Form 8-K ALAMO GROUP INC For: Nov 06
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): November�6, 2014
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Alamo Group Inc.
(Exact name of registrant as specified in its charter)
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State of Delaware | 0-21220 | 74-1621248 |
(State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
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1627 E. Walnut Seguin, Texas 78155
(Address of Principal executive offices)
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Registrant's telephone number, including area code: | (830) 379-1480 |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o� Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o� Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o� Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o� Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02� � Results of Operations and Financial Condition
On November�6, 2014, Alamo Group Inc. issued a press release announcing, among other things, financial results for the quarter ended September�30, 2014.� �A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K. The foregoing description is qualified by reference to such exhibit.
The information furnished in this report, including the exhibit, shall not be deemed to be incorporated by reference into any of Alamo Group filings with the SEC under the Securities Act of 1933, except as shall be expressly set forth by specific reference in any such filing, and shall not be deemed to be "filed" with the SEC under the Securities Exchange Act of 1934.
Item 9.01 �� Financial Statements and Exhibits
Exhibit 99.1 - Press Release dated November�6, 2014.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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November�6, 2014 | By:� /s/ Robert H. George�������������� |
� | Robert H. George, |
� | Vice President-Administration |
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EXHIBIT INDEX
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Exhibit No. | Description � |
99.1 | Press release |
� | For: | Alamo Group Inc. |
� | � | ����������������������������������������������������������������������������� |
� | Contact: | Robert H. George |
� | � | Vice President |
� | � | 830-372-9621 |
For Immediate Release | � | � |
� | � | Financial Relations Board |
� | � | Marilynn Meek |
� | � | 212-827-3773 |
ALAMO GROUP ANNOUNCES RECORD
2014 THIRD QUARTER RESULTS
SEGUIN, Texas, November 5, 2014 - Alamo Group Inc. (NYSE: ALG) today reported results for the third quarter ended September 30, 2014.
Highlights for the Quarter
" | Record net income of $13.4 million |
" | Record net earnings per diluted share of $1.10 |
" | Record net sales of $233.2 million |
� | North American Industrial Division up 75% with addition of Specialized units |
� | European Division up 19% |
� | North American Agricultural Division down 6% |
Net sales for the third quarter of 2014 were $233.2 million compared to net sales of $174.7 million for the third quarter of 2013, an increase of 33%. Net income for the quarter rose 18% to $13.4 million, or $1.10 per diluted share, versus net income of $11.3 million, or $0.93 per diluted share, for the same period of 2013. Both net sales and net income for the quarter were records for Alamo Group. The results for the quarter included the effects of recent acquisitions, primarily the units of Specialized, which Alamo completed in May of this year and to a lesser extent Kellands, a UK company acquired in April, 2014 and two Australian companies, Superior and Fieldquip, acquired in September, 2013 and April, 2014, respectively. A summary outlining the effects these acquisitions had on the Companys results is included as Attachments 1 and 2 to this earnings release. Excluding these acquisitions, net sales for the quarter were $187.4 million, an increase of 7% (1).
Near the end of the quarter Alamo Group completed a repurchase and retirement of 849,690 shares of its common stock from Capital Southwest Venture Corporation for approximately $34.2 million in cash which was financed under the Companys Amended and Restated Revolving Credit Agreement.
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ALAMO GROUP ANNOUNCES RECORD 2014 THIRD QUARTER RESULTS
Nine Month Results
For the first nine months of 2014, net sales were $610.8 million, a 19% increase compared to net sales of $511.2 million for the same period in 2013. Net income for the first nine months was $29.8 million versus $30.1 million in 2013, a decrease of 0.9%, primarily due to weakness in the Companys second quarter results.
Results by Division
Net sales for the Companys North American Industrial Division in the third quarter of 2014 were $126.0 million compared to $71.9 million in the prior years third quarter, an increase of 75%. For the nine month period ending September 30, 2014, net sales for the Division were $308.3 million compared to $218.9 million in 2013, an increase of 41%. The Divisions results include the effect of the acquisition of the Specialized units. Excluding this acquisition, net sales for the Division were up 17% in the third quarter of 2014 and 13% for the nine month period (1).
The Companys North American Agricultural Division reported net sales of $57.7 million in the third quarter of 2014, versus $61.2 million in the previous year, a decrease of 6%. This reflects the continued weak conditions in the overall U.S. agricultural market. For the first nine months of 2014, net sales in this Division were $160.1 million versus $168.0 million in 2013, a decrease of 5%. The acquisitions of Superior and Fieldquip are included in this Divisions results. Excluding these acquisitions, net sales in the Division were down 7% in the third quarter and 7% for the nine month period (1).
