SEGUIN,
Texas, May 4, 2022 /PRNewswire/ -- Alamo Group
Inc. (NYSE: ALG) today reported results for the first quarter ended
March 31, 2022.
Highlights for the Quarter
- Net sales of $362.0 million, up
16.3%
-
- Vegetation Management net sales of $221.0 million, up 20.2%
- Industrial Equipment net sales of $141.0
million, up 10.8%
- Income from operations of $29.1
million, up 14.5%
- Net income of $18.5 million, or
$1.55 per diluted share, up 5.8%
-
- Adjusted net income of $19.4
million, or $1.63 per diluted
share, up 11.4% (1)
- Trailing twelve-month EBITDA of $165.7
million, up 2.2% from full year 2021(1)
- Backlog of $917.8 million, up
102.8% compared to prior year first quarter-end
Results for the Quarter
First quarter 2022 net sales were $362.0
million compared to $311.2
million in the first quarter of 2021, an increase of
16.3%. Gross margin improved in the quarter compared to the
first quarter of 2021 but was negatively impacted by continued
higher material and transportation costs and supply chain
disruptions which resulted in material shortages throughout the
quarter. First quarter net income improved 5.8% to
$18.5 million, or $1.55 per diluted share, compared to net income
of $17.5 million, or $1.47 per diluted share in the first quarter of
2021. The Company completed an excise tax audit covering a
5-year period which resulted in a one-time $1.3 million expense in the first quarter of
2022. Excluding this charge, adjusted net income was
$19.4 million or $1.63 per diluted share.(1) The
Company's backlog at the end of the first quarter of 2022 was
$917.8 million, an increase of
$465.3 million, or 102.8%, from the
backlog at the end of the first quarter of 2021, and up 14.6% from
the end of calendar year 2021.
The Company's results for the first quarter continued to be
materially impacted by persistent pandemic-related headwinds
including supply chain disruptions, cost inflation and, to a lesser
extent, skilled labor shortages.
Results by Division
Vegetation Management
The Vegetation Management Division had a strong first quarter of
2022 as markets remained solid and orders increased compared to the
first quarter of 2021. The Division's first quarter net sales
were $221.0 million, up 20.2%
compared to $183.9 million for the
same period in 2021. The increase in sales was driven by
strong retail demand for agricultural, forestry, tree care, and
governmental mowing products in both North America and Europe.
The Division's income from operations for the first quarter 2022
was $18.3 million, up 9.5% compared
to $16.8 million for the first
quarter of 2021. Complementing a very strong performance from
its North American operations, were positive results in the
United Kingdom, France, Brazil and Australia. The Division was
negatively impacted by supply chain issues, higher material and
freight costs and related surcharges which eroded margins and
contributed to lower manufacturing efficiencies.
Industrial Equipment
The Industrial Equipment Division's first quarter 2022 net sales
were $141.0 million, up 10.8%
compared to the same period in 2021. The increase was
primarily attributable to higher sales of its excavators and vacuum
truck products and, to a lesser extent, other product lines within
the Division. Net sales and new orders for both industrial
and governmental customers were strong for the first quarter of
2022. Delays in planned deliveries of medium duty truck
chassis, other industrial engines, axles and transmissions
significantly impacted the Division in the quarter.
The Division's income from operations for the first quarter of
2022 was $10.8 million, up 24.1%,
compared to $8.7 million, for the
first quarter of 2021. The Division was negatively impacted
by supply chain problems and higher material and inbound freight
costs.
Comments on Results
Jeff Leonard, Alamo Group's
President and Chief Executive Officer, commented, "The Company
continued to perform well, setting new records for sales and
earnings for a first quarter. First quarter net sales of
$362 million set an all-time company
record for sales in a quarter and both of our operating divisions
reported healthy, double-digit sales growth compared to the first
quarter of 2021. As has been the pattern in recent quarters,
customer demand has remained quite strong in virtually every market
we serve, as evidenced by the record order bookings received in the
first quarter. Strong order activity also resulted in our
order backlog moving significantly higher and again setting a
company record.
