Alta Equipment Group Inc. (ALTG) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day ladies and gentlemen. Thank you for standing by and welcome to the Alta Equipment Group First Quarter 2021 Earnings Conference Call. At this time all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session Please be advised that today's conference is being recorded I would like to hand the conference over to your host, Sinem McDonald, Thank you. Please go ahead. Sinem McDonald: Thank you, Eddie. Good afternoon, everyone. Thank you for joining us today at press release detailing Alta's first quarter 2021. Financial results was issued this afternoon and it's posted on our website along with a presentation designed to assist you in understanding the company's results. On the call with us today are Ryan Greenawalt, our Chairman and CEO; Tony Colucci, our Chief Financial Officer. For today's call management will first provide a review of the first quarter financial results. We will begin with some prepared remarks before we open the call for your question. Ryan Greenawalt: Thank you, Sinem. Welcome everyone and thank you for joining the call today. The strong momentum we established in the second half of last year continued in the first quarter as the post pandemic recovery takes hold and our market share, sorry. Our market shows notable improvement. We are pleased to report that the year is off to a good start as labor productivity and rental utilization are two most impactful operating metrics. Now exceed 2019 pre-COVID levels. This is quite an accomplishment and a true Testament to the dedication, hard work and determination of the Alta team members. I'm proud to lead such an outstanding company, and I am genuinely thankful for their incredible contributions. Our strong first quarter financial performance in an, in an industry that typically has a slow start is particularly encouraging and demonstrates the powerful platform. We've built as the operating environment continues to improve. We're confident we'll deliver increased results as the year unfolds. Tony Colucci: Thanks Ryan. Good afternoon, everyone. And thank you for your interest in Alta equipment group and our first quarter, 2021 financial results. I trust that you and your families are safe and healthy and anticipating a well-deserved summer. My remarks today will focus on three key areas. First I'll be presenting our first quarter results, which we are pleased with as we close the COVID gap and look forward to continued recovery across our business landscape and a better 2021 for Alta our employees and our investors. Second, I want to highlight and discuss a recent bond race, which closed right after the quarter end on April 1st and detail out the balance sheet flexibility and other benefits. The bond financing gives us both now and for years to come. Lastly, for the first time in our brief history as a public company, I'll provide guidance on 2021 adjusted EBITDA and discuss the relevant elements and assumptions that drive the metric. Before I dig in, it should be noted that there are some slides in our presentation, which was released prior to our call that presents our first quarter numbers in greater detail than what I will discuss here today. I encourage everyone on today's call to review our presentation and our 10 Q, which is available on our investor relations website and also equipment.com for the first portion of my prepared remarks. First quarter performance, starting with the income statement, a few key items of know for the quarter, the company recorded revenue of $269 million, which is a solid start to the year. And especially actually notable after posting record fourth quarter result sales results of $280 million embedded in the $269 million of revenue for the quarter is a 5.2% organic sales increase over Q1 2020, which recall was largely unaffected by the COVID pandemic making for a comparatively sound quarter. Similar to the fourth quarter of 2020, we saw continued to strengthen equipment sales, especially as it relates to use the equipment and rental disposals as rental equipment sales for the quarter came in at $232 million. Additionally, and notably, as it relates to our product support business model, we continue to realize organic growth in our parts and service departments in our construction segment with that figure increasing 14.3% year-over-year. From EBITDA perspective, we, we realized $23 million in adjusted proforma EBITDA for the quarter, which is just $800,000 off from the adjusted proforma level of first quarter of 2020. The $800,000 variance is the closest to business has come to completely closing the COVID gap on a year-over-year basis, since the pandemic began. Operator: And ladies and gentlemen, we have Michael Shlisky from Colliers Securities. Mike, your line. Michael Shlisky: Good afternoon, gentlemen. I wanted to you just touch on some of your comments earlier about the sort of supply chain issues in the lift truck world or in probably in both categories, which I think any construction you touched on how it really drives some of the youth sales, which makes a lot of sense substitution when it to get so you can get from the OEM. So, but from the dealers don't have anything available. I'm curious whether the shortage of new equipment has also led to some really strong parts and service as well. I think you briefly mentioned