ALAMO GROUP INC

Previous wording

As part of our ongoing efforts to optimize operations in both of our Divisions, we have relocated applicable product families, sold the Gibson City, IL facility, repurposed one facility to support other brands, and completed initial setups for portions of the production lines. As we continue our optimization efforts throughout the rest of the year, we expect temporary production inefficiencies, duplicate costs, and shipment-timing effects that may pressure revenue and gross margin, along with potentially one-time expenses related to relocation and facility exit. Following completion, we expect improved capacity utilization, service levels and structural cost reductions. The anticipated timing, costs and benefits are forward-looking and subject to the risks and uncertainties described under “Forward- Looking Information.”

Current wording

Beginning in 2025, as part of our ongoing efforts to optimize operations in both of our Divisions, we have relocated applicable product families, sold the Gibson City, IL facility, sold the New Berlin, WI facility, repurposed one facility to support other brands, and completed initial setups for portions of the production lines. As we continue our optimization efforts, we expect temporary production inefficiencies, duplicate costs, and shipment-timing effects that may pressure revenue and gross margin, along with potentially one-time expenses related to relocation and facility exit. Following completion, we expect improved capacity utilization, service levels and structural cost reductions.

Previous wording

Selling, general and administrative expenses (“SG&A”) were $60.1 million (13% of net sales) during the second quarter of 2026 compared to $57.1 million (14% of net sales) during the same period of 2025, an increase of $3.0 million attributable primarily to recent acquisitions and restructuring-related costs. Amortization expense in the second quarter of 2026 was $5.0 million compared to $4.1 million in the same period in 2025, an increase due to addition of the Ring-O-Matic and Petersen Industries acquisitions.

Current wording

Selling, general and administrative expenses (“SG&A”) were $67.6 million (17% of net sales) during the third quarter of 2026 compared to $59.9 million (14% of net sales) during the same period of 2025, an increase of $7.7 million attributable primarily to costs associated with dispositions of approximately $9.0 million as well as the impact from our recent acquisition of Petersen Industries (See Note 3 and Note 2, respectively). Amortization expense in the third quarter of 2026 was $5.1 million compared to $4.2 million in the same period in 2025, an increase due to the acquisition of Petersen Industries.

Previous wording

Interest expense was $4.8 million for the second quarter of 2026 compared to $3.7 million during the same period in 2025 due to increased debt related to the Petersen Industries acquisition.

Current wording

Interest expense was $3.9 million for the third quarter of 2026 compared to $3.9 million during the same period in 2025 due to increased weighted-average outstanding debt related to the Petersen Industries acquisition, offset by lower interest rates comparatively, and lower supplier financing related interest expense.

Previous wording

Other net income (expense) was $0.62 million of expense in the second quarter of 2026 compared to $3.2 million of expense during the same period in 2025, primarily due to lower foreign currency transaction losses.

Current wording

Other net income (expense) was $3.6 million of income in the third quarter of 2026 compared to $0.2 million of expense during the same period in 2025, primarily due to gains incurred from the sale of facilities, partly offset by costs associated with divestitures.

Previous wording

Net sales for the first six months of 2026 were $867.9 million, an increase of $57.9 million or 7% compared to $810.0 million for the first six months of 2025. The increase in net sales during the first six months of 2026 was driven primarily by the acquisitions of Ring-O-Matic and Petersen Industries in the Industrial Equipment Division, along with improvement in agricultural and tree care markets within the Vegetation Management Division.

Current wording

Net sales for the first nine months of 2026 were $1,271.0 million, an increase of $40.9 million or 3% compared to $1,230.1 million for the first nine months of 2025. The increase in net sales was driven primarily by the acquisitions of Ring-O-Matic and Petersen Industries in the Industrial Equipment Division, along with improvement in agricultural and tree care markets within the Vegetation Management Division.

Previous wording

Net sales in the Industrial Equipment Division were $513.4 million during the first six months of 2026 compared to $467.8 million for the same period in 2025, an increase of $45.6 million or 10%. The increase in net sales for the first six months of 2026 compared to the first six months of 2025 was mainly due the acquisition of Ring-O-Matic and Petersen Industries.

