ALAMO GROUP ANNOUNCES THIRD QUARTER FINANCIAL RESULTS AND COST REDUCTION ACTIONS
Highlights for the Quarter
-
Net Sales of$401.3 million , down 4.4% versus prior year-
Industrial Equipment Division net sales of
$211.2 million , up 22.3% -
Vegetation Management Division net sales of$190.1 million , down 23.0%
-
Industrial Equipment Division net sales of
-
Income from operations of
$40.1 million , 10.0% of net sales -
Net income of
$27.4 million -
Fully diluted EPS of
$2.28 per share, including$0.10 of expense associated with workforce reductions; EPS of$2.38 per share excluding such expense (1) -
Total debt net of cash of
$84.1 million improved by$126.2 million or 60.0% compared to third quarter 2023 (1) -
Backlog at the end of the third quarter was
$728.8 million -
Trailing twelve-month EBITDA of
$228.2 million holds at 13.7% ofNet Sales (1) -
The Company is implementing cost saving actions targeting annualized savings of
$25 to$30 million -
Workforce reduction expenses for the third quarter and first nine months were approximately
$1.6 and$3.2 million , respectively
-
Workforce reduction expenses for the third quarter and first nine months were approximately
Third Quarter Results
Third quarter 2024 net sales of
Net income was
Year-to-Date Results
For the first nine months of 2024, net sales of
Net income for the first nine months was
As part of our commitment to optimize operations and enhance shareholder value, we are diligently executing cost saving initiatives inclusive of plant consolidations and workforce reductions. In the first nine months of 2024, we incurred approximately
Comments on Results
"Demand for products and services offered by the Industrial Equipment Division remained historically strong in all areas during the third quarter. Spending by governmental agencies to upgrade and modernize maintenance fleets continued at a good pace. In addition, demand from industrial contractors remained strong, and rental fleet utilization was at a healthy level. We were pleased that demand for snow removal equipment remained strong in the third quarter. This Division reported solid sales growth and excellent profitability in the third quarter and its backlog remained elevated.
"The softness in markets for Vegetation Management equipment continued during the quarter as elevated interest rates and a challenging macro economy constrained demand. Sales for agricultural mowers and related equipment were muted as farm incomes remained under pressure. Farm equipment dealer inventory, despite coming down most of this year, remained elevated. Weakness in the US housing sector continued to suppress demand for our forestry and tree care products during the quarter. Governmental mowing was once again a bright spot for this Division, and we were pleased to see that our new Mantis prime mover continued to gain acceptance among state and municipal agencies. With difficulties in forestry and agriculture, the Division's net sales declined 23% compared to the third quarter of 2023. The Division's operating margin declined under pressure from costs associated with inventory reduction actions, excess capacity, lower efficiency and separation costs.
"To address the weakness in our
"When completed, these measures will reduce the Company's worldwide total production capacity by approximately 8%. As a result of the large facility consolidations and associated personnel reductions, the Company's employee population has declined approximately 10% since January of this year. While the impact of these decisions to our employees is regrettable, ongoing Vegetation Management market weakness demanded that we take significant actions.
"As we look to the end of 2024, our outlook remains cautious as we are not expecting material changes in market conditions in the final weeks of 2024. We continue to anticipate that governmental demand for our products will be strong for the remainder of 2024 and well into the first half of 2025 at least. Our optimism in the strength of the governmental markets is only modestly tempered by the fact that National elections are imminent in the
"As we look further, we are currently not anticipating significant improvement in the agricultural equipment market until late 2025. The outlook in forestry and tree care is somewhat better. The significant damage caused by the recent storms in the
"Given this background, and with confidence in our ability to complete the consolidation activities now underway as well as the strength in our industrial and governmental businesses, we remain encouraged about the Company's prospects for 2025 and beyond."