it, but just the detail as to whether you've got some really good boost folks trying to stick to the, the equipment rather than buying new? Ryan Greenawalt: Yeah. Mike, this is Ryan. I'll take that. You know, the demand is definitely there. The, the thing that is the governor on parts and service revenue is going to be head to mechanics, which is one of the reasons we highlight that so often. So the demand is there, but you know, our ability to meet that demand will be predicated on our ability to continue to onboard mechanics. The other thing that's happening is some flexibility in terms of that, the used inventory in the rental business. So to meet rental demand, if we're seeing really high use utilization on particular assets, we might look to our remarketing department to put you know, assets into the rental fleet that we normally wouldn't. And then in addition to that, we're looking to at lease returns and things like that as a flexible model of trying to bring additional equipment into the fleet, if lead times are too stretched. So, you know, it's a really, we're just trying to maintain flexibility to meet our customer demands, but you know, the way that we think about the parts and service it's going to be kind of governed by head count. Tony Colucci: Mike, this is Tony one, one quick follow-up for based on Ryan's comments. And for everyone to understand is we are not seeing any real issues in the supply chain relative to parts which is everybody's aware is an important part of our business. So where we're seeing it maybe with some of the new equipment like Ryan alluded to, we're not seeing that same effect in parts, which is good. Michael Shlisky: Yeah, that's an important question too. I also want me to turn to the COVID-19 situation. I keep hearing from folks that it's really been tough still and in the state of Michigan I'm not sure if that's true or not, and you guys certainly have a better view on that than I do and has called it being an issue as far as absenteeism or any other issues during Q1 and the first part here of Q2 or are, is the headlines I'm reading, not quite accurate? Ryan Greenawalt: No, Mike, that's a good question. And at that probably a good time to highlight that the headlines are in relation to the infection rates in Michigan. And we did have a very tough spring in regards to that. But it hasn't translated to headwind in the business. You know we are, we're seeing a V-shaped recovery in all of the markets. The, the shape of the V is not as steep in Michigan, but it, it, to us appears more related to supply chain issues and are still, you know, heavy concentration in the auto sector versus COVID related issues. So again, it's a V-shaped recovery, not as steep, but you know, the, the auto industry is making cars. And so, you know, when we were in the, in the worst of the eye of the storm of COVID, the whole industry was shut down. Michael Shlisky: Okay. Sure. And then I also wanted to kind of piece together state of AGU made during your fair remarks. First of all, thanks for giving us the guidance here for the full year. And Ryan, your comments were about improving results throughout the year. Should we take that literally view or sort of see each quarter be a little bit better for me in that perspective between now and the fourth quarter? Or is that, am I reading too much into it? Tony Colucci: Mike this is I realized you were referring to Ryan's comments, but I'll take the, I'll take the question. You know, we, we last quarter had a, had a slide on kind of relative kind of EBITDA breaks if you will, by quarter kind of in a historically normal basis. And we expect to kind of get back to those, get back to those levels this year. And so, what that is typically meant for our business and part of Ryan's comments, I believe is that Q1 is usually rough. You know, or, or I'm sorry, I shouldn't say rough, but relatively speaking to the other quarters, we just kind of trend up from there. So when, when we think about the guidance that we're giving at 110 to 115, you can kind of do the rough math, even on average, right. We would expect you to the quarter from here to be to be better than Q1. Michael Shlisky: Okay. That's a great color. I appreciate it. I'll have back in queue. Operator: In for our next question, we have Alex Rygiel from B. Riley. Alex your line is open. Alex Rygiel: Thank you, very nice quarter. Gentlemen a couple of quick questions here. Can the new equipment sales continue at this dollar level sort of quarterly through the remainder of the year? Tony Colucci: You know, Alex this is Tony, good afternoon. We hope so. I think it's, it's definitely, won't be demand related. If the new equipment sales take a dip we, it'll be supply related and probably more acute on the material handling side versus construction side. What we made it, we alluded to it or alluded to it in my comments, but what we're finding is that our product portfolio, if you think about one end of the spectrum, if we were just a Volvo dealer and we didn't have, you know, other contract lines, for instance, that we supported if Volvo was not as something, we would be sunk. What we're finding is that the breadth of our product portfolio is that not everybody is out of new equipment all at once with all of these OEM. So our, our, the breadth of our product portfolio is really helping on the construction