alamo group inc...herder℠, santa izabel™ and other brand names alamo-group.com 11 agricultural...
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ALAMO GROUP INCA C O M P A N Y F O R A L L S E A S O N S
I N V E S T O R P R E S E N T A T I O N
August 2019
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This presentation contains statements that may be considered “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not
historical facts and represent only the Company’s beliefs and expectations. 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, changes in U.S. trade
policy, negative economic impacts resulting from geopolitical events, acquisition risks, financial issues, and
other risks and uncertainties, including (but not limited to) those described under the captions “Forward -
Looking Information” in Part I, Item 1 and “Risk Factors” in Item 1A of the Company’s Annual Report on Form
10-K for the year ended December 31, 2018, as well as other risks and uncertainties listed from time to time in
the Company’s SEC filings. The Company does not undertake any obligations to update the information
contained herein, which reflects management’s beliefs and expectations only as of this date. More information
about factors that potentially could affect Alamo Group’s financial results are included in the Company’s public
filings. This presentation also contains non-GAAP financial measures. These measures are included to 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 management’s opinion. Our reference to these non-GAAP
measures should not be considered as a substitute for results that are presented in a manner consistent with
GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of our financial
performance.
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SAFE HARBOR STATEMENT
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Organizational Highlights
Alamo Group is a global leader in the design
and manufacture of high quality agricultural
equipment for farms and ranches and
infrastructure maintenance equipment for
governmental and industrial markets
• Founded in 1969• Corporate Headquarters Seguin, Texas• IPO 1993 (NYSE: ALG)• Quarterly dividend paid since 1993
– current annual rate $0.48
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WHO WE ARE
• Three Operating Divisions
• Industrial
• Agricultural
• Europe
• 29 manufacturing locations in the U.S.,
Canada, England, France, The Netherlands,
Australia and Brazil
• Approximately 3,650 employees
• Primarily sell through an international
network of approximately 6,000 independent
dealers and distributorsBomford Mulcher Mower
Alamo Industrial Under Guardrail Mower
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These policies reflect our expectation that
our Company always acts with integrity in a
legal, ethical and responsible way for the
benefit of our customers, employees and
shareholders. Our Corporate Governance
Guidelines, Code of Business Conduct and
Ethics and Board Committee Charters can be
found under the “Our Company/Our
Commitment” tab of our website at
www.alamo-group.com
Alamo Group is dedicated to enhancing
shareholder value over the long term in a
manner that is consistent with the highest
ethical standards and good corporate
governance. We have implemented policies
and procedures that are designed to support
this commitment which apply to all of our
directors, officers and employees worldwide.
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CORPORATE GOVERNANCE
Tiger Railway Mower
Schwarze Street Sweeper
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Alamo is committed to a sustainable model for growth and profitability. This applies to both our
internal processes as well as the products we manufacture. Through investments, incentives,
process redesign and product development, we have targeted continuous improvements
including reductions in non-renewable energy consumption, non-recycled waste production and
green house gas emissions. As part of our commitment, employee health and safety is a priority
and the safety performance of each of our operations is stringently monitored.
