UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
(Exact name of registrant as specified in its charter)
(State or other jurisdiction |
(Commission |
(IRS Employer |
(Address of principal executive offices)
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(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.
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).
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.
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Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
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As of May 6, 2022, there were
Auditor Id: 1195 |
Auditor Name: UHY |
Auditor Location: New York, New York, United States |
INDEX
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PART I – FINANCIAL INFORMATION |
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Item 1. |
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Consolidated Statements of Stockholders Equity (Deficit) (Unaudited) |
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Note 1. |
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Note 2. |
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Note 3. |
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Note 4. |
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Note 5. |
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Note 6. |
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Note 7. |
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Note 8. |
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Note 9. |
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Note 10. |
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Note 11. |
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Note 12. |
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Note 13. |
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Note 14. |
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Note 15. |
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Note 16. |
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Note 17. |
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Note 18. |
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Note 19. |
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Note 20. |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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1
PART I
Item 1. Financial Statements
ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except share and per share amounts) |
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March 31, |
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December 31, |
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ASSETS |
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CURRENT ASSETS |
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Cash |
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$ |
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$ |
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Accounts receivable, net of allowances of $ |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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$ |
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$ |
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PROPERTY AND EQUIPMENT, NET |
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OPERATING LEASE RIGHT-OF-USE ASSETS, NET |
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OTHER ASSETS |
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Goodwill |
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$ |
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$ |
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Intangible assets, net |
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Other assets |
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Total other assets |
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$ |
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$ |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Lines of credit, net |
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$ |
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$ |
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Floor plan payable – new equipment |
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Floor plan payable – used and rental equipment |
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Current portion of long-term debt |
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Accounts payable |
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Customer deposits |
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Accrued expenses |
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Current operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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$ |
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$ |
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LONG-TERM LIABILITIES |
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Long-term debt, net of current portion |
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Finance lease obligations, net of current portion |
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Deferred revenue, net of current portion |
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Guaranteed purchase obligations, net of current portion |
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Long-term operating lease liabilities, net of current portion |
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Deferred tax liability |
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Other liabilities |
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TOTAL LIABILITIES |
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$ |
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$ |
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STOCKHOLDERS’ EQUITY |
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Preferred stock, $ |
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$ |
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$ |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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TOTAL STOCKHOLDERS’ EQUITY |
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$ |
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$ |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
2
ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended March 31, |
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(in millions, except share and per share amounts) |
2022 |
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2021 |
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Revenues: |
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New and used equipment sales |
$ |
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$ |
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Parts sales |
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Service revenue |
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Rental revenue |
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Rental equipment sales |
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Net revenues |
$ |
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$ |
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Cost of revenues: |
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New and used equipment sales |
$ |
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$ |
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Parts sales |
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Service revenue |
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Rental revenue |
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Rental depreciation |
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Rental equipment sales |
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Cost of revenues |
$ |
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$ |
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Gross profit |
$ |
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$ |
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General and administrative expenses |
$ |
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$ |
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Depreciation and amortization expense |
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Total general and administrative expenses |
$ |
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$ |
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Income from operations |
$ |
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$ |
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Other (expense) income: |
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Interest expense, floor plan payable – new equipment |
$ |
( |
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$ |
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Interest expense – other |
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Other income |
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Total other expense |
$ |
( |
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$ |
( |
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Loss before taxes |
$ |
( |
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$ |
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Income tax provision |
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— |
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Net loss |
$ |
( |
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$ |
( |
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Preferred stock dividends |
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( |
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— |
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Net loss available to common shareholders |
$ |
( |
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$ |
( |
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Basic loss per share |
$ |
( |
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$ |
( |
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Diluted loss per share |
$ |
( |
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$ |
( |
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Basic weighted average common shares outstanding |
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Diluted weighted average common shares outstanding |
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The accompanying notes are an integral part of these consolidated financial statements.
3
ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
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Three Months Ended March 31, 2022 |
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Preferred Stock |
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Common Stock |
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(amounts in millions, except share amounts) |
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Number |
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Amount |
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Number of |
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Amount |
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Additional |
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Accumulated |
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Treasury Stock |
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Total |
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Balance at December 31, 2021 |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Dividends on preferred stock |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Share based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2022 |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
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$ |
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$ |
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Three Months Ended March 31, 2021 |
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Preferred Stock |
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Common Stock |
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(amounts in millions, except share amounts) |
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Number |
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Amount |
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Number of |
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Amount |
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Additional |
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Accumulated |
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Treasury Stock |
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Total |
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Balance at December 31, 2020 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Share based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2021 |
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$ |
— |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
4
ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended March 31, |
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(amounts in millions) |
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2022 |
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2021 |
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OPERATING ACTIVITIES |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: |
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Depreciation and amortization |
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Amortization of debt discount and debt issuance costs |
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Imputed interest |
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Gain on sale of rental equipment |
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Inventory obsolescence |
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Provision for bad debt |
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Share based compensation |
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Changes in deferred taxes |
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— |
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Changes in: |
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Accounts receivable |
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( |
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( |
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Inventories |
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( |
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Proceeds from sale of rental equipment |
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Prepaid expenses and other assets |
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Proceeds from floor plans with manufacturers |
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Payments under floor plans with manufacturers |
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( |
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( |
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Accounts payable, accrued expenses, customer deposits, and other current liabilities |
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( |
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Leases, deferred revenue, and other liabilities |
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Net cash (used in) provided by operating activities |
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$ |
( |
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$ |
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INVESTING ACTIVITIES |
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Proceeds from the sale of assets |
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$ |
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$ |
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Expenditures for rental equipment |
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( |
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( |
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Expenditures for property and equipment |
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( |
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( |
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Expenditures for guaranteed purchase obligations |
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( |
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( |
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Expenditures for acquisitions, net of cash acquired |
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( |
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( |
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Net cash used in investing activities |
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$ |
( |
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$ |
( |
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FINANCING ACTIVITIES |
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Proceeds from lines of credit |
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$ |
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$ |
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Payments under lines of credit |
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( |
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( |
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Proceeds from floor plans with unaffiliated source |
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Payments under floor plans with unaffiliated source |
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( |
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( |
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Preferred dividends paid |
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( |
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— |
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Payments on long-term debt |
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— |
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( |
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Payments on finance lease obligations |
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( |
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( |
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Net cash provided by financing activities |
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$ |
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$ |
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NET CHANGE IN CASH |
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( |
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Cash, Beginning of year |
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Cash, End of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
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Cash paid for interest |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
5
NOTE 1 — ORGANIZATION AND NATURE OF OPERATIONS
Alta Equipment Group Inc. and its subsidiaries (“Alta” or the “Company”) is engaged in the retail sale, service, and rental of material handling and construction equipment in the states of Michigan, Illinois, Indiana, Ohio, New York (including New York City in our Material Handling segment), Virginia and Florida as well as the New England region (including Boston) of the United States.
Alta Equipment Holdings, Inc. is the holding company for Alta Enterprises, LLC. Alta Enterprises, LLC is the holding company for Alta Industrial Equipment Michigan; LLC; Alta Industrial Equipment Company, LLC; Alta Industrial Equipment New York, LLC; PeakLogix, LLC; Alta Material Handling New York State, LLC; Alta Construction Equipment, LLC; Alta Construction Equipment Illinois, LLC; Alta Heavy Equipment Services, LLC; NITCO, LLC; Alta Construction Equipment Florida, LLC; Alta Construction Equipment Ohio, LLC; Alta Construction Equipment New England, LLC; Alta Mine Services, LLC; Alta Construction Equipment New York, LLC; and Alta Electric Vehicles, LLC.
Alta Construction Equipment, LLC is the holding company for Alta Kubota Michigan, LLC which is the holding company of Ginop Sales, Inc.
Alta Electric Vehicles, LLC is the holding company for Alta Electric Vehicles North East, LLC and Alta Electric Vehicles South West, LLC.
Unless the context otherwise requires, the use of the terms “the Company”, “we,” “us,” and “our” in these notes to the unaudited consolidated financial statements refers to Alta Equipment Group Inc. and its consolidated subsidiaries.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the consolidated accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All significant intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements. Certain amounts in the prior year have been reclassified to conform with the presentation in the current year.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. Operating results for the three months ended March 31, 2022 is not necessarily indicative of the results that may be expected for the year ending December 31, 2022, and therefore, the results and trends in these interim consolidated financial statements may not be the same for the entire year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on assumptions that we believe are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ.
Impairment of Long-lived Assets
The Company evaluates long-lived assets, such as property and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of any asset group may not be recoverable.
If the estimated future cash flow (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. When reviewing long-lived assets for impairment, the Company groups long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. After evaluating and weighing all relevant events and circumstances, the Company did not identify any indications necessary to perform an interim impairment test for the long-lived assets as of and for the period ended March 31, 2022.
Goodwill
Pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 350, Intangibles-Goodwill and Other (“ASC 350”), goodwill is recorded as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired.
6
The Company evaluates goodwill for impairment at least annually, or more frequently if triggering events occur or other impairment indicators arise which might impair recoverability. Impairment of goodwill is evaluated at the reporting unit level. A reporting unit is defined as an operating segment (i.e. before aggregation or combination), or one level below an operating segment (i.e. a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.
After evaluating and weighing all relevant events and circumstances, the Company concluded there was no triggering event that constitutes the need to perform a goodwill impairment test for the period ended March 31, 2022.
Revenue Recognition
Revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services. The majority of our sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. For agreements with multiple performance obligations, which are infrequent, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, we generally allocate sales price to each distinct performance obligation based on the observable selling price.
We enter into various equipment sale transactions with certain customers, whereby customers purchase equipment from us and then lease the equipment to a third party. In some cases, we provide a guarantee to repurchase the equipment back at the end of the lease term between the customer and third-party lessee at a set residual amount set forth in the initial sales contract or pay the customer for the deficiency, if any, between the sale proceeds received for the equipment and the guaranteed minimum resale value. We are precluded from recognizing a sale of equipment if we guarantee to repurchase the sold equipment back or guarantee the resale value of the equipment. Rather, these transactions are accounted for in accordance with ASC 842, Leases (“ASC 842”).
The deferred revenue, with respect to the aforementioned sale transactions, represents the net proceeds upon the equipment’s initial transfer. These amounts, excluding the guaranteed residual value, are recognized into rental revenue on a pro-rata basis over the lease contract period up to the first exercise date of the guarantee. At March 31, 2022 and December 31, 2021, the total deferred revenue relating to these various equipment sale transactions amounted to $
The Company also enters into various rental agreements whereby owned equipment is leased to customers. Revenue from the majority of rental agreements is recognized over the term of the agreement in accordance with ASC 842. A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period. Unbilled rental revenues are included as a component of “Accounts receivable” on the Consolidated Balance Sheets. Rental equipment is also purchased outright (“rental conversions”). Rental revenue and revenue attributable to rental conversions, are recognized in “Rental revenue” and “Rental equipment sales” on the Consolidated Statements of Operations, respectively.
The Company also enters into contracts with customers where it provides design and build solutions, automated equipment installation and system integration and software services, referred to herein as project-based revenues. These project-based revenues are recognized over time as the performance obligation is satisfied, determined using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs. Revenue from recurring support services is recognized ratably over the contract period.
