ALAMO GROUP INC

Previous wording

We experienced strong demand for industrial equipment during the first six months of 2024 while demand for forestry, tree care, and agricultural mowing products has weakened as was reflected in our sales growth. Gross profit margins declined slightly due to weaker Vegetation Management Division sales that slowed our production cadence and adversely impacted production efficiency.

Current wording

We experienced strong demand for industrial equipment during the first nine months of 2024 while demand for forestry, tree care, and agricultural mowing products has weakened as was reflected in our sales growth. Gross profit margins declined slightly due to weaker Vegetation Management Division sales that slowed our production cadence and adversely impacted production efficiency.

Previous wording

For the first six months of 2024, the Company's net sales decreased by 1%, and net income decreased by 13% compared to the same period in 2023. The decrease in net sales was primarily driven by weakened product demand in the Vegetation Management Division, and the labor strike at Gradall Industries, which had a negative effect on the Industrial Equipment Division. However, these challenges were nearly offset by strong sales growth in the Industrial Equipment Division. The decrease in net income was largely driven by the decrease in Vegetation Management product demand which impacted production efficiency, and the nonrecurring costs associated with the labor strike at Gradall Industries, which negatively impacted the Industrial Equipment Division, and restructuring costs in Vegetation Management.

Current wording

For the first nine months of 2024, the Company's net sales decreased by 2% and net income decreased by 16% compared to the same period in 2023. The decrease in net sales was primarily driven by weakened product demand in the Vegetation Management Division. Additionally, the sale of Herschel Parts on August 16, 2024 had a negative impact to year-on-year sales, albeit immaterial on a year-to-date basis. These challenges were nearly offset by strong sales growth in the Industrial Equipment Division. The decrease in net income was largely driven by the decrease in Vegetation Management product demand, which impacted production efficiency, and the associated separation costs to reduce division capacity. Additionally, nonrecurring costs associated with the labor strike at Gradall Industries negatively impacted the Industrial Equipment Division in the second quarter of 2024.

Previous wording

The Company's Vegetation Management Division experienced a 16% decrease in sales for the first six months of 2024 compared to the first six months of 2023 that was driven by weaker shipments of forestry, tree care and agricultural mowing products. The Division's backlog has declined 48% compared to the same period in 2023, primarily driven by softness in incoming orders, specifically in the forestry and North American agricultural mowing markets. Vegetation Management's backlog has returned to pre-COVID levels. As a result, the Division's income from operations for the six months of 2024 declined 48% versus the same period in 2023.

Current wording

The Company's Vegetation Management Division experienced an 18% decrease in sales for the first nine months of 2024 compared to the first nine months of 2023 that was driven by steep decline in the forestry, tree care and agricultural mowing markets. The Division's backlog has declined 52% compared to the same period in 2023, primarily driven by softness in incoming forestry and agricultural mowing orders. As a result, the Division's income from operations for the first nine months of 2024 declined 51% versus the same period in 2023. The Company is executing cost savings initiatives aimed to adjust to the market conditions and improve operational efficiency.

Previous wording

The Company's Industrial Equipment Division sales increased in the first six months of 2024 by 21% as compared to the six months of 2023. Industrial Equipment sales were strong in all product lines with excavators, vacuum trucks, and safety contributing the most to year on year growth. The Division's income from operations for the first three months of 2024 was up 68% versus the same period in 2023, due to the increased demand combined with a significant improvement in supply chain performance and truck chassis availability.

Current wording

The Company's Industrial Equipment Division sales increased in the first nine months of 2024 by 22% as compared to the first nine months of 2023. Industrial Equipment sales were strong in all product lines with excavators, vacuum trucks, sweepers & safety, and snow removal contributing to year over year growth. The Division's income from operations for the first nine months of 2024 was up 58% versus the same period in 2023, due to the increased demand combined with a significant improvement in supply chain performance and truck chassis availability.

Previous wording

Consolidated income from operations was $90.3 million in the first six months of 2024 compared to $103.4 million in the first six months of 2023, a decrease of 13%. The Company's backlog of $768.9 million at the end of the first six months of 2024 is down 14% versus a backlog of $891.2 million at the end of the first six months of 2023.

Current wording

Consolidated income from operations was $130.4 million in the first nine months of 2024 compared to $153.2 million in the first nine months of 2023, a decrease of 15%. The Company's backlog of $728.8 million at the end of the first nine months of 2024 is down 18% versus a backlog of $890.9 million at the end of the first nine months of 2023.

