10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____ TO ____

Commission file number 0-21220

ALAMO GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware	74-1621248
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

 1627 East Walnut, Seguin, Texas  78155

(Address of principal executive offices, including zip code)

830-379-1480

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
	Title of each class	Trading symbol(s)	Name of each exchange on which registered
	Common Stock, par value $.10 per share	ALG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At October 28, 2022, 11,966,223 shares of common stock, $.10 par value, of the registrant were outstanding.

1

Alamo Group Inc. and Subsidiaries

INDEX

                                                                                                                                                                              

PART I.	FINANCIAL INFORMATION		PAGE
Item 1.	Interim Condensed Consolidated Financial Statements  (Unaudited)
	Interim Condensed Consolidated Balance Sheets		3
		September 30, 2022 and December 31, 2021
	Interim Condensed Consolidated Statements of Income		4
		Three and Nine Months Ended September 30, 2022 and September 30, 2021
	Interim Condensed Consolidated Statements of Comprehensive Income		5
		Three and Nine Months Ended September 30, 2022 and September 30, 2021
	Interim Condensed Consolidated Statements of Stockholders' Equity		6
		Three and Nine Months Ended September 30, 2022 and September 30, 2021
	Interim Condensed Consolidated Statements of Cash Flows		8
		Nine Months Ended September 30, 2022 and September 30, 2021
	Notes to Interim Condensed Consolidated Financial Statements		9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risks		22
Item 4.	Controls and Procedures		23
PART II.	OTHER INFORMATION		23
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Mine Safety Disclosures
Item 5.	Other Information
Item 6.	Exhibits
	SIGNATURES		25

2

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Balance Sheets

(Unaudited) 

(in thousands, except share amounts)	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	75,308		$	42,115
Accounts receivable, net		301,919			237,970
Inventories, net		362,713			320,917
Prepaid expenses and other current assets		7,443			9,500
Income tax receivable		3,242			1,666
Total current assets		750,625			612,168
Rental equipment, net		33,156			32,514
Property, plant and equipment		325,283			321,863
Less:  Accumulated depreciation		(172,221)			(169,372)
Total property, plant and equipment, net		153,062			152,491
Goodwill		192,946			202,406
Intangible assets, net		173,508			183,466
Deferred income taxes		1,043			1,110
Other non-current assets		23,451			21,587
Total assets		$	1,327,791		$	1,205,742
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	100,886		$	101,396
Income taxes payable		5,218			2,613
Accrued liabilities		71,820			73,523
Current maturities of long-term debt and finance lease obligations		15,010			15,032
Total current liabilities		192,934			192,564
Long-term debt and finance lease obligations, net of current maturities		348,463			254,522
Long-term tax liability		3,781			4,416
Other long-term liabilities		24,821			27,119
Deferred income taxes		20,761			21,458
Stockholders’ equity:
Common stock, $0.10 par value, 20,000,000 shares authorized; 11,909,944 and 11,874,178 outstanding at September 30, 2022 and December 31, 2021, respectively		1,191			1,187
Additional paid-in-capital		128,780			124,228
Treasury stock, at cost; 82,600 shares at September 30, 2022 and December 31, 2021, respectively		(4,566)			(4,566)
Retained earnings		700,156			633,804
Accumulated other comprehensive loss		(88,530)			(48,990)
Total stockholders’ equity		737,031			705,663
Total liabilities and stockholders’ equity		$	1,327,791		$	1,205,742

See accompanying notes.

3

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Income

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Net sales:
Vegetation Management	$	228,511	$	209,796	$	704,520	$	608,345
Industrial Equipment	140,282		128,515		422,492		388,705
Total net sales	368,793		338,311		1,127,012		997,050
Cost of sales	276,428		252,015		848,289		746,188
Gross profit	92,365		86,296		278,723		250,862
Selling, general and administrative expenses	52,723		52,586		161,367		150,803
Amortization expense	3,802		3,667		11,481		10,988
Income from operations	35,840		30,043		105,875		89,071
Interest expense	(3,734)		(2,660)		(9,570)		(8,127)
Interest income	93		296		222		877
Other income (expense), net	1,413		36		(473)		2,659
Income before income taxes	33,612		27,715		96,054		84,480
Provision for income taxes	7,791		10,196		23,291		23,462
Net Income	$	25,821	$	17,519	$	72,763	$	61,018
Net income per common share:
Basic	$	2.18	$	1.48	$	6.13	$	5.16
Diluted	$	2.16	$	1.47	$	6.10	$	5.13
Average common shares:
Basic	11,883		11,842		11,875		11,835
Diluted	11,941		11,900		11,932		11,895
Dividends declared	$	0.18	$	0.14	$	0.54	$	0.42

 See accompanying notes.

4

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net income	$	25,821	$	17,519	$	72,763	$	61,018
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net of tax expense of $(781) and $(321), and $(1,685) and $(436), respectively	(24,921)		(9,216)		(43,076)		(8,660)
Recognition of deferred pension and other post-retirement benefits, net of tax benefit and (expense) of $61 and $(67), and $375 and $(201), respectively	206		251		617		754
Unrealized income on derivative instruments, net of tax expense of $(7) and $(354), and $(745) and $(955), respectively	22		1,331		2,919		3,592
Other comprehensive loss, net of tax	(24,693)		(7,634)		(39,540)		(4,314)
Comprehensive income	$	1,128	$	9,885	$	33,223	$	56,704

See accompanying notes.

5

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Stockholders’ Equity

 (Unaudited)

For nine months ended September 30, 2022
	Common Stock			Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stock- holders’ Equity
(in thousands)	Shares	Amount
Balance at December 31, 2021	11,791	$	1,187	$	124,228	$	(4,566)	$	633,804	$	(48,990)	$	705,663
Other comprehensive income	—	—		—		—		18,470		3,725		22,195
Stock-based compensation expense	—	—		1,371		—		—		—		1,371
Stock-based compensation transactions	20	2		82		—		—		—		84
Dividends paid ($0.18 per share)	—	—		—		—		(2,133)		—		(2,133)
Balance at March 31, 2022	11,811	$	1,189	$	125,681	$	(4,566)	$	650,141	$	(45,265)	$	727,180
Other comprehensive income	—	—		—		—		28,472		(18,572)		9,900
Stock-based compensation expense	—	—		1,750		—		—		—		1,750
Stock-based compensation transactions	15	2		(251)		—		—		—		(249)
Dividends paid ($0.18 per share)	—	—		—		—		(2,139)		—		(2,139)
Balance at June 30, 2022	11,826	$	1,191	$	127,180	$	(4,566)	$	676,474	$	(63,837)	$	736,442
Other comprehensive income	—	—		—		—		25,821		(24,693)		1,128
Stock-based compensation expense	—	—		1,508		—		—		—		1,508
Stock-based compensation transactions	1	—		92		—		—		—		92
Dividends paid ($0.18 per share)	—	—		—		—		(2,139)		—		(2,139)
Balance at September 30, 2022	11,827	$	1,191	$	128,780	$	(4,566)	$	700,156	$	(88,530)	$	737,031

See accompanying notes.

6

For nine months ended September 30, 2021
	Common Stock			Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stock- holders’ Equity
(in thousands)	Shares	Amount
Balance at December 31, 2020	11,727	$	1,181	$	118,528	$	(4,566)	$	560,186	$	(40,326)	$	635,003
Other comprehensive income	—	—		—		—		17,462		(1,586)		15,876
Stock-based compensation expense	—	—		1,240		—		—		—		1,240
Stock-based compensation transactions	29	3		773		—		—		—		776
Dividends paid ($0.14 per share)	—	—		—		—		(1,654)		—		(1,654)
Balance at March 31, 2021	11,756	$	1,184	$	120,541	$	(4,566)	$	575,994	$	(41,912)	$	651,241
Other comprehensive income	—	—		—		—		26,037		4,906		30,943
Stock-based compensation expense	—	—		1,316		—		—		—		1,316
Stock-based compensation transactions	23	2		(604)		—		—		—		(602)
Dividends paid ($0.14 per share)	—	—		—		—		(1,657)		—		(1,657)
Balance at June 30, 2021	11,779	$	1,186	$	121,253	$	(4,566)	$	600,374	$	(37,006)	$	681,241
Other comprehensive income	—	—		—		—		17,519		(7,634)		9,885
Stock-based compensation expense	—	—		2,840		—		—		—		2,840
Stock-based compensation transactions	9	1		(647)		—		—		—		(646)
Dividends paid ($0.14 per share)	—	—		—		—		(1,658)		—		(1,658)
Balance at September 30, 2021	11,788	$	1,187	$	123,446	$	(4,566)	$	616,235	$	(44,640)	$	691,662

See accompanying notes.

7

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
(in thousands)	2022		2021
Operating Activities
Net income	$	72,763	$	61,018
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Provision for doubtful accounts	319		133
Depreciation - Property, plant and equipment	16,307		15,798
Depreciation - Rental equipment	5,665		6,562
Amortization of intangibles	11,481		10,988
Amortization of debt issuance	500		500
Stock-based compensation expense	4,629		5,396
Provision for deferred income tax (benefit)	(4,029)		(6,705)
Gain on sale of property, plant and equipment	(156)		(4,162)
Changes in operating assets and liabilities:
Accounts receivable	(74,884)		(38,106)
Inventories	(54,122)		(54,408)
Rental equipment	(6,416)		(540)
Prepaid expenses and other assets	(802)		(1,668)
Trade accounts payable and accrued liabilities	5,696		36,331
Income taxes payable	910		10,266
Long-term tax payable	(635)		454
Other assets and long-term liabilities, net	1,595		1,530
Net cash (used in) provided by operating activities	(21,179)		43,387
Investing Activities
Acquisitions, net of cash acquired	(2,000)		—
Purchase of property, plant and equipment	(23,499)		(14,584)
Proceeds from sale of property, plant and equipment	527		9,287
Purchase of patents	—		(44)
Net cash used in investing activities	(24,972)		(5,341)
Financing Activities
Borrowings on bank revolving credit facility	190,000		128,000
Repayments on bank revolving credit facility	(85,000)		(108,000)
Principal payments on long-term debt and finance leases	(11,277)		(11,308)
Dividends paid	(6,411)		(4,969)
Proceeds from exercise of stock options	639		1,485
Common stock repurchased	(712)		(1,957)
Net cash provided by financing activities	87,239		3,251
Effect of exchange rate changes on cash and cash equivalents	(7,895)		(2,303)
Net change in cash and cash equivalents	33,193		38,994
Cash and cash equivalents at beginning of the year	42,115		50,195
Cash and cash equivalents at end of the period	$	75,308	$	89,189
Cash paid during the period for:
Interest	$	9,742	$	7,839
Income taxes	27,162		20,151

See accompanying notes.

