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What changed in ALAMO GROUP INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ALAMO GROUP INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+185 added−197 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in ALAMO GROUP INC's 2023 10-K

185 paragraphs added · 197 removed · 153 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

59 edited+17 added−20 removed103 unchanged
Biggest changePollock 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.
Biggest changePollock 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.
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.
Item 1. Business Unless the context otherwise requires, the terms “the Company,” "Alamo Group," “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.
In addition to the the EPA's implementation of Tier 4 emission requirements applicable to diesel engines, China, the European Union ("EU") 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.
In addition to the EPA's implementation of Tier 4 emission requirements applicable to diesel engines, China, the European Union ("EU") 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.
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. 8 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.
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.
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 5 other industrial users.
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.
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. 15 Richard J.
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.
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. 7 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.
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.
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.
Rizzuti served as Vice President, General Counsel and Secretary for Erickson Incorporated, a publicly traded aircraft manufacturing and operating company based in Portland, Oregon. 15 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.
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.
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 and New York. The equipment is sold primarily through dealers to governmental end-users as well as snow removal contractors.
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.
This acquisition complemented our existing range of snow removal products with RPM's 5 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.
In addition, a variety of laws regulate the Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship 11 between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements.
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.
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.
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 8 sludge beds. VacAll also offers a line of sewer cleaners.
The Company’s orders are subject to cancellation at any time before shipment; therefore, a comparison of unfilled orders from period to period is not necessarily meaningful and may not be indicative of future actual shipments.
The Company’s orders are subject to cancellation at 10 any time before shipment; therefore, a comparison of unfilled orders from period to period is not necessarily meaningful and may not be indicative of future actual shipments.
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.
Generally, forward-looking statements are 13 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.
Santa Izabel designs, manufactures and markets a variety of agricultural implements, sugar cane trailers and other vegetation management products 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.
( "Santa Izabel" ). Santa Izabel designs, manufactures and markets a variety of agricultural implements, sugar cane trailers and other vegetation management products sold throughout Brazil. This acquisition, along with Herder , augmented our product portfolio and improved our manufacturing capabilities in one of the world's largest agricultural markets.
W believe there will be some additional costs to our business as a result of the increasing level of regulation applicable to our business activities, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.
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, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.
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 Industrial Equipment Division includes the Company’s vocational truck business and other industrial operations such as excavators, vacuum trucks, street sweepers, snow removal equipment, and the recently acquired Royal Truck business. 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.
We expect pricing to remain elevated in 2023 but anticipate a slowing of the rate of inflation. 10 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.
We expect pricing to remain elevated in 2024 but anticipate a slowing of the rate of inflation. 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.
Tractors and truck chassis are generally available, but during 2022 we experienced significant delays in receiving truck chassis which caused us to delay shipments of some of our products and created operational inefficiencies in some of our facilities, particularly within our Industrial Equipment Division. The Company sources its purchased goods from international and domestic suppliers.
Tractors and truck chassis are generally available, but during 2023 we experienced delays in receiving truck chassis which caused us to delay shipments of some of our products and created operational inefficiencies in some of our facilities, particularly within our Industrial Equipment Division. The Company sources its purchased goods from international and domestic suppliers.
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 manages a total of 28 plants with business operations in North America, South America, Europe, and Australia.
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 4,350 employees and manages a total of 29 plants with business operations in North America, South America, Europe, and Australia.
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 2023 annual meeting of directors or until their successor is duly appointed and qualified. Name Age Position Jeffery A. Leonard 63 President and Chief Executive Officer Richard J.
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 2024 annual meeting of directors or until their successor is duly appointed and qualified. Name Age Position Jeffery A. Leonard 64 President and Chief Executive Officer Richard J.
In addition to salaries, our compensation programs, which vary by country and region, can include annual bonus and incentive plans, 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.
Our compensation programs vary by country and region, and may include annual bonus and incentive plans, 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.
In addition, we are subject to risks and uncertainties facing the industry in general, including the following: • changes in business and political conditions and the economy in general in both domestic and international markets; • negative impacts on our business and financial results including from operational and supply chain disruptions, input cost inflation, labor shortages, and other negative effects resulting from the COVID-19 pandemic or other causes; • the price and availability of energy and critical raw materials, particularly steel and steel products; • increased competition; • 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; • 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); • an increase in unfunded pension plan liability due to financial market deterioration; • 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; 14 • climate related incidents and other sustainability risks, global pandemics, acts of war or aggression (including the war between Russia and Ukraine) and terrorist activities or military actions; • 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.
In addition, we are subject to risks and uncertainties facing the industry in general, including the following: • changes in business and political conditions and the economy in general in both domestic and international markets; • the price and availability of energy and critical raw materials, particularly steel and steel products; • increased competition; • 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; • 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); • an increase in unfunded pension plan liability due to financial market deterioration; • 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; • climate related incidents and other sustainability risks, global pandemics, acts of war or aggression and terrorist activities or military actions; • 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, and changes in tax laws, regulations and legislation, relating to the environment, commerce, infrastructure spending, health and safety; and 14 • risk of governmental defaults and resulting impact on the global economy and particularly financial institutions.
Unfilled Orders As of December 31, 2022, the Company had unfilled customer orders of $1.0 billion compared to $800.8 million at December 31, 2021. Management expects that substantially all of the Company’s unfilled orders as of December 31, 2022 will be shipped during fiscal year 2023.
Unfilled Orders As of December 31, 2023, the Company had unfilled customer orders of $859.8 million compared to $1.0 billion at December 31, 2022. Management expects that substantially all of the Company’s unfilled orders as of December 31, 2023 will be shipped during fiscal year 2024.
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 19%, 20% and 21% of the Company’s total sales for the years ended December 31, 2022, 2021 and 2020, respectively.
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 17%, 19% and 20% of the Company’s total sales for the years ended December 31, 2023, 2022 and 2021, respectively.
As a percentage of sales, research & development was approximately 0.9% in 2022, 0.9% in 2021 and 1.1% in 2020, and is expected to continue at similar levels in 2023. Seasonality The Company’s unit sales are fairly constant quarter to quarter.
As a percentage of sales, research & development was approximately 0.8% in 2023, 0.9% in 2022 and 0.9% in 2021, and is expected to continue at similar levels in 2024. Seasonality The Company’s unit sales are fairly constant quarter to quarter.
