Ag ‘Led the Way’ for Alamo Group in Q4

Alamo Group Inc. recently reported results for the quarter and year that ended Dec. 31. The company’s Agriculture Division ‘led the way’ in a year that included record net sales.

For the quarter, net sales in agriculture increased by 10.5 percent. Industrial net sales declined by 8.9 percent, which led to an overall decline for the company of 3.8 percent.

For the full year, net sales in agriculture increased by 0.5 percent compared to 2019. Alamo’s overall net sales for the full year set a record and increased by 4 percent over 2019.

Income from operations for the fourth quarter increased by 20.7 percent in ag. For the year, that increase was 13.3 percent.

A report from Alamo Group said that the ag divison “continues to benefit from somewhat improved overall market conditions that started in the second half of 2020 and has resulted in the division finishing the year with a record level of backlog that bodes well for the 2021 outlook.”

The company went to say, however, that the division is “also experiencing some operational issues related to the pandemic as well as longer lead times and cost inflation in purchased components.”

Alamo Group President and CEO Ron Robinson said this: “While operations have stabilized to a certain degree, new challenges continue to emerge. Lead times for input components are growing and we are seeing more inflationary pressures than we have seen for several years. The labor market is also tightening, particularly among certain skill sets such as engineers, mechanics and skilled shop floor workers. Transportation costs are rising and U.S. and international ports of entry are experiencing delays.”

He continued: “Alamo Group’s Agricultural Division has certainly led the way for our company and actually exhibited some growth in 2020 as it benefited from stable demand for agricultural commodities that was further aided by an increased level of subsidies provided to farmers during the year. We were also helped by lower levels of dealer inventories going into the year due to weakness in the agricultural economy over the last several years. We think similar conditions will continue to help our agricultural business in 2021, further aided by improving commodity prices. Evidence of this outlook is reflected in our strong Agricultural Division backlog, which is at record levels. While we are pleased with this backlog level, we will need to maintain a strong focus on our operational execution to ensure timely deliveries, particularly given some of the supply chain challenges we are experiencing.”

Net income for the quarter was down 15.5 percent. Net income for the full year was down 10 percent.

The results for the fourth quarter and the full year included the effects of the acquisitions of Dutch Power, which was completed in March of 2019, and Morbark, which was completed in October of 2019.