Alta (ALTG) Q1 2026 Earnings Call Transcript

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DATE

Thursday, May 7, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Ryan Greenawalt
• Chief Financial Officer — Anthony J. Colucci
• Vice President, Corporate Development and Investor Relations — Jason Dammeyer

TAKEAWAYS

• Total Revenues -- $410.5 million, down 3% year over year, reflecting lower new and used equipment sales primarily due to Q4 pull-forward and harsh winter impacts.
• Adjusted EBITDA -- $28.1 million, below internal expectations, with March EBITDA three times January’s level, signaling intraperiod recovery.
• Material Handling Segment Revenue -- $150.5 million, representing a 4.7% year-over-year decrease due to weakness in new and used lift truck sales.
• Material Handling Bookings -- March was the highest month since June 2023; management indicated improvement is “broad based” across all major end markets and not isolated to automotive.
• Construction Equipment Segment Revenue -- $244.3 million, essentially unchanged year over year, with strong quoting and particular strength in Florida supported by a new Fort Pierce branch.
• Rental Gross Book Value -- Reduced by $59.5 million year over year to $524.6 million, as a result of planned fleet optimization and focus on higher utilization assets.
• Ecoverse Master Distribution Revenue -- $17.1 million, with new equipment margins pressured by tariffs but expected to improve through renegotiated OEM pricing and legal developments.
• Gross Margins -- Increased by 240 basis points quarter over quarter, attributed to tighter supply, less discounting from OEMs, and stabilized market pricing.
• Operating Cash Flow -- $20.8 million, an improvement of $38.3 million versus the prior year, driven by inventory and fleet management, and reduced interest expense.
• Interest Expense -- Down $2.4 million year over year to $19.5 million, attributed to delevering actions in 2025.
• EBITDA Guidance -- Fiscal 2026 adjusted to a range of $167.5 million to $182.5 million, reduced by $5 million at both ends due to Q1 underperformance.
• Free Cash Flow Guidance -- Fiscal 2026 outlook set at $100 million to $110 million, excluding rent-to-sell fleet decisioning, with an expectation of being below a 4.5x leverage target by year-end.
• Rental Fleet Plan -- Targeting sub-$500 million rental fleet size by year-end, with another approximately $30 million in disposals expected subject to rental revenue trends.
• Utilization Targets -- Pursuing high 60% range for dollar-weighted time utilization, and mid- to high-30% range for dollar/financial utilization on the rental fleet.
• Health Care Costs -- Year-over-year operating expense increase included $3 million due to unexpectedly high large health claims, with normalization expected in subsequent quarters as stop-loss limits apply.

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RISKS

• Operating performance in Q1 was negatively affected by a combination of “slower start” than expected, intensified by “unusually harsh winter conditions” that “constrained field service activity, parts demand, and rental utilization.”
• Adjusted EBITDA fell short of internal expectations because of “related to health care costs, weather, a delayed start to the construction season, and outside pull-ahead buying in Q4.”
• Rental fleet repositioning and disposition activity will “continue to introduce some variability” into segment results as the company realigns capacity to match demand.

SUMMARY

Alta Equipment Group (NYSE:ALTG) reported first quarter results marked by a challenging start, driven by lower equipment sales due to Q4 demand pull-forward and severe winter weather disrupting key operations. Management identified early signs of recovery in Material Handling bookings and highlighted a surge in EBITDA momentum within March. Forward strategic priorities emphasized fleet optimization, improved capital discipline, and an updated guidance range reflecting anticipated recovery and back-half weighting for both EBITDA and cash flow targets.

• Anthony J. Colucci said, March was three times January on the EBITDA line. underscoring accelerating operational momentum within the quarter.
• Gross margin expansion of 240 basis points quarter over quarter, driven by improved supply-demand dynamics, supports the premise that industry normalization is “at hand.”
• Company liquidity was maintained with approximately $250 million in available resources, and net leverage remained stable despite the seasonally weak period.
• Material Handling segment’s strong bookings in both March and April suggest anticipated shipment reversion to growth, “in concert with what you heard from Hyster-Yale.”
• Management expects sub-$500 million rental fleet by year-end, with a utilization goal in the “high 60s” for time-weighted metrics and an emphasis on profit-focused capacity planning over fleet scale.

