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ALTA EQUIPMENT GROUP INC.

ALTA EQUIPMENT GROUP INC.ALTGEarnings & Financial Report

NYSE · Consumer Discretionary · Wholesale-Industrial Machinery & Equipment

The Alta Car and Engineering Company was a British sports and racing car manufacturer, commonly known simply as Alta. Their cars contested five FIA World Championship races between 1950 and 1952, as well as Grand Prix events prior to this. They also supplied engines to a small number of other constructors, most notably the Connaught and HWM teams.

What changed in ALTA EQUIPMENT GROUP INC.'s 10-K — 2023 vs 2024

Top changes in ALTA EQUIPMENT GROUP INC.'s 2024 10-K

479 paragraphs added · 486 removed · 357 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

49 edited+11 added−8 removed35 unchanged
We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, as well as our other SEC filings, available on our website, investors.altg.com , free of charge, as soon as reasonably practicable after they are electronically filed with or furnished pursuant to section 13(a) or 15(d) of the Exchange Act.
We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, as well as our other SEC filings, available on our website, investors.altg.com , free of charge, as soon as reasonably practicable after they are electronically filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act.
Our geographic footprint has grown through acquisitions, from our original Michigan lift truck territory to a leading equipment dealer with operations in the Midwest, New York, New England, Florida, Nevada, and the Canadian provinces of Ontario and Quebec. In selecting additional territories for acquisition, we prioritize markets with a high density of equipment users. Pursue Synergistic Verticals .
Our geographic footprint has grown through acquisitions, from our original Michigan lift truck territory to a leading equipment dealer with operations in the Midwest, New York, New England, Florida, Nevada, and the Canadian provinces of Ontario and Quebec. In selecting additional territories for acquisition, we prioritize markets with a high density of equipment users. 4 Pursue Synergistic Verticals .
We utilize a customized Enterprise Resource Planning (“ERP”) tool, called e-Emphasys, which includes a sophisticated customer relationship management ("CRM") functionality. e-Emphasys was designed specifically for equipment dealerships. We believe our ERP and its CRM functionality enhances our territory management capabilities by increasing the productivity of our sales teams and tracking equipment service history to advance our customer support goals.
We utilize a customized Enterprise Resource Planning (“ERP”) tool, called e-Emphasys, which includes customer relationship management ("CRM") functionality. e-Emphasys was designed specifically for equipment dealerships. We believe our ERP and its CRM functionality enhances our territory management capabilities by increasing the productivity of our sales teams and tracking equipment service history to advance our customer support goals.
In April 2022, the Company's Board of Directors adopted the 2022 Employee Stock Purchase Plan (the "ESPP"), which became effective upon approval by the Company's shareholders at the Annual Meeting of Stockholders on June 9, 2022. On June 8, 2023 the Company filed Form S-8 to register 325,000 common stock shares, the total shares reserved for the ESPP.
In April 2022, the Company's Board of Directors adopted the 2022 Employee Stock Purchase Plan (the "ESPP"), which became effective upon approval by the Company's shareholders at the Annual Meeting of Stockholders on June 9, 2022. On June 8, 2023 the Company filed a Form S-8 to register 325,000 common stock shares, the total shares reserved for the ESPP.
We are a leading U.S. dealer for many globally recognized material handling, construction, and environmental processing equipment OEMs, including Hyster-Yale, Volvo, JCB, Kubota and Doppstadt. Our primary dealer agreements grant us exclusivity for new equipment, replacement part sales, and diagnostic service software in our territories.
We are a leading U.S. dealer for many globally recognized material handling, construction, and environmental processing equipment OEMs, including Hyster-Yale, Volvo, JCB, Kubota, CNH and Doppstadt. Our primary dealer agreements grant us exclusivity for new equipment, replacement part sales, and diagnostic service software in our territories.
We and our regional subsidiaries enjoy long-standing relationships with leading material handling and construction equipment OEMs, including Hyster-Yale, Volvo, JCB, CNH, McCloskey and Kubota, among many others as well as master dealer rights throughout North America for environmental processing equipment with Doppstadt and Backers, among others.
We and our regional subsidiaries enjoy long-standing relationships with leading material handling and construction equipment OEMs including Hyster-Yale, Volvo, JCB, CNH, Takeuchi, McCloskey, and Kubota, among many others, as well as master dealer rights throughout North America for environmental processing equipment with Doppstadt and Backers, among others.
Our integrated equipment sales, service, and rental platform provides a one-stop-shop for a highly diverse group of customers, enabling us to profitably grow our revenues over time and providing a competitive advantage over our single channel competitors and traditional equipment rental houses, which may have difficulty expanding due to the infrastructure, training, and relationships necessary to support a growing population of equipment in a designated territory and that typically have limited parts and service offerings.
We believe that our integrated equipment sales, service, and rental platform provides a one-stop-shop for a highly diverse group of customers, enabling us to profitably grow our revenues over time and providing a competitive advantage over our single channel competitors and traditional equipment rental houses, which may have difficulty expanding due to the infrastructure, training, and relationships necessary to support a growing population of equipment in a designated territory and that typically have limited parts and service offerings.
Also, our partnerships with technical schools and community colleges provide consistent access to new technicians. We intend to replicate this strategy as we acquire additional dealership territories. Pursue Strategic Acquisitions. Our management team has successfully completed 16 acquisitions since 2020. We have two primary areas of focus when pursuing acquisitions: • Territory In-Fill .
Also, our partnerships with technical schools and community colleges provide consistent access to new technicians. We regularly replicate this strategy as we acquire additional dealership territories. Pursue Strategic Acquisitions. Our management team has successfully completed 16 acquisitions since 2020. We have two primary areas of focus when pursuing acquisitions: • Territory In-Fill .
Our customers are principally focused on equipment reliability and uptime, and our teams of skilled technicians and commitment to service are key to establishing and maintaining long-term customer relationships, representing a critical competitive advantage. Parts and service are also our most predictable and profitable businesses, with the dealership model structured to drive aftermarket parts and service revenues.
Our customers are principally focused on equipment reliability and uptime, and our teams of skilled technicians and commitment to service are key to establishing and maintaining long-term customer relationships, representing a critical competitive advantage for the Company. Parts and service are also our most predictable and profitable businesses, with the dealership model structured to drive aftermarket parts and service revenues.
We have partnered with trade and technical schools in all of our territories and these relationships, along with our recruiting prowess, provide us with a pipeline of skilled employees. To retain employees, we offer attractive benefits, clean facilities with the most advanced diagnostic software, modern tools and OEM parts.
We have partnered with trade and technical schools in many of our territories and these relationships, along with our recruiting prowess, provide us with a pipeline of skilled employees. To retain employees, we offer attractive benefits, clean facilities with the most advanced diagnostic software, modern tools and OEM parts.
With our over 80 dealership locations, we believe our scale will help us be the leading provider of material handling, construction, and environmental processing equipment and aftermarket parts and service support in each of our territories. Leading Dealer for Equipment Manufacturers.
With our over 85 dealership locations, we believe our scale will help us be the leading provider of material handling, construction, and environmental processing equipment and aftermarket parts and service support in each of our territories. Leading Dealer for Equipment Manufacturers.
Advertising and marketing costs are expensed as incurred and for the years ended December 31, 2023, 2022 and 2021 were $10.2 million $5.4 million, and $5.5 million respectively. Suppliers We purchase a significant amount of equipment and parts from a large number of manufacturers with whom we have distribution agreements.
Advertising and marketing costs are expensed as incurred and for the years ended December 31, 2024, 2023 and 2022 were $9.9 million, $10.2 million, and $5.4 million respectively. Suppliers We purchase a significant amount of equipment and parts from a large number of manufacturers with whom we have distribution agreements.
We regularly hire mechanics away from independent rental or service businesses in our markets, where a lack of access to OEM parts and diagnostic tools make servicing increasingly sophisticated equipment difficult. Additionally, we have been successful in hiring skilled technicians from other industries, such as the automotive industry.
We regularly attract technicians from independent rental or service businesses in our markets, where a lack of access to OEM parts and diagnostic tools make servicing increasingly sophisticated equipment difficult. Additionally, we have been successful in hiring skilled technicians from other industries, such as the automotive industry.
Our 2022 acquisition of Ecoverse Industries, LTD ("Ecoverse") represented our entrance into the wholesale equipment master distribution sector. Customers Our customer end markets include diversified manufacturing, food and beverage, automotive, municipal/government, education, pharmaceutical and medical, wholesale and retail distribution, construction, agriculture, road building, mining, recycling and waste management among others.
Our 2022 acquisition of Ecoverse Industries, LTD ("Ecoverse") represented our entrance into the wholesale equipment master distribution sector. Customers Our customer end markets include food and beverage, diversified manufacturing, automotive, municipal/government, education, pharmaceutical and medical, wholesale and retail distribution, construction, agriculture and forestry, road building, aggregate and mining, utilities and power generation, and recycling and waste management, among 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.
We are consistently recognized by OEMs as a top dealership partner and have been identified as an internationally recognized Hyster-Yale dealer and multi-year recipient of the Volvo Dealer of the Year award.
While our electromobility (“e-mobility”) business, and the industry in general, is in its early stages of development, we believe that our first-mover advantage and expertise in this emerging market represents an exciting future growth opportunity. We are committed to providing our customers with a best-in-class equipment dealership experience.
While our electromobility (“e-mobility”) business, and the industry in general, is in its early stages of development, we believe that our expertise in this emerging market represents a future growth opportunity. We are committed to providing our customers with a best-in-class equipment dealership experience.
Experienced Management Team. Our senior management team is led by Chief Executive Officer (“CEO”) Ryan Greenawalt, Chief Financial Officer (“CFO”) Anthony Colucci, Chief Operating Officer (“COO”) Craig Brubaker and Chief Legal Officer and 3 General Counsel, Jeffrey Hoover, each of whom has substantial experience in the equipment distribution industry.
Experienced Management Team. Our senior management team is led by Chief Executive Officer (“CEO”) Ryan Greenawalt, Chief Financial Officer (“CFO”) Anthony Colucci, Chief Operating Officer (“COO”) Craig Brubaker and Chief Legal Officer and General Counsel, Jeffrey Hoover, each of whom has substantial experience in the equipment distribution industry. Our senior leadership is well known and highly respected in the industry.
Our customers vary from small, single machine owners to large construction contractors and leading multi-national commercial companies. In 2023, no single customer accounted for more than 1% of our total revenues.
Our customers vary from small, single machine owners to large construction contractors and leading multi-national commercial companies. In 2024, no single customer accounted for more than 1% of our total revenues. Our top ten customers combined accounted for approximately 5% of our total revenues in 2024.
Human Capital Employees As of December 31, 2023, we had approximately 3,000 employees. Of these employees, approximately 1,300 are skilled technicians paid on an hourly basis and the remainder are hourly and salaried corporate, sales, operating, and administrative personnel. We have approximately 630 employees covered by collective bargaining agreements.
Human Capital Employees As of December 31, 2024, we had approximately 2,900 employees. Of these employees, approximately 1,275 are skilled technicians paid on an hourly basis and the remainder are hourly and salaried corporate, sales, operating, and administrative personnel. We have approximately 700 employees covered by collective bargaining agreements.
We view our rental fleet as an important component of our one-stop-shop model, and customers rely on our rental equipment to integrate into their business over the long term when flexing up their fleet capacity for a project or when customer-owned equipment is being serviced.
We view our rental fleet as an important component of our one-stop-shop model, allowing for customers to be flexible with their capital and rely on our rental equipment to integrate into their business when increasing their fleet capacity for a project or when customer-owned equipment is being serviced.
Seasonality The demand for our construction equipment tends to be lower in the winter months, and equipment rental performance will generally correlate to the levels of current construction activities, so severe winter weather conditions typically have a negative impact on our business in our northern territories.