"However, in the first quarter of 2022, we did not experience
improvement in the performance of our supply network. In
fact, in some areas, the supply chain situation became more
difficult. In previous quarters, supply chain disruptions and
resulting shortages had more of an impact on our Industrial
Equipment Division. During the first quarter of 2022,
however, both of our operating divisions were negatively affected
by component shortages. This was partly due to the emerging
wave of COVID in China and the
resulting lockdowns in areas of the country that are significant
producers of industrial equipment and parts. These lockdowns
exacerbated the backlog of cargo that is waiting to load in
China's ports, a situation that is
becoming increasingly critical.
"Accelerating cost inflation also adversely impacted the Company
and caused a seventy basis point compression of our first quarter
operating margin compared to the first quarter of last year.
The impact of inflation we experienced across a wide spectrum of
purchased materials and components was partially offset by
reductions in steel prices during the quarter. Rapidly rising
freight costs and associated surcharges are a growing concern that
also impacted our margin during the quarter. The price
increases we implemented at the end of 2021 helped to minimize the
overall effect of supply chain cost inflation on our operating
margin during the quarter but obviously, the situation is
dynamic. We continue to monitor our costs closely and
will take further price actions, without hesitation, to protect
margin.
"In January, several of our larger North American facilities
lost production capacity temporarily as a number of our skilled
employees fell ill with the Omicron variant of
COVID-19. Our facilities in Europe also experienced a further wave of
COVID-related illness during the quarter. By re-scheduling
work shifts and adding modest overtime, we were able to recover
some of the lost production time in February and more still in
March. It is worth mentioning that the skilled labor
shortages that we experienced in previous quarters improved
somewhat during the first quarter as our focus on retention and
recruitment began to produce the benefits we have been
targeting.
"Turning now to the performance of our two operating divisions.
Our Vegetation Management Division produced strong results in the
first quarter. This Division's markets remained buoyant and
order bookings improved by over 28% compared to the end of the
first quarter of 2021. Against the backdrop of the strong
ordering activity and a constrained supply chain, backlog increased
by 97% compared to the end of the first quarter of 2021. Net
sales in this division rose over 20% in the quarter with all of its
business groups individually contributing double digit sales
growth. An outstanding performance by the Division's North
American agricultural products operations was particularly
gratifying, while another strong performance from its forestry and
tree care businesses also contributed very nicely.
Governmental mower sales in Europe
and North America were notably
stronger, also up by double digits, in the first quarter. Our
South American operations, while smaller in scale, continued to
develop positively with net sales that more than doubled compared
to the first quarter of last year. In spite of the
strong reported sales growth, this Division's sales were
constrained by supply chain issues to a greater extent than in
previous quarters. This Division sources more components from
Europe and China relative to our Industrial Equipment
Division. Consequently, recent events in these regions had a
more significant impact in this quarter which was reflected in the
Division's gross margin that compressed by 145 basis points
relative to the first quarter of 2021. While a portion of the
erosion in margin was attributable to lower efficiency due to the
worsening supply chain situation, higher costs for inbound freight
and related surcharges had a more significant, negative
impact. Still, driven by strong top line growth, the
Division's operating income improved by 9% to $18.3 million, 8.3% of sales.
"Net sales in our Industrial Equipment Division increased nearly
11% in the quarter driven by a double-digit increase in shipments
of its excavators and vacuum trucks and supported by solid, but
more modest increases in sales of its street sweepers, debris
collectors and snow removal equipment. Demand for this
Division's products and services remained strong among the
industrial contractors and governmental agencies that are its most
important customer segments. Order bookings in the quarter
increased by 14.5% and the Division's order backlog improved by
116% relative to the end of the first quarter of 2021.
Despite the positive increase in sales in the quarter, the
Division's sales continued to be severely constrained across the
full spectrum of its operations by the ongoing shortage of
medium-duty truck chassis. While the chassis shortage was
initially caused primarily by shortages of semi-conductor chips,
now, shortages of other components such as axles and transmissions
are compounding the problem. The tragic war in Ukraine that unfolded this quarter added
further supply concerns as that country is a significant producer
of industrial truck components. European chassis
manufacturers felt the effects of the war as well as the previously
mentioned resurgence of COVID-19 in several EU member
countries. Consequently, our shipments of vacuum trucks in
the European market declined in the quarter. To address the
worsening chassis supply situation, we have further diversified our
purchases to secure sufficient supplies, although delivery times
will remain extended for at least the balance of 2022. This
Division's gross margin improved by 40 basis points compared to the
first quarter of 2021 as a result of good price discipline and
improved operational efficiency. Income from operations was
$10.8 million, 7.6% of sales, an
improvement of 24% compared to the prior year first quarter.
