Alamo Group (ALG) Q1 2026 earnings summary

Executive summary

• Net sales for Q1 2026 rose 7% year-over-year to $417.1 million, driven by acquisitions and modest agricultural growth, with both divisions contributing.

• Adjusted EBITDA reached $59.3 million (14.2% of sales), up sequentially, while adjusted net income was $31.1 million and reported net income was $29.2 million.

• Income from operations declined 5% to $42.2 million due to inefficiencies in Vegetation Management, partially offset by Industrial Equipment strength.

• Petersen Industries acquisition closed in January 2026, with integration and synergy realization underway.

• Backlog at March 31, 2026, was $603.0 million, down 14% year-over-year.

Financial highlights

• Gross profit was $104.8 million (25.1% of sales), up from $102.8 million, but gross margin declined from 26.3% to 25.1% due to lower municipal mowing sales and manufacturing ramp-up.

• Adjusted EPS was $2.56, down from $2.70 year-over-year but up from $1.70 sequentially; diluted EPS was $2.41.

• Cash from operations was -$23.5 million, reflecting strong sequential sales growth and backlog delivery; cash and cash equivalents at quarter-end were $195.2 million.

• Cash used in investing was $169.8 million, mainly for the Petersen acquisition and $4.5 million in capex.

• Interest expense rose to $4.6 million from $3.2 million, reflecting higher debt from the Petersen acquisition.

Outlook and guidance

• Industrial Equipment Division expected to be flattish to low single-digit growth organically in 2026, with acquisitions adding on top.

• Vegetation Management Division anticipated to stabilize, with end markets flattish or slightly down but sequentially improving.

• Temporary production inefficiencies, duplicate costs, and shipment-timing effects are expected to pressure revenue and gross margin in 2026 as optimization efforts continue.

• Full-year 2026 capital expenditures are projected at $28.0–$33.0 million.

• Long-term targets remain: 10%+ sales growth, 15% adjusted operating margin, 18%+ adjusted EBITDA margin, and 100% free cash flow/net income.