Alamo Group Inc. (NYSE: ALG) reported results for the first quarter ended March 31, 2014.
Highlights for the Quarter
- Record net income for a first quarter of $7.2 million
Record net sales for a first quarter of $171 million
- North American Industrial Division up 11.5%
- North American Agricultural Division up 0.4%
- European Division up 11.7%
Net sales for the first quarter of 2014 were $171.2 million compared to net sales of $158.4 million for the first quarter of 2013, an increase of 8%. Net income for the quarter was $7.2 million, or $0.59 per diluted share compared to net income of $6.9 million, or $0.57 per diluted share in 2013, an increase of 4%. Both net sales and net income were records for a first quarter for Alamo Group.
Sales by Division
Net sales for the company’s North American Industrial Division were $77.3 million, an increase of 11.5% compared to net sales of $69.3 million in the first quarter of 2013. Despite a slow start in the quarter due to challenging winter conditions, the Division continued to benefit from improving demand for its infrastructure maintenance products.
Alamo’s North American Agricultural Division net sales in the first quarter of 2014 were $49.8 million compared to net sales of $49.6 million in the comparable period of 2013. The flat performance in the quarter reflects the adverse winter weather conditions and softer demand for agricultural equipment.
Alamo Group’s European Division net sales were $44.1 million in the first quarter of 2014 vs. $39.5 million in the prior year’s first quarter, an increase of 11.7%. This increase is an indication of improvements in the overall European economic outlook.
The company also reported that the previously announced pending acquisition of the units of Specialized Industries has now satisfactorily completed the regulatory review process and is anticipated to close in early May.
Ron Robinson, Alamo Group’s president and chief executive officer, commented on the first quarter results, “The first quarter of 2014 started slowly for us, particularly in North America, where severe winter weather conditions affected both our markets and our operations. However, we were pleased to see the quarter finish strong as demand for the company’s products remains buoyant.
“This was particularly true for our North American Industrial Division which experienced over 11% growth in sales due to strong March results across all product lines. Our snow removal equipment, while currently a small part of this Division’s business, certainly benefited by the heavy snowfall this winter. With the pending completion of our proposed acquisition of the units of Specialized Industries, snow removal products will be a larger part of Alamo’s business. All of the Specialized products will be included in our Industrial Division’s results moving forward which should greatly enhance this sector of our business for the remainder of the year.
“Our North American Agricultural Division also had a good finish in the first quarter, but this was barely enough to offset the weak beginning as the agricultural market in total seems to have gotten off to a late start in 2014, again due to prolonged winter conditions. This is being further affected by projected lower farm incomes which could impact overall equipment purchases. Still, we are somewhat more optimistic in our outlook due to the strong finish in the first quarter and believe demand will further improve as farm activity increases in the second quarter.
“Our European operations showed improvement in the first quarter. While we did not have to contend with the extreme winter conditions faced in North America, our markets have been constrained by a generally weak economy and it was gratifying to see improved conditions. While we believe the recovery in Europe will be gradual, we are hopeful our operations will benefit from steadily rebounding markets. We were also pleased to have completed the acquisition in the U.K. of Kellands in April. While this is a small acquisition, it is worth noting as it broadens our agricultural product range in Europe which we believe can further benefit from access to our distribution network.
“All in all, we believe the outlook for Alamo is very positive with stable performance of our core business and the pending addition of Specialized which should materially enhance our results for the remainder of 2014 and in the years to come.”