Alamo Group Inc. Announces 2000 Third Quarter Results.Business Editors SEGUIN, Texas--(BUSINESS WIRE)--Nov. 2, 2000 Alamo Alamo Eighteenth-century mission in San Antonio, Texas, site of a historic siege of a small group of Texans by a Mexican army (1836) during the Texas war for independence from Mexico. Group Inc. (NYSE NYSE See: New York Stock Exchange :ALG ALG antilymphocyte globulin. ALG antilymphocyte globulin. ALG Antilymphocyte globulin, see there ) today reported results for the third quarter ended September 30, 2000. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the third quarter increased 27% to $55.7 million from $43.9 million for the same period last year. Net income for the quarter was $3.7 million, or $0.38 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $0.1 million, or $0.01 per diluted share, in the prior-year period. During the third quarter of 1999, the Company adopted a more conservative inventory policy, which resulted in an increase in the level of reserves relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc obsolete and excess inventory. As a result, the Company took a $3.2 million charge against its cost of sales. Excluding this charge, net income for the third quarter of 1999 would have been $2.1 million, or $0.21 per diluted share. For the nine months ending September 30, 2000, net sales were $166.3 million compared to $137.2 million for the same period last year. Net income for the nine-month period was $10.5 million, or $1.08 per diluted share, compared to $5.4 million, or $0.55 per diluted share, for the prior-year period. Net income before the inventory related charge in 1999 was $7.4 million, or $0.76 per diluted share after-tax. Sales for Alamo's agricultural business were $18.4 million for the third quarter which was flat compared to the prior-year period, reflecting the continued weakness in the agricultural industry. Although backlogs are good going into the fourth quarter, we believe the market for crop production and harvesting products continues to be soft. U.S. industrial sales for the third quarter were $26.9 million compared to $13.5 million for the prior-year period, with most of the increase attributable to the contribution from Schwarze Industries, which was acquired in February 2000. European sales for the quarter were $10.3 million, down 11% for the quarter from $11.5 million in the third quarter of 1999. Sales of products manufactured in the U.K. continue to be negatively impacted by the strength of the U.K. pound against the Euro and continuing weak market conditions, particularly in the U.K. agriculture sector. Ron Robinson Ron Robinson (born March 24, 1962 in Exeter, California) was a Major League Baseball right-handed pitcher for the Cincinnati Reds (1984-1990) and the Milwaukee Brewers (1990-1992). He was the first-round pick (19th overall) of the Reds in the 1980 amateur draft. , Chief Executive Officer, commented: "While sales increased 21% to $166.3 million for the nine months, we continue to see weaknesses in the U.S. agricultural market and in Europe. In addition, though shipments from our U.S. plants are better in most areas, we still need to show further improvement in our deliveries. Our profitability improved during the period which is reflected in net income of $1.08 per diluted share, nearly double that of the same period in 1999. This is also 42% above the adjusted net earnings for the nine months in 1999, which was $0.76 per diluted share before the inventory related charge." During the third quarter, Alamo Group's European subsidiary purchased the product line and associated assets of Twose of Tiverton Ltd. in the U.K. for approximately $1.1 million in cash. Twose, which reported 1999 annual revenues of approximately $5.0 million, is a regional manufacturer of a full line of power arm flail mowers Flail mowers are a type of PTO driven implement that can attach to the three-point hitches found on the rear of most tractors. The mower is best used to provide a rough cut to taller grass where contact with loose debris may be possible such as roadsides. and parts, as well as harrows and rollers. To maximize the Company's production efficiencies and purchasing economies, Alamo Group will move Twose production to its existing U.K. facilities in McConnel and Bomford, while maintaining its sales office in Tiverton, which is in the Devon region. Mr. Robinson noted: "While this is a small acquisition, the product line is well respected in the marketplace, and by acquiring it without the facilities we can move the production into our existing plants on an incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. basis." After the