ALG - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, welcome to the Alamo Group Incorporated Second Quarter 2019 Conference Call.

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

Following the presentation, the conference will be open for questions. [Operator Instructions]. This conference is being recorded today, Thursday, August 1, 2019.

to conference like to now would turn over the Mr. I and Vice the President, Rizzuti, Secretary General Edward Counsel of Alamo Group. Please Mr. go ahead, Rizzuti.

Ed Rizzuti

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

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

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

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

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

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

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

results company’s Forward-looking statements forecasted involve results in actual which the periods known and future differ cause risks and from unknown may to materially uncertainties

undertake herein, to information to cause speaks the actual risk geopolitical competition, obligation SEC other which time the to issues date. of Among demand, issues, time which weather, this update contained does The the company company’s listed could those only related Market from in factors as not reports. materially currency any factors results differ are seasonality, following; and

go like would Ron. introduce ahead. Ron, please I now to

Ron Robinson

for the And of today. our the us Ed. results CFO you a our we call with review for Malone, a all of Then will few then and thank results. begin want I here comments all financial you, provide to on second our quarter Thank joining will more

we remarks questions. formal your our forward look taking to Following

So, Dan. Please go ahead.

Dan Malone

Ron. Thank you,

sales compared prior by Second six of prior XX% sales nearly were over to XXXX quarter million second beat first of the year $XXX XX%, up months. year quarter $XXX million year-to-date the

acquisition impact of the was of sales the growth the Excluding year Dutch quarter Power X% to organic just for over date. X% short and

sales quarter nearly Division Industrial of year XX% million prior XXXX the a second increase represented $XXX second quarter. over

up strong to First except All half first almost organic were continued half. sales groups of prior growth. this $XXX product division’s sales contributed the equipment mowing million year over XX% governmental

were prior Agricultural quarter more Division sales second XXXX than X% $XX quarter. second the million down year from

European Power half equipment. down the the flat sales second in quarter Dutch from new essentially $XXX first negatively U.S. half. the U.S. affect quarter of dollars Division million, prolonged effect XXXX, XX% the XXXX sales to demand of in of second without X% were were $XX for The agricultural acquisition. the million downturn but continues year economy up prior First from

slightly down were $XXX year but acquisition. First without up half the almost over first U.S. in of prior million XX% half dollars sales the

local of half translation and quarter XXXX. an division’s the both effect currency unfavorable currency, in second growth Excluding X% sales about first this was organic

to XX.X% the the prior of prior sales quarter quarter of XXXX XX.X% XX% was quarter. quarter Second net million gross $XX year grew gross sales, for second of net margin over margin our year compares second which

pricing shipment and first better a of XXXX the was actions, as some quarter of and Partially compression margin of second the and margin the negative part of this improvement well offsetting a and we of XXXX, volume leveraging at the of second quarter businesses. one aftermarket cost of half of French experienced year. as high our margin saw thin steel significant we lower full the We began lower mix In benefit this realize of in saw to the easing agricultural backlog the we sales. the division prior-year

Second higher the industrial quarter to as second factors was division year XX% quarter organic sales than income $XX primarily affecting margin due exceeded already about prior as million XXXX and growth, gross discussed. well the strong operating

income Second quarter the XXXX to of XX.X% compared year operating sales was net XX.X% net quarter. prior for sales of

million income than diluted in much seen Net what of three second the was a Again, for to almost better and year-to-year or share. of per income $XX million favorably the compares diluted $X.XX nearly prior quarters. per second $X.XX share, quarter past $XX we’ve net the or XXXX $X quarter which comparison year

XXXX $XX quarter $XXX XX-month the EBITDA nearly prior-year EBITDA comparable million and Trailing the quarter. over up year prior was is exceeds over Second million, X% XX% result. up now

Second quarter million, cash year was flow second activities net provided quarter. operating compares operating $XXX,XXX XXXX above by favorably $XX in which cash prior the of

