Alta Equipment (ALTG) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Interim Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements for Alta Equipment Group Inc. as of June 30, 2025, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets (Unaudited) Total assets decreased to $1,436.0 million from $1,480.4 million, driven by inventory reduction, with total stockholders' equity declining to $43.9 million Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $739.1 | $774.5 | | Total Assets | $1,436.0 | $1,480.4 | | Total current liabilities | $531.0 | $577.2 | | Total Liabilities | $1,392.1 | $1,402.8 | | Total Stockholders' Equity | $43.9 | $77.6 | Condensed Consolidated Statements of Operations (Unaudited) Q2 2025 revenues slightly decreased to $481.2 million, but income from operations increased to $12.4 million due to lower SG&A, improving net loss to $(6.8) million Key Operating Results (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $481.2 | $488.1 | $904.2 | $929.7 | | Gross profit | $122.3 | $132.0 | $237.3 | $252.6 | | Income from operations | $12.4 | $10.3 | $13.2 | $9.4 | | Net loss available to common stockholders | $(6.8) | $(12.6) | $(28.5) | $(25.3) | | Diluted loss per share | $(0.21) | $(0.38) | $(0.87) | $(0.76) | Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash used in operating activities significantly improved to $3.4 million for H1 2025, with $8.4 million used in investing and $11.4 million provided by financing Net Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3.4) | $(24.2) | | Net cash used in investing activities | $(8.4) | $(34.2) | | Net cash provided by financing activities | $11.4 | $32.1 | | Net change in cash | $(0.2) | $(26.5) | Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes explain accounting policies, revenue recognition, segment performance, debt structure, business combinations, divestitures, and stock-based compensation - The company identified and corrected an immaterial multi-year error in its Statement of Cash Flows, reclassifying proceeds from the sale of rent-to-rent equipment from operating to investing activities. For H1 2024, this increased net cash used in operating activities by $3.2 million[28][29] - On March 14, 2025, the company acquired Les Chariots Elevateurs Du Quebec Inc. (CEQ) for $2.9 million, reported within the Material Handling segment[95] - On May 1, 2025, the company divested its aerial fleet rental business in the Chicago area for $18.0 million in cash, resulting in a gain of $4.3 million[96] - In June 2024, the company completed a private offering of $500.0 million of 9.000% Senior Secured Second Lien Notes due 2029 to refinance existing debt and for general corporate purposes[62] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance for Q2 and H1 2025, covering consolidated and segment results, revenue trends, gross profit, operating expenses, liquidity, capital resources, and cash flow Results of Operations Q2 2025 consolidated revenues decreased 1.4% to $481.2 million, gross profit fell 7.3%, but income from operations grew 20.4% to $12.4 million due to SG&A reduction Consolidated Performance Summary - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $481.2 | $488.1 | (1.4)% | | Gross profit | $122.3 | $132.0 | (7.3)% | | Gross Profit % | 25.4% | 27.0% | (1.6) p.p. | | Income from operations | $12.4 | $10.3 | 20.4% | | Adjusted EBITDA | $48.5 | $50.3 | (3.6)% | - Operating expenses decreased significantly due to cost savings initiatives implemented in late 2024 and early 2025, including workforce optimization and changes to the self-insured healthcare program[144] Material Handling Segment Results Material Handling segment revenues decreased 8.5% to $160.7 million due to lower equipment sales and product support, with gross profit margin contracting to 32.7% and adjusted EBITDA falling 16.8% Material Handling Segment Performance - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $160.7 | $175.6 | (8.5)% | | Gross profit | $52.5 | $59.5 | (11.8)% | | Gross Profit % | 32.7% | 33.9% | (1.2) p.p. | | Segment adjusted EBITDA | $16.8 | $20.2 | (16.8)% | Construction Equipment Segment Results Construction Equipment segment revenues grew 2.0% to $300.7 million, driven by new and used equipment sales, despite declines in rental, with adjusted EBITDA increasing 1.6% to $31.7 million Construction Equipment Segment Performance - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $300.7 | $294.9 | 2.0% | | Gross profit | $65.9 | $67.6 | (2.5)% | | Gross Profit % | 21.9% | 22.9% | (1.0) p.p. | | Segment adjusted EBITDA | $31.7 | $31.2 | 1.6% | Master Distribution Segment Results Master Distribution segment revenues increased 25.1% to $20.9 million, but gross profit margin sharply declined to 20.1% due to tariffs and currency, with adjusted EBITDA decreasing 35.3% Master Distribution Segment Performance - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $20.9 | $16.7 | 25.1% | | Gross profit | $4.2 | $4.6 | (8.7)% | | Gross Profit % | 20.1% | 27.5% | (7.4) p.p. | | Segment adjusted EBITDA | $1.1 | $1.7 | (35.3)% | Liquidity and Capital Resources Principal liquidity sources are cash from operations and credit facilities, with $3.4 million cash used in operations for H1 2025 and $425.2 million available borrowings as of June 30, 2025 - Principal uses of cash include funding operations, working capital, rental fleet purchases, acquisitions, debt service, and dividends[180] - As of June 30, 2025, the company had $425.2 million of available borrowings under its ABL Facility and Floor Plan Facilities[182] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates, fuel prices, and foreign currency, managing these through derivative instruments like interest rate caps and fuel swaps - As of June 30, 2025, the company had $218.9 million in outstanding borrowings under its variable-rate ABL Facility and $329.9 million under its Floor Plan Facilities[186] - A one percentage point increase in interest rates on its variable rate debt would reduce annual pre-tax earnings by approximately $2.3 million, including the impact of its interest rate cap[186] - The company manages fuel price risk through fixed price swap contracts and has exposure to foreign currency risk from its operations in Canada and Europe, though it does not consider the impact to be material[188][189] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period[190] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[191] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings, with management expecting no material effect on financial statements - Pending legal proceedings are not expected to have a material effect on the company's condensed consolidated financial statements[74][194] Item 1A. Risk Factors No material changes to risk factors were reported from those disclosed in the Annual Report on Form 10-K for FY2024 - No material changes to risk factors were reported for the quarter[195] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Board increased stock repurchase authorization to $30.0 million; company repurchased 1,145,604 shares at $5.64 per share in Q2 2025 Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid | Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | Q2 2025 Total | 1,145,604 | $5.64 | $17.7 | - The Board increased the stock repurchase program authorization to $30.0 million on May 1, 2025[196] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported Item 4. Mine Safety Disclosures This item is not applicable to the company's operations Item 5. Other Information No other material information was reported Item 6. Exhibits Lists all exhibits filed with Form 10-Q, including corporate governance documents, debt agreements, and certifications - Exhibits filed include the Indenture for the 9.000% Senior Secured Second Lien Notes due 2029 and Sarbanes-Oxley Act certifications[204]