SEGUIN, Texas, Feb. 23, 2023 /PRNewswire/ — Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and year ended December 31, 2022.
Highlights
- Fourth quarter net sales of $386.6 million, up 15%
- Fourth quarter operating income of $42.7 million, up 53%
- Fourth quarter net income of $29.2 million, or $2.44 per diluted share, up 52%
- Full year net sales of $1.5 billion, up 13% year over year
- Full year operating income of $148.6 million, up 27%
- Full year net income of $101.9 million, up 27%
- Full year diluted EPS was $8.54, up 27%
- Record EBITDA of $195.9 million, up 21% year over year(1)
- Backlog of $1.0 billion, up 26% compared to year-end 2021
Fourth Quarter Results
Fourth quarter 2022 net sales were $386.6 million compared to $337.2 million in the fourth quarter of 2021, an increase of 15%. Gross margin improved in the quarter versus the fourth quarter of 2021 by $14.1 million or 17%. Fourth quarter net income improved 52% to $29.2 million, or $2.44 per diluted share, compared to net income of $19.2 million, or $1.62 per diluted share in the fourth quarter of 2021. The Company’s backlog at the end of 2022 was in excess of $1.0 billion, an increase of $205.7 million, or 26%, from the backlog at the end of 2021.
The positive results reported for the quarter were achieved as a result of improved product deliveries, as well as a combination of effective price management, an improvement in manufacturing efficiencies, and disciplined control of operating expenses. These results were achieved despite continued headwinds 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.
Full Year Results
Full year 2022 net sales increased to $1.5 billion, up 13% compared to $1.3 billion for the full year 2021. Net income for the year was $101.9 million, or $8.54 per diluted share, compared to net income of $80.2 million, or $6.75 per diluted share in 2021, a year-over-year improvement of 27%.
Throughout 2022, the Company experienced strong demand for its products with the Company setting records for net sales and earnings in each quarter of the year. The Company’s record performance was achieved despite the significant material cost increases, supply chain disruptions and skilled labor shortages that the Company experienced during the year. Our results were also negatively impacted by currency translation as the U.S. dollar strengthened against the currencies of international countries where we operate.
Division Results
Vegetation Management
The Vegetation Management Division’s fourth quarter 2022 net sales were $232.5 million, up 14% compared to $204.3 million for the same period in 2021. Full year 2022 net sales in this Division were $937.1 million, compared to $812.7 million for the full year 2021, up 15%. The increase in net sales for both the fourth quarter and the full year was driven by strong customer demand for forestry, tree care, agricultural, and governmental mowing products in both North America and Europe.
The Division’s fourth quarter operating income for 2022 was $30.2 million, up 67% compared to $18.1 million for the fourth quarter of 2021. Full year 2022 operating income was $108.5 million versus $78.9 million for the full year 2021, an increase of 37%. The Division benefited from strong sales, improved pricing, and effective control of costs and expenses despite ongoing supply chain disruptions, higher material and inbound freight costs, and labor shortages. Outstanding performance in the Division’s North American operations was complemented by strong results during the year in the United Kingdom, France, Brazil, and Australia.
Industrial Equipment
The Industrial Equipment Division’s fourth quarter 2022 net sales were $154.1 million, up 16% compared to $132.8 million during the same period in 2021. The increase was primarily attributable to higher sales of snow removal products and, to a lesser extent, other product lines within the Division. Insufficient availability of truck chassis and other industrial components continued to constrain the Division’s sales growth during the fourth quarter of 2022.
Full year 2022 net sales were $576.6 million compared to $521.5 million for the full year 2021, an 11% increase. Excavators and vacuum trucks were the primary drivers of the sales increase, but all product lines contributed.
The Division’s fourth quarter operating income was $12.5 million, up 28% compared to $9.7 million for the fourth quarter of 2021. Full year 2022 operating income was $40.1 million compared to $38.0 million for the full year 2021, an increase of 5%. The Division was negatively impacted throughout 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, “It was gratifying to achieve very solid results in the fourth quarter despite the persistent supply chain, cost inflation, and labor shortage headwinds we experienced throughout the year. Our teams once again worked through these challenges and produced record setting results to cap off the best year for sales and earnings in Company history. I’m very proud of our employees and take this opportunity to offer thanks and special recognition for their dedication, persistence, and ingenuity that largely overcame these obstacles and produced nice results in the fourth quarter and for 2022.
