Industry News
Titan Machinery to Acquire ABC Rental’s Four CE Locations
North Dakota Dealer Elected Chairman of NAEDA Board
Who Gets Your Food Dollar? USDA Says Farmers Get Just 12%
Illinois Farmland Values Continue Upward Trend
Trimble to Acquire OmniSTAR Business Assets
JCB Opens West Coast Parts Distribution Center
Ag Growth Posts Record Earnings for 2010
Farm Equipment Manufacturers Assn. Supports Efforts of the ‘Coalition to Save Our GPS’
Titan Machinery Agrees to Acquire Schoffman’s Inc. of Minnesota
Alamo Group Announces Fourth Quarter Results, Record Full Year Earnings
AgraTurf, Elmira Farm Service join forces to form Premier Equipment Ltd.
Canadian Tractor Manufacturer Setting Up Shop in Minnesota
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Titan Machinery to Acquire ABC Rental’s Four CE Locations
Fargo, N.D., March 21 (BUSINESS WIRE) — Titan Machinery Inc. (NASDAQ:TITN) announced today that it has entered into a definitive purchase agreement to acquire ABC Rental, an independent rental yard company. The acquisition consists of four rental equipment locations in Missoula, Bozeman, and Big Sky, Montana, and Williston, North Dakota. The locations in Missoula, Williston and Bozeman will consolidate with the Titan Machinery existing Case CE dealerships in their respective markets; leveraging the synergies of both companies. The acquisition is subject to customary conditions to closing and is expected to close on or around April 1, 2011.
ABC Rental has been in business for over 40 years and has grown into one of the leading rental equipment companies in Montana. Roland Schumacher, the owner of ABC Rental, is very experienced in the industry and has tremendous rental operations expertise. Mr. Schumacher will remain with the company upon the closing of the acquisition.
With locations in southwest Montana as well as western North Dakota, these rental locations are well-positioned to benefit from the increased activity of the surrounding oil, coal and natural gas exploration and extraction in Montana, North and South Dakota as well as Wyoming. In its most recently reported fiscal year ended December 31, 2010, ABC Rental generated revenues of $5.5 million.
David Meyer, Titan Machinery's Chairman and CEO, said, "We are excited about our expansion into the construction rental business with the acquisition of ABC Rental. The timing of acquisitions coincides with increased rental demand activity in the industry. Roland Schumacher and his team bring an added rental expertise to the Titan Machinery operating model. We have been preparing for the right opportunity to expand our rental model and with ABC Rental as part of the organization the proper growth platform is now in place in this area of our business."
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North Dakota Dealer Elected Chairman of NAEDA Board
Fenton, Mo., March 18 — Roger Gjellstad, of Stanley, N.D., has been elected chairman of the board of directors of the North American Equipment Dealers Association (NAEDA), effective as of March 1, 2011.
Gjellstad is president and general manager of Stanley Equipment Inc., a Case IH dealership with seven locations under two corporations serving western North Dakota and Montana.
“Roger’s enthusiasm and leadership ability will serve the organization and members well,” says Paul Kindinger, president/CEO, NAEDA. Immediate Past Chairman of NAEDA Lester Killebrew concurs, “Roger has a great vision for our industry.”
Gjellstad’s vision involves seeing “all equipment dealers join their local associations and benefit from being part of their regional associations and NAEDA.” He says, “It’s the best investment equipment dealers will ever make.”
Gjellstad became a member of the NAEDA board in 2007. He represents the North Dakota Implement Dealers Association, one of 17 North American dealer associations affiliated with NAEDA. Since joining the board, Gjellstad has served as second vice chair, then first vice chair and on the following NAEDA committees: member services, manufacturing relations, and executive.
Locally, Gjellstad is an active member of the American Lutheran Church. He has served on numerous civic organizations and boards and is an active member of the volunteer fire department.
Gjellstad grew up on a farm and ranch near Velva, N.D. He graduated from Velva High School and then from North Dakota State University in 1972 with a BS degree in Agriculture, where he was a member of the Theta Chi fraternity. He has been active in the equipment industry since college graduation when he worked in sales for International Harvester. He began working for Stanley Equipment in 1974. He purchased the company two years later.
