Alta Equipment (ALTG) - 2025 Q1 - Quarterly Report

Part I Financial Statements (Unaudited) Alta Equipment Group reported Q1 2025 total revenues of $423.0 million, a net loss of $20.9 million, and $17.5 million cash used in operations Condensed Consolidated Balance Sheets - As of March 31, 2025, total assets were $1,504.5 million and total liabilities were $1,448.5 million, resulting in total stockholders' equity of $56.0 million, compared to total assets of $1,480.4 million and equity of $77.6 million at December 31, 2024[14] Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $11.1 | $13.4 | | Inventories, net | $544.6 | $535.9 | | Total current assets | $791.8 | $774.5 | | Rental fleet, net | $362.7 | $358.8 | | Goodwill | $78.0 | $77.5 | | Total Assets | $1,504.5 | $1,480.4 | | Liabilities & Equity | | | | Floor plan payable (new & used) | $367.3 | $374.5 | | Line of credit, net | $217.1 | $179.8 | | Long-term debt, net | $480.8 | $480.0 | | Total Liabilities | $1,448.5 | $1,402.8 | | Total Stockholders' Equity | $56.0 | $77.6 | Condensed Consolidated Statements of Operations Q1 2025 vs. Q1 2024 Performance (in millions, except EPS) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $423.0 | $441.6 | | Gross Profit | $115.0 | $120.6 | | Income (Loss) from Operations | $0.8 | $(0.9) | | Net Loss | $(20.9) | $(11.9) | | Net Loss Available to Common Stockholders | $(21.7) | $(12.7) | | Basic & Diluted Loss Per Share | $(0.65) | $(0.38) | - Total revenues decreased by 4.2% YoY, driven by declines in new and used equipment sales, rental revenues, and rental equipment sales, with net loss widening significantly due to higher interest expenses, which increased from $16.1 million to $21.9 million[15][129] Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17.5) | $(13.5) | | Net cash used in investing activities | $(14.3) | $(16.5) | | Net cash provided by financing activities | $29.5 | $4.6 | | Net Change in Cash | $(2.3) | $(25.4) | - The net use of cash in operations was primarily driven by a net loss and an increase in inventories ($41.6 million), while financing activities provided cash mainly through net proceeds from long-term borrowings ($34.5 million) used to fund working capital[22][162] Notes to Financial Statements - On March 14, 2025, the company acquired Les Chariots Elevateurs Du Quebec Inc. (CEQ) for $2.9 million, reported within the Material Handling segment[91] - Subsequent to the quarter end, on May 1, 2025, the company divested its aerial fleet rental business in Chicago for $18.0 million, concurrently increasing the stock repurchase authorization to $30.0 million and suspending the quarterly common stock dividend[102][103] Revenue Disaggregation by Accounting Standard (Q1 2025, in millions) | Revenue Type | Topic 842 (Leases) | Topic 606 (Contracts) | Total | | :--- | :--- | :--- | :--- | | New and used equipment sales | $— | $221.7 | $221.7 | | Parts sales | $— | $72.0 | $72.0 | | Service revenues | $— | $66.1 | $66.1 | | Rental revenues | $42.3 | $— | $42.3 | | Rental equipment sales | $— | $20.9 | $20.9 | | Total revenues | $42.3 | $380.7 | $423.0 | Management's Discussion and Analysis (MD&A) Management attributes the 4.2% revenue decline to normalizing demand and Q4 2024 pull-forward, with cost savings offsetting higher interest expenses that led to a larger net loss - The company operates one of North America's largest integrated equipment dealership platforms with over 85 locations, focusing on sales, rental, parts, and service for material handling and construction equipment[106][107] - The growth strategy is primarily based on strategic acquisitions to expand geographic reach and service offerings, complemented by organic growth through new OEM relationships[111][112] - The 4.2% decrease in total revenue was primarily due to a 3.0% decline in new/used equipment sales and a 12.8% drop in rental revenues, attributed to normalizing industry demand for lift trucks and demand pull-forward from Q4 2024[136] - Operating expenses decreased by $7.3 million (6.9%) YoY, mainly due to cost savings from a headcount reduction of over 6.0% implemented in the second half of 2024[139] Consolidated Results of Operations Consolidated Financial Highlights (Q1 2025 vs Q1 2024, in millions) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $423.0 | $441.6 | (4.2)% | | Gross Profit | $115.0 | $120.6 | (4.6)% | | Gross Margin | 27.2% | 27.3% | (0.1) p.p. | | Income (Loss) from Operations | $0.8 | $(0.9) | (188.9)% | | Net Loss | $(20.9) | $(11.9) | 75.6% | | Adjusted EBITDA | $33.6 | $34.1 | (1.5)% | Material Handling Segment Results - Segment revenue decreased 9.4% to $157.9 million, driven by a 16.7% drop