Alamo Group Announces 2012 Fourth Quarter and Year End Results

  Alamo Group Announces 2012 Fourth Quarter and Year End Results

Business Wire

SEGUIN, Texas -- March 6, 2013

Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and
year ended December 31, 2012.

Net sales in the fourth quarter were $149.4 million compared to net sales of
$147.0 million in the fourth quarter of 2011, an increase of 2%. Net income
for the quarter was $4.2 million, or $0.35 per diluted share, versus net
income of $8.0 million, or $0.67 per diluted share, in 2011. The 2012 results
included the effect of a non-cash impairment charge of $0.7 million on a
pretax basis, or $0.05 per diluted share on an after-tax basis, related to a
write-down of goodwill in the Company’s European Division. The 2011 fourth
quarter results reflected cash and non-cash items related to the acquisition
of Tenco. These included acquisition expenses and a Gain on Bargain Purchase
as adjusted for a retrospective change based on post-closing adjustments to
the fair value of assets acquired and liabilities assumed as of the
acquisition date. The 2011 results also included certain restructuring costs
related to the consolidation of one of the Company’s facilities in South
Dakota, and an impairment charge relating to a write-down of goodwill in the
Company’s European Division. The net effect of the 2011 adjustments amounted
to a gain of $5.3 million on a pre-tax basis, or $3.1 million, or $0.26 per
diluted share, on an after-tax basis. A reconciliation of the non-GAAP
financial measures discussed above and throughout this press release is
included in the attached tables.

Adjusting for the above referenced items, net income for the fourth quarter of
2012 was $4.9 million, or $0.40 per diluted share, compared to $4.9 million,
or $0.41 per diluted share in 2011.

For the full year, net sales in 2012 were $628.4 million versus $603.6 million
in 2011, an increase of 4%. Net sales for 2012 included the full year effect
of Tenco, which was acquired in October 2011. Tenco contributed $28.4 million
to net sales in 2012 and $7.0 million in 2011. Net income for the full year
was $28.9 million, or $2.40 per diluted share, in 2012 compared to $32.7
million, or $2.73 per diluted share, in 2011. Adjusting for the items
referenced above, net income for 2012 was $29.6 million, or $2.45 per diluted
share, compared to $29.6 million, or $2.47 per diluted share in 2011.

Alamo Group’s North American Industrial Division net sales in the fourth
quarter of 2012 were $66.5 million compared to $64.3 million in the fourth
quarter of 2011, an increase of 3%. For the full year, the Division’s net
sales were $263.4 million in 2012, compared to $229.6 million in 2011, an
increase of 15%. The acquisition of Tenco, referenced above, is included in
this Division’s results and accounted for 9% of the Division’s 2012 growth.
Organic growth in the Division was 6%, driven by improvements in the mowing
equipment and vacuum truck lines, whereas excavators and street sweeping
equipment continued to feel the effects of soft economic conditions.

Alamo’s North American Agricultural Division net sales for the fourth quarter
of 2012 were $45.0 million, an increase of 3% compared to net sales of $43.5
million in the prior year’s fourth quarter. For the full year, the Division’s
net sales were $200.5 million in 2012 compared to $204.0 million in 2011, a
decrease of 2%. The Division’s sales were impacted by the wide spread drought
conditions in the U.S. Midwest in 2012.

The Company’s European Division net sales in the fourth quarter of 2012 were
$37.9 million, compared to net sales of $39.2 million in the comparable period
of 2011, a decrease of 3%. For the full year, net sales in the Division were
$164.6 million in 2012 versus $170.0 million in 2011, a decrease of 3%. Sales
in Europe continued to be impacted by declines in the overall European
economy, though nearly all of the decrease in the Division’s 2012 net sales
was related to exchange rate changes due to the U.S. dollar’s strengthening
compared to the Euro.

Ron Robinson, Alamo Group’s President and Chief Executive Officer commented on
the results as follows, “While 2012 was a little more challenging for Alamo
Group than 2011, we had record net sales, which benefited from the acquisition
of Tenco and organic growth in some of our Industrial product lines. Despite
continued soft conditions in many of our markets, we expanded our gross
margins through our ongoing efforts focused on operational improvement, and
lowered our working capital, resulting in strong cash flow and a solid balance
sheet.”

“In North America, we continued to feel the effects of governmental budget
constraints in our Industrial Division, though sales did improve as the end
users for this Division’s products began to show indications of pent up demand
to meet the ongoing requirements of infrastructure maintenance. We believe
this trend, combined with an aging fleet of equipment, should drive growth in
this sector in 2013. Our Agricultural Division felt the impact of the drought
conditions in the Midwest, particularly in the sale of higher margin spare
parts due to lower equipment utilization. However, commodity prices are still
favorable and the growing demand for food products worldwide should bode well
for this sector. Our operations in Europe have been affected by the overall
decline in the European economy and our results there were further reduced by
currency effects. We feel market conditions in Europe will remain difficult in
2013, but we should benefit by stable demand for our type of products and
potentially from some strengthening in the Euro as well.”

“Though there is still economic uncertainty we remain optimistic about the
potential for 2013. We feel the combination of improving market prospects, our
ongoing focus on operational improvement and our strong financial condition
positions Alamo Group well to respond to changes in the economy and take
advantage of opportunities that may arise. We also remain committed to
building shareholder value, as indicated by our decision in January to raise
our dividend 17% on an annual basis. Looking ahead, we are encouraged about
our prospects for the future.”

