ALAMO GROUP INC

Previous wording

For the six months of 2025, the Company's net sales decreased by 4%, but income from operations improved 1% and net income improved 4% compared to the same period in 2024. The decrease in net sales was driven by weakness in the markets served by our 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 total Company basis. These challenges were offset by strong sales growth in the Industrial Equipment Division.

Current wording

The decreases in net sales were primarily driven by weakness in the markets served by our 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 total Company basis. These challenges were partially offset by strong sales growth in the Industrial Equipment Division. The Company's backlog at September 30, 2025, totaled $618.3 million, a 15% decrease from $728.8 million at this same period the prior-year, however, new orders increased 6% year over year.

Previous wording

As part of the ongoing consolidation within the Vegetation Management Division, the Gibson City, Illinois facility has been designated for disposition and is reported on the balance sheet under Other Non-Current Assets as held-for-sale.

Current wording

We are executing a footprint optimization program within our Vegetation Management Division. To date, we have relocated applicable product families, designated one facility as held for sale, repurposed one facility to support other brands, and completed initial set-ups for portions of the production lines. Over the next approximately two quarters, we plan to finish the remaining line installations and increase production. During this transition, we expect temporary production inefficiencies, duplicate costs, and shipment-timing effects that may pressure revenue and gross margin, along with potentially one-time expenses related to relocation and facility exit. Following completion, we expect improved capacity utilization, service levels and structural cost reductions. The anticipated timing, costs and benefits are forward-looking and subject to the risks and uncertainties described under “Forward-Looking Information”. As part of the ongoing consolidation within the Vegetation Management Division, the Gibson City, Illinois facility has been designated for disposition and is reported on the balance sheet under Other Non-Current Assets as held-for-sale.

Previous wording

Net sales for the second quarter of 2025 were $419.1 million, an increase of $2.8 million or 1% compared to $416.3 million for the second quarter of 2024. Net sales during the second quarter of 2025 increased due to strong demand for Industrial Equipment, but was offset by the weaker market demand in forestry, tree care, and agricultural mowing.

Current wording

Net sales for the third quarter of 2025 were $420.0 million, an increase of $18.7 million or 5% compared to $401.3 million for the third quarter of 2024. Net sales during the third quarter of 2025 increased due to strong demand for the Industrial Equipment Division, but were offset by the weaker forestry, tree care, and agricultural markets in the Vegetation Management Division.

Previous wording

Net Industrial Equipment sales were $240.7 million in the second quarter of 2025 compared to $204.8 million for the same period in 2024, an increase of $35.9 million or 18%. The increase was due to solid demand in most product lines, particularly vacuum trucks and snow removal contributing the most to year-over-year growth.

Current wording

Net sales in the Industrial Equipment Division were $247.0 million in the third quarter of 2025 compared to $211.2 million for the same period in 2024, an increase of $35.8 million or 17%. The increase was due to solid demand in all product lines, particularly vacuum trucks and snow removal contributing the most to year-over-year growth.

Previous wording

Net Vegetation Management sales decreased by $33.1 million or 16% to $178.4 million for the second quarter of 2025 compared to $211.5 million during the same period in 2024. The decrease was due to sustained weakness in forestry, tree care, and agricultural mowing markets. The sale of Herschel Parts on August 16, 2024, contributed slightly to the year-over-year decrease, but was immaterial to the overall results.

Current wording

Net sales in the Vegetation Management Division decreased by $17.0 million or 9% to $173.1 million for the third quarter of 2025 compared to $190.1 million during the same period in 2024. The decrease was due to sustained weakness in forestry, tree care, and agricultural mowing markets. The sale of Herschel Parts on August 16, 2024, contributed slightly to the year-over-year decrease, but was immaterial to the overall results.

Previous wording

Gross profit for the second quarter of 2025 was $108.3 million (26% of net sales) compared to $108.2 million (26% of net sales) during the same period in 2024, an increase of $0.1 million. Strong demand and performance in the Industrial Equipment Division supported the increase in gross profit during the second quarter of 2025 compared to the second quarter of 2024 and offset by the weaker demand in the Vegetation Management Division.

