Executive Summary

Q2 revenue was $419.1M (+0.7% YoY; +7.2% QoQ), driven by 17.6% organic growth in Industrial Equipment; Vegetation Management declined 15.7% YoY but improved 8.8% sequentially . EPS was $2.57; EPS was negatively impacted by FX (~$0.21/share) from USD revaluation in Canadian entities .
Versus Wall Street: revenue beat consensus ($419.1M vs $409.5M*), EBITDA slightly beat ($60.9M* vs $59.5M*), but EPS modestly missed ($2.57 vs $2.71*) due to FX and mix; 3 EPS and 4 revenue estimates for Q2*.
Operating margin expanded 83 bps YoY to 11.2% on cost controls and factory efficiencies; Industrial operating margin reached 14.3% (+93 bps YoY) while Vegetation was 7.1% (with consolidation-related costs) . Backlog remained healthy at $687.2M (Industrial $509.6M; Vegetation $177.6M) and net debt fell to ~$11.3M .
Management noted robust demand in government/industrial channels (vacuum trucks and snow removal both >20% YoY) and reiterated a constructive outlook: Industrial strength through year-end and into 2026; Vegetation improvement to continue as consolidations complete and orders build .

What Went Well and What Went Wrong

What Went Well

Industrial Equipment executed strongly: sales +17.6% YoY; vacuum trucks and snow removal up >20%; division operating margin expanded nearly 100 bps to 14.3% on efficiencies and demand .
“Ordering activity remained robust across all product groups, and backlog at quarter end… remained above $0.5 billion” .
Cost discipline and efficiencies: SG&A down 6.1% YoY; consolidated operating margin +83 bps YoY to 11.2% . CFO highlighted interest expense down on lower debt .
Balance sheet strength and cash: net debt nearly zero ($11.3M), a 93.5% YoY improvement; TTM EBITDA $219.1M (13.7% margin); YTD operating cash flow $36.9M .

What Went Wrong

Vegetation Management still soft YoY: sales -15.7% YoY; operating margin 7.1% reflecting consolidation-related productivity drag and unfavorable forestry mix; management does not expect margin improvement until Q4 .
FX headwind hit EPS by ~$0.21/share due to USD revaluation in Canada (vs a +$0.02 tailwind in Q2’24) .
Tariffs and labor: tariff uncertainty persists (inflation risk), and management flagged tightening labor as a capacity constraint to monitor . CEO reiterated tariffs are being mitigated via production shifts (Canada→U.S.) and supplier pushback .

Financial Results

Consolidated performance vs prior quarters

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$385.323	$390.950	$419.073
Gross Margin %	23.8%	26.3%	25.8%
Operating Income ($M)	$34.441	$44.462	$47.078
Operating Margin %	8.9%	11.4%	11.2%
Net Income ($M)	$28.081	$31.800	$31.106
Diluted EPS ($)	$2.33	$2.64	$2.57
Interest Expense ($M)	$3.473	$3.194	$3.684

Note: On the Q2 call, the CEO misstated EPS as “$1.57”; GAAP diluted EPS was $2.57 .

Q2 2025 vs Wall Street consensus (S&P Global)

Metric	Q2 2025 Actual	Q2 2025 Consensus	Surprise
Revenue ($M)	$419.073	$409.450*	+$9.623 (+2.3%)*
Diluted EPS ($)	$2.57	$2.71*	-$0.14 (-5.2%)*
EBITDA ($M)	$60.928*	$59.500*	+$1.428 (+2.4%)*

Values with asterisk (*) retrieved from S&P Global.

Segment performance and mix

Segment	Q4 2024	Q1 2025	Q2 2025
Vegetation Mgmt Net Sales ($M)	$159.802	$163.890	$178.358
Vegetation Mgmt Operating Margin %	4.0%	8.1%	7.1%
Industrial Equip Net Sales ($M)	$225.521	$227.060	$240.715
Industrial Equip Operating Margin %	12.4%	13.7%	14.3%

KPIs and balance sheet

KPI	Q4 2024	Q1 2025	Q2 2025
Backlog – Total ($M)	$668.6	$702.7	$687.2
Backlog – Vegetation ($M)	$187.1	$189.5	$177.6
Backlog – Industrial ($M)	$481.5	$513.2	$509.6
DSO (days)	—	78	81
Inventory ($M)	$343.363	$356.406	$372.074
Cash & Equivalents ($M)	$197.274	$200.274	$201.823
Total Debt ($M)	$220.481	$216.798	$213.115
Net Debt ($M)	$23.207	$16.524	$11.292

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company revenue/margins	FY 2025	No formal numeric guidance	No formal numeric guidance; outlook constructive (Industrial strong through YE and into 2026; Vegetation improving)	Maintained qualitative outlook
Industrial Equipment	2H25/2026	Strength expected	Strong through YE and into 2026	Maintained/affirmed
Vegetation Mgmt	2H25	Modest recovery expected	Continued sequential improvement; margin recovery skewed to Q4 given mix/productivity	Improved trajectory; timing clarified
Dividend	Ongoing	$0.30/quarter announced Jul 1, 2025	CFO reiterated quarterly dividend of $0.30	Maintained

