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, 2023

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 27, 2023, 12,011,781 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, 2023 and December 31, 2022
	Interim Condensed Consolidated Statements of Income		4
		Three and Nine Months Ended September 30, 2023 and September 30, 2022
	Interim Condensed Consolidated Statements of Comprehensive Income		5
		Three and Nine Months Ended September 30, 2023 and September 30, 2022
	Interim Condensed Consolidated Statements of Stockholders' Equity		6
		Three and Nine Months Ended September 30, 2023 and September 30, 2022
	Interim Condensed Consolidated Statements of Cash Flows		8
		Nine Months Ended September 30, 2023 and September 30, 2022
	Notes to Interim Condensed Consolidated Financial Statements		9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures About Market Risks		21
Item 4.	Controls and Procedures		21
PART II.	OTHER INFORMATION		22
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		24

2

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Balance Sheets

(Unaudited) 

(in thousands, except share amounts)	September 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	113,534		$	47,016
Accounts receivable, net		378,107			317,581
Inventories, net		371,748			352,553
Prepaid expenses and other current assets		9,226			9,144
Income tax receivable		750			916
Total current assets		873,365			727,210
Rental equipment, net		38,431			33,723
Property, plant and equipment		357,234			335,078
Less:  Accumulated depreciation		(192,715)			(180,071)
Total property, plant and equipment, net		164,519			155,007
Goodwill		195,863			195,858
Intangible assets, net		159,884			171,341
Deferred income taxes		904			969
Other non-current assets		22,548			24,400
Total assets		$	1,455,514		$	1,308,508
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	110,944		$	97,537
Income taxes payable		13,695			6,592
Accrued liabilities		79,682			71,368
Current maturities of long-term debt and finance lease obligations		15,008			15,009
Total current liabilities		219,329			190,506
Long-term debt and finance lease obligations, net of current maturities		308,892			286,943
Long-term tax liability		2,634			3,781
Other long-term liabilities		22,171			23,668
Deferred income taxes		14,754			18,250
Stockholders’ equity:
Common stock, $0.10 par value, 20,000,000 shares authorized; 11,962,295 and 11,913,890 outstanding at September 30, 2023 and December 31, 2022, respectively		1,196			1,191
Additional paid-in-capital		135,571			129,820
Treasury stock, at cost; 82,600 shares at September 30, 2023 and December 31, 2022, respectively		(4,566)			(4,566)
Retained earnings		823,960			727,183
Accumulated other comprehensive loss		(68,427)			(68,268)
Total stockholders’ equity		887,734			785,360
Total liabilities and stockholders’ equity		$	1,455,514		$	1,308,508

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)	2023		2022		2023		2022
Net sales:
Vegetation Management	$	246,902	$	228,511	$	764,683	$	704,520
Industrial Equipment	172,742		140,282		507,426		422,492
Total net sales	419,644		368,793		1,272,109		1,127,012
Cost of sales	305,501		276,428		927,385		848,289
Gross profit	114,143		92,365		344,724		278,723
Selling, general and administrative expenses	60,564		52,723		180,090		161,367
Amortization expense	3,826		3,802		11,465		11,481
Income from operations	49,753		35,840		153,169		105,875
Interest expense	(6,729)		(3,734)		(19,506)		(9,570)
Interest income	385		93		1,125		222
Other income (expense), net	138		1,413		94		(473)
Income before income taxes	43,547		33,612		134,882		96,054
Provision for income taxes	8,632		7,791		30,244		23,291
Net Income	$	34,915	$	25,821	$	104,638	$	72,763
Net income per common share:
Basic	$	2.93	$	2.18	$	8.78	$	6.13
Diluted	$	2.91	$	2.16	$	8.73	$	6.10
Average common shares:
Basic	11,928		11,883		11,916		11,875
Diluted	11,996		11,941		11,983		11,932
Dividends declared	$	0.22	$	0.18	$	0.66	$	0.54

 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)	2023		2022		2023		2022
Net income	$	34,915	$	25,821	$	104,638	$	72,763
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net of tax benefit and (expense) of $62 and $(781), and $(352) and $(1,685), respectively	(12,718)		(24,921)		(556)		(43,076)
Recognition of deferred pension and other post-retirement benefits, net of tax (expense) and benefit of $(83) and $61, and $(247) and $375, respectively	282		206		847		617
Unrealized income (loss) on derivative instruments, net of tax benefit and (expense) of $7 and $(7), and $66 and $(745), respectively	(36)		22		(450)		2,919
Other comprehensive loss	(12,472)		(24,693)		(159)		(39,540)
Comprehensive income	$	22,443	$	1,128	$	104,479	$	33,223

See accompanying notes.

5

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Stockholders’ Equity

 (Unaudited)

For nine months ended September 30, 2023
	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, 2022	11,831	$	1,191	$	129,820	$	(4,566)	$	727,183	$	(68,268)	$	785,360
Other comprehensive income	—	—		—		—		33,349		4,414		37,763
Stock-based compensation expense	—	—		1,699		—		—		—		1,699
Stock-based compensation transactions	28	3		138		—		—		—		141
Dividends paid ($0.22 per share)	—	—		—		—		(2,615)		—		(2,615)
Balance at March 31, 2023	11,859	$	1,194	$	131,657	$	(4,566)	$	757,917	$	(63,854)	$	822,348
Other comprehensive income	—	—		—		—		36,374		7,899		44,273
Stock-based compensation expense	—	—		1,869		—		—		—		1,869
Stock-based compensation transactions	17	2		72		—		—		—		74
Dividends paid ($0.22 per share)	—	—		—		—		(2,622)		—		(2,622)
Balance at June 30, 2023	11,876	$	1,196	$	133,598	$	(4,566)	$	791,669	$	(55,955)	$	865,942
Other comprehensive income	—	—		—		—		34,915		(12,472)		22,443
Stock-based compensation expense	—	—		1,805		—		—		—		1,805
Stock-based compensation transactions	4	—		168		—		—		—		168
Dividends paid ($0.22 per share)	—	—		—		—		(2,624)		—		(2,624)
Balance at September 30, 2023	11,880	$	1,196	$	135,571	$	(4,566)	$	823,960	$	(68,427)	$	887,734

See accompanying notes.

6

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.

7

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
(in thousands)	2023		2022
Operating Activities
Net income	$	104,638	$	72,763
Adjustment to reconcile net income to net cash provided by (used in) operating activities:
Provision for doubtful accounts	367		319
Depreciation - Property, plant and equipment	17,204		16,307
Depreciation - Rental equipment	6,470		5,665
Amortization of intangibles	11,465		11,481
Amortization of debt issuance	527		500
Stock-based compensation expense	5,373		4,629
Provision for deferred income tax	(3,971)		(4,029)
Gain on sale of property, plant and equipment	(2,204)		(156)
Changes in operating assets and liabilities:
Accounts receivable	(60,885)		(74,884)
Inventories	(19,220)		(54,122)
Rental equipment	(11,176)		(6,416)
Prepaid expenses and other assets	1,535		(802)
Trade accounts payable and accrued liabilities	21,784		5,696
Income taxes payable	7,365		910
Long-term tax payable	(1,147)		(635)
Other assets and long-term liabilities, net	(1,094)		1,595
Net cash provided by (used in) operating activities	77,031		(21,179)
Investing Activities
Acquisitions, net of cash acquired	—		(2,000)
Purchase of property, plant and equipment	(27,051)		(23,499)
Proceeds from sale of property, plant and equipment	3,094		527
Net cash used in investing activities	(23,957)		(24,972)
Financing Activities
Borrowings on bank revolving credit facility	134,000		190,000
Repayments on bank revolving credit facility	(101,000)		(85,000)
Principal payments on long-term debt and finance leases	(11,256)		(11,277)
Dividends paid	(7,861)		(6,411)
Proceeds from exercise of stock options	1,417		639
Common stock repurchased	(1,034)		(712)
Net cash provided by financing activities	14,266		87,239
Effect of exchange rate changes on cash and cash equivalents	(822)		(7,895)
Net change in cash and cash equivalents	66,518		33,193
Cash and cash equivalents at beginning of the year	47,016		42,115
Cash and cash equivalents at end of the period	$	113,534	$	75,308
Cash paid during the period for:
Interest	$	18,729	$	9,742
Income taxes	29,712		27,162

See accompanying notes.

