Alamo Execs Talk Supply Prices in Earnings Call

Net sales at Alamo Group for the quarter that ended June 30 increased by 29 percent compared to the same quarter last year. Net sales in agriculture increased by 35 percent. In industrial, the rise was 27 percent.

Total debt was reduced by 28 percent, and backlog increased by 10 percent during the quarter, which reflects a 132 percent improvement over the same quarter in 2020.

The company reported operating income was 9.7 percent of net sales, which is a 48 percent increase over the prior year quarter.

“While we’re pleased to see this improvement, we would normally expect a double-digit operating margin percentage in the second quarter,” said Dan Malone, head of investor relations and executive vice president. “Our recent pricing actions have been aggressive, but the effective impact of these actions has been lagging a continued steep rise in costs. This is likely to continue until the rate of cost increases moderate.”

Later, in the question-and-answer portion of the investment call, CFO Richard Wehrle expanded on that.

It has happened several times that “we put (in) price increases, and then the next week, the cost increases have gone up when the price increase we just did was to cover the cost increase that we did probably a couple of weeks ago,” Wehrle said. “So everything we’re doing is probably a drag of 45 to 60 days. So if the costs can steady for a period of time, price increases we put into effect will definitely help us as we move out.”

Source: Alamo Group | Member since 1952 | alamo-group.com