No quantitative ranges for revenue, EPS, margins, OpEx or tax were issued in Q2.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 & Q1’25)	Current Period (Q2’25)	Trend
Tariffs/macro	Monitoring; ability to adjust manufacturing; risk of broad reciprocal tariffs . Modeled 1–2% COGS impact; supplier pushback; shift production from Canada to U.S. .	Tariffs remain uncertain; mitigation via production shifts and supplier negotiations continues; FX hit EPS $0.21 .	Managed but ongoing risk.
Vegetation demand	Persistent softness; bookings improved sequentially in 2024 . Five straight quarters of booking gains; backlog building .	Sales -15.7% YoY but +8.8% QoQ; bookings improved; margin pressured by productivity/mix; expect gradual improvement, margin lift skewed to Q4 .	Gradual recovery; margin recovery lag.
Industrial strength	Double-digit growth and strong profitability . Record sales; strong demand in vacuum trucks/snow .	Sales +17.6% YoY; vacuum/snow >20% YoY; margin to 14.3%; backlog >$0.5B .	Sustained outperformance.
Capacity & labor	Facility consolidations; cost takeout . Consolidations ongoing; more efficiencies coming .	Capacity adequate; labor tightening emerging as a constraint .	Watch labor tightness.
M&A/capital allocation	Expect more activity in 2025 . Active pipeline; M&A priority .	Acquired Ring-O-Matic; pipeline active to accelerate growth .	Accelerating.
R&D/technology	—	Rebalanced R&D: less near-term electrification push; prepping for emissions changes .	Pivoting to regulatory-driven roadmap.
Regional trends	Europe softer; NA government strong .	North/South America government demand solid; Europe softer in mowing; forestry mixed .	Mixed; NA stronger.

Management Commentary

“Strong organic growth in the Industrial Equipment Division… sales of vacuum trucks and snow removal equipment increased more than 20%… operating efficiencies… drove nearly one hundred basis point margin expansion to 14.3%” .
“Vegetation Management Division… net sales… down approximately 16%… but rose nearly 9% sequentially… operating margin reflected the effects of recent facility consolidation costs” .
CFO: “Interest expense decreased… driven by significantly lower debt levels… operating cash flow year to date was $36.9 million… total debt was $213.1 million and debt net of cash was $11.3 million” .
Outlook: “Industrial Equipment… strong performance through at least the end of the year and into 2026… Vegetation… poised to improve further… mindful of… trade uncertainty” .

Q&A Highlights

Vegetation trajectory: Management expects sequential revenue build in Q3 and Q4, but forestry mix/cancellations limit near-term margin recovery; any margin inflection more likely in Q4 .
Tariffs: Biggest risk is snow business across U.S./Canada; mitigation via shifting production to U.S.; inflationary impact so far “far less significant” than expected; supplier pushbacks continue .
Capacity & labor: Plants have headroom (Wisconsin, Huntsville), but labor is tightening and being monitored closely .
Capital allocation/R&D: M&A remains first priority; Ring-O-Matic seen as strategic rental platform; R&D pivoting from near-term electrification emphasis to emissions compliance .
Succession: CEO succession process “well advanced” and expected to conclude in Q3 (subsequently, ALG named Robert P. Hureau CEO effective Sept 2, 2025) .

Estimates Context

Q2 2025 results vs S&P Global consensus: revenue beat ($419.1M vs $409.5M*), EBITDA beat ($60.9M* vs $59.5M*), EPS missed ($2.57 vs $2.71*), with 4 revenue and 3 EPS estimates contributing to the consensus*. FX headwinds ($0.21/share) and unfavorable forestry mix explain the modest EPS shortfall despite operating leverage .
Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

Industrial Equipment is the engine: sustained double-digit growth, >$0.5B backlog, and margin expansion to 14.3% provide visibility through YE and into 2026 .
Vegetation is bottoming: orders rising for a fifth consecutive quarter and sequential sales up 8.8%, but forestry mix/productivity limit near-term margins; expect improvement skewed to Q4 .
Quality of earnings: consolidated operating margin expanded 83 bps YoY to 11.2% on SG&A discipline and factory efficiencies; FX shaved $0.21 from EPS, masking underlying strength .
Balance sheet optionality: net debt ~$11M and strong cash generation position ALG to execute tuck-ins like Ring‑O‑Matic and pursue larger M&A from an increasingly active pipeline .
Tariff/labor watch items: tariff regime remains a macro swing factor but is being mitigated by footprint actions; labor tightening could constrain capacity if demand accelerates further .
Dividend intact: $0.30 quarterly dividend maintained, signaling confidence while preserving flexibility for M&A .
Trading set-up: Revenue/EBITDA beats vs consensus but EPS miss on FX/mix create a nuanced tape; catalysts include continued Industrial outperformance, evidence of Vegetation margin turn in Q4, and M&A updates .

Sources: Q2 2025 8‑K and press release, Q2 2025 earnings call, Q1 2025 and Q4 2024 filings and releases, and S&P Global consensus as noted.

Citations:

Q2 2025 press release and 8‑K:
Q2 2025 earnings call transcript:
Q1 2025 8‑K and call:
Q4 2024 8‑K:
Dividend PR (Jul 1, 2025):
CEO succession PR (Aug 18, 2025):

ALAMO GROUP INC (ALG)·Q2 2025 Earnings Summary