ALG 10-K & 10-Q changes, risk factors and insider trading

Acquisitions are an important part of our growth strategy and we have completed a number of acquisitions over the past several years. We acquired Timberwolf in 2021 and Royal Truck in 2023.2023, Ring-O-Matic in 2025, and Petersen Industries in 2026. Acquisitions can be difficult, time-consuming, and pose a number of risks, including:

As of December 31, 2024,2025, foursix investors - Henry Crown and Company, BlackRock, Inc., Allspring Global Investments, LLC, The Vanguard Group, Dimensional Fund Advisors LP, and AllspringVictory GlobalCapital Investments,Management LLCInc. - beneficially owned approximately 38%52% of our outstanding common stock. As a result, the major stockholders combined could be able to significantly influence the direction of the Company, the election of our Board of Directors, and the outcome of any other matter requiring stockholder approval, including mergers, consolidations and the sale of all or substantially all of our assets, and together with other beneficially owned investors, to prevent or cause a change in control of the Company. Also, pursuant to contractual obligations, affiliates of Henry Crown and Company were entitled to certain rights with respect to the registration of the common stock owned by them under the Securities Act. Pursuant to such registration rights, on March 12, 2012, we filed a registration statement related to the common stock owned by such entities and such registration statement was declared effective by the SEC. The interests of the major stockholders may conflict with the interests of our other stockholders.

We continued to experienced strong demand for industrial equipment products in 20242025, while demand for forestry,vegetation products was mixed. Agricultural, tree care,care and agriculturalrecycling mowingmarkets productsremained weakened.weak. Gross profitOperating margins declined slightlyas duestrong toperformance weakerin the Industrial Equipment Division only partially offset lower margins in the Vegetation Management Division sales that slowed our production cadence and adversely impacted production efficiency.Division. Market conditions arecontinue mixed;to be mixed. Demand for governmental and industrial product demandproducts is robusthealthy whileand vegetation product demand hasremains been hampered mainlyweak by highersoft commodity pricing, elevated interest ratesrates, and elevatedreduced channelhousing inventories.construction activity.

In 2024,2025, the Company's net sales decreased by 4%2% and net income decreased by 15%10% compared to 2023.2024. The decrease in net sales was primarily driven by weakthe forestry, tree care, and agricultural mowing markets, leading toongoing lower demand in tree care and recycling markets and operational challenges in the Vegetation Management Division.Division related to consolidation of certain operations. Additionally, the sale of Herschel Parts on August 16, 2024, had aan negativeunfavorable impact on year-over-year sales, though it was immaterial onfor atotal full-yearCompany basis.results for the year. These challenges were nearlyonly partially offset by strong sales growth in the Industrial Equipment Division.

The Company's Vegetation Management Division experienced a 20%17% decrease in net sales and a 59% decline in income from operations for the full year of 20242025 compared to 20232024. dueWhile continued market weakness and operational challenges led to alower steeprevenue, decline in forestry, tree care and agricultural mowing markets. Thethe Division’s backlog hasincreased declined 47% year-over-year and is now at pre-Covid levels. Income from operations for 2024 decreased by 54% compared to 2023,6% reflecting potential market downturn and costs associated with separation and reduction of capacity.stabilization. The Company continues to implement cost-saving initiatives and enhanceenhancement of operational efficiency,efficiencies within thean goaleffort ofto improvingimprove operating margins.

The Company's Industrial Equipment Division reported a 19%13% increase in net sales for the full year of 20242025 compared to 2023.2024. Sales growth was strong in all product lines, withled by excavators, vacuum trucks,trucks and snow, followed by sweepers & safety, and snow removal contributing to year-over-year growth.safety. Income from operations for 20242025 rose 43%19% versus 2023,2024, driven by increased demand, greater operational efficiencies, and an improvement in supply chain performance and truck chassis availability.performance.

Gross profit for 2024 was $412.5 million (25.3% of net sales) compared to $453.6 million (26.8% of net sales) in 2023, a decrease of $41.1 million. The decrease in gross profit was primarily attributable to the decline in Vegetation Management market demand, resulting in production inefficiencies, and the impact of costs to reduce capacity and separation expenses as the Division adjusted to market conditions. In addition, profitability was also impacted by the five-week strike at Gradall in Ohio, which negatively affected the Industrial Equipment Division.

Net cash provided by operating activities was $177.5 million for 2025, compared to $209.8 million for 2024, compared to $131.2 million for 2023.2024. The increasedecrease of cash from operating activities is primarily thea result of improvedlower receivablesnet income as well as higher inventory, which was partially offset by lower accounts receivable and inventoryimproved comparedaccounts to 2023.payable.

