Alamo Group NYSE: ALG reported mixed third-quarter results for 2026, with lower consolidated sales and adjusted earnings compared with a year earlier, while its Vegetation Management Division improved profitability and its Industrial Equipment Division posted strong order growth.
Net sales declined 4% year over year to $403.1 million, including a $7.3 million reduction related to divestiture activities. Adjusted diluted earnings per share were $2.06, compared with $2.34 in the prior-year quarter, while adjusted EBITDA totaled $52.4 million, or 13% of sales, versus $55 million, or 13.1% of sales, a year earlier.
Reported net income was $2 million, or $0.17 per diluted share, after the company recorded $33.3 million of net pretax charges tied to the sale and wind-down of certain businesses and product lines. Those charges included inventory valuation reserves, impairments of intangible and other long-lived assets, and other wind-down costs.
Margins Improve in Vegetation Management
Vegetation Management sales were $170.4 million, down 1.5% from a year earlier. Excluding the impact of divestitures, sales increased 2.7%, driven by higher volumes and favorable pricing. Adjusted EBITDA increased to $21.3 million, or 12.5% of sales, from $16.8 million, or 9.7% of sales, in the prior-year period.
President and Chief Executive Officer Robert Hureau said the sales improvement reflected better manufacturing throughput rather than a broad end-market recovery. He said U.S. agriculture and tree-care markets remain soft, though the company recorded double-digit sales increases in its U.S. Ag and Tree Care and Recycling groups excluding divestiture effects.
Municipal Mowing sales declined amid continued weakness in municipal markets, while European Ag sales were roughly flat after unusual heat affected activity late in the summer, Hureau said. He added that dealer inventories are in good condition and that the company believes it has maintained market share across many groups.
The division’s book-to-bill ratio was 0.92x, and backlog stood at $171 million, representing about three months of sales. Hureau said demand in the division’s end markets remains below the elevated levels seen from 2021 through 2023, with higher interest rates and inflation continuing to weigh on demand.
Industrial Sales Fall, but Orders Rise
Industrial Equipment sales decreased 5.8% to $232.8 million. Excluding the contribution from Petersen, which Alamo acquired in the first quarter, sales declined 12.6%. Adjusted EBITDA fell to $31.1 million, or 13.4% of sales, from $38.2 million, or 15.5% of sales, a year earlier.
Chief Financial Officer Agnes Kamps said the division faced lower volumes, material and freight inflation, and the resulting pressure on its cost structure. Favorable pricing, procurement savings, and a higher mix of parts and service partially offset those factors.
Hureau said the largest year-over-year sales impact came from the Snow group, particularly in Canada, where contractors have delayed some equipment purchases or refurbished existing trucks amid higher fuel, salt, and other costs. He said the company remains confident in the business because many contractors operate under agreements requiring strict fleet-age limits.
The Sweepers and Safety group was affected by measured spending from municipalities, although some brands serving contractor and commercial markets, including Nighthawk, posted double-digit sales growth. The Excavator and Vacuum group was roughly flat, with timing of orders affecting quarterly sales.
Industrial Equipment net orders rose 24% year over year, remaining up double digits excluding Petersen. The division’s book-to-bill ratio was 0.94x, and backlog totaled $350 million, or about 4.5 months of sales. Hureau said backlog and lead times are consistent with longer-term historical levels outside the elevated 2022-2024 period.
On margins, Hureau said material costs, freight costs, and lower volumes each contributed to the division’s year-over-year margin compression. The company implemented price increases and surcharges during the quarter and expects price-cost recovery to improve over the next quarter or two, assuming commodity costs do not move materially higher.
Econ Acquisition Adds Rental, Roadway Maintenance Operations
Alamo completed its acquisition of U.K.-based Econ Engineering after the end of the quarter for approximately $158.7 million, plus customary closing adjustments. Econ manufactures vocational trucks for year-round roadway maintenance and operates a rental fleet of its own trucks.
For its fiscal 2026, Econ generated approximately $88 million in net sales, $38 million of adjusted EBITDA, and $19 million of adjusted EBIT, according to Hureau. About half of Econ’s sales come from its original-equipment-manufacturing business, including gritters, de-icing vehicles, road-repair equipment, and multipurpose truck bodies. The other half comes from its rental fleet, which has averaged utilization above 90% in recent years.
Hureau said Econ has an estimated rental-market share of more than 80% in the U.K. and provides parts and service through its own depots. The company expects the acquisition to be accretive to earnings per share in its first full year.
On a pro forma basis, Econ would raise Alamo’s consolidated adjusted EBITDA margin from slightly above 13% to slightly below 15%, Hureau said. The acquisition follows Alamo’s earlier purchase of Petersen and aligns with the company’s strategy of completing one to two tuck-in acquisitions in a typical year.
Portfolio Simplification and Capital Position
Alamo largely completed previously announced divestitures and wind-downs involving several small businesses and product lines, nearly all within Vegetation Management. The actions represent about $30 million in annual sales that will not recur, or less than 2% of consolidated last-12-month sales and about 5% of Vegetation Management sales.
Hureau said the businesses and product lines involved were break-even at best and that the actions are expected to reduce complexity, sharpen focus on core brands, and improve margins. The company has no current plans for further divestitures, though it will continue reviewing its portfolio.
For the first nine months of 2026, operating cash flow was $83.2 million and capital expenditures were $16.1 million. Free cash flow over the last 12 months was $137.1 million, equal to 176% of net income.
At Sept. 30, Alamo held $230.7 million in cash and had $232.3 million of total debt, as well as $363.6 million of available borrowing capacity under its revolving credit facility. Pro forma for the Econ transaction, net leverage was approximately 0.7 times adjusted EBITDA, Kamps said.
The company paid $4.1 million in dividends during the quarter, reduced debt by $30.4 million, and received board approval for a quarterly dividend of $0.34 per share.
About Alamo Group (NYSE:ALG)
Alamo Group Inc NYSE: ALG manufactures equipment used in the maintenance of infrastructure, vegetation, and agricultural land. Its products are primarily sold to municipalities, government agencies, contractors, utility companies, transportation departments, and agricultural customers.
The company's product portfolio includes mowing and vegetation-management equipment, street sweepers, snow-removal equipment, vacuum trucks, excavators, agricultural implements, and other specialized machinery.
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