Gjellstad was installed as board chairman March 10, 2011, during NAEDA’s annual meeting in Scottsdale, Ariz. Joe Nash (first vice chairman) and Tom Nobbe (second vice chairman) will serve as vice chairs of the NAEDA board for 2011-12.
Nash represents the SouthEastern Equipment Dealers Association. Nobbe represents the Midwest Equipment Dealers Association.
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MVEA Votes for Dissolution
Fenton, Mo., March 17 — After careful consideration, the Mississippi Valley Equipment Association (MVEA) Board of Directors voted to recommend to its members dissolution of the association. At a membership meeting held on February 24, MVEA members voted to approve the board's recommendation.
"Continuing changes in the industry have reduced the number of dealerships, which has led to overall declining member revenues," says Joe Dykes, executive vice president, MVEA. While MVEA has worked out of the North American Equipment Dealers Association (NAEDA) office for the past three years to
help reduce operating costs, it is not a viable long-term solution, Dykes said.
Tom Nobbe, Wm. Nobbe & Co., Waterloo, Ill., past president of MVEA and currently its representative on the NAEDA board, says the decision to dissolve MVEA was difficult. Established in 1907, MVEA has had a rich heritage, he said. But because of continued industry consolidation and consequently a decline in member revenues, MVEA could not provide the increasing expense of representation in state legislatures and with manufacturers, Nobbe said.
Upon dissolution of the MVEA, Illinois dealer members will automatically become members of the Midwest Equipment Dealers Association (MEDA), which represents dealers in Illinois and Wisconsin. Missouri dealer members will become members of the SouthWestern Association, which represents dealers in Missouri, Kansas, Oklahoma, Texas and New Mexico.
The former MVEA members’ dues will transfer to the respective associations and be kept at the same level for the balance of 2011. The balance of MVEA's financial resources will be contributed to the Equipment Dealers Foundation, the publicly supported 501(c)(3) charitable organization of NAEDA. The resources will be divided into the Foundation's general fund, for use by dealers in the former MVEA for education programs, and for the disaster relief fund, Dykes said.
Going forward, dealers who had belonged to MVEA will become part of a larger voice in representing the retail equipment industry in Illinois and Missouri, Dykes said. MEDA currently has 300 members and the SouthWestern Association has approximately 700 members.
Moreover, Tom Nobbe will be MEDA's representative to the NAEDA Board of Directors; and a former MVEA member will serve on the SouthWestern Association's board for the next two to three years.
Jeff Flora, CEO, SouthWestern Association, points out that SouthWestern's membership is divided into districts so the former MVEA will have two representatives in the organization for the first couple of
years.
The decision for MVEA members to automatically become members of either MEDA or the Southwestern Association depending on their home state makes sense, Flora says. "This will make it simpler to represent all of Missouri's dealers in their state legislature." Flora added that his staff will be calling dealers over the next couple of months to welcome them to the association.
Gary Manke, executive vice president and CEO, MEDA, also welcomes former MVEA dealers from Illinois. "We will continue to provide them the same high quality services along with adding new services," he says. MEDA staff also will be calling on dealers over the next couple of months to welcome them to the association.
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Who Gets Your Food Dollar? USDA Says Farmers Get Just 12%
Washington D.C., March 17 — American farmers and agribusinesses receive just 11.6 cents of every dollar spent on food in the U.S., according to recent analysis from the U.S. Department of Agriculture (USDA). That is down from the nearly 20 cents USDA calculated, using a different method, in the past and undercuts arguments that farm prices for commodities and feedstuffs like corn are driving higher retail food prices.
“American farmers continue to produce more and more food and feed, yet they are receiving less and less of each dollar spent at the retail level,” said Geoff Cooper, Renewable Fuels Association Vice President of Research and Analysis. “Energy intensive activities like food processing, transportation, and packaging gobble up nearly three times the value farmers receive. And as oil prices continue to rise, an even larger share of every dollar spent on food is paying for the higher energy costs facing the entire supply chain.”
With news reports of food prices going higher, driven largely by dramatic mark ups in the price of fresh fruits and vegetables and meat products, many are seeking to blame farmers and biofuel producers for the run up. This USDA analysis, as well as a review of recent speculative activity in commodity markets, once again proves that volatile energy prices and Wall Street speculation are the primary factors driving food prices higher.