This is and growth improvement due with to inventories. earnings combined receivables and reductions

have Division we needs, to working applies high on turns pressure a Industrial backlog. working still reduce goods working home in capital While upward the managed to while order improve demand capital

the million highlighted planned. which investing the Dutch increased year to cash quarter levels debt by flows Due almost Second cash second is of prior now quarter. net as spending, XXXX, of year year-to-date capital $XX million $X prior were tracking Power above over acquisition,

would lower of been than acquisition, about cash have million debt prior the year. Excluding $XX net

million healthy is quarter, increased second very backlog the Our year-over-year. quarter without the the level higher including the second acquisition X% a about at $XXX prior about X% at Power acquisition order remains Dutch than backlog, which ending

year-over-year. the the Dutch up this quarter, output While improved decreased due slightly orders mainly were excluding second during million new to backlog was $XX Power as

by almost million, over In exceeding up income $XX almost caused highlighted by margin last second input record second of compression summary, million, XX%, $XXX cost. XX%. results million, full of quarter rising recovery year’s were quarter our quarter second Near up net up sales EBITDA quarter XX%. from record Record second XXXX $XX

and a quarter healthy quarter-end quarter, million year exceeding $XXX,XXX $XX Second operating million. flow $XXX prior from in backlog just cash of up the

to call would turn I back over now like to Ron. the

Ron Robinson

and thank is that and and all us Dan. are current we being to you earnings call once we release for challenges report both for again we we press on second with results quarter nicely variety of had good which again, fiscal the record these pleased with proceeding and year-to-date, sales to continue feel had with particularly noted the as I the that encounter today, Thank in And the you, this given quarter. year the to during

we Industrial our from promising. but remain helped softness, to by even was general of performance balance strong our be to we’ve key pleased our been Sanders expectations to core also results solid outlook inflation are has the in the our for our this and backlog, products and group makes Certainly, economic exceed continue Division buoyant, tariffs by despite and which continues we feel level the our strength and to stability of which XXXX of markets strong, the

community they given adversity. Our other I year. with by performing that top negative farming little America soft overall conditions you’re hampered by a believe conditions each are market in two whole being both I our a reasonably on on and think more But commodity dealing still is of the divisions prices that with. Certainly, the of impact faced weak North agricultural the farm Division weather this have in adverse had

finally believe strengthening better, of held little some too signs our tell to will a encouraged a are and there direction. we least improvements positive we down, from up commodities in looking sales emerging at the some is though bit than early this at While that Ag market actually and market have certain in are we’re it’s trend in itself, continue,

North market with some conditions affected European made weak have a and been America, economies changes have worst exchange rates. as currency than also results in operations in been softer our Our was general European by even unfavorable this the little

currency, were up slightly acquisition, down in without local were we we dollars. in whereas Europe So the in U.S.

reported, low the third-quarter. of as result had problems finished we still a most order should few we French our the the as in of in that we backlog, and as of one internal have in left remainder margin a And, operations be of some backlog with that even of little a our that well in

it us. be So behind will

hearing knows conditions economic rate results the currency as and be a It hamper that years last continue looks rhetoric several uncertainty certainly situation the unknown to unfavorable like of be who headed result the negotiations? But toward could a exchange we’re of repercussions. the the with Brexit latest will fairly soft rest of after certainly, on and what will conclusion the for XXXX the dramatic European our ramifications

about feel there if think circumstances, But short-term concerned the like we that any we’ll uncertainty the under it’s implications good create. about that are we I is our position but

acquisition our been operations also aided this year Dutch Fortunately, have by European Power. the of

acquisitions we is that think area certainly this It’s a They prove lofty efforts And for to of are general year. feel note also fit for bit operations valuations us during benefit a actually a our years will in I come. the and area since Alamo feel of good very a boost in addition nice be to are this to only last with year, our but a one have some not there one hindered they years. few this softness pleasing economic where

