prepare a well-written titled “Would You Advise a Friend to Invest in This Company?” based on your research and analysis of this company’s financial information. You should identify at least 5-7 significant points that justify your conclusion. Support your points with a comprehensive explanation incorporating sound reasoning.
Refer financial statement of The Alamo Group for a response (attached)
500 words APA format and citaations
ALAMO GROUP INC.
ANNUAL REPORT
2021ALAMO GROUP INC.
WWW.ALAMO-GROUP.COM
FINANCIAL HIGHLIGHTS
In thousands, except per share data 2021 2020 2019 2018
Net Sales $1,334,223 $1,163,466 $1,119,138 $1,008,822
Gross Margin $334,514 $293,730 $273,491 $258,842
Operating Expenses $217,576 $198,945 $178,579 $155,027
Income From Operations $116,938 $94,785 $94,912 $103,815
Net Income $80,245 $57,804 $63,103 $75,606
Earnings Per Share (Diluted) $6.75 $4.88 $5.35 $6.43
Depreciation & Amortization $45,146 $44,474 $30,260 $23,335
Capital Expenditures $25,263 $17,874 $31,337 $26,587
Dividends Paid $6,627 $6,124 $5,626 $5,124
Working Capital $419,604 $358,245 $418,864 $362,637
Cash Flow From Operations(1) $124,377 $104,261 $100,799 $97,866
Long-Term Debt(2) $254,522 $270,320 $425,141 $85,179
Shareholder Equity $705,663 $635,003 $577,943 $515,360
Average Shares Outstanding(3) 11,896 11,845 11,800 11,761
Book Value Per Share $59.32 $53.61 $48.98 $43.82
(1) Excludes Changes in Working Capital
(2) Excludes Current Portion
(3) On a Diluted Basis
18 19 20 21 18 19 20 21 18 19 20 21
$1,009
$1,119
$1,334
$1,163
$75.6
$63.1
$80.2
$57.8
$515
$578
$706
$635
NET SALES NET INCOME SHAREHOLDER EQUITY
IN MILLIONS IN MILLIONS IN MILLIONS
The past year was a very dynamic one for Alamo Group in many respects. We entered 2021 optimistic that the Coronavirus
pandemic would end soon, but unfortunately this did not prove to be the case as the pandemic continued to impact our
operations both directly and indirectly throughout the year. The Company faced a number of pandemic related headwinds
including significant cost inflation, supply chain shortages, logistics disruptions, higher shipping costs, and skilled labor
shortages to name a few. Paradoxically, our markets remained strong throughout the year and demand for the Company’s
products set records in nearly every category and geographic region. We are pleased to report that against this backdrop,
in 2021 the Company reported the highest net sales, net income, earnings per share, and order backlog in its history.
We are also pleased to report that Alamo Group ended 2021 with a healthy balance sheet. As a result of the combined
effects of the strong market demand and supply chain shortages mentioned above, inventories increased by slightly over
$78 million (49%) during the year. This was driven by a combination of material cost inflation and higher work-in-process
inventories caused by supply chain shortages that delayed shipments in many areas of our business. In spite of this, we
reduced long term debt under our revolving credit facility by nearly $16 million during the year. We remain well positioned
to exploit strategic opportunities that may arise in 2022.
The solid financial performance we reported for 2021 was the direct result of the exceptional hard work, flexibility,
ingenuity and innovation demonstrated by our employees around the world. We are extremely proud of the way our teams
rose to meet the many challenges encountered during the year and delivered results that set records in many respects.
We want to take this opportunity to acknowledge, and thank our employees for this extraordinary display of dedication
to our company.
This past year was also one marked by corporate renewal for Alamo Group. After 22 years of exemplary leadership as the
Company’s President and CEO, Ron Robinson retired but continues to contribute to the Company as a member of the Board
of Directors. In June, Jeff Leonard succeeded Ron as President and Chief Executive Officer after successfully leading the
Company’s Industrial Division for the previous ten years. Because of the care our Board has dedicated to succession planning
over the past several years, Alamo Group was able to choose from several well-prepared internal CEO candidates and a
smooth transition was achieved.
Following the leadership transition, the Company conducted a review of its strategy in the second half of the year.
This process resulted in the realignment of the Company’s two operating divisions, now called Vegetation Management
and Industrial Equipment, aiming to achieve greater market synergies and accelerate organic growth. The Vegetation
Management Division is responsible for the Company’s portfolio of brands and products that treat, maintain or harvest
organic materials including its agricultural products, mowing equipment (governmental, roadside and waterway) as
well as its complete forestry, recycling and tree care offering. The Industrial Equipment Division is responsible for the
Company’s portfolio of brands and products for road and highway maintenance including its excavators, vacuum trucks,
street sweepers, debris collectors and snow removal equipment. As we continued to refine our operating model in 2021,
we discontinued manufacturing operations at facilities at Enschede in The Netherlands and at Barre, Vermont in the United
States and transferred these production activities to other Alamo Group manufacturing locations.
On the M&A front, 2021 was an active year for corporate transactions, although valuations remained challenging due to the
abundance of liquidity in capital markets and the extraordinary level of dry powder held by private equity firms. While we
maintained our traditionally conservative approach to deal valuations, the Company was able to complete the acquisition
of Timberwolf Limited in the United Kingdom, a small but important first step at expanding our presence in the forestry
and tree care segment in Europe.
To accelerate progress with our ESG initiatives, the Company appointed Dan Malone as its first Chief Sustainability
Officer. Previously, Dan served fifteen years as Alamo Group’s Chief Financial Officer. To facilitate improvement of our
environmental performance, “Green Teams” were formed at every Company operating facility to focus on increasing
energy efficiency and reducing waste. Our progress on the environmental front this year has been gratifying. Following
Dan’s appointment as CSO, Richard Wehrle, was named Chief Financial Officer after serving twenty years as Corporate
Controller. These further leadership changes again demonstrate the strength and effectiveness of the Company’s
succession planning processes.
LETTER TO OUR SHAREHOLDERS
EARNINGS PER SHARE EBITDA*
DILUTED IN MILLIONS
18 19 20 21
$6.43
$5.35
$6.75
$4.88
18 19 20 21
$127.2 $125.2
$162.1
$139.3
Late in the year, we expanded the Board of Directors to nine members and Ms. Nina Grooms Lee joined the Company
as its newest independent director. Ms. Grooms Lee brings to the Board substantial experience in technology matters
generally, and very relevant, current experience with autonomous vehicle fleet operations in the municipal environment.
Notably, the Company’s executive team will benefit from the skills and experience of the most diverse Board of Directors
in Alamo Group’s history.
As we enter 2022, we are encouraged by the continued strength of the Company’s markets, good momentum and
exceptional order backlog. We expect the supply chain will remain challenging for at least the first half of the year. Based
on recent discussions with our key suppliers, we are hopeful that we will begin to see supply chain performance improve
in the second half. While material cost inflation, skilled labor shortages and rising labor costs certainly remain of concern,
we are confident that the Company will be able to overcome these challenges as we did in 2021.
Finally, we wish to express our gratitude to our shareholders for your ongoing support and confidence in Alamo Group
during 2021. We remain optimistic about the Company’s short and long term outlook.
Roderick R. Baty Jeffery A. Leonard
Chairman of the Board President and CEO
Certain statements included herein constitute forward-looking statements. Such statements are subject to various risks and uncertainties which may cause
the Company’s actual results in future periods to differ materially from those anticipated in any forward-looking statements. Among those factors which could
cause actual results to differ materially are the following: overall market demand, impacts from the COVID-19 pandemic including significant supply chain
disruptions, reductions in customer demand, sales and profitability declines, operational disruptions, full or partial facility closures, and other similar impacts,
inflation, competition, geopolitical risks, weather, seasonality, currency-related issues, and other risk factors listed from time to time in the reports of the
Company filed with the Securities and Exchange Commission, including the Company’s Form 10-K for 2021 attached hereto.
* EBITDA is a non-GAAP financial measure, defined
for this purpose as income from operations plus
depreciation and amortization.
ALAMO GROUP CORPORATE PROFILE
Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for infrastructure
maintenance, agriculture and other applications. Our products include truck—and tractor—mounted mowing and other
vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial
equipment, agricultural implements, forestry equipment and related after-market parts and services. The Company,
founded in 1969, has approximately 4,200 employees and operates 29 plants in North America, Europe, Australia and Brazil
as of December 31, 2021. The corporate offices of Alamo Group Inc. are located in Seguin, Texas.
Vegetation Management Division
Our Vegetation Management Division produces a wide range of equipment for the maintenance, management and recycling
of organic materials. The Division’s products include a wide array of mowing equipment from rotary cutters to boom-mounted
flail mowers as well forestry and tree-care equipment such as tree chippers, stump grinders, mulchers, and brush cutters.
Industrial Equipment Division
Our Industrial Equipment Division produces a wide range of equipment for infrastructure maintenance on and around highways,
airports, industrial properties, parks and recreational facilities, commercial landscapes and other specialty use areas. The
Division’s products include excavators, vacuum trucks, street sweepers, debris collectors and snow removal equipment.
SALES BY DIVISION
IN MILLIONS
Vegetation
Management
Industrial
Equipment
18 19 20 21
$547
$462
$1,009
$617
$502
$1,119
$521
$813
$1,334
$509
$654
$1,163
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 (I.R.S. Employer
incorporation or organization) 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
Common Stock, par value
$.10 per share
ALG on which registered
New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No
☒
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 requirement 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 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 registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and an
“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 has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting stock (which consists solely of shares of common stock) held by non-affiliates of the registrant as
of June 30, 2021 (based upon the last reported sale price of $152.68 per share) was approximately $1,511,728,346 on such date.
The number of shares of the registrant’s common stock, par value $.10 per share, outstanding as of February 18, 2022 was 11,934,602
shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement relating to the 2022 Annual Meeting of Stockholders have been incorporated by reference
herein in response to Part III.
ALAMO GROUP INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-K
TABLE OF CONTENTS
PART I Page
Item 1. Business 3
Item 1A. Risk Factors 17
Item 1B. Unresolved Staff Comments 27
Item 2. Properties 28
Item 3. Legal Proceedings 29
Item 4. Mine Safety Disclosures 29
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
29
Item 6. Reserved 31
Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
31
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 37
Item 8. Financial Statements and Supplementary Data 38
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
38
Item 9A. Controls and Procedures 38
Item 9B. Other Information 39
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 39
PART III
Item 10. Directors, Executive Officers and Corporate Governance 39
Item 11. Executive Compensation 40
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
40
Item 13. Certain Relationships, Related Transactions, and Director
Independence
41
Item 14. Principal Accountant Fees and Services 41
PART IV
Item 15. Exhibits and Financial Statement Schedules 41
Index to Consolidated Financial Statements 41
Item 16. Summary 41
2
PART I
Item 1. Business
Unless the context otherwise requires, the terms “the Company,” “we,” “our” and “us” refer to Alamo Group Inc.
and its subsidiaries on a consolidated basis.
General
The Company is a leader in the design, manufacture and servicing of high quality vegetation management and
infrastructure maintenance equipment for governmental, industrial and agricultural use. The Company’s products
include tractor mounted and self-propelled mowers, zero-turn mowers, agricultural implements, tree and branch
chippers, forestry/wood recycling equipment, street and parking lot sweepers, leaf and debris collection equipment,
pothole patchers, vacuum trucks, hydro-excavation equipment, telescopic boom excavators, and snow removal
equipment. The Company emphasizes high quality, cost-effective products for its customers and strives to develop
and market innovative products while constantly monitoring and seeking to contain its manufacturing and overhead
costs. The Company has a long-standing strategy of supplementing its internal growth through acquisitions of
businesses or product lines that currently complement, command, or have the potential to achieve a meaningful
share of their niche markets.
The Company has approximately 4,200 employees and operates a total of 29 plants in North America, South
America, Europe, and Australia. The Company sells its products primarily through a network of independent dealers
and distributors to governmental end-users, related independent contractors, as well as to the agricultural and
commercial turf markets. The primary markets for our products are North America, South America, Europe and
Australia.
The predecessor corporation to Alamo Group Inc. was incorporated in the State of Texas in 1969, as a
successor to a business that began selling mowing equipment in 1955, and Alamo Group Inc. was reincorporated in
the State of Delaware in 1987.
History
Since its founding in 1969, the Company has focused on satisfying customer needs through geographic market
expansion, product development and refinement, and selected acquisitions. The Company’s first products were
based on rotary cutting technology. Through acquisitions, the Company added flail cutting technology in 1983 and
sickle-bar cutting technology in 1984. The Company added to its presence in the industrial and governmental
vegetation markets with the acquisition of Tiger Corporation (“Tiger”) in late 1994.
The Company entered the agricultural mowing markets in 1986 with the acquisition of Rhino Products Inc.
(“Rhino”), a leading manufacturer in this field. With this acquisition, the Company embarked on a strategy to
increase the Rhino dealer distribution network during a period of industry contraction. The addition of M&W Gear
Company (“M&W”) in early 1995 allowed the Company to enter into the manufacturing and distribution of tillage
equipment, which complements the Rhino distribution network. M&W is part of the vegetation management
marketing group.
In 1991, the Company began its international expansion with the acquisition of McConnel Ltd. (“McConnel”), a
United Kingdom (“U.K.”) manufacturer of vegetation maintenance equipment, principally hydraulic boom-mounted
hedge and grass cutters and related parts. Bomford-Turner Ltd. (“Bomford”), also a U.K. company, was acquired in
1993. Bomford is a manufacturer of heavy-duty, tractor-mounted grass and hedge mowing equipment. McConnel
and Bomford sell their products to dealers and distributors through their respective sales forces.
In 1994, the Company acquired Signalisation Moderne Autoroutiere S.A. (“SMA”) located in Orleans, France.
SMA manufactures and sells principally a line of heavy-duty, tractor-mounted grass and hedge mowing-equipment
and associated replacement parts primarily to departments of the French government. This acquisition, along with
the acquisitions of Forges Gorce (“Forges Gorce”), a flail blade manufacturer in France, in 1996 and Rousseau
Holdings S.A. (“Rousseau”), a leading French manufacturer of hedge and verge mowers, in 2004, when combined
with McConnel and Bomford, has made the Company one of the largest manufacturers in the European market for
the kind of vegetation management equipment sold by the Company.
3
In 1995, the Company expanded its business in the agricultural market with the acquisition of Herschel
Corporation (“Herschel”), a manufacturer and distributor of aftermarket farm equipment replacement and wear
parts.
In 2000, the Company acquired Schwarze Industries, Inc. (“Schwarze”). Schwarze is a manufacturer of a broad
range of street sweeping equipment which is sold to governmental agencies and contractors. The Company
believes the Schwarze sweeper products fit the Company’s strategy of identifying product offerings with brand
recognition in the industrial markets the Company serves. In 2004, the Company purchased the pothole patcher
product line from Wildcat Manufacturing, Inc. The product line was merged into the Schwarze operation and is
complementary to its current product offerings.
In 2000, the Company purchased the product line and associated assets of Twose of Tiverton Ltd. (“Twose”) a
small regional manufacturer of power arm flail mowers and parts, as well as harrows and rollers, in the U.K. Twose
consolidated its operations into the existing facilities at McConnel and Bomford and its brand name has been
merged into the McConnel product line.
In 2000, the Company acquired Schulte Industries Ltd. and its related entities (“Schulte”). Schulte is a Canadian
manufacturer of mechanical rotary mowers, snow blowers, and rock removal equipment. Schulte strengthened the
Company’s Canadian presence in both marketing and manufacturing. It also expanded the Company’s range of
large, heavy-duty rotary mowers.
In 2002, the Company purchased inventory, fixed assets and certain other assets of Valu-Bilt Tractor Parts
(“Valu-Bilt”), a subsidiary of Quality Stores, Inc., located in Des Moines, Iowa. Valu-Bilt is a distributor of new, used
and rebuilt tractor parts and other agricultural spare and wear parts sold directly to customers through its catalog
and the internet and on a wholesale basis to dealers. Subsequent to the purchase, the operations of Valu-Bilt in Des
Moines, Iowa, were consolidated into the Company’s Herschel facility in Indianola, Iowa.
In 2005, the Company, through its European subsidiary Alamo Group (EUR) Ltd., acquired 100% of the issued
and outstanding stock of Spearhead Machinery Limited (“Spearhead”) and subsequently merged its manufacturing
operations into Bomford’s facility. Spearhead manufactures a range of tractor-mounted vegetation maintenance
equipment, including reach mowers, flail mowers and rotary cutters. This acquisition extended our product lines and
market coverage in Europe.
In 2006, the Company purchased substantially all of the assets of the Gradall excavator business (“Gradall”) of
JLG Industries, Inc., including their manufacturing plant in New Philadelphia, Ohio. Gradall is a leading
manufacturer of both wheeled and crawler telescopic excavators in North America. This acquisition enhanced our
Industrial Equipment Division product offering sold to governmental buyers and related contractors for maintenance
along right-of-ways.
In 2006, the Company purchased the vacuum truck and sweeper lines of Clean Earth Environmental Group,
LLC and Clean Earth Kentucky, LLC (collectively referred to as “VacAll”). This included the product lines, inventory
and certain other assets that relate to this business. The production of the vacuum truck and sweeper lines were
moved to the Gradall facility in New Philadelphia, Ohio.
In 2006, the Company acquired 100% of the ownership interests in Nite-Hawk Sweepers LLC (“Nite-Hawk”), a
manufacturer of truck mounted sweeping equipment primarily for the contract sweeping market, which expanded
our presence in that market and complements our Schwarze sweeper line.
In 2007, the Company purchased Henke Manufacturing Corporation (“Henke”), a manufacturer of specialty
snow removal attachments. Henke’s products are mounted on both heavy industrial equipment and medium to
heavy-duty trucks. The primary end-users are governmental agencies, related contractors and other industrial
users.
In 2008, the Company acquired Rivard Developpement S.A.S. (“Rivard”), a leading French manufacturer of
vacuum trucks, high pressure cleaning systems and trenchers. The acquisition broadened the Company’s product
offering to our customers in Europe and other markets we serve.
4
In 2009, the Company acquired substantially all the assets of Bush Hog, LLC (“Bush Hog”), a leading
manufacturer of rotary cutters, finishing mowers, zero turn radius mowers, front-end loaders, backhoes, landscape
equipment and a variety of other implements. This acquisition, combined with the Company’s existing range of
rotary mowers, created one of the largest manufacturers of rotary mowers in the world.
In 2011, the Company acquired substantially all of the assets and assumed certain specified liabilities of Tenco
Group, Inc. (“Tenco”) and its subsidiaries. Tenco is a Canadian-based manufacturer of snow removal equipment
including snow blades, blowers, dump bodies, spreaders and associated parts and service. Tenco has operations in
Quebec as well as New York and Vermont. The equipment is sold primarily through dealers to governmental end-
users as well as snow removal contractors.
In 2013, the Company acquired substantially all of the assets and assumed certain specified liabilities of
Superior Equipment Australia PTY LTD (“Superior”). Superior is a small Australian-based manufacturer of
agricultural mowing equipment and other attachments, parts, and services. The equipment is sold through dealers
primarily to agricultural end-users with some sold to governmental entities in Australia. The Superior operations
have been consolidated with the Company’s Fieldquip location.
In 2014, the Company acquired Kellands Agricultural Ltd. and its subsidiary Multidrive Tractors Ltd. (“Kellands”).
Kellands is a U.K.-based manufacturer of self-propelled sprayers and a range of multi-purpose load-carrying tractor
vehicles. This acquisition enhanced our manufacture and distribution of our agricultural machinery in Europe and
allowed the Company to enter into the self-propelled sprayer market. The Kellands operations were consolidated
into the Company’s Salford Priors facility and its products are sold under the McConnel brand name.
In 2014, the Company acquired Fieldquip Australia PTY LTD (“Fieldquip”), a manufacturer of rotary cutters as
well as a distributor of various lifestyle products. This acquisition allowed the Company to broaden its presence in
both the manufacturing and distribution of vegetation management machinery in Australia.
In 2014, the Company acquired all of the operating units of Specialized Industries LP. The purchase included
the businesses of Super Products LLC (“Super Products”), Wausau-Everest LP (“Wausau” & “Everest”) and Howard
P. Fairfield LLC (“H.P. Fairfield”) as well as several related entities (“Specialized”), including all brand names and
related product names and trademarks. The primary reason for the Specialized acquisition was to broaden the
Company’s existing equipment lines. This acquisition increased our product offering and enhanced our market
position both in vacuum trucks and snow removal equipment primarily in North America.
In 2015, the Company acquired Herder Implementos e Maquinas Agricolas Ltda. (“Herder”). Herder is a
manufacturer of flail mowers which are sold direct and through dealers to a wide variety of agricultural markets as
well as the roadside maintenance market. This acquisition allowed the Company to establish a presence in Brazil,
one of the largest agricultural markets in the world. The Herder manufacturing operations have been consolidated
into our Santa Izabel facility.
In 2017, the Company acquired 100% of the outstanding shares of Santa Izabel Agro Industria Ltda. (“Santa
Izabel”). Santa Izabel designs, manufactures and markets a variety of agricultural implements and sugar cane
trailers sold throughout Brazil. This acquisition, along with our existing Herder operation in Brazil, augmented our
product portfolio and improved our manufacturing capabilities in one of the world’s largest agricultural markets.
In 2017, the Company acquired substantially all of the assets and assumed certain specified liabilities of Old
Dominion Brush Company, Inc. (“ODB”). ODB manufactures leaf collection equipment as well as replacement
brooms for street sweepers, both of which are sold to municipalities, contractors and commercial landscape markets
in North America. ODB is based in Richmond, Virginia. This acquisition provided new and complementary products
to our existing range of infrastructure maintenance equipment and parts.
In 2017, the Company acquired R.P.M. Tech Inc. (“RPM”), a manufacturer of heavy duty snow removal
equipment and associated parts. RPM primarily sells to governmental agencies, related contractors, airports and
other industrial users. This acquisition complemented our existing range of snow removal products with RPM’s
range of heavy duty snow removal equipment, including their line of mechanical snow blowers. In 2020, RPM’s
operations were consolidated into the Company’s nearby Tenco facility and the former RPM facility in
Drummondville was sold.
5
In 2019, the Company acquired 100% of the outstanding capital shares of Dutch Power B.V. (“Dutch Power”) in
the Netherlands. Dutch Power designs and manufactures a variety of landscape and vegetation management
machines and attachments. This acquisition expanded our existing platform and increased our capabilities in the
European market. Dutch Power changed its legal name to Alamo Group The Netherlands in 2021.
In 2019, the Company acquired substantially all of the assets of the Dixie Chopper (“Dixie Chopper”) business.
Dixie Chopper manufactures a wide range of commercial and high end residential Zero Turn (“ZT”) mowers. This
acquisition provided a new channel and increased the Company’s exposure in the outdoor power equipment
market. Dixie Chopper was relocated into the Company’s RhinoAg facility in Gibson City, Illinois.
In 2019, the Company acquired 100% of the outstanding capital shares of Morbark, LLC (“Morbark”) which
included its subsidiaries Rayco Manufacturing LLC (“Rayco”) and Denis Cimaf Inc. (“Denis Cimaf”). Morbark is a
leading manufacturer of equipment and aftermarket parts for forestry, tree care, biomass, land management and
recycling markets. This acquisition expanded the Company’s product line and complemented its range of
vegetation maintenance equipment in an adjacent market. Morbark is based in Winn, Michigan with subsidiary
locations in Wooster, Ohio and Roxton Falls, Quebec. At the end of 2020, the Denis Cimaf manufacturing
operations based in Roxton Falls were consolidated into the Rayco facility in Wooster, Ohio.
In 2021, the Company acquired 100% of the outstanding capital shares of Timberwolf Limited (“Timberwolf”) in
the U.K. Timberwolf is a leading manufacturer of a broad range of commercial wood chippers primarily serving
markets in the U.K. and the European Union. This acquisition complements the Company’s existing range of tree
care products and strengthens the Company’s presence in the U.K. and European forestry and tree care markets.
Impact of COVID-19
In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19” or “the pandemic”)
outbreak a global pandemic. COVID-19 has had a material negative impact on public health and the global
economy. While direct impacts from the transmission of the disease have caused significant disruptions to our
business, these impacts appear to be moderating at the present time. However, the indirect effects of the
pandemic, including, among other things, supply chain disruptions, input cost inflation, labor shortages and logistics
challenges, all of which materially impacted our business and financial results in 2021, continue to adversely impact
our business and we expect these will continue to impact us at least through the first half of 2022. The longer term
impacts of COVID-19 on our business remain uncertain and will depend on certain future developments, including
the duration of the pandemic; any adverse impact due to variants of the virus; its impact on market demand for our
products; its impact on our employees, customers, and suppliers; the range of government mandated restrictions
and other measures; and the success of the deployment of approved COVID-19 vaccines and therapeutic drugs
and their effectiveness and rate of adoption. Additional information regarding the impact of COVID-19 on our
business can be found under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” of this Annual Report on Form 10-K, and risks related to COVID-19 can be found under Part
I, Item 1A, “Risk Factors,” of this Annual Report on Form 10-K.
Sales and Marketing Strategy
The Company believes that within the U.S. it is a leading supplier to governmental markets, a leading supplier in
the U.S. agricultural market, and one of the largest suppliers in the European market for its key niche product
offerings. The Company’s products are sold through the Company’s various marketing organizations and extensive
worldwide dealer and distributor networks under the Gradall®, VacAll®, Super Products®, Rivard®, Alamo
Industrial®, Terrain King®, Tiger®, Herder®, Conver®, Roberine®, Votex®, Schwarze®, NiteHawk®, ODB™, Henke®,
Tenco®, Wausau®, Everest®, H.P. Fairfield™, R.P.M. Tech™, Morbark®, Rayco®,Denis Cimaf®, Boxer®, Bush Hog®,
Rhino®, RhinoAg®, M&W®, Dixie Chopper®, Herschel®, Schulte®, Fieldquip®, Santa Izabel™, McConnel®, Bomford®,
Spearhead™, Twose™, SMA®, Forges Gorce™, Rousseau® , Timberwolf® , and Wolftrack® trademarks (some with
related designs) as well as other trademarks and trade names.
6
Products and Distribution Channels
At the beginning of the fourth quarter of 2021, the Company began reporting operating results on the basis of
two new segments, namely, the Vegetation Management Division and the Industrial Equipment Division. Prior to
the fourth quarter of 2021, the Company had been reporting its operating results on the basis of two segments
which were the Industrial Division and Agricultural Division. The Vegetation Management Division includes all of the
operations of the former Agricultural Division plus the mowing and forestry/tree care operations that were previously
part of the former Industrial Division, including the Company’s recently acquired Morbark and Dutch Power business
units. The Industrial Equipment Division includes the Company’s vocational truck business and other industrial
operations such as excavators, vacuum trucks, street sweepers, and snow removal equipment. We believe the
realignment of our two divisions provides greater potential to capture synergies in cross-branding, distribution,
product development, supply chain management and logistics. The two divisions are also more balanced in scale
and scope giving the Company two strong platforms for ongoing development through a mix of organic growth and
acquisitions.