The Company recognizes deferred revenue with respect to project-based revenues, service sales, and rental agreements. Deferred revenue with respect to service sales represents the unearned portion of fees related to guaranteed maintenance contracts for customers covering equipment they have previously purchased. These amounts are recognized based on an estimated rate at which the services are provided over the life of the contract. The Company also recognizes deferred revenue related to rental agreements. Total deferred revenue relating to project-based revenues, service sales agreements and rental agreements as of March 31, 2022 and December 31, 2021 was $
Periodic and ad-hoc maintenance service revenue is recognized upon completion of the service and the agreement of terms with the customer. Revenue from guaranteed maintenance contracts is recognized over the contract period in proportion to the costs expected to be incurred in performing services under the contract, typically to
Payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized, and payment is due is not significant. The Company does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year, or if payment is expected to be received less than a year after the
7
good or service has been provided. Sales and other taxes collected from customers and remitted to government authorities are accounted for on a net basis and, therefore, excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of revenues.
Costs to obtain contracts, such as sales commissions, are expensed as incurred given that the terms of the contracts are generally less than
Under bill-and-hold arrangements, revenue is recognized when all configuration work is complete and the equipment has been set aside for final shipment, at which point the Company has determined control has been transferred.
Income Taxes
The Company was formed in 2020 for income tax purposes. Alta Enterprises, LLC was historically and remains a partnership for federal income tax purposes, with each partner being separately taxed on its share of taxable income (loss). There is
We use the guidance in FASB ASC Topic 740-270, Income Taxes Interim Reporting, where tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period. At the end of each interim reporting period, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.
The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected income (loss) before income taxes for the year, projections of the proportion of income (and/or loss) earned and taxed, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or the Company’s tax environment changes. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or to the extent that the expected annual effective income tax rate changes, the effect of the change on prior interim periods is included in the income tax provision in the period in which the change in estimate occurs. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not likely to allow for the use of the deduction or credit.
Share Based Compensation
The Board of Directors approved the Company’s 2020 Omnibus Incentive Plan, which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance stock units ("PSUs"), unrestricted stock, other share based awards and cash awards to directors, employees and consultants to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company.
We measure the employee stock-based awards at grant-date fair value using provisions of ASC 718 – Stock Compensation and record compensation expense over the vesting period of the award. The number of PSUs granted depends on the Company's achievement of target performance goals, which may range from
New Accounting Pronouncements
Pronouncements Not Yet Adopted
Financial Instruments — Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard prescribes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in the timely recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument from the date of initial recognition of the financial instrument.
Measurement of expected credit losses is to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. As amended by ASU 2019-10, the ASU 2016-13 is effective for the annual reporting period beginning January 1, 2023. The Company believes ASU 2016-13 will only have applicability to the Company’s receivables from revenue transactions, or trade receivables, except those arising from
8
rental revenues as ASU 2016-13 does not apply to receivables arising from operating leases. The Company is currently evaluating whether the new guidance, while limited to our non-operating lease trade receivables, will have an impact on the consolidated financial statements or existing internal controls.
NOTE 3 — REVENUE RECOGNITION
We recognize revenue in accordance with two different accounting standards: 1) ASC 606 (which addresses revenue from contracts with customers) and 2) ASC 842 (which addresses lease revenue).
Under ASC 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services. The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. For agreements with multiple performance obligations, which are infrequent, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, the Company generally allocates sales prices to each distinct performance obligation based on the observable selling price.
Disaggregation of Revenues
The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statements of Operations for the three months ended March 31, 2022 and March 31, 2021, respectively, by revenue type, and by the applicable accounting standard.
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||||||||||||||||||
|
|
ASC 842 |
|
|
ASC 606 |
|
|
Total |
|
|
ASC 842 |
|
|
ASC 606 |
|
|
Total |
|
||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
New and used equipment sales |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
Parts sales |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Service revenue |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Rental revenue |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Rental equipment sales |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The Company believes that the disaggregation of revenues from contracts to customers as summarized above, together with the discussion below, depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors.
Leases revenues (ASC 842)
New and used equipment sales: The Company enters into various equipment sale transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party. In some cases, the Company provides a guarantee to repurchase the equipment back at the end of the lease term between the customer and third-party lessee at a set residual amount set forth in the initial sales contract or pay the customer for the deficiency, if any, between the sale proceeds received for the equipment and the guaranteed minimum resale value. The Company is precluded from recognizing a sale of equipment when it is obligated or has an option to repurchase or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases. For these arrangements, because the Company generally receives the full amount of the consideration at the beginning of the arrangement, the Company initially records deferred revenue for the amount received and recognizes revenue on a pro-rata basis over the term of the contract under ASC 842.
Rental revenue: Owned equipment rentals represent revenues from renting equipment. The Company accounts for these rental contracts as operating leases. The Company recognizes revenue from equipment rentals in the period earned, regardless of the timing of billing to customers. A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period.
Revenues from contracts with customers (ASC 606)
Accounting for the different types of revenues pursuant to ASC 606 are discussed below. Substantially all of the Company’s revenues under ASC 606 are recognized at a point in time rather than over time.
9
New and used equipment sales: With the exception of bill-and-hold arrangements, the Company’s revenues from the sale of new and used equipment are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good. Under bill-and-hold arrangements, revenue is recognized when all configuration work is complete and the equipment has been set aside for final shipment, at which point the Company has determined control has been transferred. The bill-and-hold arrangements primarily apply to sales when physical shipment of heavy equipment to the customer is prohibited by law (e.g. frost laws) or requested by the customer due to their inability to arrange freight simultaneous to revenue being recognized, both are limited circumstances. The customer equipment sold under a bill-and-hold arrangement is physically separated from Company inventory and that equipment cannot be used by the Company or sold to another customer. The Company does not offer material rights of return. The Company recognized approximately $
Parts sales: Revenues from the sale of parts are recognized at the time of pick-up by the customer for over-the-counter sales transactions. For parts that are shipped to a customer, the Company elected to use a practical expedient of ASC 606 and treat such shipping activities as fulfillment costs, thereby recognizing revenues at the time of shipment. The Company does not offer material rights of return.
Service revenue: The Company records service revenue primarily from guaranteed maintenance and periodic maintenance contracts with customers. The Company recognizes periodic maintenance service revenues at the time such services are completed, which is when the control of the promised services is transferred over to the customer. The Company recognizes guaranteed maintenance service revenues over-time using an input method of costs incurred to estimated costs over the life of the related contract. Revenue recognized from guaranteed maintenance contracts totaled $
Rental equipment sales: The Company also sells rental equipment from our rental fleet. These sales are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good. In some cases, certain rental agreements contain a rental purchase option, whereby the customer has an option to purchase the rented equipment during the term of the rental agreement. Revenues from the sale of rental equipment are recognized at the time the rental purchase option agreement has been approved and signed by both parties, as the equipment is already in the customer’s possession under the previous rental agreement, and therefore control has been transferred as title has been transferred.
Contract costs
The Company does not recognize assets associated with the incremental costs of obtaining a contract with a customer that the Company expects to recover (for example, a sales commission). Most of the Company’s revenue is recognized at a point in time or over a period of one year or less, and the Company has used the practical expedient that allows it to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. The amount of the costs associated with the revenue recognized over a period of greater than one year is insignificant.
Receivables and contract assets and liabilities
The Company has contract assets and contract liabilities associated with project-based contracts with customers. Contract assets are costs incurred in excess of billings for project-based revenue. Contract assets as of March 31, 2022 and December 31, 2021 were $
Consideration and Payment terms
The Company’s revenues do not include material amounts of variable consideration under ASC 606. Payment terms may vary by the type of customer, location, and the type of products or services offered. The time between invoicing and when payment is due
10
is not significant, and contracts do not generally include a significant financing component. Contracts with customers do not generally result in significant obligations associated with returns, refunds, or warranties.
Contract estimates and judgments
The Company’s revenues accounted for under ASC 606 generally do not require significant estimates or judgments as the transaction price is generally fixed and clearly stated in the customer contracts. Contracts generally do not include multiple performance obligations, and accordingly do not require estimates of the standalone selling price for each performance obligation. Substantially all of the Company’s revenues are recognized at a point in time and the timing of the satisfaction of the applicable performance obligations is readily determinable. The Company’s revenues under ASC 606 are generally recognized at the time of delivery to, or pick-up by, the customer.
The Company leases a subset of its operating facilities from three real estate entities related through common ownership. Total rent expense under these lease agreements, all of which are classified as operating, was $1.2 million for both the three months ended March 31, 2022 and March 31, 2021. At March 31, 2022, the Company had net operating right-of-use assets and operating lease liabilities associated with related party leases of $
Ryan Greenawalt, Tony Colucci, and Craig Brubaker collectively own an indirect, non-controlling minority interest in OneH2, Inc. (“OneH2”), which they each acquired through various transactions that took place in early 2018 and prior. Ryan Greenawalt is on the Board of Directors of OneH2. OneH2 is a privately held company that produces and delivers hydrogen fuel to end users. For 2021, the Company did
NOTE 5 — INVENTORIES
The components of inventories, net, consisted of the following (amounts in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
New equipment |
|
$ |
|
|
$ |
|
||
Used equipment |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Parts |
|
|
|
|
|
|
||
Gross inventory |
|
$ |
|
|
$ |
|
||
Inventory reserves |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
$ |
|
|
$ |
|
||
Direct labor of $
11
NOTE 6 — PROPERTY AND EQUIPMENT
Property and equipment, net, consisted of the following (amounts in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Rental fleet |
|
|
|
|
|
|
||
Equipment and leasehold improvements: |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Autos and trucks |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Finance lease right-of-use assets |
|
|
|
|
|
|
||
Office equipment |
|
|
|
|
|
|
||
Computer equipment |
|
|
|
|
|
|
||
Total cost |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Less: accumulated depreciation and amortization |
|
|
|
|
|
|
||
Rental fleet |
|
$ |
( |
) |
|
$ |
( |
) |
Equipment, autos and trucks, leasehold improvements, finance leases and office and computer equipment |
|
|
( |
) |
|
|
( |
) |
Total accumulated depreciation and amortization |
|
$ |
( |
) |
|
$ |
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Total depreciation and amortization on property and equipment was $
NOTE 7 — GOODWILL
The following table summarizes the changes in the carrying amount of goodwill in total and by reportable segment as of March 31, 2022 and December 31, 2021 (amounts in millions):
|
|
Material |
|
|
Construction |
|
|
Total |
|
|||
Balance, December 31, 2020 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Additions |
|
|
|
|
|
|
|
|
|
|||
Adjustments to purchase price allocations |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, December 31, 2021 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustments to purchase price allocations |
|
|
— |
|
|
|
|
|
|
|
||
Balance, March 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
See Note 17, Business Combinations, for further information.
12
NOTE 8 — INTANGIBLE ASSETS
The gross carrying amount of intangible assets and accumulated amortization as of March 31, 2022 and December 31, 2021 were as follows (amounts in millions):
|
|
March 31, 2022 |
|
|||||||||||||
|
|
Weighted Average Remaining Life (in years) |
|
|
Gross carrying |
|
|
Accumulated |
|
|
Net carrying |
|
||||
Customer relationships |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Tradenames |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Non-compete agreements |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Internal use software |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2021 |
|
|||||||||||||
|
|
Weighted Average Remaining Life (in years) |
|
|
Gross carrying |
|
|
Accumulated |
|
|
Net carrying |
|
||||
Customer relationships |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Tradenames |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Non-compete agreements |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Internal use software |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Amortization of intangible assets was $
During the fourth quarter of 2021, the Company reassessed the useful lives of our intangible assets acquired from recent acquisitions. Given our rebranding efforts, the Company shortened the remaining useful lives of some tradename intangible assets resulting in accelerated amortization prospectively beginning in the fourth quarter of 2021.
