Specialized equipment manufacturer for infrastructure and vegetation management Alamo Group (NYSE:ALG) reported Q3 CY2025 results exceeding the market’s revenue expectations , with sales up 4.7% year on year to $420 million. Its non-GAAP profit of $2.34 per share was 11.3% below analysts’ consensus estimates. Is now the time to buy ALG? Find out in our full research report (it’s free for active Edge members). Alamo (ALG) Q3 CY2025 Highlights: Revenue: $420 million vs analyst estimates of $407.6 million ...

What Happened? Shares of specialized equipment manufacturer for infrastructure and vegetation management Alamo Group (NYSE:ALG) fell 4.5% in the afternoon session after the company reported third-quarter 2025 earnings that missed profit expectations, even as sales came in higher than anticipated. The specialized equipment manufacturer's adjusted earnings per share came in at $2.34, falling short of Wall Street's forecast of $2.64. While total revenue for the period rose 4.7% year-on-year to $420 million ...

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Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $420 million, up 5% from Q3 2024, with organic growth of 3.4% [6][8] - Adjusted net income was $28 million, down 3% compared to $29 million in Q3 2024 [6][10] - Adjusted EBITDA was $55 million, or 13% of net sales, compared to 14% in Q3 2024 [6][8] - Gross profit was $101.7 million, up 0.8%, with a gross margin of 24.2%, down 90 basis points from the previous year [8][9] - Operating cash flow for the nine months ended September 30, 2025, was $102 million, or 116% of net income [7][13] Business Line Data and Key Metrics Changes - Industrial Equipment Division net sales were $247 million, up 17% with 14.5% organic growth [11] - Vegetation Management Division net sales were $173.1 million, down 9% due to weakness in end markets and production challenges [11][12] - Adjusted EBITDA as a percentage of net sales for the Industrial Equipment Division was 15.5%, while for the Vegetation Management Division it was 9.7% [11][12] Market Data and Key Metrics Changes - The company noted strong performance in municipal and contractor spending on infrastructure maintenance, with state and local spending growing at a compound annual rate of approximately 5% over the past 20 quarters [16] - The early order pattern in the fourth quarter for the Industrial Equipment Division started off reasonably, with a healthy backlog [18][22] Company Strategy and Development Direction - The company focuses on four strategic pillars: people and culture, commercial excellence, operational excellence, and acquisitions [23] - Emphasis on product innovation and catering to customer needs, with a focus on higher-margin profit pools such as parts and service [24] - The company aims for long-term financial targets including sales growth of over 10%, adjusted operating income margins around 15%, and adjusted EBITDA margins of 18-20% [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance despite mixed results in Q3, particularly in the Industrial Equipment Division [6][7] - The Vegetation Management Division is expected to improve as production efficiencies are realized and end markets stabilize [22][29] - The company anticipates a slight decline in sales moving from Q3 to Q4, typical for seasonal trends, with expectations for margin improvements in the long term [50][54] Other Important Information - The company has a strong financial position with total assets of $1,595 million and $244.8 million in cash as of September 30, 2025 [12][14] - A quarterly dividend of $0.30 per share was approved, reflecting the company's commitment to delivering long-term value to shareholders [14][25] Q&A Session Summary Question: Can you get back above 10% operating margins on vegetation without meaningful revenue growth? - Management believes they can achieve adjusted operating margins of 15% and adjusted EBITDA margins of 20% through improved production efficiencies and volume leverage as markets stabilize [29] Question: Are there specific areas within the industrial segment that are more challenged? - Management noted that while industrial orders are generally up year-to-date, there are some lumpy order patterns, particularly in excavators and vacuum trucks, with some cooling in end markets expected [31][33] Question: How do inventory levels sit in the vegetation management segment? - Inventory levels are reasonable, with order cancellations in line with historic averages, but there is some softness in tree care and government mowing segments [35] Question: What are the primary drivers behind the decline in margin on the industrial side of the business? - The decline in margins is primarily attributed to tariffs, which have increased in Q3, and management is working to pass these costs along to customers [36][37] Question: How long might it take to achieve the 18% EBITDA target? - Management expects to return vegetation division margins to previous levels within one or two quarters, with additional improvements from procurement savings and operational efficiencies [39][40] Question: What are the levers within control to sustain demand in the industrial segment? - Management highlighted the importance of product innovation and M&A as key drivers for sustaining demand, particularly in attractive end markets [61][62]