in new and used equipment sales as industry lift truck deliveries normalized from post-COVID highs[142][143] - Despite lower revenue, segment gross margin improved by 210 basis points to 34.6%, largely due to a 270 basis point increase in service margins from better pricing and technician productivity[143][144] Material Handling Performance (Q1 2025 vs Q1 2024, in millions) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $157.9 | $174.3 | (9.4)% | | Gross Profit | $54.6 | $56.7 | (3.7)% | | Income from Operations | $5.6 | $5.6 | 0.0% | | Segment Adjusted EBITDA | $15.6 | $14.5 | 7.6% | Construction Equipment Segment Results - Segment revenue decreased 3.8% to $245.8 million, mainly from a 28.7% drop in rental equipment sales and a 15.5% decrease in rental revenues, as strong Q4 2024 sales pulled demand forward and lowered the available rent-to-sell fleet[147][148] - Segment gross margin fell by 90 basis points to 22.7%, driven by lower margins on new and used equipment sales (due to competitive pricing) and rental equipment sales (due to higher equipment costs and softer used market prices)[149] Construction Equipment Performance (Q1 2025 vs Q1 2024, in millions) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $245.8 | $255.6 | (3.8)% | | Gross Profit | $55.9 | $60.3 | (7.3)% | | Loss from Operations | $(2.7) | $(0.6) | 350.0% | | Segment Adjusted EBITDA | $17.0 | $21.3 | (20.2)% | Master Distribution Segment Results - Segment revenue increased significantly by 35.9% to $17.4 million, driven by a 62.6% increase in new and used equipment sales as sub-dealer inventory levels normalized from an oversupply situation in 2024, allowing for restocking[152][153] - Segment gross margin decreased by 380 basis points to 25.9%, primarily because high-margin rental revenue and rental equipment sales present in Q1 2024 did not recur in Q1 2025[155] Master Distribution Performance (Q1 2025 vs Q1 2024, in millions) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $17.4 | $12.8 | 35.9% | | Gross Profit | $4.5 | $3.8 | 18.4% | | Income (Loss) from Operations | $1.1 | $(1.1) | (200.0)% | | Segment Adjusted EBITDA | $1.5 | $0.9 | 66.7% | Liquidity and Capital Resources - The company's principal sources of liquidity are cash from operations, sales of equipment, and borrowings under its ABL Facility and floor plans, with $11.1 million in cash as of March 31, 2025[164] - As of March 31, 2025, the company had $401.6 million of available borrowings under its ABL Facility and Floor Plan Facilities, which management believes will be adequate to meet liquidity needs for the foreseeable future[167] - Gross rental fleet capital expenditures were $40.4 million for Q1 2025, offset by $20.9 million in proceeds from the sale of rental equipment[166] Market Risk Disclosures The company manages market risks from interest rate fluctuations, commodity prices, and foreign currency exchange rates through derivative instruments like interest rate caps and fuel swaps - As of March 31, 2025, a one percentage point increase in interest rates on variable-rate debt would reduce annual pre-tax earnings by an estimated $2.5 million, including the impact of the interest rate cap[172] - The company has fixed-rate debt of $500.0 million in Senior Secured Second Lien Notes, which is not subject to interest rate fluctuation risk[173] - The company manages fuel price volatility by using fixed price swap contracts, with a hypothetical $0.10 per gallon increase in fuel prices not expected to have a material impact on pre-tax income[174] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[176] - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[177] Part II - Other Information Legal Proceedings The company is involved in various legal proceedings, but management anticipates no material financial impact from their resolution - Various legal proceedings are pending against the company, but management does not expect them to have a material financial impact[70][179] Risk Factors No material changes have occurred to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - No material changes have been identified from the risk factors disclosed in the 2024 Annual Report on Form 10-K[180] Share Repurchases and Use of Proceeds No shares were repurchased in Q1 2025, but the Board subsequently increased the repurchase authorization to $30.0 million and approved a $10.0 million Rule 10b5-1 plan - No shares were repurchased in Q1 2025, and as of March 31, 2025, $14.2 million remained authorized for repurchase[181] - Subsequent to the quarter, the Board increased the stock repurchase program authorization to $30.0 million and approved a $10.0 million Rule 10b5-1 plan[182]