SEGUIN, Texas —Alamo Group Inc. (ALG) today reported results for the first quarter ended March 31, 2025.
Highlights:
- Net Sales of $391.0 million, down 8.1% versus the same period in the prior year, up 1.5% versus fourth quarter 2024
- Industrial Equipment Division net sales of $227.1 million, up 12.5% year-over-year
- Vegetation Management Division net sales of $163.9 million, down 26.8% year-over-year
- 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 per share, an improvement of almost 13.5% compared to the fourth quarter of 2024
- Total debt was $216.8 million. Total debt net of cash was further reduced to $16.5 million, representing an improvement of $183.2 million or 91.7% compared to the first quarter in 2024 (1)
- Backlog at the end of the first quarter was $702.7 million, up 5.1% from year-end 2024
- Trailing twelve-month EBITDA of $217.8 million was 13.7% of Net Sales (1)
First Quarter Results
First quarter 2025 net sales of $391.0 million declined 8.1% compared to $425.6 million in the first quarter of 2024. Gross profit of $102.8 million or 26.3% of net sales declined by $8.8 million as a result of lower net sales, however, gross margin improved by nearly 10 basis points, compared to the same period of the prior year. The Vegetation Management Division began to recover as first quarter 2025 operating margin of 8.1% reflected sequential improvement of 410 basis points, driven by the cost reduction actions completed in 2024. The Industrial Equipment Division continued to carry out operational improvements, and delivered an operating margin of 13.7%, representing 130 basis points of sequential improvement.
Consolidated net income was $31.8 million or $2.64 per diluted share, compared to $32.1 million or $2.67 per diluted share in the first quarter of 2024. The Company's backlog at the end of the first quarter increased to $702.7 million and remains healthy. Compared to the fourth quarter of 2024, Vegetation Management Division backlog held steady at $189.5 million, while Industrial Equipment Division backlog increased to $513.2 million.
The Company's balance sheet remained strong. Accounts receivable were $339.6 million with days sales outstanding of 78 days, an improvement of 6 days versus the first quarter of 2024. Inventory was $356.4 million compared to $384.5 million in the first quarter of 2024. Operating cash flow was $14.2 million, resulting in cash and cash equivalents of $200.3 million at the end of the first quarter.
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 13% and Vegetation Management sales almost 27% lower than the first quarter of 2024. We were pleased that while consolidated net sales were down 8.1% compared to the first quarter of 2024, they were modestly higher sequentially.
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 10%, and interest expense fell by almost 50% as our debt continued to decline. First quarter operating margin of 11.4% improved 40 basis points and 250 basis points as compared to the first quarter of 2024 and the fourth quarter of 2024, respectively. Notably, these results represent the best the Company has achieved since the third quarter of 2023.
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 59% versus the fourth quarter of 2024. All Industrial product lines reported solid orders, and activity in our sweeper and safety group was exceptionally strong. Backlog in the Industrial Equipment Division was $513 million, up $31.7 million or 6.6% from the backlog at the end of 2024.
First quarter orders in the Vegetation Management Division were up nearly 18% compared to the first quarter of 2024 and were also higher than the fourth quarter of 2024. We were pleased to note this positive development in what is traditionally a slower quarter in this division. Vegetation Management backlog of $189.5 million was down 30.3% compared to the first quarter of 2024 but increased for the third consecutive quarter. Compared to the first quarter of 2024, order activity was higher across all product lines in North America but declined modestly in South America and Europe. Governmental orders for mowers in North America were notably stronger.
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."
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