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 first quarter earnings conference call. Net sales for the first quarter of 2026 were $417.1 million, an increase of 6.7% compared to the first quarter of 2025. Gross margin for the first quarter of 2026 was 25.1%, down 118 basis points compared to the first quarter of 2025.
SG&A expense in the first quarter of 2026 included approximately $3.5 million related to acquisition and integration costs, restructuring costs, and the addition of Petersen and Ring-O-Matic acquisitions. During the first quarter of 2026, we recognized $2.5 million of acquisition, integration, and restructuring expenses. These costs included $0.6 million, primarily related to acquisition and integration of Petersen Industries, and $1.9 million in restructuring expenses. Adjusted EBITDA for the first quarter of 2026 was $59.3 million, or 14.2% of net sales, compared to $58.3 million or 14.9% of net sales in the first quarter of 2025.
On a sequential basis, adjusted EBITDA improved significantly from the fourth quarter of 2025, when it totaled $44.8 million or 12% of net sales. Net sales in the Industrial Equipment division for the first quarter of 2026 were $241.7 million, an increase of 6.5% compared to net sales of $227.1 million in the first quarter of 2025. Excluding acquisitions, net sales declined $2.4 million or 1% compared to the first quarter of 2025, largely due to timing of orders in our snow group. We are pleased with the continued strong performance in this Division and particularly with the successful integration of Petersen's acquisition.
| Metric | Period | Current guidance |
|---|---|---|
| Industrial Equipment organic net sales growth (ex-acquisitions) | FY2026 | flattish to up very low single digits, plus acquisitions on top |
| Vegetation Management end markets | FY2026 | flattish to slightly down but sequentially improving; not expected to sustain Q1's 7% YoY growth over the balance of the year |
| Tariff impact as % of sales | 12-month basis | about 0.8%-0.9% of sales |
| Schwarze hybrid mechanical sweeper commercial launch | second half of 2026 | commercial launch planned in H2 2026 |
| Metric | YoY | Note |
|---|---|---|
| Net sales | +6.7% to $417.1M | acquisitions and improvement in Vegetation Management, partly offset by softer Industrial organic sales |
| Gross margin | -118 bps to 25.1% | Vegetation Management lower municipal mowing sales and manufacturing facilities still ramping throughput |
| Adjusted EBITDA | $59.3M (14.2%) vs $58.3M (14.9%) | higher sales dollars but lower margin from material inflation, tariffs, and growth investments |
| Adjusted diluted EPS | $2.56 vs $2.70 | lower margins including tariff headwind not present in Q1 2025 |
| Industrial Equipment net sales | +6.5% to $241.7M (-1% ex-acquisitions) | driven by Petersen and Ring-O-Matic acquisitions; organic dip from timing of snow orders |
| Industrial Equipment adjusted EBITDA | $39.7M (16.4%) vs $37.4M (16.5%) | positive pricing, procurement savings, and above-average-margin Petersen, offset by material inflation, tariffs, and investments |
| Vegetation Management net sales | +7% to $175.4M | operational improvements ramping in facilities and modest ag support, offsetting municipal mowing weakness; first YoY increase in nine quarters |
| Vegetation Management adjusted EBITDA | $19.6M (11.2%) vs $20.8M (12.7%) | volume leverage and favorable pricing offset by material inflation, tariffs, and growth investments |
| Net interest expense | $3.1M vs $2.0M | higher borrowings from the Petersen acquisition |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Industrial end market growth | very robust, growing in the high teens over the past few years, fueled by government infrastructure investment | rate of growth expected to slow in 2026 as prior external investment effects and construction spending moderate before normalizing | — |
| Vegetation Management recovery | end markets declining for the past few years after 2021-2023 highs | first YoY net sales growth in nine quarters and improving margins, though management is a bit more cautious given rising fertilizer/input/freight costs and declining 40-100hp tractor sales | — |
| Tariffs | no tariffs in Q1 2025; last quarter estimated slightly short of 1% of sales | a YoY margin headwind, netting to about 0.8%-0.9% of sales after IEEPA changes; roughly the same overall spot | — |
| Snow sales strategy | chased every dollar of sales even via lower-margin outsourced upfitting | more selective on orders emphasizing quality of earnings, causing modest top-line pressure but improving profitability while backlog and lead times stay strong | — |
| Long-term margin targets | 10%+ sales growth, 15% adjusted operating margin, 18%+ adjusted EBITDA margin, FCF ~100% of net income | targets intact via ~300 bps improvement from procurement savings, manufacturing efficiency, and parts mix, with the key remaining gap being a Vegetation end-market recovery | — |