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Good morning, and welcome to the Alamo Group Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, after today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Edward T. Rizzuti, Executive Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at (212) 827-3746 and we will send you a release and make sure you are on the company's distribution list. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing +1 (855) 669-9658 with the passcode 4809758. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days. On the line with me today are Robert Hureau, President and Chief Executive Officer, and Agnieszka K. Kamps, Executive Vice President and Chief Financial Officer. Management will make some opening remarks and then we will open up the line for your questions. During the call today, management may reference certain non-GAAP numbers in their remarks. Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release. Before turning the call over to Robert, I would like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the company's results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: adverse economic conditions which could lead to a reduction in overall demand, supply chain disruption, labor constraints, competition, weather, seasonality, currency-related issues, geopolitical events, and other risk factors listed from time to time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein which speaks only as of this date. I would now like to introduce Robert Hureau. Robert, please go ahead.

Thank you, Ed. I would like to thank everyone for joining our fourth quarter earnings conference call. We appreciate your continued interest in Alamo Group Inc. Before we get started, I would like to share a few thoughts. As you know, the fourth quarter was the first full quarter during which I have been at the helm at Alamo Group Inc. During this time, I have had an opportunity to visit some of our manufacturing facilities, speak with our customers, suppliers, partners, investors, and interact with our employees. Input from everyone has been incredibly valuable. In addition, during this period, the leadership team and I have been working together to develop a set of strategic initiatives designed to grow the business and a framework by which we will operate. As I reflect on the Alamo Group Inc. business, its products, markets, financial profile, and all the opportunities in front of us, I can say that I am more confident and excited today about where we expect to take this company over the next three to five years than I was when I joined just a short time ago. I will turn the call over to Agnes to review our financial results in detail. When she is finished, I will come back and discuss the performance for each of our divisions, highlight some of the key initiatives which are underway, and summarize a few of our long-term goals. Agnes?

Thank you, Robert. Net sales for 2025 were $373,700,000, down 3% compared to 2024. Gross profit for 2025 was $85,000,000 compared to $91,800,000 for 2024. Gross margin for 2025 was 22.7%, down 110 basis points compared to 2024. The degradation in gross margin was due to a few reasons, including inverse leverage on the lower Vegetation Management division volumes, charges related to inventory reserves taken during the quarter on certain Vegetation Management division product lines that we intend to divest or discontinue, and the impact from tariff costs, partially offset by pricing and disciplined margin management in our Industrial Equipment division. Selling, general and administrative expense, or SG&A expense, for 2025 was $58,300,000, up 9.3% from 2024. SG&A expense in 2025 included approximately $3,200,000 related to the acquisition and integration costs, restructuring costs, and the addition of Ring-O-Matic. Net interest expense for 2025 was $2,500,000 compared to $2,700,000 in 2024. 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 2024. However, the 2025 effective tax rate is in line with our current and longer-term expectations. During 2025, we recognized expenses related to acquisition and integration activities of $1,600,000. Most of these costs were related to the acquisition of Petersen Industries. In addition, we recognized $7,300,000 in restructuring expenses. 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 2025 was $44,800,000, or 12% of net sales, compared to adjusted EBITDA of $51,800,000, or 13.4% of net sales, for 2024. Adjusted earnings per share on a fully diluted basis for 2025 was $1.70 compared to $2.39 for 2024. Now, I will share some comments regarding the results for each of the divisions. Net sales in the Industrial Equipment division for 2025 were $234,900,000, an increase of 4.2% compared to 2024. Adjusted EBITDA for the Industrial Equipment division for 2025 was $41,500,000, or 17.7% of net sales, compared to $35,500,000, or 15.7% of net sales, for 2024. We are pleased with the continued strong performance, particularly with the adjusted EBITDA margins in the Industrial Equipment division. The performance in this division demonstrates the attractiveness of our vocational truck-related end markets in which we have great leadership positions. Net sales for the Vegetation Management division for 2025 were $138,700,000, a decrease of 13.2% compared to 2024. The decrease in net sales reflects weakness in certain end markets, particularly tree care and municipal mowing. Adjusted EBITDA for the Vegetation Management division for 2025 was $3,200,000, or 2.3% of net sales, compared to $16,300,000, or 10.2% of net sales, for 2024. The adjusted EBITDA margins in the Vegetation Management division were low this quarter due to inverse leverage on both fixed manufacturing costs and SG&A expenses from the lower volumes. Moving on to the balance sheet and cash flow. Cash provided by operating activities for fiscal year 2025 was $177,500,000 compared to $209,800,000 for fiscal year 2024. The operating cash flow of $177,500,000 reflects disciplined management of accounts receivable and accounts payable, where we made improvements on days sales outstanding and days payables outstanding. The operating cash flow also reflects uses of cash for inventory, which will be our intensified focus in 2026. Our free cash flow conversion for the full fiscal year 2025 was robust at 142% of net income. Cash used in investing activities for fiscal year 2025 was $46,200,000 and reflects cash used for the acquisition of Ring-O-Matic and $30,600,000 used for capital expenditures. The increase in capital expenditures compared to the same period in the prior year was due to expansion of our manufacturing facility in the Industrial Equipment division. We are excited about opening this new facility as it enabled growth and improved operations in Western Europe. Cash used in financing activities for fiscal year 2025 was $30,800,000, reflecting repayments of principal on our long-term debt and dividends paid. As of 12/31/2025, our gross debt was $205,700,000. In addition, as of 12/31/2025, we had $309,700,000 in cash on the balance sheet. In January 2026, we closed on the acquisition of Petersen Industries. We funded this acquisition with a $120,000,000 draw on our revolver and approximately $50,000,000 cash on hand. Subsequent to the closing of the acquisition, total availability under our credit facility was $477,000,000 including Coriant, and pro forma net leverage remains quite low. We are excited about the acquisition of Petersen given its leadership position, attractive margins, and commercial synergies. To conclude, I would like to emphasize our commitment to delivering long-term value to our shareholders. We are pleased that our Board has approved $0.04 per share, or a 13.3% increase, to our quarterly dividend to $0.34 per share. As we move forward, we remain focused on driving growth and optimization of our operations. Thank you. I will turn it back over to Robert.

