ALG - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Alamo Group Second Quarter 2018 Earnings Conference Call.

During today’s presentation all parties will be in a listen-only mode.

Following the presentation, the conference will be opened for question. [Operator Instructions] This conference is being recorded for today, Thursday, August 2, 2018. I would like to now turn the conference over to Mr. and and President Group. of Vice Rizzuti, General Securities Counsel Alamo Ed go Please ahead.

Ed Rizzuti

now, all should of you. you Thank By have release. the received press copy a

replay hour However, you and for of we would send you copy be call, please missing and which us the the will if make The one company’s a one release in receive list. sure contact run XXX-XXXX, to on and one, and replay (XXX) at with a the anyone be dialing after is will by are like a call There be the XXX-XXXX, accessed X can week. will (XXX) XXXXXXX. passcode distribution

XX the the website will and at days. is www.alamo-group.com, for replay webcast Additionally, call on company’s a available being be

today Corporate Robinson, Executive Ron make line Management On your Officer; President Vice and questions. me and the Dan some Officer; remarks, up Richard then Chief with Treasurer Controller. for Chief and President, President we’ll line Financial Executive open Malone, and the will opening Vice and Wehrle, are

the earnings reference in numbers attachments Reconciliations our their remarks. are results certain these GAAP the may call non-GAAP today, in of included to to non-GAAP applicable During release. management numbers

I’d like about turning the call make over to statements. a few Before comments to Ron, forward-looking

We the XXXX. of are that safe making Private will to Litigation be Reform Act forward-looking made harbor the pursuant statements today Securities provisions of

company’s time company contained not date. I factors obligation update Ron, undertake does reports. company’s introduce information would ahead. actual only risk market SEC could seasonality, differ Among future to known involve results. competition, Ron. the cause the which in unknown please listed this cause risks in results and issues statements are following: results and the to the to uncertainties, materially of actual like Forward-looking now which from currency-related from go weather, speaks differ and periods any factors those forecasted to time which as herein, to demand, other materially may The

Ron Robinson

will call the Thank you, results to us thank then look on formal and few a following our begin review today. to you results Ed, quarter the for our of remarks. XXXX financial Dan of for all taking any and of a with provide we want will I comments you our joining CFO, We second here may Malone, questions our forward have.

ahead. So please Dan, go

Dan Malone

Thank you, Ron.

Our the we facility Gradall at quarter second second drivers were R.P.M. Old industrial first and second very had performance were in Ohio. and the strong earnings. been which set achieved sales the by records Philadelphia, labor New with our division without XXXX of quarter by delayed and quarter acquisitions. Izabel Santa and results our again Tech These backlog Brush, at quarter order for records both action accretive main of and results High results also business shipments benefited company orders of Dominion our

second XX.X% Second acquisitions. sales. quarter without without by second were quarter $XXX represented XX.X% XXXX growth sales XX.X% million acquisitions. increase prior up and net the XXXX of Year-to-date division’s sales XX.X% sales of the sales $XXX.X quarter the about quarter prior net year’s effect million; the with year’s X.X% the Industrial of second by organic over beat of

quarter of Year-to-date growth the Brush second R.P.M. prior XX.X% or this of up quarter were division’s increased X.X% a XXXX about year XXXX. second XX.X% higher division Tech the X.X% $XX grew are million acquisition. favorable and effect Division sales without year than sales up million quarter sales in and second division’s over Dominion European quarter the Even this Year-to-date Izabel without of X.X%. XXXX Agricultural effect currency benefit were local X.X% the were the with acquisitions, sales favorable grew prior X.X% division’s compared without without up this XX.X% and sales XX.X%. the second up this sales Excluding quarter this currency to the sales Old over Year-to-date, second second $XX.X sales also the tailwind, acquisition, division’s quarter by grew sales year second XX.X% this the are Division acquisitions. of XX.X% net translation Santa prior the organic were division translation. quarter. up excluding currency

