ALAMO GROUP INC.
A C O M P A N Y F O R A L L S E A S O N S
I N V E S T O R P R E S E N TAT I O N
October 2020
SAFE HARBOR STATEMENT
This presentation contains statements that may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not
historical facts and represent only the Company's beliefs and expectations. 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, impacts of the current COVID-19 pandemic, competition, weather, disease outbreaks, seasonality, changes in U.S. trade policy, negative economic impacts resulting from
geopolitical events, acquisition risks, financial issues, and other risks and uncertainties, including (but not
limited to) those described under the captions "Forward-Looking Information" in Part I, Item 1 and "Risk Factors" in Item 1A of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and the Company's Annual Report on Form 10-K for the year ended December 31, 2019, as well as other risks and uncertainties listed from time to time in the Company's SEC filings. The Company does not undertake any obligation to update the information contained herein, which reflects management's beliefs and expectations only as of this date. More information about factors that potentially could affect Alamo Group's financial results are included in the Company's public filings. This presentation 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.
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WHO WE ARE
Alamo Group is a global leader in the design and manufacture of high quality infrastructure maintenance equipment for governmental and industrial markets and agricultural equipment for farms and ranches
- Founded in 1969
- Corporate Headquarters Seguin, Texas
- IPO 1993 (NYSE: ALG)
- Quarterly dividend paid since 1993
- current annual rate $0.52
Bomford Mulcher Mower
Alamo Industrial Under Guardrail Mower
Organizational Highlights
- Two Operating Divisions
- Industrial
- Agricultural
- 27 manufacturing locations in the U.S., Canada, England, France, the Netherlands, Australia and Brazil
- Approximately 3,950 employees
- Primarily sell through an international network of approximately 7,000 independent dealers and distributors
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COVID-19
Alamo Group Inc., like most manufacturing companies in the world today, is being affected by the COVID-19 pandemic. While most of our businesses are deemed essential, we have experienced challenges both internally and externally that have constrained our operations. Despite these challenges, Alamo continues to conduct business and meet most of our customer requirements in a timely fashion. In doing so, the Company is committed to the safety and wellbeing of our employees and we are following all the recommended standards for safety and hygiene.
As a result of this unprecedented situation, it is difficult to predict exactly how our business will be affected in the near term, but we believe we have the financial stability to maintain operations and conduct business in an orderly fashion during this pandemic and will be capable of supporting our customers as business returns to more normal operating conditions.
We appreciate this is a difficult situation for all concerned and want to thank everyone for their understanding and support.
CORPORATE GOVERNANCE
Alamo Group is dedicated to enhancing shareholder value over the long term in a manner that is consistent with the highest standards of good corporate governance and business ethics. We have implemented policies and procedures
that are designed to support this commitment which apply to all of our directors, officers and employees worldwide .
These policies reflect our expectation that our Company always acts with integrity in a legal, ethical and responsible way for the benefit of our customers, employees and shareholders. Our Corporate Governance Guidelines, Code of Business Conduct and Ethics and Board Committee Charters can be found under the "Our Company/Our Commitment" tab of our website at www.alamo-group.com.
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SUSTAINABILITY
Alamo is committed to a sustainable model for growth and profitability. This applies to both our internal processes as well as the products we manufacture. Through investments, incentives, process redesign and product development, we have targeted continuous improvements including reductions in non-renewable energy consumption, non-recycled waste production and green house gas emissions. As part of our commitment, employee health and safety is a priority and the safety performance of each of our operations is stringently monitored. More details concerning our sustainability program can be found in our Sustainability Report which may be viewed on the Company's website under the "Our Commitment" tab.
Our Alamo Industrial plant in | Many of our vacuum truck products | Our Bush Hog plant in Alabama |
Texas has operated over 12 | offer water recycling technology, | utilizes movable fixtures to |
years with no lost time | allowing our customers to operate | improve assembly process |
accidents | more efficiently, burn less fuel and | ergonomics and employee safety |
conserve water resources | ||
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SALES AND EARNINGS OVERVIEW
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Net Sales
$1,100
SALES BY DIVISION
(U.S. $ Millions)
$1,119
Agricultural | Industrial | ||
1,000
900
$880
$1,009
$912
800
700
600
500
400
300
200
100
0
$839$845
$768
$638
$478 | $538 | $563 |
$525 | ||
$361 | $342 | $320 | $349 | $371 | $351 |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
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INDUSTRIAL DIVISION
Products
Alamo Industrial Wide Area Mower
Super Products Sewer Cleaner
Gradall Highway Speed Wheeled Excavator
The Industrial Division provides
equipment for maintenance on
and around highways, airports, military installations, industrial properties, parks and recreational facilities, commercial landscapes, and other specialty markets.