Thank you, Agnes. Let me start by providing more color on the operating performance for each of our divisions. First, the Industrial Equipment division. As Agnes mentioned, net sales in the Industrial Equipment division increased by 4% during the quarter. The increase in net sales during the quarter was due to several factors, including favorable pricing, net sales from the acquired Ring-O-Matic business, which closed in the second quarter of the year, and continued market share gains in several of our businesses, partially offset by a decrease in sales in our snow business. The decrease in net sales in our snow business reflects a comparison to an unusually strong fourth quarter of 2024 where we recognized one large single order in the Canadian market. While the snow business can be lumpy from quarter to quarter, there is real positive momentum in many aspects of this business, which we are excited about. Net sales in both our excavator and vacuum business and our sweeper and safety business performed well during the quarter. These businesses continued to deliver double-digit year-over-year net sales growth. In addition, in the Industrial Equipment division, the Industrial Equipment division expanded adjusted EBITDA margins in both the fourth quarter and the full year. The book-to-bill in the Industrial Equipment division for 2025 was 0.85x. Net orders during 2025 were up 21% compared to the prior year. Net orders in the excavator and vacuum business, sweepers and safety business, and snow business were all up year over year. Lead times in all the businesses within the Industrial Equipment division are in a good competitive position. Today, our Industrial Equipment division represents 59% of our total net sales. As a reminder, the products in the Industrial Equipment division serve end markets including public works, utilities, infrastructure, and construction. These are attractive long-cycle markets. As I mentioned during our last call, net sales in this division and its end markets have been very robust over the past few years, fueled in part by various government-driven investments. Looking forward, we expect the rate of growth in these end markets to slow as the near-term effect of those prior external investments slows down. Overall, 2025 was a very strong year for our Industrial division, and we are looking forward to continuing to grow this business both organically and inorganically. Now, the Vegetation Management division. Net sales in the Vegetation Management division declined by 13% due to several factors, including a decline in certain end markets, and not ramping production volumes quickly enough in a few businesses that underwent the manufacturing consolidation activity, partially offset by favorable pricing. The end market weakness was most notable in our tree care and recycling business. Recall that a portion of our tree care and recycling business involves the manufacture and sale of very large and very expensive equipment used in land-clearing operations and is partially tied to housing starts, which remain suppressed. On the other hand, and importantly, net sales in our U.S. Agriculture business increased year over year in the fourth quarter. This was the first quarter in ages where net sales in this business turned positive, a very encouraging sign looking forward. Regarding the production inefficiencies in the two facilities that underwent consolidation, we are making progress. We see the progress in the various underlying KPIs but not yet in the financial results. We currently expect the work to continue through the remainder of the first quarter and into the second quarter before the facilities are running as designed and better aligned to the end market demand. The book-to-bill in the Vegetation Management division for 2025 was 1.1x. Net orders for the total division during 2025 were down 3% compared to the prior year. Net orders in the U.S. and European agriculture businesses were up year over year, while net orders in the other businesses were down year over year. Today, the Vegetation Management division represents 41% of total net sales. As a reminder, the products in the Vegetation Management division serve end markets including tree care and recycling, agriculture, public works, and land maintenance. As I mentioned on our last call, net sales in this division and its end markets have declined over the past few years, rolling over a period of significant growth that occurred between 2021 and 2023. Looking forward, we expect the rate of decline in the end markets to improve and stabilize before returning to growth. In addition, inventory in the channel remains healthy. We are seeing pockets of increased quoting activity in the first quarter in certain