NOTE 9 — LINES OF CREDIT AND FLOOR PLANS
Line of Credit and Floor Plan — First Lien Lender
On April 1, 2021, the Company entered into a Sixth Amended and Restated ABL First Lien Credit Agreement (the “Amended and Restated ABL Credit Agreement”) by and among Alta Equipment Group Inc. and the other credit parties named therein, the lenders named therein, JP Morgan Chase Bank, N.A., as Administrative Agent, and the syndication agents and documentation agent named therein, superseding and replacing the Fifth Amended and Restated ABL First Lien Credit Agreement. Under the Amended and Restated ABL Credit Agreement, the Company has an asset based revolving line of credit (the “ABL Facility”) with its first lien holder with advances on the line being supported by eligible accounts receivable, parts, and otherwise unencumbered new and used equipment inventory and rental equipment. The ABL Facility, which is collateralized by substantially all assets of the Company, has a maximum borrowing capacity of $
13
On April 1, 2021, the Company entered into a Sixth Amended and Restated Floor Plan First Lien Credit Agreement ("Floor Plan Credit Agreement") by an among Alta Equipment Group, Inc. and the other credit parties names therein, and the lender JP Morgan Chase Bank, N.A., as Administrative Agent. Under the Floor Plan Credit Agreement, the Company has a first lien floor plan facility (the "First Lien Floor Plan Facility") with its first lien lender to primarily finance new inventory. This First Lien Floor Plan Facility has a maximum borrowing capacity of $
Original Equipment Manufacturer (“OEM”) Captive Lenders and Suppliers’ Floor Plans
The Company has floor plan financing facilities with several OEM captive lenders and suppliers (the “OEM Floor Plan Facilities”, and together with the First Lien Floor Plan Facility, collectively the “Floor Plan Facilities”) for new and used inventory and rental equipment, each with borrowing capacities ranging from $
With the recent acquisitions, some of the Company’s OEM Floor Plan Facilities were amended to include new locations and new entities. The OEM Floor Plan Facilities are secured by the equipment being financed, and contain certain operating company guarantees. The interest cost is SOFR plus an applicable margin. The effective rates, excluding the favorable effect of interest-subsidies, as of March 31, 2022 ranged from
The total aggregate amount of financing under the Floor Plan Facilities cannot exceed $40
Maximum borrowings under the floor plans and ABL Facility are limited to $
NOTE 10 — LONG-TERM DEBT
Senior Secured Second Lien Notes
The Company sold $
The Notes are guaranteed by each of our existing and future domestic subsidiaries that become a borrower or guarantor under our or the Guarantors’ indebtedness, including the Credit Agreements, as amended and restated concurrently with the closing of the Notes offering. The Notes and the Guarantees are secured, subject to certain exceptions and permitted liens, by second-priority liens on substantially all of our assets and the assets of the Guarantors that secure on a first-priority basis all of the indebtedness under our ABL Facility and the Floor Plan Facility and certain hedging and cash management obligations, including, but not limited to, equipment, fixtures, inventory, intangibles and capital stock of our restricted subsidiaries now owned or acquired in the future by us or the Guarantors.
14
The Notes bear interest at the rate of
As of March 31, 2022, outstanding borrowings under the Notes were $
Term Loan
On February 14, 2020, the Company entered into a Note Purchase Agreement for a second lien term loan (the “Term Loan”) in an aggregate principal amount of $
Extinguishment of Debt
In the second quarter of 2021, and in connection with the repayment of the Term Loan, the Company recorded a loss on the extinguishment of debt in the amount of $
The Company’s long-term debt consists of the following (amounts in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
High yield notes |
|
$ |
|
|
$ |
|
||
Unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Debt discount |
|
|
( |
) |
|
|
( |
) |
Finance leases |
|
|
|
|
|
|
||
Total debt and finance leases |
|
$ |
|
|
$ |
|
||
Less: current maturities |
|
|
( |
) |
|
|
( |
) |
Long-term debt and finance leases, net |
|
$ |
|
|
$ |
|
||
As of March 31, 2022, the Company was in compliance with the financial covenants set forth in its debt agreements.
Notes Payable – Non-Contingent Consideration
The Company acquired all the assets of Peaklogix, Inc ("PeakLogix") on June 12, 2020. Pursuant to the asset purchase agreement, sellers are entitled to additional cash payments of a minimum of $
Promissory Note
On June 12, 2020, the Company entered into an unsecured promissory note for $
NOTE 11 — LEASES
The Company adopted ASC 842 and all related amendments effective for the annual reporting period ended December 31, 2021, with an effective date of January 1, 2021, using the modified retrospective method. Comparative 2021 results have been recast to reflect the adoption of ASC 842. The Company determines if an arrangement is a lease at inception. Operating leases are included in "Operating lease right-of-use assets, net", "Current operating lease liabilities" and "Long-term operating lease liabilities, net of current portion" on the Company’s Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021. Finance leases are included in
15
"Property and equipment, net", "Current portion of long-term debt", and "Finance lease obligations, net of current portion" on the Company’s Consolidated Balance Sheets.
Lease right-of-use assets are recognized at commencement date based upon the present value of the remaining future minimum lease payments over the lease term. The Company’s lease terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based upon information available at the commencement date to determine the present value of future lease payments. The Company applies the portfolio approach for the incremental borrowing rate on its leases based upon similar lease term and payments. The lease right-of-use asset also includes lease payments made in advance of lease commencement and excludes lease incentives. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components. For real estate leases, these components are accounted for as a single lease component. For all equipment leases excluding vehicles, the lease and non-lease components are accounted for as a single lease component. For vehicle leases, these components are accounted for separately.
Variable lease expenses include payments based upon changes in a rate or index, such as consumer price indexes, as well as usage of the leased asset. Short-term lease expenses include leases with terms, at lease commencement, of 12 months or less and no purchase option reasonably certain to be exercised, including leases with a duration of one month or less. Low-value lease expense includes leases with terms, at lease commencement, of greater than 12 months, but do not meet our capitalization threshold, which is consistent with our property and equipment capitalization threshold. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants; however, there are certain lease agreements that include guaranteed purchase obligations for lift trucks.
The Company primarily has operating and finance leases for branch facilities, corporate office, and certain equipment which encompass both related party and third-party leases. The Company’s leases have remaining lease terms that range from less than
The Company leases and subleases certain lift trucks to customers under short and long-term operating lease agreements. The sublease income is included in Rental revenue on our Consolidated Statements of Operations. The costs of the head lease for these subleases are included in operating lease expense below.
At March 31, 2022 and December 31, 2021, assets recorded under finance leases, net of accumulated depreciation were $
The components of lease expense (including related party leases) were as follows (amounts in millions):
|
Three Months Ended March 31, |
|
|||||
|
2022 |
|
|
2021 |
|
||
Operating lease expense |
$ |
|
|
$ |
|
||
Short-term lease expense |
|
|
|
|
|
||
Low-value lease expense |
|
— |
|
|
|
|
|
Variable lease expense |
|
|
|
|
— |
|
|
Finance lease expense: |
|
|
|
|
|
||
Amortization of right-of-use assets |
|
|
|
|
|
||
Interest on lease liabilities |
|
|
|
|
|
||
Total lease expense |
$ |
|
|
$ |
|
||
16
Other information related to leases is presented in the table below (amounts in millions unless otherwise noted):
Supplemental Cash Flows Information |
Three Months Ended March 31, |
|
|||||
|
2022 |
|
|
2021 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
||
Operating cash flows for operating leases |
$ |
|
|
$ |
|
||
Operating cash flows for finance leases |
|
|
|
|
|
||
Financing cash flows for finance leases |
|
|
|
|
|
||
Non-cash right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
||
|
|
|
|
|
|
||
Weighted Average Remaining Lease Term (in years): |
|
|
|
|
|
||
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
||
|
|
|
|
|
|
||
Weighted Average Discount Rate (in %): |
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
||
Minimum future lease payments under non-cancellable operating and finance leases described above as of March 31, 2022 were as follows (amounts in millions):
Years |
|
Operating Leases |
|
|
Finance Leases |
|
||
Remainder of 2022 |
|
$ |
|
|
$ |
|
||
2023 |
|
|
|
|
|
|
||
2024 |
|
|
|
|
|
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total future minimum lease payments |
|
$ |
|
|
$ |
|
||
Less: imputed interest |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Amounts recognized in the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
Current portion of long-term debt |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
||
As of March 31, 2022, the Company had additional leases, substantially all real estate and vehicles, that primarily replace expiring leases on certain assets and have not yet commenced with undiscounted lease payments of $
See Note 12, Contingencies, for more information on certain contracts where the Company guarantees the performance of the third-party lessee.
NOTE 12 — CONTINGENCIES
Guarantees
As of March 31, 2022 and December 31, 2021, the Company was party to certain contracts in which it guarantees the performance of agreements between third-party lessees and various third-party financial institutions. The terms of the guarantees range from to
17
repay the debt without the Company having to honor the guarantee; therefore,
Legal Proceedings
During the three months ended March 31, 2022 and March 31, 2021, various claims and lawsuits, incidental to the ordinary course of our business, were pending against the Company. In the opinion of management, after consultation with legal counsel, resolution of these matters is not expected to have a material effect on the Company’s consolidated financial statements.
Contractual Obligations
The Company does not believe there are any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company. As of March 31, 2022 and December 31, 2021 there was $
NOTE 13 — INCOME TAXES
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates in effect for the year in which the difference is expected to reverse. Additionally, the impact of changes in the tax rates and laws on deferred taxes, if any, is reflected in the financial statement in the period of enactment. The deferred tax liabilities and assets for the Company represent the difference between the financial statement and tax basis of the partnership interest in Alta Enterprises, LLC. The Company is using the single line-item approach for financial statement presentation of deferred tax assets and liabilities.
The income tax provision for the three months ended March 31, 2022 and March 31, 2021, respectively, consisted of the following (amounts in millions):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Federal taxes-current |
|
$ |
— |
|
|
$ |
— |
|
Federal taxes-deferred |
|
|
— |
|
|
|
|
|
State taxes-current |
|
|
— |
|
|
|
— |
|
State taxes-deferred |
|
|
— |
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
|
|
Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period. At the end of each interim reporting period, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.
The Company recorded an income tax expense of $
Alta reviews the realizability of its deferred tax asset on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results are considered, along with any other positive or negative evidence. All of the factors that Alta considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involve significant judgment.
The effective tax rate for the three months ended March 31, 2022 and March 31, 2021was
As of December 31, 2021, the Company has federal net operating tax loss carryforwards of approximately $
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property.
18
The CARES Act did not materially impact our effective tax rate for prior periods, although it will impact the timing of future cash payments for taxes. Under the CARES Act, as of both March 31, 2022 and December 31, 2021, we have deferred employer payroll taxes of $
NOTE 14 — EQUITY
Preferred Stock
On December 22, 2020, the Company closed its underwritten public offering of depositary shares, each representing th of a share of
We will pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by our Board of Directors, at the rate of
Warrants
On April 12, 2021, we exchanged all
During the quarter ended March 31, 2022, the Compensation Committee of our Board of Directors approved the grant of
The Company recognized total compensation expense of $
As of March 31, 2022, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock and performance stock awards was $
The following table summarizes our RSUs and PSUs that were granted and vested during the three months ended March 31, 2022:
19
|
|
Restricted Stock Units |
|
|
Performance Stock Units |
|
||||||||||
|
|
Number of units |
|
|
Weighted average grant date fair value |
|
|
Number of units |
|
|
Weighted average grant date fair value |
|
||||
Unvested units as of December 31, 2021 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested - issued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Vested - unissued |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Unvested units as of March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
NOTE 16 — FAIR VALUE INSTRUMENTS
The carrying value of financial instruments reported in the accompanying Consolidated Balance Sheets for cash, accounts receivable, accounts payable and accrued expenses payable and other liabilities approximate fair value due to the immediate or short-term nature or maturity of these financial instruments. Based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs, the carrying value of lines of credit, long-term debt, and the guaranteed purchase obligations approximates the fair value as of March 31, 2022 and December 31, 2021.