According to USDA, the second — largest contributor to food prices – only trailing labor costs — is the combination of food processing, packaging, transportation, all of which are highly energy-intensive activities. And, as labor costs tend to be more stable and predictable, the volatility in energy prices is driving the sticker shock Americans may be feeling now at the checkout counter. Totaling up the%ages for food processing, packaging, transportation — all energy intensive activities — and actual energy costs, nearly 33% of each food dollar is spent in these energy intensive areas. If you frequently eat away from home, labor and energy costs gobble up even more of your food dollar and leave just 3.4% for those involved in agriculture.
Since much of the criticism is aimed at American ethanol producers and their demand for corn, it is worthwhile to note that the corn value of each food dollar spent is negligible. Indeed, a rough back-of-the-envelope calculation can be used to approximate the contribution of corn to the 11.6% farm and agribusiness share of the overall food dollar. Over the past few years, corn has typically represented about 15% of the total farm value of all U.S. agricultural food and feed products. Thus, it could be argued that corn’s share of the food dollar is just 1.7% (15% of 11.6%).
“Admittedly, this math is rough but it serves to demonstrate the minimal impact corn price has in determining the retail price of food,” said Cooper. “Studies have shown that there is no statistical relationship between corn prices and retail food prices.”
Source: Renewable Fuels Assn. press release
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Illinois Farmland Values Continue Upward Trend
Bloomington, Ill., March 16 — High commodity prices and lack of good farmland for sale have kept prices paid for Illinois farmland on its continued upward trek, according to the report issued at the 2011 Illinois Farmland Values Conference held on March 16. The Illinois Society of Professional Farm Managers and Rural Appraisers sponsors the annual report. The survey was conducted among Society members and assembled by the Univ. of Illinois and reflects farmland sales activity and lease trends during 2010.
In an executive summary, Don McCabe, AFM, Soy Capital Agricultural Services, Bourbonnais, Ill., and general chairman of the event said, "There are two major points coming out of this year’s survey. The most striking is that this crop agriculture is financially strong and Illinois farmland values and lease trends are on the rise.
"The second is that there is more variation between regions, and within regions from higher to lower productivity soils. Economic forces that are pushing the current broad rise in crop returns, rents, and land values are not uniformly affecting categories of farms or areas. Even from farm to farm in similar neighborhoods there can be differences based on lease type, farm operation and management," he says.
He noted increases of 14-18% across northern Illinois for Excellent Productivity and Good Productivity land, respectively. "Values went up between 10-22% for the same types of land across the central part of the state, with even higher increases for lower productivity land across the southern part of the state
"In general, Illinois farmland values were driven higher by increasing expectations of farm income as the 2010 year progressed and commodity prices increased," McCabe reports. "There is every expectation that this trend will continue in 2011." He notes that farmland values have been supported by investment capital seeking alternatives to other financial assets. "Values are less impacted by demand for alternative real estate uses such as conversion to commercial and residential. These were driving factors in the period 2003-2009."
He went on to note that in many areas larger percentage increases for lower productivity land was noted, based on expectations of improving crop returns and absolute increases on lower values resulting in larger percentage growth.
Demand for recreational land is generally soft-to-declining with few sales to support, only showing stability or some strength in areas very close to population centers. "Aside from the ‘close-in’ effect, comments gathered from all the regions regarding recreational land include descriptions such as declining, or fallen significantly, with the most positive markets being just ‘stable,’" he explains.
Estate sales still account for the majority (57%) of reasons land is being sold. Local farmers account for the majority (56%) of the buyers.
When asked if they believed that farmland prices would fall more than 20% in the next year, none of the respondents believed that the chances were greater than 10% while a full 58% believed the chance was very small.
Lease Trends
McCabe notes that rental returns for 2010 rose from “modestly” to “significantly” based on increasing net returns to farm operations from increasing crop prices. "Fixed cash rents have a tendency to lag the commodity market, with rent levels varying depending on when lease negotiation occurs," McCabe explains. "Harvest in 2010 finished early, leading to re-setting some 2011 rents sooner than in previous years. The brisk and steady commodity market move through the last three months of the year made some farm owners regret negotiating leases early, and some farm operators glad they did.
