Provides Update on Response to
COVID-19
- Net revenues increased 76% year-over-year to $180.5 million
from $102.3 million
- Industrial and Construction revenues reach $94.6 million and
$85.9 million, respectively
- Gross profit increased to $47.1 million from $27.5 million
- Net loss from operations of $5 million; net loss of $17
million, primarily due to business combination completed in
February 2020
- First quarter 2020 Adjusted EBITDA* of $18.8 million
(reflecting seasonality of business in Q1, historically ~20% of
annual EBITDA)
- Labor utilization rate sustains at benchmark levels throughout
COVID-19 impacted periods
Alta Equipment Group Inc. (“Alta” or the “company”) (NYSE:
ALTG), a leading provider of premium industrial and construction
equipment and related services, today announced financial results
for the first quarter ended March 31, 2020 and provided an update
on the company’s response to the COVID-19 pandemic.
CEO Comment:
Ryan Greenawalt, Chief Executive Officer of Alta, said “I’m
extremely proud of the incredible response to the COVID-19 pandemic
from Alta’s one team culture. Our first quarter financial results
demonstrate the strength of our business model in terms of organic
growth driven by our parts sales and service and the contributions
of acquisitions. Our strategy to expand into new geographic markets
and diversify our customer base has served us well during the
current economic slowdown.”
Mr. Greenawalt continued, “Our experienced leaders took swift
action to service customers, reduce costs and efficiently manage
operations in response to shelter-in-place mandates that went into
effect across many of our markets. Looking ahead, we believe we
have ample liquidity and a strong capital structure to effectively
navigate these current business conditions. We are confident in the
resilience of our business model and believe the immediate actions
we’ve implemented will allow us to emerge stronger as the economy
begins to open and recover.”
Update on Response to COVID-19:
In mid-March 2020, as the result of directives issued by state
and local authorities within Alta’s geographic footprint, the
company began adjusting its business and operations in response to
the COVID-19 pandemic. The response has focused on these key
areas:
- Employee Protocols: The
safety and health of Alta’s employees is the company’s top
priority. Alta adjusted its operations to permit virtually all of
the company’s sales and back office employees to work remotely. The
company established new protocols that included health related
screening upon entering a facility, the use of face masks,
additional personal protective equipment when job requirements do
not permit following social distancing guidelines and rigorous
facility cleaning protocols.
- Customer Support: Alta has
been deemed an “essential” business in all of the company’s
geographies and all 43 of our branches are currently open and
operating. Over the course of the past six weeks, our dedicated
team of operators and skilled technicians have worked with the
company’s original equipment manufacturer (“OEM”) partners to
support Alta’s diverse customer base.
- Operating Expenses
Reductions: In April, the company took immediate action
to reduce costs across the organization. These initiatives included
the temporary elimination of certain non-essential spending,
temporarily reduced executive and senior level compensation and a
combination of workforce reductions and furloughs.
- Liquidity Preservation: The
company believes it maintains ample liquidity and financial
flexibility to continue to navigate effectively in this current
economic environment. Alta entered the second quarter of 2020 with
$150 million of cash and available liquidity to fund
operations.
Recent Business Highlights:
- The company acquired Flagler CE Holdings, LLC (“Flagler”) and
Liftech Equipment Companies, Inc. (“Liftech”) in February 2020,
expanding its geographic footprint and end-market diversity while
scaling the company’s partnerships with key OEM’s
- The product support business grew 11.3% organically in the
first quarter over last year’s comparable quarter which provides a
steady flow of recurring revenue at high margins
- The number of service technicians increased by approximately
20% in Florida since the February 14th acquisition, as business
activity in that region has continued at a near-normal pace and
Alta has implemented an aggressive recruiting campaign for skilled
labor
First Quarter 2020 Financial Highlights:
On February 14, 2020, Alta’s predecessor, Alta Equipment
Holdings, Inc., and B. Riley Principal Merger Corp., a special
purpose acquisition company (“SPAC”) sponsored by an affiliate of
B. Riley Financial, Inc., closed a business combination, through
which Alta became a publicly-traded company (the “business
combination”). The business combination provided net proceeds to
Alta of $538 million, through a combination of equity and debt
financings.
