Net sales in the fourth quarter were $111.9 million, an increase of 35% from the $82.6 million reported for the same period of 2005. The strong increase in sales was mainly the result of acquisitions in 2006, including Gradall, acquired on February 3, 2006; VacAll, acquired on May 24, 2006; and, Nite-Hawk, acquired on July 14, 2006. Together these acquisitions accounted for 97% of the fourth quarter sales increase. The remainder of the growth came from Alamo’s Industrial and European divisions, which offset a decrease in sales in the North American Agricultural Division.

Net income for the quarter was $1.1 million, or $0.12 per diluted share, a $1.0 million increase compared with $0.1 million, or $0.01 per diluted share in the fourth quarter of 2005. In 2006 Alamo Group adopted FAS123R, the new regulation related to expensing of stock options, which reduced Alamo’s earnings by just under $0.01 per share in the fourth quarter. The fourth quarter of 2005 included a $0.09 per diluted share charge for restructuring and other costs related to the planned closure of the Company’s Holton, Kansas manufacturing plant. Excluding acquisitions and the stock option expensing, 2006 fourth quarter net income would have been
$1.1 million, or $0.11 per diluted share, a $1.0 million increase compared to 2005.

For the full year of 2006, net sales grew 24% from $368.1 million in 2005 to $456.5 million in 2006. Excluding acquisitions, 2006 sales would have been $362.1 million, a decrease of 2% compared to 2005. Net income for the year was $11.5 million, or $1.16 per diluted share which was 2% above 2005 net income of $11.3 million, or $1.14 per diluted share. In 2006 the Company had expenses relating to stock option accounting of approximately $0.04 per share for which there was no comparable charge in the previous year. Results for 2005 included the restructuring charge described above. Excluding acquisitions and the stock option expensing, 2006 net income would have been $11.2 million, or $1.13 per diluted share, a decrease of less than 1% compared to 2005.

North American Industrial Division sales were $60.2 million in the fourth quarter of 2006, an increase of 99% compared to sales of $30.3 million in the fourth quarter of 2005. The majority of the increase was related to the Company’s acquisitions in 2006, all of which are included in the North American Industrial Division. Excluding the acquisitions, sales in this division were $31.8 million, an increase of 5% compared to 2005 and reflect general strengthening in demand for the Company’s products in this sector. For the full year, sales were $232.5 million, an increase of 82% compared to the Division’s sales of $128.1 million in 2005. Without the acquisitions, sales for the year were $138.0 million, an increase of 8% over 2005.

North American Agricultural Division sales were $23.4 million in the fourth quarter of 2006, a decrease of 16% compared to the $27.7 million in the comparable period of 2005. The decrease reflects continued soft market conditions across this sector. The Division’s results have also been hampered by consolidation efforts undertaken earlier in the year which impacted both sales and earnings. For the full year North American Agricultural Division sales were $106.1 million, compared to $125.9 million in 2005, a decrease of 16%.

Alamo’s European Division sales in the fourth quarter of 2006 were $28.3 million, a 15% increase compared to sales of $24.5 million in the same period of 2005. This increase was achieved despite soft market conditions in our principle European markets as a result of the Company’s successful efforts to increase export sales to non-traditional markets. Sales for the year were $117.9 million an increase of 3% compared to the Division’s sales of $114.2 million in 2005.

"2006 was a busy and exciting year for our Company," said Ron Robinson, Alamo Group’s President and Chief Executive Officer. "With three acquisitions and two manufacturing consolidations we took on quite a few challenges. This helped drive our 24% growth in sales for the year, but also affected our earnings which while up, were below our expectations."

"Among these initiatives was the merger of our two main ag manufacturing plants into one and startup issues and operating inefficiencies affected us throughout the year in addition to market conditions in this sector which were unfavorable. In February we made our largest acquisition ever with the purchase of the Gradall excavator line. As part of this acquisition we had to undertake a major systems conversion to get their operations on to our platform. We also began an upgrade of their manufacturing facility which includes improved plant layout and new capital equipment purchases. This is an ongoing process. Then, in May, we bought the VacAll vacuum truck line of Clean Earth out of bankruptcy and soon after began relocating their production from rented facilities in Alabama to the Gradall plant in Ohio. Issues with inventory, production, and the learning curve of taking on a new product line resulted in several challenging months. And, in July we acquired the Nite-Hawk sweeper company."

"While the timing of all these acquisitions and consolidation efforts may have been less than optimal, we feel these are excellent opportunities for Alamo Group and our future performance will confirm this. Each of our new business lines - Gradall, VacAll and Nite-Hawk are quality products that compliment and extend our existing range and are already strengthening our distribution network and customer relations. Additionally, the manufacturing consolidations were necessary to give us the ability to perform efficiently as a larger, more streamlined company rather than a collection of smaller ones. As a result of these and other similar moves taken previously, we have not only doubled the size of Alamo Group in the last five years, we have on average doubled the sales per plant as well."

"With most of these issues largely behind us, we are dedicated to ensuring these initiatives deliver the tangible bottom line results in 2007 that they should. To this end, we expanded our corporate management team with the addition of Dan Malone in January as our Executive Vice President and Chief Financial Officer. Dan brings a strong background of general financial skills, as well as solid experience in manufacturing cost control."

"With the exception of our North American Agricultural Division where weak market conditions are forecasted to continue, we feel the prospects for sales are promising. We continue to see solid demand from our North American Industrial Division customers and increased export opportunities for our European Division should facilitate growth in this market. As we start to benefit from the various initiatives that we began in 2006, our prospects for growth in earnings are encouraging as well. This is an exciting time to be at Alamo Group and we look forward to the coming year."Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for right-of-way maintenance and agriculture. Our products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snowblowers, pothole patchers, excavators, vacuum trucks, agricultural implements and related after market parts and services. The Company, founded in 1969, has over 2,215 employees and operates fifteen plants in North America and Europe as of February 2007. The corporate offices of Alamo Group Inc. are located in Seguin, Texas and the headquarters for the Company’s European operations are located in Salford Priors, England.

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