INDUSTRY GLOSSARY

• Dollar-weighted time utilization: Percentage of the rental fleet (by dollar value) on rent over a specified period, reflecting physical utilization adjusted by asset value.
• Dollar or financial utilization: Rental revenue divided by the average acquisition cost of the rental fleet over a defined period, indicating fleet revenue productivity.
• EBITDA bridge: A detailed reconciliation demonstrating adjustment items from reported EBITDA to management’s target or normalized EBITDA, often used for forecasting and guidance.
• OEM: Original Equipment Manufacturer; typically referenced when describing pricing, supply, or negotiating terms with manufacturers of equipment sold or rented by Alta.
• Rent-to-sell decisioning: Operating strategy where rental fleet assets are evaluated for potential sale as part of overall capital and inventory management.

Full Conference Call Transcript

Jason Dammeyer: Thank you, Melissa. Good afternoon, everyone, and thank you for joining us today. A press release detailing Alta Equipment Group Inc.'s first quarter 2026 financial results was issued this afternoon and is posted on our website, along with a presentation designed to assist you in understanding the company's results. On the call with me today are Ryan Greenawalt, our chairman and CEO, and Anthony J. Colucci, our Chief Financial Officer. For today's call, management will first provide a review of our first quarter 2026 financial results. We will begin with some prepared remarks before we open the call for your questions. Please proceed to Slide 2.

Before we get started, I would like to remind everyone that this conference call may contain certain forward-looking statements, including statements about future financial results, our business strategy and financial outlook, achievements of the company, and other nonhistorical statements as described in our press release. These forward-looking statements are subject to both known and unknown risks, uncertainties, and assumptions, including those related to Alta Equipment Group Inc.'s growth, market opportunities, and general economic and business conditions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition and results of operations.

Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in our reports filed with the SEC, including our press release that was issued today. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's press release and can be found on our website at investors.altaequipment.com. I will now turn the call over to Ryan.

Ryan Greenawalt: Thank you, Jason, and good afternoon, everyone. I appreciate you joining us today to review Alta Equipment Group Inc.'s first quarter 2026 results. I will begin with an overview of our performance and the dynamics that shaped the quarter, walk through what we are seeing across our three business segments, and close with our outlook for the balance of the year. Tony will then take you through the financials in more detail. First quarter performance was impacted by a slower start to the year than we had expected. Total revenues were $410.5 million, down 3% year-over-year, and adjusted EBITDA was $28.1 million.

Those results reflect a combination of seasonal dynamics and what we see as two discrete factors rather than any sort of indication of soft underlying demand. First, our fourth quarter equipment sales were exceptionally strong as customers accelerated purchases before year-end to capture the tax benefits of the new legislation. That pull forward was meaningful, and it created a natural headwind to Q1 equipment volumes that was more than anticipated. Second, we experienced unusually harsh winter conditions across our Midwest and Northeast markets early in the quarter. That constrained field service activity, parts demand, and rental utilization in January in particular. Our Material Handling segment generated revenues of $150.5 million, down approximately 4.7% year-over-year.

New and used equipment sales were the primary driver of that decline, consistent with the broader softness in the lift truck industry over the past 18 months. The more important story is what we see in forward indicators. We are seeing early signs of improvement in Material Handling bookings and backlog. Anecdotally, March was the strongest single booking month we have recorded since June 2023. These early wins give us confidence in the trajectory of the segment as we move through the year. External signals are also promising, as the ISM Purchasing Managers Index has recently turned positive after two years of contraction, which is a leading indicator for the lift truck industry.

The sales cycle in this business creates a natural lag between booking activity and recognized revenue. The data we are seeing today gives us confidence that Material Handling equipment sales will strengthen meaningfully as the year progresses. Customer demand across our core verticals, including food and beverage, distribution and logistics, and manufacturing, remained solid during the quarter. We are also beginning to see improving activity in automotive manufacturing across our Upper Midwest markets, as the industry recalibrates production priorities following the pullback from certain EV-related programs. Our Construction Equipment segment generated revenues of $244.3 million, essentially flat from a year ago. Underlying demand conditions remain stable, with quoting activity strong across our markets.

