Company Quick10K Filing
Alamo Group
Price117.76 EPS6
Shares12 P/E20
MCap1,391 P/FCF31
Net Debt90 EBIT93
TEV1,481 TEV/EBIT16
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-10-28
10-Q 2020-06-30 Filed 2020-07-30
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-05-01
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-08-01
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-10-31
10-Q 2017-06-30 Filed 2017-08-02
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-03-07
10-Q 2016-09-30 Filed 2016-11-04
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-03-04
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-03-06
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-03-11
10-Q 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-05
10-Q 2013-03-31 Filed 2013-05-03
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-07
10-K 2011-12-31 Filed 2012-03-12
10-Q 2011-09-30 Filed 2011-11-04
10-Q 2011-06-30 Filed 2011-08-05
10-Q 2011-03-31 Filed 2011-05-06
10-K 2010-12-31 Filed 2011-03-15
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-15
8-K 2020-10-28
8-K 2020-07-29
8-K 2020-05-11
8-K 2020-05-06
8-K 2020-04-07
8-K 2020-03-30
8-K 2020-03-26
8-K 2020-03-19
8-K 2020-03-10
8-K 2020-02-27
8-K 2019-12-13
8-K 2019-11-04
8-K 2019-10-30
8-K 2019-10-29
8-K 2019-09-11
8-K 2019-09-11
8-K 2019-07-31
8-K 2019-05-02
8-K 2019-05-02
8-K 2019-05-01
8-K 2019-03-06
8-K 2019-02-28
8-K 2018-10-31
8-K 2018-08-01
8-K 2018-05-03
8-K 2018-05-03
8-K 2018-04-06
8-K 2018-03-12
8-K 2018-03-01

ALG 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Item 4. Controls and Procedures
Part II. Other Information
Item 1. - Legal Proceedings
Item 1A. - Risk Factors
Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. - Defaults Upon Senior Securities
Item 4. - Mine Safety Disclosures
Item 5. - Other Information
Item 6. - Exhibits
EX-31.1 a2020930-ex311.htm
EX-31.2 a2020930-ex312.htm
EX-31.3 a2020930-ex313.htm
EX-32.1 a2020930-ex321.htm
EX-32.2 a2020930-ex322.htm
EX-32.3 a2020930-ex323.htm

Alamo Group Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
0.90.70.50.40.20.02012201420172020
Assets, Equity
0.30.20.20.10.10.02012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

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

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____

Commission file number 0-21220

ALAMO GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware
74-1621248
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)

 1627 East Walnut, Seguin, Texas  78155
(Address of principal executive offices, including zip code)
 
830-379-1480
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value
$.10 per share
ALGNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

At October 23, 2020, 11,879,345 shares of common stock, $.10 par value, of the registrant were outstanding.


1


Alamo Group Inc. and Subsidiaries
 
INDEX
 
                                                                                                                                                                              
PART I.
FINANCIAL INFORMATION
PAGE
Item 1.
Interim Condensed Consolidated Financial Statements  (Unaudited)
September 30, 2020 and December 31, 2019
Three and Nine Months Ended September 30, 2020 and September 30, 2019
Three and Nine Months Ended September 30, 2020 and September 30, 2019
Three and Nine Months Ended September 30, 2020 and September 30, 2019
Nine Months Ended September 30, 2020 and September 30, 2019
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits

2


Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Balance Sheets
(Unaudited) 
 
(in thousands, except share amounts)
September 30, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$93,515 $42,311 
Accounts receivable, net
217,276 237,837 
Inventories, net
243,529 267,674 
Prepaid expenses and other current assets
7,064 10,099 
Income tax receivable
5,771 12,907 
Total current assets
567,155 570,828 
Rental equipment, net
44,774 56,467 
Property, plant and equipment
307,480 302,113 
Less:  Accumulated depreciation
(152,276)(141,388)
Total property, plant and equipment, net
155,204 160,725 
Goodwill
192,976 198,022 
Intangible assets, net
195,966 206,272 
Deferred income taxes
1,675 1,078 
Other non-current assets
15,709 19,371 
Total assets
$1,173,459 $1,212,763 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable
$82,071 $81,986 
Income taxes payable
3,625 2,362 
Accrued liabilities
56,916 59,686 
Current maturities of long-term debt and finance lease obligations
15,068 18,840 
Total current liabilities
157,680 162,874 
Long-term debt and finance lease obligations, net of current maturities
359,021 425,141 
Long-term tax liability
6,778 7,432 
Deferred pension liability
1,274 1,844 
Other long-term liabilities
25,817 19,254 
Deferred income taxes
17,676 26,461 
Stockholders’ equity:
Common stock, $0.10 par value, 20,000,000 shares authorized; 11,803,055 and 11,752,509 outstanding at September 30, 2020 and December 31, 2019, respectively
1,180 1,175 
Additional paid-in-capital
117,339 113,666 
Treasury stock, at cost; 82,600 shares at September 30, 2020 and December 31, 2019, respectively
(4,566)(4,566)
Retained earnings
544,280 500,320 
Accumulated other comprehensive loss
(53,020)(40,838)
Total stockholders’ equity
605,213 569,757 
Total liabilities and stockholders’ equity
$1,173,459 $1,212,763 

