Alamo (ALG) 28 Feb 202019 Q4 Earnings call transcript

Good day, and welcome to the Alamo Group, Inc. Fourth Quarter and Year-End 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ed Rizzuti, Vice President, General Counsel and Secretary of Alamo Group. Sir, please go ahead.

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

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

the the will www.alamo-group.com Additionally, call days. website is for available on being replay Company's a webcast and XX at be

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

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

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

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

not results obligation update issues, only forecasted herein, Company's known Among statements Forward-looking reports. factors from as contained from the periods could differ listed this weather, any which involve those cause SEC actual seasonality, are risk which differ to date. currency-related does Company factors of materially Market time-to-time may to the demand, actual issues results. geopolitical and information Company's speaks cause materially other and uncertainties to competition, and the the The unknown in undertake risks future results following. which in

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

Thank for us Ed. today. to you thank of joining we all And want you, here

I financial forward we Our fourth results the call And questions. CFO, remarks, a your few more our comments taking of on a with quarter. for look will our Dan to then begin the results. review our Malone provide following will

Dan, please go ahead.

Ron. you, Thank Yes.

the on a the Before addressing and results, and focus of fourth I then orders, into getting earnings. will comments start before the backlog few Morbark quarter will margins sales regarding I acquisition. impact with

closing Finally, coronavirus as also before discuss I today. comments, we exposure my will our it know

limited This Company's we the adjusted XXXX Morbark XX, the immediately days number closures, and normal Including accounted October shut XXXX out Morbark EBITDA wall-to-wall previously adjusted counts Group's growth. On about the their we pre-acquisition cut conduct to orientations. estimate inventory operating holiday of week right Morbark the history. EBITDA provided. of also achieved clean operations down the along acquisition, for to get in physical largest period, their shutdown, completed a a of for with gate. off, employee provide most We Still, Alamo the

of Our results large as to fourth opening by up amortizable allocation assets as purchase quarter non-cash a intangible opposed of acquired step values cost were negatively affected portion by well price balance goodwill. fair sheet XXXX the the GAAP to earnings caused historical as value, inventory significant adjustments from Morbark to expenses to

The during million million, $X.X quarter. we inventory up fourth which, step $X.X of the expensed totaled

XXXX. for full the Dutch Power nearly it the and was the Morbark rest year-to-date resulting for expense or during year. first amortization million million of the will $X.X We quarter all expense the and of half incremental from acquisitions The $X.X

part and and merit out merit to on I effect and and measures. as while specific discussion XXXX inclusion new should Chopper backlog not Before of their immateriality, quarter new those due did of were during or sales discussing earnings Dixie fourth we orders note orders that the acquisitions their backlog, carve significant

XX% about with orders the prior and the without. exceeded agricultural XX% by year of quarter Fourth by benefit acquisitions

forward XXXX. may increase. quarter's This comments, new of an approximate our orders quarter the third accelerated occurred bookings million from because of by quarter You announced comparison quarter pull dealers avoid orders the into to our an new last was to $XX prior-year affected division third order of quarter Agricultural from recall fourth price

this While quarter affected quarter had comps, unfavorably issue timing on an effect our our opposite-favorable it fourth third comps.

the mixed Alamo the total orders the XXXX Industrial compared all a booked effect Division we This more strong prior-year bookings mower and in Group, For quarter in in higher of removal, excavator rebound truck offset North and snow result slightly the slightly quarter. agricultural sweepers this timing new continued new orders, strength orders American excluding and This as international saw X% rates truly Division. to up snow our weaker fourth Agricultural as in than was demand bookings three were blower about by Division. the a well and vacuum in as acquisitions, order

year-end Power year-to-year, backlog better Agricultural down contributions about is the was from up $XX which X% chopper very backlog. without Year-end [Technical level. the considerably year-end Morbark million and our X% a the to of third quarter. Dixie than is XX% The acquisitions, of the XXXX backlog Without Power, without Dixie about over million of end saw down and comp Chopper $XXX from year-end was Difficulty] prior XXXX about we the high backlog Dutch unfavorable Division added Morbark acquisitions as Dutch X% about year-end.

