ALAMO GROUP ANNOUNCES RECORD 2023 THIRD QUARTER SALES AND EARNINGS

Rhea-AI Summary

Alamo Group Inc. reported record sales and earnings for the third quarter of 2023. Net sales increased by 13.8% to $419.6 million, with Vegetation Management net sales up 8.0% and Industrial Equipment net sales up 23.1%. Income from operations increased by 38.8% to $49.8 million, and net income rose by 35.2% to $34.9 million. The trailing twelve-month EBITDA reached $245.0 million, up 25.0% from the previous year. However, the backlog decreased by 2.0% to $890.9 million compared to the prior year.

Positive

• Eighth consecutive quarterly record for sales and earnings
• Net sales increased by 13.8% to $419.6 million
• Income from operations increased by 38.8% to $49.8 million
• Net income rose by 35.2% to $34.9 million
• Trailing twelve-month EBITDA reached $245.0 million, up 25.0% from full year 2022

Negative

• Backlog decreased by 2.0% to $890.9 million compared to prior year

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.

(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, 2023			September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents		$  113,534			$     75,308
Accounts receivable, net		378,107			301,919
Inventories		371,748			362,713
Other current assets		9,976			10,685
Total current assets		873,365			750,625
Rental equipment, net		38,431			33,156
Property, plant and equipment		164,519			153,062
Goodwill		195,863			192,946
Intangible assets		159,884			173,508
Other non-current assets		23,452			24,494
Total assets		$  1,455,514			$  1,327,791
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable		$  110,944			$   100,886
Income taxes payable		13,695			5,218
Accrued liabilities		79,682			71,820
Current maturities of long-term debt and finance lease obligations		15,008			15,010
Total current liabilities		219,329			192,934
Long-term debt, net of current maturities		308,892			348,463
Long-term tax liability		2,634			3,781
Other long-term liabilities		22,171			24,821
Deferred income taxes		14,754			20,761
Total stockholders' equity		887,734			737,031
Total liabilities and stockholders' equity		$  1,455,514			$  1,327,791

 

Alamo Group Inc. and Subsidiaries  Condensed Consolidated Statements of Income (in thousands, except per share amounts) (Unaudited)
		Three Months Ended				Nine Months Ended
		9/30/2023		9/30/2022		9/30/2023		9/30/2022
Net sales:
Vegetation Management		$        246,902		$        228,511		$    764,683		$    704,520
Industrial Equipment		172,742		140,282		507,426		422,492
Total net sales		419,644		368,793		1,272,109		1,127,012
Cost of sales		305,501		276,428		927,385		848,289
Gross margin		114,143		92,365		344,724		278,723
		27.2 %		25.0 %		27.1 %		24.7 %
Selling, general and administration expense		60,564		52,723		180,090		161,367
Amortization expense		3,826		3,802		11,465		11,481
Income from operations		49,753		35,840		153,169		105,875
		11.9 %		9.7 %		12.0 %		9.4 %
Interest expense		(6,729)		(3,734)		(19,506)		(9,570)
Interest income		385		93		1,125		222
Other income (expense)		138		1,413		94		(473)
Income before income taxes		43,547		33,612		134,882		96,054
Provision for income taxes		8,632		7,791		30,244		23,291
Net Income		$          34,915		$          25,821		$    104,638		$      72,763
Net income per common share:
Basic		$              2.93		$              2.18		$           8.78		$           6.13
Diluted		$              2.91		$              2.16		$           8.73		$           6.10
Average common shares:
Basic		11,928		11,883		11,916		11,875
Diluted		11,996		11,941		11,983		11,932

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").

 

Attachment 1
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
	2023		2022		% change from 2022		$		%
Vegetation Management	$           246,902		$           228,511		8.0 %		$                3,918		1.7 %
Industrial Equipment	172,742		140,282		23.1 %		217		0.2 %
Total net sales	$           419,644		$           368,793		13.8 %		$                4,135		1.1 %
	Nine Months Ended  September 30,						Change due to currency translation
	2023		2022		% change from 2022		$		%
Vegetation Management	$           764,683		$           704,520		8.5 %		$              (1,600)		(0.2) %
Industrial Equipment	507,426		422,492		20.1 %		(3,047)		(0.7) %
Total net sales	$        1,272,109		$        1,127,012		12.9 %		$              (4,647)		(0.4) %

 

Attachment 2
Alamo Group Inc. Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
Consolidated Net Change of Total Debt, Net of Cash
		September 30, 2023		September 30, 2022		Net Change
Current maturities		$             15,008		$              15,010
Long-term debt,net of current		308,892		348,463
Total debt		$           323,900		$            363,473
Total cash		113,534		75,308
Total Debt Net of Cash		$           210,366		$            288,165		$          (77,799)

 

EBITDA
		Nine Months Ended				Trailing Twelve Months Ended
		September 30, 2023		September 30, 2022		September 30, 2023		December 31, 2022
Income from operations		$           153,169		$           105,875		$           195,886		$           148,592
Depreciation		23,674		21,972		33,114		31,412
Amortization		11,992		11,981		15,955		15,944
EBITDA		$           188,835		$           139,828		$           244,955		$           195,948

 

Attachment 3
Alamo Group Inc. Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
Vegetation Management Division Performance
		Three Months Ended September 30,				Nine Months Ended  September 30,
		2023		2022		2023		2022
Backlog						$     390,206		$      544,571
Net Sales		$      246,902		$      228,511		764,683		704,520
Income from Operations		30,251		27,130		102,320		78,261
		12.3 %		11.9 %		13.4 %		11.1 %
Depreciation		3,915		3,765		11,335		10,718
Amortization		3,038		2,999		9,124		9,188
EBITDA		37,204		33,894		122,779		98,167
		15.1 %		14.8 %		16.1 %		13.9 %

 

Industrial Equipment Division Performance
		Three Months Ended September 30,				Nine Months Ended  September 30,
		2023		2022		2023		2022
Backlog						$      500,661		$      364,286
Net Sales		$      172,742		$      140,282		507,426		422,492
Income from Operations		19,502		8,710		50,849		27,614
		11.3 %		6.2 %		10.0 %		6.5 %
Depreciation		4,230		3,794		12,339		11,254
Amortization		964		969		2,868		2,793
EBITDA		24,696		13,473		66,056		41,661
		14.3 %		9.6 %		13.0 %		9.9 %

 

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SOURCE Alamo Group Inc.

FAQ

What were Alamo Group Inc.'s net sales for the third quarter of 2023?

Alamo Group Inc.'s net sales for the third quarter of 2023 were $419.6 million.

What was the increase in net income for Alamo Group Inc. in the third quarter of 2023?

Net income for Alamo Group Inc. increased by 35.2% to $34.9 million in the third quarter of 2023.

What was the change in backlog for Alamo Group Inc. compared to the prior year?

The backlog for Alamo Group Inc. decreased by 2.0% to $890.9 million compared to the prior year.

What was the trailing twelve-month EBITDA for Alamo Group Inc.?

The trailing twelve-month EBITDA for Alamo Group Inc. was $245.0 million, up 25.0% from full year 2022.

What is the website of Alamo Group Inc.?

The website of Alamo Group Inc. is www.alamo-group.com.