businesses within the Vegetation Management division. This is also a positive sign potentially pointing to a more stable 2026. Overall, we have much more work to do in the Vegetation Management division. We are confident we will improve the manufacturing inefficiencies and drive margin improvement as originally planned. I would now like to share some comments regarding the broad framework of our long-term strategy. As mentioned before, there are four pillars of the strategy on which we will focus and devote resources: one, people and culture; two, commercial excellence; three, operational excellence; and four, capital deployment. Examples of the types of steps we are taking related to one or more of these four strategic pillars I just mentioned include the following: First, we finalized construction of our manufacturing facility expansion project in France, nearly doubling the size of the facility. The increase in the manufacturing footprint will allow us to continue to grow sales in Western Europe in the attractive vocational truck space. Net orders, by the way, in France were up 32% year over year in 2025. We completed the consolidation of additional facilities in our snow and sweeper and safety businesses within the Industrial Equipment division. Production is up and running smoothly in both facilities in which the manufacturing lines were consolidated. These consolidations will allow us to continue to remove fixed costs and expand gross margins. We launched our global procurement and supply chain initiative. This initiative will allow us to expand margins and optimize carrying levels of inventories over the next several years. In our tree care and recycling business, within our Vegetation Management division, we signed several new independent dealers in critical parts of the United States where we had longstanding gaps. These commercial efforts will help improve sales and market share. We recruited and elevated several very experienced and talented senior leaders in a few businesses within the Vegetation Management division. We are looking forward to positive outcomes from these industry veterans in 2026. As Agnes mentioned, we signed and recently closed on the acquisition of Peterson Industries, a market leader in the manufacture of equipment serving the bulky waste end market. This acquisition is a great example of the type of tuck-in acquisitions we are targeting. The M&A pipeline is robust, and we are excited to build on this momentum in 2026. We continue to centralize certain functional departments like IT, finance, procurement, and HR. These actions will help unlock previously constrained value and will lay the foundation for a more modern technology-driven organization, all while maintaining that local entrepreneurial brand spirit we love. In terms of product innovation, we are in final stages of testing our next-generation hybrid sweeper, which uses a proprietary electric sweeping architecture compared to third-party hydraulic systems in our competitors' products. This new electric sweeping architecture can run on diesel, CNG, or electric chassis globally and deliver superior efficiency, safety, and performance. This is a great example of how Alamo Group Inc.'s product innovation engine is beginning to shift from fast follower to first mover. Lastly, we performed a review of the portfolio of the businesses we operate. As a result, we identified and aligned around divesting or discontinuing a few product lines that do not fit our go-forward strategy and are not and have not been profitable. These actions will unfold over the course of 2026 and, while small, we expect will also contribute to our margin expansion story. These are all great examples of the key initiatives underway that we believe will help deliver on our long-term goals. Before I conclude, I would like to highlight again a few of our financial targets. It is very important to understand these are long-term through-the-cycle targets. First, sales growth of 10% including the effects of acquisitions. Second, adjusted operating margins of around 15%. Third, adjusted EBITDA margins of around 18% to 20%. And finally, fourth, free cash flow as a percentage of net income of 100%. In summary, as we worked through the transition during the latter part of 2025, I would like to express my thanks and appreciation to our employees who continue to demonstrate a strong passion for helping solve the needs of our customers. I also want to thank our customers and shareholders, many of whom I have had the opportunity to meet. All of you are helping to further shape the future of Alamo Group Inc. and to deliver sustainable superior performance. This concludes our prepared remarks. Operator, please open the lines for questions.