"With the high 2010 year-ending crop prices, rental returns of all types are expected to be higher in 2011," he continues. "Many rental arrangements are moving from fixed cash rents to a variety of flexible or variable cash leases due to farm owners wanting to share in increasing operating returns and farm operators willing to pay more when they have it.’
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Trimble to Acquire OmniSTAR Business Assets
Sunnyvale, Calif., March 16 — Trimble (NASDAQ: TRMB) today announced that it has entered into a definitive agreement to acquire certain assets related to the OmniSTAR Global Navigation Satellite System (GNSS) signal corrections business from Fugro N.V.
The acquisition is expected to significantly expand Trimble’s worldwide ability to provide corrections services for land based agriculture, construction, mapping and Geographic Information System (GIS) and survey applications.
Trimble and Fugro also entered into a multi-year service agreement which includes Fugro’s ongoing operation of its correction network and satellite service broadcast systems that power the OmniSTAR service. Fugro’s offshore marine business is unaffected. Closing of the transaction, anticipated in the first quarter, is subject to certain closing conditions. Financial terms were not disclosed.
OmniSTAR provides space-based GNSS correction services that can improve the accuracy of a GNSS receiver for precise positioning applications. Currently, there are four levels of OmniSTAR service: "VBS" offering sub-meter positioning, "XP" delivering better than 20 centimeter accuracy and "HP" delivering greater than10 centimeter accuracy. In addition, the new OmniSTAR “G2” service combines GPS plus GLONASS based corrections to provide decimeter level positioning.
Trimble pioneered RTK technology in the early 1990s, which enabled high-accuracy corrections for field applications. RTK is now recognized as the industry leading technology for centimeter-level positioning. To further improve accuracy Trimble subsequently introduced VRS technology in 2000 and shortly after that, Trimble VRS Now Service.
“With the addition of the OmniSTAR services and our strong relationship with Fugro, we will offer a full range of high-precision positioning capabilities which now includes satellite-delivered corrections,” says Patricia Boothe, general manager of Trimble’s newly-formed Positioning Services Division. “Today, our agriculture customers use OmniSTAR services to perform planting, harvesting, variable rate application and many other operations. Our expanded portfolio will provide not only farmers, but also surveying, construction and GIS professionals with more options to satisfy their particular accuracy, delivery and financial needs.”
“Trimble and OmniSTAR have enjoyed a long standing relationship,” says John Waits, president of OmniSTAR. “The transfer of land-based GNSS signal corrections assets marks the next phase of our efforts to bring a broader range of positioning services to our combined customer base, on land and offshore. The OmniSTAR and Fugro teams remain committed to providing industry leading corrections services for customers who own a variety of GNSS receivers.”
The OmniSTAR business will be reported as part of Trimble’s Engineering and Construction segment.
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JCB Opens West Coast Parts Distribution Center
Savannah, Ga., March 16 — JCB today announced the opening of a new West Coast Parts Distribution Center in Fontana, Calif., bringing its total number of distribution centers in North America to three.
The new facility is part of JCB’s ongoing commitment to enhance customer support in North America. The distribution center will primarily serve customers in the Mountain and Pacific Time Zones, helping to reduce freight costs and shorten delivery times. JCB’s other North American parts distribution centers are located in Burlington, Ontario and Savannah, Georgia.
“As we expand our North American Dealer Network, it’s important for us to continue providing each of our customers with the parts they need as quickly as possible,” says John Patterson, chairman and CEO of JCB Inc. “At JCB, we understand that time is money, and with this new distribution center, our customers will be able to benefit from less equipment downtime and enjoy greater productivity on their job sites.”
JCB will use SAP inventory management solutions and Syncron global supply chain management software at its West Coast Distribution Center, bringing it in line with all of JCB’s distribution facilities around the world.
While the new distribution center certainly supports JCB’s customer support philosophy, it also underscores the company’s strong global commitment to the environment by promoting more sustainable practices.
