ALG Alamo Group Inc

SEGUIN, Texas, Nov. 2, 2023 /PRNewswire/ -- Alamo Group Inc. (NYSE: ALG) today reported results for the third quarter ended September 30, 2023.

Highlights for the Quarter

• Eighth consecutive quarterly record for sales and earnings
• Net sales of $419.6 million, up 13.8%
  • Vegetation Management net sales of $246.9 million, up 8.0%
  • Industrial Equipment net sales of $172.7 million, up 23.1%
• Income from operations of $49.8 million, (11.9% of net sales), up 38.8%
• Net income of $34.9 million, or $2.91 per diluted share, up 35.2%
• Trailing twelve-month EBITDA of $245.0 million, up 25.0% from full year 2022⁽¹⁾
• Backlog of $890.9 million, down 2.0% compared to prior year third quarter-end

Results for the Quarter

Record third quarter 2023 net sales of $419.6 million increased 13.8% compared to $368.8 million in the third quarter of 2022. Gross margin improved in the quarter versus the third quarter of 2022 by $21.8 million or 23.6%.  Third quarter net income improved 35.2% to $34.9 million, or $2.91 per diluted share, compared to net income of $25.8 million, or $2.16 per diluted share in the third quarter of 2022.  The Company's backlog at the end of the third quarter was $890.9 million, virtually unchanged from the end of the second quarter of 2023 but slightly down by 2.0% versus the backlog at the end of the third quarter of 2022,  and down 11.5% compared to the Company's backlog at the end of calendar year 2022.

Comments on Results

Jeff Leonard, Alamo Group's President and Chief Executive Officer commented, "We are very pleased that our results were in line with our expectations and established new Company records for third quarter sales and earnings.  Double digit sales growth of almost 14% was driven primarily by strong demand from governmental agencies and industrial contractors.  Following the pattern of the past few quarters, further improvement in supply chain performance supported higher sales, improved operating efficiency, and allowed us to again approach our targeted 12% operating margin level.

"Conditions in our markets remained relatively strong across most customer segments.  Third quarter 2023 order bookings were up 10% compared to the third quarter of 2022 and increased 25% compared to the second quarter of this year. We were especially pleased with the very strong orders received in the UK and Europe across both operating Divisions.   In North America, the governmental sector continued to exhibit significant strength, while activity in forestry and tree care declined modestly.  The farm and ranch segment declined on a year-over-year basis but recovered very nicely sequentially compared to the weakness we reported in the second quarter as a result of the retail incentive programs we put in place this year.

"We are also pleased to announce the recent acquisition of Royal Truck and Equipment.  Royal Truck is a premier producer of specialized highway safety equipment including crash attenuator trucks.  This segment has been growing at a very high rate over the past few years, and will continue to benefit from the recent U.S. federal infrastructure bill.  Royal Truck has established a strong reputation as an innovative market leader and high-quality producer of products designed to enhance the safety of highway work crews.  This business will be integrated with our sweeper and debris collector group that forms a core part of our Industrial Equipment Division.  The acquisition is expected to be modestly accretive for the balance of 2023.

"Looking ahead, we expect the trends of the past several quarters to continue. Fleet and infrastructure investment by government agencies is likely to remain elevated for the foreseeable future. While weakness in the farm and ranch segment is expected to persist, we don't anticipate that conditions will further deteriorate in the near term. 

"Our strong, high quality order backlog gives us excellent forward visibility.  Combined with the health of our markets, this bodes well for our performance for the remainder of this year and for the first several quarters of 2024.  We are confident that we can continue to execute our strategy efficiently, and in doing so continue to grow at double digit rates and to further optimize operating margin.

"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."

Earnings Conference Call
The Company will host a conference call to discuss the results on Friday, November 3, 2023 at 10:00 a.m. ET. Hosting the call will be members of senior management.

Individuals wishing to participate in the conference call should dial 1-877-317-6789 (domestic) or 1-412-317-6789 (international). For interested individuals unable to join the call, a replay will be available until Friday, November 10, 2023, by dialing 1-877-344-7529 (domestic) or 1-412-317-0088 (internationally), passcode 1294689.

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 Friday, November 3, 2023 beginning at 10:00 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 September 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.

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^{(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.

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 3 reflects Division performance inclusive of non-GAAP financial measures such as backlog and earnings before interest, tax, depreciation and amortization ("EBITDA").

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SOURCE Alamo Group Inc.