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EX-32.3 - EXHIBIT 32.3 - ALAMO GROUP INCa2017331-ex323.htm
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EX-31.3 - EXHIBIT 31.3 - ALAMO GROUP INCa2017331-ex313.htm
EX-31.2 - EXHIBIT 31.2 - ALAMO GROUP INCa2017331-ex312.htm
EX-31.1 - EXHIBIT 31.1 - ALAMO GROUP INCa2017331-ex311.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017
OR
[    ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
FOR THE
TRANSITION PERIOD FROM ____ TO ____
Commission file number 0-21220
 
 
ALAMO GROUP INC.
(Exact name of registrant as specified in its charter)
 
DELAWARE
(State or other jurisdiction of
incorporation or organization)
 
74-1621248
(I.R.S. Employer
Identification Number)

 1627 East Walnut, Seguin, Texas  78155
(Address of principal executive offices)
 
830-379-1480
(Registrant’s telephone number, including area code)
 
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENT FOR THE PAST 90 DAYS.  
YES  X      NO ___
 
INDICATE BY CHECK MARK WHETHER REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, A NON-ACCELERATED FILER, A SMALLER REPORTING COMPANY, OR AN EMERGING GROWTH COMPANY.  SEE DEFINITION OF “ACCELERATED FILER," "LARGE ACCELERATED FILER,” "SMALLER REPORTING COMPANY," AND "EMERGING GROWTH COMPANY" IN EXCHANGE ACT RULE 12B-2. LARGE ACCELERATED FILER [  ] ACCELERATED FILER    [X]    NON-ACCELERATED FILER   [  ] SMALLER REPORTING UNIT [  ] EMERGING GROWTH COMPANY

IF AN EMERGING GROWTH COMPANY, INDICATE BY CHECK MARK IF THE REGISTRANT HAS ELECTED NOY TO USE THE EXTENDED TRANSITION PEIROD FOR COMPLYING WITH ANY NEW OR REVISED FINANCIAL ACCOUNTING STANDARDS PROVIDED PURSUANT TO SECTION 13(A) OF THE EXCHANGE ACT. [ ]
 
INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT). YES [  ] NO [X]
 
AT APRIL 28, 2017, 11,550,244 SHARES OF COMMON STOCK, $.10 PAR VALUE, OF THE REGISTRANT WERE OUTSTANDING.
 

1



Alamo Group Inc. and Subsidiaries
 
INDEX
 
                                                                                                                                                                              
PART I.
FINANCIAL INFORMATION 
PAGE
 
 
 
 
Item 1.
Interim Condensed Consolidated Financial Statements  (Unaudited)
 
 
 
 
 
 
 
 
March 31, 2017 and December 31, 2016
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017 and March 31, 2016
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017 and March 31, 2016
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017 and March 31, 2016
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
 
PART II. 
 
 
 
 
Item 1. 
Legal Proceedings
 
Item 1A.
Risk Factors
 
Item 2. 
None
 
Item 3.
None
 
Item 4. 
None
 
Item 5. 
Other Information
 
Item 6.
Exhibits
 
 
 
 
 
 
 

2



Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Balance Sheets
(Unaudited) 
 
(in thousands, except share amounts)
March 31,
2017
December 31,
2016
ASSETS
 
 

 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
70,662

 
 
$
16,793

 
Accounts receivable, net
 
196,244

 
 
170,329

 
Inventories, net
 
141,408

 
 
135,760

 
Prepaid expenses
 
5,003

 
 
4,725

 
Income tax receivable
 
243

 
 
11

 
Total current assets
 
413,560

 
 
327,618

 
 
 
 
 
 
 
 
Rental equipment, net
 
28,047

 
 
30,970

 
 
 
 
 
 
 
 
Property, plant and equipment
 
182,670

 
 
180,041

 
Less:  Accumulated depreciation
 
(116,145
)
 
 
(113,412
)
 
 
 
66,525

 
 
66,629

 
 
 
 
 
 
 
 
Goodwill
 
75,298

 
 
74,825

 
Intangible assets, net
 
49,302

 
 
50,038

 
Deferred income taxes
 
665

 
 
619

 
Other assets
 
1,742

 
 
2,077

 
 
 
 
 
 
 
 
Total assets
 
$
635,139

 
 
$
552,776

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 

 
Current liabilities:
 
 
 
 
 

 
Trade accounts payable
 
$
54,361

 
 
$
43,136

 
Income taxes payable
 
6,924

 
 
2,333

 
Accrued liabilities
 
27,287

 
 
33,158

 
Current maturities of long-term debt and capital lease obligations
 
536

 
 
73

 
Total current liabilities
 
89,108

 
 
78,700

 
 
 
 
 
 
 
 
Long-term debt and capital lease obligations, net of current maturities
 
127,017

 
 
70,017

 
Deferred pension liability
 
2,519

 
 
2,929

 
Other long-term liabilities
 
7,106

 
 
6,969

 
Deferred income taxes
 
6,533

 
 
6,444

 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 

 
 
 

 
Common stock, $.10 par value, 20,000,000 shares authorized; 11,498,423 and 11,462,484 outstanding at March 31, 2017 and December 31, 2016, respectively
 
1,150

 
 
1,146

 
 Additional paid-in-capital
 
100,695

 
 
99,765

 
Treasury stock, at cost; 42,600 shares at March 31, 2017 and December 31, 2016
 
(426
)
 
 
(426
)
 
 Retained earnings
 
346,009

 
 
334,988

 
 Accumulated other comprehensive loss, net
 
(44,572
)
 
 
(47,756
)
 
Total stockholders’ equity
 
402,856

 
 
387,717

 
 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
635,139

 
 
$
552,776

 

See accompanying notes.

