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) |
PART I. | FINANCIAL INFORMATION | PAGE | |
Item 1. | Interim Condensed Consolidated Financial Statements (Unaudited) | ||
June 30, 2017 and December 31, 2016 | |||
Three and Six Months Ended June 30, 2017 and June 30, 2016 | |||
Three and Six Months Ended June 30, 2017 and June 30, 2016 | |||
Six Months Ended June 30, 2017 | |||
Six Months Ended June 30, 2017 and June 30, 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 | ||
(in thousands, except share amounts) | June 30, 2017 | December 31, 2016 | ||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 74,637 | $ | 16,793 | ||||||
Accounts receivable, net | 200,223 | 170,329 | ||||||||
Inventories, net | 153,150 | 135,760 | ||||||||
Prepaid expenses | 5,487 | 4,725 | ||||||||
Income tax receivable | 4,493 | 11 | ||||||||
Total current assets | 437,990 | 327,618 | ||||||||
Rental equipment, net | 31,441 | 30,970 | ||||||||
Property, plant and equipment | 190,228 | 180,041 | ||||||||
Less: Accumulated depreciation | (118,995 | ) | (113,412 | ) | ||||||
71,233 | 66,629 | |||||||||
Goodwill | 82,430 | 74,825 | ||||||||
Intangible assets, net | 55,353 | 50,038 | ||||||||
Deferred income taxes | 652 | 619 | ||||||||
Other assets | 1,765 | 2,077 | ||||||||
Total assets | $ | 680,864 | $ | 552,776 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Trade accounts payable | $ | 57,164 | $ | 43,136 | ||||||
Income taxes payable | 2,210 | 2,333 | ||||||||
Accrued liabilities | 35,994 | 33,158 | ||||||||
Current maturities of long-term debt and capital lease obligations | 80 | 73 | ||||||||
Total current liabilities | 95,448 | 78,700 | ||||||||
Long-term debt and capital lease obligations, net of current maturities | 146,017 | 70,017 | ||||||||
Deferred pension liability | 2,409 | 2,929 | ||||||||
Other long-term liabilities | 7,407 | 6,969 | ||||||||
Deferred income taxes | 6,672 | 6,444 | ||||||||
Stockholders’ equity: | ||||||||||
Common stock, $.10 par value, 20,000,000 shares authorized; 11,562,001 and 11,462,484 outstanding at June 30, 2017 and December 31, 2016, respectively | 1,156 | 1,146 | ||||||||
Additional paid-in-capital | 102,355 | 99,765 | ||||||||
Treasury stock, at cost; 42,600 shares at June 30, 2017 and December 31, 2016 | (426 | ) | (426 | ) | ||||||
Retained earnings | 357,163 | 334,988 | ||||||||
Accumulated other comprehensive loss, net | (37,337 | ) | (47,756 | ) | ||||||
Total stockholders’ equity | 422,911 | 387,717 | ||||||||
Total liabilities and stockholders’ equity | $ | 680,864 | $ | 552,776 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales: | |||||||||||||||
Industrial | $ | 117,342 | $ | 117,146 | $ | 243,158 | $ | 240,424 | |||||||
Agricultural | 54,221 | 51,845 | 105,998 | 100,507 | |||||||||||
European | 41,713 | 42,498 | 79,509 | 81,529 | |||||||||||
Total net sales | 213,276 | 211,489 | 428,665 | 422,460 | |||||||||||
Cost of sales | 158,597 | 159,311 | 319,822 | 320,005 | |||||||||||
Gross profit | 54,679 | 52,178 | 108,843 | 102,455 | |||||||||||
Selling, general and administrative expenses | 34,522 | 34,137 | 68,585 | 68,125 | |||||||||||
Income from operations | 20,157 | 18,041 | 40,258 | 34,330 | |||||||||||
Interest expense | (1,500 | ) | (1,523 | ) | (2,827 | ) | (2,929 | ) | |||||||
Interest income | 81 | 56 | 157 | 118 | |||||||||||
Other income (expense), net | (665 | ) | 242 | (873 | ) | (380 | ) | ||||||||
Income before income taxes | 18,073 | 16,816 | 36,715 | 31,139 | |||||||||||
Provision for income taxes | 5,757 | 6,254 | 12,232 | 11,918 | |||||||||||
Net Income | $ | 12,316 | $ | 10,562 | $ | 24,483 | $ | 19,221 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 1.07 | $ | 0.93 | $ | 2.13 | $ | 1.69 | |||||||
Diluted | $ | 1.05 | $ | 0.92 | $ | 2.10 | $ | 1.67 | |||||||
Average common shares: | |||||||||||||||
Basic | 11,547 | 11,422 | 11,509 | 11,405 | |||||||||||
Diluted | 11,671 | 11,550 | 11,646 | 11,529 | |||||||||||