Core Viewpoint - Alamo Group reported quarterly earnings of $2.34 per share, missing the Zacks Consensus Estimate of $2.61 per share, and showing a slight decrease from $2.38 per share a year ago [1][2] Financial Performance - The company posted revenues of $420.04 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 5.72% and up from $401.3 million year-over-year [3] - Alamo Group has surpassed consensus revenue estimates two times over the last four quarters [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.79 on revenues of $409.1 million, and for the current fiscal year, it is $10.65 on revenues of $1.62 billion [8] - The estimate revisions trend for Alamo Group was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [7] Industry Context - The Manufacturing - Farm Equipment industry, to which Alamo Group belongs, is currently in the bottom 12% of over 250 Zacks industries, suggesting potential challenges ahead [9] - A related company, Deere, is expected to report quarterly earnings of $3.96 per share, reflecting a year-over-year decline of 13%, with revenues anticipated to be $9.99 billion, up 7.7% from the previous year [10]

Core Insights - Alamo Group has shown mixed performance in its recent financial results, with a notable decline in its operating margin and challenges in its Vegetation Management Division, while the Industrial Equipment Division continues to perform well [4][10][15] Company Performance - Alamo's revenue for Q3 CY2025 increased by 4.7% year-on-year to $420 million, surpassing Wall Street's estimates by 3.1% [5][6] - The company reported a non-GAAP profit of $2.34 per share, which was 11.3% below analysts' consensus estimates [5] - Over the past five years, Alamo's sales grew at a compounded annual growth rate (CAGR) of 6.6%, which is below the benchmark for the industrials sector [2] - The company's operating margin for the quarter was 8.9%, down from 10% in the same quarter last year, indicating increased operational inefficiencies [4][10] Division Performance - The Industrial Equipment Division has shown strong year-over-year double-digit net sales growth for seven consecutive quarters, with healthy backlog levels [4] - The Vegetation Management Division has faced softness in its end markets, although bookings have slightly improved [4] Profitability Metrics - Alamo's operating margin has decreased by 1 percentage point year-on-year, attributed to rising expenses in marketing, R&D, and administrative overhead [10] - Despite the recent decline, Alamo's operating margin has improved by 1.7 percentage points over the last five years, reflecting better cost management [9][12] - The company's earnings per share (EPS) grew at a remarkable CAGR of 13.2% over the last five years, indicating improved profitability on a per-share basis [11] Future Outlook - Analysts expect Alamo's revenue to grow by 5.3% over the next 12 months, driven by newer products and services [6] - Wall Street anticipates a full-year EPS of $9.94, projecting a growth of 20.5% over the next year [14]

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, 2025 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) (State or other jurisdiction of Delaware 74-16212 ...

