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- **Industrial Equipment Strength**: 17% YoY growth driven by price, market share, and new product innovation.
- **Vegetation Challenges**: 9% YoY decline due to consolidation inefficiencies, but Q3 orders up double digits YoY.
- **Tariff Impact**: 2026 margins expected to absorb ~1% of sales from tariffs, partially offset by price increases.
- **Strategic Focus**: Acquisitions, operational excellence, and product innovation to drive 10%+ long-term growth.
- **Margin Targets**: 15% operating margin, 18-20% EBITDA margin, 100% free cash flow conversion.

**【CEO Opening Remarks】**
- Q3 2025 net sales: $420 million (+5% YoY), adjusted net income: $28 million (-3% YoY). 
- Industrial Equipment division: Record quarter with 17% YoY growth driven by price, market share, and Ring-O-Matic acquisition.
- Vegetation Management division: 9% YoY decline due to end market weakness and production inefficiencies from facility consolidation.
- 2026 outlook: Moderate growth in Industrial Equipment, Vegetation margin recovery by Q4/Q1 2026.

**【CFO Financial Review】**
- Gross margin: 24.2% (-90bps YoY) due to production inefficiencies and tariffs.
- SG&A: $59.9 million (+5.6% YoY), including $3.3 million in CEO transition costs.
- Industrial Equipment EBITDA margin: 15.5% vs. 15.7% YoY; Vegetation EBITDA margin: 9.7% vs. 11.5% YoY.
- Cash flow: $102 million (116% of net income) for first 9 months.

**【CEO Divisional Update】**
- **Industrial Equipment:**
  - 7 consecutive quarters of double-digit growth; Q3 2025 orders down sequentially but up 11% YoY.
  - Tariffs expected to impact 2026 margins by ~1% of sales, partially offset by price increases.
  - New product innovation (e.g., non-CDL vacuum truck) driving differentiation.
- **Vegetation Management:**
  - Q3 2025 orders up double digits YoY, book-to-bill >1.
  - Facility consolidation expected to stabilize by Q2 2026, with 200-300bps margin improvement potential.
- **Strategy Pillars:**
  1. People & Culture: Continuous improvement, leadership development.
  2. Commercial Excellence: Parts/service margin expansion, product innovation.
  3. Operational Excellence: Lean manufacturing, supply chain optimization.
  4. Acquisitions: Tuck-in deals ($100-150M revenue) targeting 15%+ EBITDA margins.

**【Q&A Highlights】**
- Vegetation margins: 10%+ achievable without revenue growth via cost savings and lean initiatives.
- Industrial margins: 2026 impact from tariffs (~1% of sales) partially offset by price increases.
- Free cash flow target: 100% of net income through-the-cycle.
- Share buyback: $50M authorized but prioritizing M&A with limited float.

Alamo Group Inc. (ALG) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

ALG

ALG fundamentals

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