exceeded of about were prior billion sales over record XXXX prior about up is year the of quarter quarter Full net XX%. $XXX and $X.X year. company XX% fourth million year sales a by Fourth

full Morbark for acquisitions, were and year. Excluding about the up sales the of less comparable the for Dutch than X% X% impact and Power the quarter

Division net the Industrial quarter During million. year $XXX sales sales prior of exceeded million of $XXX quarter,

Industrial of of High X% snow year up vacuum offset sales the Division and effect equipment. slower $XXX acquisitions, over million, were prior removal quarter. shipments the industrial net and about excavators Excluding sweeper mowers, truck sales

net For the $XXX sales Division XX% increased prior year. full million of over year, Industrial

sales translations, this grew the acquisitions, local currency If grew X%. XX% full Division division impact net Excluding in Industrial the exclude in also of sales year we currencies.

for this except to growth all full businesses industrial the For mowers. year, division's organic contributed

Division Division $XXX of quarter sales year. $XX Agricultural million prior Full about about were down of down X% prior sales million the were from net net year X% from year quarter. Fourth Agricultural

Excluding in the were X% local in sales translation, net currency currencies. this division impact down of about

While quarter, impact an North agricultural in saw geopolitical the of trade to uptick during the economies. and disputes other weather, global we orders American equipment continue constrain events

Fourth Dutch million of fourth to grew year the $XX primarily quarter Power Morbark over gross margin due the prior X% and quarter, acquisitions.

adjusted for XX%. expense margin of XX.X% which was the net gross quarter. of inventory million step-up compares $X.X -- inventory prior million to year gross quarter expense, sales, step-up grew excluding XX.X% Fourth Excluding adjusted margin of the net sales $XX.X

production related $X due also Industrial XXXX growth Full million mix, margin growth import quarter negatively year transaction cost to inventory of to year. the and top higher the of and XXXX tariffs EBITDA, excluding million. rental non-recurring would lower Adjusted result offset of was the we Morbark utilization this X% million steel cost. above was EBITDA continue exclude acquisitions, prior If the product levels, than lower to Division. in step-up expense nearly results full lower adjusted year benefits Unfavorable organic more primarily and the fleet partial affect in gross $XXX XXXX a $XXX and

operating charge acquisitions respectively $X.X and and quarter step-up Dixie incremental $X.X million, and contributed the million income. year the Chopper fourth Excluding and the amortization to adjusted inventory expense, Morbark full

quarter, XX% than lower expenses. XXXX due million factors was increase discussed, the $XX fourth Dixie already to adjusted about margin due affecting income start-up operating quarter primarily R&D spending year but to Fourth prior and of also an the gross in Chopper

after in was income related compared tax rate XXXX, XX.X% Our XX.X% excluding tax to one-time legislation. adjustment tax new effective prior year the to

of effect was share. the acquisitions, diluted Morbark $XX.X or and net adjusted the costs, Power Dutch $X.XX acquisition Excluding and million per income

XXXX income $XX.X $X.XX Excluding per diluted or one-time million the adjusted tax share. fourth favorable adjustments, was net quarter

requirements. to million. million drove Division operating quarter working cash quarter above compared $X This capital year $XX only by net million, due in over growth year which XXXX higher of activities of Industrial is liquidation nearly Fourth the receivables cash prior was quarter flow and mostly million operating provided prior organic quarter when of inventories to was fourth $XX XXX% $X

and of million highlighted investing flows operating Morbark prior year. expected compared year was to is Company Full capital than Full $XX over above in quarter spending as spending, about which cash track flow of million acquire continued cash million $XXX XXX% to used cash capital and XXXX year XXXX. XXXX a better by to $XX prior Fourth year. $XX.X million $XX record million were

to about year Due increased $XXX debt net cash million acquisitions, prior of the over quarter.