Dividends declared | $ | 0.10 | $ | 0.09 | $ | 0.20 | $ | 0.18 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net Income | $ | 12,316 | $ | 10,562 | $ | 24,483 | $ | 19,221 | ||||||||||
Other comprehensive income: | ||||||||||||||||||
Foreign currency translation adjustments | 7,098 | (7,140 | ) | 10,144 | (3,581 | ) | ||||||||||||
Net gain on pension and other postretirement benefits | 217 | 268 | 434 | 533 | ||||||||||||||
Other comprehensive income (loss) before income tax expense | 7,315 | (6,872 | ) | 10,578 | (3,048 | ) | ||||||||||||
Income tax expense related to items of other comprehensive loss | (80 | ) | (98 | ) | (159 | ) | (197 | ) | ||||||||||
Other comprehensive income (loss) | 7,235 | (6,970 | ) | 10,419 | (3,245 | ) | ||||||||||||
Comprehensive Income | $ | 19,551 | $ | 3,592 | $ | 34,902 | $ | 15,976 |
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 | — | — | — | — | 24,483 | — | 24,483 | |||||||||||||||||||||
Adoption of new accounting standard | — | — | 11 | — | (11 | ) | — | — | ||||||||||||||||||||
Translation adjustment | — | — | — | — | — | 10,144 | 10,144 | |||||||||||||||||||||
Net actuarial gain arising during period | — | — | — | — | — | 275 | 275 | |||||||||||||||||||||
Stock-based compensation | — | — | 774 | — | — | — | 774 | |||||||||||||||||||||
Exercise of stock options | 99 | 10 | 1,971 | — | — | — | 1,981 | |||||||||||||||||||||
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation | — | — | (166 | ) | — | — | — | (166 | ) | |||||||||||||||||||
Dividends paid ($.20 per share) | — | — | — | — | (2,297 | ) | — | (2,297 | ) | |||||||||||||||||||
Balance at June 30, 2017 | 11,519 | $ | 1,156 | $ | 102,355 | $ | (426 | ) | $ | 357,163 | $ | (37,337 | ) | $ | 422,911 |
Six Months Ended June 30, | |||||||
(in thousands) | 2017 | 2016 | |||||
Operating Activities | |||||||
Net income | $ | 24,483 | $ | 19,221 | |||
Adjustment to reconcile net income to net cash used in operating activities: | |||||||
Provision for doubtful accounts | (87 | ) | 172 | ||||
Depreciation - PP&E | 5,560 | 5,712 | |||||
Depreciation - Rental | 2,804 | 3,443 | |||||
Amortization of intangibles | 1,554 | 1,549 | |||||
Amortization of debt issuance costs | 110 | 106 | |||||
Stock-based compensation expense | 774 | 724 | |||||
Provision for deferred income tax expense (benefit) | (20 | ) | 262 | ||||
Gain on sale of property, plant and equipment | (238 | ) | (239 | ) | |||
Changes in operating assets and liabilities, net of amounts acquired: | |||||||
Accounts receivable | (23,519 | ) | (20,149 | ) | |||
Inventories | (4,436 | ) | (9,519 | ) | |||
Rental equipment | (3,275 | ) | 153 | ||||
Prepaid expenses and other assets | 1,012 | (1,895 | ) | ||||
Trade accounts payable and accrued liabilities | 11,621 | 5,736 | |||||
Income taxes payable | (4,226 | ) | (193 | ) | |||
Other long-term liabilities | 305 | (83 | ) | ||||
Net cash provided by operating activities | 12,422 | 5,000 | |||||
Investing Activities | |||||||
Acquisitions, net of cash acquired | (26,440 | ) | (188 | ) | |||
Purchase of property, plant and equipment | (6,268 | ) | (6,191 | ) | |||
Proceeds from sale of property, plant and equipment | 417 | 500 | |||||
Net cash used in investing activities | (32,291 | ) | (5,879 | ) | |||
Financing Activities | |||||||
Borrowings on bank revolving credit facility | 109,000 | 49,000 | |||||
Repayments on bank revolving credit facility | (33,000 | ) | (29,000 | ) | |||
Principal payments on long-term debt and capital leases | — | (10 | ) | ||||
Proceeds from issuance of debt | — | 918 | |||||
Dividends paid | (2,297 | ) | (2,051 | ) | |||
Proceeds from sale of common stock | 1,981 | 998 | |||||
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation | (166 | ) | (19 | ) | |||
Net cash provided by financing activities | 75,518 | 19,836 | |||||
Effect of exchange rate changes on cash and cash equivalents | 2,195 | (907 | ) | ||||
