ALAMO GROUP ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER 2025
- Operating margin improved to 11.4%, up 40 basis points YoY and 130 basis points vs full year 2024
- Total debt net of cash reduced by 91.7% to $16.5 million
- Industrial Equipment Division sales grew 12.5% YoY with strong order activity
- Backlog increased 5.1% to $702.7 million from year-end 2024
- Gross margin improved by 10 basis points YoY
- Interest expense fell by almost 50% due to debt reduction
- Overall net sales declined 8.1% YoY to $391.0 million
- Vegetation Management Division sales dropped 26.8% YoY
- Net income slightly decreased to $31.8 million from $32.1 million YoY
- Potential risks from tariffs and trade disruptions noted by management
Insights
Strong operational discipline drives margin expansion and debt reduction despite mixed revenue; backlog growth signals future potential.
Alamo Group's Q1 2025 results showcase a company effectively managing through market transitions while significantly strengthening its financial foundation. Despite an 8.1% year-over-year revenue decline to
The performance divergence between divisions is particularly notable. The Industrial Equipment Division delivered
Most impressive is Alamo's balance sheet transformation. The company reduced net debt by
Forward indicators appear encouraging. Total backlog increased
With capital investments in agricultural equipment facilities completing in Q2 and full benefits expected in Q3, Alamo appears positioned for further margin expansion through 2025. While management appropriately flags uncertainty around global trade negotiations and potential tariff impacts, the company's substantially improved cost structure and financial position provide a solid foundation to navigate these challenges while pursuing growth opportunities.
Highlights:
- Net Sales of
$391.0 million 8.1% versus the same period in the prior year, up1.5% versus fourth quarter 2024- Industrial Equipment Division net sales of
$227.1 million 12.5% year-over-year - Vegetation Management Division net sales of
$163.9 million 26.8% year-over-year
- Industrial Equipment Division net sales of
- Income from operations of
$44.5 million 11.4% of net sales – an increase of 40 basis points versus the first quarter of 2024 and 130 basis points versus the full year 2024 - Net Income of
$31.8 million - Fully diluted EPS increased to
$2.64 13.5% compared to the fourth quarter of 2024 - Total debt was
$216.8 million $16.5 million $183.2 million 91.7% compared to the first quarter in 2024 (1) - Backlog at the end of the first quarter was
$702.7 million 5.1% from year-end 2024 - Trailing twelve-month EBITDA of
$217.8 million 13.7% of Net Sales (1)
First Quarter Results
First quarter 2025 net sales of
Consolidated net income was
The Company's balance sheet remained strong. Accounts receivable were
As we look ahead to the remainder of the year, we expect continued strong demand within our Industrial Equipment Division coupled with a return to modest growth within our Vegetation Management Division, following the substantial channel inventory de-stocking that occurred during 2024. In addition, we anticipate improved profitability driven by the cost reduction actions that were implemented in 2024.
Comments on Results
Jeff Leonard, Alamo Group's President and Chief Executive Officer commented, "The Company's first quarter results reflected another strong performance from our Industrial Equipment Division and notable performance improvement in our Vegetation Management Division.
First quarter sales were in line with our expectations with Industrial Equipment Division sales up nearly
We were also pleased to see that the benefits from our second-half 2024 cost reduction efforts were reflected in our first quarter 2025 results. Compared to the first quarter of 2024, gross margin improved almost 10 basis points, SG&A expenses declined more than
The governmental and industrial contractor markets continued to display robust strength despite potential risk in the form of tariffs and trade disruptions. Industrial Equipment orders exceeded the strong pace set in the first quarter of 2024, the strongest quarter of that year, and were up nearly
First quarter orders in the Vegetation Management Division were up nearly
Looking ahead, the outlook for the next several quarters remains cautiously optimistic. Trends in our markets during the first quarter were positive overall, and we expect profitability should continue to improve as we enter the seasonally stronger second and third quarters. In the second quarter, we expect to complete capital investments in our North American agricultural equipment facilities following the plant consolidations that were carried out last year. Consequently, in the third quarter of this year we expect to see the full benefit of the actions we took at the end of 2024. With rising backlog, stable to rising markets, and a meaningfully improved cost structure, the near-term prospects for the Company appear encouraging.
We also remain mindful of uncertainty tied to evolving global trade negotiations, and particularly how these developments may impact our markets. We are closely evaluating the effects of both existing and potential tariffs on our markets and operations, and are actively taking steps to mitigate our exposure. Despite the near-term volatility, we believe the Company is well positioned to further expand its operating margin and leverage our strong balance sheet to accelerate both organic and inorganic growth."
