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 second quarter earnings conference call. We made good progress across our key initiatives, highlighted by strong sales, improved adjusted earnings, and solid Adjusted EBITDA performance. Net sales for the second quarter of 2026 were $415.7 million, an increase of 7.6% compared to the second quarter of 2025.
Organic net sales increased 1.3% compared to the second quarter of 2025. Gross margin for the second quarter of 2026 was 24.6%, down 120 basis points compared to the second quarter of 2025. The year-over-year decline in gross margin reflected the impact of net sales mix and investments we are making to support long-term growth, partially offset by favorable pricing, procurement savings, and continued operating disciplines. SG&A expense in the second quarter of 2026 included acquisition and integration expenses, restructuring expenses, and the addition of Petersen and Ring-O-Matic businesses.
Excluding acquisition, integration, and restructuring expenses in both periods, SG&A expense as % of net sales was approximately 12.5% in the second quarter of 2026. During the second quarter of 2026, we recognized $4.3 million of acquisition integration and restructuring expenses. Adjusted EBITDA for the second quarter of 2026 was $63.9 million or 14.2% of net sales, compared to $58.8 million or 14% of net sales in the second quarter of 2025. Adjusted earnings per share on a fully diluted basis for the second quarter of 2026 were $2.82, up 7.2% compared to $2.63 in the second quarter of 2025.
| Metric | Period | Current guidance |
|---|---|---|
| Vegetation Management end-market demand | H2 2026 (full year) | flattish to down mid-single digits |
| Industrial Equipment end markets (organic) | H2 2026 | flattish, consistent with construction end markets |
| Sequential sales and earnings | Q3 and Q4 2026 | expected to move down slightly from Q2 peak per historical seasonality |
| Capital expenditures | long-term average | approximately 2% of net sales |
| Net leverage target | long-term | up to 2.5x |
| Adjusted EBITDA margin (through-cycle target) | long-term | 18% (currently ~400 bps away) |
| Adjusted operating income margin (through-cycle target) | long-term | 15% |
| Dividend payout ratio | target | approximately 15% of net income |
| Acquisitions per year | typical year | one to two tuck-ins |
| Metric | YoY | Note |
|---|---|---|
| Net sales | +7.6% to $415.7M (organic +1.3%) | Petersen and Ring-O-Matic acquisitions plus organic demand |
| Gross margin | -120 bps to 24.6% | unfavorable net sales mix and growth investments, partly offset by pricing, procurement savings, and operating discipline |
| Adjusted EBITDA | +$5.1M to $63.9M (14.2% vs 14.0%) | higher volume, procurement savings, and cost efficiency initiatives |
| Adjusted diluted EPS | +7.2% to $2.82 from $2.63 | improved earnings and operational performance |
| Industrial Equipment Division net sales | +12.8% to $271.6M (organic +2.6%) | excavator and vacuum truck strength, share gains, plus Petersen and Ring-O-Matic contributions |
| Industrial Equipment Adjusted EBITDA margin | 16.7% vs 16.8% (roughly flat) | higher volume, procurement savings, and Petersen offset by higher freight and steel costs and manufacturing streamlining costs |
| Vegetation Management net sales | +0.4% to $179.1M | growth in North American ag, tree care/recycling, and Europe offset by lower South American municipal mowing |
| Vegetation Management Adjusted EBITDA margin | 10.4% (flat vs prior year) | favorable pricing and improved operational execution offset by inflation, tariffs, and unfavorable mix |
| Net interest expense | +$1.1M to $3.6M | Petersen acquisition and related financing |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Vegetation Management demand trajectory | eight consecutive quarters of year-over-year declines | second consecutive quarter of growth; end markets stabilizing after 2021-2023 elevated levels | — |
| Municipal/DOT-served businesses (municipal mowing and sweepers) | softer in first six months as municipalities shifted budget years | orders up double digits as municipalities entered new budget year | — |
| Vegetation facility consolidations (Morbark/Rayco, Bush Hog/Rhino) | significant disruption in back half of 2025 | production lines recovered and efficient, driving second-quarter sales growth from throughput not end-market recovery | — |
| Portfolio review | announced intent to review portfolio and act on non-core lines | exiting small Netherlands waterway vegetation business by year-end; further decisions expected in H2 2026 | — |
| M&A strategy | Petersen acquisition completed earlier in 2026 as tuck-in model | pipeline strong, focus on industrial tuck-ins ($15-50M EBITDA range), Edward Rizzuti leading full-time Corporate Development | — |
| Procurement savings program | program started earlier in 2026, organized around commodities/spend | progressing well; savings begin flowing late 2026, largely 2027 due to inventory turnover timing | — |
| AI / SG&A productivity | — | early efforts to apply AI across the organization to help manage SG&A as a percentage of sales over time | — |