Alamo Group is a leader in the design, manufacture, distribution and service
of high quality equipment for right-of-way maintenance and agriculture. Our
products include tractor mounted mowing and other vegetation maintenance
equipment, excavators, street sweepers, vacuum trucks, snow removal equipment,
pothole patchers, agricultural implements and related after-market parts and
services. The Company, founded in 1969, has approximately 2,470 employees and
operates eighteen plants in North America, Europe and Australia as of December
31, 2012. The corporate offices of Alamo Group Inc. are located in Seguin,
Texas and the headquarters for the Company’s European operations are located
in Salford Priors, England. The company website address is
www.alamo-group.com.

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: market demand,
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. This release also contains non-GAAP
financial measures. These measures are included to facilitate meaningful
comparisons of our results to those in prior periods and future periods and to
allow a better evaluation of our operating performance, in management’s
opinion. Our reference to these non-GAAP measures should not be considered as
a substitute for results that are presented in a manner consistent with GAAP.
These non-GAAP measures are provided to enhance investors overall
understanding of our financial performance.

                               (Tables Follow)


ALAMO GROUP REPORTS 2012 FOURTH QUARTER RESULTS

Alamo Group Inc. and Subsidiaries (NYSE:ALG)
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
                                                            
                               Fourth Quarter Ended      Year Ended
                               12/31/12     12/31/11     12/31/12     12/31/11
North American
Industrial                     $66,512      $64,275      $263,353     $229,594
Agricultural                   44,980       43,483       200,467      203,993
European                       37,912       39,239       164,582      170,006
Total Sales                    149,404      146,997      628,402      603,593
                                                                      
Cost of sales                  117,361      118,427      484,890      468,508
Gross margin                   32,043       28,570       143,512      135,085
                               21.4%        19.4%        22.8%        22.4%
                                                                      
Operating Expenses             24,434       23,340       97,507       92,347
Gain on Bargain Purchase       -            (8,616)      -            (8,616)
Goodwill Impairment            656          1,898        656          1,898
Income from Operations         6,953        11,948       45,349       49,456
                               4.7%         8.1%         7.2%         8.2%
                                                                      
Interest Expense               (260)        (707)        (1,620)      (2,422)
Interest Income                55           90           234          247
Other Income (Expense)         139          253          (517)        848
                                                                      
Income before income taxes     6,887        11,584       43,446       48,129
Provision for income taxes     2,688        3,534        14,543       15,442
                                                                      
Net Income                     $4,199       $8,050       $28,903      $32,687
                                                                      
Net income per common
share:
Basic                          $0.35        $0.68        $2.43        $2.76
                                                                      
Diluted                        $0.35        $0.67        $2.40        $2.73
                                                                      
Average common shares:
Basic                          11,933       11,859       11,899       11,848
                                                                      
Diluted                        12,090       11,973       12,058       11,966



Summary Balance Sheet Data
                                    
                              12/31/12       12/31/11
Receivables                   140,268        143,934
Inventories                   108,758        114,523
Current Liabilities           78,128         75,805
Long Term Debt                118            8,621
Equity                        310,286        277,276


                                            
Alamo Group Inc.
Fourth Quarter Earnings
Non-GAAP Financial Reconciliation
(in thousands)
                                            
                                       Fourth Quarter
                                       2012            2011                
                                                                  
Reported Net Income                         $ 4,199                 $ 8,050
                                                                    
Adjustments (Pre-tax)
- Acquisition, Severance,              -                 1,464
Restructuring Costs
- Gain on Bargain Purchase             -                 (8,616 )
- Goodwill Impairment                  656               1,898  
Adjustments (Pre-tax)                  656               (5,254 )
                                                                    
Adjustments (After-tax)                      656                    (3,126 )
                                                                    
Adjusted Net Income                         $ 4,855                 $ 4,924  
                                                                    
Diluted Shares                                12,090                  11,973
                                                                    
Adjusted Diluted EPS                        $ 0.40                  $ 0.41
                                                                    
                                                                    
                                                                    
                                                                    
                                       Year to Date
                                       2012              2011
                                                                    
Reported Net Income                         $ 28,903                $ 32,687
                                                                    
Adjustments (Pre-tax)
- Acquisition, Severance,              -                 1,464
Restructuring Costs
- Gain on Bargain Purchase             -                 (8,616 )
- Goodwill Impairment                  656               1,898  
Adjustments (Pre-tax)                  656               (5,254 )
                                                                    
                                                                    
Adjustments (After-tax)                      656                    (3,126 )
                                                                    
Adjusted Net Income                         $ 29,559                $ 29,561 
                                                                    
                                                                    
Diluted Shares                                12,058                  11,966
                                                                    
Adjusted Diluted EPS                        $ 2.45                  $ 2.47
                                            


Alamo Group Inc.                     
Revenue YTD
                                              
Total Revenue               $ 628,402         $ 603,593
Less:
-Tenco                      (28,394)          (6,950)
Total                       $ 600,008         $ 596,643
                                              
Industrial Division
Revenue YTD
Total Revenue               263,353           229,594
Less:
-Tenco                      (28,394)          (6,950)
Total                       $ 234,959         $ 222,644


Contact:

For: Alamo Group Inc.
Robert H. George, 830-372-9621
Vice President
or
FTI Consulting Inc.
Eric Boyriven, 212-850-5600
 
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