ALG
$160.47
Alamo Group
$.28
.17%
Earnings Details
3rd Quarter September 2022
Thursday, November 3, 2022 4:15:00 PM
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Summary

Alamo Group (ALG) Recent Earnings

Alamo Group (ALG) reported 3rd Quarter September 2022 earnings of $2.16 per share on revenue of $368.8 million. The consensus earnings estimate was $2.48 per share on revenue of $390.6 million. Revenue grew 9.0% 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
$2.16
Earnings Whisper
-
Consensus Estimate
$2.48
Reported Revenue
$368.8 Mil
Revenue Estimate
$390.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ALAMO GROUP ANNOUNCES RECORD 2022 THIRD QUARTER SALES AND EARNINGS

SEGUIN, Texas, Nov. 3, 2022 /PRNewswire/ -- Alamo Group Inc. (NYSE: ALG) today reported record results for the third quarter ended September 30, 2022.

Highlights for the Quarter

  • Net sales of $368.8 million, up 9.0%
    • Vegetation Management net sales of $228.5 million, up 8.9%
    • Industrial Equipment net sales of $140.3 million, up 9.2%
  • Income from operations of $35.8 million, up 19.3%
  • Net income of $25.8 million, or $2.16 per diluted share, up 46.9%
  • Trailing twelve-month EBITDA of $179.0 million, up 10.4% from full year 2021(1)
  • Backlog of $908.9 million, up 40.9% compared to prior year third quarter-end

Results for the Quarter

Third quarter 2022 net sales were $368.8 million compared to $338.3 million in the third quarter of 2021, an increase of 9.0%.  Gross margin improved in the quarter versus the third quarter of 2021 by $6.1 million or 7.0%.  Third quarter net income improved 46.9% to $25.8 million, or $2.16 per diluted share, compared to net income of $17.5 million, or $1.47 per diluted share in the third quarter of 2021.  The Company's backlog at the end of the third quarter was $908.9 million, an increase of $263.7 million, or 40.9%, from the backlog at the end of the third quarter of 2021, and up 13.5% from the end of calendar year 2021.

The positive results reported for the quarter were achieved through a combination of effective price management and disciplined control of operating expenses.  These results were achieved despite persistent headwinds including material cost inflation, elevated transportation costs, and unfavorable manufacturing efficiencies directly related to supply chain disruptions and skilled labor shortages as well as the negative impact of currency exchange rates on our consolidated financial results.

Results by Division

Vegetation Management

The Vegetation Management Division's third quarter net sales were $228.5 million, up 8.9% compared to $209.8 million for the same period in 2021. For the first nine months of 2022, net sales in this Division were $704.5 million, compared to $608.3 million for the first nine months of 2021, up 15.8%.  The increase in net sales was driven by strong retail demand for forestry, tree care, agricultural and governmental mowing products in both North America and Europe. 

The Division's income from operations for the third quarter 2022 was $27.1 million, up 26.9% compared to $21.4 million for the third quarter of 2021.  For the first nine months of 2022, income from operations was $78.3 million versus $60.8 million for the first nine months of 2021, an increase of 28.7%.   The Division also benefited from solid sales, improved pricing and effective control of costs and expenses despite ongoing supply chain issues, higher material and inbound freight costs and continued labor shortages. Outstanding performance in the Division's North American operations was complemented by strong results in the United Kingdom, France, Brazil and Australia during the quarter.

Industrial Equipment

The Industrial Equipment Division's third quarter 2022 net sales were $140.3 million, up 9.2% compared to $128.5 million during the same period in 2021.  The increase was primarily attributable to higher sales of its snow removal products and, to a lesser extent, other product lines within the Division.  Delays in deliveries of medium duty truck chassis and other industrial components continued to constrain the Division's sales growth during the third quarter of 2022.

For the first nine months of 2022 net sales were $422.5 million compared to $388.7 million for the first nine months of 2021, an 8.7% increase.  Excavators and vacuum trucks were the primary drivers of the sales increase but all product lines contributed.