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’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, truck mounted highway attenuator trucks, vacuum trucks, hydro-excavation equipment, telescopic boom excavators, and snow removal equipment .
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 $78.9 million and $84.8 million as of December 31, 2022 and 2021, respectively.
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 $77.1 million and $78.9 million as of December 31, 2023 and 2022, respectively.
This acquisition established a presence for the Company 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" ).
This acquisition established a presence for the Company in Brazil, one of the largest agricultural markets in the world. The Herder manufacturing operations have been consolidated into our Santa Izabel facility and the Herder Matao facility was subsequently sold in 2023. In 2017, the Company acquired 100% of the outstanding shares of Santa Izabel Agro Industria Ltda.
Labor Agreements: As of December 31, 2022, we employed approximately 4,200 employees. In the U.S. the Company has a collective bargaining agreement at its Gradall plant which covers 185 employees and will expire on April 14, 2024.
Labor Agreements: As of December 31, 2023, we employed approximately 4,350 employees. In the U.S., the Company has a collective bargaining agreement at its Gradall plant which covers 215 employees and will expire on April 14, 2024.
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 promulgated by the U.S.
Toxic Substances Control Act ("TSCA"), 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 promulgated by the U.S.
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.
At the end of 2020, the Denis Cimaf manufacturing operations based in Roxton Falls were consolidated into the Rayco facility in Wooster, Ohio. In 2023, the Morbark Roxton Falls, Quebec location was sold. In 2021, the Company acquired 100% of the outstanding capital shares of Timberwolf Limited ( "Timberwolf" ) in the U.K.
As of December 31, 2022, the Company employed 267 people in its various engineering departments, 166 of whom are degreed engineers and the balance of whom are support staff. Amounts expended on research and development activities were approximately $14.3 million in 2022, $11.7 million in 2021 and $12.4 million in 2020.
As of December 31, 2023, the Company employed 269 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 $13.4 million in 2023, $14.3 million in 2022 and $11.7 million in 2021.
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.
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 7 mowers manufactured by the Company in the U.K. to expand its presence in agricultural dealerships. The SMA product line is manufactured at our facility near Lyon, France.
This 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.
This product line was merged into the Schwarze operation and, in 2023, the product line assets were sold. 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.
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.
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.
It is possible that the lingering effects of the COVID-19 pandemic, including supply chain disruptions, labor constraints and other new and/or unanticipated effects, could cause delays in delivery or an inability to complete unfilled customer orders.
It is possible that supply chain disruptions, labor constraints, and other new and/or unanticipated effects, could cause delays in delivery or an inability to complete unfilled customer orders.
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 13 corporate office of the Company. The telephone number is 830-379-1480.
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.
Replacement parts generally are more profitable and less cyclical than wholegoods. 9 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.
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.
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.
Human Capital Resources and Management The success of our Company depends on the talents and dedication of our people, and we are committed to investing in their success.
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.
The acquisition broadened the Company’s product offering to our customers in Europe and other markets we serve. 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.
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 initiatives.
Our Vice-President of Corporate Human Resources ("VPHR") is responsible for developing and executing our human resources strategy together with our President and Chief Executive Officer ("CEO") and the other members of the Company's management team.
Pollock 64 Vice President, Human Resources Lori L. Sullivan 53 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.
Eckert 36 Vice President, Corporate Controller and Chief Accounting Officer Janet S. Pollock 65 Vice President, Human Resources Lori L. Sullivan 54 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.
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 .
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.
Wehrle 66 Executive Vice President and Chief Financial Officer Edward T. Rizzuti 53 Executive Vice President, General Counsel and Secretary Dan E. Malone 62 Executive Vice President, Chief Sustainability Officer Richard H. Raborn 57 Executive Vice President, Alamo Vegetation Management Division Michael A. Haberman 64 Executive Vice President, Alamo Industrial Equipment Division Janet S.
Wehrle 67 Executive Vice President and Chief Financial Officer Edward T. Rizzuti 54 Executive Vice President, General Counsel and Secretary Dan E. Malone 63 Executive Vice President, Chief Sustainability Officer Richard H. Raborn 58 Executive Vice President, Alamo Vegetation Management Division Michael A. Haberman 65 Executive Vice President, Alamo Industrial Equipment Division Ian M.
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 which complements our Schwarze sweeper line. In 2007, the Company purchased Henke Manufacturing Corporation (“Henke”) , a manufacturer of specialty snow removal attachments.
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 which complements our Schwarze sweeper line. In 2023, the Kent, Washington facility was sold and leased back.
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.
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.
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. 12 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.
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.
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.
CARB continues to propose new regulations, including Tier 5 off-road diesel engine emissions standards that are in development. In addition, CARB has started to implement on-road zero emissions equipment regulations that will likely create increasingly stringent requirements on exhaust and other emissions from some of the products we manufacture.
In Canada the Tenco bargaining agreement covers 99 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 66 employees which will expire on November 30, 2023. In the Company’s European locations, all employees are covered by the European Works Council agreements.
In Canada the Tenco bargaining agreement covers 115 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 67 employees which expired on November 30, 2023 and with respect to which negotiations are ongoing.
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.
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® , Royal Truck & Equipment™, 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.
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. 6 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.
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.
During 2022, the raw materials needed by the Company were available from a variety of sources in adequate quantities and at prevailing market prices, but in 2022 we experienced significant price inflation for many of the raw materials we purchase.
During 2023, the raw materials needed by the Company were available from a variety of sources in adequate quantities and at prevailing market prices. While supply chain issues have improved compared to prior years, we remain affected by inflationary impacts for many of the raw materials we purchase.
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.
Haberman served as President of the Company's Gradall Industries company from February of 2006 until January of 2020. Ian M. Eckert was appointed Vice President, Corporate Controller and Chief Accounting Officer of Alamo Group Inc. in June 2023. Prior to joining the Company, from 2020 to 2023, Mr.
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 2022, the Henke manufacturing operations were consolidated into our Wausau snow equipment facility in New Berlin, Wisconsin. 4 In 2008, the Company acquired Rivard Developpement S.A.S.
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.
McConnel, Bomford, Spearhead, AMS-UK, SMA, Faucheux, Forges Gorce, Rousseau, Rivard, and Alamo Group The Netherlands have various collective bargaining agreements covering approximately 784 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 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”).