8

Alamo Group Inc. and Subsidiaries

Notes to Interim Condensed Consolidated Financial Statements - (Unaudited)

September 30, 2022

1.  Basis of Financial Statement Presentation

General

The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.  The balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the "2021 10-K").

Effective July 1, 2021, the Company changed its method of accounting for its U.S. inventories from last-in, first-out ("LIFO") method to the first-in, first-out ("FIFO") method. The Company applied this change retrospectively for all prior periods presented.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. This Topic provides accounting relief for the transition away from LIBOR and certain other reference rates. The amendments for this update are effective through December 31, 2022. The Company is evaluating the impact the adoption of this standard will have on our financial statements.

2. Business Combinations

On October 26, 2021, the Company acquired 100% of the issued and outstanding equity interests of Timberwolf Limited (“Timberwolf”). Timberwolf manufactures a broad range of commercial wood chippers, primarily serving markets in the U.K. and the European Union. The primary reason for the Timberwolf acquisition was to enhance the Company's forestry and tree care platform for growth by increasing both the Company's product portfolio and capabilities in the European market. The acquisition price was approximately $25.0 million. The Company completed its review of the valuation of the purchase price allocation for Timberwolf during the second quarter of 2022. The Company has included the operating results of Timberwolf in its consolidated financial statements since the date of acquisition, these results are considered immaterial.

3. Accounts Receivable

Accounts receivable is shown net of sales discounts and the allowance for credit losses.

At September 30, 2022 the Company had $17.2 million in reserves for sales discounts compared to $12.6 million at December 31, 2021 related to products shipped to our customers under various promotional programs.

9

4.  Inventories

Inventories are stated at the lower of cost or net realizable value. Net inventories consist of the following:

(in thousands)	September 30, 2022			December 31, 2021
Finished goods		$	320,384		$	277,760
Work in process		28,410			24,895
Raw materials		13,919			18,262
Inventories, net		$	362,713		$	320,917

Inventory obsolescence reserves were $11.5 million at September 30, 2022 and $12.9 million at December 31, 2021.

5. Rental Equipment

Rental equipment is shown net of accumulated depreciation of $22.0 million and $20.1 million at September 30, 2022 and December 31, 2021, respectively. The Company recognized depreciation expense of $1.9 million and $2.1 million for the three months ended September 30, 2022 and 2021, respectively and $5.7 million and $6.6 million for the nine months ended September 30, 2022 and 2021, respectively.

6.  Fair Value Measurements

The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate their fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of September 30, 2022 and December 31, 2021, as the floating rates on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.

7. Goodwill and Intangible Assets

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2022:

(in thousands)	Vegetation Management			Industrial Equipment			Consolidated
Balance at December 31, 2021		$	132,963		$	69,443		$	202,406
Translation adjustment		(3,836)			(2,105)			(5,941)
Goodwill adjustment		(3,519)			—			(3,519)
Balance at September 30, 2022		$	125,608		$	67,338		$	192,946

10

The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:

(in thousands)	Estimated Useful Lives	September 30, 2022		December 31, 2021
Definite:
Trade names and trademarks	15-25 years	$	67,949		$	68,321
Customer and dealer relationships	8-15 years	128,644			126,104
Patents and drawings	3-12 years	27,967			29,338
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		228,760			227,963
Less accumulated amortization		(60,752)			(49,997)
Total net		168,008			177,966
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	173,508		$	183,466

The Company recognized amortization expense of $3.8 million and $3.7 million for the three months ended September 30, 2022 and 2021, respectively, and $11.5 million and $11.0 million for the nine months ended September 30, 2022 and 2021, respectively.

8.  Leases

The Company leases office space and equipment under various operating and finance leases, which generally are expected to be renewed or replaced by other leases. The finance leases currently held are considered immaterial. The components of lease cost were as follows:

Components of Lease Cost
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Finance lease cost:
Amortization of right-of-use assets	$	6	$	17	$	25	$	51
Interest on lease liabilities	—		1		1		3
Operating lease cost	1,414		1,464		4,345		3,985
Short-term lease cost	320		365		953		822
Variable lease cost	56		87		268		300
Total lease cost	$	1,796	$	1,934	$	5,592	$	5,161

Rent expense for the three and nine months ended September 30, 2022 and 2021 was immaterial.

11

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2022			December 31, 2021
2022	$	1,399	*		$	4,949
2023	4,629				3,793
2024	3,568				2,683
2025	2,779				2,036
2026	2,261				1,652
Thereafter	3,150				3,090
Total minimum lease payments	$	17,786			$	18,203
Less imputed interest	(1,176)				(1,311)
Total operating lease liabilities	$	16,610			$	16,892
*Period ended September 30, 2022 represents the remaining three months of 2022.

Future Lease Commencements

As of September 30, 2022, there are additional operating leases, primarily for autos and forklifts, that have not yet commenced in the amount of $0.5 million. These operating leases will commence in fiscal year 2022 with lease terms of 3 to 5 years.

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2022			December 31, 2021
Other non-current assets	$	16,498			$	16,744
Accrued liabilities	4,495				4,655
Other long-term liabilities	12,115				12,237
Total operating lease liabilities	$	16,610			$	16,892
Weighted Average Remaining Lease Term	4.78 years				5.14 years
Weighted Average Discount Rate	3.13		%		2.83		%

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,971	$	3,603

12

9. Debt

The components of long-term debt are as follows:

(in thousands)	September 30, 2022		December 31, 2021
Current Maturities:
Finance lease obligations	$	10		$	32
Term debt	15,000			15,000
	15,010			15,032
Long-term debt:
Finance lease obligations	16			24
Term debt, net	239,447			250,498
Bank revolving credit facility	109,000			4,000
Total Long-term debt	348,463			254,522
Total debt	$	363,473		$	269,554

As of September 30, 2022, $2.4 million 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 $216.7 million in available borrowings.

10.  Common Stock and Dividends

Dividends declared and paid on a per share basis were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Dividends declared	$	0.18	$	0.14	$	0.54	$	0.42
Dividends paid	$	0.18	$	0.14	$	0.54	$	0.42

On October 3, 2022, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.18 per share, which was paid on November 1, 2022, to shareholders of record at the close of business on October 18, 2022.

11.  Earnings Per Share

The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share.  Net income for basic and diluted calculations do not differ.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share)	2022		2021		2022		2021
Net Income	$	25,821	$	17,519	$	72,763	$	61,018
Average Common Shares:
Basic (weighted-average outstanding shares)	11,883		11,842		11,875		11,835
Dilutive potential common shares from stock options	58		58		57		60
Diluted (weighted-average outstanding shares)	11,941		11,900		11,932		11,895
Basic earnings per share	$	2.18	$	1.48	$	6.13	$	5.16
Diluted earnings per share	$	2.16	$	1.47	$	6.10	$	5.13

13

12.  Revenue and Segment Information

Revenues from Contracts with Customers

Disaggregation of revenue is presented in the tables below by product type and by geographical location. Management has determined that this level of disaggregation would be beneficial to users of the financial statements.

Revenue by Product Type
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
Wholegoods	$	282,619	$	251,712	$	877,446	$	761,674
Parts	76,047		74,009		214,844		201,601
Other	10,127		12,590		34,722		33,775
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050

Other includes rental sales, extended warranty sales and service sales as it is considered immaterial.

Revenue by Geographical Location
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
United States	$	264,915	$	249,024	$	803,204	$	710,814
France	18,369		21,236		65,086		69,252
Canada	24,753		15,499		68,482		60,383
United Kingdom	17,613		15,524		52,682		43,840
Netherlands	8,570		6,624		15,912		22,789
Brazil	9,688		9,212		36,891		23,396
Australia	7,513		4,999		20,454		14,588
Germany	2,757		2,665		4,515		6,497
Other	14,615		13,528		59,786		45,491
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050

Net sales are attributed to countries based on the location of the customer.

14

Segment Information

The following includes a summary of the unaudited financial information by reporting segment at September 30, 2022:  

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
Vegetation Management	$	228,511	$	209,796	$	704,520	$	608,345
Industrial Equipment	140,282		128,515		422,492		388,705
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050
Income from Operations
Vegetation Management	$	27,130	$	21,375	$	78,261	$	60,789
Industrial Equipment	8,710		8,668		27,614		28,282
Consolidated	$	35,840	$	30,043	$	105,875	$	89,071

(in thousands)	September 30, 2022		December 31, 2021
Goodwill
Vegetation Management	$	125,608	$	132,963
Industrial Equipment	67,338		69,443
Consolidated	$	192,946	$	202,406
Total Identifiable Assets
Vegetation Management	$	873,055	$	789,838
Industrial Equipment	454,736		415,904
Consolidated	$	1,327,791	$	1,205,742

13.  Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of tax, were as follows:

	Three Months Ended September 30,
	2022								2021
(in thousands)	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(60,552)	$	(4,606)	$	1,321	$	(63,837)	$	(26,041)	$	(6,352)	$	(4,613)	$	(37,006)
Other comprehensive income (loss) before reclassifications	(24,921)		—		(373)		(25,294)		(9,216)		—		2,013		(7,203)
Amounts reclassified from accumulated other comprehensive loss	—		206		395		601		—		251		(682)		(431)
Other comprehensive income (loss)	(24,921)		206		22		(24,693)		(9,216)		251		1,331		(7,634)
Balance as of end of period	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)	$	(35,257)	$	(6,101)	$	(3,282)	$	(44,640)

15

	Nine Months Ended September 30,
	2022								2021
(in thousands)	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(42,397)	$	(5,017)	$	(1,576)	$	(48,990)	$	(26,597)	$	(6,855)	$	(6,874)	$	(40,326)
Other comprehensive income (loss) before reclassifications	(43,076)		—		3,503		(39,573)		(8,660)		—		5,593		(3,067)
Amounts reclassified from accumulated other comprehensive loss	—		617		(584)		33		—		754		(2,001)		(1,247)
Other comprehensive income (loss)	(43,076)		617		2,919		(39,540)		(8,660)		754		3,592		(4,314)
Balance as of end of period	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)	$	(35,257)	$	(6,101)	$	(3,282)	$	(44,640)

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following tables set forth, for the periods indicated, certain financial data:

 

As a Percent of Net Sales	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Vegetation Management	62.0	%	62.0	%	62.5	%	61.0	%
Industrial Equipment	38.0	%	38.0	%	37.5	%	39.0	%
Total sales, net	100.0	%	100.0	%	100.0	%	100.0	%

Cost Trends and Profit Margin, as Percentages of Net Sales	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Gross profit	25.0	%	25.5	%	24.7	%	25.2	%
Income from operations	9.7	%	8.9	%	9.4	%	8.9	%
Income before income taxes	9.1	%	8.2	%	8.5	%	8.5	%
Net income	7.0	%	5.2	%	6.5	%	6.1	%

Overview

This report contains forward-looking statements that are based on Alamo Group’s current expectations.  Actual results in future periods may differ materially from those expressed or implied because of a number of risks and uncertainties which are discussed below and in the Forward-Looking Information section. Unless the context otherwise requires, the terms the "Company", "we", "our" and "us" means Alamo Group Inc.