M&A us valuation at within we and are for Alamo feel be opportunities are should We pleased looking more remains activity that range Group. feel a for we the actually actionable is buoyant quite

softness. pluses some the of So and minuses

and saw a in we our they due much overall a changes bit of bit in up fair inflationary real lag for a steel declines were there it being usually how when before really year below which economic a less go since areas what actually lag just steel, inflation. steel well than is of they as is to being actually seeing – year when steel pressure, were a are now effect components there’s lot in particularly such effect last we realize starting way down, buy are a the led they or hits we ago Similarly, softening between purchase results. to we are some price of we in This less prices factor by

price in than we should the first in So fuel the in much they year year. even half really the did of the more half of feel benefit our second reductions results the

ones just operational in a of ongoing improvement our consolidation help which like managing have think input Super certainly for we should few I ongoing have Wisconsin is I initiatives, announced big we Products actually element can been of like improvement we’ve that, cumulatively years, of the think this plan we our which have or we’re new efforts. last accelerating feel while And improvement operational another smaller costs continue number some plant operations margin projects, in we our building the and element the ongoing things major to of one

that certainly the the are efficiency Group these real feel am very in to I we and Alamo whether Brexit while results process of a and pleased or progress that whatever. record the improve ongoing key anxious it’s not tariffs – economic challenges we’re more allowed despite variety our know to with conditions to We area. be or with making produce initiatives has what weather going adverse tomorrow, do facing challenges ongoing we’re softness or or

We focus feel changing are for and outlook internal any for external conditions, as feel year operations to we reacting changing good and and we about rest that very for market for year on our conditions to or feel remains the the positive where the any this company Alamo of outlook with Group quickly own our next well. continued and good about

you I any like in this want would your journey. we So support that, may questions you with have. to And thank entertain to for

Operator

first [Operator Company. from Thank Our question come Joe will Instructions] & with Mondillo you. Sidoti

Joe Mondillo

guys. afternoon good Hi,

Ron Robinson

Joe. Hi,

Joe Mondillo

backlog slowed ask the back sort half business? the quite just was a go didn’t really to to your it year It’s and you bit last you anywhere ask to of year. indicator half backlog. see XX% of for back how up ago first wanted the your do year theoretically also of that important an close you growth last in to on as I wanted a I translate the If but certainly of revenue from XX% year,

just weight I you provided? So is that guess a that are metric you that that and looking outlook how important, put that relatively provide – positive we if should quite what much you with at not behind it’s

Ron Robinson

that backlog. not could be too few production lead but our able have because that negative it help to that level to we our sales, usually times, I it’s or far mean, in of backlog like get are quickly means certainly, to a Yes, important I’ve that we’re lengthening said lead I reasonable as don’t future don’t high too I mean, we that ahead, planning a want think implication we mean, times times our a on respond I rapidly. have and to if like

the - in backlog time it Dan as quarter, actually bit last went quarter the the sales bookings so than a which mean, we’re were little what quarter, our down And from up stronger this is as that I it mean, is were stronger this our bookings a actually strong sales, mean - I quite say I was pointed our good. during were actually something. I year up but than the -- bookings out, actually is where

remember, The to through sector and other thing profit things got of don’t spare spare go highest parts, wear like you our parts, backlog.

So of those I spare in. the since – of short-term. I to mean, are from deliveries in I are XX% almost mean mean, days. they one come our when usually two parts orders very

bunch, said, not So We and it’s for said, planning but it’s support to get base, too it a operations. it big. important a you are up to up good I said, level I sales as to bunch but don’t a so as I want say, yes, too a now healthy big. it to don’t go tomorrow, well, said we but I yes, it like it’s going we actually our like stable as like okay get not But think went at provides

Dan Malone

mean and they for because forward on very and backlog is that seasonality next vision the the of industrial programs months side of side. backlogs ag to are thing normal preseason sort so. certainly kind There on healthy the industrial I side, a Yes, the of in our that’s the few

just Just big were it as you groups last probably the see such during year, industrial that didn’t time. much orders booking because

was look I at you if are normalized bit. the a feels a it backlog is out compared at you – to mean last moment, last year order But if The year up a acquisition, of very back still up the new flow the orders strong. bit more and