The Division's income from operations for the third quarter was $8.7 million, unchanged relative to the third quarter of 2021.  For the first nine months of 2022, income from operations was $27.6 million compared to $28.3 million for the first nine months of 2021, a decrease of 2.4%.  The Division was negatively impacted during the third quarter and first nine months of 2022 by supply chain disruptions, constrained chassis deliveries, labor shortages and higher material and inbound freight costs.

Comments on Results

Jeff Leonard, Alamo Group's President and Chief Executive Officer, commented, "We were pleased that our third quarter and year-to-date sales and earnings again set Company records despite a stubbornly challenging operating environment. 

"The Company's third quarter order bookings declined relative to the exceptionally strong third quarter of 2021 due to the timing of large snow equipment orders, the elimination of a preseason program in North American agricultural equipment (a result of historically high backlog levels), and unfavorable currency translations. Despite this, order backlog at the end of the quarter was $909 million, up 41% compared to one year ago and over 300% higher than third quarter of 2019 backlog, prior to the onset of the pandemic.

"Supply chain delays and shortages again constrained sales during the third quarter.  Although the truck chassis situation stabilized somewhat, delivery reliability continued to be a problem, with some suppliers pushing planned 2022 deliveries into 2023.  Allocated chassis volumes remained insufficient to support accelerated shipment of orders from backlog.  Shortages of other industrial components continued to present challenges and delays as well.  Supply chain re-shoring by larger equipment manufacturers continues to stress North American suppliers of specialty components.  Labor remained very tight in most areas where we operate, and this also contributed to constrained top line growth.  The combination of supply chain delays and labor shortages once again reduced operational efficiency and resulting gross margin during the third quarter.  We had anticipated some improvement in supply chain performance in the third quarter, however the expected gains did not materialize.

"Looking ahead, we are expecting fourth quarter sales to show solid growth relative to the fourth quarter of 2021 and we anticipate that earnings will continue to improve on a year-over-year basis.  However, exchange rates are likely to negatively impact sales when compared to the prior year.  We continue to anticipate a gradual improvement in supply chain performance; however, the timing remains uncertain and problems associated with labor shortages are expected to persist.  Certainly, these problems, although slowly improving, will continue to affect us in the fourth quarter and into early 2023. 

"We were pleased that, in spite of ongoing supply side headwinds, our third quarter and year-to-date sales and earnings results were records for the Company.  We continue to expect sales and earnings will expand nicely once the supply side issues resolve. The strength and health of our backlog continues to provide us with confidence about the performance of the Company for the remainder of this year and the near future."

Earnings Conference Call

The Company will host a conference call to discuss the results on Friday, November 4, 2022 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, November 11, 2022, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (internationally), passcode 13733267.

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 4, 2022, 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 4,200 employees and operates 29 plants in North America, Europe, Australia and Brazil as of September 30, 2022.  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: overall market demand, continuing impacts from the COVID-19 pandemic including more significant supply chain disruptions, reductions in customer demand, sales and profitability declines, operational disruptions, full or partial facility closures, and other similar impacts, geopolitical risks, including effects of the war in Ukraine, inflation, 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) 



September 30,
2022

September 30,
2021

ASSETS







Current assets:







Cash and cash equivalents


$     75,308



$     89,189


Accounts receivable, net


301,919



245,517


Inventories


362,713



294,270


Other current assets


10,685



6,807


Total current assets


750,625



635,783









Rental equipment, net


33,156



36,244









Property, plant and equipment


153,062



147,790









Goodwill


192,946



193,572


Intangible assets


173,508



181,516


Other non-current assets


24,494



22,873









Total assets


$  1,327,791



$  1,217,778









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







Trade accounts payable


$  100,886



$   107,059


Income taxes payable


5,218



6,425


Accrued liabilities


71,820



67,183


Current maturities of long-term debt and finance lease obligations


15,010



15,059


Total current liabilities


192,934



195,726









Long-term debt, net of current maturities


348,463



279,215


Long-term tax liability


3,781



4,408


Other long-term liabilities


24,821



29,058


Deferred income taxes


20,761



17,709









Total stockholders' equity


737,031



691,662









Total liabilities and stockholders' equity


$  1,327,791



$  1,217,778


 

Alamo Group Inc. and Subsidiaries 
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)




