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AE

ALTA EQUIPMENT GROUP INC. (ALTG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $423.0M with GAAP diluted EPS of $(0.65); revenue missed S&P Global consensus ($436.1M*) while Primary EPS (S&P definition) modestly beat (actual −$0.50* vs −$0.62*) .
  • Adjusted EBITDA was $33.6M, down ~1.5% YoY, supported by stronger service margins and $7.9M SG&A reductions despite lower equipment and rental revenues .
  • Capital allocation pivot: Board suspended the common dividend after the May 30 payment and expanded buyback authorization to $30M (including a $10M Rule 10b5-1 plan); proceeds from an Illinois aerial fleet divestiture ($18M cash; ~$4M annual pro forma Adjusted EBITDA) will go to debt reduction—key stock reaction catalysts .
  • FY 2025 Adjusted EBITDA guidance was reaffirmed on an organic basis, updated to $171.5–$186.5M reflecting divestiture impact (from prior $175–$190M) .

What Went Well and What Went Wrong

What Went Well

  • Product support resilience: service gross profit percentage rose 230 bps YoY to 60.1%, with construction service margin up 290 bps, reflecting technician efficiency initiatives .
  • Cost discipline: SG&A fell $7.9M YoY; management emphasized fixed cost reductions expected to sustain through the year .
  • Strategic portfolio actions: divested Chicago aerial rental assets ($18M cash; implied EV ~$20M, ~$4M annual pro forma Adjusted EBITDA); management highlighted focus on higher-return assets and debt reduction .

What Went Wrong

  • Top-line headwinds: total revenue decreased $18.6M YoY to $423.0M; Material Handling new equipment sales declined (timing and tough prior-year delivery comps), and rental revenues fell due to fleet optimization .
  • Higher interest costs pressured earnings: “interest expense – other” rose to $18.7M (+40.6% YoY), contributing to a larger net loss available to common shareholders of $(21.7)M .
  • Tariffs and macro uncertainty: management cited manageable surcharges (0–10%) but cautioned that reinstatement of “90-day pause” tariffs or recession could impair demand, especially in manufacturing/Material Handling .

Financial Results

Consolidated performance vs prior quarters and S&P estimates

MetricQ3 2024Q4 2024Q1 2025Q1 2025 S&P Consensus*Result vs Consensus
Revenue ($USD Millions)$448.8 $498.1 $423.0 $436.1*Miss
GAAP Diluted EPS ($)$(0.86) $(0.34) $(0.65) N/AN/A
Primary EPS (S&P) ($)N/AN/A$(0.50)*$(0.62)*Beat
Gross Profit ($USD Millions)$124.6 $116.5 $115.0 N/AN/A
SG&A ($USD Millions)$110.6 $106.8 $106.7 N/AN/A
Adjusted EBITDA ($USD Millions)$43.2 $40.7 $33.6 $31.1*—

Notes:

  • Primary EPS is S&P Global’s definition and may differ from GAAP diluted EPS.
  • Values marked with * retrieved from S&P Global.

Revenue mix and product support

Revenue Component ($USD Millions)Q3 2024Q4 2024Q1 2025
New & Used Equipment Sales$219.8 $287.1 $221.7
Parts Sales$75.6 $67.9 $72.0
Service Revenues$64.6 $59.0 $66.1
Rental Revenues$53.7 $47.5 $42.3
Rental Equipment Sales$35.1 $36.6 $20.9

Segment detail

Segment Revenues ($USD Millions)Q3 2024Q4 2024Q1 2025
Construction Equipment$262.3 $318.6 $245.8
Material Handling$168.9 $168.6 $157.9
Master Distribution——$17.4
Product Support (Parts + Service)$140.2 — (parts $67.9; service $59.0) $138.1

KPIs and cost lines

KPI ($USD Millions unless noted)Q3 2024Q4 2024Q1 2025
Service Gross Profit %——60.1%
Gross Profit$124.6 $116.5 $115.0
SG&A$110.6 $106.8 $106.7
Interest Expense – Other$19.4 $20.0 $18.7
Net Loss to Common$(28.4) $(11.4) $(21.7)
Adjusted EBITDA$43.2 $40.7 $33.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$175.0–$190.0M $171.5–$186.5M Lowered (divestiture impact)
Common Stock DividendOngoing$0.057 per share quarterly (declared May 2) Suspended after May 30, 2025 payment Suspended
Share Repurchase AuthorizationOngoing$20.0M (Oct 30, 2024 update) $30.0M total; $10.0M 10b5-1 plan Raised
Use of Divestiture ProceedsFY 2025N/A$18.0M cash to debt reduction; ~$4M annual pro forma Adjusted EBITDA divested Deleveraging
Tariff AssumptionsFY 2025N/AGuidance assumes surcharges in 0–10% range are manageable; excludes recession or reinstatement of “90-day pause” tariffs Assumptions clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroElection-year uncertainty weighed on equipment demand; oversupply pressured margins Surcharges 0–10% seen as manageable; risk if “90-day pause” tariffs return; attention on manufacturing MH in Midwest/Canada Cautious but manageable; monitoring risk
Product Support EfficiencyEmphasis on technician productivity and SG&A optimization; $8M annualized cost-out Service margin +230 bps YoY; construction service +290 bps; SG&A −$7.9M YoY Improving margins; sustained cost discipline
Rental Fleet OptimizationRight-sized fleet by ~$45M in 2H24 to delever; rent-to-sell flexibility highlighted Continued focus on utilization and returns; lower rental revenues from strategic fleet decisions Ongoing optimization
Capital AllocationBuyback authorization raised to $20M (Oct 2024); opportunistic repurchases Dividend suspended; buyback raised to $30M incl. $10M 10b5-1; divestiture proceeds to debt Shift to repurchases/deleveraging
Material Handling BookingsStable demand; backlog worked through; pricing pressure in used Bookings solid; pipeline supports H2 2025; Q1 deliveries down vs elevated prior-year levels Mixed: softer deliveries, better pipeline
Master Distribution2024 headwinds from oversupply Ecoverse revenue +35.9% YoY to $17.4M; tariff pressure from European imports Demand recovery; margin pressure
Warehouse SolutionsSoftness in 2024; long-term automation opportunity Reinvigoration remains a focus; path to prior peak over ~12 months Long-term growth focus
eMobilityAsset-light stance; hydrogen viability; infrastructure challenges Nikola bankruptcy noted; immaterial revenue impact; evaluating other Class 8 vendors Resetting; optionality preserved

