Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release. I'd like to thank everyone for joining our fourth quarter earnings conference call. Gross margin for the fourth quarter of 2025 was 22.7%, down 110 basis points compared to the fourth quarter of 2024. SG&A expense in the fourth quarter of 2025 included approximately $3.2 million related to the acquisition and integration costs, restructuring costs.
For the full fiscal year 2025, our effective income tax rate was 25.6%, which was higher than the effective income tax rate for the full year of 2024. During the fourth quarter of 2025, we recognized expenses related to acquisition and integration activities of $1.6 million. Most of these costs were related to the acquisition of Petersen Industries. Both acquisition and integration expenses and the restructuring expenses are being treated as adjustments for certain non-GAAP measures as shown in the press release.
Adjusted EBITDA for the fourth quarter of 2025 was $44.8 million or 12% of net sales compared to adjusted EBITDA of $51.8 million or 13.4% of net sales for the fourth quarter of 2024. Adjusted earnings per share on a fully diluted basis for the fourth quarter of 2025 was $1.70 compared to $2.39 for the fourth quarter of 2024. Net sales in the Industrial Equipment Division for the fourth quarter of 2025 were $234.9 million, an increase of 4.2% compared to the fourth quarter of 2024. We are pleased with the continued strong performance, particularly with the adjusted EBITDA margins in the Industrial Equipment Division.
| Metric | Period | Current guidance |
|---|---|---|
| Industrial Equipment end-market growth | FY2026 | flattish to low-to-mid single digit (excluding Petersen) |
| Petersen sales contribution | FY2026 | 11/12ths of the year, slow growth, margin profile above Alamo average |
| Vegetation Management Q1 margin | Q1 2026 | sequential improvement vs Q4, approaching but below Q1 2025 ~8% adjusted operating margin |
| Sales growth | long-term through-the-cycle | 10% including acquisitions |
| Adjusted operating margin | long-term through-the-cycle | around 15% |
| Adjusted EBITDA margin | long-term through-the-cycle | around 18%-20% |
| Free cash flow as a percentage of net income | long-term through-the-cycle | 100% |
| Metric | YoY | Note |
|---|---|---|
| Net sales | -3% to $373.7M | Vegetation Management weakness in Tree Care and municipal mowing, partly offset by Industrial Equipment growth. |
| Gross margin | -110 bps to 22.7% | Inverse leverage on lower Vegetation volumes, inventory reserve charges, and tariff costs, partly offset by pricing and Industrial margin discipline. |
| SG&A expense | +9.3% to $58.3M | Included ~$3.2M of acquisition, integration and restructuring costs plus the addition of Ring-O-Matic. |
| Adjusted EBITDA | -13.5% to $44.8M (12% of sales vs 13.4%) | Sharp Vegetation Management margin compression outweighed Industrial Equipment gains. |
| Adjusted diluted EPS | $1.70 vs $2.39 | Lower sales and gross margin, led by Vegetation Management volume declines. |
| Industrial Equipment net sales | +4.2% to $234.9M | Favorable pricing, Ring-O-Matic contribution and market-share gains, partly offset by lower Snow sales. |
| Industrial Equipment adjusted EBITDA margin | +200 bps to 17.7% | Strong performance in vocational truck-related end markets and disciplined margin management. |
| Vegetation Management net sales | -13.2% to $138.7M | End-market weakness in Tree Care and municipal mowing plus slow production ramp after facility consolidation. |
| Vegetation Management adjusted EBITDA margin | -790 bps to 2.3% | Inverse leverage on fixed manufacturing and SG&A costs from lower volumes. |
| Operating cash flow (FY2025) | $177.5M vs $209.8M | Disciplined AR/AP management offset by cash used for inventory. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Industrial Equipment end markets | Very robust, double-digit growth over the past several years fueled by government-driven investments. | Growth expected to slow to flattish to low-to-mid single digit as prior external investment effects fade. | — |
| Vegetation Management end markets | Declined over the past few years, rolling over the significant 2021-2023 growth period. | Rate of decline expected to improve and stabilize before returning to growth, with early green shoots in quoting activity and healthy channel inventory. | — |
| Snow business strategy | Historically chased every last dollar of sales regardless of margin profile. | Shifting to prioritize quality of earnings and margins, accepting slightly lower sales. | — |
| M&A / capital deployment | Ring-O-Matic tuck-in closed in Q2 2025. | Petersen Industries closed January 2026; robust pipeline of $10M-$20M EBITDA tuck-ins, near-term leaning slightly more Industrial. | — |
| Product innovation | Positioned as a fast follower. | Shifting toward first mover, e.g. next-generation hybrid sweeper with proprietary electric sweeping architecture in final testing. | — |