8

Alamo Group Inc. and Subsidiaries

Notes to Interim Condensed Consolidated Financial Statements - (Unaudited)

September 30, 2023

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, 2023.  The balance sheet at December 31, 2022 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, 2022 (the "2022 10-K").

2. Accounts Receivable

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

At September 30, 2023 the Company had $23.4 million in reserves for sales discounts compared to $19.9 million at December 31, 2022 related to products shipped to our customers under various promotional programs.

3.  Inventories

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

(in thousands)	September 30, 2023			December 31, 2022
Finished goods		$	333,318		$	312,726
Work in process		29,844			22,273
Raw materials		8,586			17,554
Inventories, net		$	371,748		$	352,553

Inventory obsolescence reserves were $8.3 million at September 30, 2023 and $13.2 million at December 31, 2022.

4. Rental Equipment

Rental equipment is shown net of accumulated depreciation of $24.3 million and $22.3 million at September 30, 2023 and December 31, 2022, respectively. The Company recognized depreciation expense of $2.2 million and $1.9 million for the three months ended September 30, 2023 and 2022, respectively and $6.5 million and $5.7 million for the nine months ended September 30, 2023 and 2022, respectively.

5.  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, 2023 and December 31, 2022, as the floating rates on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.

9

6. Goodwill and Intangible Assets

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2023:

(in thousands)	Vegetation Management			Industrial Equipment			Consolidated
Balance at December 31, 2022		$	127,562		$	68,296		$	195,858
Translation adjustment		122			(117)			5
Balance at September 30, 2023		$	127,684		$	68,179		$	195,863

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, 2023		December 31, 2022
Definite:
Trade names and trademarks	15-25 years	$	68,753		$	68,797
Customer and dealer relationships	8-15 years	129,395			129,338
Patents and drawings	3-12 years	28,394			28,437
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		230,742			230,772
Less accumulated amortization		(76,358)			(64,931)
Total net		154,384			165,841
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	159,884		$	171,341

The Company recognized amortization expense of $3.8 million and $3.8 million for the three months ended September 30, 2023 and 2022, respectively, and $11.5 million and $11.5 million for the nine months ended September 30, 2023 and 2022, respectively.

7.  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)	2023		2022		2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	2	$	6	$	7	$	25
Interest on lease liabilities	1		—		1		1
Operating lease cost	1,513		1,414		4,453		4,345
Short-term lease cost	306		320		935		953
Variable lease cost	69		56		220		268
Total lease cost	$	1,891	$	1,796	$	5,616	$	5,592

Rent expense for the three and nine months ended September 30, 2023 and 2022 was immaterial.

10

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2023			December 31, 2022
2023	$	1,432	*		$	5,177
2024	5,115				4,099
2025	4,094				3,294
2026	2,941				2,728
2027	1,882				1,780
Thereafter	1,747				1,743
Total minimum lease payments	$	17,211			$	18,821
Less imputed interest	(1,140)				(1,287)
Total operating lease liabilities	$	16,071			$	17,534
*Period ended September 30, 2023 represents the remaining three months of 2023.

Future Lease Commencements

As of September 30, 2023, there are additional operating leases, primarily for buildings, that have not yet commenced in the amount of $4.1 million. These operating leases will commence in fiscal year 2024 with lease terms of 2 to 3 years.

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2023			December 31, 2022
Other non-current assets	$	15,768			$	17,249
Accrued liabilities	4,877				4,685
Other long-term liabilities	11,194				12,849
Total operating lease liabilities	$	16,071			$	17,534
Weighted Average Remaining Lease Term	4.03 years				4.66 years
Weighted Average Discount Rate	3.85		%		3.30		%

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,994	$	3,971

11

8. Debt

The components of long-term debt are as follows:

(in thousands)	September 30, 2023		December 31, 2022
Current Maturities:
Finance lease obligations	$	8		$	9
Term debt	15,000			15,000
	15,008			15,009
Long-term debt:
Finance lease obligations	9			15
Term debt, net	223,883			234,928
Bank revolving credit facility	85,000			52,000
Total Long-term debt	308,892			286,943
Total debt	$	323,900		$	301,952

As of September 30, 2023, $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 $312.6 million in available borrowings.

9.  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,
	2023		2022		2023		2022
Dividends declared	$	0.22	$	0.18	$	0.66	$	0.54
Dividends paid	$	0.22	$	0.18	$	0.66	$	0.54

On October 2, 2023, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.22 per share, which was paid on October 31, 2023, to shareholders of record at the close of business on October 16, 2023.

10.  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)	2023		2022		2023		2022
Net Income	$	34,915	$	25,821	$	104,638	$	72,763
Average Common Shares:
Basic (weighted-average outstanding shares)	11,928		11,883		11,916		11,875
Dilutive potential common shares from stock options	68		58		67		57
Diluted (weighted-average outstanding shares)	11,996		11,941		11,983		11,932
Basic earnings per share	$	2.93	$	2.18	$	8.78	$	6.13
Diluted earnings per share	$	2.91	$	2.16	$	8.73	$	6.10

12

11.  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)	2023		2022		2023		2022
Net Sales
Wholegoods	$	326,843	$	282,619	$	1,010,281	$	877,446
Parts	78,739		76,047		221,071		214,844
Other	14,062		10,127		40,757		34,722
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012

Other includes rental sales, extended warranty sales and service sales as they are considered immaterial.

Revenue by Geographical Location
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net Sales
United States	$	295,021	$	264,915	$	898,914	$	803,204
Canada	37,720		24,753		102,049		68,482
France	20,959		18,369		70,324		65,086
United Kingdom	19,277		17,613		61,266		52,682
Brazil	13,322		9,688		37,354		36,891
Netherlands	7,720		8,570		26,603		15,912
Australia	6,332		7,513		21,882		20,454
Germany	3,754		2,757		9,326		4,515
Other	15,539		14,615		44,391		59,786
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012

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

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Segment Information

The following includes a summary of the unaudited financial information by reporting segment at September 30, 2023:  

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net Sales
Vegetation Management	$	246,902	$	228,511	$	764,683	$	704,520
Industrial Equipment	172,742		140,282		507,426		422,492
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012
Income from Operations
Vegetation Management	$	30,251	$	27,130	$	102,320	$	78,261
Industrial Equipment	19,502		8,710		50,849		27,614
Consolidated	$	49,753	$	35,840	$	153,169	$	105,875

(in thousands)	September 30, 2023		December 31, 2022
Goodwill
Vegetation Management	$	127,684	$	127,562
Industrial Equipment	68,179		68,296
Consolidated	$	195,863	$	195,858
Total Identifiable Assets
Vegetation Management	$	941,288	$	866,974
Industrial Equipment	514,226		441,534
Consolidated	$	1,455,514	$	1,308,508

12.  Accumulated Other Comprehensive Loss

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

	Three Months Ended September 30,
	2023								2022
(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	$	(53,267)	$	(2,745)	$	57	$	(55,955)	$	(60,552)	$	(4,606)	$	1,321	$	(63,837)
Other comprehensive income (loss) before reclassifications	(12,718)		—		(97)		(12,815)		(24,921)		—		(373)		(25,294)
Amounts reclassified from accumulated other comprehensive (income) loss	—		282		61		343		—		206		395		601
Other comprehensive income (loss)	(12,718)		282		(36)		(12,472)		(24,921)		206		22		(24,693)
Balance as of end of period	$	(65,985)	$	(2,463)	$	21	$	(68,427)	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)

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	Nine Months Ended September 30,
	2023								2022
(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	$	(65,429)	$	(3,310)	$	471	$	(68,268)	$	(42,397)	$	(5,017)	$	(1,576)	$	(48,990)
Other comprehensive income (loss) before reclassifications	(556)		—		(1,037)		(1,593)		(43,076)		—		3,503		(39,573)
Amounts reclassified from accumulated other comprehensive (income) loss	—		847		587		1,434		—		617		(584)		33
Other comprehensive income (loss)	(556)		847		(450)		(159)		(43,076)		617		2,919		(39,540)
Balance as of end of period	$	(65,985)	$	(2,463)	$	21	$	(68,427)	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)

13.  Subsequent Events

On October 10, 2023, the Company announced that it acquired 100% of the outstanding equity capital of Royal Truck & Equipment, Inc. ("Royal Truck"). Royal Truck is a leading manufacturer of truck mounted highway attenuator trucks and other specialty trucks and equipment for the highway infrastructure and traffic control market. Royal Truck represents the Company's entry into the highway safety equipment market, a new platform for future opportunities. The purchase price was approximately $28 million subject to post closing adjustments. The Company will include the operating results of Royal Truck in its consolidated financial statements as of December 31, 2023, these results are expected to be immaterial.