Seasonality and Weather The demand for our construction equipment, product support, and rentals tends to be lower in the winter months so severe cold weather conditions typically have a negative impact on our business in our northern territories.
These exclusive agreements allow us to take a long-term view to a given market place, build a complementary product offering which drives market share with customers and ultimately allows us, and our OEMs, to focus on growing market share within the territory.
These exclusive agreements allow us to take a long-term view to a given marketplace as we invest in rental fleet for the products we represent and build a high-end, complementary product offering that drives wallet share with customers and ultimately allows us, and our OEMs, to focus on growing market share within the territory.
Within our territories, our competitors range from multi-location, regional operators to single-location dealers of competing equipment brands. We compete with equipment dealers that sell other brands of equipment we do not represent or that we do not represent in a particular market. We also compete with local and nationwide rental businesses in certain product categories.
We compete with equipment dealers that sell other brands of equipment we do not represent anywhere in our footprint or that we do not represent in a particular market. We also compete with local and nationwide rental businesses in certain product categories.
Business Strategy We employ the following business strategies: Align with World-Class OEMs by Securing Dealership Agreements for Exclusive Territories. We contractually agree with best-in-class material handling, construction, and environmental processing equipment OEMs to represent them exclusively in designated territories (i.e., a state or province).
We contractually agree with best-in-class material handling, construction, and environmental processing equipment OEMs to represent them exclusively in designated territories (i.e., a county, state or province).
Total contributions made by the Company to the 401(k) plan amounted to $5.4 million, $4.0 million and $3.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Total contributions made by the Company to the ESPP amounted to $0.5 million and $0.2 million for the years ended December 31, 2024 and 2023, respectively.
Above all, we view our technicians as key contributors to future success, and we accord respect to our skilled technicians. High-Quality Rental Fleet for Rent-to-Sell and Rent-to-Rent Programs. Equipment rental is complementary to our new and used equipment sales and is an important component of our one-stop-shop model.
Above all, we view our technicians as key contributors to future success, and we accord respect to our skilled technicians. High-Quality Rental Fleet for Rent-to-Sell and Rent-to-Rent Programs.
Environmental, Health and Safety Regulations Environmental Our facilities and operations are subject to various, comprehensive, and frequently changing federal, state, and local environmental and occupational health and safety laws and regulations in the U.S and Canada.
This exclusivity affords us effectively no competition from others when selling these brands in our territories. 6 Environmental, Health and Safety Regulations Environmental Our facilities and operations are subject to various, comprehensive, and frequently changing federal, state, and local environmental and occupational health and safety laws and regulations in the U.S and Canada.
OEMs provide this financing to enable dealers to carry equipment in anticipation of customer orders and to increase market share. In many cases we sell the equipment before the expiration of the promotional interest period.
Floor Plan Financing New equipment inventory is primarily financed with OEM floor plan facilities with an initial promotional period that is either subsidized or interest-free. OEMs provide this financing to enable dealers to carry equipment in anticipation of customer orders and to increase market share. In many cases we sell the equipment before the expiration of the promotional interest period.
Our parts and service capabilities support customers in maximizing equipment uptime, which we believe is a key consideration when an equipment customer is making a selection among competing product offerings. The aftermarket parts and service businesses provide us with a predictable, high-margin revenue source that is relatively insulated from the typical business cycle.
Our parts and service capabilities support customers in maximizing equipment uptime, which we believe is a key consideration when an equipment customer is making a selection among competing product offerings.
Our senior leadership is well known and highly respected in the industry. Industry relationships provide a meaningful portion of our acquisition pipeline, as dealership owners frequently approach our management team to discuss a sale. Additionally, our senior leadership team is experienced in managing our business throughout the business cycle.
Industry relationships provide a meaningful portion of our acquisition pipeline, as dealership owners frequently approach our management team to discuss a sale. Additionally, our senior leadership team is experienced in managing our business throughout the business cycle. Business Strategy We employ the following business strategies: Align with World-Class OEMs by Securing Dealership Agreements for Exclusive Territories.
Ability to Attract and Retain Skilled Technical Employees. We believe we provide best-in-class parts and service support to our customers, and the ability to attract and retain skilled technicians is critical to aftermarket performance.
The aftermarket parts and service businesses provide us with a predictable, high-margin revenue source that is relatively insulated from the typical business cycle. 3 Ability to Attract and Retain Skilled Technical Employees. We believe we provide best-in-class parts and service support to our customers, and the ability to attract and retain skilled technicians is critical to aftermarket performance.
Within substantially all our territories, we are the exclusive distributor of new equipment and replacement parts on behalf of our OEM partners. This exclusivity affords us effectively no competition from others when selling these brands in our territories.
Within substantially all our territories, we are the exclusive distributor of new equipment and replacement parts on behalf of our OEM partners.
Substantially all of the Company’s employees are eligible to participate in the Company’s 401(k) and profit-sharing plan. Eligible employees may contribute a percentage of their salary up to the Internal Revenue Service limit. The Company may contribute a discretionary percentage of the amount deferred by the employee.
We believe our compensation programs align both individual and team contributions to promote our culture and drive our performance. Substantially all of the Company’s employees are eligible to participate in the Company’s 401(k) and profit-sharing plan. Eligible employees may contribute a percentage of their salary up to the Internal Revenue Service limit.
More recently, given the Company’s successful history with electrified fork lifts, battery charging and power generation as well as its material handling customer base, where customers typically employ large fleets of commercial over-the-road vehicles in their day-to-day operations, we are pursuing a strategy focused on the distribution and powering of commercial electric vehicles in the over-the-road vehicle segment.
More recently, given the Company’s successful history with electrified forklifts, battery charging, and power generation, we are pursuing a synergistic, asset-light strategy focused on the distribution and powering of commercial electric vehicles in the over-the-road vehicle segment.
We maintain an extensive customer database which allows us to monitor the status and maintenance history of our customers’ owned equipment and enables us to more effectively provide parts and services to meet their needs.
We maintain customer database which allows us to monitor the status and maintenance history of our customers’ owned equipment and enables us to provide parts and services to meet their needs. Our critical business systems are deployed across a hybrid infrastructure, leveraging both on-premise and cloud environments.
Our point-of-sale system enables us to link all of our facilities, permitting universal access to real-time data concerning equipment located at the individual facility locations and the rental status and maintenance history for each piece of equipment. Our business system is a full suite of highly integrated software solutions intended to manage equipment dealership activities at all essential levels.
Our integrated services platform enables us to closely monitor our performance and our business. Our point-of-sale systems enable us to maintain visibility into all of our facilities, permitting universal access to real-time data concerning equipment located at the individual facility locations and the status and maintenance history for each piece of equipment.
Parts and services activities are less affected by changes in demand caused by seasonality, especially in our material handling segment, and are highly predictable based on historical maintenance and service trends as equipment ages. Competition The equipment distribution and service industry is competitive and fragmented, with large numbers of competitors operating on a regional or local scale.
Parts and services activities are less affected by changes in demand caused by seasonality, especially in our material handling segment, and are generally more predictable than our other revenue generating activities based on our knowledge of historical maintenance and service trends as equipment ages.
Additional operational efficiencies are gained through our use of integrated solutions such as electronic document management, service scheduling and technician dispatch, mobile field service, and mobile equipment inspection.
Points of integration with our OEMs and other third-parties have been implemented which have greatly streamlined activities in the areas of operations, customer support, and accounting and finance. Additional operational efficiencies are gained through our use of integrated solutions such as electronic document management, service scheduling and technician dispatch, mobile field service, and mobile equipment inspection.
We believe our relations with our employees are good, and we have never experienced a long-term work stoppage.
We believe our relations with our employees are good, and we have never experienced a long-term work stoppage. Generally, the total number of employees does not significantly fluctuate throughout the year. However, acquisition activity may increase the number of our employees.
With our existing expertise with commercial equipment dealerships, we pursue strategic opportunities to leverage our knowledge in operating equipment dealerships to grow into other tangential verticals of commercial equipment.
With our existing expertise with commercial equipment dealerships, we pursue strategic opportunities to leverage our knowledge in operating equipment dealerships to grow into other tangential verticals of commercial equipment. As an example, we recently entered the over-the-road vehicle dealership industry by virtue of various partnerships with commercial electric vehicle and charging and infrastructure related OEMs.
We are committed to our employees and their development, and we strive to create opportunities for the continual professional development of our employee base. These opportunities include continuing education and specialty training. Our in-house recruiters and partnerships with colleges and trade schools help build relationships and recruit talent from various sources within our territories.
Our in-house recruiters and partnerships with colleges and trade schools help build relationships and recruit talent from various sources within our territories. Compensation and Benefits We are committed to providing competitive compensation and benefits programs for our employees as we believe they are core to an engaged and productive employee base.
We are the exclusive distributor of OEM parts in substantially all of our territories. Our in-house parts inventory is extensive, enabling us to provide timely service support to our customers. Service support. We provide maintenance and repair services for our customers’ equipment and maintain our own rental fleet.
Used equipment sales in our territories, like new equipment sales, generate parts and service business for the Company. 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 OEMs pay us for repairs we perform on equipment under warranty in our territories.
Product Warranties Product warranties for new equipment and parts are provided by our OEM partners. The term and scope of these warranties vary greatly by supplier and by product. The OEMs pay us for repairs we perform on equipment under warranty in our territories.
Total contributions made by the Company to the ESPP amounted to $0.2 million for the year ended December 31, 2023. Legal Proceedings There is no material litigation, arbitration, or governmental proceeding currently pending against us where the potential liability is not offset by expected insurance proceeds, or any members of our management team in their capacity as such.
Legal Proceedings There is no material litigation, arbitration, or governmental proceeding currently pending against us or any members of our management team where the potential liability is not offset by expected insurance proceeds. 7 Available Information We electronically file annual reports, quarterly reports, proxy statements and other reports and information statements with the SEC.
In addition to repair and maintenance on an as needed or scheduled basis, we provide recurring maintenance services and warranty repairs for our customers. 2 Equipment rentals. We rent material handling and construction equipment to our customers.
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 helps to differentiate us from our competitors. Equipment rentals.
We purchased approximately 47% of our new equipment, rental fleet, and replacement parts from five major OEMs (Hyster-Yale, Kubota, JCB, Doppstadt and Volvo) during the year ended December 31, 2023. Notably, we are the exclusive OEM replacement part distributor in substantially all our territories, allowing us to provide superior aftermarket service support to our customers.
We purchased approximately 58% of our equipment and parts sold during the year ended December 31, 2024 from five major OEMs (Volvo, Hyster-Yale, Kubota, CNH, and JCB).
Information Technology ("IT") Systems Among other metrics, our IT systems track new, used and rental inventory and labor utilization statistics, and detailed operational and financial information. Our integrated services platform enables us to closely monitor our performance and our business.
Notably, we are the exclusive OEM replacement parts distributor in substantially all our territories, allowing us to provide superior aftermarket service support to our customers. 5 Information Technology ("IT") Systems Among other metrics, our IT systems track new, used and rental inventory and labor utilization statistics, and detailed operational and financial information.
We sell new material handling, construction, crushing and screening, and environmental processing equipment and are a leading dealer for nationally recognized OEMs. Our new equipment sales generate customers for our parts sales and service operations, which grow with an expanding equipment field population in our territories.
We sell new heavy construction, material handling and environmental processing equipment and are a leading regional distributor for nationally recognized equipment manufacturers. Our new equipment sales operation is a primary source of new customers for our rental, parts and service business. The majority of our new equipment sales are predicated on exclusive distribution agreements we have with best-in-class OEMs.
Fluctuations in the level of our business activity could require some staffing level adjustments in response to actual or anticipated customer demand. Talent Development and Employee Training Our goal is to attract, develop, and retain a talented and high-performing workforce.
Fluctuations in the level of our business activity could require some staffing level adjustments in response to actual or anticipated customer demand. Lastly, dependent on performance, operating optimization initiatives which may be underpinned by strategic OEM eliminations and/or branch consolidations could result in headcount reductions.
