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AE

ALTA EQUIPMENT GROUP INC. (ALTG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $498.1M, down 4.5% YoY but up sequentially vs Q3; adjusted EBITDA was $40.7M, down 18.1% YoY, with gross margin dollars down 12.4% YoY as equipment pricing remained pressured by industry oversupply .
  • Management highlighted a post‑election demand rebound in Q4 equipment sales but noted continued margin pressure and seasonal rental softness; full‑year product support grew 5.5% YoY while total revenue was essentially flat at $1.8766B .
  • FY2025 adjusted EBITDA guidance set at $175–$190M, supported by expected normalization of equipment oversupply, product support efficiencies, and $8M run‑rate cost savings; FY2024 actual adjusted EBITDA was $168.3M vs FY2023 $191.4M .
  • Catalysts: guidance and cost‑out execution, deleveraging actions ($61M funded debt reduction 2H’24), and narrative around normalization of construction equipment supply; potential headwinds include tariffs, rate uncertainty, and private non‑residential softness .

What Went Well and What Went Wrong

  • What Went Well

    • “We registered our best equipment sales quarter of 2024” post‑election, indicating improved customer sentiment and sequential demand recovery in Q4 .
    • Product support resilience: full‑year parts and service revenues increased to $294.4M and $253.8M (+5.5% YoY), marking five consecutive years of organic product support growth since going public .
    • Balance sheet actions: reduced funded debt by $61M in 2H’24 via rent‑to‑sell fleet rightsizing and working capital optimization; $8M annualized cost‑out run‑rate established .

  • What Went Wrong

    • Equipment oversupply pressured pricing and gross margins, driving EBITDA compression; Q4 adjusted EBITDA fell to $40.7M (‑18.1% YoY) despite volume recovery .
    • Q4 product support underperformed sequentially due to technician/customer downtime from mid‑week holidays and earlier‑than‑expected rental returns in northern markets; rental revenues fell to $47.5M (‑14.1% YoY) .
    • Elevated interest expense and macro uncertainty weighed on earnings; Q4 other interest expense rose to $20.0M vs $13.5M YoY; Q4 net loss to common increased to $(11.4)M vs $(2.7)M YoY .

Financial Results

Quarterly Comparison (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($MM)$488.1 $448.8 $498.1
New & Used Equipment Sales ($MM)$251.5 $219.8 $287.1
Parts Sales ($MM)$78.0 $75.6 $67.9
Service Revenues ($MM)$66.2 $64.6 $59.0
Rental Revenue ($MM)$53.7 $53.7 $47.5
Rental Equipment Sales ($MM)$38.7 $35.1 $36.6
Income from Operations ($MM)$10.3 $6.8 $2.4
Adjusted EBITDA ($MM)$50.3 $43.2 $40.7
Net Loss to Common ($MM)$(12.6) $(28.4) $(11.4)
Basic/Diluted EPS ($)$(0.38) $(0.86) $(0.34)

YoY Comparison – Q4 2024 vs Q4 2023

MetricQ4 2023Q4 2024Δ YoY
Total Revenues ($MM)$521.5 $498.1 (4.5%)
Income from Operations ($MM)$12.2 $2.4 (80.3%)
Adjusted EBITDA ($MM)$49.7 $40.7 (18.1%)
Basic/Diluted EPS ($)$(0.08) $(0.34) N/M

Segment Breakdown (Quarterly)

Segment Revenues ($MM)Q2 2024Q3 2024Q4 2024
Construction Equipment$294.9 $262.3 $318.6
Material Handling$175.6 $168.9 $168.6

KPIs – Product Support and Rental

KPI ($MM)Q2 2024Q3 2024Q4 2024
Parts Sales$78.0 $75.6 $67.9
Service Revenues$66.2 $64.6 $59.0
Rental Revenues$53.7 $53.7 $47.5