Joe Mondillo

really trying was of quantifying, a improvement sense provide. just saw segment. necessarily not a color how maybe is to related, you I’m much margin is sort there industrial of related. expansion there And can specifically, at you that price If That Okay. any good the – but productivity any volume get related, segment

Ron Robinson

As year, you was certainly – mention nothing was volume, I we higher number was price variances. that inflation a – variance, you – one of very input said, certainly thing It price were to price it had wasn’t purchase was thing. the one Last things of beneficial. There variances mean, due didn’t which costs. negative

was a turned contribution positive margin. it year it to This and

major another effect. So that was

biggest input I said, as were – were contributors think cost those – I two and volume the two

Dan Malone

full And effect of pricing. the

Ron Robinson

last were – as Yes. result input a Well, were We the raising last higher year, we of yes. costs, year. our prices more

we year. that of more we actually of Some that have felt this felt last year

Dan Malone

of gap So industrials favorable volume and and getting they had industrials favorable negative the major were effect. effects while was getting and ag, steel, they the effects a ag and pricing volume the lower between is that

industrial expand So what you was much… saw

Joe Mondillo

such of I’m really. a Yes, much or we sense seen we’ve with just volatile pricing. a – quarters volume pricing get four how and trying how last five to much just

is think – or how can half – about about how I’m to growth think these we volume just revenue industrial pricing, So days. is XX% in trying like it volume organic the half

Ron Robinson

don’t really break like that. We quite Yes. down it

Dan Malone

was side. mean, think price volume We of more We sort was on it industrial that than didn’t I the get… growth. it

Ron Robinson

would be Volume would second, would costing pricing be be first, third.

Joe Mondillo

Okay.

is bit volume And I relative about of volume assume side, - we thanks. digits of on can – a there? same on single or like what so to volume I type volume you Okay, high mean the down of top then thing. sort got the think the how ag is pricing. mean, How I as line little the price

Ron Robinson

I some mean. it’s the we’ve and Yes, mid-single digits, volumes – pricing, even got down

Dan Malone

would then little XX%. X% single some high on of lower be. It’s, with say the we line offset margin the And a digits price volume to got cost. it’s Yes, with that between we got and I would and the steel help

Joe Mondillo

other some just of terms because ask half that? back categories. year? segment, the in more to a the of have steel especially business we get compared or a price-cost big coming wanted of And to you tailwind at the maybe is of down in I the component of Do I feeling prices agriculture with that to Have or the feel that’s you think benefit products steel been started

Dan Malone

of We’re benefit. a going to get more

more We’re year – if comparing great division year - job particularly of quarter current get second did of quarter doing to prior now, going to delaying cost Ag increases, you’re the year. quarter-to-quarter especially a the we prior to the steel the in half

year. – number year, So last one last

number steel easier and one, high second is lot the a then come number quite So down there half comparison a gets from cost. bit two that

on to year a of the the better steel going year-to-year be comparisons and cost. So second lot half are

Ron Robinson

about Yes, that’s a have right, we XX-day delay. because

units but the a the a on XX when and others steel it on XX as from go delay we prices when more or average the little feel than XX it’s little to day as is effect; thing Some down upside. up that about the same

So a it going half, steel that’s dramatically going we’re down first but more the lot half. feel prices in feel second why dramatically even went the in to like we’re to say

Dan Malone

Yes, went the plus then of up year; last when better. going because is there delaying because and mechanism so to be they it’s –

Joe Mondillo

And potentially theoretically half we’re volume then, going good to especially thinking if out, – accelerates, in of in for have the just year. third next in the ag we comps the get gets or quarter – the imagine I starts probably easy probably the to first also pretty XXXX how volume mean, a with comps that it I here and you’re the improve I thinking, or plays better and mean,

likely see So what thinking? a of sort scenario? as Is you that you’re that do

Ron Robinson

third get most volumes profitable, Yes. the one it’s better mean parts particularly because – say mean, spare the in we I when sales the because highest sector especially – I are much half is the the the level there. Ag mean, usually Well, I quarter that of second