3



Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Statements of Income
(Unaudited)
 
 
Three Months Ended 
 March 31,
(in thousands, except per share amounts)
2017
 
2016
 
 

 
 
Net sales:
 

 
 
Industrial
$
125,816

 
$
123,278

Agricultural
51,777

 
48,662

European
37,796

 
39,031

Total net sales
215,389

 
210,971

Cost of sales
161,225

 
160,694

Gross profit
54,164

 
50,277

 
 
 
 
Selling, general and administrative expenses
34,063

 
33,988

Income from operations
20,101

 
16,289

 
 
 
 
Interest expense
(1,327
)
 
(1,406
)
Interest income
76

 
62

Other income (expense), net
(208
)
 
(622
)
Income before income taxes
18,642

 
14,323

Provision for income taxes
6,475

 
5,664

Net Income
$
12,167

 
$
8,659

 
 
 
 
Net income per common share:
 

 
 

Basic
$
1.06

 
$
0.76

Diluted
$
1.05

 
$
0.75

Average common shares:
 
 
 
Basic
11,472

 
11,389

Diluted
11,620

 
11,507

 
 
 
 
Dividends declared
$
0.10

 
$
0.09

 
 See accompanying notes.
 

4



Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

 
 
 
 
Three Months Ended 
 March 31,
(in thousands)
 
2017
 
2016
Net Income
 
$
12,167

 
$
8,659

Other comprehensive income:
 
 
 
 
 
Foreign currency translation adjustments
 
3,046

 
3,559

 
Net gain on pension and other postretirement benefits
 
236

 
246

 
Other comprehensive income before income tax expense
 
3,282

 
3,805

 
Income tax expense related to items of other comprehensive loss
 
(98
)
 
(80
)
 
Other comprehensive income
 
3,184

 
3,725

Comprehensive Income
 
$
15,351

 
$
12,384


See accompanying notes.



5



Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Statements of Stockholders’ Equity
 (Unaudited)

 
Common Stock
Additional
Paid-in Capital
Treasury Stock
Retained Earnings
Accumulated
Other
Comprehensive Loss
Total Stock-
holders’ Equity
(in thousands)
Shares
Amount
Balance at December 31, 2016
11,420

$
1,146

 
$
99,765

 
 
$
(426
)
 
 
$
334,988

 
 
$
(47,756
)
 
$
387,717

Net income


 

 
 

 
 
12,167

 
 

 
12,167

Translation adjustment


 

 
 

 
 

 
 
3,046

 
3,046

Net actuarial gain arising during period


 

 
 

 
 

 
 
138

 
138

Stock-based compensation


 
328

 
 

 
 

 
 

 
328

Exercise of stock options
36

4

 
602

 
 

 
 

 
 

 
606

Dividends paid ($.10 per share)


 

 
 

 
 
(1,146
)
 
 

 
(1,146
)
Balance at March 31, 2017
11,456

$
1,150

 
$
100,695

 
 
$
(426
)
 
 
$
346,009

 
 
$
(44,572
)
 
$
402,856

 
See accompanying notes.


6



Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended 
 March 31,
(in thousands)
2017
 
2016
Operating Activities
 
 
 
Net income
$
12,167

 
$
8,659

Adjustment to reconcile net income to net cash used in operating activities:
 
 
 
Provision for doubtful accounts
(7
)
 
69

Depreciation
4,184

 
4,579

Amortization of intangibles
777

 
772

Amortization of debt issuance costs
55

 
53

Stock-based compensation expense
328

 
285

Provision for deferred income tax expense (benefit)
(41
)
 
292

Gain on sale of property, plant and equipment
(67
)
 
(165
)
Changes in operating assets and liabilities, net of amounts acquired:
 
 
 
Accounts receivable
(25,048
)
 
(16,383
)
Inventories
(4,696
)
 
(4,337
)
Rental equipment
1,516

 
1,916

Prepaid expenses and other assets
358

 
(1,241
)
Trade accounts payable and accrued liabilities
4,776

 
655

Income taxes payable
4,323

 
(47
)
Other long-term liabilities
(68
)
 
(154
)
Net cash used in operating activities
(1,443
)
 
(5,047
)
 
 
 
 
Investing Activities
 

 
 

Acquisitions, net of cash acquired

 
(188
)
Purchase of property, plant and equipment
(2,257
)
 
(1,761
)
Proceeds from sale of property, plant and equipment
74

 
354

Net cash used in investing activities
(2,183
)
 
(1,595
)
 
 
 
 
Financing Activities
 

 
 

Borrowings on bank revolving credit facility
66,000

 
44,000

Repayments on bank revolving credit facility
(9,000
)
 
(15,000
)
Principal payments on long-term debt and capital leases

 
(6
)
Proceeds from issuance of debt
460

 

Dividends paid
(1,146
)
 
(1,025
)
Proceeds from sale of common stock
606

 
317

Net cash provided by financing activities
56,920

 
28,286

 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
575

 
1,088

Net change in cash and cash equivalents
53,869

 
22,732

Cash and cash equivalents at beginning of the period
16,793

 
26,922

Cash and cash equivalents at end of the period
$
70,662

 
$
49,654

 
 
 
 
Cash paid during the period for:
 

 
 

Interest
$
1,485

 
$
1,419

Income taxes
2,366

 
5,735

See accompanying notes.