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,
	2023		2022		2023		2022
Vegetation Management	58.8	%	62.0	%	60.1	%	62.5	%
Industrial Equipment	41.2	%	38.0	%	39.9	%	37.5	%
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,
	2023		2022		2023		2022
Gross profit	27.2	%	25.0	%	27.1	%	24.7	%
Income from operations	11.9	%	9.7	%	12.0	%	9.4	%
Income before income taxes	10.4	%	9.1	%	10.6	%	8.5	%
Net income	8.3	%	7.0	%	8.2	%	6.5	%

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.

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We experienced continued strong demand for our products during the first nine months of 2023 as was reflected in our top line growth. Margins improved due to price discipline over the past year, better manufacturing flows and improved capacity utilization. We also experienced more consistent deliveries of purchased products as our supply chain performance improved, which led to enhanced manufacturing efficiencies and margin expansion.

For the first nine months of 2023, the Company's net sales increased by 13%, and net income increased by 44% compared to the same period in 2022. 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 and a moderately improving supply chain. The year-over-year improvement in both net sales and net income was somewhat constrained by ongoing challenges in certain parts of our supply chain and tightness in the availability of skilled labor.

The Company's Vegetation Management Division experienced a 9% increase in sales for the first nine months of 2023 compared to the first nine months of 2022 that was driven by strong shipments of forestry, tree care and governmental mowing products in both North America and Europe. The Division's backlog remained strong but incoming orders, specifically in the forestry and North American agricultural mowing, softened. The Division's income from operations for the first nine months of 2023 was up 31% versus the same period in 2022, due to increased demand, higher pricing and improving supply chain conditions, but offset by labor constraints and negative currency effects.

The Company's Industrial Equipment Division sales increased in the first nine months of 2023 by 20% as compared to the first nine months of 2022. Industrial Equipment sales were strong in all product lines with vacuum trucks, sweeper and debris collector and snow removal products increasing the most. The Division's income from operations for the first nine months of 2023 was up 84% versus the same period in 2022, due to increased demand, higher pricing and some improvement in supply chain conditions. Negatively impacting this Division were supply chain disruptions, labor shortages and, to a lesser extent, negative currency effects.

Consolidated income from operations was $153.2 million in the first nine months of 2023 compared to $105.9 million in the first nine months of 2022, an increase of 45%. The Company's backlog of $890.9 million at the end of the first nine months of 2023 was down slightly versus a backlog of $908.9 million at the end of the first nine months of 2022.

While the supply chain issues we experienced over the last several quarters appear to be improving, we remain affected by inflationary impacts, negative currency exchange rates, and labor constraints. In addition, the Company may also be negatively affected by several other factors such as weakness in the overall U.S. or world-wide economy, further increases in interest rates, changes in tariff regulations and the imposition of new tariffs, ongoing trade disputes, a deterioration of our supply chain, changes in U.S. fiscal policy such as changes in the federal tax rate, significant changes in currency exchange rates, negative economic impacts resulting from geopolitical events such as the ongoing 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, 2022 (the "2022 Form 10-K").

Results of Operations

Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022

Net sales for the third quarter of 2023 were $419.6 million, an increase of $50.8 million or 14% compared to $368.8 million for the third quarter of 2022. Net sales during the third quarter of 2023 improved due to strong customer demand resulting in higher shipments of our products versus the third quarter of 2022, as well as positive pricing actions. Also contributing to our sales were currency translation effects which had a favorable impact on the quarterly results. Negatively affecting the third quarter of 2023 were ongoing labor constraints and disruptions in certain areas of our supply chain, although the supply chain moderately improved compared to previous quarters.

Net Vegetation Management sales increased by $18.4 million or 8% to $246.9 million for the third quarter of 2023 compared to $228.5 million during the same period in 2022. The increase was due to strong performance in governmental and agricultural mowing equipment in North America, Europe, and

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South America. Labor shortages and, to a lesser extent, supply chain issues, had an overall negative affect during the third quarter of 2023.

Net Industrial Equipment sales were $172.7 million in the third quarter of 2023 compared to $140.3 million for the same period in 2022, an increase of $32.4 million or 23%. The increase was mainly due to solid results in all product lines, particularly vacuum trucks, sweeper, debris collectors and snow removal. This Division continued to be negatively impacted by supply chain disruptions, although improved from last quarter, and continued labor shortages.

Gross profit for the third quarter of 2023 was $114.1 million (27% of net sales) compared to $92.4 million (25% of net sales) during the same period in 2022, an increase of $21.7 million. The increase in gross profit during the third quarter of 2023 compared to the third quarter of 2022 was primarily attributable to higher sales volume and positive pricing actions. Profitability in the quarter increased as supply chain conditions generally improved which led to higher efficiencies and better capacity utilization. This resulted in higher gross margins compared to the third quarter of 2022.

Selling, general and administrative expenses (“SG&A”) were $60.6 million (14% of net sales) during the third quarter of 2023 compared to $52.7 million (14% of net sales) during the same period of 2022, an increase of $7.9 million. The increase in SG&A expense in the third quarter of 2023 compared to the third quarter of 2022 was attributable to higher marketing expenses related to sales promotions and commissions. Amortization expense in the third quarter of 2023 was $3.8 million compared to $3.8 million in the same period in 2022.

Interest expense was $6.7 million for the third quarter of 2023 compared to $3.7 million during the same period in 2022. The increase in interest expense in the third quarter of 2023 was mainly due to higher interest rates compared to the third quarter of 2022.

Other income (expense), net was $0.1 million of income for the third quarter of 2023 compared to $1.4 million of income during the same period in 2022. The income in the third quarter of 2022 was from changes in currency exchange rates.

Provision for income taxes was $8.6 million (20% of income before income tax) in the third quarter of 2023 compared to $7.8 million (23% of income before income tax) during the same period in 2022. The decrease in the tax rate for the third quarter of 2023 was a result of a return to provision adjustment largely driven by higher research and development and foreign tax credits.

The Company’s net income after tax was $34.9 million or $2.91 per share on a diluted basis for the third quarter of 2023 compared to $25.8 million or $2.16 per share on a diluted basis for the third quarter of 2022.  The increase of $9.1 million resulted from the factors described above.

Nine Months Ended September 30, 2023 vs. Nine Months Ended September 30, 2022

Net sales for the first nine months of 2023 were $1,272.1 million, an increase of $145.1 million or 13% compared to $1,127.0 million for the first nine months of 2022. 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 affecting the first nine months of 2023 were ongoing disruptions in certain areas of our supply chain, although our supply chain moderately improved compared to previous quarters. Ongoing skilled labor shortages and negative currency translation effects also negatively impacted the first nine months results of 2023.

Net Vegetation Management sales increased during the first nine months by $60.2 million or 9% to $764.7 million for 2023 compared to $704.5 million during the same period in 2022. 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. Labor shortages and to a lesser extent currency translation effects negatively impacted net sales in this division during the first nine months of 2023.

Net Industrial Equipment sales were $507.4 million during the first nine months of 2023 compared to $422.5 million for the same period in 2022, an increase of $84.9 million or 20%. The increase in sales for the first nine months of 2023 compared to the first nine months of 2022 was mainly due to the continued

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solid results in vacuum trucks, sweeper, debris collectors and snow removal, with modest support from excavators. Net sales in the first nine months of 2023 were negatively affected by supply chain disruptions, although it improved from last few quarters, continued labor shortages and currency translation effects.

Gross profit for the first nine months of 2023 was $344.7 million (27% of net sales) compared to $278.7 million (25% of net sales) during the same period in 2022, an increase of $66.0 million. The increase in gross profit was mainly attributable to higher sales volume and positive pricing actions. Profitability in the first nine months of 2023 increased as supply chain conditions generally improved which led to higher efficiencies and better capacity utilization. This also led to a significantly higher gross margin percentage in the first nine months of 2023 compared to the first nine months of 2022.

SG&A expenses were $180.1 million (14% of net sales) during the first nine months of 2023 compared to $161.4 million (14% of net sales) during the same period of 2022, an increase of $18.7 million. The increase in SG&A expense in the first nine months of 2023 compared to the first nine months of 2022 was a result of higher marketing expenses related to commissions and sales promotions. Amortization expense in the first nine months of 2023 was $11.5 million compared to $11.5 million in the same period in 2022. a decrease of $0.0 million.

