Alamo Group Reports 4% Decrease in Net Sales for Fiscal Year 2024

Alamo Group Inc. reported a decrease in financial performance for the fiscal year ending December 31, 2024, with net sales of $1.63 billion, down 4% from $1.69 billion in 2023. The decline was primarily attributed to a significant 20% drop in the Vegetation Management Division, which faced weakened demand in forestry, tree care, and agricultural mowing markets. In contrast, the Industrial Equipment Division saw a 19% increase in sales, reaching $843.3 million, driven by strong demand across all product lines, including excavators and vacuum trucks. Net income also fell by 15% to $115.9 million, influenced by production inefficiencies and costs associated with capacity reductions in the Vegetation Management Division.

The company's operational metrics reflected a challenging year, with a consolidated income from operations of $165 million, a 17% decrease from the previous year. The backlog of unfilled orders decreased to $669 million, down 22% from $860 million in 2023, indicating a shift in market demand. The Vegetation Management Division's backlog declined by 47%, returning to pre-COVID levels, while the Industrial Equipment Division's backlog remained more stable. Alamo Group's employee count stood at approximately 3,750, with ongoing efforts to enhance operational efficiency and implement cost-saving initiatives.

Strategically, Alamo Group continued its acquisition strategy, acquiring Royal Truck & Equipment in 2023, which is expected to bolster its presence in the highway safety and equipment market. The company also sold its Herschel Parts business in August 2024, a move that had a minor impact on overall sales. The restructuring efforts included a new five-year collective bargaining agreement at the Gradall plant, which was reached in May 2024 following a labor strike that affected second-quarter results.

Looking ahead, Alamo Group anticipates continued challenges in the market, particularly in the Vegetation Management Division, due to high interest rates and elevated channel inventories. The company plans to focus on improving operational efficiencies and enhancing product offerings to adapt to changing market conditions. Management expects that the strong demand for industrial equipment will persist, providing a counterbalance to the challenges faced in the vegetation management sector. The company remains committed to maintaining its dividend policy, having recently increased its quarterly dividend to $0.30 per share, reflecting confidence in its long-term financial health despite current market fluctuations.