side, on the material handling side, we're a little bit more heavily anchored to Heister Yale. I think they've been pretty upfront with going on with them, the good news on that end for us relative to maybe what an OEM's perspective is. We can wait, as we've said all along, if a customer has to extend a lease on an existing fleet to wait for their, you know, their new Heister yields to show up we're happy to, we're happy to continue to service them throughout that period on reminded, you know, what kind of margins we make on, on selling forklifts is unfortunately it might be a little bit softer for some of our sales guys as they wait for things to invoice. But there's, there's not a lot of impact even Dow wise in the material handling segment, when we, if we get behind a new sales, Ryan Greenawalt: I definitely -- one thing I would just add to Tony's comment is that the backlog is continuing to build really it, it right now approaching record levels, it's the, you know, the demand is there so that when we're talking about equipment sales this year, it's really a function of taking receipt of the equipment and turning it around prepping and delivering it. And that, that will eventually happen. It's just you know, where it, it timing wise, it hit in terms of revenue recognition. Alex Rygiel: And then as it relates to M&A does the new balance sheet capacity change sort of the relative size of a acquisition that you're pursuing? Tony Colucci: No, I don't really think of it that way, Alex, what we're pursuing on all fronts, you know, we -- big moves in our territory. We'll probably be anchored with expansion of with our OEM partners versus some of the infill opportunities that we had examples of last year, but we're looking for opportunities on all fronts. COVID last year pulled some deals forward. It was a catalyst for deals that were in the pipelines that transact and, and more of a tight timeline. So, you know, this is we are, we remain very focused on M&A and that was a big part of this whole strategy with raising the bond was to have the dry powder to continue our strategy. Alex Rygiel: Very helpful. Thank you. Great quarter. Operator: Again for dispense. for our next question, we have Matt Summerville from D.A. Davidson. Matt your line is open. Matt Summerville: Thanks. A couple of questions. Talk about your ability given where the labor market is right now, like how tight it is. Are you still able to organically add to your service tech base? And the reason I'm asking that is that look like organic, you know, parts and service was only up 1.4% year-over-year total for the company. I know it was up more than that construction, but I'm trying to kind of square that up. I guess I would've thought organically, it would have been a little bit more than 1%? Tony Colucci: Ryan, do you want to talk about the labor markets? Ryan Greenawalt: And so in terms of the labor market, we don't really perceive any additional tightness it's been in our industry, something we've navigated for many years, a dearth of, of people coming into the trades. So in our industry, we're all seeking the same talent and we remain focused on it. We, we are successfully on-boarding technicians. You know, one of the benchmarks that we shared in the third quarter last year was that we had all of our employees back from furlough. We're hitting benchmark levels of labor utilization. And today the labor utilization is there and we are actively recruiting and hiring in all markets. Tony Colucci: Yeah Matt. This is Tony did touch on the numerics of the numerical part of your question there. When we talk about organically, I think it's important to define that when we talk, when we think organically, we're thinking about basically everything pre-IPO which would have included our Michigan and Illinois construction business. Because recall last year we didn't have, the eight acquisitions then, so that business was up like we said, 14%, and it's important to think about the nominal dollars to associated with it, our parts and service revenues given the maturity of the materially handling segment our nominal dollars are much bigger on that side of the house. And we made -- I made special comments on how the material handling business parts and service specifically has really, started to close the gap. I think it was off on an organic basis something like 6%. And when you roll all that up, you're only up 1.4% organically. But that the parts and service business, the material handling is it's a big number. And that business continues to even though its off year-over-year, it's not like that business is suffering. It's very cash-flow, generative and profitable given its maturity. Matt Summerville: Thank you. That's helpful. And then just going through your queue very quickly, it looked quite within the construction segment that gross margins on the rental side took a bit of a hit on a year-over-year basis. And I guess that surprises me a little bit if rates, if utilization rates are good and seemingly if utilization rates are good, perhaps you can start charging more. Tony Colucci: Are you are you referring to gross margin? Matt Summerville: Yeah. Tony Colucci: So gross margin in the rent-to-rent business includes depreciation and if you go down a few into our segment reporting, they actually refer to that kind of concept because Flagler which is, more heavy