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ALAMO GROUP INC.A C O M P A N Y F O R A L L S E A S O N S
I N V E S T O R P R E S E N T A T I O N
May 2020
2
This presentation contains statements that may be considered “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not
historical facts and represent only the Company’s beliefs and expectations. Forward-looking statements
involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future
periods to differ materially from forecasted results. Among those factors which could cause actual results to
differ materially are the following: market demand, impact of the current COVID-19 pandemic, competition,
weather, disease outbreaks, seasonality, changes in U.S. trade policy, negative economic impacts resulting from
geopolitical events, acquisition risks, financial issues, and other risks and uncertainties, including (but not
limited to) those described under the captions “Forward-Looking Information” in Part I, Item 1 and “Risk
Factors” in Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020
and the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as other risks
and uncertainties listed from time to time in the Company’s SEC filings. The Company does not undertake any
obligation to update the information contained herein, which reflects management’s beliefs and expectations
only as of this date. More information about factors that potentially could affect Alamo Group’s financial
results are included in the Company’s public filings. This presentation also contains non -GAAP financial
measures. These measures are included to facilitate meaningful comparisons of our results to those in prior
periods and future periods and to allow a better evaluation of our operating performance, in management’s
opinion. Our reference to these non-GAAP measures should not be considered as a substitute for results that
are presented in a manner consistent with GAAP. These non-GAAP measures are provided to enhance
investors’ overall understanding of our financial performance.
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SAFE HARBOR STATEMENT
Organizational Highlights
Alamo Group is a global leader in the design and
manufacture of high quality infrastructure
maintenance equipment for governmental and
industrial markets and agricultural equipment for
farms and ranches
• Founded in 1969• Corporate Headquarters Seguin, Texas• IPO 1993 (NYSE: ALG)• Quarterly dividend paid since 1993
– current annual rate $0.52
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WHO WE ARE
• Two Operating Divisions
• Industrial
• Agricultural
• 30 manufacturing locations in the U.S.,
Canada, England, France, the Netherlands,
Australia and Brazil
• Approximately 4,230 employees
• Primarily sell through an international
network of approximately 7,000 independent
dealers and distributorsBomford Mulcher Mower
Alamo Industrial Under Guardrail Mower
4
Alamo Group Inc., like most manufacturing companies in the world today, is being affected by the COVID-19 pandemic. While the Company and most of its businesses are deemed essential, we have experienced challenges both internally and externally that have constrained our operations. Despite these challenges, Alamo continues to conduct business and meet most of its customer requirements in a timely fashion. In doing so, the Company is committed to the safety and wellbeing of our employees and we are following all the recommended standards for safety and hygiene.
As a result of this unprecedented situation, it is difficult to predict exactly how our business will be affected in the nearterm, but we believe we have the financial stability to maintain operations and conduct business in an orderly fashion during this pandemic and will be capable of supporting our customers as business returns to more normal operating conditions.
We appreciate this is a difficult situation for all concerned and want to thank everyone for their understanding and support.
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COVID-19
Alamo Group is dedicated to enhancing shareholder value over the long term in a manner that is consistent with the
highest standards of good corporate governance and business ethics. We have implemented policies and procedures
that are designed to support this commitment which apply to all of our directors, officers and employees worldwide .
These policies reflect our expectation that our Company always acts with integrity in a legal, ethical and responsible
way for the benefit of our customers, employees and shareholders. Our Corporate Governance Guidelines, Code of
Business Conduct and Ethics and Board Committee Charters can be found under the “Our Company/Our Commitment”
tab of our website at www.alamo-group.com.
CORPORATE GOVERNANCE
Alamo is committed to a sustainable model for growth and profitability. This applies to both our internal
processes as well as the products we manufacture. Through investments, incentives, process redesign and
product development, we have targeted continuous improvements including reductions in non-renewable
energy consumption, non-recycled waste production and green house gas emissions. As part of our
commitment, employee health and safety is a priority and the safety performance of each of our operations
is stringently monitored. More details concerning our sustainability program can be found in our
Sustainability Report which may be viewed on the Company's website under the "Our Commitment" tab.
Our Bush Hog plant in Alabama
utilizes movable fixtures to
improve assembly process
ergonomics and employee safety
Our Alamo Industrial plant in
Texas has operated over 12
years with no lost time
accidents
Many of our vacuum truck products
offer water recycling technology,
allowing our customers to operate
more efficiently, burn less fuel and
conserve water resources
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SUSTAINABILITY
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SALES AND EARNINGS OVERVIEW
7
$361 $342 $320 $349 $371 $351
$478 $538$525
$563
$638$768
0
100
200
300
400
500
600
700
800
900
1,000
1,100
2014 2015 2016 2017 2018 2019
Agricultural Industrial
$839$880
$845
$912
$1,009
(U.S. $ Millions)Net Sales
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SALES BY DIVISION
$$1,119
8
The Industrial Division provides
equipment for maintenance on
and around highways, airports,
military installations, industrial
properties, parks and recreational
facilities, commercial landscapes,
and other specialty markets.
