Alamo (US:ALG)2021-08-03 16:00Financial Performance - For the first six months of 2021, the company's net sales increased by 13% to $658.7 million compared to $583.1 million in the same period of 2020[56][69] - Net income for the first six months of 2021 rose by 53% to $43.5 million, or $3.66 per share, compared to $28.5 million, or $2.41 per share, in the first six months of 2020[56][75] - Gross profit for the first six months of 2021 was $164.6 million, maintaining a gross margin of 25%, despite inflationary pressures on input costs[72] Sales Performance by Division - The Industrial Division's sales increased by 7% to $443.1 million for the first six months of 2021, driven by higher customer demand[57][70] - The Agricultural Division's sales surged by 26% to $215.6 million in the first six months of 2021, supported by improved commodity prices and government subsidies[58][71] Backlog and Market Conditions - The company's backlog increased by 132% to $503.6 million at the end of Q2 2021, up from $216.6 million at the end of Q2 2020, reflecting improved market conditions[59] Expenses and Financial Management - Selling, general and administrative expenses (SG&A) were $98.2 million, representing 15% of net sales, an increase from $92.8 million or 16% of net sales in the same period of 2020[73] - Interest expense decreased to $5.5 million for the first six months of 2021, down from $9.5 million in the same period of 2020, due to reduced debt levels[73] Operational Challenges - The company experienced supply chain disruptions and higher input costs, which negatively impacted operations and gross margin percentages[60][72] - The company remains cautious about the ongoing impact of the COVID-19 pandemic on business operations and customer demand for the remainder of 2021[60][61] Working Capital and Cash Management - As of June 30, 2021, the Company reported working capital of $437.9 million, an increase of $92.2 million from $345.7 million at December 31, 2020[77] - Net cash provided by financing activities was $26.3 million for the first half of 2021, compared to a net cash used of $8.5 million in the same period of 2020[78] - The Company had $79.4 million in cash and cash equivalents held by foreign subsidiaries as of June 30, 2021, primarily in Europe and Canada[79] Debt and Capital Expenditures - As of June 30, 2021, $315.8 million was outstanding under the Credit Agreement, with $273.8 million on the Term Facility and $42.0 million on the Revolver Facility[81] - Capital expenditures for the first six months of 2021 were $9.4 million, down from $12.5 million during the same period in 2020[78] - The Company expects to return to a more normalized capital expenditure level for the full year of 2021[78] Currency and Risk Management - A uniform 10% strengthening or decrease in the value of the U.S. dollar relative to foreign currencies would result in a change in gross profit of $4.6 million for the six-month period ended June 30, 2021[95] - The Company entered into an interest rate swap agreement to hedge $200.0 million of its outstanding debt obligations with a fixed LIBOR base rate of 1.43%[99] Future Plans - The Company plans to repatriate excess cash from foreign subsidiaries to reduce funded debt levels and support working capital[79] - Management believes that the Company's ability to generate funds from operations will be sufficient to meet cash requirements for the foreseeable future[82]