Alamo (ALG) - 2024 Q1 - Quarterly Report

PART I Interim Condensed Consolidated Financial Statements (Unaudited) Alamo Group's Q1 2024 saw net sales increase to $425.6 million, while net income decreased to $32.1 million, with total assets growing to $1.52 billion Consolidated Balance Sheets Total assets increased to $1.52 billion as of March 31, 2024, driven by higher cash and receivables, with stockholders' equity reaching $956.6 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $915,531 | $803,957 | | Cash and cash equivalents | $121,802 | $51,919 | | Total Assets | $1,519,420 | $1,409,386 | | Total Current Liabilities | $213,362 | $213,926 | | Long-term debt and finance lease obligations | $306,525 | $220,269 | | Total Stockholders' Equity | $956,556 | $932,763 | Consolidated Statements of Income Q1 2024 net sales rose 3.3% to $425.6 million, driven by Industrial Equipment, though income from operations and net income decreased to $47.0 million and $32.1 million respectively Q1 2024 vs. Q1 2023 Income Statement (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Net Sales | $425,586 | $411,771 | | Gross Profit | $111,632 | $112,507 | | Income from Operations | $46,979 | $49,024 | | Net Income | $32,120 | $33,349 | | Diluted EPS | $2.67 | $2.79 | - The increase in total net sales was driven by a 30% rise in the Industrial Equipment segment, while the Vegetation Management segment saw a 13% decrease in sales[11] Consolidated Statements of Cash Flows Net cash from operations was $1.1 million in Q1 2024, with financing activities providing $77.8 million, leading to an ending cash balance of $121.8 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,124 | $1,206 | | Net cash used in investing activities | ($5,904) | ($6,466) | | Net cash provided by financing activities | $77,792 | $66,773 | | Net change in cash and cash equivalents | $69,883 | $62,304 | | Cash and cash equivalents at end of period | $121,802 | $109,320 | Notes to Financial Statements Notes detail accounting policies, Royal Truck acquisition allocation, inventory and debt specifics, and disaggregated revenue, confirming Industrial Equipment's strong segment performance - The company completed its review of the purchase price allocation for the Royal Truck & Equipment, Inc. acquisition during Q1 2024. Royal Truck was acquired on October 10, 2023, for approximately $32 million[25] Net Sales by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Vegetation Management | $223,747 | $256,435 | | Industrial Equipment | $201,839 | $155,336 | | Consolidated | $425,586 | $411,771 | Income from Operations by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Vegetation Management | $21,679 | $36,508 | | Industrial Equipment | $25,300 | $12,516 | | Consolidated | $46,979 | $49,024 | - As of March 31, 2024, the company had total debt of $321.5 million, up from $235.3 million at year-end 2023, with $307.4 million available for borrowing under its revolving credit facility[40] Management's Discussion and Analysis (MD&A) MD&A highlights a 3% Q1 2024 net sales increase driven by industrial equipment, offset by vegetation management weakness, leading to a gross margin decline and a 4% net income decrease, with backlog at $831.3 million - Overall Q1 2024 net sales increased by 3%, but net income decreased by 4% compared to Q1 2023[53] - The company's backlog at the end of Q1 2024 was $831.3 million, down 16% from $994.8 million at the end of Q1 2023[55] - Supply chain performance has broadly improved, but disruptions related to chassis frames, transmissions, and hydraulics continue to negatively impact performance[56] Results of Operations Q1 2024 net sales increased 3% to $425.6 million, driven by a 30% rise in Industrial Equipment sales, while gross profit margin contracted to 26% and net income fell to $32.1 million Q1 2024 vs Q1 2023 Segment Sales Change | Segment | Change | Reason | | :--- | :--- | :--- | | Vegetation Management | -13% | Weaker demand for forestry, tree care, and agricultural mowing products | | Industrial Equipment | +30% | Strong results in all product lines, especially excavators, vacuum trucks, and safety equipment | - Gross profit margin decreased from 27% to 26% of net sales, primarily due to the weaker mix between divisions and production inefficiencies from lower volume in Vegetation Management[59] - The effective tax rate decreased to 23% in Q1 2024 from 25% in Q1 2023, largely due to a favorable research and development tax settlement with the Brazilian government[62] Liquidity and Capital Resources Working capital increased to $702.2 million, with Q1 capital expenditures at $6.7 million and full-year forecast of $35-45 million, while $307.4 million remains available under the credit facility - Working capital increased to $702.2 million at March 31, 2024, up from $590.0 million at December 31, 2023[64] - The company expects full-year 2024 capital expenditures to be between $35.0 million and $45.0 million[65] - As of March 31, 2024, the company had $116.0 million in cash held by foreign subsidiaries, primarily in Europe and Canada, which it plans to continue repatriating[66] - The company was in compliance with all financial covenants under its 2022 Credit Agreement as of March 31, 2024[67] Quantitative and Qualitative Disclosures About Market Risks The company faces market risks from foreign currency fluctuations and variable interest rates on debt, utilizing hedging strategies and providing sensitivity analyses for these exposures - A uniform 10% strengthening or weakening of the U.S. dollar relative to the currencies in which the company's sales are denominated would change gross profit by approximately $3.6 million for the three-month period[82] - A two percentage point change in the average interest rate on variable-rate borrowings would have changed the company's Q1 2024 interest expense by approximately $1.6 million[84] - The foreign currency translation adjustment for Q1 2024 decreased stockholders' equity by $7.3 million[81] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the end of the quarter[85] - There were no material changes to the company's internal control over financial reporting during the quarter[86] PART II. OTHER INFORMATION Other Information The company reports no material changes to legal proceedings or risk factors from its 2023 Form 10-K, with no unregistered equity sales, senior security defaults, or Form 8-K filings - There have not been any material changes from the risk factors previously disclosed in the 2023 Form 10-K[86] - The company reports no material updates to legal proceedings, no unregistered sales of equity, and no defaults on senior securities[86][87] - No reports on Form 8-K were filed during the quarter[88]