We experienced continued strong demand for our products during the first nine months of 2022 as was reflected in our top line growth. Margins improved due to the increase in shipments along with pricing actions we began in 2021 which helped mitigate inflation cost pressures. However, we continue to be constrained by higher material and inbound freight costs, ongoing supply chain disruptions and skilled labor shortages.

For the first nine months of 2022, the Company's net sales increased by 13%, and net income increased by 19% compared to the same period in 2021. The increase in both net sales and net income was primarily due to continued strong customer demand for our products compared to the prior year, positive pricing actions, and ongoing cost and expense discipline. The year-over-year improvement in both net sales and net income was constrained by disruptions in our supply chain, significant input cost inflation (including increased inbound freight and material costs), and tightness in the availability of skilled labor.

16

The Company's Vegetation Management Division experienced a 16% increase in sales for the first nine months of 2022 compared to the first nine months of 2021 primarily as a result of increased customer demand as well as pricing actions. The Division's backlog improved in all product lines with the exception of Brazilian Herder products. The Division's income from operations for the first nine months of 2022 was up 29% versus the same period in 2021, due to increased demand but offset by higher material and inbound freight costs and supply chain disruptions.

The Company's Industrial Equipment Division sales increased in the first nine months of 2022 by 9% as compared to the first nine months of 2021. Industrial Equipment sales were strong in the excavator and vacuum truck product lines and were also supported by moderate sales increases in our street sweeper, debris collector and snow removal equipment lines. Negatively impacting this Division were higher input costs and supply chain disruptions including a shortage of truck chassis. These challenges had a negative effect on the Division's income from operations which led to a 2% decline for the first nine months of 2022 compared to the first nine months of 2021.

Consolidated income from operations was $105.9 million in the first nine months of 2022 compared to $89.1 million in the first nine months of 2021, an increase of 19%. The Company's backlog increased 41% to $908.9 million at the end of the third quarter of 2022 versus a backlog of $645.1 million at the end of the third quarter of 2021. The increase in the Company's backlog was primarily attributable to strong customer demand for our products in both Divisions as outlined above.

The effects of the COVID-19 pandemic continue to impact our business and operations. There has been a general decline in the number of COVID-19 cases in our facilities despite occasional localized outbreaks. However, new strains of the disease and/or a significant resurgence of cases could negatively impact us in the future by, among other things, reducing overall customer demand for our products or creating significant operational disruptions in our manufacturing facilities that could lead to delayed deliveries and/or production inefficiencies and higher costs. The indirect effects of the pandemic, including supply chain and logistics challenges, the unavailability of certain raw materials and key product components, input cost inflation and labor shortages, continue to negatively impact us and seem likely to persist in the near-term.

While the direct and indirect consequences of the COVID-19 pandemic continue to pose significant challenges, the Company may also be negatively affected by several other factors such as increases in interest rates, changes in tariff regulations and the imposition of new tariffs, ongoing trade disputes, further supply chain issues, changes in U.S. fiscal policy such as changes in the federal tax rate, weakness in the overall world-wide economy, significant changes in currency exchange rates, negative economic impacts resulting from geopolitical events such as the war in Ukraine, changes in trade policy, increased levels of government regulations, weakness in the agricultural sector, acquisition integration issues, budget constraints or revenue shortfalls in governmental entities, and other risks and uncertainties as described in “Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K").

Results of Operations

Three Months Ended September 30, 2022 vs. Three Months Ended September 30, 2021

Net sales for the third quarter of 2022 were $368.8 million, an increase of $30.5 million or 9% compared to $338.3 million for the third quarter of 2021. Net sales during the third quarter of 2022 improved due to strong customer demand for our products versus the third quarter of 2021, as well as positive pricing actions. Negatively affecting the third quarter of 2022 were higher costs for materials and inbound freight, supply chain disruptions, which caused component shortages, and related operational disruptions and continuing labor constraints.

Net Vegetation Management sales increased by $18.7 million or 9% to $228.5 million for the third quarter of 2022 compared to $209.8 million during the same period in 2021. The increase was due to strong performance in all product lines particularly agricultural, forestry and tree care and governmental mowing equipment in both North America and Europe. Supply chain disruptions and labor shortages had an overall negative impact during the third quarter of 2022. Currency translation effects also negatively impacted net sales in this division during the third quarter.

Net Industrial Equipment sales were $140.3 million in the third quarter of 2022 compared to $128.5 million for the same period in 2021, an increase of $11.8 million or 9%. The increase was mainly due to

17

continued solid results in our excavator and vacuum truck product lines with modest support from other product lines. This Division was also negatively impacted by ongoing supply chain disruptions and logistics issues in the third quarter of 2022, including delays in receiving truck chassis and component parts from supply chain partners.

Gross profit for the third quarter of 2022 was $92.4 million (25% of net sales) compared to $86.3 million (26% of net sales) during the same period in 2021, an increase of $6.1 million.  The increase in gross profit during the third quarter of 2022 compared to the third quarter of 2021 was primarily attributable to higher sales volume and positive pricing actions. Profitability in the quarter was negatively impacted by supply chain disruptions, shortages of component parts, along with higher costs of materials and inbound freight. These factors had a negative effect on the Company's gross margin percentage during the third quarter of 2022.

Selling, general and administrative expenses (“SG&A”) were $52.7 million (14% of net sales) during the third quarter of 2022 compared to $52.6 million (16% of net sales) during the same period of 2021, an increase of $0.1 million. The increase in SG&A expense in the third quarter of 2022 compared to the third quarter of 2021 was attributable to higher administrative, marketing and engineering expenses as the Company returned to pre-pandemic expense levels. Included in the 2021 SG&A expenses, are additional stock based compensation in the amount of $1.1

million related to the acceleration of restricted stock awards of our former CEO. Amortization expense in the third quarter of 2022 was $3.8 million compared to $3.7 million in the same period in 2021, an increase of $0.1 million.

Interest expense was $3.7 million for the third quarter of 2022 compared to $2.7 million during the same period in 2021.

Other income (expense), net was $1.4 million of income for the third quarter of 2022 compared to $36.0 thousand of income during the same period in 2021.  Both the income in 2021 and the expense in 2022 was primarily the result of changes in currency exchange rates.

Provision for income taxes was $7.8 million (23% of income before income tax) in the third quarter of 2022 compared to $10.2 million (37% of income before income tax) during the same period in 2021.

The Company’s net income after tax was $25.8 million or $2.16 per share on a diluted basis for the third quarter of 2022 compared to $17.5 million or $1.47 per share on a diluted basis for the third quarter of 2021.  The increase of $8.3 million resulted from the factors described above.

Nine Months Ended September 30, 2022 vs. Nine Months Ended September 30, 2021

Net sales for the first nine months of 2022 were $1,127.0 million, an increase of $129.9 million or 13% compared to $997.1 million for the first nine months of 2021. The increase in net sales was attributable to continued strong customer demand for our products in both the Vegetation Management and Industrial Equipment Divisions and improved pricing. Negatively impacting net sales were higher costs for materials and inbound freight, supply chain disruptions and a shortage of skilled labor.

Net Vegetation Management sales increased during the first nine months by $96.2 million or 16% to $704.5 million for 2022 compared to $608.3 million during the same period in 2021. The increase was due to a strong performance in all product lines, particularly forestry and tree care and agricultural and governmental mowing equipment in both North America and Europe. Supply chain disruptions, labor constraints and unfavorable input cost changes constrained this Division during the first nine months of 2022.

Net Industrial Equipment sales were $422.5 million during the first nine months of 2022 compared to $388.7 million for the same period in 2021, an increase of $33.8 million or 9%. The increase in sales for the first nine months of 2022 compared to the first nine months of 2021 was mainly due to the continued solid results in excavator and vacuum truck product lines, with modest support from other product lines. Net sales in the first nine months of 2022 were negatively affected by supply chain disruptions and higher input costs in both material and inbound freight costs.

18

Gross profit for the first nine months of 2022 was $278.7 million (25% of net sales) compared to $250.9 million (25% of net sales) during the same period in 2021, an increase of $27.8 million. The increase in gross profit was mainly attributable to higher sales volume during the first nine months of 2022 compared to the first nine months of 2021 as well as improved pricing. Shortages of component parts along with higher costs of materials and inbound freight negatively impacted the first nine months of 2022.

SG&A expenses were $161.4 million (14% of net sales) during the first nine months of 2022 compared to $150.8 million (15% of net sales) during the same period of 2021, an increase of $10.6 million. The increase in SG&A expense in the first nine months of 2022 compared to the first nine months of 2021 was attributable to higher administrative, marketing and engineering expenses as the Company returned to pre-pandemic expense levels. Amortization expense in the first nine months of 2022 was $11.5 million compared to $11.0 million in the same period in 2021, an increase of $0.5 million.

Interest expense was $9.6 million for the first nine months of 2022 compared to $8.1 million during the same period in 2021, an increase of $1.5 million.

Other income (expense), net was $0.5 million of expense during the first nine months of 2022 compared to $2.7 million of income in the first nine months of 2021. The expense in 2022 is primarily from an excise tax audit and to a lesser extent, changes in exchange rates. The income in 2021 is primarily from changes in exchange rates and the sale of a facility in the Netherlands for $3.4 million.

Provision for income taxes was $23.3 million (24% of income before income taxes) in the first nine months of 2022 compared to $23.5 million (28% of income before income taxes) during the same period in 2021.

The Company's net income after tax was $72.8 million or $6.10 per share on a diluted basis for the first nine months of 2022 compared to $61.0 million or $5.13 per share on a diluted basis for the first nine months of 2021. The increase of $11.8 million resulted from the factors described above.

Liquidity and Capital Resources

In addition to normal operating expenses, the Company has ongoing cash requirements which are necessary to operate the business, including inventory purchases and capital expenditures.  The Company’s accounts receivable, inventory and accounts payable levels, particularly in its Vegetation Management Division, build in the first quarter and early spring and, to a lesser extent, in the fourth quarter in anticipation of the spring and fall selling seasons. Accounts receivable historically build in the first and fourth quarters of each year as a result of pre-season sales and year-round sales programs. These sales, primarily in the Vegetation Management Division, help balance the Company’s production during the first and fourth quarters.

As of September 30, 2022, the Company had working capital of $557.7 million which represents an increase of $138.1 million from working capital of $419.6 million at December 31, 2021. The increase in working capital was primarily a result of volume-driven and inflation-driven increases in accounts receivable as well as an increase in inventory to support the Company's higher backlog levels.

