SEGUIN,
Texas, Aug. 2, 2023 /PRNewswire/ -- Alamo Group
Inc. (NYSE: ALG) today reported results for the second quarter
ended June 30, 2023.
Highlights for the Quarter
- Net sales of $440.7 million, up
11.2%
-
- Vegetation Management net sales of $261.3 million, up 2.5%
- Industrial Equipment net sales of $179.3
million, up 27.0%
- Income from operations of $54.4
million, up 32.9%
- Net income of $36.4 million, or
$3.03 per diluted share, up
26.8%
- Trailing twelve-month EBITDA of $230.4
million, up 17.6% from full year 2022(1)
- Backlog of $891.2 million,
slightly down compared to prior year second quarter-end
Results for the Quarter
Record second quarter 2023 net sales of $440.7 million increased 11.2% compared to
$396.2 million in the second quarter
of 2022. Gross margin improved in the quarter versus the second
quarter of 2022 by $18.4 million or
18.4%. Second quarter net income improved 27.8% to
$36.4 million, or $3.03 per diluted share, compared to net income
of $28.5 million, or $2.39 per diluted share in the second quarter of
2022. The Company's backlog at the end of the second quarter
was $891.2 million, slightly down
versus the backlog at the end of the second quarter of 2022, and
was also down 11.5% compared to the Company's backlog at the end of
calendar year 2022.
The record results reported for the quarter were achieved
through a combination of effective price management, improvement in
supply chain and higher manufacturing throughput. These
positive results were achieved despite persistent supply chain
challenges, tight labor markets, and to a lesser extent, negative
currency impacts.
Results by Division
Vegetation Management
The Vegetation Management
Division's second quarter net sales were $261.3 million, up 2.5% compared to $255.0 million for the same period in 2022.
The increase in net sales was driven by strong shipments of
forestry, tree care and governmental mowing products in
North America, Europe and the UK. For the first six
months of 2023, net sales in this Division were $517.8 million, compared to $476.0 million for the first six months of 2022,
up 8.8%. The increase in net sales was driven by strong
retail demand for forestry, tree care, agricultural and
governmental mowing products in North
America and Europe.
The Division's operating income for the second quarter 2023 was
$35.6 million, up 8.4% compared to
$32.8 million for the second quarter
of 2022. For the first six months of 2023, operating income
was $72.1 million versus $51.1 million for the first six months of 2022,
an increase of 41.0%. The Division's performance benefited
from improved pricing and effective cost controls, despite ongoing
supply chain issues, continued labor shortages and currency
translation effects. Outstanding performance in the Division's
North American operations was complemented by strong results in the
United Kingdom, France, Australia and to a lesser extent Brazil during the quarter.
Industrial Equipment
The Industrial Equipment
Division's second quarter 2023 net sales were $179.3 million, up 27.0% compared to $141.2 million for the same period in 2022.
The increase was attributable to higher sales in all product lines
with vacuum trucks, snow removal equipment, as well as sweepers and
debris collectors leading the way. For the first six months
of 2023, net sales in this Division were $334.7 million, compared to $282.2 million for the first six months of 2022,
an 18.6% increase. Strong net sales of excavators, snow
removal equipment, street sweepers and vacuum trucks were the
primary reasons for the increase.
The Division's operating income for the second quarter of 2023
was $18.8 million compared to
$8.1 million for the second quarter
of 2022, an increase of 131.9%. For the first six months of
2023, operating income was $31.3
million compared to $18.9
million for the first six months of 2022, an increase of
65.8%. Supply chain issues improved during the first six
months of 2023, however, the Division continued to have constraints
on labor availability.
Comments on Results
Jeff
Leonard, Alamo Group's President and Chief Executive Officer
commented, "Our second quarter results validated our expectation
for further improvement in our operations, and once again marked
the best quarter in Company history. Notably better supply
chain performance supported higher sales, while moderated cost
inflation, and improved efficiencies supported margin expansion.