Net cash used in investing activities was $46.2 million for 2025, compared to $22.2 million for 2024, compared to $52.6 million for 2023.2024. The decreaseincrease in investing activities was in part driven by the acquisition of Royal TruckRing-O-Matic in 2023.2025. Net cash used by financing activities was $32.0$30.8 million for 2024,2025, compared to net cash used of $76.9$32.0 million for 2023.2024. This reduction in cash used by financing activities is due to repaymentpayment of revolvingcontingent credit.consideration in 2024 offset by higher dividend payments in 2025.

The Company is exposed to the risk that the price of energy, steel and other purchased components may increase and the Company may not be able to increase the price of its products correspondingly. If this occurs, the Company’s results of operations would be adversely impacted. In 2024, while inflation moderated compared to prior years,2025, the cost of commodities, components, parts, and accessories remainedsomewhat elevatednormalized relative to historical levels. Throughout 2024,2025, we continued to implement strategic pricing actions and operational efficiency measures to help offset thesetariffs sustainedand other supply chain cost pressures. While the rate of inflation decreased during 2024, prices for many key inputs remained higher than pre-pandemic levels. Looking ahead to 2025,2026, we expect the cost environment to remainreturn challenging,to thoughmore withhistorically lessnormal volatilitylevels than we have seen in recent years. We anticipate modest increases in the average cost of commodities, components, parts, and accessories compared to 20242025 levels. However, cost inflation continues to be an ongoing challenge that could have a material impact on the Company's business and financial results, particularly if there are unexpected shifts in political policy changes (including the continued imposition of tariffs), global economic environment or supply chain dynamics.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes thethere followingare currently no critical accounting policy reflects its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements. For further information on the critical accounting policies, see Note 1 of our Notes to Consolidated Financial Statements.policies.

Net Sales in the Industrial Equipment Division increased by 6%13% (downexcluding 1%acquisitions, organicallygrowth was 3%) forin the firstsecond three monthsquarter of 2026 compared to the same period in 2025. The Division’s backlog declined by 21%28% as lead times improved and demand normalized following elevated order levels in prior periods. New orders decreased approximately 11%2% year over year.year (excluding acquisitions, new orders declined 12%). Income from operations rose 2%7% versus the prior-year period, reflecting highercontributions salesfrom recent acquisitions and continued operational improvements acrossin thisoperating Division.efficiency.

Net Sales in the Vegetation Management Division increasedwere 7%flat forin the firstsecond three monthsquarter of 2026 compared to the same period in 2025.2025 as growth in agricultural and tree care markets was offset by weakness in municipal markets. The Division's backlog increased 5%4% and new orders increasedwere 5%flat year over year.year in the second quarter of 2026. Income from operations decreased 21%30% versus the prior year period primarily due to operationalthe inefficienciesimpact associatedfrom withlower factorysales consolidation, partially offset byin the reductionmunicipal inmowing operating expenses.businesses.

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. In the first quarter of 2026, we have also listed our facility in New Berlin, WI as an asset held for sale. 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.”

Three Months Ended MarchJune 31,30, 2026 vs. Three Months Ended MarchJune 31,30, 2025

Net sales for the firstsecond quarter of 2026 were $417.1$450.7 million, an increase of $26.1$31.6 million or 7%8% compared to $391.0$419.1 million for the firstsecond quarter of 2025. Net sales during the firstsecond quarter of 2026 increased due to contributions from recent acquisitions in the Industrial Equipment Division,Division and modest improvement in agricultural markets within the Vegetation Management Division, and FX.Division. Our price/volume analysis indicateindicates 2%0.4% of the 7%8% growth was due to currency movement.

Net sales in the Industrial Equipment Division were $241.7$271.6 million in the firstsecond quarter of 2026 compared to $227.1$240.7 million for the same period in 2025, an increase of $14.6$30.9 million or 6%.13%. The increase was due to the addition of the Ring-O-Matic and Petersen Industries.Industries acquisitions. Organic net sales in the firstsecond quarter of 2026 declinedincreased 1%3% compared to the firstsecond quarter in 2025. Currency movement impacted sales favorably by 1%.0.1%.

Net sales in the Vegetation Management Division increased by $11.5$0.7 million or 7%0% to $175.4$179.1 million for the firstsecond quarter of 2026 compared to $163.9$178.4 million during the same period in 2025. The increase was due to modest improvements in tree care and agricultural mowing markets which offset weakness in thelower municipal mowing markets, and FX.activity. Currency movement was 4%0.8% in the second quarter of the 7% growth.2026.

