investor presentation november 2017 · 2017. 11. 1. · of the ompany’s annual report on form í...
TRANSCRIPT
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Investor Presentation
November 2017
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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, 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, 2016, 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.
Safe Harbor
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Operating Highlights
• Three Operating Divisions• Industrial• Agricultural• Europe
• 26 manufacturing locations in the U.S., Canada, England, France, Australia and Brazil
• Approximately 3,300 employees• Primarily sell through an
international network of approximately 6,000 independent dealers and distributors
• Founded in 1969• Corporate Headquarters
Seguin, Texas• IPO 1993 (NYSE: ALG)• Quarterly dividend paid
since 1993 - current annual rate $0.40
Corporate Profile
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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
• Primarily sold through an international network of approximately 6,000 independent dealers and distributors
• End users include governmental entities and related contractors, as well as agricultural, commercial turf and other similar markets
• Products include, among others:
About Alamo Group
• tractor mounted mowers• vegetation maintenance equipment• rotary mowers• flail mowers• zero turn radius mowers• tillage equipment• front end loaders
• backhoes• agricultural implements• excavators• street sweepers• vacuum trucks• snow removal equipment• related aftermarket parts and service
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Corporate Governance
Alamo Group is dedicated to enhancing shareholder value over the long term in a manner that is consistent with high 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. 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
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Business Overview
$230$197
$178
$265
$436
$95
$182
$181
$161
$204
$170
$203
$165
$219
$165
$214
$189
$298
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Sales by Division
$230$197
$178
$265
$436
$95
$182
$181
$161
$204
$170
$203
$165
$219
$165
$214
$189
$298Industrial
Agricultural
Europe
$264
$204
$165
(U.S. $ millions)
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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
• End-Users• State, county and local authorities and other governmental agencies in the United States and internationally• Contractors• Other specialty markets
• Sales and Distribution• 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.
Industrial Division
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Gradall Wheeled Excavator
Tiger Triple Pull Flail Mower
Super Products Vacuum Truck Alamo Industrial Boom Arm Mower
Tenco Snowplows Nite-Hawk Parking Lot Street Sweeper
Industrial Products
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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
• 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
Agricultural Division
•Farmers•Ranchers
•Mowing contractors•Hobby farmers
•Other specialty markets
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Earthmaster Vertical Tillage Implement RhinoAg Flex Flail Mower
Bush Hog Zero-Turn Radius MowerSchulte Offset Rotary Cutter Herder 400 Flail Mower
Schulte Rock Picker
Agricultural Products
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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
• Sales and Distribution• Sold direct and through approximately 2,100 dealers and distributors• Marketed under Bomford®, McConnel®, Twose™, Spearhead™, Rousseau™, SMA®, Faucheux™,
Forges Gorce™, Rivard®, Kellands™ and other brand names.
European Division
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Spearhead Rotary Cutter
Remote Control Mower
Bomford Rotary Mower
Rousseau Boom Arm MowerRivard Vacuum Truck
Kellands Agribuggy
European Products
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Organic Growth
Strategic Acquisitions
Continuous Operational
Improvement
Strategic Objectives Drive Shareholder Value
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Our objective is to continuously improve our operating efficiencies
Plant Consolidations• The Company has closed and consolidated 9 manufacturing locations in the past 10 years
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
Group Purchasing Initiatives• The Company takes advantage of combined group’s procurement power through corporate
purchasing discounts available to all units on a number of purchased components, supplies and services. Through the Company’s procurement office in China, we have been able to eliminate the middleman in a number of international sourcing situations
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
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Results of
Operational Improvement
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Sales Per
Employee
2008
$218,000
2016
$291,000
+33%
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Alamo Group has a global manufacturing presence in close proximity to our major markets.
Our manufacturing provides value added benefits to our results which are further enhanced by growing economies of scale.
The Company sources raw materials and components globally to ensure competitiveness.
Our manufacturing capabilities provide us better control over costs, quality, on-time deliveries and safety.
Rhino - Gibson City, Illinois
Rivard – Daumeray, France
McConnel - Ludlow, England
Alamo Industrial – Seguin, Texas
Gradall – New Philadelphia, Ohio
Continuous Operational
Improvement
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Organic Growth
Our objective is to grow organically at rates in excess of core market growth rates
• Product development • Geographical expansion• Cross selling opportunities• Strength of multiple distribution
networks• Pricing leadership
Organic Growth Drivers
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Strategic Acquisitions
• 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
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
Types of Target
Acquisitions
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Alamo Acquisitions
Market Share Consolidation
Complementary Products for Existing Markets
International Expansion of Existing Products
Schulte, Twose, Valu-Bilt, Rousseau, Tenco, Nite-Hawk, Bush Hog, Spearhead, Super Products,
Wausau-Everest
Schwarze, Twose, Schulte, Gradall, Vacall, Henke, Tenco, Kellands,
Old Dominion Brush, R.P.M.
