Equipment dealer Alta Equipment Group’s revenue dropped in the first quarter amid economic turbulence, but a pipeline of construction projects brightened its outlook.
BIGGER PICTURE: Tariff-driven uncertainty and a seasonal slowdown in construction activity, primarily in the Northeast and Midwest, challenged the company in Q1. However, Alta Equipment is confident in its ability to manage price increases or surcharges related to tariffs, Chief Executive Ryan Greenawalt said during its May 7 earnings call.
“This will allow us to remain competitive across our markets, and we have been encouraged by the partnership displayed by our OEMs as we collectively navigate these challenges,” he said.
Plus, a slew of infrastructure projects and other large commercial developments are expected to continue invigorating the construction and material handling segments, Greenwalt said.
“These projects, unlike general non-residential construction, continue to drive steady demand for heavy equipment,” he said. “While some geographies have seen some softening in local, private non-residential construction, we are also encouraged by some early signs that the regulatory headwind on permitting of new large-scale projects is easing.”
BY THE NUMBERS: Livonia, Mich.-based Alta Equipment reported in its 10-Q filing with the Securities and Exchange Commission in Q1:
- Total revenue fell 4.2% year over year to $423 million;
- Construction segment revenue totaled $245.8 million, down 3.8% YoY;
- New- and used-construction equipment sales rose 0.5% YoY to $126.7 million;
- Construction rental revenue declined 15.5% YoY to $24.6 million;
- Material handling segment revenue totaled $157.9 million, down 9.4% YoY;
- Material handling sales for new and used equipment dropped 16.7% YoY to $78.4 million;
- Material handling rental revenue fell 7.4% YoY to $17.6 million;
- Master distribution revenue increased 35.9% YoY to $17.4 million;
- Master distribution new and used sales jumped 62.6% YoY to $14.8 million;
- Floor plan payable for new equipment totaled $297.3 million, up 1.3% YoY; and
- Floor plan payable for used and rental equipment dropped 13.7% YoY to $70 million.
Moreover, the company’s service revenue rose 3.3% YoY to $66.1 million, reflecting its “ongoing initiative to drive technician efficiency,” Chief Financial Officer Tony Colucci said during the earnings call.
The drop in construction rental revenue, meanwhile, was partly attributed to Alta’s decision to “divest substantially” its aerial equipment rental business in the Chicago area, Greenawalt said.
NOTEWORTHY: Alta Equipment also sells commercial EVs, but Nikola, its primary OEM partner for Class 8 trucks, filed for bankruptcy in February. While EVs are only a small part of Alta’s business, Nikola’s bankruptcy “definitely was a setback” for that segment, Greenawalt said.
“But we are evaluating other potential Class 8 vendors, and we continue to work with our other OEMs on the early-stage commercialization of some of these other technologies for more of the last-mile and lighter-duty applications for electric vehicles,” he said.
MARKET REACTION: Shares of Alta Equipment Group [NYSE: ALTG] were down 1.5% from market open to $4.48 as of market close today. It has a market capitalization of $148.7 million.
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