What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-28 · 73 added, 38 removed, 372 unchanged (23% of the section changed)

5 unchanged sentences

The Company has a long-standing strategy of supplementing its internal growth through acquisitions of businesses or product lines that currently complement, command, or have the potential to achieve a meaningful share of their niche markets.

In 2019, the Company completed three acquisitions which included the acquisitions of Dutch Power B.V.

("Dutch Power"), Dixie Chopper ("Dixie Chopper" ) and Morbark, LLC (" Morbark" ), each as described below in further detail.

The Company has approximately 4,270 employees and operates a total of thirty plants in North America, South America, Europe, and Australia.

The Company has approximately 3,990 employees and operates a total of 27 plants in North America, South America, Europe, and Australia.

The Company sells its products primarily through a network of independent dealers and distributors to governmental end-users, related independent contractors, as well as to the agricultural and commercial turf markets.

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range of heavy duty snow removal equipment, including their line of mechanical snow blowers.

RPM's operations are in Drummondville, Quebec and RPM's production operations have recently moved into the Company's nearby Tenco facility.

On March 5, 2019, the Company acquired 100% of the outstanding capital shares of Dutch Power B.V.

In 2020, RPM's operations were consolidated into the Company's nearby Tenco facility and the former RPM facility in Drummondville was sold.

In 2019, the Company acquired 100% of the outstanding capital shares of Dutch Power B.V.

("Dutch Power") in the Netherlands.

Dutch Power designs and manufactures a variety of landscape and vegetation management machines and attachments.

This acquisition complements our existing platform and increases our capabilities in the European market.

On August 6, 2019, the Company acquired substantially all of the assets of the Dixie Chopper ("Dixie Chopper" ) business.

This acquisition expanded our existing platform and increased our capabilities in the European market.

In 2019, the Company acquired substantially all of the assets of the Dixie Chopper ("Dixie Chopper" ) business.

Dixie Chopper manufactures a wide range of commercial and high end residential Zero Turn ("ZT") mowers.

This acquisition provides a new channel and increases the Company's exposure in the outdoor power equipment market.

This acquisition provided a new channel and increased the Company's exposure in the outdoor power equipment market.

Dixie Chopper was relocated into the Company's RhinoAg facility in Gibson City, Illinois.

On October 24, 2019, the Company acquired 100% of the outstanding capital shares of Morbark, LLC (" Morbark" ).

In 2019, the Company acquired 100% of the outstanding capital shares of Morbark, LLC (" Morbark" ) which included its subsidiaries Rayco Manufacturing LLC (" Rayco ") and Denis Cimaf Inc.

(" Denis Cimaf ").

Morbark is a leading manufacturer of equipment and aftermarket parts for forestry, tree care, biomass, land management and recycling markets.

The acquisition expands the Company's product line and complements its range of vegetation maintenance equipment in an adjacent market.

This acquisition expanded the Company's product line and complemented its range of vegetation maintenance equipment in an adjacent market.

Morbark is based in Winn, Michigan with subsidiary locations in Wooster, Ohio and Roxton Falls, Quebec.

At the end of 2020, the Denis Cimaf manufacturing operations based in Roxton Falls were consolidated into the Rayco facility in Wooster, Ohio.

Impact of COVID-19

In March 2020, the World Health Organization declared the novel coronavirus ("COVID-19") outbreak a global pandemic.

COVID-19 continues to spread throughout the U.S.

and the rest of the world and has negatively impacted portions of the global economy, disrupted global supply chains, and created volatility in financial markets.

COVID-19 caused government authorities around the world to implement stringent measures to attempt to help control the spread of the virus, including business shutdowns and curtailments, travel restrictions, prohibitions on group events and gatherings, quarantines, "shelter-in-place" and "stay-at-home" orders, curfews, social distancing, and other measures.

The adverse global economic impact of this pandemic negatively and materially impacted our business, customers, and suppliers and caused many challenges for our business and manufacturing operations during 2020.

The Company continues to experience negative impacts of COVID-19 on our markets and operations as well as ongoing business uncertainty.

The full extent to which COVID-19 will adversely impact the Company’s business depends on future developments, potential new virus strains or variations, and the effectiveness of actions globally to contain or limit the spread of the virus, including the impact of vaccines.

Additional information regarding the impact of COVID-19 on our business can be found under Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K and risks related to COVID-19 can be found under Part I, Item 1A, "Risk Factors," of this Annual Report on Form 10-K.