Second $XX.X gross the of second margin prior quarter. XX.X% by million quarter year XXXX grew over

of up Our as gross year purchasing material favorably of quarter. sales from for was margin and second sales comparisons favorable were net period. partially higher margin prior pricing quarter an was cost. year by net productivity of These sales, initiatives equipment XXXX XX.X% mix net helped Year-to-date XX.X% the compares gross which prior the XX.X% well actions, of parts as to in sales aftermarket by unfavorable improvements offset XX.X%

over $XX.X was over XX.X% million without operating and the second sales quarter the prior operating up acquisitions. Year-to-date of XX.X% primarily organic due higher the XX.X% operating income prior quarter. grew contributions income Without year quarter the than year of companies, growth. income up is prior the XX.X% Second XXXX was year acquired to

The XX.X% year second the was of which well quarter. sales, sales X.X% operating is above XXXX for net net quarter income prior of

prior improvement to gross SG&A fixed significant to period. profit compared already the of improvement quarter X.X% of mentioned is expenses. operating Year-to-date net second leveraging sales The as in the income was year due as well same X.X%

were earnings tax helped quarter rates. per lower Second and statutory also by XXXX income net U.S. share

income our second second quarter the are to diluted XX.X% rate $X.XX XX.X% in share. diluted year Our which or a year the second Year-to-date year $XX.X the net the income quarter million XX.X% of the earnings to period. period, both increases diluted rate XX.X% $X.X $X.XX of prior prior share. for or up dropped XX% – dropped was diluted prior year from effective the compared quarter. prior and $X.XX second over share prior Year-to-date a Net for over share, per income quarter to the savings million, per in – XXXX over of effective million quarter, tax savings XX.X% from per per tax XXXX $X.X or

half, $XXX.X million positively year over X.X% of XXXX year EBITDA up trend trailing to is of XX.X% was now continues First half million up XXXX EBITDA and EBITDA. the full XX-month $XX.X over the prior first

totaled the our to $XX.X cash sales in supplier used $XX.X cash XXXX, operating in We hand, at $XXX.X to the backlog compares activities net end quarter, For of the in vacuum the operating million on and utilization as provided investment prior increase the from us lead growth, of caused $XX.X million the million quarter end. High in fleet. have truck rental times half. the working our capital first million down which quarter cash the half increased order first $XX.X with have first from $XXX rates million net second also down debt and total million, year prior of requirements high ended

During the from operations. our second quarter, we started repatriating excess cash overseas

the continue to local last but call, careful funds. will as not incur mentioned quarterly of we back, cash or We in we’re taxes these other indirect being bring excess moving cost

the million, the quarter. XX% Our quarter year’s from prior at $XXX second up about ended order backlog second

were order agricultural new quarter, between Second partially rates quarter and X% This year-over-year all new tax and benefit results income growth continued of grew gross by sales, European divisions. highlighted $X.XX In the XXXX order saw of slowing earnings order quarter of quarter. reductions a returning division we X% XX% in about effective offset XXXX about over new X%. order bookings the our rate boosted improvements quarter organic operating sales in prior the acquisitions, divisions operating our that in second year by and over prior and industrial record Without by reflects bookings year summary, margins. of second in EPS a the and strong

Ron. and high record the prior growth I’d like ending levels EBITDA now turn to Continued over order back to backlogs. call

Ron Robinson

Dan. you, Thank

see, our these you we are above was results the with earnings pleased not experiencing are was record this margins is divisions reason as benefits up the But over years. This for organic also should imported up in the main our even Certainly second the sales go quarter. about several corporate year X% we’re of Obviously, basis income U.S. this cost the in particularly over up reform only up, acquisitions we XX%. impact the by of sales our see was the but Net up without reform the of adjusted average the results Particularly help going throughout continue it but all tariffs the last XX% rest pleasing had and XX% level to year of benefits, which to affect during nice total the nice also quarter cost well was of quarter increase XXXX. increases overall. from our were the throughout a as components to likely that and it an for growth, the start tax cost XXXX tax our As are as given can from was up completed and strong with quarter on company growth. three well. the helped as the for contributed nearly the increases and even that our to

indicated I earlier, our contributor strong products the other excavators, with vacuum all removal industrial evident certainly equipment but divisions, and improvements all across trucks strongest the As results. among of were division was our showing snow