7



Alamo Group Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements - (Unaudited)
March 31, 2017
 
1.  Basis of Financial Statement Presentation
 
The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.  The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016 (the "2016 10-K").

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. This update is effective as of January 1, 2018, with early adoption permitted as of January 1, 2017. This update could impact the timing and amounts of revenue recognized. The Company is in the process of completing its initial assessment of the standard, which could impact the timing of revenue recognition and the timing of recognition of expenses directly related to revenue contracts. The company expects to complete its initial assessment in the second quarter of 2017.

In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory,” as part of its simplification initiative. ASU 2015-11 amends existing guidance for measuring inventories. This amendment requires the Company to measure inventories recorded using the first-in, first-out method at the lower of cost and net realizable value. This amendment does not change the methodology for measuring inventories recorded using the last-in, first-out method. This amendment was effective prospectively for the Company on January 1, 2017, with early adoption permitted. The adoption of the changes did not materially affect our financial position or results of our operations.

In February 2016, the FASB issued ASU No. 2016-02, “Leases.” This update requires that a lessee recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Similar to current guidance, the update continues to differentiate between finance leases and operating leases, however this distinction now primarily relates to differences in the manner of expense recognition over time and in the classification of lease payments in the statement of cash flows. The updated guidance leaves the accounting for leases by lessors largely unchanged from existing GAAP. Early application is permitted. Entities are required to use a modified retrospective adoption, with certain relief provisions, for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements when adopted. The guidance will become effective for us on January 1, 2019. The impacts that adoption of the ASU is expected to have on our consolidated financial statements and related disclosures are being evaluated. Additionally, we have not determined the effect of the ASU on our internal control over financial reporting or other changes in business practices and processes.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation,” to simplify the accounting and reporting for employee share-based payments. This amendment, among other changes, allows for a policy election such that an entity can continue to estimate forfeitures at the time of the grant or can account for forfeitures as they occur. The amendment requires a modified retrospective approach for the adoption. The

8



Company's adoption of this ASU had no material impact on our financial statements. In addition, the amendment eliminates the requirement to reclassify excess tax benefits from operating activities to financing activities. The effect of the change on prior period has been retrospectively adjusted to make the cash flow statements comparable.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses,” to improve information on credit losses for financial instruments. The ASU replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses.  The ASU is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted beginning in fiscal years beginning after December 18, 2018. The Company has not yet evaluated the effect the adoption of this ASU will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments,” to address diversity in practice on certain specific cash flow issues. The ASU is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company early-adopted this ASU on January 1, 2017 and the adoption did not have an effect on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04 “Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment” to simplify how an entity is required to test for goodwill impairment. As a result, an entity will perform its goodwill impairment test by comparing the carrying value of a reporting unit against the fair value and will record an impairment for the amount that the carrying value of a reporting unit exceeds the fair value. The ASU is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company early-adopted this ASU on January 1, 2017 and will apply the new guidance prospectively on goodwill impairment tests.

In March 2017, the FASB issued ASU 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” to provide income statement classification guidance for components of the net benefit cost. The ASU requires entities to disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement. Furthermore,  entities should present the other components elsewhere in the income statement and outside of income from operations if such a subtotal is presented. The ASU is to be adopted retrospectively and is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and may be early adopted. The Company expects that adoption will result in a reclassification of the non-service components of pension and post-retirement costs, primarily from cost of sales and selling, general and administrative expenses to other income (loss) on the consolidated statements of income. The Company’s pensions, including net periodic cost, is disclosed in Note 13 of the 2016 10-K.

2. Accounting Policies

There have been no changes or additions to our significant accounting policies described in Note 1 to the Consolidated Financial Statements in the Company’s 2016 10-K.

3.  Accounts Receivable
 
Accounts receivable is shown net of sales discounts and the allowance for doubtful accounts.

At March 31, 2017 the Company had $17,453,000 in reserves for sales discounts compared to $13,488,000 at December 31, 2016 on products shipped to our customers under various promotional programs. The increase was primarily due to additional discounts taken on the Company's agricultural products during the pre-season, which runs from August to December of each year, with orders shipped through the second quarter of 2017. The Company reviews the reserve quarterly based on analysis made on each program outstanding at the time. 
 
The allowance for doubtful accounts was $2,429,000 at March 31, 2017 and $2,501,000 at December 31, 2016.