Vegetation Management Division
Bush Hog and Rhino equipment is generally sold to farmers, ranchers and other end-users to clear brush, mow
grass, maintain pastures and unused farmland, shred crops, till fields, and for haymaking and other applications.
Bush Hog and Rhino equipment consists principally of a comprehensive line of tractor-powered equipment,
including rotary mowers, finishing mowers, flail mowers, disc mowers, front-end loaders, backhoes, rotary tillers,
posthole diggers, scraper blades and replacement parts. The equipment also includes a range of self-propelled
zero turn radius mowers.
Dixie Chopper produces a wide range of commercial and high end residential zero turn (“ZT”) mowers. It sells
its products through its independent dealers in the outdoor power equipment channel throughout the U.S.
Schulte equipment includes heavy-duty mechanical rotary mowers, snow blowers, rock removal equipment and
related replacement parts. Schulte serves both the agricultural and governmental markets primarily in Canada and
the U.S. It also sells some of the Company’s other product lines in its markets and some of its products through
independent distributors throughout the world.
McConnel equipment principally includes a broad line of hydraulic, boom-mounted hedge and grass cutters,
remote control mowers as well as other tractor attachments and implements such as cultivators, subsoilers and
other implements and related replacement parts. McConnel equipment is sold primarily in the U.K., Ireland and
France and in other parts of Europe and, to a lesser extent, throughout the world, through independent dealers and
distributors. McConnel also sells a range of self-propelled sprayers and a variety of multi-drive load-carrying
vehicles. These products are sold through its existing dealer network as well as various marketing groups within the
European region of the Vegetation Management Division.
Bomford equipment includes hydraulic boom-mounted hedge and hedgerow cutters, industrial grass mowers,
agricultural seedbed preparation cultivators and related replacement parts. Bomford equipment is sold to
governmental agencies, contractors and agricultural end-users in the U.K., Ireland and France and, to a lesser
extent, other countries in Europe, North America, Australia and Asia. Bomford’s sales network is similar to that of
McConnel in the U.K.
Spearhead manufactures a range of tractor-mounted vegetation maintenance equipment, including reach
mowers, flail mowers and rotary cutters. These products are manufactured in the Company’s Salford Priors facility.
Fieldquip broadens the Company’s presence in Australia. The company sells a variety of vegetation
maintenance equipment, specifically rotary mowers and tractor attachments. Fieldquip sells to customers ranging
from large agricultural and commercial operators to small farm hobbyist and residential users, as well as agricultural
dealers who serve owners and operators in the turf, golf, park and airport industries and growers with orchards,
vineyards and plantations in Australia and the South Pacific.
Rousseau sells hydraulic and mechanical boom mowers, primarily in France, through its own sales force and
dealer distribution network mainly to agricultural and governmental markets. These products have also been
introduced into other markets outside of France. These products are manufactured at our facility near Lyon, France.
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SMA equipment includes hydraulic boom-mounted hedge and hedgerow cutters and related replacement parts.
SMA’s principal customers are French local authorities. SMA’s product offerings include certain quick-attach boom
mowers manufactured by the Company in the U.K. to expand its presence in agricultural dealerships. The Company
consolidated its SMA operations located in Orleans, France, and production was relocated to its manufacturing
facility near Lyon, France.
Forges Gorce manufactures cutting blades which are sold to some of the Company’s subsidiaries as well as to
other third party customers and distributors.
Morbark manufactures a broad range of tree chippers, stump grinders, mulchers, brush cutters, flails and
debarkers sold under the Morbark, Rayco, Denis Cimaf and Boxer brand names. Its products are sold to industrial
and commercial contractors mainly through a network of independent dealers and distributors and, to a lesser
extent, direct sales to end-users.
Timberwolf produces a variety of commercial tree care and forestry equipment and attachments under several
brand names including Timberwolf and Wolftrack. Timberwolf sells its products primarily to commercial customers
through a comprehensive network of dealers.
Alamo Industrial equipment is principally sold through independent dealers to governmental end-users, related
independent contractors and, to a lesser extent, utility and other dealers serving infrastructure maintenance
operators and other applications in the U.S. and other countries. Governmental agencies and contractors that
perform services for such agencies purchase primarily hydraulically-powered, tractor – and off-road chassis
mounted mowers, including boom-mounted mowers, other types of cutters and replacement parts for heavy-duty,
intensive use applications, including maintenance around highway, airport, recreational and other public areas. A
portion of Alamo Industrial’s sales includes tractors, which are not manufactured by Alamo Industrial.
Tiger equipment includes heavy duty, tractor- and truck-mounted mowing and vegetation maintenance
equipment and replacement parts. Tiger sells to state, county and local governmental entities and related
contractors, primarily through a network of independent dealers. Tiger’s dealer distribution network is independent
of Alamo Industrial’s dealer distribution network. A portion of Tiger’s sales includes tractors, which are not
manufactured by Tiger.
Alamo Group The Netherlands produces a variety of landscape and vegetation maintenance equipment and
attachments under several brand names including Herder, Conver, Roberine, and Votex. Alamo Group The
Netherlands primarily sells to contractors who perform infrastructure maintenance for governmental agencies and
private landowners.
Herder and Santa Izabel give the Company a presence in the Brazilian agricultural market. Herder
manufactures and distributes flail and rotary mowers and various other agricultural equipment, direct and through
dealers. Its products are used in a wide variety of agricultural and governmental markets. Santa Izabel designs,
manufactures and markets a variety of agricultural implements, including sugar cane trailers sold throughout Brazil.
Herschel aftermarket replacement parts are sold for many types of farm equipment and tractors and certain
types of mowing and construction equipment. Herschel products include a wide range of cutting parts, plain and
hard-faced replacement tillage tools, disc blades and fertilizer application components. Herschel replacement tools
and parts are sold throughout the United States, Canada and Mexico to five major customer groups: farm
equipment dealers; fleet stores; wholesale distributors; OEMs; and construction equipment dealers. Valu-Bilt
complements the Herschel product lines while also expanding the Company’s offering of aftermarket agricultural
parts and added catalog and internet sales direct to end-users.
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Industrial Equipment Division
Gradall produces a range of excavators based on high-pressure hydraulic telescoping booms which are
primarily sold through dealers primarily to governmental agencies and related contractors, and to a lesser extent the
mining industry, steel mills and other specialty applications in the U.S. and other countries. Many of these products
are designed for excavation, grading, shaping and similar tasks involved in land clearing, road building or
maintenance. These products are available mounted on various types of undercarriages: wheels for full-speed
highway travel, wheels for on/off road use, and crawlers. A portion of Gradall’s sales includes truck chassis which
are not manufactured by Gradall.
VacAll produces catch basin cleaners and roadway debris vacuum systems. These units are powerful and
versatile with uses including, but not limited to, removal of wet and dry debris, spill elimination, and cleaning of
sludge beds. VacAll also offers a line of sewer cleaners. Its products are primarily sold through dealers to industrial
and commercial contractors as well as governmental agencies. A portion of VacAll’s sales includes truck chassis
which are not manufactured by the Company.
Super Products produces truck-mounted vacuum machines, combination sewer cleaners and hydro excavators.
Its products are sold to municipalities, utilities and contractors through a nationwide distributor network. Super
Products also operates a network of rental stores that provides short and long-term rental contracts for its products.
Rental customers are primarily contractors serving the petrochemical, petroleum production and refining industries.
A portion of the sales of Super Products includes truck chassis which are not manufactured by the Company.
Rivard manufactures vacuum trucks, high pressure cleaning systems and trenchers. Rivard’s equipment is sold
primarily in France and certain other markets, mainly in Europe, the Middle East and North Africa, and to
governmental entities and related contractors. This business also complements our product offerings in North
America. The majority of Rivard’s customers provide their own truck chassis.
Tenco and RPM both design and manufacture a heavy-duty line of snow removal equipment, including truck-
mounted snow plows, snow blowers, dump bodies and spreaders. Their products are primarily sold through
independent dealers. End-users are governmental agencies, contractors, airports and other industrial users.
Wausau designs and manufactures a comprehensive range of snow removal and ice control products.
Products include snowplows, snow blowers, snow throwers, brooms, deicers, brine sprayers and other related
accessories and parts. Wausau sells its products through its established dealer network to both governmental and
non-governmental end-users and sells directly to airports and fixed-base operators.
Everest designs and manufactures a range of snow removal and ice control products including snowplows, wing
systems, spreader bodies, and other related accessories and parts. Everest also manufactures custom-engineered
underground construction forms for tunnels.
Henke designs and manufactures snow plows and heavy duty snow removal equipment, hitches and
attachments for trucks, loaders and graders sold primarily through independent truck and industrial equipment
dealers. Henke’s primary end-users are governmental agencies, related contractors and other industrial users.
H.P. Fairfield is a full-service distributor of public works and runway maintenance products, parts and service,
whose sales and service outlets are located in the northeastern part of the U.S. H.P. Fairfield’s offerings include
custom municipal snow and ice removal equipment, a range of salt spreaders and truck bodies, street sweepers, a
line of industrial rotary, flail and boom mowers, solid waste and recycling equipment, water and sewer maintenance
equipment, municipal tractors and attachments, and asphalt maintenance patchers, some of which are sourced
from other Alamo Group companies. H.P. Fairfield also provides truck up-fitting services as part of its business.
Schwarze equipment includes truck-mounted air vacuum, mechanical broom, and regenerative air sweepers,
pothole patchers and replacement parts. Schwarze sells its products primarily to governmental agencies and
independent contractors, either directly or through its independent dealer network. A portion of Schwarze’s sales
includes truck chassis which are not manufactured by Schwarze.
ODB manufactures and sells leaf collection equipment and replacement brooms for street sweepers, both of
which are sold to municipalities, contractors and commercial landscape markets in North America.
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Nite-Hawk manufactures parking lot sweepers with unique and innovative hydraulic designs. By eliminating the
auxiliary engine, Nite-Hawk sweepers have proven to be fuel-efficient, environmentally conscious, and cost-effective
to operate. Nite-Hawk focuses mainly on and sells direct to parking lot contractors. A portion of Nite-Hawk’s sales
includes truck chassis which are not manufactured by Nite-Hawk.
Replacement Parts
The Company derives a significant portion of its revenues from sales of replacement parts for each of its
wholegoods lines. Replacement parts represented approximately 20%, 21% and 19% of the Company’s total sales
for the years ended December 31, 2021, 2020 and 2019, respectively. Replacement parts generally are more
profitable and less cyclical than wholegoods.
Product Development
The Company’s ability to provide innovative responses to customer needs, to develop and manufacture new
products, and to enhance existing product lines is important to its success. The Company continually conducts
research and development activities in an effort to improve existing products and develop new products. As of
December 31, 2021, the Company employed 268 people in its various engineering departments, 164 of whom are
degreed engineers and the balance of whom are support staff. Amounts expended on research and development
activities were approximately $11.7 million in 2021, $12.4 million in 2020 and $12.0 million in 2019. As a percentage
of sales, research & development was approximately 0.9% in 2021, 1.1% in 2020 and 1.1% in 2019, and is
expected to continue at similar levels in 2022.
Seasonality
The Company’s unit sales are fairly constant quarter to quarter. However, replacement part sales are generally
higher in the second and third quarters of the year, because a substantial number of the Company’s products are
used for maintenance activities such as vegetation maintenance, highway right-of-way maintenance, construction,
and street and parking lot sweeping. Usage of this equipment is typically lower in harsh weather. The Company
utilizes an annual twelve-month sales forecast provided by the Company’s marketing departments which is updated
quarterly in order to develop a production plan for its manufacturing facilities. In addition, many of the Company’s
marketing departments attempt to equalize demand for products throughout the calendar year by offering seasonal
sales programs which may provide additional incentives, including discounts and extended payment terms.
Competition
The Company’s products are sold in highly competitive markets throughout the world. The principal competitive
factors are price, quality, availability, service and reputation. The Company competes with several large national and
international companies that offer a broad range of equipment and replacement parts, as well as with numerous
small, privately-held manufacturers and suppliers of a limited number of products, mainly on a regional basis. Some
of the Company’s competitors are significantly larger than the Company and have substantially greater financial and
other resources at their disposal. The Company believes that it is able to compete successfully in its markets by
effectively managing its manufacturing costs, offering high quality products, developing and designing innovative
products and, to some extent, avoiding direct competition with significantly larger potential competitors. There can
be no assurance that the Company’s competitors will not substantially increase the resources devoted to the
development and marketing of products competitive with the Company’s products or that new competitors with
greater resources will not enter the Company’s markets.
Unfilled Orders
As of December 31, 2021, the Company had unfilled customer orders of $800.8 million compared to
$354.1 million at December 31, 2020. Management expects that substantially all of the Company’s unfilled orders
as of December 31, 2021 will be shipped during fiscal year 2022. The amount of unfilled orders at a particular time
is affected by a number of factors, including manufacturing and shipping schedules which, in most instances, are
dependent on the Company’s seasonal sales programs and the requirements of its customers. It is possible that
unanticipated effects of the COVID-19 pandemic, including supply chain disruptions or customer issues, could
continue to cause delays in delivery or an inability to complete unfilled customer orders. The Company’s orders are
subject to cancellation at any time before shipment; therefore, a comparison of unfilled orders from period to period
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is not necessarily meaningful and may not be indicative of future actual shipments. No single customer or group of
customers is responsible for 10% or more of the aggregate revenue of the Company or of a segment of the
Company.
Sources of Supply
The principal raw materials used by the Company include steel, other metal components, hydraulic hoses, paint
and tires. During 2021, the raw materials needed by the Company were available from a variety of sources in
adequate quantities and at prevailing market prices.
While the Company manufactures many of the parts for its products, a significant percentage of parts, including
most drivelines, gearboxes, industrial engines, and hydraulic components, are purchased from outside suppliers
which manufacture to the Company’s specifications. In addition, the Company, through its subsidiaries, purchases
tractors and truck chassis as a number of the Company’s products are mounted and shipped with a tractor or truck
chassis. Tractors and truck chassis are generally available, but some delays in receiving tractors or truck chassis
can occur throughout the year. The Company sources its purchased goods from international and domestic
suppliers. No one supplier is responsible for supplying more than 10% of the principal raw materials or purchased
goods used by the Company.
Patents, Trademarks and Trade Names
The Company owns various U.S. and international patents, trademarks and trade names. While the Company
considers its patents, trademarks and trade names to be advantageous to its business, it is not dependent on any
single patent, trademark, trade name or group of patents, trademarks, or trade names. The net book value of
patents, trademarks and trade names was $84.8 million and $89.2 million as of December 31, 2021 and 2020,
respectively.
Environmental and Other Governmental Regulations
Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws,
rules and regulations including those relating to climate change; emissions to air, including Tier 4 or similar engine
emission regulations; discharges to water; restrictions placed on water usage and water availability; product and
associated packaging; use of certain chemicals; restricted substances, including “conflict minerals” disclosure rules;
import and export compliance, including country of origin certification requirements; worker and product user health
and safety; energy efficiency; product life-cycles; outdoor noise laws; and the generation, use, handling, labeling,
collection, management, storage, transportation, treatment, and disposal of hazardous substances, wastes, and
other regulated materials.
The U.S. Environmental Protection Agency (“EPA”), the California Air Resources Board (“CARB”), and
similar regulators in other U.S. states and foreign jurisdictions in which we sell our products have emission
requirements setting maximum emission standards for certain equipment. In addition to the the EPA’s
implementation of Tier 4 emission requirements applicable to diesel engines, China, the European Union (“EU”) and
and the United Kingdom also have adopted similar regulations, and similar emission regulations are also being
considered in other markets in which we sell our products. CARB continues to propose and discuss implementation
of zero emissions equipment regulations that will likely create increasingly stringent requirements on exhaust and
other emissions from some of the products we manufacture.
The U.S. federal government, several U.S. states, and certain international markets where we sell our
products, including the EU and some EU member countries have introduced product life-cycle laws, rules, or
regulations, which are intended to reduce waste and environmental and human health impact, and require
manufacturers to label, collect, dispose, and recycle certain products, including some of our products, at the end of
their useful life. These include, among other laws and regulations: (i) the Registration, Evaluation, Authorization and
Restriction of Chemicals directive or similar substance level laws, rules, or regulations that require notification of use
of certain chemicals, or ban or restrict the use of certain chemicals; (ii) California Proposition 65 and other product
substance restriction laws, some of which require certain labeling of products; (iii) energy efficiency laws, rules, or
regulations, which are intended to reduce the use and inefficiencies associated with energy and natural resource
consumption and require specified efficiency ratings and capabilities for certain products; (iv) conflict minerals laws,
such as those contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules
11
promulgated by the U.S. Securities and Exchange Commission (“SEC”), which require specific procedures for the
determination and disclosure of the use of certain minerals, known as “conflict minerals,” which are mined from the
Democratic Republic of the Congo and adjoining countries; and (v) supply chain transparency laws and regulations
addressing modern slavery and human trafficking.
The Company is also subject to various other federal, state, and local laws affecting its business, as well as a
variety of regulations relating to such matters as working conditions, equal employment opportunities, and product
safety, including National Highway Traffic Safety Administration reporting. In addition, a variety of laws regulate the
Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship
between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer
contracts, and equipment repurchase requirements.
We believe we have maintained compliance with existing laws, rules and regulations applicable to our business
and will continue to do so. While we believe there will be some additional costs to our business as a result of the
increasing level of regulation applicable to our business activities, we do not believe that the costs associated with
our compliance efforts will have a material impact on our financial results.
Human Capital Resources and Management
We recognize that the success of our Company is dependent upon the talents and dedication of our people, and
we are committed to investing in their success. Our Vice-President of Corporate Human Resources is responsible
for developing and executing our human resources strategy together with our President and Chief Executive Officer
and the other members of the Company’s management team. Our Chief Executive Officer and Vice-President of
Human Resources regularly update our Board of Directors regarding the status of our human resources activities.
Among the key elements of our human resources strategy are the following:
Focus on Health and Safety: Employee health and safety is of paramount importance to us. We believe it
is our responsibility to maintain a safe and healthy workplace in each of our locations and to make continuous
improvements in this area. We do this by embedding safety into every level of the organization as one of our core
values. Our approach is proactive and preventative. Regular safety meetings are held at our plants on an ongoing
basis. Every location offers frequent safety training programs to all employees and leverages safety committees
who conduct safety audits to identify and remove potential issues. We ensure that safety performance is tracked,
aggregated, and reviewed on an ongoing basis. Our corporate technical affairs and safety team collects data on
recordable injury rates, severe injury rates, and near misses from each Alamo Group operating company, and
conducts root cause analysis with corrective action plans to prevent future occurrences. This data is reviewed
monthly by the executive leadership team and shared with the Company’s Board of Directors on a quarterly basis.
With the onset of the COVID-19 pandemic, we implemented, and continue to adhere to, certain rigorous and
meaningful safety measures recommended by the U.S. Centers for Disease Control and Prevention, World Health
Organization, and federal, state, local, and foreign authorities that we determined were in the best interest of our
employees, customers, and suppliers. This led to the adoption of various measures including COVID-19 case
tracking and quarantining where and when necessary, mandating face coverings when required by local rules and
regulations (except where hazardous), regular sanitization, reconfiguration of workstations to allow for appropriate
distancing, expanding the use of internal video meetings and installation of related technology, minimizing travel,
and implementing remote work assignments, amongst other actions.
Employee Engagement and Talent Development: We focus on attracting, developing, and retaining a
team of highly talented and motivated employees. Our key talent philosophy is to develop talent from within, so
they are “ready now” when career opportunities arise, and when we recruit externally to select candidates with
future stretch potential. We provide all employees a wide range of professional development experiences, both
formal and informal, at all stages in their careers. Our formal offerings include tuition reimbursement, a diverse
curriculum of learning programs, leadership development experiences, vocational and trade skills training, and
external partnerships across the globe. The Company’s focus on supervisor and manager development and a
culture of promoting a diverse, inclusive, and respectful workplace supports our ability to attract, engage, retain, and
motivate industry-leading talent to meet our customer’s needs and sustain the Company’s growth. Formal welder
training, apprenticeships, and local partnerships with vocational training programs, junior colleges, and high schools
ensure that our operating companies continue to attract and grow their critical manufacturing skills. The Company’s
emphasis on our core competencies, including Leading People and Leading Change, continues to favorably impact
our succession planning and employee retention with below industry average annual turnover rates. In January of
2022, we implemented The Alamo Group Learning & Development Academy, a new talent development program
which focuses on building and strengthening the leadership capabilities of our management teams and also offers
technical skills training for our production floor employees. Many programs are available on-demand to
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manufacturing supervisors, which offers development opportunities to those with direct oversight of the people
building our products. Training is easily accessible both to employees who work on-site as well as those who work
in remote and hybrid environments. Virtual, in-person and on-campus programs are offered to encourage cross-
location and cross-functional networking and sharing of ideas that foster and support our culture of continuous
improvement.
Commitment to Diversity and Inclusion: We recognize, value, and respect the individual differences of
our employees and believe that a diverse set of backgrounds, experiences, and perspectives is crucial to our ability
to continue to innovate, collaborate, and meet the needs of our global workforce and customers. Accordingly, we
are committed to encouraging and fostering an inclusive culture where diversity and individual differences are
accepted, respected, and valued so that employees feel empowered to contribute fully to the Company’s ongoing
success. To promote diversity and inclusion in the workplace, we dedicate people and resources to promote an
inclusive environment through policies and training. We also promote our career opportunities to a wide network of
organizations and job boards that can help us source diverse candidate pools. We actively volunteer and engage in
local community projects and contribute donations to charitable organizations. We build strategies and implement
tactics that will attract and maintain a diverse workforce, positively impacting the communities and markets in which
our employees live and work. Initiatives include but are not limited to increased diversity and inclusion training that
increases awareness and reinforces respect in the workplace, as well as building partnerships with organizations
like Women in Manufacturing and The National Diversity Council.
Compensation and Benefits: We conduct regular assessments of our pay and benefit practices to help
ensure that our people are compensated fairly and competitively. We also devote significant resources to
management and employee training and development, including tuition assistance for career-enhancing academic
and professional programs. In addition to salaries, our compensation programs, which vary by country and region,
can include annual bonuses, profit sharing, stock-based compensation awards, company-sponsored retirement
savings plans with employee matching opportunities (or similar local retirement benefits), healthcare and insurance
benefits, dependent care and flexible savings accounts, paid time off such as vacation and holidays, sick pay,
disability pay and family leave, flexible work schedules, wellness and employee assistance programs for mental
health, self-improvement, legal and financial services, service anniversary awards, tuition assistance and dependent
college scholarships, and discounts on products and services.
Labor Agreements: As of December 31, 2021, we employed approximately 4,200 employees. In the U.S.
the Company has a collective bargaining agreement at its Gradall plant which covers 174 employees and will expire
on April 14, 2024. In Canada the Tenco bargaining agreement covers 109 employees and expires on December 31,
2025; RPM has an agreement covering 4 employees which expires on February 1, 2025; and Everest has a
collective bargaining agreement covering 70 employees which will expire on November 30, 2023. In the Company’s
European locations, all employees are covered by the European Works Council agreements. McConnel, Bomford,
Spearhead, AMS-UK, SMA, Faucheux, Forges Gorce, Rousseau, Rivard, and Alamo Group The Netherlands have
various collective bargaining agreements covering approximately 969 employees. The Company considers its
employee relations to be satisfactory.
Available Information
The Company files annual, quarterly and current reports, proxy statements and other information with the
Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains annual, quarterly
and current reports, proxy and information statements, and other information that issuers (including the Company)
file electronically with the SEC. The SEC’s website is www.sec.gov.
The Company’s website is www.alamo-group.com. The Company makes available free of charge through its
website, via a link to the SEC’s website at www.sec.gov, its annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably
practicable after such material is electronically filed with, or furnished to, the SEC. The Company also makes
available through its website, via a link to the SEC’s website, statements of beneficial ownership of the Company’s
equity securities filed by its directors, officers, 10% or greater shareholders, and others required to file under
Section 16 of the Exchange Act.
The Company also makes available free of charge on its website its most recent annual report on Form 10-K, its
quarterly reports on Form 10-Q for the current fiscal year, its most recent proxy statement and its most recent
annual report to stockholders, although in some cases these documents are not available on our site as soon as
13
they are available on the SEC’s site. You will need to have on your computer the Adobe Acrobat Reader® software
to view the documents, which are in PDF format. In addition, the Company posts on its website its Charters for its
Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, as well as its
Corporate Governance Policies and its Code of Conduct and Ethics for its directors, officers and employees. You
can obtain a written copy of these documents, excluding exhibits, at no cost, by sending your request to the
Corporate Secretary, Alamo Group Inc., 1627 E. Walnut Street, Seguin, Texas 78155, which is the principal
corporate office of the Company. The telephone number is 830-379-1480. The information on the Company’s
website is not incorporated by reference into this report.
Forward-Looking Information
Part I of this Annual Report on Form 10-K and the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included in Part II of this Annual 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 in other documents filed or furnished with the SEC, or
by management orally or in press releases, conferences, reports or otherwise to analysts, investors, representatives
of the media and others, in the future by or on behalf of the Company. Generally, forward-looking statements are
not based on historical facts but instead represent the Company’s and its management’s beliefs regarding future
events.
Statements that are not historical are forward-looking. When used by us or on our behalf, the words “expect,”
“will,” “estimate,” “believe,” “intend,” “would,” “could,” “predict,” “should,” “anticipate,” “continue,” “project,” “forecast,”
“plan,” “may” and similar expressions generally identify forward-looking statements made by us or on our behalf.
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 we serve.
Certain particular risks and uncertainties that continually face us include the following:
• budget constraints and revenue shortfalls which could affect the purchases of our type of equipment
by governmental customers and related contractors in both domestic and international markets;
• market acceptance of new and existing products;
• our ability to maintain good relations with our employees;
• our ability to develop and manufacture new and existing products profitably;
• the inability of our suppliers, creditors, public utility providers and financial and other service
organizations to deliver or provide their products or services to us;
• legal actions and litigation;
• adverse impacts on our supply chain and other parts of our business resulting from the sudden
unrestrained outbreak of human disease including those caused by the coronavirus;
• impairment in the carrying value of goodwill;
• our ability to successfully integrate acquisitions and operate acquired businesses or assets;
• current and changing tax laws in the U.S. and internationally;
• our ability to hire and retain quality skilled employees; and
• changes in the prices of agricultural commodities, which could affect our customers’ income
levels.