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Additionally, we provide warehouse design and build services, automated equipment installation and system integration solutions within our Material Handling segment. Used equipment sales. We sell used equipment, primarily sourced from equipment trade-ins and the purchase of lease return assets. Used equipment sales, like new equipment sales, generate parts and services business for us. Parts sales.
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The sale of new equipment to customers, while profitable from a gross margin perspective, acts as a means of generating equipment field population and activity for our higher-margin aftermarket revenue streams, specifically service and parts.
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As an example, to leverage our prowess in e-mobility and meet the growing demand for commercial electric vehicles within our existing territories, we entered the over-the-road vehicle dealership industry by virtue of our partnership with Nikola and various charging and infrastructure related OEMs.
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We also sell tangential products and services related to our material handling equipment offerings which include, but are not limited to, automated equipment installation and warehouse management systems integration. 2 Used equipment sales.
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Our top ten customers combined accounted for approximately 7% of our total revenues in 2023. 4 Floor Plan Financing New equipment inventory is primarily financed with OEM floor plan facilities with an initial promotional period that is either subsidized or interest-free.
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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.
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Real-time data and analytics provide detailed visibility to information across all functional areas, promoting proactive, data-driven decisions. Over 75 points of integration with our OEMs have been implemented which have greatly streamlined activities in the areas of parts inventory management and pricing, warranty claims handling, accounts payable automation, and supporting commercial credit accounts.
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The majority of our parts inventory is made up of OEM replacement parts for those OEMs with which we have exclusive agreements to sell new equipment. Service support. We provide maintenance and repair services for customer-owned equipment and maintain our own rental fleet.
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Our critical business systems are deployed across a hybrid infrastructure, leveraging both on-premise and cloud environments to ensure resilience, scalability and optimal performance. 5 Product Warranties Product warranties for new equipment and parts are provided by our OEM partners. The term and scope of these warranties vary greatly by supplier and by product.
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We rent heavy construction, compact, aerial, material handling, and a variety of other types of equipment to our customers on a daily, weekly, and monthly basis.
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We are committed to fostering a diverse workforce and an inclusive environment and have instituted various initiatives to increase our diversity as it relates to recruiting and training opportunities. 6 Generally, the total number of employees does not significantly fluctuate throughout the year. However, acquisition activity may increase the number of our employees.
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Equipment rental is complementary to our new and used equipment sales and is an important component of our one-stop-shop model, allowing customers to be flexible with their capital spend on equipment needed to operate their businesses.
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Compensation and Benefits We are committed to providing competitive compensation and benefits programs for our employees as we believe they are core to an engaged and productive employee base. We believe our compensation programs align both individual and team contributions to promote our culture and drive our performance.
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Our business system is a full suite of highly integrated software solutions intended to manage equipment dealership activities at all essential levels. Real-time data and analytics provide detailed visibility to information across all functional areas, promoting proactive, data-driven decisions.
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Available Information We electronically file annual reports, quarterly reports, proxy statements and other reports and information statements with the SEC.
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Additionally, a notable portion of our construction segment operates in Florida, which can be impacted by severe summer heat, thunderstorms, tornados and hurricanes which can have an impact our customers and business operations.
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Competition The equipment distribution and service industry is competitive and fragmented, with large numbers of competitors operating on a regional or local scale. Within our territories, our competitors range from multi-location, regional operators to single-location dealers of competing equipment brands.
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Talent Development and Employee Training Our goal is to attract, develop, and retain a talented and high-performing workforce. We are committed to our employees and their development, and we strive to create opportunities for the continual professional development of our employee base. These opportunities include continuing education and specialty training.
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The Company may contribute a discretionary percentage of the amount deferred by the employee. Total contributions made by the Company to the 401(k) plan amounted to $5.8 million, $5.4 million and $4.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+15 added−10 removed77 unchanged
Third, manufacturers provide product warranties and, in some cases, service contracts to customers. Our technicians perform warranty and service contract work for equipment under manufacturer product warranties and service contracts, and direct bill the manufacturer as opposed to invoicing the customer. At any particular time, we have significant receivables from manufacturers for warranty and service work performed for customers.
Third, manufacturers provide product warranties and, in some cases, service contracts to customers. Our technicians perform warranty and service contract work for equipment under manufacturer product warranties and service contracts, and we direct bill the manufacturer as opposed to invoicing the customer. At any particular time, we have significant receivables from manufacturers for warranty and service work performed for customers.
Further, as the Company pursues our strategy to grow through acquisitions and pursue new initiatives that require IT solutions, we are expanding our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk, including emerging risks posed by artificial intelligence.
Further, as the Company pursues a strategy to grow through acquisitions and pursue new initiatives that require IT solutions, we are expanding our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk, including emerging risks posed by artificial intelligence.
Further, the inability to reach a feasible agreement could lead to the exit of region, business line or segment which could have an adverse effect on our results of operations.
Further, the inability to reach a feasible agreement could lead to the exit of a region, business line or segment, which could have an adverse effect on our results of operations.
The Company’s ability to make scheduled debt payments depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, economic, legislative, regulatory and other factors beyond the Company’s control.
The Company’s ability to make scheduled debt payments depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond the Company’s control.
All of these events could negatively impact the Company’s business, financial condition, results of operations and cash flows. Risk Related to Our Series A Preferred Stock and Depositary Shares The Series A Preferred Stock and the depositary shares rank junior to all our indebtedness and other liabilities and are effectively junior to all indebtedness and other liabilities of our subsidiaries.
These events could negatively impact the Company’s business, financial condition, results of operations and cash flows. Risk Related to Our Series A Preferred Stock and Depositary Shares The Series A Preferred Stock and the depositary shares rank junior to all our indebtedness and other liabilities and are effectively junior to all indebtedness and other liabilities of our subsidiaries.
The Company’s business exposes us to claims for personal injury, death or property damage resulting from the use of the equipment we rent or sell and from injuries caused in motor vehicle accidents in which the Company’s delivery and service personnel are involved and other employee related matters.
The Company’s business exposes us to claims for personal injury, death or property damage resulting from the use of the equipment we rent or sell and from injuries caused in motor vehicle accidents in which the Company’s delivery and service personnel are involved and claims related to other employee related matters.
Voting rights for holders of depositary shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of our preferred stock, or depositary shares representing interests in our preferred stock, or additional series of preferred stock we may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to our Board of Directors in the event six quarterly dividends (whether or not declared or consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to our articles of incorporation or certificate of designation (in some cases voting together with the holders of other outstanding series of our preferred stock as a single class) that adversely affect the rights of the holders of depositary shares representing interests in the Series A Preferred Stock (and other series of preferred stock, as applicable) or create additional classes or series of our stock that are senior 15 to the Series A Preferred Stock, provided that in any event adequate provision for redemption has not been made.
Voting rights for holders of depositary shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of our preferred stock, or depositary shares representing interests in our preferred stock, or additional series of preferred stock we may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to our Board of Directors in the event six quarterly dividends (whether or not declared or consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to our articles of incorporation or certificate of designation (in some cases voting together with the holders of other outstanding series of our preferred stock as a single class) that adversely affect the rights of the holders of depositary shares representing interests in the Series A Preferred Stock (and other series of preferred stock, as applicable) or create additional classes or series of our stock that are senior to the Series A Preferred Stock, provided that in any event adequate provision for redemption has not been made.
It is possible that these requirements will change or that liabilities will arise in the future in a manner that could have an adverse effect on the Company’s business, financial condition and results of operations. 16 Environmental laws also impose obligations and liability for the cleanup of properties affected by hazardous substance spills or releases.
It is possible that these requirements will change or that liabilities will arise in the future in a manner that could have an adverse effect on the Company’s business, financial condition and results of operations. Environmental laws also impose obligations and liability for the cleanup of properties affected by hazardous substance spills or releases.
If we are unable to control these benefits and costs, we may experience increased operating costs, which may adversely affect our financial condition and results of operations. Risks Related to the Company’s Growth, Acquisitions and Integration The Company may not be able to identify or complete transactions with attractive acquisition candidates.
If we are unable to control these benefits and costs, we may experience increased operating costs, which may adversely affect our financial condition and results of operations. 12 Risks Related to the Company’s Growth, Acquisitions and Integration The Company may not be able to identify or complete transactions with attractive acquisition candidates.
Additionally, to the extent our OEMs replacement parts are not cost competitive versus the competition this could impact the total cost of ownership of a piece of equipment from a customer perspective and ultimately lead to lost sales for the Company. The Company purchases a significant amount of our equipment from a limited number of manufacturers.
Additionally, to the extent our OEMs replacement parts are not cost competitive versus the competition this could impact the total cost of ownership of a piece of equipment from a customer perspective and ultimately lead to lost sales for the Company. 9 The Company purchases a significant amount of our equipment from a limited number of manufacturers.
The market value of used rental equipment depends on several factors including: the market price for new equipment of a like kind; wear and tear on the equipment relative to its age; worldwide and domestic demands for used equipment; the supply of used equipment on the market; and general economic conditions.
The market value of used equipment depends on several factors including: the market price for new equipment of a like kind; wear and tear on the equipment relative to its age; worldwide and domestic demands for used equipment; the supply of used equipment on the market; and general economic conditions.
These increases could materially impact the Company’s financial condition and results of operations in future periods if the Company is not able to pass such 9 cost increases through to the Company’s customers.
These increases could materially impact the Company’s financial condition and results of operations in future periods if the Company is not able to pass such cost increases through to the Company’s customers.
The Company’s business may not generate sufficient cash flow from operations in the future, which could result in the Company being unable to repay indebtedness or to fund other liquidity needs. 13 The Company may not be able to generate sufficient cash flow to service all of the Company’s indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
The Company’s business may not generate sufficient cash flow from operations in the future, which could result in the Company being unable to repay indebtedness or to fund other liquidity needs. 14 The Company may not be able to generate sufficient cash flow to service all of the Company’s indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
A significant or protracted disruption of fuel supplies could have an adverse effect on the Company’s financial condition and results of operations. 10 The Company is dependent on key personnel. A loss of key personnel could have an adverse effect on the Company’s business which could result in a decline in the Company’s revenues and profitability.
A significant or protracted disruption of fuel supplies could have an adverse effect on the Company’s financial condition and results of operations. 11 The Company is dependent on key personnel. A loss of key personnel could have an adverse effect on the Company’s business which could result in a decline in the Company’s revenues and profitability.
The Company’s inability to refinance the Company’s indebtedness or to do so upon attractive terms 14 could materially and adversely affect the Company’s business prospects, results of operations, financial condition and cash flows, and make us vulnerable to adverse industry and general economic conditions.
The Company’s inability to refinance its indebtedness or to do so upon attractive terms could materially and adversely affect the Company’s business prospects, results of operations and cash flows, financial condition, and make us vulnerable to adverse industry and general economic conditions.
Among other things, these integration risks could include: • the loss of key employees; • disruption of operations and business; • retention or transition of existing customers and vendors; • integration of corporate cultures and maintenance of employee morale; • inability to maintain and increase competitive presence; • customers and revenue losses; • inconsistencies in standards, control procedures, and policies; • problems with the assimilation of new operations, sites or personnel, which could divert resources from the Company’s regular operations; • impairment of goodwill or other acquisition-related intangible assets; • integration of financial reporting, treasury, and regulatory reporting functions; and/or • potential unknown liabilities.
Among other things, these integration risks could include: • the loss of key employees; • disruption of operations and business; • retention or transition of existing customers and vendors; • integration of corporate cultures and maintenance of employee morale; • inability to maintain and increase competitive presence; • customers and revenue losses; • the inability to properly implement the Company's standards, control procedures, and policies; • problems with the assimilation of new operations, sites or personnel, which could divert resources from the Company’s regular operations; • impairment of goodwill or other acquisition-related intangible assets; • integration of financial reporting, treasury, and regulatory reporting functions; and/or • potential unknown liabilities.
