Alamo Group (ALG) Q3 2025 earnings summary

Executive summary

• Net sales in Q3 2025 rose 4.7% year-over-year to $420 million, driven by strong Industrial Equipment Division performance, while Vegetation Management Division continued to face weakness.

• Adjusted net income was $28.2 million, slightly down from $28.6 million in Q3 2024; net income for Q3 2025 was $25.4 million, down from $27.4 million.

• Adjusted EBITDA was $55 million (13% of net sales), flat year-over-year.

• Operating cash flow for the first nine months reached $102.4 million, or 116% of net income.

• Backlog at September 30, 2025, was $618.3 million, down 15% from the prior year, but new orders increased 6% year-over-year.

Financial highlights

• Gross profit for Q3 2025 was $101.7 million, up slightly year-over-year; gross margin declined to 24.2% due to production inefficiencies and tariffs.

• SG&A expense was $59.9 million in Q3, up 5.6%, including $3.3 million in CEO transition, acquisition, and integration costs.

• Interest expense fell to $3.9 million in Q3 and $10.8 million for the nine months, reflecting debt reduction.

• Adjusted EPS was $2.34, down from $2.38 in Q3 2024; fully diluted EPS was $2.10, down $0.18 year-over-year.

• Nine-month net sales were $1,230.1 million, with net income of $88.3 million ($7.31 diluted EPS).

Outlook and guidance

• Q4 sales expected to decline 4%-5% sequentially due to seasonality, with gross profit drop-through of about 30%.

• No immediate improvement expected in Vegetation Management margins in Q4; normalization anticipated over the next 1-2 quarters.

• Industrial Equipment Division growth expected to moderate in 2026; tariffs expected to impact margins by less than 1% of sales in 2026.

• Capital expenditures for 2025 are expected to be $30–35 million, funded by operating cash flows or credit facility.

• Long-term targets: 10%+ sales growth (including M&A), 15% adjusted operating margin, 18%-20% adjusted EBITDA margin, and free cash flow at 100% of net income.