“As they had throughout the year, our markets continued to display strength during the fourth quarter. Governmental agencies at the state, county and municipal levels remained in good fiscal health and continued to invest in upgrading their infrastructure maintenance fleets. Activity in our forestry and tree care segment was also strong and demand from the agricultural sector was good, especially for a fourth quarter. Order bookings in the quarter, while down 2% from prior year, were at a very good level. Bookings in our Industrial Equipment Division were sharply higher, while those in our Vegetation Management Division decreased. We ended 2022 with a backlog in excess of $1.0 billion for the first time which provides us good visibility for the first half of 2023.
“Our supply chain performance also improved modestly relative to the third quarter, although more improvement is needed to support accelerated sales growth over the next several quarters. Truck chassis deliveries remained constrained by allocations from the major OEM’s, and although the allocation quantities are slowly increasing, they are not yet keeping pace with our requirements. This has driven the backlog in our Industrial Equipment Division higher, and it may be several more quarters before a balance is achieved. Other supply chain bottlenecks in components such as engines, hydraulics and wiring harnesses are easing and our Vegetation Management Division clearly benefited from this in the fourth quarter. Our labor situation also improved during the quarter, although we continue to have many open positions, particularly in manufacturing.
“Throughout 2022, our teams effectively managed pricing to stay ahead of material cost inflation. During the fourth quarter, we benefited demonstrably from this good price stewardship as our operating margin reached 11%, a record for a fourth quarter and, more importantly, the highest level of the year. Our teams also maintained good expense discipline and total fourth quarter operating expenses declined compared to the prior year.
“The combination of double-digit sales growth, price leverage, improving efficiencies, and spending restraint produced the highest quarterly earnings per share in our history. For the full year 2022, the Company also set new records for both sales and earnings. As we look ahead to the balance of 2023, we continue to have confidence in our team’s ability to drive further performance improvements. The continued strength of our markets, combined with the size and quality of our backlog supports that confidence, and we believe the Company is well positioned for future success.”
Earnings Conference Call
The Company will host a conference call to discuss fourth quarter and year end 2022 financial results on Friday, February 24, 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 877-407-0789 (domestic) or 201-689-8562 (international). For interested individuals unable to join the call, a replay will be available until Friday, March 03, 2023 by dialing 844-512-2921 (domestic) or 412-317-6671 (internationally), passcode 13734940.
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, February 24, 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 4,200 employees and operates 28 plants in North America, Europe, Australia and Brazil as of December 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: 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.
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Alamo Group Inc. and Subsidiaries |
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December 31, |
December 31, |
|||||
|
ASSETS |
||||||
|
Current assets: |
||||||
|
Cash and cash equivalents |
$ 47,016 |
$ 42,115 |
||||
|
Accounts receivable, net |
317,581 |
237,970 |
||||
|
Inventories |
352,553 |
320,917 |
||||
|
Other current assets |
10,060 |
11,166 |
||||
|
Total current assets |
727,210 |
612,168 |
||||
|
Rental equipment, net |
33,723 |
32,514 |
||||
|
Property, plant and equipment |
155,007 |
152,491 |
||||
|
Goodwill |
195,858 |
202,406 |
||||
|
Intangible assets |
171,341 |
183,466 |
||||
|
Other non-current assets |
25,369 |
22,697 |
||||
|
Total assets |
$ 1,308,508 |
$ 1,205,742 |
||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||
|
Current liabilities: |
||||||
|
Trade accounts payable |
$ 97,537 |
$ 101,396 |
||||
|
Income taxes payable |
6,592 |
2,613 |
||||
|
Accrued liabilities |
71,368 |
73,523 |
||||
|
Current maturities of long-term debt and finance lease obligations |
15,009 |
15,032 |
||||
|
Total current liabilities |
190,506 |
192,564 |
