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Alamo Group Inc. (ALG) filed Quarterly Report for the period ended 2011-03-31.
Alamo Group Inc. has a market cap of $319.5 million; its shares were traded at around $27 with a P/E ratio of 18.1 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 9% over the past 10 years. GuruFocus rated Alamo Group Inc. the business predictability rank of 1-star.
This is the annual revenues and earnings per share of ALG over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of ALG.
Highlight of Business Operations:
Net sales for the first quarter of 2011 were $140,715,000, an increase of $9,562,000 or 7.3% compared to $131,153,000 for the first quarter of 2010. The majority of the increase was from improved sales in the North American Agricultural segment. Also included in these sales is the effect of a reclassification of freight revenue. Freight billed to customers had been previously recorded net of cost of sales and has been reclassified to sales. This change resulted in an increase in net sales of $3,361,000 in the first quarter of 2011 and $2,764,000 in the first quarter of 2010, with no impact on reported earnings.
Selling, general and administrative expenses (“SG&A”) were $22,560,000 (16.0% of net sales) during the first quarter of 2011 compared to $21,668,000 (16.5% of net sales) during the same period of 2010, an increase of $892,000. The increase was mainly from higher sales commissions on increased sales and $119,000 in expense relating to the supplemental retirement plan that was adopted on January 3, 2011.
The Company’s net income after tax was $5,667,000 or $0.47 per share on a diluted basis for the first quarter of 2011 compared to 3,993,000 or $0.34 per share on a diluted basis for the first quarter of 2010. The increase of $1,674,000 resulted from the factors described above.
As of March 31, 2011, the Company had working capital of $219,296,000 which represents an increase of $33,425,000 from working capital of $185,871,000 of December 31, 2010. The increase in working capital was primarily from higher levels of accounts receivable and inventory due to seasonality.
As of March 31, 2011, there was $45,000,000 borrowed under the revolving credit facility. On March 31, 2011, $884,000 of the revolver capacity was committed to irrevocable standby letters of credit issued in the ordinary course of business as required by vendors’ contracts resulting in approximately $54,000,000 in available borrowings.
The Company estimates the fair value of its reporting units using a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses. The Company believes that the assumptions and estimates used to determine the estimated fair values of each of its reporting units are reasonable. However, different assumptions could materially affect the estimated fair value. The Company recognized no goodwill impairment in 2010. The North American Industrial segment had a goodwill impairment of $14,104,000 in 2009. During the 2010 impairment analysis review, it was noted that even though the Schwarze reporting unit’s fair value was above carrying value it was not materially different. At December 31, 2010, there was approximately $6.8 million of goodwill related to the Schwarze reporting unit. This reporting unit would be most likely affected by changes in the Company’s assumptions and estimates. As of March 31, 2011, the Company had $35,281,000 of goodwill, which represents 8% of total assets. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, discount rates, etc.
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