See accompanying notes.
3


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

Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except per share amounts)2020201920202019
Net sales:
Industrial
$196,241 $178,180 $608,473 $546,014 
Agricultural
95,518 93,649 266,369 272,935 
Total net sales291,759 271,829 874,842 818,949 
Cost of sales213,123 203,119 649,441 613,798 
Gross profit78,636 68,710 225,401 205,151 
Selling, general and administrative expenses44,069 43,143 136,868 125,660 
Amortization expense3,644 1,112 11,093 3,081 
Income from operations
30,923 24,455 77,440 76,410 
Interest expense(3,461)(1,837)(12,921)(5,222)
Interest income306 359 968 862 
Other income (expense), net(333)242 720 (442)
Income before income taxes
27,435 23,219 66,207 71,608 
Provision for income taxes7,402 5,801 17,657 18,270 
Net Income
$20,033 $17,418 $48,550 $53,338 
Net income per common share:
Basic
$1.70 $1.48 $4.12 $4.55 
Diluted
$1.69 $1.47 $4.10 $4.52 
Average common shares:
Basic
11,788 11,748 11,776 11,724 
Diluted
11,851 11,813 11,840 11,796 
Dividends declared$0.13 $0.12 $0.39 $0.36 
 
 See accompanying notes.
 
4


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

Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2020201920202019
Net income$20,033 $17,418 $48,550 $53,338 
Other comprehensive income (loss):
Foreign currency translation adjustment
8,606 (9,791)(6,244)(7,877)
Net gain on pension and other post-retirement benefits
245 215 737 645 
Unrealized (loss) gain on derivative instruments
(1,247)1,864 (8,106)1,852 
Other comprehensive income (loss) before income tax expense
7,604 (7,712)(13,613)(5,380)
Income tax benefit (expense) related to items of other comprehensive income (loss)210 (46)1,431 (136)
Other comprehensive income (loss)
7,814 (7,758)(12,182)(5,516)
Comprehensive income$27,847 $9,660 $36,368 $47,822 

See accompanying notes.

5



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


For nine months ended September 30, 2020
Common Stock
Additional
Paid-in Capital
Treasury StockRetained Earnings
Accumulated
Other
Comprehensive Loss
Total Stock-
holders’ Equity
(in thousands)
SharesAmount
Balance at December 31, 201911,670 $1,175 $113,666 $(4,566)$500,320 $(40,838)$569,757 
Other comprehensive income
— — — — 15,528 (24,650)(9,122)
Stock-based compensation expense
— — 933 — — — 933 
Stock-based compensation transactions
9 1 368 — — — 369 
Dividends paid ($0.13 per share)
— — — — (1,528)— (1,528)
Balance at March 31, 202011,679 $1,176 $114,967 $(4,566)$514,320 $(65,488)$560,409 
Other comprehensive income— — — — 12,989 4,654 17,643 
Stock-based compensation expense
— — 1,103 — — — 1,103 
Stock-based compensation transactions
25 3 (476)— — — (473)
Dividends paid ($0.13 per share)
— — — — (1,531)— (1,531)
Balance at June 30, 202011,704 $1,179 $115,594 $(4,566)$525,778 $(60,834)$577,151 
Other comprehensive income— — — — 20,033 7,814 27,847 
Stock-based compensation expense
— — 1,079 — — — 1,079 
Stock-based compensation transactions
16 1 666 — — — 667 
Dividends paid ($0.13 per share)
— — — — (1,531)— (1,531)
Balance at September 30, 202011,720 $1,180 $117,339 $(4,566)$544,280 $(53,020)$605,213 



