With acquisitions seemingly a vital part of the Alamo group structure the company continues to break its own net sales results year on year through the benefit of expansion.
The full year of 2020 was no exception with US$1.16 billion recorded, a record for Alamo Group and up 4% compared to US$1.12 billion in 2019.
However, net income for the full year was down 10% to US$56.6 million when compared to the US$62.9 million garnished in 2019.
The increased sales results for the full year included the effects of the acquisitions of Dutch Power, completed in March of 2019, and Morbark, completed in October 2019.
Together these acquisitions were vital to the Alamo ongoing acquisition program as they contributed US$230 million to net sales and US$10 million to operating income in 2020 compared to US$71.5 million to net sales and a loss of US$1.7 million to operating income in 2019.
Looking at the latest sales revenue results from the company.
Net sales for the fourth quarter 2020 were US$288.6 million compared to net sales of US$300.2 million in the fourth quarter of 2019, a decrease of 3.8%.
Net income for the fourth quarter was US$8.1 million, compared to net income of US$9.6 million, in the fourth quarter of 2019.
While all Alamo Group manufacturing facilities are open, and functioning at various levels of operation based on demand, the Company’s 2020 fourth quarter results were adversely impacted by COVID-19 challenges that led to delayed shipments as a result of operational and supply chain disruptions.
The Company’s Agricultural Division net sales in the fourth quarter of 2020 were US$85.9 million compared to US$77.7 million in the prior year, an increase of 10.5%.
The Division’s income from operations for the quarter was US$7.3 million compared to US$6.0 million in 2019, an increase of 20.7%.
For the full year, net sales in the Agricultural Division were US$352.3 million 2020 versus US$350.7 million in 2019, an increase of 0.5%. The Division’s income from operations was US$33.3 million for the full year 2020 compared to US$29.4 million in 2019, an increase of 13.3%.
The Agricultural Division 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.
However, as with the Industrial Division, the Agricultural Division is also experiencing some operational issues related to the pandemic as well as longer lead times and cost inflation in purchased components.
Ron Robinson, Alamo Group’s president and CEO commented on 2020 results, “We have been pleased to see that although our markets remained relatively soft, bookings have been steadily picking up to where we ended the year with record backlog.
“This bodes well for Alamo Group in 2021, despite ongoing issues related to the still unresolved COVID-19 situation.
“While operations have stabilised 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 labour 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.
“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.” Ron concluded.
