ALAMO GROUP INC

Previous wording

Net Sales in the Industrial Equipment Division increased by 6% (down 1% organically) for the first three months of 2026 compared to the same period in 2025. The Division’s backlog declined by 21% as lead times improved and demand normalized following elevated order levels in prior periods. New orders decreased approximately 11% year over year. Income from operations rose 2% versus the prior-year period, reflecting higher sales and continued operational improvements across this Division.

Current wording

Net Sales in the Industrial Equipment Division increased by 13% (excluding acquisitions, growth was 3%) in the second quarter of 2026 compared to the same period in 2025. The Division’s backlog declined by 28% as lead times improved and demand normalized following elevated order levels in prior periods. New orders decreased approximately 2% year over year (excluding acquisitions, new orders declined 12%). Income from operations rose 7% versus the prior-year period, reflecting contributions from recent acquisitions and continued improvements in operating efficiency.

Previous wording

Net Sales in the Vegetation Management Division increased 7% for the first three months of 2026 compared to the same period in 2025. The Division's backlog increased 5% and new orders increased 5% year over year. Income from operations decreased 21% versus the prior year period primarily due to operational inefficiencies associated with factory consolidation, partially offset by the reduction in operating expenses.

Current wording

Net Sales in the Vegetation Management Division were flat in the second quarter of 2026 compared to the same period in 2025 as growth in agricultural and tree care markets was offset by weakness in municipal markets. The Division's backlog increased 4% and new orders were flat year over year in the second quarter of 2026. Income from operations decreased 30% versus the prior year period primarily due to the impact from lower sales in the municipal mowing businesses.

Previous wording

As part of our ongoing efforts to optimize operations in both of our Divisions, we have relocated applicable product families, sold the Gibson City, IL facility, repurposed one facility to support other brands, and completed initial setups for portions of the production lines. In the first quarter of 2026, we have also listed our facility in New Berlin, WI as an asset held for sale. As we continue our optimization efforts throughout the rest of the year, 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.”

Current wording

As part of our ongoing efforts to optimize operations in both of our Divisions, we have relocated applicable product families, sold the Gibson City, IL facility, repurposed one facility to support other brands, and completed initial setups for portions of the production lines. As we continue our optimization efforts throughout the rest of the year, 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.”

Previous wording

Net sales for the first quarter of 2026 were $417.1 million, an increase of $26.1 million or 7% compared to $391.0 million for the first quarter of 2025. Net sales during the first quarter of 2026 increased due to contributions from recent acquisitions in the Industrial Equipment Division, modest improvement in agricultural markets within the Vegetation Management Division, and FX. Our price/volume analysis indicate 2% of the 7% growth was due to currency movement.

Current wording

Net sales for the second quarter of 2026 were $450.7 million, an increase of $31.6 million or 8% compared to $419.1 million for the second quarter of 2025. Net sales during the second quarter of 2026 increased due to contributions from recent acquisitions in the Industrial Equipment Division and modest improvement in agricultural markets within the Vegetation Management Division. Our price/volume analysis indicates 0.4% of the 8% growth was due to currency movement.

Previous wording

Net sales in the Industrial Equipment Division were $241.7 million in the first quarter of 2026 compared to $227.1 million for the same period in 2025, an increase of $14.6 million or 6%. The increase was due to the addition of Ring-O-Matic and Petersen Industries. Organic net sales in the first quarter of 2026 declined 1% compared to the first quarter in 2025. Currency movement impacted sales favorably by 1%.

Current wording

Net sales in the Industrial Equipment Division were $271.6 million in the second quarter of 2026 compared to $240.7 million for the same period in 2025, an increase of $30.9 million or 13%. The increase was due to the addition of the Ring-O-Matic and Petersen Industries acquisitions. Organic net sales in the second quarter of 2026 increased 3% compared to the second quarter in 2025. Currency movement impacted sales favorably by 0.1%.