- Tractor Mounted Mowers
- Forestry Mulchers
- Brush Cutters
- Horizontal Grinders
- Street Sweepers and Debris Collectors
- Mechanical Excavators
- Hydro-Excavators/JettingEquipment
- Snow Removal Equipment
- Trenchers
- Compact Loaders
- Replacement Parts and Technical Services
Tiger Triple Flail Mower
Schwarze Updraft Sweeper
Henke Front & Wing Snow Plows
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INDUSTRIAL DIVISION
Rivard Trencher
Rayco Forestry Mulchers
End Users
- State, county and local authorities and other governmental agencies in the United States and internationally
- Contractors
- Other specialty markets
Tenco Snow Plow
Rivard Vacuum Truck
Conver Weed Harvester Work Boat | Morbark Brush Chippers | Votex Flail Mower |
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INDUSTRIAL DIVISION
Sales and Distribution
• Sold direct and through approximately 1,300 dealers with over 3,300 sales outlets
-
Marketed under Alamo Industrial®, Boxer®, Conver, Denis Cimaf®, Everest®,
Gradall®, H.P. Fairfield™, Henke®,
Herder®, Morbark®, NiteHawk®, Old Dominion Brush™, Precision Makers®, R.P.M. Tech™, Rayco®, Rivard®, Roberine®, Schwarze®, Super Products®, Tenco®,Terrain King®, Tiger®, Vacall®, Votex®, Wausau® and other brands
Vacall Sweeper/Vacuum
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RECENT ACQUISTION
Morbark, LLC
On October 24, 2019 Alamo Group Inc. completed the acquisition of Morbark, LLC, the company's largest acquisition to date.
Morbark is a leading manufacturer of equipment and aftermarket parts for the forestry tree maintenance, biomass, land management and recycling markets. Their products include a broad range of tree chippers, grinders, flails, debarkers, stump grinders, mulchers and brush cutters plus related aftermarket spare and wear parts. Morbark products are marketed under the Morbark, Rayco, Boxer and Denis Cimaf brand names and are sold through a network of independent dealers with about 300 sales locations. The company, with approximately 690 employees, is based in Winn, Michigan, with subsidiary operations in Wooster, Ohio and Roxton Falls, Quebec.
Denis Cimaf Excavator Mulcher
Morbark Horizontal Grinder
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AGRICULTURAL DIVISION
Products
Dixie Chopper ZT Mower
Schulte 42 Foot Rotary Cutter
McConnel Reach Arm Mower
The Agricultural Division provides equipment for farmers, ranchers, contractors and landscapers primarily aimed at vegetation maintenance, turf and landscaping markets, as well as supporting
production agriculture and the
livestock industry.
- Rotary & flail mowers
- Zero turn mowers
- Tractor mounted reach arm mowers
- Rock pickers
- Hay processing tools
- Remote controlled mowers
- Tillage tools
- Sprayers
- Landscape tools
- General agricultural implements
- Aftermarket replacement parts
McConnel Agribuggy
Rhino Flex Flail Mower
Schulte Rock Picker
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AGRICULTURAL DIVISION
End Users
• | Farmers | • | Commercial landscapers |
• | Ranchers | • | Residential homeowners |
• | Mowing contractors | • | Hobby farmers |
Sales and Distribution
- Sold primarily through approximately 6,000 dealers, distributors, OEMs and other outlets
Bomford Rotary Mower
- Marketed under Bomford®, Bush Hog®, Dixie Chopper®, Earthmaster®, Faucheux™, Fieldquip®, Forges Gorce™, Herder®, Herschel®, McConnel®, M&W®, Rhino®, Rousseau™, Santa Izabel®, Schulte®, SMA®, Spearhead™, Twose™, and other brand names
Bush Hog Multi Spindle Rotary Mower
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STRATEGIC OBJECTIVES DRIVE
SHAREHOLDER VALUE
Strategic | ||
Organic Growth | Continuous | |
Acquisitions | ||
Operational
Improvement
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ACQUISITION STRATEGY
Our objective is to acquire businesses or products that command or have potential to be major players in their niche markets
and are complementary to Alamo's
existing range
Conver Mowing Boat
Bomford Rotary Mower
Types of Targeted Acquisitions
- Consolidation of similar products in current markets
- New products that are complementary to the markets and customers we currently serve
- Similar products to those we currently offer in new geographical markets
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ALAMO ACQUISITIONS
Type of Acquisition
Market Share
Consolidation
Complementary
Products
for Existing Markets
International Expansion
of Existing Products
