SEGUIN, Texas, July 31, 2019 /PRNewswire/ -- Alamo Group Inc.
(NYSE: ALG) today reported record results for the second quarter
ended June 30, 2019.
Highlights for the Quarter
- Record net income for a second quarter of $20.7 million, up 10.1%
- Record net sales for a second quarter of $285.2 million, up 10.9%
-
- Industrial Division net sales $168.0
million, up 12.0%
- Agricultural Division net sales $55.2
million, down (6.6%)
- European Division net sales $62.0
million, up 29.2%
- Record net income for the first six months of $35.9 million, up 7.7%
- Record net sales for the first six months of $547.1 million, up 10.5%
- Backlog remains steady at $228.8
million, up 3.9% year over year
Summary of Results
Alamo Group's net sales for the second quarter of 2019 were
$285.2 million compared to
$257.1 million in the second quarter
of 2018, an increase of 10.9%. Net income for the quarter was
$20.7 million, or $1.75 per diluted share, compared to net income
of $18.8 million, or $1.60 per diluted share in the second quarter of
2018, an increase of 10.1% in net income.
For the first six months of 2019, net sales were $547.1 million compared to $495.2 million in the previous year six month
period, an increase of 10.5%. Net income for the first half
of 2019 was $35.9 million or
$3.05 per diluted share, versus
$33.4 million, or $2.84 per diluted share, for the same period in
2018, an increase of 7.7% in net income.
The results for the second quarter and first six months of 2019
included the effect of the acquisition of Dutch Power which was
completed in March 2019. In the second quarter of 2019, Dutch
Power contributed $14.0 million to
net sales and $0.9 million to net
income. For the first six months of 2019, they contributed
$17.6 million to net sales and
$1.1 million to net income. Net
sales, net income and earnings per share were all at record levels
for Alamo Group for the second quarter and for the first six months
of 2019, both with and without the effects of the acquisition of
Dutch Power.(1)
Results by Division
Alamo's Industrial Division net
sales in the second quarter of 2019 were $168.0 million compared to $150.0 million in the prior year, an increase of
12.0%. The Division's income from operations for the quarter
was $20.2 million compared to
$16.2 million in the previous year,
an increase of 24.8%. For the first six months of 2019 the
Industrial Division's net sales were $326.4
million versus $282.2 million
in the first six months of 2018, an increase of 15.7%. Income
from operations in the Division was $36.6
million for the first six months of 2019 versus $28.0 million in the same period of the prior
year, an increase of 31.0%. The Industrial Division benefited
from continued strong demand for the Company's products in its core
markets focused on governmental infrastructure maintenance and also
by growing demand for certain products such as vacuum trucks and
excavators from non-governmental end users.
The Company's Agricultural Division net sales in the second
quarter of 2019 were $55.2 million
compared to net sales of $59.1
million in the prior year's second quarter, a decrease of
6.6%. The Division's income from operations for the quarter
was $4.2 million compared to
$6.2 million in 2018, a decrease of
31.6%. For the first six months of 2019, the Agricultural
Division's net sales were $108.3
million versus $117.7 million
in the same period of the prior year, a decrease of 8.0%.
Income from operations was $6.4
million in the first six months of 2019 compared to
$11.4 million in the same period in
2018, a decrease of 44.0%. The Agricultural Division's
results continue to be impacted by weak agricultural market
conditions and lower farm incomes.
Alamo's European Division net
sales in the second quarter of 2019 were $62.0 million, a 29.2% increase compared to net
sales of $48.0 million in the second
quarter of 2018. Income from operations for the quarter was
$4.9 million compared to $4.4 million in the second quarter of the prior
year, an increase of 11.5%. For the first six months of 2019,
net sales in the European Division were $112.4 million compared to $95.3 million in the same period of 2018, an
increase of 17.9%. Income from operations for the first half
of 2019 was $8.9 million versus
$8.7 million in 2018, an increase of
1.9%. The results in the Division include the effects of the
acquisition of Dutch Power referenced previously which contributed
$14.0 million to net sales in the
second quarter and $17.6 million for
the first six months of 2019. Dutch Power contributed
$1.2 million to the Division's income
from operations in the second quarter and $1.5 million for the first six months of
2019. Alamo's European
Division results were also impacted by changes in currency exchange
rates between the U.S. dollar and both the U.K. pound sterling and
the Euro.
Changes in exchange rates compared to the comparable periods in
2018 had a $2.8 million negative
effect on the Division's net sales in the second quarter of 2019
and a $6.3 million negative effect
for the first six months of 2019.(1)
Comments on Results
Ron Robinson, Alamo Group's
President and Chief Executive Officer, commented, "We are very
pleased with our second quarter results. Having record sales
and earnings is always gratifying, but to achieve these levels in a
quarter with a number of challenges is even more rewarding.
