Investor Presentation November 2014

Transcription

1 Investor Presentation November 2014

2 Safe Harbor This presentation contains statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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, 2013, and under the caption Risk Factors in Item 1A of the Company s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, 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. 2

3 Corporate Profile Founded in 1969 Corporate Headquarters Seguin, Texas IPO 1993 (NYSE: ALG) Quarterly dividend paid since current annual rate $0.28 Operating Highlights Three Operating Divisions North American Industrial North American Agricultural Europe 24 manufacturing locations in the U.S., Canada, England, France and Australia Approximately 3,100 employees as of September 30, 2014 Primarily sell through an international network of 6,100 independent dealers and distributors 3

4 About Alamo Group 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 Products include, among others: tractor mounted mowers backhoes vegetation maintenance equipment agricultural implements rotary mowers excavators flail mowers street sweepers zero turn radius mowers vacuum trucks tillage equipment snow removal equipment front end loaders related aftermarket parts and service Primarily sold through an international network of over 6,100 independent dealers and distributors End users include governmental entities and related contractors, as well as agricultural, commercial turf and other similar markets 4

5 Business Overview Net Sales Sales & Earnings History (U.S. $ millions) Net Earnings year CAGR ( 03 13) Sales 9.3 % Earnings 16.3 % Net Sales Net Earnings LTM 0.0 5

6 2014 Major Developments May September November Acquired Business Units of Specialized Industries, LP Largest acquisition in company history Adds more than 20% to the top line Expands Company s presence in vacuum trucks and snow removal Accretive to shareholders in first full quarter of operations Repurchased 7% of the Outstanding Shares from Company s Largest Shareholder 849,690 shares at $40.255, a 3% discount to NYSE closing price Retired the shares reducing total outstanding shares to 11,256,093 at September 30, 2014 Public Offering of 1,980,610 Shares Held by Company s Largest Shareholder Increased trading liquidity Increased research with Bank of America Merrill Lynch and Piper Jaffray initiating coverage 6

7 Sales by Division North American Industrial North American Agricultural Europe $776 $677 $604 $628 $539 $386 $455 $297 $230 $263 $197 $178 $95 $181 $204 $200 $215 $207 $182 $161 $170 $165 $165 $ LTM 7

8 North American Industrial Division 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 and other brand names. 8

9 Industrial Products Gradall Wheeled Excavator Tiger TrucKat Boom Arm Mower Alamo Industrial Twin Side and Rear Mowers Super Products Vacuum Truck Schwarze Regenerative Air Street Sweeper Henke Motor Grader Mounted Snowplow 9

10 North American Agricultural Division 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 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 and other brand names. 10

11 Agricultural Products Bush Hog Rotary Cutter Rhino 15 Flex Wing Cutter Bush Hog Harrow Schulte Offset Rotary Cutter Bush Hog Zero Turn Radius Mower Earthmaster Vertical Tillage Implement 11

12 European Division 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. 12

13 European Products McConnel Remote Control Mower Rivard Vacuum Truck Rousseau Boom Arm Mower Spearhead Rotary Cutter Bomford Embankment Mower Kellands Self-Propelled Sprayer 13

14 Strategic Objectives Drive Shareholder Value Continuous Operational Improvement Organic Growth Strategic Acquisitions 14

15 Continuous Operational Improvement 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, it has 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 15

16 Results of Operational Improvement Sales (U.S. $ millions) $800.0 Headcount 3,000 $700.0 $ ,900 $600.0 $ ,800 $ ,700 $ ,600 $ ,557 2,523 2,500 $ ,400 $100.0 $ ,300 2,200 Sales Headcount 16

17 Continuous Operational Improvement Alamo Group has a global manufacturing presence in close proximity to our major markets. Rhino - Gibson City, Illinois The Company sources raw materials and components globally to ensure competitiveness. McConnel - Ludlow, England Our manufacturing capabilities provide us better control over costs, quality, on time deliveries and safety. Rivard Daumeray, France Alamo Industrial Seguin, Texas Our manufacturing provides value added benefits to our results which are further enhanced by growing economies of scale. Gradall New Philadelphia, Ohio 17

18 Organic Growth Our objective is to grow organically at rates in excess of core market growth rates Organic Growth Drivers Product development Geographical expansion Cross selling opportunities Strength of multiple distribution networks Pricing leadership 18

19 Strategic 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 Types of Target 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 19