Alamo Groups European Division net sales for the third quarter of 2014 were $49.6 million, an increase of 19% compared to net sales of $41.7 million in the previous year. For the first nine months of 2014 net sales in the Division were $142.3 million versus $124.3 million in 2013, an increase of 14%. The Divisions results include the effect of the acquisition of Kellands. Excluding this acquisition, net sales in the Division were up 13% in the third quarter and 10% for the nine month period (1). These results reflect continued improvement in demand for the Companys products in Europe despite weak overall market conditions and were further aided by changes in exchange rates.
Alamo Groups President and Chief Executive Officer, Ron Robinson, commented, We were pleased to see our third quarter rebound from the weak second quarter results. We feel this quarters results more fully exhibit the positive contribution the units of Specialized should have on Alamos results going forward. In the second quarter this potential was obscured by transactional costs and being part of Alamo for less than half of the quarter, but in the third quarter this potential was more fully revealed.
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ALAMO GROUP ANNOUNCES RECORD 2014 THIRD QUARTER RESULTS
However, our third quarter results were about more than just Specialized. Excluding acquisitions our Industrial Division showed strong progress with sales continuing to benefit from solid demand for our infrastructure maintenance products. We believe these same factors helped drive the growth experienced by our European Division as well. Our organic growth in Europe was particularly satisfying given the ongoing weak economic environment that still pervades that market in general. And while our North American Agricultural Division sales were down, the Division showed more strength than many other companies in this sector. We were much more proactive in managing this Divisions costs to ensure they did not impact Alamos overall results as negatively as they did in the second quarter.
As a result we were able to deliver sales and earnings results at record levels for the third quarter making it the strongest quarter ever for Alamo Group. We feel this is a particularly noteworthy accomplishment given weak market conditions in both agriculture and Europe. Even our Industrial unit results were negatively affected by a $1.1 million non-cash pre-tax charge relating to the sale of acquired Specialized inventory which was subject to a step up to fair value in the initial purchase price allocation. This was recognized as additional cost of goods sold during the quarter. These step ups will affect our earnings, but not our cash flow, for the next few quarters. To be able to produce the results achieved despite the headwinds indicated above, we believe shows the true strength of Alamo Group, a strength that gives us confidence in our future.
Earnings Conference Call
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Alamo Group will host a conference call to discuss the third quarter results on Thursday, November 6, 2014, at 10:00 a.m. Central Time.� Hosting the call will be members of senior management.
Individuals wishing to participate in the conference call should dial 888-329-8893 (domestic) or 719-457-1035 (internationally). For interested individuals unable to join the call, a replay will be available until Thursday, November 13, 2014 by dialing 888-203-1112 (domestic) or 719-457-0820 (internationally), passcode 8763937.
The live broadcast of Alamo Group Inc.s quarterly conference call will be available online at the Company's web site, www.alamo-group.com (under Investor Relations/Events & Presentations ) on Thursday, November 6, 2014, beginning at 10:00 a.m. CT. The online replay will follow shortly after the call ends and will be archived on the Companys website for 60 days.
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ALAMO GROUP ANNOUNCES RECORD 2014 THIRD QUARTER RESULTS
About Alamo Group
Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for infrastructure maintenance, agriculture and other applications. Our products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial equipment, agricultural implements and related after-market parts and services. The Company, founded in 1969, has approximately 3,100 employees and operates 24 plants in North America, Europe and Australia as of September 30, 2014. The corporate offices of Alamo Group Inc. are located in Seguin, Texas and the headquarters for the Companys European operations are located in Salford Priors, England.
Forward Looking Statements
This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Companys actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: market demand, competition, weather, seasonality, acquisition risks, currency-related issues, and other risk factors listed from time to time in the Companys SEC reports. The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date. This release may contain non-GAAP financial measures. These measures, if included, are to help facilitate meaningful comparisons of our results to those in prior periods and future periods and to allow a better evaluation of our operating performance, in managements opinion. Our reference to any non-GAAP measures should not be considered as a substitute for results that are presented in a manner consistent with GAAP.
(Tables Follow)
(1) In this earnings release, Alamo Group reports net sales excluding the impact of the acquisitions which is a non-GAAP financial measure. The Company considers this information useful to investors to allow better comparability of period-to-period operating performance. Attachments 1 and 2 to this earnings release contains a revenue reconciliation of the non-GAAP financial measure to the comparable GAAP financial measure.