Interest expense was $19.5 million for the first nine months of 2023 compared to $9.6 million during the same period in 2022, an increase of $9.9 million. The increase in interest expense in the first nine months of 2023 was mainly due to higher interest rates compared to the first nine months of 2022.

Other income (expense), net was less than $0.1 million of income during the first nine months of 2023 compared to $0.5 million of expense in the first nine months of 2022. The income in 2023 was a result from a gain of approximately $1.7 million related to a sale of a manufacturing facility offset by changes in currency exchange rates. The expense in 2022 is primarily from an excise tax audit and to a lesser extent, changes in exchange rates.

Provision for income taxes was $30.2 million (22% of income before income taxes) in the first nine months of 2023 compared to $23.3 million (24% of income before income taxes) during the same period in 2022. The decrease in the tax rate for the first nine months of 2023 was a result of a return to provision adjustment largely driven by higher research and development and foreign tax credits.

The Company's net income after tax was $104.6 million or $8.73 per share on a diluted basis for the first nine months of 2023 compared to $72.8 million or $6.10 per share on a diluted basis for the first nine months of 2022. The increase of $31.8 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, 2023, the Company had working capital of $654.0 million which represents an increase of $117.3 million from working capital of $536.7 million at December 31, 2022. The increase in working capital was primarily a result of volume-driven and inflation-driven increases in accounts receivable and, to a lesser extent, an increase in inventory to support the Company's high backlog levels.

Capital expenditures were $27.1 million for the first nine months of 2023, compared to $23.5 million during the first nine months of 2022. The Company expects to approve a normalized capital expenditure level of approximately $33.0 million to $37.0 million for the full year of 2023. 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 $24.0 million during the first nine months of 2023 compared to $25.0 million during the first nine months of 2022.

Net cash provided by financing activities was $14.3 million and $87.2 million during the nine month periods ended September 30, 2023 and September 30, 2022, respectively. Lower net cash provided by financing activities for the first nine months of 2023 relates to reduced net borrowings on the Company's credit facility.

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The Company had $109.9 million in cash and cash equivalents held by its foreign subsidiaries as of September 30, 2023. 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 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.

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 $655.0 million. Under the 2022 Credit Agreement, the Company has borrowed $255.0 million pursuant to a Term Facility, while up to $400.0 million 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 $3.75 million 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 $400.0 million 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. As of September 30, 2023, $325.0 million was outstanding under the 2022 Credit Agreement, $240.0 million on the Term Facility and $85.0 million on the Revolver Facility. On September 30, 2023, $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 $312.6 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of September 30, 2023.

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.

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 2022 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

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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 2022 Form 10-K.

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 and a potential weakening of the markets we serve; supply chain disruptions; labor constraints; 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; new or unanticipated effects of the COVID-19 pandemic; decreases in the prices of agricultural commodities, which could affect our customers' income levels; increases in input costs; our inability to increase profit margins through continuing production efficiencies and cost reductions; 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.

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 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.

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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, 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.

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 $12.7 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 $9.6 million for the nine month period ended September 30, 2023.  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 2023 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.6 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, which expired in January 2023.

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 and Executive Vice President and Chief Financial Officer

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(Principal Financial 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 and Executive Vice President and Chief Financial Officer (Principal Financial 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, 2022 (the "2022 10-K").

Item 1A. Risk Factors

There have not been any material changes from the risk factors previously disclosed in the 2022 Form 10-K for the year ended December 31, 2022.

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, 2023:

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, 2023	—	—	—	$25,861,222
August 1-31, 2023	—	—	—	$25,861,222
September 1-30, 2023	—	—	—	$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

None.

(b) Other Information

None.

22

(c) During the period covered by this report, none of the Company’s directors or executive officers has adopted     or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5–1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

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

23

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 2, 2023	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)

24

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 2, 2023	/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 2, 2023	/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, 2023 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 2, 2023	/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, 2023 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 2, 2023	/s/ Richard J. Wehrle
		Richard J. Wehrle
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer)

XML

Cover - shares	9 Months Ended
	Sep. 30, 2023	Oct. 27, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
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		12,011,781
Document Fiscal Year Focus	2023
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, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 113,534	$ 47,016
Accounts receivable, net	378,107	317,581
Inventories, net	371,748	352,553
Prepaid expenses and other current assets	9,226	9,144
Income tax receivable	750	916
Total current assets	873,365	727,210
Rental equipment, net	38,431	33,723
Property, plant and equipment	357,234	335,078
Less:  Accumulated depreciation	(192,715)	(180,071)
Total property, plant and equipment, net	164,519	155,007
Goodwill	195,863	195,858
Intangible assets, net	159,884	171,341
Deferred income taxes	904	969
Other non-current assets	22,548	24,400
Total assets	1,455,514	1,308,508
Current liabilities:
Trade accounts payable	110,944	97,537
Income taxes payable	13,695	6,592
Accrued liabilities	79,682	71,368
Current maturities of long-term debt and finance lease obligations	15,008	15,009
Total current liabilities	219,329	190,506
Long-term debt and finance lease obligations, net of current maturities	308,892	286,943
Long-term tax liability	2,634	3,781
Other long-term liabilities	22,171	23,668
Deferred income taxes	14,754	18,250
Stockholders’ equity:
Common stock, $0.10 par value, 20,000,000 shares authorized; 11,962,295 and 11,913,890 outstanding at September 30, 2023 and December 31, 2022, respectively	1,196	1,191
Additional paid-in-capital	135,571	129,820
Treasury stock, at cost; 82,600 shares at September 30, 2023 and December 31, 2022, respectively	(4,566)	(4,566)
Retained earnings	823,960	727,183
Accumulated other comprehensive loss	(68,427)	(68,268)
Total stockholders’ equity	887,734	785,360
Total liabilities and stockholders’ equity	$ 1,455,514	$ 1,308,508

XML

Interim Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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)	11,962,295	11,913,890
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, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net sales:
Total net sales	$ 419,644	$ 368,793	$ 1,272,109	$ 1,127,012
Cost of sales	305,501	276,428	927,385	848,289
Gross profit	114,143	92,365	344,724	278,723
Selling, general and administrative expenses	60,564	52,723	180,090	161,367
Amortization expense	3,826	3,802	11,465	11,481
Income from operations	49,753	35,840	153,169	105,875
Interest expense	(6,729)	(3,734)	(19,506)	(9,570)
Interest income	385	93	1,125	222
Other income (expense), net	138	1,413	94	(473)
Income before income taxes	43,547	33,612	134,882	96,054
Provision for income taxes	8,632	7,791	30,244	23,291
Net Income	$ 34,915	$ 25,821	$ 104,638	$ 72,763
Net income per common share:
Basic (in dollars per share)	$ 2.93	$ 2.18	$ 8.78	$ 6.13
Diluted (in dollars per share)	$ 2.91	$ 2.16	$ 8.73	$ 6.10
Average common shares:
Basic (in shares)	11,928	11,883	11,916	11,875
Diluted (in shares)	11,996	11,941	11,983	11,932
Dividends declared (in dollars per share)	$ 0.22	$ 0.18	$ 0.66	$ 0.54
Vegetation Management
Net sales:
Total net sales	$ 246,902	$ 228,511	$ 764,683	$ 704,520
Income from operations	30,251	27,130	102,320	78,261
Industrial Equipment
Net sales:
Total net sales	172,742	140,282	507,426	422,492
Income from operations	$ 19,502	$ 8,710	$ 50,849	$ 27,614

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 34,915	$ 25,821	$ 104,638	$ 72,763
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net of tax benefit and (expense) of $62 and $(781), and $(352) and $(1,685), respectively	(12,718)	(24,921)	(556)	(43,076)
Recognition of deferred pension and other post-retirement benefits, net of tax (expense) and benefit of $(83) and $61, and $(247) and $375, respectively	282	206	847	617
Unrealized income (loss) on derivative instruments, net of tax benefit and (expense) of $7 and $(7), and $66 and $(745), respectively	(36)	22	(450)	2,919
Other comprehensive loss	(12,472)	(24,693)	(159)	(39,540)
Comprehensive income	$ 22,443	$ 1,128	$ 104,479	$ 33,223

XML

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustment, tax (expense) benefit	$ 62	$ (781)	$ (352)	$ (1,685)
Net tax benefit (expense) on pension and other post-retirement benefits	(83)	61	(247)	375
Net tax (expense) benefit on unrealized gain (loss) on derivative instruments	$ 7	$ (7)	$ 66	$ (745)

