. The final purchase price for FPH was $41,316, including a measurement period adjustment during the three months ended June 30, 2023, resulting in a decrease to inventories of $1,080 an increase to purchase price of $276, and an increase to goodwill of $1,356. The final allocation of the purchase price paid for FPH is based on fair values of the assets acquired and liabilities assumed of FPH and is as follows (in thousands):


Cash and cash equivalents	$	1,755
Trade receivables		3,100
Inventories		3,496
Other assets, net		174
Property, plant, and equipment		624
Right of use assets		4,165
Intangible assets		22,611
Goodwill		15,840
Other current liabilities		(1,577)
Deferred revenue		(776)
Lease liabilities		(4,165)
Net deferred income tax liabilities		(3,931)
Net purchase price	$	41,316

On May 24, 2022, the Company acquired 100% of the outstanding stock of ThinGap, Inc. (“ThinGap”), a privately-owned California headquartered developer and manufacturer of high performance, zero cogging slotless motors for use in aerospace, defense, and medical applications that require precise performance in a compact, yet high-torque-to-volume solutions.

On June 17, 2022, the Company acquired 100% of the membership interests of Airex, LLC (“Airex”), a privately-owned New Hampshire headquartered developer of high precision electromagnetic components and solutions for the aerospace and defense, life sciences, semiconductor, and commercial industrial applications. The purchase price, collectively, for ThinGap and Airex was $16,618.

There were no additional measurement period adjustments during the six months ended June 30, 2023 related to the ThinGap and Airex acquisitions. The purchase price allocations of each of these acquisitions are final.

The December 30, 2021 acquisition of Spectrum Controls, Inc. (“Spectrum Controls”) included two deferred acquisition payments of which $12,500 (comprised of 50% cash and 50% Company stock) was paid in January 2023. One remaining payment of $12,500 is to be paid no later than January 3, 2024, comprised 50% cash and 50% in Company stock. As of June 30, 2023, $12,444 is included in accrued liabilities on the condensed consolidated balance sheet. As of December 31, 2022, $12,500 is included in accrued liabilities and $12,277 is included in other long-term liabilities on the condensed consolidated balance sheet.

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


	Three months ended		Six months ended
	June 30,		June 30,
	2022		2022
Revenues	$	127,492	$	248,322
Income before income taxes	$	8,225	$	12,943

The pro forma information includes certain adjustments, including depreciation and amortization expense, interest expense, and certain other adjustments, together with related income tax effects. The pro forma amounts do not reflect adjustments for anticipated operating efficiencies that the Company expected to or has subsequently achieved as a result of these acquisitions. The pro forma financial information is for informational purposes only and does not purport to present what the Company’s results would have been had these transactions actually occurred on the date presented or to project the combined company’s results of operations or financial position for future periods.

LEASES

6 Months Ended

Jun. 30, 2023

LEASES

LEASES

14. LEASES

The Company has operating leases for office space, manufacturing facilities and equipment, computer equipment and automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for a long-term period, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for capital area maintenance, utilities, inflation and/or changes in other indexes.

Supplemental cash flow information related to the Company’s operating and finance leases for the six months ended June 30, 2023 and 2022 was as follows:


	June 30,
	2023		2022
Cash paid for operating leases	$	2,796	$	2,290
Cash paid for interest on finance lease obligations	$	214	$	368
Assets acquired under operating leases	$	1,888	$	2,770
Assets acquired under finance leases	$	—	$	9,471
ROU assets obtained in acquisitions	$	—	$	5,053

The Company’s finance lease obligations relate to a manufacturing facility. As of June 30, 2023, finance lease assets of $8,524 are included in property, plant and equipment, net, finance lease obligations of $394 are included in accrued liabilities, and $8,815 are included in long-term debt on the condensed consolidated balance sheet. During the three months ended June 30, 2023, the Company entered into a lease amendement for one manufacturing facility which modified the term of the lease, resulting in a reduction of both the ROU asset and lease liability of $700.

The following table presents the maturity of the Company’s operating and finance lease liabilities as of June 30, 2023:


	Operating Leases		Finance Leases
Remainder of 2023		2,705		399
2024		5,028		815
2025		4,067		831
2026		3,487		848
2027		2,908		867
Thereafter		6,488		8,751
Total undiscounted cash flows	$	24,683	$	12,511
Less: present value discount		(2,551)		(3,302)
Total lease liabilities	$	22,132	$	9,209

The Company has operating leases certain facilities from companies for which a member of management is a part owner. In connection with such leases, the Company made fixed minimum lease payments to the lessor of $220 and $441 during the three and six months ended June 30, 2023 and is obligated to make payments of $517 during the remainder of 2023. Future fixed minimum lease payments under these leases as of June 30, 2023 are $15,668.