9



4.  Inventories
 
Inventories valued at LIFO cost represented 65% and 67% of total inventory at March 31, 2017 and December 31, 2016, respectively.  The excess of current cost over LIFO valued inventories was approximately $8,123,000 at March 31, 2017 and December 31, 2016. An actual valuation of inventory under the LIFO method is made only at the end of each year based on the inventory levels and costs at that time.  Accordingly, interim LIFO must necessarily be based, to some extent, on management's estimates at each quarter end. Net inventories consist of the following:

 
 
(in thousands)
March 31,
2017
December 31,
2016
 
 
 
 
 
 
 
Finished goods
 
$
119,834

 
 
$
116,667

 
Work in process
 
10,769

 
 
9,431

 
Raw materials
 
10,805

 
 
9,662

 
Total inventory
 
$
141,408

 
 
$
135,760

 
 
Inventory obsolescence reserves were $7,209,000 at March 31, 2017 and $7,262,000 at December 31, 2016

5. Rental Equipment

Rental equipment is shown net of accumulated depreciation of $10,465,000 and $10,430,000 at March 31, 2017 and December 31, 2016, respectively. The Company recognized depreciation expense of $1,407,000 and $1,744,000 for the three months ended March 31, 2017 and March 31, 2016, respectively.

6.  Fair Value Measurements
 
The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate their fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of March 31, 2017 and December 31, 2016, as the floating rates on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.

7. Goodwill and Intangible Assets

The following is the summary of changes to the Company's Goodwill for the three months ended March 31, 2017:
(in thousands)
 
Balance at December 31, 2016
$
74,825

Goodwill acquired

Translation adjustments
473

Balance at March 31, 2017
$
75,298


As of March 31, 2017, the Company had $75,298,000 of goodwill, which represents 12% of total assets.


10



The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:
 
(in thousands)
Estimated Useful Lives
March 31,
2017
December 31, 2016
Definite:
 
 
 
 
 
 
 
   Trade names and trademarks
25 years
 
$
21,925

 
 
$
21,914

 
   Customer and dealer relationships
14 years
 
28,856

 
 
28,822

 
   Patents and drawings
3-12 years
 
1,958

 
 
1,954

 
      Total at cost
 
 
52,739

 
 
52,690

 
   Less accumulated amortization
 
 
(8,937
)
 
 
(8,152
)
 
       Total net
 
 
43,802

 
 
44,538

 
Indefinite:
 
 
 
 
 
 
 
   Trade names and trademarks
 
 
5,500

 
 
5,500

 
Total Intangible Assets
 
 
$
49,302

 
 
$
50,038

 

The Company recognized amortization expense of $777,000 and $772,000 for the three months ending March 31, 2017 and 2016, respectively.

As of March 31, 2017, the Company had $49,302,000 of intangible assets, which represents 8% of total assets. 

8. Warranty
 
The current liability warranty reserve balance was $5,126,000 at March 31, 2017 and $5,262,000 at December 31, 2016 and is included in Accrued liabilities on the Balance Sheet. The decrease was mainly from the Company's European Operations.

9. Debt

The components of long-term debt are as follows:
 
(in thousands)
March 31,
2017
December 31,
2016
Current Maturities:
 
 
 
 
 
 
    Other notes payable
 
$
536

 
 
$
73

 
 
 
536

 
 
73

 
Long-term debt:
 
 
 
 
 
 
    Bank revolving credit facility
 
127,000

 
 
70,000

 
    Other notes payable
 
17

 
 
17

 
 
 
127,017

 
 
70,017

 
Total debt
 
$
127,553

 
 
$
70,090

 

As of March 31, 2017, $1,628,000 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 $121,372,000 in available borrowings.


11



10.  Common Stock and Dividends
 
Dividends declared and paid on a per share basis were as follows:
 
 
Three Months Ended 
 March 31,
 
2017
 
2016
 
 
 
 
Dividends declared
$
0.10

 
$
0.09

Dividends paid
$
0.10

 
$
0.09


On April 3, 2017, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.10 per share, which was paid on April 28, 2017, to shareholders of record at the close of business on April 17, 2017.
 
11.  Earnings Per Share
 
The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share.  Net income for basic and diluted calculations do not differ.
 
 
Three Months Ended 
 March 31,
(In thousands, except per share)
2017
 
2016
Net Income
$
12,167

 
$
8,659

Average Common Shares:
 
 
 
Basic (weighted-average outstanding shares)
11,472

 
11,389

Dilutive potential common shares from stock options
148

 
118

Diluted (weighted-average outstanding shares)
11,620

 
11,507

 
 
 
 
Basic earnings per share
$
1.06

 
$
0.76

Diluted earnings per share
$
1.05

 
$
0.75


12.  Segment Reporting
 
At March 31, 2017 the following includes a summary of the unaudited financial information by reporting segment: 
 
 
Three Months Ended 
 March 31,
(in thousands)
2017
 
2016
Net Sales
 
 
 
Industrial
$
125,816

 
$
123,278

Agricultural
51,777

 
48,662

European
37,796

 
39,031

Consolidated
$
215,389

 
$
210,971

 
 
 
 
Income from Operations
 

 
 

Industrial
$
12,463

 
$
11,527

Agricultural
4,816

 
2,759

European
2,822

 
2,003

Consolidated
$
20,101

 
$
16,289



12



(in thousands)
March 31, 2017
 
December 31, 2016
Goodwill
 
 
 
Industrial
$
56,496

 
$
56,447

Agricultural
3,648

 
3,489

European
15,154

 
14,889

Consolidated
$
75,298

 
$
74,825

 
 
 
 
Total Identifiable Assets
 
 
 
Industrial
$
350,935

 
$
339,064

Agricultural
138,395

 
111,120

European
145,809

 
102,592

Consolidated
$
635,139

 
$
552,776


13.  Contingent Matters
     
Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and off-site disposal locations, workplace safety and equal employment opportunities. These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.
 