Net change in cash and cash equivalents | 57,844 | 18,050 | |||||
Cash and cash equivalents at beginning of the period | 16,793 | 26,922 | |||||
Cash and cash equivalents at end of the period | $ | 74,637 | $ | 44,972 | |||
Cash paid during the period for: | |||||||
Interest | $ | 3,131 | $ | 2,918 | |||
Income taxes | 16,444 | 11,725 |
Accounts receivable | 1,690 | |
Inventory | 8,563 | |
Property, plant & equipment | 959 | |
Intangible assets | 4,500 | |
Other liabilities assumed | (1,041 | ) |
Net assets assumed | 14,671 | |
Goodwill | 3,000 | |
Acquisition Price | 17,671 |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||||||
Finished goods | $ | 132,238 | $ | 116,667 | ||||||
Work in process | 8,940 | 9,431 | ||||||||
Raw materials | 11,972 | 9,662 | ||||||||
Total inventory | $ | 153,150 | $ | 135,760 |
(in thousands) | |||
Balance at December 31, 2016 | $ | 74,825 | |
Goodwill acquired | 6,301 | ||
Translation adjustments | 1,304 | ||
Balance at June 30, 2017 | $ | 82,430 |
(in thousands) | Estimated Useful Lives | June 30, 2017 | December 31, 2016 | ||||||||
Definite: | |||||||||||
Trade names and trademarks | 25 years | $ | 25,288 | $ | 21,914 | ||||||
Customer and dealer relationships | 14 years | 32,335 | 28,822 | ||||||||
Patents and drawings | 3-12 years | 1,974 | 1,954 | ||||||||
Total at cost | 59,597 | 52,690 | |||||||||
Less accumulated amortization | (9,744 | ) | (8,152 | ) | |||||||
Total net | 49,853 | 44,538 | |||||||||
Indefinite: | |||||||||||
Trade names and trademarks | 5,500 | 5,500 | |||||||||
Total Intangible Assets | $ | 55,353 | $ | 50,038 |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||||||
Current Maturities: | ||||||||||
Other notes payable | $ | 80 | $ | 73 | ||||||
80 | 73 | |||||||||
Long-term debt: | ||||||||||
Bank revolving credit facility | 146,000 | 70,000 | ||||||||
Other notes payable | 17 | 17 | ||||||||
146,017 | 70,017 | |||||||||
Total debt | $ | 146,097 | $ | 70,090 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Dividends declared | $ | 0.10 | $ | 0.09 | $ | 0.20 | $ | 0.18 | |||||||
Dividends paid | $ | 0.10 | $ | 0.09 | $ | 0.20 | $ | 0.18 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands, except per share) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Income | $ | 12,316 | $ | 10,562 | $ | 24,483 | $ | 19,221 | |||||||
Average Common Shares: | |||||||||||||||
Basic (weighted-average outstanding shares) | 11,547 | 11,422 | 11,509 | 11,405 | |||||||||||
Dilutive potential common shares from stock options | 124 | 128 | 137 | 124 | |||||||||||
Diluted (weighted-average outstanding shares) | 11,671 | 11,550 | 11,646 | 11,529 | |||||||||||
Basic earnings per share | $ | 1.07 | $ | 0.93 | $ | 2.13 | $ | 1.69 | |||||||
Diluted earnings per share | $ | 1.05 | $ | 0.92 | $ | 2.10 | $ | 1.67 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Sales | |||||||||||||||
Industrial | $ | 117,342 | $ | 117,146 | $ | 243,158 | $ | 240,424 | |||||||
Agricultural | 54,221 | 51,845 | 105,998 | 100,507 | |||||||||||
European | 41,713 | 42,498 | 79,509 | 81,529 | |||||||||||
Consolidated | $ | 213,276 | $ | 211,489 | $ | 428,665 | $ | 422,460 | |||||||
Income from Operations | |||||||||||||||
Industrial | $ | 10,949 | $ | 9,171 | $ | 23,412 | $ | 20,698 | |||||||
Agricultural | 5,811 | 6,048 | 10,627 | 8,807 | |||||||||||
European | 3,397 | 2,822 | 6,219 | 4,825 | |||||||||||
Consolidated | $ | 20,157 | $ | 18,041 | $ | 40,258 | $ | 34,330 |
(in thousands) | June 30, 2017 | December 31, 2016 | |||||
Goodwill | |||||||
Industrial | $ | 59,643 | $ | 56,447 | |||
Agricultural | 6,786 | 3,489 | |||||
European | 16,001 | 14,889 | |||||
Consolidated | $ | 82,430 | $ | 74,825 | |||
Total Identifiable Assets | |||||||
Industrial | $ | 371,769 | $ | 339,064 | |||
Agricultural | 153,889 | 111,120 | |||||
European | 155,206 | 102,592 | |||||
Consolidated | $ | 680,864 | $ | 552,776 |
Six Months Ended June 30, 2017 | ||||||||||||||