X% from Division to which strong see Industrial from QX. than in the which good truck in You may Division affected quarter organic of San our The by led quarter. both and the while recall X% Old quarter Agricultural our seen was the on part of of the Alamo’s up week delayed growth Isabel last our weakness nice a Products several which an our in X% quarter the had added especially quarter results. second XXXX in Division Industrial was a was shipments than the The also the in excellent second benefited last R.P.M. past also nearly by Alamo’s sales. more first up And at the that division unit quarter made area aided quarter, given nearly for have became acquisitions growth the Gradall Tech, less had had around years. This after Dominion Gradall year negatively the to Brazil. a about we end was as the unit acquisition had end overall settled well. was vacuum of of Super strike, the products It

our but with shown tractor concern we our in last was results had growth, comparable I ag, rebound in some few yet as to the the of pleased incomes much sales as this cases of to We’re better big have a years. little overall have manufacturers many compared that but know lower anticipated. farm

as a ticket not Our as horsepower several organic growth years items combines much, in the sales never last particularly down like as were big but up tractors. much lot the were of they are and high items

a the see a to up our like growth quarter very compared more we ag over So nice the pleased margins think no benefit the second there sales would with continue to with performance rates had sector. little in we’re Division I of overall quarter to by in second XXXX ag the Alamo’s grow, little which were where European to more that. also – but and They did as currencies contributed a acquisitions, were XX% and bit in XXXX. exchange favorable

this as with started to seems either However, well should way be backlog the local the and again. in have strengthen quarter a continue for to year. of nicely benefit third our weakening of rest But results dollar perform to European U.S. XXXX has the currency, help strong the the improved in in

backlog affecting the shape. that that we to some us components will our XXXX. we forecast. which our seeing customers suppliers of uncertainty the of is Group to company – are up and our internationally climate tariffs, in the as Still impacted and that we about started comment increases world concerned by not as we’re on today creating But really whole even as geopolitical new some continue Certainly, sourced we’re only Alamo in certainly investments. are for times, in longer feel which further is is as capital our general in our the which this good difficult lead which a to degree but fact, more the well are quarter cost markets whole be benefit show strong concerned really the applies seeing, a throughout In third should

have We backlog. good a

from We acquisitions. recent additions the have

tax from contributions U.S. have We reform.

Alamo We improvements. have for as long outlook operational for looks react changes, good Group our remainder feel very to quickly any the as ongoing XXXX. And external we of we the

Group. interest I it of for And up So you support Alamo have. your for now, you again may questions to any like we thank open would and

Operator

with question Instructions] Seaport Thank you. [Operator first Shlisky Our Mike from comes Global.

Mike Shlisky

Good morning guys.

Ron Robinson

Good morning, Mike.

Mike Shlisky

simply the some some crop wanted Europe. to livestock a the in off very the some growing of as large as in producers end-users mean even grass I I affecting or ask just northern more your even now. large and that appears of area, Europe growers. not sentiment well some of hearing Eastern about So conditions dealers industrial where question farm parts mowing be Europe, of part dry part Europe about [Indiscernible] world to in or right from a that the in is in

Ron Robinson

the southeastern Europe mean in So holding critical Greece They’re than too. reached is far effect. markets particular a and we’ve of – are more I am us, haven’t has were the starting our levels. I like central Yeah they Europe, or done in some area. fairly conditions a for said, about. sort stronger which well. there’s not in parts Europe I well drop backlogs northern few in terrible been I like known of There is more a are where And U.S., It’s I the think in in seen down our Europe. central any bit strong some little central concerned but even

watching our actually, us agricultural the I and have seen actually we’re farm actually we on not think is – So, but impact it, any pretty sentiment decent. backlogs there or