In addition, we are subject to risks and uncertainties facing the industry in general, including the following:
• negative impacts on our business and financial results attributable to the ongoing COVID-19
pandemic which may include a softening of customer demand, operational and supply chain
disruptions, input cost inflation, labor shortages, or other negative unanticipated effects;
• changes in business and political conditions and the economy in general in both domestic and
international markets;
• an increase in unfunded pension plan liability due to financial market deterioration;
• price and availability of energy and critical raw materials, particularly steel and steel products;
• increased competition;
• repercussions resulting from the U.K.’s exit from the European Union;
• increases in input costs on items we use in the manufacturing of our products;
• adverse weather conditions such as droughts, floods, snowstorms, etc., which can affect the buying
patterns of our customers and end-users;
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• increased costs of complying with governmental regulations which affect corporations including
related fines and penalties (such as the European General Data Protection Regulation (GDPR) and
the California Consumer Privacy Act);
• the potential effects on the buying habits of our customers due to animal disease outbreaks and
other epidemics;
• adverse market conditions and credit constraints which could affect our customers and end-users,
such as cutbacks on dealer stocking levels;
• changes in market demand;
• cyber security risks including the potential loss of proprietary data or data security breaches and
related fines, penalties and other liabilities;
• financial market changes including changes in interest rates and fluctuations in foreign exchange
rates;
• abnormal seasonal factors in our industry;
• changes in domestic and foreign governmental policies and laws, including increased levels of
government regulation and changes in agricultural policies, including the amount of farm subsidies
and farm payments as well as changes in trade policy that may have an adverse impact on our
business;
• government actions, including but not limited to budget levels, change in tax laws, regulations and
legislation, relating to the environment, commerce, infrastructure spending, health and safety; and
• risk of governmental defaults and resulting impact on the global economy and particularly financial
institutions.
We wish to caution readers not to place undue reliance on any forward-looking statement 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 and under “Risk Factors,” as well as others not now anticipated. The foregoing statements are not
exclusive and further information concerning us and our businesses, including factors that could potentially
materially affect our 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. Any forward-looking
statements made by or on behalf of the Company speak only to the date they are made and we do not undertake to
update forward-looking statements to reflect the impact of circumstances or events that arise after the forward-
looking statements were made.
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Information About our Executive Officers
Certain information is set forth below concerning the executive officers of the Company (the “Executives”), each
of whom has been appointed to serve until the 2022 annual meeting of directors or until their successor is duly
appointed and qualified.
Name Age Position
Jeffery A. Leonard 62 President and Chief Executive Officer
Richard J. Wehrle 65 Executive Vice President and Chief Financial Officer
Edward T. Rizzuti 52 Executive Vice President, General Counsel and Secretary
Dan E. Malone 61 Executive Vice President, Chief Sustainability Officer
Richard H. Raborn 56 Executive Vice President, Alamo Vegetation Management Division
Michael A. Haberman 63 Executive Vice President, Alamo Industrial Equipment Division
Janet S. Pollock 63 Vice President, Human Resources
Lori L. Sullivan 52 Vice President, Internal Audit
Jeffery A. Leonard was appointed President and Chief Executive Officer of the Company in May of 2021. Mr.
Leonard was also appointed as a director of the Company in June of 2021. Mr. Leonard joined the Company in
2011, and served as Executive Vice President of the Company’s former Industrial Division from 2011 to 2021. Mr.
Leonard previously was Senior Vice President of Metso Minerals Industries Inc., a supplier of technology and
services for mining, construction, power generation, automation, recycling, and pulp and paper industries.
Richard J. Wehrle was appointed Executive Vice-President and Chief Financial Officer of the Company in July
of 2021. Prior to that, Mr. Wehrle served as Vice President, Controller and Treasurer of the Company from May
2001 to July 2021. He assumed Treasury responsibilities in May of 2018. Previously, Mr. Wehrle served in various
accounting management capacities within the Company from 1988 to 2001.
Edward T. Rizzuti was appointed Vice President, General Counsel of Alamo Group Inc. in July of 2015,
assumed the Secretary role in May of 2018 and was promoted to Executive Vice-President in November of 2021.
Prior to joining the Company, from 2010 to 2015, Mr. Rizzuti served as Vice President, General Counsel and
Secretary for Erickson Incorporated, a publicly traded aircraft manufacturing and operating company based in
Portland, Oregon.
Dan E. Malone was appointed Executive Vice President, Chief Sustainability Officer in July of 2021. Mr. Malone
joined the Company in 2007 and served as Executive Vice President, Chief Financial Officer from 2007 to 2021.
Prior to joining the Company, Mr. Malone held the position of Executive Vice President, Chief Financial Officer &
Corporate Secretary at Igloo Products Corporation, a manufacturer of insulated consumer goods, from 2002 to
January 2007. Mr. Malone was Vice President and Chief Financial Officer of The York Group, Inc. from 2000 to
2002, and held various financial positions from 1987 to 2000 with Cooper Industries, Inc. and its various
subsidiaries.
Richard H. Raborn was appointed Executive Vice President the Company’s Vegetation Management Division in
July of 2021. Mr. Raborn joined the Company in 2015 and served as Executive Vice-President of the Company’s
former Agricultural Division from 2015 to 2021. Prior to joining the Company, Mr. Raborn was Vice President and
General Manager of the Powertrain Metal Division for Illinois Tool Works (ITW) from 2009 to 2015. ITW is one of the
world’s leading diversified manufacturers of specialized industrial equipment, consumables and related service
business.
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Michael A. Haberman was appointed Executive Vice-President of the Company’s Industrial Equipment Division
in July of 2021. Prior to his role as Executive Vice-President, Mr. Haberman served as the Company’s Excavation/
Vacuum Truck group Vice-President from January 2020 to July 2021. Previously, Mr. Haberman served as President
of the Company’s Gradall Industries company from February of 2006 until January of 2020.
Janet S. Pollock was appointed Vice President, Human Resources of Alamo Group Inc. in May of 2018. Ms.
Pollock joined Alamo Group in June of 2013 as Vice President of Human Resources for U.S. Operations. Prior to
joining the Company, Ms. Pollock was Vice President of Human Resources with CPS Energy in San Antonio, Texas
and Vice President of Strategic Initiatives for Coca-Cola Enterprises, Inc.
Lori L. Sullivan was appointed Vice President, Internal Audit of Alamo Group Inc. in May of 2019. Prior to this
appointment, Ms. Sullivan was Vice President of Internal Audit for U.S. Operations and Director of Internal Audit for
Alamo Group Inc. Ms. Sullivan has held audit positions within various industries including research and
development, public utilities, and public accounting prior to joining Alamo Group in July of 2011.
Item 1A. Risk Factors
You should carefully consider each of the risks described below, together with all of the other information
contained in this Annual Report on Form 10-K, before making an investment decision with respect to the Company’s
securities. If any of the following risks develop into actual events, the Company’s business, financial condition or
results from operations could be materially and adversely affected and you could lose all or part of your investment.
Risks related to our business
The ongoing COVID-19 pandemic could have a material and adverse effect on our results of
operations, financial condition and cash flows.
The COVID-19 pandemic caused a significant downturn in our markets globally. While our markets appear to
have recovered in 2021, the sustainability of the recovery remains unclear. Challenging market conditions could
continue for an extended period of time given the uncertainty that new COVID-19 variants could cause governments
around the world to implement stringent or restrictive measures to help control the spread of the virus, including
quarantines, “shelter in place” or “stay home” orders, travel restrictions, and other measures. The COVID-19
pandemic could negatively impact our operations, financial condition and cash flows in numerous ways, including
but not limited to the following:
• macroeconomic conditions may negatively affect the proper functioning of financial and capital markets,
foreign currency exchange rates, commodity and energy prices, and interest rates;
• we may be prevented from operating our manufacturing facilities and other worksites;
• we may experience interruptions including temporary suspensions or reduced capacity of operations due to
health concerns and government imposed restrictions;
• we may experience ongoing supply chain disruptions, including those caused by industry capacity
constraints, mismatch of supply and demand, material availability, logistics delays, and delays in resumption
of operations by one or more suppliers;
• we may be subject to legal claims related to alleged exposure to COVID-19 on Company premises; and
• we may experience labor shortages or disruptions due to illnesses or unwillingness of employees to return
to work.
The longer the pandemic continues, the more likely the foregoing risks will be realized. The ultimate duration
and severity of the COVID-19 pandemic cannot be accurately forecasted at this time. Nor can the disruption to our
business, customers and supply chain due to the pandemic be accurately forecasted at this time. Even after the
COVID-19 pandemic has subsided, we may continue to experience material adverse impacts to our business as a
result of any economic recession or depression that has occurred or may occur in the future. Moreover, the effects
of the COVID-19 pandemic will heighten the other risks described throughout this section.
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Deterioration of industry conditions could harm our business, results of operations and financial
condition.
Our business depends to a large extent upon the prospects for the mowing, infrastructure maintenance and
agricultural markets in general. Future prospects of the industry depend largely on factors outside of our control.
Any of those factors could adversely impact demand for our products, which could adversely impact our business,
results of operations and financial condition. These factors include the following:
• weakness in the worldwide economy;
• the price and availability of raw materials, purchased components and energy;
• budget constraints and revenue shortfalls for our governmental customers;
• changes in domestic and foreign governmental policies and laws, including increased levels of
governmental regulation and associated liabilities;
• the levels of interest rates;
• the value of the U.S. dollar relative to the foreign currencies in countries where we sell our products but
don’t have a manufacturing presence;
• impact of tighter credit markets on the Company, its dealers and end-users;
• impairment in the carrying value of goodwill; and
• increase in unfunded pension plan liability due to financial market deterioration.
In addition, our business is susceptible to a number of factors that specifically affect agricultural customer
spending patterns, including the following:
• animal disease outbreaks, epidemics and crop pests;
• weather conditions, such as droughts, floods and snowstorms;
• changes in farm incomes;
• cattle and agricultural commodity prices;
• changes in governmental agricultural policies worldwide;
• the level of worldwide farm output and demand for farm products; and
• limits on agricultural imports/exports.
Some or all of the above factors may be negatively impacted or magnified by the ongoing COVID-19 pandemic.
A downturn in general economic conditions and outlook in the United States and around the world
could adversely affect our net sales and earnings.
The strength and profitability of our business depends on the overall demand for our products and upon
economic conditions and outlook, including but not limited to economic growth rates; consumer spending levels;
financing availability, pricing and terms for our dealers and end-users; employment rates; interest rates; inflation;
consumer confidence and general economic and political conditions and expectations in the United States and the
other economies in which we conduct business. Slow or negative growth rates, inflationary/deflationary pressures,
higher commodity costs and energy prices, reduced credit availability or unfavorable credit terms for our dealers
and end-user customers, increased unemployment rates, and recessionary economic conditions and outlook could
cause consumers to reduce spending, which may cause them to delay or forgo purchases of our products and could
have an adverse effect on our net sales and earnings. In addition, the ongoing effects of the COVID-19 pandemic
may continue to adversely affect global economic activity which could negatively impact our revenues.
The U.K.’s exit from the European Union (“Brexit”) and the impact of the withdrawal may adversely affect
business activity, political stability and economic conditions in the U.K., the European Union and elsewhere. Our
business in Europe may suffer from shipment delays, supply chain disruptions, tariffs or other effects that could
negatively impact our business. The economic conditions and outlook could be further adversely affected by the
uncertainty concerning new or modified trading arrangements between the U.K. and other countries. Any of these
developments could negatively affect economic growth or business activity in the U.K., the European Union and
elsewhere, and could materially and adversely affect our business and results of operations.
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Significant changes in trade policy and related trade wars could have a material adverse impact on our
results of operations.
The U.S. continues to make potentially significant changes in its trade policy and has taken certain actions that
have adversely impacted U.S. trade and relationships with China and other trading partners, including imposing
tariffs on certain goods imported into the U.S. Any continued actions or further changes in U.S. trade policy could
trigger additional retaliatory actions by affected countries, resulting in “trade wars.” Trade wars may lead to reduced
economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our
products, or other potentially adverse economic outcomes. These or other consequences from any trade wars could
have a material adverse impact on our sales volumes, prices and our consolidated financial results.
We depend on governmental sales, and a decrease in such sales could adversely affect our business,
results of operations and financial condition.
A substantial portion of our revenues is derived from sales to federal, state, provincial and local governmental
entities and related contractors, both in the U.S. and in other countries in which we sell our products. These sales
depend primarily on the levels of budgeted and appropriated expenditures for highway, airport, roadside and parks
maintenance by various governmental entities and are affected by changes in local and national economic
conditions. Federal, state, provincial and local government budgets have been and will likely continue to be
negatively affected by the COVID-19 pandemic and this could have a material negative impact on our business and
financial condition.
Our dependence on, and the price and availability of, raw materials as well as purchased components
may adversely affect our business, results of operations and financial condition.
We are subject to fluctuations in market prices for raw materials such as steel and energy. For example, in
2021 the price of raw materials like steel and other components we require in our manufacturing process increased
materially due to inflationary pressures. In addition, although most of the raw materials and purchased components
we use are commercially available from a number of sources, we could experience disruptions in the availability of
such materials. If we are unable to purchase materials we require or are unable to pass on price increases to our
customers or otherwise reduce our cost of goods sold, our business, results of operations and financial condition
may be adversely affected. In addition, higher energy costs could negatively affect spending by farmers, including
their purchases of our products. In 2021 we experienced delays in obtaining certain important components from our
suppliers largely due to operational disruptions resulting from the COVID-19 pandemic. We may experience delays,
shortages, price increases or other supply chain disruptions as a result of the ongoing COVID-19 pandemic which
could have a material adverse effect on our business and financial results.
Impairment in the carrying value of goodwill could negatively impact our consolidated results of
operations and net worth.
The Company has conducted for the last three years an analysis for estimating the fair value of the Company’s
business enterprise. We have utilized the discounted cash flow income approach and market approach for which we
chose to heavily weigh more on the discounted cash flow approach. This analysis requires the Company to make
significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth
rates. The cash flows are estimated over a significant future period of time, which makes those estimates and
assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models
and other financial ratios, which require the Company to make certain assumptions and estimates regarding the
applicability of those models to its assets and businesses. As of December 31, 2021, goodwill was $202.4 million,
which represents 17% of total assets.
The Company recognized no goodwill impairment in 2021, 2020 or 2019. During the 2021 impairment analysis
review, we performed a sensitivity analysis for goodwill impairment with respect to each of our reporting units and
determined that a hypothetical 15% decline in the fair value of each reporting unit as of October 1, 2021 would not
result in an impairment of goodwill for any of the reporting units. If we were to have a significant goodwill impairment
caused by a greater than 15% decline in fair value, it could impact our results of operations as well as our net worth.
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We are significantly dependent on information technology and our business may suffer from
disruptions associated with information technology, cyber-attacks or other catastrophic losses affecting
our IT infrastructure.
We rely on information technology networks and systems, including the Internet, to process, transmit, and store
electronic and financial information, to manage a variety of business processes and activities, and to comply with
regulatory, legal, and tax requirements. We also depend on our information technology infrastructure for digital
marketing activities and for electronic communications among our locations, personnel, customers, and suppliers.
These information technology systems (some of which are provided and maintained by third parties) may be
susceptible to damage, disruptions, or shutdowns due to hardware failures, computer viruses, hacker attacks,
telecommunication failures, user errors, catastrophic events or other factors. In addition, a number of our salaried
employees are working remotely at various times. This remote working environment may pose a heightened risk for
security breaches or other disruptions of our information technology systems. If our information technology systems
suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the
issues in a timely manner, we could experience business disruptions, transaction errors, processing inefficiencies,
and the loss of customers and sales, causing our product sales, financial condition, and operating results to be
adversely affected and the reporting of our financial results to be delayed.
In addition, in the ordinary course of our business, we collect and store sensitive data, including our intellectual
property, our proprietary business information and that of our customers, suppliers and business partners, and
personally identifiable information or other sensitive information of our customers and employees. The secure use,
processing, maintenance and transmission of this information is critical to our operations and business strategy.
Despite the information security measures we have taken, our information technology and infrastructure may be
subjected to attacks by hackers or breached due to employee malfeasance, employee errors, or other disruptions.
Cybersecurity threats and sophisticated computer crime pose a potential risk to the security of the Company’s
information technology systems, networks, and services, as well as the confidentiality and integrity of the
Company’s data and intellectual property. Cyber-attacks, unauthorized access or security breaches, and other
cyber incidents could include, among other things, computer viruses, malicious or destructive code, ransomware,
social engineering attacks (including phishing and impersonation), hacking, denial-of-service attacks, and other
similar attacks. These threats are constantly evolving, which increases the difficulty of defending against them or
implementing adequate preventive measures. Sensitive information is also stored by our vendors and on the
platforms and networks of third-party providers. Cyber-attacks on the Company, our vendors, or our third-party
providers could result in inappropriate access to our intellectual property, Company data, or personally identifiable
information of our global workforce, suppliers, or customers. Potential consequences of a successful cyber-attack
or other cybersecurity breach or incident include remediation costs, legal costs, increased cybersecurity protection
costs, lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract
customers following an attack, litigation and legal risks including governmental or regulatory enforcement actions,
increased insurance premiums, reputational damage that adversely affects customer or investor confidence, and
damage to the Company’s competitiveness, stock price, and long-term shareholder value.
While we have taken steps to address these risks by implementing enhanced security technologies, internal
controls, and business continuity plans, these measures may not be adequate. We cannot assure that the steps we
have taken will be sufficient to protect our systems, information or other property. Our systems and information may
be vulnerable to theft, loss, damage and interruption from a number of potential threats and events.
Changes in the regulatory environment regarding privacy and data protection regulations could have a
material adverse impact on our results of operations.
The EU has recently adopted a comprehensive overhaul of its data protection regime in the form of the General
Data Protection Regulation (“GDPR”), which came into effect in May of 2018. GDPR extends the scope of the
existing EU data protection law to foreign companies processing personal data of EU residents. The regulation
imposes a strict data protection compliance regime with severe penalties of 4% of worldwide turnover or €20.0
million, whichever is greater, and includes new rights such as the right of erasure of personal data. Although the
GDPR applies across the EU, as has been the case under the current data protection regime, EU Member States
have some national derogations and local data protection authorities (“DPAs”) will still have the ability to interpret
the GDPR, which has the potential to create inconsistencies on a country-by-country basis. In addition, certain
U.S. states have enacted privacy and data protection laws. For example, the State of California enacted the
California Consumer Privacy Act (“CCPA”) which became effective in 2020. Implementation of, and compliance
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with, the GDPR, CCPA and other similar laws could increase our cost of doing business and/or force us to change
our business practices in a manner adverse to our business. In addition, violations of the GDPR, CCPA and other
laws may result in significant fines, penalties and damage to our brand and business which could, individually or in
the aggregate, materially harm our business and reputation. Privacy legislation, enforcement and policy activity in
this area continues to rapidly expand. Compliance costs and costs related with implementing privacy-related and
data protection measures could be significant. Further, noncompliance could expose us to significant monetary
penalties, damage to our reputation, and even possible criminal sanctions. Even our inadvertent failure to comply
with privacy-related or data protection laws and regulations could have a material adverse impact on our results of
operations.
We operate in a highly competitive industry, and some of our competitors and potential competitors
have greater resources than we do.
Our products are sold in highly competitive markets throughout the world. We compete with several large
national and international companies that offer a broad range of equipment and replacement parts that compete
with our products, as well as with numerous small, privately-held manufacturers and suppliers of a limited number of
products mainly on a regional basis. Some of our competitors are significantly larger than we are and have
substantially greater financial and other resources at their disposal. We believe that we are able to compete
successfully in our markets by, to some extent, avoiding direct competition with significantly larger potential
competitors. There can be no assurance that our competitors will not substantially increase the resources devoted
to the development and marketing of products competitive with our products or that new competitors with greater
resources will not enter our markets. Any failure to effectively compete could have an adverse effect on our
business, results of operations and financial condition.
Failure to develop new products or keep pace with technological developments may have a material
adverse impact on our results of operations.
Our industry is affected by future technological developments. The introduction of new products or processes
with innovative technologies could render our existing products or processes obsolete or unmarketable. Our
success depends, to some extent, upon our ability to develop, market and sell cost-effective new products and
applications that keep pace with technological developments in the markets we serve. We may not be successful in
identifying, developing and marketing new products and applications or we may experience difficulties that could
delay or prevent the successful development, introduction and marketing of such new products and applications,
which could have a material adverse impact on our business and results of operations.
We operate and source internationally, which exposes us to the political, economic and other risks of
doing business abroad.
We have operations in a number of countries outside of the United States and we source raw materials and
components globally. Our international operations are subject to the risks normally associated with conducting
business in foreign countries, including but not limited to the following:
• limitations on ownership and on repatriation of earnings;
• import and export restrictions, tariffs and quotas;
• potentially adverse effects including negative economic conditions resulting from war or the threat of war,
including the ongoing conflict occurring in the Ukraine;
• additional expenses relating to the difficulties and costs of staffing and managing international operations;
• labor disputes and uncertain political and economic environments and the impact of foreign business
cycles;
• changes in laws or policies;
• changes in any international trade agreements, such as any changes in European Union membership;
• delays in obtaining or the inability to obtain necessary governmental permits;
• potentially adverse consequences resulting from the applicability of foreign tax laws;
• cultural differences;
• increased expenses due to inflation;
• weak economic conditions in foreign markets where our subsidiaries distribute their products;
• changes in currency exchange rates;
• disruptions in transportation and port authorities; and
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• regulations involving international freight shipments.
Operating in the international marketplace exposes us to a number of risks, including the need to comply with
U.S. and foreign laws and regulations applicable to our foreign operations, including anti-corruption laws such as
the Foreign Corrupt Practices Act and the U.K. Bribery Act, United States export control laws, and data privacy laws
such as the recently enacted European GDPR. The costs of compliance with these various laws, regulations and
policies can be significant and penalties for noncompliance could significantly and adversely impact our business.
Our international operations may also be adversely affected by laws and policies affecting foreign trade, investment,
taxation, and our ability to effectively source components and raw materials internationally. For example, any
significant changes in U.S. trade policy, including the introduction of any new or expanded tariffs, could increase the
cost of critical materials and supplies that we source internationally or negatively impact international sales of our
products, which would have an adverse effect on our net sales and earnings.
In addition, political developments and governmental regulations and policies in the countries in which we
operate directly affect the demand for our products. For example, decreases or delays in farm subsidies to our
agricultural customers, or changes in environmental policies aimed at limiting mowing activities, could adversely
affect our business, results of operations and financial condition.
Our acquisition strategy may not be successful, which may adversely affect our business, results of
operations and financial condition.
We intend to grow internally and through the acquisition of businesses and assets that will complement our
current businesses. To date, a material portion of our growth has come through acquisitions. We cannot be certain
that we will be able to identify attractive acquisition targets, obtain financing for acquisitions on satisfactory terms or
successfully acquire identified targets. Competition for acquisition opportunities may also increase our costs of
making acquisitions or prevent us from making certain acquisitions. These and other acquisition-related factors may
adversely impact our business, results of operations and financial condition.
We may not be able to realize the potential or strategic benefits of the acquisitions we complete, and the
businesses we have acquired, or may acquire in the future, may not perform as expected.
Acquisitions are an important part of our growth strategy and we have completed a number of acquisitions over
the past several years. In 2019, we completed three acquisitions, namely Dutch Power, Dixie Chopper, and
Morbark, and in 2021 we acquired Timberwolf. Acquisitions can be difficult, time-consuming, and pose a number of
risks, including:
• potential negative impact on our earnings per share as a result of acquisition costs and related
financing costs, among other things;
• the assumption of liabilities that are unknown to us at the time of closing;
• failure of acquired products to achieve projected sales;
• potential downward pressure on operating margins due to lower operating margins of acquired
businesses, increased headcount costs and other expenses associated with adding and supporting new
products;
• disruption of ongoing business operations, including diversion of management’s attention and
uncertainty for employees and customers, particularly during the post-acquisition integration process;
and
• potential negative impact on our relationships with customers, distributors and vendors.
If we do not manage these risks, the acquisitions that we complete may have an adverse effect on our business,
our results of operations or financial condition. In addition, we may not be successful in integrating acquired
businesses into our existing operations and achieving projected synergies. We could face many risks in integrating
acquired businesses, including but not limited to the following:
• we may incur substantial costs, delays or other operational or financial challenges in integrating
acquired businesses, including integrating each company’s accounting, information technology, human
resource and other administrative systems to facilitate effective management;
• we may be unable to achieve expected cost reductions, to take advantage of cross-selling
opportunities, or to eliminate redundant operations, facilities and systems;
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• We may encounter problems in integrating the acquired products with our existing and/or new products;
• we may need to implement or improve controls, procedures and policies appropriate for a public
company which could take a significant amount of time and expense;
• acquisitions may divert our management’s attention from the operation of our existing businesses;
• we may not be able to retain key personnel of acquired businesses;
• there may be cultural challenges associated with integrating management and employees from the
acquired businesses into our organization; and
• we may encounter unanticipated events, circumstances and legal risk and associated liabilities.
Our integration of acquired businesses requires significant efforts from the management of each entity,
including coordinating existing business plans and research and development efforts. Integrating operations may
distract management’s attention from the day-to-day operation of the combined companies. Ultimately, our attempts
to integrate the operations, technology and personnel of acquired businesses may not be successful. If we are
unable to successfully integrate acquired businesses, our future results may be negatively impacted.
The agricultural industry and the infrastructure maintenance industry are seasonal, and seasonal
fluctuations may cause our results of operations and working capital to fluctuate from quarter to quarter.
In general, agricultural and governmental end-users typically purchase new equipment during the first and
second calendar quarters. Other products such as street sweepers, excavators, snow removal equipment, front-end
loaders and pothole patchers have different seasonal patterns, as do replacement parts in general. In attempting to
achieve efficient utilization of manpower and facilities throughout the year, we estimate seasonal demand months in
advance and manufacturing capacity is scheduled in anticipation of such demand. We utilize an annual plan with
updated quarterly sales forecasts provided by our marketing divisions and order backlog in order to develop a
production plan for our manufacturing facilities. In addition, many of our marketing departments attempt to equalize
demand for their products throughout the calendar year by offering seasonal sales programs which may provide
additional incentives, including discounts and extended payment terms, on equipment that is ordered during off-
season periods. Because we spread our production and wholesale shipments throughout the year to take into
account the factors described above, sales in any given period may not reflect the timing of dealer orders and retail
demand.
Weather conditions and general economic conditions may affect the timing of purchases and actual industry
conditions might differ from our forecasts. In addition to seasonal factors, the agricultural industry is cyclical in
nature with sales largely dependent on the state of the farm economy and, in particular, agriculture commodity
prices and farm income. Consequently, sudden or significant declines in industry demand could adversely affect our
working capital or results of operations.