Sales and Marketing Strategy

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agricultural market, and one of the largest suppliers in the European market for its key niche product offerings.

The Company’s products are sold through the Company’s various marketing organizations and extensive worldwide dealer and distributor networks under the Gradall ® , VacAll ® , Super Products ® , Rivard ® , Alamo Industrial ® , Terrain King ® , Tiger ® , Herder ® , Conver ® , Roberine ® , Votex ® , Precision Makers ® , Schwarze ® , NiteHawk ® , ODB ™ , Henke ® , Tenco ® , Wausau ® , Everest ® , H.P.

The Company’s products are sold through the Company’s various marketing organizations and extensive worldwide dealer and distributor networks under the Gradall ® , VacAll ® , Super Products ® , Rivard ® , Alamo Industrial ® , Terrain King ® , Tiger ® , Herder ® , Conver ® , Roberine ® , Votex ® , Schwarze ® , NiteHawk ® , ODB ™ , Henke ® , Tenco ® , Wausau ® , Everest ® , H.P.

Fairfield ™ , R.P.M.

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VacAll also offers a line of sewer cleaners.

Its products are primarily sold through dealers to industrial

and commercial contractors as well as governmental agencies.

Its products are primarily sold through dealers to industrial and commercial contractors as well as governmental agencies.

A portion of VacAll’s sales includes truck chassis which are not manufactured by the Company.

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Morbark manufactures a broad range of tree chippers, stump grinders, mulchers, brush cutters, flails and debarkers sold under the Morbark , Rayco , Denis Cimaf and Boxer brand names.

It's products are sold to industrial and commercial contractors mainly through a network of independent dealers and distributors and, to a lesser extent, direct sales to end-users.

Its products are sold to industrial and commercial contractors mainly through a network of independent dealers and distributors and, to a lesser extent, direct sales to end-users.

Tenco and RPM both design and manufacture a heavy-duty line of snow removal equipment, including truck-mounted snow plows, snow blowers, dump bodies and spreaders.

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and other countries.

Governmental agencies and contractors that perform services for such agencies purchase primarily hydraulically-powered, tractor-mounted mowers, including boom-mounted mowers, other types of cutters and replacement parts for heavy-duty, intensive use applications, including maintenance around highway, airport, recreational and other public areas.

Governmental agencies and contractors that perform services for such agencies purchase primarily hydraulically-powered, tractor - and off-road chassis mounted mowers, including boom-mounted mowers, other types of cutters and replacement parts for heavy-duty, intensive use applications, including maintenance around highway, airport, recreational and other public areas.

A portion of Alamo Industrial’s sales includes tractors, which are not manufactured by Alamo Industrial.

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A portion of Tiger’s sales includes tractors, which are not manufactured by Tiger.

Dutch Power produces a variety of landscape and vegetation maintenance equipment and attachments under several brand names including Herder , Conver , Roberine , Votex and Precision Makers .

Dutch Power produces a variety of landscape and vegetation maintenance equipment and attachments under several brand names including Herder , Conver , Roberine , and Votex .

Dutch Power primarily sells to contractors who perform infrastructure maintenance for governmental agencies and private landowners.

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McConnel equipment principally includes a broad line of hydraulic, boom-mounted hedge and grass cutters, remote control mowers as well as other tractor attachments and implements such as cultivators, subsoilers and other implements and related replacement parts.

McConnel equipment is sold primarily in the U.K., Ireland and France and in other parts of Europe and, to a lesser extent, throughout the world, through independent dealers and distributors.

McConnel equipment is sold primarily in the U.K., Ireland and

France and in other parts of Europe and, to a lesser extent, throughout the world, through independent dealers and distributors.

McConnel also sells a range of self-propelled sprayers and a variety of multi-drive load-carrying vehicles.

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SMA’s principal customers are French local authorities.

SMA’s product offerings include certain quick-attach boom

mowers manufactured by the Company in the U.K.

SMA’s product offerings include certain quick-attach boom mowers manufactured by the Company in the U.K.

to expand its presence in agricultural dealerships.

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Replacement parts represented approximately 21%, 19% and 19% of the Company’s total sales for the years ended December 31, 2020, 2019 and 2018, respectively.

Proprietary replacement parts generally are more profitable and less cyclical than wholegoods.

Replacement parts generally are more profitable and less cyclical than wholegoods.

Product Development

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As of December 31, 2020, the Company employed 261 people in its various engineering departments, 174 of whom are degreed engineers and the balance of whom are support staff.