Certainly, the strong performance of our Industrial Division has
been the key driver to our results this year, but I feel our other
divisions have performed well given the conditions they've
faced. Our Agricultural Division held up reasonably given the
overall weakness in that sector due to prolonged soft agricultural
commodity prices, the negative effect on the markets from
unfavorable trade tariffs and the impact of adverse weather
conditions in the first half of the year. While sales were
down, margins improved compared to the slow start the Division
experienced in the first quarter of 2019. And, we believe our
sales in this area have performed better than the market
itself. While it is difficult to predict when the market will
start to show significant improvement, in the last month or so
commodity prices have shown signs of strengthening, which is a much
needed development.
"The same can be said for our European operations, which also
had reasonable results in the second quarter despite overall soft
European market conditions, the lingering effects of some lower
margin backlog in our French operations which will dampen our
results into the third quarter of this year and unfavorable changes
in currency exchange rates which lowered the value of our European
results in both sales and earnings compared to the previous year's
rates. Our European results did benefit from the acquisition
of Dutch Power which occurred late in the first quarter of
2019.
"As noted, our Industrial Division continued to lead the way
with strong growth in sales and earnings. Excavators, vacuum
trucks, street sweepers and snow removal equipment were the
Division's leading performers, all showing double digit
gains. And, while there are indications of some market
softening in the U.S. economy, we believe our strong backlog should
continue to benefit us throughout 2019. Some indications of
this softening economy are helping our results, for instance, last
year increases in input costs were a challenge, whereas so far this
year they are more of a tailwind, led by reduced steel prices.
"At Alamo Group, we are also benefiting by ongoing operational
improvement initiatives which are proceeding at an accelerated
pace. This year our two major projects, the expansion at our
Tenco facility in Canada along
with our new Super Products vacuum truck manufacturing facility
being built in Wisconsin, are both
coming along nicely and we expect they will be fully operational in
2020, which should help drive further margin improvements.
"So, while we feel soft agricultural market conditions, a
weakened European economy, unfavorable exchange rates and unsettled
tariff negotiations will all continue to impact our results, we
believe the stability of Alamo's
core markets further aided by our favorable backlog, less
inflationary pressure and contributions from acquisitions will all
contribute to our ongoing success for the remainder of 2019."
Earnings Conference Call
Alamo Group will host a conference call to discuss the results
on Thursday, August 1, 2019 at
2:00 p.m. ET. Hosting the call will
be members of senior management.
Individuals wishing to participate in the conference call should
dial 800-353-6461 (domestic) or 334-323-0501 (international). For
interested individuals unable to join the call, a replay will be
available until Tuesday, August 6,
2019 by dialing 888-203-1112 (domestic) or 719-457-0820
(internationally), passcode 9760087.
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 & and
Presentations") on Thursday, August 1,
2019, beginning at 2:00 p.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 3,650 employees and
operates 29 plants in North
America, Europe,
Australia and Brazil as of June
30, 2019. 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,
acquisition integration issues, tariffs 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 or other information
relating to our GAAP financial measures that we have provided to
investors in order to allow greater transparency and a deeper
understanding of our financial condition and operating
results. For a reconciliation of the non-GAAP financial
measure or for a more detailed explanation of financial results,
refer to "Non-GAAP Financial Measure Reconciliation" below and the
Attachments thereto.