Extreme weather conditions may impact demand for some of our products and impact our business,
results of operations and financial condition.
Extreme weather conditions such as droughts or flooding may adversely affect sales of some of our products
including our mowing equipment and other agricultural equipment and related parts. Milder winter conditions with
lower snowfall accumulations can have an adverse impact on sales of our snow removal equipment and related
parts business in the key markets we serve. In the event unfavorable weather conditions are worsened as a result
of global climate change, our business may be adversely affected to a more significant extent.
Our business and operations are subject to risks related to climate change.
The long-term effects of global climate change present both physical risks (such as extreme weather conditions
or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be
widespread and unpredictable. These changes could affect the availability and cost of products, commodities and
energy, which may impact our ability to procure goods or services required for the operation of our business at the
quantities and levels we require. In addition, many of our operations and facilities around the world are in locations
that may be impacted by the physical risks of climate change, and we face the risk of losses incurred as a result of
physical damage to our facilities, loss or spoilage of inventory and business interruption caused by such events. We
also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face increased
regulation as a result of climate change or other environmental concerns. New legal and regulatory requirements
have been, and may continue to be, implemented to address the concern over climate change in an effort to reduce
or mitigate the effects of it, and such regulatory requirements dealing with the environmental aspects of the products
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we manufacture could result in significant expenditures in designing and manufacturing new forms of equipment
that satisfy such requirements. We cannot currently predict the specific terms of any new climate change legislation
or regulation, but any such new legislation or regulation may have a material adverse impact on our business,
results of operations, or financial condition.
If we do not retain key personnel and attract and retain other highly skilled employees, our business
may suffer.
Our continued success will depend on, among other things, the efforts and skills of our executive officers,
including our president and chief executive officer, and our ability to attract and retain additional highly qualified
managerial, technical, manufacturing, and sales and marketing personnel. We do not maintain “key man” life
insurance for any of our employees, and all of our senior management are employed at will. We cannot assure you
that we will be able to attract and hire suitable replacements for any of our key employees. We believe the loss of a
key executive officer or other key employee could have an adverse effect on our business, results of operations,
and financial condition.
Skilled labor shortages or our ability to retain qualified employees could adversely affect our
operations.
In 2021, we experienced labor constraints that negatively impacted our business. Shortages of skilled labor,
such as welders and machine operators, are ongoing and could negatively affect our production capabilities or lead
to production inefficiencies, which could materially impact our financial results. Our failure to attract or retain
qualified employees could also have an adverse effect on our business, results of operations, and financial
condition.
Increasingly stringent engine emission regulations could impact our ability to sell certain of our
products into the market and appropriately price certain of our products, which could negatively affect our
competitive position and financial results.
The products we manufacture or sell, particularly engines, are subject to increasingly stringent environmental
emission regulations. For instance, the EPA has adopted increasingly stringent engine emission regulations,
including Tier 4 emission requirements applicable to diesel engines in specified horsepower ranges that are used in
some of our products. Requirements have expanded to additional horsepower categories and, accordingly, apply to
more of the products we sell. Our ability to meet the Tier 4 requirements is subject to many variables, some of which
are beyond our direct control. If we fail to meet the Tier 4 requirements and any other EPA emission standards that
are currently in place or that may be introduced in the future, our ability to sell our products into the market may be
limited, which could have a material adverse effect on our competitive position and financial results.
We are subject to environmental, health and safety and employment laws and regulations and related
compliance expenditures and liabilities.
Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and
requirements, including those concerning air emissions, discharges into waterways, and the generation, handling,
storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the
remediation of contamination associated with releases of hazardous substances at the Company’s facilities and
offsite disposal locations, workplace safety and equal employment opportunities. These laws and regulations are
constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and
regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing
operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material
costs or other liabilities as a result thereof.
Changes in environmental laws or new laws relating to the emission of greenhouse gases (“GHG”) or the
emission of other gases may cause us to make additional investment in new product designs or could increase our
environmental compliance expenditures. The regulation of GHG emissions could result in other additional costs to
the Company in the form of tax or emissions allowances, facility improvement costs, and higher input costs.
Increased input costs and other costs associated with GHG emissions regulation and related compliance may also
negatively impact customer demand. Because the timing and extent of GHG emission regulations or climate change
regulations are unknown at this time, we are unable to predict the impact this may have on our overall business.
24
The Company is subject to various other federal, state, and local laws affecting its business, as well as a
variety of regulations relating to such matters as working conditions, equal employment opportunities, and product
safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which
impose restrictive standards on the relationship between the Company and its dealers, including events of default,
grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements.
We are subject on an ongoing basis to the risk of product liability claims and other litigation arising in
the ordinary course of business.
Like other manufacturers, we are subject to various claims, including product liability claims, arising in the
ordinary course of business, and we are a party to various legal proceedings that constitute routine litigation
incidental to our business. We may be exposed to product liability claims in the event that the use of our products
results, or is alleged to result, in bodily injury, property damage, or both. We cannot assure you that we will not
experience any material product liability losses in the future or that we will not incur significant costs to defend the
Company against such claims. We cannot assure you that our product liability insurance coverage will be adequate
for any liabilities that may ultimately be incurred or that it will continue to be available on terms acceptable to us. A
successful claim brought against us in excess of available insurance coverage or a requirement to participate in a
product recall may have a materially adverse effect on our business.
If we are unable to comply with the terms of our credit arrangements, especially the financial covenants,
our credit arrangements could be terminated.
We cannot assure you that we will be able to comply with all of the terms of our credit arrangements, especially
the financial covenants. Our ability to comply with such terms depends on the success of our business and our
operating results. Various risks, uncertainties, and events beyond our control could affect our ability to comply with
the terms of our credit arrangements. If we were out of compliance with any covenant required by our credit
arrangements following any applicable cure periods, the banks could terminate their commitments unless we could
negotiate a covenant waiver. The banks could condition such waiver on amendments to the terms of our credit
arrangements that may be unfavorable to us, including a potential increase to the interest rate we currently pay on
outstanding debt under our credit arrangements, which could adversely affect our operating results.
Fluctuations in currency exchange rates may adversely affect our financial results.
Our earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies,
predominantly in European countries, Canada and Australia, as a result of the sale of our products in international
markets. While we do enter into foreign exchange contracts to protect against such fluctuations to an extent
(primarily in the U.K. market), we cannot assure you that we will be able to effectively manage these risks.
Significant long-term fluctuations in relative currency values, such as a devaluation of the Euro against the U.S.
dollar, could have an adverse effect on our future results of operations or financial condition.
Changes concerning the availability of the London Interbank Offered Rate (“LIBOR”) may have a
negative impact on our business.
Current interest rates on borrowings under our credit facility are variable and include the use of the London
Interbank Offered Rate (“LIBOR”). In 2017, the U.K. Financial Conduct Authority announced that it intends to phase
out LIBOR by the end of 2021. In addition, other regulators have suggested reforming or replacing other benchmark
rates. Although the publication of certain USD LIBOR for key tenors have been extended through June 30, 2023, to
allow certain legacy LIBOR-indexed contracts to mature without disruption, there is no certainty as to the outcome
of such extension. The discontinuation, reform, or replacement of LIBOR, including with the Secured Overnight
Financing Rate identified by the Alternative Reference Rate Committee as the alternative reference rate for US
dollar LIBOR, or any other benchmark rates, may result in fluctuating interest rates that may have a negative impact
on our interest expense and our profitability.
25
Risks related to investing in our common stock
Because the price of our common stock may fluctuate significantly, it may be difficult for you to resell
our common stock when desired or at attractive prices.
The trading price of our common stock has and may continue to fluctuate. The closing prices of our common
stock on the New York Stock Exchange during 2021 ranged from $136.01 to $164.81 per share, and during 2020
from $75.21 to $143.15 per share. Our stock price may fluctuate in response to the risk factors set forth herein and
to a number of events and factors, such as quarterly variations in operating and financial results, litigation, changes
in financial estimates and recommendations by securities analysts, the operating and stock performance of other
companies that investors may deem comparable to us, news reports relating to us or trends in our industry or
general economic conditions. The stock price volatility and trading volume may make it difficult for you to resell your
shares of our common stock when desired or at attractive prices.
You may experience dilution of your ownership interests due to the future issuance of additional shares
of our common stock.
We may issue shares of our previously authorized and unissued securities, which will result in the dilution of the
ownership interests of our present stockholders. We are currently authorized to issue 20,000,000 shares of common
stock. On December 31, 2021, 11,927,452 shares of our common stock were issued and outstanding, and there
were outstanding options and restricted stock awards totaling an additional 170,226 shares of our common stock.
We also have additional shares available for grant under our 2015 Incentive Stock Option Plan and our 2019 Equity
Incentive Plan. Additional stock option or other compensation plans or amendments to existing plans for employees
and directors may be adopted. Issuance of these shares of common stock may dilute the ownership interests of our
then existing stockholders. We may also issue additional shares of our common stock in connection with the hiring
of personnel, future acquisitions, such as the 1,700,000 shares issued as consideration for the acquisition of Bush
Hog in 2009, future private placements of our securities for capital raising purposes, or for other business purposes.
This would further dilute the interests of our existing stockholders.
There is no assurance that we will continue declaring dividends or have the available cash to make
dividend payments.
On January 3, 2022, the Board of Directors of the Company increased its quarterly dividend from $0.14 per
share to $0.18 per share. Although we have paid a cash dividend in each quarter since becoming a public company
in 1993, there can be no assurance that we will continue to declare dividends or that funds will continue to be
available for this purpose in the future. The declaration and payment of dividends are restricted by the terms of our
credit facility, are subject to the discretion of our Board of Directors, are not cumulative, and will depend upon our
profitability, financial condition, capital needs, future prospects, and other factors deemed relevant by our Board of
Directors.
Provisions of our corporate documents may have anti-takeover effects that could prevent a change in
control.
Provisions of our charter, bylaws and Delaware law could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders. These provisions include prohibiting stockholders from
calling stockholder meetings and prohibiting stockholder actions by written consent. Our Certificate of Incorporation
and Bylaws state that any amendment to certain provisions, including those provisions regarding limitations on
action by written consent discussed above, be approved by the holders of at least two-thirds of our common stock.
We are also afforded the protections of Section 203 of the Delaware General Corporation Law, which would prevent
us from engaging in a business combination with a person who becomes a 15% or greater stockholder for a period
of three years from the date such person acquired such status unless certain board or stockholder approvals were
obtained.
26
Future sales, or the possibility of future sales, of a substantial amount of our common stock may
depress the price of the shares of our common stock.
Future sales, or the availability for sale in the public market, of substantial amounts of our common stock could
adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through
future sales of equity securities. If we or our existing stockholders sell substantial amounts of our common stock in
the public market, or if there is a perception that these sales may occur, the market price of our common stock could
decline.
Certain stockholders own a significant amount of our common stock, and their interests may conflict
with those of our other stockholders.
As of December 31, 2021, six investors – BlackRock, Inc., Henry Crown and Company, Dimensional Fund
Advisors LP, T. Rowe Price Associates, Inc., Victory Capital Management Inc., and The Vanguard Group –
beneficially owned approximately 49% of our outstanding common stock. As a result, the major stockholders
combined could be able to significantly influence the direction of the Company, the election of our Board of
Directors, and the outcome of any other matter requiring stockholder approval, including mergers, consolidations
and the sale of all or substantially all of our assets, and together with other beneficially owned investors, to prevent
or cause a change in control of the Company. Also, pursuant to contractual obligations, affiliates of Henry Crown
and Company were entitled to certain rights with respect to the registration of the common stock owned by them
under the Securities Act. Pursuant to such registration rights, on March 12, 2012, we filed a registration statement
related to the common stock owned by such entities and such registration statement was declared effective by the
SEC. The interests of the major stockholders may conflict with the interests of our other stockholders.
Item 1B. Unresolved Staff Comments
The Company has no unresolved staff comments to report pursuant to Item 1B.
27
Item 2. Properties
As of December 31, 2021, the Company utilized twenty-nine principal manufacturing plants with sixteen located
in the United States, eight in Europe, three in Canada, one in Brazil, and one in Australia. The facilities are listed
below:
Facility
Square
Footage
Principal Types of Products
Manufactured And Assembled
Winn, Michigan* 1,100,000 Owned Tree chippers, Grinders, Brush Cutters, Debarkers, Utility Loaders for
Morbark and Boxer
Selma, Alabama* 769,000 Owned Mechanical Rotary Mowers, Finishing Mowers, Zero Turn Radius
Mowers, Backhoes, Front-End Loaders for Bush Hog
New Philadelphia, Ohio* 430,000 Owned Telescopic Excavators for Gradall and Vacuum Trucks for VacAll
Wooster, Ohio* 400,000 Leased Stump Cutters, Aerial Trimmers, Mulchers, Crawler Trucks for Rayco
and Denis Cimaf
Gibson City, Illinois* 275,000 Owned Mechanical Mowers, Blades, Post Hole Diggers, Deep Tillage
Equipment, front-end loaders, backhoes, and other implements for
Rhino, Bush Hog and OEMs
Seguin, Texas* 230,000 Owned Hydraulic and Mechanical Rotary and Flail Mowers, Sickle-Bar Mowers,
and Boom-Mounted Equipment for Alamo Industrial
Indianola, Iowa* 200,000 Owned Distribution and Manufacturing of Aftermarket Farm Equipment
Replacement and Wear Parts for Herschel/Valu-Bilt
Richmond, Virginia* 197,000 Leased Leaf Collection Equipment and Replacement Brooms for Street
Sweepers for ODB
Neuville, France* 195,000 Owned Hydraulic and Mechanical Boom-Mounted Hedge and Grass Cutters for
Rousseau and SMA
Mukwonago, Wisconsin* 171,000 Owned Truck-Mounted Vacuum Trucks for Super Products
Ludlow, England* 160,000 Owned Hydraulic Boom-Mounted Hedge and Grass Cutters and other
Equipment for McConnel and Twose
Salford Priors, England* 157,000 Owned Tractor-Mounted Power Arm Flails and other Equipment for Bomford
and Twose and Spearhead
Sao Joao da Boa Vista, Brazil* 138,000 Owned Agriculture Mowing Equipment and other Attachments for Santa Izabel
Huntsville, Alabama* 135,000 Owned Air and Mechanical Sweeping Equipment for Schwarze
New Berlin, Wisconsin* 120,000 Owned Municipal Snow Removal and Ice Control Equipment for Wausau
Middelburg, the Netherlands* 110,000 Owned Boom Mowers and Stump Grinders for Dutch Power
Englefeld, Saskatchewan, Canada* 105,000 Owned Mechanical Rotary Mowers, Snow Blowers, and Rock Removal
Equipment for Schulte
St. Valerien, Quebec, Canada* 100,000 Owned Snow and Ice Removal Equipment for Tenco
Daumeray, France* 100,000 Owned Vacuum Trucks, High Pressure Cleaning Systems and Trenchers for
Rivard
Leavenworth, Kansas* 72,000 Owned Snow Plows and Heavy-Duty Snow Removal Equipment for Henke
Giessen, the Netherlands* 70,000 Owned Aquatic Harvesting Boats and Remote Control Mowing Equipment for
Alamo Group The Netherlands
Sioux Falls, South Dakota* 66,000 Owned Hydraulic and Mechanical Mowing Equipment for Tiger
Hopkinton, New Hampshire* 55,000 Owned Distributor of Public Works and Runway Maintenance Products for H.P.
Fairfield
Skowhegan, Maine* 47,000 Owned Distributor of Public Works and Runway Maintenance Products for H.P.
Fairfield
Kent, Washington* 43,000 Owned Truck-Mounted Sweeping Equipment for the contractor market branded
NiteHawk
Ayer’s Cliff, Quebec, Canada* 41,000 Owned Municipal Snow Removal and Ice Control Equipment for Everest
Suffolk, England* 35,000 Leased Commercial wood chippers and other forestry equipment for Timberwolf
Peschadoires, France* 22,000 Owned Replacement Parts for Blades, Knives and Shackles for Forges Gorce
Oakey, Australia* 18,000 Leased Agriculture Mowing Equipment and other Attachments for Fieldquip
Matao, Brazil 12,000 Owned Agriculture Mowing Equipment and other Attachments for Herder
Installation & Rental Facilities,
Warehouses & Sales
585,000 Leased /
Owned
Services Parts Distribution, Installation Facilities and Sales and After
Market Office
Offices, Seguin, Texas 21,000 Owned Corporate Office
Total 6,179,000 80%
* Principal manufacturing plants
28
Approximately 80% of the manufacturing, warehouse and office space is owned. The Company considers each
of these facilities to be well maintained, in good operating condition and adequate for its present level of operations.
Our Chartres, France location which was listed for sale, was sold in February of 2021. In the fourth quarter of 2020,
the Company announced the future closure of Dutch Power’s facility in Enschede, The Netherlands. The facility was
subsequently sold in April of 2021.
Item 3. Legal Proceedings
The Company is subject to various legal actions which have arisen in the ordinary course of its business. The
most prevalent of such actions relate to product liability, which is generally covered by insurance after various self-
insured retention amounts. While amounts claimed might be substantial and the ultimate liability with respect to
such litigation cannot be determined at this time, the Company believes that the ultimate outcome of these matters
will not have a material adverse effect on the Company’s consolidated financial position or results of operations;
however, the ultimate resolution cannot be determined at this time.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The Company’s common stock trades on the New York Stock Exchange under the symbol: ALG. On
February 18, 2022, there were 11,934,602 shares of common stock outstanding, held by approximately 84 holders
of record, but the total number of beneficial owners of the Company’s common stock exceeds this number. On
February 18, 2022, the closing price of the common stock on the New York Stock Exchange was $136.62 per share.
On January 3, 2022, the Board of Directors of the Company declared a quarterly dividend of $0.18 per share
which was paid on February 1, 2022 to holders of record as of January 18, 2022. The Company expects to continue
its policy of paying regular cash dividends, although there is no assurance as to future dividends as they depend on
future earnings, capital requirements and financial condition. In addition, the payment of dividends is subject to
restrictions under the Company’s bank revolving credit agreement. See “Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Liquidity and Capital Resources” in Item 7 of Part II of this Annual
Report on Form 10-K for a further description of the bank revolving credit agreement.
Information relating to compensation plans under which equity securities of the Company are authorized for
issuance is set forth in Part III, Item 12 of this Annual Report on Form 10-K.
29
Stock Price Performance Graph
The information contained in this Stock Performance Graph section shall not be deemed to be “soliciting
material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent
that Alamo Group Inc. specifically incorporates it by reference into a document filed under the Securities Act or the
Exchange Act.
The following graph and table set forth the cumulative total return to the Company’s stockholders of our
Common Stock during a five-year period ended December 31, 2021, as well as the performance of an overall stock
market index (the S&P SmallCap 600 Index) and the Company’s selected peer group index (the Russell 2000
Index).
The Company believes a representative industry peer group of companies with a similar business segment
profile does not exist. The SEC has indicated that companies may use a base other than industry or line of business
for determining its peer group index, such as an index of companies with similar market capitalization. Accordingly,
the Company has selected the Russell 2000 Index, a widely used small market capitalization index, to use as a
representative peer group.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Alamo Group Inc., the S&P SmallCap 600 Index and the Russell
2000 Index
Alamo Group Inc. S&P SmallCap 600 Russell 2000
12/16 12/17 12/18 12/19 12/20 12/21
$0
$50
$100
$150
$200
$250
*$100 invested on 12/31/16 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Copyright© 2022 Standard & Poor’s, a division of S&P Global. All rights reserved.
Copyright© 2022 Russell Investment Group. All rights reserved.
12/16 12/17 12/18 12/19 12/20 12/21
Alamo Group Inc. 100.00 149.01 102.53 167.31 184.72 197.82
S&P SmallCap 600 100.00 113.23 103.63 127.24 141.60 179.58
Russell 2000 100.00 114.65 102.02 128.06 153.62 176.39
Purchase of Equity Securities
30
Due to the COVID-19 pandemic, in April of 2020, the Company announced that it had temporarily suspended
its share repurchase program for the year.
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Outlook
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 beginning on page 14.
While we experienced strong demand in our markets and across our full range of products in 2021, we were
confronted with the direct and indirect consequences of the COVID-19 pandemic which remained ongoing
throughout the year. At various times during the year, employee sickness and quarantining requirements created
operational disruptions at several of our manufacturing facilities, leading to delayed shipments of our products, plant
inefficiencies, and higher labor costs. We were also negatively impacted by significant input cost inflation, supply
chain disruptions, and labor shortages, all of which continued throughout the year. We believe these negative forces
will persist, at least for the first half of 2022.
Our record backlog level at the end of 2021 provides us with some confidence and visibility for 2022, but we
remain concerned about the ongoing negative effects of the pandemic. During the first few weeks of 2022, we
experienced an increase in employee absences due to illness and quarantining, and we continue to struggle with
inflationary pressures, supply chain issues and labor shortages. We are hopeful that these negative influences will
moderate during the course of the year, but it is hard to determine the extent to which these issues will continue with
the information we currently have available to us. The extent of the pandemic’s effect on our operational and
financial performance will depend in large part on future developments, which cannot be predicted with confidence
at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to
contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or
vaccines, the contagiousness and severity of Coronavirus variants, including Delta and Omicron, and the
resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and rapidly
evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our
future operations. Of course, we may also be negatively affected by several other unanticipated factors, such as a
weakness in the overall economy; significant changes in currency exchange rates; further changes in trade or tax
policy; increased levels of government regulation; weakness in the end-markets we serve; acquisition integration
issues; budget constraints or revenue shortfalls in governmental entities; and other risks and uncertainties as
described in “Risk Factors.”
2021 Performance
In 2021, the Company’s net sales increased by 14.7% and net income increased by 38.8% compared to 2020.
The increase in both net sales and net income was primarily due to a strong recovery in customer demand for our
products compared to the prior year where demand for our products was materially impacted as a result of the
onset of the COVID-19 pandemic. Partially offsetting the increases in net sales and net income in 2021 were the
ongoing negative effects associated with the pandemic, including supply chain disruptions, labor shortages,
inflationary pressures, and logistics issues.
The Company’s Vegetation Management Division experienced a 24.1% increase in sales for the full year of
2021 compared to a full year of 2020. The increase in sales was primarily attributable to improved sales of forestry
and tree care products and agricultural mowing products, along with solid contributions from the U.K., Europe, Brazil
and Australia operations. The Division’s new orders and backlog improved in all product lines, though cases of
COVID-19 in certain facilities caused some operational disruptions during the first half of 2021. Negatively
impacting this Division were higher input costs and supply chain disruptions which affected manufacturing
efficiencies. Notwithstanding these challenges, the Division’s income from operations for the full year of 2021
recorded a 69.2% improvement compared to the full year of 2020.
31
The Company’s Industrial Equipment Division sales were up 2.5% for the full year of 2021 compared to a full
year of 2020. The increase in sales was led by excavation/vacuum trucks and sweeper/debris collection offset by
soft demand for our Snow Removal product line. The Division’s income from operations for the full year of 2021 was
down 21.0% compared to the full year of 2020. Negatively affecting this Division’s sales and income for operations
were the effects of the ongoing COVID-19 pandemic which included higher input costs, supply chain disruptions and
labor shortages and related affected manufacturing efficiencies. While the Industrial Division experienced ongoing
strong market conditions for most of its product categories, the supply chain and inflation cost impacts on this
division were more significant than those experienced by our Vegetation Management Division in 2021. In addition,
sales of snow removal products were lower in 2021 as compared to 2020 and the snow product group had both
higher warranty costs with more significant impacts from steel price increases that could not be passed on to their
government customers. New orders and backlog improved in all product groups for the full year 2021.
Consolidated income from operations was $116.9 million for the full year of 2021, which included a $1.1 million
charge for acceleration of stock grants for our former CEO, compared to $94.8 million, which included $4.8 million of
an inventory step-up expense related to the Morbark acquisition. The Company’s backlog increased 126.2% to
$800.8 million at the end of 2021 versus the backlog of $354.1 million at the end of 2020. The increase in the
Company’s backlog was primarily attributable to improved market conditions and an increase in customer demand
for our products in both Divisions as outlined above.
The following discussion should be read in conjunction with the consolidated financial statements of the
Company and the notes thereto included elsewhere in this Annual Report on Form 10-K.
The following tables set forth, for the periods indicated, certain financial data:
Fiscal Year Ended December 31,
Net sales (data in thousands): 2021 2020 2019
Vegetation Management $ 812,676 $ 654,630 $ 502,194
Industrial Equipment 521,547 508,836 616,944
Total net sales $ 1,334,223 $ 1,163,466 $ 1,119,138
Cost and profit margins, as percentages of net sales:
Cost of sales 74.9 % 74.8 % 75.6 %
Gross profit 25.1 % 25.2 % 24.4 %
Selling, general, administrative, and amortization expenses 16.3 % 17.1 % 16.0 %
Income from operations 8.8 % 8.1 % 8.5 %
Income before income taxes 8.2 % 6.9 % 7.6 %
Net income 6.0 % 5.0 % 5.6 %
Results of Operations
Fiscal 2021 compared to Fiscal 2020
The Company’s net sales in the fiscal year ended December 31, 2021 (“2021”) were $1,334.2 million, an
increase of $170.7 million or 14.7% compared to $1,163.5 million for the fiscal year ended December 31, 2020
(“2020”). The increase in sales was attributable to the continued strong recovery in customer demand for our
products in both the Vegetation Management and the Industrial Equipment Divisions. Negatively affecting sales in
2020 was the onset of the COVID-19 pandemic which materially impacted global demand for the Company’s
products and overall Company financial performance.
Net Vegetation Management sales were $812.7 million in 2021 compared to $654.6 million in 2020, an
increase of $158.1 million or 24.1%, coming from improved sales in the forestry/tree care and agricultural
mowing units along with solid contributions from the U.K., Europe, Brazil and Australia operations. Sales in
this Division were negatively impacted by operational and supply chain disruptions and logistics issues due
to the pandemic.
32
Net Industrial Equipment sales were $521.5 million in 2021 compared to $508.8 million in 2020,
representing an increase of $12.7 million or 2.5%. The increase primarily resulted from higher customer
demand for excavation/vacuum truck products and to a lesser extent the sweeper/debris collection
products, offset by softer demand for snow removal equipment. Negatively affecting this Division were
delays in truck chassis deliveries due to ongoing computer chip shortages as well as other supply chain
constraints and operational disruptions due to the pandemic.
Gross profit for 2021 was $334.5 million (25.1% of net sales) compared to $293.7 million (25.2% of net sales) in
2020, an increase of $40.8 million. The increase in gross profit was primarily attributable to higher sales volume in
2021 as well as pricing increases that were implemented over the course of the year. This was offset by inflationary
pressures, mainly from steel, along with higher costs relating to delivery of component parts, such as airfreighting
charges to meet customer deliveries, which also had a negative effect on gross margin percentage for the full year
of 2021. Negatively affecting the gross margin and gross margin percentage during for the full year of 2020 was a
$4.8 million charge on sales of inventory that had been previously stepped-up related to the Morbark acquisition.