(in thousands) | Hourly Employees’ Pension Plan | Employees’ Retirement Plan | Total | |||||||||||
Service cost | $ | — | $ | 2 | $ | 2 | ||||||||
Interest cost | — | 416 | 416 | |||||||||||
Expected return on plan assets | — | (637 | ) | (637 | ) | |||||||||
Amortization of net loss | — | 216 | 216 | |||||||||||
Net periodic benefit | $ | — | $ | (3 | ) | $ | (3 | ) |
Six Months Ended June 30, 2016 | ||||||||||||||
(in thousands) | Hourly Employees’ Pension Plan | Employees’ Retirement Plan | Total | |||||||||||
Service cost | $ | 4 | $ | 2 | $ | 6 | ||||||||
Interest cost | 200 | 444 | 644 | |||||||||||
Expected return on plan assets | (324 | ) | (598 | ) | (922 | ) | ||||||||
Amortization of net loss | 142 | 220 | 362 | |||||||||||
Net periodic benefit cost | $ | 22 | $ | 68 | $ | 90 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
As a Percent of Net Sales | 2017 | 2016 | 2017 | 2016 | |||||||
Industrial | 55.0 | % | 55.4 | % | 56.7 | % | 56.9 | % | |||
Agricultural | 25.4 | % | 24.5 | % | 24.7 | % | 23.8 | % | |||
European | 19.6 | % | 20.1 | % | 18.6 | % | 19.3 | % | |||
Total sales, net | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
Cost Trends and Profit Margin, as Percentages of Net Sales | 2017 | 2016 | 2017 | 2016 | |||||||
Gross profit | 25.6 | % | 24.7 | % | 25.4 | % | 24.3 | % | |||
Income from operations | 9.5 | % | 8.5 | % | 9.4 | % | 8.1 | % | |||
Income before income taxes | 8.5 | % | 8.0 | % | 8.6 | % | 7.4 | % | |||
Net income | 5.8 | % | 5.0 | % | 5.7 | % | 4.5 | % |
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 |
August 2, 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) |
1. | I have reviewed this quarterly report on Form 10-Q of Alamo Group Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 2, 2017 | /s/ Ronald A. Robinson |
Ronald A. Robinson | ||
President & Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Alamo Group Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 2, 2017 | /s/ Dan E. Malone |
Dan E. Malone | ||
Executive Vice President & Chief Financial Officer | ||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Alamo Group Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 2, 2017 | /s/ Richard J. Wehrle |
Richard J. Wehrle | ||
Vice President & Corporate Controller | ||
(Principal Accounting Officer) |
1. | The Form 10-Q fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
2. | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 2, 2017 | /s/ Ronald A. Robinson |
Ronald A. Robinson | ||
President & Chief Executive Officer |
1. | The Form 10-Q fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
2. | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 2, 2017 | /s/ Dan E. Malone |
Dan E. Malone | ||
Executive Vice President & Chief Financial Officer | ||
(Principal Financial Officer) |
1. | The Form 10-Q fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
2. | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 2, 2017 | /s/ Richard J. Wehrle |
Richard J. Wehrle | ||
Vice President & Corporate Controller | ||
(Principal Accounting Officer) |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2017 |
Jul. 31, 2017 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | ALAMO GROUP INC | |
Entity Central Index Key | 0000897077 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 11,627,794 |
Interim Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Stockholders' Equity: | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares outstanding | 11,562,001 | 11,462,484 |
Treasury stock, shares | 42,600 | 42,600 |
Interim Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Net sales: | ||||
Net sales | $ 213,276 | $ 211,489 | $ 428,665 | $ 422,460 |
Cost of sales | 158,597 | 159,311 | 319,822 | 320,005 |
Gross profit | 54,679 | 52,178 | 108,843 | 102,455 |
Selling, general and administrative expenses | 34,522 | 34,137 | 68,585 | 68,125 |
Income from operations | 20,157 | 18,041 | 40,258 | 34,330 |
Interest expense | (1,500) | (1,523) | (2,827) | (2,929) |