Alamo Group Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(in thousands)
|
(Unaudited)
|
|
|
June 30,
2019
|
June 30,
2018
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
48,190
|
|
|
$
|
43,602
|
|
Accounts receivable,
net
|
|
267,064
|
|
|
238,126
|
|
Inventories
|
|
205,910
|
|
|
174,836
|
|
Other current
assets
|
|
14,940
|
|
|
12,116
|
|
Total current
assets
|
|
536,104
|
|
|
468,680
|
|
|
|
|
|
|
|
|
Rental equipment,
net
|
|
51,517
|
|
|
37,057
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
105,467
|
|
|
79,737
|
|
|
|
|
|
|
|
|
Goodwill
|
|
93,134
|
|
|
83,972
|
|
Intangible
assets
|
|
62,725
|
|
|
50,636
|
|
Other non-current
assets
|
|
17,632
|
|
|
5,297
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
866,579
|
|
|
$
|
725,379
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
67,391
|
|
|
$
|
63,322
|
|
Income taxes
payable
|
|
1,926
|
|
|
—
|
|
Accrued
liabilities
|
|
47,707
|
|
|
37,312
|
|
Current maturities of
long-term debt and finance lease obligations
|
|
131
|
|
|
17
|
|
Total current
liabilities
|
|
117,155
|
|
|
100,651
|
|
|
|
|
|
|
|
|
Long-term debt, net
of current maturities
|
|
166,232
|
|
|
119,000
|
|
Long-term tax
liability
|
|
6,378
|
|
|
12,316
|
|
Deferred pension
liability
|
|
1,719
|
|
|
879
|
|
Other long-term
liabilities
|
|
14,340
|
|
|
7,415
|
|
Deferred income
taxes
|
|
17,923
|
|
|
10,671
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
542,832
|
|
|
474,447
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
866,579
|
|
|
$
|
725,379
|
|
Alamo Group Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Income
|
|
(in thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
Second Quarter
Ended
|
|
Six Months
Ended
|
|
|
|
6/30/2019
|
|
6/30/2018
|
|
6/30/2019
|
|
6/30/2018
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
$
|
168,000
|
|
$
|
150,031
|
|
$
|
326,425
|
|
$
|
282,198
|
|
Agricultural
|
|
55,159
|
|
59,071
|
|
108,332
|
|
117,718
|
|
European
|
|
62,027
|
|
48,023
|
|
112,363
|
|
95,296
|
|
Total
net sales
|
|
285,186
|
|
257,125
|
|
547,120
|
|
495,212
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
212,053
|
|
190,671
|
|
410,679
|
|
368,501
|
|
Gross margin
|
|
73,133
|
|
66,454
|
|
136,441
|
|
126,711
|
|
|
|
25.6
|
%
|
25.8
|
%
|
24.9
|
%
|
25.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
43,784
|
|
39,668
|
|
84,486
|
|
78,564
|
|
Income from operations
|
|
29,349
|
|
26,786
|
|
51,955
|
|
48,147
|
|
|
|
|
10.3
|
%
|
|
10.4
|
%
|
|
9.5
|
%
|
|
9.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(1,935)
|
|
(1,497)
|
|
(3,385)
|
|
(2,834)
|
|
Interest income
|
|
330
|
|
109
|
|
503
|
|
209
|
|
Other income (expense)
|
|
(295)
|
|
(92)
|
|
(684)
|
|
(226)
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
27,449
|
|
25,306
|
|
48,389
|
|
45,296
|
|
Provision for income taxes
|
|
6,782
|
|
6,535
|
|
12,469
|
|
11,942
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
20,667
|
|
$
|
18,771
|
|
$
|
35,920
|
|
$
|
33,354
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.76
|
|
$
|
1.61
|
|
$
|
3.07
|
|
$
|
2.87
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
1.75
|
|
$
|
1.60
|
|
$
|
3.05
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
11,726
|
|
11,652
|
|
11,712
|
|
11,629
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
11,798
|
|
11,759
|
|
11,787
|
|
11,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Attachment 1 discloses the impact of the Company's recently
completed acquisitions upon Sales, Operating Income and Net Income
all of which are non-GAAP financial measures. Attachment 2
discloses a non-GAAP financial presentation related to the impact
of currency translation on net sales by division. Attachment 3
shows the net change in our total debt, net of cash, and adjusted
earnings before interest, taxes, depreciation and amortization
("EBITDA"), both of 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
|
|
|
|
Alamo Group
Inc.