We have seen particular strength in heavy moving equipment markets in Florida, and have recently opened a new branch in Fort Pierce to serve that growing demand. Our construction business is levered to fully funded state and federal infrastructure spending. That distinction matters in the current environment. State DOT budgets in our markets continue to grow. Federal Highway Administration funding from the Infrastructure Investment and Jobs Act is still in its early to mid-deployment stage, with the bulk of spending forecast for the coming years. A federal highway reauthorization bill is expected in September, which will give the state DOTs a significant additional commitment for road and bridge work.

Nonresidential construction also remains an important end market for our business, and any improvement in that sector would represent an additional source of demand acceleration going forward. Rental revenues reflected the continued repositioning of the fleet towards higher utilization and stronger returns. We reduced gross book value by approximately $59.5 million year-over-year to $524.6 million. This is intentional capital management, not a reflection of demand. We are protecting share while prioritizing margin quality, and we are positioned to convert recovering demand into earnings as activity builds through the year. Our Ecoverse Master Distribution segment generated $17.1 million in revenue for the quarter. New equipment margins were pressured by tariffs since early 2025.

We believe the first quarter marks the end of that compression. Renegotiated OEM pricing and the recent Supreme Court ruling on tariffs are anticipated to help restore normal gross margins on our European-sourced environmental processing equipment going forward. We expect this segment's profitability to improve through the balance of the year. The defining theme of the quarter was balance sheet discipline. We generated $20.8 million in operating cash flow, an improvement of $38.3 million versus 2025. That reflects rigorous rental fleet management, improved working capital positioning, and reduced interest expense. Interest expense declined $2.4 million year-over-year to $19.5 million, a direct result of the delevering actions we took in 2025.

The fundamentals driving our 2026 outlook remain intact, even as we update our guidance to reflect first quarter performance. The conditions underpinning that guidance are taking shape as expected. Material Handling bookings are inflecting. Construction activity is picking up as the season opens. Infrastructure spending tailwinds are building. Ecoverse margin headwinds are resolving. Our execution on fleet optimization, cost management, and capital allocation is consistent with the plan. As we enter peak season, the primary levers in front of us are service, utilization, and rental fleet productivity. These are within our control, and they are where our focus is concentrated. In closing, Q1 was a quarter defined by difficult conditions, strong execution on capital discipline, and improving forward momentum.

The organization is focused. The strategy is clear. The underlying business is healthy. Our priorities for 2026 are consistent: core business growth in product support and high-return segments, operational optimization, targeted talent development, and selective M&A where we see clear strategic and financial fit. I want to recognize our approximately 2,700 employees who serve customers every day across our 85 locations. They are the foundation of this business, and their commitment is what makes the Alta model work. I will now turn the call over to Tony, who will further detail the booking trends we are seeing, how they flow through our EBITDA bridge, and why we remain confident in anchoring our updated guidance as the year progresses.

Anthony J. Colucci: Thanks, Ryan. Good evening, everyone. Thank you for your interest in Alta Equipment Group Inc. and our first quarter 2026 financial results. Before getting into the quarter, I want to begin by recognizing our employees, customers, and partners for their support and resiliency thus far in 2026, as we collectively navigated the impacts of a difficult winter season and embarked on what we believe will be a busy remainder of the year. My remarks today will focus on three key areas. First, I will present our first quarter financial results, which were naturally affected by the seasonal impacts of winter weather but were amplified given the harsher conditions observed year-over-year.

As part of that discussion, I will touch on the momentum we saw build through the quarter and then check in on cash flows and the balance sheet, where we were pleased with our performance and which helps to set the foundation for better returns going forward. Second, I will give an EBITDA drill-down for Q1 in terms of what we were expecting versus actual performance, and how we believe that our dealership business will inflect throughout the remainder of the year. Lastly, I will comment on our updated guidance range and why we believe several KPIs are trending positively, which gives us confidence for the coming quarter.