Our formal offerings include tuition reimbursement, a diverse curriculum of learning programs, leadership development experiences, vocational and trade skills training, and external partnerships with educational institutions and trade schools across the globe.
Employees are provided a wide range of professional development experiences, at all stages in their careers. We offer tuition reimbursement, a broad range of leadership development experiences, vocational and trade skills training, and external partnerships with educational institutions across the globe.
We ensure that safety performance is tracked, aggregated, and reviewed timely and reported to management for appropriate action. 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.
Every location offers frequent safety meetings and training programs to all employees. Our safety committees conduct audits to identify and remove potential issues. Safety performance is tracked, aggregated, reviewed timely and reported to management for appropriate action by our corporate technical affairs and safety team, who conducts root cause analysis with corrective action plans to prevent future occurrences.
We also market 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 promote an inclusive environment through policies and training, so that employees feel empowered to contribute to the Company's ongoing success. Career opportunities are marketed internally and externally to a wide network of organizations and job boards, such as Women in Manufacturing, so we can source diverse candidate pools.
Removed
(“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.
Added
In 2022, the Henke manufacturing operations were consolidated into our Wausau snow equipment facility in New Berlin, Wisconsin. In 2023, the Henke Leavenworth, Kansas facility was sold. 4 In 2008, the Company acquired Rivard Developpement S.A.S. (“Rivard”) , a leading French manufacturer of vacuum trucks, high pressure cleaning systems and trenchers.
Removed
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.
Added
In 2023, the Company acquired 100% of the outstanding equity capital of Royal Truck & Equipment, Inc. (" Royal Truck "), a leading manufacturer of truck mounted highway attenuator trucks and other specialty trucks and equipment for the highway infrastructure and traffic control market.
Removed
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.
Added
The primary reason for the Royal Truck acquisition was to acquire business operations in an adjacent market, highway safety and equipment, where the Company sees compelling future opportunities. Royal Truck is based in Shoemakersville, Pennsylvania.
Removed
The Company consolidated its SMA operations located in Orleans, France, and production was relocated to its manufacturing facility near Lyon, France.
Added
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.
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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.
Added
A portion of Nite-Hawk’s sales includes truck chassis which are not manufactured by Nite-Hawk . 9 Royal Truck manufactures and sells truck mounted highway crash attenuator trucks, cone safety and traffic control trucks, and a broad range of other equipment focused on highway safety.
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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.
Added
Royal Truck sells its products directly to a diverse base of customers in the traffic control services, equipment rental, and construction businesses, as well as to governmental agencies. A portion of Royal Truck's sales includes truck chassis which are not manufactured by Royal Truck .
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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.
Added
These new on-road zero emissions regulations have started to limit the availability of some on-road vehicle chassis that use diesel engines in California and possibly in other states that plan to adopt these CARB regulations.
Removed
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.
Added
These include, among other laws and regulations: (i) the Registration, Evaluation, Authorization and Restriction of 11 Chemicals ("REACH") directive, U.S.
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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.
Added
Our CEO and VPHR regularly update our Board of Directors regarding the status of our human resources initiatives, which include: Focus on Health and Safety : Maintaining a safe and healthy workplace in each of our locations is a priority, and we focus on continuous improvement by embedding proactive and preventative safety into every level of the organization as one of our core values.
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These measures continue to be in place where and when necessary. Employee Engagement and Talent Development : We focus on attracting, developing, and retaining a team of highly talented and motivated employees.
Added
Safety performance data is reviewed by the executive leadership team and the Company's Board of Directors. Employee Engagement and Talent Development : Alamo Group's culture aims to promote a diverse, inclusive, and respectful workplace.
Removed
Our key talent philosophy is to develop internal candidates from within our Company, 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf 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, a loss of critical company records, 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.
Biggest changeIf 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, a loss of critical company records, 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. 18 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.
Acquisitions can be difficult, time-consuming, and pose a number of risks, including: 21 • 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.
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.
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, 19 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.
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.
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, 23 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.
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.
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 16 other economies in which we conduct business.
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.
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.
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. 23 If we are unable to comply with the terms of our credit arrangements, especially the financial covenants, our credit arrangements could be terminated.
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 22 prices and farm income. Consequently, sudden or significant declines in industry demand could adversely affect our working capital or results of operations.
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.
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.
In addition, violations of the GDPR, CCPA, CPRA, 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.
Labor shortages or increased labor costs could impair our ability to operate our business, meet customer commitments or grow our revenues, and could materially and adversely impact our business, results of operations and financial results. We depend on governmental sales, and a decrease in such sales could adversely affect our business, results of operations and financial condition.
Labor shortages or increased labor costs could impair our ability to 17 operate our business, meet customer commitments or grow our revenues, and could materially and adversely impact our business, results of operations and financial results. We depend on governmental sales, and a decrease in such sales could adversely affect our business, results of operations and financial condition.
These or other consequences from any trade wars could have a material adverse impact on our sales volumes, prices and our consolidated financial results. 18 Impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and net worth.
These or other consequences from any trade wars could have a material adverse impact on our sales volumes, prices and our consolidated financial results. Impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and net worth.
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.
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 19 successfully in our markets by, to some extent, avoiding direct competition with significantly larger potential competitors.
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.
If we are unable to successfully integrate acquired businesses, our future results may be negatively impacted. 21 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.
The U.S. has made 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.
The U.S. has made significant changes in its trade policy and has taken certain actions that have impacted U.S. trade and relationships with China and other trading partners, including imposing tariffs on certain goods imported into the U.S.
Implementation of, and compliance 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.
Implementation of, and compliance with, the GDPR, CCPA, CPRA, 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.
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.
If we fail to meet the Tier 4 or CARB requirements and any other EPA or state 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.
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.
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. 16 Deterioration of industry conditions could harm our business, results of operations and financial condition.
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, 2022, goodwill was $195.9 million, which represents 15% of total assets. The Company recognized no goodwill impairment in 2022, 2021 or 2020.
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, 2023, goodwill was $206.5 million, which represents approximately 15% of total assets. The Company recognized no goodwill impairment in 2023, 2022 or 2021.
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.
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.
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. 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.
If we were to have a significant goodwill impairment it could impact our results of operations as well as our net worth. 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.
Skilled labor shortages or our inability to retain qualified employees could adversely affect our operations. Our ability to maintain our productivity at competitive levels may be limited by our ability to employ, compensate, train and retain personnel necessary to meet our requirements. We may experience shortages of qualified personnel such as engineers, project managers, supervisors, and select skilled trades.