Risks Related to the Company’s Business and Industry The Company’s business could be adversely affected by declines in construction, material handling and environmental processing activities, or a downturn in the economy in general, which could lead to decreased demand for equipment, depressed equipment rental rates and lower sales prices, resulting in a decline in the Company’s revenues, gross margins and operating results.
Risks Related to the Company’s Business and Industry The Company’s business has in the past and could in the future be adversely affected by declines in construction, material handling, and environmental processing activities, or a downturn in the economy in general, which could lead to decreased demand for equipment, depressed equipment rental rates, and lower sales prices, resulting in a decline in the Company’s revenues, gross margins, and operating results.
Any significant decline in the selling prices for used equipment could have an adverse effect on the Company’s business, financial condition and results of operations. The Company incurs maintenance and repair costs associated with our rental fleet equipment that could have an adverse effect on our business in the event these costs are greater than anticipated.
Any significant decline in the selling prices for used equipment could have an adverse effect on the Company’s business, available liquidity, financial condition and results of operations. 10 The Company incurs maintenance and repair costs associated with our rental fleet equipment that could have an adverse effect on our business in the event these costs are greater than anticipated.
Despite security measures and business continuity plans, the Company’s IT networks and infrastructure may be vulnerable to damage, disruptions or shutdowns due to attacks by cyber criminals, breaches due to employee error or malfeasance or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist acts, natural disasters or other catastrophic events.
Despite security measures and business continuity plans, the Company’s IT networks and infrastructure are vulnerable to damage, disruptions or shutdowns due to the threat of attacks by cyber criminals, breaches due to employee error or malfeasance or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist acts, natural disasters or other catastrophic events.
Any failure to effectively prevent, detect, and/or recover from any such access, disclosure or other loss of information, or to comply with any such current or future law related thereto, could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage the Company’s reputation, which could adversely affect the Company’s business.
Any failure to effectively prevent, detect, and/or recover from any breach, disclosure or other loss of information, or to comply with any such current or future law related thereto, could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage the Company’s reputation, which could adversely affect the Company’s business, stock price and reputation.
The market value of any given piece of rental equipment could be less than its depreciated value at the time it is sold.
The market value of any given piece of rental or used equipment could be less than its depreciated value at the time it is sold.
Similarly, any increase in the cost of parts the Company purchases for resale could materially impact the Company’s financial condition and results of operations in future periods if the Company is not able to pass such cost increases through to the Company’s customers. The Company’s rental fleet is subject to market value risk upon disposition.
Similarly, any increase in the cost of parts the Company purchases for resale could materially impact the Company’s financial condition and results of operations in future periods if the Company is not able to pass such cost increases through to the Company’s customers. The Company’s rental fleet and used equipment is subject to market value risk.
If the Company is unable to fill and keep filled all of the Company’s senior management positions, or if the Company loses the services of any key member of the Company’s senior management team and is unable to find a suitable replacement in a timely manner, the Company may be challenged to effectively manage our business and execute our strategy.
If the Company is unable to recruit and keep talent in all of the Company’s senior management positions, or if the Company loses the services of any key member of the Company’s senior management team and is unable to find a suitable replacement in a timely manner, the Company may be challenged to effectively manage our business and execute our strategy.
Periods of decline could result in an overall decline in profitability and make it more difficult for the Company to make payments on our indebtedness and grow the Company’s business.
Periods of decline have in the past and could in the future result in an overall decline in profitability and make it more difficult for the Company to make payments on our indebtedness and grow the Company’s business.
Labor disputes could disrupt the Company’s ability to serve our customers and/or lead to higher labor costs. The Company has approximately 630 employees who are covered by a collective bargaining agreement and approximately 2,370 employees who are not represented by unions or covered by collective bargaining agreements.
Labor disputes could disrupt the Company’s ability to serve our customers and/or lead to higher labor costs. The Company has approximately 700 employees who are covered by a collective bargaining agreement and approximately 2,200 employees who are not represented by unions or covered by collective bargaining agreements.
The equipment dealership and rental industries are highly competitive and fragmented. Many of the markets in which the Company operates are served by a large number of competitors, ranging from national and multi-regional equipment dealerships and rental companies to small, independent businesses with a limited number of locations.
Many of the markets in which the Company operates are served by a large number of competitors, ranging from national and multi-regional equipment dealerships and rental companies to small, independent businesses with a limited number of locations.
The Company’s indebtedness may result in important consequences, such as: • increasing the Company’s vulnerability to general adverse economic, industry, and competitive conditions; • requiring the Company to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions, and other general corporate purposes; • limiting the Company’s flexibility in planning for, or reacting to, changes in the Company’s business and the industry in which we operate; • making it more difficult to refinance or pay our debts as they become due during adverse economic, financial market, or industry conditions; • placing the Company at a competitive disadvantage compared to our competitors that have less debt; and • limiting the Company’s ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes.
The Company’s indebtedness may result in important consequences, such as: • increasing the Company’s vulnerability to general adverse economic, industry, and competitive conditions; • requiring the Company to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions, and other general corporate initiatives; • limiting the Company’s flexibility in planning for, or reacting to, changes in the Company’s business and the industry in which we operate; • making it more difficult to refinance or pay our debts as they become due during adverse economic, financial market, or industry conditions; • placing the Company at a competitive disadvantage compared to our competitors that have less debt; • resulting in a downgrade in our credit rating, which could increase the cost of further borrowings; • requiring our debt to become due and payable upon a change in control; and • limiting the Company’s ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes.
Fluctuations in fuel costs or reduced supplies of fuel could harm the Company’s business. The Company could be adversely affected by limitations on fuel supplies or significant increases in fuel prices that result in higher costs related to the Company’s field service fleet and for transporting equipment from one location to another.
The Company could be adversely affected by limitations on fuel supplies or significant increases in fuel prices that result in higher costs related to deploying the Company’s field service fleet and for transporting equipment from one location to another.
Any disruption in any of these systems, including the Company’s customer management system, or the failure of any of these systems to operate as expected could, depending on the magnitude of the problem, adversely affect the Company’s operating results by limiting the Company’s capacity to effectively monitor and control the Company’s operations and adjust to changing market conditions.
Any disruption in any of these systems, including the Company’s customer management system, or the failure of any of these systems to operate as expected could, depending on the magnitude of the problem, adversely affect the Company’s operating results by limiting the Company’s capacity to effectively monitor and control the Company’s operations and adjust to changing market conditions, which in turn could adversely affect our financial results, stock price and reputation.
We expect the Company’s quarterly results to fluctuate in the future due to a number of factors, including: • general economic conditions in the markets where we operate; • the cyclical and seasonal nature of the Company’s customers’ business and our sales and rental patterns, particularly the Company’s construction customers; • the weather conditions, specifically in our northern markets; • the timeliness of OEM equipment deliveries; • changes in the size of the Company’s rental fleet, the rate at which we rent our fleet, and the price at which we sell equipment from our fleet; • changes in corporate or government spending for commercial and infrastructure projects; • changes in interest rates and related changes in the Company’s interest expense and debt service obligations; • changes or fluctuations in skilled technician headcount levels; • timing of technician non-billable hours primarily associated with holiday, paid time off and training programs; • the effectiveness of integrating acquired businesses and new start-up locations; and • timing of acquisitions and new location openings and related costs.
We expect the Company’s quarterly results to fluctuate in the future due to a number of factors, including: • general economic conditions in the markets where we operate; • the cyclical and seasonal nature of the Company’s customers’ business and our sales and rental patterns, particularly the Company’s construction customers; • the weather conditions, specifically in our northern markets; • the timeliness of OEM equipment deliveries; • ad hoc, period-based, competitive pricing programs offered by competitive equipment OEMs and their dealers that put our products at a disadvantage in a given market from a pricing perspective; • changes in the size of the Company’s rental fleet, the rate at which we rent our fleet, and the price at which we sell equipment from our fleet; • changes in corporate or government spending for commercial and infrastructure projects; • changes in interest rates and related changes in the Company’s interest expense and debt service obligations; • changes or fluctuations in skilled technician headcount levels; • timing of technician non-billable hours primarily associated with holiday, paid time off and training programs; • the effectiveness of integrating acquired businesses and new start-up locations; and • timing of acquisitions and new location openings and related costs.
If we determine our goodwill or other intangible assets have become impaired, we may incur impairment charges which would negatively impact our operating results. At December 31, 2023, we had $76.7 million of goodwill and $66.3 million of other intangible assets on our Consolidated Balance Sheet.
If we determine our goodwill or other intangible assets have become impaired, we may incur impairment charges which would negatively impact our operating results. At December 31, 2024, we had $77.5 million of goodwill and $54.7 million of other intangible assets on our Consolidated Balance Sheet.
The Company’s business may also be negatively impacted, either temporarily or long-term, by: • a reduction in spending levels by our customers; • the lack of availability of credit for our customers; • adverse changes in federal, state, and local government infrastructure spending and taxation; 7 • excess fleet in the equipment markets we participate in; • our inability to pass along operating cost increases related to inflation to customers; • an increase in costs generally, including the cost of inputs for our customers' operations, as a result of inflation or other factors; • adverse weather conditions or natural disasters which may affect a particular region; • a pandemic or similar national or global health crisis; • a labor work stoppage or shortage of skilled technicians; • a prolonged shutdown of the U.S. or local government; • an increase in interest rates; • adverse foreign currency fluctuations; • terrorism, war or hostilities involving the U.S. or Canada; • failure to execute on strategic plans generally, including those associated with commercial electric vehicle business model; • disruptions to global supply chains, specifically our major OEM partner supply chains; or • other unforeseen or catastrophic events.
The Company’s business has in the past and may in the future be negatively impacted, either temporarily or long-term, by: • a reduction in spending levels by our customers; • the lack of availability of credit for our customers; • adverse changes in federal, state, and local government infrastructure spending and taxation; • excess supply in the equipment markets we participate in; • our inability to pass along operating cost increases related to inflation or otherwise to customers; • an increase in costs generally, including the cost of inputs for our OEMs or customers' operations, as a result of tariffs, inflation or other factors; • adverse weather conditions or natural disasters which may affect a particular region; • a pandemic or similar national or global health crisis; • a labor work stoppage or shortage of skilled technicians; • labor market conditions in the U.S. or Canada that would impair the Company’s, our OEM’s, or our customers’ ability to hire and/or retain appropriately skilled employees to support ongoing operations; • a prolonged shutdown of the U.S., state or local government; • an increase in interest rates; • adverse foreign currency fluctuations; • terrorism, war or hostilities involving the U.S. or Canada; • our failure to execute on strategic plans generally, including those associated with commercial electric vehicle business model; • disruptions to global supply chains, specifically our major OEM partner supply chains; or • other unforeseen or catastrophic events. 8 The Company’s inability to forecast trends accurately may adversely impact the Company’s business and financial condition.
Our ability to pay cash dividends on the Series A Preferred Stock requires us to have either net profits or positive net assets (total assets less total liabilities), and that we have sufficient working capital in order to be able to pay our debts as they become due in the usual course of business.
Our ability to pay cash dividends on the Series A Preferred Stock is restricted by Delaware law and generally requires us to have either net profits or positive net assets (total assets less total liabilities) as calculated in accordance with the Delaware General Corporation Law, and that we have sufficient working capital in order to be able to pay our debts as they become due in the usual course of business.
The Company’s revenues and operating results may fluctuate, which could result in a decline in the Company’s profitability and make it more difficult for the Company to grow our business. The Company’s revenues and operating results may vary from quarter to quarter and by season.
Variations in the Company’s revenues and operating results have in the past and could in the future result in a decline in the Company’s profitability and make it more difficult for the Company to grow our business. The Company’s revenues and operating results vary from quarter to quarter and by season.