Interest income | 81 | 56 | 157 | 118 |
Other income (expense), net | (665) | 242 | (873) | (380) |
Income before income taxes | 18,073 | 16,816 | 36,715 | 31,139 |
Provision for income taxes | 5,757 | 6,254 | 12,232 | 11,918 |
Net Income | $ 12,316 | $ 10,562 | $ 24,483 | $ 19,221 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 1.07 | $ 0.93 | $ 2.13 | $ 1.69 |
Diluted (in dollars per share) | $ 1.05 | $ 0.92 | $ 2.10 | $ 1.67 |
Average common shares: | ||||
Basic (in shares) | 11,547 | 11,422 | 11,509 | 11,405 |
Diluted (in shares) | 11,671 | 11,550 | 11,646 | 11,529 |
Dividends declared (in dollars per share) | $ 0.1000 | $ 0.09000 | $ 0.2000 | $ 0.18000 |
Industrial | ||||
Net sales: | ||||
Net sales | $ 117,342 | $ 117,146 | $ 243,158 | $ 240,424 |
Income from operations | 10,949 | 9,171 | 23,412 | 20,698 |
Agricultural | ||||
Net sales: | ||||
Net sales | 54,221 | 51,845 | 105,998 | 100,507 |
Income from operations | 5,811 | 6,048 | 10,627 | 8,807 |
European | ||||
Net sales: | ||||
Net sales | 41,713 | 42,498 | 79,509 | 81,529 |
Income from operations | $ 3,397 | $ 2,822 | $ 6,219 | $ 4,825 |
Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 12,316 | $ 10,562 | $ 24,483 | $ 19,221 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 7,098 | (7,140) | 10,144 | (3,581) |
Net gain on pension and other postretirement benefits | 217 | 268 | 434 | 533 |
Other comprehensive income (loss) before income tax expense | 7,315 | (6,872) | 10,578 | (3,048) |
Income tax expense related to items of other comprehensive loss | (80) | (98) | (159) | (197) |
Other comprehensive income (loss) | 7,235 | (6,970) | 10,419 | (3,245) |
Comprehensive Income | $ 19,551 | $ 3,592 | $ 34,902 | $ 15,976 |
Interim Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Statement of Stockholders' Equity [Abstract] | ||||
Dividends paid (in dollars per share) | $ 0.1000 | $ 0.09000 | $ 0.2000 | $ 0.18000 |
Basis of Financial Statement Presentation |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Financial Statement Presentation | 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 assessment in the third 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. 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. 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 yet 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. 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. The Company adopted this ASU on January 1, 2017. 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. |
Accounting Policies |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Accounting Policies | 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. |
Business Combinations |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations On June 6, 2017, the Company completed the acquisition of Santa Izabel Agro Industria Ltda. ("Santa Izabel"). Santa Izabel designs, manufactures and markets a variety of agricultural implements and trailers sold throughout Brazil. The acquisition price was approximately $10 million. Revenues and earnings subsequent to the acquisition are immaterial during the second quarter of 2017. On June 26, 2017, the Company completed the acquisition of Old Dominion Brush Company, Inc. ("Old Dominion"). Old Dominion manufactures and sells replacement brooms for street sweepers and leaf vacuum equipment. The acquisition price was approximately $18 million. There were no revenues or earnings subsequent to the acquisition during the second quarter of 2017. At the closing date, the Company estimated the value of the intangible assets to be $4.5 million, which are primarily comprised of customer relationships and trade names. This resulted in an allocation to goodwill of $3.0 million, which has been assigned to the Company's Industrial reporting segment. The recognized goodwill is primarily attributable to expected synergies between Old Dominion and the Company's sweeper product line. Certain estimated values are not yet finalized and are subject to change, which could be significant. The Company will finalize the amounts once the necessary information is obtained and the analysis is complete. The following are the estimated fair value of the assets acquired and liabilities assumed as of the Acquisition date (in thousands):