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

up between our Now manufactured non-Chinese are would estimate sales the sourced supply But today, mechanical from on we $XX be of they're back can suppliers at of in million monitoring closely full coronavirus disrupted. delays China. that power a Agricultural chain are not suppliers situation looking $XX temporarily mowers be such demand staff. each are inbound meantime, no we impact at these situation have have worsens. to for week date, the and boots in two four of China to we we actively seen To pursuing we're the million division our major Most could the running, these the components on regarding for but suppliers. and products. Currently ground the used as Most contingencies buy mitigate on we exposure; necessarily be exposed risk coronavirus some of In disruption. the transmission our of through sourcing components and our that at

offset XXXX year included completion year. XXX% from of million continued in lower record lower In cash and the mix sales record flow summary, prior and than and the $XXX operating and margin of product fourth XXX% $X.X above full acquisition, unfavorable full-year of respectively and quarter largest volume, rental production benefit results history, the fourth fleet quarter fourth which over steel the the full-year utilization, billion our respectively, quarter Morbark pressure Company's more cost lower and and strong

to over call I'd turn now to like the Ron. back

in levels. fourth and which all while below issues. we're you presentation, our certainly Thank the at and highest Dan's little certainly in a in from acquisitions, heard achievements in fourth a amortization, and history, pleased in record and were in made with everything the actually Dan. noise results the we expectations, it, as And all, second had with the were lot other write-ups, our Well, challenges market quarter. you, results total, coronavirus inventory of off sales But quarter and still some XXXX were our Company's

somewhat results not a as think as unfavorable think very of quarter, agricultural conditions positive the we we some which third but I mix our affected weak earnings, in and effect our were in I sector, quarter results, to our but our some third all, in quarter of quite is impacted they we reported our did we're industrial fourth and acknowledge development. these of starting said, market same our conditions short First by expectations, our

were so year I acquisitions before the record the And it with Even levels. year said sales overall X% for as also to decrease is acquisitions good and in our up at even in note, more sales the for currencies. contribution excluding local from even sales agricultural were the

our In as actually fact, more Industrial going European currency will results effect reporting, started and currencies longer Division reporting operations which to no change with since that just quarter consistent separately, but results with also have together. you noted, a probably think now little similar report this now products more in in make have we all bit reporting our I we our forward their regard are fourth our going to Agricultural

most were even And in we mix, some bookings fewer quarter, our affected that of seen were said internal we below in definitely had which sector, sales the previous the reported affected by year, we in had our due were on our we was also to for improvements again fourth profits XXXX. margins been that unfavorable up. Division backlogs welcomed third and as during declining in while And agricultural weaker This organic impacted results pleased by quarter. the the some that the particularly Industrial quarter challenges Ag sales which still of were our still our

our largest us Alamos' course So, believe, acquisitions been again major development showing for some for October the in in market. future. has ever XXXX achievement of significant completed Morbark, capped But we we in the is a with this sign that of stabilization

clouded So deal this certainly it's fourth quarter in late results. our completed We October.

close Christmas and was followed to trained Dan as the just inventory, normal get Thanksgiving operational before books, everybody said, down week fully by count holidays And they were quickly a then their that shutdown. over and being the

up generate in million of were So but higher in pleased expenses, in we and quarter. again to sold transaction the able required fourth we were the over really our related in impacted which valuations, short pointed to in further $X.X by were this, just sales added as inventory time limited, our I obviously there and Dan that results mean the amortization costs was goods that addition million cost step $XX cost alone were still out, in

amortization we current step practically while first XXXX in be the away as all flushed obviously will the of out of go the should of year. continue will certainly expense system, So higher expenses the up level move and half transaction inventory in ahead, end the through by all the the valuation

We'll our integration expense, be can for in bit will a little Group results our and acquisition significantly at record in XXXX of should organic we was unadjusted it results contributor a get EBITDA results but where XXXX, of believe believe still levels -- indication despite expenses, XXXX softer very better for related XXXX. Alamo and in have our some major seen this good we to actually be Morbark

internal by organic to help improvements. which growth drive operational addition, we pleased further are our number feel we of sales will In other initiatives, a our

plan big completed is more about yes, product or capital efficiencies really these And discussed we variety new we made have mean, our of though the of little -- signs are a and of in variety we some our continue plant a the for previously that's CapEx improve to stabilizing our, most face, that spending up, include technology challenges on and in of we've period -- been built part you and the no US. And driver year have greenfield initiatives introductions within spending have our four two-year course more consolidations with in Wisconsin, in some and plant hit, of the been I has so. our five as we've recently the I in invest a these plants was increase underway some now, these pleased all which noted, to also of our very big slow, the CapEx showing as new of made taking. manufacturing of direction we still there -- the our certainly to agricultural mean that market still the is bit of is well been

weather further However sector unfavorable and year. worse by is it some in a conditions weaker may -- the the actually this Europe in in little last