6


For nine months ended September 30, 2019
Common Stock
Additional Paid-in Capital
Treasury StockRetained Earnings
Accumulated
Other
Comprehensive Loss
Total Stock-
holders’ Equity
(in thousands)SharesAmount
Balance at December 31, 201811,620 $1,166 $108,422 $(426)$443,040 $(44,831)$507,371 
Other comprehensive income
— — — — 15,253 890 16,143 
Stock-based compensation expense
— — 627 — — — 627 
Repurchased shares(15)— — (1,490)— — (1,490)
Stock-based compensation transactions
11 1 236 — — — 237 
  Dividends paid ($0.12 per share)
— — — — (1,404)— (1,404)
Balance at March 31, 201911,616 $1,167 $109,285 $(1,916)$456,889 $(43,941)$521,484 
Other comprehensive income— — — — 20,667 1,352 22,019 
Stock-based compensation expense
— — 948 — — — 948 
Repurchased shares(15)— — (1,465)— — (1,465)
Stock-based compensation transactions
64 7 1,243 — — — 1,250 
Dividends paid ($0.12 per share)
— — — — (1,404)— (1,404)
Balance at June 30, 201911,665 $1,174 $111,476 $(3,381)$476,152 $(42,589)$542,832 
Other comprehensive income— — — — 17,418 (7,758)9,660 
Stock-based compensation expense
— — 766 — — — 766 
Repurchased shares(10)— — (1,185)— — (1,185)
Stock-based compensation transactions
10 1 387 — — — 388 
Dividends paid ($0.12 per share)
— — — — (1,409)— (1,409)
Balance at September 30, 201911,665 $1,175 $112,629 $(4,566)$492,161 $(50,347)$551,052 


See accompanying notes.

7


Alamo Group Inc. and Subsidiaries
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
(in thousands)20202019
Operating Activities
Net income$48,550 $53,338 
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts
541 280 
Depreciation - Property, plant and equipment
14,237 10,583 
Depreciation - Rental equipment
7,504 6,770 
Amortization of intangibles
11,093 3,081 
Amortization of debt issuance
500 166 
Stock-based compensation expense
3,115 2,341 
Provision for deferred income tax (benefit)(4,548)(2,549)
Gain on sale of property, plant and equipment
(1,037)(732)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
17,612 (11,263)
Inventories
22,893 (8,413)
Rental equipment
4,189 (18,970)
Prepaid expenses and other assets
5,765 (5,377)
Trade accounts payable and accrued liabilities
(2,422)9,481 
Income taxes payable
8,432 1,738 
Long-term tax payable(654)590 
Other assets and long-term liabilities, net
205 3,146 
Net cash provided by operating activities
135,975 44,210 
Investing Activities
Acquisitions, net of cash acquired (58,531)
Purchase of property, plant and equipment(14,962)(19,488)
Proceeds from sale of property, plant and equipment3,433 1,987 
Net cash used in investing activities(11,529)(76,032)
Financing Activities
Borrowings on bank revolving credit facility98,000 141,000 
Repayments on bank revolving credit facility(153,000)(76,000)
Principal payments on long-term debt and finance leases(15,094)(97)
Proceeds from issuance of long-term debt and finance leases 2 
Dividends paid(4,590)(4,217)
Proceeds from exercise of stock options1,272 2,465 
Treasury stock repurchased (4,140)
Common stock repurchased(710)(590)
Net cash (used in) provided by financing activities(74,122)58,423 
Effect of exchange rate changes on cash and cash equivalents880 (365)
Net change in cash and cash equivalents51,204 26,236 
Cash and cash equivalents at beginning of the year42,311 34,043 
Cash and cash equivalents at end of the period$93,515 $60,279 
Cash paid during the period for:
Interest
$14,149 $5,327 
Income taxes
13,309 18,431 
See accompanying notes.
8


Alamo Group Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements - (Unaudited)
September 30, 2020
 
1.  Basis of Financial Statement Presentation

General

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, 2020.  The balance sheet at December 31, 2019 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, 2019 (the "2019 10-K").