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Accounts Receivable |
6 Months Ended |
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Jun. 30, 2017 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable is shown net of sales discounts and the allowance for doubtful accounts. At June 30, 2017 the Company had $16,275,000 in reserves for sales discounts compared to $13,488,000 at December 31, 2016 related to products shipped to our customers under various promotional programs. The increase was primarily due to additional discounts reserved on the Company's agricultural products sold during the first and 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 $2,441,000 at June 30, 2017 and $2,501,000 at December 31, 2016. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories valued at LIFO cost represented 68% and 67% of total inventory at June 30, 2017 and December 31, 2016, respectively. The excess of current cost over LIFO valued inventories was approximately $8,123,000 at June 30, 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:
Inventory obsolescence reserves were $7,074,000 at June 30, 2017 and $7,262,000 at December 31, 2016. |
Rental Equipment |
6 Months Ended |
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Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Rental Equipment | Rental Equipment Rental equipment is shown net of accumulated depreciation of $11,345,000 and $10,430,000 at June 30, 2017 and December 31, 2016, respectively. The Company recognized depreciation expense of $1,396,000 and $1,699,000 for the three months ended June 30, 2017 and June 30, 2016, respectively and $2,804,000 and $3,443,000 for the six months ended June 30, 2017 and June 30, 2016, respectively. |
Fair Value Measurements |
6 Months Ended |
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Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 June 30, 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. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following is the summary of changes to the Company's Goodwill for the six months ended June 30, 2017:
As of June 30, 2017, the Company had $82,430,000 of goodwill, which represents 12% of total assets. The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:
The Company recognized amortization expense of $777,000 for the three months ending June 30, 2017 and 2016, and $1,554,000 and $1,549,000 for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, the Company had $55,353,000 of intangible assets, which represents 8% of total assets. |
Warranty |
6 Months Ended |
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Jun. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
Warranty | Warranty The current liability warranty reserve balance was $5,292,000 at June 30, 2017 and $5,262,000 at December 31, 2016 and is included in Accrued liabilities on the Balance Sheet. The increase was mainly from the Company's U.S. Operations. |
Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The components of long-term debt are as follows:
As of June 30, 2017, $1,607,000 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 $102,393,000 in available borrowings. |
Common Stock and Dividends |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock and Dividends | Common Stock and Dividends Dividends declared and paid on a per share basis were as follows:
On July 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 July 28, 2017, to shareholders of record at the close of business on July 17, 2017. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | 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.