Current wording

Gross profit for the third quarter of 2025 was $101.7 million (24% of net sales) compared to $100.9 million (25% of net sales) during the same period in 2024, an increase of $0.8 million. Strong demand and performance in the Industrial Equipment Division supported the increase in gross profit, but was offset by the weaker demand and operating inefficiencies in the Vegetation Management Division. Additionally, tariff impact in the third quarter was only partially offset by mitigating actions.

Previous wording

Selling, general and administrative expenses (“SG&A”) were $57.1 million (14% of net sales) during the second quarter of 2025 compared to $60.8 million (15% of net sales) during the same period of 2024, a decrease of $3.7 million attributable to labor cost savings actions taken in the Vegetation Management Division. Amortization expense in the second quarter of 2025 was $4.1 million compared to $4.1 million in the same period in 2024.

Current wording

Selling, general and administrative expenses (“SG&A”) were $59.9 million (14% of net sales) during the third quarter of 2025 compared to $56.7 million (14% of net sales) during the same period of 2024, an increase of $3.2 million attributable to the CEO transition and acquisition and integration costs. Amortization expense in the third quarter of 2025 was $4.2 million compared to $4.1 million in the same period in 2024.

Previous wording

Interest expense was $3.7 million for the second quarter of 2025 compared to $6.1 million during the same period in 2024. The decrease in interest expense in the second quarter of 2025 was due to debt reduction.

Current wording

Interest expense was $3.9 million for the third quarter of 2025 compared to $4.9 million during the same period in 2024 due to debt reduction.

Previous wording

Other income (expense), net was $3.2 million of expense for the second quarter of 2025 compared to $0.1 million of expense during the same period in 2024. The increase was primarily a result of unfavorable currency exchange rates.

Current wording

Other income (expense), net was $0.2 million of expense for the third quarter of 2025 compared to less than $0.1 million of expense during the same period in 2024.

Previous wording

Provision for income taxes was $10.3 million (25% of income before income tax) in the second quarter of 2025 compared to $9.3 million (25% of income before income tax) during the same period in 2024.

Current wording

Provision for income taxes was $9.6 million (27% of income before income tax) in the third quarter of 2025 compared to $8.3 million (23% of income before income tax) during the same period in 2024. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which introduced significant changes to U.S. income tax legislation. Key provisions of the OBBBA that affect the company include (i) 100 percent bonus depreciation for qualified property placed in service after January 19, 2025, and (ii) immediate expensing of domestic research and experimental expenditures starting January 1, 2025. In accordance with ASC 740, the Company has recognized the effects of the new tax law in the period of enactment. The impact of the OBBBA for the quarter ended September 30, 2025, resulted in a reduction of current income tax expense, primarily due to the impact of 100% bonus depreciation and immediate expensing of domestic research and experimental expenditures. This reduction was substantially offset by a corresponding increase in deferred income tax expense. The net effect of OBBBA did not have a material impact on the Company’s effective tax rate for the period. The Company continues to evaluate the impact of the OBBBA on its consolidated financial statements.

Previous wording

The Company’s net income after tax was $31.1 million or $2.57 per share on a diluted basis for the second quarter of 2025 compared to $28.3 million or $2.35 per share on a diluted basis for the second quarter of 2024.

Current wording

The Company’s net income after tax was $25.4 million or $2.10 per share on a diluted basis for the third quarter of 2025 compared to $27.4 million or $2.28 per share on a diluted basis for the third quarter of 2024. Tariffs were only partially offset by mitigating actions.

Previous wording

Net sales for the first six months of 2025 were $810.0 million, a decrease of $31.9 million or 4% compared to $841.9 million for the first six months of 2024. The decrease in net sales during the first six months of 2025 is a result of a steep decline in market 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 2025 were $1,230.1 million, a decrease of $13.1 million or 1% compared to $1,243.2 million for the first nine months of 2024. The decrease in net sales during the first nine months of 2025 was driven by a significant reduction in market demand in forestry, tree care, and agricultural mowing in the Vegetation Management Division, partially offset by continued robust demand for Industrial Equipment.