Selling, general and administrative expenses (“SG&A”) were $202.9 million (15.2% of net sales) in 2021
compared to $184.2 million (15.8% of net sales) in 2020, an increase of $18.7 million. The full year of 2021 included
higher administrative and marketing expenses as the Company returned to pre-pandemic expense levels.
Amortization expense in 2021 was $14.6 million compared to $14.7 million in 2020, a decrease of $0.1 million.
Interest expense for 2021 was $10.5 million compared to $15.8 million in 2020, a decrease of $5.3 million or
33.5%. The decrease in interest expense in 2021 primarily came from a decrease in interest rates, and to a lesser
extent, reduced borrowing levels.
Other income (expense), net was income of $1.9 million during 2021 compared to expense of $0.6 million in
2020. The income in 2021 was primarily from changes in exchange rates and the sale of a facility in the Netherlands
and the expense in 2020 was primarily the result of changes in exchange rates offset by the gain on the sale of two
properties, one in the U.S. and one in Canada.
Provision for income taxes was $29.3 million (26.7% of income before income taxes) for 2021 compared to
$22.0 million (27.5% of income before income taxes) in 2020.
Net income for 2021 was $80.2 million compared to $57.8 million in 2020, with the increase in 2021 net income
resulting from the factors described above.
Fiscal 2020 compared to Fiscal 2019
The Company’s net sales in the fiscal year ended December 31, 2020 (“2020”) were $1,163.5 million, an
increase of $44.4 million or 4.0% compared to $1,119.1 million for the fiscal year ended December 31, 2019
(“2019”). The increase was attributable to the acquisitions of Morbark and Dutch Power, which year over year
contributed net sales of $160.5 million. Negatively affecting sales in 2020, was the onset of the COVID-19 pandemic
which began to negatively affect the Company’s operations and customer demand late in the first quarter of 2020.
Net Vegetation Management sales were $654.6 million in 2020 compared to $502.2 million in 2019, an
increase of $152.4 million or 30.4%, mainly coming from the acquisitions of Dutch Power and Morbark
mentioned above and improved sales of agricultural mowing as demand for those products in 2020
outpaced demand in 2019. This was offset by the impacts from the COVID-19 pandemic that began to
materially affect the Division late in the first quarter of 2020. This included temporary plant closures in the
U.S., France and Canada along with other operational disruptions throughout our global markets resulting
from health concerns and governmental directives, reduced governmental spending, lower customer
demand, and customer delivery restrictions, among other things.
Net Industrial Machinery sales were $508.8 million in 2020 compared to $616.9 million in 2019,
representing a decrease of $108.1 million or 17.5%. The COVID-19 pandemic materially impacted all
product lines in this Division, which resulted in significantly lower sales during 2020. This Division also had
several operational disruptions throughout 2020 including temporary plant closures and delays in customer
deliveries.
33
Gross profit for 2020 was $293.7 million (25.2% of net sales) compared to $273.5 million (24.4% of net sales) in
2019, an increase of $20.2 million. The increase in gross profit mainly came from the acquisitions of Dutch Power
and Morbark. Gross margin percentage improved year over year primarily due to a favorable mix of parts sales and
pricing actions which more than offset the negative impact of higher steel prices and lower factory utilization. Also
negatively affecting the gross margin and gross margin percentage of 2020 were $4.8 million of charges on sales of
inventory that had been previously stepped-up related to the Morbark acquisition.
Selling, general and administrative expenses (“SG&A”) were $184.2 million (15.8% of net sales) in 2020
compared to $172.9 million (15.5% of net sales) in 2019, an increase of $11.3 million. Morbark and Dutch Power
accounted for $23.6 million of net additional SG&A expense in 2020 offset by $12.3 million in expense savings
related to the COVID-19 pandemic. 2019 included $1.9 million of acquisition expenses related to the Morbark and
Dutch Power. Amortization expense in 2020 was $14.7 million compared to $5.7 million in 2019, an increase of
$9.0 million. The increased amortization expense in 2020 was primarily due to the acquisitions of Morbark and
Dutch Power.
Interest expense for 2020 was $15.8 million compared to $10.7 million in 2019, an increase of $5.1 million or
47.4%. The increase in interest expense in 2020 was the result of increased borrowings due to the Morbark
acquisition in 2019 offset by a decrease in interest rates.
Other income (expense), net was expense of $0.6 million during 2020 compared to expense of $0.8 million in
2019. The expense in 2020 and the expense in 2019 were primarily the result of changes in exchange rates.
Provision for income taxes was $22.0 million (27.5% of income before income taxes) for 2020 compared to
$21.5 million (25.4% of income before income taxes) in 2019. The increase in the tax rate for 2020 was due to the
reversal of a FIN 48 benefit recognized in 2019 partially offset by the benefit of the final GILTI regulations issued in
July of 2020.
Net income for 2020 was $57.8 million compared to $63.1 million in 2019, due to the factors described above.
Liquidity and Capital Resources
In addition to normal operating expenses, the Company has ongoing cash requirements which are necessary to
conduct the Company’s 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 December 31, 2021, the Company had working capital of $419.6 million, which represents a increase of
$61.4 million from working capital of $358.2 million as of December 31, 2020. The increase in working capital was
primarily due to sales growth and increased demand for our products as well as increased inventory to support
Company’s higher backlog levels along with increased work in process due to supply chain constraints.
Capital expenditures were $25.3 million for 2021, compared to $17.9 million for 2020. The increase was related
to the Company returning to a more normalized level of capital expenditures as the Company limited new capital
expenditures in 2020 in response to the COVID-19 pandemic. The Company will fund any future expenditure from
operating cash flows or through our revolving credit facility, described below. Also contributing to the increase in
capital expenditures in 2021 was approximately $2.2 million of capital projects intended to advance the Company’s
ongoing sustainability efforts. These capital projects included LED lighting upgrades at several of our facilities, the
installation of a solar power system at one of our facilities and the replacement of less efficient capital equipment.
Net cash provided by operating activities was $49.7 million for 2021, compared to $184.3 million for 2020. The
decrease of cash from operating activities came primarily from volume related increases in working capital due to
higher accounts receivable and inventory levels from sales growth. In 2021 we experienced strong demand for our
products coupled with supply chain disruptions and material cost inflation which led to higher inventory levels. In
2020, as a result of the COVID-19 pandemic, we focused on reductions in accounts receivable and inventory levels
which led to a significant reduction in our debt levels.
34
Net cash used in investing activities was $33.4 million for 2021, compared to $14.2 million for 2020. The
increase in cash used in investing activities was primarily due to the acquisition of Timberwolf, and increased
purchases of Property, plant and equipment partially offset by proceeds from the sale of an facility in the
Netherlands.
Net cash used by financing activities was $23.0 million for 2021, compared to $164.2 million for 2020. The
majority of the net cash used by financing activities in 2020 was primarily due to the pay down of debt related to the
2019 acquisitions of Morbark and Dutch Power.
The Company had $37.2 million in cash and cash equivalents held by its foreign subsidiaries as of
December 31, 2021. 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, but will need to monitor exchange rates to determine the appropriate timing of
such repatriation given the current relative strength 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 24, 2019, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered
into a Second Amended and Restated Credit Agreement (the Credit Agreement) with Bank of America, N.A., as
Administrative Agent. The Credit Agreement provides the Company with the ability to request loans and other
financial obligations in an aggregate amount of up to $650.0 million and, subject to certain conditions, the Company
has the option to request an increase in aggregate commitments of up to an additional $200.0 million. Pursuant to
the Credit Agreement, the Company has borrowed $300.0 million pursuant to a Term Facility repayable with interest
quarterly at a percentage of the initial principal amount of the Term Facility of 5.0% per year with the remaining
principal due in 2024. Up to $350.0 million is available under the Credit Agreement pursuant to a Revolver Facility
which terminates in 2024. Outstanding loans under the revolving credit facility bear interest at a variable rate
generally based on LIBOR or an alternative variable rate based on the highest of the Bank of America prime rate,
the federal funds rate or a rate generally based on LIBOR, in each case depending on the leverage ratio. The
Agreement requires the Company to maintain two financial covenants, a maximum leverage ratio and a minimum
asset coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness,
limitations on investments and acquisitions, limitations on 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 Term Facility and the Revolver Facility is October 24, 2024. As of December 31, 2021,
$269.5 million was outstanding under the Credit Agreement, $265.5 million on the Term Facility and $4.0 million on
the Revolver Facility. On December 31, 2021, $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
$255.0 million in available borrowings. The Company is in compliance with the covenants under the Agreement.
Management believes the Agreement and the Company’s ability to internally generate funds from operations
should be sufficient to meet the Company’s 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.
Inflation
The Company is exposed to the risk that the price of energy, steel and other purchased components may
increase and the Company may not be able to increase the price of its products correspondingly. If this occurs, the
Company’s results of operations would be adversely impacted. In 2021, the Company was impacted by inflationary
pressures that significantly increased the price of steel as well as the price of many other purchased components.
These inflationary pressures are ongoing.
New Accounting Pronouncements
As discussed in Note 2 of Notes to Consolidated Financial Statements, certain new financial accounting
pronouncements became effective January 1, 2021, or will become effective in the future. The effect on our financial
statements upon adoption of these pronouncements is discussed in the above-referenced note.
35
Contractual and Other Obligations
The following table shows the Company’s approximate obligations and commitments to make future payments
under contractual obligations as of December 31, 2021:
Payment due by period
(in thousands) Less than 1-3 3-5 More than
Contractual Obligations Total 1 Year Years Years 5 Years
Long-term debt obligations $ 269,498 $ 15,000 $ 254,498 $ — $ —
Finance and operating lease obligations 18,259 4,981 6,492 3,696 3,090
Interest obligations 12 4 8 — —
Purchase obligations 338,017 338,017 — — —
Total $ 625,786 $ 358,002 $ 260,998 $ 3,696 $ 3,090
Definitions:
A. Long-term debt obligation means a principal payment obligation under long-term borrowings.
B. Finance lease obligation means a principal payment obligation under a lease classified as a finance lease. Operating lease obligation
means a payment obligation under a lease classified as an operating lease.
C. Interest obligation means interest due on long-term debt and capital lease obligations. Interest on long-term debt assumes all floating
rates of interest remain the same as those in effect at December 31, 2021.
D. Purchase obligation means an agreement to purchase goods or services that is enforceable and legally binding on the registrant that
specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and
the approximate timing of the transactions.
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 U.S. Generally Accepted
Accounting Principles (“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 the following critical accounting
policy reflect its more significant estimates and assumptions used in the preparation of the Consolidated Financial
Statements. For further information on the critical accounting policies, see Note 1 of our Notes to Consolidated
Financial Statements.
Business Combinations
We account for the acquisition of a business in accordance with the accounting standards codification guidance
for business combinations, whereby the total consideration transferred is allocated to the assets acquired and
liabilities assumed, including amounts attributable to intangible assets based on their respective estimated fair
values as of the date of acquisition. Goodwill represents the excess of consideration transferred over the estimated
fair value of the net assets acquired in a business combination.
36
Assigning estimated fair values to the assets acquired and liabilities assumed requires the use of significant
estimates, judgments, inputs, and assumptions regarding the fair value of intangible assets that are separately
identifiable from goodwill, inventory step-up, and property, plant, and equipment, and are based on available
historical information, future expectations, and assumptions determined to be reasonable but are inherently
uncertain with respect to future events, including economic conditions, competition, the useful life of the acquired
assets and other factors. Such significant estimates, judgments, inputs, and assumptions include, when applicable,
the selection of an appropriate valuation method depending on the nature of the respective asset, such as the
income approach, the market or sales comparison approach, or the cost approach; estimating future cash flows
based on projected revenues and/or margins that we expect to generate subsequent to an acquisition; applying an
appropriate discount rate to estimate the present value of those projected cash flows we expect to generate
subsequent to an acquisition; selecting an appropriate royalty rate or estimating a customer attrition or technological
obsolescence factor where necessary and appropriate given the nature of the respective asset; assigning the
appropriate contributory asset charge where needed; determining an appropriate useful life and the related
depreciation or amortization method for the respective asset; and assessing the accuracy and completeness of
other historical financial metrics of the acquiree used as standalone inputs or as the basis for determining estimated
projected inputs such as margins, customer attrition, and costs to hold and sell product.
In determining the estimated fair value of intangible assets that are separately identifiable from goodwill, we
typically utilize the income approach, which discounts the projected future cash flows using an appropriate discount
rate that reflects the risks associated with the projected cash flows. However, in certain instances, particularly in
relation to developed technology or patents, we may utilize the cost approach depending on the nature of the
respective intangible asset and the recency of the development or procurement of such technology. In determining
the estimated fair value of acquired inventory, we typically utilize the cost approach for raw materials and the sales
comparison approach for finished goods, work in process and component parts. In determining the estimated fair
value of acquired property, plant, and equipment, we typically utilize the sales comparison approach or the cost
approach depending on the nature of the respective asset and the recency of the construction or procurement of
such asset.
We may refine the estimated fair values of assets acquired and liabilities assumed, if necessary, over a period
not to exceed one year from the date of acquisition by taking into consideration new information that, if known at the
date of acquisition, would have affected the estimated fair values ascribed to the assets acquired and liabilities
assumed. The judgments made in determining the estimated fair value assigned to assets acquired and liabilities
assumed, as well as the estimated useful life and depreciation or amortization method of each asset, can materially
impact the net earnings of the periods subsequent to an acquisition through depreciation and amortization, and in
certain instances through impairment charges, if the asset becomes impaired in the future. During the measurement
period, any purchase price allocation changes that impact the carrying value of goodwill will affect any
measurement of goodwill impairment taken during the measurement period, if applicable.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to various financial market risks. Market risk is the potential loss 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 manufactures its products primarily in the U.S., the U.K., France, the Netherlands,
Canada, Brazil and Australia. The Company sells its products primarily within the markets where the products are
produced, but certain of the Company’s sales from its U.K. and Canadian operations are denominated in other
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 in the U.K. and Canada or weak economic conditions in
the other markets in which the subsidiaries of the Company distribute their products.
37
Exposure to Exchange Rates
The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign
currencies, predominantly in European countries and Canada and, to a lesser extent, Australia and Brazil, as a
result of the sale of its products in international markets. Foreign currency forward exchange contracts in the U.K.
are used to offset the earnings effects of such fluctuations. On December 31, 2021, the result of a uniform 10%
strengthening in the value of the U.S. dollar relative to the currencies in which the Company’s sales are
denominated would have been a decrease in gross profit of $8.9 million. Comparatively, on December 31, 2020, the
result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which the Company’s
sales are denominated would have been a decrease in gross profit of approximately $8.2 million. 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 are 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. The translation
adjustment during 2021 was a loss of $15.8 million. On December 31, 2021, the British pound closed at 0.7392
relative to the U.S. dollar, and the Euro closed at 0.8793 relative to the U.S. dollar. By comparison, on
December 31, 2020, the British pound closed at 0.7318 relative to the U.S. dollar, and the Euro closed at 0.8187
relative to the U.S. dollar. No assurance can be given as to future valuation of the British pound or Euro or how
further movements in those or other currencies could affect future earnings or the financial position of the Company.
Interest Rate Risk
The majority of 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 average level of borrowings at variable rates and a
two hundred basis point change in the 2021 average interest rate under these borrowings, the Company’s 2021
interest expense would have changed by approximately $6.6 million. In the event of an adverse change in interest
rates, management could take actions to mitigate its exposure. 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. However, challenges
affecting the banking industry and credit markets in general can potentially cause changes to credit availability and
cost of borrowing, which creates a level of uncertainty.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data described in Item 15 of this report and included on pages 49
through 81 of this report are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures. An evaluation was carried out, under the supervision and with the
participation of the Company’s management, including our President & Chief Executive Officer and Executive Vice
President & Chief Financial Officer (Principal Financial and Accounting Officer), of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934). Based upon the evaluation, the President & Chief Executive Officer and Executive Vice
President & Chief Financial Officer (Principal Financial and Accounting Officer) concluded that the Company’s
disclosure controls and procedures were effective at the end of the period covered by this report.
Management’s Annual Report on Internal Control over Financial Reporting. Management’s report on the
Company’s internal control over financial reporting is included on page 45 of this Annual Report on Form 10-K and
incorporated by reference herein. The Company’s independent registered public accounting firm has audited and
issued a report on the Company’s internal control over financial reporting which is included on page 48 of this
Annual Report on Form 10-K and incorporated by reference herein.
38
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by
KPMG LLP, an independent registered public accounting firm, and the firm’s report on this matter is included in Item
8 of this annual report on Form 10-K.
Changes in Internal Controls over Financial Reporting. There have not been any changes in the Company’s
internal control over financial reporting (as such term is defined by paragraph (d) of Rule 13a-15 under the
Securities Exchange Act) during the fourth fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
(a) On February 24, 2022, the Company entered into a change in control agreement with Michael A.
Haberman. The Company entered into similar change in control of agreements with its other executive officers on
March 6, 2020. The agreement with Mr. Haberman is entered into in connection with Mr. Haberman’s recent
appointment as the Executive Vice-President of the Company’s Industrial Equipment Division. The intent of this
agreement is to provide the executive with financial security in the event of a change in control to facilitate a
transaction which may benefit shareholders but result in job loss to the executive. Mr. Haberman is entitled to
receive, upon termination of employment within six months preceding or twenty-four months after a change in
control of the Company (unless such termination is because of death, disability, for cause, or by the officer other
than for “good reason,” as defined in the change in control agreement), (a) a lump sum severance payment equal to
(i) the executive officers annual base salary in effect immediately prior to the change in control or the date of the
executive’s termination (whichever is greater) plus (ii) an amount equal to the executive’s target bonus opportunity
for the calendar year in which the change in control or the date of the executive’s termination occurs (whichever is
greater) multiplied by a benefit factor which has been set at a factor of “2” for Mr. Haberman (the “Severance
Factor”); (b) acceleration of vesting of all time-based equity awards including restricted stock awards (RSAs) and
stock options that vest ratably over time; and (c) reimbursement of health care insurance costs for a period of
eighteen (18) months following the executive’s termination of employment, if COBRA is elected by the executive
under the Company’s group health plan. The events that trigger a change-in-control under the agreement include (i)
the acquisition of 50% or more of our outstanding common stock by certain persons, (ii) certain changes in the
membership of the Board of Directors of the Company, (iii) certain mergers or consolidations, and (iv) a sale or
transfer of all or substantially all of the Company’s assets. The receipt of any and all severance payments pursuant
the change in control agreement is expressly conditioned on the executive’s execution (and non-revocation) of a
release of claims agreement. The summary is qualified in its entirety by the form of change of control agreement
attached hereto as exhibit 10.24 and incorporated herein by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
There are incorporated in this Item 10, by reference, those portions of the Company’s definitive proxy statement
for the 2022 Annual Meeting of Stockholders which appear therein under the captions “Proposal 1 – Election of
Directors,” “Nominees for Election to the Board of Directors,” “Information Concerning Directors,” “Meetings and
Committees of the Board,” “The Audit Committee,” and “The Nominating/Corporate Governance Committee.” See
also the information under the caption “Information About Our Executive Officers” in Part I of this Report.
39
The Board of Directors has delegated certain responsibilities to three Committees of the Board. The
Committees are the Audit Committee, Compensation Committee and Nominating/Corporate Governance
Committee. The Board of Directors has also adopted Corporate Governance guidelines and a Code of Business
Conduct and Ethics for all employees, including the Chief Executive Officer, Principal Financial Officer, Principal
Accounting Officer and those individuals performing similar functions.
The Committee Charters, Code of Business Conduct and Ethics, and Corporate Governance Guidelines may be
found on the Company’s website (www.alamo-group.com) under the “Our Commitment” tab and are also available
in printed form at no charge by sending a request to the Corporate Secretary, Alamo Group Inc., 1627 E. Walnut
Street, Seguin, Texas 78155, which is the principal executive office of the Company. The telephone number is (830)
379-1480. The Company will post any amendments to the Code of Conduct and Ethics, and any waivers that are
required to be disclosed by the rules of either the SEC or the New York Stock Exchange, on the Company’s
website.
Item 11. Executive Compensation
There are incorporated in this Item 11, by reference, those portions of the Company’s definitive proxy statement
for the 2022 Annual Meeting of Stockholders which appear therein under the captions “Executive Compensation,”
“The Compensation Committee,” “Compensation Discussion and Analysis,” “Compensation Committee Report” and
“Director Compensation during 2021.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
There is incorporated in this Item 12, by reference, that portion of the Company’s definitive proxy statement for
the 2022 Annual Meeting of Stockholders which appears under the caption “Beneficial Ownership of our Common
Stock.”
Information on Alamo Group Inc.’s Equity Compensation Plans
The following table provides information on the shares that are available under the Company’s stock
compensation plans and, in the case of plans where stock options may be granted, the number of shares of
common stock issuable upon exercise of those stock options. The Company currently does not have an Equity
Compensation Plan that is not approved by the Stockholders.
The numbers in the table are as of December 31, 2021, the last day of Alamo Group Inc.’s 2021 fiscal year.
A B C
Equity Compensation
Plan Category
Number of Securities to
be issued upon
exercise of outstanding
options, warrants and
rights
Weighted-average
exercise
price of outstanding
options, warrants and
rights
Number of Securities
that remain
available for future
issuance
under equity
compensation plans
(excluding securities
reflected in column A)
Plans approved by stockholders
2005 Incentive Stock Option Plan 19,050 $43.05 —
2009 Equity Incentive Plan 18,225 $96.21 —
2015 Incentive Stock Option Plan 68,560 $104.63 297,850
2019 Equity Incentive Plan 64,391 $136.59 423,969
Plans not approved by stockholders — — —
Total 170,226 721,819
40
Item 13. Certain Relationships, Related Transactions and Director Independence
Information regarding certain relationships and related transactions is set forth under the caption “Certain
Relationships and Related Transactions” in the Company’s definitive proxy statement for the 2022 Annual Meeting
of Stockholders, and such information is incorporated by reference herein. There were no such reportable
relationships or related party transactions in the fiscal year ended December 31, 2021.
Information regarding director independence is set forth under the caption “Information Concerning Directors” in
the Company’s definitive proxy statement for the 2022 Annual Meeting of Stockholders, and such information is
incorporated by reference herein.
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is KPMG LLP, San Antonio, TX, Auditor Firm ID: 185.
Information regarding principal accountant fees and services is set forth under the caption “Proposal 3 –
Ratification of Appointment of Independent Auditors” in the Company’s definitive proxy statement for the 2022
Annual Meeting of Stockholders, and such information is incorporated by reference herein.
PART IV
Item 15. Exhibits and Financial Statement Schedules
Financial Statements
Page
Report of Management on Internal Control over Financial Reporting 45
Reports of Independent Registered Public Accounting Firm (KPMG LLP) 46
Consolidated Balance Sheets 49
Consolidated Statements of Income 50
Consolidated Statements of Comprehensive Income 51
Consolidated Statements of Stockholders’ Equity 52
Consolidated Statements of Cash Flows 53
Notes to Consolidated Financial Statements 54
Financial Statement Schedules
All schedules for which a provision is made in the applicable accounting regulation of the Securities and
Exchange Commission are omitted because they are not required or because the required information is included in
the consolidated financial statements or notes thereto.
Item 16. Summary
None.
41
Exhibits
Exhibits – The following exhibits are incorporated by reference to the filing indicated or are included following
the index to Exhibits.
INDEX TO EXHIBITS
Incorporated by Reference
From the Following
Exhibits Exhibit Title Documents
3.1 — Certificate of Incorporation, as amended, of
Alamo Group Inc.
Filed as Exhibit 3.1 to Form S-1, February 5,
1993
3.2 — Certificate of Amendment of Certificate of
Incorporation of Alamo Group Inc.
Filed as Exhibit 3.1 to Form 8-K, May 10, 2016
3.3 — By-Laws of Alamo Group Inc. as amended Filed as Exhibit 3.1 to Form 8-K, March 30,
2020
4.1 — Description of Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of
1934
Filed as Exhibit 4.1 to Form 10-K, February 28,
2020
10.1 — Form of indemnification agreements with
Directors of Alamo Group Inc.
Filed as Exhibit 10.1 to Form 10-Q, May 15,
1997
10.2 — Form of indemnification agreements with certain
executive officers of Alamo Group Inc.
Filed as Exhibit 10.2 to Form 10-Q, May 15,
1997
*10.3 — 401(k) Restoration Plan for Highly Compensated
Employees, adopted on December 9, 1997
Filed as Exhibit 10.15 to Form 10-K, March 31,
1998
*10.4 — First Amended and Restated 1999 Non-Qualified
Stock Option Plan, adopted by the Board of
Directors on February 13, 2001
Filed as Exhibit B to Schedule 14A, March 30,
2001
*10.5 — 2005 Incentive Stock Option Plan, adopted by the
Board of Directors on May 4, 2005
Filed as Appendix E to Schedule 14A, March
29, 2005
*10.6 — 2009 Equity Incentive Plan, adopted by the Board
of Directors on May 7, 2009
Filed as Exhibit 10.1 to Form 8-K, May 13,
2009
10.7 — Second Amended and Restated Credit
Agreement, dated as of October 24, 2019, by and
among Alamo Group Inc., Bank of America, N.A.
as administrative agent, Wells Fargo Bank,
National Association, and BBVA USA as co-
syndication agents, and the other lenders party
thereto.
Filed as Exhibit 10.1 to Form 8-K, October 29,
2019
10.8 — First Amendment to Securities Purchase
Agreement, dated as of October 22, 2019, by and
among Alamo Acquisition Corporation, a
Delaware corporation, Alamo Group Inc., a
Delaware corporation, Stellex Capital Partners,
LP, a Delaware limited partnership, and in its
capacity as the initial representative of the other
Sellers pursuant to Section 10.6 of the Securities
Purchase Agreement.
