Alta Equipment (ALTG) - 2024 Q2 - Quarterly Results

Second Quarter 2024 Financial & Operational Overview Financial Highlights Alta Equipment Group reported a 4.2% year-over-year revenue increase to $488.1 million in Q2 2024, driven by strong product support growth of 10.1%, yet recorded a net loss of $(12.6) million, a significant decline from a net income of $1.7 million in the prior-year quarter, with Adjusted EBITDA remaining stable at $50.3 million Q2 2024 Key Financial Metrics | Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | Total Revenues | $488.1 million | +$19.7 million | | Product Support Revenues | $144.2 million | +10.1% | | New and Used Equipment Sales | $251.5 million | -1.2% | | Net Loss to Common Stockholders | $(12.6) million | N/A | | Basic and Diluted EPS | $(0.38) | N/A | | Adjusted Basic and Diluted EPS | $0.01 | N/A | | Adjusted EBITDA | $50.3 million | +0.8% | Management Commentary CEO Ryan Greenawalt highlighted a rebound from Q1, driven by record performance in the product support business ($144.2 million in revenue) and steady growth in the Material Handling segment, while the Construction Equipment segment faced pressure from market uncertainty affecting small to mid-size contractors, with the company gaining traction in its eMobility segment with a new partnership and a $25 million sales backlog, and prioritizing cost and fleet optimization for the second half of 2024 - The product support business achieved record revenues of $144.2 million, an increase of $13.2 million year-over-year, demonstrating strong organic growth[2] - The Construction Equipment segment is experiencing market pressure due to uncertainty around interest rates and the election, impacting sales volumes and margins[2] - The eMobility segment is expanding with a new partnership with Harbinger Motors and has accumulated a sales backlog of approximately $25 million, expected to convert to revenue in H2 2024[2] - Strategic priorities for H2 2024 and 2025 include cost and fleet optimization to adapt to the current market environment[2] Full Year 2024 Guidance & Corporate Actions The company updated its full-year 2024 guidance, now expecting Adjusted EBITDA to be between $190.0 million and $200.0 million, with key financial activities in the quarter including a significant debt refinancing where $500.0 million in new notes were issued to extinguish older debt, resulting in a $6.7 million loss, and the repurchase of $2.0 million worth of its shares - Full-year 2024 Adjusted EBITDA guidance has been updated to a range of $190.0 million to $200.0 million[3] - Completed a major debt refinancing by issuing $500.0 million of 9.000% Senior Secured Second Lien Notes due 2029 to extinguish $315.0 million of notes due 2026, incurring a $6.7 million loss on debt extinguishment[4] - Repurchased 231,334 shares for $2.0 million during the second quarter, with $10.5 million remaining under the repurchase authorization[4] Consolidated Financial Statements (Unaudited) Consolidated Statements of Operations For the second quarter of 2024, total revenues grew 4.2% YoY to $488.1 million, while gross profit increased 4.1% to $132.0 million, but a 10.0% rise in operating expenses and an 84.4% increase in net other expenses, including a $6.7 million loss on debt extinguishment, led to a pre-tax loss of $(14.6) million and a net loss available to common stockholders of $(12.6) million, compared to a $1.7 million profit in Q2 2023 Q2 2024 vs Q2 2023 Income Statement Highlights (in millions) | Line Item | Q2 2024 | Q2 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $488.1 | $468.4 | +4.2% | | Gross Profit | $132.0 | $126.8 | +4.1% | | Income from Operations | $10.3 | $16.2 | -36.4% | | Total Other Expense, Net | $(24.9) | $(13.5) | +84.4% | | Net (Loss) Income to Common Stockholders | $(12.6) | $1.7 | NM | Six Months Ended June 30, 2024 vs 2023 (in millions) | Line Item | YTD 2024 | YTD 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $929.7 | $889.1 | +4.6% | | Gross Profit | $252.6 | $248.1 | +1.8% | | Income from Operations | $9.4 | $28.3 | -66.8% | | Net (Loss) Income to Common Stockholders | $(25.3) | $1.9 | NM | Consolidated Balance Sheets As of June 30, 2024, Alta's total assets stood at $1.59 billion, a slight increase from $1.57 billion at year-end 2023, while total liabilities increased to $1.47 billion from $1.42 billion, primarily due to a rise in long-term debt, consequently decreasing total stockholders' equity from $149.7 million to $125.2 million over the six-month