Capital expenditures were $23.5 million for the first nine months of 2022, compared to $14.6 million during the first nine months of 2021. The Company expects to approve a normalized capital expenditure level of approximately $30.0 million for the full year of 2022. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below.

Net cash used for investing activities was $25.0 million during the first nine months of 2022 compared to $5.3 million during the first nine months of 2021.

Net cash provided by financing activities was $87.2 million and $3.3 million during the nine month periods ended September 30, 2022 and September 30, 2021, respectively. Higher net cash provided by financing activities for the first nine months of 2022 relates to increased borrowings on the Company's revolving credit facility used for increased working capital needs in support of elevated backlog levels.

The Company had $73.9 million in cash and cash equivalents held by its foreign subsidiaries as of September 30, 2022. The majority of these funds are at our European and Canadian facilities. The Company will continue to repatriate European and Canadian cash and cash equivalents in excess of amounts needed to fund operating and investing activities in these locations, and will monitor exchange rates to determine the appropriate timing of such repatriation given the current relative value of the U.S. dollar. Repatriated funds will initially be used

19

to reduce funded debt levels under the Company's current credit facility and subsequently used to fund working capital, capital investments and acquisitions company-wide.

As of September 30, 2022, $364.0 million was outstanding under the Credit Agreement, $255.0 million on the Term Facility and $109.0 million on the Revolver Facility. On September 30, 2022, $2.4 million 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 $216.7 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of September 30, 2022.

On October 28, 2022, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered into a Third Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with Bank of America, N.A., as Administrative Agent. The 2022 Credit Agreement provides Borrower with the ability to request loans and other financial obligations in an aggregate amount of up to $655,000,000. Under the 2022 Credit Agreement, the Company has borrowed $255,000,000 pursuant to a Term Facility, while up to $400,000,000 is available to the Company pursuant to a Revolver Facility which terminates in five years. The Term Facility requires the Company to make equal quarterly principal payments of $3,750,000 over the term of the loan, with the final payment of any outstanding principal amount, plus interest, due at the end of the five year term.

Borrowings under the 2022 Credit Agreement bear interest, at the Company’s option, at a Term Secured Overnight Financing Rate (“SOFR”) or a Base Rate (each as defined in the 2022 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.50% for Term SOFR borrowings and from .25% to 1.50% for Base Rate borrowings with the margin percentage based upon the Company's consolidated leverage ratio. The Company must also pay a commitment fee to the lenders ranging between 0.15% to 0.30% on any unused portion of the $400,000,000 Revolver Facility.

The 2022 Credit Agreement requires the Company to maintain two financial covenants, namely, a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on the sale of properties and limitations on liens and capital expenditures. The Agreement also contains other customary covenants, representations and events of defaults. The expiration date of the 2022 Credit Agreement, including the Term Facility and the Revolver Facility, is October 28, 2027.

Management believes the 2022 Credit Agreement along with the Company’s ability to internally generate funds from operations should be sufficient to allow the Company to meet its cash requirements for the foreseeable future. However, future challenges affecting the banking industry and credit markets in general could potentially cause changes to credit availability, which creates a level of uncertainty.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions, particularly given the uncertainty created by the COVID-19 pandemic.

Critical Accounting Policies

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.  Management believes that of the Company's significant accounting policies, which are set forth in Note 1 of the Notes to Consolidated Financial Statements in the 2021 Form 10-K, the policies relating to the business combinations involve a higher degree of judgment and complexity. There have been no material changes to the nature of estimates, assumptions and levels of subjectivity and judgment related to critical accounting estimates disclosed in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the 2021 Form 10-K.

20

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are likely to have a current or future material effect on our financial condition.

Forward-Looking Information

Part I of this Quarterly Report on Form 10-Q and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 2 of this Quarterly Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  In addition, forward-looking statements may be made orally or in press releases, conferences, reports or otherwise, in the future by or on behalf of the Company.

Statements that are not historical are forward-looking.  When used by or on behalf of the Company, the words “estimate,” "anticipate," "expect," “believe,” “intend”, "will", "would", "should", "could" and similar expressions generally identify forward-looking statements made by or on behalf of the Company.

Forward-looking statements involve risks and uncertainties.  These uncertainties include factors that affect all businesses operating in a global market, as well as matters specific to the Company and the markets it serves.  Particular risks and uncertainties facing the Company include changes in market conditions; the ongoing direct and indirect impacts of the COVID-19 pandemic; changes in tariff regulations and the imposition of new tariffs; a strong U.S. dollar; increased competition; negative economic impacts resulting from geopolitical events such as the war in Ukraine or trade wars; decreases in the prices of agricultural commodities, which could affect our customers' income levels; increase in input costs; our inability to increase profit margins through continuing production efficiencies and cost reductions; repercussions from the exit by the U.K. from the European Union (EU); acquisition integration issues; budget constraints or income shortfalls which could affect the purchases of our type of equipment by governmental customers; credit availability for both the Company and its customers, adverse weather conditions such as droughts, floods, snowstorms, etc. which can affect buying patterns of the Company’s customers and related contractors; the price and availability of raw materials and product components; energy cost; increased cost of governmental regulations which effect corporations including related fines and penalties (such as the European General Data Protection Regulation and the California Consumer Privacy Act); the potential effects on the buying habits of our customers due to animal disease outbreaks and other epidemics; the Company’s ability to develop and manufacture new and existing products profitably; market acceptance of new and existing products; the Company’s ability to maintain good relations with its employees; the Company's ability to successfully complete acquisitions and operate acquired businesses or assets; the ability to hire and retain quality skilled employees; cyber security risks affecting information technology or data security breaches; and the possible effects of events beyond our control, such as political unrest, acts of terror, natural disasters and pandemics, on the Company or its customers, suppliers and the economy in general. The Company continues to experience the impacts of COVID-19 on its markets and operations including, most notably, supply chain disruptions, input cost inflation and skilled labor shortages. The full extent to which COVID-19 will continue to adversely impact the Company’s business depends on future developments, which are highly uncertain and unpredictable.

In addition, the Company is subject to risks and uncertainties facing the industry in general, including changes in business and political conditions and the economy in general in both domestic and international markets; weather conditions affecting demand; slower growth in the Company’s markets; financial market changes including increases in interest rates and fluctuations in foreign exchange rates; actions of competitors; the inability of the Company’s suppliers, customers, creditors, public utility providers and financial service organizations to deliver or provide their products or services to the Company; seasonal factors in the Company’s industry; litigation; government actions including budget levels, regulations and legislation, primarily relating to the environment, commerce, infrastructure spending, health and safety; and availability of materials.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements and to recognize that the statements are not predictions of actual future results.  Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated.  The foregoing statements are not exclusive and further information concerning the Company and its businesses, including factors that could potentially materially affect the

21

Company’s financial results, may emerge from time to time.  It is not possible for management to predict all risk factors or to assess the impact of such risk factors on the Company’s businesses.

Item 3.  Quantitative and Qualitative Disclosures About Market Risks

The Company is exposed to various market risks.  Market risks are the potential losses arising from adverse changes in market prices and rates.  The Company does not enter into derivative or other financial instruments for trading or speculative purposes.

Foreign Currency Risk        

International Sales

A portion of the Company’s operations consists of manufacturing and sales activities in international jurisdictions. The Company primarily manufactures its products in the U.S., U.K., France, Canada, Brazil, Australia and the Netherlands.  The Company sells its products primarily in the functional currency within the markets where the products are produced, but certain sales from the Company's U.K. and Canadian operations are denominated in other foreign currencies.  As a result, the Company’s financials, specifically the value of its foreign assets, could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the other markets in which the subsidiaries of the Company distribute their products. Foreign exchange rates and economic conditions in these foreign markets may be further impacted by the effects of the COVID-19 pandemic.

Exposure to Exchange Rates

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity. The total foreign currency translation adjustment for the current quarter decreased stockholders’ equity by $24.9 million.

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in Europe and Canada, as a result of the sales of its products in international markets.  Forward currency contracts are used to hedge against the earnings effects of such fluctuations.  The result of a uniform 10% strengthening or 10% decrease in the value of the dollar relative to the currencies in which the Company’s sales are denominated would result in a change in gross profit of $8.1 million for the nine month period ended September 30, 2022.  This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.  In addition to the direct effects of changes in exchange rates, which include a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive.  The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices. 

Interest Rate Risk

The Company’s long-term debt bears interest at variable rates.  Accordingly, the Company’s net income is affected by changes in interest rates.  Assuming the current level of borrowings at variable rates and a two percentage point change for the third quarter 2022 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.8 million.  In the event of an adverse change in interest rates, management could take actions to mitigate its exposure.  However, due to the uncertainty of the actions that would be taken and their possible effects this analysis assumes no such actions.  Further this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.

In January 2020, the Company entered into an interest rate swap agreement with three of its total lenders that hedge future cash flows related to its outstanding debt obligations. As of September 30, 2022, the Company had $364.0 million outstanding under the Credit Agreement of which $200.0 million was hedged in a three year interest rate swap contract with a fixed LIBOR base rate of 1.43%.

22

Item 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of Alamo’s management, including our President and Chief Executive Officer, Executive Vice President and Chief Financial Officer (Principal Financial Officer) and Vice President, Controller and Treasurer, (Principal Accounting Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).  Based upon the evaluation, the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer (Principal Financial Officer) and Vice President, Controller and Treasurer, (Principal Accounting Officer) concluded that the Company’s design and operation of these disclosure controls and procedures were effective at the end of the period covered by this report.

Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

For a description of legal proceedings, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the "2021 10-K").

Item 1A. Risk Factors

There have not been any material changes from the risk factors previously disclosed in the 2021 Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides a summary of the Company's repurchase activity for its common stock during the three months ended September 30, 2022:

Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly announced Plans or Programs	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (a)
July 1-31, 2022	—	—	—	$25,861,222
August 1-31, 2022	—	—	—	$25,861,222
September 1-30, 2022	—	—	—	$25,861,222
(a) On December 13, 2018, the Board authorized a stock repurchase program of up to $30.0 million of the Company's common stock. The program has a term of five (5) years, terminating on December 12, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

(a) Reports on Form 8-K

23

None.

(b) Other Information

None.