Our Bush Hog plant in Alabama
utilizes movable fixtures to
improve assembly process
ergonomics and employee safety
Our Alamo Industrial plant in
Texas celebrated 10 years with
no lost time accidents
Many of our vacuum truck products
offer water recycling technology,
allowing our customers to operate
more efficiently, burn less fuel and
conserve water resources
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SUSTAINABILITY
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SALES AND EARNINGS OVERVIEW
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$165 $189 $173 $155 $162 $175
$219 $214 $208 $206 $227$235
$298
$436 $499 $484$523
$599
0
100
200
300
400
500
600
700
800
900
1,000
1,100
2013 2014 2015 2016 2017 2018
Europe Agricultural Industrial
$682
$839$880
$845
$912
$1,009
(U.S. $ Millions)Net Sales
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SALES BY DIVISION
$
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Tractor mounted mowers, street
sweeping equipment, excavators,
vacuum trucks, snow removal
equipment and replacement parts
Equipment for maintenance on
and around highways, airports,
military installations, recreational
areas, commercial landscape and
other specialty markets
Gradall Highway Speed Wheeled Excavator
Super Products Sewer Cleaner
Alamo Industrial Municipal Prime Mover
End Users
• State, county and local authorities and other governmental agencies in the United States and internationally
• Contractors• Other specialty markets
Tiger Triple Flail Mower
Schwarze Updraft Sweeper
Henke Front & Wing Snow Plows
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INDUSTRIAL DIVISION
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• Sold direct and through approximately 700 dealers with over 1,300 sales outlets
• Marketed under Alamo Industrial®, Terrain King®, Tiger®, Schwarze®, Nite-Hawk®, Gradall®, Vacall®, Henke®, Tenco®, Super Products®, Wausau™, Everest®, H.P. Fairfield™, Old Dominion Brush™, R.P.M. Tech™ and other brand names
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INDUSTRIAL DIVISION
Sales and Distribution
RPM Loader Mounted Snow Blower
Vacall Sweeper/Vacuum
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Tractor powered mowers, tillage
implements, post hole diggers, scraper
blades, rock pickers, front-end loaders
and backhoes, snow blowers, zero turn
radius mowers, hay rakes and tedders,
other ag implements, related
replacement parts and other
agricultural aftermarket wear and
spare parts
Clear brush, maintain pastures and
unused farmland, shred crop stubble,
hay-making, tillage, rock removal and
general farm operations
End Users• Farmers• Ranchers• Mowing contractors• Hobby farmers• Other specialty markets
Bush Hog Hay Rake
Rhino Flex Flail Mower Schulte Rock Picker
Schulte 42 Foot Rotary Cutter Bush Hog Zero-Turn Radius Mower
Rhino Flex Wing Mower
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AGRICULTURAL DIVISION
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Sales and Distribution
• Sold primarily through approximately 3,300 dealers, distributors and other Original Equipment Manufacturers
• Marketed under Bush Hog®, Rhino®, Earthmaster®, Schulte®, Herschel®, Valu-Bilt®, Superior®, Fieldquip®, Herder℠, Santa Izabel™ and other brand names
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AGRICULTURAL DIVISION
Bush Hog Multi Spindle Rotary Mower
Schulte Flexwing Mower with Flex Arm
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Hedge and grass cutters,
front-end loaders and
backhoes, mowers,
cultivators, and other ag
implements, vacuum trucks,
jetting systems, trenchers and
related replacement parts
End Users
• Agricultural markets
• Governmental agencies
• Contractors
• Other specialty markets
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McConnel Boom Arm Mower
Bomford Rotary Mower
EUROPEAN DIVISION
Rivard Trencher
McConnel Agribuggy Votex Flail Mower
Rivard Vacuum Truck
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Sales and Distribution
EUROPEAN DIVISION
• Sold direct and through approximately
2,100 dealers and distributors
• Marketed under Bomford®, McConnel®,
Twose™, Spearhead™, Rousseau™, SMA®,
Faucheux™, Forges Gorce™, Rivard®,
Kellands™ , Conver™, Votex™, Precision
Makers™, Roberine™, Herder™ and other
brand names