Our ability to maintain our productivity at competitive levels may be limited by our ability to employ, compensate, train and retain personnel necessary to meet our requirements. We may experience shortages of qualified personnel such as engineers, project managers, supervisors, and select skilled trades.
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. 25 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.
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.
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 infrastructure maintenance, vegetation management and agricultural markets in general. Future prospects of the industry depend largely on factors outside of our control.
Our business depends to a large extent upon the prospects for the infrastructure maintenance, vegetation management 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.
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.
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 and was further amended and extended by the California Privacy Rights Act ("CPRA") which became effective in 2023.
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. Significant changes in trade policy and related trade wars could have a material adverse impact on our results of operations.
Federal, state, provincial and local government budgets were negatively affected by the COVID-19 pandemic and its resurgence or a similar pandemic or event could have a material negative impact on our business and financial condition. Significant changes in trade policy and related trade wars could have a material adverse impact on our results of operations.
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. 20 We operate and source internationally, which exposes us to the political, economic and other risks of doing business abroad.
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.
On December 31, 2022, 11,968,197 shares of our common stock were issued and outstanding, and there were outstanding options and restricted stock awards totaling an additional 183,277 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.
On December 31, 2023, 12,013,481 shares of our common stock were issued and outstanding, and there were outstanding options and restricted stock awards totaling an additional 169,840 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.
The closing prices of our common stock on the New York Stock Exchange during 2022 ranged from $109.83 to $159.75 per share, and during 2021 from $136.01 to $164.81 per share.
The closing prices of our common stock on the New York Stock Exchange during 2023 ranged from $140.27 to $213.25 per share, and during 2022 from $109.83 to $159.75 per share.
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.
The products we manufacture or sell, particularly engines, are subject to increasingly stringent environmental emission regulations. For instance, the EPA 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.
There is no assurance that we will continue declaring dividends or have the available cash to make dividend payments. On January 3, 2023, the Board of Directors of the Company increased its quarterly dividend from $0.18 per share to $0.22 per share.
This would further dilute the interests of our existing stockholders. 24 There is no assurance that we will continue declaring dividends or have the available cash to make dividend payments. On January 2, 2024, the Board of Directors of the Company increased its quarterly dividend from $0.22 per share to $0.26 per share.
As of December 31, 2022, 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 50% of our outstanding common stock.
As of December 31, 2023, four investors - Henry Crown and Company, BlackRock, Inc., Dimensional Fund Advisors LP, and The Vanguard Group - beneficially owned approximately 40% of our outstanding common stock.
Further, if we are unavailable to timely source items such as truck chassis, engines, hydraulics and other critical components our business, results of operations and financial condition may be adversely affected. The COVID-19 pandemic may continue to materially and adversely affect our business, results of operations and financial condition.
Further, if we are unable to timely source items such as truck chassis, engines, hydraulics and other critical components our business, results of operations and financial condition may be adversely affected. Skilled labor shortages or our inability to retain qualified employees could adversely affect our operations.
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.
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. 20 Our acquisition strategy may not be successful, which may adversely affect our business, results of operations and financial condition.
We have operations in a number of countries outside of the United States and we source raw materials and components globally.
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.
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.
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. 22 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.
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. 24 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.
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.
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.
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.
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 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.
Our ability to meet the Tier 4 requirements is subject to many variables, some of which are beyond our direct control.
State agencies, including the California Air Resources Board ("CARB"), are also adopting emission regulations that apply to products we sell. Requirements have expanded to additional horsepower categories and, accordingly, apply to more of the products we sell. Our ability to meet the Tier 4 and CARB requirements is subject to many variables, some of which are beyond our direct control.
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.
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 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.
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.
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Any of those factors could adversely impact demand for our products, which could adversely impact our business, results of operations and financial condition.
Added
In addition, political developments and governmental regulations and policies in the countries in which we operate directly affect the demand for our products.
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The COVID-19 pandemic caused a significant downturn in our markets and subsequently caused significant market volatility and operational challenges, among other things.
Added
We acquired Timberwolf in 2021 and Royal Truck in 2023.
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The extent and duration of ongoing impacts stemming from the pandemic will depend on numerous factors, including: 17 • global governmental, business and individual actions taken in response to COVID-19; • the effect on our suppliers and companies throughout our supply chain to meet supply commitments, requirements, and/or demands and our ability to continue to obtain commodities, components, parts, and accessories on a timely basis and at anticipated costs; • the effect on our dealers, distributors, and other channel partners and customers, including reduced or constrained budgets and cash preservation efforts; • our ability to fulfill existing and future sales order backlog; • potential effects the pandemic may have on our available labor force; • increasing logistics costs and transportation challenges; While our markets appear to have recovered from the more direct negative impacts of the pandemic, the longer term effects of the pandemic, including supply chain disruptions, purchased component shortages, and inflationary pressures are unknown and could have a material adverse effect on our business, results of operations and financial results.
Added
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.
Removed
During the 2022 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, 2022 would not result in an impairment of goodwill for any of the reporting units.
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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.
Removed
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.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe 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, and Debarkers for Morbark Selma, Alabama* 769,000 Owned Mechanical Rotary Mowers, Finishing 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, Zero Turn Radius Mowers, Blades, Deep Tillage Equipment, 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 Street Sweeper Replacement Brooms 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 Mowing Equipment, Sugar Cane Trailers and other equipment for Santa Izabel Huntsville, Alabama* 135,000 Owned Air and Mechanical Street 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, Flail 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.
Biggest changeThe 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, and Debarkers for Morbark Selma, Alabama* 744,000 Owned Mechanical Rotary Mowers, Finishing 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, Deep Tillage Equipment, 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 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 Richmond, Virginia* 160,000 Leased Leaf Collection Equipment and Street Sweeper Replacement Brooms for ODB 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 Mowing Equipment, Sugar Cane Trailers and other equipment for Santa Izabel Huntsville, Alabama* 135,000 Owned Air and Mechanical Street Sweeping Equipment for Schwarze New Berlin, Wisconsin* 120,000 Owned Municipal Snow Removal and Ice Control Equipment for Wausau Coatesville, Indiana* 120,000 Owned Zero Turn Radius Mowers for Dixie Chopper Middelburg, the Netherlands* 110,000 Owned Boom Mowers, Flail 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.
