# ALAMO GROUP INC (ALG) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-12  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/ALG/thesis · /stocks/ALG/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: ALG
step: 04
title: Financial Quality & Adversarial Sweep
date: 2026-06-11
---

### Step 04 — Financial Quality: Alamo Group Inc. (ALG)

#### 1. Income Statement Quality Assessment

**Overall quality: MEDIUM-HIGH.** Alamo Group reports under US GAAP with clean revenue recognition. No material restatements, no SAB 99 issues noted, audited by PricewaterhouseCoopers. Key adjustments to GAAP:

| Adjustment | Type | FY2024 Amount | Direction | Rationale |
|------------|------|--------------|-----------|-----------|
| Intangible amortization | Add-back | +$16.2M | Non-cash | Acquisition-related; recurring but non-cash |
| Restructuring charges | Add-back | +$4.2M | One-time | FY2024 workforce reduction ($25–30M savings program) |
| Depreciation | Add-back | ~$30M | Non-cash | Capex-aligned; maintenance adequate |
| SBC | Non-cash | ~$7–9M est. | Non-cash | Low relative to revenues; minimal dilution |
| Purchase price amortization | Add-back | included above | Distorts EBITDA | Primarily Morbark/Petersen goodwill amortization |

**Adjusted EBIT (FY2024):** ~$181M ($164.8M GAAP + $16.2M amortization)
**Adjusted EBITDA (FY2024):** ~$217.9M [S2]
**Reported EBITDA margin (FY2024):** ~13.4%

*Note: "transcript analysis was not performed; this is the filings-and-consensus path."* [S3]

#### 2. Revenue Recognition

Alamo follows ASC 606 (point-in-time recognition for equipment sales upon delivery/customer acceptance). No long-term contracts with percentage-of-completion issues. Multi-year service contracts (minor portion of revenue) recognized ratably. Revenue is straightforward for a manufactured goods business. [S5]

#### 3. Working Capital and Cash Conversion

| Metric | FY2022 | FY2023 | FY2024 |
|--------|--------|--------|--------|
| Operating CF ($M) | $14.5M | $131.2M | $209.8M |
| FCF ($M) | ($16.6M) | $93.4M | $184.8M |
| FCF / Net Income | (16%) | 68% | 159% |

**FY2022 explanation:** Negative FCF driven by working capital build (~$200M inventory build) due to supply-chain backlogs creating dealer pre-buy behavior. This is the same dynamic that created the VMD channel inventory overhang in FY2024–FY2025.

**FY2024 normalization:** FCF/Net Income of 159% reflects inventory rundown (reversal of prior build) + modest CapEx. Normalized FCF/Net Income target is 80–100% per management. [S7]

#### 4. Balance Sheet Quality

| Item | FY2024 | Assessment |
|------|--------|-----------|
| Cash | $197.3M | Adequate; no liquidity concerns |
| Total Debt | $220.5M | Well-managed; nearly all term-loan / revolver |
| Net Debt | $23.2M | Near zero — best position in company history |
| Goodwill + Intangibles | ~$350–380M est. | ~26% of total assets; Morbark acquisition-driven |
| Inventory | ~$200–220M est. | Normalizing from FY2022 peak |
| Debt/EBITDA | ~0.1x | Essentially unlevered |
| Interest coverage (EBIT/interest) | ~8x | Very strong |

*Sources: XBRL + StockAnalysis [S1][S2]*

**Goodwill impairment risk:** Morbark acquisition paid ~$399.5M in 2019 for a business contributing ~$200–250M revenue. With VMD struggling, goodwill impairment testing is relevant. No impairment charges reported through FY2024, but if VMD profitability doesn't recover, impairment risk increases. *[Judgment — Medium confidence]*

#### 5. Adversarial Research Sweep

*The following section specifically searches for negative signals that could challenge the thesis: short reports, regulatory issues, accounting concerns, litigation.*

##### 5.1 Short Seller Reports
**Search results:** No notable short-seller reports identified for Alamo Group. ALG short interest is 3.73% of float as of June 2026 — low to normal range. No activist short campaigns documented. [S8]

##### 5.2 Legal/Regulatory Issues
- **Gradall labor strike (FY2024):** The Gradall division (telescopic excavators) in New Philadelphia, Ohio experienced a labor strike that depressed FY2024 IED production and contributed to Q4 2024 revenue miss. Strike was settled in FY2024. No ongoing litigation flagged. [S8]
- **Product liability:** Standard product liability exposure for capital equipment manufacturer. No material class-action or mass-tort cases identified.
- **EPA/environmental:** Manufacturing operations subject to standard environmental compliance. No material EPA enforcement actions in SEC filings.
- **Government contracting:** No suspension/debarment proceedings or FCPA issues identified.