Conver Weed Harvester Work Boat
McConnel Triple Flail Mower
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STRATEGIC OBJECTIVES DRIVE SHAREHOLDER VALUE
Organic Growth
Continuous
Operational
Improvement
Strategic
Acquisitions
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Types of Targeted Acquisitions
Our objective is to acquire
businesses or products that
command or have potential to be
major players in their niche markets
and are complementary to Alamo’s
existing range
• Consolidation of similar products in current markets
• New products that are complementary to the markets and customers we currently serve
• Similar products to those we currently offer in new geographical markets
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ACQUISITION STRATEGY
Conver Mowing Boat
Bomford Rotary Mower
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Complementary Products
for Existing Markets
Schwarze, Twose, Schulte, Gradall, Vacall, Henke, Tenco, Kellands, Old Dominion Brush,
R.P.M. , Conver, Herder, Roberine, Precision Makers,
Votex
Type of Acquisition Acquisitions
Market Share Consolidation
Schulte, Twose, Valu-Bilt, Rousseau, Tenco, Nite-Hawk, Bush Hog, Spearhead, Super
Products, Wausau-Everest
International Expansion of Existing Products
Schulte, Faucheux, Spearhead, Rivard, Tenco, Superior, Herder,
Santa Izabel, R.P.M., Conver, Roberine, Precision Makers,
Votex
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ALAMO ACQUISITIONS
RPM Rail Mounted Snow Removal System
Votex Flail Slope & Bank Mower
Henke Plow Wing Combo
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ACQUISTION TIMELINE
We have completed 25
acquisitions since 2000
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ORGANIC GROWTH
Organic Growth Drivers
Our objective is to grow organically
at rates in excess of core market
growth rates
• Geographical expansion
• Product development
• Cross selling opportunities
• Strength of multiple distribution networks
• Pricing leadership
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McConnel Robotic Flail Mower
Schulte Disc Harrow
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Our new product development
is focused on the needs of
customers, both large and small,
for more efficient, safer and
user-friendly equipment
Improving customer operating
efficiencies, as well as product
functionality, manufacturability,
serviceability, ergonomics,
safety and aesthetics, are key
objectives of our new product
strategy
Super Products Camel 1200 Vacuum
Truck with improved Water
Recycling technology reduces water
use and improves productivity
The redesigned Wausau SnoDozer
grows sales by meeting a wider range
of airport snow removal applications
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NEW PRODUCT DEVELOPMENT ENHANCES ORGANIC GROWTH
Gradall Discovery – a new truck-
mounted excavator reduces ownership
costs for municipalities
Alamo Industrial Mantis wide area
Mower
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Our objective is to continuously improve our operating efficiencies
Investments in Technology
• The Company has continually invested in
more automated equipment to reduce
labor input and has all operating units on
or moving to a common ERP platform to
ensure timely flow of information
Lean
• The Company has an ongoing lean
manufacturing program aimed at reducing
lead times, improving asset utilization,
improving flow through plants and
increasing manufacturing efficiencies
CONTINUOUS OPERATIONAL IMPROVEMENT
Group Purchasing Initiatives
• The Company takes advantage of the
combined group’s procurement power
through corporate purchasing initiatives
available to all units on a number of
purchased components, supplies and services
Plant Consolidations
• The Company has consolidated 13
manufacturing plants in the past 20 years
NiteHawk Parking Lot Sweeper
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The Company sources raw
materials and components
globally to ensure
competitiveness
Alamo Group has a global
manufacturing presence in close
proximity to our major markets
Our improvement initiatives
enhance our margins which
benefit further from growing
economies of scale
Our manufacturing
capabilities provide us better
control over costs, quality, on-
time deliveries and safety