We will now begin the question and answer session. The first question is from Michael Shlisky with D.A. Davidson. Please go ahead.

Good morning. Thanks for taking my questions. I want to get a final point on a couple of different details from your prepared remarks there. First of all, on the industrial side, you mentioned that growth rates might slow down, if I caught that correctly. Does that mean you will usually see a decline in top line in 2026 or just maybe perhaps not quite a double-digit growth but still positive in 2026?

Yes, Mike. Good morning. In short, I would say more the latter. So as we have mentioned, the Industrial division has seen strong end market demand over the last eight quarters, really strong robust double-digit growth. All things being equal, we expect the end markets to slow in 2026. I think as we look out over the course of the year, that likely means something in the order of magnitude of flattish to maybe low- to mid-single-digit end market growth. I think it is important when you think about that and the impact on our business, recall that roughly 25% of that Industrial division business is snow. Something a little bit different going on with snow. Within snow, in the past, we would historically chase every last dollar of sales regardless of the margin profile. We are not going to do that. We are changing direction with snow. With respect to the snow business, it is all about the quality of earnings and the margins. And therefore, on a year-over-year basis, you are likely to see a little bit downward pressure in snow, but the remaining businesses would align with that end market demand that I just talked about. So that was a long-winded answer. But in short, kind of flattish to low- to mid-single-digit end market demand in the majority of those Industrial divisions businesses. Does that get to your question, Mike?

Yes. Just to clarify, your comments do or do not include the effect of Peterson and other acquired businesses?

Excluding Peterson.

Okay. Thank you. And then the other fine point I wanted to ask about was actually on Peterson. Just tell us, can you tell us a little bit about whether that is a growing business in 2026? Is it going to be accretive, etcetera? All the usual stuff that we might want to hear about just from a directional standpoint for the next twelve months.

Yes. So we are really excited about the Peterson acquisition. First thing I would say is it really is a great example of the type of tuck-in deals that we are looking at. It is a business whose end markets, whose sales channels, whose product categories are very similar or close to our core. It is accretive from a margin perspective. We got it at a fair price. We think it is a growth end market. It is a leader in its space. It has a talented management team that is staying with the business. So many, many positive attributes about that business. As we think about it in 2026, I believe in the press release we articulated the purchase price, the multiple, and what the 2025 sales were going to be. One thing to highlight as you think about 2026 is we acquired it in January. So you will see eleven-twelfths of sales in 2026, of course. I think the growth will be a little bit slow in 2026, but overall a good long-term end market to be in. In terms of the margin profile, it is above what the Alamo Group Inc. averages are in terms of adjusted operating margins and adjusted EBITDA margins. We are going to make some investments early in this business to drive some of those synergies, particularly in the area of operations and some commercial folks. So you might see a little bit of degradation in the margin profile early on relative to its history, but nothing that would drive it below the Alamo Group Inc. average. Overall, really, really positive news with respect to Peterson in 2026.

Outstanding. Maybe one last one for me. This week is the big CONEXPO show. Of products on display, can you maybe share with us if you have anything new rolling out at the show, expectations for what you think might take place here? Could others you think we could hear placing orders, just checking out the product, etcetera? Just some thoughts around what you have got planned for the show and maybe even for new products across the businesses for 2026?