Before I get to my talking points, it should be noted that I will be referring to slides from our investor presentation throughout the call today. I would encourage everyone on today's call to review our presentation and our 10-Q, which is available on our Investor Relations website at altg.com.

With that said, for the first portion of my prepared remarks, and in line with Slides 12 through 23 in the earnings deck, first quarter performance: The company recorded $410.5 million of revenue, a reduction of 2.1% versus last year on an organic basis, namely on reduced new and used equipment sales year-over-year, a reflection of pull-forward buying in Q4, continued stress on deliveries in the Material Handling segment, and modestly compressed volumes in the Construction segment. That said, our history and the inflection we are seeing in important KPIs, especially in our Material Handling segment, have us bullish that Q1 will be far and away the low point in equipment sales for the year.

While overall new and used equipment revenue suffered on a comparative basis, gross margins outperformed in the quarter in both of our major segments. Importantly, gross margins saw a 240 basis point increase versus Q4, a hopeful signal that pricing and supply-demand dynamics in the equipment markets are improving. On the operating expense line, while the year-over-year results present an increase of $0.8 million, it should be noted that the company's self-insured health plan expense was responsible for approximately $3 million of that variance. Given the transition to a new health plan in 2025, claims were delayed, and we saw an unfortunate increase in the volume of larger claims in 2026.

Expect this expense to normalize for the remainder of the year as the stop-loss limits take effect on larger claims. In summary for the quarter, as it relates to the P&L, we recorded $28.1 million of adjusted EBITDA, which was below our internal expectations given some of the headwinds mentioned previously related to health care costs, weather, a delayed start to the construction season, and outside pull-ahead buying in Q4. Having said that, I would point investors to Slide 7 of our investor presentation, which shows the EBITDA momentum we observed throughout the quarter, as March was three times January on the EBITDA line.

Keep in mind, this EBITDA momentum is expected to continue into the construction busy season and is also expected to be bolstered by the increased equipment booking environment in Material Handling, with market volumes up over 20% in our markets in the quarter, as depicted on Slide 8. In terms of cash flows, despite the challenged P&L in the quarter, we were able to generate meaningful positive GAAP operating cash flows. That metric came in at a positive $20.8 million. This is a reflection of disciplined inventory and working capital management and rental fleet optimization.

As presented on Slide 18, this dynamic led to us holding net leverage effectively flat versus year-end in what typically is a quarter where we see leverage tick up. Separate but related, this cash flow performance also allowed us to maintain our cash liquidity position of approximately $250 million as well. Moving on to the second portion of my prepared remarks, a drill-down on our EBITDA performance in Q1 and how that informs the remainder of the year: As mentioned previously, the business underperformed our internal expectations in the quarter. With that as context, Slide 23 lays out how we are thinking about the bridge from the first quarter performance into the balance of the year.

At a high level, some of the Q1 shortfall is tied to timing-related factors within the dealership business, primarily weather and equipment demand pull-forward, which we view as largely recoverable. Why do we believe that? Improving booking trends, a growing backlog, and sequential momentum exiting the quarter all support our expectation for recovery as we move through the year. In contrast, the rental business remains in a planned transition phase, where fleet optimization and disposition activity will continue to introduce some variability. To be clear, as we head into the construction season, our rental revenues in the Construction segment will increase, as April saw an incremental $25 million of fleet on rent when compared to March.

However, we are focused on driving returns on capital in our rental business versus low-ROI EBITDA, and we will continue to rightsize fleet with the endgame being a more capital-efficient rental business that supports market demand and our customers' needs for our specialized equipment and best-in-class service. Moving on to the last portion of my prepared remarks, guidance for the remainder of the year and how the dynamics I just described in our dealership-centric model underpin our confidence in the updated range: As presented on Slide 22, overall, we are reducing the range of the EBITDA guide by $5 million on each end of the range given Q1 performance.

The updated range is now $167.5 million to $182.5 million for FY 2026, and we now expect $100 million to $110 million of free cash flow before rent-to-sell decisioning for the year, both of which are expected to be back-half weighted and keep us on target to be below our 4.5x leverage target by year-end. In terms of the key assumptions that underpin the guide, I would refer investors to the EBITDA bridge we provided last quarter that showed the path to the company generating $180 million of EBITDA in 2026. Two of the largest steps to that EBITDA bridge related to: one, industry volumes normalizing, and two, gross margins solidifying first and then improving over time.