These factors include governmental regulations such as The Patient Protection and Affordable Care Act, which resulted in changes to the U.S. healthcare system and impose mandatory types of coverage, reporting and other requirements; return on plan assets; changes in actuarial valuations, estimates, or assumptions used to determine our benefit obligations for certain benefit plans, which require the use of significant estimates, including the discount rate, expected long-term rate of return on plan assets, mortality rates and the rates of increase in compensation and healthcare costs; for multiemployer plans, the outcome of collective bargaining and actions taken by trustees who manage the plans; and potential changes to applicable legislation or regulation. 11 The Company has various health plans that cover eligible employees, including a self-insured group health plan, workers compensation, and auto coverage which contain certain stop-loss provisions.
These factors include governmental regulations such as The Patient Protection and Affordable Care Act, which resulted in changes to the U.S. healthcare system and impose mandatory types of coverage, reporting and other requirements on U.S. companies; return on plan assets; changes in actuarial valuations, estimates, or assumptions used to determine our benefit obligations for certain benefit plans, which require the use of significant estimates, including the discount rate, expected long-term rate of return on plan assets, mortality rates and the rates of increase in compensation and healthcare costs; for multiemployer plans, the outcome of collective bargaining and actions taken by trustees who manage the plans; and potential changes to applicable legislation or regulation.
In these instances, the suppliers may unilaterally terminate distribution agreements with the Company at any time without cause. Any such actions could have an adverse effect on the Company’s business, financial condition and results of operations.
Additionally, most of our distribution agreements grant our suppliers the right to unilaterally terminate distribution agreements with the Company at any time without cause. Any such actions could have an adverse effect on the Company’s business, financial condition and results of operations.
Our existing subsidiaries are, and any future subsidiaries would be, separate legal entities and have no legal obligation to pay any amounts with respect to dividends due on the Series A Preferred Stock.
In addition, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of our existing subsidiaries and any future subsidiaries. Our existing subsidiaries are, and any future subsidiaries would be, separate legal entities and have no legal obligation to pay any amounts with respect to dividends due on the Series A Preferred Stock.
Uncertainty regarding future equipment product demand could cause the Company to maintain excess equipment inventory and increase the Company’s equipment inventory carrying costs. Alternatively, this forecasting difficulty could cause a shortage of equipment for sale or rental that could result in an inability to satisfy demand for the Company’s products and a loss of market share.
Alternatively, this forecasting difficulty could cause a shortage of equipment for sale or rental that could result in an inability to satisfy demand for the Company’s products and a loss of market share.
Any significant diversion of management’s attention or any major difficulties encountered in the locations the Company opens in the future could have an adverse effect on the Company’s business, financial condition and results of operations, which could decrease the Company’s profitability and make it more difficult for the Company to grow.
Any significant diversion of management’s attention or any major difficulties encountered in the locations the Company opens in the future could have an adverse effect on the Company’s business, financial condition and results of operations, which could decrease the Company’s profitability and make it more difficult for the Company to grow. 13 The Company may not be able to successfully or profitably launch our commercial electric vehicle and hydrogen related businesses.
The Company’s equipment is principally used in connection with construction, material handling, and environmental processing activities. Consequently, a downturn in these activities, or the economy in general, may lead to a decrease in the demand for equipment and services or depress rental rates and the sales prices for the Company’s replacement parts and equipment.
Consequently, a downturn in these activities, or the economy in general, has in the past and may in the future lead to a decrease in the demand for equipment and services or depress rental rates and the sales prices for the Company’s replacement parts, services, and equipment.
If the Company is required to pay significantly higher premiums for insurance, is not able to maintain insurance coverage at affordable rates or if we must pay amounts in excess of claims covered by the Company’s insurance, the Company could experience higher costs that could adversely affect the Company’s financial condition and results of operations.
If the Company is required to pay significantly higher premiums for insurance, is not able to maintain insurance coverage at affordable rates or if we must pay amounts in excess of claims covered by the Company’s insurance, the Company could experience higher costs that could adversely affect the Company’s financial condition and results of operations. 17 The Company has operations throughout the U.S. and Canada and purchases capital goods from Europe which exposes us to multiple international, federal, state and local regulations.
Failure to execute on this plan or a failure of the Company, or Nikola, to successfully capitalize on the transition of long-haul trucking to battery electric and fuel cell powered vehicles could cause a diversion of management’s attention and have an adverse effect on the Company’s business, financial condition and results of operations, which could decrease the Company’s profitability and make it more difficult for the Company to grow.
Failure to execute on this plan or a failure of the Company, or our partners, in its choice of strategy to pursue zero-emission commercial vehicles or to successfully capitalize on its strategy could cause a diversion of management’s attention and have an adverse effect on the Company’s business, financial condition and results of operations, which could decrease the Company’s profitability and make it more difficult for the Company to grow.
In addition, prevailing interest rates or other factors at the time of refinancing could increase the Company’s interest expense. A refinancing of the Company’s indebtedness could also require us to comply with more onerous covenants and further restrict the Company’s business operations.
A refinancing of the Company’s indebtedness could also require us to comply with more onerous covenants and further restrict the Company’s business operations.
These laws and requirements address multiple aspects of the Company’s operations, such as worker safety, consumer rights, privacy, employee benefits, taxation, securities law compliance and more, and can often have different requirements in different jurisdictions.
The Company also has seven locations throughout Canada and acquires inventory from Europe which exposes us to foreign regulations and taxation as well. These laws and requirements address multiple aspects of the Company’s operations, such as worker safety, consumer rights, privacy, employee benefits, taxation, securities law compliance and more, and can often have different requirements in different jurisdictions.
In addition, the Company incurs various costs when integrating newly acquired businesses or opening new start-up locations, and the profitability of a new location is generally expected to be lower in the initial months of operation. 8 The Company is subject to competition, which may have an adverse effect on the Company’s business by reducing the Company’s ability to increase or maintain revenues or profitability.
In addition, the Company incurs various costs when integrating newly acquired businesses or opening new start-up locations, and the profitability of a new location is generally expected to be lower in the initial months or years of operation.
The Company’s inability to forecast trends accurately may adversely impact the Company’s business and financial condition. An economic downturn or economic uncertainty makes it difficult for the Company to forecast trends, which may have an adverse impact on the Company’s business and financial condition.
An economic downturn or economic uncertainty makes it difficult for the Company to forecast trends, which may have an adverse impact on the Company’s business and financial condition. Uncertainty regarding future equipment demand could cause the Company to maintain excess equipment inventory and increase the Company’s equipment inventory carrying costs.
The Company has operations throughout the U.S. and Canada and purchases capital goods from Europe which exposes us to multiple international, federal, state and local regulations. Changes in applicable law, regulations or requirements, or the Company’s material failure to comply with any of them, can increase the Company’s costs and have other negative impacts on the Company’s business.
Changes in applicable law, regulations or requirements, or the Company’s material failure to comply with any of them, can increase the Company’s costs and have other negative impacts on the Company’s business. The Company’s 80 branch locations in the U.S. are located in 15 different states, which exposes us to different federal, state, and local regulations and taxation.
Approximately 47% of the Company’s equipment sales and aftermarket parts are purchased from five major manufacturers (Hyster-Yale, Kubota, JCB, Doppstadt and Volvo).
During the year ended December 31, 2024, approximately 58% of the Company’s equipment and aftermarket parts sales were purchased from five major manufacturers (Volvo, Hyster-Yale, Kubota, CNH, and JCB).
As a result, we may not have sufficient funds remaining to satisfy our dividend obligations relating to our Series A Preferred Stock if we incur additional indebtedness. In addition, our existing credit arrangements include events of default which could result in acceleration of such indebtedness upon the occurrence of certain events, including failure to meet certain financial covenants.
In addition, our existing credit arrangements include events of default which could result in acceleration of such indebtedness upon the occurrence of certain events, including failure to meet certain financial covenants. 16 We may not be able to pay dividends on the Series A Preferred Stock if we have insufficient cash or available ‘surplus’ as defined under Delaware law to make such dividend payments.
The Company’s business could be adversely affected if we are unable to obtain additional capital as required and could result in a decrease in the Company’s revenues and profitability. In addition, the Company’s inability to refinance our indebtedness on favorable terms, or at all, could adversely affect the Company’s liquidity and our ongoing results of operations.
To the extent we are unable to renew, or renew on favorable terms, any of our OEM captive floor plan finance agreements our liquidity position, financial condition, cash flows and results from operations could be adversely impacted. 15 The Company’s business could be adversely affected if we are unable to obtain additional capital as required and could result in a decrease in the Company’s revenues and profitability.
The cost of new equipment the Company sells or purchases for use in our rental fleet may increase and, in some cases, the Company may not be able to procure new equipment on a timely basis due to supplier constraints.
The cost of new equipment the Company sells or purchases for use in our rental fleet may increase and the Company may not be able to pass these increases along to customers or otherwise offset these cost increases in our operation.
If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price .
If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, as such standards are modified, supplemented or amended from time to time, our ability to record, process and report financial information accurately, prevent fraud, and to prepare financial statements within required time periods could be adversely affected.
The Company cannot be sure we will be able to identify attractive start-up locations and opening start-up locations may involve significant costs and limit the Company’s ability to expand our operations. 12 The Company may not have sufficient management, financial, and other resources to successfully operate new locations.
The success of this element of the Company’s growth strategy depends, in part, on identifying strategic start-up locations. The Company cannot be sure we will be able to identify attractive start-up locations and opening start-up locations may involve significant costs and limit the Company’s ability to expand our operations.
If the Company fails to maintain an effective system of internal controls, the Company may not be able to accurately report financial results or prevent fraud. Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm the Company’s business.
If the Company fails to maintain an effective system of internal controls, the Company may not be able to accurately report financial results or prevent fraud and losses of investor confidence and an adverse impact on our stock price could result.
Also, if there are significant increases in healthcare costs, the premiums paid by the Company could adversely affect the Company's financial condition and results of operations. Health benefit plan expenses, including benefits paid and insurance premiums, totaled approximately $29.9 million, $25.6 million, and $21.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Health benefit plan expenses, including benefits paid and insurance premiums, totaled approximately $30.9 million, $29.9 million, and $25.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Any additional indebtedness the Company incurs will make us more vulnerable to economic downturns and limit the Company’s ability to withstand competitive pressures. Moreover, the Company may not be able to obtain additional capital on acceptable terms, if at all. If we are unable to obtain sufficient additional financing in the future, the Company’s business could be adversely affected.
Moreover, the Company may not be able to obtain additional capital on acceptable terms, if at all. If we are unable to obtain sufficient additional financing in the future, the Company’s business could be adversely affected. In addition, prevailing interest rates or other factors at the time of refinancing could increase the Company’s interest expense.
The Company may not be able to successfully or profitably launch our commercial electric vehicle and hydrogen related businesses. With our existing expertise in electro-mobility, we have elected to pursue the strategic opportunity to leverage our knowledge to meet the growing demand for commercial electric vehicles and deliver world-class service to commercial electric vehicle customers within our existing territories.
With our existing expertise in electro-mobility, we have elected to pursue the strategic opportunity to leverage our knowledge to meet the growing demand for zero-emission commercial vehicles and deliver service to commercial vehicle fleet customers within our existing territories. This strategic opportunity requires us to devote certain resources to it, including the time and attention of management.
Hydrogen gas will also power Nikola’s fuel cell electric vehicle in the future.
We believe, like several other market participants, that hydrogen gas will also power fuel cell electric vehicles in the future.
The cash the Company generates from our business, together with cash we may borrow, if credit is available, may not be sufficient to fund the Company’s capital requirements. The Company may require additional financing to obtain capital for, among other purposes, purchasing equipment, completing acquisitions, establishing new locations and to repay or refinance existing indebtedness.
The Company may require additional financing to obtain capital for, among other purposes, purchasing equipment, completing acquisitions, establishing new locations and to repay or refinance existing indebtedness. Any additional indebtedness the Company incurs will make us more vulnerable to business downturns and limit the Company’s ability to withstand competitive pressures.