The following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis:
Contingent Consideration
The contingent consideration liability represents the fair value of the future earn-out liability that the Company may be required to pay in conjunction with the acquisitions upon the achievement of certain performance milestones. The earn-out for the acquisitions is measured at fair value in each reporting period, based on Level 3 inputs, with any change to the fair value recorded in the Consolidated Statements of Operations.
PeakLogix
The purchase agreement for the PeakLogix acquisition provides for earn-out payments of a minimum of $
The Company concluded the future minimum cash payments of $
In addition to the non-contingent liability, there is a potential earn-out payment of $
Hilo Equipment & Services (“Hilo”)
The purchase agreement for the Hilo acquisition provides an earn-out payment of $
20
Ginop Sales, Inc ("Ginop")
The purchase agreement for the Ginop acquisition provides an opportunity for earn-out payments up to $
The following table sets forth, by level of hierarchy, the Company’s recurring measures at fair value as of March 31, 2022 and December 31, 2021, which was presented in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheets (amounts in millions):
|
|
March 31, 2022 |
|
|||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||
Liabilities: contingent consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
December 31, 2021 |
|
|||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||
Liabilities: contingent consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
The following is a summary of changes to Level 3 instruments as of March 31, 2022 and December 31, 2021 (amounts in millions):
|
Contingent Consideration |
|
|
Balance, January 1, 2021 |
$ |
|
|
Acquisition of Ginop |
|
|
|
Change in fair value |
|
|
|
Balance, December 31, 2021 |
$ |
|
|
Changes in fair value |
|
|
|
Balance, March 31, 2022 |
$ |
|
|
21
NOTE 17 — BUSINESS COMBINATIONS
The following table summarizes the net assets acquired from the acquisitions in 2021 (amounts in millions):
|
ScottTech |
|
Baron |
|
Gibson |
|
Midwest Mine |
|
Ambrose |
|
Ginop |
|
Total |
|
|||||||
Cash |
$ |
|
$ |
— |
|
$ |
— |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||
Accounts receivable |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
||||||
Inventory |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Prepaid and other assets |
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
||||
Rental fleet, net |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
||||
Property and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||
Intangible assets |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|||||
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Assets |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Floor plan payable |
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
( |
) |
|
( |
) |
|
( |
) |
Accounts payable |
|
( |
) |
|
— |
|
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Accrued expenses |
|
( |
) |
|
— |
|
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Other current liabilities |
|
( |
) |
|
( |
) |
|
— |
|
|
( |
) |
|
— |
|
|
( |
) |
|
( |
) |
Deferred tax liability |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
( |
) |
|
( |
) |
Other liabilities |
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
— |
|
|
— |
|
|
( |
) |
Total liabilities |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net Assets Acquired |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Assets acquired net of cash |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Ginop
On December 31, 2021, the Company acquired the stock of Ginop, a privately held construction and agricultural equipment distributor, for a total purchase price of $
The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.
The following table summarizes the components of the purchase price at December 31, 2021 (amounts in millions):
Cash consideration paid * |
|
$ |
|
|
Earn-out liability |
|
|
|
|
Total purchase price |
|
$ |
|
*
Ambrose Equipment, LLC ("Ambrose")
On December 31, 2021, the Company acquired the assets of Ambrose, a privately held construction equipment distributor, for a total purchase price of $
The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as
22
soon as practical but no later than one year from the acquisition date. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.
Midwest Mine Services, LLC ("Midwest Mine")
On December 1, 2021, the Company acquired the assets of Midwest Mine for a total purchase price of $
The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.
Gibson Machinery, LLC ("Gibson")
On October 1, 2021, the Company acquired the assets of Gibson, a privately held premium equipment distributor, for a total purchase price of $
The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.
Baron Industries ("Baron")
On September 1, 2021, the Company acquired Baron, a privately held dock & door business, for a total purchase price of $
The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.
ScottTech, LLC ("ScottTech")
On March 1, 2021, the Company acquired all the assets of ScottTech, a material handling, warehouse control software, and turn-key warehouse system integration services provider, for a total purchase price of $
The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses.
NOTE 18 — SEGMENTS
The Company has
23
The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks and other material handling equipment in Michigan, Illinois, Indiana, New York (including New York City), Virginia as well as the New England region (including Boston) of the United States. As of March 31, 2022, the Material Handling segment included the ScottTech and Baron acquisitions and their related results for the quarter.
The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Illinois, Indiana, Ohio, New York, Florida and the New England region (including Boston) of the United States. As of March 31, 2022 the Construction Equipment segment includes the Gibson, Midwest Mine, Ambrose, and Ginop acquisitions and their related results for the quarter.
The Company retains various unallocated expense items at the general corporate level, which the Company refers to as “Corporate” in the table below. Corporate holds corporate debt and has minor activity all together. Corporate incurs expenses associated with compensation (including share based compensation) of our directors, corporate officers and certain members of our shared-services leadership team, consulting and legal fees related to acquisitions and capital raising activities, corporate governance and compliance related matters, certain corporate development related expenses, interest expense associated with original issue discounts and deferred financing cost related to previous capital raises, and the Company’s income tax provision.
The following table presents the Company’s results of operations by reportable segment for the three months ended March 31, 2022 (amounts in millions):
|
|
Three Months Ended March 31, 2022 |
|
|||||||||||||
|
|
Material |
|
|
Construction |
|
|
Corporate |
|
|
Total |
|
||||
New and used equipment sales |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Parts sales |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Service revenue |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Rental revenue |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Rental equipment sales |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
The following table presents the Company’s results of operations by reportable segment for the three months ended March 31, 2021 (amounts in millions):
|
|
Three Months Ended March 31, 2021 |
|
|||||||||||||
|
|
Material |
|
|
Construction |
|
|
Corporate |
|
|
Total |
|
||||
New and used equipment sales |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Parts sales |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Service revenue |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Rental revenue |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Rental equipment sales |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
The following table presents the Company’s identified assets by reportable segment for the period ending March 31, 2022 and December 31, 2021 (amounts in millions):
|
|
March 31, |
|
|
December 31, |
|
||
Segment assets: |
|
|
|
|
|
|
||
Material handling |
|
$ |
|
|
$ |
|
||
Construction equipment |
|
|
|
|
|
|
||
Corporate |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
24
Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding, after giving effect to all potential dilutive common shares outstanding during the period. We include all common shares granted under our share-based compensation plan which remain unvested (RSUs and PSUs), in the number of shares outstanding for our diluted EPS calculations using the treasury method.
Basic and diluted earnings per share for the three months ended March 31, 2022 and March 31, 2021 were calculated as follows (amounts in millions, except per share amounts):
|
|
Three Months Ended |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Basic net loss per share |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Basic weighted average common shares outstanding |
|
|
|
|
|
|
||
Basic net loss per share of common stock |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted loss per share |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Basic weighted average common shares outstanding |
|
|
|
|
|
|
||
Effect of dilutive securities: |
|
|
|
|
|
|
||
Effect of dilutive non-vested restricted stock units |
|
|
— |
|
|
|
— |
|
Diluted weighted average common shares outstanding |
|
|
|
|
|
|
||
Diluted net loss per share of common stock |
|
$ |
( |
) |
|
$ |
( |
) |
Securities excluded from the calculation of diluted loss per share were approximately
NOTE 20 — SUBSEQUENT EVENTS
On April 12, 2022, Alta Equipment Group Inc. announced the appointment of Craig Brubaker as Chief Operating Officer, a new position at the company, effective immediately. Previously, Mr. Brubaker held positions as Systems Manager, Rental Manager, General Service Manager, Regional Operations Manager, and Vice President of Operations. As Chief Operating Officer Mr. Brubaker will report to Alta’s Chief Executive Officer, Ryan Greenawalt, and oversee day-to-day operations of both Material Handling and Construction Equipment segments.
25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report, and the audited consolidated financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. This discussion contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 reflecting Alta’s current expectations, estimates and assumptions concerning events and financial trends that may affect its future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward- looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. Alta assumes no obligation to update any of these forward-looking statements.
Recent Developments
COVID-19
The economic volatility and disruptions caused by the COVID-19 pandemic caused an adverse effect on our business and our financial results in fiscal year 2021. Currently, our business is experiencing “recovery-related” supply-chain constraints that have affected some of our OEM equipment suppliers. Specifically, lead-times from OEMs for new equipment has been pushed beyond historic norms. While we believe our diversified cash flow streams, the breadth of our product portfolio, geographic reach and our ability to source used equipment will help mitigate the impact of the current supply-chain disruptions we are facing, an extended period or worsening of the supply chain issues our OEM equipment providers are experiencing could impact our financial results adversely. Although currently COVID-19 is not impacting our business activity levels and we believe the worst of the pandemic’s effect on our business to be behind us, the potential future emergence of additional variant strains of COVID-19 remains and how those variant strains would impact the macroeconomic environment and our business is uncertain.
While our operations in 2021 and in the first quarter of 2022, in general, performed beyond pre-COVID levels, we will continue to monitor key performance metrics such as labor hour demand and rental utilization and, in-turn, rationalize our skilled labor and rental fleet levels to match expected demand in 2022 and through the end of the COVID-19 pandemic.
We believe that the acquisitions and investments made in the calendar year 2021 expanded our service capabilities, geographic reach, end market diversification and product offerings; each of which will ultimately strengthen our resiliency to economic shocks and will help to preserve liquidity over the long term.
While we have sufficient liquidity to fund our operations currently, our Board of Directors and management team continue to monitor and evaluate the ongoing impacts of the COVID-19 pandemic and “recovery-related” supply-chain constraints on our business and operations, and to the extent business conditions regress from current levels we may take actions to reduce costs and/or seek additional financing to bolster our liquidity position.
Exchange of Warrants
On April 12, 2021, we exchanged all 8,668,746 of our outstanding warrants into shares of our common stock at an exchange ratio of 0.263 shares of common stock per warrant, for an aggregate issuance of approximately 2,279,874 shares of common stock in the exchange.
April 1, 2021 Note Issuance and Debt Refinance
On April 1, 2021, we completed a private offering of $315 million of our 5.625% Senior Secured Second Lien Notes due 2026 (the “Notes”) and Amended and Restated our First Lien Credit Agreements (collectively, the “2021 Refinance”). The 2021 Refinance allowed the Company to, among other things, repay and refinance of a significant portion of the Company’s debt, reduce its borrowing costs and interest rate risk, and enhance liquidity for future growth initiatives.
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
26
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:
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, 2021, 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.
Business Description
The Company owns and operates one of the largest integrated equipment dealership platforms in the U.S. Through our branch network, we sell, rent, and provide parts and service support for several categories of specialized equipment, including lift trucks and aerial work platforms, cranes, paving and asphalt equipment, earthmoving equipment and other material handling and construction equipment. We engage in five principal business activities in these equipment categories:
We have operated as an equipment dealership for over 37 years and have developed a branch network that includes over 60 total locations in Michigan, Illinois, Indiana, Ohio, Massachusetts, Maine, Connecticut, New Hampshire, Vermont, New York, Virginia and Florida. We offer our customers a one-stop-shop for their equipment needs by providing sales, parts, service, and rental functions under one roof. More recently, with the acquisitions of PeakLogix in June 2020 and ScottTech in March 2021, we have entered the
27
automated equipment installation and system integration sector, which we believe has natural synergies with our material handling business and positions us to take advantage of the macroeconomic trend in e-commerce and logistics.