Mike Shlisky

raw materials that half also have we And higher seems would kind pricing there’s sum new of wanted it about up announcements ask it to offset Do high quarter? and the I or back steps other you mean, cost. versus great. in additional us in the productivity with able Should your the all either action enhancements? the to you of I maybe pricing still price pricing year? tariffs. for of cost given Okay,

Ron Robinson

third quarter quarter said, coming several and pricing at effect as much I last going – bit the second as We quarter average over and more fairly up little years reacted little surcharges. quarter. over above the general rates well. in in the in the which there. like But didn’t price second we started average were second a in above certainly on been years mean I some some has I the the the increases Yes. price increases, think quickly probably They’re a our last in above had us the were we’ve tariffs few

think we’ve that didn’t with increases, our surcharges, of margins able along And price of combination but been – lot, been to I So pass up cost go they and we’ve most the so able I to went increases up. a the top we’re tariffs we’re people are passing think our in this environment stay And to that of and passing And already it. believe was trying very along as we’re positive development. us – well. customers on to along to we passing as

into So our we’re building cost. it

that we’re pretty – reacting are taken. increases affected, quickly. well – and think, to actions going of been We surcharges I’m market I the able top not has – staying have but and on saying that not We’ve to and we’re got we be price accepted but, the

Michael Shlisky

this further ask of of than on I’m quarter what’s backlog that better about in Got that the the hoping little of the want And was first, to it. secondly, think as some And the products one kind bit to guess, I out as detail kind did anything snow in backlog. about last out performing the then stands you I stretch little quarter? to color a products of you I me of it tell ask but the wondering particular, of there? a out better more backlog. just kind if in maybe

Ron Robinson

even lead us it think also too try it – too into I – spending. our said, of I it’s as to we’ve quarter, a to our healthy We far times in have year. point we from the – go get to really not I don’t our view capital because mean, get of some it of market to typical, increased too don’t increase into some next almost some we’ve most goes said on I if production is try third Yes, I well fourth effect get far could ahead But a want too we ahead. great. as backlog, We think backlogs quarter, get that negative – does our carries like because little the – mean of

to and strong, is don’t backlog get much healthy, the it’s too think, I – stronger. I So too wanted grow

the beyond I certainly carry it ship third of Like will some in that. most So, of said, over quarter. will it

the As our growth there. Group had far rental in and Super strong where both the well. who think did increasing excavator well. bookings really earlier, have fleet I where sales sales rentals, led Division. was Division as the as said Industrial did our Certainly, the I by in is – and unit our stronger Vacuum trucks we’re Industrial This Products Gradall done

been the start right. second for in are in they as to didn’t good trying and ended out bookings season. Snow quarter winter coming the this second but they get good You were removal people have good ready quarter,

– was strong that street us. said, but the – for guys Even good as pretty was softness, I mowers guys the ag for was So as we Like across sweepers were several it’s we bit the is ag. tractor I good, much if think, there were there. years. good. I little big we said, as it’s like still in fairly was But in because weren’t good. the tractor down a up But, and shape everybody any up, it the much in Like big said, as last broad. weren’t But

solid very So growth. – But, heaviest Division we is where I like the saw but Industrial said, feel and it’s still good. we the

Michael Shlisky

much. I appreciate very hop back I thanks queue. the will it. Okay, in

Ron Robinson

you. Thank

Dan Malone

Thanks, Mike.

Operator

with next Joe Sidoti. Our from Mondello question comes

Joe Mondello

morning Hi, guys. good

Ron Robinson

Good morning, Joe.

Joe Mondello

to XQ the hit if of of in the from quarter, at was revenue wanted quantify XQ sort that terms of segment? to ask first way any I the could that strike you end the pushed at that

Ron Robinson

then $X in And shipments. we probably had $X about delayed in have make was we we second. mean we up give or we thought that most – take I or going we even said, – the said first as Gradall thought results, quarter all said it in $X up may million million – the be million third. in Well, we back. of the the would and made We – second, so

on Mike delayed just catch that with fortunately, and then able the on I few Gradall of As good own. they said some over yes, their had the has up growth were to But, shipments. bookings backlog – good –

And track schedule back and nice still on on so, showing they’re back and growth.