Item 6. Exhibits

(a)   Exhibits

Exhibits		Exhibit Title	Incorporated by Reference From the Following Documents
31.1	—	Certification by Jeffery A. Leonard under Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
31.2	—	Certification by Richard J. Wehrle under Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
32.1	—	Certification by Jeffery A. Leonard under Section 906 of the  Sarbanes-Oxley Act of 2002	Filed Herewith
32.2	—	Certification by Richard J. Wehrle under Section 906 of the  Sarbanes-Oxley Act of 2002	Filed Herewith
101.INS	—	XBRL Instance Document - the instance document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document	Filed Herewith
101.SCH	—	XBRL Taxonomy Extension Schema Document	Filed Herewith
101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase Document	Filed Herewith
101.DEF	—	XBRL Taxonomy Extension Definition Linkbase Document	Filed Herewith
101.LAB	—	XBRL Taxonomy Extension Label Linkbase Document	Filed Herewith
101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase Document	Filed Herewith
104	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	Filed Herewith

24

Alamo Group Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

November 3, 2022	Alamo Group Inc.
	(Registrant)
	/s/ Jeffery A. Leonard
	Jeffery A. Leonard
	President & Chief Executive Officer

/s/ Richard J. Wehrle

Richard J. Wehrle

Executive Vice President & Chief Financial Officer

(Principal Financial Officer)

25

EX-31.1

Exhibit 31.1

I, Jeffery A. Leonard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alamo Group Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 3, 2022	/s/ Jeffery A. Leonard
		Jeffery A. Leonard
		President & Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Richard J. Wehrle, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alamo Group Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 3, 2022	/s/ Richard J. Wehrle
		Richard J. Wehrle
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alamo Group Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffery A. Leonard, President & Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Form 10-Q fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 3, 2022	/s/ Jeffery A. Leonard
		Jeffery A. Leonard
		President & Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alamo Group Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Wehrle, Executive Vice President & Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Form 10-Q fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 3, 2022	/s/ Richard J. Wehrle
		Richard J. Wehrle
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer)

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Oct. 28, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	0-21220
Entity Registrant Name	ALAMO GROUP INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-1621248
Entity Address, Address Line One	1627 East Walnut
Entity Address, City or Town	Seguin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78155
City Area Code	830
Local Phone Number	379-1480
Title of 12(b) Security	Common Stock, par value$.10 per share
Trading Symbol	ALG
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,966,223
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Central Index Key	0000897077
Current Fiscal Year End Date	--12-31

XML

Interim Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 75,308	$ 42,115
Accounts receivable, net	301,919	237,970
Inventories, net	362,713	320,917
Prepaid expenses and other current assets	7,443	9,500
Income tax receivable	3,242	1,666
Total current assets	750,625	612,168
Rental equipment, net	33,156	32,514
Property, plant and equipment	325,283	321,863
Less:  Accumulated depreciation	(172,221)	(169,372)
Total property, plant and equipment, net	153,062	152,491
Goodwill	192,946	202,406
Intangible assets, net	173,508	183,466
Deferred income taxes	1,043	1,110
Other non-current assets	23,451	21,587
Total assets	1,327,791	1,205,742
Current liabilities:
Trade accounts payable	100,886	101,396
Income taxes payable	5,218	2,613
Accrued liabilities	71,820	73,523
Current maturities of long-term debt and finance lease obligations	15,010	15,032
Total current liabilities	192,934	192,564
Long-term debt and finance lease obligations, net of current maturities	348,463	254,522
Long-term tax liability	3,781	4,416
Other long-term liabilities	24,821	27,119
Deferred income taxes	20,761	21,458
Stockholders’ equity:
Common stock, $0.10 par value, 20,000,000 shares authorized; 11,909,944 and 11,874,178 outstanding at September 30, 2022 and December 31, 2021, respectively	1,191	1,187
Additional paid-in-capital	128,780	124,228
Treasury stock, at cost; 82,600 shares at September 30, 2022 and December 31, 2021, respectively	(4,566)	(4,566)
Retained earnings	700,156	633,804
Accumulated other comprehensive loss	(88,530)	(48,990)
Total stockholders’ equity	737,031	705,663
Total liabilities and stockholders’ equity	$ 1,327,791	$ 1,205,742

XML

Interim Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock par value (in dollars per share)	$ 0.1	$ 0.1
Common stock authorized (in shares)	20,000,000	20,000,000
Common stock outstanding (in shares)	11,909,944	11,874,178
Treasury stock (in shares)	82,600	82,600

XML

Interim Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Net sales:
Total net sales	$ 368,793	$ 338,311	$ 1,127,012	$ 997,050
Cost of sales	276,428	252,015	848,289	746,188
Gross profit	92,365	86,296	278,723	250,862
Selling, general and administrative expenses	52,723	52,586	161,367	150,803
Amortization expense	3,802	3,667	11,481	10,988
Income from operations	35,840	30,043	105,875	89,071
Interest expense	(3,734)	(2,660)	(9,570)	(8,127)
Interest income	93	296	222	877
Other income (expense), net	1,413	36	(473)	2,659
Income before income taxes	33,612	27,715	96,054	84,480
Provision for income taxes	7,791	10,196	23,291	23,462
Net Income	$ 25,821	$ 17,519	$ 72,763	$ 61,018
Net income per common share:
Basic (in dollars per share)	$ 2.18	$ 1.48	$ 6.13	$ 5.16
Diluted (in dollars per share)	$ 2.16	$ 1.47	$ 6.10	$ 5.13
Average common shares:
Basic (in shares)	11,883	11,842	11,875	11,835
Diluted (in shares)	11,941	11,900	11,932	11,895
Dividends declared (in dollars per share)	$ 0.18	$ 0.14	$ 0.54	$ 0.42
Vegetation Management
Net sales:
Total net sales	$ 228,511	$ 209,796	$ 704,520	$ 608,345
Income from operations	27,130	21,375	78,261	60,789
Industrial Equipment
Net sales:
Total net sales	140,282	128,515	422,492	388,705
Income from operations	$ 8,710	$ 8,668	$ 27,614	$ 28,282

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 25,821	$ 17,519	$ 72,763	$ 61,018
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net of tax expense of $(781) and $(321), and $(1,685) and $(436), respectively	(24,921)	(9,216)	(43,076)	(8,660)
Recognition of deferred pension and other post-retirement benefits, net of tax benefit and (expense) of $61 and $(67), and $375 and $(201), respectively	206	251	617	754
Unrealized income on derivative instruments, net of tax expense of $(7) and $(354), and $(745) and $(955), respectively	22	1,331	2,919	3,592
Other comprehensive loss, net of tax	(24,693)	(7,634)	(39,540)	(4,314)
Comprehensive income	$ 1,128	$ 9,885	$ 33,223	$ 56,704

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustment, tax (expense) benefit	$ (781)	$ (321)	$ (1,685)	$ (436)
Net tax benefit (expense) on pension and other post-retirement benefits	61	(67)	375	(201)
Net tax (expense) benefit on unrealized gain (loss) on derivative instruments	$ (7)	$ (354)	$ (745)	$ (955)

XML

Interim Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning balance ( in shares) at Dec. 31, 2020		11,727,000
Beginning balance at Dec. 31, 2020	$ 635,003	$ 1,181	$ 118,528	$ (4,566)	$ 560,186	$ (40,326)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	15,876				17,462	(1,586)
Stock-based compensation expense	1,240		1,240
Stock-based compensation transactions (in shares)		29,000
Stock-based compensation transactions	776	$ 3	773
Dividends paid	(1,654)				(1,654)
Ending balance (in shares) at Mar. 31, 2021		11,756,000
Ending balance at Mar. 31, 2021	651,241	$ 1,184	120,541	(4,566)	575,994	(41,912)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	30,943				26,037	4,906
Stock-based compensation expense	1,316		1,316
Stock-based compensation transactions (in shares)		23,000
Stock-based compensation transactions	(602)	$ 2	(604)
Dividends paid	(1,657)				(1,657)
Ending balance (in shares) at Jun. 30, 2021		11,779,000
Ending balance at Jun. 30, 2021	681,241	$ 1,186	121,253	(4,566)	600,374	(37,006)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	9,885				17,519	(7,634)
Stock-based compensation expense	2,840		2,840
Stock-based compensation transactions (in shares)		9,000
Stock-based compensation transactions	(646)	$ 1	(647)
Dividends paid	(1,658)				(1,658)
Ending balance (in shares) at Sep. 30, 2021		11,788,000
Ending balance at Sep. 30, 2021	$ 691,662	$ 1,187	123,446	(4,566)	616,235	(44,640)
Beginning balance ( in shares) at Dec. 31, 2021	11,874,178	11,791,000
Beginning balance at Dec. 31, 2021	$ 705,663	$ 1,187	124,228	(4,566)	633,804	(48,990)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	22,195				18,470	3,725
Stock-based compensation expense	1,371		1,371
Stock-based compensation transactions (in shares)		20,000
Stock-based compensation transactions	84	$ 2	82
Dividends paid	(2,133)				(2,133)
Ending balance (in shares) at Mar. 31, 2022		11,811,000
Ending balance at Mar. 31, 2022	727,180	$ 1,189	125,681	(4,566)	650,141	(45,265)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	9,900				28,472	(18,572)
Stock-based compensation expense	1,750		1,750
Stock-based compensation transactions (in shares)		15,000
Stock-based compensation transactions	(249)	$ 2	(251)
Dividends paid	(2,139)				(2,139)
Ending balance (in shares) at Jun. 30, 2022		11,826,000
Ending balance at Jun. 30, 2022	736,442	$ 1,191	127,180	(4,566)	676,474	(63,837)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	1,128				25,821	(24,693)
Stock-based compensation expense	1,508		1,508
Stock-based compensation transactions (in shares)		1,000
Stock-based compensation transactions	92		92
Dividends paid	$ (2,139)				(2,139)
Ending balance (in shares) at Sep. 30, 2022	11,909,944	11,827,000
Ending balance at Sep. 30, 2022	$ 737,031	$ 1,191	$ 128,780	$ (4,566)	$ 700,156	$ (88,530)

XML

Interim Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Stockholders' Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.18	$ 0.18	$ 0.18	$ 0.14	$ 0.14	$ 0.14	$ 0.54	$ 0.42

XML

Interim Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Operating Activities
Net income	$ 72,763	$ 61,018
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Provision for doubtful accounts	319	133
Depreciation - Property, plant and equipment	16,307	15,798
Depreciation - Rental equipment	5,665	6,562
Amortization of intangibles	11,481	10,988
Amortization of debt issuance	500	500
Stock-based compensation expense	4,629	5,396
Provision for deferred income tax (benefit)	(4,029)	(6,705)
Gain on sale of property, plant and equipment	(156)	(4,162)
Changes in operating assets and liabilities:
Accounts receivable	(74,884)	(38,106)
Inventories	(54,122)	(54,408)
Rental equipment	(6,416)	(540)
Prepaid expenses and other assets	(802)	(1,668)
Trade accounts payable and accrued liabilities	5,696	36,331
Income taxes payable	910	10,266
Long-term tax payable	(635)	454
Other assets and long-term liabilities, net	1,595	1,530
Net cash (used in) provided by operating activities	(21,179)	43,387
Investing Activities
Acquisitions, net of cash acquired	(2,000)	0
Purchase of property, plant and equipment	(23,499)	(14,584)
Proceeds from sale of property, plant and equipment	527	9,287
Purchase of patents	0	(44)
Net cash used in investing activities	(24,972)	(5,341)
Financing Activities
Borrowings on bank revolving credit facility	190,000	128,000
Repayments on bank revolving credit facility	(85,000)	(108,000)
Principal payments on long-term debt and finance leases	(11,277)	(11,308)
Dividends paid	(6,411)	(4,969)
Proceeds from exercise of stock options	639	1,485
Common stock repurchased	(712)	(1,957)
Net cash provided by financing activities	87,239	3,251
Effect of exchange rate changes on cash and cash equivalents	(7,895)	(2,303)
Net change in cash and cash equivalents	33,193	38,994
Cash and cash equivalents at beginning of the year	42,115	50,195
Cash and cash equivalents at end of the period	75,308	89,189
Cash paid during the period for:
Interest	9,742	7,839
Income taxes	$ 27,162	$ 20,151

XML

Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation

General

The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.  The balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the "2021 10-K").