Gross profit for the firstsecond quarter of 2026 was $104.8$110.9 million (25% of net sales) compared to $102.8$108.3 million (26% of net sales) during the same period in 2025, an increase of $2.0$2.6 million. Higher net sales in the Industrial Equipment Division supported the increase in gross profit,profit. howeverHowever, overall gross margin declined by 125 basis points due to operationallower municipal mowing volumes and temporary production inefficiencies inassociated thewith Vegetationfacility Managementconsolidation Division.activities.

Selling, general and administrative expenses (“SG&A”) were $57.8$60.1 million (14%13% of net sales) during the firstsecond quarter of 2026 compared to $54.3$57.1 million (14% of net sales) during the same period of 2025, an increase of $3.5$3.0 million attributable mainlyprimarily to therecent newacquisitions acquisitions.and restructuring-related costs. Amortization expense in the firstsecond quarter of 2026 was $4.9$5.0 million compared to $4.0$4.1 million in the same period in 2025, an increase due to addition of the Ring-o-MaticRing-O-Matic and Petersen Industries acquisitions.

Interest expense was $4.6$4.8 million for the firstsecond quarter of 2026 compared to $3.2$3.7 million during the same period in 2025 due to increased debt related to the Petersen Industries acquisition.

Other net income (expense) was $0.03$0.62 million of incomeexpense in the firstsecond quarter of 2026 compared to $0.7$3.2 million of expense during the same period in 2025.2025, primarily due to lower foreign currency transaction losses.

Provision for income taxes was $9.9$10.7 million (25%26% of income before income tax) in the firstsecond quarter of 2026 compared to $10.0$10.3 million (24%25% of income before income tax) during the same period in 2025. The slight increase in the tax rate forin the firstsecond quarter of 2026 was largely due to a lower expected R&D credit for 2026.

The Company’s net income after tax was $29.2$30.9 million or $2.41$2.55 per share on a diluted basis for the firstsecond quarter of 2026 compared to $31.8$31.1 million or $2.64$2.57 per share on a diluted basis for the firstsecond quarter of 2025.2025, reflecting the factors discussed above, including restructuring, acquisition and integration expenses, lower municipal mowing volumes, and higher interest expense.

As of MarchJune 31,30, 2026, the Company had working capital of $755.7$766.6 million, a decrease of $24.0$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 revenue-driven increaseincreases in accounts receivable and inventory.

Capital expenditures were $4.5$10.3 million for the first threesix months of 2026, compared to $6.0$13.0 million during the first threesix 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 Net cash used for investing activities was $169.8 million during the first three months of 2026 compared to $5.9 million during the first three months of 2025.below.

Net cash provided by financing activities was $80.2$37.3 million induring the threefirst six months of 2026, compared to net cash used in financing activities of $15.1 million during the six month period ended MarchJune 31, 2026, compared to financing activities of $8.6 million during the three month period ended March 31,30, 2025. Higher net cash provided by financing activities for the first threesix months of 2026 relates to additional borrowings on bank revolving credit facilities to partially fund the Petersen Industries acquisition.

The Company had $146.7$133.8 million in cash and cash equivalents held by its foreign subsidiaries as of MarchJune 31,30, 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.

On OctoberMay 28,27, 2022,2026, the Company, as Borrower, and each of its domestic subsidiaries as guarantors, entered into a ThirdFourth Amended and Restated Credit Agreement (the “20222026 Credit Agreement”) with Bank of America, N.A., as Administrative Agent. The 20222026 Credit Agreement provides Borrower with the ability to request loans and other financial obligations in an aggregate amount of up to $655.0$602.5 million. Under the 20222026 Credit Agreement, the Company has borrowed $255.0$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 2027.2031. The Term Facility requires the Company to make equal quarterly principal payments of $3.75$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 yearfive-year term. Borrowings under the 20222026 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 20222026 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranges from 1.25% to 2.50%2.25% for Term SOFR borrowings and from .25%0.25% to 1.50%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 0.15%0.125% to 0.30% on any unused portion of the $400.0 million Revolver Facility. The 20222026 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 20222026 Credit Agreement, including the Term Facility and the Revolver Facility, is OctoberMay 28,27, 2027.2031. As of MarchJune 31,30, 2026, $290.9$263.7 million was outstanding under the 20222026 Credit Agreement, $202.5$201.2 million on the Term Facility and $88.4$62.5 million on the Revolver Facility. On MarchJune 31,30, 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 $308.4$334.3 million in available borrowings. The Company is in compliance with the covenants under the Agreement as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 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.