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 27 Approximately 80% of the manufacturing, warehouse and office space is owned.
Fairfield Kent, Washington* 43,000 Leased 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 Installation & Rental Facilities, Warehouses & Sales 503,200 Leased / Owned Services Parts Distribution, Installation Facilities and Sales and After Market Office Offices, Seguin & New Braunfels, Texas 29,000 Leased /Owned Corporate Office Total 6,144,200 82% * Principal manufacturing plants 28 Approximately 82% of the manufacturing, warehouse and office space is owned.
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.
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 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 Shoemakersville, Pennsylvania* 65,000 Leased Truck Mounted Highway Attenuator Trucks and Other Specialty Trucks and Equipment for Royal Truck and Equipment Hopkinton, New Hampshire* 55,000 Owned Distributor of Public Works and Runway Maintenance Products for H.P.
Item 2. Properties As of December 31, 2022, the Company utilized twenty-eight principal manufacturing plants with sixteen located in the United States, eight in Europe, three in Canada, and one in Brazil.
Item 2. Properties As of February 16, 2024, the Company utilized twenty-nine principal manufacturing plants with seventeen located in the United States, eight in Europe, three in Canada, and one in Brazil.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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, 2022, as well as the performance of an overall stock market index (the S&P SmallCap 600 Index).
Biggest changeThe 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, 2023, as well as the performance of an overall stock market index (the S&P SmallCap 600 Index) and a published industry or line-of-business index (the S&P 500 Industrials Index) for the same period. *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
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. 28 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.
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.
On February 17, 2023, there were 11,971,477 shares of common stock outstanding, held by approximately 78 holders of record, but the total number of beneficial owners of the Company’s common stock exceeds this number. On February 17, 2023, the closing price of the common stock on the New York Stock Exchange was $163.16 per share.
On February 16, 2024, there were 12,015,281 shares of common stock outstanding, held by approximately 78 holders of record, but the total number of beneficial owners of the Company’s common stock exceeds this number. On February 16, 2024, the closing price of the common stock on the New York Stock Exchange was $217.33 per share.
On January 3, 2023, the Board of Directors of the Company declared a quarterly dividend of $0.22 per share which was paid on February 1, 2023 to holders of record as of January 18, 2023.
On January 2, 2024, the Board of Directors of the Company declared a quarterly dividend of $0.26 per share which was paid on January 29, 2024 to holders of record as of January 16, 2024.
All rights reserved. 12/17 12/18 12/19 12/20 12/21 12/22 Alamo Group Inc. 100.00 68.81 112.28 123.97 132.76 128.40 S&P SmallCap 600 100.00 91.52 112.37 125.05 158.59 133.06 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 S&P Industrials 100.00 86.71 112.17 124.59 150.89 142.63 29 Purchase of Equity Securities The Company has suspended its share repurchase program but the program may be reinstated in the future.
All rights reserved. 12/18 12/19 12/20 12/21 12/22 12/23 Alamo Group Inc. 100.00 163.18 180.16 192.93 186.60 278.40 S&P SmallCap 600 100.00 122.78 136.64 173.29 145.39 168.73 S&P 500 Industrials 100.00 129.37 143.68 174.02 164.49 194.31 Purchase of Equity Securities The Company has suspended its share repurchase program but the program may be reinstated in the future. Item 6.
Removed
In addition, the Company has changed its peer group index and has selected the S&P Industrials Index as its published industry or line-of-business index, replacing the Russell 2000 Index used in prior years, as the Company believes the S&P industrials Index represents a more appropriate peer group.
Added
Fiscal year ending December 31. Copyright© 2024 Standard & Poor's, a division of S&P Global.
Removed
The cumulative return of the Russell 2000 Index is presented in the graph below as required by Item 201(e)(4) of Regulation S-K. *$100 invested on 12/31/17 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2023 Russell Investment Group.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn 2022, we worked to mitigate some of the effects of cost increases through aggressive pricing actions but cost inflation is an ongoing challenge that could have a material impact on the Company's business and financial results, particularly if the current inflationary environment materially worsens.
Biggest changeHowever, cost inflation is an ongoing challenge that could have a material impact on the Company's business and financial results, particularly if the current inflationary environment materially worsens. New Accounting Pronouncements As discussed in Note 2 of Notes to Consolidated Financial Statements, certain new financial accounting pronouncements became effective January 1, 2023, or will become effective in the future.
The income in 2021 was primarily due to changes in exchange rates and the sale of a facility in the Netherlands for $3.4 million. Provision for income taxes was $32.4 million (24.1% of income before income taxes) for 2022 compared to $29.3 million (26.7% of income before income taxes) in 2021.
The income in 2021 was primarily due to changes in exchange rates and the sale of a facility in the Netherlands for $3.4 million. 33 Provision for income taxes was $32.4 million (24.1% of income before income taxes) for 2022 compared to $29.3 million (26.7% of income before income taxes) in 2021.
The Term Facility requires the Company to 33 make equal quarterly principal payments of $3.75 million over the term of the loan, with the final payment of any outstanding principal amount, plus interest, due at the end of the five year term.
The Term Facility requires the Company to make equal quarterly principal payments of $3.75 million over the term of the loan, with the final payment of any outstanding principal amount, plus interest, due at the end of the five year term.
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. 35
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.
Interest expense for 2022 was $14.4 million compared to $10.5 million in 2021, an increase of $3.9 million or 36.3%. The increase in interest expense in 2022 primarily came from higher interest rates and increased borrowing levels.
Amortization expense in 2022 was $15.3 million compared to $14.6 million in 2021, an increase of $0.7 million. Interest expense for 2022 was $14.4 million compared to $10.5 million in 2021, an increase of $3.9 million or 36.3%. The increase in interest expense in 2022 primarily came from higher interest rates and increased borrowing levels.
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.
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.
The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below. Net cash provided by operating activities was $14.5 million for 2022, compared to $49.7 million for 2021.
The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below. Net cash provided by operating activities was $131.2 million for 2023, compared to $14.5 million for 2022.
On December 31, 2022, $2.8 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 $295.2 million in available borrowings. The Company is in compliance with the covenants under the Agreement.
On December 31, 2023, $2.6 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 $397.4 million in available borrowings. The Company is in compliance with the covenants under the Agreement.