Management Commentary

  • CEO: “Our first quarter performance continues to underscore the resiliency of our business model… product support business remained solid… tariffs… manageable… underpins our reiteration of our guidance on an organic basis.” .
  • CEO on portfolio: “Closed on the sale of substantially all of our aerial fleet rental equipment business in the Chicagoland market… proceeds will be allocated towards reducing our outstanding debt.” .
  • CEO on capital allocation: “Board… authorized the indefinite suspension of our quarterly common stock dividend… reallocated to an expanded share repurchase program… $30 million overall… $10 million to a Rule 10b5-1 Plan.” .
  • CFO: “Revenue of $423 million, reduction of 4.2%… product support held strong… SG&A down $7.9 million YoY… Adjusted EBITDA $33.6 million… nearly same level of EBITDA YoY on a reduced balance sheet.” .
  • CFO on liquidity: “Post divestiture… near $300 million in liquidity… comfortable amount to navigate any business climate.” .

Q&A Highlights

  • Portfolio optimization: Additional asset rationalizations likely to be “more surgical” at product-line level following the aerial divestiture .
  • Product support margin drivers: Focus on minimizing nonbillable time, technician training, and segment-level execution, particularly in Construction .
  • Capital return philosophy: Opportunistic redeployment from dividends to buybacks; $20M divestiture proceeds to debt; nimble based on share price and opportunities .
  • Material Handling end-market mix: Stability in food & beverage, utilities, medical; monitoring manufacturing (auto) amid uncertainty; April demand characterized as stable .
  • Tariffs: Direct exposure in Master Distribution (European imports) manageable at ~10%; concerns if “90-day snapback” occurs; Volvo impacts less direct with some U.S. assembly .
  • eMobility: Nikola bankruptcy immaterial to Alta; maintaining capabilities for charging and hydrogen; evaluating other OEMs .
  • M&A pricing: Multiples broadly range-bound; volatility may create more opportunities (succession-driven sellers) .

Estimates Context

  • Q1 2025 revenue missed S&P Global consensus ($423.0M actual vs $436.1M estimate*) .
  • Q1 2025 Primary EPS (S&P definition) beat (−$0.50 actual* vs −$0.62 estimate*), noting definitional differences versus GAAP diluted EPS of −$0.65 .
  • FY 2025 consensus Revenue ~$1.881B* and EBITDA ~$168.5M*; company’s Adjusted EBITDA guidance midpoint ($179.0M based on $171.5–$186.5M range) is above EBITDA consensus but uses Adjusted EBITDA vs S&P EBITDA—definitions differ .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Product support efficiency is offsetting softer equipment and rental revenues; continued focus on technician productivity and SG&A suggests margin durability into H2 2025 .
  • The capital allocation pivot (dividend suspension; expanded buyback; $10M 10b5-1) and $18M divestiture proceeds to debt are clear near-term stock catalysts; opportunistic repurchases can support the equity while deleveraging reduces risk .
  • Revenue mix is shifting: CE stable on infrastructure demand; MH deliveries down vs tough comps but bookings healthy for H2; Master Distribution demand rebounding though tariff-related margin pressures persist .
  • Watch interest expense and tariff headlines: elevated borrowing costs and any tariff snapback are key downside risks to earnings trajectory, particularly in MH/manufacturing regions .
  • Guidance credibility: reaffirmed on an organic basis post-divestiture; execution on service margins and cost control are the main levers to bridge to targets .
  • Tactical implication: Favor buyback-supported re-rating potential; monitor Q2 sequential recovery (seasonality, infrastructure) and MH pipeline conversion into H2; avoid extrapolating Primary EPS beats to GAAP EPS without definition alignment .
  • Medium-term thesis: Diverse platform, rent-to-sell flexibility, and infrastructure exposure position Alta to benefit as equipment oversupply normalizes and macro uncertainty abates .