Alamo Group (ALG) Q1 2026 earnings summary

Executive summary

• Net sales for Q1 2026 reached $417.1 million, up 7% year-over-year, driven by both divisions and recent acquisitions, including Petersen.

• Adjusted EBITDA was $59.3 million (14.2% of sales), up sequentially but slightly down year-over-year; adjusted net income was $31.1 million, while reported net income was $29.2 million.

• Net income decreased 8% to $29.2 million, with diluted EPS at $2.41 compared to $2.64 in Q1 2025; adjusted EPS was $2.56.

• The Vegetation Management Division saw its first year-over-year quarterly net sales increase in nine quarters, signaling stabilization, but income from operations fell 21% due to operational inefficiencies.

• 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 net sales), up from $102.8 million in Q1 2025, but gross margin declined 118 bps year-over-year.

• SG&A expense rose to $57.8 million (14% of net sales), including $3.5 million in acquisition, integration, and restructuring costs.

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

• Cash and cash equivalents at quarter-end were $195.2 million; operating cash flow for Q1 2026 was negative $23.5 million, but LTM operating cash flow was $139.8 million.

• Working capital at March 31, 2026, was $755.7 million, down $24.0 million from year-end 2025.

Outlook and guidance

• Industrial Equipment organic sales expected to be flat to low single-digit growth in 2026, with acquisitions providing additional upside.

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

• Management expects improved capacity utilization and cost reductions after completion of facility optimization.

• 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.