Linda Willy's questions to Alamo Group Inc (ALG) leadership • Q1 2025
Question
Linda Willy, on behalf of Michael Shlisky at D.A. Davidson, asked about the drivers of the year-over-year operating margin improvement, capital allocation priorities given the low net debt, and the outlook for the Vegetation Management division's recovery and dealer inventory levels.
Answer
CFO Agnes Kamps attributed the margin expansion to the successful execution of $25-$30 million in cost-cutting initiatives. CEO Jeff Leonard added that major facility consolidations were key drivers of these efficiencies. Regarding capital, Leonard emphasized that M&A is the clear top priority, citing an active pipeline of both large and tuck-in opportunities, with share buybacks as a secondary option. For the Vegetation division, he expressed optimism for a stronger second half of 2025, noting five consecutive quarters of booking improvements and a 72% reduction in channel inventory from its peak, which he expects will lead to dealer restocking starting in Q2.