XML

Interim Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	AdditionalPaid-in Capital	Treasury Stock	Retained Earnings	AccumulatedOtherComprehensive Loss
Beginning balance ( in shares) at Dec. 31, 2021		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	$ 0	92
Dividends paid	(2,139)				(2,139)
Ending balance (in shares) at Sep. 30, 2022		11,827,000
Ending balance at Sep. 30, 2022	$ 737,031	$ 1,191	128,780	(4,566)	700,156	(88,530)
Beginning balance ( in shares) at Dec. 31, 2022	11,913,890	11,831,000
Beginning balance at Dec. 31, 2022	$ 785,360	$ 1,191	129,820	(4,566)	727,183	(68,268)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	37,763				33,349	4,414
Stock-based compensation expense	1,699		1,699
Stock-based compensation transactions (in shares)		28,000
Stock-based compensation transactions	141	$ 3	138
Dividends paid	(2,615)				(2,615)
Ending balance (in shares) at Mar. 31, 2023		11,859,000
Ending balance at Mar. 31, 2023	822,348	$ 1,194	131,657	(4,566)	757,917	(63,854)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	44,273				36,374	7,899
Stock-based compensation expense	1,869		1,869
Stock-based compensation transactions (in shares)		17,000
Stock-based compensation transactions	74	$ 2	72
Dividends paid	(2,622)				(2,622)
Ending balance (in shares) at Jun. 30, 2023		11,876,000
Ending balance at Jun. 30, 2023	865,942	$ 1,196	133,598	(4,566)	791,669	(55,955)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income	22,443				34,915	(12,472)
Stock-based compensation expense	1,805		1,805
Stock-based compensation transactions (in shares)		4,000
Stock-based compensation transactions	168		168
Dividends paid	$ (2,624)				(2,624)
Ending balance (in shares) at Sep. 30, 2023	11,962,295	11,880,000
Ending balance at Sep. 30, 2023	$ 887,734	$ 1,196	$ 135,571	$ (4,566)	$ 823,960	$ (68,427)

XML

Interim Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.22	$ 0.22	$ 0.22	$ 0.18	$ 0.18	$ 0.18	$ 0.66	$ 0.54

XML

Interim Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating Activities
Net income	$ 104,638	$ 72,763
Adjustment to reconcile net income to net cash provided by (used in) operating activities:
Provision for doubtful accounts	367	319
Depreciation - Property, plant and equipment	17,204	16,307
Depreciation - Rental equipment	6,470	5,665
Amortization of intangibles	11,465	11,481
Amortization of debt issuance	527	500
Stock-based compensation expense	5,373	4,629
Provision for deferred income tax	(3,971)	(4,029)
Gain on sale of property, plant and equipment	(2,204)	(156)
Changes in operating assets and liabilities:
Accounts receivable	(60,885)	(74,884)
Inventories	(19,220)	(54,122)
Rental equipment	(11,176)	(6,416)
Prepaid expenses and other assets	1,535	(802)
Trade accounts payable and accrued liabilities	21,784	5,696
Income taxes payable	7,365	910
Long-term tax payable	(1,147)	(635)
Other assets and long-term liabilities, net	(1,094)	1,595
Net cash provided by (used in) operating activities	77,031	(21,179)
Investing Activities
Acquisitions, net of cash acquired	0	(2,000)
Purchase of property, plant and equipment	(27,051)	(23,499)
Proceeds from sale of property, plant and equipment	3,094	527
Net cash used in investing activities	(23,957)	(24,972)
Financing Activities
Borrowings on bank revolving credit facility	134,000	190,000
Repayments on bank revolving credit facility	(101,000)	(85,000)
Principal payments on long-term debt and finance leases	(11,256)	(11,277)
Dividends paid	(7,861)	(6,411)
Proceeds from exercise of stock options	1,417	639
Common stock repurchased	(1,034)	(712)
Net cash provided by financing activities	14,266	87,239
Effect of exchange rate changes on cash and cash equivalents	(822)	(7,895)
Net change in cash and cash equivalents	66,518	33,193
Cash and cash equivalents at beginning of the year	47,016	42,115
Cash and cash equivalents at end of the period	113,534	75,308
Cash paid during the period for:
Interest	18,729	9,742
Income taxes	$ 29,712	$ 27,162

XML

Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2023

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, 2023.  The balance sheet at December 31, 2022 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, 2022 (the "2022 10-K").

XML

Accounts Receivable	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
Accounts Receivable	Accounts ReceivableAccounts receivable is shown net of sales discounts and the allowance for credit losses.At September 30, 2023 the Company had $23.4 million in reserves for sales discounts compared to $19.9 million at December 31, 2022 related to products shipped to our customers under various promotional programs.

XML

Inventories

9 Months Ended

Sep. 30, 2023

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, 2023			December 31, 2022
Finished goods		$	333,318		$	312,726
Work in process		29,844			22,273
Raw materials		8,586			17,554
Inventories, net		$	371,748		$	352,553

Inventory obsolescence reserves were $8.3 million at September 30, 2023 and $13.2 million at December 31, 2022.

XML

Rental Equipment	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Rental Equipment	Rental EquipmentRental equipment is shown net of accumulated depreciation of $24.3 million and $22.3 million at September 30, 2023 and December 31, 2022, respectively. The Company recognized depreciation expense of $2.2 million and $1.9 million for the three months ended September 30, 2023 and 2022, respectively and $6.5 million and $5.7 million for the nine months ended September 30, 2023 and 2022, respectively.

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

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, 2023 and December 31, 2022, 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, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2023:

(in thousands)	Vegetation Management			Industrial Equipment			Consolidated
Balance at December 31, 2022		$	127,562		$	68,296		$	195,858
Translation adjustment		122			(117)			5
Balance at September 30, 2023		$	127,684		$	68,179		$	195,863

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, 2023		December 31, 2022
Definite:
Trade names and trademarks	15-25 years	$	68,753		$	68,797
Customer and dealer relationships	8-15 years	129,395			129,338
Patents and drawings	3-12 years	28,394			28,437
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		230,742			230,772
Less accumulated amortization		(76,358)			(64,931)
Total net		154,384			165,841
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	159,884		$	171,341

The Company recognized amortization expense of $3.8 million and $3.8 million for the three months ended September 30, 2023 and 2022, respectively, and $11.5 million and $11.5 million for the nine months ended September 30, 2023 and 2022, respectively.

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Leases

9 Months Ended

Sep. 30, 2023

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)	2023		2022		2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	2	$	6	$	7	$	25
Interest on lease liabilities	1		—		1		1
Operating lease cost	1,513		1,414		4,453		4,345
Short-term lease cost	306		320		935		953
Variable lease cost	69		56		220		268
Total lease cost	$	1,891	$	1,796	$	5,616	$	5,592

Rent expense for the three and nine months ended September 30, 2023 and 2022 was immaterial.

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2023			December 31, 2022
2023	$	1,432	*		$	5,177
2024	5,115				4,099
2025	4,094				3,294
2026	2,941				2,728
2027	1,882				1,780
Thereafter	1,747				1,743
Total minimum lease payments	$	17,211			$	18,821
Less imputed interest	(1,140)				(1,287)
Total operating lease liabilities	$	16,071			$	17,534
*Period ended September 30, 2023 represents the remaining three months of 2023.

Future Lease Commencements

As of September 30, 2023, there are additional operating leases, primarily for buildings, that have not yet commenced in the amount of $4.1 million. These operating leases will commence in fiscal year 2024 with lease terms of 2 to 3 years.

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2023			December 31, 2022
Other non-current assets	$	15,768			$	17,249
Accrued liabilities	4,877				4,685
Other long-term liabilities	11,194				12,849
Total operating lease liabilities	$	16,071			$	17,534
Weighted Average Remaining Lease Term	4.03 years				4.66 years
Weighted Average Discount Rate	3.85		%		3.30		%

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,994	$	3,971

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)	2023		2022		2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	2	$	6	$	7	$	25
Interest on lease liabilities	1		—		1		1
Operating lease cost	1,513		1,414		4,453		4,345
Short-term lease cost	306		320		935		953
Variable lease cost	69		56		220		268
Total lease cost	$	1,891	$	1,796	$	5,616	$	5,592

Rent expense for the three and nine months ended September 30, 2023 and 2022 was immaterial.