The Company knows that its Indianola, Iowa property is contaminated with chromium which most likely resulted from chrome plating operations which were discontinued before the Company purchased the property. Chlorinated volatile organic compounds have also been detected in water samples on the property, though the source is unknown at this time. The Company voluntarily worked with an environmental consultant and the state of Iowa with respect to these issues and believes it completed its remediation program in June 2006. The work was accomplished within the Company’s environmental liability reserve balance. We requested a “no further action” classification from the state. We received a conditional “no further action” letter in January of 2009. When we demonstrate stable or improving conditions below residential standards for a certain period of time by monitoring existing wells, we will request an unconditional “no further action” letter.

Certain assets of the Company contain asbestos that may have to be remediated over time. The Company believes that any subsequent change in the liability associated with the asbestos removal will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company is subject to various other federal, state, and local laws affecting its business, as well as a variety of regulations relating to such matters as working conditions, equal employment opportunities, and product safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements. The Company believes it is currently in material compliance with all such applicable laws and regulations.


13



14.  Retirement Benefit Plans
 
Defined Benefit Plan
  
The following tables present the components of net periodic benefit cost (gains are denoted with parentheses and losses are not):
 
Three Months Ended March 31, 2017
 
(in thousands)
Hourly Employees’
Pension Plan
Employees’
Retirement Plan
 
Total
Service cost
 
$

 
 
$
1

 
 
$
1

Interest cost
 

 
 
208

 
 
208

Expected return on plan assets
 

 
 
(319
)
 
 
(319
)
Amortization of net loss
 

 
 
108

 
 
108

Net periodic benefit
 
$

 
 
$
(2
)
 
 
$
(2
)
  
 
Three Months Ended March 31, 2016
 
(in thousands)
Hourly Employees’
Pension Plan
Employees’
Retirement Plan
 
Total
Service cost
 
$
2

 
 
$
1

 
 
$
3

Interest cost
 
100

 
 
222

 
 
322

Expected return on plan assets
 
(162
)
 
 
(299
)
 
 
(461
)
Amortization of net loss
 
71

 
 
110

 
 
181

Net periodic benefit cost
 
$
11

 
 
$
34

 
 
$
45


The Company amortizes annual pension income or expense evenly over four quarters. Pension income was $2,000 and pension expense was $45,000 for the three months ended March 31, 2017 and March 31, 2016, respectively. The Company is not required to contribute to the pension plans for the 2017 plan year but may do so.

On April 6, 2016 we notified all participants in the Gradall Company Hourly Employees’ Pension Plan of our decision to terminate the plan.  Participants in the plan did not lose any benefits but were given a choice between obtaining certain continued annuity benefits that match the benefits offered under the plan or receiving an immediate one-time lump sum payment in total settlement of benefits.  The Company made a final contribution and met all legal requirements to effectuate a proper termination of the plan before December 31, 2016.

Supplemental Retirement Plan
 
In May of 2015, the Board amended the SERP to allow the Board to modify the retirement benefit percentage either higher or lower than 20%. In May of 2016, the Board added additional key management to the plan. As of March 31, 2017, the current retirement benefit (as defined in the plan) for the participants ranges from 10% to 20%.

The net period expense for the three months ended March 31, 2017 and 2016 was $202,000 and $148,000, respectively.
 
15.  Subsequent Events

On May 2, 2017, the Company announced that it entered into an agreement to acquire 100% of the outstanding capital shares of Santa Izabel Agro Industria, LTDA (Santa Izabel), a privately held company owned by Soufer Industria Ltda. Santa Izabel, located in Sao Joao da Boa Vista, SP, Brazil, designs, manufactures and markets a variety of agricultural implements and trailers sold throughout Brazil. We anticipate that this acquisition will enhance the Company's platform for growth by increasing our product portfolio. The purchase is expected to close in the second quarter of 2017.


14



Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following tables set forth, for the periods indicated, certain financial data:
 
 
Three Months Ended 
 March 31,
As a
Percent of Net Sales
2017
 
2016
 
 

 
 

Industrial
58.4
%
 
58.4
%
Agricultural
24.1
%
 
23.1
%
European
17.5
%
 
18.5
%
Total sales, net
100.0
%
 
100.0
%
 
 
 
Three Months Ended 
 March 31,
Cost Trends and Profit Margin, as
Percentages of Net Sales
2017
 
2016
 
 
 
 
Gross profit
25.1
%
 
23.8
%
Income from operations
9.3
%
 
7.7
%
Income before income taxes
8.7
%
 
6.8
%
Net income
5.6
%
 
4.1
%
 
Overview
 
This report contains forward-looking statements that are based on Alamo Group’s current expectations.  Actual results in future periods may differ materially from those expressed or implied because of a number of risks and uncertainties which are discussed below and in the Forward-Looking Information section.
 