Previous wording

Net Industrial Equipment sales were $467.8 million during the first six months of 2025 compared to $406.6 million for the same period in 2024, an increase of $61.2 million or 15%. The increase in sales for the first six months of 2025 compared to the first six months of 2024 was mainly due to the continued strong demand across the division in excavators, vacuum trucks, and snow removal.

Current wording

Net sales in the Industrial Equipment Division were $714.8 million during the first nine months of 2025 compared to $617.8 million for the same period in 2024, an increase of $97.0 million or 16%. The increase in sales for the first nine months of 2025 compared to the first nine months of 2024 was mainly due to the continued strong demand across the division in excavators, vacuum trucks, and snow removal.

Previous wording

Net Vegetation Management sales decreased during the first six months by $93.1 million or 21% to $342.2 million for 2025 compared to $435.3 million during the same period in 2024. 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.

Current wording

Net sales in the Vegetation Management Division decreased during the first nine months by $110.1 million or 18% to $515.3 million for 2025 compared to $625.4 million during the same period in 2024. 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

Gross profit for the first six months of 2025 was $211.1 million (26% of net sales) compared to $219.8 million (26% of net sales) during the same period in 2024, a decrease of $8.7 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 2025 remained flat compared to the same period in 2024.

Current wording

Gross profit for the first nine months of 2025 was $312.8 million (25% of net sales) compared to $320.7 million (26% of net sales) during the same period in 2024, a decrease of $7.9 million. The decrease in gross profit was mainly attributable to lower sales volume and production inefficiencies in Vegetation Management Division. Tariffs were only partially offset by mitigating actions.

Previous wording

SG&A expenses were $111.5 million (14% of net sales) during the first six months of 2025 compared to $121.4 million (14% of net sales) during the same period of 2024, a decrease of $9.9 million attributable to labor cost savings actions taken in Vegetation Management. Amortization expense in the first six months of 2025 was $8.1 million compared to $8.1 million in the same period in 2024. a decrease of $0.0 million.

Current wording

SG&A expenses were $171.4 million (14% of net sales) during the first nine months of 2025 compared to $178.2 million (14% of net sales) during the same period of 2024, a decrease of $6.8 million attributable to labor cost savings actions taken in Vegetation Management offsetting additional costs of $3.9 million due to CEO transition and acquisition and integration costs. Amortization expense in the first nine months of 2025 was $12.3 million compared to $12.2 million in the same period in 2024. a decrease of $0.0 million.

Previous wording

Interest expense was $6.9 million for the first six months of 2025 compared to $12.2 million during the same period in 2024, a decrease of $5.3 million. The decrease in interest expense in the first six months of 2025 was mainly due to debt reduction.

Current wording

Interest expense was $10.8 million for the first nine months of 2025 compared to $17.1 million during the same period in 2024, a decrease of $6.3 million mainly due to debt reduction.

Previous wording

Other income (expense), net was $3.8 million of expense during the first six months of 2025 compared to less than $0.1 million of income in the first six months of 2024. The increase was a result of unfavorable currency exchange rates.

Current wording

Other income (expense), net was $4.1 million of expense during the first nine months of 2025 compared to less than $0.1 million of income in the first nine months of 2024. The increase was a result of unfavorable currency exchange rates.

Previous wording

Provision for income taxes was $20.3 million (24% of income before income taxes) in the first six months of 2025 compared to $19.0 million (24% of income before income taxes) during the same period in 2024.

Current wording

Provision for income taxes was $29.9 million (25% of income before income taxes) in the first nine months of 2025 compared to $27.3 million (24% of income before income taxes) during the same period in 2024.

Previous wording

The Company's net income after tax was $62.9 million or $5.21 per share on a diluted basis for the first six months of 2025 compared to $60.4 million or $5.02 per share on a diluted basis for the first six months of 2024. The increase of $2.5 million resulted from the factors described above.