Our seem still were contributors products they of for were certainly industrial products pleased them of improved major like as Dan made, to because holding but to sort commented, XXXX, we're back paying of dispute that's we in but the which we not our with a commenting still mowing us terms up course, we some with not -- totally little it's all on. steadier the tariffs there we see but soft are the agreements presidential and issues a outlook -- and what Brexit be XXXX a and Europe, are how know all. certainly don't in have mean and to clear are coming, little the election soft, bookings, been US, going profit sort situation some areas, but starting variety that is China is it's just I same for affect external And to Trade normal. know is thing, us been there are. still the of

in situation of in to components we on results in the the the concern pay first some of the at coronavirus there do major quarter first second our and indicated what don't the major if global everything anyone flowing not that the this China meet operations And or we or I some do China full actions this And course our list need would quarter. pointed we daily, next think levels. on Dan point. be monitoring mitigate in in though [indiscernible] mainly component from can our commitments start for but our not knows customers adverse at economy level feel situation, our a a of But effect But will staffing quarter suppliers this this the time, issue could or the pleased open, disruptions any or so. at to agricultural more And have this suppliers taking not is Dan We're have so which everyone. situation much within as matter our full that we we're top will month is at out industrial. for as protect deliveries at the impact in our are result, all from as situation, our us

to Group. we positive. while outlook that outlook are lot certainly year, absolutely actually the we focus, quarter focus will acquisitions we the our internal and about some results this the the feel producing. I feel various with a can other the first for results, we various of a are our begin on become contributions for will So XXXX. internal in working XXXX acquisitions, of capable feel actually And and areas think current was stronger definitely of than is as results we XXXX of from With very through better have our in Alamo combined integration you we assure more much mean concern, total noise but be we initiatives, there we're internal on our the There the delivering fourth this and they know will appear, evident initiatives move good we

open the thank you and So line questions we you would have. like for with that, support to your now to might any

Instructions] Thank Securities. Chris first you, Our CJS question from will sir. Moore with come [Operator

Hey, good guys. morning

Good Chris. morning,

Good morning.

any industrial in of Morbark better there normally on impact Just QX will the that a time trying there? seasonality kind on Is the ultimate have there little year slower much to of the is couple margins. or bit Morbark, things. understand of impact a is seasonality the A

at winter first in slower the year of vegetation-related impact, usually much. year the are little it cleaning and not brush they're I mean months. the up a of a the as in end is -- debris when little activities snows, the There quite the

in as parts not in which higher margin. the on are spare almost it's much certainly spare So equipment itself as parts, little bit the the a

So certainly but announced for And like actually we bit our made then, we levels the seasonality. though parameter not and the when margins in what said, significant, everything, line little as we with some pointed mean we their we I believe acquisition are in. margins. that Morbark are gave better some than their we've I a out indications they is sales and -- still

think mean, effect. that bit So inventory and we we contributor higher like of in take and somewhat general. they I we should to with little amortization the have short a things noise the out step-up in you actually positive got will a Again, they now have that. than the very think be margins nice a But term

to just a Got it. No, little the like revenue it you expense expense sounded QX there times than more shutdown had one from a week. in beyond items, that one was -- matching there revenue

of kind understand to trying that just balance. I'm So

one like Yes. And not is thing They shut home. accounting. everybody the were week like it's went there that down, we're out

we that and So -- week accruing a else. interest everything and had had we

just a So little a wanted slow of start. clean start, to make a had mainly sure we we it was because bit

Got it, got versus it. Dan, QX XX.X%. Industrial 'XX, was in versus if X.X% I look at it margins the QX

I think one about you gets back amortization the it to if incremental the times, step-ups, you add X%.

