November 6, 2009

Alamo Group Q3 sales down; income up slightly

Alamo Group's third quarter net sales amounted to US$110.3 million, down from US$148.7 million for the same period in 2008, while net income increased three percent on-year to US$4.6 million.

The 26-percent decrease in sales was due to the general economic weakness, which has affected most of the company's markets. The increase in earnings was a result of improved operating margins and tight cost control.

Net sales for the first nine months of 2009 were US$333.7 million, compared to US$434.6 million in the first nine months of 2008. Net income for the nine-month period was US$9.1 million versus net income of US$12.8 million for the comparable nine-month period in 2008.

The nine-month results include the effects of the May 2008 acquisition of Rivard Development SAS, which contributed US$23.9 million in net sales and net income of US$800,000.

The company's North American Industrial Division sales for the third quarter of 2009 were US$45.5 million, compared to US$64.8 million in the prior year's third quarter. For the nine-month period, sales in the Division were US$134.7 million, versus US$199.9 million in 2008. The decrease reflects ongoing weakness in sales to governmental entities, which are the main customers of this Division, as they continue to be affected by revenue shortfalls and budget constraints. This situation is likely to persist throughout the remainder of 2009 and into 2010.

Sales for Alamo's North American Agricultural Division were US$20.2 million in the third quarter of 2009, compared to US$29.6 million in the previous year. For the first nine months of 2009, Division sales were US$63.3 million, compared to US$94.8 million for the 2008 nine-month period. The decreases are a result of the weaker market conditions in the agricultural sector, as lower commodity prices have affected farm incomes. This situation has been further compounded as dealers have been reducing inventories in light of the uncertain economic outlook and tighter credit availability. There are indications these conditions could improve in 2010 as input costs have continued to soften, improving farm prospects, but timing is still uncertain.

Alamo's European Division reported sales of US$44.6 million for the third quarter of 2009 compared to US$54.3 million in 2008. For the first nine months of 2009, Division sales were US$135.7 million, versus US$140 million in the same period of 2008.

The overall decreases in sales reflect soft market conditions similar to those being experienced in North America, and have affected both Alamo's agricultural and governmental business throughout Europe.

Alamo Group is a leader in the design, manufacture, distribution and service of equipment for right-of-way maintenance and agriculture. The company operates 18 plants in North America and Europe as of September 30, 2009.