Within our territories, we are the exclusive distributor of new equipment and replacement parts on behalf of our OEM partners. We enjoy long-standing relationships with leading material handling and construction equipment OEMs, including Hyster-Yale, Volvo, and JCB, among more than 30 others. We are consistently recognized by OEMs as a top dealership partner and have been identified as a nationally recognized Hyster-Yale dealer and multi-year recipient of the Volvo Dealer of the Year award. In August 2021 the Company entered into a dealer agreement with Nikola Corporation to become the authorized dealer to sell and service Nikola medium and long-haul class 8 electric vehicle trucks in the New York, New Jersey, eastern Pennsylvania, and New England markets. More recently, the Company has added Arizona to its dealer agreement with Nikola.
Business Segments
We have two reportable segments: Material Handling and Construction Equipment. Our “Material Handling” segment has been previously reported as our “Industrial” segment. Our segments are determined based on management structure, which is organized based on types of products sold and customer end markets, as described in the following paragraph. The operating results for each segment are reported separately to our Chief Executive Officer (our chief operating decision maker) to make decisions regarding the allocation of resources, to assess our operating performance and to make strategic decisions.
The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks in Michigan, Illinois, Indiana, New York, Virginia and throughout the New England states. The Material Handling segment is made up of the legal entities Alta Industrial Equipment Michigan, LLC, Alta Industrial Equipment Company, LLC, Alta Material Handling New York State, LLC, PeakLogix, LLC, Alta Industrial Equipment New York, LLC, Alta Electric Vehicles, LLC, Alta Electric Vehicles North East, LLC, and Alta Electric Vehicles South West, LLC.
The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Indiana, Illinois, Ohio, New York, Florida and throughout the New England States. The Construction Equipment segment is made up of the legal entities Alta Construction Equipment, LLC, Alta Construction Equipment Illinois, LLC, Alta Heavy Equipment Services, LLC, Alta Construction Equipment Florida, LLC, Alta Construction Equipment Ohio, LLC, Alta Construction Equipment New England, LLC, Alta Mine Services, LLC, and Alta Construction Equipment New York, LLC. Ginop Sales, Inc. is the wholly-owned subsidiary of Alta Kubota Michigan, LLC which is the wholly-owned subsidiary of Alta Construction Equipment, LLC. As further explained below, NITCO, LLC, engages in operations related to both the Material Handling and the Construction Equipment segment within a common legal entity.
Alta Equipment Group Inc., Alta Equipment Holdings, Inc. and Alta Enterprises, LLC (individually or as sometimes collectively referred to as “Corporate”) are the holding companies for the legal operating entities noted above that make up each segment. In addition to being holding companies, the Corporate entities also hold compensation (including share based compensation) of our directors, corporate officers and certain members of our shared-services leadership team, consulting and legal fees related to acquisitions and capital raising activities, corporate governance and compliance related matters, certain corporate development related expenses, interest expense associated with original issue discounts and deferred financing cost related to previous capital raises, and the Company’s income tax provision.
Acquisitions
Ginop
On December 31, 2021, the Company acquired the stock of Ginop, a privately held compact construction and agricultural equipment distributor, for a total purchase price of $30.2 million which includes $0.9 million of the potential $1.5 million additional earn-out payments tied to post closing performance of the Ginop business. Alta acquired $0.7 million of cash and $0.3 million of estimated excess working capital in the transaction, yielding an enterprise value of approximately $29.2 million. The acquisition strengthens our construction product and service offerings in Northern Michigan and expands our relationship with Kubota.
Ambrose
On December 31, 2021, the Company acquired the assets of Ambrose, a privately held construction equipment distributor, for a total purchase price of $14.3 million, including a $1.2 million adjustment to the purchase price which occurred subsequent to the 2021 year-end audit. The Company acquired $0.2 million of cash and $0.6 million of estimated working capital deficit in the transaction, yielding an enterprise value of approximately $14.7 million. Ambrose has been the Northeast’s premier asphalt equipment dealer for more than 33 years, with locations in New Hampshire and
28
Massachusetts.
Midwest Mine
On December 1, 2021, the Company acquired the assets of Midwest Mine for a total purchase price of $6.9 million. Midwest Mine fabricates and installs full aggregate processing plants for quarries, mines, and recycling operations throughout the United States and is well-established in the Ohio and Michigan markets.
Gibson
On October 1, 2021, the Company acquired the assets of Gibson, a privately held premium equipment distributor, for a total purchase price of $10.6 million. The acquisition included $1.2 million of floorplan-eligible new equipment inventory and the Company assumed $4.4 million of equipment financing at closing, yielding an enterprise value at close of approximately $13.8 million. Gibson expands our geographic footprint and presence into Ohio and broadens our construction equipment product portfolio, OEM relationships, and service offerings.
Baron
On September 1, 2021, the Company acquired Baron, a privately held dock & door company, for a total purchase price of $1.3 million. Baron specializes in commercial overhead loading dock doors and equipment, hydraulic lifts, and vertical reciprocating conveyors. The acquisition is another step in the Company’s strategy to build out a full-service warehousing and logistics offering within the Material Handling segment.
ScottTech
On March 1, 2021, the Company acquired the assets of ScottTech, a material handling, warehouse control software, and turn-key warehouse system integration services provider, for a total purchase price of $2.4 million. The acquisition has natural synergies with the Company’s prior year acquisition of PeakLogix and further bolsters our capabilities with customers in the warehousing and logistics, distribution and e-commerce end-markets.
Financial Statement Components
Our revenues and related costs are primarily derived from sale or rental of equipment and related activities, and consist of:
New Equipment Sales. We sell new heavy construction and material handling equipment and are a leading regional distributor for over 30 nationally recognized equipment manufacturers, including Hyster, Yale, Volvo, and JCB. Our new equipment sales operation is a primary source of new customers for the rental, parts and services business. The majority of our new equipment sales is predicated on exclusive distribution agreements we have with best-in-class OEMs. The sale of new equipment to customers, while profitable, acts as a means of generating equipment field population and activity for our higher-margin aftermarket revenue streams, specifically service and parts. We also sell tangential products related to our material handling equipment offerings and, with the acquisition of PeakLogix and ScottTech, we provide warehouse design, automated equipment installation, system integration and warehouse controls software.
Used Equipment Sales. We sell used equipment which is typically equipment that has been taken in on trade from a customer that is purchasing new equipment, equipment coming off a third-party lease arrangement where we purchase the equipment from the finance company, or used equipment that is sourced for our customers in the open market by our used equipment specialists. In the case of our Material Handling segment, rental fleet that has been designated for disposal is transferred to our used inventory which is then sold to an end customer. Used equipment sales made in our territories, like new equipment sales, generate parts and services business for the Company, as well.
Parts Sales. We sell replacement parts to customers and supply parts to our own rental fleet. Our in-house parts inventory is extensive such that we are able to provide timely service support to our customers. The majority of our parts inventory is made up of OEM replacement parts for those OEM’s with which we have exclusive dealership agreements to sell new equipment.
Service Support. We provide maintenance and repair services for customer-owned equipment and we maintain our own rental fleet. In addition to repair and maintenance on an as needed or scheduled basis, we provide ongoing preventative maintenance services and warranty repairs for our customers. We have committed substantial resources to training our technical service employees and have a full-scale service infrastructure that we believe differentiates us from our competitors. Approximately half of our employees are skilled service technicians. Training, paid time off, and other non-billable costs of maintaining our expert technicians flow through this department in addition to the direct customer-billable labor.
Equipment Rentals. We rent heavy construction, aerial, material handling, and compact equipment to our customers on a daily, weekly and monthly basis. Our rental fleet, which is well-maintained has an original acquisition cost (which we define as the cost originally paid to manufacturers plus any capitalized costs) of $447.2 million as of March 31, 2022. The original acquisition cost of our rental fleet excludes the $10.7 million of assets associated with our guaranteed purchase obligations, which are assets that are not
29
in our day-to-day operational control. In addition to being a core business, our rental business also creates cross-selling opportunities for us in our sales and product support activities.
Rental Equipment Sales. We also sell rental equipment from our rental fleet. Customers often have options to purchase equipment after or before rental agreements have matured. Rental equipment sales, like new and used equipment sales, generate customer-based equipment field population within our territories and ultimately yield high-margin parts and services revenue for us.
General and Administrative Expenses. These costs are comprised of three main components: personnel costs, operational costs, and occupancy costs. Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation, and employee benefits, including medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, insurance, information technology, office and shop supplies, general corporate costs, depreciation on non-sales and rental related assets, and intangible amortization. Occupancy costs are comprised of all expenses related to our facility infrastructure, including rent, utilities, property taxes, and building insurance.
Other Income (Expense). This section of the income statement is mostly comprised of interest expense and other miscellaneous items that result in income or expense. Interest expense is mostly driven by our OEM floorplan financing arrangements, a working capital line of credit, and our second lien secured notes. Also included in this section of the financials are non-recurring costs, in particular expenses associated with the extinguishment of debt.
