Alamo Group Q4 Sales Down 3%, Industrial EBITDA Rises 17.7%, Veg EBITDA Slides
Alamo Group’s Industrial Equipment sales rose 4.2% year-over-year to $234.9 million, driving adjusted EBITDA up to $41.5 million, or 17.7% of sales. Overall Q4 revenue slipped 3% to $373.7 million as Vegetation Management sales fell 13.2% to $138.7 million and adjusted EBITDA dropped to $3.2 million.
1. Q4 Financial Results
Alamo Group reported fourth-quarter net sales of $373.7 million, down 3% year-over-year, with gross profit of $85.0 million and a 22.7% gross margin, down 110 basis points. Adjusted EBITDA declined to $44.8 million (12% of sales) from $51.8 million, and adjusted EPS fell to $1.70 from $2.39.
2. Industrial Equipment Division Performance
The Industrial Equipment Division delivered net sales of $234.9 million, up 4.2%, and adjusted EBITDA of $41.5 million, or 17.7% of sales, up from 15.7%. Book-to-bill in the division was 0.85x despite net orders rising 21% year-over-year, driven by pricing, the Ring-O-Matic acquisition, and market share gains.
3. Vegetation Management Challenges
Vegetation Management sales declined 13.2% to $138.7 million, with adjusted EBITDA plunging to $3.2 million, or 2.3% of sales. Management cited lower volumes, inverse leverage, inventory reserves on slow-moving lines, and manufacturing inefficiencies, while targeting an 8% adjusted operating margin in Q1 2026 and 15% through-the-cycle.
4. Cash Flow and Acquisition Activity
Full-year 2025 operating cash flow was $177.5 million with free cash flow conversion at 142% of net income. The company recorded $46.2 million in investing outflows, completed a facility expansion in France, and closed the Petersen Industries acquisition using a $120 million revolver draw and $50 million cash, leaving gross debt of $205.7 million against $309.7 million cash.