ALAMO GROUP ANNOUNCES 2010 FOURTH QUARTER RESULTS AND RECORD FULL YEAR EARNINGS

SEGUIN, Texas, March 9, 2011 -- Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and year ended December 31, 2010.

Net sales in the fourth quarter were $129.5 million compared to net sales of $112.8 million in the fourth quarter of 2009, an increase of 15%.  Net income for the quarter was $4.1 million, or $0.34 per diluted share, versus net income of $9.5 million, or $0.83 per diluted share in 2009.  These results include the effects of the acquisition of Bush Hog, which took place in October 2009 and contributed $19.1 million in incremental sales and $1.2 million in incremental net income during the 2010 fourth quarter.  Results in the fourth quarter of 2009 reflected certain other restructuring and non-cash items including the interim results of Bush Hog, a Gain on Bargain Purchase as adjusted for a retrospective change based on post closing adjustments to the fair value of assets acquired and liabilities assumed as of the acquisition date, certain expenses incurred in connection with the acquisition and subsequent restructuring measures, and an impairment charge relating to a write-down of goodwill in the Company’s North American Industrial Division, all of which are more fully summarized in the non-GAAP financial reconciliation below.  Excluding these items and the effects of the acquisition, our adjusted net income for the fourth quarter of 2010 was $2.9 million, or $0.29 per diluted share, versus $4.0 million, or $0.40 per diluted share in 2009.

For the full year, net sales in 2010 were $524.5 million versus $446.5 million in 2009, an increase of 17%.  Net income for fiscal 2010 was $21.1 million, or $1.78 per diluted share, compared to $18.6 million, or $1.80 per diluted share in 2009.  The full year results include the effects referenced above, as well as tax credits related to prior years’ research and development expenses which reduced the provision for income tax by $0.9 million.  Without these factors, net sales for the 2010 fiscal year would have been $435.6 million and net income would have been $15.9 million, or $1.56 per diluted share.  For the 2009 fiscal year, adjusting for the acquisition of Bush Hog and the other restructuring and non-cash charges and gains

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referenced above, net sales would have been $435.6 million and net income would have been $13.4 million, or $1.34 per diluted share.

Alamo Group’s North American Industrial Division’s net sales for the fourth quarter of 2010 were $50.9 million, an increase of 30% compared to net sales of $39.2 million in the fourth quarter of 2009.  For the full year, net sales in 2010 were $192.4 million, an increase of 11% compared to net sales of $173.9 million in 2009.  While governmental spending at all levels continues to be constrained by budget cutbacks, the Division’s sales exhibited some rebounding in the fourth quarter.  We believe this reflects some amount of pent up demand which we have anticipated based on the nature of our products and markets, though it is too early to tell how strong or sustainable this affect will be.

The Company’s North American Agricultural Division net sales were $39.5 million in the fourth quarter of 2010 compared to $29.2 million in the fourth quarter of 2009, an increase of 35%.  For the full year, net sales in 2010 were $173.5 million versus $92.4 million in fiscal 2009.  The increase in 2010 was primarily related to the acquisition of Bush Hog, which accounted for $88.9 million in net sales in 2010 and $10.9 million in net sales in 2009.  The Division was aided by improvements in the agricultural market which began in the second half of the year and shows signs of continuing in 2011.

Net sales for Alamo’s European Division were $39.1 million in the fourth quarter of 2010 versus $44.5 million in 2009, a decrease of 12%.  For the full year, net sales in 2010 were $158.7 million compared to $180.2 million in 2009, a decrease of 12%.  The decrease in European sales in 2010 reflects continued weak market conditions which have lagged conditions in the Company’s North American markets.  While governmental purchases in this sector are likely to remain soft, there are indications of improved demand from agricultural customers in 2011.

Alamo Group’s President and Chief Executive Officer, Ron Robinson, commented on the year’s results as follows, “While we continue to be affected by overall weak economic conditions, we are pleased with our 2010 performance.  We achieved record full year earnings as a result of our diligent focus on cost control and asset management measures, as well as the successful integration of Bush Hog, which has resulted in a substantial increase in profitability for this business.  Our actions have positioned us for long-term growth while mitigating near-

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term challenges.  These efforts have allowed us to steadily improve our margins and strengthen our balance sheet.  Despite the difficult economic conditions, we continue to maintain a reliable level of customer support and our product development efforts have resulted in over one hundred new or improved products being introduced to our markets each year.”

“Looking ahead, we intend to build on our achievements in 2010.  We feel the investments we have made in our business, the operational improvements and the strengthening we are seeing in our agricultural markets should result in continued improvement despite weakness in governmental sales in the U.S. and abroad.  In addition, our financial position provides us the ability to both fund our growth initiatives as well as pursue potential acquisition opportunities that may arise.  As a result, we remain optimistic these efforts will lead to continued growth in Alamo’s sales and earnings in 2011.”

Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for right-of-way maintenance and agriculture.  Our products include tractor mounted mowing and other vegetation maintenance equipment, excavators, street sweepers, vacuum trucks, snow removal equipment, pothole patchers, agricultural implements and related after-market parts and services. The Company, founded in 1969, has over 2,340 employees and operates eighteen plants in North America, Europe and Australia as of December 31, 2010.  The corporate offices of Alamo Group Inc. are located in Seguin, Texas and the headquarters for the Company’s European operations are located in Salford Priors, England.  The company website address is www.alamo-group.com.

This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: market demand, competition, weather, seasonality, currency-related issues, and other risk factors listed from time to time in the Company’s SEC reports.  The Company does not undertake any obligation to update the information contained herein, which speaks only as of this date.  This release also contains non-GAAP financial measures.  These measures are included to facilitate meaningful comparisons of our results to those in prior periods and future periods and to allow a better evaluation of our operating performance, in management’s opinion.  Our reference to these non-GAAP measures should not be considered as a substitute for results that are

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presented in a manner consistent with GAAP.  These non-GAAP measures are provided to enhance investors overall understanding of our financial performance.

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