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Alamo Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in�thousands)
(Unaudited)�
September�30, 2014 | September�30, 2013 | |||||||||
ASSETS | � | |||||||||
Current assets: | � | � | ||||||||
Cash and cash equivalents | $ | 38,644 | $ | 53,603 | ||||||
Accounts receivable, net | 178,072 | 161,704 | ||||||||
Inventories | 183,797 | 121,639 | ||||||||
Other current assets | 13,761 | 11,128 | ||||||||
Total current assets | 414,274 | 348,074 | ||||||||
Rental equipment, net | 28,927 | |||||||||
Property, plant and equipment | 72,416 | 60,633 | ||||||||
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Goodwill | 71,996 | 31,814 | ||||||||
Intangible assets | 62,028 | 5,500 | ||||||||
Other non-current assets | 4,699 | 3,623 | ||||||||
Total assets | $ | 654,340 | $ | 449,644 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY | � | � | ||||||||
Current liabilities: | � | � | ||||||||
Trade accounts payable | $ | 68,701 | $ | 55,911 | ||||||
Income taxes payable | 3,111 | 1,869 | ||||||||
Accrued liabilities | 44,391 | 36,170 | ||||||||
Current maturities of long-term debt and capital lease obligations | 852 | 499 | ||||||||
Other current liabilities | 884 | 243 | ||||||||
Total current liabilities | 117,939 | 94,692 | ||||||||
Long-term debt, net of current maturities | 190,005 | 90 | ||||||||
Deferred pension liability | 1,264 | 8,248 | ||||||||
Other long-term liabilities | 3,843 | 3,710 | ||||||||
Deferred income taxes | 3,825 | 2,705 | ||||||||
Total stockholders equity | 337,464 | 340,199 | ||||||||
Total liabilities and stockholders equity | $ | 654,340 | $ | 449,644 | ||||||
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Alamo�Group�Inc.�and�Subsidiaries�
Condensed�Consolidated�Statements�of�Income
(in�thousands,�except�per�share�amounts)
(Unaudited)
� | Third Quarter Ended | Nine Months Ended | |||||||||||||
� | 9/30/2014 | 9/30/2013 | 9/30/2014 | 9/30/2013 | |||||||||||
North�American | � | � | � | � | |||||||||||
Industrial | $ | 125,952 | $ | 71,890 | $ | 308,348 | $ | 218,863 | |||||||
Agricultural | 57,668 | 61,157 | 160,144 | 168,048 | |||||||||||
European | 49,555 | 41,691 | 142,286 | 124,320 | |||||||||||
Total net�sales | 233,175 | 174,738 | 610,778 | 511,231 | |||||||||||
Cost�of�sales | 177,735 | 131,582 | 469,922 | 389,072 | |||||||||||
Gross�margin | 55,440 | 43,156 | 140,856 | 122,159 | |||||||||||
� | 23.8 | % | 24.7 | % | 23.1 | % | 23.9 | % | |||||||
Operating�expenses | 33,914 | 27,830 | 93,903 | 79,533 | |||||||||||
Income�from�operations | 21,526 | 15,326 | 46,953 | 42,626 | |||||||||||
� | 9.2 | % | 8.8 | % | 7.7 | % | 8.3 | % | |||||||
Interest�expense | (1,497 | ) | (319 | ) | (2,780 | ) | (897 | ) | |||||||
Interest�income | 41 | 44 | 137 | 129 | |||||||||||
Other�income�(expense) | 421 | 558 | 1,048 | 1,190 | |||||||||||
Income�before�income�taxes | 20,491 | 15,609 | 45,358 | 43,048 | |||||||||||
Provision�for�income�taxes | 7,124 | 4,276 | 15,558 | 12,978 | |||||||||||
Net�Income | $ | 13,367 | $ | 11,333 | $ | 29,800 | $ | 30,070 | |||||||
Net�income�per�common�share: | � | � | � | � | |||||||||||
Basic | $ | 1.11 | $ | 0.94 | $ | 2.47 | $ | 2.50 | |||||||
Diluted | $ | 1.10 | $ | 0.93 | $ | 2.43 | $ | 2.47 | |||||||
Average�common�shares: | � | � | � | � | |||||||||||
Basic | 12,050 | 12,069 | 12,077 | 12,040 | |||||||||||
Diluted | 12,206 | 12,229 | 12,251 | 12,196 | |||||||||||
Alamo Group Inc.
Non-GAAP Financial Measures Reconciliation
From time to time, Alamo Group Inc. may disclose certain non-GAAP financial measures in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. For these purposes, GAAP refers to generally accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a non-GAAP financial measure as a numerical measure of historical or future financial performance, financial positions, or cash flows that is subject to adjustments that effectively exclude or include amounts from the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Alamo Group are provided as additional information to investors in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.
In this earnings release, Alamo Group reports each of net sales, operating income and net income excluding the impact of acquisitions which are non-GAAP financial measures. The Company considers this information useful to investors to allow better comparability of period-to-period operating performance. Attachment 1 to this earnings release contains a revenue reconciliation of these non-GAAP financial measures to the comparable GAAP financial measure. Attachment 2 discloses Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted EPS each adjusted to exclude the impact of inventory step up charge and transaction costs connected to the acquisitions and additional stock expense related to the accelerated vesting options to retirement eligible recipients, all of which are non-GAAP financial measures. The Company believes that providing Operating Income and Net Income exclusive of these adjustments, is useful to investors to allow better comparability of period-to-period operating preference. Attachment 2 sets forth a reconciliation of each such non-GAAP financial measure to its most directly comparable GAAP measure.