For the first three months of 2017, the Company's net income increased by approximately 40.5% when compared to the same period in 2016. This increase was primarily the result of sales growth in the Company's Industrial and Agricultural Divisions as well as continued improvement in production efficiencies, lower material costs and control of operating expenses. Also, improved part sales in most of our product lines were up during the first quarter of 2017 compared to the same time in 2016. Negatively influencing both our sales and profits was the effect of the currency translation rates on our non-U.S. results. Alamo's Industrial Division saw a 2.0% increase in sales for the first three months of 2017 as sales of mowing, excavator and sweeping equipment outperformed the same period in 2016, while sales of vacuum trucks and snow removal products declined during the first three months of 2017 compared to the same period in 2016. Agricultural sales were up in the first three months of 2017 by 6.4% compared to the first three months of 2016 as new product introductions and a broad demand for our mowing equipment more than offset soft market conditions which continue to affect the agricultural market. European sales for the first three months of 2017 were down in U.S. dollars by 3.2% compared to the same period in 2016 primarily as a result of currency effects. Consolidated income from operations was up 23.4% in the first three months of 2017 as compared to the same period in 2016. The Company's backlog was $147 million at the end of the first three months of 2017, which was down 3.8% versus the backlog of $153 million at the end of the first three months of 2016. The decrease in the Company's backlog was primarily attributable to softness in the Industrial Division's snow removal and mowing product lines.
 
The Company believes that its markets for the remainder of 2017 will remain challenged and could be negatively affected by a variety of factors such as a continued weakness in the overall economy; sovereign debt issues; credit availability; changes in currency exchange rates; increased levels of government regulations; ongoing weakness in the agricultural sector; increase in input costs; changes in farm incomes due to commodity prices or governmental aid programs; adverse situations that could affect our customers such as animal disease epidemics;

15



extreme weather conditions; repercussions from the pending exit by the U.K. from the European Union (EU) and potentially similar actions by other EU members; budget constraints or revenue shortfalls in governmental entities and changes in our customers' buying habits due to lack of confidence in the economic outlook.

Results of Operations
 
Three Months Ended March 31, 2017 vs. Three Months Ended March 31, 2016
 
Net sales for the first quarter of 2017 were $215,389,000, an increase of $4,418,000, or 2.1% compared to $210,971,000 for the first quarter of 2016.  The increase was mainly attributable to increased demand for our products in the Industrial and Agricultural Divisions negatively offset by currency translation effects which continued to negatively impact our European sales.
 
Net Industrial sales increased during the first quarter by $2,538,000 or 2.1% to $125,816,000 for the first quarter of 2017 compared to $123,278,000 during the same period in 2016.  The increase was from higher sales of sweepers, excavators, mowing equipment which were partially offset by a lower sales volume of vacuum trucks to non-governmental users and weak sales of snow removal products due to mild winter conditions.
 
Net Agricultural sales were $51,777,000 in the first quarter of 2017 compared to $48,662,000 for the same period in 2016, an increase of $3,115,000 or 6.4%. Improved demand for agricultural mowers in the markets we serve and new product introductions more than outweighed continued soft agricultural market conditions.
 
Net European sales for the first quarter of 2017 were $37,796,000, a decrease of $1,235,000 or 3.2% compared to $39,031,000 during the first quarter of 2016.  The decrease primarily resulted from changes in currency translation rates which had a negative impact during the quarter. Industrial sales in France were up compared to the first quarter of 2017 as a result of higher sales of Rivard vacuum trucks while sales in the French agricultural markets reflected a slight increase. U.K. sales were down in the first quarter of 2017 compared to the first quarter of 2016 as the U.K. business continue to be impacted by currency translation rates and softness in agricultural markets we serve.
 
Gross profit for the first quarter of 2017 was $54,164,000 (25.1% of net sales) compared to $50,277,000 (23.8% of net sales) during the same period in 2016, an increase of $3,887,000.  The increase in gross profit during the first quarter of 2017 was due to the higher equipment and parts sales volume from the Industrial and Agricultural divisions. Also, contributing to the margin percent for the quarter were improvement in productivity and lower material costs.

Selling, general and administrative expenses (“SG&A”) were $34,063,000 (15.8% of net sales) during the first quarter of 2017 compared to $33,988,000 (16.1% of net sales) during the same period of 2016, an increase of $75,000.
 
Interest expense was $1,327,000 for the first quarter of 2017 compared to $1,406,000 during the same period in 2016, a decrease of $79,000.  The decrease in 2017 came from lower debt levels during the first quarter of 2017 compared to the first quarter of 2016.
 
Other income (expense), net was $208,000 of expense for the first quarter of 2017 compared to $622,000 of expense during the same period in 2016.  The expense in 2017 and 2016 were primarily the result of changes in currency exchange rates.
                                         
Provision for income taxes was $6,475,000 (34.7% of income before income tax) in the first quarter of 2017 compared to $5,664,000 (39.5% of income before income tax) during the same period in 2016. The increase in taxes is from higher taxable income in the first quarter of 2017. The higher effective tax rate in 2016 was primarily related to losses incurred in certain foreign jurisdictions that did not result in a tax benefit.
    
The Company’s net income after tax was $12,167,000 or $1.05 per share on a diluted basis for the first quarter of 2017 compared to $8,659,000 or $0.75 per share on a diluted basis for the first quarter of 2016.  The increase of $3,508,000 resulted from the factors described above.


16



Liquidity and Capital Resources
 
In addition to normal operating expenses, the Company has ongoing cash requirements which are necessary to operate the Company’s business, including inventory purchases and capital expenditures.  The Company’s inventory and accounts payable levels typically build in the first half of the year and in the fourth quarter in anticipation of the spring and fall selling seasons.  Accounts receivable historically build in the first and fourth quarters of each year as a result of fall preseason sales programs and out of season sales, particularly in our Agricultural Division.  Preseason sales, primarily in the Agricultural Division, help level the Company’s production during the off season.
 