Previous wording

While the supply chain performance has broadly improved, we continue to experience shortages of certain components such as transmissions and hydraulics which negatively impact performance. In addition, the Company may also be negatively affected by several other factors such as weakness in the overall U.S. or world-wide economy, further increases in interest rates, changes in tariff regulations and the imposition of new tariffs, ongoing trade disputes, a deterioration of our supply chain, changes in U.S. fiscal policy such as changes in the federal tax rate, significant changes in currency exchange rates, negative economic impacts resulting from geopolitical events such as the ongoing war in Ukraine, changes in trade policy, increased levels of government regulations, weakness in the agricultural sector, acquisition integration issues, budget constraints or revenue shortfalls in governmental entities, and other risks and uncertainties as described in the “Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K").

Current wording

While the supply chain performance has broadly improved, we continue to experience shortages of certain components that could impact performance. In addition, the Company may also be negatively affected by several other factors such as weakness in the overall U.S. or world-wide economy, further increases in interest rates, savings related to cost saving actions being diminished by declining revenue, changes in tariff regulations and the imposition of new tariffs, ongoing trade disputes, a deterioration of our supply chain, changes in U.S. fiscal policy such as changes in the federal tax rate, significant changes in currency exchange rates, negative economic impacts resulting from geopolitical events such as the ongoing wars in Ukraine and the Middle East, changes in trade policy, increased levels of government regulations, weakness in the agricultural sector, acquisition integration issues, budget constraints or revenue shortfalls in governmental entities, and other risks and uncertainties as described in the “Risk Factors" section in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K").

Previous wording

Net sales for the second quarter of 2024 were $416.3 million, a decrease of $24.4 million or 6% compared to $440.7 million for the second quarter of 2023. Net sales during the second quarter of 2024 declined due to weaker product demand in forestry, tree care, and agricultural mowing partially offset by continued strong demand for Industrial Equipment. Negatively affecting the second quarter of 2024, employees at Gradall Industries went on strike for 5 weeks during the quarter.

Current wording

Net sales for the third quarter of 2024 were $401.3 million, a decrease of $18.3 million or 4% compared to $419.6 million for the third quarter of 2023. Net sales during the third quarter of 2024 declined due to weaker market demand in forestry, tree care, and agricultural mowing partially offset by continued strong demand for Industrial Equipment.

Previous wording

Net Vegetation Management sales decreased by $49.8 million or 19% to $211.5 million for the second quarter of 2024 compared to $261.3 million during the same period in 2023. The decrease was due to sustained weakness in forestry, tree care, and agricultural mowing products.

Current wording

Net Vegetation Management sales decreased by $56.8 million or 23% to $190.1 million for the third quarter of 2024 compared to $246.9 million during the same period in 2023. The decrease was due to sustained weakness in forestry, tree care, and agricultural mowing markets. The sale of Herschel Parts on August 16, 2024 was immaterial to the year over year sales decrease.

Previous wording

Net Industrial Equipment sales were $204.8 million in the second quarter of 2024 compared to $179.3 million for the same period in 2023, an increase of $25.5 million or 14%. The increase was due to solid results in all product lines, particularly safety, vacuum trucks, and snow contributing the most to year on year growth.

Current wording

Net Industrial Equipment sales were $211.2 million in the third quarter of 2024 compared to $172.7 million for the same period in 2023, an increase of $38.5 million or 22%. The increase was due to solid results in all product lines, particularly sweepers & safety, vacuum trucks, and snow contributing the most to year over year growth.

Previous wording

Gross profit for the second quarter of 2024 was $108.2 million (26% of net sales) compared to $118.1 million (27% of net sales) during the same period in 2023, a decrease of $9.9 million. The decrease in gross profit during the second quarter of 2024 compared to the second quarter of 2023 was primarily attributable to the decline in Vegetation Management product demand. Profitability in the quarter also decreased due to production inefficiencies, under-absorption, and the impact of restructuring costs to reduce capacity in Vegetation Management. Industrial profitability, while very solid, was impacted by the five-week strike at the Gradall operations in Ohio.

Current wording

Gross profit for the third quarter of 2024 was $100.9 million (25% of net sales) compared to $114.1 million (27% of net sales) during the same period in 2023, a decrease of $13.2 million. The decrease in gross profit during the third quarter of 2024 compared to the third quarter of 2023 was primarily attributable to the decline in Vegetation Management market demand. Profitability in the quarter also decreased due to production inefficiencies, under- absorption, and the impact of continued separation costs to reduce capacity in Vegetation Management. Cost savings actions taken in the second quarter 2024 were offset by continued revenue decline.

