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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

ALTA EQUIPMENT GROUP INC.

(Exact name of registrant as specified in its charter)

 

Delaware

001-38864

83-2583782

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

13211 Merriman Road, Livonia, Michigan 48150

(Address of principal executive offices)

 

(248) 449-6700

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large accelerated filer

Accelerated filer

 Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, $0.0001 par value per share

ALTG

The New York Stock Exchange

Depositary Shares representing a 1/1000th fractional interest in a share of 10% Series A Cumulative Perpetual Preferred Stock, $0.0001 par value per share

ALTG PRA

 

The New York Stock Exchange

 

As of May 8, 2023, there were 32,368,112 shares of Common Stock, $0.0001 par value, and 1,200 shares of Preferred Stock, $0.0001 par value, which Preferred Stock is evidenced by 1,200,000 depositary shares, outstanding.

 

 

 


 

INDEX

 

 

 

Page

PART I – FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Interim Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets (Unaudited)

3

Condensed Consolidated Statements of Operations (Unaudited)

4

 

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

5

 

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

6

Condensed Consolidated Statements of Cash Flows (Unaudited)

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Note 1.

Organization and Nature of Operations

8

Note 2.

Summary of Significant Accounting Policies

8

Note 3.

Revenue Recognition

8

Note 4.

Related Party Transactions

11

Note 5.

Inventories

11

Note 6.

Property and Equipment

12

Note 7.

Goodwill

12

Note 8.

Other Intangible Assets

12

Note 9.

Floor Plans

13

Note 10.

Long-Term Debt

13

 

Note 11.

Equity

15

 

Note 12.

Leases

15

Note 13.

Contingencies

16

Note 14.

Income Taxes

17

 

Note 15.

Stock-Based Compensation

17

Note 16.

Fair Value of Financial Instruments

18

Note 17.

Business Combinations

19

 

Note 18.

Segments

20

 

Note 19.

Earnings Per Share

21

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

37

Signature

40

 

 

1


 

Forward-Looking Statements

This Form 10-Q contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of federal securities laws, and are based on our current expectations and assumptions. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “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. These statements are not intended to guarantee future performance and are subject to risks and uncertainties. Actual results may differ materially due to factors such as:

supply chain disruptions, inflationary pressures resulting from supply chain disruptions or a tightening labor market;
negative impacts on customer payment policies and adverse banking and governmental regulations, resulting in a potential reduction to the fair value of our assets;
the performance and financial viability of key suppliers, contractors, customers, and financing sources;
economic, industry, business and political conditions including their effects on governmental policy and government actions that disrupt our supply chain or sales channels;
our success in identifying acquisition targets and integrating acquisitions;
our success in expanding into and doing business in additional markets;
our ability to raise capital at favorable terms;
the competitive environment for our products and services;
our ability to continue to innovate and develop new business lines;
our ability to attract and retain key personnel, including, but not limited to, skilled technicians;
our ability to maintain our listing on the New York Stock Exchange;
the impact of cyber or other security threats or other disruptions to our businesses;
our ability to realize the anticipated benefits of acquisitions or divestitures, rental fleet investments or internal reorganizations;
federal, state, and local government budget uncertainty, especially as it relates to infrastructure projects and taxation;
currency risks and other risks associated with international operations; and
other risks and uncertainties identified 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”).

These are only some of the factors that may affect the forward-looking statements contained in this Form 10-Q. For a discussion identifying additional important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see our filings with the SEC including, but not limited to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and in this Quarterly Report on Form 10-Q. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise.

2


 

PART I

Item 1. Financial Statements

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except share and per share amounts)

 

March 31,
2023

 

 

December 31,
2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

$

1.7

 

 

$

2.7

 

Accounts receivable, net of allowances of $14.3 and $13.0 as of March 31, 2023 and December 31, 2022, respectively

 

 

228.3

 

 

 

232.8

 

Inventories, net

 

 

469.1

 

 

 

399.7

 

Prepaid expenses and other current assets

 

 

30.4

 

 

 

28.1

 

Total current assets

 

 

729.5

 

 

 

663.3

 

 

 

 

 

 

 

Property and equipment, net

 

 

398.9

 

 

 

377.8

 

Operating lease right-of-use assets, net

 

 

111.4

 

 

 

113.6

 

OTHER ASSETS

 

 

 

 

 

 

Goodwill

 

 

70.5

 

 

 

69.2

 

Other intangible assets, net

 