As of March 31, 2017, the Company had working capital of $324,452,000 which represents an increase of $75,534,000 from working capital of $248,918,000 at December 31, 2016

Capital expenditures were $2,257,000 for the first three months of 2017, compared to $1,761,000 during the first three months of 2016.  The Company expects to fund future expenditures from operating cash flows or through its revolving credit facility, described below.

Net cash provided by financing activities was $56,920,000 and $28,286,000 during the three month periods ended March 31, 2017 and March 31, 2016, respectively. The increase in net cash provided by financing activities in 2017 resulted from an increase in net borrowings under our bank credit facility due to seasonal funding of operations.

The Company had $68,935,000 in cash and cash equivalents held by its foreign subsidiaries as of March 31, 2017. The majority of these funds are at our U.K. and Canadian subsidiaries and would not be available for use in the United States without incurring US federal and state tax consequences. The Company plans to use these funds for capital expenditures or acquisitions outside the United States.     

The Company maintains an unsecured revolving credit facility with certain lenders under its Amended and Restated Revolving Credit Agreement ("the Agreement"). The aggregate commitments from lenders under the Agreement is $250,000,000 and, subject to certain conditions, the Company has the option to request an increase in aggregate commitments of up to an additional $50,000,000. The Agreement requires the Company to maintain various financial covenants including a minimum earnings before interest and tax to interest expense ratio, a maximum leverage ratio and a minimum asset coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on sale of properties and limitations on liens and capital expenditures. The Agreement also contains other customary covenants, representations and events of defaults. Effective December 20, 2016, the Company amended it's revolving credit facility to extend the termination date, reduce LIBOR interest margin and to modify certain financial and other covenants in order to meet the ongoing needs of the Company's business and to allow for greater flexibility in relation to future acquisitions. The expiration date of the revolving credit facility is December 20, 2021. As of March 31, 2017, $127,000,000 was outstanding under the Agreement. On March 31, 2017, $1,628,000 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 $121,372,000 in available borrowings. As of March 31, 2017, the Company was in compliance with the covenants under the Agreement.
 
Management believes the Agreement and the Company’s ability to internally generate funds from operations should be sufficient to meet the Company’s cash requirements for the foreseeable future. However, the challenges affecting the banking industry and credit markets in general could potentially cause changes to credit availability, which creates a level of uncertainty.


17



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 GAAP.  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.
 
Critical Accounting Policies

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.  Management believes that of the Company's significant accounting policies, which are set forth in Note 1 of the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Form 10-K"), the policies relating to the business combinations, allowance for doubtful accounts, sales discounts, inventories-obsolete and slow moving, warranty, and goodwill and other intangible assets involved a higher degree of judgment and complexity. There have been no material changes to the nature of estimates, assumptions and levels of subjectivity and judgment related to critical accounting estimates disclosed in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's 2016 Form 10-K.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are likely to have a current or future material effect on our financial condition.

Forward-Looking Information

Part I of this Quarterly Report on Form 10-Q and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 2 of this Quarterly Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  In addition, forward-looking statements may be made orally or in press releases, conferences, reports or otherwise, in the future by or on behalf of the Company.

Statements that are not historical are forward-looking.  When used by or on behalf of the Company, the words “estimate,” “believe,” “intend”, "will", "would", "should", "could" and similar expressions generally identify forward-looking statements made by or on behalf of the Company.

Forward-looking statements involve risks and uncertainties.  These uncertainties include factors that affect all businesses operating in a global market, as well as matters specific to the Company and the markets it serves.  Particular risks and uncertainties facing the Company include changes in market conditions; ongoing weakness in the agricultural sector; a strong U.S. dollar; increased competition; decreases in the prices of agricultural commodities, which could affect our customers' income levels; increase in input costs; repercussions from the pending exit by the U.K. from the European Union (EU) and potentially similar actions by other EU members; budget constraints or income shortfalls which could affect the purchases of our type of equipment by governmental customers; credit availability for both the Company and its customers, adverse weather conditions such as droughts, floods, snowstorms, etc. which can affect buying patterns of the Company’s customers and related contractors; the price and availability of critical raw materials, particularly steel and steel products; energy cost; increased cost of new governmental regulations which effect corporations; the potential effects on the buying habits of our customers due to animal disease outbreaks such as mad cow and other epidemics; the Company’s ability to develop and manufacture new and existing products profitably; market acceptance of new and existing products; the Company’s ability to maintain good relations with its employees; the Company's ability to successfully complete acquisitions and operate acquired businesses or assets; and the ability to hire and retain quality employees.


18



In addition, the Company is subject to risks and uncertainties facing the industry in general, including changes in business and political conditions and the economy in general in both domestic and international markets; weather conditions affecting demand; slower growth in the Company’s markets; financial market changes including increases in interest rates and fluctuations in foreign exchange rates; actions of competitors; the inability of the Company’s suppliers, customers, creditors, public utility providers and financial service organizations to deliver or provide their products or services to the Company; seasonal factors in the Company’s industry; litigation; government actions including budget levels, regulations and legislation, primarily relating to the environment, commerce, infrastructure spending, health and safety; and availability of materials.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements and to recognize that the statements are not predictions of actual future results.  Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated.  The foregoing statements are not exclusive and further information concerning the Company and its businesses, including factors that could potentially materially affect the Company’s financial results, may emerge from time to time.  It is not possible for management to predict all risk factors or to assess the impact of such risk factors on the Company’s businesses.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risks
 
The Company is exposed to various market risks.  Market risks are the potential losses arising from adverse changes in market prices and rates.  The Company does not enter into derivative or other financial instruments for trading or speculative purposes.