Previous wording

Selling, general and administrative expenses (“SG&A”) were $60.8 million (15% of net sales) during the second quarter of 2024 compared to $59.9 million (14% of net sales) during the same period of 2023, an increase of $0.9 million. The increase in SG&A expense in the second quarter of 2024 compared to the second quarter of 2023 was attributable to the Royal Truck acquisition. Labor cost inflation has been offset by cost savings actions. Amortization expense in the second quarter of 2024 was $4.1 million compared to $3.8 million in the same period in 2023.

Current wording

Selling, general and administrative expenses (“SG&A”) were $56.7 million (14% of net sales) during the third quarter of 2024 compared to $60.6 million (14% of net sales) during the same period of 2023, a decrease of $3.9 million. The decrease in SG&A expense in the third quarter of 2024 compared to the third quarter of 2023 is attributable to labor cost savings actions taken in Vegetation Management partially offset by additional cost from the Royal Truck acquisition. Labor cost inflation has been more than offset by cost savings actions. Amortization expense in the third quarter of 2024 was $4.1 million compared to $3.8 million in the same period in 2023, an increase due to the Royal Truck acquisition.

Previous wording

Interest expense was $6.1 million for the second quarter of 2024 compared to $6.8 million during the same period in 2023. The decrease in interest expense in the second quarter of 2024 was mainly due to debt reduction and slightly lower interest rates compared to the second quarter of 2023.

Current wording

Interest expense was $4.9 million for the third quarter of 2024 compared to $6.7 million during the same period in 2023. The decrease in interest expense in the third quarter of 2024 was mainly due to debt reduction and slightly lower interest rates compared to the third quarter of 2023.

Previous wording

Other income (expense), net was $0.1 million of expense for the second quarter of 2024 compared to $1.0 million of expense during the same period in 2023. The improvement was primarily a result of more favorable currency exchange rates in the second quarter of 2024.

Current wording

Other income (expense), net was less than $0.1 million of expense for the third quarter of 2024 compared to $0.1 million of income during the same period in 2023. The decline was primarily a result of unfavorable currency exchange rates in the third quarter of 2024 nearly offset by the gain on sale of Herschel Parts.

Previous wording

Provision for income taxes was $9.3 million (25% of income before income tax) in the second quarter of 2024 compared to $10.5 million (22% of income before income tax) during the same period in 2023. The increase in tax rate for the second quarter of 2024 was largely a result of jurisdictional mix and a nonrecurring tax refund received in the same period in 2023.

Current wording

Provision for income taxes was $8.3 million (23% of income before income tax) in the third quarter of 2024 compared to $8.6 million (20% of income before income tax) during the same period in 2023. The increase in tax rate for the third quarter of 2024 was largely a result of a return to provision adjustment driven by higher research and development and foreign tax credits recognized in the same period in 2023.

Previous wording

The Company’s net income after tax was $28.3 million or $2.35 per share on a diluted basis for the second quarter of 2024 compared to $36.4 million or $3.03 per share on a diluted basis for the second quarter of 2023. The decrease of $8.1 million resulted from the factors described above.

Current wording

The Company’s net income after tax was $27.4 million or $2.28 per share on a diluted basis for the third quarter of 2024 compared to $34.9 million or $2.91 per share on a diluted basis for the third quarter of 2023. The decrease of $7.5 million resulted from the factors described above.

Previous wording

Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023

Current wording

Nine Months Ended September 30, 2024 vs. Nine Months Ended September 30, 2023

Previous wording

Net sales for the first six months of 2024 were $841.9 million, a decrease of $10.6 million or 1% compared to $852.5 million for the first six months of 2023. The decrease in net sales during the first six months of 2024 is a result of weaker product demand in forestry, tree care, and agricultural mowing partially offset by continued strong demand for Industrial Equipment.

Current wording

Net sales for the first nine months of 2024 were $1,243.2 million, a decrease of $28.9 million or 2% compared to $1,272.1 million for the first nine months of 2023. The decrease in net sales during the first nine months of 2024 is a result of steep decline in market demand in forestry, tree care, and agricultural mowing partially offset by continued strong demand for Industrial Equipment.