construction coming on, they depreciate their assets pretty heavily. Anyway, it's depreciation, which is driving the year-over-year depressed margin, which is obviously non-cash, our rental revenues are on the mend, if you will as I mentioned, related to utilization. Matt Summerville: Got it. And then just from an end-market standpoint, obviously non residential construction, particularly in the Southeast, I would imagine if there's a bright spot perhaps in parts of the Midwest and Northeast as well. So we would put that obviously in the very good column, would we put logistics warehousing e-commerce in that same column, and then conversely outside of automotive, are you seeing for the last what's the right word? I want to use less steep recovery in what markets besides automotive place so kind of the good and the still good, but maybe not as good. It's really what I'm asking that. Ryan Greenawalt: And this is Ryan, I think the best way to think about the markets that are recovering, but not as quickly are the markets tied to manufacturing where the supply chain constraints are actually muting demand because they're just waiting for product to come in. You know, so upstate New York, Michigan parts of our Chicago land and that are tied to manufacturing are softer than the markets you've addressed which are definitely seeing surge demand and, you know, more secular long long-term growth. Operator: For our next question, we have Bryan Fast - Raymond James. Bryan your line is open. Bryan Fast: Thanks. Good afternoon guys. I was disconnected, so I apologize if this was already addressed, but can we just get some color on the warehouse solution space, and I guess the kind of synergy use you're seeing between material handling business and then PeakLog -- PeakLogix and most recent ScottTech acquisition? Ryan Greenawalt: Sure. So that is a essentially a vertical integration of a previous group of vendors. So Nicco that was an acquisition. We made a New England that's our high cereal dealership in the Northeast had a legacy relationship with PeakLogix. So they, they work together to do warehouse solutions for their customers. After we acquired Nicco, we looked at that as a strategic asset to bolster our capabilities and have more tools in our bag. One of the ways to think about the growth opportunities that we now have a hundred material handling sales professionals out there looking for opportunities for a business that used to have a half dozen sales reps on the street. ScottTech is further driving down to that strategy so that ScottTech was actually a vendor to PeakLogix, so more specialized software and warehouse management type systems. And now that's, again a vertical integration where it's we've added that to the product portfolio. Today there's no missing part of that capability. We have essentially a design build warehouse solutions group where we can with the vendors that are part of our portfolio and then also with outside vendors kind of design and fully implement a solution for our warehousing customers. So this will be a fast growing part of the business and its asset light, it's essentially we're selling solutions and it will have a great cross selling opportunities across the rest of the material handling product portfolio. Tony Colucci: Ryan. This is Tony just to follow that up with maybe some anecdotal news, if you will. But one of the things that we know is happening and we've gotten feedback kind of from our salespeople, is that the acumen that the skill set that peak and ScottTech now bring to the table with customers is getting us into deals that we otherwise would not have been able to touch historically prior to adding that sort of talent to the team. And we can't speak specifically about different customers and things that we're quoting on, but we are and we can say that we're getting in on deals that we otherwise wouldn't have for warehouse build-outs retrofit, so on and so forth because of, because of those deals. Bryan Fast: Okay. That's very helpful. And then I think you've kind of addressed it with Alex's question, but are you seeing customers pull ahead buying decisions in an effort to get ahead of any pending supply constraints Tony Colucci: It's too late. So the supply constraints are upon us. It, there are certain products today that if you wanted to order a brand new from the factory, you're out more than a year. So the companies that we're thinking about that maybe coming right out of COVID last summer could have gotten in front of that. But today the supply constraints are real for our industry they're here. And, and we just like to remind that we have a very flexible structure that we we're here to serve as our customer needs. We use our rental fleet, we'll use new and used inventory to make sure that we can keep them up and running. Operator: And thank you. And we don't have any further questions at this time and ladies and gentlemen on a hound back. Ryan Greenawalt: I that's the -- if there are no further questions and we'll have that concludes the meeting this afternoon. And thank everyone for joining. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for also participating. You may now disconnect.
Alta Equipment Group (NYSE: ALTG) Maintains Market Perform Rating
- Alta Equipment Group's Q3 2024 earnings report showed a loss of $0.86 per share, missing the Zacks Consensus Estimate.