Previous wording

Net sales in the Vegetation Management Division increased by $11.5 million or 7% to $175.4 million for the first quarter of 2026 compared to $163.9 million during the same period in 2025. The increase was due to modest improvements in tree care and agricultural mowing markets which offset weakness in the municipal mowing markets, and FX. Currency movement was 4% of the 7% growth.

Current wording

Net sales in the Vegetation Management Division increased by $0.7 million or 0% to $179.1 million for the second quarter of 2026 compared to $178.4 million during the same period in 2025. The increase was due to modest improvements in tree care and agricultural markets which offset lower municipal mowing activity. Currency movement was 0.8% in the second quarter of 2026.

Previous wording

Gross profit for the first quarter of 2026 was $104.8 million (25% of net sales) compared to $102.8 million (26% of net sales) during the same period in 2025, an increase of $2.0 million. Higher net sales in the Industrial Equipment Division supported the increase in gross profit, however overall gross margin declined due to operational inefficiencies in the Vegetation Management Division.

Current wording

Gross profit for the second quarter of 2026 was $110.9 million (25% of net sales) compared to $108.3 million (26% of net sales) during the same period in 2025, an increase of $2.6 million. Higher net sales in the Industrial Equipment Division supported the increase in gross profit. However, overall gross margin declined by 125 basis points due to lower municipal mowing volumes and temporary production inefficiencies associated with facility consolidation activities.

Previous wording

Selling, general and administrative expenses (“SG&A”) were $57.8 million (14% of net sales) during the first quarter of 2026 compared to $54.3 million (14% of net sales) during the same period of 2025, an increase of $3.5 million attributable mainly to the new acquisitions. Amortization expense in the first quarter of 2026 was $4.9 million compared to $4.0 million in the same period in 2025, an increase due to addition of the Ring-o-Matic and Petersen Industries acquisitions.

Current wording

Selling, general and administrative expenses (“SG&A”) were $60.1 million (13% of net sales) during the second quarter of 2026 compared to $57.1 million (14% of net sales) during the same period of 2025, an increase of $3.0 million attributable primarily to recent acquisitions and restructuring-related costs. Amortization expense in the second quarter of 2026 was $5.0 million compared to $4.1 million in the same period in 2025, an increase due to addition of the Ring-O-Matic and Petersen Industries acquisitions.

Previous wording

Interest expense was $4.6 million for the first quarter of 2026 compared to $3.2 million during the same period in 2025 due to increased debt related to the Petersen Industries acquisition.

Current wording

Interest expense was $4.8 million for the second quarter of 2026 compared to $3.7 million during the same period in 2025 due to increased debt related to the Petersen Industries acquisition.

Previous wording

Other net income (expense) was $0.03 million of income in the first quarter of 2026 compared to $0.7 million of expense during the same period in 2025.

Current wording

Other net income (expense) was $0.62 million of expense in the second quarter of 2026 compared to $3.2 million of expense during the same period in 2025, primarily due to lower foreign currency transaction losses.

Previous wording

Provision for income taxes was $9.9 million (25% of income before income tax) in the first quarter of 2026 compared to $10.0 million (24% of income before income tax) during the same period in 2025. The increase in the tax rate for the first quarter of 2026 was largely due to a lower expected R&D credit for 2026.

Current wording

Provision for income taxes was $10.7 million (26% of income before income tax) in the second quarter of 2026 compared to $10.3 million (25% of income before income tax) during the same period in 2025. The slight increase in the tax rate in the second quarter of 2026 was due to a lower expected R&D credit for 2026.

Previous wording

The Company’s net income after tax was $29.2 million or $2.41 per share on a diluted basis for the first quarter of 2026 compared to $31.8 million or $2.64 per share on a diluted basis for the first quarter of 2025.

Current wording

The Company’s net income after tax was $30.9 million or $2.55 per share on a diluted basis for the second quarter of 2026 compared to $31.1 million or $2.57 per share on a diluted basis for the second quarter of 2025, reflecting the factors discussed above, including restructuring, acquisition and integration expenses, lower municipal mowing volumes, and higher interest expense.