So mean, was last not year is our I much Ag that’s mix. it to highest as last But volume okay. that’s comparing since as mix year the

half the first fell second The they of really off the half. year,

So be from second to the second going comparables says half half, last year’s year. are like easier this the

always the seasonal feel quarter third that seasonality for in we but tail effect. be mean, off quarter is I should of the So it little strongest one – a is is the sector year fourth our – again Ag because the a

Joe Mondillo

… so – part the than parts normal third think Will quarter, the get the do weaker you are don’t you in

Ron Robinson

be They’re in actually we strong last in the think there’ll – with year. line third I somewhat yes And think, quarter.

Joe Mondillo

compared think a normal out as of year. because much sort I the field to year the weren’t farmers early in in

So as usage much year not prior there’s this to equipment year. maybe compared the

So as much, maybe get you don’t I don’t know...

Ron Robinson

in I certainly what is cultivation an certainly seeing mean, will Ag I year. That and that, year say, we’re acreage the being second effect seeing but about supposed – be mean of quarter sort because down the all We of weather. in year this ahead see this we’re like of under XX% of to bookings actually previous I have

so with had little And mean a quarter I than Ag more third we bit actually last year. even the backlog – entering

Dan Malone

third going and Joe, quarter, does Ag their the get we quarter fourth into And program. preseason

they for So then stronger and take they’re orders units.

so a always shift so been. much are bit seasonally the QX, which pretty down QX parts we little those lower, then there; margins that’s are way it’s you it’s And the because colder and [indiscernible] there, enter are quarters in and two higher as –

Ron Robinson

like we’re not of negative feeling We’ve continuing trend. But don’t follow-up. a there felt the – I is year-to-year, kind

what pattern continued in not and that seeing Ag the was some a demand. decline last and year look can the least this we’re seeing see you think I at signs we’re

Joe Mondillo

I have right. in more back few questions queue. I’ll a jump but Okay. All

Operator

you. Thank

Research. Our Singular from next question come Sakai with will Chris

Chris Sakai

everyone. Hi,

– why this what Just well for just industrial well a on industrial on in quarter a they you and and for I’ve – your segment products your do and were quarter them did so the next year? see question the got do best doing question

Ron Robinson

very three of street Those best vacuum it were industrial our sweepers. products three Some trucks and good second like and excavators, and in probably of strongest quarter our were our had in biggest. the

just I So – think they helped a mean, I by was were I they think all product stable new it been introductions. their good – core markets bit and we’ve little strong. I that some mean all and

surprisingly for think was through because season, was and I think mean was snow like above I areas. it’s well but nicely some it But they of snow well our into backlog actually the are sort it say up, we weak still is next there as executed up but Actually, weak last sort in quarters weak second, going I strong benefited third but snow even of in businesses those by season.

did certainly of top they held a steady, Our softness. little performers which see our mower are groups, one very

of were I sometimes there sort tell and sales I due the start softer But on spent getting – of not they maybe winter the it’s I mean why. little heavy too things. were winter on We as and think two well. early into a bookings the municipalities were their so plan more you and we’re everything. They mowing think to later to and and think of some in the to some winter government budgets fields up used

trucks, will benefited we how very I but board our and the to by strong products really sweepers, that continues vacuum but wait the [ph], across units, but well did non-governmental. did said vacuum quite business our good governmental sweeper only Schwarze [great not develop, backhaul, reasonably, and and I see haul] the all we as So think

growing on other some from of seeing trucks, kind in some other have for mean mining, opportunities users held I utility, of everything up the construction vacuum non-governmental we well. and nice excavation vacuum just that end applications continuing and

based pretty was broad it industrial. So improvement in

Chris Sakai

And then to right guess the question I’m one I thought two I the was be into consolidated is there? other divisions, I European that Okay, Division right? great. going

Ron Robinson

in the in the of we fourth the announced – would beginning the last happen of fourth quarter it Yes, we this year. said that we that quarter When quarter. that happen announced would end

reconciliation reporting we a until and have be then, of that will we change. when So we historically, still whole up give do that, as will we

Dan Malone

we and Chris year-end of [indiscernible] two when third do end in year, XX-K quarter So earnings fourth at quarter segments. our release we’ll the the we’ll three the will the segments, be, report

Operator

you. Thank

the come will question next Our from [indiscernible].