Effective July 1, 2021, the Company changed its method of accounting for its U.S. inventories from last-in, first-out ("LIFO") method to the first-in, first-out ("FIFO") method. The Company applied this change retrospectively for all prior periods presented.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. This Topic provides accounting relief for the transition away from LIBOR and certain other reference rates. The amendments for this update are effective through December 31, 2022. The Company is evaluating the impact the adoption of this standard will have on our financial statements.

XML

Business Combinations	9 Months Ended
	Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract]
Business Combinations	Business CombinationsOn October 26, 2021, the Company acquired 100% of the issued and outstanding equity interests of Timberwolf Limited (“Timberwolf”). Timberwolf manufactures a broad range of commercial wood chippers, primarily serving markets in the U.K. and the European Union. The primary reason for the Timberwolf acquisition was to enhance the Company's forestry and tree care platform for growth by increasing both the Company's product portfolio and capabilities in the European market. The acquisition price was approximately $25.0 million. The Company completed its review of the valuation of the purchase price allocation for Timberwolf during the second quarter of 2022. The Company has included the operating results of Timberwolf in its consolidated financial statements since the date of acquisition, these results are considered immaterial.

XML

Accounts Receivable	9 Months Ended
	Sep. 30, 2022
Receivables [Abstract]
Accounts Receivable	Accounts ReceivableAccounts receivable is shown net of sales discounts and the allowance for credit losses.At September 30, 2022 the Company had $17.2 million in reserves for sales discounts compared to $12.6 million at December 31, 2021 related to products shipped to our customers under various promotional programs.

XML

Inventories

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value. Net inventories consist of the following:

(in thousands)	September 30, 2022			December 31, 2021
Finished goods		$	320,384		$	277,760
Work in process		28,410			24,895
Raw materials		13,919			18,262
Inventories, net		$	362,713		$	320,917

Inventory obsolescence reserves were $11.5 million at September 30, 2022 and $12.9 million at December 31, 2021.

XML

Rental Equipment	9 Months Ended
	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Rental Equipment	Rental EquipmentRental equipment is shown net of accumulated depreciation of $22.0 million and $20.1 million at September 30, 2022 and December 31, 2021, respectively. The Company recognized depreciation expense of $1.9 million and $2.1 million for the three months ended September 30, 2022 and 2021, respectively and $5.7 million and $6.6 million for the nine months ended September 30, 2022 and 2021, respectively.

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate their fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of September 30, 2022 and December 31, 2021, as the floating rates on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.

XML

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible AssetsThe following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2022:

(in thousands)	Vegetation Management			Industrial Equipment			Consolidated
Balance at December 31, 2021		$	132,963		$	69,443		$	202,406
Translation adjustment		(3,836)			(2,105)			(5,941)
Goodwill adjustment		(3,519)			—			(3,519)
Balance at September 30, 2022		$	125,608		$	67,338		$	192,946

The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:

(in thousands)	Estimated Useful Lives	September 30, 2022		December 31, 2021
Definite:
Trade names and trademarks	15-25 years	$	67,949		$	68,321
Customer and dealer relationships	8-15 years	128,644			126,104
Patents and drawings	3-12 years	27,967			29,338
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		228,760			227,963
Less accumulated amortization		(60,752)			(49,997)
Total net		168,008			177,966
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	173,508		$	183,466

The Company recognized amortization expense of $3.8 million and $3.7 million for the three months ended September 30, 2022 and 2021, respectively, and $11.5 million and $11.0 million for the nine months ended September 30, 2022 and 2021, respectively.

XML

Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

Leases

The Company leases office space and equipment under various operating and finance leases, which generally are expected to be renewed or replaced by other leases. The finance leases currently held are considered immaterial. The components of lease cost were as follows:

Components of Lease Cost
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Finance lease cost:
Amortization of right-of-use assets	$	6	$	17	$	25	$	51
Interest on lease liabilities	—		1		1		3
Operating lease cost	1,414		1,464		4,345		3,985
Short-term lease cost	320		365		953		822
Variable lease cost	56		87		268		300
Total lease cost	$	1,796	$	1,934	$	5,592	$	5,161

Rent expense for the three and nine months ended September 30, 2022 and 2021 was immaterial.

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2022			December 31, 2021
2022	$	1,399	*		$	4,949
2023	4,629				3,793
2024	3,568				2,683
2025	2,779				2,036
2026	2,261				1,652
Thereafter	3,150				3,090
Total minimum lease payments	$	17,786			$	18,203
Less imputed interest	(1,176)				(1,311)
Total operating lease liabilities	$	16,610			$	16,892
*Period ended September 30, 2022 represents the remaining three months of 2022.

Future Lease Commencements

As of September 30, 2022, there are additional operating leases, primarily for autos and forklifts, that have not yet commenced in the amount of $0.5 million. These operating leases will commence in fiscal year 2022 with lease terms of 3 to 5 years.

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2022			December 31, 2021
Other non-current assets	$	16,498			$	16,744
Accrued liabilities	4,495				4,655
Other long-term liabilities	12,115				12,237
Total operating lease liabilities	$	16,610			$	16,892
Weighted Average Remaining Lease Term	4.78 years				5.14 years
Weighted Average Discount Rate	3.13		%		2.83		%

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,971	$	3,603

Leases

Leases

The Company leases office space and equipment under various operating and finance leases, which generally are expected to be renewed or replaced by other leases. The finance leases currently held are considered immaterial. The components of lease cost were as follows:

Components of Lease Cost
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Finance lease cost:
Amortization of right-of-use assets	$	6	$	17	$	25	$	51
Interest on lease liabilities	—		1		1		3
Operating lease cost	1,414		1,464		4,345		3,985
Short-term lease cost	320		365		953		822
Variable lease cost	56		87		268		300
Total lease cost	$	1,796	$	1,934	$	5,592	$	5,161

Rent expense for the three and nine months ended September 30, 2022 and 2021 was immaterial.

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2022			December 31, 2021
2022	$	1,399	*		$	4,949
2023	4,629				3,793
2024	3,568				2,683
2025	2,779				2,036
2026	2,261				1,652
Thereafter	3,150				3,090
Total minimum lease payments	$	17,786			$	18,203
Less imputed interest	(1,176)				(1,311)
Total operating lease liabilities	$	16,610			$	16,892
*Period ended September 30, 2022 represents the remaining three months of 2022.

Future Lease Commencements

As of September 30, 2022, there are additional operating leases, primarily for autos and forklifts, that have not yet commenced in the amount of $0.5 million. These operating leases will commence in fiscal year 2022 with lease terms of 3 to 5 years.

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2022			December 31, 2021
Other non-current assets	$	16,498			$	16,744
Accrued liabilities	4,495				4,655
Other long-term liabilities	12,115				12,237
Total operating lease liabilities	$	16,610			$	16,892
Weighted Average Remaining Lease Term	4.78 years				5.14 years
Weighted Average Discount Rate	3.13		%		2.83		%

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,971	$	3,603

XML

Debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

DebtThe components of long-term debt are as follows:

(in thousands)	September 30, 2022		December 31, 2021
Current Maturities:
Finance lease obligations	$	10		$	32
Term debt	15,000			15,000
	15,010			15,032
Long-term debt:
Finance lease obligations	16			24
Term debt, net	239,447			250,498
Bank revolving credit facility	109,000			4,000
Total Long-term debt	348,463			254,522
Total debt	$	363,473		$	269,554

As of September 30, 2022, $2.4 million 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 $216.7 million in available borrowings.

XML

Common Stock and Dividends

9 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

Common Stock and Dividends

Common Stock and Dividends

Dividends declared and paid on a per share basis were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Dividends declared	$	0.18	$	0.14	$	0.54	$	0.42
Dividends paid	$	0.18	$	0.14	$	0.54	$	0.42

On October 3, 2022, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.18 per share, which was paid on November 1, 2022, to shareholders of record at the close of business on October 18, 2022.

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per ShareThe following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share.  Net income for basic and diluted calculations do not differ.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share)	2022		2021		2022		2021
Net Income	$	25,821	$	17,519	$	72,763	$	61,018
Average Common Shares:
Basic (weighted-average outstanding shares)	11,883		11,842		11,875		11,835
Dilutive potential common shares from stock options	58		58		57		60
Diluted (weighted-average outstanding shares)	11,941		11,900		11,932		11,895
Basic earnings per share	$	2.18	$	1.48	$	6.13	$	5.16
Diluted earnings per share	$	2.16	$	1.47	$	6.10	$	5.13

XML

Revenue and Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Revenue and Segment Information

Revenue and Segment Information

Revenues from Contracts with Customers

Disaggregation of revenue is presented in the tables below by product type and by geographical location. Management has determined that this level of disaggregation would be beneficial to users of the financial statements.

Revenue by Product Type
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
Wholegoods	$	282,619	$	251,712	$	877,446	$	761,674
Parts	76,047		74,009		214,844		201,601
Other	10,127		12,590		34,722		33,775
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050

Other includes rental sales, extended warranty sales and service sales as it is considered immaterial.

Revenue by Geographical Location
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
United States	$	264,915	$	249,024	$	803,204	$	710,814
France	18,369		21,236		65,086		69,252
Canada	24,753		15,499		68,482		60,383
United Kingdom	17,613		15,524		52,682		43,840
Netherlands	8,570		6,624		15,912		22,789
Brazil	9,688		9,212		36,891		23,396
Australia	7,513		4,999		20,454		14,588
Germany	2,757		2,665		4,515		6,497
Other	14,615		13,528		59,786		45,491
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050

Net sales are attributed to countries based on the location of the customer.

