SEGUIN, Texas, Nov. 3, 2016 /PRNewswire/ -- Alamo Group
Inc. (NYSE: ALG) today reported results for the third quarter ended
September 30, 2016.
Highlights for the Quarter
- Net sales of $216.8 million, down
6.4%
- Net income of $13.2 million, down
10.3%
- Net earnings per diluted share of $1.14, down 10.9%
- Gross margins at 25.2%, up 1.6%
- Nine month net sales of $639.2
million, down 2.4%
- Record nine month net income of $32.5
million
- Record nine month earnings per diluted share of $2.81
- Backlog at $137 million, up
versus previous quarter, down versus last year
- Total debt, net of cash(1) is $53.9 million lower than previous year's third
quarter
Net sales for the third quarter of 2016 were $216.8 million compared with net sales of
$231.6 million for the third quarter
of 2015, a decrease of 6.4%. The decrease in sales was the
result of a variety of factors including the weak worldwide
agricultural market, softness in sales of Industrial Division
products to non-governmental entities, the weak overall European
economy, and changes in exchange rates, particularly due to the
strengthening U.S. dollar compared to the British pound which
dropped significantly in the third quarter of 2016 following the
Brexit vote in the U.K. A more complete summary of the
currency translation effects on sales and earnings is included as
an attachment to this release.
Net income for the quarter was $13.2
million, or $1.14 per diluted
share, versus net income of $14.8
million, or $1.28 per diluted
share for the third quarter of 2015. This decrease was
primarily due to softer sales as discussed previously, despite
improvements in gross margin to 25.2% in the third quarter of 2016
compared to 24.8% in the same period of the previous year.
For the first nine months of 2016, net sales were $639.2 million compared to $655.1 million in the prior year period, a
decrease of 2.4%, primarily resulting from the effects mentioned
previously. Net income for the nine month period was a record
$32.5 million, or $2.81 per diluted share compared to $31.8 million, or $2.77 per diluted share for the same nine month
period in 2015.
Sales by Division
Alamo Group's Industrial Division net sales in the third quarter
of 2016 were $121.2 million compared
to $127.4 million in third quarter
2015, a decrease of 4.9%. This decrease was primarily related
to weaker sales to non-governmental end users, particularly of
vacuum trucks. For the first nine months of 2016 net sales in
the Division were $361.6 million,
essentially flat compared to the previous year's nine month net
sales of $362.8 million.
The Company's Agricultural Division reported net sales of
$56.4 million in the third quarter
compared to $58.9 million achieved in
2015, a decrease of 4.2%. The decrease was caused in large
part by the ongoing weakness in the overall agricultural
market. For the first nine months of 2016 the Division's net
sales were $157.0 million compared to
net sales of $160.4 million in the
prior year, a decrease of 2.1%.
Alamo's European Division net
sales in the third quarter were $39.1
million versus $45.3 million
in 2015, a decrease of 13.7%. The decrease was related to the
Company's U.K. operations where we believe sales were affected by
concerns and uncertainty over the recent Brexit vote combined with
the decline in value of the British pound compared to the U.S.
dollar which resulted in unfavorable currency translation effects
for the quarter. These results were partially offset by
improvements from the Company's French operations. For the
first nine months of 2016 European Division net sales were
$120.6 million compared with
$132.0 million for the same period in
2015, a decrease of 8.6%.
Comments on Results
Ron Robinson, Alamo Group's
President and CEO commented, "Weakness in several of our market
sectors combined with unfavorable currency translation from the
weaker British pound continue to constrain our Company's
results. These effects impacted both our sales and earnings
for the third quarter of 2016. Despite this, the Company made
continued progress in other areas. Gross margins were up for
both the quarter and year to date as we continue to work on
operational improvement, even with lower volume. Our Balance
Sheet also reflected positive developments as our inventory turns
improved and our total debt, net of cash, has improved nearly
$54 million in the last twelve
months. Consequently, despite weak sales, the Company's
financial strength continues to improve.
"The market conditions that have contributed to the lower sales
have been impacting our results for nearly two years and are likely
to continue for the remainder of 2016. However, we are
starting to see some signs of improvement which we think bodes well
for our 2017 outlook. While increases in agricultural
commodity prices are likely to remain limited, we believe the
outlook for implement suppliers such as Alamo could experience some upside due to the
broader applicability of our product offering. We also feel the
European market could exhibit modest improvement as more clarity
emerges regarding Brexit. Recently we have seen an increase
in inquiry levels in the U.K., although it is still too early to
know if this is a lasting trend. Additionally, we feel
activity in our infrastructure maintenance equipment sector should
start to show some positive movement following the U.S. election
with additional contributions from new product introductions.