30
Results of Operations (amounts in millions unless otherwise noted)
Three months ended March 31, 2022 compared to three months ended March 31, 2021
Consolidated Results
|
|
Three Months Ended |
|
|
Increase (Decrease) |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
|||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New and used equipment sales |
|
$ |
151.6 |
|
|
$ |
123.8 |
|
|
$ |
27.8 |
|
|
|
22.5 |
% |
Parts sales |
|
|
53.4 |
|
|
|
41.4 |
|
|
|
12.0 |
|
|
|
29.0 |
% |
Service revenue |
|
|
48.2 |
|
|
|
38.7 |
|
|
|
9.5 |
|
|
|
24.5 |
% |
Rental revenue |
|
|
37.7 |
|
|
|
33.1 |
|
|
|
4.6 |
|
|
|
13.9 |
% |
Rental equipment sales |
|
|
40.8 |
|
|
|
31.8 |
|
|
|
9.0 |
|
|
|
28.3 |
% |
Net revenues |
|
$ |
331.7 |
|
|
$ |
268.8 |
|
|
$ |
62.9 |
|
|
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New and used equipment sales |
|
$ |
123.9 |
|
|
$ |
106.5 |
|
|
$ |
17.4 |
|
|
|
16.3 |
% |
Parts sales |
|
|
36.7 |
|
|
|
28.7 |
|
|
|
8.0 |
|
|
|
27.9 |
% |
Service revenue |
|
|
20.1 |
|
|
|
14.5 |
|
|
|
5.6 |
|
|
|
38.6 |
% |
Rental revenue |
|
|
5.4 |
|
|
|
5.5 |
|
|
|
(0.1 |
) |
|
|
(1.8 |
)% |
Rental depreciation |
|
|
20.3 |
|
|
|
19.4 |
|
|
|
0.9 |
|
|
|
4.6 |
% |
Rental equipment sales |
|
|
33.9 |
|
|
|
26.9 |
|
|
|
7.0 |
|
|
|
26.0 |
% |
Cost of revenues |
|
$ |
240.3 |
|
|
$ |
201.5 |
|
|
$ |
38.8 |
|
|
|
19.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
$ |
91.4 |
|
|
$ |
67.3 |
|
|
$ |
24.1 |
|
|
|
35.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
$ |
82.9 |
|
|
$ |
64.8 |
|
|
$ |
18.1 |
|
|
|
27.9 |
% |
Depreciation and amortization expense |
|
|
3.9 |
|
|
|
2.0 |
|
|
|
1.9 |
|
|
|
95.0 |
% |
Total general and administrative expenses |
|
$ |
86.8 |
|
|
$ |
66.8 |
|
|
$ |
20.0 |
|
|
|
29.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from operations |
|
$ |
4.6 |
|
|
$ |
0.5 |
|
|
$ |
4.1 |
|
|
|
820.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, floor plan payable – new equipment |
|
$ |
(0.3 |
) |
|
$ |
(0.5 |
) |
|
$ |
0.2 |
|
|
|
(40.0 |
)% |
Interest expense – other |
|
|
(5.8 |
) |
|
|
(5.3 |
) |
|
|
(0.5 |
) |
|
|
9.4 |
% |
Other income |
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
200.0 |
% |
Total other expense |
|
$ |
(5.8 |
) |
|
$ |
(5.7 |
) |
|
$ |
(0.1 |
) |
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before taxes |
|
$ |
(1.2 |
) |
|
$ |
(5.2 |
) |
|
$ |
4.0 |
|
|
|
(76.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax provision |
|
|
— |
|
|
|
0.5 |
|
|
|
(0.5 |
) |
|
|
(100.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(1.2 |
) |
|
$ |
(5.7 |
) |
|
$ |
4.5 |
|
|
|
(78.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred stock dividends |
|
|
(0.8 |
) |
|
|
— |
|
|
|
(0.8 |
) |
|
100% |
|
|
Net loss available to common shareholders |
|
$ |
(2.0 |
) |
|
$ |
(5.7 |
) |
|
$ |
3.7 |
|
|
|
(64.9 |
)% |
31
|
|
Percent of Revenue |
|
|||||
Consolidated |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Revenues: |
|
|
|
|
|
|
||
New and used equipment sales |
|
|
45.7 |
% |
|
|
46.1 |
% |
Parts sales |
|
|
16.1 |
% |
|
|
15.4 |
% |
Service revenue |
|
|
14.5 |
% |
|
|
14.4 |
% |
Rental revenue |
|
|
11.4 |
% |
|
|
12.3 |
% |
Rental equipment sales |
|
|
12.3 |
% |
|
|
11.8 |
% |
Net revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
||
Cost of revenues: |
|
|
|
|
|
|
||
New and used equipment sales |
|
|
37.3 |
% |
|
|
39.6 |
% |
Parts sales |
|
|
11.1 |
% |
|
|
10.7 |
% |
Service revenue |
|
|
6.1 |
% |
|
|
5.4 |
% |
Rental revenue |
|
|
1.6 |
% |
|
|
2.1 |
% |
Rental depreciation |
|
|
6.1 |
% |
|
|
7.2 |
% |
Rental equipment sales |
|
|
10.2 |
% |
|
|
10.0 |
% |
Cost of revenues |
|
|
72.4 |
% |
|
|
75.0 |
% |
|
|
|
|
|
|
|
||
Gross profit |
|
|
27.6 |
% |
|
|
25.0 |
% |
Revenues: Consolidated revenues increased by $62.9 million, or 23.4%, to $331.7 million for the three months ended March 31, 2022 as compared to the same period last year. The primary drivers of this period over period increase were the favorable full period impact from acquisitions, and the favorable business climate existing in the quarter. If excluding the effects of acquisitions by observing the consolidated results on an organic basis, thereby including only the results of the entities that appear fully in both periods, new and used equipment sales increased 9.1% over the same period last year as market demand for equipment remains high, but lead time delays within the supply chain have limited our ability for even greater new equipment throughput, resulting in large sales order backlogs. Organic parts sales and service revenue increased by 16.1% and 12.3%, respectively, over the same period last year. Similarly, rental revenue exhibited growth on an organic basis of 12.8% period over period as physical utilization trends improve and rental rates have increased amidst industry-wide delays in new equipment deliveries. Lastly, and in following with the pattern from last year, rental equipment sales increased organically by 18.5% as we continue to actively manage our fleet mix, and our rent-to-sell model enables us to meet customer demand for lightly used equipment while lead times for new equipment are extended amid the global supply chain issues of many manufacturers. Importantly, despite macro-level supply chain issues, our robust parts inventory and ongoing parts availability from key OEMs has allowed us to continue to service customers and maintain profitability in our high margin product support departments.
Gross profit (GP):
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
Consolidated |
|
GP% |
|
|
GP% |
|
|
GP% |
|
|||
New and used equipment sales |
|
|
18.3 |
% |
|
|
14.0 |
% |
|
|
4.3 |
% |
Parts sales |
|
|
31.3 |
% |
|
|
30.7 |
% |
|
|
0.6 |
% |
Service revenue |
|
|
58.3 |
% |
|
|
62.5 |
% |
|
|
(4.2 |
)% |
Rental revenue |
|
|
31.8 |
% |
|
|
24.8 |
% |
|
|
7.0 |
% |
Rental equipment sales |
|
|
16.9 |
% |
|
|
15.4 |
% |
|
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Consolidated gross profit |
|
|
27.6 |
% |
|
|
25.0 |
% |
|
|
2.6 |
% |
The consolidated gross profit for the three months ended March 31, 2022 was 27.6%, a 2.6% increase from the 25.0% for the same period in 2021. New and used equipment sales, as well as rental equipment sales, margins improved in the first quarter compared to the same time last year as retail pricing levels improved and our Material Handling segment’s design and build business, which realizes higher gross margins than traditional lift truck sales, was a larger portion of equipment sales for the quarter versus the same period last year. We realized an increase in rental revenue gross margin in the first quarter of 2022, largely as a result improved physical utilization of the rental fleet and a favorable rental rate environment. Additionally, parts sales gross margins improved modestly while service gross margins reduced, in part to tightened warranty and fleet reimbursement levels from OEMs, and partially due to a year-over-year labor cost allocation change in our Material Handling segment, described further in our segment-based discussion and analysis.
32
General and Administrative expenses: Consolidated general and administrative (G&A) expenses increased by $20.0 million to $86.8 million for the three months ended March 31, 2022 compared to the same period last year. This increase was mainly driven by the full period impact from our 2021 acquisitions as well as an increases in operating input costs, such as fuel and technician supplies, and an increase in certain sales-based expenses such as sales commissions and marketing expenditures. Further, employment costs such as wages and benefits increased due to the inflationary environment and a rise in self-insured healthcare costs.
Other (expense) income: Consolidated other expense for the three months ended March 31, 2022 was $5.8 million compared to $5.7 million for the same period in 2021.
Provision for income taxes: The Company recorded an income tax provision of $0.0 million and $0.5 million for the three months ended March 31, 2022 and March 31, 2021, respectively.
Material Handling Results:
|
|
Three Months Ended |
|
|
Increase (Decrease) |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
|||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New and used equipment sales |
|
$ |
66.9 |
|
|
$ |
57.4 |
|
|
$ |
9.5 |
|
|
|
16.6 |
% |
Parts sales |
|
|
19.2 |
|
|
|
15.2 |
|
|
|
4.0 |
|
|
|
26.3 |
% |
Service revenue |
|
|
26.7 |
|
|
|
22.6 |
|
|
|
4.1 |
|
|
|
18.1 |
% |
Rental revenue |
|
|
12.8 |
|
|
|
11.1 |
|
|
|
1.7 |
|
|
|
15.3 |
% |
Rental equipment sales |
|
|
— |
|
|
|
0.5 |
|
|
|
(0.5 |
) |
|
|
(100.0 |
)% |
Net revenues |
|
$ |
125.6 |
|
|
$ |
106.8 |
|
|
$ |
18.8 |
|
|
|
17.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New and used equipment sales |
|
$ |
52.5 |
|
|
$ |
47.0 |
|
|
$ |
5.5 |
|
|
|
11.7 |
% |
Parts sales |
|
|
11.9 |
|
|
|
9.9 |
|
|
|
2.0 |
|
|
|
20.2 |
% |
Service revenue |
|
|
10.7 |
|
|
|
8.1 |
|
|
|
2.6 |
|
|
|
32.1 |
% |
Rental revenue |
|
|
1.4 |
|
|
|
1.7 |
|
|
|
(0.3 |
) |
|
|
(17.6 |
)% |
Rental depreciation |
|
|
3.8 |
|
|
|
3.6 |
|
|
|
0.2 |
|
|
|
5.6 |
% |
Rental equipment sales |
|
|
— |
|
|
|
0.4 |
|
|
|
(0.4 |
) |
|
|
(100.0 |
)% |
Cost of revenues |
|
$ |
80.3 |
|
|
$ |
70.7 |
|
|
$ |
9.6 |
|
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
$ |
45.3 |
|
|
$ |
36.1 |
|
|
$ |
9.2 |
|
|
|
25.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
$ |
38.6 |
|
|
$ |
32.4 |
|
|
$ |
6.2 |
|
|
|
19.1 |
% |
Depreciation and amortization expense |
|
|
1.5 |
|
|
|
1.0 |
|
|
|
0.5 |
|
|
|
50.0 |
% |
Total general and administrative expenses |
|
$ |
40.1 |
|
|
$ |
33.4 |
|
|
$ |
6.7 |
|
|
|
20.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from operations |
|
$ |
5.2 |
|
|
$ |
2.7 |
|
|
$ |
2.5 |
|
|
|
92.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, floor plan payable – new equipment |
|
$ |
(0.1 |
) |
|
$ |
(0.2 |
) |
|
$ |
0.1 |
|
|
|
(50.0 |
)% |
Interest expense – other |
|
|
(2.2 |
) |
|
|
(2.0 |
) |
|
|
(0.2 |
) |
|
|
10.0 |
% |
Other income |
|
|
1.1 |
|
|
|
0.8 |
|
|
|
0.3 |
|
|
|
37.5 |
% |
Total other expense |
|
$ |
(1.2 |
) |
|
$ |
(1.4 |
) |
|
$ |
0.2 |
|
|
|
(14.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
4.0 |
|
|
$ |
1.3 |
|
|
$ |
2.7 |
|
|
|
207.7 |
% |
33
|
|
Percent of Revenue |
|
|||||
Material Handling |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Revenues: |
|
|
|
|
|
|
||
New and used equipment sales |
|
|
53.2 |
% |
|
|
53.7 |
% |
Parts sales |
|
|
15.3 |
% |
|
|
14.2 |
% |
Service revenue |
|
|
21.3 |
% |
|
|
21.2 |
% |
Rental revenue |
|
|
10.2 |
% |
|
|
10.4 |
% |
Rental equipment sales |
|
|
— |
|
|
|
0.5 |
% |
Net revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
||
Cost of revenues: |
|
|
|
|
|
|
||
New and used equipment sales |
|
|
41.8 |
% |
|
|
44.0 |
% |
Parts sales |
|
|
9.5 |
% |
|
|
9.3 |
% |
Service revenue |
|
|
8.5 |
% |
|
|
7.6 |
% |
Rental revenue |
|
|
1.1 |
% |
|
|
1.6 |
% |
Rental depreciation |
|
|
3.0 |
% |
|
|
3.4 |
% |
Rental equipment sales |
|
|
— |
|
|
|
0.4 |
% |
Cost of revenues |
|
|
63.9 |
% |
|
|
66.2 |
% |
|
|
|
|
|
|
|
||
Gross profit |
|
|
36.1 |
% |
|
|
33.8 |
% |
Revenues: Material Handling segment revenues increased by $18.8 million to $125.6 million for the three months ended March 31, 2022 as compared to the same period last year. Overall, organic revenue streams were up 16.2%, with nearly half the growth coming from PeakLogix’s design and build project revenues, inclusive of revenues of ScottTech, which was acquired in the first quarter of 2021. Including the aforementioned results of PeakLogix, and despite supply chain delays, new and used equipment sales increased 15.5% on an organic basis. Aftermarket parts and service revenues increased 18.8% organically when comparing to the same period last year. Rental revenue increased 15.3% on an organic basis from the same period last year as a result of improved fleet utilization and an increased rental rate environment.