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2023

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair value of the Company's derivative financial instruments as well as classification on the condensed consolidated balance sheets


		Asset Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	June 30,		December 31,
hedging instruments	Location	2023		2022
Foreign currency contracts	Prepaid expenses and other assets	$	30	$	48
Interest rate swaps	Other long-term assets		6,675		7,236
		$	6,705	$	7,284

		Liability Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	June 30,		December 31,
hedging instruments	Location	2023		2022
Foreign currency contracts	Accrued liabilities	$	27	$	—

Schedule of effect of cash flow hedge accounting on other comprehensive income (loss) (OCI)


		Asset Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	June 30,		December 31,
hedging instruments	Location	2023		2022
Foreign currency contracts	Prepaid expenses and other assets	$	30	$	48
Interest rate swaps	Other long-term assets		6,675		7,236
		$	6,705	$	7,284

		Liability Derivatives
		Fair value as of:
Derivatives designated as	Balance Sheet	June 30,		December 31,
hedging instruments	Location	2023		2022
Foreign currency contracts	Accrued liabilities	$	27	$	—

Schedule of effect of the Company's derivative financial instruments on the condensed consolidated statements of income and comprehensive (loss) income

Total amounts of income and expense

line items presented that reflect the

effects of cash flow hedges recorded

Three months ended June 30,

Six months ended June 30,

Derivatives designated as hedging instruments

Income Statement Location

2023

2022

2023

2022

Interest rate swaps

Interest Expense

3,162

1,525

6,145

2,563

Schedule of fair value provides the location that derivative assets and liabilities

Derivative assets:

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

June 30,

of recognized

consolidated

Financial

Cash collateral

2023

assets

balance sheets

instruments

received

Net amount

Derivatives

6,705

—

6,705

—

6,705

Net amounts

Gross amounts

of assets

Gross amounts not offset in the consolidated

As of

Gross amounts

offset in the

presented in the

balance sheets

December 31,

of recognized

consolidated

Financial

Cash collateral

2022

assets

balance sheets

instruments

received

Net amount

Derivatives

7,284

—

7,284

—

7,284

FAIR VALUE

6 Months Ended

Jun. 30, 2023

FAIR VALUE

FAIR VALUE

12. FAIR VALUE

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

The guidance establishes a framework for measuring fair value which utilizes observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Preference is given to observable inputs.

These two types of inputs create the following three - level fair value hierarchy:

Level 1:

Quoted prices for identical assets or liabilities in active markets.

Level 2:

Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model - derived valuations whose inputs or significant value drivers are observable.

Level 3:

Significant inputs to the valuation model that are unobservable.

The Company’s financial assets and liabilities include cash and cash equivalents, accounts receivable, debt obligations, accounts payable, and accrued liabilities. The carrying amounts reported in the condensed consolidated balance sheets for these assets and liabilities approximate their fair value because of the immediate or short-term maturities of these financial instruments.


	June 30, 2023
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,730	$	—	$	—
Deferred compensation plan assets		4,141		—		—
Foreign currency hedge contract assets		—		30		—
Foreign currency hedge contract liabilities		—		(27)		—
Interest rate swaps, net		—		6,675		—
Contingent consideration		—		—		(4,100)


	December 31, 2022
	Level 1		Level 2		Level 3
Assets (liabilities)
Pension plan assets	$	5,324	$	—	$	—
Deferred compensation plan assets		3,870		—		—
Foreign currency hedge contracts		—		48		—
Interest rate swaps, net		—		7,236		—
Contingent consideration		—		—		(4,100)

The contingent consideration fair value measurement in connection with the acquisition of ALIO Industries (“ALIO”) is based on significant inputs not observable in the market and therefore constitute Level 3 inputs within the fair value hierarchy. The Company determines the initial fair value of contingent consideration liabilities using a Monte Carlo valuation model, which involves a simulation of future earnings generated during the earn-out period using management’s best estimates, or a probability-weighted discounted cash flow analysis. There were no change to the estimated fair value of contingent consideration during the three and six months ended June 30, 2023, and the contingent consideration of $4,100 as of June 30, 2023 is included in other long-term liabilities on the condensed consolidated balance sheet.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2023

ACQUISITIONS

Schedule of purchase price allocation and estimated fair value of the assets acquired