The company’s results for the first quarter of 2020 include
Northland Industrial Truck Co. (“NITCO”), acquired in May 2019 and
Flagler and Liftech which were acquired on February 14, 2020.
Net revenue increased to $181 million from $102 million in the
first quarter of 2019. Gross profit grew to $47.1 million compared
to $27.5 million. Net loss was $17 million primarily due to debt
extinguishment and transaction costs related to business
combination.
Adjusted EBITDA* was $18.8 million compared to $15.1 million in
the first quarter of 2019.
Three months ended March
31,
Increase (Decrease) 2020
versus 2019
2020
2019
Revenues:
New and used equipment sales
$
82.2
$
44.8
$
37.4
83.5
%
Parts sales
28.7
16.5
12.2
73.9
%
Service revenue
30.2
17.2
13.0
75.6
%
Rental revenue
25.2
17.0
8.2
48.2
%
Rental equipment sales
14.2
6.8
7.4
108.8
%
Net revenue
$
180.5
$
102.3
$
78.2
76.4
%
Cost of revenues:
New and used equipment sales
72.4
39.7
32.7
82.4
%
Parts sales
19.6
10.9
8.7
79.8
%
Service revenue
11.4
6.2
5.2
83.9
%
Rental revenue
4.9
3.5
1.4
40.0
%
Rental depreciation and amortization
12.9
8.5
4.4
51.8
%
Rental equipment sales
12.2
6.0
6.2
103.3
%
Cost of revenue
$
133.4
$
74.8
$
58.6
78.3
%
Gross profit
$
47.1
$
27.5
$
19.6
71.3
%
Total general and administrative
expenses
$
52.1
$
25.9
$
26.2
101.2
%
(Loss) income from operations
$
(5.0
)
$
1.6
$
(6.6
)
(412.5
)%
Total other income (expense)
$
(13.1
)
$
(4.2
)
$
(8.9
)
211.9
%
Loss before taxes
$
(18.1
)
$
(2.6
)
(15.5
)
596.2
%
Income tax provision (benefit)
(1.1
)
—
(1.1
)
NA
Net loss
$
(17.0
)
$
(2.6
)
$
(14.4
)
553.8
%
Earnings Call and Webcast
Alta will discuss its first quarter 2020 results via live
webcast and teleconference today at 5:00 p.m. Eastern Time. A live
webcast of the call can be found on the investor relations portion
of the company's website at https://Investors.altaequipment.com.
For a live audio teleconference, please dial (844) 543-5487
(domestic), or (825) 312-2330 (international), with conference ID #
4928529 to access the conference call at least five minutes prior
to the 5:00 p.m. Eastern Time start time. Once connected with the
operator, request access to the Alta Equipment Group First Quarter
2020 Earnings Call.
A live replay of the call will also be available on the investor
relations portion of the company's website at
https://Investors.altaequipment.com. An audio replay will be
available between 8:00 p.m. Eastern Time, May 14, 2020, and 12:59
p.m. Eastern Time, May 21, 2020, by calling (800) 585-8367, or
(416) 621-4642, with conference ID # 4928529.
Additionally, supplementary presentation slides will be
accessible on the “Investor Relations” section of the Company’s
website at https://Investors.altaequipment.com.
About Alta Equipment Group
Alta owns and operates one of the largest integrated equipment
dealership platforms in the U.S. Through its branch network, the
company sells, rents, and provides parts and service support for
several categories of specialized equipment, including lift trucks
and aerial work platforms, cranes, earthmoving equipment and other
industrial and construction equipment. Alta has operated as an
equipment dealership for 35 years and has developed a branch
network that includes 43 total locations across Michigan, Illinois,
Indiana, New England, New York and Florida. Alta offers its
customers a one-stop-shop for most of their equipment needs by
providing sales, parts, service, and rental functions under one
roof. More information can be found at www.altaequipment.com.