period Balance Sheet Summary (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $835.9 | $838.0 | | Total Assets | $1,591.3 | $1,570.9 | | Total Current Liabilities | $610.4 | $635.1 | | Long-term Debt, net | $477.4 | $312.3 | | Total Liabilities | $1,466.1 | $1,421.2 | | Total Stockholders' Equity | $125.2 | $149.7 | Consolidated Statements of Cash Flows For the first six months of 2024, net cash used in operating activities was $(21.0) million, an improvement from $(33.8) million in the prior year period despite a larger net loss, with net cash used in investing activities at $(37.4) million mainly for equipment expenditures, and net cash provided by financing activities at $32.1 million driven by new debt issuance offsetting debt extinguishment and share repurchases, resulting in a $26.5 million decrease in the company's cash position to $4.5 million at period-end Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(21.0) | $(33.8) | | Net Cash Used in Investing Activities | $(37.4) | $(40.6) | | Net Cash Provided by Financing Activities | $32.1 | $74.1 | | Net Change in Cash | $(26.5) | $(0.4) | | Cash, End of Period | $4.5 | $2.3 | Non-GAAP Financial Measures & Reconciliations Reconciliation of Net Income to Adjusted EBITDA The company reconciled its Q2 2024 net loss of $(12.6) million to an Adjusted EBITDA of $50.3 million, with key adjustments including adding back depreciation & amortization ($38.0 million), interest expense ($19.2 million), and a one-time loss on debt extinguishment ($6.7 million), resulting in Adjusted EBITDA being slightly up from $49.9 million in Q2 2023 Adjusted EBITDA Reconciliation - Q2 (in millions) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net (Loss) Income to Common Stockholders | $(12.6) | $1.7 | | Depreciation and Amortization | $38.0 | $33.0 | | Interest Expense | $19.2 | $13.7 | | Income Tax (Benefit) Provision | $(2.7) | $0.3 | | Loss on Debt Extinguishment | $6.7 | $— | | Other Adjustments | $1.7 | $2.5 | | Adjusted EBITDA | $50.3 | $49.9 | Reconciliation of Net Income to Adjusted Net Income and EPS After adjusting the Q2 2024 net loss for items such as the loss on debt extinguishment, stock-based compensation, and intangible amortization, the company reported an Adjusted Net Income of $0.4 million, or $0.01 per share, representing a significant decrease from an Adjusted Net Income of $6.3 million, or $0.19 per share, in the prior-year quarter Adjusted Net Income & EPS Reconciliation - Q2 | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net (Loss) Income to Common Stockholders | $(12.6) M | $1.7 M | | Adjusted Net Income | $0.4 M | $6.3 M | | Basic EPS | $(0.38) | $0.05 | | Adjusted Basic EPS | $0.01 | $0.19 | Debt and Floor Plan Payables Analysis The company's total debt increased to $1.16 billion as of June 30, 2024, from $1.07 billion at the end of 2023, and after adjusting for new equipment floor plan payables and cash, the Adjusted total net debt and floor plan payables rose to $858.1 million from $739.8 million over the six-month period Debt Analysis (in millions) | Line Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Senior secured second lien notes | $500.0 | $315.0 | | Line of credit | $217.6 | $317.5 | | Total debt | $1,161.0 | $1,068.6 | | Adjusted total net debt and floor plan payables | $858.1 | $739.8 | Appendix About Alta Equipment Group Inc. Alta Equipment Group Inc. is a major integrated equipment dealership in North America, operating over 85 locations across the U.S. and Canada, providing a wide range of specialized equipment sales, rentals, and services, including material handling, construction, and environmental processing machinery - Operates one of the largest integrated equipment dealership platforms in North America with over 85 locations[10] - Provides a one-stop-shop for sales, rental, parts, and service of specialized equipment across various industries[10] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning investors that the press release includes forward-looking statements subject to significant risks and uncertainties, advising that actual results may differ materially from expectations and listing various factors that could cause such differences, including supply chain disruptions, economic conditions, and interest rate fluctuations - The document includes forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[11] - Key risk factors mentioned include supply chain disruptions, inflationary pressures, interest rate fluctuations, and the competitive environment[11]