Unidentified Analyst

thank congratulation for Hi, taking you quarter. good question my the on and

Looking been last more just a level be of little couple as have know Power with there where Dutch quarters, bit should I and growing sheet at balance well. comfort than we Can rapidly the directionally of sales. a we have first discussion toward the those as the inventory about That’s it to heading head question. your the them relates of outlook as inventories, the business my year? end you

Ron Robinson

that. should go should our year I or that The inventory for too we are believe our – of too levels can right as percent they down with right, they And yes, rest are be because – that there previous you’re of in mean I is tell sales But high. sort you assets to an there is a effect. Power Dutch now. levels had they high the compared inventory of the

Dan Malone

now. And statement turned if we – if XX-Q, we begun kind quarter, started that the you process of at inventories have the look the you and you yes, I in to mean, see of the – reducing we’ve that in exclude receivables. the And can we even cash reduce flow the acquisition

bit during quarter, we negative $XX $XX generated in we cash the in earnings in by of now inventories. only a higher $XXX,XXX flow and quarter were over and quarter not the Cash used so that receivables generated the was operations we at reduction a million. So first you little million positive nearly a if statement, was looked also that were cash

Ron Robinson

we be the And year reducing inventory basis, year-to-year for two end quarters. we the will on the a of expect next by

Unidentified Analyst

very Can total us number actually puts disclosure and the good help second helpful. showing better that’s so sure is quarter? why sales growing part’s in understand nice rate there a in a Okay, revenues. just I’m XX-Q part we’re higher of at In than there. parts the takes a you the improvement the

Ron Robinson

but more Because they the help in last, little than last were that a will higher I too third two there, they usually I they be second quarters. of quarter have should And put parts quarter we effort. Certainly think weaker help that little acquisition for been. acquisition it were think but than the most we our year us two and other a

Unidentified Analyst

Okay.

no parts the from year. better So comparing a mean mix the that drastically. move But us but prior initiatives, from some or little was I standpoint, changes that I real to you’re competitive a right

Ron Robinson

better that’s been sales up whole sales. of some than good whole in, in even in And part sales more were we’ve down like because especially a good a now, held

Unidentified Analyst

Okay, that’s helpful.

things you’ve the of further other some your the to of that of geographic things in Power XX-Q but couple I sales guess, I out is that’s stood noticed Dutch that One deal, related disclosure me. to delineated a then but and the

a sales also meaningfully increase geographic increased Chinese Netherlands you’ve have Your and had pretty nice the in sales.

looks been I moved lot hasn’t sequentially pretty you that’s area Germany well and but like understand big as Dutch an that market. very your a clearly Power where has it and the think it’s sales of up there been a of growth,

just you high opportunity on in we’ve opportunities is you in what’s start us that help that? as to in understand to What very opportunity. us Germany, Can level, Netherlands, longer. walk books had in through can our distribution, a grow either now skews Power just the at China So markets, the those grow Dutch

Ron Robinson

the you of I the because is of of mean and all in Dutch biggest but Well, Central their said mean their of the Europe, markets most German the majority whole but I more course, sort Sure. as Dutch Netherlands home Germany sales they’re in improvement market too. one Power of Europe. Netherlands really are powers their was – is

very we mean quarter is had them. Germany Dutch markets sales all that our for the good the believe Benelux I the – certainly, little countries, I – And certainly Power like mean, it. first in the obviously and And second – quarter

had lot. a Second quarter

so that benefits levels the going we be think one more, ahead we improve we a can yes, Dutch that’s So of will because Power. more bit – those like that of it will and at little think it

sort distribution have [indiscernible] position strengthen of have products, those to them Then to try we that in really they and in Germany? better in our Will some for utilize markets. we will and