Current wording

Net sales in the Industrial Equipment Division were $746.1 million during the first nine months of 2026 compared to $714.8 million for the same period in 2025, an increase of $31.3 million or 4%. The increase in net sales was mainly due to the acquisitions of Ring-O-Matic and Petersen Industries, partly offset by a decline in our snow and sweepers businesses.

Previous wording

Net sales in the Vegetation Management Division increased during the first six months by $12.3 million or 4% to $354.5 million for 2026 compared to $342.2 million during the same period in 2025. The increase was due to improvements in the agricultural and tree care businesses, partially offset by weakness in the municipal mowing markets.

Current wording

Net sales in the Vegetation Management Division increased during the first nine months by $9.6 million or 2% to $524.9 million for 2026 compared to $515.3 million during the same period in 2025. The increase was due to improvements in the agricultural and tree care businesses, partially offset by weakness in municipal mowing and impacts from disposition-related charges incurred in our third fiscal quarter.

Previous wording

SG&A expenses were $117.8 million (14% of net sales) during the first six months of 2026 compared to $111.5 million (14% of net sales) during the same period of 2025, an increase of $6.3 million attributable primarily to recent acquisitions, including Ring-O-Matic and Petersen Industries, as well as restructuring-related costs. Amortization expense in the first six months of 2026 was $9.9 million compared to $8.1 million in the same period in 2025, an increase due to acquisitions. ease of $0.0 million.

Current wording

SG&A expenses were $185.5 million (15% of net sales) during the first nine months of 2026 compared to $171.4 million (14% of net sales) during the same period of 2025, an increase of $14.1 million attributable primarily to recent acquisitions (See Note 2), as well as divestiture-activity and restructuring-related costs. Amortization expense in the first nine months of 2026 was $15.0 million compared to $12.3 million in the same period in 2025, an increase stemming from recent acquisitions.

Previous wording

Interest expense was $9.4 million for the first six months of 2026 compared to $6.9 million during the same period in 2025, an increase of $2.5 million following acquisition of Petersen Industries in January 2026.

Current wording

Interest expense was $13.3 million for the first nine months of 2026 compared to $10.8 million during the same period in 2025, an increase of $2.5 million following the acquisition of Petersen Industries in January 2026 which led to greater average outstanding debt balances comparatively.

Previous wording

Provision for income taxes was $20.5 million (25% of income before income taxes) during the first six months of 2026 compared to $20.3 million (24% of income before income taxes) during the same period in 2025. The increase in the effective tax rate was primarily due to a lower expected R&D credit in 2026.

Current wording

Provision for income taxes was $23.1 million (27% of Income before income taxes) during the first nine months of 2026 compared to $29.9 million (25% of Income before income taxes) during the same period in 2025. The increase in the effective tax rate was primarily due to the effect of several unfavorable rate items, including the impact from certain assets that were deemed held for sale and marked down to fair value (see Note 3).

Previous wording

As of June 30, 2026, the Company had working capital of $766.6 million, a decrease of $13.1 million from working capital of $779.7 million at December 31, 2025. The decrease was primarily due to the use of cash and cash equivalents to partially fund the Petersen Industries acquisition, partly offset by increases in accounts receivable and inventory.

Current wording

As of September 30, 2026, the Company had working capital, defined as current assets less current liabilities, of $751.6 million, a decrease of $28.1 million from working capital of $779.7 million at December 31, 2025. The decrease was primarily due to the use of cash and cash equivalents to partially fund the Petersen Industries acquisition (see Note 2), partly offset by increases in accounts receivable and inventory.

Previous wording

Capital expenditures were $10.3 million for the first six months of 2026, compared to $13.0 million during the first six months of 2025. The Company expects a capital expenditure level of approximately $28.0 million to $33.0 million for the full year of 2026. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below.

Current wording

Capital expenditures were $16.1 million for the first nine months of 2026, compared to $25.4 million during the first nine months of 2025. The Company expects a capital expenditure level of approximately $22.0 million to $27.0 million for the full year of 2026. The Company will fund any future expenditures from operating cash flows or through our revolving credit facility, described below.