Gross profit (GP):
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|||
New and used equipment sales |
|
|
21.5 |
% |
|
|
18.1 |
% |
|
|
3.4 |
% |
Parts sales |
|
|
38.0 |
% |
|
|
34.9 |
% |
|
|
3.1 |
% |
Service revenue |
|
|
59.9 |
% |
|
|
64.2 |
% |
|
|
(4.3 |
)% |
Rental revenue |
|
|
59.4 |
% |
|
|
52.3 |
% |
|
|
7.1 |
% |
Rental equipment sales |
|
NA |
|
|
|
20.0 |
% |
|
NA |
|
||
|
|
|
|
|
|
|
|
|
|
|||
Segment gross profit |
|
|
36.1 |
% |
|
|
33.8 |
% |
|
|
2.3 |
% |
Material Handling gross profit for the three months ended March 31, 2022 increased 2.3% to 36.1% compared to the same period in 2021. We realized improved new and used equipment gross margin in the first quarter of 2022 when compared to the same period in 2021 as retail pricing for equipment has strengthened amid increased demand for equipment and a dearth of new supply. Increased equipment margins for the three months ended March 31, 2022 are also attributable to PeakLogix and ScottTech’s influence, as their design and build projects realize higher margins than traditional lift truck sales. We also realized an increase in rental revenue gross margin in the first quarter of 2022 as cost of revenues decreased and rental rates for material handling equipment continued to strengthen amid increased demand for equipment and a dearth of new supply. Service revenue gross profit margins decreased by 4.3% while the parts sales gross profit margins increased by 3.1% in the first quarter of 2022 compared to the same period in 2021. The service margin declines in the Material Handling segment can be primarily attributed to the historic allocation of technician labor cost in our New York City-based business to general and administrative expense versus cost of labor while they operated on their legacy accounting system. On June 1, 2021, the business unit was fully integrated into our ERP platform and cost of technician labor is properly allocated for this quarter and will continue to be going forward.
General and administrative expenses: Material Handling general and administrative (G&A) expenses increased by $6.7 million to $40.1 million for the three months ended March 31, 2022 as compared to the same period last year. This increase was mainly driven by the full period impact from the 2021 acquisition of ScottTech, as well as an increase in operating input costs, such as vehicle fuel, and an increase in personnel costs such as wages, incentives, and employer-sponsored benefits.
34
Other (expense) income: Material Handling other expense decreased by $0.2 to $1.2 million for the three months ended March 31, 2022 as compared to the same period last year.
Construction Equipment Results
|
|
Three Months Ended |
|
|
Increase (Decrease) |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
|||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New and used equipment sales |
|
$ |
84.7 |
|
|
$ |
66.4 |
|
|
$ |
18.3 |
|
|
|
27.6 |
% |
Parts sales |
|
|
34.2 |
|
|
|
26.2 |
|
|
|
8.0 |
|
|
|
30.5 |
% |
Service revenue |
|
|
21.5 |
|
|
|
16.1 |
|
|
|
5.4 |
|
|
|
33.5 |
% |
Rental revenue |
|
|
24.9 |
|
|
|
22.0 |
|
|
|
2.9 |
|
|
|
13.2 |
% |
Rental equipment sales |
|
|
40.8 |
|
|
|
31.3 |
|
|
|
9.5 |
|
|
|
30.4 |
% |
Net revenues |
|
$ |
206.1 |
|
|
$ |
162.0 |
|
|
$ |
44.1 |
|
|
|
27.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New and used equipment sales |
|
$ |
71.4 |
|
|
$ |
59.5 |
|
|
$ |
11.9 |
|
|
|
20.0 |
% |
Parts sales |
|
|
24.8 |
|
|
|
18.8 |
|
|
|
6.0 |
|
|
|
31.9 |
% |
Service revenue |
|
|
9.4 |
|
|
|
6.4 |
|
|
|
3.0 |
|
|
|
46.9 |
% |
Rental revenue |
|
|
4.0 |
|
|
|
3.8 |
|
|
|
0.2 |
|
|
|
5.3 |
% |
Rental depreciation |
|
|
16.5 |
|
|
|
15.8 |
|
|
|
0.7 |
|
|
|
4.4 |
% |
Rental equipment sales |
|
|
33.9 |
|
|
|
26.5 |
|
|
|
7.4 |
|
|
|
27.9 |
% |
Cost of revenues |
|
$ |
160.0 |
|
|
$ |
130.8 |
|
|
$ |
29.2 |
|
|
|
22.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
$ |
46.1 |
|
|
$ |
31.2 |
|
|
$ |
14.9 |
|
|
|
47.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
$ |
41.5 |
|
|
$ |
29.7 |
|
|
$ |
11.8 |
|
|
|
39.7 |
% |
Depreciation and amortization expense |
|
|
2.4 |
|
|
|
1.0 |
|
|
|
1.4 |
|
|
|
140.0 |
% |
Total general and administrative expenses |
|
$ |
43.9 |
|
|
$ |
30.7 |
|
|
$ |
13.2 |
|
|
|
43.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from operations |
|
$ |
2.2 |
|
|
$ |
0.5 |
|
|
$ |
1.7 |
|
|
|
340.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, floor plan payable – new equipment |
|
$ |
(0.2 |
) |
|
$ |
(0.3 |
) |
|
$ |
0.1 |
|
|
|
(33.3 |
)% |
Interest expense – other |
|
|
(3.3 |
) |
|
|
(2.8 |
) |
|
|
(0.5 |
) |
|
|
17.9 |
% |
Other expense |
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
14.3 |
% |
Total other expense |
|
$ |
(4.3 |
) |
|
$ |
(3.8 |
) |
|
$ |
(0.5 |
) |
|
|
13.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(2.1 |
) |
|
$ |
(3.3 |
) |
|
$ |
1.2 |
|
|
|
(36.4 |
)% |
35
|
|
Percent of Revenue |
|
|||||
Construction Equipment |
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Revenues: |
|
|
|
|
|
|
||
New and used equipment sales |
|
|
41.1 |
% |
|
|
41.0 |
% |
Parts sales |
|
|
16.6 |
% |
|
|
16.2 |
% |
Service revenue |
|
|
10.4 |
% |
|
|
9.9 |
% |
Rental revenue |
|
|
12.1 |
% |
|
|
13.6 |
% |
Rental equipment sales |
|
|
19.8 |
% |
|
|
19.3 |
% |
Net revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
||
Cost of revenues: |
|
|
|
|
|
|
||
New and used equipment sales |
|
|
34.6 |
% |
|
|
36.7 |
% |
Parts sales |
|
|
12.0 |
% |
|
|
11.6 |
% |
Service revenue |
|
|
4.6 |
% |
|
|
3.9 |
% |
Rental revenue |
|
|
1.9 |
% |
|
|
2.3 |
% |
Rental depreciation and amortization |
|
|
8.0 |
% |
|
|
9.8 |
% |
Rental equipment sales |
|
|
16.5 |
% |
|
|
16.4 |
% |
Cost of revenues |
|
|
77.6 |
% |
|
|
80.7 |
% |
|
|
|
|
|
|
|
||
Gross profit |
|
|
22.4 |
% |
|
|
19.3 |
% |
Revenues: Construction Equipment segment revenues increased by $44.1 million to $206.1 million for the three months ended March 31, 2022 as compared to the same period last year. This increase was mainly attributable to the full period results from the Ginop, Ambrose, Midwest Mine, and Gibson acquisitions that occurred throughout the second half of 2021. On an organic basis, new and used equipment sales increased 3.5%, and parts and service revenues increased 10.2% when compared to the same period last year primarily on the basis of a higher technician headcount. Rental revenue has increased 11.5% on an organic basis, and rental equipment sales increased 20.3% when compared to the same period a year ago on an organic basis. Our rental department experienced improvements in both physical utilization and rental rates from the same time a year ago, along with an increase in the demand for customers seeking the purchase of lightly used equipment amid OEM production shortages for new equipment.
Gross profit (GP):
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|||
New and used equipment sales |
|
|
15.7 |
% |
|
|
10.4 |
% |
|
|
5.3 |
% |
Parts sales |
|
|
27.5 |
% |
|
|
28.2 |
% |
|
|
(0.7 |
)% |
Service revenue |
|
|
56.3 |
% |
|
|
60.2 |
% |
|
|
(3.9 |
)% |
Rental revenue |
|
|
17.7 |
% |
|
|
10.9 |
% |
|
|
6.8 |
% |
Rental equipment sales |
|
|
16.9 |
% |
|
|
15.3 |
% |
|
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Segment gross profit |
|
|
22.4 |
% |
|
|
19.3 |
% |
|
|
3.1 |
% |
Construction Equipment gross profit increased by 3.1% to 22.4% in the three months ended March 31, 2022 from 19.3% in the same period in 2021. New and used equipment sales margins as well as rental equipment sales margins improved compared to the same period in 2021 amidst a supply-constrained marketplace causing retail prices to rise. Parts sales margins were down 0.7% in the first quarter of 2022 compared to the same period in 2021 but remain in line with expectations. Service revenue margins were down 3.9% in the first quarter of 2022 compared to the same period in 2021, in part due to a lower relative service margin coming from recently acquired companies, but also reflective of the impact of lower OEM reimbursement margins on warranty work in the quarter. Rental revenue gross margins improved amid strengthening physical utilization and a positive rental rate environment.
36
General and Administrative expenses: Construction Equipment general and administrative (G&A) expenses increased by $13.2 million to $43.9 million for the three months ended March 31, 2022 as compared to the same period in 2021. The quarter over quarter increase was mainly attributable to the full period G&A impact as a result of the construction segment acquisitions of Ginop, Ambrose, Midwest Mine and Gibson throughout the second half of 2021. Beyond the influence of the acquisitions, we experienced increases in operating input costs, such as fuel and technician supplies, and an increase in certain sales-based expenses such as sales commissions and marketing expenditures alongside an increase in personnel costs such as wages, incentives, and employer-sponsored benefits.
Other Income (expense): Construction Equipment other expense increased by $0.5 million to $4.3 million for the three months ended March 31, 2022 as compared to the same period in 2021. The quarter over quarter increase was mainly due to the interest expense respective to the 2021 acquisitions, as assets were financed through our line of credit and floorplan financing facilities.
Liquidity and Capital Resources
Three months ended March 31, 2022 compared with three months ended March 31, 2021 Cash Flows
Cash Flow from Operating Activities. Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. For the three months ended March 31, 2022, operating activities resulted in net cash used in operations of $6.7 million. Our reported net loss of $1.2 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, inventory obsolescence and bad debt reserves, and share based compensation, provided net cash inflows of $19.2 million. Changes in working capital included $82.6 million of net new inventory purchased, and a $7.8 million increase in accounts receivable. Cash flows from operating activities were favorably impacted by $40.8 million due to proceeds from the sale of rental equipment, $21.7 million in net inflows related to manufacturer floor plans, $1.8 million favorable change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities, and a $0.2 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities.
For the three months ended March 31, 2021, operating activities resulted in net cash provided by operations of $0.6 million. Our reported net loss of $5.7 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, inventory obsolescence and bad debt reserves, and share based compensation, provided net cash inflows of $13.0 million. Changes in working capital included a $33.4 million increase in inventories, a $5.9 million increase in accounts receivable, a $3.8 million decrease in accounts payable, accrued expenses, customer deposits, and other current liabilities, and $2.1 million in net payments on manufacturer floor plans. Cash flows from operating activities were favorably impacted by a $31.8 million change in proceeds from the sale of rental equipment, and $1.0 million change in prepaid expense and other assets and leases, deferred revenue, and other liabilities.
Cash Flow from Investing Activities. For the three months ended March 31, 2022, our cash used in investing activities was $18.6 million. This was mainly due to $17.4 million purchases of rental equipment, non-rental property and equipment, and equipment contracted under guaranteed purchase obligations offset by proceeds from the sale of assets and $1.2 million use of cash for an adjustment to the recent Ambrose acquisition purchase price.