Previous wording

As of March 31, 2026, the Company had working capital of $755.7 million, a decrease of $24.0 million from working capital of $779.7 million at December 31, 2025. The decrease was primarily due to the use of cash and cash equivalents to partially fund the Petersen Industries acquisition, partly offset by revenue-driven increase in accounts receivable and inventory.

Current wording

As of June 30, 2026, the Company had working capital of $766.6 million, a decrease of $13.1 million from working capital of $779.7 million at December 31, 2025. The decrease was primarily due to the use of cash and cash equivalents to partially fund the Petersen Industries acquisition, partly offset by increases in accounts receivable and inventory.

Previous wording

Capital expenditures were $4.5 million for the first three months of 2026, compared to $6.0 million during the first three months of 2025. The Company expects a capital expenditure level of approximately $28.0 million to $33.0 million for the full year of 2026. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below

Current wording

Capital expenditures were $10.3 million for the first six months of 2026, compared to $13.0 million during the first six months of 2025. The Company expects a capital expenditure level of approximately $28.0 million to $33.0 million for the full year of 2026. 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 $169.8 million during the first three months of 2026 compared to $5.9 million during the first three months of 2025.

Current wording

Net cash used for investing activities was $171.6 million during the first six months of 2026 compared to $29.7 million during the first six months of 2025.

Previous wording

Net cash provided by financing activities was $80.2 million in the three month period ended March 31, 2026, compared to financing activities of $8.6 million during the three month period ended March 31, 2025. Higher net cash provided by financing activities for the first three months of 2026 relates to additional borrowings on bank revolving credit facilities to partially fund the Petersen Industries acquisition.

Current wording

Net cash provided by financing activities was $37.3 million during the first six months of 2026, compared to net cash used in financing activities of $15.1 million during the six month period ended June 30, 2025. Higher net cash provided by financing activities for the first six months of 2026 relates to additional borrowings on bank revolving credit facilities to partially fund the Petersen Industries acquisition.

Previous wording

The Company had $146.7 million in cash and cash equivalents held by its foreign subsidiaries as of March 31, 2026. 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.

Current wording

The Company had $133.8 million in cash and cash equivalents held by its foreign subsidiaries as of June 30, 2026. 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 March 31, 2026, $290.9 million was outstanding under the 2022 Credit Agreement, $202.5 million on the Term Facility and $88.4 million on the Revolver Facility. On March 31, 2026, $3.2 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 $308.4 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of March 31, 2026.

Current wording

On May 27, 2026, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered into a Fourth Amended and Restated Credit Agreement (the “2026 Credit Agreement”) with Bank of America, N.A., as Administrative Agent. The 2026 Credit Agreement provides Borrower with the ability to request loans and other financial obligations in an aggregate amount of up to $602.5 million. Under the 2026 Credit Agreement, the Company has borrowed $202.5 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 2031. The Term Facility requires the Company to make equal quarterly principal payments of $1.27 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 2026 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 2026 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.25% for Term SOFR borrowings and from 0.25% to 1.25% 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 0.125% to 0.30% on any unused portion of the $400.0 million Revolver Facility. The 2026 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 2026 Credit Agreement, including the Term Facility and the Revolver Facility, is May 27, 2031. As of June 30, 2026, $263.7 million was outstanding under the 2026 Credit Agreement, $201.2 million on the Term Facility and $62.5 million on the Revolver Facility. On June 30, 2026, $3.2 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 $334.3 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of June 30, 2026.

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 decreased stockholders’ equity by $3.8 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 $4.4 million.

Previous 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 $3.3 million for the three month period ended March 31, 2026. 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 $6.2 million for the six month period ended June 30, 2026. 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 first quarter 2026 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.5 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 second quarter 2026 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.3 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.