Alamo (ALG) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Key Financial and Operational Highlights Alamo Group Inc. reported strong Q2 2025 operating results, with modest net sales growth, significant improvements in operating and net income, robust Industrial Equipment Division growth, and reduced net debt Q2 2025 Key Financial Highlights | Metric | Q2 2025 Value | YoY Change | QoQ Change | | :-------------------------------- | :------------ | :--------- | :--------- | | Net Sales | $419.1 million| +0.7% | +7.2% | | Industrial Equipment Division Sales | $240.7 million| +17.6% | +6.0% | | Vegetation Management Division Sales| $178.4 million| -15.7% | +8.8% | | Income from Operations | $47.1 million | +83 bps | N/A | | Net Income | $31.1 million | +9.8% | N/A | | Fully Diluted EPS | $2.57 | +$0.22 | N/A | | Total Debt Net of Cash | $11.3 million | -93.5% | N/A | | Backlog | $687.2 million| +2.8% | N/A | - EPS results for the quarter include an unfavorable currency revaluation impact of $0.21 per share[3] Second Quarter 2025 Financial Performance Consolidated Results Alamo Group reported slight Q2 2025 consolidated net sales growth, improved operating income from cost reductions, and healthy net income and diluted EPS growth Consolidated Financial Performance (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 (million) | Q2 2024 (million) | Change (YoY) | | :----------------------- | :---------- | :---------- | :----------- | | Net Sales | $419.1 | $416.3 | +0.7% | | Gross Profit | $108.3 | $108.2 | +0.1% | | Gross Margin | 25.8% | 26.0% | -0.2 ppts | | SG&A Expenses | $57.1 | $60.8 | -6.1% | | Income from Operations | $47.1 | $43.3 | +8.8% | | Operating Margin | 11.2% | 10.4% | +0.83 ppts | | Net Income | $31.1 | $28.3 | +9.8% | | Diluted EPS | $2.57 | $2.35 | +$0.22 | - Q2 EPS included an unfavorable impact to net income of $2.5 million, or approximately $0.21 per share, primarily due to the revaluation of US dollar-denominated monetary assets held in Canadian entities[5] - SG&A expenses declined by 6.1% compared to Q2 2024, reflecting successful cost reduction efforts completed in 2024[4] Divisional Performance Industrial Equipment Division showed strong organic growth and improved margins; Vegetation Management Division saw YoY sales decline but sequential recovery, with margins impacted by consolidation Divisional Sales and Operating Margin (Q2 2025 vs. Q2 2024, in millions) | Division | Q2 2025 Sales (million) | Q2 2024 Sales (million) | YoY Change | QoQ Change | Q2 2025 Operating Margin | Q2 2024 Operating Margin | YoY Margin Change | | :----------------------- | :------------ | :------------ | :--------- | :--------- | :----------------------- | :----------------------- | :---------------- | | Industrial Equipment | $240.7 | $204.8 | +17.6% | +6.0% | 14.3% | 13.4% | +0.93 ppts | | Vegetation Management | $178.4 | $211.5 | -15.7% | +8.8% | 7.1% | 7.6% | -0.5 ppts | - The Vegetation Management Division's operating margin of 7.1% included costs associated with manufacturing facility consolidations[4] Balance Sheet and Cash Flow The company maintained a strong balance sheet, reducing inventory, improving accounts receivable days outstanding, and generating positive year-to-date operating cash flow Key Balance Sheet and Cash Flow Metrics (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 (million) | Q2 2024 (million) | Change (YoY) | | :------------------------- | :---------- | :---------- | :----------- | | Accounts Receivable | $356.2 | $388.5 | -8.4% | | DSO | 81 days | 84 days | -3 days | | Inventory | $372.1 | $385.1 | -3.4% | | Operating Cash Flow (YTD) | $36.9 | N/A | N/A | | Cash & Cash Equivalents | $201.8 | $118.5 | +70.3% | | Total Debt Net of Cash | $11.3 | $175.1 | -93.5% | - The company's backlog at the end of Q2 2025 was $687.2 million, with Industrial Equipment at $509.6 million and Vegetation Management at $177.6 million[6] Management Commentary & Business Outlook CEO's Review of Q2 Performance CEO Jeff Leonard highlighted improved Q2 operating margin, driven by strong Industrial Equipment demand and sequential recovery in Vegetation Management, with modest consolidated net sales growth - Industrial Equipment Division's net sales rose nearly 18% compared to the same period last year, with sales of vacuum trucks and snow removal equipment increasing more than 20% due to healthy demand and market share gains[10] - Vegetation Management Division's net sales were down approximately 16% YoY but rose nearly 9% sequentially, with order volumes increasing for the fifth consecutive quarter[11] - Consolidated operating margin improved by 83 basis points from Q2 2024 to 11.2%, with growth in the Industrial Equipment Division and greater factory efficiencies offsetting early-quarter softness in Vegetation Management[12] Strategic Initiatives & Acquisitions Alamo Group expanded its product portfolio and market share by acquiring Ring-O-Matic, a manufacturer of industrial vacuum excavation equipment, funded with existing cash - Acquired Ring-O-Matic, a manufacturer of industrial vacuum excavation equipment specializing in trailer-mounted units, aligning with the strategic focus on expanding market share and strengthening the product portfolio[13] - The acquisition was funded with existing cash on hand and will be part of the Excavator and Vacuum Trucks group[13] Outlook The company anticipates continued strong Industrial Equipment Division performance and further Vegetation Management Division improvement, leveraging its strong balance sheet for growth - Anticipates continued strong performance from the Industrial Equipment Division through at least the end of the year and into 2026[14] - The Vegetation Management Division is poised for further improvement, driven by stronger order flow supported by enhanced operational gains following the completion of plant consolidations[14] - The company expects to leverage its strong balance sheet to accelerate both organic and inorganic growth, while remaining mindful of ongoing global trade uncertainty[14] Company Information & Disclosures Earnings Conference Call Details Alamo Group Inc. hosted a Q2 earnings conference call on August 7, 2025, with replay and online archive available - A conference call to discuss Q2 results was held on Thursday, August 7, 2025, at 8:30 a.m. ET[15] - A replay was available until Thursday, August 21, 2025, via phone and archived on the Company's website for 60 days[15][16] About Alamo Group Alamo Group, founded in 1969, is a leading global provider of equipment for vegetation management and infrastructure maintenance, operating 27 plants with 3,800 employees - Alamo Group is a leader in the design, manufacture, distribution, and service of high-quality equipment for vegetation management, infrastructure maintenance, and other applications[17] - Products include truck and tractor mounted mowing equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, industrial equipment, agricultural implements, forestry equipment, and related after-market parts and services[17] - Founded in 1969, the company has approximately 3,800 employees and operates 27 plants in North America