ALAMO GROUP ANNOUNCES RECORD 2022 THIRD QUARTER SALES AND EARNINGS
Alamo Group reported record third-quarter results for 2022, with net sales reaching $368.8 million, a 9.0% increase year-over-year. Net income rose 46.9% to $25.8 million, or $2.16 per diluted share. Notably, the backlog increased 40.9% to $908.9 million. The Vegetation Management division contributed significantly, achieving net sales of $228.5 million. However, supply chain disruptions and labor shortages continued to pressure operational efficiency and gross margins.
- Record net sales of $368.8 million, up 9.0% year-over-year.
- Net income increased by 46.9% to $25.8 million, or $2.16 per diluted share.
- Backlog growth of 40.9% to $908.9 million compared to Q3 2021.
- Vegetation Management net sales increased by 8.9% to $228.5 million.
- Supply chain disruptions and labor shortages negatively impacted operational efficiency.
- Order bookings declined compared to the exceptionally strong third quarter of 2021.
- Delivery issues with truck chassis constrained sales growth.
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 , up9.0% - Vegetation Management net sales of
$228.5 million , up8.9% - Industrial Equipment net sales of
$140.3 million , up9.2% - Income from operations of
$35.8 million , up19.3% - Net income of
$25.8 million , or$2.16 per diluted share, up46.9% - Trailing twelve-month EBITDA of
$179.0 million , up10.4% from full year 2021(1) - Backlog of
$908.9 million , up40.9% compared to prior year third quarter-end
Results for the Quarter
Third quarter 2022 net sales were
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
The Division's income from operations for the third quarter 2022 was
Industrial Equipment
The Industrial Equipment Division's third quarter 2022 net sales were
For the first nine months of 2022 net sales were
The Division's income from operations for the third quarter was
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
"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 | ||||||
September 30, | September 30, | |||||
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 | ||||||||
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. | ||||||||
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. | |||||||||
Impact of Currency Translation on Net Sales by Division | |||||||||
Three Months Ended | Change due to currency | ||||||||
2022 | 2021 | % change | $ | % | |||||
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 | Change due to currency | ||||||||
2022 | 2021 | % change | $ | % | |||||
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. | ||||||
Consolidated Net Change of Total Debt, Net of Cash | ||||||
September 30, | September 30, | 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, | September 30, | September 30, | December 31, | |||||
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.
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