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2023			December 31, 2022
2023	$	1,432	*		$	5,177
2024	5,115				4,099
2025	4,094				3,294
2026	2,941				2,728
2027	1,882				1,780
Thereafter	1,747				1,743
Total minimum lease payments	$	17,211			$	18,821
Less imputed interest	(1,140)				(1,287)
Total operating lease liabilities	$	16,071			$	17,534
*Period ended September 30, 2023 represents the remaining three months of 2023.

Future Lease Commencements

As of September 30, 2023, there are additional operating leases, primarily for buildings, that have not yet commenced in the amount of $4.1 million. These operating leases will commence in fiscal year 2024 with lease terms of 2 to 3 years.

Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)	September 30, 2023			December 31, 2022
Other non-current assets	$	15,768			$	17,249
Accrued liabilities	4,877				4,685
Other long-term liabilities	11,194				12,849
Total operating lease liabilities	$	16,071			$	17,534
Weighted Average Remaining Lease Term	4.03 years				4.66 years
Weighted Average Discount Rate	3.85		%		3.30		%

Supplemental Cash Flow information related to leases was as follows:

	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,994	$	3,971

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Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

DebtThe components of long-term debt are as follows:

(in thousands)	September 30, 2023		December 31, 2022
Current Maturities:
Finance lease obligations	$	8		$	9
Term debt	15,000			15,000
	15,008			15,009
Long-term debt:
Finance lease obligations	9			15
Term debt, net	223,883			234,928
Bank revolving credit facility	85,000			52,000
Total Long-term debt	308,892			286,943
Total debt	$	323,900		$	301,952

As of September 30, 2023, $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 $312.6 million in available borrowings.

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Common Stock and Dividends

9 Months Ended

Sep. 30, 2023

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,
	2023		2022		2023		2022
Dividends declared	$	0.22	$	0.18	$	0.66	$	0.54
Dividends paid	$	0.22	$	0.18	$	0.66	$	0.54

On October 2, 2023, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.22 per share, which was paid on October 31, 2023, to shareholders of record at the close of business on October 16, 2023.

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Earnings Per Share

9 Months Ended

Sep. 30, 2023

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)	2023		2022		2023		2022
Net Income	$	34,915	$	25,821	$	104,638	$	72,763
Average Common Shares:
Basic (weighted-average outstanding shares)	11,928		11,883		11,916		11,875
Dilutive potential common shares from stock options	68		58		67		57
Diluted (weighted-average outstanding shares)	11,996		11,941		11,983		11,932
Basic earnings per share	$	2.93	$	2.18	$	8.78	$	6.13
Diluted earnings per share	$	2.91	$	2.16	$	8.73	$	6.10

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Revenue and Segment Information

9 Months Ended

Sep. 30, 2023

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)	2023		2022		2023		2022
Net Sales
Wholegoods	$	326,843	$	282,619	$	1,010,281	$	877,446
Parts	78,739		76,047		221,071		214,844
Other	14,062		10,127		40,757		34,722
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012

Other includes rental sales, extended warranty sales and service sales as they are considered immaterial.

Revenue by Geographical Location
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net Sales
United States	$	295,021	$	264,915	$	898,914	$	803,204
Canada	37,720		24,753		102,049		68,482
France	20,959		18,369		70,324		65,086
United Kingdom	19,277		17,613		61,266		52,682
Brazil	13,322		9,688		37,354		36,891
Netherlands	7,720		8,570		26,603		15,912
Australia	6,332		7,513		21,882		20,454
Germany	3,754		2,757		9,326		4,515
Other	15,539		14,615		44,391		59,786
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012

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, 2023:  

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net Sales
Vegetation Management	$	246,902	$	228,511	$	764,683	$	704,520
Industrial Equipment	172,742		140,282		507,426		422,492
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012
Income from Operations
Vegetation Management	$	30,251	$	27,130	$	102,320	$	78,261
Industrial Equipment	19,502		8,710		50,849		27,614
Consolidated	$	49,753	$	35,840	$	153,169	$	105,875

(in thousands)	September 30, 2023		December 31, 2022
Goodwill
Vegetation Management	$	127,684	$	127,562
Industrial Equipment	68,179		68,296
Consolidated	$	195,863	$	195,858
Total Identifiable Assets
Vegetation Management	$	941,288	$	866,974
Industrial Equipment	514,226		441,534
Consolidated	$	1,455,514	$	1,308,508

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2023

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,
	2023								2022
(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	$	(53,267)	$	(2,745)	$	57	$	(55,955)	$	(60,552)	$	(4,606)	$	1,321	$	(63,837)
Other comprehensive income (loss) before reclassifications	(12,718)		—		(97)		(12,815)		(24,921)		—		(373)		(25,294)
Amounts reclassified from accumulated other comprehensive (income) loss	—		282		61		343		—		206		395		601
Other comprehensive income (loss)	(12,718)		282		(36)		(12,472)		(24,921)		206		22		(24,693)
Balance as of end of period	$	(65,985)	$	(2,463)	$	21	$	(68,427)	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)

	Nine Months Ended September 30,
	2023								2022
(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	$	(65,429)	$	(3,310)	$	471	$	(68,268)	$	(42,397)	$	(5,017)	$	(1,576)	$	(48,990)
Other comprehensive income (loss) before reclassifications	(556)		—		(1,037)		(1,593)		(43,076)		—		3,503		(39,573)
Amounts reclassified from accumulated other comprehensive (income) loss	—		847		587		1,434		—		617		(584)		33
Other comprehensive income (loss)	(556)		847		(450)		(159)		(43,076)		617		2,919		(39,540)
Balance as of end of period	$	(65,985)	$	(2,463)	$	21	$	(68,427)	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)

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Subsequent Events	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn October 10, 2023, the Company announced that it acquired 100% of the outstanding equity capital of Royal Truck & Equipment, Inc. ("Royal Truck"). Royal Truck is a leading manufacturer of truck mounted highway attenuator trucks and other specialty trucks and equipment for the highway infrastructure and traffic control market. Royal Truck represents the Company's entry into the highway safety equipment market, a new platform for future opportunities. The purchase price was approximately $28 million subject to post closing adjustments. The Company will include the operating results of Royal Truck in its consolidated financial statements as of December 31, 2023, these results are expected to be immaterial.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net income	$ 34,915	$ 25,821	$ 104,638	$ 72,763

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Basis of Financial Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2023

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, 2023.  The balance sheet at December 31, 2022 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, 2022 (the "2022 10-K").

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Inventories (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventories

Net inventories consist of the following:

(in thousands)	September 30, 2023			December 31, 2022
Finished goods		$	333,318		$	312,726
Work in process		29,844			22,273
Raw materials		8,586			17,554
Inventories, net		$	371,748		$	352,553

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2023:

(in thousands)	Vegetation Management			Industrial Equipment			Consolidated
Balance at December 31, 2022		$	127,562		$	68,296		$	195,858
Translation adjustment		122			(117)			5
Balance at September 30, 2023		$	127,684		$	68,179		$	195,863

Schedule of Finite-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, 2023		December 31, 2022
Definite:
Trade names and trademarks	15-25 years	$	68,753		$	68,797
Customer and dealer relationships	8-15 years	129,395			129,338
Patents and drawings	3-12 years	28,394			28,437
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		230,742			230,772
Less accumulated amortization		(76,358)			(64,931)
Total net		154,384			165,841
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	159,884		$	171,341

Schedule of 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, 2023		December 31, 2022
Definite:
Trade names and trademarks	15-25 years	$	68,753		$	68,797
Customer and dealer relationships	8-15 years	129,395			129,338
Patents and drawings	3-12 years	28,394			28,437
Favorable leasehold interests	7 years	4,200			4,200
Total at cost		230,742			230,772
Less accumulated amortization		(76,358)			(64,931)
Total net		154,384			165,841
Indefinite:
Trade names and trademarks		5,500			5,500
Total Intangible Assets		$	159,884		$	171,341

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Leases (Tables)

9 Months Ended

Sep. 30, 2023

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)	2023		2022		2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	2	$	6	$	7	$	25
Interest on lease liabilities	1		—		1		1
Operating lease cost	1,513		1,414		4,453		4,345
Short-term lease cost	306		320		935		953
Variable lease cost	69		56		220		268
Total lease cost	$	1,891	$	1,796	$	5,616	$	5,592

Schedule of Operating Lease Maturity

Maturities of operating lease liabilities were as follows:

Future Minimum Lease Payments
(in thousands)	September 30, 2023			December 31, 2022
2023	$	1,432	*		$	5,177
2024	5,115				4,099
2025	4,094				3,294
2026	2,941				2,728
2027	1,882				1,780
Thereafter	1,747				1,743
Total minimum lease payments	$	17,211			$	18,821
Less imputed interest	(1,140)				(1,287)
Total operating lease liabilities	$	16,071			$	17,534
*Period ended September 30, 2023 represents the remaining three months of 2023.