Previous wording

Net cash used for investing activities was $171.6 million during the first six months of 2026 compared to $29.7 million during the first six months of 2025.

Current wording

Net cash used for investing activities was $161.0 million during the first nine months of 2026 compared to $41.9 million during the first nine months of 2025.

Previous wording

Net cash provided by financing activities was $37.3 million during the first six months of 2026, compared to net cash used in financing activities of $15.1 million during the six month period ended June 30, 2025. Higher net cash provided by financing activities for the first six months of 2026 relates to additional borrowings on bank revolving credit facilities to partially fund the Petersen Industries acquisition.

Current wording

Net cash provided by financing activities was $2.6 million during the first nine months of 2026, compared to net cash used in financing activities of $23.6 million during the nine month period ended September 30, 2025. Higher net cash provided by financing activities for the first nine months of 2026 relates to additional borrowings on bank revolving credit facilities to partially fund the Petersen Industries acquisition.

Previous wording

The Company had $133.8 million in cash and cash equivalents held by its foreign subsidiaries as of June 30, 2026. The majority of these funds are at our European and Canadian facilities. The Company will repatriate European and Canadian cash and cash equivalents as needed to fund operating and investing activities, and will monitor exchange rates to determine the appropriate timing of such repatriation given the current relative value of the U.S. dollar. Repatriated funds will be used to reduce debt levels, and to fund working capital, capital investments, and acquisitions company-wide.

Current wording

The Company had $154.8 million in cash and cash equivalents held by its foreign subsidiaries as of September 30, 2026. The majority of these funds are at our European and Canadian facilities. The Company will repatriate European and Canadian cash and cash equivalents as needed and will monitor exchange rates to determine the appropriate timing of such repatriation given the prevailing relative value of the U.S. dollar. Generally, repatriated funds will be used to reduce debt levels, and to fund working capital, capital investments, and acquisitions company-wide.

Previous wording

On May 27, 2026, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered into a Fourth Amended and Restated Credit Agreement (the “2026 Credit Agreement”) with Bank of America, N.A., as Administrative Agent. The 2026 Credit Agreement provides Borrower with the ability to request loans and other financial obligations in an aggregate amount of up to $602.5 million. Under the 2026 Credit Agreement, the Company has borrowed $202.5 million pursuant to a Term Facility, while up to $400.0 million is available to the Company pursuant to a Revolver Facility which terminates in 2031. The Term Facility requires the Company to make equal quarterly principal payments of $1.27 million over the term of the loan, with the final payment of any outstanding principal amount, plus interest, due at the end of the five-year term. Borrowings under the 2026 Credit Agreement bear interest, at the Company’s option, at a Term Secured Overnight Financing Rate (“SOFR”) or a Base Rate (each as defined in the 2026 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.25% for Term SOFR borrowings and from 0.25% to 1.25% for Base Rate borrowings with the margin percentage based upon the Company's consolidated leverage ratio. The Company must also pay a commitment fee to the lenders ranging between 0.125% to 0.30% on any unused portion of the $400.0 million Revolver Facility. The 2026 Credit Agreement requires the Company to maintain two financial covenants, namely, a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on the sale of properties and limitations on liens and capital expenditures. The Agreement also contains other customary covenants, representations and events of defaults. The expiration date of the 2026 Credit Agreement, including the Term Facility and the Revolver Facility, is May 27, 2031. As of June 30, 2026, $263.7 million was outstanding under the 2026 Credit Agreement, $201.2 million on the Term Facility and $62.5 million on the Revolver Facility. On June 30, 2026, $3.2 million of the revolver capacity was committed to irrevocable standby letters of credit issued in the ordinary course of business as required by vendors' contracts resulting in $334.3 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of June 30, 2026.