Notes: Q4 gross profit dollars were $116.5M (‑12.4% YoY), reflecting pricing pressure and mix; SG&A fell sequentially to $106.8M as cost actions took hold .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY2024$190–$200M (updated Aug 7, 2024) $170–$175M (updated Nov 12, 2024) Lowered
Adjusted EBITDA (Actual)FY2024N/A$168.3M N/A
Adjusted EBITDAFY2025N/A$175–$190M New guide
Share Repurchase AuthorizationOngoing$12.5M → $20.0M (Oct 30, 2024) $20.0M remains active Raised
Common Stock DividendQ4 2024$0.057 per share (Nov 29, 2024 payment) $0.057 per share (Feb 28, 2025 payment) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Macro/Interest Rates & ElectionModerating market; uncertainty impacting CE margins and demand Customers delayed capital commitments; sentiment improved post‑election Elevated rates and election uncertainty reduced CE volumes; sequential improvement post‑election Stabilizing demand; rates remain a headwind
Equipment OversupplyOversupply pressured pricing/margins in CE Expect normalization in H1 2025 Continued margin pressure; normalization expected in coming quarters Improving supply‑demand expected
Product SupportRecord product support revenue in Q2 +7.8% YoY in Q3; strong parts/service Q4 underperformed seasonally; full‑year +5.5% YoY Structurally resilient; Q4 seasonal dip
Regional TrendsN/AN/ANorthern/Great Lakes double‑digit declines; Florida better vs national average Mixed by region
Warehouse SolutionsN/AN/AGoal to return to prior peak in ~12 months; secular automation growth Reinvigorating growth
eMobility (EV/Hydrogen)Harbinger partnership; ~$25M backlog expected to convert in 2H’24 N/AHydrogen viable for high‑utilization; infrastructure/cost challenges persist Disciplined, selective growth
Cost OptimizationN/AG&A reductions began in Q3 ~$8M run‑rate savings; further product support efficiency targeted Executing; more to come
Tariffs/PolicyN/AN/ATariff uncertainty a cloud; DOT‑funded projects robust vs private non‑res Policy risk; infrastructure support

Management Commentary

  • CEO: “Post‑election, customer sentiment improved, which drove increased demand for equipment as evidenced by our fourth quarter equipment sales results where we registered our best equipment sales quarter of 2024. Despite the notable sequential increase in equipment sales in the fourth quarter, gross margins on equipment sales continued to be pressured as market participants aimed to right‑size their inventory and rental fleet levels heading into the new year.”
  • CEO: “Our product support business continued to perform well in 2024… parts and service sales growing to $294.4 million and $253.8 million… we successfully achieved organic growth for the fifth consecutive year in product support since going public.”
  • CFO: “Expense optimization initiatives… yielded approximately $8 million on an annual basis… we recorded $40.7 million of adjusted EBITDA for the quarter.”
  • CFO: “We were able to flex our fleet by $45 million… paying down funded debt by $61 million in the second half of 2024.”
  • CFO: “We expect to report $175 million to $190 million of adjusted EBITDA for the full year 2025,” with EBITDA bridge drivers from margin expansion, product support efficiencies, and remaining cost savings .

Q&A Highlights

  • Pricing/margins and market assumptions: Guidance embeds modest margin improvement and flattish CE volumes with potential share gains as supply overhang melts; MH low‑single‑digit growth; Master Distribution ~20% YoY off a two‑year average .
  • Leverage and deleveraging: Focus on nominal debt reduction; no plans to grow rent‑to‑sell or rent‑to‑rent fleet; highlighted tangible asset coverage and expected accretion on leverage ratio .
  • Product support efficiency: $8M cost‑out largely admin; further gains targeted in technician productivity (training, rework, non‑billable time) and price realization in 2025 .
  • CE purchasing drivers: Sentiment‑driven uncertainty eased post‑election; DOT‑funded projects robust while private non‑residential remains pressured; tariff uncertainty noted .
  • Warehouse Solutions: Aim to regain prior peak organically over ~12 months; secular growth as customers adopt automation; long‑term commitment to the segment .
  • Cash flow presentation: Clarified rent‑to‑sell vs rent‑to‑rent classification in cash flow statements causing model differences for some analysts .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue/EBITDA could not be retrieved due to S&P Global daily request limit. As a result, estimate comparisons and beat/miss determinations are unavailable for this recap. Values normally would be retrieved from S&P Global.

Key Takeaways for Investors

  • Sequential demand recovery but margin pressure persists; near‑term focus should be on normalization of equipment oversupply and the pace of margin repair in CE .
  • Full‑year product support growth and cost‑out actions provide downside protection; watch Q1–Q2 trajectory in parts/service and technician productivity programs .
  • FY2025 adjusted EBITDA guide ($175–$190M) implies modest improvement vs FY2024 actual ($168.3M); monitoring execution on margin expansion and product support efficiencies is critical .
  • Balance sheet flexibility improving: $61M deleveraging in 2H’24 and fleet rightsizing support liquidity; cautious capital allocation (buyback authorization $20M active) .
  • Regional dispersion matters: Great Lakes/northern markets show deeper declines; Florida and DOT‑funded projects underpin demand—portfolio exposure to public vs private projects will influence results .
  • Tariff and rate path remain external risks; absent clarity, expect continued caution in private non‑residential; any easing in rates or tariff certainty could unlock CE demand .
  • Near‑term trading: Narrative likely driven by early‑2025 order intake, equipment margin trajectory, and confirmation of product support efficiency gains; medium‑term thesis hinges on supply normalization, infrastructure tailwinds, and disciplined capital allocation .