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Segment Reporting |
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Segment Reporting | Segment Reporting At June 30, 2017 the following includes a summary of the unaudited financial information by reporting segment:
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Contingent Matters |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Matters | 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. In January 2009, we received a “no further action” letter from the Iowa Department of Natural Resources, according to which the Iowa property will be subject to certain ongoing environmental covenants that create restrictions regarding the use and future development of the property. |
Retirement Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefit Plans | 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):
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 June 30, 2017 and June 30, 2016, respectively. Pension income for the six months ended June 30, 2017 was $3,000 and pension expense for the six months ended June 30, 2016 was $90,000 . 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 June 30, 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 June 30, 2017 and 2016 was $202,000 and $148,000, respectively and $404,000 and $295,000 for the six months ended June 30, 2017 and 2016, respectively. |
Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
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"). |
New Accounting Pronouncements | 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 assessment in the third 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. 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. 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 yet 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. 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. The Company adopted this ASU on January 1, 2017. 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. |
Business Combinations (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following are the estimated fair value of the assets acquired and liabilities assumed as of the Acquisition date (in thousands):
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Inventories (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | Net inventories consist of the following:
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following is the summary of changes to the Company's Goodwill for the six months ended June 30, 2017:
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Schedule of Definite and Indefinite Lived Intangible Assets | The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:
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Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The components of long-term debt are as follows:
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Common Stock and Dividends (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Dividends Declared and Paid | Dividends declared and paid on a per share basis were as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | 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.
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | At June 30, 2017 the following includes a summary of the unaudited financial information by reporting segment:
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Retirement Benefit Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Cost | The following tables present the components of net periodic benefit cost (gains are denoted with parentheses and losses are not):
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Business Combinations (Narrative) (Details) - USD ($) $ in Thousands |
Jun. 26, 2017 |
Jun. 06, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 82,430 | $ 74,825 | ||
Industrial | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 59,643 | $ 56,447 | ||
Santa Izabel Agro Industria, LTDA | ||||
Business Acquisition [Line Items] | ||||
Acquisition price | $ 10,000 | |||
Old Dominion | ||||
Business Acquisition [Line Items] | ||||
Acquisition price | $ 18,000 | |||
Estimated value of intangible assets | 4,500 | |||
Goodwill | 3,000 | |||
Old Dominion | Operating Segments | Industrial | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 3,000 |
Business Combinations (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Jun. 26, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 82,430 | $ 74,825 | |
Old Dominion | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 1,690 | ||
Inventory | 8,563 | ||
Property, plant & equipment | 959 | ||
Intangible assets | 4,500 | ||
Other liabilities assumed | (1,041) | ||
Net assets assumed | 14,671 | ||
Goodwill | 3,000 | ||
Acquisition Price | $ 17,671 |
Accounts Receivable (Narrative) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Allowance for doubtful accounts | $ 2,441 | $ 2,501 |
Reserves for sales discounts | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Reserves for sales discounts on products shipped under promotional programs | $ 16,275 | $ 13,488 |
Inventories (Narrative) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Inventory Disclosure [Abstract] | ||
Percentage of LIFO inventory | 68.00% | 67.00% |
Excess of current costs over stated LIFO value | $ 8,123 | $ 8,123 |
Inventory obsolescence reserves | $ 7,074 | $ 7,262 |
Inventories (Schedule of Inventory, Current) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Inventory Disclosure [Abstract] | ||