close of the quarter, the Company decided it would close its Adams Hard-Facing Company facility in Guymon, Oklahoma The City of Guymon is located in the U.S. State of Oklahoma and serves as the seat of Texas CountyGR6. The population was 10,472 at the 2000 census. . Alamo Group will transfer the production to its other facilities in Wakita, Oklahoma and Indianola, Iowa Indianola is a city in Warren County, Iowa, United States. The population was 12,998 at the 2000 census. It is the county seat of Warren CountyGR6. Simpson College, a liberal arts college of the United Methodist Church, is located in Indianola. , and will outsource certain products to third-party contractors. Alamo Group will continue to provide its customers access to the full range of products that were manufactured at the Guymon facility. The facility closure is expected to be complete by the end of January 2001. Mr. Robinson stated: "The decision to close a facility is always difficult but we believe it is in the best interest of the Company. Although the estimated cost of the closure will impact pre-tax earnings in the fourth quarter by approximately $650,000, we anticipate savings from the closure should provide more than a 100% payback Payback The length of time it takes to recover the initial cost of a project, without regard to the time value of money. in 2001. The estimated cost of closure includes severance packages A severance package is pay and benefits an employee receives when they leave employment at a company. In addition to the employee's remaining regular pay, it may include some of the following:
Mr. Robinson concluded: "We enter the fourth quarter with relatively healthy backlogs, with our industrial business remaining our strongest area. We see continued weakness in some of our agricultural markets, which is being further exacerbated by high fuel prices and the weak Euro. Still, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the balance of this year, and feel we will be in good shape entering 2001 as a result of our focus on improving our deliveries and production efficiencies." Separately, Alamo Group announced its regular quarterly cash dividend of $0.06 per share payable on November 3, 2000 to shareholders of record as of October 18, 2000. 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 mow 1 n. 1. The place in a barn where hay, grain, or other feed is stored. 2. A stack of hay or other feed stored in a barn. and other vegetation maintenance equipment, street sweepers, agricultural implements and related after market parts and services. The Company, founded in 1969, has over 1,400 employees and operates eleven plants in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Europe as of March 2000. The corporate offices of Alamo Group Inc. are located in Seguin, Texas Seguin (pronounced IPA: /səˈgiːn/) is a city in Guadalupe County, Texas, in the United States. As of the 2000 census, the city population was 22,011. and the headquarters for the Company's European operations are located in Salford Priors Salford Priors is a rural, agricultural village and civil parish about six miles south west of Alcester, Warwickshire, UK. It is found on the Warwickshire border with Worcestershire. , England. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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.
ALAMO GROUP REPORTS 2000 THIRD QUARTER RESULTS
Alamo Group Inc. and Subsidiaries (NYSE:ALG)
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
Third Quarter Ended Nine Months Ended
09/30/00 09/30/99 09/30/00 09/30/99
American
Agricultural $18,398 $18,889 $61,153 $58,183
Industrial 26,935 13,514 73,504 46,116
European 10,320 11,533 31,687 32,900
Total Sales 55,653 43,936 166,344 137,199
Cost of sales 40,957 35,668 123,687 105,508
Gross margin 14,696 8,268 42,657 31,691
26.4% 18.8% 25.6% 23.1%
Operating Expenses 9,049 7,867 25,652 21,890
Income from Operations 5,647 401 17,005 9,801
10.1% 0.9% 10.2% 7.1%
Interest Expense (487) (265) (1,528) (1,355)
Interest Income 162 187 561 394
Other Income (Expense) (53) (258) (216) (591)
Income before income
taxes 5,269 65 15,822 8,249
Provision for income
taxes 1,601 (66) 5,322 2,890
Net Income $3,668 $ 131 $10,500 $5,359
Net income per common share:
Basic $ 0.38 $ 0.01 $ 1.08 $ 0.55
Diluted $ 0.38 $ 0.01 $ 1.08 $ 0.55
Average common shares:
Basic 9,699 9,736 9,696 9,736
Diluted 9,769 9,743 9,755 9,738
Summary Balance Sheet Data
09/30/00 12/31/99 09/30/99
Receivables 48,263 41,764 41,687
Inventories 54,428 45,570 48,706
Current Liabilities 27,030 18,040 21,996
Long Term Debt 17,119 5,469 5,736
Equity 113,808 108,030 108,157
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