Net income for 2022 was $101.9 million compared to $80.2 million in 2021, with the increase in 2022 net income resulting from the factors described above.
Net income for 2023 was $136.2 million compared to $101.9 million in 2022, with the increase in 2023 net income resulting from the factors described above.
Actual results may differ from these estimates under different assumptions or conditions. 34 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.
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.
The increase in working capital was primarily a result of volume-driven and inflation-driven increases in accounts receivable as well as an increase in inventory to support the Company's higher backlog levels. Capital expenditures were $31.1 million for 2022, compared to $25.3 million for 2021.
The increase in working capital was primarily a result of volume-driven and inflation-driven increases in accounts receivable as well as a volume driven increase in inventory to support the Company's backlog. Capital expenditures were $37.7 million for 2023, compared to $31.1 million for 2022.
The following tables set forth, for the periods indicated, certain financial data: Fiscal Year Ended December 31, Net sales (data in thousands): 2022 2021 2020 Vegetation Management $ 937,065 $ 812,676 $ 654,630 Industrial Equipment 576,551 521,547 508,836 Total net sales $ 1,513,616 $ 1,334,223 $ 1,163,466 Cost and profit margins, as percentages of net sales: Cost of sales 75.1 % 74.9 % 74.8 % Gross profit 24.9 % 25.1 % 25.2 % Selling, general, administrative, and amortization expenses 15.1 % 16.3 % 17.1 % Income from operations 9.8 % 8.8 % 8.1 % Income before income taxes 8.9 % 8.2 % 6.9 % Net income 6.7 % 6.0 % 5.0 % Results of Operations Fiscal 2022 compared to Fiscal 2021 The Company’s net sales in the fiscal year ended December 31, 2022 (“2022”) were $1,513.6 million, an increase of $179.4 million or 13.4% compared to $1,334.2 million for the fiscal year ended December 31, 2021 (“2021”).
The following tables set forth, for the periods indicated, certain financial data: Fiscal Year Ended December 31, Net sales (data in thousands): 2023 2022 2021 Vegetation Management $ 979,040 $ 937,065 $ 812,676 Industrial Equipment 710,611 576,551 521,547 Total net sales $ 1,689,651 $ 1,513,616 $ 1,334,223 Cost and profit margins, as percentages of net sales: Cost of sales 73.2 % 75.1 % 74.9 % Gross profit 26.8 % 24.9 % 25.1 % Selling, general, administrative, and amortization expenses 15.1 % 15.1 % 16.3 % Income from operations 11.7 % 9.8 % 8.8 % Income before income taxes 10.4 % 8.9 % 8.2 % Net income 8.1 % 6.7 % 6.0 % Results of Operations Fiscal 2023 compared to Fiscal 2022 The Company’s net sales in the fiscal year ended December 31, 2023 (“2023”) were $1,689.7 million, an increase of $176.1 million or 11.6% compared to $1,513.6 million for the fiscal year ended December 31, 2022 (“2022”).
The division's income from operations for 2022 was up 37% versus the full year of 2021, due to improved sales and positive pricing actions but offset by higher input costs and operational inefficiencies due to supply chain disruptions and labor constraints.
The division's income from operations for 2023 was up 13% versus the full year of 2022, due to improved sales, positive pricing actions,and better productivity, but offset by higher input costs, lingering supply chain disruptions, labor constraints, and higher marketing costs.
The Agreement also contains other customary covenants, representations and events of defaults. The expiration date of the 2022 Credit Agreement, including the Term Facility and the Revolver Facility, is October 28, 2027. As of December 31, 2022, $301.9 million was outstanding under the Credit Agreement, $249.9 million on the Term Facility and $52.0 million on the Revolver Facility.
The Agreement also contains 34 other customary covenants, representations and events of defaults. The expiration date of the 2022 Credit Agreement, including the Term Facility and the Revolver Facility, is October 28, 2027. As of December 31, 2023, $235.2 million was outstanding under the Credit Agreement, $235.2 million on the Term Facility and zero on the Revolver Facility.
Payment due by period 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 effect on our financial statements upon adoption of these pronouncements is discussed in the above-referenced note. Payment due by period 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”).
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.
For further information on the critical accounting policies, see Note 1 of our Notes to Consolidated Financial Statements. 35 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.
The increase in SG&A expenses in 2022 was attributable to higher administrative, marketing and engineering expenses as the Company returned to pre-pandemic expense levels. Amortization expense in 2022 was $15.3 million compared to $14.6 million in 2021, an increase of $0.7 million.
Selling, general and administrative expenses (“SG&A”) were $212.6 million (14.0% of net sales) in 2022 compared to $202.9 million (15.2% of net sales) in 2021, an increase of $9.7 million. The increase in SG&A expenses in 2022 was attributable to higher administrative, marketing and engineering expenses as the Company returned to pre-pandemic expense levels.
Consolidated income from operations was $148.6 million for the full year of 2022 compared to $116.9 million in 2021, an increase of 27%. The Company's backlog increased 26% to $1.0 billion at the end of 2022 versus the backlog of $800.8 million at the end of 2021.
Consolidated income from operations was $198.0 million for the full year of 2023 compared to $148.6 million in 2022, an increase of 33%. The Company's backlog decreased 15% to $859.8 million at the end of 2023 versus the backlog of $1.0 billion at the end of 2022.
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. We experienced strong demand for our products in 2022 which led to record net sales for the full year.
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 13.
Net cash provided by financing activities was $24.5 million for 2022, compared to net cash used of $23.0 million for 2021. The Company had $42.9 million in cash and cash equivalents held by its foreign subsidiaries as of December 31, 2022. The majority of these funds are held at our European and Canadian facilities.
The Company had $42.5 million in cash and cash equivalents held by its foreign subsidiaries as of December 31, 2023. The majority of these funds are held at our European and Canadian facilities.
The Company's Industrial Equipment Division net sales were up 11% for the full year of 2022 compared to the full year of 2021. The division's net sales were strong in the excavator and vacuum truck product lines and were also supported by moderate sales increases in our street sweeper, debris collector and snow removal equipment lines.
The Company's Industrial Equipment Division net sales were up 23% for the full year of 2023 compared to the full year of 2022. The division's net sales were strong in each of the product lines: excavator and vacuum trucks, street sweepers, debris collectors, and snow removal equipment.