Previous wording

Net Vegetation Management sales decreased during the first six months by $82.5 million or 16% to $435.3 million for 2024 compared to $517.8 million during the same period in 2023. The decrease was due to weaker demand for forestry, tree care, and agricultural mowing products.

Current wording

Net Vegetation Management sales decreased during the first nine months by $139.3 million or 18% to $625.4 million for 2024 compared to $764.7 million during the same period in 2023. The decrease was due to weaker demand for forestry, tree care, and agricultural mowing markets. The sale of Herschel Parts on August 16, 2024 was immaterial to the year over year sales decrease.

Previous wording

Net Industrial Equipment sales were $406.6 million during the first six months of 2024 compared to $334.7 million for the same period in 2023, an increase of $71.9 million or 21%. The increase in sales for the first six months of 2024 compared to the first six months of 2023 was mainly due to the continued strong demand across the division in excavators and vacuum trucks, sweepers & safety, and snow removal.

Current wording

Net Industrial Equipment sales were $617.8 million during the first nine months of 2024 compared to $507.4 million for the same period in 2023, an increase of $110.4 million or 22%. The increase in sales for the first nine months of 2024 compared to the first nine months of 2023 was mainly due to the continued strong demand across the division in excavators, vacuum trucks, sweepers & safety, and snow removal.

Previous wording

Gross profit for the first six months of 2024 was $219.8 million (26% of net sales) compared to $230.6 million (27% of net sales) during the same period in 2023, a decrease of $10.8 million. The decrease in gross profit was mainly attributable to lower sales volume and production inefficiencies in Vegetation Management. Profitability in the first six months of 2024 also decreased due to the five-week strike at Gradall in Ohio, which negatively affected the Industrial Equipment Division, and restructuring costs incurred primarily in the Vegetation Management Division.

Current wording

Gross profit for the first nine months of 2024 was $320.7 million (26% of net sales) compared to $344.7 million (27% of net sales) during the same period in 2023, a decrease of $24.0 million. The decrease in gross profit was mainly attributable to lower sales volume and production inefficiencies in Vegetation Management. Profitability in the first nine months of 2024 also decreased due to the five-week strike at Gradall in Ohio, which negatively affected the Industrial Equipment Division, and separation costs incurred in the Vegetation Management Division. Cost savings actions taken in the second quarter 2024 were offset by continued revenue decline.

Previous wording

SG&A expenses were $121.4 million (14% of net sales) during the first six months of 2024 compared to $119.5 million (14% of net sales) during the same period of 2023, an increase of $1.9 million. The increase in SG&A expense in the first six months of 2024 compared to the first six months of 2023 was attributable to attributable to the Royal Truck acquisition. Labor cost inflation has been offset by cost savings actions. Amortization expense in the first six months of 2024 was $8.1 million compared to $7.6 million in the same period in 2023, an increase of $0.5 million.

Current wording

SG&A expenses were $178.2 million (14% of net sales) during the first nine months of 2024 compared to $180.1 million (14% of net sales) during the same period of 2023, a decrease of $1.9 million. The decrease in SG&A expense in the first nine months of 2024 compared to the first nine months of 2023 is attributable to labor cost savings actions taken in Vegetation Management partially offset by additional cost from the Royal Truck acquisition. Labor cost inflation has been offset by cost savings actions. Amortization expense in the first nine months of 2024 was $12.2 million compared to $11.5 million in the same period in 2023, an increase of $0.7 million.

Previous wording

Interest expense was $12.2 million for the first six months of 2024 compared to $12.8 million during the same period in 2023, a decrease of $0.6 million. The decrease in interest expense in the first six months of 2024 was mainly due to debt reduction and slightly lower interest rates compared to the first six months of 2023.

Current wording

Interest expense was $17.1 million for the first nine months of 2024 compared to $19.5 million during the same period in 2023, a decrease of $2.4 million. The decrease in interest expense in the first nine months of 2024 was mainly due to debt reduction.

Previous wording

Other income (expense), net was less than $0.1 million of income during the first six months of 2024 compared to less than $0.1 million of expense in the first six months of 2023.

Current wording

Other income (expense), net was less than $0.1 million of income during the first nine months of 2024 compared to less than $0.1 million of income in the first nine months of 2023.

Previous wording

Provision for income taxes was $19.0 million (24% of income before income taxes) in the first six months of 2024 compared to $21.6 million (24% of income before income taxes) during the same period in 2023. The tax rates were minimally different in the first six months of 2024 when compared to the first six months in 2023. The decrease in provision was primarily due to lower income before taxes.