Financial Performance - Net sales for Q3 2025 were $420.0 million, a 4.7% increase from $401.3 million in Q3 2024[3] - Income from operations decreased by 6.3% to $37.5 million, representing 8.9% of net sales, compared to $40.1 million or 10.0% of net sales in Q3 2024[4] - Net income for Q3 2025 was $25.4 million, or $2.10 per fully diluted share, down from $27.4 million, or $2.28 per fully diluted share in Q3 2024[3] - Adjusted EBITDA for Q3 2025 was $55.0 million, flat compared to $54.9 million in Q3 2024, representing 13.1% of net sales[5] - Total net sales for the nine months ended September 30, 2025, were $1,230,065,000, a decrease of 1.1% compared to $1,243,190,000 in 2024[29] - Adjusted Operating Income for the nine months ended September 30, 2025, was $134,958,000, down from $137,149,000 in 2024, reflecting a decline of 1.6%[27] - EBITDA for the nine months ended September 30, 2025, was $166,226,000, compared to $169,827,000 in 2024, indicating a decrease of 2.4%[31] - Net Sales for the overall company decreased to $173,059, down 9.0% from $190,115 year-over-year[33] - Income from Operations for the overall company fell to $7,478, a decrease of 39.4% from $12,404 in Q3 2024[33] - Adjusted EBITDA for the overall company was $16,847, with a margin of 9.7%, down from 11.5% in the same quarter last year[33] - EBITDA for the overall company decreased to $14,714, down 27.1% from $20,166 in Q3 2024[33] Division Performance - Industrial Equipment Division net sales increased by 17.0% to $247.0 million, with adjusted EBITDA of $38.2 million, or 15.5% of net sales[5] - Vegetation Management Division net sales decreased by 9.0% to $173.1 million, with adjusted EBITDA of $16.8 million, or 9.7% of net sales[5] - The Vegetation Management division reported a 17.6% decrease in net sales for the nine months ended September 30, 2025, totaling $515,307,000, down from $625,397,000 in 2024[29] - The Industrial Equipment division saw a 15.7% increase in net sales for the nine months ended September 30, 2025, reaching $714,758,000, up from $617,793,000 in 2024[29] - Backlog for the Industrial Equipment Division decreased to $438,106, down from $543,425 year-over-year[35] - Net Sales increased to $246,983, up 16.9% from $211,186 in the same quarter last year[35] - Income from Operations rose to $30,064, representing a 8.8% increase compared to $27,675 in Q3 2024[35] - Adjusted EBITDA for the Industrial Equipment Division reached $38,164, a 15.5% margin, compared to 15.7% in Q3 2024[35] Cash Flow and Debt - Operating cash flow for the first nine months of 2025 was $102.4 million[4] - Total debt as of September 30, 2025, was $209.4 million, with total cash of $244.8 million and $397.2 million available under the Revolving Facility[6] - Cash and cash equivalents at the end of the period increased to $244,806,000 from $140,038,000, marking a significant rise of 74.5%[19] - The company reported a net cash provided by operating activities of $102,424,000 for the nine months ended September 30, 2025, down from $130,642,000 in 2024, a decrease of 21.6%[19] - Total debt net of cash as of September 30, 2025, was $(35,376,000), a significant improvement from $84,128,000 in 2024, indicating a reduction of $119,504,000[31] Dividends and Expenses - The company incurred $10,805,000 in dividends paid during the nine months ended September 30, 2025, compared to $9,329,000 in 2024, an increase of 15.8%[19] - The company reported a significant increase in restructuring expenses, totaling $572 in Q3 2025 compared to $1,607 in Q3 2024[33] - The company noted that CEO Transition costs included $893 in Q3 2025, with no comparable costs in Q3 2024[33] Assets - Total assets increased to $1,594.98 million as of September 30, 2025, compared to $1,481.34 million in 2024[17] - Net income for the nine months ended September 30, 2025, was $88,289,000, a slight increase from $87,849,000 in 2024, representing a growth of 0.5%[19]

Core Insights - The industrials sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Company Summaries - **Automatic Data Processing Inc (NASDAQ:ADP)**: Reported quarterly revenues of $5.18 billion, exceeding analyst expectations of $5.14 billion, with a year-over-year revenue increase of 7%. The company maintains a revenue growth outlook of 5%-6% for the fiscal year, with adjusted diluted EPS growth projected at 8%-10%. The stock has fallen approximately 11% in the past month, with a 52-week low of $255.16 and an RSI value of 25.6 [7] - **Alamo Group Inc (NYSE:ALG)**: Set to release third-quarter financial results on November 6. The stock has decreased around 7% over the past month, with a 52-week low of $157.07 and an RSI value of 26.3 [7] - **Apogee Enterprises Inc (NASDAQ:APOG)**: Reported better-than-expected second-quarter results, with revenue growth in Performance Surfaces and Architectural Services. The stock has dropped about 33% in the last five days, reaching a 52-week low of $1.52, and has an RSI value of 26.7 [7]

Group 1 - The industrials sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] - An asset is considered oversold when the Relative Strength Index (RSI) is below 30, which helps traders gauge short-term performance [1] Group 2 - Automatic Data Processing Inc (ADP) reported quarterly revenues of $5.18 billion, exceeding analyst expectations of $5.14 billion, with a year-over-year revenue increase of 7% [7] - ADP maintained its revenue growth outlook of 5%-6%, equating to $21.6 billion-$21.8 billion, and adjusted diluted EPS growth of 8%-10%, or $10.81-$11.01, against analyst consensus of $21.8 billion and $10.92 respectively [7] - ADP's stock has fallen approximately 11% over the past month, with a 52-week low of $255.16 and an RSI value of 25.6 [7] Group 3 - Alamo Group Inc (ALG) will release its third-quarter financial results on November 6, with its stock having decreased around 7% in the past month and a 52-week low of $157.07 [7] - ALG's RSI value is 26.3, and its shares closed at $174.79 after a 1.5% decline [7] Group 4 - Apogee Enterprises Inc (APOG) reported better-than-expected second-quarter results, with revenue growth in Performance Surfaces and Architectural Services [7] - APOG's stock has dropped about 33% over the last five days, reaching a 52-week low of $1.52, with an RSI value of 26.7 [7] - Shares of Apogee Enterprises fell 1.1% to close at $35.27 [7]