Alamo Group Inc. (NYSE: ALG) today reported results for the fourth
quarter and year ended December 31, 2009.
Net sales in the fourth quarter were $112.8 million compared to net
sales in the fourth quarter of 2008 of $122.5 million. Sales for the
quarter included $10.9 million from the acquisition of Bush Hog, which
was completed in October, 2009.
Net income for the fourth quarter was $8.0 million, or $0.70 per diluted
share, compared to a loss of $1.9 million, or ($0.19) per diluted share,
in the fourth quarter of 2008. The 2009 results include the effect of
the acquisition of Bush Hog and certain other restructuring and non-cash
charges. Excluding the results of Bush Hog, a Gain on Bargain Purchase
resulting from the acquisition, certain expenses incurred in connection
with the acquisition and subsequent restructuring measures, and an
impairment charge relating to a write-down of goodwill in the Company’s
North American Industrial Division, which are more fully described
below, our adjusted net income for the quarter was $4.0 million, or
$0.35 per diluted share. The 2008 results included a non-cash, pre-tax
goodwill impairment charge of $5.0 million. Excluding this charge,
adjusted net income was $2.7 million, or $0.27 per diluted share, in the
fourth quarter of 2008.
The adjustments to the Company’s 2009 fourth quarter results referenced
above include, on a pre-tax basis, an operating loss from Bush Hog of
$0.8 million in the fourth quarter; acquisition costs, severance and
restructuring charges related to Bush Hog of $1.8 million; a Gain on
Bargain Purchase on the Bush Hog asset acquisition of $27.7 million; and
a non-cash impairment charge of $14.1 million related to a write down of
a portion of the goodwill in the Company’s North American Industrial
Division due to continued soft market conditions. In total, these
adjustments for the fourth quarter amounted to a gain of $11.0 million
on a pre-tax basis, or $4.0 million, or $0.35 per diluted share, on an
after-tax basis. A reconciliation of the non-GAAP financial measures
discussed above and throughout this Press Release are included in the
attached tables.
For the full year, net sales in 2009 were $446.5 million versus $557.1
million in 2008. Excluding the contributions of Bush Hog and the
contributions of Rivard Developpement SAS (“Rivard”), which was acquired
in May 2008, our adjusted net sales were $411.8 million in 2009 compared
to $557.1 million in 2008.
Net income for 2009 was $17.1 million, or $1.65 per diluted share,
compared to $11.0 million, or $1.11 per diluted share in 2008. Excluding
the effects of the Bush Hog acquisition and the other adjustments in the
2009 fourth quarter referenced above, plus acquisition, severance and
reorganization charges taken earlier in the year as previously
announced, and adjusting for the acquisition of Rivard, adjusted net
income for the 2009 full-year period was $12.6 million, or $1.21 per
diluted share. This compares to adjusted net income, giving effect to
the previously announced goodwill impairment charge in the Company’s
North American Agricultural Division, of $15.5 million, or $1.56 per
diluted share, in 2008.
Alamo Group’s North American Industrial Division net sales for the
fourth quarter of 2009 were $39.2 million compared to $54.9 million in
the fourth quarter of 2008. This decrease reflects ongoing weak market
conditions for the Division’s products as governmental buyers, the main
customer for this Division, continue to cope with revenue shortfalls and
budget constraints. For the full year, net sales in the Division were
$173.9 million compared to $254.8 million in 2008.
Net sales for Alamo’s North American Agricultural Division were $29.1
million in the fourth quarter of 2009 compared to $25.4 million in the
fourth quarter of 2008, an increase of 15%. The results include the
contributions of Bush Hog which added $10.9 million to the Division’s
sales in the fourth quarter of 2009. Lower commodity prices continue to
impact the market. Additionally, dealers remained cautious about
inventory levels, particularly in the seasonally weak fourth quarter.
For the full year, the Agricultural Division net sales were $92.4
million in 2009 compared to $120.2 million in 2008.
Alamo’s European Division net sales in the fourth quarter of 2009 were
$44.5 million, a 5% increase versus $42.2 million in the fourth quarter
of 2008. The sales improvement for the quarter was achieved despite
generally soft market conditions, and reflects aggressive marketing
initiatives within both our traditional areas as well as new markets we
are developing. For the full year, sales were $180.2 million in 2009
compared to $182.1 million in the previous year. The full year results
include the effects of the acquisition of Rivard; excluding this effect,
our adjusted net sales in 2009 would have been $156.3 million.
Ron Robinson, Alamo Group’s President and Chief Executive Officer
commented, “Considering the difficult economic conditions we faced, we
are pleased with our performance in 2009 and the actions we took to
strengthen our operations and position our business for growth over the
longer term. During the year, we took a number of strategic initiatives
to align our expenses with lower sales volumes and, as a result,
incurred both severance and reorganization costs. Despite these costs,
we were profitable, and had higher gross margins, lower overheads and
strong positive cash flow as we worked our assets down in response to
the weaker market conditions. We have ended the year with a stronger
balance sheet, significantly lower debt and a substantially enhanced
presence in the North American agricultural market with the addition of
Bush Hog, and we continue to expect this acquisition to be accretive to
our earnings in 2010 and beyond.”
“Looking ahead, we believe the measures we adopted in 2009 to control
our costs and manage our balance sheet will continue to benefit us
throughout 2010. Certainly, we still have work to do, particularly as we
continue with the initiatives at Bush Hog to consolidate their
production, streamline their processes and convert them to our operating
systems, as well as ensuring we respond quickly to changing market
conditions in general. However, we expect to show reasonable improvement
in our results even if market conditions remain weak, since we are now
better sized for the current level of demand. And, with our financial
strength we will continue to improve our products and processes and
remain on the lookout for opportunistic acquisition prospects that fit
our business. As a result, despite the uncertainty in our markets, we
are pleased with our positioning and look forward to a successful 2010.”
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 over 2,340 employees and operates eighteen plants
in North America, Europe and Australia as of December 31, 2009. 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.