mix, getting talked double-digit back combination terms of of Is volume. you So mix it the utilization level? and of towards big that kind there rental was in driver fleet then had a about,

the one It's of We first. it no, just -- list several factors. It's did

all there. quarter mowing quarter. third of larger those the excavators come into three weak in on impact But the we factors bit and So Remember, Industrial really Division. play a a in had little

that's on quarter isn't so And two benefit XXXX. really to a quarter getting going that surged delayed fourth kind it's product bookings, affecting of, effect, the more us of thereafter lines, the while in end, as those

were less, So production inventories you come lower. levels We were still saw the down. absorbing

We less are absorbing cost into inventory.

has see other that a anything temporary of little of comprises all an that impact. impact as but we don't than bit So a margins, that

me. Sure. Last from one

amortization can 'XX, the fiscal terms us Morbark of in expected for just intangible a... you Just give

we on -- booked two $X.X Morbark, we a for booked months. million So,

extrapolate So, if $X you million. it's that out,

on quarter, Chris, Yes. that's so just estimate are.. an we And

Understood. Yes.

There is over. place opening your

Appreciate line. All it guys. right, I'll jump back in

you. Thank

Thank you.

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

EBITDA excluding Hi the sort Morbark The guys, of that's accounting historically good morning. still seen, that intact? margins has amortization purchase

Yes.

I'm a than expense the that I over then, few with just made going And interest seemed acquisition, anticipated, I've -- interest higher a this Okay. the could little assumptions you...

Interest $XXX of were commented balance $X.X have I in on But for about for quarter. we the around weeks, if the million quarter. think you almost about probably was about should then and million interest. the three $XXX it, million up

I into pretty weighted the pay did the we using in average that debt. kind the of about I X%, late quarter, down think backed debt of outstanding

Okay.

$X then that's to if the look Joe, expense, way additional net we you million, that gross at another if of which number effect you two, where the have interest number we million $X attachment is look is, about at expense. tax back interest into like

about so a we And normally, million. $X.X would been have

So only million the $X about of related that acquisitions. to is

Okay.

But in total X%. [indiscernible] about

X%.

with sure acquisition. Okay, anything Can good. what to doing, anything, quantify about not have opportunity, it's lastly, about, that you what you're going and of a and talk lot you provide you can how you is? but the talk can timing I the benefit you And much the if then know synergies?

big kind show to pleased till a we'll but and none will second But throughout are the that in like this purchasing procurement which big have buckets but be working certainly, And mean old stuff, they half is put on in one systems numbers, because all is this inventory, that's a for we mean several that function, we're I going we and they I the putting on their of until half one, got them of mean, we're already, of our agreements -- any year I I achieve already the benefits They're [indiscernible]. we're year. ones said, operating through up the achieving rates about of flow reached actively feel procurement. sure. that, haven't to

believe some which shop cutting operational -- help new some some literally is new investing their -- three, is we there mean the I already will robots so on we wins. there already, capabilities, have in to started cost, We and CapEx

I been And not then year, to very Morbark our the And Brazilian bit through our hope company, before little already strong market outside European, end international. but got products we've have we distribution and Groups longer all term, much has America. good of as mean Australian -- American, there our capabilities have to new the our their some been lately. international of network up And North set this North

And the year most are of so, I second results. it's a mean different this there in start of said, of them into I -- issues a believe next and half in as all buckets is variety of those But them year, before. are of being underway. the We sort evident will

question with that then, is depreciation regarding what the Morbark; whole And Okay. And company? how of rate acquisition the the the does incremental tax affect Morbark? effective last comes

or from not think depreciation the that I information given you added piece, yet. we've

assets. of part some that to be the we're the right valuation As step going fixed up of in now some through there's going

out putting not we're that yet. just information So

the States. to their most of in tax United effect As are the rate, sales

look federal have it's probably tax now. So where to at state same there, I obviously tax of be that in they say do wouldn't if rate we're roughly going but at you range the a the at XX%,

tenths a swing percent. a see of few You maybe

Okay. Industrial about I'm I had of segment. ahead. couple sorry, a questions the go