Yes. So we are super excited about CONEXPO. For the first time the entire Alamo Group Inc. portfolio, or the majority of the portfolio, will be there in one booth, if you will. So we will be there as a team showcasing a lot of our products. We will have some new things. I do not want to share right now what those are. We have got a lot of new products in the works. I highlighted one in the prepared remarks that we are super excited about. We think in many cases, these product innovations really demonstrate the shift that we are trying to push here at Alamo Group Inc. from fast follower to first mover. That is an important principle that we are adopting here at Alamo Group Inc. We are not going to showcase all of those at the show. Some of them are still in the final stages, but will be rolled out later in 2026. I would expect we would take orders. I would expect the show to drive positive results for us. It will be my first time there, so I am looking forward to meeting folks at the show.

Thank you very much.

The next question is from Mitch Dobre with Baird. Please go ahead.

Hey guys, this is Peter Kalenkaryian on for Mig this morning. Thanks for taking my questions. I have a couple here. Let me start with vegetation margin. I appreciated the color on what happened this quarter. Is there any way to help us get a sense for how you expect margin to progress through '26? What would be an appropriate starting point here in the first quarter? And then just directionally from there, how should we think about margin progression in this segment? Yes. So let me start, maybe provide a little bit more color with respect to the fourth quarter results in the Vegetation division. And then I will go and address maybe the first quarter and beyond there. And Peter, if I go a little long, just remind me in terms of what your specific questions are if I get off track a little bit here. So starting with the fourth quarter, there really were three things that drove the margin compression in the fourth quarter. The first was lower volumes, and the lower volumes had inverse leverage on our fixed manufacturing costs and our SG&A costs, as Agnes said. That was the primary driver of the margin progression in the quarter. The reason the volumes were lower is we saw end market demand slow meaningfully in two of our businesses, in tree care, and in government mowing or municipal mowing. In the tree care business, recall that the majority of this business serves the large industrial sector, which is tied to land-clearing operations, which is tied to housing. And many of these products are very, very expensive. They are north of $1,000,000. And so what we saw was dealers hesitant to place orders in the fourth quarter. That was different from the preceding quarters during 2025. In many ways, similarly, in government mowing, here we are selling through dealers, but many of our end customers are state DOT offices, Department of Transportation offices. In the third and fourth quarter, and more pronounced in the fourth quarter, the DOT offices are wrestling with the impact from the One Big Beautiful Bill. Under the One Big Beautiful Bill, federal government is shifting burdens to the state for certain costs and expenses and actually rescind certain funding tied to highways and access and things of that nature. And so in the fourth quarter, you saw certain large state DOTs that we do business with hesitant to place orders. I do not think either of these things are long term in nature. They are shorter term. But that drove the end markets down, which compressed margins. That is the first thing. In addition, reflecting on that softer end markets, we ended up taking some charges and reserves around some slow-moving inventory in these particular businesses that I just referenced. That is the second thing. And then the third thing was we talked about the consolidation activity in two facilities in the Vegetation division. We made good progress from the third to the fourth in terms of driving those efficiencies. We can see in the underlying KPIs things are getting better. It will take another quarter or thereabouts, but it is improving. But nonetheless, we left a little bit of backlog on the table in the quarter. Those are the three drivers of the margin degradation in the fourth quarter, in order of prominence, if you will. Now as we shift from the fourth to the first, within the Vegetation Management division, we would expect to see top-line improvement. We would expect to see margin improvement, adjusted operating and adjusted EBITDA margin fourth to first improvement. From the fourth to first, if you compare 2026 relative to where we were in the first quarter of 2025, we are likely to get close to that level, maybe a little bit south of that level. But recall, we are coming off of eight quarters of down 13%, 14%, 15%. In terms of profitability in the first quarter in the Vegetation Management division, again, we will see sequential good improvement, but probably not all the way back to the level of first quarter 2025. So good progress. We are encouraged. We are starting to see green shoots in many of these places. Even in tree care, we saw good green shoots in the quoting activity early on in 2026. Longer term, the goal is to get back, at least initially longer term in 2026, back initially to at least where we were in 2020, back in that 8% adjusted operating margin level. Longer term, through the cycle, the goal is to get to that 15% OI, 18% adjusted EBITDA levels. We think we can do that. But the primary thing that needs to happen is we need the end markets and the volumes to stabilize. From there, we can start building, if you will. We think that will start happening in 2026. Does that help? Got it. That was awesome, Robert. Thanks for that color. Last one for me here, just on M&A. I understand that Peterson is still in the early days of being integrated here. But just wondering what your deal pipeline looks like, and is there any detail you could give on which current verticals you might be looking to add to or potential adjacencies that you might be looking to add to your current—you know, that could be M&A targets in the future? Yeah.

