ALG
$172.86
Alamo Group
($.85)
(.49%)
Earnings Details
1st Quarter March 2023
Thursday, May 4, 2023 4:15:00 PM
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Summary

Alamo Group (ALG) Recent Earnings

Alamo Group (ALG) reported 1st Quarter March 2023 earnings of $2.79 per share on revenue of $411.8 million. The consensus earnings estimate was $1.95 per share on revenue of $390.1 million. Revenue grew 13.7% on a year-over-year basis.

Alamo Group Inc is engaged in the design and manufacture of agricultural equipment and infrastructure maintenance equipment. Its products include tractor-mounted mowing and other vegetation maintenance equipment, among others.

Results
Reported Earnings
$2.79
Earnings Whisper
-
Consensus Estimate
$1.95
Reported Revenue
$411.8 Mil
Revenue Estimate
$390.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ALAMO GROUP ANNOUNCES RECORD 2023 FIRST QUARTER SALES AND EARNINGS

SEGUIN, Texas, May 4, 2023 /PRNewswire/ -- Alamo Group Inc. (NYSE: ALG) today reported results for the first quarter ended March 31, 2023.

Highlights for the Quarter

  • Net sales of $411.8 million, up 13.7%
    • Vegetation Management net sales of $256.4 million, up 16.0%
    • Industrial Equipment net sales of $155.3 million, up 10.2%
  • Income from operations of $49.0 million, up 68.4%
  • Net income of $33.3 million, or $2.79 per diluted share, up 80.6%
  • Trailing twelve-month EBITDA of $216.3 million, up 10.4% from full year 2022(1)
  • Backlog of $994.8 million, up 8.4% compared to prior year first quarter-end

Results for the Quarter

Record first quarter 2023 net sales of $411.8 million increased 13.7% compared to $362.0 million in the first quarter of 2022. Gross margin improved in the quarter versus the first quarter of 2022 by $25.9 million or 29.9%.  First quarter net income improved 80.6% to $33.3 million, or $2.79 per diluted share, compared to net income of $18.5 million, or $1.55 per diluted share in the first quarter of 2022.  The Company's backlog at the end of the first quarter was $994.8 million, an increase of $77.0 million, or 8.4%, from the backlog at the end of the first quarter of 2022, but was down slightly from the end of calendar year 2022.

The positive results reported for the quarter were achieved through a combination of improved supply chain performance, higher manufacturing throughput and effective price management.  These results were achieved despite certain challenges that remain within our supply chain, ongoing skilled labor constraints, as well as negative currency impacts.

Results by Division

Vegetation Management

The Vegetation Management Division's first quarter net sales were $256.4 million, up 16.0% compared to $221.0 million for the same period in 2022.  The increase in net sales was driven by strong shipments of forestry, tree care, agricultural and governmental mowing products in both North America and Europe. 

The Division's income from operations for the first quarter 2023 was $36.5 million, up 99.1% compared to $18.3 million for the first quarter of 2022.  The Division's performance benefited from improved pricing and effective cost controls, despite ongoing supply chain issues and continued labor shortages. 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 first quarter 2023 net sales were $155.3 million, up 10.2% compared to $141.0 million during the same period in 2022.  The increase was attributable to higher sales in all product lines with sweepers and debris collectors leading the way. The Division's income from operations for the first quarter of 2023 was $12.5 million compared to $10.8 million for first quarter of 2022, an increase of 16.1%.  Limited allocations of truck chassis and ongoing shortages of other industrial components continued to constrain this Division's sales growth during the first quarter of 2023.

Comments on Results

Jeff Leonard, Alamo Group's President, and Chief Executive Officer commented, "Our first quarter results validated our expectation for sequential improvement in our operations, and marked the best quarter in Company history.  Enhanced supply chain performance supported higher sales, while moderated material cost inflation, improved efficiencies, and our own spending restraint, supported margin expansion. The 340-basis point improvement in gross margin relative to the first quarter of 2022 was driven by determined price discipline over the past year, better manufacturing flows and improved capacity utilization. Our ongoing facility consolidation and make-in-market initiatives also contributed to margin expansion. Overall, it was an excellent quarter and we are very pleased that the Company is approaching the upgraded 12 percent operating income target that we established in early 2022.  

"Conditions in our markets remained relatively strong during the first quarter, although order bookings were down 17% compared to the exceptional pace in the first quarter of 2022.  The decline in bookings was related mainly to lower orders for forestry and tree care equipment, and to a lesser extent modestly lower sales of mowers and agricultural attachments to farm and ranch customers in North America.  Orders for vegetation management equipment from governmental customers in North America and Europe increased nicely. First quarter bookings in our Industrial Equipment Division also improved, driven by sharply higher orders for street sweepers, debris collectors, and vacuum trucks while orders for excavators and snow removal equipment were relatively flat compared to the same period last year.  Consolidated order backlog of $995 million was approximately 8% higher than the prior year's first quarter.

"As we anticipated, supply chain performance began to improve as we started 2023. While shortages continued and quantities of big-ticket items like truck chassis remained limited by allocations, the volume of parts, components, and chassis we received during the quarter increased appreciably. Thanks to outstanding support from our key suppliers, our teams were able to complete manufacturing of additional machines that had been partially assembled previously, but were awaiting delivery of delayed parts.