Joe Mondello

that equate quarter – exclude in if of to organically XX% could sort you anyways? growth year-over-year So second million $X would revenue to

Ron Robinson

pretty Yes, healthy. which is still

Joe Mondello

you us and considering some suspect drivers through the that wondering wouldn’t second the I’m saw but sort could is next the you quarters, that growth you of couple XX% walk Yes, longer over are of that period, growth just how over thinking about there, I quarter? a in sustainable

Ron Robinson

customers and overall our I are our – going the say a markets who input suppliers uncertainties, costs, are I not stuff. first like geopolitical kind pretty and so only that’s But I’m said, economy. this in shape. knows Yes, of good but all, of what I’m to there sort even of about do actually, to concerned going Well, our to of not think, lot

our as have good budget need – always oriented our know, they you that spending. which, Industrial money. Division, shape. in be a they’re think pretty in have I more governmental is little than seem And bit to spending, mainly to They seem governmental

think I steady. money, keeps they helped. So demand they’re And being the as that pretty have

product some I by, of in introductions made years. we’re last the helped new by they’ve even think, Gradall I think that being couple

that, have new only last demand. next believe, years we of not think the to the I going think, interesting been got help as I couple some coming helped we up years, drive couple and are but well, products of further we –

and see we’ve down, of general, in side, you some like I I been ago, just but up. trucks I and nongovernmental down got some as nicely. when there. said, mean, that to mining vacuum think market I as we new and governmental vacuum Whereas, the has oil yes, Plus, not in was down downturn was that had over initiatives there growing a and nicely trucks, couple little. particularly rebounded had was – only marketing years it opened as knew new dive, pick said, new up heavily a we’re of oriented – nice sort went But which some construction then there. softened had that branches took stabilized, on

new have the I some some growing of so we’re market that has things seen. And with new initiatives. at think, XX%, marketing certainly but I been the of doing Yes, some so – itself and we’ve mean, new this products, solidify will other some some growth we new

have I growth. think in good bit can little shape we pretty average we’re above that a

Joe Mondello

Just that coming XX% the volume up to is get pricing I because is growth sense is what of so how at, organic trending of a at pricing? much. Industrial, know much Of

Ron Robinson

to range. the it’s and hard we probably varies way X% things – it to – the don’t up, break say Yes, but we in X%

Joe Mondello

XX% Okay, still then. sort about year. last quarter, of I and looking the to so you’re of All ask third wanted right the in second at quarter

huge in above outlier, recall years, a the that? over we drove quarter and segment It’s of like, outliers. could at tough a third against are Industrial a quarter wondering as here up had You I’m several if margin last looking at you result the year that pretty what you comp huge trends was look if in of XX%. the your last third

Ron Robinson

I that good was quarter. it I Yes, yes, think a think –

– as for nothing good wrong. much really pretty usually is right quarter us, much but – went wasn’t it went Third as

parts off percent it year-to-date, parts first the I a bit – of still was probably honest, little yes, as in to were I think a sales. think, little little as And quarter, a average. said stronger. even far that parts below we bit be And bit were our are a

goods whole good for are mix. I mix we to stable. quarter happen little this a did So slightly more that us – even parts with mean, grow, And tends unfavorable when the

had outlier, the earlier, point. was in XX%. if than we bit, Other parts said, see third in because, as it more just of that uptick parts as said, in good it divisions a one in was some they’re the I year, of just said we like a little a I little new I a were was last not know down mean, good wrong. a that, lot probably went think, Dan I in go But, like it just there a where when was quarter, usually, equipment, stable an quarter this even quarter at quarter So our percent, and at ups I – bit downs. And parts.