Gross margin percent relative to net sales improved 160 basis
points compared to the second quarter of 2022. This was
driven by price discipline over the past year, stabilized
manufacturing flows and improved capacity utilization. Overall, it
was an excellent quarter, with the Company delivering 12.3%
operating income. Further demonstrating consistent execution
of key strategic initiatives by our teams, we're extremely pleased
that through the first six months of 2023 the Company's Operating
income has exceeded our 12% operating income target that we
established in early 2022.
"Conditions in our markets remained relatively strong during the
second quarter. Activity in our governmental and industrial
contractor segments remained at a high level in the UK,
Europe and North America. In
North America, however, further softening in the hobby farm and
ranch segment was evident. Order bookings were down 9% compared to
the solid pace in the second quarter of 2022. The decline in
bookings was related primarily to lower orders for forestry and
tree care equipment, and mowers and other tractor attachments for
hobby farm and ranch customers in North America. Vegetation
management equipment orders from governmental customers increased
nicely. Second quarter bookings in our Industrial Equipment
Division were flat compared to the second quarter of 2022 although
market activity remained strong. Higher orders for excavators and
vacuum trucks were offset by somewhat lower orders for sweepers and
snow removal equipment compared to the same period last year.
Consolidated order backlog of $891
million was essentially unchanged versus the prior year's
second quarter.
"As we anticipated, supply chain performance improved for the
first six months of 2023. Truck chassis receipts improved
again, as expected, but shortages of other industrial components
including diesel engines and hydraulic fittings continued. We were
able to complete manufacturing of additional machines that had been
partially assembled previously, but we continued to have delays in
key components which limited improvement in manufacturing
efficiency.
"Moving forward, our outlook for the next several quarters
remains positive. We expect that the trends evident in our results
during the first half of this year will continue for the remainder
of 2023. Our backlog remains very strong, and we anticipate
continued, positive pricing contribution in the coming quarters. We
also expect that several key trends that were evident this quarter,
namely better supply chain performance, slowing inflation and
sequential improvement of operational performance will continue for
the foreseeable future. Our conservative approach to spending
will also continue given the economic uncertainty that remains
clear.
"Our longer-term outlook is a bit more cautious. We believe that
the somewhat softer order activity we experienced in Vegetation
Management this quarter was at least partly due to dealer concerns
over rising inventories and higher interest rates. The drought
in many areas of North America and
Europe is expected to continue to
adversely impact sales of mowers, agricultural attachments and
related replacement parts for the remainder of 2023. U.S. net farm
income is forecast to decline this year for the first time in
several years, although it is expected to remain at historically
high levels. A weakening U.S. housing market and rising
biomass feedstock input costs are expected to continue to pressure
margins for wood pellet producers and could indicate a more
cautious near-term outlook for the forestry segment.
"More positively, the outlook for our governmental customers,
who represent the majority of Company sales, remains quite
positive. U.S. state finances remain in excellent shape, with
historically elevated revenues, and healthy rainy-day funds. U.S.
municipal finances also remain in good condition as tax receipts
have risen in recent years due to asset price inflation. The
longer-term outlook for municipalities is somewhat less bullish, as
declining home prices will eventually result in lower property tax
receipts. However, on balance, the financial condition of
most governmental agencies appears to be quite good in both
North America and Europe.
"I want to take this opportunity to thank all of our employees
for their exceptional dedication as well as our many suppliers, who
worked in close coordination with us to achieve these
results. I would also like to thank our dealers and customers
who have continued to support our company, and our family of
well-known brands.
"In summary, given the continued strength and durability of our
markets, our large and healthy backlog, and the strength of our
balance sheet, we remain optimistic about the Company's prospects
for the remainder of 2023 and beyond."
Earnings Conference Call
The Company will host a
conference call to discuss the results on Thursday, August 3, 2023 at 9:00 a.m. ET. Hosting the call will be members of
senior management.
Individuals wishing to participate in the conference call should
dial 1-866-886-7786 (domestic) or 1-416-764-8658 (international).