provision a LLP number. affect don't There you that tax because Just, we there interest. was benefit but cash GAAP in was tax taxes, will benefit, tax necessarily the which bought a see

provision. to a should put, -- into continue put to than going is better numbers put We're what be taxes deferred cash tax we there actually liability. So, on

your vacuum couple clarify, you of Okay. questions And on you I were of Industrial had trucks. segment. talking the about comments, one I missed a excavators and Could

those when was were talking I the negative you order positive quarter? or about rates, rates fourth that with the -- in were think you products

well, vacuum strong. Yes, be continue trucks to

-- excavators sort and strong in big weak as down the this in well And for the strong. new orders a had and of mentioned rates kind on strong saw mid-year. up quarter. pick really So while strong as a utilization a the a rebound mowing think in even industrial really and excavators I Excavators rebounds the have was we didn't industrial quarter, quarter we year, a of of that been that fourth in has fourth quarter. dropped mowing. rental see saw around third drop-off we last order The excavators have -- fleet more industrial we some Remember, continued rebounded. and We while call report our trucks we in mowing the all has

could And overall, of the trending been two first talk, months order Okay. this you the just how have through rates year.

[indiscernible], go Don. at but they positive Yes, I XXX% continue areas got now. far to say they overall around probably -- I think increase, are us struggling, positive huge ahead so but where right yet think get trending Joe, now, obviously it's that for wouldn't huge trending think not right we're we're We've I seeing few are impacts because I

up, which were I to going year. got going sales steady is, the down Ag and remember, you last of was down say year, I going they're mean most mean and I to bookings were No, and

-- back activators, mean I that mean equipment to installed some -- levels nicely, our well. good And from the so, areas bit Europe I bit. coming see trucks had too. But in are actually strong little up strong, bit seeing continuing it's Ag, I mowing are soft little very to off last doing steady mowing little are year our total are is and a not and so, they've think above now a mean bookings strong mowers, off even strong especially the in bookings is quite Europe bit, little a better, adverse as the a Europe Europe. probably between weather, in mix but some I sweepers they product mean, I were our be sales equipment but of and vacuum is industrial and very and are

in still they're in Ag, total, European So softness up. but

the don't if that seeing you And plant or benefits all about I question sticking how right. on have focusing and the quantify and anything know you last that been consolidation, me, you, Industrial, All great. initiatives timing. can you can at automation, talk that expand going if could the you're productivity from be with would But

we We the nearby move allow talk Yes, one we're consolidate our the -- our facility, about in I Tenco -- to consolidations had facility mean R.P.M the us manufacturing. was pleased. last year, we Canada to expanded major R.P.M two mainly to announced one, that facility into

year, now So that late completed last that's been but done. has

Mukwonago, of one that that and office The year plants construction started but told, one me the moving Europe completed several -- got where the basically on started excuse contract that [ph] we on -- new and for the a of into us and we've that did budget so will that production we haven't first track production moving Wisconsin, time, one for that to we -- are Milwaukee. to in track, -- quarter close in see allow and plants we already sell several on consolidate we -- their with now in fact in that one started the did -- in on and own, own we up Super literally built we've the we or greenfield in, other was on most like Products -- would gearing plant major of the has the is at plant been on before first the budget just though

of we this in a is that and we so, and our that in the are up we show little of as least all on bit bit at yet, stuff will think more half we obviously CapEx. we numbers most but on I So, year. and mean mean bottom none start believe most I been spent will, to this It's of starting second of the is it line, of contributing more to time. -- our said, a on target little

things of -- are always talked lot know and know, automation. on I you've a Anything else doing about don't a significant, I random Okay. you

equipment to when plant, new Chopper equipment manufacturing, to As paint system robots Morbark, -- got, we where our on Dixie got buying I new online made at new that able we more Rivard, the probably money the already into robot we brought spent we're some We there Rhino efficiently. -- we've make that in manufacturing a other of mentioned, new Hog. Illinois some production two going or Bush at assembly robots at additional be

of above. And million of I I'd spending into million $XX not this I CapEx extra spending we'll think off just been year number into a lot could that year we've plant, plant tail this spent a benefits the all the second XXXX mean bit that of of these. then year this some will This start for doing. say CapEx year, a be big year So, but considerably last of has the [indiscernible] of just seeing the spending yes, XXXX $XX years, the like you're XXXX. half right, two we've the we I our went little been -- got CapEx But so over this but start think, we almost

thanks. Thanks Have my Okay, a for questions. great taking day.