So like somebody said, at going I which be to going we ought but we’re be be to overall if means – above XX% XX% that XX%. is overall, to

Industrial so one And think our Division historically of has been I leading margin well. producers as

Joe Mondello

at it you then a segment, half the for And second – the last Okay. ag of the again, of looks very growth. second like revenue half saw year, strong

and Just given market that right growth the the of back what a the that’s – tougher wondering, going to alluding on comp. the you maybe year, half given last of dynamic in in sort saw now

is wondering back Just at in considering ag your what of all outlook sort the that half?

Ron Robinson

than Yes, the X% we organic well, ag was as quarter. I in actually quarter, said, less though for growth even right, this well did

and in – think, have liked There incomes said, would I been not as a as softer. strongly have year rebounded a like ag so has this And been we general. little Farm I yet. it’s little

waiting I that. think we’re still follow to

think Alamo tariffs some billion farmers in the sort put of I few the �� coming. weeks gave help effects these to of negative offset $XX good on that last help to that – are government the it’s the

So, that I will think, help.

they growth acreage a nice said been I I comparables much said, there’s just like. little and of we’re has low rebounding pent-up I As have and though would two as incomes under ag think, nicely like a be were up three the levels to the in tractors to quarter, think healthy, finding but, – we the had cultivation did the demand held of very farm not and ago. not or as that’s But there. growing you even as big rebounded Because combines years

ag, on so now. there feel growth not strong of and It’s probably see watching But, going if the that, year, that I much lot prices. of seeing – good is backlogs growing we’re outlook a won’t just than – I we’re ag the probably there but this as We’ll they’re we’d to for the have and healthy. to we now – the as about the money of rest mean, ag give got decent kind see and commodity think what And other like we it. not

Joe Mondello

there Okay. of of you half costs on that that half July. little was as wanted back that a bit clarify maybe release are It I sounds have through but year? Chinese and Does of to or first write to more of your tariffs more to the your and price react price as sort or a that the And in based won’t material year. just then because in new mean little through able were caution be did and headwinds the missed just have pass that, does of I is it more a cost easy that just it headwind mean commentary you like that implemented still a the likes the in little of just you’re more to pushing press sort there in sounded bit some coming

Ron Robinson

first were – think the they’re tariffs. subject until are effecting in the included have items growing over above increases year years. I to didn’t half several and the rates last of the in things cost third The there no, as really that the the Well, start quarter, certainly, the more been and tariffs more

price pass going I feel like to of I be yes, market. seems help like pricing, help last that or Like that may our should even along accept Deere, versus just which been in hurt grown in above commenting not will we I increases to average us it as I make we’re I increases, the that on reasonably in able the will own. John us where be or from said, going it think, market we’re but Europe, I – tariff that Chinese offset doing this the or know general that something surcharges in the margins cost costs. dollar said, little has mean, a Like environment, to mean, doing think, anticipate price currency. even some strengthening were feel But, tariffs. for were the are has we And that year these along they in willing of Chinese, there – form the the to has So so – even quarter descent goods strengthened I maintaining that, on offset I of – the bit be passing average. above those they to And whole pricing. the I dollar cheaper, the think increases the think some they to through

I this action being the think what’s same have – is know most accepting the nobody the what increase, likes market we’re boat. on kind the are just of to it, the in to but all going of and price know people in and read that newspapers market seems taking

So…

Joe Mondello

much for continue can headwind? So you price through shouldn’t generally the to margin part, most you and feel a too of push that see like you squeeze

Ron Robinson

an Yes. and Like margin parts went our versus I still had second above-average went we up. old said, very mix, cost quarter, and actually up. in that’s We had why that unfavorable the pleased even I margins goods increases was

is right able everything. stay problem we along. – time as the quickly respond we’re it get and as when That’s top between of So our the I increase and lag it, think we we on pass long when cost to usually

the in it’s of get the the that’s we’re And lag. going and lag isn’t long as occur. there that, lag between as think, the if it’s much were that we over shown of as usually two the hurt, I – pretty of on have there’s well a I we where, events years top one that not so think to So

that currencies. like like happens changes it’s think currencies pass worry in worry when I we’ve cost were something quickly rapid a and it. I not currencies. in about in I top I say, It’s to about but changes rapid and on So, little a of those on, been harder changes

second I’m quarter, geopolitical are continue when that that okay. we comfortable the with as quickly I And even will can in But we as do – I scenario comfortable mean, I’m happens to it. – still average. we improve in whatever As we think long we margins climate. showed I going react feel to like up in be comfortable costs mean, can when the say, I general above whole

Joe Mondello

for two-part sort just of. question Last question me, Great.