"Looking ahead to our second quarter, there seems to be no
supply chain relief in sight nor do we anticipate any near-term
moderation in the cost inflation we are experiencing. In
April, steel prices began moving higher again and that's obviously
concerning. We continue to monitor our cost structure closely
and will implement further pricing measures to protect
margins. Realistically, with the COVID outbreak in
China, worsening severe congestion
at Chinese ports, and logistics problems generally, it is unlikely
we will see meaningful supply side improvement during the second
quarter and perhaps not for the rest of 2022.
"Given the significant supply disruptions that were evident, I'm
very pleased with the Company's record-setting sales and earnings
performance in the first quarter. The full credit for this
performance goes to our thousands of dedicated employees around the
world who continue to find creative ways to work through, or
around, the many setbacks being presented by the turbulent supply
chain situation. While the operating environment remains very
challenging, and new challenges continue to arise, I'm confident
that we will continue to identify and quickly implement solutions
that will allow Alamo Group to maintain good momentum in sales and
earnings for the remainder of the year."
Earnings Conference Call
The Company will host a conference call to discuss the results
on Thursday, May 5, 2022 at
4:00 p.m. ET. Hosting the call will
be members of senior management.
Individuals wishing to participate in the conference call should
dial 888-882-4478 (domestic) or 323-794-2590 (international). For
interested individuals unable to join the call, a replay will be
available until Thursday, May 12,
2022, by dialing 888-203-1112 (domestic) or 719-457-0820
(internationally), passcode 7515566.
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 Thursday, May 5,
2022, beginning at 4:00 p.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 4,300 employees and operates 29 plants in
North America, Europe, Australia and Brazil as of March
31, 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)
|
|
|
March 31,
2022
|
March 31,
2021
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 84,277
|
|
|
$
105,265
|
|
Accounts receivable,
net
|
|
296,857
|
|
|
242,971
|
|
Inventories
|
|
355,389
|
|
|
262,780
|
|
Other current assets
|
|
12,740
|
|
|
13,347
|
|
Total current
assets
|
|
749,263
|
|
|
624,363
|
|
|
|
|
|
|
|
|
Rental equipment, net
|
|
31,850
|
|
|
39,693
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
151,684
|
|
|
152,787
|
|
|
|
|
|
|
|
|
Goodwill
|
|
198,726
|
|
|
194,025
|
|
Intangible assets
|
|
182,305
|
|
|
188,955
|
|
Other non-current assets
|
|
24,187
|
|
|
18,860
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
1,338,015
|
|
|
$
1,218,683
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
114,312
|
|
|
$ 93,899
|
|
Income taxes payable
|
|
867
|
|
|
2,749
|
|
Accrued liabilities
|
|
68,315
|
|
|
60,681
|
|
Current maturities of long-term
debt and finance lease obligations
|
|
15,022
|
|
|
15,078
|
|
Total current
liabilities
|
|
198,516
|
|
|
172,407
|
|
|
|
|
|
|
|
|
Long-term debt, net of current
maturities
|
|
357,834
|
|
|
338,605
|
|
Long-term tax
liability
|
|
4,416
|
|
|
4,408
|
