Alamo Group Announces 2002 Year End Results
SEGUIN, Texas--Feb. 20, 2003--Alamo Group Inc. today reported results for the fourth quarter and year ended December 31, 2002.Net sales in the fourth quarter were $59.9 million, an increase of 2% from the $58.6 million reported for the same period of 2001. The increases in sales were the result of the Valu-Bilt and Faucheux acquisitions in 2002, which helped to offset a decline in internal sales. For the quarter the Company reported a net loss of $522,000, or $0.05 per diluted share, compared with a profit of $660,000, or $0.07 per diluted share in the prior year period.
For 2002, net sales grew 5% to $259.4 million from $246.0 million in 2001. Net income for the year was $6.4 million, or $0.65 per diluted share, versus net income of $10.8 million, or $1.11 per diluted share, a year ago.
North American Agricultural sales increased by 13% for the year and decreased 8% in the fourth quarter, compared to the respective periods of 2001. Nearly all of this increase for the year is attributable to the acquisition of Valu-Bilt in April 2002 and SMC in August 2001, as internal sales showed a slight decline due to weak conditions in the agricultural market.
North American Industrial sales declined 7% for the year and 5% in the fourth quarter compared to respective periods of 2001. The decreases were a reflection of the reduced levels of government spending due to budget shortfalls at city, county and state levels across the country. The Company saw an increase in sales in its Schwarze street sweepers line, which benefited from the introduction of a new model range.
Alamo Group European sales were up 19% for the year and 50% in the fourth quarter compared to the respective periods of 2001. This increase was the result of internal growth and the acquisition of Faucheux in France at the beginning of the fourth quarter. Sales increased despite continued sluggish conditions in European markets as a result of the Company's strong marketing efforts during the year.
Ron Robinson, President and Chief Executive Officer of Alamo Group, commented, "The year 2002 was a challenging one for Alamo Group and the markets we serve. The North American agricultural market continued to suffer as U.S. farm incomes declined and many areas were affected by drought. Also, the Farm Bill, which took effect during the year, has failed to produce the level of benefits anticipated by the industry to date. Hopes for improvement in 2002 did not materialize and may not occur in 2003.
Our biggest disappointment was in the Industrial segment, where we experienced sales declines as a result of cutbacks in government spending in nearly every state. The depressed conditions we experienced in this sector were unprecedented, as historically this part of our business has proven to be very stable and our most profitable. The revenue shortfalls in most states could continue to hamper our business into 2003, though early indications are showing some improvement compared to last year."
Mr. Robinson continued, "Europe was one of our bright spots in 2002. Here we achieved increases in both sales and earnings. Market conditions in Europe were better than the previous year, when we were adversely affected by the foot and mouth epidemic in the UK, our largest European market. We are pleased with the positive impact of our new product introductions and aggressive marketing campaigns, which resulted in improved performance in the European market despite overall soft economic conditions and increasing competition. The steps we are taking should enhance our results into 2003 and beyond.
Our results for the year were also aided by acquisitions during 2002 of Valu-Bilt in the U.S. and Faucheux in France. While these acquisitions were small, they were accretive to our results during the year and have proven to be good fits for Alamo Group that we believe will continue to pay off in the future."
Mr. Robinson concluded, "While Alamo's 2002 results were below our expectations, the fact that we remained profitable in a market environment where many of our peers experienced losses, indicates some of our Company's inherent strengths. But we must do better in 2003 and believe we will. Despite uncertain economic conditions and weak markets, we believe Alamo Group will improve earnings performance in 2003 as a result of operational improvements, new products, aggressive marketing initiatives, selective acquisitions and a staff that is dedicated to improving results."
Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for right-of-way maintenance and agriculture. Our products include tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, agricultural implements and related after market parts and services. The Company, founded in 1969, has over 1,600 employees and operates thirteen plants in North America and Europe as of December 2002. The corporate offices of Alamo Group Inc. are located in Seguin, Texas and the headquarters for the Company's European operations are located in Salford Priors, England.
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 Company's 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, currency-related issues, and other risk factors listed from time to time in the Company's SEC reports. The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date.
ALAMO GROUP REPORTS 2002 FOURTH QUARTER RESULTS
Alamo Group Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
Fourth Quarter Year Ended
Ended
12/31/02 12/31/01 12/31/02 12/31/01
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American
Agricultural $24,422 $26,520 $110,784 $97,978
Industrial 21,798 22,912 100,905 108,001
European 13,705 9,127 47,746 40,068
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Total Sales 59,925 58,559 259,435 246,047
Cost of sales 50,287 46,403 205,891 186,518
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Gross margin 9,638 12,156 53,544 59,529
16.1% 20.8% 20.6% 24.2%
Operating Expenses 10,229 10,283 42,112 40,173
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Income from Operations (591) 1,873 11,432 19,356
(1.0%) 3.2% 4.4% 7.9%
Interest Expense (436) (637) (2,426) (3,284)
Interest Income 116 152 503 609
Other Income (Expense) 207 (12) 265 (75)
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Income before income taxes (704) 1,376 9,774 16,606
Provision for income taxes (182) 716 3,392 5,794
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Net Income ($522) $660 $6,382 $10,812
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Net income per common share:
Basic ($0.05) $0.07 $0.66 $1.11
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Diluted ($0.05) $0.07 $0.65 $1.11
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Average common shares:
Basic 9,717 9,710 9,713 9,706
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Diluted 9,717 9,779 9,789 9,787
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Summary Balance Sheet Data
12/31/02 12/31/01
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Receivables 59,722 57,768
Inventories 63,512 64,044
Current Liabilities 30,492 25,360
Long Term Debt 27,833 36,315
Equity 130,478 121,813