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, 2023			December 31, 2022
Other non-current assets	$	15,768			$	17,249
Accrued liabilities	4,877				4,685
Other long-term liabilities	11,194				12,849
Total operating lease liabilities	$	16,071			$	17,534
Weighted Average Remaining Lease Term	4.03 years				4.66 years
Weighted Average Discount Rate	3.85		%		3.30		%

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)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,994	$	3,971

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Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Components of Long-Term Debt

The components of long-term debt are as follows:

(in thousands)	September 30, 2023		December 31, 2022
Current Maturities:
Finance lease obligations	$	8		$	9
Term debt	15,000			15,000
	15,008			15,009
Long-term debt:
Finance lease obligations	9			15
Term debt, net	223,883			234,928
Bank revolving credit facility	85,000			52,000
Total Long-term debt	308,892			286,943
Total debt	$	323,900		$	301,952

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Common Stock and Dividends (Tables)

9 Months Ended

Sep. 30, 2023

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,
	2023		2022		2023		2022
Dividends declared	$	0.22	$	0.18	$	0.66	$	0.54
Dividends paid	$	0.22	$	0.18	$	0.66	$	0.54

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

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)	2023		2022		2023		2022
Net Income	$	34,915	$	25,821	$	104,638	$	72,763
Average Common Shares:
Basic (weighted-average outstanding shares)	11,928		11,883		11,916		11,875
Dilutive potential common shares from stock options	68		58		67		57
Diluted (weighted-average outstanding shares)	11,996		11,941		11,983		11,932
Basic earnings per share	$	2.93	$	2.18	$	8.78	$	6.13
Diluted earnings per share	$	2.91	$	2.16	$	8.73	$	6.10

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Revenue and Segment Information (Tables)

9 Months Ended

Sep. 30, 2023

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)	2023		2022		2023		2022
Net Sales
Wholegoods	$	326,843	$	282,619	$	1,010,281	$	877,446
Parts	78,739		76,047		221,071		214,844
Other	14,062		10,127		40,757		34,722
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012

Other includes rental sales, extended warranty sales and service sales as they are considered immaterial.

Revenue by Geographical Location
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net Sales
United States	$	295,021	$	264,915	$	898,914	$	803,204
Canada	37,720		24,753		102,049		68,482
France	20,959		18,369		70,324		65,086
United Kingdom	19,277		17,613		61,266		52,682
Brazil	13,322		9,688		37,354		36,891
Netherlands	7,720		8,570		26,603		15,912
Australia	6,332		7,513		21,882		20,454
Germany	3,754		2,757		9,326		4,515
Other	15,539		14,615		44,391		59,786
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012

Schedule of Segment Reporting Information, by Segment

The following includes a summary of the unaudited financial information by reporting segment at September 30, 2023:  

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net Sales
Vegetation Management	$	246,902	$	228,511	$	764,683	$	704,520
Industrial Equipment	172,742		140,282		507,426		422,492
Consolidated	$	419,644	$	368,793	$	1,272,109	$	1,127,012
Income from Operations
Vegetation Management	$	30,251	$	27,130	$	102,320	$	78,261
Industrial Equipment	19,502		8,710		50,849		27,614
Consolidated	$	49,753	$	35,840	$	153,169	$	105,875

(in thousands)	September 30, 2023		December 31, 2022
Goodwill
Vegetation Management	$	127,684	$	127,562
Industrial Equipment	68,179		68,296
Consolidated	$	195,863	$	195,858
Total Identifiable Assets
Vegetation Management	$	941,288	$	866,974
Industrial Equipment	514,226		441,534
Consolidated	$	1,455,514	$	1,308,508

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2023

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,
	2023								2022
(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	$	(53,267)	$	(2,745)	$	57	$	(55,955)	$	(60,552)	$	(4,606)	$	1,321	$	(63,837)
Other comprehensive income (loss) before reclassifications	(12,718)		—		(97)		(12,815)		(24,921)		—		(373)		(25,294)
Amounts reclassified from accumulated other comprehensive (income) loss	—		282		61		343		—		206		395		601
Other comprehensive income (loss)	(12,718)		282		(36)		(12,472)		(24,921)		206		22		(24,693)
Balance as of end of period	$	(65,985)	$	(2,463)	$	21	$	(68,427)	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)

	Nine Months Ended September 30,
	2023								2022
(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	$	(65,429)	$	(3,310)	$	471	$	(68,268)	$	(42,397)	$	(5,017)	$	(1,576)	$	(48,990)
Other comprehensive income (loss) before reclassifications	(556)		—		(1,037)		(1,593)		(43,076)		—		3,503		(39,573)
Amounts reclassified from accumulated other comprehensive (income) loss	—		847		587		1,434		—		617		(584)		33
Other comprehensive income (loss)	(556)		847		(450)		(159)		(43,076)		617		2,919		(39,540)
Balance as of end of period	$	(65,985)	$	(2,463)	$	21	$	(68,427)	$	(85,473)	$	(4,400)	$	1,343	$	(88,530)

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Accounts Receivable (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Reserves for sales discounts
Valuation and Qualifying Accounts Disclosure [Line Items]
Reserves for sales discounts on products shipped under promotional programs	$ 23.4	$ 19.9

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Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Finished goods	$ 333,318	$ 312,726
Work in process	29,844	22,273
Raw materials	8,586	17,554
Inventories, net	$ 371,748	$ 352,553

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Inventories - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Inventory obsolescence reserves	$ 8.3	$ 13.2

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Rental Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Accumulated depreciation	$ 192,715		$ 192,715		$ 180,071
Depreciation			17,204	$ 16,307
Rental Equipment
Property, Plant and Equipment [Line Items]
Accumulated depreciation	24,300		24,300		$ 22,300
Depreciation	$ 2,200	$ 1,900	$ 6,500	$ 5,700

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Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Goodwill [Roll Forward]
Goodwill, balance at the beginning of the period	$ 195,858
Translation adjustment	5
Goodwill, balance at the end of the period	195,863
Vegetation Management
Goodwill [Roll Forward]
Goodwill, balance at the beginning of the period	127,562
Translation adjustment	122
Goodwill, balance at the end of the period	127,684
Industrial Equipment
Goodwill [Roll Forward]
Goodwill, balance at the beginning of the period	68,296
Translation adjustment	(117)
Goodwill, balance at the end of the period	$ 68,179

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Goodwill and Intangible Assets - Schedule of Definite and Indefinite Lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Total at cost	$ 230,742	$ 230,772
Less accumulated amortization	(76,358)	(64,931)
Total net	154,384	165,841
Total Intangible Assets	159,884	171,341
Trade names and trademarks
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Indefinite-Trade names and trademarks	5,500	5,500
Trade names and trademarks
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Total at cost	68,753	68,797
Customer and dealer relationships
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Total at cost	129,395	129,338
Patents and drawings
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Total at cost	$ 28,394	28,437
Favorable leasehold interests
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	7 years
Total at cost	$ 4,200	$ 4,200
Minimum | Trade names and trademarks
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	15 years
Minimum | Customer and dealer relationships
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	8 years
Minimum | Patents and drawings
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	3 years
Maximum | Trade names and trademarks
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	25 years
Maximum | Customer and dealer relationships
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	15 years
Maximum | Patents and drawings
Schedule of Acquired Indefinite-lived and Finite Intangible Assets by major class [Line Items]
Estimated Useful Lives	12 years

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Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 3,826	$ 3,802	$ 11,465	$ 11,481

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Finance lease cost:
Amortization of right-of-use assets	$ 2	$ 6	$ 7	$ 25
Interest on lease liabilities	1	0	1	1
Operating lease cost	1,513	1,414	4,453	4,345
Short-term lease cost	306	320	935	953
Variable lease cost	69	56	220	268
Total lease cost	$ 1,891	$ 1,796	$ 5,616	$ 5,592