Forward Looking Statements
This presentation includes certain statements that may
constitute “forward-looking statements” for purposes of the federal
securities laws. Forward-looking statements include, but are not
limited to, statements that refer to projections, forecasts or
other characterizations of future events or circumstances,
including any underlying assumptions. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements may include, for example, statements about: our future
financial performance; our plans for expansion and acquisitions;
and changes in our strategy, future operations, financial position,
estimated revenues, and losses, projected costs, prospects, plans
and objectives of management. These forward-looking statements are
based on information available as of the date of this presentation,
and current expectations, forecasts and assumptions, and involve a
number of judgments, risks and uncertainties. Accordingly,
forward-looking statements should not be relied upon as
representing the parties’ views as of any subsequent date, and we
do not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date they
were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
laws. You should not place undue reliance on these forward-looking
statements. As a result of a number of known and unknown risks and
uncertainties, actual results or performance may be materially
different from those expressed or implied by these forward-looking
statements. Some factors that could cause actual results to differ
include, but are not limited to: (1) the outcome of any legal
proceedings that may be instituted against us relating to the
business combination and related transactions; (2) the ability to
maintain our listing of shares of common stock on the New York
Stock Exchange; (3) the risk that integrating our acquisitions
disrupts our current plans and operations; (4) the ability to
recognize the anticipated benefits of our business combination and
acquisitions, which may be affected by, among other things,
competition, our ability to grow and manage growth profitably, our
ability to maintain relationships with customers and suppliers and
retain our management and key employees; (5) changes in applicable
laws or regulations; (6) the possibility that we may be adversely
affected by other economic, business, and/or competitive factors;
(7) disruptions in the political, regulatory, economic and social
conditions domestically or internationally; (8) major public health
issues, such as an outbreak of a pandemic or epidemic (such as the
novel coronavirus COVID-19), which could cause disruptions in our
operations, supply chain, or workforce; and (9) and other risks and
uncertainties identified in this presentation or indicated from
time to time in the section entitled “Risk Factors” in our annual
report on Form 10-K and other filings with the U.S. Securities and
Exchange Commission (the “SEC”). The company cautions that the
foregoing list of factors is not exclusive, and readers should not
place undue reliance upon any forward-looking statements, which
speak only as of the date made. We do not undertake or accept any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements to reflect any change
in its expectations or any change in events, conditions or
circumstances on which any such statement is based.
* Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are
prepared and presented in accordance with accounting principles
generally accepted in the United States (“GAAP”), Alta discloses
non-GAAP financial measures, including Adjusted EBITDA, in this
press release because Alta believes they are useful performance
measures because they allow for an effective evaluation of Alta’s
operating performance when compared to its peers, without regard to
financing methods or capital structure. Alta believes such measures
are useful for investors and others in understanding and evaluating
Alta’s operating results in the same manner as its management.
However, such measures are not financial measures calculated in
accordance with GAAP and should not be considered as a substitute
for, or in isolation from, net income (loss), revenue, operating
profit, or any other operating performance measures calculated in
accordance with GAAP.
Alta defines Adjusted EBITDA as net income (loss) before
interest expense, income taxes, depreciation and amortization,
adjustments for certain one-time or non-recurring items and other
adjustments. Alta excludes these items from net income (loss) in
arriving at Adjusted EBITDA because these amounts are either
non-recurring or can vary substantially within the industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. Certain items excluded from Adjusted EBITDA are
significant components in understanding and assessing a company’s
financial performance, such as a company’s cost of capital and tax
structure, as well as the historic costs of depreciable assets,
none of which are reflected in Adjusted EBITDA. Alta’s presentation
of Adjusted EBITDA should not be construed as an indication that
results will be unaffected by the items excluded from Adjusted
EBITDA. Alta’s computation of Adjusted EBITDA may not be identical
to other similarly titled measures of other companies. For a
reconciliation of non-GAAP measures to their most comparable
measures under GAAP, please see the table entitled “Reconciliation
of Non-GAAP Financial Measures” at the end of this press
release.