##### 5.3 Accounting Concerns
- **Revenue timing:** No channel stuffing risk noted — Alamo ships to dealers (not directly to government), so no end-customer booking manipulation concern.
- **Inventory quality:** FY2022 inventory build was operational (supply chain response), not financial manipulation. Subsequent rundown confirms this.
- **Acquisition accounting:** Morbark acquisition at ~$400M was a meaningful premium. Integration has been challenged (VMD cycle trough coincided with Morbark integration), but no accounting irregularities noted.
- **Non-GAAP adjustments:** Company uses "Adjusted EBITDA" and "Adjusted EPS" — adjustments are limited to amortization and one-time items. Not excessive. [S5]

##### 5.4 Management Concerns
- **CEO succession:** The transition from long-tenured CEO Jeffery Leonard (retired) to Robert Hureau (Sept 2025) creates transition risk. Hureau is new to the equipment manufacturing sector (background in trailer manufacturing and specialty chemicals CFO roles). No material concerns identified, but new CEO risk is relevant. [S9]
- **CFO newness:** Agnes Kamps joined March 2024 — also relatively new. Not a red flag, but both top officers are <2 years in their roles simultaneously. [S9]

##### 5.5 Steel Tariff Risk
Section 232 steel/aluminum tariffs elevated to 50% in June 2025. Steel constitutes a significant portion of Alamo's COGS (equipment is predominantly steel-fabricated). Management has indicated tariff surcharges and pricing adjustments are being pursued, but full pass-through is not assured in the competitive government bid environment. *[Judgment — medium impact; most likely -50 to -100bps gross margin headwind]* [S8]

#### 6. Capital Structure Summary

| Item | As of Dec 31, 2024 |
|------|-------------------|
| Revolving Credit Facility | $400M authorized; ~$50–75M drawn |
| Term Loans | ~$150–175M outstanding |
| Total Gross Debt | $220.5M |
| Cash | $197.3M |
| Net Debt | $23.2M |
| Equity | $1,018.3M |
| Net Debt/Equity | 0.02x |

*By FY2025 end, net cash of $104M — reflects strong FCF and minimal M&A spending until Petersen acquisition (January 2026). The $166.5M Petersen acquisition likely re-leverages the balance sheet but remains within 1x EBITDA/Debt.* [S4]

#### 7. Key Financial Quality Metrics

| Metric | FY2022 | FY2023 | FY2024 | Assessment |
|--------|--------|--------|--------|-----------|
| Gross Margin | 24.9% | 26.8% | 25.3% | Acceptable; 100–200bps below FSS |
| Operating Margin | 9.8% | 11.7% | 10.1% | Cyclically compressed; target 13–15% |
| Net Margin | 6.7% | 8.1% | 7.1% | Adequate |
| Return on Equity | 13.0% | 14.6% | 11.4% | Declining; below cost of equity |
| Debt/EBITDA | ~1.3x | ~0.7x | ~0.1x | Excellent |
| Interest Coverage | ~10x | ~7.6x | ~8x | Strong |

#### Source Index

| ID | Source |
|----|--------|
| S1 | SEC XBRL (CIK 0000897077), 2026-06-11 |
| S2 | StockAnalysis.com ALG financials, 2026-06-11 |
| S3 | Coverage-next-full methodology |
| S5 | Alamo Group 10-K FY2024 (filed 2025-02-27) |
| S7 | Alamo Group investor presentations 2024–2025 |
| S8 | Web consensus search + news research (2026-06-11) |
| S9 | Alamo Group DEF 14A proxy statement (2025) |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/ALG/fundamental

## Navigation

- Overview: /stocks/ALG
- Financials (this page): /stocks/ALG/financials
- Thesis: /stocks/ALG/thesis
- Investment Memo: /stocks/ALG/memo
- Coverage universe: /stocks