For interested individuals unable to join the call, a replay will
be available until Thursday, August 10,
2023, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671
(internationally), passcode 97441743.
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 3,
2023 beginning at 9:00 a.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 vegetation management, infrastructure maintenance 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, forestry equipment
and related after-market parts and services. The Company,
founded in 1969, has approximately 4,350 employees and operates 27
plants in North America,
Europe, Australia and Brazil as of June
30, 2023. The corporate offices of Alamo Group Inc.
are located in Seguin, Texas.
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:
adverse economic conditions which could lead to a reduction in
overall market demand, supply chain disruptions, labor constraints,
increasing costs due to inflation, new or unanticipated effects of
the COVID-19 pandemic, geopolitical risks, including effects of the
war in Ukraine, 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 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,
2023
|
June 30,
2022
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
112,061
|
|
|
$ 75,894
|
|
Accounts receivable,
net
|
|
378,675
|
|
|
306,967
|
|
Inventories
|
|
369,319
|
|
|
352,915
|
|
Other current
assets
|
|
11,916
|
|
|
12,527
|
|
Total current
assets
|
|
871,971
|
|
|
748,303
|
|
|
|
|
|
|
|
|
Rental equipment,
net
|
|
36,375
|
|
|
31,168
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
163,434
|
|
|
153,907
|
|
|
|
|
|
|
|
|
Goodwill
|
|
197,445
|
|
|
196,068
|
|
Intangible
assets
|
|
164,376
|
|
|
178,781
|
|
Other non-current
assets
|
|
24,158
|
|
|
24,149
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
1,457,759
|
|
|
$
1,332,376
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
116,287
|
|
|
$
107,003
|
|
Income taxes
payable
|
|
11,284
|
|
|
1,498
|
|
Accrued
liabilities
|
|
72,266
|
|
|
66,100
|
|
Current maturities of
long-term debt and finance lease obligations
|
|
15,008
|
|
|
15,015
|
|
Total current
liabilities
|
|
214,845
|
|
|
189,616
|
|
|
|
|
|
|
|
|
Long-term debt, net of
current maturities
|
|
332,576
|
|
|
356,149
|
|
Long-term tax
liability
|
|
2,464
|
|
|
2,444
|
|
Other long-term
liabilities
|
|
22,804
|
|
|
24,642
|
|
Deferred income
taxes
|
|
19,128
|
|
|
23,083
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
865,942
|
|
|
736,442
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
1,457,759
|
|
|
$
1,332,376
|
|
Alamo Group Inc. and
Subsidiaries
|
Condensed Consolidated Statements of Income
|
(in thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
6/30/2023
|
|
6/30/2022
|
|
6/30/2023
|
|
6/30/2022
|
Net sales:
|
|
|
|
|
|
|
|
|
Vegetation
Management
|
|
$
261,346
|
|
$
255,003
|
|
$
517,781
|
|
$
476,009
|
Industrial
Equipment
|
|
179,348
|
|
141,211
|
|
334,684
|
|
282,210
|
Total
net sales
|
|
440,694
|
|
396,214
|
|
852,465
|
|
758,219
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
322,620
|
|
296,497
|
|
621,884
|
|
571,861
|
Gross margin
|
|
118,074
|
|
99,717
|
|
230,581
|
|
186,358
|
|
|
26.8 %
|
|
25.2 %
|
|
27.0 %
|
|
24.6 %
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration expense
|
|
59,858
|
|
55,009
|
|
119,526
|
|
108,644
|
Amortization
expense
|
|
3,824
|
|
3,792
|
|
7,639
|
|
7,679
|
Income from operations
|
|
54,392
|
|
40,916
|
|
103,416
|
|