Foreign Currency Risk        

International Sales
 
A portion of the Company’s operations consists of manufacturing and sales activities in international jurisdictions. The Company primarily manufactures its products in the U.S., U.K., France, Canada, Brazil and Australia.  The Company sells its products primarily in the functional currency within the markets where the products are produced, but certain sales from the Company's U.K. and Canadian operations are denominated in other foreign currencies.  As a result, the Company’s financials, specifically the value of its foreign assets, could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the other markets in which the subsidiaries of the Company distribute their products.

To mitigate the short-term effect of changes in currency exchange rates on the Company’s functional currency-based sales, the Company’s U.K. subsidiaries regularly enter into foreign exchange forward contracts to hedge approximately 90% of its future net foreign currency collections over a period of six months.  As of March 31, 2017, the Company had $3,240,000 outstanding in forward exchange contracts related to accounts receivable.  A 15% fluctuation in exchange rates for these currencies would change the fair value of these contracts by approximately $486,000.  However, since these contracts hedge foreign currency denominated transactions, any change in the fair value of the contracts should be offset by changes in the underlying value of the transaction being hedged.

Exposure to Exchange Rates
 
The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity. The total foreign currency translation adjustment for the current quarter increased stockholders’ equity by $3,046,000.

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in Europe and Canada, as a result of the sales of its products in international markets.  Forward currency contracts are used to hedge against the earnings effects of such fluctuations.  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 result in a decrease in gross profit of $1,455,000 for the three month period ending March 31, 2017.  Comparatively, 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 resulted in a decrease in gross profit of approximately $1,228,000 for the three month period ended March 31, 2016.  This calculation assumes that each exchange rate

19



would change in the same direction relative to the U.S. dollar.  In addition to the direct effects of changes in exchange rates, which include a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive.  The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices. 

Interest Rate Risk

The Company’s long-term debt bears interest at variable rates.  Accordingly, the Company’s net income is affected by changes in interest rates.  Assuming the current level of borrowings at variable rates and a two percentage point change for the first quarter 2017 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $635,000.  In the event of an adverse change in interest rates, management could take actions to mitigate its exposure.  However, due to the uncertainty of the actions that would be taken and their possible effects this analysis assumes no such actions.  Further this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.

Item 4. Controls and Procedures
 
Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of Alamo’s management, including our President and Chief Executive Officer, Executive Vice President and Chief Financial Officer (Principal Financial Officer) and Vice-President and Corporate Controller, (Principal Accounting Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).  Based upon the evaluation, the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer (Principal Financial Officer) and Vice-President, Corporate Controller, (Principal Accounting Officer) concluded that the Company’s design and operation of these disclosure controls and procedures were effective at the end of the period covered by this report.

Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
  

20




PART II.  OTHER INFORMATION
 
Item 1. - Legal Proceedings

For a description of legal proceedings, see Note 13 Contingent Matters to our interim condensed consolidated financial statements.
 
Item 1A. - Risk Factors

There have not been any material changes from the risk factors previously disclosed in the 2016 Form 10-K for the year ended December 31, 2016.

Item 2. - None

Item 3. - None
 
Item 4. - None
 
Item 5. - Other Information

(a) Reports on Form 8-K

None
 
(b) Other Information
 
None
 
Item 6. - Exhibits
 
(a)   Exhibits
31.1 
Certification by Ronald A. Robinson under Section 302 of the Sarbanes-Oxley Act of 2002
 
Filed Herewith
31.2 
Certification by Dan E. Malone under Section 302 of the Sarbanes-Oxley Act of 2002
 
Filed Herewith
31.3 
Certification by Richard J. Wehrle under Section 302 of the Sarbanes-Oxley Act of 2002
 
Filed Herewith
32.1 
Certification by Ronald A. Robinson under Section 906 of the  Sarbanes-Oxley Act of 2002
 
Filed Herewith
32.2 
Certification by Dan E. Malone under Section 906 of the  Sarbanes-Oxley Act of 2002
 
Filed Herewith
32.3 
Certification by Richard J. Wehrle under Section 906 of the  Sarbanes-Oxley Act of 2002
 
Filed Herewith
101.INS
XBRL Instance Document
 
Filed Herewith
101.SCH
XBRL Taxonomy Extension Schema Document
 
Filed Herewith
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
Filed Herewith
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
Filed Herewith
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
Filed Herewith
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
Filed Herewith

21



Alamo Group Inc. and Subsidiaries

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
May 3, 2017
Alamo Group Inc.
 
(Registrant)
 
 
 
 
/s/ Ronald A. Robinson
 
Ronald A. Robinson
 
President & Chief Executive Officer
 
  
 
/s/ Dan E. Malone
 
Dan E. Malone
 
Executive Vice President & Chief Financial Officer
 
(Principal Financial Officer)
 
 
 
/s/ Richard J. Wehrle
 
Richard J. Wehrle
 
Vice President & Corporate Controller
 
(Principal Accounting Officer)
 

22