- The company's revenue for the quarter was $448.8 million, with product support revenues increasing by 7.8%.
- Alta's Board of Directors increased the share buyback authorization from $12.5 million to $20 million.
On November 14, 2024, Raymond James maintained its "Market Perform" rating for Alta Equipment Group (NYSE: ALTG), advising investors to hold their positions. At the time, ALTG's stock price was $7.39. Alta Equipment Group is a company that provides equipment and related services for construction and material handling industries. It competes with other equipment providers in the market.
Alta Equipment's recent Q3 2024 earnings call, held on November 12, 2024, featured key company figures like CEO Ryan Greenawalt and CFO Tony Colucci. Analysts from firms such as D.A. Davidson and Thompson Research Group participated, likely discussing the company's financial performance and strategic plans. The call followed a disappointing earnings report, with a loss of $0.86 per share, missing the Zacks Consensus Estimate of a $0.22 loss.
The company's revenue for the quarter was $448.8 million, falling short of the Zacks Consensus Estimate by 6.71% and down from $466.2 million a year ago. Despite the overall decline, product support revenues increased by 7.8%, with parts sales at $75.6 million and service revenues at $64.6 million. However, sales of new and used equipment dropped by 13.3% to $219.8 million.
Alta Equipment reported a net loss of $28.4 million for the quarter, translating to a net loss per share of $0.86. On an adjusted basis, the net loss per share was $0.72, with an adjusted EBITDA of $43.2 million. The loss was significantly impacted by a $14 million discrete tax expense related to deferred tax assets.
In a strategic decision, Alta's Board of Directors increased the share buyback authorization from $12.5 million to $20 million on October 30, 2024. Currently, ALTG's stock price is $7.28, reflecting an 8.66% decrease. The stock has traded between $7.19 and $7.85 today, with a market capitalization of approximately $240.9 million.
Alta Equipment Group Inc. (NYSE:ALGT) Faces Market Volatility with Optimistic Outlook
- Frederic Bastien from Raymond James set a price target of $9 for NYSE:ALTG, indicating a potential increase of 21.79%.
- The stock has experienced significant volatility, trading between $7.19 and $7.85, with a yearly high of $13.67 and a low of $5.40.
- Alta Equipment Group's Q3 2024 earnings call provided insights into the company's financial performance and strategic initiatives, crucial for understanding its future trajectory.
Alta Equipment Group Inc. (NYSE:ALTG) is a prominent player in the equipment industry, specializing in the sale, rental, and service of construction and industrial equipment. The company operates across various sectors, providing essential machinery and support to businesses. Alta Equipment Group faces competition from other equipment providers, but it continues to carve out its niche with a focus on customer service and comprehensive solutions.
On November 14, 2024, Frederic Bastien from Raymond James set a price target of $9 for ALTG. At that time, the stock was priced at $7.39, suggesting a potential increase of 21.79%. This optimistic outlook reflects confidence in the company's future performance and market position. However, the current stock price of $7.28 indicates a decrease of 8.66% from the previous price, with a change of $0.69.
During Alta Equipment Group's Q3 2024 earnings conference call, key figures like CEO Ryan Greenawalt and CFO Tony Colucci discussed the company's financial performance. The call, held on November 12, 2024, included analysts from D.A. Davidson, Thompson Research Group, and Northland Securities. This discussion likely provided insights into the company's strategic initiatives and market outlook, which are crucial for understanding its future trajectory.
The stock has shown volatility, trading between $7.19 and $7.85 today. Over the past year, ALTG has experienced a high of $13.67 and a low of $5.40. This fluctuation highlights the dynamic nature of the market and the challenges the company faces. Despite this, Alta Equipment Group maintains a market capitalization of approximately $240.9 million, with a trading volume of 179,527 shares on the NYSE.
As highlighted by StreetInsider, the price target set by Raymond James suggests potential growth for ALTG. Investors and analysts will be closely monitoring the company's performance and strategic decisions to assess its ability to reach this target. The insights from the recent earnings call will play a significant role in shaping expectations and guiding investment decisions.