Filed as Exhibit 10.2 to Form 10-Q, October
31, 2019
*10.9 — Form of Restricted Stock Award Agreement under
the 2009 Equity Incentive Plan
Filed as Exhibit 10.2 to Form 8-K, May 13,
2009
*10.10 — Form of Restricted Stock Unit Award Agreement
under the 2009 Equity Incentive Plan
Filed as Exhibit 10.3 to Form 8-K, May 13,
2009
*10.11 — Form of Nonqualified Stock Option Agreement
under the 2009 Equity Incentive Plan
Filed as Exhibit 10.4 to Form 8-K, May 13,
2009
*10.12 — Form of Nonqualified Stock Option Agreement
under the First Amended and Restated 1999
Nonqualified Stock Option Plan
Filed as Exhibit 10.5 to Form 8-K, May 13,
2009
42
*10.13 — Form of Stock Option Agreement under the 2005
Stock Option Plan
Filed as Exhibit 10.6 to Form 8-K, May 13,
2009
10.14 — Investor Rights Agreement, dated October 22,
2009, between Alamo Group Inc. and Bush Hog,
LLC
Filed as Exhibit 10.25 to Form 10-K, March 12,
2012
*10.15 — Supplemental Executive Retirement Plan Filed as Exhibit 10.1 to Form 8-K, January 18,
2011
*10.16 — Amended and Restated Executive Incentive Plan Filed as Exhibit 10.26 to Form 10-K, March 1,
2018
*10.17 — 2015 Incentive Stock Option Plan, adopted by the
Board of Directors on May 7, 2015
Filed as Appendix A to Schedule 14A, March
19, 2015
*10.18 — Alamo Group Inc. 2019 Equity Incentive Plan Filed as Exhibit 10.1 to Form 8-K, May 7, 2019
*10.19 — Form of Restricted Stock Award Agreement under
the Alamo Group Inc. 2019 Equity Incentive Plan
Filed as Exhibit 10.23 to Form 10-K, February
28, 2020
*10.20 — Form of Restricted Stock Unit Agreement under
the Alamo Group Inc. 2019 Equity Incentive Plan
Filed as Exhibit 10.24 to Form 10-K, February
28, 2020
*10.21 — Form of Performance Share Unit Agreement
under the Alamo Group Inc. 2019 Equity Incentive
Plan
Filed as Exhibit 10.22 to Form 10-K, February
26, 2021
10.22 — Form of Executive Change in Control Agreement Filed as Exhibit 10.1 to Form 8-K, March 10,
2020
10.23 — Amendment to Executive Change in Control
Agreement
Filed as Exhibit 10.1 to Form 10-Q, August 4,
2021
10.24 — Executive Change in Control Agreement by and
between Alamo Group Inc. and Michael A.
Haberman
Filed Herewith
18.1 — Lifo Preferability Letter Filed as Exhibit 18.1 to Form 10-Q, November
3, 2021
21.1 — Subsidiaries of the Registrant Filed Herewith
23.1 — Consent of KPMG LLP Filed Herewith
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 Filed Herewith
101.SCH — XBRL Taxonomy Extension Schema Document Filed Herewith
101.CAL — XBRL Taxonomy Extension Calculation Linkbase
Document
Filed Herewith
101.LAB — XBRL Taxonomy Extension Label Linkbase
Document
Filed Herewith
101.PRE — XBRL Taxonomy Extension Presentation
Linkbase Document
Filed Herewith
101.DEF — XBRL Taxonomy Extension Definition Linkbase
Document
Filed Herewith
104 — Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101)
Filed Herewith
________________________________________________________________________________________________________________________
*Compensatory Plan
43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ALAMO GROUP INC.
Date: February 24, 2022
/s/ Jeffery A. Leonard
Jeffery A. Leonard
President & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in their capacities and on the 24th day of February, 2022.
Signature Title
/s/RODERICK R. BATY
Roderick R. Baty
Chairman of the Board & Director
/s/JEFFERY A. LEONARD
Jeffery A. Leonard
President & Chief Executive Officer
(Principal Executive Officer)
/s/RICHARD J. WEHRLE
Richard J. Wehrle
Executive Vice President & Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
/s/ROBERT P. BAUER
Robert P. Bauer
Director
/s/ERIC P. ETCHART
Eric P. Etchart
Director
/s/NINA C. GROOMS
Nina C. Grooms
Director
/s/TRACY C. JOKINEN
Tracy C. Jokinen
Director
/s/RICHARD W. PAROD
Richard W. Parod
Director
/s/RONALD A. ROBINSON
Ronald A. Robinson
Director
/s/LORIE L. TEKORIUS
Lorie L. Tekorius
Director
44
Report of Management on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with U.S. Generally Accepted Accounting Principles.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2021 using the criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this
assessment, the Company’s management concludes that, as of December 31, 2021, the Company’s internal
controls over financial reporting were effective based on these criteria.
KPMG LLP, an independent registered public accounting firm, has issued an attestation report on the
effectiveness of internal control over financial reporting, which is included herein.
Date: February 24, 2022 /s/Jeffery A. Leonard
Jeffery A. Leonard
President, Chief Executive Officer & Director
(Principal Executive Officer)
/s/Richard J. Wehrle
Richard J. Wehrle
Executive Vice President & Chief Financial Officer
(Principal Financial Officer)
45
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Alamo Group Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Alamo Group, Inc. and subsidiaries (the
Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive
income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31,
2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period
ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 24, 2022 expressed an unqualified
opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Sufficiency of evidence over the existence of inventory
As discussed in Note 6 to the consolidated financial statements, the value of inventory was $320.9 million
as of December 31, 2021. To facilitate the global delivery of goods to customers, the Company operates
across North America, South America, Europe and Australia. Within these locations, the Company has 29
principal manufacturing plants located in seven countries.
We identified the assessment of the sufficiency of evidence over the existence of inventory as a critical audit
matter. The geographical dispersion of inventory required especially subjective auditor judgment in
determining the sufficiency of audit evidence obtained over the existence of inventory.
46
The following are the primary procedures we performed to address this critical audit matter. We applied
auditor judgment to determine the nature and extent of procedures to be performed over the existence of
inventory including determining where we would perform procedures. We evaluated the design and tested
the operating effectiveness of certain internal controls over the Company’s inventory process at certain
manufacturing plants. This included controls related to the physical inspection of inventories at certain
plants. We performed independent test counts for a sample of items and compared them to the Company’s
records to evaluate the inventory at those specific plants. We selected a sample of inventory transactions
that were made by the Company near the Company’s fiscal year-end and evaluated the accounting period
in which they were recorded. We evaluated the sufficiency of audit evidence obtained by assessing the
results of the procedures performed.
/s/ KPMG LLP
We have served as the Company’s auditor since 2009.
San Antonio, Texas
February 24, 2022
47
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Alamo Group Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Alamo Group, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related
consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the
years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated
financial statements), and our report dated February 24, 2022 expressed an unqualified opinion on those
consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report
of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ KPMG LLP
San Antonio, Texas
February 24, 2022
48
Alamo Group Inc. and Subsidiaries
Consolidated Balance Sheets
Year Ended December 31,
(in thousands, except per share amounts) 2021 2020
ASSETS
Current assets:
Cash and cash equivalents $ 42,115 $ 50,195
Accounts receivable, net 237,970 209,276
Inventories, net 320,917 242,501
Prepaid expenses and other current assets 9,500 7,382
Income tax receivable 1,666 6,186
Total current assets 612,168 515,540
Rental equipment, net 32,514 42,266
Property, plant and equipment 321,863 312,362
Less: Accumulated depreciation (169,372) (156,928)
Total property, plant and equipment, net 152,491 155,434
Goodwill 202,406 195,132
Intangible assets, net 183,466 193,172
Deferred income taxes 1,110 1,203
Other non-current assets 21,587 19,112
Total assets $ 1,205,742 $ 1,121,859
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable $ 101,396 $ 75,317
Income taxes payable 2,613 2,278
Accrued liabilities 73,523 64,634
Current maturities of long-term debt and finance lease obligations 15,032 15,066
Total current liabilities 192,564 157,295
Long-term debt and finance lease obligations, net of current maturities 254,522 270,320
Long-term tax liability 4,416 3,954
Other long-term liabilities 27,119 32,475
Deferred income taxes 21,458 22,812
Stockholders’ equity:
Common stock, $.10 par value, 20,000,000 shares authorized;
11,874,178 and 11,809,926 outstanding at December 31, 2021 and
December 31, 2020, respectively 1,187 1,181
Additional paid-in capital 124,228 118,528
Treasury stock, at cost; 82,600 shares at December 31, 2021 and
December 31, 2020 (4,566) (4,566)
Retained earnings 633,804 560,186
Accumulated other comprehensive loss (48,990) (40,326)
Total stockholders’ equity 705,663 635,003
Total liabilities and stockholders’ equity $ 1,205,742 $ 1,121,859
*Years ended December 31, 2020 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to the Consolidated
Financial Statements.
See accompanying notes.
49
Alamo Group Inc. and Subsidiaries
Consolidated Statements of Income
Year Ended December 31,
(in thousands, except per share amounts) 2021 2020 2019
Net sales:
Vegetation Management $ 812,676 $ 654,630 $ 502,194
Industrial Equipment 521,547 508,836 616,944
Total net sales 1,334,223 1,163,466 1,119,138
Cost of sales 999,709 869,736 845,647
Gross profit 334,514 293,730 273,491
Selling, general and administrative expenses 202,939 184,199 172,921
Amortization expense 14,637 14,746 5,658
Income from operations 116,938 94,785 94,912
Interest expense (10,533) (15,837) (10,747)
Interest income 1,149 1,366 1,229
Other income 1,944 (557) (795)
Income before income taxes 109,498 79,757 84,599
Provision for income taxes 29,253 21,953 21,496
Net income $ 80,245 $ 57,804 $ 63,103
Net income per common share:
Basic $ 6.78 $ 4.91 $ 5.38
Diluted $ 6.75 $ 4.88 $ 5.35
Average common shares:
Basic 11,837 11,782 11,729
Diluted 11,896 11,845 11,800
*Years ended December 31, 2020 and 2019 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to the
Consolidated Financial Statements.
See accompanying notes.
50
Alamo Group Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Year Ended December 31,
(in thousands) 2021 2020 2019
Net income $ 80,245 $ 57,804 $ 63,103
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax (expense)
benefit of $(344), $810, and zero (15,800) 8,862 3,363
Unrealized income (loss) on derivative instruments, net of tax
(expense) benefit of $(1,405), $1,842, and zero, respectively 5,298 (7,484) 610
Recognition of deferred pension and other post-retirement
benefits, net of tax (expense) benefit of $(356), $230, and $703,
respectively
1,838 (866) 20
Other comprehensive (loss) income, net of tax $ (8,664) $ 512 $ 3,993
Comprehensive income $ 71,581 $ 58,316 $ 67,096
*Years ended December 31, 2020 and 2019 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to the
Consolidated Financial Statements.
See accompanying notes.
51
Alamo Group Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
Common Stock Additional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Stock-
holders’
Equity(in thousands) Shares Amount
Balance at December 31, 2018 11,620 $ 1,166 $ 108,422 $ (426) $ 451,029 $ (44,831) $ 515,360
Other comprehensive income — — — — 63,103 3,993 67,096
Stock-based compensation expense — — 3,269 — — — 3,269
Stock-based compensation transactions 90 9 1,975 — — — 1,984
Repurchased shares (40) — (4,140) — — (4,140)
Dividends paid ($0.48 per share) — — — — (5,626) — (5,626)
Balance at December 31, 2019 11,670 $ 1,175 $ 113,666 $ (4,566) $ 508,506 $ (40,838) $ 577,943
Other comprehensive income — — — — 57,804 512 58,316
Stock-based compensation expense — — 4,119 — — — 4,119
Stock-based compensation transactions 57 6 743 — — — 749
Repurchased shares — — — — — — —
Dividends paid ($0.52 per share) — — — — (6,124) — (6,124)
Balance at December 31, 2020 11,727 $ 1,181 $ 118,528 $ (4,566) $ 560,186 $ (40,326) $ 635,003
Other comprehensive income — — — — 80,245 (8,664) 71,581
Stock-based compensation expense — — 5,987 — — — 5,987
Stock-based compensation transactions 64 6 (287) — — — (281)
Dividends paid ($0.56 per share) — — — — (6,627) — (6,627)
Balance at December 31, 2021 11,791 $ 1,187 $ 124,228 $ (4,566) $ 633,804 $ (48,990) $ 705,663
*Years ended December 31, 2020 and 2019 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to the Consolidated
Financial Statements.
See accompanying notes.
52
Alamo Group Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
(in thousands) 2021 2020 2019
Operating Activities
Net income $ 80,245 $ 57,804 $ 63,103
Adjustments to reconcile net income to cash provided by operating activities:
Provision for doubtful accounts 506 860 575
Depreciation – PP&E 21,229 19,264 14,934
Depreciation – Rental 8,613 9,830 9,373
Amortization of intangibles 14,637 14,746 5,658
Amortization of debt issuance 667 634 295
Stock-based compensation expense 5,987 4,119 3,269
Provision for deferred income tax (benefit) expense (1,182) (855) 3,383
Gain on sale of property, plant and equipment (3,779) (1,094) (912)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (27,571) 28,064 11,447
Inventories (78,463) 38,275 393
Rental equipment 1,138 4,542 (20,729)
Prepaid expenses and other (6,994) 6,373 (4,633)
Trade accounts payable and accrued liabilities 32,532 (3,783) 6,397
Income taxes payable 4,648 6,601 (4,861)
Long term tax payable 462 (3,478) (1,082)
Other assets and liabilities, net (3,008) 2,431 2,203
Net cash provided by operating activities 49,667 184,333 88,813
Investing Activities
Acquisitions, net of cash acquired (17,798) — (400,784)
Purchase of property, plant and equipment (25,263) (17,874) (31,337)
Proceeds from sale of property, plant and equipment 9,667 3,703 2,277
Purchase of patents (44) — (96)
Net cash used in investing activities (33,438) (14,171) (429,940)
Financing Activities
Borrowings on bank revolving credit facility 188,000 115,000 217,000
Repayment on bank revolving credit facility (189,000) (255,000) (157,000)
Principal payments on long-term debt and capital leases (15,093) (18,867) (122)
Proceeds from issuance of long-term debt — — 300,002
Debt issuance cost — — (2,875)
Dividends paid (6,627) (6,124) (5,626)
Proceeds from exercise of stock options 1,676 1,459 2,573
Treasury stock repurchased — — (4,140)
Common stock repurchased (1,957) (710) (589)
Net cash used in financing activities (23,001) (164,242) 349,223
Effect of exchange rate changes on cash (1,308) 1,964 172
Net change in cash and cash equivalents (8,080) 7,884 8,268
Cash and cash equivalents at beginning of the year 50,195 42,311 34,043
Cash and cash equivalents at end of the year $ 42,115 $ 50,195 $ 42,311
Cash paid during the year for:
Interest $ 10,248 $ 17,049 $ 9,455
Income taxes $ 32,865 $ 17,140 $ 23,099
*Years ended December 31, 2020 and 2019 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to the
Consolidated Financial Statements.
See accompanying notes.
53
Alamo Group Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Description of the Business and Segments
The Company manufactures, distributes and services high quality tractor-mounted mowing and other
vegetation maintenance equipment, street sweepers, excavators, vacuum trucks, forestry and tree maintenance
equipment, snow removal equipment, leaf collection equipment, pothole patchers, zero turn radius mowers,
agricultural implements and related aftermarket parts and services.
The Company manages its business through two principal reporting segments: Vegetation Management and
Industrial Equipment, which are discussed in Note 18.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Alamo Group Inc. and its
subsidiaries (the “Company” or “Alamo Group”), all of which are wholly owned. All intercompany accounts and
transactions have been eliminated in consolidation.
Reclassifications
At the beginning of the fourth quarter of 2021, the Company began reporting operating results on the basis of
two new segments, the Vegetation Management Division and the Industrial Equipment Division. Prior to the fourth
quarter of 2021, the Company had been reporting its operating results on the basis of two segments, the Industrial
and Agricultural Divisions. The realignment into these two new segments will allow the Company to capture
synergies in areas such as cross-branding, distribution and product development. The prior period segment
information has been retrospectively adjusted to reflect the current segment presentation in Note 18 to the
Consolidated Financial Statements.
Use of Estimates
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles
requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenues,
and expenses reported in the financial statements and accompanying notes. Judgments related to asset impairment
and certain reserves are particularly subject to change. Actual results could differ from those estimates. Such
estimates include, but are not limited to, allowance for doubtful accounts, reserve for sales discounts, estimated
realizable value on obsolete and slow-moving inventory, warranty reserve, estimates related to pension accounting,
estimates related to fair value for purposes of assessing goodwill, long-lived assets and intangible assets for
impairment, estimates related to income taxes, and estimates related to contingencies.
Foreign Currency
The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the end of
the year. Revenues and expenses are translated at average rates in effect during the reporting period. Translation
adjustments are included in Accumulated other comprehensive income (loss).
Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less from the
date of purchase to be cash equivalents. As of December 31, 2021 and December 31, 2020, there was no
restricted cash.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of
accounts receivable. The credit risk is limited because of the large numbers and types of customers and their
geographic dispersion.
54
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. Effective July 1, 2021, the Company changed
its method of accounting for its U.S. inventories currently accounted for under the LIFO method to the FIFO method.
Total U.S. inventories that utilized the LIFO cost method represented 41% of the Company’s total inventory as of
December 31, 2020 prior to this change in method. The Company believes the FIFO method is preferable because
it: (i) more accurately matches cost of sales with the related revenues as the FIFO method more accurately
resembles the physical flow of inventory and; (ii) conforms all of the Company’s consolidated inventory to a single
method of accounting. The Company also notes that the revised policy improves comparability with many of the
Company’s peers.
The Company applied this change retrospectively to all periods presented. There was an immaterial impact to
the Company’s Consolidated Income Statement and Consolidated Statement of Cash Flows for the twelve
months ended December 31, 2021, 2020 and 2019. The following financial statement line items in the Company’s
Consolidated Balance Sheet as of December 31, 2020 was adjusted as follows:
Consolidated Balance Sheets December 31, 2020
(in thousands) As
Originally
Reported
Effect of
Change
As
Adjusted
Inventories, net $ 229,971 $ 12,530 $ 242,501
Deferred income taxes (liability) 19,642 3,170 22,812
Retained earnings 550,826 9,360 560,186
Property, Plant and Equipment
Property, plant, and equipment are stated on the basis of cost. Major renewals and betterments are charged to
the property accounts, while replacements, maintenance and repairs, which do not improve or extend the lives of
the respective assets, are expensed to the current period. Depreciation is provided at amounts calculated to
amortize the cost of the assets over their estimated useful economic lives using the straight-line method.
Impairment of Long-Lived Assets
Long-lived assets, such as property, plant and equipment, rental equipment, and purchased intangibles
subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to
be tested for possible impairment, the Company first compares non-discounted cash flows expected to be
generated by that asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is
not recoverable on a non-discounted cash flow basis, an impairment is recognized to the extent that the carrying
amount exceeds fair value. Fair value is determined through various valuation techniques including discounted
cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable net assets
acquired. Goodwill is not amortized but is instead tested for impairment at least annually, or whenever events or
circumstances change between the annual impairment tests that make it likely that an impairment may have
occurred, such as a significant adverse change in the business climate or a decision to sell all or a portion of a
reporting unit. The Company performs its annual test for goodwill impairment related to its reporting units on
October 1 of each fiscal year. Impairment testing for goodwill is done at the reporting unit level. A reporting unit is
an operating segment or one level below an operating segment (also known as a component). A component of an
operating segment is a reporting unit if the component constitutes a business for which discrete financial information
is available, and segment management regularly reviews the operating results of that component.
We perform a qualitative assessment for all of our reporting units to determine whether it is more likely than not
that an impairment exists. Factors considered include macroeconomic, industry and competitive conditions, legal
and regulatory environment, historical financial performance and significant changes in the reporting unit. If the
qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative
55
assessment is performed. Alternatively, we may also bypass the qualitative assessment and go ahead and perform
step 1 to determine if the carrying amount exceeds the reporting unit’s fair value. If the fair value of the reporting unit
is lower than its carrying amount, goodwill is written down for the amount by which the carrying amount exceeds the
fair value. However, the loss recognized cannot exceed the carrying amount of goodwill. We typically use
discounted cash flow models to determine the fair value of a reporting unit. The assumptions used in these models
are consistent with those we believe a hypothetical marketplace participant would use.
See Note 8 to the Consolidated Financial Statements for more information regarding goodwill.
Intangible Assets
The Company has intangible assets with both definite and indefinite useful lives. The definite-lived assets are
trade names and trademarks, customer and dealer relationships, and patents and drawings that are subject to
amortization with useful lives ranging from 3 years to 25 years. Impairment of definite-lived assets is discussed as
part of the Impairment of Long-Lived Assets paragraph above.
The indefinite-lived assets not subject to amortization consist of trade names. The Company tests its indefinite-
lived intangible assets for impairment on an annual basis at year-end, or more frequently if an event occurs or
circumstances change that indicate that the fair value of an indefinite-lived intangible asset could be below its
carrying amount. The impairment test consists of comparing the fair value of the indefinite-lived intangible asset,
determined using the relief from royalty method, with its carrying amount. An impairment loss would be recognized
for the carrying amount in excess of its fair value.
See Note 9 to the Consolidated Financial Statements for more information regarding intangible assets.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in other non-current
assets, accrued liabilities, and other long-term liabilities on our consolidated balance sheets. Finance leases are
included in property, plant and equipment, accrued liabilities, and other long-term liabilities on our consolidated
balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are
recognized at commencement date based on the present value of lease payments over the lease term. As most of
our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available
at commencement date in determining the present value of lease payments. The operating lease ROU asset also
includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend
or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease
payments is recognized on a straight-line basis over the lease term.
We have elected to not account for the lease and non-lease components separately for most of our asset
classes with the exception of real-estate. We have also elected to exclude all lease agreements with an initial term
of 12 months or less from the lease recognition requirements as allowed by ASC.
See Note 10 to the Consolidated Financial Statements for more information regarding leases.
Pensions
The Company records annual amounts relating to its pension and post-retirement plans based on calculations
that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of
return, compensation increases, turnover rates and health care cost trend rates. The Company reviews its
assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends
when it is appropriate to do so. The effect of modifications to those assumptions is recorded in Accumulated other
comprehensive income (loss) and amortized to net periodic cost over future periods using the corridor method. The
Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on
its experience and market conditions. The net periodic costs are recognized as employees render the services
necessary to earn the post-retirement benefits.
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Revenue Recognition
The majority of the Company’s revenue is recognized from product sales under contracts with customers. The
Company presents two reportable operating segments within its financial statements: Vegetation Management and
Industrial Equipment. Contract terms and performance obligations within each contractual agreement are generally
consistent for both divisions, with small differences that do not have a significant impact on the revenue recognition
considerations under Topic 606. Revenues are recognized when we satisfy our performance obligation to transfer
product to our customers, which typically occurs at a point in time upon shipment or delivery of the product, and for
an amount that reflects the transaction price that is allocated to the performance obligation. Our contracts with
customers state the final terms of sale, including the description, quantity and price for goods sold. In the normal
course of business, we generally do not accept product returns.
The transaction price is the consideration that we expect to be entitled to in exchange for our products. Some
of our contracts contain variable consideration in the form of sales incentives to our customers, such as discounts
and rebates. For contracts that include variable consideration, we estimate the factors that determine the variable
consideration in order to establish the transaction price.
We have elected that any taxes collected from customers and remitted to government authorities (i.e., sales tax,
use tax, etc.) are excluded from the measurement of the transaction price and therefore are excluded from net sales
in the consolidated statements of operations.
There are instances where we provide shipping services in relation to the goods sold to our customers.
Shipping and handling costs that occur before the customer obtains control of the goods are deemed to be
fulfillment activities and are included in cost of goods sold. We have elected to account for shipping and handling
activities that occur after the customer has obtained control of a good as fulfillment activities (i.e., an expense)
rather than as a promised service.
Rental Equipment
The Company enters into operating lease agreements with customers related to the rental of certain equipment.
In accounting for these leases, the cost of the equipment purchased or manufactured by the Company is recorded
as an asset, and is depreciated over its estimated useful life. Accumulated depreciation relating to the rental
equipment was $20.1 million and $18.0 million on December 31, 2021 and December 31, 2020, respectively.
Shipping and Handling Costs
The Company’s policy is to include shipping and handling costs in costs of goods sold.
Advertising
We charge advertising costs to expense as incurred. Advertising and marketing expense related to operations
for fiscal years 2021, 2020, and 2019 was approximately $10.2 million, $10.1 million and $12.2 million, respectively.
Advertising and marketing expenses are included in Selling, General and Administrative expenses (“SG&A”).
Research and Development
Product development and engineering costs charged to SG&A amounted to $11.7 million, $12.4 million, and
$12.0 million for the years ended December 31, 2021, 2020, and 2019, respectively.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other
sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably
estimated. The Company’s policy is to accrue for legal costs expected to be incurred in connection with loss
contingencies.
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Income Taxes
Deferred tax assets and liabilities are determined based on differences between the financial reporting basis
and tax basis of assets and liabilities, and are measured by applying enacted statutory tax rates applicable to the
future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the
realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all
of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, available
tax carrybacks and tax planning strategies in making this assessment other than those which we have reserved. We
have elected to treat the global intangible low-taxed income (GILTI) tax as a period expense.
Stock-Based Compensation
The Company has granted options to purchase its common stock, restricted stock awards, restricted stock
units, and performance stock units to certain employees and directors of the Company and its affiliates under
various stock option plans at no less than the fair market value of the underlying stock on the date of grant. These
options are granted for a term not exceeding ten years and are forfeited in the event that the employee or director
terminates his or her employment or relationship with the Company or one of its affiliates other than by retirement or
death. These options generally vest over five years. All option plans contain anti-dilutive provisions that permit an
adjustment of the number of shares of the Company’s common stock represented by each option for any change in
capitalization.
The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation method
with the following assumptions noted:
1. The risk-free rate is based on the U.S. Treasury rate over the expected life of the option at the time of the
grant.
2. The dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price
on the date of the grant.
3. The expected volatility factors are based on the historical movement of the Company’s common stock price
over the expected life of the option.
4. The expected life is the average length of time in which officers, other employees, and non-employee
directors are expected to exercise their options, and which are primarily based on historical experience.
The Company calculated the fair value for options with the following weighted-average assumptions for 2021,
2020, and 2019:
December 31,
2021 2020 2019
Risk-free interest rate 1.25 % 1.22 % 2.43 %
Dividend yield 0.4 % 0.5 % 0.5 %
Volatility factors 33.9 % 30.0 % 31.2 %
Weighted-average expected life 8.0 years 8.0 years 8.0 years
Fair Value Calculation Assumptions for Stock Compensation
Earnings per Common Share (“EPS”)
Basic EPS is computed using the weighted-average number of common shares outstanding during the year.
The treasury stock method is used to compute diluted EPS which gives effect to the potential dilution of earnings
that could have occurred if additional shares were issued for awards granted under the Company’s incentive stock
option plans. The treasury stock method assumes that proceeds obtained upon exercise of awards granted under
the incentive stock option plans are used to purchase outstanding common stock at the average market price during
the period.
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2. ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Adopted on January 1, 2021
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” to simplify the accounting for income
taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to
the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for
other areas of Topic 740 by clarifying and amending existing guidance. This guidance became effective for us on
January 1, 2021. The adoption of this ASU did not have a material impact on the Company’s consolidated financial
statements.
Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the
Effects of Reference Rate Reform on Financial Reporting”. This Topic provides accounting relief for the transition
away from LIBOR and certain other reference rates. The amendments for this update are effective through
December 31, 2022. The Company is evaluating the impact the adoption of this standard will have on our financial
statements.
3. BUSINESS COMBINATIONS
On October 26, 2021, the Company acquired 100% of the issued and outstanding equity interests of Timberwolf
Limited (“Timberwolf”). Timberwolf manufactures a broad range of commercial wood chippers, primarily serving
markets in the U.K. and the European Union. The primary reason for the Timberwolf acquisition was to enhance
the Company’s forestry and tree care platform for growth by increasing both the Company’s product portfolio and
capabilities in the European market. The acquisition price was approximately $25.0 million. The Company has
included the operating results of Timberwolf in its consolidated financial statements since the date of acquisition,
these results are considered immaterial.
4. 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 does not differ.
(in thousands, except per share amounts) 2021 2020 2019
Net income $ 80,245 $ 57,804 $ 63,103
Average common shares:
Basic (weighted-average outstanding shares) 11,837 11,782 11,729
Dilutive potential common shares from stock options 59 63 71
Diluted (weighted-average outstanding shares) 11,896 11,845 11,800
Basic earnings per share $ 6.78 $ 4.91 $ 5.38
Diluted earnings per share $ 6.75 $ 4.88 $ 5.35
Stock options totaling 15,586 shares in 2021, 9,864 shares in 2020, and 4,244 shares in 2019 were not
included in the diluted earnings per share calculation because the effect would have been anti-dilutive.
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5. VALUATION AND QUALIFYING ACCOUNTS
Valuation and qualifying accounts included the following:
(in thousands)
Balance
Beginning
of
Year
Net
Charged to
Costs and
Expenses
Translations,
Reclassifications
and Acquisitions
Net Write-
Offs or
Discounts
Taken
Balance
End of
Year
2021
Reserve for sales discounts $ 13,549 $ 116,114 $ (688) $ (116,408) $ 12,567
Reserve for inventory obsolescence 12,027 6,531 (146) (5,504) 12,908
Reserve for warranty 9,096 10,727 (132) (9,738) 9,953
2020
Reserve for sales discounts $ 16,883 $ 93,398 $ 15 $ (96,747) $ 13,549
Reserve for inventory obsolescence 8,233 4,609 1,471 (2,286) 12,027
Reserve for warranty 10,249 8,466 247 (9,866) 9,096
2019
Reserve for sales discounts $ 18,123 $ 91,962 $ 39 $ (93,241) $ 16,883
Reserve for inventory obsolescence 7,194 5,711 6,467 (11,139) 8,233
Reserve for warranty 4,992 8,273 4,343 (7,359) 10,249
Sales Discounts
On December 31, 2021, the Company had $12.6 million in reserves for sales discounts compared to $13.5
million on December 31, 2020 on product shipped to our customers under various promotional programs. The most
common programs provide a discount when the customer pays within a specified period of time.
The Company reviews the reserve quarterly based on analysis made on each program outstanding at the time.
The cost of these discounts is estimated based on historical experience and known changes in promotional
programs and is reported as a reduction to sales when the product sale is recognized. The reserve is adjusted if
discounts paid differ from those estimated. Historically, those adjustments have not been material.
Reserve for Inventory Obsolescence
We value inventories at the lower of the cost of inventory or net realizable value. As needed, we record an
inventory valuation adjustment for excess, slow moving, and obsolete inventory that is equal to the excess of the
cost of the inventory over the estimated net realizable value. The inventory valuation adjustment to net realizable
value establishes a new cost basis of the inventory that cannot be subsequently reversed. Such inventory valuation
adjustments for excess, obsolete, and slow moving inventory are not reduced or removed until the product is sold or
disposed of.
The Company had a reserve of $12.9 million on December 31, 2021 and $12.0 million on December 31, 2020 to
cover obsolete and slow moving inventory. The increase in the reserve was primarily attributable to the Company’s
Industrial Equipment Division. The reserve for inventory obsolescence is calculated as follows: 1) no inventory
usage over a three-year period is deemed obsolete and reserved at 100%; and 2) slow moving inventory with little
usage requires a 100% reserve on items that have a quantity greater than a three-year supply. There are exceptions
to the obsolete and slow moving classifications if approved by an officer of the Company, based on specific
identification of an item or items that are deemed to be either included or excluded from this classification. In cases
where there is no historical data, management makes a judgment based on a specific review of the inventory in
question to determine what reserves, if any, are appropriate. New products or parts are generally excluded from the
reserve until a three-year history has been established.
Warranty
The Company’s warranty policy is generally to provide its customers warranty for up to one year on all
wholegood units and 90 days on parts, though some components can have warranty for longer terms.
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Warranty reserve, as a percentage of sales, is generally calculated by looking at the current twelve months’
expenses and prorating that amount based on twelve months’ sales with a three to six month lag period. The
Company’s historical experience is that an end-user takes approximately three to six months from the receipt of the
unit to file a warranty claim.
The current liability warranty reserve balance was $10.0 million on December 31, 2021 and $9.1 million on
December 31, 2020 and is included in Note 11.
6. INVENTORIES
Inventories consisted of the following:
December 31,
(in thousands) 2021 2020
Finished goods and parts $ 277,760 $ 208,656
Work in process 24,895 21,225
Raw materials 18,262 12,620
Inventory, net $ 320,917 $ 242,501
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
December 31,
(in thousands) 2021 2020
Useful
Lives
Land $ 12,838 $ 14,908
Buildings and improvements 145,086 149,048 5-20 yrs.
Machinery and equipment 129,901 116,825 3-10 yrs.
Office furniture and equipment 13,291 11,743 3-7 yrs.
Computer software 12,384 12,276 3-7 yrs.
Transportation equipment 8,363 7,562 3 yrs.
Property, plant and equipment, at cost 321,863 312,362
Accumulated depreciation (169,372) (156,928)
Property, plant and equipment, net $ 152,491 $ 155,434
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8. GOODWILL
The changes in the carrying amount of goodwill for the year ended December 31, 2019, 2020, and 2021 are as
follows:
Vegetation
Management
Industrial
Equipment Consolidated
(in thousands)
Balance at December 31, 2018 $ 16,751 $ 66,492 $ 83,243
Translation adjustment (72) 92 20
Goodwill acquired 110,215 4,544 114,759
Balance at December 31, 2019 $ 126,894 $ 71,128 $ 198,022
Translation adjustment 132 1,036 1,168
Goodwill adjustment (2,045) (2,013) (4,058)
Balance at December 31, 2020 $ 124,981 $ 70,151 $ 195,132
Translation adjustment (1,510) (708) (2,218)
Goodwill acquired 9,492 — 9,492
Balance at December 31, 2021 $ 132,963 $ 69,443 $ 202,406
9. INTANGIBLE ASSETS
The following is a summary of the Company’s intangible assets net of the accumulated amortization:
(in thousands)
Estimated Useful
Lives
December 31,
2021
December 31,
2020
Definite:
Trade names and trademarks 15-25 years $ 68,321 $ 67,770
Customer and dealer relationships 8-15 years 126,104 122,470
Patents and developed technologies 3-12 years 29,338 28,764
Favorable leasehold interests 7 years 4,200 4,200
Total at cost 227,963 223,204
Less accumulated amortization (49,997) (35,532)
Total net 177,966 187,672
Indefinite:
Trade names and trademarks 5,500 5,500
Total Intangible Assets $ 183,466 $ 193,172
The Company’s net carrying value at December 31, 2021 of intangible assets with definite useful lives consists
of trade names and trademarks at $57.2 million, customer and dealer relationships at $95.8 million, patents and
drawings at $22.1 million, and favorable leasehold interests at $2.9 million. As of December 31, 2021, the related
accumulated amortization balance for the definite-lived assets were $11.1 million for trade names and trademarks,
$30.4 million for customer and dealer relationships, $7.2 million for patents and drawings, and $1.3 million for
favorable leasehold interests. The Company estimates amortization expense to be $14.5 million for each of the
next five years.
Indefinite-lived trade names and trademarks consisted of the Gradall trade name with a carrying value of $3.6
million and the Bush Hog trade name with a carrying value of $1.9 million.
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10. LEASES
Leases
The Company leases office space and equipment under various operating and capital leases, which generally
are expected to be renewed or replaced by other leases. As of December 31, 2021, the components of lease cost
were as follows:
Components of Lease Cost
Twelve Months Ended December 31,
(in thousands) 2021 2020
Finance lease cost:
Amortization of right-of-use assets $ 67 $ 89
Interest on lease liabilities 3 7
Operating lease cost 5,571 4,824
Short-term lease cost 1,033 818
Variable lease cost 410 487
Total lease cost $ 7,084 $ 6,225
As of December 31, 2021, future minimum lease payments under these non-cancelable leases are:
Future Minimum Lease Payments
(in thousands)
Operating
Leases
2022 $ 4,949
2023 3,793
2024 2,683
2025 2,036
2026 1,652
Thereafter 3,090
Total minimum lease payments $ 18,203
Less imputed interest (1,311)
Total lease liabilities $ 16,892
Rental expense for operating leases was $7.0 million for 2021, $6.1 million for 2020, and $5.5 million for 2019.
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Future Lease Commencements
As of December 31, 2021, we have additional operating leases that have not yet commenced in the amount of
$4.2 million. These operating leases will commence in fiscal year 2022.
Supplemental balance sheet information related to leases was as follows:
Operating Leases
December 31,
(in thousands) 2021 2020
Other non-current assets $ 16,744 $ 14,144
Accrued liabilities 4,655 3,680
Other long-term liabilities 12,237 10,565
Total operating lease liabilities $ 16,892 $ 14,245
Weighted average remaining lease term 5.14 years 5.83 years
Weighted average discount rate 2.83 % 3.04 %
Supplemental cash flow information related to leases was as follows:
Twelve Months Ended December 31,
(in thousands) 2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases 5,013 4,487
11. ACCRUED LIABILITIES
Accrued liabilities consist of the following balances:
December 31,
(in thousands) 2021 2020
Salaries, wages and bonuses $ 37,462 $ 31,658
Lease liability 4,655 3,680
Taxes 1,902 5,907
Warranty 9,953 9,096
Retirement provision 2,967 3,252
Customer deposits 6,383 1,385
Other 10,201 9,656
Accrued liabilities $ 73,523 $ 64,634
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
U.S. GAAP requires or permits certain assets or liabilities to be measured at fair value on a recurring or non-
recurring basis in our balance sheets. U.S. GAAP also requires the disclosure of the fair values of financial
instruments when an option to elect fair value accounting has been provided but such election has not been made.
A debt obligation is an example of such a financial instrument.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between
market participants. There is a three-tier fair value hierarchy based upon the observability of inputs used in valuation
techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while
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unobservable inputs (lowest level) reflect internally developed market assumptions. In fair value, measurements are
classified under the following hierarchy:
Level 1 – Quoted prices for identical assets or liabilities in active markets.
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations in which all significant
inputs or significant value-drivers are observable in active markets.
Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are
unobservable.
When measuring fair value, the Company maximizes use of observable inputs and minimizes the use of
unobservable inputs.
Fair value measurements are classified to the lowest level input or value-driver that is significant to the
valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs
that are readily observable.
The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses, approximate fair value because of the short-term nature of these items.
The carrying value of our debt approximates the fair value as of December 31, 2021 and 2020, as the floating rates
on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.
Fair values determined by Level 2 utilize inputs that are observable for the asset or liability, either directly or
indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical
or similar assets or liabilities in markets that are not active. Other than the investments held by the retirement
benefit plans, as described in Note 17 to the Consolidated Financial Statements, the Company does not have any
other significant financial assets or liabilities measured at fair value on a recurring basis.
The Company has no recurring or nonrecurring valuations that fall under Level 3 of the fair value hierarchy as of
December 31, 2021 and 2020.
13. LONG-TERM DEBT
The components of long-term debt are as follows:
December 31,
(in thousands) 2021 2020
Bank revolving credit facility $ 4,000 $ 5,000
Term debt 265,498 280,233
Capital lease obligations 56 153
Total debt 269,554 285,386
Less current maturities 15,032 15,066
Total long-term debt $ 254,522 $ 270,320
On October 24, 2019, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered
into a Second Amended and Restated Credit Agreement (the Credit Agreement) with Bank of America, N.A., as
Administrative Agent. The Credit Agreement provides the Company with the ability to request loans and other
financial obligations in an aggregate amount of up to $650.0 million and, subject to certain conditions, the Company
has the option to request an increase in aggregate commitments of up to an additional $200.0 million. Pursuant to
the Credit Agreement, the Company has borrowed $300.0 million pursuant to a Term Facility repayable with interest
quarterly at a percentage of the initial principal amount of the Term Facility of 5.0% per year with the remaining
principal due in 5 years. Up to $350.0 million is available under the Credit Agreement pursuant to a Revolver
Facility which terminates in 5 years. Outstanding loans under the revolving credit facility bear interest at a variable
rate generally based on LIBOR or an alternative variable rate based on the highest of the Bank of America prime
rate, the federal funds rate or a rate generally based on LIBOR, in each case depending on the leverage ratio. The
Agreement requires the Company to maintain two financial covenants – a maximum leverage ratio and a minimum
asset coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness,
limitations on investments and acquisitions, limitations on sale of properties and limitations on liens and capital
expenditures. The Agreement also contains other customary covenants, representations and events of defaults. The
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expiration date of the Term Facility and the Revolver Facility is October 24, 2024. As of December 31, 2021, $269.5
million was outstanding under the Credit Agreement. Of the total outstanding, $265.5 million was on the Term
Facility at a rate of 1.60% and $4.0 million was on the Revolver Facility at a rate of 3.75%. On December 31, 2021,
$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 $255.0 million in available borrowings. The
Company is in compliance with the covenants under the Credit Agreement.
The aggregate maturities of long-term debt, as of December 31, 2021, are as follows: $15.0 million in 2022;
$15.0 million in 2023; $239.5 million in 2024; $0.01 million in 2025; and zero thereafter.
14. INCOME TAXES
Income Statement Components
Earnings before income taxes were as follows:
December 31,
(in thousands) 2021 2020 2019
Income before income taxes:
Domestic $ 74,070 $ 50,977 $ 54,830
Foreign 35,428 28,780 29,769
$ 109,498 $ 79,757 $ 84,599
The components of income tax expense (benefit) were as follows:
December 31,
(in thousands) 2021 2020 2019
Current:
Domestic $ 16,846 $ 10,823 $ 6,403
Foreign 8,646 8,759 8,419
State 4,943 3,226 3,291
30,435 22,808 18,113
Deferred:
Domestic (679) 1,238 3,906
Foreign (274) (1,199) (280)
State (229) (894) (243)
(1,182) (855) 3,383
Total income taxes $ 29,253 $ 21,953 $ 21,496
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A reconciliation of the income tax at the Company’s U.S. statutory federal income tax rate to the provision for
income taxes
follows:
December 31,
(in thousands) 2021 2020 2019
Income tax expense at statutory rates $ 22,995 $ 16,749 $ 17,765
Increase (reduction) from:
Jurisdictional rate differences 1,599 1,034 988
Executive compensation limitation 1,314 170 715
Stock based compensation (322) (366) (358)
U.S. state taxes 3,724 2,556 3,137
Foreign tax expense — 704 —
R&D credit (670) (415) (699)
GILTI — 50 872
Previously unrecognized tax (benefit)/expense 8 2,219 (1,504)
Other, net 605 (748) 580
Provision for income taxes $ 29,253 $ 21,953 $ 21,496
Effective tax rate 27 % 28 % 25 %
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Deferred Income Tax Assets and Liabilities
The components of the Company’s deferred income tax assets and liabilities were as follows:
December 31,
(in thousands) 2021 2020
Deferred income tax assets:
Inventory basis difference $ 892 $ 519
Accounts receivable reserve 240 255
Rental equipment and Property, plant and equipment 201 144
Stock based compensation 688 606
Pension liability 3,116 3,655
Employee benefit accrual 2,747 1,585
Product liability and warranty reserves 2,155 2,242
Foreign net operating loss 3,764 3,566
Lease liability 3,858 3,376
State net operating loss 157 148
Other 1,016 1,891
Total deferred income tax assets $ 18,834 $ 17,987
Less: Valuation allowance (4,129) (3,641)
Net deferred income tax assets $ 14,705 $ 14,346
Deferred income tax liabilities:
Inventory basis differences $ (165) $ (287)
Rental equipment and Property, plant and equipment (13,844) (14,818)
Lease asset (3,794) (3,351)
Intangible assets (16,197) (16,496)
Expenses not currently deductible for book purposes (1,053) (1,003)
Total deferred income tax liabilities $ (35,053) $ (35,955)
Net deferred income taxes $ (20,348) $ (21,609)
As of December 31, 2021, the Company had foreign deferred tax assets consisting of foreign net operating
losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign
jurisdictions’ net operating loss carry-forwards are approximately $11.8 million with an unlimited carry-forward
period, and $0.8 million with a carry-forward expiring in 2035. The Company also has U.S. state net operating loss
carry-forwards in the amount of $3.6 million which will expire between 2022 and 2030.
The Company’s valuation allowances as of December 31, 2021 and 2020 related primarily to foreign net
operating losses and foreign tax credits.
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Unrecognized Tax Benefits
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows. The Company
does not expect the unrecognized tax benefits to change significantly over the next 12 months.
Unrecognized Tax Benefits
December 31,
(in thousands) 2021 2020
Balance as of beginning of year $ 262 $ 262
Increases for tax positions related to the current year 82 88
Decreases due to lapse of statute of limitations (74) (88)
Balance as of end of year $ 270 $ 262
The Company has adopted the policy to include interest and penalty expense related to income taxes as
interest and other expense, respectively. As of December 31, 2021, no interest or penalties have accrued. With few
exceptions, the Company’s open tax years for its federal and state income tax returns are for the tax years ended
2018 through 2021, and for tax years ended 2014 through 2021 for its foreign income tax returns.
The Company currently intends to permanently reinvest its earnings in certain foreign subsidiaries. No U.S.
corporate income taxes or foreign withholding taxes should be imposed on future distributions of the earnings not
permanently reinvested. If the amounts asserted as permanent reinvestment were distributed, the Company would
be subject to approximately $4.5 million in withholding taxes.
15. COMMON STOCK
On January 3, 2022, the Board of Directors of the Company declared a quarterly dividend of $0.18 per share
which was paid on February 1, 2022 to holders of record as of January 18, 2022. The Company also has a share
repurchase program under which the Company is authorized to repurchase, in the aggregate, up to $30.0 million of
its outstanding common stock. During 2021, the Company purchased zero shares.
16. STOCK OPTIONS
Incentive Stock Option Plan
On May 7, 2015, the stockholders of the Company approved the 2015 Incentive Stock Option Plan (“2015 ISO
Plan”) and the Company reserved 400,000 shares of common stock for options to be issued under the 2015 ISO
Plan. Each option becomes vested and exercisable for up to 20% of the total optioned shares one year following the
grant of the option and for an additional 20% of the total optioned shares after each succeeding year until the option
is fully exercisable at the end of the fifth year.
We also maintain other incentive option plans that have expired, under which previously granted awards remain
outstanding. No additional grants may be awarded under these plans.
69
Following is a summary of activity in the Incentive Stock Option Plans for the periods indicated:
2021 2020 2019
Shares
Exercise
Price* Shares
Exercise
Price* Shares
Exercise
Price*
Options outstanding at beginning of year 100,920 $ 68.58 119,720 $ 57.65 140,170 $ 49.78
Granted 18,900 156.38 13,950 114.53 12,150 105.56
Exercised (30,210) 53.68 (31,300) 45.94 (28,100) 38.93
Canceled (2,000) 130.92 (1,450) 96.97 (4,500) 58.57
Options outstanding at end of year 87,610 91.24 100,920 68.58 119,720 57.65
Options exercisable at end of year 49,360 $ 61.21 67,700 $ 52.60 85,070 $ 47.10
Options available for grant at end of year 297,850 314,750 327,250
*Weighted Averages
Options outstanding and exercisable at December 31, 2021 were as follows:
Qualified Stock Options Options Outstanding Options Exercisable
Shares
Remaining
Contractual Life
(yrs)*
Exercise
Price* Shares
Exercise
Price*
Range of Exercise Price
$32.76 – $52.51 16,100 1.49 $ 40.88 16,100 $ 40.88
$53.51 – $80.27 19,800 3.35 $ 54.20 19,800 $ 54.20
$83.99 – $125.99 33,710 7.08 $ 102.27 13,460 $ 95.85
$156.38 – $234.57 18,000 9.16 $ 156.38 — $ —
Total 87,610 49,360
*Weighted Averages
The weighted-average grant-date fair values of options granted during 2021, 2020, and 2019 were $59.01,
$38.33 and $39.85, respectively. Stock option expense was $0.6 million, $0.5 million and $0.5 million for years
ending 2021, 2020, and 2019, respectively. As of December 31, 2021, there was $1.2 million of total unrecognized
compensation cost related to non-vested share-based compensation arrangements granted under the plans. That
cost is expected to be recognized over a period of five years.
Equity Incentive Plan
On May 2, 2019, the stockholders of the Company approved the 2019 Equity Incentive Plan and the Company
reserved 500,000 shares of common stock for issuance of equity awards including the issuance of non-qualified
options for the purchase of shares of our common stock which may be granted to Company officers and non-
employee directors. Options become vested and exercisable for up to 20% of the total optioned shares one year
following the grant of the option and for an additional 20% of the total optioned shares after each succeeding year
until the option is fully exercisable at the end of the fifth year.
2021 2020 2019
Options available for grant at end of year 423,969 455,549 499,640
We also maintain other incentive option plans that have expired, under which previously granted awards remain
outstanding. No additional grants may be awarded under these plans.
70
Non-Qualified Options
Following is a summary of activity in the Non-Qualified Stock Option Plans for the periods indicated:
2021 2020 2019
Shares
Exercise
Price* Shares
Exercise
Price* Shares
Exercise
Price*
Options outstanding at beginning of year 3,000 $ 53.51 5,300 $ 46.87 40,200 $ 42.99
Granted — — — — — —
Exercised (1,000) 53.51 (2,300) 38.22 (34,900) 42.40
Canceled — — — — — —
Options outstanding at end of year 2,000 53.51 3,000 53.51 5,300 46.87
Options exercisable at end of year 2,000 $ 53.51 3,000 $ 53.51 5,300 $ 46.87
*Weighted Averages
Options outstanding and exercisable as of December 31, 2021 were as follows:
Non-Qualified Stock Options Options Outstanding Options Exercisable
Shares
Remaining
Contractual Life
(yrs)*
Exercise
Price* Shares
Exercise
Price*
Range of Exercise Price
$53.51 – $80.27 2,000 2.36 $ 53.51 2,000 $ 53.51
Total 2,000 2,000
*Weighted Averages
There were no options granted in 2019, 2020 or 2021. Stock option expense was zero, zero and $0.01 million
for years ending 2021, 2020, and 2019, respectively. As of December 31, 2021, there was zero unrecognized
compensation cost related to non-vested share-based compensation arrangements granted under the plans.
During 2021, 2020, and 2019, 1,000, 2,300, and 34,900 non-qualified options were exercised, respectively, $0.1
million, $0.1 million, and $1.5 million of cash receipts were received, respectively.
Restricted Stock Awards/Units
Following is a summary of activity in the Restricted Stock Awards (“RSA”)/Units for the periods indicated:
2021 2020 2019
Shares
Grant-Date
Fair Value* Shares
Grant-Date
Fair Value* Shares
Grant-Date
Fair Value*
Awards outstanding at beginning of year 91,043 $ 104.77 78,705 $ 94.34 75,636 $ 81.39
Granted 35,224 157.00 44,307 111.95 36,060 105.69
Exercised (45,651) 101.36 (31,594) 88.90 (32,466) 69.94
Canceled — — (375) 100.34 (525) 99.96
Awards outstanding at end of year 80,616 129.53 91,043 104.77 78,705 94.34
*Weighted Averages
Restricted stock awards granted in 2019 vest 25% after one year following the award date and for an additional
25% of total awarded shares each succeeding year until fully vested. Restricted stock awards granted in 2020 and
2021 vest over a three year period. The weighted-average remaining contractual life in years for 2021, 2020 and
2019 was 1.61, 1.95 and 2.48, respectively. Compensation expense was $5.4 million, $3.7 million and $2.8 million
for years ending 2021, 2020, and 2019, respectively. As of December 31, 2021, there was $6.3 million of total
unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the
71
plans. The cost for awards granted prior to 2020 is expected to be recognized over a period of four years. In 2020,
the Board of Directors modified the vesting period for new RSA’s granted to three years to be inline with grants of
future performance stock units.
Performance Stock Units
In 2020, the Company’s Board of Directors approved a change to our long-term incentive compensation plan to
implement new performance-based equity grants in the form of a Performance Stock Unit (“PSU”) award. PSU
award vesting and payout amounts are tied to the Company’s achievement of certain targeted financial metrics
relating to a three-year performance period with the goal of more closely aligning executive compensation with long-
term Company performance.
The 2020 target long-term incentive compensation mix established for the Company’s Section 16 filers consists
of RSAs and PSUs each representing fifty percent (50%) of the total long-term incentive compensation target value.
PSU awards represent a right to receive a certain number of shares of the Company’s common stock at the end of
the three-year performance period if certain financial or other performance targets/metrics have been met.
17. RETIREMENT BENEFIT PLANS
Defined Benefit Plans
In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, the
Company assumed sponsorship of two Gradall non-contributory defined benefit pension plans, both of which are
frozen with respect to both future benefit accruals and future new entrants.
The Gradall Company Employees’ Retirement Plan covers approximately 248 former employees and 55 current
employees who (i) were formerly employed by JLG Industries, Inc., (ii) were not covered by a collective bargaining
agreement and (iii) first participated in the plan before December 31, 2004. An amendment ceasing future benefit
accruals for certain participants was effective December 31, 2004. A second amendment discontinued all future
benefit accruals for all participants effective April 24, 2006.
The Gradall Company Hourly Employees’ Pension Plan covered former employees and current employees who
(i) were formerly employed by JLG Industries, Inc., (ii) were covered by a collective bargaining agreement and (iii)
first participated in the plan before April 6, 1997. An amendment ceasing all future benefit accruals was effective
April 6, 1997.
The following table sets forth the change in plan assets, change in projected benefit obligation, rate
assumptions and components of net periodic benefit cost as of December 31 with respect to the plan. The
measurement dates of the assets and liabilities of the plan were December 31 of the respective years presented.