Amounts expended on research and development activities were approximately $11,984,000 in 2019, $10,429,000 in 2018 and $9,849,000 in 2017.

Amounts expended on research and development activities were approximately $12.4 million in 2020, $12.0 million in 2019 and $10.4 million in 2018.

As a percentage of sales, research and development was approximately 1.1% in 2020, 1.1% in 2019 and 1.0% in 2018, and is expected to continue at similar levels in 2021.

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Unfilled Orders

As of December 31, 2019, the Company had unfilled customer orders of $261,016,000 compared to $240,260,000 at December 31, 2018.

As of December 31, 2020, the Company had unfilled customer orders of $354.1 million compared to $261.0 million at December 31, 2019.

Management expects that substantially all of the Company’s unfilled orders as of December 31, 2020 will be shipped during fiscal year 2021.

The amount of unfilled orders at a particular time is affected by a number of factors, including manufacturing and shipping schedules which, in most instances, are dependent on the Company’s seasonal sales programs and the requirements of its customers.

It is possible that unanticipated effects of the COVID-19 pandemic, including supply chain disruptions or customer issues could continue to cause delays in delivery or an inability to complete unfilled customer orders.

The Company’s orders are subject to cancellation at any time before shipment;

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During 2020, the raw materials needed by the Company were available from a variety of sources in adequate quantities and at prevailing market prices.

While the Company manufactures many of the parts for its products, a significant percentage of parts, including most drivelines, gearboxes, industrial engines, and hydraulic components, are purchased from outside suppliers which manufacture to the Company’s specifications.

which manufacture to the Company’s specifications.

In addition, the Company, through its subsidiaries, purchases tractors and truck chassis as a number of the Company’s products are mounted and shipped with a tractor or truck chassis.

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While the Company considers its patents, trademarks and trade names to be advantageous to its business, it is not dependent on any single patent, trademark, trade name or group of patents, trademarks, or trade names.

The net book value of patents, trademarks and trade names was $94,049,000 and $26,523,000 as of December 31, 2019 and 2018, respectively.

The increase was primarily related to the valuation on intangible assets from the acquisitions of Dutch Power and Morbark .

The net book value of patents, trademarks and trade names was $89.2 million and $94.0 million as of December 31, 2020 and 2019, respectively.

Environmental and Other Governmental Regulations

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.

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.

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The Company believes it is currently in material compliance with all such applicable laws and regulations.

As of December 31, 2019, the Company employed approximately 4,270 employees.

In North America, the Company has collective bargaining agreements at its Gradall facility which covers 214 employees and will expire on April 11, 2021, and its Tenco facility in Canada covering 101 employees which will expire on December 31, 2020.

in Canada currently has two union agreements, one which covers 4 employees and expires in February 2020 and one covering 20 employees that expired in December 2019, and, upon expiration, merged into the union agreement at Tenco .

Human Capital Resources and Management

We recognize that the success of our Company is dependent upon the talents and dedication of our employees, and we are committed to investing in their success.

We focus on attracting, developing and retaining a team of highly talented and motivated employees.

We conduct regular assessments of our pay and benefit practices to help ensure that staff members are compensated fairly and competitively.

We also devote significant resources to staff training and development, including tuition assistance for career-enhancing academic and professional programs.

The Company provides competitive compensation and benefits.

In addition to salaries, our compensation programs, which vary by country and region, can include annual bonuses, stock-based compensation awards, company-sponsored retirement savings plans with employee matching opportunities (or similar local retirement benefit), healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance programs, and tuition assistance.

Employee health and safety is of paramount importance to us.

We believe it is our responsibility to maintain a safe and healthy workplace in each of our facilities and to make continuous improvements in this area.

We do this by embedding safety into every level of the organization as one of our core values.

We ensure that safety performance is tracked, aggregated, and reviewed on an ongoing basis.

Our corporate technical affairs and safety team collects data on recordable injury rates, serious injury rates, and near misses from each Alamo Group company, and conducts root cause analysis with corrective action to prevent future occurrences .

This data is reviewed monthly by the executive leadership team and shared with the Company's Board of Directors on a

quarterly basis.

Regular safety meetings are also held at our facilities on an ongoing basis.