Alta Equipment Group (NYSE: ALTG) Maintains Market Perform Rating
- Alta Equipment Group's Q3 2024 earnings report showed a loss of $0.86 per share, missing the Zacks Consensus Estimate.
- The company's revenue for the quarter was $448.8 million, with product support revenues increasing by 7.8%.
- Alta's Board of Directors increased the share buyback authorization from $12.5 million to $20 million.
On November 14, 2024, Raymond James maintained its "Market Perform" rating for Alta Equipment Group (NYSE: ALTG), advising investors to hold their positions. At the time, ALTG's stock price was $7.39. Alta Equipment Group is a company that provides equipment and related services for construction and material handling industries. It competes with other equipment providers in the market.
Alta Equipment's recent Q3 2024 earnings call, held on November 12, 2024, featured key company figures like CEO Ryan Greenawalt and CFO Tony Colucci. Analysts from firms such as D.A. Davidson and Thompson Research Group participated, likely discussing the company's financial performance and strategic plans. The call followed a disappointing earnings report, with a loss of $0.86 per share, missing the Zacks Consensus Estimate of a $0.22 loss.
The company's revenue for the quarter was $448.8 million, falling short of the Zacks Consensus Estimate by 6.71% and down from $466.2 million a year ago. Despite the overall decline, product support revenues increased by 7.8%, with parts sales at $75.6 million and service revenues at $64.6 million. However, sales of new and used equipment dropped by 13.3% to $219.8 million.
Alta Equipment reported a net loss of $28.4 million for the quarter, translating to a net loss per share of $0.86. On an adjusted basis, the net loss per share was $0.72, with an adjusted EBITDA of $43.2 million. The loss was significantly impacted by a $14 million discrete tax expense related to deferred tax assets.
In a strategic decision, Alta's Board of Directors increased the share buyback authorization from $12.5 million to $20 million on October 30, 2024. Currently, ALTG's stock price is $7.28, reflecting an 8.66% decrease. The stock has traded between $7.19 and $7.85 today, with a market capitalization of approximately $240.9 million.
Alta Equipment Group Inc. (NYSE:ALGT) Faces Market Volatility with Optimistic Outlook
- Frederic Bastien from Raymond James set a price target of $9 for NYSE:ALTG, indicating a potential increase of 21.79%.
- The stock has experienced significant volatility, trading between $7.19 and $7.85, with a yearly high of $13.67 and a low of $5.40.
- Alta Equipment Group's Q3 2024 earnings call provided insights into the company's financial performance and strategic initiatives, crucial for understanding its future trajectory.
Alta Equipment Group Inc. (NYSE:ALTG) is a prominent player in the equipment industry, specializing in the sale, rental, and service of construction and industrial equipment. The company operates across various sectors, providing essential machinery and support to businesses. Alta Equipment Group faces competition from other equipment providers, but it continues to carve out its niche with a focus on customer service and comprehensive solutions.
On November 14, 2024, Frederic Bastien from Raymond James set a price target of $9 for ALTG. At that time, the stock was priced at $7.39, suggesting a potential increase of 21.79%. This optimistic outlook reflects confidence in the company's future performance and market position. However, the current stock price of $7.28 indicates a decrease of 8.66% from the previous price, with a change of $0.69.
During Alta Equipment Group's Q3 2024 earnings conference call, key figures like CEO Ryan Greenawalt and CFO Tony Colucci discussed the company's financial performance. The call, held on November 12, 2024, included analysts from D.A. Davidson, Thompson Research Group, and Northland Securities. This discussion likely provided insights into the company's strategic initiatives and market outlook, which are crucial for understanding its future trajectory.
The stock has shown volatility, trading between $7.19 and $7.85 today. Over the past year, ALTG has experienced a high of $13.67 and a low of $5.40. This fluctuation highlights the dynamic nature of the market and the challenges the company faces. Despite this, Alta Equipment Group maintains a market capitalization of approximately $240.9 million, with a trading volume of 179,527 shares on the NYSE.
As highlighted by StreetInsider, the price target set by Raymond James suggests potential growth for ALTG. Investors and analysts will be closely monitoring the company's performance and strategic decisions to assess its ability to reach this target. The insights from the recent earnings call will play a significant role in shaping expectations and guiding investment decisions.