– first compared of the wondering balance of you last working Your wondering how going just flow cash that. see lot sort the have just capital, And on of your of it’s room this year. a on wondering was thoughts looks then free of M&A a you just flow free I about year cash still your secondly, – used lot a sheet, cash your half pipeline in was to lot on to so that.

Ron Robinson

in even increases time really the the the cost sales we we and Yes, free strong still we’re into And more we’re putting but lengthened than lead said, as – bit flow because – so – just the are prices It’s I – times cash mean, about mean, that. are one, for than growth capital. going assets our up, feel I but be buying the like but a yes, growth little number I But, little deliver of more a up, has growth, components did Joe, deliveries able going not lead bit put the growth lead as say, related we commodity turns, have into more our working growth. grown you it’s the our and more little good – input into to to number lengthening. it putting want backlogs a bit and capital, it’s to times only growth bit little related and and more ahead we’re in suppliers sales sales. to is working for We a so we’re two,

is some asset reasonably actually our good we we from just of lot that a at And managing new to we’re that about where feel certainly them a a bit we’re a is – why, little than I we’re spent on I are we developing opportunity. and yes, trying because operations we’re several on bit. I yes, we of a time own more our think, months our away still heady are lot valuations, frustrated some spending a buy and these actually in spending capabilities. and M&A, not plant to improving of some technological news seeing very we’re plant deals R&D have spending And mean, properly fair efficiencies looking stretch willing to so, products, and and which we’re M&A, on our more rather time, effectively. lot looking we’re last good – think, I’m walked valuations The our we’re active. – little fairly

think side. the definitely little strategy. that some our a Usually, on And things actionable. finding we’re they’re still I of it’s are a part think smaller I

where like We’re seems the been say, those affected. looking like deals, it ones, but yes, bigger most at I finding stuff. have valuations But, we’re some are

We’re looking stuff. at

just short-term We’re in willing But economic on somewhat limited looking – give going our – at criteria for the we’re some to not up a to valuations because are acquisitions. lot.

Joe Mondello

at in that that. there, of in the know potential Not just a you sorry your last I surprised I just that, not mind. to the efforts I’m actually, plans, a squeeze what some sure on your you are I’m drawing – sorry, been to burner hear up facilities point or on are I’m in I wondering but in or Actually thoughts your plan it’s are one, had you one that with time facility in. back will couple board Milwaukee there’s have doing if restructuring wanted sort of where The back that? with – do just at any potentially least

Ron Robinson

little plans. involved. Yes, I or – I evaluation that facilities there hope the the slower just than right just like, we’ve still finding has would been capital we’re are and It’s under – developed

we but a footprint that’s there. get want – better something still now to So

with that As we’re operations. looking we R.P.M., we said, somewhat when something probably some at Tenco of consolidating bought

a So, couple of things. we yes, have

starting We’re those. some move on to of

average CapEx we’re equipment. been we over technologically only little more – but will And more a years, but equipment, develop, a to next As investing said, and advanced is in above be it’s the happening slower it bit have spending the not and last little this year several year.

We are in seen – they hit of the balance the the just recently But are expanding a start couple year. of yet. sheet half the facilities haven’t to that in second you hit numbers will really

good some will yes, more coming effect we have But all CapEx be are like on our have is some proceeding. up a not up. said going it we those and a So year, – spending what – our to next very and flows, this is sooner, we year works, that spending doing And coming cash little think, some are effect of are operations that exactly but will on were it I and are are in the later.