Segment Information

The following includes a summary of the unaudited financial information by reporting segment at September 30, 2022:  

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
Vegetation Management	$	228,511	$	209,796	$	704,520	$	608,345
Industrial Equipment	140,282		128,515		422,492		388,705
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050
Income from Operations
Vegetation Management	$	27,130	$	21,375	$	78,261	$	60,789
Industrial Equipment	8,710		8,668		27,614		28,282
Consolidated	$	35,840	$	30,043	$	105,875	$	89,071

(in thousands)	September 30, 2022		December 31, 2021
Goodwill
Vegetation Management	$	125,608	$	132,963
Industrial Equipment	67,338		69,443
Consolidated	$	192,946	$	202,406
Total Identifiable Assets
Vegetation Management	$	873,055	$	789,838
Industrial Equipment	454,736		415,904
Consolidated	$	1,327,791	$	1,205,742

XML

Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of tax, were as follows:

	Three Months Ended September 30,
	2022								2021
(in thousands)	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(60,552)	$	(4,606)	$	1,321	$	(63,837)	$	(26,041)	$	(6,352)	$	(4,613)	$	(37,006)
Other comprehensive income (loss) before reclassifications	(24,921)		—		(373)		(25,294)		(9,216)		—		2,013		(7,203)
Amounts reclassified from accumulated other comprehensive loss	—		206		395		601		—		251		(682)		(431)
Other comprehensive income (loss)	(24,921)		206		22		(24,693)		(9,216)		251		1,331		(7,634)
Balance as of end of period	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)	$	(35,257)	$	(6,101)	$	(3,282)	$	(44,640)

	Nine Months Ended September 30,
	2022								2021
(in thousands)	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(42,397)	$	(5,017)	$	(1,576)	$	(48,990)	$	(26,597)	$	(6,855)	$	(6,874)	$	(40,326)
Other comprehensive income (loss) before reclassifications	(43,076)		—		3,503		(39,573)		(8,660)		—		5,593		(3,067)
Amounts reclassified from accumulated other comprehensive loss	—		617		(584)		33		—		754		(2,001)		(1,247)
Other comprehensive income (loss)	(43,076)		617		2,919		(39,540)		(8,660)		754		3,592		(4,314)
Balance as of end of period	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)	$	(35,257)	$	(6,101)	$	(3,282)	$	(44,640)

XML

Basis of Financial Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

General

The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.  The balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 (the "2021 10-K").

Effective July 1, 2021, the Company changed its method of accounting for its U.S. inventories from last-in, first-out ("LIFO") method to the first-in, first-out ("FIFO") method. The Company applied this change retrospectively for all prior periods presented.

Accounting Pronouncements Not Yet Adopted

Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. This Topic provides accounting relief for the transition away from LIBOR and certain other reference rates. The amendments for this update are effective through December 31, 2022. The Company is evaluating the impact the adoption of this standard will have on our financial statements.

XML

Inventories (Tables)

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventories

Net inventories consist of the following:

(in thousands)	September 30, 2022			December 31, 2021
Finished goods		$	320,384		$	277,760
Work in process		28,410			24,895
Raw materials		13,919			18,262
Inventories, net		$	362,713		$	320,917

XML

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes to The Company's Goodwill

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2022:

(in thousands)	Vegetation Management			Industrial Equipment			Consolidated
Balance at December 31, 2021		$	132,963		$	69,443		$	202,406
Translation adjustment		(3,836)			(2,105)			(5,941)
Goodwill adjustment		(3,519)			—			(3,519)
Balance at September 30, 2022		$	125,608		$	67,338		$	192,946

Schedule of Definite and Indefinite Lived Intangible Assets

The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:

(in thousands)	Estimated Useful Lives	September 30, 2022		December 31, 2021
Definite:
Trade names and trademarks	15-25 years	$	67,949		$	68,321
Customer and dealer relationships	8-15 years	128,644			126,104
Patents and drawings	3-12 years	27,967			29,338
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		228,760			227,963
Less accumulated amortization		(60,752)			(49,997)
Total net		168,008			177,966
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	173,508		$	183,466

XML

Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Components of Lease Expense

The components of lease cost were as follows:

Components of Lease Cost
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Finance lease cost:
Amortization of right-of-use assets	$	6	$	17	$	25	$	51
Interest on lease liabilities	—		1		1		3
Operating lease cost	1,414		1,464		4,345		3,985
Short-term lease cost	320		365		953		822
Variable lease cost	56		87		268		300
Total lease cost	$	1,796	$	1,934	$	5,592	$	5,161

Schedule of Operating Lease Maturity

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2022			December 31, 2021
2022	$	1,399	*		$	4,949
2023	4,629				3,793
2024	3,568				2,683
2025	2,779				2,036
2026	2,261				1,652
Thereafter	3,150				3,090
Total minimum lease payments	$	17,786			$	18,203
Less imputed interest	(1,176)				(1,311)
Total operating lease liabilities	$	16,610			$	16,892
*Period ended September 30, 2022 represents the remaining three months of 2022.

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2022			December 31, 2021
Other non-current assets	$	16,498			$	16,744
Accrued liabilities	4,495				4,655
Other long-term liabilities	12,115				12,237
Total operating lease liabilities	$	16,610			$	16,892
Weighted Average Remaining Lease Term	4.78 years				5.14 years
Weighted Average Discount Rate	3.13		%		2.83		%

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,971	$	3,603

XML

Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt

The components of long-term debt are as follows:

(in thousands)	September 30, 2022		December 31, 2021
Current Maturities:
Finance lease obligations	$	10		$	32
Term debt	15,000			15,000
	15,010			15,032
Long-term debt:
Finance lease obligations	16			24
Term debt, net	239,447			250,498
Bank revolving credit facility	109,000			4,000
Total Long-term debt	348,463			254,522
Total debt	$	363,473		$	269,554

XML

Common Stock and Dividends (Tables)

9 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

Schedule of Dividends Declared and Paid

Dividends declared and paid on a per share basis were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Dividends declared	$	0.18	$	0.14	$	0.54	$	0.42
Dividends paid	$	0.18	$	0.14	$	0.54	$	0.42

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share.  Net income for basic and diluted calculations do not differ.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share)	2022		2021		2022		2021
Net Income	$	25,821	$	17,519	$	72,763	$	61,018
Average Common Shares:
Basic (weighted-average outstanding shares)	11,883		11,842		11,875		11,835
Dilutive potential common shares from stock options	58		58		57		60
Diluted (weighted-average outstanding shares)	11,941		11,900		11,932		11,895
Basic earnings per share	$	2.18	$	1.48	$	6.13	$	5.16
Diluted earnings per share	$	2.16	$	1.47	$	6.10	$	5.13

XML

Revenue and Segment Information (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Schedule of Disaggregation of Revenue

Disaggregation of revenue is presented in the tables below by product type and by geographical location. Management has determined that this level of disaggregation would be beneficial to users of the financial statements.

Revenue by Product Type
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
Wholegoods	$	282,619	$	251,712	$	877,446	$	761,674
Parts	76,047		74,009		214,844		201,601
Other	10,127		12,590		34,722		33,775
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050

Other includes rental sales, extended warranty sales and service sales as it is considered immaterial.

Revenue by Geographical Location
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
United States	$	264,915	$	249,024	$	803,204	$	710,814
France	18,369		21,236		65,086		69,252
Canada	24,753		15,499		68,482		60,383
United Kingdom	17,613		15,524		52,682		43,840
Netherlands	8,570		6,624		15,912		22,789
Brazil	9,688		9,212		36,891		23,396
Australia	7,513		4,999		20,454		14,588
Germany	2,757		2,665		4,515		6,497
Other	14,615		13,528		59,786		45,491
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050

Schedule of Financial Information by Segment

The following includes a summary of the unaudited financial information by reporting segment at September 30, 2022:  

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net Sales
Vegetation Management	$	228,511	$	209,796	$	704,520	$	608,345
Industrial Equipment	140,282		128,515		422,492		388,705
Consolidated	$	368,793	$	338,311	$	1,127,012	$	997,050
Income from Operations
Vegetation Management	$	27,130	$	21,375	$	78,261	$	60,789
Industrial Equipment	8,710		8,668		27,614		28,282
Consolidated	$	35,840	$	30,043	$	105,875	$	89,071

(in thousands)	September 30, 2022		December 31, 2021
Goodwill
Vegetation Management	$	125,608	$	132,963
Industrial Equipment	67,338		69,443
Consolidated	$	192,946	$	202,406
Total Identifiable Assets
Vegetation Management	$	873,055	$	789,838
Industrial Equipment	454,736		415,904
Consolidated	$	1,327,791	$	1,205,742

XML

Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of tax, were as follows:

	Three Months Ended September 30,
	2022								2021
(in thousands)	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(60,552)	$	(4,606)	$	1,321	$	(63,837)	$	(26,041)	$	(6,352)	$	(4,613)	$	(37,006)
Other comprehensive income (loss) before reclassifications	(24,921)		—		(373)		(25,294)		(9,216)		—		2,013		(7,203)
Amounts reclassified from accumulated other comprehensive loss	—		206		395		601		—		251		(682)		(431)
Other comprehensive income (loss)	(24,921)		206		22		(24,693)		(9,216)		251		1,331		(7,634)
Balance as of end of period	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)	$	(35,257)	$	(6,101)	$	(3,282)	$	(44,640)

	Nine Months Ended September 30,
	2022								2021
(in thousands)	Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total		Foreign Currency Translation Adjustment		Defined Benefit Plans Items		Gains (Losses) on Cash Flow Hedges		Total
Balance as of beginning of period	$	(42,397)	$	(5,017)	$	(1,576)	$	(48,990)	$	(26,597)	$	(6,855)	$	(6,874)	$	(40,326)
Other comprehensive income (loss) before reclassifications	(43,076)		—		3,503		(39,573)		(8,660)		—		5,593		(3,067)
Amounts reclassified from accumulated other comprehensive loss	—		617		(584)		33		—		754		(2,001)		(1,247)
Other comprehensive income (loss)	(43,076)		617		2,919		(39,540)		(8,660)		754		3,592		(4,314)
Balance as of end of period	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)	$	(35,257)	$	(6,101)	$	(3,282)	$	(44,640)

XML

Business Combinations (Details) - Timberwolf Limited $ in Millions	Oct. 26, 2021 USD ($)
Business Acquisition [Line Items]
Percentage of interests acquired	100.00%
Total consideration for purchase	$ 25.0

XML

Accounts Receivable (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Reserves for sales discounts
Valuation and Qualifying Accounts Disclosure [Line Items]
Reserves for sales discounts on products shipped under promotional programs	$ 17.2	$ 12.6

XML

Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Finished goods	$ 320,384	$ 277,760
Work in process	28,410	24,895
Raw materials	13,919	18,262
Inventories, net	$ 362,713	$ 320,917

