Equipment distribution company Alta Equipment Group (NYSE:ALTG) reported revenue ahead of Wall Street’s expectations in Q4 CY2024, but sales fell by 4.5% year on year to $498.1 million. Its non-GAAP loss of $0.46 per share was 91.7% below analysts’ consensus estimates.
Revenue: $498.1 million vs analyst estimates of $481 million (4.5% year-on-year decline, 3.6% beat)
Adjusted EPS: -$0.46 vs analyst expectations of -$0.24 (91.7% miss)
Adjusted EBITDA: $40.7 million vs analyst estimates of $43.9 million (8.2% margin, 7.3% miss)
EBITDA guidance for the upcoming financial year 2025 is $182.5 million at the midpoint, above analyst estimates of $177.4 million
Operating Margin: 0.5%, down from 2.3% in the same quarter last year
Free Cash Flow was -$24.2 million, down from $65.9 million in the same quarter last year
Market Capitalization: $158.3 million
LIVONIA, Mich., March 05, 2025 (GLOBE NEWSWIRE) -- Alta Equipment Group Inc. (NYSE: ALTG) (“Alta”, "we", "our" or the “Company”), a leading provider of premium material handling, construction and environmental processing equipment and related services, today announced financial results for the fourth quarter and full year ended December 31, 2024.
Company Overview
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Specialty Equipment Distributors
Historically, specialty equipment distributors have boasted deep selection and expertise in sometimes narrow areas like single-use packaging or unique lighting equipment. Additionally, the industry has evolved to include more automated industrial equipment and machinery over the last decade, driving efficiencies and enabling valuable data collection. Specialty equipment distributors whose offerings keep up with these trends can take share in a still-fragmented market, but like the broader industrials sector, this space is at the whim of economic cycles that impact the capital spending and manufacturing propelling industry volumes.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Alta’s 27.5% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
Alta Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Alta’s annualized revenue growth of 9.3% over the last two years is below its five-year trend, but we still think the results were good and suggest demand was healthy.
Alta Year-On-Year Revenue Growth
We can dig further into the company’s revenue dynamics by analyzing its most important segments, Equipment and Parts, which are 57.6% and 13.6% of revenue. Over the last two years, Alta’s Equipment revenue (new and used) averaged 3.7% year-on-year declines while its Parts revenue (maintenance and repair products) averaged 1.7% declines.
This quarter, Alta’s revenue fell by 4.5% year on year to $498.1 million but beat Wall Street’s estimates by 3.6%.
Looking ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges.
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Operating Margin
Alta was profitable over the last five years but held back by its large cost base. Its average operating margin of 1.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, Alta’s operating margin rose by 1.9 percentage points over the last five years, as its sales growth gave it operating leverage.
Alta Trailing 12-Month Operating Margin (GAAP)
This quarter, Alta’s breakeven margin was down 1.9 percentage points year on year. Since Alta’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Alta’s earnings losses deepened over the last four years as its EPS dropped 41.4% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Alta’s low margin of safety could leave its stock price susceptible to large downswings.
Alta Trailing 12-Month EPS (Non-GAAP)
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
Sadly for Alta, its EPS declined by 113% annually over the last two years while its revenue grew by 9.3%. This tells us the company became less profitable on a per-share basis as it expanded.
We can take a deeper look into Alta’s earnings to better understand the drivers of its performance. Alta’s operating margin has declined by 1.7 percentage points over the last two yearswhile its share count has grown 2.6%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders.
Alta Diluted Shares Outstanding
In Q4, Alta reported EPS at negative $0.46, down from $0.03 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Alta’s full-year EPS of negative $1.39 will reach break even.
Key Takeaways from Alta’s Q4 Results
We were impressed by how significantly Alta blew past analysts’ revenue expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. On the other hand, its EBITDA in the quarter missed and its EPS also fell short of Wall Street’s estimates. Overall, this was a mixed quarter. The stock remained flat at $5.10 immediately following the results.