“The world is changing, and we need to realign our responsibilities accordingly,” Patterson says. “That includes placing a greater emphasis on environmental stewardship and sustainability. Our new distribution center will allow us to ship parts shorter distances, reducing fuel consumption and costs as well as the amount of pollutants created during the transportation process.”
JCB’s dedication to sustainability extends beyond its efforts to streamline parts availability. The company has developed a number of sustainable equipment innovations in recent years, including a 23% reduction in direct carbon emissions since 2007, and a 16% decrease in fuel consumption from its new and improved range of backhoe loaders and skid steer loaders.
“We’re confident that this new distribution center will enable us to better serve our growing customer base while also making it possible for JCB and its dealers to reduce their collective carbon footprint,” Patterson says.
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Ag Growth Posts Record Earnings for 2010
Winnipeg, Manitoba, March 14 — Ag Growth International Inc. (TSX: AFN) reported its record financial results for the 3 and 12 months ended December 31, 2010.
Sales and EBITDA for the three and twelve month periods ended December 31, 2010 exceeded the record levels established in 2009 as sales of commercial equipment surged due to positive agricultural fundamentals and a significant increase in international sales. Sales of portable grain handling equipment benefited from another successful harvest in the U.S., but were negatively impacted by poor crop conditions in Canada.
Sales for the three and twelve months ended December 31, 2010, excluding the results of companies acquired in 2010, were $49.0 million (2009 - $46.8 million) and $247.5 million (2009 - $237.3 million), respectively. Sales in 2010 were negatively impacted by the stronger Canadian dollar. Had the foreign exchange rates experienced in 2009 been in effect in 2010, sales for the 3 and 12 month periods ended December 31, 2010, excluding acquisitions, would have been approximately $50.8 million and $266.5 million, respectively, representing increases of 9% and 12% over the same periods in 2009.
“We are very pleased with our performance in 2010,” said Gary Anderson, Chief Executive Officer of Ag Growth. “After a 45% increase in adjusted EBITDA in 2009 we entered 2010 with the goal of consolidating our gains and laying the foundation for growth in 2011 and beyond. Adjusted EBITDA in 2010 exceeded 2009 levels despite significant foreign exchange headwinds and less than optimal crop conditions.
“In addition, we have equipped the company for future growth through the acquisitions of Mepu, Franklin and Tramco, and the construction of a new storage bin manufacturing facility in Alberta. In 2011 we anticipate modest growth in sales of our portable grain handling equipment. Our order backlog for commercial equipment is considerably higher than at this time in 2010. However, sales may ultimately be influenced by macro-economic factors including the availability of credit in developing markets. On balance, we expect the strategic initiatives undertaken in 2010 to be our primary drivers of growth in 2011 and we look forward with excitement to the coming year as we begin to capitalize on these investments.”
Ag Growth's financial statements and management's discussion and analysis for the year ended December 31, 2010 are available electronically from SEDAR (www.sedar.com ) or from Ag Growth's website (www.aggrowth.com).
Dividends
Ag Growth also announced cash dividends of $0.20 per common share for the months of March 2011, April 2011 and May 2011. The dividends are eligible dividends for Canadian income tax purposes. Ag Growth's current annualized cash dividend rate is $2.40 per share.
The March 2011 dividend is payable on April 29, 2011 to holders of common shares of record on March 31, 2011. The April 2011 dividend is payable on May 30, 2011 to holders of common shares of record on April 29, 2011. The May 2011 dividend is payable on June 30, 2011 to holders of common shares of record on May 31, 2011.
Company Profile
Ag Growth is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems. Ag Growth has eleven manufacturing facilities in Canada, the United States, the United Kingdom and Finland and its sales, marketing, and distribution system distributes product in 48 states, nine provinces, and internationally.
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Farm Equipment Manufacturers Assn. Supports Efforts of the ‘Coalition to Save Our GPS’
Association urges members to add their support and calls on Congress to insist on an impartial FCC review process.
The Farm Equipment Manufacturers Assn. (FEMA) has joined a wide variety of industries and companies supporting the efforts of the “Coalition to Save Our GPS” in an effort to resolve a serious threat to Global Positioning Systems (GPS) — a national utility upon which farmers and their equipment rely on more everyday.