Acquisitions
Schulte, Twose, Valu-Bilt,
Rousseau, Tenco, Nite-Hawk,
Bush Hog, Spearhead, Super
Products, Wausau-Everest,
Dixie Chopper
Schwarze, Twose, Schulte,
Gradall, Vacall, Henke, Tenco,
Kellands, Old Dominion Brush,
R.P.M. , Conver, Herder,
Roberine, Precision Makers,
Votex, Dixie Chopper, Morbark,
Rayco, Boxer, Denis Cimaf
Schulte, Faucheux, Spearhead,
Rivard, Tenco, Superior, Herder,
Santa Izabel, R.P.M., Conver,
Roberine, Precision Makers,
Votex, Denis Cimaf
Votex Flail Slope & Bank Mower
RPM Rail Mounted Snow Removal System
Henke Plow Wing Combo
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ACQUISTION
TIMELINE
We have completed 27
acquisitions since 2000
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ORGANIC GROWTH
Our objective is to grow organically at rates in excess of core market growth rates
McConnel Robotic Flail Mower
Organic Growth Drivers
• Geographical expansion
• Product development
• Cross selling opportunities
• Strength of multiple distribution networks
Schulte Disc Harrow
• Pricing leadership
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NEW PRODUCT DEVELOPMENT ENHANCES
ORGANIC GROWTH
Alamo Industrial Mantis wide area mower
Gradall Discovery - a new truck- mounted excavator reduces ownership costs for municipalities
Our new product development
is focused on the needs of
customers, both large and small,
for more efficient, safer and
user-friendly equipment
Improving customer operating
efficiencies, as well as product
functionality, manufacturability,
serviceability, ergonomics,
safety and aesthetics are key
objectives of our product
development strategy
Super Products Camel 1200 Vacuum Truck with improved water recycling technology reduces water use and improves productivity
The redesigned Wausau SnoDozer grows sales by meeting a wider range of airport snow removal applications
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CONTINUOUS OPERATIONAL IMPROVEMENT
Our objective is to continuously improve our operating efficiencies
Investments in Technology
- The Company has continually invested in more automated production equipment to improve quality and efficiency and has all operating units on, or moving to, a common ERP platform to ensure timely flow of information
Group Purchasing Initiatives
- The Company takes advantage of the combined group's procurement power through corporate purchasing initiatives available to all units on a number of purchased components, supplies and services
Plant Consolidations
- The Company has consolidated 16 manufacturing plants in the past 20 years
Lean
- The Company has an ongoing lean manufacturing program aimed at reducing lead times, improving asset utilization, improving flow through plants and increasing manufacturing efficiencies
NiteHawk Parking Lot Sweeper
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CONTINUOUS IMPROVEMENT FOCUS
DRIVES OUR PRODUCTION STRATEGY
Alamo Group has a global | |||||||
manufacturing presence in close | |||||||
proximity to our major markets | |||||||
Bush Hog - Selma, Alabama | Rivard - Daumeray, France | ||||||
Our manufacturing | The Company sources raw | ||||||
capabilities provide us better | materials and components | ||||||
control over costs, quality, on- | globally to ensure | ||||||
time deliveries and safety | competitiveness | ||||||
Alamo Industrial - Seguin, Texas | |||||||
Our improvement initiatives | |||||||
enhance our margins which | |||||||
benefit further from growing | |||||||
economies of scale | |||||||
McConnel - Ludlow, England | |||||||
Gradall - New Philadelphia, Ohio | |||||||
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CONTINUOUS IMPROVEMENT FOCUS DRIVES OUR PRODUCTION STRATEGY
Fiber laser plate cutting center
Robotic welder used to fabricate large tanks and frames
We make capital investments to continuously improve the efficiency and productive capacity of our manufacturing facilities, as well as the quality of the products we manufacture
Alamo has a long term strategy to have fewer but larger plants to provide the scale necessary to justify more automation. More
reliable output, reduced cycle
times, efficiency gains, and
greater flexibility are positive
outcomes from these investments
Automatic plate handling system
Laser tube cutter
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RESULTS OF OPERATIONAL IMPROVEMENTS
Sales Per Employee
2009
$194,000
2019
$305,000
+57%
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INCOME STATEMENT