Earnings Conference Call
The Company will host a conference call to discuss the results on
Individuals wishing to participate in the conference call should dial (833) 816-1163 (domestic) or (412) 317-1898 (international). For interested individuals unable to join the call, a replay will be available until
The live broadcast of
About
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, disease outbreaks, geopolitical risks, including effects of the war in the
(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. |
Condensed Consolidated Balance Sheets (in thousands) (Unaudited) |
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ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ 140,038 |
|
|
$ 113,534 |
|
Accounts receivable, net |
|
356,617 |
|
|
378,107 |
|
Inventories |
|
371,999 |
|
|
371,748 |
|
Other current assets |
|
10,950 |
|
|
9,976 |
|
Total current assets |
|
879,604 |
|
|
873,365 |
|
|
|
|
|
|
|
|
Rental equipment, net |
|
47,260 |
|
|
38,431 |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
163,374 |
|
|
164,519 |
|
|
|
|
|
|
|
|
|
|
206,458 |
|
|
195,863 |
|
Intangible assets |
|
156,399 |
|
|
159,884 |
|
Other non-current assets |
|
28,246 |
|
|
23,452 |
|
|
|
|
|
|
|
|
Total assets |
|
$ 1,481,341 |
|
|
$ 1,455,514 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Trade accounts payable |
|
$ 97,259 |
|
|
$ 110,944 |
|
Income taxes payable |
|
15,687 |
|
|
13,695 |
|
Accrued liabilities |
|
84,061 |
|
|
79,682 |
|
Current maturities of long-term debt and finance lease obligations |
|
15,009 |
|
|
15,008 |
|
Total current liabilities |
|
212,016 |
|
|
219,329 |
|
|
|
|
|
|
|
|
Long-term debt, net of current maturities |
|
209,157 |
|
|
308,892 |
|
Long-term tax liability |
|
708 |
|
|
2,634 |
|
Other long-term liabilities |
|
28,886 |
|
|
22,171 |
|
Deferred income taxes |
|
12,854 |
|
|
14,754 |
|
|
|
|
|
|
|
|
Total stockholders' equity |
|
1,017,720 |
|
|
887,734 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity |
|
$ 1,481,341 |
|
|
$ 1,455,514 |
|
Alamo Group Inc. and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except per share amounts) (Unaudited) |
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Three Months Ended |
|
Nine Months Ended |
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|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
Vegetation Management |
|
$ 190,115 |
|
$ 246,902 |
|
$ 625,397 |
|
$ 764,683 |
Industrial Equipment |
|
211,186 |
|
172,742 |
|
617,793 |
|
507,426 |
Total net sales |
|
401,301 |
|
419,644 |
|
1,243,190 |
|
1,272,109 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
300,414 |
|
305,501 |
|
922,490 |
|
927,385 |
Gross margin |
|
100,887 |
|
114,143 |
|
320,700 |
|
344,724 |
|
|
25.1 % |
|
27.2 % |
|
25.8 % |
|
27.1 % |
|
|
|
|
|
|
|
|
|
Selling, general and administration expense |
|
56,747 |
|
60,564 |
|
178,158 |
|
180,090 |
Amortization expense |
|
4,061 |
|
3,826 |
|
12,175 |
|
11,465 |
Income from operations |
|
40,079 |
|
49,753 |
|
130,367 |
|
153,169 |
|
|
10.0 % |
|
11.9 % |
|
10.5 % |
|
12.0 % |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(4,886) |
|
(6,729) |
|
(17,075) |
|
(19,506) |
Interest income |
|
562 |
|
385 |
|
1,877 |
|
1,125 |
Other income (expense) |
|
(32) |
|
138 |
|
1 |
|
94 |
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
35,723 |
|
43,547 |
|
115,170 |
|
134,882 |
Provision for income taxes |
|
8,318 |
|
8,632 |
|
27,321 |
|
30,244 |
|
|
|
|
|
|
|
|
|
Net Income |
|
$ 27,405 |
|
$ 34,915 |
|
$ 87,849 |
|
$ 104,638 |
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic |
|
$ 2.29 |
|
$ 2.93 |
|
$ 7.34 |
|
$ 8.78 |
|
|
|
|
|
|
|
|
|
Diluted |
|
$ 2.28 |
|
$ 2.91 |
|
$ 7.30 |
|
$ 8.73 |
|
|
|
|
|
|
|
|
|
Average common shares: |
|
|
|
|
|
|
|
|
Basic |
|
11,977 |
|
11,928 |
|
11,965 |
|
11,916 |
|
|
|
|
|
|
|
|
|
Diluted |
|
12,041 |
|
11,996 |
|
12,035 |
|
11,983 |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures Reconciliation
From time to time,
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 4 reflects Division performance inclusive of non-GAAP financial measures such as backlog and earnings before interest, tax, depreciation and amortization ("EBITDA").