ALTA EQUIPMENT GROUP INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in millions, except share and per
share amounts)
March 31, 2020
December 31, 2019
ASSETS
CURRENT ASSETS
Cash
$
36.4
$
—
Accounts receivable, net of allowances of
$4.8 and $4.4 as of March 31, 2020 and December 31, 2019,
respectively
123.8
101.2
Inventories, net
209.0
137.2
Prepaid expenses and other current
assets
9.8
5.7
Total current assets
379.0
244.1
PROPERTY AND EQUIPMENT, NET
261.2
196.5
OTHER ASSETS
Goodwill
30.3
8.6
Intangible assets, net
2.9
3.0
Other assets
1.5
2.0
Total other assets
34.7
13.6
TOTAL ASSETS
$
674.9
$
454.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
CURRENT LIABILITIES
Lines of credit
$
131.7
$
72.5
Floor plan payable – new equipment
131.0
87.7
Floor plan payable – used and rental
equipment
31.5
112.5
Current portion of long-term debt
7.8
7.1
Accounts payable
45.2
31.1
Customer deposits
6.1
7.2
Accrued expenses
20.7
16.0
Other current liabilities
9.2
9.3
Total current liabilities
383.2
343.4
LONG-TERM LIABILITIES
Long-term debt, net of current portion
139.5
86.5
Capital lease obligations, net of current
portion
1.2
1.4
Buyback residual obligations, net of
current portion
0.6
0.7
Guaranteed purchase obligation, net of
current portion
8.4
9.0
Lease liability, net of current
portion
3.3
3.7
Deferred tax liability
5.8
—
Other liabilities
4.1
3.1
Warrant liability
—
29.6
TOTAL LIABILITIES
$
546.1
$
477.4
CONTINGENCIES - NOTE 11
STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.0001 par value,
29,511,359 and 7,300,000 shares issued and outstanding at March 31,
2020 and December 31, 2019
$
—
$
—
Additional paid-in capital
178.8
—
Treasury stock
(2.9
)
—
Retained deficit
(47.1
)
(23.2
)
TOTAL STOCKHOLDERS’ EQUITY
(DEFICIT)
128.8
(23.2
)
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT)
$
674.9
$
454.2
ALTA EQUIPMENT GROUP INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months Ended March
31,
(in millions, except share and per
share amounts)
2020
2019
Revenues:
New and used equipment sales
$
82.2
$
44.8
Parts sales
28.7
16.5
Service revenue
30.2
17.2
Rental revenue
25.2
17.0
Rental equipment sales
14.2
6.8
Net revenue
$
180.5
$
102.3
Cost of revenues:
New and used equipment sales
72.4
39.7
Parts sales
19.6
10.9
Service revenue
11.4
6.2
Rental revenue
4.9
3.5
Rental depreciation
12.9
8.5
Rental equipment sales
12.2
6.0
Cost of revenue
$
133.4
$
74.8
Gross profit
$
47.1
$
27.5
General and administrative expenses
51.1
25.3
Depreciation and amortization expense
1.0
0.6
Total general and administrative
expenses
52.1
25.9
(Loss) income from operations
$
(5.0
)
$
1.6
Other income (expense)
Interest expense, floor plan payable – new
equipment
(1.0
)
(0.7
)
Interest expense – other
(4.9
)
(3.8
)
Other income
0.4
0.3
Loss on extinguishment of debt
(7.6
)
—
Total other income (expense)
$
(13.1
)
$
(4.2
)
Loss before taxes
$
(18.1
)
$
(2.6
)
Income tax benefit
(1.1
)
—
Net loss
$
(17.0
)
$
(2.6
)
Basic and diluted loss per share
$
(0.91
)
$
(0.36
)
Basic and diluted weighted average
common shares outstanding
18,767,981
7,300,000
ALTA EQUIPMENT GROUP INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Three Months Ended March
31,
(amounts in millions)
2020
2019
OPERATING ACTIVITIES
Net loss
$
(17.0
)
$
(2.6
)
Adjustments to reconcile net loss to net
cash flows provided by operating activities:
Depreciation and amortization
13.9
9.1
Inventory obsolescence
0.5
0.5
Gain on sale of assets
(0.1
)
—
Gain on sale of rental fleets
(2.0
)
(0.8
)
Provision for bad debt
0.4
0.4
Loss on debt extinguishment
7.6
—
Amortization of debt discount and debt
issuance costs
0.3
0.2
(Repayment) accrual of paid-in-kind
interest
(11.2
)
1.3
Share-based payment
3.1
—
Changes in deferred taxes