70,035
|
|
|
12.3 %
|
|
10.3 %
|
|
12.1 %
|
|
9.2 %
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(6,837)
|
|
(3,189)
|
|
(12,777)
|
|
(5,836)
|
Interest income
|
|
357
|
|
57
|
|
740
|
|
129
|
Other income (expense)
|
|
(1,046)
|
|
(134)
|
|
(44)
|
|
(1,886)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
46,866
|
|
37,650
|
|
91,335
|
|
62,442
|
Provision for income taxes
|
|
10,492
|
|
9,178
|
|
21,612
|
|
15,500
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
36,374
|
|
$
28,472
|
|
$ 69,723
|
|
$ 46,942
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
3.05
|
|
$
2.39
|
|
$
5.85
|
|
$
3.95
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
3.03
|
|
$
2.39
|
|
$
5.82
|
|
$
3.94
|
|
|
|
|
|
|
|
|
|
Average common shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
11,921
|
|
11,880
|
|
11,910
|
|
11,870
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
11,993
|
|
11,938
|
|
11,977
|
|
11,927
|
|
|
|
|
|
|
|
|
|
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 position, 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 a non-GAAP financial presentation related
to the impact of currency translation on net sales by
division. Attachment 2 shows the net change in our total debt
net of cash and earnings before interest, taxes, depreciation and
amortization ("EBITDA") which is a non-GAAP financial measure. 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 Currency
Translation on Net Sales by Division
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June
30,
|
|
|
|
Change due to
currency
translation
|
|
2023
|
|
2022
|
|
% change
from 2022
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Vegetation
Management
|
$
261,346
|
|
$
255,003
|
|
2.5 %
|
|
$
(614)
|
|
(0.2) %
|
Industrial
Equipment
|
179,348
|
|
141,211
|
|
27.0 %
|
|
(1,165)
|
|
(0.8) %
|
Total
net sales
|
$
440,694
|
|
$
396,214
|
|
11.2 %
|
|
$
(1,779)
|
|
(0.4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June
30,
|
|
|
|
Change due to
currency
translation
|
|
2023
|
|
2022
|
|
% change
from 2022
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Vegetation
Management
|
$
517,781
|
|
$
476,009
|
|
8.8 %
|
|
$
(5,882)
|
|
(1.2) %
|
Industrial
Equipment
|
334,684
|
|
282,210
|
|
18.6 %
|
|
(3,183)
|
|
(1.1) %
|
Total
net sales
|
$
852,465
|
|
$
758,219
|
|
12.4 %
|
|
$
(9,065)
|
|
(1.2) %
|
|
|
|
|
|
|
|
|
|
|
Attachment
2
|
|
Alamo Group
Inc.
|
Non-GAAP Financial
Reconciliation
|
(in
thousands)
|
(Unaudited)
|
|
Consolidated Net
Change of Total Debt, Net of Cash
|
|
|
June 30,
2023
|
|
June 30,
2022
|
|
Net
Change
|
|
|
|
|
|
|
|
Current
maturities
|
|
$
15,008
|
|
$
15,015
|
|
|
Long-term debt,net of
current
|
|
332,576
|
|
356,149
|
|
|
Total debt
|
|
$
347,584
|
|
$
371,164
|
|
|
|
|
|
|
|
|
|
Total cash
|
|
112,061
|
|
75,894
|
|
|
Total Debt Net of
Cash
|
|
$
235,523
|
|
$
295,270
|
|
$
(59,747)
|
|
|
|
|
|
|
|
EBITDA
|
|
|
Six Months
Ended
|
|
Trailing Twelve
Months Ended
|
|
|
June 30,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
$
103,416
|
|
$
70,035
|
|
$
181,973
|
|
$
148,592
|
Depreciation
|
|
15,529
|
|
14,413
|
|
32,528
|
|
31,412
|
Amortization
|
|
7,990
|
|
8,013
|
|
15,921
|
|
15,944
|
EBITDA
|
|
$
126,935
|
|
$
92,461
|
|
$
230,422
|
|
$
195,948
|
|
|
|
|
|
|
|
|
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content:https://www.prnewswire.com/news-releases/alamo-group-announces-record-2023-second-quarter-sales-and-earnings-301891971.html
SOURCE Alamo Group Inc.