20 Alamo Acquisitions Type of Acquisition Market Share Consolidation Acquisitions Schulte, Twose, Valu-Bilt, Rousseau, Tenco, Nite-Hawk, Bush Hog, Spearhead, Super Products, Wausau-Everest Complementary Products for Existing Markets Schwarze, Twose, Schulte, Gradall, Vacall, Henke, Tenco, Kellands International Expansion of Existing Products Schulte, Faucheux, Spearhead, Rivard, Tenco, Superior 20

21 Acquisitions Timeline We have completed 20 acquisitions since

22 A Proven Recipe for Growth Continuous Operational Improvement leads to greater efficiency and controls cost to aid Organic Growth Continuous Operational Improvement Continuous Operational Improvement provides financial strength to fund Strategic Acquisitions Organic Growth provides greater scale which allows Operational Improvements to increase shareholder returns Strategic Acquisitions increases scale and purchasing power which drive Operational Improvement Organic Growth Strategic Acquisitions Organic Growth strengthens market leadership and expands Strategic Acquisition opportunities Strategic Acquisitions consolidate share, expand geographic reach and provide complementary products to fuel Organic Growth 22

23 Why Alamo, Why Now? A growing demand for agricultural attachments Leadership position in niche markets Stability in government spending on infrastructure maintenance An integrated strategy for longterm revenue and earnings growth An incentive system aligned with performance Financial strength to support strategic objectives 23

24 Income Statement (in U.S. $ thousands) Nine Months Ending Fiscal Year Ending 9/30/14 9/30/13 12/31/13 12/31/12 12/31/11 Revenue $ 610,778 $ 511,231 $ 676,836 $ 628,402 $ 603,593 Gross Margin $ 140,856 $ 122,159 $ 158,510 $ 143,512 $ 135,085 % of Revenue 23.1% 23.9% 23.4% 22.8% 22.4% Operating Expenses $ 93,903 $ 79,533 $ 107,773 $ 97,507 $ 92,347 Operating Income $ 46,953 $ 42,626 $ 50,737 $ 45,349 $ 49,456 % of Revenue 7.7% 8.3% 7.5% 7.2% 8.2% Depreciation & Amortization $ 8,570 $ 6,680 $ 9,024 $ 10,074 $ 10,606 Net Income $ 29,800 $ 30,070 $ 36,094 $ 28,903 $ 32,687 % of Revenue 4.9% 5.9% 5.3% 4.6% 5.4% Diluted Earnings Per Share $ 2.43 $ 2.47 $ 2.96 $ 2.40 $ 2.73 EBITDA (1) $ 55,523 $ 49,306 $ 59,761 $ 55,423 $ 60,062 (1) EBITDA is a non-gaap financial measures defined for this purpose as the sum of operating income and depreciation and amortization 24

25 Balance Sheet (in U.S. $ thousands) Nine Months Ending Fiscal Year Ending 9/30/14 9/30/13 12/31/13 12/31/12 12/31/11 Current Assets $ 414,274 $ 348,074 $ 336,953 $ 306,800 $ 276,341 Total Assets $ 654,340 $ 449,644 $ 438,476 $ 404,339 $ 381,665 Current Liabilities $ 117,939 $ 94,692 $ 80,621 $ 78,128 $ 75,805 Working Capital $ 296,335 $ 253,382 $ 256,332 $ 228,672 $ 200,536 Total Debt $ 190,857 $ 589 $ 428 $ 706 $ 9,811 Total Debt Net of Cash $ 152,213 $ (53,014) $ (63,532) $ (47,585) $ (477) Shareholders' Equity $ 337,464 $ 340,199 $ 350,465 $ 310,286 $ 277,276 Total Debt as a % of Capitaliza 36.1% 0.2% 0.1% 0.2% 3.4% Total Debt Net of Cash as a % o 31.1% -18.5% -22.1% -18.1% -0.2% Net Cash provided (used) by O $ 24,410 $ 16,954 $ 31,627 $ 51,263 $ 10,667 Capital Expenditures $ 6,689 $ 9,910 $ 13,639 $ 4,654 $ 5,766 Dividends Paid $ 2,539 $ 2,526 $ 3,371 $ 2,854 $ 2,845 25

26 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 Commitment tab of our website at 26

27 Contact Information Corporate Office 1627 East Walnut St., Seguin, Texas Ron Robinson, President & CEO Phone: Dan Malone, Executive Vice President & CFO Phone: Bob George, Investor Relations Director, Vice President, Secretary & Treasurer Phone: We clear the way... 27