While we endeavor to purchase insurance coverage appropriate to our risk assessment, we are unable to predict with certainty the frequency, nature or magnitude of claims. Our business may be adversely impacted if our insurance proves to be inadequate.
The Company has various health plans that cover eligible employees, including a self-insured group health plan, workers compensation, and auto coverage which contain certain stop-loss provisions. While we endeavor to purchase insurance coverage appropriate to our risk assessment, we are unable to predict with certainty the frequency, nature or magnitude of claims.
In addition, claims associated with risks we have retained through our self-insurance may exceed our recorded liabilities which could negatively impact future earnings. Accrued health insurance for both known claims and an estimated amount of claims incurred but not reported was $3.1 million and $1.8 million, as of December 31, 2023 and 2022, respectively.
Our business may be adversely impacted if our insurance proves to be inadequate. In addition, claims associated with risks we have retained through our self-insurance may exceed our recorded liabilities which could negatively impact future earnings.
Removed
The Company previously identified one material weakness in our internal controls related to ineffective controls over the sales process. If we fail to maintain an effective system of internal control in the future, losses of investor confidence and an adverse impact on our stock price could result.
Added
The Company’s equipment is principally used in connection with construction, material handling, and environmental processing activities.
Removed
As disclosed in Part II, Item 9A, our Annual Report on Form 10-K as of December 31, 2022, management previously identified one material weakness in internal controls. There were ineffective controls over the sales process, including proper review and authorization of pricing and discounts, work orders, sales agreements, and rental contracts, which in the aggregate constituted a material weakness.
Added
The Company is subject to competition, which may have an adverse effect on the Company’s business by reducing the Company’s ability to increase or maintain revenues or profitability. The equipment dealership and rental industries are highly competitive and fragmented.
Removed
Throughout 2023, the Company implemented measures to remediate the ineffective controls then completed the testing of the design and operating effectiveness of the controls. Management has determined the controls are adequately designed and operating effectively and consider this material weakness identified in the prior year to be remediated as of December 31, 2023.
Added
Additionally, the Company’s collateral base for borrowings, and thus available liquidity, is linked to the market value, obtained via third-party appraisals, of its rental fleet and used equipment.
Removed
If the Company fails to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, the Company could be subject to regulatory scrutiny, civil or criminal penalties or stockholder litigation.
Added
The Company faces risks from cybersecurity threats that could potentially have an adverse effect on our business, financial condition, results of operations, cash flows and reputation. Although such risks have not materially affected our business, to date, we have experienced various immaterial threats to our data and systems.
Removed
In addition, failure to maintain effective internal controls could result in financial statements that do not accurately reflect the Company’s financial condition or results of operations.
Added
We are in the midst of a multiyear process of implementing a new ERP system. Implementing a new ERP system is not only costly but complex and difficult. Implementing a new ERP system can negatively affect not only financial accounting and reporting processes, but also external commercial activities such as order receipt and product delivery.
Removed
The success of this element of the Company’s growth strategy depends, in part, on identifying strategic start-up locations.
Added
We cannot be assured that we will successfully implement our new ERP system or that we will avoid these and other negative impacts from our implementation efforts. Fluctuations in fuel costs or reduced supplies of fuel could harm the Company’s business.
Removed
Accordingly, the Company has an 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, New England, Florida, Michigan and Illinois markets. This strategic opportunity requires us to devote certain resources to it, including the time and attention of management.
Added
This could subject us to regulatory scrutiny, civil or criminal penalties, stockholder litigation or investigations requiring management resources and payment of legal and other expenses as well as negatively affect investor confidence in our financial statements and adversely impact our stock price .
Removed
In addition, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities (as well as any preferred equity interests held by others) of our existing subsidiaries and any future subsidiaries.
Added
Accrued health insurance for both known claims and an estimated amount of claims incurred but not reported was $5.1 million and $3.1 million, as of December 31, 2024 and 2023, respectively. Also, if there are significant increases in healthcare costs, the premiums paid by the Company could adversely affect the Company's financial condition and results of operations.
Removed
We may not be able to pay dividends on the Series A Preferred Stock if we have insufficient cash or available ‘surplus’ as defined under Delaware law to make such dividend payments.
Added
The Company may not have sufficient management, financial, and other resources to successfully operate new locations.
Removed
The Company’s 76 branch locations in the U.S. are located in 15 different states, which exposes us to different federal, state, and local regulations and taxation. The Company also has seven locations throughout Canada and acquires inventory from Europe which exposes us to foreign regulations and taxation as well.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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This allows us to respond and proactively mitigate cybersecurity risks, underscoring our commitment to the confidentiality, integrity, and availability of our data and systems. The Company has processes to oversee and identify risks from cybersecurity threats associated with our use of third-party service providers.
This allows us to respond and mitigate cybersecurity risks, underscoring our commitment to the confidentiality, integrity, and availability of our data and systems. The Company has processes to oversee and identify risks from cybersecurity threats associated with our use of third-party service providers.
As part of our annual security commitment, we undergo annual penetration testing to assess whether our necessary security controls are maintained. The Company faces risks from cybersecurity threats that could potentially have an adverse effect on our business, financial condition, results of operations, cash flows and/or reputation.
As part of our security commitment, we undergo penetration testing to assess whether our necessary security controls are maintained. The Company faces risks from cybersecurity threats that could potentially have an adverse effect on our business, financial condition, results of operations, cash flows and reputation.
Item 1C. Cybersecurity. Governance Governance and oversight of cybersecurity risks and strategies form a core component of our risk management framework. Recognizing the critical importance of cybersecurity in protecting our operations and preserving shareholder value, we have established a governance structure that emphasizes proactive risk identification, management, and mitigation across the entirety of our organization.
Item 1C. Cybersecurity. Governance Governance and oversight of cybersecurity risks and strategies form a core component of our risk management framework. Recognizing the critical importance of cybersecurity in protecting our operations and preserving shareholder value, we have established a governance structure that emphasizes risk identification, management, and mitigation across our organization.
Third parties routinely assess our security practices providing tactical assistance or strategic guidance through audits and penetration tests. All members of the team routinely discuss emerging security threats and ways to mitigate risk. Strategy We utilize an in-depth layered approach to security.
Our internal team is bolstered by strategic third-party security partners leveraged to provide 24x7 monitoring and response. Third parties routinely assess our security practices providing tactical assistance or strategic guidance through audits and penetration tests. All members of the team routinely discuss emerging security threats and ways to mitigate risk. Strategy We utilize an in-depth layered approach to security.
During these critical meetings, several pivotal areas are reviewed to assess the adequacy and effectiveness of our cybersecurity measures: • Incident Response: Evaluation of our readiness and response strategies to cybersecurity incidents, positioning us to quickly and effectively mitigate any potential impacts. • Cybersecurity Industry Updates: Review of recent industry developments (i.e., new threats/tactics, industry news) to comply and adapt our strategies accordingly. • Acquisition Security Integration: Discussion on the security aspects of recent or upcoming acquisitions, focusing on the integration of their cybersecurity frameworks into our broader security posture. • Key Initiatives: Reflection on the major cybersecurity initiatives undertaken in the past year, assessing their outcomes and lessons learned. • Goals: Setting forth our cybersecurity objectives for the coming year, aligning them with our overall business strategy and risk management framework. • Employee Security Awareness and Training: Results from our regular testing and training of employees is presented and discussed. • Penetration Test Results: Analysis of the findings from our regular penetration testing exercises, which help identify vulnerabilities and strengthen our defenses. • Questions and Answers: An open forum for the Audit Committee to seek clarifications and provide guidance on cybersecurity matters, fostering a culture of transparency and continuous improvement.
During these critical meetings, several pivotal areas are reviewed to assess the adequacy and effectiveness of our cybersecurity measures: • Incident Response: Evaluation of our readiness and response strategies to potential cybersecurity incidents. • Cybersecurity Industry Updates: Review of recent industry developments (i.e., new threats/tactics, industry news) to focus on compliance and adaptation of our strategies accordingly. • Acquisition Security Integration: Discussion on the security aspects of recent or upcoming acquisitions, focusing on the integration of their cybersecurity frameworks into our broader security posture. • Employee Security Awareness and Training: Information regarding our regular testing and training of employees is presented and discussed. • Penetration Test Results: Analysis of our regular penetration testing exercises, which help identify vulnerabilities and strengthen our defenses. • Questions and Answers: An open forum for the Audit Committee to seek clarifications and provide guidance on cybersecurity matters, fostering a culture of transparency and continuous improvement.
Our strategy includes the deployment of advanced security products and rigorous penetration testing to identify and mitigate vulnerabilities by continuous vulnerability scanning and round-the-clock monitoring by both internal and external teams.
Our strategy includes the deployment of advanced security products and penetration testing to identify and mitigate vulnerabilities by continuous vulnerability scanning and monitoring by both internal and external teams. This approach is bolstered by backup and recovery protocols, including data resilience, email security measures and endpoint detection and response systems to thwart malicious activities.
An internal team of cybersecurity experts execute our cybersecurity program while our VP of Information Services provides executive oversight. Combined, our experts bring multiple decades of cybersecurity experience and have earned cybersecurity-related certifications. Our internal team is bolstered by strategic third-party security partners leveraged to provide 24x7 monitoring and response.
Management Our Senior Director of IT and Director of Security and Compliance have primary responsibility for assessing and managing cybersecurity risks. An internal team of cybersecurity professionals execute our cybersecurity program while our VP of Information Services provides executive oversight. Combined, our experts bring multiple decades of cybersecurity experience and have earned cybersecurity-related certifications.
Our incident response plan is designed to address security incidents promptly and effectively, supported by stringent information security policies and the implementation of a Security Information and Event Manager (SIEM) system for real-time analysis and reporting of security events and incidents. Furthermore, identity management and mobile device management extend our security perimeter, safeguarding against both external and internal threats.
Additionally, our commitment to security is evident in our security awareness training for all employees, dark web monitoring, and 24x7 threat monitoring. Our incident response plan is designed to address security incidents effectively, supported by stringent information security policies and the implementation of a security information and event manager system for real-time analysis and reporting of security events and incidents.
Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have experienced threats to and breaches of our data and systems.
Although such risks have no t materially affected our business, to date, we have experienced various immaterial threats to our data and systems.
Key to the Audit Committee's effectiveness is its regular engagement with our cybersecurity team, as further described below, a practice that provides direct communication and alignment on cybersecurity matters.
Central to our governance approach is the involvement of our Audit Committee, which maintains oversight over the Company's cybersecurity strategy . 18 Key to the Audit Committee's role is its periodic engagement with our cybersecurity team, as further described below, which provides direct communication and alignment on cybersecurity matters between members of our board and management.
This structured approach to governance and oversight, with a clear emphasis on receiving feedback allows us to align with the entire Alta organization.
This structured approach to governance and oversight, with an emphasis on receiving feedback allows us to align across the Alta organization. By prioritizing the identification and management of cybersecurity risks, we aim to safeguard our assets and maintain the continuity of our business operations in the face of evolving cyber threats.
Removed
Central to our governance approach is the active involvement of our Audit Committee, which plays a vital role in overseeing the Company's cybersecurity strategy. Alta's Audit Committee is a subset of our Board of Directors, which maintains oversight of our strategic direction regarding cybersecurity.
Removed
By prioritizing the identification and management of cybersecurity risks at the highest levels, we aim to 17 safeguard our assets, protect shareholder interests, and maintain the continuity of our business operations in the face of evolving cyber threats. Management Our Senior Director of IT and Director of Security and Compliance have primary responsibility for assessing and managing cybersecurity risks.
Removed
This proactive stance is further bolstered by backup and recovery protocols, ensuring data resilience, and enhanced by email security measures and endpoint detection and response systems to thwart malicious activities. Additionally, our commitment to security best practices is evident in our implementation of privileged access management, security awareness training for all employees, dark web monitoring, and 24x7 threat monitoring.