The threat stems from a recent and highly unusual decision by the Federal Communications Commission (FCC) to grant a conditional waiver that allows the dramatic expansion of terrestrial use of the satellite spectrum, immediately neighboring that of GPS, potentially causing severe interference to millions of GPS receivers. The conditional waiver was granted to a company called LightSquared.
The “Coalition to Save our GPS” includes representatives from a broad range of industries, including agriculture, aviation, construction, transportation, engineering and surveying, as well as GPS-based equipment manufacturers and service providers. The Coalition’s website is SaveOurGPS.org.
On March 11, 2011, a founding member of the Coalition told a House subcommittee that the recent action by the FCC could cause “consequences of disruption” to GPS that will be “far reaching, likely to affect large portions of the population and the federal government.”
In testimony prepared for delivery before the Subcommittee on Commerce, Justice and Science of the House Appropriations Committee, vice president and General Counsel Jim Kirkland of Trimble, a GPS equipment manufacturer, stated that a recent and highly unusual FCC decision creates a serious risk of severe interference to millions of GPS receivers.
The unusual waiver granted in January to LightSquared by the FCC, allows it to use its satellite spectrum for high-powered, ground-based broadband transmissions, if the company can demonstrate that harmful interference could be avoided. The usual FCC process of conducting extensive testing followed by approvals was not followed in this instance. Instead, the process was approved first, then tested.
Additional safeguards are needed, the GPS Coalition says. The Coalition recommends the following:
• The FCC must make clear, and the NTIA must ensure, that LightSquared’s license modification is contingent on the out- come of the mandated study. The study must be comprehensive, objective and based on correct assumptions about existing GPS uses rather than theoretical possibilities. The views of LightSquared, as an interested party, are entitled to no special weight in this process.
• The FCC should make clear that LightSquared and its investors should not proceed to make any investment in operating facilities prior to a final FCC decision (or at least make it explicit that they do so at their own risk). While this is the FCC’s established policy, it failed to make this explicit in its order.
• Further, the FCC’s, and NTIA’s, finding that “harmful interference concerns have been resolved” must mean “resolved to the satisfaction of preexisting GPS providers and users.”
• Resolution of interference has to be the obligation of LightSquared, not the extensive GPS user community of millions of citizens. LightSquared must bear the costs of preventing interference of any kind resulting from operations in Light- Squared’s frequencies. GPS users or providers should not have to bear any of the consequences of LightSquared’s actions.
• This is a matter of critical national interest. There must be a reasonable opportunity for public comment of at least 45 days on the report produced by the working group.The Farm Equipment Manufacturers Association adds its name to an impressive group of Coalition members which include: Association of Equipment Manufacturers, Aeronautical Repair Stations Association, Air Transport Association, Aircraft Owners and Pilots Association, American Association of State Highway and Transportation Officials, American Rental As- sociation, Associated Equipment Distributors, Case New Holland, Caterpillar Inc., Edison Electric Institute, Esri, Garmin, General Aviation Manufacturers Association, Deere & Company, National Association of Manufacturers, OmniSTAR, and Trimble. Additional members are expected to join in the near future.
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Titan Machinery Agrees to Acquire Schoffman’s Inc. of Minnesota
Fargo, N.D., March 14 (BUSINESS WIRE) — Titan Machinery Inc. (NASDAQ:TITN) announced today that it has entered into a definitive purchase agreement to acquire Schoffman's Inc., a fourth generation Case IH, agriculture dealership located in Redwood Falls, Minn. The acquisition is subject to customary conditions to closing and is expected to close on or around March 31, 2011. Upon completion of the agreement, Titan will operate a network of 80 stores.
Founded by J.W. Hopfenspirger, Schoffman's Inc. began operations in Morgan, Minn. in 1895 and moved to Clements in 1902. In 1914, he brought his son, V.C. Hopfenspirger into the business and the name was changed to J.W. Hopfenspirger and Son. In 1957, the dealership was moved to Redwood Falls under the management of F.J. Schoffman and in 1960 the dealership name was changed to Hopfenspirger-Schoffman. In 1981, the dealership name was changed to Schoffman's Inc. and continued to be located in Redwood Falls, Minn. Schoffman's has been successful for over 116 years based on its superior customer service and knowing that its greatest assets are its employees and customers. Fourth Generation owner Patrick Schoffman will continue in a leadership role with Titan Machinery.