With the onset of the COVID-19 pandemic in early 2020, we immediately responded by prioritizing the safety and well-being of our employees, and all of our facilities quickly adapted to the COVID-19 environment by implementing various health and safety measures including COVID-19 case tracking and quarantining where and when necessary, daily temperature checks, mandating face coverings (except where hazardous), regular facility sanitization, widely distributing hand-sanitizer, reconfiguration of workstations to allow for appropriate distancing, expanding the use of internal video meetings and installation of related technology, and implementing remote work policies, among other things.

The Company's focus on supervisor and manager development and a culture of promoting a diverse, inclusive, and respectful workplace supports our ability to attract, engage, and retain industry-leading talent to meet our customer’s needs and sustain the Company’s growth.

Formal welder training, apprenticeships, and local partnerships with vocational training programs, junior colleges, and high schools ensure our business units continue to attract and grow their critical manufacturing skills.

The Company’s emphasis on our core competencies, including Leading People and Leading Change , continues to favorably impact our employee retention with below industry average annual turnover rates.

Employee engagement and development is another important focus for the Company.

We believe in empowering our employees to develop new ideas, create new products, processes, or services, or solve significant organizational or industry problems through continuous improvement and innovation.

We continuously offer employees relevant training and learning opportunities for advancement and growth.

We also recognize, value, and respect the individual differences of our employees and believe that a diverse set of backgrounds, experiences, and perspectives is crucial to our ability to continue to innovate, collaborate, and meet the needs of our global workforce and customers.

Accordingly, we are committed to encouraging and fostering an inclusive culture where diversity and individual differences are accepted, respected, and valued, and that employees feel empowered to contribute fully to the Company's ongoing success.

As of December 31, 2020, we employed approximately 3,990 employees.

In North America, the Company has collective bargaining agreements at its Gradall facility which covers 173 employees and will expire on April 11, 2021, and its Tenco facility in Canada which covered 113 employees which expired on December 31, 2020.

The Company is currently in negotiations for a new collective bargaining agreement for the Tenco facility.

in Canada has an agreement covering 4 employees and expires in February 1, 2025.

Everest has a collective bargaining agreement covering 70 employees which will expire on November 30, 2023.

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You will need to have on your computer the Adobe Acrobat Reader ® software to view the documents, which are in PDF format.

In addition, the Company posts on its website its Charters for its Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, as well as its Corporate Governance Policies and its Code of Conduct and Ethics for its directors, officers and employees.

In addition, the Company posts on its website its Charters for its

Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, as well as its Corporate Governance Policies and its Code of Conduct and Ethics for its directors, officers and employees.

You can obtain a written copy of these documents, excluding exhibits, at no cost, by sending your request to the Corporate Secretary, Alamo Group Inc., 1627 E.

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and internationally;

• our ability to hire and retain quality employees;

• our ability to hire and retain quality skilled employees;

• changes in the prices of agricultural commodities, which could affect our customers’ income

In addition, we are subject to risks and uncertainties facing the industry in general, including the following:

• negative impacts on our business and financial results attributable to the ongoing COVID-19 pandemic which may include a softening of customer demand, operational and supply chain disruptions or other negative unanticipated effects;

• changes in business and political conditions and the economy in general in both domestic and international markets;

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• increased competition;

• repercussions from the exit by the U.K.

from the European Union;

• repercussions resulting from the U.K.'s exit from the European Union;

• increases in input costs on items we use in the manufacturing of our products;

• adverse weather conditions such as droughts, floods, snowstorms, etc., which can affect the buying patterns of our customers and end-users;

• increased costs of complying with new regulations, including compliance with the European General Data Protection Regulation (GDPR) and similar data protection laws imposed by the State of California and other U.S.

states, including any related potential fines and penalties;

• the potential effects on the buying habits of our customers due to animal disease outbreaks;

• increased costs of complying with governmental regulations which affect corporations including related fines and penalties (such as the European General Data Protection Regulation (GDPR) and the California Consumer Privacy Act);

• the potential effects on the buying habits of our customers due to animal disease outbreaks and other epidemics;

• adverse market conditions and credit constraints which could affect our customers and end-users, such as cutbacks on dealer stocking levels;

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Name Age Position

Robinson 67 President and Chief Executive Officer

68 President and Chief Executive Officer

Malone 60 Executive Vice President and Chief Financial Officer

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Sullivan 51 Vice President, Internal Audit

* On December 10, 2020, Mr.

Robinson notified the Company's Board of his intention to retire as President and Chief Executive Officer by mid-year 2021 and upon the appointment of his successor

Robinson was appointed President, Chief Executive Officer and a director of the Company on July 7, 1999.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business