Alamo Group Inc. Reports Operating Results (10-K)
Alamo Group Inc. has a market cap of $317.1 million; its shares were traded at around $26.85 with a P/E ratio of 18 and P/S ratio of 0.6. The dividend yield of Alamo Group Inc. stocks is 0.9%. Alamo Group Inc. had an annual average earning growth of 8.8% over the past 10 years. GuruFocus rated Alamo Group Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations: The aggregate market value of the voting stock (which consists solely of shares of common stock) held by non-affiliates of the registrant as of June 30, 2010 (based upon the last reported sale price of $21.70 per share) was approximately $183,325,701 on such date.
The Companys ability to provide innovative responses to customer needs, to develop and manufacture new products, and to enhance existing product lines is important to its success. The Company continually conducts research and development activities in an effort to improve existing products and develop new products. As of December 31, 2010, the Company employed 136 people in its various engineering departments, 60 of whom are degreed engineers and the balance of whom are support staff. Amounts expended on research and development activities were approximately $5,774,000 in 2010, $4,762,000 in 2009 and $5,443,000 in 2008. As a percentage of sales, research and development was approximately 1.1% in 2010 and 1.0% in 2009 and 2008, and is expected to continue at similar levels in 2011.
As of December 31, 2010, the Company had unfilled customer orders of $97,616,000 compared to $71,333,000 at December 31, 2009. The 37% increase was primarily due to the positive impact of improved agricultural market conditions on Bush Hog and Rhino backlogs. The Company continues to be affected by soft market conditions in its Industrial and European divisions due to the downturn in the global economy. Management expects that substantially all of the Companys backlog as of December 31, 2010 will be shipped during fiscal year 2011. The amount of unfilled orders at a particular time is affected by a number of factors, including manufacturing and shipping schedules which, in most instances, are dependent on the Companys seasonal sales programs and the requirements of its customers. Certain of the Companys orders are subject to cancellation at any time before shipment; therefore, a comparison of unfilled orders from period to period is not necessarily meaningful and may not be indicative of future actual shipments. No single customer is responsible for 10% or more of the aggregate revenue of the Company.
The Company owns various U.S. and international patents. While the Company considers its patents to be advantageous to its business, it is not dependent on any single patent or group of patents. The Company amortized approximately $79,000 in patents and trademarks relating to the industrial segment. The Company wrote off $224,000 in older patents which the Company believes no longer provide a competitive advantage. The net book value of the patents and trademarks was $5,500,000 and $5,803,000 as of December 31, 2010 and 2009, respectively.
On December 31, 2010, the Company had an environmental reserve in the amount of $1,495,000 related to the acquisition of Gradalls facility in New Philadelphia, Ohio. Three specific remediation projects that were identified prior to the acquisition are in process of remediation with a remaining reserve balance of $30,000. The Company has a reserve of $277,000 concerning a potential asbestos issue that is expected to be remediated over time. The balance of the reserve, $1,188,000, is mainly for potential ground water contamination/remediation that was identified before the acquisition and believed to have been generated by a third party company located near the Gradall facility.
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