Current wording

Provision for income taxes was $27.3 million (24% of income before income taxes) in the first nine months of 2024 compared to $30.2 million (22% of income before income taxes) during the same period in 2023. The increase in tax rate for 2024 was largely a result of a return to provision adjustment driven by higher research and development and foreign tax credits recognized in 2023.

Previous wording

The Company's net income after tax was $60.4 million or $5.02 per share on a diluted basis for the first six months of 2024 compared to $69.7 million or $5.82 per share on a diluted basis for the first six months of 2023. The decrease of $9.3 million resulted from the factors described above.

Current wording

The Company's net income after tax was $87.8 million or $7.30 per share on a diluted basis for the first nine months of 2024 compared to $104.6 million or $8.73 per share on a diluted basis for the first nine months of 2023. The decrease of $16.8 million resulted from the factors described above.

Previous wording

As of June 30, 2024, the Company had working capital of $699.9 million which represents an increase of $109.9 million from working capital of $590.0 million at December 31, 2023. The increase in working capital was primarily a result of cash and cash equivalents.

Current wording

As of September 30, 2024, the Company had working capital of $667.6 million which represents an increase of $77.6 million from working capital of $590.0 million at December 31, 2023. The increase in working capital was primarily a result of cash and cash equivalents.

Previous wording

Capital expenditures were $11.1 million for the first six months of 2024, compared to $18.2 million during the first six months of 2023. The Company expects a capital expenditure level of approximately $30.0 million to $35.0 million for the full year of 2024. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below.

Current wording

Capital expenditures were $19.0 million for the first nine months of 2024, compared to $27.1 million during the first nine months of 2023. The Company expects a capital expenditure level of approximately $30.0 million to $35.0 million for the full year of 2024. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below.

Previous wording

Net cash used for investing activities was $10.3 million during the first six months of 2024 compared to $15.3 million during the first six months of 2023.

Current wording

Net cash used for investing activities was $16.1 million during the first nine months of 2024 compared to $24.0 million during the first nine months of 2023.

Previous wording

Net cash provided by financing activities was $47.2 million and $40.5 million during the six month periods ended June 30, 2024 and June 30, 2023, respectively. Higher net cash provided by financing activities for the first six months of 2024 relates to increased net borrowings on the Company's credit facility.

Current wording

Net cash used in financing activities was $25.4 million and net cash provided by financing activities was $14.3 million during the nine month periods ended September 30, 2024 and September 30, 2023, respectively. Lower net cash provided by financing activities for the first nine months of 2024 relates to increased repayments on the Company's credit facility.

Previous wording

The Company had $112.2 million in cash and cash equivalents held by its foreign subsidiaries as of June 30, 2024. The majority of these funds are at our European and Canadian facilities. The Company will continue to repatriate European and Canadian cash and cash equivalents in excess of amounts needed to fund operating and investing activities in these locations, and will monitor exchange rates to determine the appropriate timing of such repatriation given the current relative value of the U.S. dollar. Repatriated funds will initially be used to reduce funded debt levels under the Company's current credit facility and subsequently used to fund working capital, capital investments and acquisitions company-wide.

Current wording

The Company had $130.8 million in cash and cash equivalents held by its foreign subsidiaries as of September 30, 2024. The majority of these funds are at our European and Canadian facilities. The Company will continue to repatriate European and Canadian cash and cash equivalents in excess of amounts needed to fund operating and investing activities in these locations, and will monitor exchange rates to determine the appropriate timing of such repatriation given the current relative value of the U.S. dollar. Repatriated funds will initially be used to reduce funded debt levels under the Company's current credit facility and subsequently used to fund working capital, capital investments and acquisitions company-wide.