Current wording

The Company's net income after tax was $88.3 million or $7.31 per share on a diluted basis for the first nine months of 2025 compared to $87.8 million or $7.30 per share on a diluted basis for the first nine months of 2024. The increase of $0.5 million resulted from the factors described above.

Previous wording

As of June 30, 2025, the Company had working capital of $735.7 million which represents an increase of $68.5 million from working capital of $667.2 million at December 31, 2024. The increase in working capital was due to higher cash and cash equivalents as well as an increase in accounts receivable and inventory, partially offset by increase in accounts payable.

Current wording

As of September 30, 2025, the Company had working capital of $758.3 million which represents an increase of $91.1 million from working capital of $667.2 million at December 31, 2024. The increase in working capital was due to higher cash and cash equivalents as well as an increase in accounts receivable and inventory, partially offset by increase in accounts payable.

Previous wording

Capital expenditures were $13.0 million for the first six months of 2025, compared to $11.1 million during the first six months of 2024. The Company expects a capital expenditure level of approximately $30.0 million to $35.0 million for the full year of 2025. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below.

Current wording

Capital expenditures were $25.4 million for the first nine months of 2025, compared to $19.0 million during the first nine months of 2024. The Company expects a capital expenditure level of approximately $30.0 million to $35.0 million for the full year of 2025. 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 $29.7 million during the first six months of 2025 compared to $10.3 million during the first six months of 2024.

Current wording

Net cash used for investing activities was $41.9 million during the first nine months of 2025 compared to $16.1 million during the first nine months of 2024.

Previous wording

Net cash used in financing activities was $15.1 million and net cash provided by financing activities was $47.2 million during the six month periods ended June 30, 2025 and June 30, 2024, respectively. Lower net cash provided by financing activities for the first six months of 2025 relates to no net borrowings from the revolver during the six months ended June 30, 2025, while paying down long-term debt and a quarterly dividend.

Current wording

Net cash used in financing activities was $23.6 million and $25.4 million during the nine month periods ended September 30, 2025 and September 30, 2024, respectively. Lower net cash used by financing activities for the first nine months of 2025 relates to no contingent consideration payment from an acquisition net of a higher dividend during the nine months ended September 30, 2025.

Previous wording

European and Canadian cash and cash equivalents as needed to fund operating and investing activities, 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 be used to reduce debt levels, and to fund working capital, capital investments, and acquisitions company-wide.

Current wording

The Company had $159.4 million in cash and cash equivalents held by its foreign subsidiaries as of September 30, 2025. The majority of these funds are at our European and Canadian facilities. The Company will repatriate European and Canadian cash and cash equivalents as needed to fund operating and investing activities, 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 be used to reduce debt levels, and 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, 2025, $213.8 million was outstanding under the 2022 Credit Agreement, $213.8 million on the Term Facility and zero on the Revolver Facility. On June 30, 2025, $2.7 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 $397.3 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of June 30, 2025.

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, 2025, $210.0 million was outstanding under the 2022 Credit Agreement, $210.0 million on the Term Facility and zero on the Revolver Facility. On September 30, 2025, $2.8 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 $397.2 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of September 30, 2025.

Previous wording

Management believes the 2022 Credit Agreement along with the Company’s ability to internally generate funds from operations should be sufficient to allow the Company to meet its cash requirements for the foreseeable future. However, future challenges affecting the banking industry and credit markets in general could potentially cause changes to credit availability, which creates a level of uncertainty.

Current wording

Management believes the 2022 Credit Agreement along with the Company’s ability to internally generate funds from operations should be sufficient to allow the Company to meet its cash requirements for the foreseeable future.

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 increased stockholders’ equity by $28.1 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 decreased stockholders’ equity by $7.3 million.

Previous wording

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 $6.4 million for the six month period ended June 30, 2025. 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.

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 $9.5 million for the nine month period ended September 30, 2025. 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 2025 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.

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 2025 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.