We are seeing some evidence of this improvement with the increase
in our backlog compared to the previous quarter, but we remain
cautious and are not sure whether this is a precursor of generally
improving conditions. We are, however, confident that our
ongoing operational improvement initiatives will allow us to
maintain healthy levels of profitability and cash flow even as we
deal with weak market conditions. Further, we believe these
initiatives position us to provide increasing shareholder value
when the markets start to rebound.
"We are also experiencing more acquisition activity and feel
better about Alamo's near term
prospects in this area. Not only are we seeing more
opportunities, but the deal economics of potential acquisitions
have moved to a more actionable level.
"While we remain concerned about challenging market conditions,
we are generally pleased with what Alamo has been able to achieve in this climate
and feel good about the outlook for our Company in 2017."
Earnings Conference Call
Alamo Group will host a conference call to discuss the third
quarter results on Friday, November 4,
2016 at 11:00 a.m. Eastern
(10:00 a.m. Central, 9:00 a.m. Mountain and 8:00 a.m. Pacific). Hosting the call will
be members of senior management.
Individuals wishing to participate in the conference call should
dial 888-203-7667 (domestic) or 719-325-2345 (internationally). For
interested individuals unable to join the call, a replay will be
available until Friday, November 11,
2016 by dialing 888-203-1112 (domestic) or 719-457-0820
(internationally), passcode 8256869.
The live broadcast of Alamo Group Inc.'s quarterly conference
call will be available online at the Company's website,
www.alamo-group.com (under "Investor Relations/Events &
Presentations") on Friday, November 4,
2016, beginning at 11:00a.m.
ET. The online replay will follow shortly after the call
ends and will be archived on the Company's website for 60 days.
About Alamo Group
Alamo Group is a leader in the design, manufacture, distribution
and service of high quality equipment for infrastructure
maintenance, agriculture and other applications. Our products
include truck and tractor mounted mowing and other vegetation
maintenance equipment, street sweepers, snow removal equipment,
excavators, vacuum trucks, other industrial equipment, agricultural
implements and related after-market parts and services. The
Company, founded in 1969, has approximately 3,000 employees and
operates 24 plants in North
America, Europe,
Australia and Brazil as of September
30, 2016. The corporate offices of Alamo Group Inc.
are located in Seguin, Texas and
the headquarters for the Company's European operations are located
in Salford Priors, England.
Forward Looking Statements
This release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties, which
may cause the Company's actual results in future periods to differ
materially from forecasted results. Among those factors which could
cause actual results to differ materially are the following: market
demand, competition, weather, seasonality, currency-related issues,
and other risk factors listed from time to time in the Company's
SEC reports. The Company does not undertake any obligation to
update the information contained herein, which speaks only as of
this date.
(Tables Follow)
(1) This is a non-GAAP financial measure. For a
reconciliation of non-GAAP measures please refer to Attachments 1,
2 and 3.
Alamo Group Inc.
and Subsidiaries
Condensed
Consolidated Balance Sheets
(in thousands)
(Unaudited)
|
|
|
September 30,
2016
|
September 30,
2015
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
56,485
|
|
|
|
$
|
42,657
|
|
|
Accounts receivable,
net
|
|
174,047
|
|
|
|
175,940
|
|
|
Inventories
|
|
154,604
|
|
|
|
174,423
|
|
|
Other current
assets
|
|
7,559
|
|
|
|
11,187
|
|
|
Total current
assets
|
|
392,695
|
|
|
|
404,207
|
|
|
|
|
|
|
|
|
|
Rental equipment,
net
|
|
32,506
|
|
|
|
42,214
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
68,350
|
|
|
|
67,117
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
75,883
|
|
|
|
76,082
|
|
|
Intangible
assets
|
|
50,921
|
|
|
|
53,908
|
|
|
Other non-current
assets
|
|
4,527
|
|
|
|
1,394
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
624,882
|
|
|
|
$
|
644,922
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
48,504
|
|
|
|
$
|
60,952
|
|
|
Income taxes
payable
|
|
2,150
|
|
|
|
1,131
|
|
|
Accrued
liabilities
|
|
32,567
|