Three Months Ended


Nine Months Ended



9/30/2022


9/30/2021


9/30/2022


9/30/2021

Net sales:









  Vegetation Management


$        228,511


$        209,796


$    704,520


$    608,345

  Industrial Equipment


140,282


128,515


422,492


388,705

Total net sales


368,793


338,311


1,127,012


997,050










Cost of sales


276,428


252,015


848,289


746,188

Gross margin


92,365


86,296


278,723


250,862



25.0 %


25.5 %


24.7 %


25.2 %










Selling, general and administration expense


52,723


52,586


161,367


150,803

Amortization expense


3,802


3,667


11,481


10,988

Income from operations


35,840


30,043


105,875


89,071



9.7 %


8.9 %


9.4 %


8.9 %










Interest expense


(3,734)


(2,660)


(9,570)


(8,127)

Interest income


93


296


222


877

Other income (expense)


1,413


36


(473)


2,659










Income before income taxes


33,612


27,715


96,054


84,480

Provision for income taxes


7,791


10,196


23,291


23,462










Net Income


$          25,821


$          17,519


$      72,763


$      61,018










Net income per common share:


















Basic


$              2.18


$              1.48


$           6.13


$           5.16










Diluted


$              2.16


$              1.47


$           6.10


$           5.13










Average common shares:









Basic


11,883


11,842


11,875


11,835










Diluted


11,941


11,900


11,932


11,895










 

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 Operating Income, Adjusted Net Income and Adjusted Diluted EPS,  related to the impact of non-recurring items, 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 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, except per share numbers)
(Unaudited)


Impact of Non-recurring Items












Three Months Ended


Nine Months Ended



September 30,


September 30,



2022


2021


2022


2021










Operating Income - GAAP


$       35,840


$       30,043


$     105,875


$       89,071










Net Income - GAAP


$       25,821


$       17,519


$       72,763


$       61,018

(less: gain on sales of property)





(2,483)

(add: excise tax)




991


Adjusted Net Income - non-GAAP


$       25,821


$       17,519


$       73,754


$       58,535










Diluted EPS - GAAP


$           2.16


$           1.47


$           6.10


$           5.13

(less: gain on sales of property)





(0.21)

(add: excise tax)




0.08


              Adjusted Diluted EPS - non-GAAP


$           2.16


$           1.47


$           6.18


$           4.92

 

Attachment 2


Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands)
(Unaudited)


Impact of Currency Translation on Net Sales by Division












Three Months Ended
September 30,




Change due to currency
translation


2022


2021


% change
from 2021


$


%











Vegetation Management

$           228,511


$           209,796


8.9 %


$              (8,286)


(3.9) %

Industrial Equipment

140,282


128,515


9.2 %


(2,410)


(1.9) %

Total net sales

$           368,793


$           338,311


9.0 %


$            (10,696)


(3.2) %






















Nine Months Ended 
September 30,




Change due to currency
translation


2022


2021


% change
from 2021


$


%











Vegetation Management

$           704,520


$           608,345


15.8 %


$            (15,838)


(2.6) %

Industrial Equipment

422,492


388,705


8.7 %


(5,955)


(1.5) %

Total net sales

$        1,127,012


$           997,050


13.0 %


$            (21,793)


(2.2) %

 

Attachment 3


Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands)
(Unaudited)


Consolidated Net Change of Total Debt, Net of Cash



September 30,
2022


September 30,
2021


Net Change








Current maturities


$                   15,010


$                   15,059



Long-term debt,net of current


348,463


279,215



Total debt


$                363,473


$                294,274










Total cash


75,308


89,189



     Total Debt Net of Cash


$                288,165


$                205,085


$           83,080








 

EBITDA



Nine Months Ended


Trailing Twelve Months Ended



September 30,
2022


September 30,
2021


September 30,
2022


December 31,
2021










Income from operations


$          105,875


$            89,071


$          133,742


$         116,938

Depreciation


21,972


22,360


29,454


29,842

Amortization


11,981


11,488


15,797


15,304

     EBITDA


$          139,828


$          122,919


$          178,993


$         162,084










 

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SOURCE Alamo Group Inc.