"Moving forward, our outlook for the next few quarters remains quite positive. We expect that the trends evident in our first quarter results will continue. Our backlog remains strong, and we anticipate continued, positive pricing contribution in the coming quarters. Our conservative approach to spending will also continue given the economic uncertainty that remains evident.

"Our longer-term outlook is a bit more cautious. We believe that the somewhat softer order activity we experienced in the first quarter was at least partly due to dealer concerns over higher interest rates.  U.S. net farm income is forecast to decline this year for the first time in several years, but is expected to remain at historically high levels. Agriculture equipment dealer inventories continue to rise, and are approaching pre-pandemic levels.  A weakening U.S. housing market and falling prices for industrial wood pellets could indicate a more cautious outlook for the forestry segment.

"More positively, the outlook for our governmental customers, who represent the majority of Company sales, remains positive.  While recent forecasts of U.S. state revenues are mixed, it appears that 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 asset values have begun to decline in many areas due to fiscal tightening.  However, on balance, the financial condition of most governmental agencies appears to be quite good in both North America and Europe.

"Lastly, during the first quarter of 2023, we unveiled our first fully electric and electric-hybrid versions of our flagship products at the ConExpo show including, for example, an all-electric excavator and street sweeper. We received overwhelmingly positive customer feedback regarding these new, more climate friendly products. We are encouraged that, based on this feedback, we are on the right path with the development of our product range. We will also be releasing our fourth annual sustainability report in the coming days that will highlight the consistent progress we have made across the spectrum of our environmental, social and governance initiatives.

"I want to take this opportunity to thank all 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 end-customers who have remained loyal to our company, and to our family of well-known equipment 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 Friday, May 5, 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 1-877-407-0789 (domestic) or 1-201-689-8562 (international). For interested individuals unable to join the call, a replay will be available until Friday, May 12, 2023, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (internationally), passcode 13738073.

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, May 5, 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 4,250 employees and operates 28 plants in North America, Europe, Australia and Brazil as of March 31, 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) 



March 31,
2023

March 31,
2022

ASSETS







Current assets:







Cash and cash equivalents


$  109,320



$     84,277


Accounts receivable, net


363,525



296,857


Inventories


362,593



355,389


Other current assets


9,978



12,740


Total current assets


845,416



749,263









Rental equipment, net


36,125



31,850









Property, plant and equipment


158,388



151,684









Goodwill


196,533



198,726


Intangible assets


167,832



182,305


Other non-current assets


24,918



24,187









Total assets


$  1,429,212



$  1,338,015









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







Trade accounts payable


$  101,549



$   114,312


Income taxes payable


14,801



867


Accrued liabilities


72,890



68,315


Current maturities of long-term debt and finance lease obligations


15,008



15,022


Total current liabilities


204,248



198,516









Long-term debt, net of current maturities


356,259



357,834


Long-term tax liability


3,781



4,416


Other long-term liabilities


23,628



25,908


Deferred income taxes


18,948



24,161









Total stockholders' equity


822,348



727,180









Total liabilities and stockholders' equity


$  1,429,212



$  1,338,015


 

Alamo Group Inc. and Subsidiaries 

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(Unaudited)




Three Months Ended



3/31/2023


3/31/2022

Net sales:





  Vegetation Management


$        256,435


$        221,006

  Industrial Equipment


155,336


140,999

Total net sales


411,771


362,005






Cost of sales


299,264


275,364

Gross margin


112,507


86,641



27.3 %


23.9 %






Selling, general and administration expense


59,668


53,635

Amortization expense


3,815


3,887

Income from operations


49,024


29,119



11.9 %


8.0 %






Interest expense


(5,940)


(2,647)

Interest income


383


72

Other income (expense)


1,002


(1,752)






Income before income taxes


44,469


24,792

Provision for income taxes


11,120


6,322






Net Income


$          33,349


$          18,470






Net income per common share:










Basic


$              2.80


$              1.56






Diluted


$              2.79


$              1.55






Average common shares:





Basic


11,899


11,860






Diluted


11,962


11,916






 

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

March 31,




Change due to currency
translation


2023


2022


% change
from 2022


$


%











Vegetation Management

$           256,435


$           221,006


16.0 %


$              (5,538)


(2.5) %

Industrial Equipment

155,336


140,999


10.2 %


(2,002)


(1.4) %

Total net sales

$           411,771


$           362,005


13.7 %


$              (7,540)


(2.1) %





















 

Attachment 2


Alamo Group Inc.

Non-GAAP Financial Reconciliation

(in thousands)

(Unaudited)

 


Consolidated Net Change of Total Debt, Net of Cash



March 31, 2023


March 31, 2022


Net Change








Current maturities


$                   15,008


$                   15,022



Long-term debt,net of current


356,259


357,834



Total debt


$                371,267


$                372,856










Total cash


109,320


84,277



     Total Debt Net of Cash


$                261,947


$                288,579


$          (26,632)








 

EBITDA



Three Months Ended


Trailing Twelve Months Ended



March 31, 2023


March 31, 2022


March 31, 2023


December 31, 2022










Income from operations


$            49,024


$            29,119


$          168,497


$         148,592

Depreciation


7,626


7,126


31,912


31,412

Amortization


3,991


4,054


15,881


15,944

     EBITDA


$            60,641


$            40,299


$          216,290


$         195,948










 

Cision View original content:https://www.prnewswire.com/news-releases/alamo-group-announces-record-2023-first-quarter-sales-and-earnings-301816528.html

SOURCE Alamo Group Inc.