We got good news on both items in Q1. First, given market volumes as depicted on Slide 8—which also parallels various industry participants' messaging—an upcoming reversion to the norm in equipment volumes appears at hand. On the second EBITDA bridge factor, we saw a 240 basis point increase in new and used equipment margins quarter-over-quarter, with industry participants signaling reduced dealer inventories and a stabilizing pricing environment. Additionally, we believe Ecoverse's tariff-related margin compression is now largely behind us as renewed pricing agreements with OEMs and IPF tariff relief take hold. All told, these two KPIs suggest that the majority of our plan remains intact in our dealership equipment sales-related operations.

When it comes to the rental segment, while activity is inflecting positively, we remain steadfast in our pursuit of driving utilization and matching an appropriate level of rental fleet with demand in each of our markets. Lastly, the company continues to drive efficiencies throughout the organization, and in particular, our product support departments. We are focused on technician productivity and working with customers that value our technical and industry capabilities. While this initiative may come at the sacrifice of the top line in product support, it will improve overall profitability and ultimately EBITDA of the dealership and create a more sustained business model going forward.

In closing, I wish you all the best as we head into the summer months, and look forward to updating investors on our Q2 performance in August. Thank you for your time, and I will turn it back over to the operator for Q&A.

Operator: We will now open the call for questions. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Liam Burke with B. Riley. Your line is now open. Please go ahead.

Liam Burke: Thank you. Good afternoon, Ryan. Good afternoon, Tony. In Material Handling, you highlighted bookings being as strong as they have been in almost three years. You talked about the automotive sector picking up. Are there any other verticals within your markets that are showing life as well, or is it just isolated to the automotive field? And on Construction, there is a lot of potential end-market or macro pent-up demand. You have weather and then you also have the release of funding. Are you seeing anything in terms of bookings or any kind of clues that bookings will pick up into the second half of the year?

Anthony J. Colucci: Hey, Liam. This is Tony. Definitely not isolated to automotive. I think we are seeing the beginnings of a comeback in automotive, but the bookings increase was pretty broad based. We saw it in each region and in a lot of different end markets—distribution, food and beverage, automotive and manufacturing as we mentioned, as well as energy and utilities, and even some activity in defense given the increased activity in that realm. So it was broad based, it was each region, and certainly not just isolated to automotive. On Construction, over time Q1 in the construction business—specifically in the North—is always difficult to get a barometer on in terms of sales that get booked in Q1.

As we mentioned and as depicted on some of the slides, the industry was down in our geographies—approximately 6% year-over-year. That is not indicative of what we are seeing on the ground, especially in places like Florida where we see lots of quoting activity. Customers are busy, and we had a delayed start to the construction season. Some of the deliveries that typically would have gone out in March because of weather did not make their way out until April or are getting started right now on projects.

So we agree with you that for the Construction business, Q1 is a low point like it always is, but I think that inflection could be even stronger given what we had to deal with in the winter and the delay of getting started here.

Liam Burke: Great. Thank you, Ryan. Thank you, Tony.

Operator: Your next question comes from the line of Steven P. Hansen with Raymond James. Your line is now open. Please go ahead.

Steven P. Hansen: Good afternoon, and thanks for the time. I wanted to follow up on the gross margin front. You referenced the improvement you are seeing there as a positive indication. Any additional detail on what you are seeing from the competitive environment and inventories on the ground? How are you seeing that margin improvement play out, and in which verticals in particular? And then on the rental fleet repositioning, from a timeline and sizing perspective, how long do you think it will take to execute the balance of that plan, and what kind of capital takeout would ultimately get you to where you want to be?