For the three months ended March 31, 2021, our cash used in investing activities was $9.8 million. This was mainly due to $7.9 million purchases of rental equipment, non-rental property and equipment, and equipment contracted under guaranteed purchase obligations offset by proceeds from the sale of assets and $1.9 million use of cash for the ScottTech acquisition.
Cash Flow from Financing Activities. For the three months ended March 31, 2022, cash provided by financing activities was $24.6 million. The favorable impact was mainly due to $15.4 million of net proceeds under our lines of credits and net proceeds of $10.7 million related to floor plans with an unaffiliated source (i.e. a non-vendor). This was partially offset by $0.7 million payments on finance lease obligations and $0.8 million related to preferred dividend payments.
For the three months ended March 31, 2021, cash provided by financing activities was $8.6 million. The favorable impact was mainly due to $11.8 million of net proceeds under our lines of credits. This was partially offset by $1.1 million payments related to floor plans with an unaffiliated source (i.e. a non-vendor) and $2.1 million payments on long-term debt and finance lease obligations.
Sources of Liquidity
The Company reported $1.6 million in cash for the three months ended March 31, 2022.
Senior Secured Second Lien Notes
On April 1, 2021, the Company completed a private offering of $315.0 million of its 5.625% Senior Secured Second Lien Notes due 2026 (the “Notes”). The Notes were offered and sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement among the Company, the guarantors party thereto and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed by the guarantors on a second lien, senior secured basis. The Notes were issued pursuant to an indenture dated April 1, 2021 among the Company, the guarantors and
37
Wilmington Trust, National Association, as trustee and as collateral agent. The Notes mature on April 15, 2026. Interest on the Notes is payable in cash on April 15 and October 15 of each year, beginning on October 15, 2021. As of March 31, 2022, outstanding borrowings under the Notes were $310.2 million, which included $4.8 million deferred financing costs and original issue discounts. The effective interest rate on the Notes, taking into account the original issue discount, is 5.93%.
Line of Credit and First Lien Floor Plan Facility
Effective April 1, 2021, the Company amended and restated its credit facility with its first lien lender by entering into the Sixth Amended and Restated ABL First Lien Credit Agreement (“Amended and Restated Credit Agreement” and the revolving line of credit facility thereunder, the “ABL Facility”) by and among Alta Equipment Group Inc. and the other credit parties named therein, the lenders named therein, JP Morgan Chase Bank, N.A., as Administrative Agent, and the syndication agents and documentation agent named therein. The ABL Facility are supported by eligible accounts receivable, parts, and otherwise unencumbered new and used equipment inventory and rental equipment. The ABL Facility, which is collateralized by substantially all assets of the Company, has a maximum borrowing capacity of $350.0 million, subject to the borrowing base limitation in the Amended and Restated Credit Agreement, and interest cost is the SOFR plus an applicable margin on the CB Floating Rate, depending on borrowing levels. The ABL Facility matures on the earlier of April 1, 2026 or December 1, 2025 if any of the Notes remain outstanding as of December 1, 2025. As of March 31, 2022, the Company had an outstanding ABL Facility balance of $116.1 million, excluding unamortized debt issuance costs.
Effective April 1, 2021, the Company amended and restated its floor plan facility with its first lien lender by entering into the Sixth Amended and Restated Floor Plan First Lien Credit Agreement (“Floor Plan Credit Agreement”) by and among Alta Equipment Group Inc. and the other credit parties named therein, and the lender JP Morgan Chase Bank, N.A., as Administrative Agent. The Floor Plan Credit Agreement is an asset-based revolving loan facility related to specific equipment that provides for borrowings of up to the lesser of $50 million, as a result of the December 20, 2021 First Amendment to the Amended and Restated Floor Plan Credit Agreement, or the borrowing base. The Floor Plan Facility has an expiration date of the earlier of (a) April 1, 2026, or (b) December 1, 2025 if the Notes remain outstanding on December 1, 2025. The interest cost for the First Lien Floor Plan Facility is SOFR plus an applicable margin. The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company. As of March 31, 2022, the Company had an outstanding balance on their First Lien Floor Plan Facility of $41.2 million, excluding unamortized debt issuance costs.
Original Equipment Manufacturer (“OEM”) Captive Lenders and Suppliers’ Floor Plans
OEM captive lender and suppliers’ floor plans payable are financing arrangements for new and used inventory and rental equipment. We have such arrangements with several OEM captive lenders and suppliers each with borrowing capacities ranging from $0.1 million to $102.0 million. Certain floor plans provide for a five to twelve-month interest only or deferred payment period. In addition, these floor plan agreements provide for interest or principal free terms at the supplier’s discretion. The Company routinely sells equipment that is financed under OEM captive lender floor plans prior to the original maturity date of the financing agreement. The related OEM captive lender floor plans payable is then due and payable at the time the equipment being financed is sold. As of March 31, 2022 and December 31, 2021, the Company had an outstanding balance on the OEM Floor Plan Facilities of $145.9 million and $124.3 million, respectively.
Maximum borrowings under the floor plans and the revolving line of credit are limited to $750 million. The total amount outstanding as of March 31, 2022 and December 31, 2021 was $303.2 million and $255.6 million, exclusive of debt issuance and deferred financings costs of $2.3 million and $2.4 million, respectively.
As of March 31, 2022, we had $342.3 million of available borrowings under the revolving line of credit and floor plans.
Cash Requirements Related to Operations
Our principal sources of liquidity have been from cash provided by our service-related operations and the sales of new, used and rental fleet equipment along with rentals of such equipment, proceeds from the issuance of debt, and borrowings available under our lines of credit and floor plans. Our principal uses of cash have been to fund operating activities and working capital (including new and used equipment inventories), purchases of rental fleet equipment and property and equipment, fund payments due under lines of credit and floor plans payable, fund acquisitions, meet debt service requirements and funding the Preferred Stock dividend. In the future, we may pursue additional strategic acquisitions and seek to open new start-up locations. We anticipate that the uses described above encompass the principal demands on our cash and availability under our lines of credit in the future.
The amount of our future capital expenditures will depend on a number of factors including general economic conditions and growth prospects. Our gross rental fleet capital expenditures for the period ended March 31, 2022 was approximately $44.6 million, including $29.5 million of transfers from new and used inventory to rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of approximately $40.8 million for the period ended March 31, 2022 as our business model is to sell lightly used inventory to customers from our rental fleet so as to increase field population in our geographies. In response to changing economic conditions, we have the flexibility to modify our capital expenditures, especially as it relates to rental fleet.
To service our debt, we will require a significant amount of cash. Our ability to pay interest and principal on our indebtedness, will depend upon our future operating performance and the availability of borrowings under the lines of credit and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current
38
level of operations and given the current state of the capital markets, we believe our cash flow from operations, available cash, and available borrowings under the lines of credit will be adequate to meet our future liquidity needs for the foreseeable future.
We cannot provide absolute assurance that our future cash flow from operating activities will be sufficient to meet our long-term obligations and commitments. If we are unable to generate sufficient cash flow from operating activities in the future to service our indebtedness and to meet our other commitments, we will be required to adopt one or more alternatives, such as refinancing or restructuring our indebtedness, selling material assets or operations, or seeking to raise additional debt or equity capital. Given current economic and market conditions, including the volatility in the global capital markets, we cannot assure investors that any of these actions could be affected on a timely basis or on satisfactory terms or at all, or that these actions would enable us to continue to satisfy our capital requirements. In addition, our existing debt agreements, as well as any future debt agreements, contain or may contain restrictive covenants, which may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt.
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company. As of March 31, 2022, there was $3.4 million in outstanding letters of credits issued in the normal course of business.
The Company was also party to certain contracts in which it guarantees the performance of lease agreements between third-party lessees and various third-party leasing companies. The terms of the guarantees range from two to five years. In the event of a default by a third-party lessee, the Company would be required to pay all, or a portion of the remaining unpaid lease obligation as specified in the contract. The estimated exposure related to these guarantees was $1.6 million and $1.7 million at March 31, 2022 and December 31, 2021, respectively. It is anticipated that the third parties will have the ability to repay the debt without the Company having to honor the guarantee; therefore, no amount has been accrued on the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, respectively.
Critical accounting policies
In the preparation of consolidated financial statements prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures. Our management, on an ongoing basis, reviews these estimates and assumptions. While we believe the estimates and judgments we use in preparing our consolidated financial statements are appropriate, they are subject to future events and uncertainties regarding their outcome and, therefore, actual results may materially differ from these estimates. Refer to Part I, Item 1, Note 2 of the Notes to our Consolidated Financial Statements for disclosures regarding the use of estimates and assumptions.
Additionally, see Note 2 to the audited consolidated financial statements contained in the Company’s 2021 Annual Report on Form 10-K for a summary of our significant accounting policies.
39
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk primarily consists of interest rate risk associated with our variable and fixed rate debt.
Our earnings may be affected by changes in interest rates since interest expense on the ABL Facility and Floor Plan Facilities are currently calculated based upon (a) the prime rate less an applicable margin of 0.75% and (b) the SOFR plus an applicable margin of 2.75%.
At March 31, 2022 and December 31, 2021, we had $116.1 million and $100.7 million, respectively, outstanding borrowings under the ABL Facility. At March 31, 2022 and December 31, 2021, we had $187.1 million and $154.9 million, respectively, outstanding borrowings under the Floor Plan Facilities. As of March 31, 2022, based upon the amount of our variable rate debt outstanding, our annual pre-tax earnings would decrease by approximately $1.9 million for each one percentage point increase in the interest rates applicable to our variable rate debt. The amount of variable rate indebtedness outstanding may fluctuate significantly. See Note 9, Lines of Credit and Floor Plans, in our consolidated financial statements for additional information concerning the terms of our variable rate debt.
We have fixed rate Notes of $315.0 million which are due in 2026. We did not have significant exposure to changing interest rates as of March 31, 2022 on the fixed rate Notes. For additional information concerning the terms of our fixed rate debt, see Note 10, Long-Term Debt.
Item 4. Controls and Procedures.
Management’s Evaluation of Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management utilized the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to conduct an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2022.
Refer to Item 9A. Controls and Procedures in the 2021 Annual Report on Form 10-K for more information on the material weaknesses identified leading to the conclusion that our internal control over financial reporting was not effective as of December 31, 2021. As of March 31, 2022, these material weaknesses have not been remediated. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2022, our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting described below.
Our Chief Executive Officer and Chief Financial Officer have certified that, based on each such officer’s knowledge, the financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects our financial condition, results of operations, and cash flows as of, and for, the periods presented in this Quarterly Report on Form 10-Q. We have begun to develop a remediation plan for these material weaknesses, which is described below.
Remediation
Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include:
40
We believe that these actions will remediate the material weaknesses. The weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. While there can be no assurance that our efforts will be successful, we expect that the remediation of these material weaknesses will be completed prior to the end of fiscal 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
41
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Other than routine legal proceedings incident to our business, there are no material legal proceedings to which we are a party or to which any of our property is subject.
Item 1A. Risk Factors.
We face a number of uncertainties and risks that are difficult to predict and many of which are outside of our control. For a detailed discussion of the risks that affect our business, please refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There have been no material changes from the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibit Number |
|
Description |
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
EX-104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
*Filed herewith.
42
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
ALTA EQUIPMENT GROUP INC. |
|
|
|
|
|
Date: May 10, 2022 |
|
By: |
/s/ Anthony J. Colucci |
|
|
|
Anthony J. Colucci |
|
|
|
Chief Financial Officer (Principal Financial Officer) |
43