continuing big those see know, as we So markets to be us. you for

snow Tenco our years actually a acquisition removal. in itself. mainly of in China our RPM mainly Canadian mean is The of big of We XXXX. that China had we snow from couple I our on old operations only sort some orders – Just and removal was thing some which bought

it orders the Tenco very years. to RPM China Chinese in – the mean, I and they typically had and lumps. some come ones. But But be over orders tend both big so to from nice you’ve tends

some And had very wins this so year. we nice already

like going will of a so, some mean backlog have stuff, not stuff – China. I great other And we sell orders to good sell lot China is we’ll of there. actually so don’t all

that we’ve felt – but we the adds still be believe it that say snow of we and continue a China that decent comes removal for sweepers removal. And relatively snow actually there be of we say majority that that will But is been in like big market it to snow got like chunks. to I removal it’s I has on some more some and and lumpy. of mean

Dan Malone

that’s so other $X is in million. And country no the geographical thing, than there that location that one one greater other the other in is category

that’s So we million than listen Okay? nothing greater on $X will always our list.

Unidentified Analyst

the one’s that I way France Maybe to on business $XX.X a business. ask helpful. Okay, think the just different question million. about When that’s

right of fact truck that now mean... has we lot we is I think Are fact business. Netherlands the if selling trucks in a and that aren’t

Ron Robinson

No, no. would. I wish we

are what there. big there competition I looking Netherlands We our have to vacuum half that there a since are they like at ways under players mean are there. trucks getting local of is better it’s trying some water, distribution actually

like our then from We we’ve business distribution Power not the actually hope, thing. what into with So bit, very said, that’s I Dutch we there try Netherlands of little small trucks French market it’s country, you a in and but is pretty also done that were the for competition a vacuum one the vacuum help but maybe [indiscernible] maybe not decent sort that can some much truck market. well-established

Unidentified Analyst

on vac can you question same for of If kind trucks? the Germany the

Ron Robinson

there trucks potential a and Germany to vacuum Germany. a Again, we different. but is think do do much Yes, Germany in we’d either. Again like with don’t little is and I

market Netherlands playing but not is bit couple there’s think I the field some of and that hoping get little so yes. it’s But more had we’re just is right then that I there can in but the better, yes really I we’ve and I mean think a the potential a competitors. open distribution a we German think

the Southern I mean, improve more sales in in of strong that initiatives involved the of general little in net got Central of I in out sort of there the think Europe. and to a France Northern we’ve some – and fact and export Europe

Operator

Thank you. Instructions]. [Operator

question will CJS Moore from Our Securities. come with next Chris

Chris Moore

just Did impact margin any start Hey, afternoon in Europe. Maybe good the with of backlog guys. this QX? lower

Ron Robinson

be really last thought. lower that quarters, And the will big took good probably order the of margin than in by yes. because plan safeguards first said, we to that had year one that our some we made again. We’ve do been that plan, our Oh, bit we still half like were our was the a of that had four little it that half ensure of the we it a but retrospect like half of for year. – about don’t third hit about last lot in pretty us last like some and really orders on I impacted And most this quarter,

Chris Moore

Got it.

So through QX this from a in flowing margin QX? like backlog sounds to of less than be standpoint, in did it

Ron Robinson

And be finished should in it QX.

Chris Moore

exactly. Right,

it. Got Okay.

to increasing took at I quite it any you lead in about a bit are this products with times backlog You time? experiencing point down, before want bring or

Ron Robinson

had were not the times from we part lead mean on No, because fact, side, suppliers. inventory some And really. some in of more year last I our long issues input

think So, I us of steady. are times our our have I exceptions, lead lead not but and basically but a mean pretty pretty to steady year, holding lead few customers. mean times There’s – times for I our we’re this us

some not we with it’s strong where our got places point. times, very even At some We impacting backlog, lead this much.

times were But they down on inputs, we buying purchasing think So have a side, the have I come our the have I time the year worse. last on those pretty little come times getting at for and same down feel and lead improved it’s or component little a the this good that little or have mean good the side, a and bit gotten not worse. this, lead bit. certainly stayed whereas times lead