|
|
|
37,413
|
|
|
Current maturities of
long-term debt and capital lease obligations
|
|
1,372
|
|
|
|
473
|
|
|
Other current
liabilities
|
|
—
|
|
|
|
302
|
|
|
Total current
liabilities
|
|
84,593
|
|
|
|
100,271
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
of current maturities
|
|
134,018
|
|
|
|
175,005
|
|
|
Deferred pension
liability
|
|
3,790
|
|
|
|
4,337
|
|
|
Other long-term
liabilities
|
|
5,935
|
|
|
|
6,084
|
|
|
Deferred income
taxes
|
|
9,030
|
|
|
|
5,125
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
387,516
|
|
|
|
354,100
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
624,882
|
|
|
|
$
|
644,922
|
|
|
Alamo Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
|
|
|
Third Quarter
Ended
|
|
Nine Months
Ended
|
|
9/30/2016
|
|
9/30/2015
|
|
9/30/2016
|
|
9/30/2015
|
|
|
|
|
|
|
|
|
Industrial
|
$
|
121,205
|
|
|
$
|
127,385
|
|
|
$
|
361,629
|
|
|
$
|
362,818
|
|
Agricultural
|
56,443
|
|
|
58,919
|
|
|
156,950
|
|
|
160,357
|
|
European
|
39,118
|
|
|
45,310
|
|
|
120,647
|
|
|
131,971
|
|
Total
net sales
|
216,766
|
|
|
231,614
|
|
|
639,226
|
|
|
655,146
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
162,055
|
|
|
174,105
|
|
|
482,060
|
|
|
501,435
|
|
Gross margin
|
54,711
|
|
|
57,509
|
|
|
157,166
|
|
|
153,711
|
|
|
25.2
|
%
|
|
24.8
|
%
|
|
24.6
|
%
|
|
23.5
|
%
|
|
|
|
|
|
|
|
|
Operating expenses
|
33,699
|
|
|
33,939
|
|
|
101,824
|
|
|
101,578
|
|
Income from operations
|
21,012
|
|
|
23,570
|
|
|
55,342
|
|
|
52,133
|
|
|
9.7
|
%
|
|
10.2
|
%
|
|
8.7
|
%
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
Interest expense
|
(1,405)
|
|
|
(1,671)
|
|
|
(4,334)
|
|
|
(5,142)
|
|
Interest income
|
43
|
|
|
27
|
|
|
161
|
|
|
120
|
|
Other income (expense)
|
127
|
|
|
895
|
|
|
(253)
|
|
|
2,243
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
19,777
|
|
|
22,821
|
|
|
50,916
|
|
|
49,354
|
|
Provision for income taxes
|
6,541
|
|
|
8,065
|
|
|
18,459
|
|
|
17,529
|
|
|
|
|
|
|
|
|
|
Net Income
|
$
|
13,236
|
|
|
$
|
14,756
|
|
|
$
|
32,457
|
|
|
$
|
31,825
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.15
|
|
|
$
|
1.30
|
|
|
$
|
2.84
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
|
1.14
|
|
|
$
|
1.28
|
|
|
$
|
2.81
|
|
|
$
|
2.77
|
|
|
|
|
|
|
|
|
|
Average common shares:
|
|
|
|
|
|
|
|
Basic
|
11,460
|
|
|
11,380
|
|
|
11,424
|
|
|
11,337
|
|
|
|
|
|
|
|
|
|
Diluted
|
11,595
|
|
|
11,496
|
|
|
11,551
|
|
|
11,477
|
|
|
|
|
|
|
|
|
|
Alamo Group Inc.
Non-GAAP Financial Measures
Reconciliation
From time to time, Alamo Group Inc. may disclose certain
"non-GAAP financial measures" in the course of its earnings
releases, earnings conference calls, financial presentations and
otherwise. For these purposes, "GAAP" refers to generally
accepted accounting principles in the United States. The
Securities and Exchange Commission (SEC) defines a "non-GAAP
financial measure" as a numerical measure of historical or future
financial performance, financial positions, or cash flows that is
subject to adjustments that effectively exclude or include amounts
from the most directly comparable measure calculated and presented
in accordance with GAAP. Non-GAAP financial measures
disclosed by Alamo Group are provided as additional information to
investors in order to provide them with greater transparency about,
or an alternative method for assessing, our financial condition and
operating results. These measures are not in accordance with,
or a substitute for, GAAP and may be different from, or
inconsistent with, non-GAAP financial measures used by other
companies. Whenever we refer to a non-GAAP financial measure,
we will also generally present the most directly comparable
financial measure calculated and presented in accordance with GAAP,
along with a reconciliation of the differences between the non-GAAP
financial measure we reference and such comparable GAAP financial
measure.
From time to time, Alamo Group reports each of net sales,
operating income and net income excluding the impact of
acquisitions, dispositions or restructuring and consolidations
which are non-GAAP financial measures. The Company considers
this information useful to investors to allow better comparability
of period-to-period operating performance. Attachment 1 discloses a
non-GAAP financial measure for Adjusted Operating Income, Adjusted
Net Income and Adjusted Diluted EPS to exclude the impact of
inventory step up charge connected to an acquisition.