Item 2. Properties

Properties — owned and leased real estate

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United States Connecticut (CE 1, MH 1, OTH 1) Maine (CE 1, MH 1) Ohio (CE 2, MD 1) Florida (CE 9, OTH 1) Michigan (CE 12, MH 10, OTH 1) Pennsylvania (CE 2) Illinois (CE 7, MH 4, OTH 1) New Hampshire (CE 2, MH 1) Rhode Island (MH 1) Indiana (CE 1, MH 2) Nevada (MD 1) Vermont (MH 1) Massachusetts (CE 2, MH 5, OTH 1) New York (CE 3, MH 10, OTH 2) Virginia (MH 1) Canada Ontario (CE 1, MD 1, MH 3) Quebec (CE 1, MH 1) 18
United States Connecticut (MH 1, CE 1, OTH 1) Maine (MH 1, CE 1) Ohio (CE 2, MD 1) Florida (CE 10, OTH 1) Michigan (MH 10, CE 11, OTH 2) Pennsylvania (CE 4) Illinois (MH 4, CE 7, OTH 1) Nevada (MD 1) Rhode Island (MH 1) Indiana (MH 2, CE 1) New Hampshire (MH 1, CE 2) Vermont (MH 1) Massachusetts (MH 5, CE 1, OTH 1) New York (MH 9, CE 3, OTH 2) Virginia (MH 1) Canada Ontario (MH 3, CE 1, MD 1) Quebec (MH 1, CE 1)
Item 2. Pr operties. As of December 31, 2023, we leased substantially all our facilities used in our operations. These leases are generally with terms ranging from month-to-month at some locations to an expiration date in 2037 and are typically structured to include renewal options at our election.
Item 2. Pr operties. As of December 31, 2024, we leased substantially all our facilities used in our operations. These leases are generally with terms ranging from month-to-month at some locations to an expiration date in 2039 and are typically structured to include renewal options at our election.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proceedings. Other than routine legal proceedings incident to our business, there are no material legal proceedings, where the potential liability is not offset by expected insurance proceeds, to which we are a party or to which any of our property is subject. Item 4. Mine Safe ty Disclosures. Not applicable. 19 PART II
Added
Item 3. Legal Proceedings. The information required with respect to this item can be found in Note 11, Contingencies, of the notes to the consolidated financial statements contained in this Annual Report and is incorporated by reference into this Item 3. Item 4. Mine Safe ty Disclosures. Not applicable. 20 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Dividends During the years ended December 31, 2023 and 2022, we paid quarterly cash dividends totaling $2,500 per share of our Series A Preferred Stock, or $2.50 per depositary share, which was $3.0 million each year.
Dividends During the years ended December 31, 2024 and 2023, we paid quarterly cash dividends totaling $2,500 per share of our Series A Preferred Stock, or $2.50 per depositary share, which was $3.0 million each year.
During the years ended December 31, 2023 and 2022, we declared and paid quarterly cash dividends on common stock and dividend equivalents on stock-based compensation totaling $0.228 and $0.114 per share, respectively, which was $7.6 million and $3.7 million, respectively.
During the years ended December 31, 2024 and 2023, we declared and paid quarterly cash dividends on common stock and dividend equivalents on stock-based compensation totaling $0.228 per share each year, which was $7.8 million and $7.6 million, respectively.
Subject to applicable rules and regulations, the Company may repurchase shares of our common stock from time to time in the open market or by negotiated transactions.
Subject to applicable rules and regulations, the Company may repurchase shares of our common stock from time to time in the open market or by negotiated transactions and in compliance with Rule 10b-18 of the Exchange Act.
The peer group consists of the following companies: MRC Global Inc.; Herc Holdings Inc.; MarineMax, Inc.; Titan Machinery Inc.; NOW Inc.; OneWater Marine Inc.; Trinity Industries, Inc.; Global Industrial Company; Astec Industries, Inc.; DXP Enterprises, Inc.; America’s Car-Mart, Inc.; H&E Equipment Services, Inc.; and McGrath RentCorp.
The peer group for 2024 consists of the following companies: MRC Global Inc.; Herc Holdings Inc.; BlueLinx Holdings Inc.; Trinity Industries, Inc; MarineMax, Inc.; DNOW Inc.; The Manitowoc Company, Inc.; Titan Machinery Inc.; Custom Truck One Source, Inc.; OneWater Marine Inc.; DXP Enterprises, Inc.; H&E Equipment Services, Inc.; Astec Industries, Inc.; Monro, Inc.; Global Industrial Company; America’s Car-Mart, Inc.; and McGrath RentCorp.
Holders As of March 11, 2024, there were 8 active holders of record of our common stock and 1 active holder of record of our depositary shares.
Holders As of March 3, 2025, there were 8 holders of record of our common stock and 1 holder of record of our preferred stock depositary shares.
During 2023, 84,554 shares of common stock were purchased by our employees under the ESPP and will be issued in 2024. 20 Performance Graph The following graph compares the cumulative stockholder return of the Company's common stock as of the last trading day of each fiscal year since our initial public offering with that of the Russell 2000 Index and an industry peer group selected by us.
Performance Graph The following graph compares the cumulative stockholder return ("CSR") of the Company's common stock as of the last trading day of each fiscal year since our initial public offering with that of the Russell 2000 Index and an industry peer group selected by us.
Securities Repurchases On July 6, 2022 the Company's Board approved a share repurchase program authorizing Alta to repurchase shares of our common stock for an aggregate purchase price of not more than $12.5 million. The share repurchase program is in accordance with Rule 10b-18 of the Exchange Act.
Securities Repurchases On July 6, 2022 the Company's Board approved a share repurchase program authorizing Alta to repurchase shares of our common stock for an aggregate purchase price of not more than $12.5 million. On October 30, 2024, the Company's Board of Directors approved an increase to the share repurchase program authorization from $12.5 million to $20.0 million.
The performance graph comparison assumes $100 was invested in our common stock, Russell 2000 Index and our peer group on February 14, 2020 and all dividends have been reinvested. Ticker 2/14/2020 12/31/2021 12/31/2022 12/31/2023 Alta Equipment Group ALTG 100.00 141.04 128.19 122.17 Peer Group Various 100.00 161.79 149.21 163.80 Russell 2000 Index RUT 100.00 133.05 104.37 120.12 Item 6. [Reserved].
Ticker 2/14/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Alta Equipment Group ALTG 100.00 95.18 141.04 128.19 122.17 66.49 Peer Group Various 100.00 113.71 161.79 149.21 163.80 155.78 Russell 2000 RUT 100.00 117.02 133.05 104.37 120.12 132.15 22 Item 6. [Reserved].
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings We issued 212,400 shares during the year ended December 31, 2022 that were not registered under the Securities Act. These shares were used as consideration in connection with the purchase of Ecoverse.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings In connection with the purchases of Ecoverse and Ault Industries, LLC ("Ault"), we issued 339,847 shares and 163,880 shares, respectively, during the year ended December 31, 2024 that were not registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of Securities Act of 1933, as amended.
The stock repurchase program does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase program at any time. No share repurchases have been made under this program and the Company has $12.5 million of remaining authorization as of December 31, 2023.
The stock repurchase program does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase program at any time. 21 The table below sets forth information regarding repurchases by the Company of its common stock during the fourth quarter of 2024.
Removed
The ESPP authorizes up to 325,000 shares of common stock to be issued and purchased by employees of the Company through payroll deductions.
Added
Our ability to pay cash dividends is restricted by Delaware law and generally requires us to have either net profits or positive net assets (total assets less total liabilities) as calculated in accordance with the Delaware General Corporation Law, and that we have sufficient working capital in order to be able to pay our debts as they become due in the usual course of business.
Added
ISSUER PURCHASES OF EQUITY SECURITIES Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program (in millions) (1) October 1, 2024 - October 31, 2024 — — — 18.0 November 1, 2024 - November 30, 2024 218,152 7.57 218,152 16.3 December 1, 2024 - December 31, 2024 276,034 7.75 276,034 14.2 Total 494,186 7.67 494,186 14.2 (1) Includes commission costs.
Added
The peer groups used to calculate Peer Group CSR in prior years are disclosed in our 2024 and 2023 proxy statements. The performance graph comparison assumes $100 was invested in our common stock, Russell 2000 Index and our peer group on February 14, 2020 and all dividends have been reinvested.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Our operating expenses consist principally of selling, general and administrative expenses, which primarily include personnel costs associated with our sales and administrative staff and expenses associated with the deployment of our service vehicle fleet and occupancy expenses. In addition, we have interest expense related to our floor plan payables, finance leases, line of credit, and secured second lien notes.
Our operating expenses consist principally of selling, general and administrative expenses, which primarily include personnel costs associated with our sales and administrative staff and expenses associated with the deployment of our service vehicle fleet and occupancy expenses. In addition, we have interest expense related to our floor plan payables, finance leases, line of credit, and senior secured second lien notes.
Cash Requirements Related to Operations 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 line of credit and floor plans payable, fund acquisitions, meet debt service requirements and fund the preferred stock and common stock dividends.
Cash Requirements Related to Operations 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 line of credit and floor plans payable, fund acquisitions, meet debt service requirements, stock repurchases, and fund the preferred stock and common stock dividends.
Equipment inventory and rental fleet acquired in the transaction are 34 valued at fair value, which approximates a market participant’s estimated selling price adjusted for (1) costs to sell and (2) a reasonable profit allowance. In addition to long-lived assets, we also acquire other assets and assume liabilities.
Equipment inventory and rental fleet acquired in the transaction are valued at fair value, which approximates a market participant’s estimated selling price adjusted for (1) costs to sell and (2) a reasonable profit allowance. In addition to long-lived assets, we also acquire other assets and assume liabilities.
Equipment Inventory Availability, Rental Fleet Investment and Product Support Throughout 2021 and 2022, our industry was unfavorably impacted by equipment supply chain constraints leading to shortages across construction and material handling equipment categories and limiting our ability to meet customer demand and potentially increase our market share.
Equipment Inventory Availability, Rental Fleet Investment and Product Support Trends Throughout 2021 and 2022, our industry was unfavorably impacted by equipment supply chain constraints leading to shortages across construction and material handling equipment categories and limiting our ability to meet customer demand and potentially increase our market share.
Cost of parts sales represents the average cost of parts used in the maintenance and repair of customer-owned equipment we service or parts sold directly to customers for their owned equipment (e.g., over-the-counter parts sales). 23 Services revenues. Cost of service revenues primarily represents the labor costs attributable to services provided for the maintenance and repair of customer-owned equipment.
Cost of parts sales represents the average cost of parts used in the maintenance and repair of customer-owned equipment we service or parts sold directly to customers for their owned equipment (e.g., over-the-counter parts sales). Services revenues. Cost of service revenues primarily represents the labor costs attributable to services provided for the maintenance and repair of customer-owned equipment.
Based on our current level of operations and given the current state of the capital markets, we believe our cash flows from operations, available cash, and 33 available borrowings under the line of credit will be adequate to meet our future liquidity needs for the foreseeable future.
Based on our current level of operations and given the current state of the capital markets, we believe our cash flows from operations, available cash, and available borrowings under the line of credit will be adequate to meet our future liquidity needs for the foreseeable future.
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.
In response to changing economic conditions, we have the flexibility to modify our capital expenditures, especially as it relates to rental fleet. 36 To service our debt, we will require a significant amount of cash.
Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation and employee benefits, such as medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, insurance, IT, office and shop supplies, general corporate costs, depreciation on non-sales and rental related assets and intangible amortization.
Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation, sale commissions, and employee benefits, such as medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, insurance, IT, office and shop supplies, general corporate costs, depreciation on non-sales and rental related assets, and intangible amortization.
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 43% of our employees are skilled service technicians.
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 44% of our employees are skilled service technicians.
The majority of our parts inventory is made up of OEM replacement parts for those OEM’s with which we have exclusive agreements to sell new equipment. Service revenues. We provide maintenance and repair services for customer-owned equipment and we maintain our own rental fleet.