you, Thank Joe.

from Instructions] & with Mike [Operator next Daugherty you. Shlisky question comes Company. Our Thank

good guys, Hey you okay? morning. Can hear me

Mike. Yes,

Mike. We you, hear can

going forward? that savings, cost be may quantify you that there better people going Great. Can any maybe cost three? the to costs that are having you there be if or changing are two segments still the any from expect Are changing than

say, flow we've had As far consolidation the now like three as that of two, was it cost, as But not overhead information is, of much it's, obviously, much I we position. but overhead it's products. like very division improved a that the and managers cost expensive -- savings between got mean, as

I -- little topline don't bit And said, think that's I mean a it's is significant. of cost there where opportunity I though see like saving, I mean the not is. So I even

outlook have also you share wanted ask to pay I want for how for the Dan, I place, any is you much debt -- anything or down plan Okay. guess to year? the I actual XXXX. about in us there guess budget about debt with dollars

you that significant make and is, a reduction new see. we slower that do could Well, we few this $XXX up, kind all a but growth the lot of capital. generate absorb that good math seeing, tax cash been going the cash. direction that Right flow whole double-digit at go we're like of I super-hot statement look EBITDA Proof pay and in that a we're and in on growth we seeing the sudden of the little given the period, now, other saying I you into and is quarters. in if years. down mean, what borrowing our growth mean, not back a can generated a the We Division that's in or debt over that rate, growth it, heats we over organic a we a kind in of so could thing few deal we've level last change working particular money mode. normal just We another as cash. might million seeing were lot Industrial of of feel of forward, more at we're We've can last like effective should our a only liquidation

to add to like I'd that.

Dutch are we than I add them higher returns Power, their levels, to and acquisition as want well to think to as be. aren't as inventory want date both probably The as to Morbark be. we is that that strong them of

something of for opportunity of each inventory now. is their there's both there. are at goals the them one year So at this for And them to levels one of reduce where they

will So that be helpful.

it. Got

forward, had of going Dan reduction. be for I stuff, mean should debt of for acquisition over as said previously, I free barring XX% EBITDA available kind and mean our cash flow literally But available that

farmers, year? about the Okay, you're other XXXX, to figure about words, hearing outlook what order getting Ag I the commentary [indiscernible] from wanted for In the the --it's well. seeing as there pattern like perfect. tone out look you're not we're the -- some the given quarter, in dealers your with might even some actual just

which was place we Louisville, America, ago. sentiment Farm I just in is North don't the but the good show show just yet. like comment, And felt Machinery think there I the I heard the biggest took Ag weeks of the couple said Show it big that, National in somebody numbers

little before commodity up bookings some is That's think and going There take I'd mean, start was really that little going numbers certainly I better, outlook. more prices the bit sentiment and bit. and it's I say felt But think the in in a the think some to that still good. you're buying a again. shown I people the better are to it I there see but mean the the, yet, up farmers strengthening feeling think enthusiasm was but -- were farmers hasn't I showed I buyers,

about it. guess And months, I to business you -- then, XXXX? from trailing Got do able be a could be from that this line one the may and Ag or -- twelve a bottom business' last you in me. is high perspective, feel Can you topline what growth one year? growth in how you did

think a continue. natural years, last think higher rates we little be to a higher done growing all space that's the several couple been our growth have their -- just and seem to growth things likely There have have think been growing disasters being we continuing before and bit products most they in couple last been of of to -- the than at then The at or than I points industrials rates. we be a percent average will what, would south-west manage, that above have, barely and growing

ours should think and above that whole little negative but no positive a above are still be -- coronavirus be to rate there average. growth feel excited, given that positive else but, should growth from little bit but rates should we effects their the economy we So anything that or be bit a we

color, for I thanks the it. appreciate Ron, Okay.

you, Thank Mike.