Gradall Highway Speed Wheeled Excavator
Super Products Sewer Cleaner
Alamo Industrial Wide Area Mower Tiger Triple Flail Mower
Schwarze Updraft Sweeper
Henke Front & Wing Snow Plows
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INDUSTRIAL DIVISION
Products
• Tractor Mounted Mowers• Forestry Mulchers• Brush Cutters• Horizontal Grinders• Street Sweepers and Debris
Collectors• Mechanical Excavators• Hydro-Excavators/Jetting
Equipment• Snow Removal Equipment• Trenchers• Compact Loaders• Replacement Parts and Technical
Services
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End Users
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INDUSTRIAL DIVISION
Rivard Trencher
Votex Flail Mower
Rivard Vacuum Truck
• State, county and local authorities and other governmental agencies in the United States and internationally
• Contractors
• Other specialty markets
Rayco Forestry Mulchers
Conver Weed Harvester Work Boat Morbark Brush Chippers
Tenco Snow Plow
10
• Sold direct and through approximately 1,300 dealers with over 3,300 sales outlets
• Marketed under Alamo Industrial®, Boxer®, Conver, Denis Cimaf®, Everest®, Gradall®, H.P. Fairfield™, Henke®, Herder®, Morbark®, NiteHawk®, Old Dominion Brush™, Precision Makers®, R.P.M. Tech™, Rayco®, Rivard®, Roberine®, Schwarze®, Super Products®, Tenco®,Terrain King®, Tiger®, Vacall®, Votex®, Wausau® and other brand names
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INDUSTRIAL DIVISIONSales and Distribution
Vacall Sweeper/Vacuum
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RECENT ACQUISTIONMorbark, LLC
On October 24, 2019 Alamo Group Inc. completed the acquisition of Morbark, LLC, the company’s largest acquisition to date.
Morbark is a leading manufacturer of equipment and aftermarket parts for the forestry tree maintenance, biomass, land management and recycling markets. Their products include a broad range of tree chippers, grinders, flails, debarkers, stump grinders, mulchers and brush cutters plus related aftermarket spare and wear parts. Morbark products are marketed under the Morbark, Rayco, Boxer and Denis Cimaf brand names and are sold through a network of independent dealers with about 300 sales locations. The company, with approximately 720 employees, is based in Winn, Michigan, with subsidiary operations in Wooster, Ohio and Roxton Falls, Quebec.
Morbark Horizontal Grinder
Denis Cimaf Excavator Mulcher
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The Agricultural Division provides
equipment for farmers, ranchers,
contractors and landscapers
primarily aimed at vegetation
maintenance, turf and landscaping
markets, as well as supporting
production agriculture and the
livestock industry.
Rhino Flex Flail Mower
Schulte Rock Picker
Schulte 42 Foot Rotary Cutter
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AGRICULTURAL DIVISION
Dixie Chopper ZT Mower McConnel Agribuggy
McConnel Reach Arm Mower
Products
• Rotary & flail mowers• Zero turn mowers• Tractor mounted reach arm mowers• Rock pickers• Hay processing tools• Remote controlled mowers• Tillage tools• Sprayers• Landscape tools• General agricultural implements• Aftermarket replacement parts
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Sales and Distribution
• Sold primarily through approximately 6,000 dealers, distributors, OEMs and other outlets
• Marketed under Bomford®, Bush Hog®, Dixie Chopper®, Earthmaster®, Faucheux™, Fieldquip®,Forges Gorce™, Herder®, Herschel®, McConnel®, M&W®, Rhino®, Rousseau™, Santa Izabel®, Schulte®, SMA®, Spearhead™, Twose™,Valu-Bilt®, and other brand names
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AGRICULTURAL DIVISION
Bush Hog Multi Spindle Rotary Mower
Bomford Rotary Mower
End Users
• Farmers• Ranchers• Mowing contractors
• Commercial landscapers• Residential homeowners• Hobby farmers
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STRATEGIC OBJECTIVES DRIVE SHAREHOLDER VALUE
Continuous
Operational
Improvement
Strategic
Acquisitions
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Organic Growth
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Types of Targeted Acquisitions
Our objective is to acquire
businesses or products that
command or have potential to be
major players in their niche markets
and are complementary to Alamo’s
existing range
• Consolidation of similar products in current markets
• New products that are complementary to the markets and customers we currently serve
• Similar products to those we currently offer in new geographical markets
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ACQUISITION STRATEGY
Conver Mowing Boat
Bomford Rotary Mower
Complementary Products
for Existing Markets