||||
|
Long-term debt, net of current maturities |
286,943 |
254,522 |
||||
|
Long term tax payable |
3,781 |
4,416 |
||||
|
Other long-term liabilities |
23,668 |
27,119 |
||||
|
Deferred income taxes |
18,250 |
21,458 |
||||
|
Total stockholders’ equity |
785,360 |
705,663 |
||||
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Total liabilities and stockholders’ equity |
$ 1,308,508 |
$ 1,205,742 |
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Alamo Group Inc. and Subsidiaries |
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Fourth Quarter Ended |
Year Ended |
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12/31/2022 |
12/31/2021 |
12/31/2022 |
12/31/2021 |
||||
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Net sales: |
|||||||
|
Vegetation Management |
$ 232,545 |
$ 204,331 |
$ 937,065 |
$ 812,676 |
|||
|
Industrial Equipment |
154,059 |
132,842 |
576,551 |
521,547 |
|||
|
Total Net Sales |
386,604 |
337,173 |
1,513,616 |
1,334,223 |
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|
Cost of Sales |
288,809 |
253,521 |
1,137,098 |
999,709 |
|||
|
Gross Margin |
97,795 |
83,652 |
376,518 |
334,514 |
|||
|
25.3 % |
24.8 % |
24.9 % |
25.1 % |
||||
|
Selling, general and administration expense |
51,282 |
52,136 |
212,649 |
202,939 |
|||
|
Amortization Expense |
3,796 |
3,649 |
15,277 |
14,637 |
|||
|
Income from Operations |
42,717 |
27,867 |
148,592 |
116,938 |
|||
|
11.0 % |
8.3 % |
9.8 % |
8.8 % |
||||
|
Interest Expense |
(4,791) |
(2,406) |
(14,361) |
(10,533) |
|||
|
Interest Income |
530 |
272 |
752 |
1,149 |
|||
|
Other Income |
(200) |
(715) |
(673) |
1,944 |
|||
|
Income before income taxes |
38,256 |
25,018 |
134,310 |
109,498 |
|||
|
Provision for income taxes |
9,091 |
5,791 |
32,382 |
29,253 |
|||
|
Net Income |
$ 29,165 |
$ 19,227 |
$ 101,928 |
$ 80,245 |
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Net Income per common share: |
|||||||
|
Basic |
$ 2.45 |
$ 1.62 |
$ 8.58 |
$ 6.78 |
|||
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Diluted |
$ 2.44 |
$ 1.62 |
$ 8.54 |
$ 6.75 |
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Average common shares: |
|||||||
|
Basic |
11,884 |
11,843 |
11,877 |
11,837 |
|||
|
Diluted |
11,940 |
11,899 |
11,934 |
11,896 |
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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 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.
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Attachment 1 |
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Alamo Group Inc. |
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Impact of Currency Translation on Net Sales by Division |
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Three Months Ended December 31, |
Change due to currency |
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|
2022 |
2021 |
% change |
$ |
% |
|||||
|
Vegetation Management |
$ 232,545 |
$ 204,331 |
13.8 % |
$ (7,004) |
(3.4) % |
||||
|
Industrial Equipment |
154,059 |
132,842 |
16.0 % |
(3,511) |
(2.6) % |
||||
|
Total Net Sales |
$ 386,604 |
$ 337,173 |
14.7 % |
$ (10,515) |
(3.1) % |
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|
Twelve Months Ended |
Change due to currency |
||||||||
|
2022 |
2021 |
% change |
$ |
% |
|||||
|
Vegetation Management |
$ 937,065 |
$ 812,676 |
15.3 % |
$ (22,885) |
(2.8) % |
||||
|
Industrial Equipment |
576,551 |
521,547 |
10.5 % |
(9,537) |
(1.8) % |
||||
|
Total Net Sales |
$ 1,513,616 |
$ 1,334,223 |
13.4 % |
$ (32,422) |
(2.4) % |
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|
Attachment 2 |
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|
Alamo Group Inc. |
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|
Consolidated Net Change of Total Debt, Net of Cash |
|||||||
|
December 31, |
December 31, |
Net Change |
|||||
|
Current maturities |
$ 15,009 |
$ 15,032 |
|||||
|
Long-term debt, net of current |
286,943 |
254,522 |
|||||
|
Total Debt |
$ 301,952 |
$ 269,554 |
|||||
|
Total Cash |
47,016 |
42,115 |
|||||
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Total Debt Net of Cash |
$ 254,936 |
$ 227,439 |
$ (27,497) |
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EBITDA |
|||||||
|
Twelve Months Ended |
|||||||
|
December 31, |
December 31, |
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|
Income from operations |
$ 148,592 |
$ 116,938 |
|||||
|
Depreciation |
31,412
|
29,842 |
|||||
|
Amortization |
15,944 |
15,304 |
|||||
|
EBITDA |
$ 195,948 |
$ 162,084 |
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SOURCE Alamo Group Inc.