Finished goods | $ 132,238 | $ 116,667 |
Work in process | 8,940 | 9,431 |
Raw materials | 11,972 | 9,662 |
Total inventory | $ 153,150 | $ 135,760 |
Rental Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
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Property, Plant and Equipment [Line Items] | |||||
Accumulated depreciation | $ (118,995) | $ (118,995) | $ (113,412) | ||
Depreciation - PP&E | 5,560 | $ 5,712 | |||
Rental Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Accumulated depreciation | (11,345) | (11,345) | $ (10,430) | ||
Depreciation - PP&E | $ 1,396 | $ 1,699 | $ 2,804 | $ 3,443 |
Goodwill and Intangible Assets (Goodwill) (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at December 31, 2016 | $ 74,825 |
Goodwill acquired | 6,301 |
Translation adjustments | 1,304 |
Balance at June 30, 2017 | $ 82,430 |
Goodwill | Total assets | |
Goodwill [Roll Forward] | |
Percentage of total assets | 12.00% |
Warranty (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Product Warranties Disclosures [Abstract] | ||
Current liability warranty reserve balance | $ 5,292 | $ 5,262 |
Debt (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Current Maturities: | $ 80 | $ 73 |
Long-term debt: | 146,017 | 70,017 |
Total debt | 146,097 | 70,090 |
Other notes payable | ||
Debt Instrument [Line Items] | ||
Current Maturities: | 80 | 73 |
Long-term debt: | 17 | 17 |
Bank revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt: | $ 146,000 | $ 70,000 |
Debt (Narrative) (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Bank revolving credit facility | |
Debt Instrument [Line Items] | |
Available borrowings | $ 102,393 |
Standby Letters of Credit | |
Debt Instrument [Line Items] | |
Amount of capacity | $ 1,607 |
Common Stock and Dividends (Details) - $ / shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 03, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Class of Stock [Line Items] | |||||
Dividends declared (in dollars per share) | $ 0.1000 | $ 0.09000 | $ 0.2000 | $ 0.18000 | |
Dividends paid (in dollars per share) | $ 0.1000 | $ 0.09000 | $ 0.2000 | $ 0.18000 | |
Subsequent Event | |||||
Class of Stock [Line Items] | |||||
Dividends declared (in dollars per share) | $ 0.10 |
Earnings Per Share (Calculation of Basic and Diluted EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 12,316 | $ 10,562 | $ 24,483 | $ 19,221 |
Average Common Shares: | ||||
Basic (weighted-average outstanding shares) | 11,547 | 11,422 | 11,509 | 11,405 |
Dilutive potential common shares from stock options, shares | 124 | 128 | 137 | 124 |
Diluted (weighted-average outstanding shares) | 11,671 | 11,550 | 11,646 | 11,529 |
Basic earnings per share (in dollars per share) | $ 1.07 | $ 0.93 | $ 2.13 | $ 1.69 |
Diluted earnings per share (in dollars per share) | $ 1.05 | $ 0.92 | $ 2.10 | $ 1.67 |
Segment Reporting (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||||
Net Sales | $ 213,276 | $ 211,489 | $ 428,665 | $ 422,460 | |
Income from Operations | 20,157 | 18,041 | 40,258 | 34,330 | |
Goodwill | 82,430 | 82,430 | $ 74,825 | ||
Total Identifiable Assets | 680,864 | 680,864 | 552,776 | ||
Industrial | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 117,342 | 117,146 | 243,158 | 240,424 | |
Income from Operations | 10,949 | 9,171 | 23,412 | 20,698 | |
Goodwill | 59,643 | 59,643 | 56,447 | ||
Total Identifiable Assets | 371,769 | 371,769 | 339,064 | ||
Agricultural | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 54,221 | 51,845 | 105,998 | 100,507 | |
Income from Operations | 5,811 | 6,048 | 10,627 | 8,807 | |
Goodwill | 6,786 | 6,786 | 3,489 | ||
Total Identifiable Assets | 153,889 | 153,889 | 111,120 | ||
European | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 41,713 | 42,498 | 79,509 | 81,529 | |
Income from Operations | 3,397 | $ 2,822 | 6,219 | $ 4,825 | |
Goodwill | 16,001 | 16,001 | 14,889 | ||
Total Identifiable Assets | $ 155,206 | $ 155,206 | $ 102,592 |
Retirement Benefit Plans (Components of Net Periodic Benefit Cost) (Details) - Defined Benefit Plan - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 2 | $ 6 | ||
Interest cost | 416 | 644 | ||
Expected return on plan assets | (637) | (922) | ||
Amortization of net loss | 216 | 362 | ||
Net periodic benefit cost (credit) | $ (2) | $ 45 | (3) | 90 |
Hourly Employees’ Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 4 | ||
Interest cost | 0 | 200 | ||
Expected return on plan assets | 0 | (324) | ||
Amortization of net loss | 0 | 142 | ||
Net periodic benefit cost (credit) | 0 | 22 | ||
Employees’ Retirement Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 2 | 2 | ||
Interest cost | 416 | 444 | ||
Expected return on plan assets | (637) | (598) | ||
Amortization of net loss | 216 | 220 | ||
Net periodic benefit cost (credit) | $ (3) | $ 68 |
Retirement Benefit Plans (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Defined Benefit Plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Pension expense (income) | $ (2) | $ 45 | $ (3) | $ 90 |
Supplemental Employee Retirement Plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Pension expense (income) | $ 202 | $ 148 | $ 404 | $ 295 |
Supplemental Employee Retirement Plan | Minimum | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Retirement benefit percentage | 10.00% | |||
Supplemental Employee Retirement Plan | Maximum | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Retirement benefit percentage | 20.00% |
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