Alamo Group Reports 8% Decrease in Q1 2025 Net Sales, Driven by Vegetation Management Division

Alamo Group Inc. reported a decrease in financial performance for the first quarter of 2025, with total net sales of $390.95 million, down 8% from $425.59 million in the same period of 2024. The decline was primarily attributed to a 27% drop in sales within the Vegetation Management Division, which generated $163.89 million compared to $223.75 million a year earlier. In contrast, the Industrial Equipment Division saw a 12% increase in sales, reaching $227.06 million, driven by strong demand for excavators, vacuum trucks, and snow removal equipment. The company's net income for the quarter was $31.8 million, slightly down from $32.12 million in the previous year, resulting in diluted earnings per share of $2.64, compared to $2.67 in 2024.

The company's gross profit for the first quarter was $102.84 million, representing 26% of net sales, a slight decrease from $111.63 million (also 26% of net sales) in the prior year. The decline in gross profit was largely due to lower sales in the Vegetation Management Division, although cost reduction initiatives implemented in 2024 helped mitigate some of the impact. Selling, general, and administrative expenses decreased to $54.33 million from $60.59 million, reflecting labor cost savings in the Vegetation Management segment. Interest expenses also fell significantly to $3.19 million from $6.09 million, attributed to debt reduction efforts.

Operationally, Alamo Group's backlog at the end of March 2025 was $702.7 million, down 15% from $831.3 million a year prior, although it showed a slight improvement of 1.3% compared to the previous quarter. The company’s working capital increased to $699.5 million, up $32.3 million from $667.2 million at the end of 2024, driven by higher accounts receivable and inventory levels. The total employee headcount remained stable, supporting the company's operational needs amid fluctuating market conditions.

Looking ahead, Alamo Group's management expressed cautious optimism, noting that while the Vegetation Management Division faces ongoing challenges, the Industrial Equipment Division continues to show strong demand. The company plans to maintain its focus on operational efficiency and cost management to navigate the current market landscape. Additionally, Alamo Group is committed to exploring strategic initiatives, including potential share repurchases, contingent on market conditions and alignment with its long-term goals. The company remains vigilant regarding external factors that could impact its performance, including economic conditions, interest rates, and supply chain dynamics.