Current wording

Agreement bear interest, at the Company’s option, at a Term Secured Overnight Financing Rate (“SOFR”) or a Base Rate (each as defined in the 2026 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.25% for Term SOFR borrowings and from 0.25% to 1.25% for Base Rate borrowings with the margin percentage based upon the Company's consolidated leverage ratio. The Company must also pay a commitment fee to the lenders ranging between 0.125% to 0.30% on any unused portion of the $400.0 million Revolver Facility. The 2026 Credit Agreement requires the Company to maintain two financial covenants, namely, a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The Agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on the sale of properties and limitations on liens and capital expenditures. The Agreement also contains other customary covenants, representations and events of defaults. The expiration date of the 2026 Credit Agreement, including the Term Facility and the Revolver Facility, is May 27, 2031. As of September 30, 2026, $233.1 million was outstanding under the 2026 Credit Agreement, $200.0 million on the Term Facility and $33.1 million on the Revolver Facility. On September 30, 2026, $3.3 million of the revolver capacity was committed to irrevocable standby letters of credit issued in the ordinary course of business as required by vendors' contracts resulting in $363.6 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of September 30, 2026.

Previous wording

As of June 30, 2026, we believe our financial position remains robust, supported by a strong balance sheet and healthy cash flow from operations. Our available liquidity, comprised of cash and cash equivalents, along with access to undrawn credit facilities, ensures that we are well equipped to meet our operating needs and explore strategic initiatives that could enhance shareholder value. We continuously evaluate our capital allocation strategy, including potentially repurchasing shares under the share repurchase program adopted by the Company and approved by the Board of Directors as announced on October 31, 2024 if it aligns with our strategic priorities and is deemed to be in the best interest of our shareholders. We believe that repurchasing our shares would be a prudent use of capital, provided appropriate market conditions exist.

Current wording

We believe our financial position remains robust, supported by a strong balance sheet and healthy cash flows from operations. Our available liquidity, comprised of cash and cash equivalents, along with access to undrawn credit facilities, ensures that we are well equipped to meet our operating needs and explore strategic initiatives that could enhance shareholder value. We continuously evaluate our capital allocation strategy, including potentially repurchasing shares under the share repurchase program adopted by the Company and approved by the Board of Directors as announced on October 31, 2024, if it aligns with our strategic priorities and is deemed to be in the best interest of our shareholders. We believe that repurchasing our shares would be a prudent use of capital, provided appropriate market conditions exist.

Previous wording

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity. The total foreign currency translation adjustment for the current quarter decreased stockholders’ equity by $4.4 million.

Current wording

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity. The total foreign currency translation adjustment for the current quarter decreased stockholders’ equity by $1.4 million.

Previous wording

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in Europe and Canada, as a result of the sales of its products in international markets. Forward currency contracts are used to hedge against the earnings effects of such fluctuations. The result of a uniform 10% strengthening or 10% decrease in the value of the dollar relative to the currencies in which the Company’s sales are denominated would result in a change in gross profit of $6.2 million for the six month period ended June 30, 2026. A stronger U.S. dollar would unfavorably impact gross profit while a weaker U.S. dollar would provide a favorable impact to gross profit. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, which include a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

Current wording

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in Europe and Canada, as a result of the sales of its products in international markets. Forward currency contracts are used to hedge against the earnings effects of such fluctuations. The result of a uniform 10% strengthening or 10% decrease in the value of the dollar relative to the currencies in which the Company’s sales are denominated would result in a change in gross profit of $8.5 million for the nine month period ended September 30, 2026. A stronger U.S. dollar would unfavorably impact gross profit while a weaker U.S. dollar would provide a favorable impact to gross profit. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, which include a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

Previous wording

The Company’s long-term debt bears interest at variable rates. Accordingly, the Company’s net income is affected by changes in interest rates. Assuming the current level of borrowings at variable rates and a two percentage point change for the second quarter 2026 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.3 million. To protect the Company's long-term debt from fluctuations in interest rates, the Company may enter into interest rate swaps to mitigate exposure. However, this analysis assumes no such actions. Further this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.

Current wording

The Company’s long-term debt bears interest at variable rates. Accordingly, the Company’s net income is affected by changes in interest rates. Assuming the current level of borrowings at variable rates and a two percentage point change for the third quarter 2026 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $1.2 million. To protect the Company's long-term debt from fluctuations in interest rates, the Company may enter into interest rate swaps to mitigate exposure. However, this analysis assumes no such actions. Further this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.