McConnel – Ludlow, England
Alamo Industrial – Seguin, Texas
Bush Hog – Selma, Alabama Rivard – Daumeray, France
Gradall – New Philadelphia, Ohio
CONTINUOUS IMPROVEMENT FOCUS DRIVES OUR PRODUCTION STRATEGY
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CONTINUOUS IMPROVEMENT FOCUS DRIVES OUR PRODUCTION STRATEGY
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We make capital investments to
continuously improve the
efficiency and productive capacity
of our manufacturing facilities, as
well as the quality of the products
we manufacture
Alamo has a long term strategy to
have fewer but larger plants to
provide the scale necessary to
justify more automation. More
reliable output, reduced cycle
times, efficiency gains, and
greater flexibility are positive
outcomes from these investments
Fiber laser plate cutting center
Robotic welder used to fabricate large tanks and frames
Laser tube cutter
Automatic plate handling system
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Sales Per Employee
2008$218,000
2018$291,000
+33%
RESULTS OF OPERATIONAL IMPROVEMENTS
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INCOME STATEMENT( In U.S. $ Thousands)
Six Months Ended Fiscal Year Ended
6/30/19 6/30/18 12/31/18 12/31/17 12/31/16
Revenue $547,120 $495,212 $1,008,822 $912,380 $844,748
Gross Margin $136,441 $126,711 $256,115 $234,693 $205,099
% of Revenue 24.9% 25.6% 25.4% 25.7% 24.3%
Operating Expenses $84,486 $78,564 $155,027 $145,955 $137,479
Operating Income $51,955 $48,147 $101,088 $88,738 $67,620
% of Revenue 9.5% 9.7% 10.0% 9.7% 8.0%
Depreciation - PP&E $6,868 $6,242 $12,884 $11,616 $11,267
Depreciation – Rental Fleet $4,323 $2,983 $6,725 $5,531 $6,429
Amortization $2,079 $1,866 $3,726 $3,520 $3,317
Net Income $35,920 $33,354 $73,486 $44,315 $40,045
Diluted Earnings Per Share $3.05 $2.84 $6.25 $3.79 $3.46
Adjusted Net Income (1) $35,920 $33,354 $70,155 $54,551 $40,045
Adjusted Diluted Earnings Per Share (1) $3.05 $2.84 $ 5.97 $ 4.67 $3.46
EBITDA (2) $65,225 $59,238 $124,423 $109,405 $88,633
(1) For year ended 2017 Adjusted Net Income and Adjusted Diluted Earnings Per Share are each adjusted to exclude a one-time net charge of $10.2 million relating to the 2017 U.S. tax reform bill enacted in December 2017. For year ended 2018 the results include a $3.3 million favorable adjustment to the provisional tax reform expense recorded in 2017, both are non-GAAP financial measures.
(2) EBITDA is a non-GAAP financial measure defined for this purpose as the sum of operating income and depreciation and amortization.
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BALANCE SHEET( In U.S. $ Thousands)
Period Ended Fiscal Year Ended
6/30/19 6/30/18 12/31/18 12/31/17 12/31/16
Current Assets $536,104 $468,680 $452,843 $392,527 $327,618
Total Assets $866,579 $725,379 $721,633 $639,671 $552,776
Current Liabilities $117,155 $100,651 $100,852 $101,363 $78,700
Working Capital $418,949 $368,029 $351,991 $291,164 $248,918
Total Debt $166,363 $119,017 $85,298 $60,082 $70,090
Total Debt Net of Cash $118,173 $75,415 $51,255 $34,709 $53,297
Shareholders’ Equity $542,832 $474,447 $507,371 $449,108 $387,717
Debt as a % of Capitalization 23.5% 20.1% 14.4% 11.8% 15.3%
Debt Net of Cash as % of Capitalization 17.9% 13.7% 9.2% 7.2% 12.1%
Net Cash from Operating Activities $899 $(27,714) $12,910 $70,804 $75,784
Capital Expenditures $12,423 $10,829 $26,587 $13,490 $9,711
Dividends Paid $2,808 $2,553 $5,124 $4,614 $4,114
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WHY ALAMO, WHY NOW?
A Proven Recipe For Growth
Long-term growing
demand for agricultural
attachments
Leadership position in
niche markets
An incentive system
aligned with performance
Financial strength to
support strategic
objectives
An integrated strategy for long-term
revenue and earnings growth
Stability in government spending on
infrastructure maintenance
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CONTACT INFORMATION
ALAMO GROUP INC.A company for all seasons…
Corporate Office
1627 East Walnut St., Seguin, Texas 78155
Ron Robinson, President & CEO
Phone: 830-372-9615Email: [email protected]
Dan Malone, Executive Vice President,
CFO & Investor Relations Director
Phone: 830-372-9581Email: [email protected]
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