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Leases - Maturity Schedule (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Future Minimum Lease Payments
Remainder of fiscal year	$ 1,432
Year one	5,115	$ 5,177
Year two	4,094	4,099
Year three	2,941	3,294
Year four	1,882	2,728
Year five		1,780
Thereafter	1,747
Thereafter		1,743
Total minimum lease payments	17,211	18,821
Less imputed interest	(1,140)	(1,287)
Total operating lease liabilities	$ 16,071	$ 17,534

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Leases - Additional Information (Details) $ in Millions	Sep. 30, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Additional operating lease not yet commenced	$ 4.1
Minimum
Lessee, Lease, Description [Line Items]
Additional operating lease not yet commenced, lease terms	2 years
Maximum
Lessee, Lease, Description [Line Items]
Additional operating lease not yet commenced, lease terms	3 years

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Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Operating Leases
Other non-current assets	$ 15,768	$ 17,249
Accrued liabilities	4,877	4,685
Other long-term liabilities	11,194	12,849
Total operating lease liabilities	$ 16,071	$ 17,534
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other non-current assets	Other non-current assets
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued liabilities	Accrued liabilities
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other long-term liabilities	Other long-term liabilities
Weighted Average Remaining Lease Term	4 years 10 days	4 years 7 months 28 days
Weighted Average Discount Rate	3.85%	3.30%

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Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating cash flows from operating leases	$ 3,994	$ 3,971

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Debt - Schedule of Components of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current Maturities:
Finance lease obligations	$ 8	$ 9
Term debt	15,000	15,000
Total Long-term debt, current maturities	15,008	15,009
Long-term debt:
Finance lease obligations	9	15
Total Long-term debt	308,892	286,943
Total debt	323,900	301,952
Term debt, net
Long-term debt:
Long-term debt, excluding current maturities	223,883	234,928
Bank revolving credit facility | Bank revolving credit facility
Long-term debt:
Long-term debt, excluding current maturities	$ 85,000	$ 52,000

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Debt - Additional Information (Details) $ in Millions	Sep. 30, 2023 USD ($)
Standby Letters of Credit
Debt Instrument [Line Items]
Amount of capacity	$ 2.4
Revolving Line of Credit
Debt Instrument [Line Items]
Available borrowings	$ 312.6

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Common Stock and Dividends - Dividend Declared and Paid (Details) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Stockholders' Equity Note [Abstract]
Dividends declared (in dollars per share)	$ 0.22			$ 0.18			$ 0.66	$ 0.54
Dividends paid (in dollars per share)	$ 0.22	$ 0.22	$ 0.22	$ 0.18	$ 0.18	$ 0.18	$ 0.66	$ 0.54

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Common Stock and Dividends - Additional Information (Details) - $ / shares			3 Months Ended						9 Months Ended
	Oct. 31, 2023	Oct. 02, 2023	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Class of Stock [Line Items]
Dividends declared (in dollars per share)			$ 0.22			$ 0.18			$ 0.66	$ 0.54
Dividends paid (in dollars per share)			$ 0.22	$ 0.22	$ 0.22	$ 0.18	$ 0.18	$ 0.18	$ 0.66	$ 0.54
Subsequent Event
Class of Stock [Line Items]
Dividends declared (in dollars per share)		$ 0.22
Dividends paid (in dollars per share)	$ 0.22

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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, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Net income	$ 34,915	$ 25,821	$ 104,638	$ 72,763
Average Common Shares:
Basic (weighted-average outstanding shares) (in shares)	11,928	11,883	11,916	11,875
Dilutive potential common shares from stock options (in shares)	68	58	67	57
Diluted (weighted-average outstanding shares) (in shares)	11,996	11,941	11,983	11,932
Basic earnings per share (in dollars per share)	$ 2.93	$ 2.18	$ 8.78	$ 6.13
Diluted earnings per share (in dollars per share)	$ 2.91	$ 2.16	$ 8.73	$ 6.10

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Revenue and Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Net Sales	$ 419,644	$ 368,793	$ 1,272,109	$ 1,127,012
Wholegoods
Disaggregation of Revenue [Line Items]
Net Sales	326,843	282,619	1,010,281	877,446
Parts
Disaggregation of Revenue [Line Items]
Net Sales	78,739	76,047	221,071	214,844
Other
Disaggregation of Revenue [Line Items]
Net Sales	$ 14,062	$ 10,127	$ 40,757	$ 34,722

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Revenue and Segment Information - Revenue by Geographical Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Net Sales	$ 419,644	$ 368,793	$ 1,272,109	$ 1,127,012
United States
Disaggregation of Revenue [Line Items]
Net Sales	295,021	264,915	898,914	803,204
Canada
Disaggregation of Revenue [Line Items]
Net Sales	37,720	24,753	102,049	68,482
France
Disaggregation of Revenue [Line Items]
Net Sales	20,959	18,369	70,324	65,086
United Kingdom
Disaggregation of Revenue [Line Items]
Net Sales	19,277	17,613	61,266	52,682
Brazil
Disaggregation of Revenue [Line Items]
Net Sales	13,322	9,688	37,354	36,891
Netherlands
Disaggregation of Revenue [Line Items]
Net Sales	7,720	8,570	26,603	15,912
Australia
Disaggregation of Revenue [Line Items]
Net Sales	6,332	7,513	21,882	20,454
Germany
Disaggregation of Revenue [Line Items]
Net Sales	3,754	2,757	9,326	4,515
Other
Disaggregation of Revenue [Line Items]
Net Sales	$ 15,539	$ 14,615	$ 44,391	$ 59,786

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Revenue and Segment Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Segment Reporting Information [Line Items]
Net Sales	$ 419,644	$ 368,793	$ 1,272,109	$ 1,127,012
Income from Operations	49,753	35,840	153,169	105,875
Goodwill	195,863		195,863		$ 195,858
Total Identifiable Assets	1,455,514		1,455,514		1,308,508
Vegetation Management
Segment Reporting Information [Line Items]
Net Sales	246,902	228,511	764,683	704,520
Income from Operations	30,251	27,130	102,320	78,261
Goodwill	127,684		127,684		127,562
Total Identifiable Assets	941,288		941,288		866,974
Industrial Equipment
Segment Reporting Information [Line Items]
Net Sales	172,742	140,282	507,426	422,492
Income from Operations	19,502	$ 8,710	50,849	$ 27,614
Goodwill	68,179		68,179		68,296
Total Identifiable Assets	$ 514,226		$ 514,226		$ 441,534

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 865,942	$ 736,442	$ 785,360	$ 705,663
Other comprehensive income (loss) before reclassifications	(12,815)	(25,294)
Amounts reclassified from accumulated other comprehensive (income) loss	343	601
Other comprehensive income (loss)	(12,472)	(24,693)	(159)	(39,540)
Ending balance	887,734	737,031	887,734	737,031
Foreign Currency Translation Adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(53,267)	(60,552)	(65,429)	(42,397)
Other comprehensive income (loss) before reclassifications	(12,718)	(24,921)	(556)	(43,076)
Amounts reclassified from accumulated other comprehensive (income) loss	0	0	0	0
Other comprehensive income (loss)	(12,718)	(24,921)	(556)	(43,076)
Ending balance	(65,985)	(85,473)	(65,985)	(85,473)
Defined Benefit Plans Items
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(2,745)	(4,606)	(3,310)	(5,017)
Other comprehensive income (loss) before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive (income) loss	282	206	847	617
Other comprehensive income (loss)	282	206	847	617
Ending balance	(2,463)	(4,400)	(2,463)	(4,400)
Gains (Losses) on Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	57	1,321	471	(1,576)
Other comprehensive income (loss) before reclassifications	(97)	(373)	(1,037)	3,503
Amounts reclassified from accumulated other comprehensive (income) loss	61	395	587	(584)
Other comprehensive income (loss)	(36)	22	(450)	2,919
Ending balance	21	1,343	21	1,343
AccumulatedOtherComprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(55,955)	(63,837)	(68,268)	(48,990)
Other comprehensive income (loss) before reclassifications			(1,593)	(39,573)
Amounts reclassified from accumulated other comprehensive (income) loss			1,434	33
Other comprehensive income (loss)			(159)	(39,540)
Ending balance	$ (68,427)	$ (88,530)	$ (68,427)	$ (88,530)

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Subsequent Events (Details) - Royal Truck & Equipment, Inc. ("Royal Truck") - Subsequent Event $ in Millions	Oct. 10, 2023 USD ($)
Subsequent Event [Line Items]
Percentage of outstanding capital shares acquired	100.00%
Purchase price	$ 28