Yes. So M&A is an important lever within our capital deployment framework. Super excited about it. Ed and the team are doing a wonderful job building the pipeline. We are engaged with a number of folks. Nothing is imminent. But we are excited about the trajectory that we are on. As we have said in a couple of instances, we are primarily focused on tuck-in acquisitions. That does not mean we will not do a large deal, but the sweet spot is going to be on tuck-in acquisitions. These are probably $10,000,000 to $20,000,000 of EBITDA, give or take, something in that order of magnitude. We would like to stay close to the core, meaning sales channels that we are familiar with where we can drive commercial synergies, product categories that we are familiar with, end markets that we are familiar with. Again, that does not mean we will not go a little bit to the right or a little bit to the left like we did with Peterson, entering into the waste management and grapple space. But we feel like that is close enough to the core. One thing I would say is probably in the near term, we will probably lean a little bit more industrial in nature, long cycle in nature, rather than shorter cycle in nature. We love both divisions here at Alamo Group Inc., and there are opportunities for M&A in both divisions. But near term, probably leaning just a smidge more towards the industrial space. Does that help?

Got it. Thanks, Robert. Really appreciate the detail.

The next question is from Christopher Paul Moore with CJS Securities. Please go ahead.

Hey, good morning, guys. Maybe just one follow-up on the vegetation margins, I will start with. I want to make sure I heard correctly. So in terms of Q1, Robert, did you say that the margins can approach the 8.1% that you did in Q1 2025? I thought there is still some consolidation going on in the Vegetation division. Did I hear that correctly?

No. And maybe I was not clear or it is getting a little long-winded here. So let me try again. As we move from 2025 into 2026, we should expect to see good progression on the top line and good progression on the adjusted operating and adjusted EBITDA margin from the fourth to the first. And when we compare 2026 to 2025, we will approach where we were a year ago, but we will not get all the way back to that level. But we are making good progress towards it. We think there is good progression. We see the efficiencies. We will not get all the way back to where we were in terms of the margin in 2025.

Got it. Okay. You will approach the 8.1%. You will not get there. That makes sense. In terms of just the backlog at the end of—book-to-bill was on the industrial, I think, was 0.8-something. The backlog at the end of December was—what was that?

The backlog in the Industrial division was roughly $400,000,000, and the backlog in the Vegetation division was about $198,000,000. I think, importantly, when we think about that backlog, we are also looking at the order pattern. The order pattern, a couple of things: quite strong in the Industrial division across all three businesses, really, really robust in our snow group. Excited about the things that we can do there. Again, I do think it is important just to stress when we look at the snow business and its impact on the division billing forward, we are going to be a little light on sales as we are not chasing that last dollar at low margins. We are being a little bit more disciplined around the types of business that we go after. But really good order pattern. The backlogs overall, the lead times are in good shape. We do not feel like we are too extended. Snow is probably six to nine months, which is better than our competitors. We are picking up share because of that. In the Vegetation Management division, again, from an order pattern perspective, we saw really good order strength in the first quarter in our U.S. Ag business and our European Ag businesses, which is really remarkable. We think that signals potentially a good, more stable environment in 2026. The other businesses, tree care and government mowing—now municipal mowing—they too were double digits, but down double digits. What I will say is in tree care and government mowing, it feels like that was a fourth quarter, end-of-year hesitance to place orders. Specifically in tree care because we can see in the first quarter the level of quoting activity actually increased. So we are encouraged that it was a temporary pause. Still more to learn there. On the government mowing, we see that weakness continue into the first quarter a little bit in the early days. Overall, I think that is going to be in a good spot as Congress works through their renewal or extension of the Infrastructure Investment Act. But we will see short-term weakness there in government mowing. I think maybe the other thing to add, Chris, is the ending inventories in the channel in both divisions are in a reasonably good spot, particularly within U.S. Ag. They have been depleted over the last several years. So that is not a headwind for us going into 2026. If anything, it might be a little bit of a tailwind.

