Alamo Group (ALG) investor relations material

Executive summary

• Q3 net sales were $403.1M, down 4.0% YoY; GAAP net income was $2.0M versus $25.4M, while adjusted net income was $24.9M and adjusted diluted EPS was $2.06.

• Adjusted gross margin rose 40 bps to 24.7%; adjusted EBITDA was $52.4M, or 13.0% of sales, versus $55.0M and 13.1% a year earlier.

• Industrial Equipment orders strengthened and Vegetation Management profitability improved, while soft markets and $33.3M of divestiture-related charges weighed on reported earnings.

• 9M net sales increased 3.3% to $1.271B; net income fell to $62.2M from $88.3M.

Financial highlights

• Q3 gross profit was $76.1M versus $101.7M; adjusted gross profit was $99.8M versus $102.2M.

• Q3 operating income was $3.4M versus $37.5M; adjusted operating income was $38.7M, or 9.6% of sales, versus $41.4M, or 9.8%.

• Q3 diluted EPS was $0.17 versus $2.10; 9M diluted EPS was $5.14 versus $7.31.

• 9M adjusted EBITDA increased 2.0% to $175.6M; adjusted diluted EPS was $7.43 versus $7.67.

• 9M operating cash flow was $83.2M versus $102.4M; capital expenditures were $16.1M.

Outlook and guidance

• No FY2027 financial guidance was issued; Vegetation Management markets were soft, with softness expected to continue into 2027.

• Industrial Equipment end-market prospects for 2027 were described as flat to low-single-digit growth, though the outlook remained difficult to call.

• Econ is expected to be EPS-accretive in its first full year; industrial price-cost recovery is expected over Q4 or the following one to two quarters, subject to steel prices.

• Procurement savings are expected to continue in Q4 and accelerate in 2027; FY2026 capital expenditures are expected to be $22M–$27M.