Schulte, Faucheux, Spearhead, Rivard, Tenco , Superior, Herder,
Santa Izabel, R.P.M.
Type of Acquisition Acquisitions
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Acquisitions Timeline
We have completed 24 acquisitions since 2000
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Continuous Operational
Improvement
Organic
Growth
Strategic Acquisitions
Continuous Operational Improvement provides financial strength to fund Strategic Acquisitions
Strategic Acquisitions increases scale and purchasing power which drive Operational Improvement
Continuous Operational Improvement leads to greater efficiency and controls cost to aid Organic Growth
Organic Growth provides greater scale which allows Operational Improvements to increase shareholder returns
Strategic Acquisitions consolidate share, expand geographic reach and provide complementary products to fuel Organic Growth
Organic Growth strengthens market leadership and expands Strategic Acquisition opportunities
A Proven Recipe for Growth…
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Why Alamo, Why Now?
An integrated strategy for long-
term revenue and earnings
growth
Long-term growing demand for agricultural
attachments
Stability in government spending on
infrastructure maintenance
Financial strength to
support strategic objectives
Leadership position in
niche markets
An incentive system aligned
with performance
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(in U.S. $ thousands)
Income Statement
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(1) EBITDA is a non-GAAP financial measures defined for this purpose as the sum of operating income and depreciation and amortization
9/30/2017 9/30/2016 12/31/2016 12/31/2015 12/31/2014
Revenue 669,120$ 639,226$ 844,748$ 879,577$ 839,055$
Gross Margin 173,782$ 157,166$ 205,099$ 202,448$ 189,228$
% of Revenue 26.0 % 24.6 % 24.3 % 23.0 % 22.6 %
Operating Expenses 105,913$ 101,824$ 137,479$ 135,920$ 126,564$
Operating Income 67,869$ 55,342$ 67,620$ 66,528$ 62,664$
% of Revenue 10.1 % 8.7 % 8.0 % 7.6 % 7.5 %
Depreciation & Amortization 15,495$ 15,938$ 21,013$ 22,315$ 12,833$
Net Income 41,075$ 32,457$ 40,045$ 43,209$ 41,151$
% of Revenue 6.1 % 5.1 % 4.7 % 4.9 % 4.9 %
Diluted Earnings Per Share 3.52$ 2.81$ 3.46$ 3.76$ 3.42$
EBITDA (1) 83,364$ 71,280$ 88,633$ 88,843$ 75,497$
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Balance Sheet
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(in U.S. $ thousands)9/30/2017 9/30/2016 12/31/2016 12/31/2015 12/31/2014
Current Assets 438,162$ 392,695$ 327,618$ 362,886$ 393,302$
Total Assets 686,569$ 624,882$ 552,776$ 603,503$ 632,886$
Current Liabilities 97,755$ 84,593$ 78,700$ 85,024$ 89,367$
Working Capital 340,407$ 308,102$ 248,918$ 277,862$ 303,935$
Total Debt 126,276$ 135,390$ 70,090$ 144,083$ 190,575$
Total Debt Net of Cash 57,208$ 78,905$ 53,297$ 117,161$ 151,042$
Shareholders' Equity 446,493$ 387,516$ 387,717$ 360,469$ 337,670$
Debt as a % of Capitalization 22.0 % 25.9 % 15.3 % 28.6 % 36.1 %
Debt Net of Cash as % of
Capitalization 11.4 % 16.9 % 12.1 % 24.5 % 30.9 %
Net Cash from Operating
Activities 41,882$ 48,248$ 75,554$ 52,560$ 30,210$
Capital Expenditures 9,686$ 7,201$ 9,711$ 15,479$ 9,806$
Dividends Paid 3,455$ 3,082$ 4,114$ 3,628$ 3,328$
Period Ended Fiscal Year Ended
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Corporate Office1627 East Walnut St., Seguin, Texas 78155
Ron Robinson, President & CEOPhone: 830-372-9615Email: [email protected]
Dan Malone, Executive Vice President & CFOPhone: 830-372-9581Email: [email protected]
Bob George, Investor Relations Director,Vice President, Secretary & TreasurerPhone: 830-372-9621Email: [email protected]
Contact Information
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www.alamo-group.com
We clear the way ...
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