SEGUIN, Texas — Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and year ended December 31, 2014.
- Record net sales for the fourth quarter of $223.9 million
- North American Industrial Division up 62%
- North American Agricultural Division up 6%
- European Division up 14%
- Record net income for the fourth quarter of $11.4 million
- Record net sales for full year of $839.1 million
- Record net income for full year of $41.2 million
Net sales for the fourth quarter of 2014 were $223.9 million compared to net sales of $166.7 million for the fourth quarter of 2013, an increase of 34%. Net income for the quarter was $11.4 million, or $1.00 per diluted share, vs. net income of $6 million, or $0.49 per diluted share in 2013, an increase of 104%. The results for the quarter included the effects of recent acquisitions, primarily the units of Specialized, which Alamo completed in May 2014 and to a lesser extent Kellands, a UK company acquired in April 2014 and Fieldquip in Australia, acquired in April 2014. Excluding these acquisitions, net sales for the quarter were $173.5 million, and net income for the quarter was $8.6 million.
Full Year Results
For full year 2014, net sales were $839.1 million vs. $682.1 million in 2013, an increase of 23%. Net income for the year was $41.2 million, or $3.42 per diluted share, compared to $36.1 million, or $2.96 per diluted share in 2013, an increase of 14.0%. Net sales and net income for both the fourth quarter and full year of 2014 were records for Alamo Group.
On September 25, 2014, Alamo Group completed a repurchase and retirement of 849,690 shares of its common stock from Capital Southwest Venture Corp. for approximately $34.2 million in cash which was financed under the Company’s Amended and Restated Revolving Credit Agreement.
Sales by Division
The company's North American Industrial Division net sales in the fourth quarter of 2014 were $126.5 million compared to $78.1 million in the fourth quarter of 2013, an increase of 62%. For the full year the Division’s net sales were $436 million in 2014 compared to $297.9 million in 2013, an increase of 46%. The acquisition of the Specialized units accounted for the majority of the sales increase although organic growth was also strong in the Division, adding 10% in 2014 compared to 2013. Alamo’s North American Agricultural Division had net sales of $51.0 million in the fourth quarter of 2014 compared to $48.1 million in the prior year, an increase of 6%. The Division’s full year net sales were $214.3 million in 2014 vs. $219.4 million in 2013, a decrease of 2%. The decrease for the year reflected overall weaker agricultural market conditions in North America which were somewhat offset by the acquisitions of Fieldquip and Superior in Australia.
Net sales in Alamo Group’s European Division in the fourth quarter of 2014 were $46.4 million, an increase of 14% over net sales of $40.6 million achieved in 2013. The Division’s full year net sales were $188.7 million in 2014, 14% above the $164.9 million achieved in the prior year. Despite continued weakness in the overall European economy, the company experienced organic growth mainly from its U.K. operations which were further enhanced by the acquisition of Kellands. In the fourth quarter, the Division’s results were negatively impacted by the effects of the strengthening U.S. Dollar compared to the U.K. Pound Sterling and the Euro.
Alamo Group’s President and Chief Executive Officer, Ron Robinson commented, “This was a good quarter and a good year for our Company. It was also a very busy quarter as we worked hard to bring the year to a satisfactory close, continued with the integration of our recent acquisitions and successfully completed a public offering of 17% of our shares on behalf of a long term major shareholder. This offering was a follow on to our repurchase and retirement of 7% of the company’s outstanding shares in the third quarter from the same shareholder, which together with the offering was substantially their total position in Alamo.
“We were pleased with the record results for both the quarter and the year, which were favorably impacted by our recent acquisitions. Even without the inclusion of these acquisitions, our results for the quarter and full year were at record levels with our organic growth in both the quarter and the year outpacing the overall growth in the economy. And, they were achieved despite certain headwinds that continue to affect some of the segments in which we operate.
“Our Industrial Division led the way as most of our product groups in the sector benefited from strong demand for our infrastructure maintenance equipment. This market has benefited by improving budget conditions at many governmental entities who are the primary end users for much of the Division’s products. Internal developments including the continuous introduction of an array of innovative, new and improved products contributed to this growth as well.
"While sales in our Agricultural Division were down slightly for the year, we believe they did better than the sector in general with nearly all equipment manufacturers having been impacted by lower commodity prices and declining farm incomes. We feel the broad applicability of our products across the sector from large commercial farms down to small hobby farms is benefiting us. In addition, our products are used across a wide array of agriculture endeavors including row crop farming, ranching, orchards, and specialty farms. And, while we expect overall conditions in the ag sector will remain soft throughout 2015, we currently think we should perform somewhat better than the market itself for the same reasons described above.
“We were particularly pleased with the results achieved in our European Division in 2014 as here again we outpaced the overall market conditions which remained weak in most of the Eurozone. Our U.K. operations led the way as they benefited from improving local market conditions. They also did well in exports throughout the markets they serve. These improvements were achieved despite the effects, primarily in the fourth quarter, of currency changes as the stronger U.S. dollar reduced the translated value of earnings in the local currencies in which we conduct business in Europe, mainly the U.K. Pound Sterling and the Euro. While we feel good about the prospects for further improvement in our European Division in 2015, a continuing strong dollar will negatively impact our consolidated results there. It will also have a negative effect in other countries in which we operate such as Canada and Australia.
“As noted above, we are pleased with the progress we made excluding acquisitions, but we are even more pleased with our results with the acquisitions. All three acquisitions completed in 2014 were strategic fits for Alamo, and the scale of the addition of the units of Specialized was an important step in Alamo’s development. This was the largest acquisition we have done by any measure and its partial year contribution to our company was significantly accretive to our results. The ongoing integration of Specialized is proceeding at a good pace and we feel they will be a major contributor to our results in 2015 and beyond. “As a result we are optimistic about the outlook for 2015. While we remain concerned by weakness in the agriculture sector, uncertain economic conditions in Europe and other parts of the world, and the impact of the strong dollar, we are confident about the long term prospects for Alamo.”