Chris Moore

Got it.

thinking a with was you be in about just softening about so? talked your you’re your terms U.S. of or in market core indications general respect and of prepared specific So, economy. kind market, that of Anything that statement impacted the could products a to in industrial

Ron Robinson

trucks a No, has it say kind and gotten availability last like mean trucking mean freight like of get hard was gotten I statement. think it better. to I we’re general of that even that’s was said, year, I some like and I good seeing better. because

little better like some So I have times even as said on lead chassis input other like being I they’re say like components a gotten things that, bit not because think I say, there. truck

suppliers our [indiscernible], little have bit. a they So softened hold

mean, I read paper these – days. just everything it’s and So, you

softening slight in I some always a had be in election even up years slight next mean in and we and general of to things year there economy it’s interesting seems the we have, like just coming is some there little didn’t governmental dip an indications election always year.

you – almost Just almost level. the not so not just I it’s it’s think at the it’s because it’s distraction federal

But even like where, party there goes one comes some orders. bit a I in if of is little level delay say, or state at a the

questions. our this little we in feel I holding few but quite decent anyway, level backlogs are of But mean or remaining responsible is and just what’s we and good backlog, well not activity buoyant. quite for is up still things. that mean a one we’re is feel your good say us I inquiry like quotation So it’s buoyant,

Operator

you. Thank

Company. will question Joe & next come Sidoti Mondillo Our from with

Joe Mondillo

on question, which but lot right Hi, sort you that focus to on, one you all productivity follow-up your guys, CapEx just generally smaller of certainly initiatives ask it your just now. consistently plate projects thing positive wanted improvement is have seems and like a the regarding

you’re aside in those So from really should second next I’m should quarter the the we CapEx year. first start of expansion which year, that from year, big pretty This the getting to the seems second done have two it margin by be by good projects curious, of like sometime the quarter half productivity improvements. volume but benefit in margins

productivity if just contribution greater you think So what be even I’m initiatives that currently. next will seeing the than from improvement you’re year wondering

Ron Robinson

not of sure, a than I a little us, big be a lot little usually lot but I’m it’s like than more of consistent. we’ve rather from it’s a say from of lot they’ll things a from of be things bit say, lot few little a with they’ll as because things think couple things. got a but I lot a

helped So purchase variances price in stuff. this we’re by good. Like I of think year I will being it also said, this kind be

that or And or helping don’t will, to margins is – costs that’s this if to our year. I of some those with what rates exchange going that. like happen going input what’s so know new with something happen

equipments. mean varying I play I little line, lasers next year ought normal and to that other more of a even we into on other think bit I more initiatives, things few least margins, be things on plants the maybe other or I these can buying mean variances improvements few [CNC] some of kind as certainly more like some but online the in spending we’re few at better we these with come more CapEx, said, got, on when just at robust,

little least maybe bit at going should good there it. some factors better, and So, as be as a into other are but think it I

Joe Mondillo

at visibility period. the XX-month the like least sounds very It time Okay. for an

last back right your is to of sort next, the good the when years, go productivity you improvements? If visibility over comes now very several it

Ron Robinson

better as probably that as been. right that’s Yes, or good

Operator

showing no questions queue in at there Thank the you. time. [Operator are further Instructions]. this I’m

Ron Robinson

Thank again we a you forward call day. to for end speaking with much. all we look good today, October. interest you thank on us the very and at of well, our third Have appreciate you joining Okay, quarter

Operator

Thank and teleconference gentlemen, you, disconnect. today’s may ladies this now concludes you

Ed Rizzuti	VP, General Counsel & Secretary
Ron Robinson	President & CEO
Dan Malone	EVP & CFO
Richard Wehrle	VP, Treasurer & Corporate Controller
Joseph Mondillo	Sidoti & Company
Chris Sakai	Singular Research
Chris Moore	CJS Securities

Alamo (ALG) 3 Aug 192019 Q2 Earnings call transcript