Attachment 2 discloses a non-GAAP financial presentation related to
the impact of currency translation on net sales by division.
In this press release, we disclose a reduction in our total debt,
net of cash, which is a non-GAAP financial measure.
Attachment 3 shows a non-GAAP financial presentation that describes
the consolidated net change of the total debt, net of cash.
Attachment
1
|
|
Alamo Group
Inc.
Non-GAAP Financial
Reconciliation
(in thousands,
except per share numbers)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Operating Income -
GAAP
|
|
$
|
21,012
|
|
|
$
|
23,570
|
|
|
$
|
55,342
|
|
|
$
|
52,133
|
|
(add: inventory
step charge)
|
|
—
|
|
|
209
|
|
|
—
|
|
|
2,740
|
|
(add: expenses
relating to system conversion)
|
|
—
|
|
|
341
|
|
|
—
|
|
|
1,011
|
|
Adjusted Operating Income - non-GAAP
|
|
$
|
21,012
|
|
|
$
|
24,120
|
|
|
$
|
55,342
|
|
|
$
|
55,884
|
|
|
|
|
|
|
|
|
|
|
Net Income -
GAAP
|
|
$
|
13,236
|
|
|
$
|
14,756
|
|
|
$
|
32,457
|
|
|
$
|
31,825
|
|
Adjustments
(after tax):
|
|
|
|
|
|
|
|
|
(add: inventory
step charge)
|
|
—
|
|
|
135
|
|
|
—
|
|
|
1,763
|
|
(add: expenses
relating to system conversion)
|
|
—
|
|
|
220
|
|
|
—
|
|
|
651
|
|
Adjusted Net Income - non-GAAP
|
|
$
|
13,236
|
|
|
$
|
15,111
|
|
|
$
|
32,457
|
|
|
$
|
34,239
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS -
GAAP
|
|
$
|
1.14
|
|
|
$
|
1.28
|
|
|
$
|
2.81
|
|
|
$
|
2.77
|
|
(add: inventory
step charge)
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.15
|
|
(add: expenses
relating to system conversion)
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.06
|
|
Adjusted Diluted
EPS - non-GAAP
|
|
$
|
1.14
|
|
|
$
|
1.31
|
|
|
$
|
2.81
|
|
|
$
|
2.98
|
|
Attachment
2
|
|
Alamo Group
Inc.
Non-GAAP Financial
Reconciliation
(in
thousands)
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Change due to
currency translation
|
|
2016
|
|
2015
|
|
%
change
from
2015
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
$
|
121,205
|
|
|
$
|
127,385
|
|
(4.9)%
|
|
$
|
149
|
|
0.1%
|
Agricultural
|
56,443
|
|
|
58,919
|
|
(4.2)%
|
|
118
|
|
0.2%
|
European
|
39,118
|
|
|
45,310
|
|
(13.7)%
|
|
(3,272)
|
|
(7.2)%
|
Total
net sales
|
$
|
216,766
|
|
|
$
|
231,614
|
|
(6.4)%
|
|
$
|
(3,005)
|
|
(1.3)%
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
Change due to
currency translation
|
|
2016
|
|
2015
|
|
%
change
from
2015
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
$
|
361,629
|
|
|
$
|
362,818
|
|
(0.3)%
|
|
$
|
(1,530)
|
|
(0.4)%
|
Agricultural
|
156,950
|
|
|
160,357
|
|
(2.1)%
|
|
(725)
|
|
(0.5)%
|
European
|
120,647
|
|
|
131,971
|
|
(8.6)%
|
|
(5,810)
|
|
(4.4)%
|
Total
net sales
|
$
|
639,226
|
|
|
$
|
655,146
|
|
(2.4)%
|
|
$
|
(8,065)
|
|
(1.2)%
|
Attachment 3
|
|
Alamo Group
Inc.
Non-GAAP Financial
Reconciliation
(in
thousands)
(Unaudited)
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Net
Change
|
|
|
|
|
|
|
|
Current
maturities
|
|
$
|
1,372
|
|
|
$
|
473
|
|
|
|
Long-term debt, net
of current
|
|
134,018
|
|
|
175,005
|
|
|
|
Total Debt
|
|
$
|
135,390
|
|
|
$
|
175,478
|
|
|
|
|
|
|
|
|
|
|
Total Cash
|
|
56,485
|
|
|
42,657
|
|
|
|
Total Debt Net of
Cash
|
|
$
|
78,905
|
|
|
$
|
132,821
|
|
|
$
|
53,916
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alamo-group-announces-2016-third-quarter-results-300357160.html
SOURCE Alamo Group Inc.