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


Cash and cash equivalents	$	1,755
Trade receivables		3,100
Inventories		3,496
Other assets, net		174
Property, plant, and equipment		624
Right of use assets		4,165
Intangible assets		22,611
Goodwill		15,840
Other current liabilities		(1,577)
Deferred revenue		(776)
Lease liabilities		(4,165)
Net deferred income tax liabilities		(3,931)
Net purchase price	$	41,316

Schedule of unaudited pro forma financial information

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


	Three months ended		Six months ended
	June 30,		June 30,
	2022		2022
Revenues	$	127,492	$	248,322
Income before income taxes	$	8,225	$	12,943

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock and Paid-in Capital	Common Stock	Unamortized Cost of Equity Awards	Retained Earnings	Foreign Currency Translation Adjustments	Accumulated income (loss) on derivatives	Pension Adjustments	Total
Balance at the beginning at Dec. 31, 2021	$ 68,097	$ 73,106	$ (5,009)	$ 127,757	$ (7,409)	$ 180	$ (863)	$ 187,762
Balance at the beginning (in shares) at Dec. 31, 2021		15,361
Increase (Decrease) in Stockholders' Equity
Stock transactions under employee benefit stock plans	1,217	$ 1,217						1,217
Stock transactions under employee benefit stock plans (in shares)		36
Issuance of restricted stock, net of forfeitures	(4)	$ 5,140	(5,144)					(4)
Issuance of restricted stock, net of forfeitures (in shares)		141
Stock-based compensation expense	1,349		1,349					1,349
Shares withheld for payment of employee payroll taxes	(137)	$ (137)						(137)
Shares withheld for payment of employee payroll taxes (in shares)		(4)
Comprehensive (loss) income					(1,233)	3,423		2,190
Tax effect of derivative transactions						(822)		(822)
Net income				2,504				2,504
Dividends to stockholders				(388)				(388)
Balance at the ending at Mar. 31, 2022	70,522	$ 79,326	(8,804)	129,873	(8,642)	2,781	(863)	193,671
Balance at the ending (in shares) at Mar. 31, 2022		15,534
Balance at the beginning at Dec. 31, 2021	68,097	$ 73,106	(5,009)	127,757	(7,409)	180	(863)	187,762
Balance at the beginning (in shares) at Dec. 31, 2021		15,361
Increase (Decrease) in Stockholders' Equity
Net income								7,084
Balance at the ending at Jun. 30, 2022	81,662	$ 89,639	(7,977)	134,066	(17,341)	3,755	(863)	201,279
Balance at the ending (in shares) at Jun. 30, 2022		15,978
Balance at the beginning at Mar. 31, 2022	70,522	$ 79,326	(8,804)	129,873	(8,642)	2,781	(863)	193,671
Balance at the beginning (in shares) at Mar. 31, 2022		15,534
Increase (Decrease) in Stockholders' Equity
Issuance of restricted stock, net of forfeitures	(1)	$ 313	(314)					(1)
Issuance of restricted stock, net of forfeitures (in shares)		16
Share issuance in connection with acquisitions	11,103	$ 11,103						11,103
Share issuance in connection with acquisitions (in shares)		463
Stock-based compensation expense	1,141		1,141					1,141
Shares withheld for payment of employee payroll taxes	(1,103)	$ (1,103)						(1,103)
Shares withheld for payment of employee payroll taxes (in shares)		(35)
Comprehensive (loss) income					(8,699)	1,284		(7,415)
Tax effect of derivative transactions						(310)		(310)
Net income				4,581				4,581
Dividends to stockholders				(388)				(388)
Balance at the ending at Jun. 30, 2022	81,662	$ 89,639	(7,977)	134,066	(17,341)	3,755	(863)	201,279
Balance at the ending (in shares) at Jun. 30, 2022		15,978
Balance at the beginning at Dec. 31, 2022	83,852	$ 89,522	(5,670)	143,576	(16,925)	5,556	(594)	$ 215,465
Balance at the beginning (in shares) at Dec. 31, 2022		15,978						15,978
Increase (Decrease) in Stockholders' Equity
Stock transactions under employee benefit stock plans	1,246	$ 1,246						$ 1,246
Stock transactions under employee benefit stock plans (in shares)		31
Issuance of restricted stock, net of forfeitures	(34)	$ 4,621	(4,655)					(34)
Issuance of restricted stock, net of forfeitures (in shares)		103
Share issuance in connection with acquisitions	6,250		6,250					6,250
Share issuance in connection with acquisitions (in shares)		185
Stock-based compensation expense	1,267		1,267					1,267
Shares withheld for payment of employee payroll taxes	(146)	$ (146)						(146)
Shares withheld for payment of employee payroll taxes (in shares)		(4)
Comprehensive (loss) income					1,354	(1,565)		(211)
Tax effect of derivative transactions						432		432
Net income				6,315				6,315
Dividends to stockholders				(403)				(403)
Balance at the ending at Mar. 31, 2023	92,435	$ 95,243	(2,808)	149,488	(15,571)	4,423	(594)	230,181
Balance at the ending (in shares) at Mar. 31, 2023		16,293
Balance at the beginning at Dec. 31, 2022	83,852	$ 89,522	(5,670)	143,576	(16,925)	5,556	(594)	$ 215,465
Balance at the beginning (in shares) at Dec. 31, 2022		15,978						15,978
Increase (Decrease) in Stockholders' Equity
Net income								$ 13,084
Balance at the ending at Jun. 30, 2023	92,483	$ 94,191	(1,708)	155,772	(15,997)	5,130	(594)	$ 236,794
Balance at the ending (in shares) at Jun. 30, 2023		16,268						16,268
Balance at the beginning at Mar. 31, 2023	92,435	$ 95,243	(2,808)	149,488	(15,571)	4,423	(594)	$ 230,181
Balance at the beginning (in shares) at Mar. 31, 2023		16,293
Increase (Decrease) in Stockholders' Equity
Issuance of restricted stock, net of forfeitures	11	$ 455	(444)					11
Issuance of restricted stock, net of forfeitures (in shares)		14
Stock-based compensation expense	1,544		1,544					1,544
Shares withheld for payment of employee payroll taxes	(1,507)	$ (1,507)						(1,507)
Shares withheld for payment of employee payroll taxes (in shares)		(39)
Comprehensive (loss) income					(426)	930		504
Tax effect of derivative transactions						(223)		(223)
Net income				6,769				6,769
Dividends to stockholders				(485)				(485)
Balance at the ending at Jun. 30, 2023	$ 92,483	$ 94,191	$ (1,708)	$ 155,772	$ (15,997)	$ 5,130	$ (594)	$ 236,794
Balance at the ending (in shares) at Jun. 30, 2023		16,268						16,268

SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2023

SEGMENT INFORMATION

SEGMENT INFORMATION

18. SEGMENT INFORMATION

The Company operates in one segment for the manufacture and marketing of controlled motion products for end user and OEM applications. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services in which the entity holds material assets and reports revenue.

Revenue for each of the three months ended June 30, 2023 and 2022 was comprised of 58% shipped to U.S. customers. For each of the six months ended June 30, 2023 and 2022, revenues was comprised of 57% shipped to U.S. customers. The remainder of revenues for all periods were shipped to foreign customers, primarily in Europe, Canada, and Asia-Pacific.

Identifiable foreign fixed assets were $36,391 and $34,879 as of June 30, 2023 and December 31, 2022, respectively. Identifiable assets outside of the U.S. are attributable to Europe, China, Mexico, and Asia-Pacific.

For the three months ended June 30, 2023, one customer (Customer A) accounted for 12% of revenues and one customer (Customer B) accounted for 10% of revenues. Both Customer A and Customer B accounted for 10% of revenues for the six months ended June 30, 2023. For the three and six months ended June 30, 2022, Customer B accounted for 11% and 12% of revenues, respectively. As of June 30, 2023, Customer A represented 16% of trade receivables.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2023	Aug. 02, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	0-04041
Entity Registrant Name	ALLIED MOTION TECHNOLOGIES INC
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-0518115
Entity Address, Address Line One	495 Commerce Drive
Entity Address, City or Town	Amherst
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	14228
City Area Code	716
Local Phone Number	242-8634
Title of 12(b) Security	Common stock
Trading Symbol	AMOT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,180,170
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000046129
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Trade receivables, provision for credit losses	$ 1,155	$ 1,192
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized shares	50,000	50,000
Common stock, shares issued	16,268	15,978
Common stock, shares outstanding	16,268	15,978
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, authorized shares	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2023

ACCRUED LIABILITIES

Schedule of accrued liabilities


	June 30,		December 31,
	2023		2022
Compensation and fringe benefits	$	13,292	$	15,818
Accrued business acquisition consideration		12,444		12,500
Warranty reserve		2,225		2,160
Income taxes payable		1,710		3,934
Operating lease liabilities - current		4,575		4,224
Finance lease obligations - current		394		377
Contract liabilities		3,620		4,807
Other accrued expenses		7,129		4,301
	$	45,389	$	48,121

ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ACCRUED LIABILITIES
Compensation and fringe benefits	$ 13,292	$ 15,818
Accrued business acquisition consideration	12,444	12,500
Warranty reserve	2,225	2,160
Income taxes payable	1,710	3,934
Operating lease liabilities - current	$ 4,575	$ 4,224
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued liabilities	Accrued liabilities
Finance lease obligations, current	$ 394	$ 377
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued liabilities	Accrued liabilities
Contract liabilities	$ 3,620	$ 4,807
Other accrued expenses	7,129	4,301
Accrued liabilities	$ 45,389	$ 48,121

INCOME TAXES (Details)	3 Months Ended		6 Months Ended
INCOME TAXES (Details)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Effective income tax rate
Discrete tax provision (benefit) (as a percent)	(1.6)	(1.6)	(2.2)	(3.5)
Effective income tax rate (as a percent)	23.90%	27.00%	23.60%	25.10%

DEBT OBLIGATIONS

6 Months Ended

Jun. 30, 2023

DEBT OBLIGATIONS

DEBT OBLIGATIONS

10. DEBT OBLIGATIONS

Debt obligations consisted of the following:


	June 30,		December 31,
	2023		2022
Long-term Debt
Revolving Credit Facility, long-term (1)	$	218,766	$	227,060
Unamortized debt issuance costs		(475)		(625)
Finance lease obligations - noncurrent		8,815		9,019
Long-term debt	$	227,106	$	235,454

(1)

The effective rate of the Amended Revolving Facility is 5.06% at June 30, 2023.

Amended Revolving Credit Facility

The Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”), effective August 23, 2022, includes a $280 million revolving credit facility (the “Amended Revolving Facility”). In the Amended Credit Agreement, the referenced index was amended to the Term Standard Overnight Financing Rate (“SOFR”), whereas the previous credit agreement utilized the London Interbank Offering Rate (LIBOR) as the referenced interest rate. The Amended Credit Agreement has a maturity date of February 2025.

Borrowings under the Amended Revolving Facility bear interest at an annual rate equal to the Adjusted SOFR (as defined in the Amended Credit Agreement) which is subject to a floor of 0.00% plus an applicable margin spread ranging from 1.00% to 2.25% (1.75% at June 30, 2023) based on the Company’s ratio of total funded indebtedness to consolidated trailing twelve-month EBITDA (the “Total Leverage Ratio”). In addition, the Company is required to pay a commitment fee of between 0.10% and 0.275% annually on the unused portion of the Amended Revolving Facility, also based on the Company’s Total Leverage Ratio. The Amended Revolving Facility is secured by substantially all of the Company’s non-realty assets and is fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

The Amended Credit Agreement includes covenants and restrictions that limit the Company’s ability to incur additional indebtedness, make certain investments, create, incur or assume certain liens, merge, consolidate or sell all or substantially all of its assets and enter into transactions with an affiliate of the Company on other than an arms’ length transaction. These covenants, which are described more fully in the Amended Credit Agreement, to which reference is made for a complete statement of the covenants, are subject to certain exceptions. The Amended Credit Agreement contains financial covenants that require that the Company maintain a minimum interest coverage ratio of at least 3.0 to 1.0 at the end of each fiscal quarter. In addition, the Company’s Leverage Ratio at the end of any fiscal quarter shall not be greater than 4.0 to 1.0 ratio (reduced to 3.5:1.0 for quarters ending on or after December 31, 2023); provided that the Company may elect to temporarily increase the Leverage Ratio by 0.5x during the twelve-month period following a material acquisition under the Amended Credit Agreement (“acquisition leverage increase”), subject to certain exceptions. The Company was in compliance with all covenants as of June 30, 2023.

As of June 30, 2023, the unused Amended Revolving Facility was $61,234. The amount available to borrow may be limited by the Company’s debt and EBITDA levels, which impacts its covenant calculations.

Other

The China Credit Facility (“the China Facility”) provided credit of $1,444 (Chinese Renminbi 10,000). The China Facility was a demand revolving facility used for working capital and capital equipment needs at the Company’s China operations. The term was annual and cancelleable at the bank’s discretion. The interest rate shall be agreed upon by the Lender and the Borrower before the Utilization Date (as defined in the China Facility) and shall be specified in the Utilization Request (as defined in the China Facility). Collateral for the facility is a guarantee issued by the Company. There were no borrowings under the China Facility during the three and six months ended June 30, 2023 or 2022, respectively, and the Company closed the China Facility during the three months ended June 30, 2023.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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