Attachment 1
Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands)
(Unaudited)�
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net Sales (consolidated) - GAAP | $ | 233,175 | $ | 174,738 | $ | 610,778 | $ | 511,231 | ||||||||
���(less: net sales attributable to acquisitions) | (45,760 | ) | (223 | ) | (70,133 | ) | (223 | ) | ||||||||
Net Sales less acquisitions (consolidated) - non-GAAP | $ | 187,415 | $ | 174,515 | $ | 540,645 | $ | 511,008 | ||||||||
Net Sales (N.A. Industrial Division) - GAAP | $ | 125,952 | $ | 71,890 | $ | 308,348 | $ | 218,863 | ||||||||
���(less: net sales attributable to acquisition) | (42,099 | ) | (61,076 | ) | ||||||||||||
Net Sales less acquisitions (N.A. Industrial Division) - non-GAAP | $ | 83,853 | $ | 71,890 | $ | 247,272 | $ | 218,863 | ||||||||
Net Sales (N.A. Agricultural Division) - GAAP | $ | 57,668 | $ | 61,157 | $ | 160,144 | $ | 168,048 | ||||||||
���(less: net sales attributable to acquisitions) | (1,190 | ) | (223 | ) | (3,304 | ) | (223 | ) | ||||||||
Net Sales less acquisitions (N.A. Agricultural Division) - non-GAAP | $ | 56,478 | $ | 60,934 | $ | 156,840 | $ | 167,825 | ||||||||
Net Sales (European Division) - GAAP | $ | 49,555 | $ | 41,691 | $ | 142,286 | $ | 124,320 | ||||||||
���(less: net sales attributable to acquisition) | (2,471 | ) | (5,753 | ) | ||||||||||||
Net Sales less acquisitions (European Division) - non-GAAP | $ | 47,084 | $ | 41,691 | $ | 136,533 | $ | 124,320 | ||||||||
Operating Income (consolidated) - GAAP | $ | 21,526 | $ | 15,326 | $ | 46,953 | $ | 42,626 | ||||||||
���(less: operating income attributable to acquisitions) | (3,862 | ) | 6 | (6,198 | ) | 6 | ||||||||||
Operating Income less acquisitions (consolidated) - non-GAAP | $ | 17,664 | $ | 15,332 | $ | 40,755 | $ | 42,632 | ||||||||
Net Income (consolidated) - GAAP | $ | 13,367 | $ | 11,333 | $ | 29,800 | $ | 30,070 | ||||||||
���(less: net income attributable to acquisitions) | (2,212 | ) | 8 | (3,509 | ) | 8 | ||||||||||
Net Income less acquisitions (consolidated) - non-GAAP | $ | 11,155 | $ | 11,341 | $ | 26,291 | $ | 30,078 | ||||||||
Attachment 2
Alamo Group Inc.
Non-GAAP Financial Reconciliation
(in thousands, except per share numbers)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Operating Income - GAAP | $ | 21,526 | $ | 15,326 | $ | 46,953 | $ | 42,626 | ||||||||
�������(add: inventory step charge) | 1,139 | 1,139 | ||||||||||||||
�������(add: transaction costs relating to acquisitions) | 131 | 1,839 | ||||||||||||||
�������(add: stock option expense) | 1,015 | |||||||||||||||
�������������Adjusted Operating Income - non-GAAP | $ | 22,796 | $ | 15,326 | $ | 50,946 | $ | 42,626 | ||||||||
Net Income - GAAP | $ | 13,367 | $ | 11,333 | $ | 29,800 | $ | 30,070 | ||||||||
�������Adjustments (after tax): | ||||||||||||||||
�������(add: inventory step charge) | 724 | 724 | ||||||||||||||
�������(add: transaction costs relating to acquisitions) | 83 | 1,169 | ||||||||||||||
�������(add: stock option expense) | 645 | |||||||||||||||
�������������Adjusted Net Income - non-GAAP | $ | 14,174 | $ | 11,333 | $ | 32,338 | $ | 30,070 | ||||||||
Diluted EPS - GAAP | $ | 1.10 | $ | 0.93 | $ | 2.43 | $ | 2.47 | ||||||||
�������(add: inventory step charge) | 0.06 | 0.06 | ||||||||||||||
�������(add: transaction costs relating to acquisitions) | 0.10 | |||||||||||||||
�������(add: stock option expense) | 0.05 | |||||||||||||||
Adjusted Diluted EPS - non-GAAP | $ | 1.16 | $ | 0.93 | $ | 2.64 | $ | 2.47 | ||||||||
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