Orin Hirschman

Orin Hirschman of Aigh Capital Management inquired about the energy storage product, asking about customer commitments and target applications like data centers. He also questioned the purpose of developing ceramic separator technology, the current revenue and growth outlook for the robotics business, and the progress of the solid-state battery R&D, particularly its potential for the drone market.

Answer

CEO Rajshekar DasGupta stated that three customers are awaiting final specifications for the energy storage product, which targets applications like warehouses and data centers where safety commands a premium. He explained the ceramic separator R&D aims to improve margins and bring strategic technology in-house. The robotics business is currently generating about $1-2 million and is expected to grow quickly. On solid-state batteries, he noted progress is being made and the company is investing in better lab facilities to produce samples for potential customers in aerospace and drones.

Orin Hirschman of Aigh Capital Management questioned the specifics of the data center business, including the function of its power conditioning products and the company's capacity to meet surging demand. He also asked for an update on the industrial automation recovery and whether the munitions business was facing any capacity constraints.

Answer

Richard Warzala, Chairman, CEO & President, explained that Allient's data center solutions enhance power quality and efficiency, and confirmed the company is expanding capacity to meet demand. He stated that the industrial automation market has 'turned the corner' with sequential improvements. Regarding munitions, he assured that Allient is not capacity constrained due to prior facility investments and is now seeing high-volume inquiries convert into firm orders.

Orin Hirschman sought to quantify the revenue impact of the rare earth magnet sourcing issue and asked for an update on the recreational vehicle market, including its size and whether it has bottomed.

Answer

Executive Richard Warzala estimated that magnet costs can be around 20% of the cost of goods sold, implying the $1.5 million of impacted magnets could relate to roughly $7.5 million to $8 million in sales. Regarding vehicles, he clarified that the off-road vehicle market is about 40-50% industrial and commercial, not purely consumer-based, and the company is not exiting but is focused on profitability. He suggested the consumer portion's outlook is best obtained from the vehicle manufacturers themselves.

Orin Hirschman of AIGH Investment Partners questioned if gross margins could continue improving before price increases take full effect, given potential tariffs. He also asked about the BKR 9000's growth rate and margins, and whether the software business is becoming a standalone revenue source.

Answer

CEO John Suzuki explained that while Q1 margins would be healthy, a potential Q2 tariff could cause a temporary dip below their 42% annual target, which they expect to achieve for the full year as price increases take effect in the second half. He confirmed the BKR 9000 is the primary growth driver and was historically a 60% gross margin product before tariffs. Suzuki also stated that the BK ONE solutions business is becoming a revenue source, though still small. While InteropONE is not yet profitable on its own, it drives significant radio sales, and he believes it can become a profitable SaaS business.

Orin Hirschman asked for confirmation of Motorola as a key customer, the growth trajectory of the long-range infrared security market, the status of delayed shipments, the ramp-up of newer programs, and an update on the Lockheed Martin project.

Answer

CEO Sam Rubin confirmed Motorola is a major customer of G5 and described the long-range IR market for Counter-UAS and perimeter security as new and rapidly growing. CFO Albert Miranda reported that most delayed shipments have been fulfilled but supply chain issues from China persist. He also noted strong performance in the high-margin assemblies and cores business. Sam Rubin added that the Lockheed Martin project is on track, with flight-worthy units for missile tests shipping soon.

Orin Hirschman asked for details on the live-fire testing for the Lockheed missile program, the feasibility of the production timeline, the number of upcoming deliverables, and whether the AI camera technology is for infrared or visible light, particularly for the high-end security market.

Answer

CEO Sam Rubin stated that units are being shipped for missile integration in the coming months, with extensive feedback expected post-flight tests. He explained that production readiness in 2025 is feasible due to sophisticated simulation systems. He also clarified that while the AI camera focus is on infrared, they can create dual visible/infrared systems and are targeting the high-end security market, aiming to be an OEM supplier to major players.

Sought details on the Lockheed missile program, including the status of live-fire testing, the feasibility of the 2025 production timeline, and the scale of near-term deliverables. Also asked about the AI camera's technology (IR vs. visible) and its application in the booming high-end security market.

Answer

Units are certified and will be shipped for missile integration and testing in the coming months, with intimate feedback from Lockheed. The accelerated timeline is feasible due to sophisticated simulation systems. Over 100 flight units will be shipped as part of the existing contract. The AI camera started with IR but is seeing demand for visible light as well. The company is targeting the high-end security market by OEMing to major players and building a software partner ecosystem.