(1.1
)
—
Changes in:
Accounts receivable
(3.5
)
(20.3
)
Inventories
(33.6
)
(16.6
)
Proceeds from rental fleets
14.4
9.4
Prepaid expenses and other assets
(0.4
)
(2.8
)
Proceeds from floor plans with
manufacturers
94.2
64.8
Payments under floor plans with
manufacturers
(120.7
)
(51.8
)
Accounts payable, accrued expenses,
customer deposits, and other current liabilities
(2.1
)
13.4
Deferred revenue
0.8
0.6
Leases and other liabilities
(0.6
)
(1.4
)
Net cash (used in) provided by
operating activities
$
(57.1
)
$
3.4
INVESTING ACTIVITIES
Proceeds from the sale of assets
0.1
—
Expenditures for rental fleets
(25.5
)
(6.5
)
Expenditures for property and
equipment
(1.2
)
(0.5
)
Expenditures for acquisitions, net of cash
acquired
(91.7
)
—
Net activity on notes and land contract
receivable
—
0.1
Net cash used in investing
activities
$
(118.3
)
$
(6.9
)
FINANCING ACTIVITIES
Expenditures for debt issuance costs
(2.7
)
—
Extinguishment of floor plans and line of
credit
(132.9
)
—
Extinguishment of long-term debt
(82.0
)
—
Redemption of former shareholder notes
payable
(6.7
)
—
Extinguishment of warrant liability
(29.6
)
—
Proceeds from lines of credit
220.2
3.1
Payments under lines of credit
(79.9
)
—
Proceeds from floor plans with
unaffiliated source
25.8
11.8
Payments under floor plans with
unaffiliated source
(21.6
)
(10.4
)
Proceeds from issuance of long-term debt,
net
149.4
0.2
Payments on long-term debt
(0.8
)
(2.0
)
Payments on capital lease obligations
(0.2
)
(0.1
)
Equity proceeds from reverse
recapitalization, net
175.7
—
Repurchases of common stock
(2.9
)
—
Net cash provided by financing
activities
$
211.8
$
2.6
NET CHANGE IN CASH
36.4
(0.9
)
Cash, Beginning of year
—
1.5
Cash, End of period
$
36.4
$
0.6
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest
$
15.2
$
3.1
ALTA EQUIPMENT GROUP INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
Three months ended March
31,
(amounts in millions)
2020
2019
Net loss
$
(17.0
)
$
(2.6
)
Depreciation and amortization
13.9
9.1
Interest expense
5.9
4.5
Income tax (benefit) expense
(1.1
)
—
EBITDA
$
1.7
$
11.0
Proforma EBITDA - Acquisitions (1)
2.3
4.2
One-Time Transaction Costs (2)
0.8
0.1
Loan Administration Fees (3)
0.1
0.1
Non-Cash Adjustments (4)
0.2
0.3
Loss on Debt Extinguishment (5)
7.6
—
Equity-linked Incentives (6)
6.6
—
New Floorplan Interest Expense (7)
(0.7
)
(0.6
)
Other expenses (8)
0.2
—
Adjusted EBITDA
$
18.8
$
15.1
(1) Prorated EBITDA of acquisitions made
in same fiscal year period; for instance, Northland acquisition was
completed in May 2019, so 2019 YTD periods include the Pro Forma
EBITDA as if Northland was acquired at the beginning of the fiscal
year.
(2) Includes expenses related to the
acquisition of Flagler and Liftech and public company preparation
costs.
(3) Debt administration expenses
associated with debt refinancing activities in the first quarter of
2019 and February 2020 in connection with the business
combination.
(4) Non-cash adjustments related to
deferred rent expenses.
(5) Represents expenses of debt
extinguishments related to refinancing activities relating to the
business combination in February 2020
(6) Reflects equity-based compensation
expenses related to refinancing activities in February 2020
(7) Represents interest expense associated
with showroom-ready new floorplan equipment interest included in
total interest expense above
(8) Other non-recurring expenses primarily
related to severance payments
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200514005762/en/
Investors: Bob Jones / Taylor Krafchik Ellipsis
IR@altaequipment.com (646) 776-0886
Media: Glenn Moore Alta Equipment
glenn.moore@altaequipment.com (248) 305-2134
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