Joe Mondello

Well, thanks great. lot. appreciate a Okay, it. I

Ron Robinson

you, Thank Joe

Dan Malone

Joe Thanks,

Operator

Thank have [Operator Mike you. follow-up a Instructions] We question Global. Shlisky now from with Seaport

Mike Shlisky

thanks. Got you. more for guys, two Hey, questions

availability. I truck First, want the to ask about chassis

chassis your half mentioned in there You it you for the perhaps that this problem, kind big ever of XXXX? a anymore, mentioned expect [indiscernible] fine mentioning not only and first totally is just be I’m or had was but year of part curious timeframe this being to release, the really going be of not worth

Ron Robinson

what mean, I truck I grown. have backlogs the mean, Yes, I don’t know – their chassis

they I I I talk don’t it Douglas better. and mean, concerned shipments. and know I actually. some will think I think I’ve shape getting in some say Dynamics better I see – it’s it read missed because companies, we’re like I mentioned

I significant that year. ordered of – Yes, mean, we haven’t the good is We ordering, I ordered to think of a I I more. people in it the slowing shape. But to so ahead. bit what in I or were ordered there haven’t now bubble on And I right don’t – lot times a going we’ve like is down some little more. and that truck they seeing lead fortunately, the double doubled shipments literally And there’s But going times get there’s but, we’ve slow know that still bit any last have to the people back I delay, chassis few suppliers, see don’t coming, slow point little pretty but I think, are and is But if missed a a down. – at down. had mean, backlogs mean, have lead said, chassis are year normal. probably a last for we’re

We’re few a stocking more.

had meeting really our haven’t problems our we any major far and so forecast. meeting And deliveries

assume So year, going we I once mean, within responding. I but are I would it’s know. like a next don’t settle concern the and to say I down, it’s

Dan Malone

We do with have pretty high with. particularly the chassis the strong ones volumes very relationships we manufacturers,

the we on with don’t we more think chassis the have sort a volume have have I that the same customer of little because manufacturers. supply they concern leverage

priorities to and that. And sometimes some with been have deal of those to delayed shuffle we’ve had

Mike Shlisky

people’s taxability local if able – a their taxes of of the some any curious, states, tax concerns government. tax if starting question this – is for of going actually and then there’s or on maybe to the picture being collecting federal and number wanted that about of DOT complications taxes paying that same in the higher budgets more reform higher –expressed to And finally, tax it. Got I big ask, limited state supposed kind I’m return is forward states taxes being they’re have it’s to year. around or future taxes maybe if are the not not raise about

soft XXXX? thoughts maybe impact overall your on like of business kind in deductions the how You’re might

Ron Robinson

mean, has of probably on you it’s lots all, there’s I Yes, – taxes first If that state does, don’t nothing things, there us. in affected mean, but, I mean, things. yes, in small of climate, as of the basis. hear this certainly an things. small I I it that geopolitical a seeing as are are scheme our we’re issue, far

in I’ve mean, manufacturing don’t heard raise I California, taxes in mean, So a the offset any taxes. they have to But, we to California. decline wanted federal talk in I

crystal forecast happen said. said, I but – guess geopolitical I on ask me going at, ball like work geopolitical Like Don’t I doesn’t things my not what guess to said, yes, or try really what’s this climate, So events. that. to on you especially taxes and say, hear in quickly, like to just – I I respond that’s I yes,

Mike Shlisky

and Helpful then…

Dan Malone

But – local governmental state the and part of budgets in DOT and small budgets we’re are the pretty maintenance. really

as Our of that aren’t services equipment optional is budget. things type other perhaps for used in as the

Mike Shlisky

enough. fair leave there. you, Okay, Thank guys. it I’ll

Ron Robinson

Mike. you, Thank

Operator

at Thank are this There additional you. no other questions time.

Ron Robinson

you. you with to then. speaking for call. good today. day. you third on We that, you the forward close And look us we’ll Have quarter our thank thank a meeting. joining Well, with Thank again, Okay. conference all And

Alamo (ALG) 2 Aug 182018 Q2 Earnings call transcript