The dealership is strategically located in the fertile Minnesota River Valley and is contiguous to Titan Machinery's Marshall Dealership. In its most recently reported fiscal year ended January 31, 2011, Schoffman's Inc. generated revenues of approximately $16 million.
David Meyer, Titan Machinery's Chairman and CEO, said, "I am very pleased to have a company with the history and success of Schoffman's join the Titan Machinery team. This is an excellent Ag Equipment market and Titan Machinery looks forward to working with Pat Schoffman, the knowledgeable employees and loyal customers in the years ahead."
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Alamo Group Announces Fourth Quarter Results, Record Full Year Earnings
Seguin, Texas, March 9 — Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and year ended December 31, 2010.
Net sales in the fourth quarter were $129.5 million compared to net sales of $112.8 million in the fourth quarter of 2009, an increase of 15%. Net income for the quarter was $4.1 million, or $0.34 per diluted share, versus net income of $9.5 million, or $0.83 per diluted share in 2009. These results include the effects of the acquisition of Bush Hog, which took place in October 2009 and contributed $19.1 million in incremental sales and $1.2 million in incremental net income during the 2010 fourth quarter.
Results in the fourth quarter of 2009 reflected certain other restructuring and non-cash items including the interim results of Bush Hog, 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, 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, all of which are more fully summarized in the non-GAAP financial reconciliation below. Excluding these items and the effects of the acquisition, our adjusted net income for the fourth quarter of 2010 was $2.9 million, or $0.29 per diluted share, versus $4.0 million, or $0.40 per diluted share in 2009.
For the full year, net sales in 2010 were $524.5 million versus $446.5 million in 2009, an increase of 17%. Net income for fiscal 2010 was $21.1 million, or $1.78 per diluted share, compared to $18.6 million, or $1.80 per diluted share in 2009. The full year results include the effects referenced above, as well as tax credits related to prior years’ research and development expenses which reduced the provision for income tax by $0.9 million. Without these factors, net sales for the 2010 fiscal year would have been $435.6 million and net income would have been $15.9 million, or $1.56 per diluted share. For the 2009 fiscal year, adjusting for the acquisition of Bush Hog and the other restructuring and non-cash charges and gains referenced above, net sales would have been $435.6 million and net income would have been $13.4 million, or $1.34 per diluted share.
Alamo Group’s North American Industrial Division’s net sales for the fourth quarter of 2010 were $50.9 million, an increase of 30% compared to net sales of $39.2 million in the fourth quarter of 2009. For the full year, net sales in 2010 were $192.4 million, an increase of 11% compared to net sales of $173.9 million in 2009. While governmental spending at all levels continues to be constrained by budget cutbacks, the Division’s sales exhibited some rebounding in the fourth quarter. We believe this reflects some amount of pent up demand which we have anticipated based on the nature of our products and markets, though it is too early to tell how strong or sustainable this affect will be.
The Company’s North American Agricultural Division net sales were $39.5 million in the fourth quarter of 2010 compared to $29.2 million in the fourth quarter of 2009, an increase of 35%. For the full year, net sales in 2010 were $173.5 million versus $92.4 million in fiscal 2009. The increase in 2010 was primarily related to the acquisition of Bush Hog, which accounted for $88.9 million in net sales in 2010 and $10.9 million in net sales in 2009. The Division was aided by improvements in the agricultural market which began in the second half of the year and shows signs of continuing in 2011.
Net sales for Alamo’s European Division were $39.1 million in the fourth quarter of 2010 versus $44.5 million in 2009, a decrease of 12%. For the full year, net sales in 2010 were $158.7 million compared to $180.2 million in 2009, a decrease of 12%. The decrease in European sales in 2010 reflects continued weak market conditions which have lagged conditions in the Company’s North American markets. While governmental purchases in this sector are likely to remain soft, there are indications of improved demand from agricultural customers in 2011.
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AgraTurf, Elmira Farm Service join forces to form Premier Equipment Ltd.
Elmira, Ontario, March 7 – AgraTurf Equipment Services Inc. and Elmira Farm Service Ltd., two John Deere dealers in Southern Ontario, announced they have agreed to merge into a new dealership – Premier Equipment Ltd., effective May 2, 2011.
