Business Overview and History
Alta Equipment Group Inc. (NYSE:ALTG) is a leading provider of premium material handling, construction, and environmental processing equipment and related services in North America. The company's diversified business model and commitment to operational excellence have allowed it to navigate challenging market conditions, positioning Alta for long-term success.
Alta Equipment Group was founded in 1984 and has since grown to become one of the largest integrated equipment dealership platforms in North America. The company owns and operates a network of over 85 branch locations across 15 different states in the U.S. as well as 7 locations in Canada. Through its extensive branch network, the company sells, rents, and provides parts and service support for a wide range of specialized equipment, including lift trucks, heavy construction machinery, crushing and screening equipment, environmental processing solutions, cranes and aerial work platforms, paving and asphalt equipment, and other construction equipment.
The company's success can be attributed to its strong partnerships with leading Original Equipment Manufacturers (OEMs), such as Hyster-Yale, Volvo, JCB, CNH, Takeuchi, McCloskey, and Kubota, among others. Alta holds exclusive distribution agreements with these OEMs, granting it the ability to sell new equipment and provide replacement parts and service support within its designated territories. The company has been recognized by these OEMs as a top dealership partner and has received awards such as the Hyster-Yale internationally recognized dealer and Volvo Dealer of the Year.
In 2019, Alta completed a business combination with B. Riley Principal Merger Corp., becoming a publicly traded company on the New York Stock Exchange under the ticker symbol ALTG. This transaction provided Alta with additional capital and resources to facilitate its growth strategy through acquisitions and new branch openings. Since then, the company has completed 16 strategic acquisitions to expand its geographic footprint and product offerings.
Financial Performance and Resilience
Despite facing macroeconomic headwinds in 2024, Alta Equipment Group maintained relatively stable financial performance. For the full year 2024, the company reported total revenues of approximately $1.88 billion, on par with the previous year's results. This resilience can be attributed to the company's diversified revenue streams, with product support (parts and service) revenues accounting for nearly 30% of total sales.
The company's adjusted EBITDA for the full year 2024 was $168.3 million, down from $201 million in 2023, primarily due to a decline in new and used equipment sales volumes and compressed gross margins in the Construction Equipment and Master Distribution segments. However, Alta's management team successfully implemented cost optimization initiatives, which helped offset some of the revenue and margin pressures.
Navigating Market Challenges
The construction equipment market faced significant headwinds in 2024, with overall sales declining by approximately 10% due to factors such as elevated interest rates, uncertainty surrounding the U.S. presidential election, and an oversupply of equipment in the dealer channel. Alta's Construction Equipment segment saw a 10.2% organic decline in new and used equipment sales, a reduction of over $60 million.
In contrast, the Material Handling segment remained relatively stable, with revenues increasing 0.9% to $687.4 million, supported by sustained product support growth and stable equipment margins. However, the segment did face pricing pressure, particularly in the used equipment market.
The Master Distribution segment, which focuses on the distribution of environmental processing equipment, also experienced a decline in revenues due to the broader market challenges and supply-demand imbalances.
Strategies for Growth and Efficiency
To navigate the challenging market environment, Alta has implemented several strategic initiatives. The company has focused on operational efficiency, enhancing profitability through cost optimization, streamlining SG&A, and improving fleet utilization. Additionally, Alta has taken a more opportunistic approach to acquisitions in 2025, prioritizing high-margin, recurring business lines and expanding its geographic footprint of exclusive distribution rights.
The company has also demonstrated financial discipline, reducing net debt by over $60 million in the second half of 2024 through rental fleet right-sizing and working capital management. Alta's $20 million share repurchase program remains active, and the company will continue to deploy capital opportunistically based on market conditions.
Financials
Alta Equipment Group's financial performance in 2024 demonstrated resilience in the face of market challenges. The company's total revenues for the year remained stable at approximately $1.88 billion. Adjusted EBITDA for 2024 was $168.3 million, compared to $201 million in 2023. The Material Handling segment showed a slight increase in revenues, growing 0.9% to $687.4 million.
For the full year 2024, Alta reported a net loss of $62.1 million. Operating cash flow for the year was $57.0 million, while free cash flow was negative $13.5 million. In the most recent quarter (Q4 2024), the company reported revenue of $498.1 million, representing a year-over-year decline of 4.5%, and a net loss of $11.4 million.
Alta Equipment Group operates through three main reportable segments:
1. Material Handling: This segment generated revenues of $687.4 million in 2024, representing 36.6% of the company's total revenues. Gross profit for the segment was $222.7 million, with a gross profit margin of 32.4%.
2. Construction Equipment: This segment generated revenues of $1.13 billion in 2024, accounting for 60.0% of the company's total revenues. Gross profit for the segment was $254.1 million, with a gross profit margin of 22.5%.
3. Master Distribution: This segment generated revenues of $59.2 million in 2024, representing 3.1% of the company's total revenues. Gross profit for the segment was $16.3 million, with a gross profit margin of 27.5%.
Liquidity
Alta Equipment Group has maintained a strong focus on liquidity and financial discipline. The company successfully reduced its net debt by over $60 million in the second half of 2024 through strategic initiatives such as rental fleet right-sizing and effective working capital management. Additionally, Alta has an active $20 million share repurchase program, which it will continue to utilize opportunistically based on market conditions.
As of the end of 2024, Alta's liquidity position included:
- Cash: $13.4 million
- Available credit line: $441.0 million (under the revolving line of credit and floor plans)
- Debt/Equity ratio: 4.71
- Current ratio: 1.34
- Quick ratio: 0.41
Industry Trends and Market Position
The North American construction equipment market experienced a downturn in 2024, with overall sales declining by approximately 10%. This decline was primarily due to economic uncertainty, rising interest rates, and reduced demand from small and medium-sized contractors. However, the North American lift truck market exhibited growth in 2024 as the industry continued to deliver off of record levels of bookings in the 2021-2022 post-COVID timeframe.
Alta's diverse product portfolio and geographic footprint have allowed the company to navigate these challenges by leveraging growth opportunities in its material handling and distribution businesses. The company's focus on providing comprehensive equipment solutions, including sales, service, and rentals, has been a key factor in its ability to generate consistent financial performance across economic cycles.
Outlook and Conclusion
Looking ahead to 2025, Alta has provided adjusted EBITDA guidance in the range of $175 million to $190 million. This guidance reflects the company's confidence in its ability to navigate the current market environment and capitalize on growth opportunities, particularly in the material handling and master distribution segments.
The key assumptions underlying the 2025 adjusted EBITDA guidance include:
- Modest growth in equipment sales volumes and expanded gross margins, contributing $7 million.
- Organic growth and improved efficiency in product support revenues, contributing $9 million.
- $4 million in additional cost savings from initiatives started in 2024.
- Minimal growth expectations for the rental business.
- Typical inflationary cost headwinds.
Despite the challenges faced in 2024, Alta Equipment Group has proven its resilience and ability to adapt to changing market conditions. The company's diversified business model, strong OEM partnerships, and focus on operational excellence position it well for long-term success. As the company continues to execute on its strategic initiatives, investors can look forward to Alta's continued growth and value creation.