Thanks, Mike.

Thank Joe Sidoti. Mondillo from you. have follow-up with We do a

questions. a just of guys, follow Hi couple up

Regarding the segment in face dynamic you your your XXXX, this should expand? that is if the Ag flat revenue year margins given

of largest job so, done you current of if costs of look a to great level they've cost structure to business we've done down adjusting that adjusting think their our -- I in good segment, a at job demand. their

of so in chopper have other, had going second bringing facility. are similar a available performance a lot So business except in that in just leverage we and moved going on we But to in capacity would that that largest facility relating lot segment to seen I comps, start-up think that that volume be the a easier year-to-year additional that. for and they're the our segment expenses Dixie utilizing that to also

improve So, to numbers I would their as expect well.

was foot of margin, sell We lower a it lot those mix five XX also So for. our want that looking than six percentage gives a because to 'XX more margin margin the was of out, footers. we foot, of XX higher product units sold and we us off XX footers shows going products lower are -- improvement really more lot that the in

the a chance pretty dice buying footers that. think for us. probably bread need XX We equipment back and help. if was of and I roll good on to be butter bet And that the has it, I been Yes, would professional there's farmers to

Okay. just question. And of another then, our more

any the of believe difference seasonality I there? revenue You you're and between about addressed talking there margins Is the the probably the seasonality revenue. versus

revenue probably do. That's as quite the doesn't margins what saying, I much was the as fluctuate

more, Second, vegetation consumes third is quarters maintenance for are equipment, when more parts. spare certainly that's utilized equipment the it

been And so, you've a margin bit yes, so seasonality on than like more seasonality. so that little -- revenue on

addressed regarding given weighed that. orders saw you with sort factors the the those Okay. and especially trend rebound levels? of is outlook sort you're the you going that sort I'm the you of think half Industrial of sort segment, second excavators on And margins wondering that Industrial from XXXX? saw Do into your what that and you that of margins seeing with of the

is and the -- half more with more of we now be to our bit we Yes. a because mean to we mix then I affects mixed said, Morbark step like up because some too, I -- to bit a still think that We for going in believe it, in yes, to conditions be normal it going to industrial year, unfavorable, that first levels. bit integration there results cost little normal a do the return the our normal the rebound more I little condition but that in with should I that -- overall they was XXXX going ag the little and being would the market organically to mean in some was be think to mean, inventory but results be noise the back being going mix certainly. off, have, was valuation we

net of most times inventory of of the at and Okay. like then number the from our probably one And the press release you some it negative just earnings net of looks in It number. but is a at more if contribution type -- actually the lastly, related related sort regarding is the of end net number, question, mow income the up nuance to than And reconciliation market. is number this the step it's the earnings of income. the a operating negative negative and the bigger contribution look that from the table

Just a that tax is wondering or? thing

you and earnings And at of plus that always be number the I when that up the the earnings the net really you will think out need back level, highlighted out out. at to tax what be will step acquisitions, number. the three need from amortization. the what go look up that's will going a operating you to The split look you go and those straight that it's income all of three to then -- we combination just it will be to forward, down effecting income, the if

Okay.

the with three the in pre-tax made amortization. the negative a adjustment together Yes. and do We number, just Without the that, we burdened with we did step-up to the we broke operating earnings. broke they what number, -- were it additional number. them operating out a it That's net -- with negative additional out, them burdened we pieces but

that's earnings. that contribution So, [ph] $X.XXX was why million a to operating

tax, after and more then EPS. breakout same So, we the do didn't for

amortization I netting level. names at I the only operating see, was okay. the wasn't netting income step-up, for I

So I think...

Yes, right.

Thanks, All Dan. right.

you. Thank Yes.

now currently for questions back to remarks. Thank in would closing you. queue. showing further over management I the it no I'm like turn to

All which again, today. joining with first call, be us thank speaking quarter on our May. Well XXXX right. you forward look for to you in will We

interest. thanks So, your and good for day care. have a Take

you, This and gentlemen. today's Thank concludes teleconference. ladies

disconnect. now You may