72
Reconciliation of Funded Status
Year Ended December 31,
(in thousands) 2021 2020
Change in projected benefit obligation
Benefit obligation at beginning of year $ 24,100 $ 22,449
Service cost 5 4
Interest cost 553 689
Liability actuarial (gain) loss (994) 2,025
Benefits paid (1,100) (1,067)
Benefit obligation at end of year $ 22,564 $ 24,100
Change in fair value of plan assets
Fair value of plan assets at beginning of year $ 22,370 $ 20,605
Return on plan assets 2,401 2,832
Employer contributions — —
Benefits paid (1,100) (1,067)
Fair value of plan assets at end of year 23,671 22,370
Funded status $ 1,107 $ (1,730)
The Company recognizes the overfunded or underfunded status (i.e., the difference between the fair value of
plan assets and the projected benefit obligations) of defined benefit postretirement plans as an asset or liability in its
consolidated balance sheet and recognizes changes in the funded status in the year in which the changes occur.
The Company measures the funded status of a plan as of the date of the year-end consolidated balance sheet.
The accumulated benefit obligation for our pension plan represents the actuarial present value of benefits
based on employee service and compensation as of a certain date and does not include an assumption about future
compensation levels.
In determining the projected benefit obligation and the net pension cost, we used the following significant
weighted-average assumptions:
Rates to Determine Benefit Obligation
Year Ended December 31,
2021 2020
Discount rate 2.75% 2.35%
Composite rate of compensation increase N/A N/A
Rates to Determine Net Periodic Benefit Cost
Year Ended December 31,
2021 2020
Discount rate 2.35% 3.15%
Long-term rate of return on plan assets 7.25% 7.25%
Composite rate of compensation increase N/A N/A
The Company employs a building block approach in determining the expected long-term rate of return on plan
assets. Historical markets are studied and long-term historical relationships between equities and fixed income are
preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a
greater return over the long run. Current market factors such as inflation and interest rates are evaluated before
long-term market assumptions are determined. The long-term portfolio return is established via a building block
approach with proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed
to check for reasonability and appropriateness.
73
The following table presents the components of net periodic benefit cost (gains are denoted with parentheses
and losses are not):
Components of Net Periodic Benefit Cost
Year Ended December 31,
(in thousands) 2021 2020
Service cost $ 5 $ 4
Interest cost 553 689
Expected return on plan assets (1,581) (1,452)
Amortization of net loss 542 508
Net periodic benefit cost $ (481) $ (251)
The Company estimates that $0.2 million of unrecognized actuarial expense will be amortized from
Accumulated other comprehensive income (loss) into net periodic benefit costs during 2022.
The Company employs a total return investment approach whereby a mix of equities and fixed income
investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is
established through careful consideration of plan liabilities, plan funded status, and corporate financial condition.
The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity
investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large
capitalization. Other assets such as real estate, private equity, and hedge funds are used judiciously to enhance
long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure in an
efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value
of the underlying investments. Investment risk is measured and monitored on an ongoing basis through quarterly
investment portfolio reviews, annual liability measurements, and periodic asset/liability studies. Our current asset
allocations are consistent with our targeted allocations.
The pension plans’ weighted-average asset allocation as a percentage of plan assets at December 31 is as
follows:
Asset Allocation as a Percentage of the Plan
Year Ended December 31,
2021 2020
Equity securities 36% 56%
Debt securities 62% 38%
Short-term investments 2% 2%
Other —% 4%
Total 100% 100%
The following table presents the hierarchy levels for our postretirement benefit plan investments as of
December 31 as described in Note 1 to the Consolidated Financial Statements:
74
(in thousands)
December
31, 2021
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservab
le
Inputs
(Level 3)
Mutual Funds:
Mid Cap $ 637 $ 637 $ — $ —
International 940 940 — —
Common/Collective Trusts:
Wells Fargo Liability Driven Solution CIT I 7,782 — 7,782 —
Wells Fargo Liability Driven Solution CIT II 7,026 — 7,026 —
Wells Fargo BlackRock International Equity 616 — 616 —
Wells Fargo/Causeway International Value 586 — 586 —
Wells Fargo BlackRock Large Cap Growth Index Fund 950 — 950 —
Wells Fargo BlackRock Large Cap Value Index Fund 968 — 968 —
Wells Fargo Multi-Manager Small Cap 1,015 — 1,015 —
Wells Fargo BlackRock Russell 2000 Index Fund 332 — 332 —
Wells Fargo BlackRock S&P Mid Cap Index Fund 419 — 419 —
Wells Fargo/MFS Value CIT F 469 — 469 —
Wells Fargo/T. Rowe Price Large-Cap Growth Managed CIT 465 — 465 —
Wells Fargo/T. Rowe Price Equity Income Managed CIT 487 — 487 —
Wells Fargo Voya Large Cap Growth CIT F 482 — 482 —
Cash & Short-term Investments 497 497 — —
Total $ 23,671 $ 2,074 $ 21,597 $ —
75
(in thousands)
December
31, 2020
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservabl
e
Inputs
(Level 3)
Mutual Funds:
Mid Cap $ 1,450 $ 1,450 $ — $ —
Large Cap 3,233 3,233 — —
International 2,660 2,660 — —
Common/Collective Trusts:
Wells Fargo Liability Driven Solution 3,106 — 3,106 —
Wells Fargo BlackRock International Equity 959 — 959 —
Wells Fargo Core Bond 1,552 — 1,552 —
Wells Fargo/Causeway International Value 923 — 923 —
Wells Fargo BlackRock Large Cap Growth Index Fund 1,268 — 1,268 —
Wells Fargo BlackRock Large Cap Value Index Fund 1,240 — 1,240 —
Wells Fargo Multi-Manager Small Cap 1,544 — 1,544 —
Wells Fargo BlackRock Russell 2000 Index Fund 702 — 702 —
Wells Fargo BlackRock S&P Mid Cap Index Fund 781 — 781 —
Wells Fargo/MFS Value CIT F 627 — 627 —
Wells Fargo/T. Rowe Price Large-Cap Growth Managed CIT 639 — 639 —
Wells Fargo/T. Rowe Price Equity Income Managed CIT 643 — 643 —
Wells Fargo Voya Large Cap Growth CIT F 639 — 639 —
Cash & Short-term Investments 404 404 — —
Total $ 22,370 $ 7,747 $ 14,623 $ —
Our interests in the common collective trust investments are managed by one custodian. Consistent with our
investment policy, the custodian has invested the assets across a widely diversified portfolio of U.S. and
international equity and fixed income securities. Fair values of each security within the collective trust as of
December 31, 2021 were obtained from the custodian and are based on quoted market prices of individual
investments; however, since the fund itself does not have a quoted market price, these assets are considered
Level 2.
The common collective funds noted in the above table have estimated fair value using the net asset value per
share of investments. Investments can be redeemed immediately at the current net asset value per share based on
the fair value of the underlying assets. Redemption frequency is daily. The categories contain investments in equity
securities of smaller growing companies, medium-sized U.S. companies, large value-oriented and growth-oriented
companies, and foreign companies traded on international markets.
76
Expected benefit payments are estimated using the same assumptions used in determining our benefit
obligation as of December 31, 2021. The following table illustrates the estimated pension benefit payments that are
projected to be paid:
Projected Future Benefit Payments
(in thousands)
Employees’
Retirement Plan
2022 $ 1,269
2023 1,288
2024 1,301
2025 1,310
2026 1,306
Years 2027 through 2031 6,287
Supplemental Retirement Plan
The Board of Directors of the Company adopted the Alamo Group Inc. Supplemental Executive Retirement
Plan (the “SERP”), effective as of January 3, 2011. The SERP will benefit certain key management or other highly
compensated employees of the Company and/or certain subsidiaries who are selected by the Compensation
Committee and approved by the Board to participate.
The SERP is intended to provide a benefit from the Company upon retirement, death or disability, or a change
in control of the Company. Accordingly, the SERP obligates the Company to pay to a participant a Retirement
Benefit (as defined in the SERP) upon the occurrence of certain payment events to the extent a participant has a
vested right thereto. A participant’s right to his or her Retirement Benefit becomes vested in the Company’s
contributions upon 10 years of Credited Service (as defined in the SERP) or a change in control of the Company.
The Retirement Benefit is based on 20% of the final three-year average salary of each participant on or after his or
her normal retirement age (65 years of age). In the event of the participant’s death or a change in control, the
participant’s vested retirement benefit will be paid in a lump sum to the participant or his or her estate, as applicable,
within 90 days after the participant’s death or a change in control, as applicable. In the event that the participant is
entitled to a benefit from the SERP due to disability, retirement or other termination of employment, the benefit will
be paid in monthly installments over a period of fifteen years.
The Company records amounts relating to the SERP based on calculations that incorporate various actuarial
and other assumptions, including discount rates, rate of compensation increases, retirement dates and life
expectancy. The net periodic costs are recognized as employees render the services necessary to earn the SERP
benefits.
In May of 2015, the Board amended the SERP to allow the Board to modify the retirement benefit percentage
either higher or lower than 20%. In May of 2016, the Board added additional highly compensated employees to the
plan. As of December 31, 2021, the current retirement benefit (as defined in the plan) for the participants ranges
from 10% to 20%.
77
The change in the Projected Benefit Obligation (PBO) as of December 31, 2021 and 2020, is shown below:
Reconciliation of Benefit Obligation
Year Ended December 31,
(in thousands) 2021 2020
Benefit obligation at January 1, $ 10,160 $ 9,022
Service cost 369 305
Interest cost 205 236
Liability actuarial loss (gain) 759 1,168
Benefits paid (167) (1,025)
Plan amendments — 454
Benefit obligation at December 31, $ 11,326 $ 10,160
The components of net periodic pension expense were as follows:
Components of Net Periodic Benefit Cost
Year Ended December 31,
(in thousands) 2021 2020
Service cost $ 369 $ 305
Interest cost 205 236
Amortization of prior service cost 413 317
Amortization of net (gain)/loss 318 158
Recognition of settlement — 188
Net periodic benefit cost $ 1,305 $ 1,204
The Company estimates that $0.9 million of unrecognized actuarial expense will be amortized from
Accumulated other comprehensive income into net periodic benefit costs during 2022.
In determining the projected benefit obligation and the net pension cost, we used the following significant
weighted-average assumptions:
Assumptions used to determine benefit obligations at December 31:
Rates to Determine Benefit Obligation
2021 2020
Discount rate 2.50% 2.05%
Composite rate of compensation increase 3.00% 3.00%
Assumptions used to determine net periodic benefit cost for the years ended December 31:
Rates to Determine Net Periodic Benefit Cost
2021 2020
Discount rate 2.05% 2.95%
Composite rate of compensation increase 3.00% 3.00%
Long-term rate of return on plan assets N/A N/A
78
Future estimated benefits expected to be paid from the plan over the next ten years as follows:
Projected Future Benefit Payments
(in thousands) SERP
2022 $ 456
2023 489
2024 530
2025 606
2026 828
Years 2027 through 2031 4,105
Defined Contribution Plans
The Company has two defined contribution plans, The Gradall Salaried Employees’ Savings and Investment
Plan (“Salary Plan”) and The International Association of Machinist and Aerospace Workers Retirement Plan (“IAM
Plan”). The Company contributed $0.5 million, $0.4 million, and $0.6 million to the IAM Plan for the plan years
ended December 31, 2021, 2020 and 2019, respectively. The Company converted the Salary Plan into its 401(k)
retirement and savings plan and put the Hourly Plan into a separate 401(k) retirement and savings plan.
The Company provides a defined contribution 401(k) retirement and savings plan for eligible U.S. employees.
Company matching contributions are based on a percentage of employee contributions. Company contributions to
the plan during 2021, 2020 and 2019 were $3.9 million, $3.5 million, and $2.8 million, respectively.
Three of the Company’s international subsidiaries also participate in a defined contribution and savings plan
covering eligible employees. The Company’s international subsidiaries contribute between 0% and 10% of the
participant’s salary up to a specific limit. Total contributions made to the above plans were $0.9 million, $0.9 million,
and $0.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.
18. REVENUE AND SEGMENT REPORTING
Disaggregation of revenue is presented in the tables below by product type. Management has determined that
this level of disaggregation would be beneficial to users of the financial statements.
Revenue by Product Type
December 31,
(in thousands) 2021 2020 2019
Net Sales
Wholegoods $ 1,024,158 $ 885,254 $ 875,805
Parts 262,432 247,126 207,766
Other 47,633 31,086 35,567
Consolidated $ 1,334,223 $ 1,163,466 $ 1,119,138
The Company has two reportable segments: Industrial, Agricultural and European. The Company’s sales are
principally within the United States, United Kingdom, France, Canada and Australia. The Company sells its products
primarily through a network of independent dealers and distributors to governmental end-users, related independent
contractors, as well as to the agricultural and commercial turf markets.
Other includes rental sales, extended warranty sales and service sales as it is considered immaterial.
Effective for the fourth quarter of 2021, the Company began reporting its operating results on the basis of the
following segments, Vegetation Management Division and Industrial Equipment Division. Prior to the fourth quarter
of 2021, the Company had been reporting its operating results on the basis of two segments which were the
Industrial Division and Agricultural Division. The Vegetation Management Division includes all of the operations of
the former Agricultural Division plus the mowing and forestry/tree care operations that were previously part of the
former Industrial Division. The Industrial Equipment Division includes the Company’s vocational truck business and
other industrial operations such as excavators, vacuum trucks, street sweepers, and snow removal equipment. The
79
Company’s prior period segment information has been retrospectively adjusted to reflect the current segment
presentation.
The Company has included a summary of the financial information by reporting segment. The following table
presents the revenue and income from operations by reporting segment for the years ended December 31, 2021,
2020, and 2019:
December 31,
(in thousands) 2021 2020 2019
Net Revenue
Vegetation Management $ 812,676 $ 654,630 $ 502,194
Industrial Equipment 521,547 508,836 616,944
Consolidated $ 1,334,223 $ 1,163,466 $ 1,119,138
Income from Operations
Vegetation Management $ 78,917 $ 46,651 $ 34,035
Industrial Equipment 38,021 48,134 60,877
Consolidated $ 116,938 $ 94,785 $ 94,912
The following table presents the goodwill and total identifiable assets by reporting segment for the years ended
December 31, 2021 and 2020:
December 31,
(in thousands) 2021 2020
Goodwill
Vegetation Management $ 132,963 $ 124,981
Industrial Equipment 69,443 70,151
Consolidated $ 202,406 $ 195,132
Identifiable Assets
Vegetation Management $ 789,838 $ 707,398
Industrial Equipment 415,904 414,461
Consolidated $ 1,205,742 $ 1,121,859
80
19. ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in accumulated other comprehensive loss by component, net of tax, were as follows:
Twelve Months Ended December 31,
2021 2020
(in thousands)
Foreign
Currency
Translation
Adjustment
Defined
Benefit
Plans
Items
Gaines
(Losses)
on Cash
Flow
Hedges Total
Foreign
Currency
Translation
Adjustment
Defined
Benefit
Plans
Items
Gaines
(Losses)
on Cash
Flow
Hedges Total
Balance as of beginning
of period $ (26,597) $ (6,855) $ (6,874) $ (40,326) $ (35,459) $ (5,989) $ 610 $ (40,838)
Other comprehensive
income (loss) before
reclassifications (15,800) — 7,984 (7,816) 8,862 — (5,789) 3,073
Amounts reclassified
from accumulated other
comprehensive loss — 1,838 (2,686) (848) — (866) (1,695) (2,561)
Other comprehensive
income (loss) (15,800) 1,838 5,298 (8,664) 8,862 (866) (7,484) 512
Balance as of end of
period $ (42,397) $ (5,017) $ (1,576) $ (48,990) $ (26,597) $ (6,855) $ (6,874) $ (40,326)
20. INTERNATIONAL OPERATIONS AND GEOGRAPHIC INFORMATION
Following is selected financial information on the Company’s international operations, which include the United
Kingdom, France, Netherlands, Canada, Brazil, and Australia:
International Operations Financial Information
December 31,
(in thousands) 2021 2020 2019
Net sales $ 363,339 $ 312,462 $ 357,602
Income from operations 34,561 31,166 32,518
Income before income taxes 37,051 30,674 31,975
Identifiable assets 352,187 304,536 333,392
81
Following is other selected geographic financial information on the Company’s operations:
Geographic Financial Information
December 31,
(in thousands) 2021 2020 2019
Geographic net sales:
United States $ 953,024 $ 862,430 $ 774,854
France 92,052 81,259 99,145
Canada 83,392 65,313 72,950
United Kingdom 57,386 47,757 52,098
Brazil 31,365 16,592 17,919
Netherlands 27,964 23,946 23,462
Germany 8,977 9,328 7,825
Australia 20,980 10,999 7,550
Other 59,083 45,842 63,335
Total net sales $ 1,334,223 $ 1,163,466 $ 1,119,138
Geographic location of long-lived assets:
United States $ 461,341 $ 480,940 $ 515,189
Netherlands 32,262 39,063 37,930
Canada 32,132 33,573 32,606
United Kingdom 36,569 18,843 19,840
France 19,781 21,033 19,513
Brazil 10,408 11,123 15,096
Australia 790 964 1,021
Total long-lived assets $ 593,283 $ 605,539 $ 641,195
Net sales are attributed to countries based on the location of customers.
21. COMMITMENTS AND CONTINGENCIES
The Company is subject to various unresolved legal actions that arise in the ordinary course of its business.
The most significant of such actions relates to product liability, which is generally covered by insurance after various
self-insured retention amounts. While amounts claimed might be substantial and the liability with respect to such
litigation cannot be determined at this time, the Company believes that the outcome of these matters will not have a
material adverse effect on the Company’s consolidated financial position or results of operations; however, the
ultimate resolution cannot be determined at this time.
Also, like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws
and requirements, including those concerning air emissions, discharges into waterways, and the generation,
handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as
the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and
off-site disposal locations, workplace safety and equal employment opportunities. These laws and regulations are
constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and
regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing
operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material
costs or other liabilities as a result thereof.
82
Exhibit 21.1
SUBSIDIARIES OF ALAMO GROUP INC.
Name
Jurisdiction
of Incorporation
Alamo Group (USA) Inc. (1) Delaware
Alamo Group Europe Limited (1) United Kingdom
Alamo Group (Canada) Inc. (1) New Brunswick
Alamo Group Brazil I, Inc. (1) Delaware
Alamo Group Brazil II, Inc. (1) Delaware
Alamo Group (TX) Inc. (2) Texas
Alamo Group Management Inc. (2) Texas
Bush Hog, Inc. (2) Delaware
Gradall Industries, Inc. (2) Delaware
Henke Manufacturing Corporation (2) Kansas
Herschel Parts, Inc. (2) Nevada
Howard P. Fairfield LLC (2) Delaware
Morbark, LLC (15) Michigan
Nite-Hawk Sweepers, LLC (2) Washington
Old Dominion Brush Company, Inc. (2) Delaware
RhinoAg, Inc. (2) Delaware
Schulte (USA) Inc. (2) Florida
Schwarze Industries Australia PTY Ltd. (3) Australia
Schwarze Industries, Inc. (2) Alabama
Super Products LLC (2) Delaware
Tenco Industries Inc. (2) Delaware
Terrain King Corporation (2) Nevada
Tiger Corporation (2) Nevada
Wausau Equipment Company Inc. (2) Delaware
ALG (HK) Limited (2) Hong Kong
ALG (Beijing) Trading Co. Ltd. (9) China
Bomford Turner Limited (4) United Kingdom
Bomford & Evershed Ltd. (5) United Kingdom
Bomford Turner (1954) Limited. (5) United Kingdom
Kellands Agricultural Ltd. (4) United Kingdom
McConnel Ltd. (4) United Kingdom
Spearhead Machinery Ltd. (4) United Kingdom
Timberwolf Limited (4) United Kingdom
Turner International (ENG) Ltd. (5) United Kingdom
Twose of Tiverton Ltd. (5) United Kingdom
Alamo Group (FR) SAS (4) France
SMA Faucheux SAS (6) France
Forges Gorce SAS (6) France
Rivard SAS (6) France
Rousseau SAS (6) France
ALSA Alamo Legal Services and Advice (6) France
Schulte Industries Ltd. (7) New Brunswick
Tenco Inc. (7) New Brunswick
Everest Equipment Co. (7) Nova Scotia
Super Products Canada Inc. (7) Alberta
Fieldquip PTY Ltd. (10) Australia
Herder Implementos e Maquinas Agricolas Ltda. (12) Brazil
Santa Izabel Agro Industria Ltda. (11) Brazil
Alamo Group The Netherlands Holding B.V. (4) The Netherlands
Conver B.V. (13) The Netherlands
Herder B.V.. (13) The Netherlands
Roberine B.V. (13) The Netherlands
DPC Maschinen Vertrieb GMBH (13) Germany
_____________________
(1) 100% owned by Alamo Group Inc.
(2) 100% owned by Alamo Group (USA) Inc.
(3) 100% owned by Schwarze Industries, Inc.
(4) 100% owned by Alamo Group (Europe) Limited
(5) 100% owned by Bomford Turner Limited
(6) 100% owned by Alamo Group (FR) SAS
(7) 100% owned by Alamo Group (Canada) Inc.
(8) 100% owned by SMA SAS
(9) 100% owned by ALG (HK) Limited
(10) 100% owned by Schwarze Industries Australia PTY Ltd.
(11) 90% owned by Alamo Group Brazil I, Inc.
10% owned by Alamo Group Brazil II, Inc.
(12) 99.99% owned by Santa Izabel Agro Industria Ltda.
00.01% owned by Brazil 1, Inc.
(13) 100% owned by Alamo Group The Netherlands Holding B.V.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Alamo Group Inc.:
We consent to the incorporation by reference in the registration statement (No. 333-180049) on Form S-3 and
registration statements (Nos. 333-231205, 333-204169, 333-174755, 333-143216, and 333-88454) on Form S-8 of
our reports dated February 24, 2022, with respect to the consolidated financial statements of Alamo Group Inc. and
the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
San Antonio, Texas
February 24, 2022
Exhibit 31.1
I, Jeffery A. Leonard, certify that:
1. I have reviewed this annual report on Form 10-K 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 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 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 Rules 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.
February 24, 2022 /s/Jeffery A. Leonard
Jeffery A. Leonard
President & Chief Executive Officer
Exhibit 31.2
I, Richard J. Wehrle, certify that:
1. I have reviewed this annual report on Form 10-K 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 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 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 Rules 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.
February 24, 2022 /s/Richard J. Wehrle
Richard J. Wehrle
Executive Vice President & Chief Financial Officer
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 Annual Report of Alamo Group Inc. (the “Company”) on Form 10-K for the period ended
December 31, 2021 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. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report 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 Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
February 24, 2022 /s/Jeffery A. Leonard
Jeffery A. Leonard
President & Chief Executive Officer
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 Annual Report of Alamo Group Inc. (the “Company”) on Form 10-K for the period ended
December 31, 2021 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.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report 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 Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
February 24, 2022 /s/Richard J. Wehrle
Richard J. Wehrle
Executive Vice President & Chief Financial Officer
(Principal Financial Officer)
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ALAMO GROUP INC.
BOARD OF DIRECTORS
Roderick R. Baty
Chairman of the Board:
Retired — Director since 2011
Robert P. Bauer (1) (2) (3)
Retired — Director since 2015
Eric P. Etchart (1) (3)
Retired — Director since 2015
Nina C. Grooms (2)
Chief Product Officer:
May Mobility — Director since 2021
Tracy C. Jokinen (1) (2)
Retired — Director since 2016
Richard W. Parod (1) (2) (3)
Retired — Director since 2017
Jeffery A. Leonard
Chief Executive Officer and President
Director since 2021
Ronald A. Robinson
Retired — Director since 1999
Lorie L. Tekorius (2) (3)
President and Chief Operating Officer:
Greenbrier Companies, Inc. — Director since 2019
OFFICERS
Jeffrey A. Leonard
Chief Executive Officer and President
Richard J. Wehrle
Executive Vice President, Chief Financial Officer
and Treasurer
Michael A. Haberman
Executive Vice President, Industrial Equipment Division
Dan E. Malone
Executive Vice President and Chief Sustainability Officer
Richard H. Raborn
Executive Vice President, Vegetation Management Division
Edward T. Rizzuti
Executive Vice President, General Counsel
and Secretary
Janet S. Pollock
Vice President, Human Resources
Lori L. Sullivan
Vice President, Internal Audit
Corporate Office
Alamo Group Inc.
1627 East Walnut | Seguin, TX 78155
p 830.379.1480
f 830.372.9683
www.alamo-group.com
STOCK SYMBOL:ALG
Stock traded on NYSE
CUSIP Number: 011311107
Investor Relations Contact
Dan E. Malone
Alamo Group Inc.
p 830.379.1480
f 830.372.9683
e dmalone@alamo-group.com
Transfer Agent and Registrar
American Stock Transfer & Trust Co.
6201 15th Avenue | Brooklyn, NY 11219
p 800.937.5449
e info@astfinancial.com
www.astfinancial.com
Annual Stockholders’ Meeting
Date: May 5, 2022, 9:00 a.m. CST
Virtual Meeting
www.virtualshareholdermeeting.com/ALG2022
Independent Auditors
KPMG LLP
17802 IH 10, Suite 101 Promenade Two
San Antonio, TX 78257
Counsel
Clark Hill PLC
The Bakery Building
2301 Broadway Street | San Antonio, TX 78215
Sidley Austin LLP
787 7th Avenue | New York, NY 10019
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Nominating/Corporate Governance Committee
ALAMO GROUP INC.
ANNUAL REPORT
2021ALAMO GROUP INC.
WWW.ALAMO-GROUP.COM
Alamo Group Inc._10K_2022_V1_PWO-674 (1)
Cover Page
Table of Contents
Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for Registrant’s Common Equity
Item 6. Reserved
Item 7. Management Discussion and Analysis
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships, Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Summary
Index to Exhibits
Signatures
Report of Management on Internal Control Over Financial Reporting
Reports of Independent Registered Public Accounting Firm (KPMG LLP)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
2. ACCOUNTING PRONOUNCEMENTS
3. BUSINESS COMBINATIONS
4. EARNINGS PER SHARE
5. VALUATION AND QUALIFYING ACCOUNTS
6. INVENTORIES
7. PROPERTY, PLANT AND EQUIPMENT
8. GOODWILL
9. INTANGIBLE ASSETS
10. LEASES
11. ACCRUED LIABILITIES
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
13. LONG-TERM DEBT
14. INCOME TAXES
15. COMMON STOCK
16. STOCK OPTIONS
17. RETIREMENT BENEFIT PLANS
18. SEGMENT REPORTING
19. ACCUMULATED OTHER COMP LOSS
20. INTERNATIONAL OPERATIONS AND GEOGRAPHIC INFORMATION
21. COMMITMENTS
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