Got it. And just in terms of the longer-term 15% operating margin, I know that is initially—I thought it was fiscal 2028—but it is more through the cycle. And you talked about different pieces, lean manufacturing, procurement, supply chain. Are you looking at that—I am trying to envision that. Is that kind of smooth improvement over the next two, three, four years? Is it more kind of back-half loaded when we get some normalization from a volume perspective? Just trying to understand kind of how we get from here to that 15%.

Yes. I can understand that. The first thing, and it is the most important, is we need end market stability. As I mentioned, we have seen eight quarters now of consecutive down 13%, 14%, 15% in the end markets. That is a really challenging environment to operate in. I think the team has done a nice job taking out cost and adjusting to right-size to that level of demand. We still have more work to do. But the first thing that we need is stabilization in those end markets. And the way we think about that is, obviously, the fourth quarter was not what we all wanted or expect going forward. We have to get back to where we were in 2025 in the Vegetation division, and that is when you look at the average between the first and the second quarter, we were around 8% adjusted operating margin. So that is what we are chasing. We have to get back to there. Stable volumes, right-size the manufacturing facilities to the end market demand level, we get to 8%. From there, we are on our way. With a little bit of tailwind, with a little bit of volume growth, we will then push to 10%. Then we will begin our journey on the 300 basis points that I talked about in the last call: a point from procurement, a point from parts and service, a point from continued manufacturing efficiencies. I expect if the markets stabilize, you will see good progression certainly back half 2025 to full year 2026 in terms of that operating margin, and then it is slow and steady on our way from there. Does that color help?

It does. It does. I will leave it there. I appreciate it.

You bet. Thank you.

The next question is from Gregory Burns with Sidoti and Company. Please go ahead.

Good morning. Did you mention what side of the business or more specifically where the product divestitures were coming from?

In the Vegetation Management division, and these are product lines. They are not brands or businesses. They are product lines that really do not fit where we are going long term. So we will look to divest those at some point over the course of 2026.

Okay. And then the orders on the Vegetation Management side of the business in the fourth quarter, I know you mentioned Ag was up and tree care and government mowing were down. Is there any way you could quantify maybe how much Ag was up, how much tree care was down, just to get a sense of where those two businesses are from a demand perspective?

Yes. Definitely. So the U.S. Ag business and the European Ag business, they were both up double digits. The U.S. Ag business, even a little bit stronger. So good performance. And by the way, we see that continuing into the first quarter. So really positive sign that those end markets are moving in the right direction. Now, again, whether or not in 2026 they get all the way to flat or growth, coming off of eight quarters of down 15%, still to be determined, but it is a very positive sign. In tree care and in government mowing, or now municipal mowing, they too were double digits, but down double digits. What I will say is in tree care and government mowing, it feels like that was a fourth quarter end-of-year hesitance to place orders. Specifically in tree care, because we can see in the first quarter the level of quoting activity actually increased. So we are encouraged that it was a temporary pause. Still more to learn there. On government mowing, we see that weakness continue into the first quarter a little bit in the early days. Overall, I think that is going to be in a good spot as Congress kind of works through their renewal or extension of the Infrastructure Investment Act. But we will see short-term weakness there in government mowing. Does that color help?

Yep. No. That is great. Thank you.

This concludes our question and answer session. I would also like to turn the conference back over to management for any closing remarks.

We appreciate the interest in Alamo Group Inc. and look forward to speaking with you again on our next call. Thank you.