Schwarze, Twose, Schulte, Gradall, Vacall, Henke, Tenco, Kellands, Old Dominion Brush,
R.P.M. , Conver, Herder, Roberine, Precision Makers,
Votex, Dixie Chopper, Morbark, Rayco, Boxer, Denis Cimaf
Type of Acquisition Acquisitions
Market Share Consolidation
Schulte, Twose, Valu-Bilt, Rousseau, Tenco, Nite-Hawk, Bush Hog, Spearhead, Super Products, Wausau-Everest,
Dixie Chopper
International Expansion of Existing Products
Schulte, Faucheux, Spearhead, Rivard, Tenco, Superior, Herder,
Santa Izabel, R.P.M., Conver, Roberine, Precision Makers,
Votex, Denis Cimaf
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ALAMO ACQUISITIONS
RPM Rail Mounted Snow Removal System
Votex Flail Slope & Bank Mower
Henke Plow Wing Combo
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ACQUISTION TIMELINE
We have completed 27
acquisitions since 2000
ORGANIC GROWTH
Organic Growth Drivers
Our objective is to grow organically
at rates in excess of core market
growth rates
• Geographical expansion
• Product development
• Cross selling opportunities
• Strength of multiple distribution networks
• Pricing leadership
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McConnel Robotic Flail Mower
Schulte Disc Harrow
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Our new product development
is focused on the needs of
customers, both large and small,
for more efficient, safer and
user-friendly equipment
Improving customer operating
efficiencies, as well as product
functionality, manufacturability,
serviceability, ergonomics,
safety and aesthetics are key
objectives of our product
development strategy
Super Products Camel 1200 Vacuum
Truck with improved water recycling
technology reduces water use and
improves productivity
The redesigned Wausau SnoDozer
grows sales by meeting a wider range
of airport snow removal applications
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NEW PRODUCT DEVELOPMENT ENHANCES ORGANIC GROWTH
Gradall Discovery – a new truck-
mounted excavator reduces ownership
costs for municipalities
Alamo Industrial Mantis wide area
mower
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Our objective is to continuously improve our operating efficiencies
Investments in Technology
• The Company has continually invested in
more automated production equipment to
improve quality and efficiency and has all
operating units on, or moving to, a
common ERP platform to ensure timely
flow of information
Lean
• The Company has an ongoing lean
manufacturing program aimed at reducing
lead times, improving asset utilization,
improving flow through plants and
increasing manufacturing efficiencies
CONTINUOUS OPERATIONAL IMPROVEMENT
Group Purchasing Initiatives
• The Company takes advantage of the
combined group’s procurement power
through corporate purchasing initiatives
available to all units on a number of
purchased components, supplies and services
Plant Consolidations
• The Company has consolidated 16
manufacturing plants in the past 20 years
NiteHawk Parking Lot Sweeper
21
The Company sources raw
materials and components
globally to ensure
competitiveness
Alamo Group has a global
manufacturing presence in close
proximity to our major markets
Our improvement initiatives
enhance our margins which
benefit further from growing
economies of scale
Our manufacturing
capabilities provide us better
control over costs, quality, on-
time deliveries and safety
McConnel – Ludlow, England
Alamo Industrial – Seguin, Texas
Bush Hog – Selma, Alabama Rivard – Daumeray, France
Gradall – New Philadelphia, Ohio
CONTINUOUS IMPROVEMENT FOCUS DRIVES OUR PRODUCTION STRATEGY
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CONTINUOUS IMPROVEMENT FOCUS DRIVES OUR PRODUCTION STRATEGY
22
We make capital investments to
continuously improve the
efficiency and productive capacity
of our manufacturing facilities, as
well as the quality of the products
we manufacture
Alamo has a long term strategy to
have fewer but larger plants to
provide the scale necessary to
justify more automation. More
reliable output, reduced cycle
times, efficiency gains, and
greater flexibility are positive
outcomes from these investments
Fiber laser plate cutting center
Robotic welder used to fabricate large tanks and frames
Laser tube cutter
Automatic plate handling system
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Sales Per Employee
2009$194,000
2019$305,000
+57%
RESULTS OF OPERATIONAL IMPROVEMENTS
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INCOME STATEMENT
(2) EBITDA is a non-GAAP financial measure defined for this purpose as the sum of operating income and depreciation and amortization. Adjusted EBITDA for 2019 also excludes $3.3 million of an inventory step up charge related to the Morbark acquisition.