Accounting Pronouncements Adopted on January 1, 2020

In August 2018, the FASB issued Accounting Statement Update (ASU) No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirements on fair value measurements. Among other things, the amendments added disclosures for changes in unrealized gains and losses on Level 3 fair value measurements and required additional disclosures on unobservable inputs associated with Level 3 assets. The guidance became effective for us on January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

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 previous incurred loss impairment methodology with a methodology that reflects expected credit losses. This guidance became effective for us on January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued Accounting Statement Update (ASU) No. 2018-14, “Compensation, Defined Benefit Plans", which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The update removes certain disclosures that are no longer considered cost beneficial and adds disclosure requirements identified as relevant. The guidance will become effective for us on January 1, 2021 with early adoption permitted for any financial statements that have not been issued. The impacts that adoption of the ASU is expected to have on our financial disclosures is being evaluated.

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” to simplify the accounting for income taxes. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The guidance will become effective for us on January 1, 2021 with early adoption permitted for any financial statements that have not been issued. The impacts that adoption of the ASU is expected to have on our financial disclosures is being evaluated.


9


2.  Business Combinations

Morbark, LLC.

On October 24, 2019, the Company completed the acquisition of 100% of the outstanding capital shares of Morbark, LLC. ("Morbark") a former portfolio company of Stellex Capital Management. Morbark manufacturers equipment and aftermarket parts for forestry, tree maintenance, biomass, land management and recycling markets. These products are marketed under the Morbark, Rayco, Denis Cimaf and Boxer Equipment brand names. The total consideration for the purchase was approximately $354.0 million on a debt free basis and subject to certain post-closing adjustments.

The primary reason for the acquisition was to expand and complement our range of vegetation maintenance equipment in an adjacent market along with accelerating Morbark's international growth using the Company's existing presence in Europe, Brazil and Australia.

The acquisition was accounted for in accordance with ASC Topic 805 Business Combinations ("ASC Topic 805"). The total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed, including deferred taxes, based on their estimated fair values as of October 24, 2019. The Company will finalize goodwill and deferred tax amounts related to the completed final partnership return for Morbark.

The valuation of Morbark resulted in goodwill of $98.6 million, all of which has been assigned to the Company's Industrial reporting segment, $93.0 million of goodwill is tax deductible, the remaining balance is not. During the third quarter, the Company adjusted goodwill due to ongoing evaluation of tax balances.

During the nine months ended September 30, 2020, Morbark generated approximately $143.7 million of net sales and $6.0 million of net income. The Company has included the operating results of Morbark in its consolidated financial statements since the date of acquisition.

The following table reflects the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Accounts receivable$13,966 
Inventory72,972 
Prepaid and other assets5,180 
Rental Equipment1,133 
Property, plant and equipment42,969 
Intangible assets149,790 
Deferred tax liability(4,982)
Other liabilities assumed(30,056)
Net assets assumed$250,972 
Goodwill98,604 
Total Acquisition Price net cash$349,576 
Plus: Cash4,735 
Total Consideration$354,311 

Dutch Power Company B.V.

On March 4, 2019, the Company acquired 100% of the issued and outstanding equity interests of Dutch Power Company B.V. ("Dutch Power"). Dutch Power designs, manufactures and sells a variety of landscape and vegetation management machines primarily in Europe. The primary reason for the Dutch Power acquisition was to enhance the Company's platform for growth by increasing both the Company's product portfolio and capabilities in the European market. The acquisition price was approximately $53.0 million.
10



The Company completed its review of the valuation of the purchase price allocation for Dutch Power during the first quarter of 2020. The Company found that no additional changes were necessary and that the values disclosed in the 2019 10-K were final.

3.  Accounts Receivable

Accounts receivable is shown net of sales discounts and the allowance for credit losses.

At September 30, 2020 the Company had $13.2 million in reserves for sales discounts compared to $16.9 million at December 31, 2019 related to products shipped to our customers under various promotional programs.
The decrease was primarily due to the reduced sales within the Company's agricultural division.
 
4.  Inventories
 
Inventories valued at LIFO cost represented 43% and 42% of total inventory at September 30, 2020 and December 31, 2019, respectively. The excess of current cost over LIFO valued inventories was approximately $10.9 million at September 30, 2020 and December 31, 2019. 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 be based, to some extent, on management's estimates at each quarter end. Net inventories consist of the following:
(in thousands)
September 30, 2020December 31, 2019
Finished goods
$207,939 $227,823 
Work in process
23,509 21,918 
Raw materials
12,081 17,933 
Inventories, net$243,529 $267,674 
 
Inventory obsolescence reserves were $10.5 million at September 30, 2020 and $8.2 million at December 31, 2019.

