Alamo Group Inc. (ALG) reported results for the fourth quarter and year ended December 31, 2019 on Feb. 27. The company said it achieved record sales for the full year and during the fourth quarter of 2019. While Alamo’s Industrial Division sales increased 29.3%, its Agricultural Division sales fell 7.5%. The company also reported a backlog at $261 million, including acquisitions, up 8.6% compared to the previous year. Bookings in the Agricultural Division in the fourth quarter were 45.9% above the previous year's fourth quarter.
As previously announced, beginning with this release the company will report its results on the basis of two divisions, Industrial and Agricultural, which includes their respective parts of the former European Division.
Results for Fourth Quarter
Net sales for the fourth quarter of 2019 were $300.2 million compared to net sales of $256 million in the fourth quarter of 2018, an increase of 17.2%. Net income for the fourth quarter was $9.6 million compared to $16.6 million in the prior year.
The results for the fourth quarter of 2019 included the effects of the acquisitions of Dutch Power, completed in March 2019, and Morbark, completed in October 2019. Excluding the effects of these acquisitions adjusted net sales for the quarter were $256.4 million and net income was $15.5 million compared to $16.3 million in 2018. The acquisition of Dixie Chopper was completed in August 2019, although their results for the fourth quarter and for the year ended Dec. 31, 2019 were immaterial and are not included in the adjustments.
Results for the Full Year 2019
Net sales for the full year of 2019 were $1.1 billion, up 10.9% compared to net sales of $1 billion in the prior year. Net income for the full year was $62.9 million vs. $73.5 million in 2018.
The results for 2019 included the effects of the Dutch Power and Morbark acquisitions and the results for 2018 include a net $3.3 million favorable adjustment to the provisional tax reform expense recorded in 2017. Excluding the effects of the Dutch Power and Morbark acquisitions in 2019 and the tax adjustment in 2018, full year 2019 net sales were $1.05 billion vs. $1.01 billion in 2018 and net income for 2019 was $69.8 million vs. $70.2 million in 2018.
Agricultural Division Results
The company's Agricultural Division net sales in the fourth quarter of 2019 were $77.7 million compared to $84 million in the prior year, a decrease of 7.5%. The Division's income from operations for the quarter was $6 million compared to $7.1 million in 2018, a decrease of 14.9%. For the 2019 full year, net sales in the division were $350.7 million compared to $370.6 million in 2018, a decrease of 5.4%. Income from operations was $29.4 million for the 2019 full year compared to $36 million in 2018, a decrease of 18.4%. The Division's results continue to be impacted by weak overall agricultural market conditions, although the outlook showed some signs of improvement as bookings in the quarter were ahead of the previous year.
"There were certainly challenges during the year,” said Ron Robinson, Alamo Group’s president and CEO. “Some of these were not new, such as the ongoing weakness in the agricultural markets worldwide. The U.S. markets for our agricultural products remained weak throughout the past year and Europe, which had seemed a little more stable going into 2019, exhibited slowing conditions as the year progressed. Some of our other agricultural markets such as Brazil and Australia were soft as well, made worse in Australia by major, widespread wildfires.”
Robinson added, "We also are pleased that as we moved into 2020, we started to see some positive signs in some of the areas where we experienced challenges last year. In our Agricultural Division, our bookings in the fourth quarter were 45.9% above the previous year's fourth quarter. While this is certainly not a trend, any improvement in the agricultural market is a welcome development.”
Source: Alamo Group