Alamo Group Inc. has reported results for the first quarter ended March 31, 2021.
Highlights for the Quarter
- Record net income for a first quarter of $17.5 million, up 12.5%
- Net sales for the first quarter of $311.2 million, down 1%
- Industrial Division net sales of $211.9 million, down 7.9%
- Agricultural Division net sales of $99.3 million, up 17.5%
- EBITDA for the first quarter of $36.7 million, up 4.9%
- Record Backlog at $452.5 million, up 94.5% compared to the first quarter of 2020 and up 27.8% compared to year end 2020
Summary of Results
Alamo Group's net sales for the first quarter of 2021 were $311.2 million compared to net sales of $314.4 million in the first quarter of 2020, a decrease of 1.0%. Net income for the quarter was a record of $17.5 million, or $1.47 per diluted share, compared to $15.5 million, or $1.31 per diluted share, in the first quarter of 2020, an increase of 12.5% in net income and 12.2% in net income per diluted share. The 2020 first quarter results included the negative effects of the non-cash inventory step up charges of approximately $2.0 million on a pre-tax basis related to the October 2019 acquisition of Morbark.
Results by Division
Net sales for Alamo Group's Industrial Division in the first quarter of 2021 were $211.9 million, a decrease of 7.9% compared to net sales of $230 million in the first quarter of 2020. The Division's income from operations for the quarter was $16.1 million compared to $18.1 million in the previous year's first quarter, a decrease of 11.2%. The 2020 first quarter results included the negative effects of the non-cash inventory step up charges of approximately $2 million mentioned previously. The Industrial Division's net sales were off compared to the record level achieved in the first quarter of 2020 due to ongoing impacts of the pandemic on state, county and local government budgets. Sales were also adversely impacted by COVID-19 related issues in a few of the Company's operations and by supply chain interruptions.
Alamo Group's Agricultural Division net sales in the first quarter of 2021 were $99.3 million compared to net sales of $84.5 million in the first quarter of 2020, an increase of 17.5%. The Division's income from operations for the quarter was $9.3 million compared to $5.7 million in the previous year's first quarter, an increase of 63%. The Agricultural Division's first quarter results benefited from the overall strengthening of the agricultural market that began in the second half of 2020 and the Company's growth in sales and operating income was achieved despite inflationary pressures and sporadic supply chain limitations.
Comments on Results
Ron Robinson, Alamo Group's president and CEO, commented on the first quarter results as follows, "We are very pleased with Alamo Group's 2021 first quarter results. While our sales were slightly below last year's record first quarter levels, our earnings showed solid improvement and finished at record levels for a first quarter helped by lower operating and interest expenses. This was achieved despite the many challenges that continue to affect us and most industrial equipment manufacturers these days. These are certainly interesting times with the lingering issues related to the COVID pandemic, a variety of supply chain challenges, disruption with logistics and more inflationary pressure than we have experienced in the last several years. Yet, despite all of these issues our business is rebounding nicely from the economic downturn that began a little over one year ago spawned by the pandemic.
"We are particularly pleased to see the improvements in our Agricultural Division's first quarter results. Market conditions in this sector had been weak for the last several years but started to show improvement in the second half of 2020 despite the pandemic. Bookings and backlog have continued to rebound helped by improving agricultural commodity prices and higher levels of government subsidies. With a record backlog, low dealer inventory levels and rising agricultural commodity prices, we feel the upturn in this market should continue well past the current year.
"The outlook for Alamo Group's Industrial Division is also promising. While sales in the first quarter of 2021 were below last year's record level, with strong and continuing improvements in bookings and backlog we should be back to pre-pandemic levels of operations in the second half of the year assuming we can overcome the variety of supply chain challenges we are facing. We also look forward to getting the full effect of the major acquisitions we completed in 2019 - Morbark and Dutch Power. While their contributions were muted in 2020 due to the pandemic, we are pleased they both have seen their bookings rebound nicely and have very strong levels of backlog. Unfortunately, both have had several cases of COVID within their respective work forces which have caused some operational delays but the outlook remains strong. And, we will further benefit by a variety of synergies resulting from these acquisitions which have been ongoing in spite of the pandemic challenges. As part of these initiatives, the consolidation of Dutch Power manufacturing from three plants into two which was announced the fourth quarter of 2020 is on track and will be completed in 2021. Our Industrial Division should also benefit by the recent economic stimulus package in the U.S. This will certainly provide needed help to cities, counties and states who are the biggest end users of our Industrial Division's infrastructure maintenance equipment.