“We are excited to officially make this announcement,” says Brett Barriage, general manager of Elmira Farm Service and the new CEO of Premier Equipment Ltd. “Establishing this new entity will position us to meet the long term needs of the farming, commercial and residential customers in Southern Ontario.”
The joining of the two brings together ten store locations and over 250 employees in a trade area spanning from Alliston in Ontario's northeast to Smithville and Simcoe in the south and west. With collective history dating back to 1955, this merger links the experience and expertise of two leading dealerships recognized by John Deere as being ‘Dealers of Tomorrow’.
“We’re in a very dynamic market, and our customers are continuing to grow,” comments Joe Fewer, GM of AgraTurf and the new Chief Operations Officer of Premier Equipment Ltd. “This merger solidifies resources and provides the strength and stability needed to continue as leaders in the marketplace. It ensures our commitment to meet the growing needs of our customers, today and in the future."
To make certain all staff had an opportunity to participate; the announcement was shared through an online video featuring Barriage and Fewer. In addition to naming Fewer as Chief Operations Officer, Barriage shared that Ian Verbeek is assuming the role of Chief Sales Officer and Alan Dueck will be the Chief Financial Officer for the newly formed company.

“We are in the business of providing our customers with the ideas, technology and service that will help them compete effectively in the global agriculture market,” says Barriage. “We are taking these steps to reinforce the future for our staff and customers. We are taking these steps to ensure that we’re here to grow with them.”
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Canadian Tractor Manufacturer Setting Up Shop in Minnesota
By: David Little, West Central Tribune
Willmar, Minn., March 8 — A Canadian company that makes Versatile tractors is coming to town.
The company is buying the building that presently houses Willmar Fabrication in the industrial park and is buying some of Willmar Fabrication’s equipment.
Willmar Fabrication manufactures agricultural spraying equipment. Versatile will be retaining the 54 to 60 local manufacturing jobs.
Willmar Fabrication began operation in 2005 in the former AGCO and Willmar Manufacturing building at 2500 Airport Dr. S.W. The former manufacturer closed in April 2001 and moved to Jackson, and the building had sat vacant for four years.
Along with buying Willmar Fabrication’s building, Versatile requested that local and state tax exemptions granted to Willmar Fabrication be transferred to Versatile under a state program that expires in 2015. Willmar Fabrication received the exemptions in 2005.
A request to transfer the exemptions under the Job Opportunity Building Zone (JOBZ) program was approved by the Willmar City Council on Monday night. The request was made by Steve Renquist, executive director of the Kandiyohi County and City of Willmar Economic Development Commission.
Renquist said the Minnesota Department of Employment and Economic Development, which administers JOBZ, is excited about Willmar acquiring the company.
“This doesn’t just have local significance,’’ Renquist said. “This will be their third manufacturing plant in the United States, and we see this as a big plus.’’
Renquist said the company, which he didn’t name but which makes Versatile tractors, will be retaining 54 jobs.
The company is buying the building and most of the manufacturing equipment and some of the product lines, but not the business, Renquist said.
He said there is no tax or cost consequence to the city.
Renquist said Willmar Fabrication is moving the most profitable portion of its business — manufacturing of equipment primarily for the cotton industry — to a building at 2209 Trott Ave. S.W.
Also, Willmar Fabrication has tentative agreement to move the assembly portion of the business to 2400 19th Ave. S.W., said Renquist.
Neither of these buildings has JOBZ status. Renquist said he will request the council approve JOBZ status for those buildings. He said the tax consequences to the city will be about $12,000 a year until the program expires at the end of 2015.
Renquist said Willmar Fabrication will keep 15 employees and will be required to hire at least five workers under JOBZ.
In related business, the council granted JOBZ status to an additional building at the MinnWest Technology Campus for a start-up medical device company, which would be the first medical device manufacturer at the campus. The device uses ultrasonic wave energy to break down and remove scar tissue in joints, muscle and ligaments.
“We’re quite proud of this,’’ he said.
Renquist said the MinnWest Campus is already in the JOBZ program but he said each new company must be added individually.