XML

Inventories - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Inventory obsolescence reserves	$ 11.5	$ 12.9

XML

Rental Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Accumulated depreciation	$ 172,221		$ 172,221		$ 169,372
Depreciation			16,307	$ 15,798
Rental Equipment
Property, Plant and Equipment [Line Items]
Accumulated depreciation	22,000		22,000		$ 20,100
Depreciation	$ 1,900	$ 2,100	$ 5,700	$ 6,600

XML

Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 202,406
Translation adjustment	(5,941)
Goodwill adjustment	(3,519)
Ending Balance	192,946
Vegetation Management
Goodwill [Roll Forward]
Beginning balance	132,963
Translation adjustment	(3,836)
Goodwill adjustment	(3,519)
Ending Balance	125,608
Industrial Equipment
Goodwill [Roll Forward]
Beginning balance	69,443
Translation adjustment	(2,105)
Goodwill adjustment	0
Ending Balance	$ 67,338

XML

Goodwill and Intangible Assets - Definite and Indefinite Lived Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Finite-lived intangible assets	$ 228,760	$ 227,963
Less accumulated amortization	(60,752)	(49,997)
Total net	168,008	177,966
Total Intangible Assets	173,508	183,466
Trade names and trademarks
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Indefinite-lived intangible assets	5,500	5,500
Trade names and trademarks
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Finite-lived intangible assets	$ 67,949	68,321
Trade names and trademarks | Minimum
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	15 years
Trade names and trademarks | Maximum
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	25 years
Customer and dealer relationships
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Finite-lived intangible assets	$ 128,644	126,104
Customer and dealer relationships | Minimum
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	8 years
Customer and dealer relationships | Maximum
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	15 years
Patents and drawings
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Finite-lived intangible assets	$ 27,967	29,338
Patents and drawings | Minimum
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	3 years
Patents and drawings | Maximum
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	12 years
Favorable leasehold interests
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	7 years
Finite-lived intangible assets	$ 4,200	$ 4,200

XML

Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 3,802	$ 3,667	$ 11,481	$ 10,988

XML

Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Finance lease cost:
Amortization of right-of-use assets	$ 6	$ 17	$ 25	$ 51
Interest on lease liabilities	0	1	1	3
Operating lease cost	1,414	1,464	4,345	3,985
Short-term lease cost	320	365	953	822
Variable lease cost	56	87	268	300
Total lease cost	$ 1,796	$ 1,934	$ 5,592	$ 5,161

XML

Leases - Maturity Schedule (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Future Minimum Lease Payments
2022	$ 1,399
Year one	4,629	$ 4,949
Year two	3,568	3,793
Year three	2,779	2,683
Year four	2,261	2,036
2026		1,652
Thereafter	3,150
Thereafter		3,090
Total minimum lease payments	17,786	18,203
Less imputed interest	(1,176)	(1,311)
Total operating lease liabilities	$ 16,610	$ 16,892

XML

Leases - Additional Information (Details) $ in Millions	Sep. 30, 2022 USD ($)
Lessee, Lease, Description [Line Items]
Additional operating lease not yet commenced	$ 0.5
Minimum
Lessee, Lease, Description [Line Items]
Additional operating lease not yet commenced, lease terms	3 years
Maximum
Lessee, Lease, Description [Line Items]
Additional operating lease not yet commenced, lease terms	5 years

XML

Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Operating Leases
Other non-current assets	$ 16,498	$ 16,744
Accrued liabilities	4,495	4,655
Other long-term liabilities	12,115	12,237
Total operating lease liabilities	$ 16,610	$ 16,892
Weighted Average Remaining Lease Term	4 years 9 months 10 days	5 years 1 month 20 days
Weighted Average Discount Rate	3.13%	2.83%
Other non-current assets	Other non-current assets	Other non-current assets
Accrued liabilities	Accrued liabilities	Accrued liabilities
Other long-term liabilities	Other long-term liabilities	Other long-term liabilities

XML

Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating cash flows from operating leases	$ 3,971	$ 3,603

XML

Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current Maturities:
Finance lease obligations	$ 10	$ 32
Term debt	15,000	15,000
Total Long-term debt, current maturities	15,010	15,032
Long-term debt:
Finance lease obligations	16	24
Total Long-term debt	348,463	254,522
Total debt	363,473	269,554
Term debt, net
Long-term debt:
Long-term debt, excluding current maturities	239,447	250,498
Bank revolving credit facility | Bank revolving credit facility
Long-term debt:
Long-term debt, excluding current maturities	$ 109,000	$ 4,000

XML

Debt - Additional Information (Details) $ in Millions	Sep. 30, 2022 USD ($)
Standby letters of credit
Debt Instrument [Line Items]
Amount of capacity	$ 2.4
Revolving Line of Credit
Debt Instrument [Line Items]
Available borrowings	$ 216.7

XML

Common Stock and Dividends - Dividend Declared and Paid (Details) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Stockholders' Equity Note [Abstract]
Dividends declared (in dollars per share)	$ 0.18			$ 0.14			$ 0.54	$ 0.42
Dividends paid (in dollars per share)	$ 0.18	$ 0.18	$ 0.18	$ 0.14	$ 0.14	$ 0.14	$ 0.54	$ 0.42

XML

Common Stock and Dividends - Additional Information (Details) - $ / shares			3 Months Ended						9 Months Ended
	Nov. 01, 2022	Oct. 03, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Class of Stock [Line Items]
Dividends declared (in dollars per share)			$ 0.18			$ 0.14			$ 0.54	$ 0.42
Dividends paid (in dollars per share)			$ 0.18	$ 0.18	$ 0.18	$ 0.14	$ 0.14	$ 0.14	$ 0.54	$ 0.42
Subsequent Event
Class of Stock [Line Items]
Dividends declared (in dollars per share)		$ 0.18
Dividends paid (in dollars per share)	$ 0.18

XML

Earnings Per Share - Calculation of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share [Abstract]
Net income	$ 25,821	$ 17,519	$ 72,763	$ 61,018
Average Common Shares:
Basic (weighted-average outstanding shares) (in shares)	11,883	11,842	11,875	11,835
Dilutive potential common shares from stock options (in shares)	58	58	57	60
Diluted (weighted-average outstanding shares) (in shares)	11,941	11,900	11,932	11,895
Basic earnings per share (in dollars per share)	$ 2.18	$ 1.48	$ 6.13	$ 5.16
Diluted earnings per share (in dollars per share)	$ 2.16	$ 1.47	$ 6.10	$ 5.13

XML

Revenue and Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Net Sales	$ 368,793	$ 338,311	$ 1,127,012	$ 997,050
Wholegoods
Disaggregation of Revenue [Line Items]
Net Sales	282,619	251,712	877,446	761,674
Parts
Disaggregation of Revenue [Line Items]
Net Sales	76,047	74,009	214,844	201,601
Other
Disaggregation of Revenue [Line Items]
Net Sales	$ 10,127	$ 12,590	$ 34,722	$ 33,775

XML

Revenue and Segment Information - Revenue by Geographical Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Net Sales	$ 368,793	$ 338,311	$ 1,127,012	$ 997,050
United States
Disaggregation of Revenue [Line Items]
Net Sales	264,915	249,024	803,204	710,814
France
Disaggregation of Revenue [Line Items]
Net Sales	18,369	21,236	65,086	69,252
Canada
Disaggregation of Revenue [Line Items]
Net Sales	24,753	15,499	68,482	60,383
United Kingdom
Disaggregation of Revenue [Line Items]
Net Sales	17,613	15,524	52,682	43,840
Netherlands
Disaggregation of Revenue [Line Items]
Net Sales	8,570	6,624	15,912	22,789
Brazil
Disaggregation of Revenue [Line Items]
Net Sales	9,688	9,212	36,891	23,396
Australia
Disaggregation of Revenue [Line Items]
Net Sales	7,513	4,999	20,454	14,588
Germany
Disaggregation of Revenue [Line Items]
Net Sales	2,757	2,665	4,515	6,497
Other
Disaggregation of Revenue [Line Items]
Net Sales	$ 14,615	$ 13,528	$ 59,786	$ 45,491

XML

Revenue and Segment Information - Revenue, Income, Goodwill and Identifiable Assets by Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Segment Reporting Information [Line Items]
Net Sales	$ 368,793	$ 338,311	$ 1,127,012	$ 997,050
Income from Operations	35,840	30,043	105,875	89,071
Goodwill	192,946		192,946		$ 202,406
Total Identifiable Assets	1,327,791		1,327,791		1,205,742
Vegetation Management
Segment Reporting Information [Line Items]
Net Sales	228,511	209,796	704,520	608,345
Income from Operations	27,130	21,375	78,261	60,789
Goodwill	125,608		125,608		132,963
Total Identifiable Assets	873,055		873,055		789,838
Industrial Equipment
Segment Reporting Information [Line Items]
Net Sales	140,282	128,515	422,492	388,705
Income from Operations	8,710	$ 8,668	27,614	$ 28,282
Goodwill	67,338		67,338		69,443
Total Identifiable Assets	$ 454,736		$ 454,736		$ 415,904

XML

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 736,442	$ 681,241	$ 705,663	$ 635,003
Other comprehensive income (loss) before reclassifications	(25,294)	(7,203)	(39,573)	(3,067)
Amounts reclassified from accumulated other comprehensive loss	601	(431)	33	(1,247)
Other comprehensive loss, net of tax	(24,693)	(7,634)	(39,540)	(4,314)
Ending balance	737,031	691,662	737,031	691,662
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(63,837)	(37,006)	(48,990)	(40,326)
Ending balance	(88,530)	(44,640)	(88,530)	(44,640)
Foreign Currency Translation Adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(60,552)	(26,041)	(42,397)	(26,597)
Other comprehensive income (loss) before reclassifications	(24,921)	(9,216)	(43,076)	(8,660)
Amounts reclassified from accumulated other comprehensive loss	0	0	0	0
Other comprehensive loss, net of tax	(24,921)	(9,216)	(43,076)	(8,660)
Ending balance	(85,473)	(35,257)	(85,473)	(35,257)
Defined Benefit Plans Items
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(4,606)	(6,352)	(5,017)	(6,855)
Other comprehensive income (loss) before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive loss	206	251	617	754
Other comprehensive loss, net of tax	206	251	617	754
Ending balance	(4,400)	(6,101)	(4,400)	(6,101)
Gains (Losses) on Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	1,321	(4,613)	(1,576)	(6,874)
Other comprehensive income (loss) before reclassifications	(373)	2,013	3,503	5,593
Amounts reclassified from accumulated other comprehensive loss	395	(682)	(584)	(2,001)
Other comprehensive loss, net of tax	22	1,331	2,919	3,592
Ending balance	$ 1,343	$ (3,282)	$ 1,343	$ (3,282)