Alta Equipment 2025 Q1 Earnings Misses Targets as Net Income Declines 75.6%

Alta Equipment (ALTG) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The company posted a net loss of $20.90 million, widening by 75.6% from the previous year's loss of $11.90 million. Revenue came in at $423 million, representing a 4.2% decline year-over-year, missing analyst expectations. Alta reaffirmed its guidance for 2025, expecting consistent demand driven by infrastructure projects. Despite challenges, the company remains optimistic about its strategic initiatives, including debt reduction from recent divestitures.

Revenue

Alta Equipment's Q1 2025 results showed total revenue of $423 million, a 4.2% decrease from the previous year’s $441.60 million. The new and used equipment sales segment generated $221.7 million, while parts sales contributed $72 million. Service revenues increased to $66.1 million, and rental revenues reached $42.3 million. Additionally, rental equipment sales accounted for $20.9 million.

Earnings/Net Income

Alta Equipment's losses widened in fiscal 2025 Q1, with earnings per share dropping to $0.65 from $0.38 in Q1 2024. The company reported a net loss of $20.90 million, a sharp increase from the previous year's $11.90 million loss. Overall, the EPS performance was disappointing, reflecting significant operational challenges.

Price Action

The stock price of Alta Equipment declined by 6.76% during the latest trading day, climbed 7.06% during the most recent full trading week, and jumped 10.44% month-to-date.

Post-Earnings Price Action Review

Over the past five years, the strategy of buying Alta Equipment shares after a quarterly revenue drop and holding them for 30 days has yielded mixed results. Although there were brief periods of positive returns, the overall trend was negative, and the strategy underperformed compared to the broader market. From May 2020 to May 2025, this approach resulted in a total return of -5.2%, while the S&P 500 returned 14.9% during the same period. The lowest point in Alta's stock price occurred in May 2020, coinciding with the onset of the COVID-19 pandemic, and the stock remained below this low throughout the five-year span. The strategy faced particular challenges in 2024, delivering a return of -23.1%, despite strong market performance, suggesting company-specific factors negatively impacted Alta's stock price more than broader market movements. In early 2025, the strategy showed a brief positive return of 5.3% but was followed by a decline of 6.4% by May 2025, indicating limited resilience.

CEO Commentary

Ryan Greenawalt, Chief Executive Officer of Alta Equipment Group Inc., remarked on the company's resilient business model, highlighting stable operating trends in the Construction Equipment segment despite macroeconomic uncertainties. He noted that seasonal impacts in the Northeast and Midwest markets were anticipated, with a healthy Florida construction market bolstered by ongoing funding for large projects. Greenawalt acknowledged a decline in Material Handling new equipment sales compared to the previous year's peak but pointed to stronger margins and solid bookings that support future sales. The CEO expressed confidence in the company's ability to manage cost increases and reiterated organic guidance based on resilient end markets and robust product support.

Guidance

The company anticipates consistent demand for heavy equipment driven by infrastructure-related projects throughout the year. Alta Equipment affirmed its organic guidance, emphasizing the strength of its product support business amid economic volatility. Greenawalt indicated that the proceeds from the recent divestiture would be allocated to debt reduction, reinforcing the company's focus on strategic priorities. The firm has also implemented a rebalanced capital allocation strategy, suspending its quarterly dividend to redirect approximately $8 million into an expanded share repurchase program, thereby enhancing its market positioning.

Additional News

Recently, Alta Equipment announced the divestiture of its aerial fleet rental business in the Chicago market for $18 million in cash, aligning with its strategic focus and allowing for debt reduction. The company plans to allocate the proceeds to reducing outstanding senior indebtedness, reinforcing its financial stability. Additionally, Alta Equipment's Board of Directors has indefinitely suspended the quarterly common stock dividend, reallocating approximately $8 million from dividend payments to an expanded share repurchase program. This move reflects the disparity between the company's stock price and its intrinsic value, aiming to maximize shareholder returns. The enhanced buyback initiative includes a Rule 10b5-1 Plan, allowing the purchase of common stock at predetermined price intervals, irrespective of blackout periods or privileged information restrictions.