5. Rental Equipment

Rental equipment is shown net of accumulated depreciation of $16.9 million and $14.6 million at September 30, 2020 and December 31, 2019, respectively. The Company recognized depreciation expense of $2.3 million and $2.4 million for the three months ended September 30, 2020 and September 30, 2019, respectively and $7.5 million and $6.8 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

6.  Fair Value Measurements
 
The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate their fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of September 30, 2020 and December 31, 2019, as the floating rates on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.

11


7. Goodwill and Intangible Assets

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2020:
IndustrialAgriculturalConsolidated
(in thousands)
Balance at December 31, 2019$183,307 $14,715 $198,022 
Translation adjustment740 (1,728)(988)
Goodwill adjustment(4,058) (4,058)
Balance at September 30, 2020$179,989 $12,987 $192,976 

The following is a summary of the Company's definite and indefinite-lived intangible assets net of the accumulated amortization:
(in thousands)
Estimated Useful Lives
September 30, 2020December 31, 2019
Definite:
Trade names and trademarks
15-25 years
$67,251 $67,222 
Customer and dealer relationships
8-15 years
122,168 121,508 
Patents and drawings
3-12 years
28,520 28,485 
Favorable leasehold interests
7 years
4,200 4,200 
Total at cost222,139 221,415 
Less accumulated amortization(31,673)(20,643)
Total net190,466 200,772 
Indefinite:
Trade names and trademarks5,500 5,500 
Total Intangible Assets$195,966 $206,272 

The Company recognized amortization expense of $3.6 million and $1.1 million for the three months ending September 30, 2020 and 2019, respectively, and $11.1 million and $3.1 million for the nine months ended September 30, 2020 and 2019, respectively. The increase in amortization is related to the intangible assets acquired in the Morbark acquisition.

As of September 30, 2020, the Company had $196.0 million of intangible assets, which represents 17% of total assets. 

8.  Leases

The Company leases office space and equipment under various operating and finance leases, which generally are expected to be renewed or replaced by other leases. The components of lease cost were as follows:
Components of Lease Cost
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2020201920202019
Finance lease cost:
     Amortization of right-of-use assets$22 $33 $70 $98 
     Interest on lease liabilities1 3 5 8 
Operating lease cost1,216 1,095 3,624 3,207 
Short-term lease cost150 79 608 311 
Variable lease cost120 120 364 347 
Total lease cost$1,509 $1,330 $4,671 $3,971 

12


Rent expense for the three and nine months ending September 30, 2020 and 2019 was immaterial.

Maturities of lease liabilities were as follows:
Future Minimum Lease Payments
September 30, 2020December 31, 2019
(in thousands)Operating LeasesFinance LeasesOperating LeasesFinance Leases
2020$1,092 (a)$46 (a)$4,305 $97 
20213,198 72 2,718 83 
20222,240 34 2,051 45 
20231,557 11 1,459 22 
20241,054 9 941 19 
Thereafter2,657 8 2,587 14 
Total minimum lease payments$11,798 $180 $14,061 $280 
Less imputed interest(926)(7)(1,100)(16)
Total lease liabilities$10,872 $173 $12,961 $264 
(a) Amounts represent remaining three months of payments due for 2019.
Future Lease Commencements

As of September 30, 2020, there are additional operating leases, primarily for buildings, that have not yet commenced in the amount of $4.3 million. These operating leases will commence in fiscal year 2020 with lease terms of 2 to 10 years.

13


Supplemental balance sheet information related to leases was as follows:

Operating Leases
(in thousands)September 30, 2020December 31, 2019
Other non-current assets
$10,770 $12,858 
Accrued liabilities3,309 3,972 
Other long-term liabilities7,563 8,989 
    Total operating lease liabilities$10,872 $12,961 
Finance Leases
(in thousands)September 30, 2020December 31, 2019
Property, plant and equipment, gross$420 $524 
Accumulated Depreciation(283)(265)
    Property, plant and equipment, net$137 $259 
Current maturities of long-term debt and finance lease obligations$68 $90 
Long-term debt and finance lease obligations, net of current maturities105 174 
    Total finance lease liabilities$173 $264