The increase in gross profit was mainly attributable to higher sales volume during 2022 compared to 2021 as well as improved pricing. Profitability was negatively impacted by supply chain disruptions, shortages of component parts, along with higher costs of materials and inbound freight.
Profitability was negatively impacted by supply chain disruptions, shortages of component parts, along with higher costs of materials and inbound freight. These factors led to lower profitability as a percentage of sales in 2022 as compared to the same period in 2021.
The Company's Vegetation Management Division experienced a 15% increase in net sales for the full year of 2022 compared to the full year of 2021. The increase in net sales was primarily due to continued strong customer demand for our products and positive pricing actions.
The increase in net sales was primarily due to continued strong customer demand for our products and positive pricing actions.
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.
Management believes the following critical accounting policy reflects its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.
Fiscal 2021 compared to Fiscal 2020 The Company’s net sales in the fiscal year ended 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”).
Fiscal 2022 compared to Fiscal 2021 The Company’s net sales in the fiscal year ended December 31, 2022 (“2022”) were $1,513.6 million, an increase of $179.4 million or 13.4% compared to $1,334.2 million for the fiscal year ended December 31, 2021 (“2021”).
As of December 31, 2022, the Company had working capital of $536.7 million, which represents a increase of $117.1 million from working capital of $419.6 million as of December 31, 2021.
As of December 31, 2023, the Company had working capital of $590.0 million, which represents an increase of $53.3 million from working capital of $536.7 million as of December 31, 2022.
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.
Net income for 2022 was $101.9 million compared to $80.2 million in 2021, with the increase in 2022 net income resulting from the factors described above. Liquidity and Capital Resources In addition to normal operating expenses, the Company has ongoing cash requirements which are necessary to conduct the Company’s business, including inventory purchases and capital expenditures.
This division was also negatively impacted by ongoing supply chain disruptions and logistics issues in 2022, including delays in receiving truck chassis and component parts from supply chain partners. 31 Gross profit for 2022 was $376.5 million (24.9% of net sales) compared to $334.5 million (25.1% of net sales) in 2021, an increase of $42.0 million.
This division was negatively impacted by a shortage of skilled labor and disruptions in parts of its supply chain, predominantly causing delays in receiving truck chassis. Gross profit for 2023 was $453.6 million (26.8% of net sales) compared to $376.5 million (24.9% of net sales) in 2022, an increase of $77.1 million.
These factors led to lower profitability as a percentage of sales in 2022 as compared to the same period in 2021. Selling, general and administrative expenses (“SG&A”) were $212.6 million (14.0% of net sales) in 2022 compared to $202.9 million (15.2% of net sales) in 2021, an increase of $9.7 million.
Selling, general and administrative expenses (“SG&A”) were $240.2 million (14.2% of net sales) in 2023 compared to $212.6 million (14.0% of net sales) in 2022, an increase of $27.6 million.
The increase in both net sales and net income was primarily due to a strong demand for our products. Margins improved due to the increase in demand along with pricing actions we began in 2021 which helped mitigate inflation cost pressures. However, our results were constrained by higher input costs, ongoing supply chain disruptions, and skilled labor shortages.
The increase in both net sales and net income was primarily due to a strong demand for our products and improving operating conditions, particularly in the later part of the year. Margins improved due to the increase in demand along with pricing actions which helped mitigate inflation cost pressures.
The increase was mainly due to continued solid results in our excavator and vacuum truck product lines with modest support from other product lines.
The increase was mainly due to continued solid results in our excavator and vacuum truck product lines with modest support from other product lines. This division was also negatively impacted by ongoing supply chain disruptions and logistics issues in 2022, including delays in receiving truck chassis and component parts from supply chain partners.
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.
Gross profit for 2022 was $376.5 million (24.9% of net sales) compared to $334.5 million (25.1% of net sales) in 2021, an increase of $42.0 million. The increase in gross profit was mainly attributable to higher sales volume during 2022 compared to 2021 as well as improved pricing.
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.
Inflation moderated in the second half of 2023 and we anticipate that trend will continue in 2024 with the average cost of commodities, components, parts, and accessories increasing slightly when compared to the average costs in 2023. 31 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.
In 2023, we anticipate that the average cost of commodities, components, parts, and accessories will be slightly higher than the average costs experienced during 2022 but the rate of inflation appears to be moderating.
Inflation moderated in the second half of 2023 and we anticipate that trend will continue in 2024 with the average cost of commodities, components, parts, and accessories increasing slightly when compared to the average costs in 2023.
The increase in the Company's backlog was primarily attributable to continued strong customer demand for our products in both of the Company's divisions as outlined above. Inflationary Impacts In 2022, the cost of commodities, components, parts, and accessories was significantly higher compared to the cost of those items purchased in 2021, mainly as a result of ongoing upward inflationary pressure.
The decrease in the Company's backlog was primarily attributable to a decline in Vegetation Management Division product orders which returned to normal levels from a historical perspective. Inflationary Impacts In 2023, the cost of commodities, components, parts, and accessories was higher compared to the cost of those items purchased in 2022, mainly as a result of inflationary pressure.
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.
The increase in sales was attributable to continued strong customer demand for our products in both the Vegetation Management and Industrial Equipment Divisions, improved pricing, and higher throughput due to gradually improving supply chain conditions. Supply chain disruptions and a shortage of skilled labor negatively impacted net sales, especially in the first half of the year earlier.
The decrease of cash from operating activities is primarily the result of increased borrowings on the Company's revolving credit facility used for increased working capital needs in support of elevated backlog levels. Net cash used in investing activities was $31.7 million for 2022, compared to $33.4 million for 2021.
The increase of cash from operating activities is primarily the result of stronger net income driven by sales growth and a significantly lower year-on-year change in operating assets compared to 2022. Net cash used in investing activities was $52.6 million for 2023, compared to $31.7 million for 2022.
While our supply chain appears to be gradually improving, we expect that some or all of these adverse operating conditions will persist for at least a portion of 2023. 2022 Performance In 2022, the Company's net sales increased by 13% and net income increased by 27% compared to 2021.
While our supply chain has improved, there are lingering supply chain issues and we continue to face labor challenges in some of our locations. 2023 Performance In 2023, the Company's net sales increased by 12% and net income increased by 34% compared to 2022.
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%.
Amortization expense in 2023 was $15.5 million compared to $15.3 million in 2022, an increase of $0.2 million. 32 Interest expense for 2023 was $26.1 million compared to $14.4 million in 2022, an increase of $11.7 million or 81.7%. The increase in interest expense in 2023 primarily came from higher interest rates compared to 2022.