|
Other long-term
liabilities
|
|
25,908
|
|
|
29,075
|
|
Deferred income
taxes
|
|
24,161
|
|
|
22,947
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
727,180
|
|
|
651,241
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
1,338,015
|
|
|
$
1,218,683
|
|
Alamo Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
|
|
|
|
Three Months Ended
|
|
|
3/31/2022
|
|
3/31/2021
|
Net sales:
|
|
|
|
|
Vegetation
Management
|
|
$
221,006
|
|
$
183,884
|
Industrial
Equipment
|
|
140,999
|
|
127,305
|
Total net sales
|
|
362,005
|
|
311,189
|
|
|
|
|
|
Cost of sales
|
|
275,364
|
|
234,763
|
Gross margin
|
|
86,641
|
|
76,426
|
|
|
23.9 %
|
|
24.6 %
|
|
|
|
|
|
Selling, general and
administration expense
|
|
53,635
|
|
47,330
|
Amortization
expense
|
|
3,887
|
|
3,658
|
Income from operations
|
|
29,119
|
|
25,438
|
|
|
8.0 %
|
|
8.2 %
|
|
|
|
|
|
Interest expense
|
|
(2,647)
|
|
(2,613)
|
Interest income
|
|
72
|
|
288
|
Other income (expense)
|
|
(1,752)
|
|
(630)
|
|
|
|
|
|
Income before income taxes
|
|
24,792
|
|
22,483
|
Provision for income taxes
|
|
6,322
|
|
5,021
|
|
|
|
|
|
Net Income
|
|
$
18,470
|
|
$
17,462
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.56
|
|
$
1.48
|
|
|
|
|
|
Diluted
|
|
$
1.55
|
|
$
1.47
|
|
|
|
|
|
Average common shares:
|
|
|
|
|
Basic
|
|
11,860
|
|
11,820
|
|
|
|
|
|
Diluted
|
|
11,916
|
|
11,882
|
|
|
|
|
|
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
|
|
|
March 31,
|
|
|
2022
|
|
2021
|
|
|
|
|
|
Operating Income - GAAP
|
|
$
29,119
|
|
$
25,438
|
|
|
|
|
|
Net Income - GAAP
|
|
$
18,470
|
|
$
17,462
|
(add: excise tax)
|
|
974
|
|
—
|
Adjusted Net Income -
non-GAAP
|
|
$
19,444
|
|
$
17,462
|
|
|
|
|
|
Diluted EPS - GAAP
|
|
$
1.55
|
|
$
1.47
|
(add: excise tax)
|
|
0.08
|
|
—
|
Adjusted Diluted EPS -
non-GAAP
|
|
$
1.63
|
|
$
1.47
|
Attachment 2
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
|
|
2022
|
|
2021
|
|
% change
from 2021
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Vegetation
Management
|
$
221,006
|
|
$
183,884
|
|
20.2 %
|
|
$
(1,560)
|
|
(0.8) %
|
Industrial
Equipment
|
140,999
|
|
127,305
|
|
10.8 %
|
|
(1,003)
|
|
(0.8) %
|
Total net sales
|
$
362,005
|
|
$
311,189
|
|
16.3 %
|
|
$
(2,563)
|
|
(0.8) %
|
|
|
|
|
|
|
|
|
|
|
Attachment 3
Alamo Group
Inc.
Non-GAAP Financial
Reconciliation
(in
thousands)
(Unaudited)
|
|
Consolidated Net Change of Total Debt, Net of
Cash
|
|
|
March 31, 2022
|
|
March 31, 2021
|
|
Net Change
|
|
|
|
|
|
|
|
Current
maturities
|
|
$
15,022
|
|
$
15,078
|
|
|
Long-term debt,net of
current
|
|
357,834
|
|
338,605
|
|
|
Total debt
|
|
$
372,856
|
|
$
353,683
|
|
|
|
|
|
|
|
|
|
Total cash
|
|
84,277
|
|
105,265
|
|
|
Total Debt Net of
Cash
|
|
$
288,579
|
|
$
248,418
|
|
$
40,161
|
|
|
|
|
|
|
|
EBITDA
|
|
|
Three Months Ended
|
|
Trailing Twelve Months Ended
|
|
|
March 31,
2022
|
|
March 31,
2021
|
|
March 31,
2022
|
|
December 31,
2021
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
$
29,119
|
|
$
25,438
|
|
$
120,619
|
|
$
116,938
|
Depreciation
|
|
7,126
|
|
7,454
|
|
29,514
|
|
29,842
|
Amortization
|
|
4,054
|
|
3,825
|
|
15,533
|
|
15,304
|
EBITDA
|
|
$
40,299
|
|
$
36,717
|
|
$
165,666
|
|
$
162,084
|
|
|
|
|
|
|
|
|
|
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SOURCE Alamo Group Inc.