Attachment 1 |
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Non-GAAP Financial Reconciliation (in thousands, except per share numbers) (Unaudited)
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Impact of Non-recurring Items |
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Three Months Ended |
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Nine Months Ended |
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|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
Operating Income - GAAP |
|
$ 40,079 |
|
$ 49,753 |
|
$ 130,367 |
|
$ 153,169 |
(add: workforce reduction) |
|
1,607 |
|
— |
|
3,226 |
|
— |
Adjusted Operating Income - non-GAAP |
|
$ 41,686 |
|
$ 49,753 |
|
$ 133,593 |
|
$ 153,169 |
|
|
|
|
|
|
|
|
|
Net Income - GAAP |
|
$ 27,405 |
|
$ 34,915 |
|
$ 87,849 |
|
$ 104,638 |
(add: workforce reduction) |
|
1,226 |
|
— |
|
2,461 |
|
— |
Adjusted Net Income - non-GAAP |
|
$ 28,631 |
|
$ 34,915 |
|
$ 90,310 |
|
$ 104,638 |
|
|
|
|
|
|
|
|
|
Diluted EPS - GAAP |
|
$ 2.28 |
|
$ 2.91 |
|
$ 7.30 |
|
$ 8.73 |
(add: workforce reduction) |
|
0.10 |
|
— |
|
0.20 |
|
— |
Adjusted Diluted EPS - non-GAAP |
|
$ 2.38 |
|
$ 2.91 |
|
$ 7.50 |
|
$ 8.73 |
Attachment 2 |
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Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
|
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Impact of Currency Translation on |
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|
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Three Months Ended
|
|
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Change due to currency |
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|
2024 |
|
2023 |
|
% change |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
Vegetation Management |
$ 190,115 |
|
$ 246,902 |
|
(23.0) % |
|
$ (336) |
|
(0.1) % |
Industrial Equipment |
211,186 |
|
172,742 |
|
22.3 % |
|
(330) |
|
(0.2) % |
Total net sales |
$ 401,301 |
|
$ 419,644 |
|
(4.4) % |
|
$ (666) |
|
(0.2) % |
|
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|
|
|
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|
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|
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|
|
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|
Nine Months Ended
|
|
|
|
Change due to currency |
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|
2024 |
|
2023 |
|
% change |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
Vegetation Management |
$ 625,397 |
|
$ 764,683 |
|
(18.2) % |
|
$ 926 |
|
0.1 % |
Industrial Equipment |
617,793 |
|
507,426 |
|
21.8 % |
|
(816) |
|
(0.2) % |
Total net sales |
$ 1,243,190 |
|
$ 1,272,109 |
|
(2.3) % |
|
$ 110 |
|
— % |
|
|
|
|
|
|
|
|
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|
Attachment 3 |
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Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
|
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Consolidated Net Change of Total Debt, Net of Cash |
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Net Change |
|
|
|
|
|
|
|
Current maturities |
|
$ 15,009 |
|
$ 15,008 |
|
|
Long-term debt, net of current |
|
209,157 |
|
308,892 |
|
|
Total debt |
|
$ 224,166 |
|
$ 323,900 |
|
|
|
|
|
|
|
|
|
Total cash |
|
140,038 |
|
113,534 |
|
|
Total Debt Net of Cash |
|
$ 84,128 |
|
$ 210,366 |
|
$ (126,238) |
|
|
|
|
|
|
|
EBITDA |
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|
Nine Months Ended |
|
Trailing Twelve Months Ended |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
$ 130,367 |
|
$ 153,169 |
|
$ 175,165 |
|
$ 197,967 |
Depreciation |
|
27,284 |
|
23,674 |
|
36,064 |
|
32,454 |
Amortization |
|
12,702 |
|
11,992 |
|
16,932 |
|
16,222 |
EBITDA |
|
$ 170,353 |
|
$ 188,835 |
|
$ 228,161 |
|
$ 246,643 |
|
|
|
|
|
|
|
|
|
Attachment 4 |
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Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
|
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Vegetation Management Division Performance |
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|
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|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
Backlog |
|
|
|
|
|
$ 185,353 |
|
$ 390,206 |
|
|
|
|
|
|
|
|
|
|
|
$ 190,115 |
|
$ 246,902 |
|
625,397 |
|
764,683 |
|
|
|
|
|
|
|
|
|
Income from Operations |
|
12,404 |
|
30,251 |
|
50,089 |
|
102,320 |
|
|
6.5 % |
|
12.3 % |
|
8.0 % |
|
13.4 % |
|
|
|
|
|
|
|
|
|
Depreciation |
|
4,457 |
|
3,915 |
|
13,224 |
|
11,335 |
Amortization |
|
3,032 |
|
3,038 |
|
9,109 |
|
9,124 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
19,893 |
|
37,204 |
|
72,422 |
|
122,779 |
|
|
10.5 % |
|
15.1 % |
|
11.6 % |
|
16.1 % |
|
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Industrial Equipment Division Performance |
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Three Months Ended
|
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Nine Months Ended
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
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Backlog |
|
|
|
|
|
$ 543,425 |
|
$ 500,661 |
|
|
|
|
|
|
|
|
|
|
|
$ 211,186 |
|
$ 172,742 |
|
617,793 |
|
507,426 |
|
|
|
|
|
|
|
|
|
Income from Operations |
|
27,675 |
|
19,502 |
|
80,278 |
|
50,849 |
|
|
13.1 % |
|
11.3 % |
|
13.0 % |
|
10.0 % |
|
|
|
|
|
|
|
|
|
Depreciation |
|
4,734 |
|
4,230 |
|
14,060 |
|
12,339 |
Amortization |
|
1,205 |
|
964 |
|
3,593 |
|
2,868 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
33,614 |
|
24,696 |
|
97,931 |
|
66,056 |
|
|
15.9 % |
|
14.3 % |
|
15.9 % |
|
13.0 % |
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SOURCE