 

58.5

 

 

 

60.7

 

Other assets

 

 

8.0

 

 

 

6.0

 

Total other assets

 

 

137.0

 

 

 

135.9

 

TOTAL ASSETS

 

$

1,376.8

 

 

$

1,290.6

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Floor plan payable – new equipment

 

$

252.5

 

 

$

211.5

 

Floor plan payable – used and rental equipment

 

 

62.3

 

 

 

45.3

 

Current portion of long-term debt

 

 

4.7

 

 

 

4.2

 

Accounts payable

 

 

88.1

 

 

 

90.8

 

Customer deposits

 

 

24.1

 

 

 

27.9

 

Accrued expenses

 

 

56.7

 

 

 

55.1

 

Current operating lease liabilities

 

 

15.2

 

 

 

14.8

 

Current deferred revenue

 

 

12.6

 

 

 

14.1

 

Other current liabilities

 

 

9.6

 

 

 

7.5

 

Total current liabilities

 

 

525.8

 

 

 

471.2

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

Line of credit, net

 

 

256.0

 

 

 

217.5

 

Long-term debt, net of current portion

 

 

311.3

 

 

 

311.2

 

Finance lease obligations, net of current portion

 

 

17.7

 

 

 

15.4

 

Deferred revenue, net of current portion

 

 

4.9

 

 

 

4.9

 

Guaranteed purchase obligations, net of current portion

 

 

4.0

 

 

 

4.7

 

Long-term operating lease liabilities, net of current portion

 

 

100.0

 

 

 

101.9

 

Deferred tax liability

 

 

6.3

 

 

 

6.4

 

Other liabilities

 

 

12.7

 

 

 

17.6

 

TOTAL LIABILITIES

 

 

1,238.7

 

 

 

1,150.8

 

CONTINGENCIES - NOTE 13

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred stock, $0.0001 par value per share, 1,000,000 shares authorized, 1,200,000 Depositary Shares representing a 1/1000th fractional interest in a share of 10% Series A Cumulative Perpetual Preferred Stock, $0.0001 par value per share, issued and outstanding at both March 31, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value per share, 200,000,000 shares authorized; 32,368,112 and 32,194,243 issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

223.6

 

 

 

222.8

 

Treasury stock at cost, 862,182 shares of common stock held at both March 31, 2023 and December 31, 2022

 

 

(5.9

)

 

 

(5.9

)

Accumulated deficit

 

 

(76.4

)

 

 

(74.2

)

Accumulated other comprehensive income (loss)

 

 

(3.2

)

 

 

(2.9

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

138.1

 

 

 

139.8

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,376.8

 

 

$

1,290.6

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

Three Months Ended March 31,

 

(in millions, except share and per share amounts)

2023

 

 

2022

 

Revenues:

 

 

 

 

 

New and used equipment sales

$

219.6

 

 

$

151.6

 

Parts sales

 

68.4

 

 

 

53.4

 

Service revenue

 

60.2

 

 

 

48.2

 

Rental revenue

 

43.5

 

 

 

37.7

 

Rental equipment sales

 

29.0

 

 

 

40.8

 

Total revenues

 

420.7

 

 

 

331.7

 

Cost of revenues:

 

 

 

 

 

New and used equipment sales

 

179.0

 

 

 

123.9

 

Parts sales

 

45.4

 

 

 

36.7

 

Service revenue

 

25.1

 

 

 

20.1

 

Rental revenue

 

6.1

 

 

 

5.4

 

Rental depreciation

 

22.9

 

 

 

20.3

 

Rental equipment sales

 

20.9

 

 

 

33.9

 

Cost of revenues

 

299.4

 

 

 

240.3

 

Gross profit

 

121.3

 

 

 

91.4

 

General and administrative expenses

 

104.0

 

 

 

82.9

 

Depreciation and amortization expense

 

5.2

 

 

 

3.9

 

Total general and administrative expenses

 

109.2

 

 

 

86.8

 

Income from operations

 

12.1

 

 

 

4.6

 

Other (expense) income:

 

 

 

 

 

Interest expense, floor plan payable – new equipment

 

(1.5

)

 

 

(0.3

)

Interest expense – other

 

(10.5

)

 

 

(5.8

)

Other income

 

1.0

 

 

 

0.3

 

Total other expense, net

 

(11.0

)

 

 

(5.8

)

Income (loss) before taxes

 

1.1

 

 

 