Removed
Our markets continue to exhibit strength and we currently see do not anticipate a significant reduction in customer demand, at least in the near term. However, many of the same adverse operating conditions that we experienced in 2022 including, among other things, supply chain disruptions, input cost inflation, and labor shortages continue to present challenges to our business.
Added
We experienced strong demand for our products in 2023 together with improving supply chain conditions which facilitated higher throughput and better operating efficiency, leading to record net sales and income for the full year. Market conditions are mixed; governmental and industrial product demand is robust while vegetation product demand has been hampered by higher interest rates and elevated channel inventories.
Removed
Supply chain and labor issues have led to disruptions in our manufacturing facilities which constrain our operating efficiencies and negatively impact our overall profitability. These challenges are also partially responsible for our record high backlog levels, as we have struggled to fully complete and ship products in a timely manner.
Added
However, our full-year results were constrained to some extent by higher input costs, ongoing supply chain disruptions, and skilled labor shortages, all of which had a greater impact on our results earlier in the year. The Company's Vegetation Management Division experienced a 4% increase in net sales for the full year of 2023 compared to the full year of 2022.
Removed
Negatively impacting this division were higher input costs and supply chain disruptions including, most significantly, a shortage of truck chassis. These adverse conditions had a negative impact on the division's income from operations, which for the full year of 2022 was up only 5% compared to the full year of 2021.
Added
The division's income from operations for 2023 was up 89% versus the full year of 2022, driven by significant sales growth and improved operating efficiencies, but offset by higher input costs and certain key supplier issues, most notably, a shortage of truck chassis earlier in the year.
Removed
Any material worsening of the current inflationary environment could lead to higher input costs which is likely to have a material adverse effect on our business and financial results. 30 Impact of the War in Ukraine In 2022, we discontinued sales into the Russian and Belarusian markets as a response to the war in Ukraine.
Added
Net Vegetation Management sales were $979.0 million in 2023 compared to $937.1 million in 2022, an increase of $41.9 million or 4.5%, coming from a strong performance in European agricultural and governmental mowing, forestry and tree care, and North American governmental mowing equipment. Skilled labor shortages and certain supplier issues constrained this division during 2023.
Removed
Our sales in those markets represented an insignificant share of our overall international business and, accordingly, this decision did not have a material impact on our 2022 results nor do we expect it to have a material impact on our future financial results.
Added
Net Industrial Equipment sales were $710.6 million in 2023 compared to $576.6 million in 2022, representing an increase of $134.0 million or 23.3%. The increase was a result of strong performance in all product lines including excavator and vacuum trucks, sweepers and debris collection, and snow removal equipment further supported by the acquisition of Royal Truck.
Removed
The war has disrupted parts of our supply chain and has created additional inflationary pressure on some of the items we purchase for our end-products, but we do not believe these effects are material to our business. However, any significant change in or escalation of the war in Ukraine could result in unanticipated effects which may adversely impact our business.
Added
The increase in gross profit was mainly attributable to higher sales volume and better operational performance during 2023 compared to 2022 as well as improved pricing which led to higher profitability as a percentage of sales in 2023 compared to 2022, though these results were partially offset by the negative impacts of supply chain disruptions and material inflation previously mentioned.
Removed
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.
Added
The increase in SG&A expenses in 2023 was largely attributable to higher marketing expenses related to trade shows, sales promotions and commissions and to a lesser extent, sales volume-driven administration expense.
Removed
Sales in this Division were negatively impacted by operational and supply chain disruptions and logistics issues due to the pandemic. 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%.
Added
Other income (expense), net was income of $1.8 million during 2023 compared to expense of $0.7 million in 2022. The increase in 2023 was primarily the result of a gain on fixed assets relating to the sale of a manufacturing facility located in Kent, Washington partially offset by loss on currency exchange.
Removed
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.
Added
The expense in 2022 was primarily the result of an excise tax audit and to a lesser extent, changes in exchange rates. Provision for income taxes was $39.0 million (22.2% of income before income taxes) for 2023 compared to $32.4 million (24.1% of income before income taxes) in 2022.
Removed
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.
Added
The increase in investing activities is driven by the acquisition of Royal Truck. Net cash used by financing activities was $76.9 million for 2023, compared to net cash provided of $24.5 million for 2022. This reduction in cash provided by financing activities is due to repayment of revolving credit.
Removed
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. 32 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.
Added
In 2023, the cost of commodities, components, parts, and accessories was higher compared to the cost of those items purchased in 2022, mainly as a result of inflationary pressure. In 2023, we worked to mitigate some of the effects of cost increases through pricing actions.
Removed
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.
Removed
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.
Removed
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.
Removed
In 2022, the Company was materially impacted by inflationary pressures that significantly increased the price of steel as well as the price of many other purchased components.
Removed
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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed8 unchanged
Biggest changeOn December 31, 2022, the British pound closed at 0.8266 relative to the U.S. dollar, and the Euro closed at 0.9344 relative to the U.S. dollar. By comparison, 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.
Biggest changeOn December 31, 2023, the British pound closed at 0.7854 relative to the U.S. dollar, and the Euro closed at 0.9060 relative to the U.S. dollar. By comparison, on December 31, 2022, the British pound closed at 0.8266 relative to the U.S. dollar, and the Euro closed at 0.9344 relative to the U.S. dollar.
Comparatively, on December 31, 2021, 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 $8.9 million. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.
Comparatively, on December 31, 2022, 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 $10.9 million. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar.
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 2022 average interest rate under these borrowings, the Company’s 2022 interest expense would have changed by approximately $7.3 million.
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 2023 average interest rate under these borrowings, the Company’s 2023 interest expense would have changed by approximately $7.0 million.
Foreign currency forward exchange contracts in the U.K. are used to offset the earnings effects of such fluctuations. On December 31, 2022, 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 $10.9 million.
Foreign currency forward exchange contracts in the U.K. are used to offset the earnings effects of such fluctuations. On December 31, 2023, 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 $12.5 million.
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.
The Company sells its products primarily within the markets where the products are 36 produced, but some of the Company’s sales from its U.K. and Canadian operations are denominated in other currencies.
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 2022 was a loss of $23.0 million.
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 2023 was a gain of $13.6 million.

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