Earnings Conference Call
The Company will host a conference call to discuss the first quarter results on Friday, May 9, 2025, at 10:00 a.m. ET. Hosting the call will be members of senior management. Individuals wishing to participate in the conference call should dial (866) 524-3159 (domestic) or (412) 317-6759 (international). For interested individuals unable to join the call, a replay will be available until Friday, May 16, 2025, by dialing (877) 344-7529 (domestic) or (412) 317-0088 (internationally), passcode 3570057.
The live broadcast of Alamo Group Inc.'s quarterly conference call will be available online at the Company's website, www.alamo-group.com (under "Investor Relations/Events and Presentations") on Friday, May 9, 2025, beginning at 10:00 a.m. ET. The online replay will follow shortly after the call ends and will be archived on the Company's website for 60 days.
About Alamo Group
Alamo Group is a leader in the design, manufacture, distribution, and service of high-quality equipment for vegetation management, infrastructure maintenance and other applications. Our products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial equipment, agricultural implements, forestry equipment and related after-market parts and services. The Company, founded in 1969, has approximately 3,750 employees and operates 27 plants in
Forward Looking Statements
This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: adverse economic conditions which could lead to a reduction in overall market demand, supply chain disruptions, labor constraints, increasing costs due to inflation, disease outbreaks, geopolitical risks, including tariffs, trade wars, and the effects of the war in the
(Tables Follow)
(1) This is a non-GAAP financial measure or other information relating to our GAAP financial measures that we have provided to investors in order to allow greater transparency and a deeper understanding of our financial condition and operating results. For a reconciliation of the non-GAAP financial measure or for a more detailed explanation of financial results, refer to "Non-GAAP Financial Measure Reconciliation" below and the Attachments thereto. |
Alamo Group Inc. and Subsidiaries Condensed Consolidated Statements of Income (in thousands, except per share amounts) (Unaudited) | ||||
Three Months Ended | ||||
3/31/2025 | 3/31/2024 | |||
Net sales: | ||||
Vegetation Management | $ 163,890 | $ 223,747 | ||
Industrial Equipment | 227,060 | 201,839 | ||
Total net sales | 390,950 | 425,586 | ||
Cost of sales | 288,109 | 313,954 | ||
Gross margin | 102,841 | 111,632 | ||
26.3 % | 26.2 % | |||
Selling, general and administration expense | 54,330 | 60,594 | ||
Amortization expense | 4,049 | 4,059 | ||
Income from operations | 44,462 | 46,979 | ||
11.4 % | 11.0 % | |||
Interest expense | (3,194) | (6,091) | ||
Interest income | 1,238 | 801 | ||
Other income (expense) | (663) | 98 | ||
Income before income taxes | 41,843 | 41,787 | ||
Provision for income taxes | 10,043 | 9,667 | ||
Net Income | $ 31,800 | $ 32,120 | ||
Net income per common share: | ||||
Basic | $ 2.65 | $ 2.69 | ||
Diluted | $ 2.64 | $ 2.67 | ||
Average common shares: | ||||
Basic | 11,990 | 11,944 | ||
Diluted | 12,048 | 12,020 | ||
Alamo Group Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands) (Unaudited) | ||||||
March 31, | March 31, | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ 200,274 | $ 121,802 | ||||
Accounts receivable, net | 339,596 | 392,940 | ||||
Inventories | 356,406 | 384,488 | ||||
Other current assets | 14,958 | 16,301 | ||||
Total current assets | 911,234 | 915,531 | ||||
Rental equipment, net | 57,198 | 43,102 | ||||
Property, plant and equipment | 159,183 | 164,810 | ||||
Goodwill | 204,582 | 205,452 | ||||
Intangible assets | 147,899 | 163,909 | ||||
Other non-current assets | 24,598 | 26,616 | ||||
Total assets | $ 1,504,694 | $ 1,519,420 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Trade accounts payable | $ 104,977 | $ 103,409 | ||||
Income taxes payable | 18,725 | 17,596 | ||||
Accrued liabilities | 73,006 | 77,349 | ||||
Current maturities of long-term debt and finance lease obligations | 15,009 | 15,008 | ||||
Total current liabilities | 211,717 | 213,362 | ||||
Long-term debt, net of current maturities | 201,789 | 306,525 | ||||
Long-term tax liability | 626 | 2,633 | ||||
Other long-term liabilities | 24,201 | 24,335 | ||||
Deferred income taxes | 9,300 | 16,009 | ||||
Total stockholders' equity | 1,057,061 | 956,556 | ||||
Total liabilities and stockholders' equity | $ 1,504,694 | $ 1,519,420 | ||||
Alamo Group Inc.
Non-GAAP Financial Measures Reconciliation
From time to time, Alamo Group Inc. may disclose certain "non-GAAP financial measures" in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustments that effectively exclude or include amounts from the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Alamo Group are provided as additional information to investors in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.