(In U.S. $ Thousands)
Nine Months Ended | Fiscal Year Ended | |||
9/30/2020 | 9/30/2019 | 12/31/2019 | 12/31/2018 | 12/31/2017 |
Revenue | $ | 874,842 | $ | |||
Gross Margin | $ | 225,401 | $ | |||
% of Revenue | 25.8 % | |||||
Operating Expenses | $ | 147,961 | $ | |||
Operating Income | $ | 77,440 | $ | |||
% of Revenue | 8.9 % | |||||
Depreciation - PP&E | $ | 14,237 | $ | |||
Depreciation - Rental | $ | 7,504 | $ | |||
Amortization | $ | 11,593 | $ | |||
Net Income | $ | 48,550 | $ | |||
Diluted Earnings Per Share | $ | 4.10 | $ | |||
Adjusted Net Income | (1) | $ | 48,550 | $ | ||
Adjusted Diluted Earnings Per Share | (1) | $ | 4.10 | $ | ||
EBITDA | (2) | $ | 110,774 | $ | ||
818,949 | $ | 1,119,138 | $ | 1,008,822 | $ | 912,380 |
205,151 | $ | 273,227 | $ | 256,115 | $ | 234,693 |
25.1 % | 24.4 % | 25.4 % | 25.7 % | |||
128,741 | $ | 178,579 | $ | 155,027 | $ | 145,955 |
76,410 | $ | 94,648 | $ | 101,088 | $ | 88,738 |
9.3 % | 8.5 % | 10.0 % | 9.7 % | |||
10,583 | $ | 14,934 | $ | 12,884 | $ | 11,616 |
6,770 | $ | 9,373 | $ | 6,725 | $ | 5,531 |
3,247 | $ | 5,953 | $ | 3,726 | $ | 3,520 |
53,338 | $ | 62,906 | $ | 73,486 | $ | 44,315 |
4.52 | $ | 5.33 | $ | 6.25 | $ | 3.79 |
53,338 | $ | 62,906 | $ | 70,155 | $ | 54,551 |
4.52 | $ | 5.33 | $ | 5.97 | $ | 4.67 |
97,010 | $ | 124,908 | $ | 124,423 | $ | 109,405 |
- For year ended 2017, 2018 and 2019, Adjusted Net Income and Adjusted Diluted Earnings Per Share are each adjusted for the following: 2017 excludes a one-time net charge of $10.2 million relating to the 2017 U.S. tax reform bill enacted in December 2017; 2018 results include a $3.3 million favorable adjustment to the provisional tax reform expense originally recorded in 2017; 2019 results excludes a $1.5 million impact of the recently completed acquisitions and related transaction costs of $1.4 million and related interest expense of $4.0 million.
- EBITDA is a non-GAAP financial measure defined for this purpose as the sum of operating income and depreciation and amortization. Adjusted EBITDA for 2019 also excludes $3.3 million of an inventory step up charge related to the Morbark acquisition.
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BALANCE SHEET
(In U.S. $ Thousands)
Current Assets Total Assets Current Liabilities Working Capital Total Debt Total Debt Net of Cash Shareholders' Equity Debt as a % of Capitalization Debt Net of Cash as % of Capitalization Net Cash from Operating Activities Capital Expenditures Dividends Paid
Period Ended | ||||
9/30/2020 | 9/30/2019 | |||
$ | 567,155 | $ | 524,477 | $ |
$ | 1,173,459 | $ | 856,393 | $ |
$ | 157,680 | $ | 120,163 | $ |
$ | 409,475 | $ | 404,314 | $ |
$ | 374,089 | $ | 150,305 | $ |
$ | 280,574 | $ | 90,026 | $ |
$ | 605,213 | $ | 551,052 | $ |
38.2 % | 21.4 % | |||
31.7 % | 14.0 % | |||
$ | 135,975 | $ | 44,210 | $ |
$ | 14,962 | $ | 19,488 | $ |
$ | 4,590 | $ | 4,217 | $ |
Fiscal Year Ended | ||||
12/31/2019 | 12/31/2018 | 12/31/2017 | ||
570,828 | $ | 452,843 | $ | 392,527 |
1,212,763 | $ | 721,633 | $ | 639,671 |
162,874 | $ | 100,852 | $ | 101,363 |
407,954 | $ | 351,991 | $ | 291,164 |
443,981 | $ | 85,298 | $ | 60,082 |
401,670 | $ | 51,255 | $ | 34,709 |
569,757 | $ | 507,371 | $ | 449,108 |
43.8 % | 14.4 % | 11.8 % | ||
41.3 % | 9.2 % | 7.2 % | ||
88,813 | $ | 12,910 | $ | 70,804 |
31,337 | $ | 26,587 | $ | 13,490 |
5,626 | $ | 5,124 | $ | 4,614 |
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WHY ALAMO, WHY NOW?
An integrated | ||||
Leadership | strategy for | An incentive | ||
position in | long-term | system | ||
niche | revenue and | aligned with | ||
markets | earnings | performance | ||
growth | ||||
A Proven Recipe For Growth
Financial | Stability in | Long-term | ||
strength to | government | growing | ||
support | spending on | demand for | ||
strategic | infrastructure | agricultural | ||
objectives | maintenance | products | ||
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CONTACT INFORMATION
Corporate Office
1627 East Walnut St.
Seguin, Texas 78155
Ron Robinson, President & CEO
Phone: 830-372-9615
Email: rrobinson@alamo-group.com
Dan Malone, Executive Vice President,
CFO & Investor Relations Director
ALAMO GROUP INC.
A company for all seasons…
Phone: 830-372-9581
Email: dmalone@alamo-group.com
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Alamo Group Inc. published this content on 29 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2020 15:14:08 UTC