Previous wording

On October 28, 2022, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered into a Third Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with Bank of America, N.A., as Administrative Agent. The 2022 Credit Agreement provides Borrower with the ability to request loans and other financial obligations in an aggregate amount of up to $655.0 million. Under the 2022 Credit Agreement, the Company has borrowed $255.0 million pursuant to a Term Facility, while up to $400.0 million is available to the Company pursuant to a Revolver Facility which terminates in 2027. The Term Facility requires the Company to make equal quarterly principal payments of $3.75 million over the term of the loan, with the final payment of any outstanding principal amount, plus interest, due at the end of the five year term. Borrowings under the 2022 Credit Agreement bear interest, at the Company’s option, at a Term Secured Overnight Financing Rate (“SOFR”) or a Base Rate (each as defined in the 2022 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.50% for Term SOFR borrowings and from .25% to 1.50% for Base Rate borrowings with the margin percentage based upon the Company's consolidated leverage ratio. The Company must also pay a commitment fee to the lenders ranging between 0.15% to 0.30% on any unused portion of the $400.0 million Revolver Facility. The 2022 Credit Agreement requires the Company to maintain two financial covenants, namely, a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on the sale of properties and limitations on liens and capital expenditures. The Agreement also contains other customary covenants, representations and events of defaults. The expiration date of the 2022 Credit Agreement, including the Term Facility and the Revolver Facility, is October 28, 2027. As of June 30, 2024, $294.5 million was outstanding under the 2022 Credit Agreement, $228.8 million on the Term Facility and $65.8 million on the Revolver Facility. On June 30, 2024, $2.6 million 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 $331.7 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of June 30, 2024.

Current wording

On October 28, 2022, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered into a Third Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with Bank of America, N.A., as Administrative Agent. The 2022 Credit Agreement provides Borrower with the ability to request loans and other financial obligations in an aggregate amount of up to $655.0 million. Under the 2022 Credit Agreement, the Company has borrowed $255.0 million pursuant to a Term Facility, while up to $400.0 million is available to the Company pursuant to a Revolver Facility which terminates in 2027. The Term Facility requires the Company to make equal quarterly principal payments of $3.75 million over the term of the loan, with the final payment of any outstanding principal amount, plus interest, due at the end of the five year term. Borrowings under the 2022 Credit Agreement bear interest, at the Company’s option, at a Term Secured Overnight Financing Rate (“SOFR”) or a Base Rate (each as defined in the 2022 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.50% for Term SOFR borrowings and from .25% to 1.50% for Base Rate borrowings with the margin percentage based upon the Company's consolidated leverage ratio. The Company must also pay a commitment fee to the lenders ranging between 0.15% to 0.30% on any unused portion of the $400.0 million Revolver Facility. The 2022 Credit Agreement requires the Company to maintain two financial covenants, namely, a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on the sale of properties and limitations on liens and capital expenditures. The Agreement also contains other customary covenants, representations and events of defaults. The expiration date of the 2022 Credit Agreement, including the Term Facility and the Revolver Facility, is October 28, 2027. As of September 30, 2024, $225.0 million was outstanding under the 2022 Credit Agreement, $225.0 million on the Term Facility and zero on the Revolver Facility. On September 30, 2024, $2.6 million 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 $397.4 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of September 30, 2024.

Previous wording

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity. The total foreign currency translation adjustment for the current quarter decreased stockholders’ equity by $5.5 million.

Current wording

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity. The total foreign currency translation adjustment for the current quarter increased stockholders’ equity by $13.8 million.

Previous wording

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in Europe and Canada, as a result of the sales of its products in international markets. Forward currency contracts are used to hedge against the earnings effects of such fluctuations. The result of a uniform 10% strengthening or 10% decrease in the value of the dollar relative to the currencies in which the Company’s sales are denominated would result in a change in gross profit of $7.0 million for the six month period ended June 30, 2024. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, which include a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

Current wording

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in Europe and Canada, as a result of the sales of its products in international markets. Forward currency contracts are used to hedge against the earnings effects of such fluctuations. The result of a uniform 10% strengthening or 10% decrease in the value of the dollar relative to the currencies in which the Company’s sales are denominated would result in a change in gross profit of $10.0 million for the nine month period ended September 30, 2024. A stronger U.S. dollar would unfavorably impact gross profit while a weaker U.S. dollar would provide a favorable impact to gross profit. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, which include a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

Previous wording

The Company’s long-term debt bears interest at variable rates. Accordingly, the Company’s net income is affected by changes in interest rates. Assuming the current level of borrowings at variable rates and a two percentage point change for the second quarter 2024 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.5 million. In the event of an adverse change in interest rates, management could take actions to mitigate its exposure. However, due to the uncertainty of the actions that would be taken and their possible effects this analysis assumes no such actions. Further this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.

Current wording

The Company’s long-term debt bears interest at variable rates. Accordingly, the Company’s net income is affected by changes in interest rates. Assuming the current level of borrowings at variable rates and a two percentage point change for the third quarter 2024 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.1 million. To protect the Company's long-term debt from fluctuations in interest rates, the Company may enter into interest rate swaps to mitigate exposure. However, this analysis assumes no such actions. Further this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.