Attachment 1 discloses Operating Income, Adjusted Net Income and Adjusted Diluted EPS, related to the impact of non-recurring items, of which are non-GAAP financial measures. Attachment 2 discloses a non-GAAP financial presentation related to the impact of currency translation on net sales by division. Attachment 3 shows the net change in our total debt net of cash and earnings before interest, taxes, depreciation and amortization ("EBITDA") which is a non-GAAP financial measure. The Company considers this information useful to investors to allow better comparability of period-to-period operating performance. Attachment 4 reflects Division performance inclusive of non-GAAP financial measures such as backlog and earnings before interest, tax, depreciation and amortization ("EBITDA").
Attachment 1 | ||||
Alamo Group Inc. Non-GAAP Financial Reconciliation (in thousands, except per share numbers) (Unaudited)
| ||||
Impact of Non-recurring Items | ||||
Three Months Ended | ||||
March 31, | ||||
2025 | 2024 | |||
Operating Income - GAAP | $ 44,462 | $ 46,979 | ||
(add: workforce reduction) | 82 | 481 | ||
Adjusted Operating Income - non-GAAP | $ 44,544 | $ 47,460 | ||
Net Income - GAAP | $ 31,800 | $ 32,120 | ||
(add: workforce reduction) | 62 | 370 | ||
Adjusted Net Income - non-GAAP | $ 31,862 | $ 32,490 | ||
Diluted EPS - GAAP | $ 2.64 | $ 2.67 | ||
(add: workforce reduction) | 0.01 | 0.03 | ||
Adjusted Diluted EPS - non-GAAP | $ 2.65 | $ 2.70 | ||
Attachment 2 | |||||||||
Alamo Group Inc. Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
| |||||||||
Impact of Currency Translation on Net Sales by Division | |||||||||
Three Months Ended March 31, | Change due to currency | ||||||||
2025 | 2024 | % change | $ | % | |||||
Vegetation Management | $ 163,890 | $ 223,747 | (26.8) % | $ (3,129) | (1.4) % | ||||
Industrial Equipment | 227,060 | 201,839 | 12.5 % | (2,907) | (1.4) % | ||||
Total net sales | $ 390,950 | $ 425,586 | (8.1) % | $ (6,036) | (1.4) % | ||||
Attachment 3 | ||||||
Alamo Group Inc. Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
| ||||||
Consolidated Net Change of Total Debt, Net of Cash | ||||||
March 31, 2025 | March 31, 2024 | Net Change | ||||
Current maturities | $ 15,009 | $ 15,008 | ||||
Long-term debt,net of current | 201,789 | 306,525 | ||||
Total debt | $ 216,798 | $ 321,533 | ||||
Total cash | 200,274 | 121,802 | ||||
Total Debt Net of Cash | $ 16,524 | $ 199,731 | $ (183,207) | |||
EBITDA | ||||||||
Three Months Ended | Trailing Twelve Months Ended | |||||||
March 31, 2025 | March 31, 2024 | March 31, 2025 | December 31, 2024 | |||||
Net Income | $ 31,800 | $ 32,120 | $ 115,610 | $ 115,930 | ||||
Interest, net | 1,956 | 5,290 | 14,577 | 17,911 | ||||
Provision for income taxes | 10,043 | 9,667 | 34,074 | 33,698 | ||||
Depreciation | 9,445 | 8,935 | 37,367 | 36,857 | ||||
Amortization | 4,049 | 4,059 | 16,217 | 16,227 | ||||
EBITDA | $ 57,293 | $ 60,071 | $ 217,845 | $ 220,623 | ||||
Attachment 4 | ||||
Alamo Group Inc. Non-GAAP Financial Reconciliation (in thousands) (Unaudited)
| ||||
Vegetation Management Division Performance | ||||
Three Months Ended March 31, | ||||
2025 | 2024 | |||
Backlog | $ 189,493 | $ 271,805 | ||
Net Sales | 163,890 | 223,747 | ||
Income from Operations | 13,312 | 21,679 | ||
8.1 % | 9.7 % | |||
Depreciation | 4,052 | 4,333 | ||
Amortization | 2,920 | 2,931 | ||
Other income (expense) | (303) | 172 | ||
EBITDA | 19,981 | 29,115 | ||
12.2 % | 13.0 % | |||
Industrial Equipment Division Performance | ||||
Three Months Ended March 31, | ||||
2025 | 2024 | |||
Backlog | $ 513,215 | $ 559,497 | ||
Net Sales | 227,060 | 201,839 | ||
Income from Operations | 31,150 | 25,300 | ||
13.7 % | 12.5 % | |||
Depreciation | 5,393 | 4,602 | ||
Amortization | 1,129 | 1,128 | ||
Other income (expense) | (360) | (74) | ||
EBITDA | 37,312 | 30,956 | ||
16.4 % | 15.3 % | |||
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SOURCE Alamo Group Inc.
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