(1.2

)

Income tax provision

 

0.1

 

 

 

 

Net income (loss)

 

1.0

 

 

 

(1.2

)

Preferred stock dividends

 

(0.8

)

 

 

(0.8

)

Net income (loss) available to common stockholders

$

0.2

 

 

$

(2.0

)

Basic income (loss) per share

$

0.01

 

 

$

(0.06

)

Diluted income (loss) per share

$

0.01

 

 

$

(0.06

)

Basic weighted average common shares outstanding

 

32,223,221

 

 

 

32,363,376

 

Diluted weighted average common shares outstanding

 

32,430,715

 

 

 

32,363,376

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


 

 

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

Three Months Ended March 31,

 

(in millions)

2023

 

 

2022

 

Net income (loss)

$

1.0

 

 

$

(1.2

)

Other comprehensive loss

 

 

 

 

 

Foreign currency translation adjustments

 

0.1

 

 

 

 

Change in fair value of derivative, net of tax

 

(0.4

)

 

 

 

Total other comprehensive loss

 

(0.3

)

 

 

 

Comprehensive income (loss)

$

0.7

 

 

$

(1.2

)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

Three Months Ended March 31, 2023

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except share amounts)

 

Number
of Shares

 

 

Amount

 

 

Number of
Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total
Stockholders'
Equity (Deficit)

 

Balance at December 31, 2022

 

 

1,200,000

 

 

$

 

 

 

32,194,243

 

 

$

 

 

$

222.8

 

 

$

(74.2

)

 

$

(5.9

)

 

$

(2.9

)

 

$

139.8

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.0

 

 

 

 

 

 

 

 

 

1.0

 

Dividends on preferred stock, $0.625 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.8

)

 

 

 

 

 

 

 

 

(0.8

)

Dividends on common stock and dividend equivalent on stock-based compensation, $0.057 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.9

)

 

 

 

 

 

 

 

 

(1.9

)

Impact of adoption of new accounting standard (Note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.5

)

 

 

 

 

 

 

 

 

(0.5

)

Stock-based compensation

 

 

 

 

 

 

 

 

173,869

 

 

 

 

 

 

0.8

 

 

 

 

 

 

 

 

 

 

 

 

0.8

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

Change in fair value of derivatives, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.4

)

 

 

(0.4

)

Balance at March 31, 2023

 

 

1,200,000

 

 

$

 

 

 

32,368,112

 

 

$

 

 

$

223.6

 

 

$

(76.4

)

 

$

(5.9

)

 

$

(3.2

)

 

$

138.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2022

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(amounts in millions, except share amounts)

 

Number
of Shares

 

 

Amount

 

 

Number of
Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total
Stockholders'
Equity (Deficit)

 

Balance at December 31, 2021

 

 

1,200,000

 

 

$

 

 

 

32,363,376

 

 

$

 

 

$

217.4

 

 

$

(76.8

)

 

$

(5.9

)

 

$

 

 

$

134.7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

 

 

 

 

 

 

(1.2

)

Dividends on preferred stock, $0.625 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.8

)

 

 

 

 

 

 

 

 

(0.8

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

Balance at March 31, 2022

 

 

1,200,000

 

 

$

 

 

 

32,363,376

 

 

$

 

 

$

217.7

 

 

$

(78.8

)

 

$

(5.9

)

 

$

 

 

$

133.0

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended March 31,

 

(in millions)

 

2023

 

 

2022

 

OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss)

 

$

1.0

 

 

$

(1.2

)

Adjustments to reconcile net income (loss) to net cash flows used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

28.1

 

 

 

24.2

 

Amortization of debt discount and debt issuance costs

 

 

0.3

 

 

 

0.3

 

Imputed interest

 

 

0.3

 

 

 

0.1

 

Gain on sale of rental equipment

 

 

(8.1

)

 

 

(6.8

)

Provision for inventory obsolescence

 

 

0.1

 

 

 

1.1

 

Provision for losses on accounts receivable

 

 

1.5

 

 

 

1.2

 

Stock-based compensation expense

 

 

0.8

 

 

 

0.3

 

Changes in deferred income taxes

 

 

(0.1

)

 

 

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

1.3

 

 

 

(7.8

)

Inventories

 

 

(114.3

)

 

 

(82.6

)

Proceeds from sale of rental equipment

 

 

29.0

 

 

 

40.8

 

Prepaid expenses and other assets

 

 

(5.2

)