|
|
Non-GAAP Financial
Reconciliation
|
|
(in
thousands)
|
|
(Unaudited)
|
|
|
|
Impact of
Acquisitions
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
June
30,
|
|
(in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
(consolidated) - GAAP
|
|
$
|
285,186
|
|
$
|
257,125
|
|
$
|
547,120
|
|
$
|
495,212
|
|
(less: net sales
attributable to acquisitions)
|
|
(14,034)
|
|
—
|
|
(17,648)
|
|
—
|
|
Net Sales less
acquisitions (consolidated) - non-GAAP
|
|
$
|
271,152
|
|
$
|
257,125
|
|
$
|
529,472
|
|
$
|
495,212
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales (Industrial
Division) - GAAP
|
|
$
|
168,000
|
|
$
|
150,031
|
|
$
|
326,425
|
|
$
|
282,198
|
|
(less: net sales
attributable to acquisition)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales less
acquisitions (N.A. Industrial Division) - non-GAAP
|
|
$
|
168,000
|
|
$
|
150,031
|
|
$
|
326,425
|
|
$
|
282,198
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
(Agricultural Division) - GAAP
|
|
$
|
55,159
|
|
$
|
59,071
|
|
$
|
108,332
|
|
$
|
117,718
|
|
(less: net sales
attributable to acquisitions)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Sales less
acquisitions (N.A. Agricultural Division) - non-GAAP
|
|
$
|
55,159
|
|
$
|
59,071
|
|
$
|
108,332
|
|
$
|
117,718
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales (European
Division) - GAAP
|
|
$
|
62,027
|
|
$
|
48,023
|
|
$
|
112,363
|
|
$
|
95,296
|
|
(less: net sales
attributable to acquisition)
|
|
(14,034)
|
|
—
|
|
(17,648)
|
|
—
|
|
Net Sales less
acquisitions (European Division) - non-GAAP
|
|
$
|
47,993
|
|
$
|
48,023
|
|
$
|
94,715
|
|
$
|
95,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(consolidated) - GAAP
|
|
$
|
29,349
|
|
$
|
26,786
|
|
$
|
51,955
|
|
$
|
48,147
|
|
(less: operating income
attributable to acquisitions)
|
|
(1,200)
|
|
—
|
|
(1,452)
|
|
—
|
|
Operating Income less
acquisitions (consolidated) - non-GAAP
|
|
$
|
28,149
|
|
$
|
26,786
|
|
$
|
50,503
|
|
$
|
48,147
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(consolidated) - GAAP
|
|
$
|
20,667
|
|
$
|
18,771
|
|
$
|
35,920
|
|
$
|
33,354
|
|
(less: net income
attributable to acquisitions)
|
|
(896)
|
|
—
|
|
(1,078)
|
|
—
|
|
Net Income less
acquisitions (consolidated) - non-GAAP
|
|
$
|
19,771
|
|
$
|
18,771
|
|
$
|
34,842
|
|
$
|
33,354
|
|
|
|
|
|
|
|
|
|
|
|
Attachment
2
|
|
Alamo Group
Inc.
|
Non-GAAP Financial
Reconciliation
|
(in
thousands)
|
(Unaudited)
|
|
Impact of Currency
Translation on Net Sales by Division
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
Change due to
currency
translation
|
|
2019
|
|
2018
|
|
% change
from 2018
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
$
|
168,000
|
|
$
|
150,031
|
|
12.0
|
%
|
|
$
|
(854)
|
|
(0.6)
|
%
|
Agricultural
|
55,159
|
|
59,071
|
|
(6.6)
|
%
|
|
(810)
|
|
(1.4)
|
%
|
European
|
62,027
|
|
48,023
|
|
29.2
|
%
|
|
(2,825)
|
|
(5.9)
|
%
|
Total
net sales
|
$
|
285,186
|
|
$
|
257,125
|
|
10.9
|
%
|
|
$
|
(4,489)
|
|
(1.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
|
|
Change due to
currency
translation
|
|
2019
|
|
2018
|
|
% change
from 2018
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
$
|
326,425
|
|
$
|
282,198
|
|
15.7
|
%
|
|
$
|
(1,892)
|
|
(0.7)
|
%
|
Agricultural
|
108,332
|
|
117,718
|
|
(8.0)
|
%
|
|
(1,904)
|
|
(1.6)
|
%
|
European
|
112,363
|
|
95,296
|
|
17.9
|
%
|
|
(6,346)
|
|
(6.7)
|
%
|
Total
net sales
|
$
|
547,120
|
|
$
|
495,212
|
|
10.5
|
%
|
|
$
|
(10,142)
|
|
(2.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
Attachment
3
|
|
Alamo Group
Inc.
|
Non-GAAP Financial
Reconciliation
|
(in
thousands)
|
(Unaudited)
|
|
Consolidated Net
Change of Total Debt, Net of Cash
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
Net
Change
|
|
|
|
|
|
|
|
Current
maturities
|
|
$
|
131
|
|
$
|
17
|
|
|
Long-term debt,net of
current
|
|
166,232
|
|
119,000
|
|
|
Total debt
|
|
$
|
166,363
|
|
$
|
119,017
|
|
|
|
|
|
|
|
|
|
Total cash
|
|
48,190
|
|
43,602
|
|
|
Total debt net of
cash
|
|
$
|
118,173
|
|
$
|
75,415
|
|
$
|
42,758
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Trailing Twelve
Months Ended
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
$
|
51,955
|
|
$
|
48,147
|
|
$
|
104,896
|
|
$
|
101,088
|
Depreciation
|
|
11,191
|
|
9,225
|
|
21,575
|
|
19,609
|
Amortization
|
|
2,079
|
|
1,866
|
|
3,939
|
|
3,726
|
EBITDA
|
|
$
|
65,225
|
|
$
|
59,238
|
|
$
|
130,410
|
|
$
|
124,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/alamo-group-announces-record-2019-second-quarter-and-year-to-date-results-300894377.html
SOURCE Alamo Group Inc.