Anthony J. Colucci: Thanks, Steve. If you look at industry surveys and commentary, dealer inventories are coming down. From some of the household OEM names in the Construction segment that we follow, dealer channels have right-sized. In the meantime, OEM pricing continues to move up—PPI on wholesale construction equipment and machinery was approximately +5% in the first quarter. Tariffs are still impactful. What we have seen on the top line from OEMs—Caterpillar, John Deere in particular—has been a lot of discounting to clear the dealer channel, and I think we are starting to see less discounting from some of the major players. Our focus on margin is more dialed in relative to Construction because it is more sensitive to our EBITDA line.

So when we think of gross margin, we think about it more in the Construction context versus Material Handling. It is a combination of less supply on the market—which is good for used equipment too, as values come back—and a reduction in discounting from some of the major players. On rental fleet repositioning, having a rental fleet that is underperforming impacts the debt load, and if you get something on rent at a low rate, it can be leverage dilutive. We are focusing on the right balance of rental fleet, especially in our northern regions where we are seasonal. Carrying underutilized equipment through the winter can be difficult.

Ahead of plan, we had $30 million of rental disposals in Q1—team did a great job. We are ahead of plan for Q1. At these rental revenue levels, we probably still have another approximately $30 million to go, and we hope to get there by year-end. We are going to hit our utilization targets, and we hope to get there by year-end.

Steven P. Hansen: Appreciate your time. Thanks, guys.

Operator: Your next question comes from the line of Ted Jackson with Northland Securities. Your line is now open. Please go ahead.

Ted Jackson: Thank you very much. A couple of questions. First, on the Material Handling side, Hyster-Yale's expectations for shipments in the second half of this year are very robust, and you are one of their larger distributors. What kind of ramp do you think you are going to see in new equipment sales in the second half of the year? Any color around that would be helpful. Second, from a seasonal standpoint, there was a change with regard to the ability to depreciate equipment.

You talked about a large portion of your construction equipment sales in the fourth quarter might have been pulled from the first quarter because of that, and that you might not have fully anticipated how that would impact first quarter when you were exiting 2025. Looking at the last five years, the average sequential decline has been 18.5% and the median 26%, and you were down almost 40%. Do you see this change in depreciation and expensing altering the seasonality of the equipment business—more robust fourth quarters and weaker first quarters going forward? Lastly, on the rental fleet, you have brought it down sequentially over the last four quarters. Your ending rental fleet is at $524.6 million.

At what point do you find that your fleet is right-sized—is it $500 million, $450 million? How should we think about that and the timeline? And what would be your target utilization rate?

Anthony J. Colucci: Ted, part of our bullishness on the guidance is exactly related to a really strong back half in Material Handling, and it is in concert with what you heard from Hyster-Yale. There is a little more delay between their booking process, production, shipment to the dealer, and then us prepping and delivering, so it could be another month or two of equipment on the ground before we get things delivered. But we are early in the year, and their lead times are such that this is all 2026 revenue that we think we can book.

In terms of how hard that inflection can happen, I would revert to how hard it inflected the other way over the last couple of years, where we saw shipments go down roughly 20% on a volume basis. I think we could have that same level of reversion in the second half here. We had strong bookings in April, consistent with what we showed for March, so we are feeling bullish that the second half is going to be good for Material Handling. On seasonality and depreciation changes, the up-and-down was radical—Q3 roughly $200 million of new and used equipment sales, Q4 around $300 million, and Q1 around $200 million.

I do not expect it to be as volatile going forward. The change was new for 2025, and I think some buyers were waiting for that to be in place. We will always have year-end buyers to take advantage of tax depreciation, but my view is that this year was a bit of an anomaly. On the rental fleet, based on the plan for this year—and noting we were several million dollars off in Q1 on rental revenue—it is not about hitting a nominal fleet target as much as achieving utilization targets. We expect to be sub-$500 million by the end of the year from $524.6 million at the end of Q1.

Given Q1 performance, that is still intact, and we could drop further below $500 million depending on revenue trends. Our target is to be in the high 60s for dollar-weighted time utilization (physical utilization of fleet on rent over a calendar year divided by total fleet). That typically translates to rental revenue divided by average acquisition cost in the mid-to-high 30s—what we would call dollar or financial utilization. We are not there yet, but that is the goal.

Ted Jackson: Okay. Thank you.

Operator: We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

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