(1) For year ended 2017, 2018 and 2019, Adjusted Net Income and Adjusted Diluted Earnings Per Share are each adjusted for the following: 2017 excludes a one-time net charge of $10.2 million relating to the 2017 U.S. tax reform bill enacted in December 2017; 2018 results include a $3.3 million favorable adjustment to the provisional tax reform expense originally recorded in 2017; 2019 results excludes a $1.5 million impact of the recently completed acquisitions and related transaction costs of $1.4 million and related interest expense of $4.0 million.
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3/31/2020 3/31/2019 12/31/2019 12/31/2018 12/31/2017
Revenue $ 314,448 $ 261,934 $ 1,119,138 $ 1,008,822 $ 912,380
Gross Margin $ 78,940 $ 63,308 $ 273,227 $ 256,115 $ 234,693
% of Revenue 25.1 % 24.2 % 24.4 % 25.4 % 25.7 %
Operating Expenses $ 55,084 $ 40,702 $ 178,579 $ 155,027 $ 145,955
Operating Income $ 23,856 $ 22,606 $ 94,648 $ 101,088 $ 88,738
% of Revenue 7.6 % 8.6 % 8.5 % 10.0 % 9.7 %
Depreciation - PP&E $ 4,624 $ 3,338 $ 14,934 $ 12,884 $ 11,616
Depreciation - Rental $ 2,516 $ 2,088 $ 9,373 $ 6,725 $ 5,531
Amortization $ 4,003 $ 910 $ 5,953 $ 3,726 $ 3,520
Net Income $ 15,528 $ 15,253 $ 62,906 $ 73,486 $ 44,315
Diluted Earnings Per Share $ 1.31 $ 1.30 $ 5.33 $ 6.25 $ 3.79
Adjusted Net Income (1) $ 15,528 $ 12,258 $ 62,906 $ 70,155 $ 54,551
Adjusted Diluted Earnings Per Share (1) $ 1.31 $ 1.05 $ 5.33 $ 5.97 $ 4.67
EBITDA (2) $ 34,999 $ 28,942 $ 124,908 $ 124,423 $ 109,405
Three Months Ended Fiscal Year Ended
(In U.S. $ Thousands)
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BALANCE SHEET
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3/31/2020 3/31/2019 12/31/2019 12/31/2018 12/31/2017
Current Assets $ 623,967 $ 531,987 $ 570,828 $ 452,843 $ 392,527
Total Assets $ 1,249,876 $ 852,253 $ 1,212,763 $ 721,633 $ 639,671
Current Liabilities $ 162,719 $ 114,894 $ 162,874 $ 100,852 $ 101,363
Working Capital $ 461,248 $ 417,093 $ 407,954 $ 351,991 $ 291,164
Total Debt $ 490,255 $ 180,368 $ 443,981 $ 85,298 $ 60,082
Total Debt Net of Cash $ 405,830 $ 141,345 $ 401,670 $ 51,255 $ 34,709
Shareholders' Equity $ 560,409 $ 521,484 $ 569,757 $ 507,371 $ 449,108
Debt as a % of Capitalization 46.7 % 25.7 % 43.8 % 14.4 % 11.8 %
Debt Net of Cash as % of Capitalization 42.0 % 21.3 % 41.3 % 9.2 % 7.2 %
Net Cash from Operating Activities $ 5,574 $ (32,361) $ 88,813 $ 12,910 $ 70,804
Capital Expenditures $ 7,378 $ 5,284 $ 31,337 $ 26,587 $ 13,490
Dividends Paid $ 1,528 $ 1,404 $ 5,626 $ 5,124 $ 4,614
Period Ended Fiscal Year Ended
(In U.S. $ Thousands)
26
WHY ALAMO, WHY NOW?
A Proven Recipe For Growth
Long-term growing
demand for agricultural
products
Leadership position in
niche markets
An incentive system
aligned with performance
Financial strength to
support strategic
objectives
An integrated strategy for long-term
revenue and earnings growth
Stability in government spending on
infrastructure maintenance
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CONTACT INFORMATION
ALAMO GROUP INC.A company for all seasons…
Corporate Office
1627 East Walnut St., Seguin, Texas 78155
Ron Robinson, President & CEO
Phone: 830-372-9615Email: [email protected]
Dan Malone, Executive Vice President,
CFO & Investor Relations Director
Phone: 830-372-9581Email: [email protected]
27alamo-group.com