The majority of our parts inventory is made up of OEM replacement parts for those OEMs with which we have exclusive agreements to sell new equipment. Service revenues. We provide maintenance and repair services for customer-owned equipment and maintain our own rental fleet.
The original acquisition cost of our rental fleet excludes the $8.9 million of assets associated with our guaranteed purchase obligations, which are assets that are not 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.
The original acquisition cost of our rental fleet excludes $5.7 million of assets associated with our guaranteed purchase obligations, which are assets that are not 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.
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.
Our new equipment sales operation is a primary source of new customers for our rental, parts and service business. The majority of our new equipment sales are predicated on exclusive distribution agreements we have with best-in-class OEMs.
Changes in working capital included $286.3 million of inventory purchased (of which $180.2 million has been transferred into our rental fleet for replenishment and growth purposes), and a $16.6 million increase in accounts receivable.
Changes in working capital included $286.3 million of inventory purchased (of which $180.2 million was transferred into our rental fleet for replenishment and growth purposes), and a $16.6 million increase in accounts receivable.
We also sell tangential products and services related to our material handling equipment offerings which include, but are not limited to, automated equipment and related installation, warehouse systems integration solutions and related controls software. Used equipment sales.
We also sell tangential products and services related to our material handling equipment offerings which include, but are not limited to, automated equipment installation and warehouse management systems integration. Used equipment sales.
Sources of Liquidity Our principal sources of liquidity have been from cash provided by our service, parts and rental related operations and the sales of new, used, and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under our line of credit and floor plans. The Company reported $31.0 million in cash as of December 31, 2023.
Sources of Liquidity Our principal sources of liquidity have been from cash provided by our service, parts and rental operations and the sales of new, used, and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under our line of credit and floor plans. The Company reported $13.4 million in cash as of December 31, 2024.
As of December 31, 2023, we had $187.8 million of available borrowings under the revolving line of credit and floor plans. Critical Accounting Policies and Estimates In the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.
As of December 31, 2024, we had $441.0 million of available borrowings under the revolving line of credit and floor plans. Critical Accounting Policies and Estimates In the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.
Liquidity and Capital Resources Years ended December 31, 2023 and 2022 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 year ended December 31, 2023, operating activities resulted in net cash provided by operations of $63.8 million.
Liquidity and Capital Resources Years ended December 31, 2024 and 2023 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 year ended December 31, 2024, operating activities resulted in net cash provided by operations of $57.0 million.
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 $591.9 million as of December 31, 2023.
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 $565.5 million as of December 31, 2024.
Cash flows from operating activities were favorably impacted by $133.1 million due to proceeds from the sale of rental equipment, $77.3 million in net inflows related to manufacturer floor plans and by a $26.7 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities and unfavorably impacted by a $4.8 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.
Cash flows from operating activities were favorably impacted by $123.5 million due to proceeds from the sale of rent-to-sell equipment, $122.5 million in net inflows related to manufacturer floor plans and by a $7.3 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities partially offset by a $3.8 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.
This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of approximately $128.9 million for the period ended December 31, 2023 as our business model is to sell lightly used inventory to customers from our rental fleet to increase field population in our geographies.
This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of approximately $138.0 million for the period ended December 31, 2024, of which $126.1 million came from rent-to-sell equipment categories, as our business model is to sell lightly used inventory to customers from our rental fleet to increase field population in our geographies.
Cash flows from operating activities were favorably impacted by $128.9 million due to proceeds from the sale of rental equipment, $122.5 million in net inflows related to manufacturer floor plans, and a $3.8 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities and unfavorably impacted by a $7.3 million decrease in accounts payable, accrued expenses, customer deposits, and other current liabilities. 32 For the year ended December 31, 2022, operating activities resulted in net cash provided by operations of $26.0 million.
Cash flows from operating activities were favorably impacted by $126.1 million due to proceeds from the sale of rent-to-sell equipment, and a $4.7 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities and unfavorably impacted by a $26.9 million decrease in accounts payable, accrued expenses, customer deposits, and other current liabilities and $7.8 million in net outflows related to manufacturer floor plans. 35 For the year ended December 31, 2023, operating activities resulted in net cash provided by operations of $58.4 million.
Allowance for Credit Losses The Company records trade accounts receivables at invoice amount less allowances for credit losses. These allowances reflect our estimate of the amount of our receivables we will be unable to collect based on historical write-off experience and, as applicable, current economic conditions and reasonable and supportable forecasts that affect collectability.
These allowances reflect our estimate of the amount of our receivables we will be unable to collect based on historical write-off experience and, as applicable, current economic conditions and reasonable and supportable forecasts that affect collectability.
Gross profit (GP): Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 GP% GP% GP% New and used equipment sales 16.8 % 16.4 % 0.4 % Parts sales 34.2 % 33.0 % 1.2 % Service revenues 57.1 % 56.1 % 1.0 % Rental revenues 33.3 % 34.5 % (1.2 )% Rental equipment sales 26.7 % 22.6 % 4.1 % Consolidated gross profit 27.0 % 26.7 % 0.3 % Consolidated gross profit increased by 30 basis point from 26.7% in the year ended December 31, 2022 to 27.0% over the same period in 2023.
Gross profit (GP): Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Consolidated GP% GP% GP% New and used equipment sales 15.1 % 16.8 % (1.7 )% Parts sales 33.4 % 34.2 % (0.8 )% Service revenues 58.3 % 57.1 % 1.2 % Rental revenues 32.0 % 33.3 % (1.3 )% Rental equipment sales 24.2 % 26.7 % (2.5 )% Consolidated gross profit 26.3 % 27.0 % (0.7 )% Consolidated gross profit decreased by 70 basis points from 27.0% in the year ended December 31, 2023 to 26.3% over the same period in 2024.
Provision (benefit) for income taxes: The Company recorded an income tax benefit of $6.4 million and provision of $1.3 million for the years ended December 31, 2023 and 2022, respectively.
Income tax benefit: The Company recorded an income tax benefit of $4.2 million and $6.4 million for the years ended December 31, 2024 and 2023, respectively.
Gross profit (GP): Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 GP% GP% GP% New and used equipment sales 19.9 % 20.4 % (0.5 )% Parts sales 37.9 % 37.4 % 0.5 % Service revenues 56.9 % 55.8 % 1.1 % Rental revenues 52.2 % 59.5 % (7.3 )% Rental equipment sales 34.6 % 40.0 % (5.4 )% Segment gross profit 33.5 % 34.4 % (0.9 )% Material Handling gross profit for the year ended December 31, 2023 decreased 90 basis points to 33.5% compared to the same period in 2022, remaining relatively consistent overall.
Gross profit (GP): Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 GP% GP% GP% New and used equipment sales 17.8 % 19.9 % (2.1 )% Parts sales 37.1 % 37.9 % (0.8 )% Service revenues 58.6 % 56.9 % 1.7 % Rental revenues 50.0 % 52.2 % (2.2 )% Rental equipment sales 27.6 % 34.6 % (7.0 )% Segment gross profit 32.4 % 33.5 % (1.1 )% 30 Material Handling gross profit for the year ended December 31, 2024 decreased 110 basis points to 32.4% compared to the same period in 2023.
Cash Flow from Investing Activities . For the year ended December 31, 2023, our cash used in investing activities was $122.8 million.
For the year ended December 31, 2023, our cash used in investing activities was $117.4 million.
Pursuant to the requirements of Regulation G, we have provided a reconciliation of organic revenues to the most directly comparable GAAP financial measure in the table above and in subsequent tables in management's discussion and analysis of our individual business segments. This measure is supplemental to, and should be used in conjunction with, the most comparable GAAP measure.
Pursuant to the requirements of Regulation G, we have provided a reconciliation of Adjusted EBITDA and organic revenues to the most directly comparable U.S. GAAP financial measure in the tables above and organic revenues in subsequent tables in management's discussion and analysis of our individual business segments.
Changes in working capital included $272.6 million of inventory purchased (of which $122.9 million was transferred into our rental fleet for replenishment and growth purposes), and a $34.7 million increase in accounts receivable.
Changes in working capital included $145.3 million of inventory purchased (of which $120.6 million was transferred into our rental fleet for replenishment purposes), and a $42.7 million decrease in accounts receivable.
In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. Refer to Note 2, Summary of Significant Accounting Policies, and Note 12, Income Taxes, herein for more information.
In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
Our gross rental fleet capital expenditures for the period ended December 31, 2023 were approximately $242.4 million, including $180.2 million of transfers from new and used inventory to rental fleet.
Our gross rental fleet capital expenditures for the period ended December 31, 2024 were approximately $175.7 million, including $120.6 million of transfers from new and used inventory to rent-to-sell rental fleet.
For the year ended December 31, 2023, cash provided by financing activities was $87.3 million. This cash inflow was mainly due to $91.3 million of net borrowings under our line of credit, which funded the Burris and Ault acquisitions, and the increase in net working capital and rental fleet as previously noted.
This cash inflow was mainly due to $91.3 million of net borrowings under our line of credit, which funded the Burris and Ault acquisitions, and the increase in net working capital and rental fleet as previously noted. Additionally, there were net borrowings of $8.7 million related to non-manufacturer floor plans for the year.
Material Handling Results Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Revenues: New and used equipment sales $ 367.6 $ 305.2 $ 62.4 20.4 % Parts sales 99.5 84.4 15.1 17.9 % Service revenues 132.8 112.1 20.7 18.5 % Rental revenues 76.4 63.5 12.9 20.3 % Rental equipment sales 5.2 5.5 (0.3 ) (5.5 )% Total revenues 681.5 570.7 110.8 19.4 % Cost of revenues: New and used equipment sales 294.3 242.9 51.4 21.2 % Parts sales 61.8 52.8 9.0 17.0 % Service revenues 57.3 49.5 7.8 15.8 % Rental revenues 9.7 6.1 3.6 59.0 % Rental depreciation 26.8 19.6 7.2 36.7 % Rental equipment sales 3.4 3.3 0.1 3.0 % Total cost of revenues 453.3 374.2 79.1 21.1 % Gross profit 228.2 196.5 31.7 16.1 % General and administrative expenses 187.8 164.9 22.9 13.9 % Non-rental depreciation and amortization 8.1 7.2 0.9 12.5 % Total operating expenses 195.9 172.1 23.8 13.8 % Income from operations 32.3 24.4 7.9 32.4 % Other (expense) income: Interest expense, floor plan payable – new equipment (2.7 ) (1.2 ) (1.5 ) 125.0 % Interest expense – other (15.4 ) (10.5 ) (4.9 ) 46.7 % Other income 0.5 4.4 (3.9 ) (88.6 )% Total other expense, net (17.6 ) (7.3 ) (10.3 ) 141.1 % Income before taxes $ 14.7 $ 17.1 $ (2.4 ) (14.0 )% 27 Percent of Revenues Year Ended December 31, 2023 2022 Revenues: New and used equipment sales 53.9 % 53.5 % Parts sales 14.6 % 14.8 % Service revenues 19.5 % 19.6 % Rental revenues 11.2 % 11.1 % Rental equipment sales 0.8 % 1.0 % Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 43.2 % 42.6 % Parts sales 9.1 % 9.3 % Service revenues 8.4 % 8.7 % Rental revenues 1.4 % 1.1 % Rental depreciation 3.9 % 3.3 % Rental equipment sales 0.5 % 0.6 % Total cost of revenues 66.5 % 65.6 % Gross profit 33.5 % 34.4 % Non-GAAP Financial Measure: Organic Revenues Organic Revenues Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Total revenues $ 681.5 $ 570.7 $ 110.8 19.4 % Acquisitions revenues 61.1 19.7 Organic revenues: New and used equipment sales 344.9 299.8 45.1 15.0 % Parts sales 88.3 80.0 8.3 10.4 % Service revenues 120.8 108.1 12.7 11.7 % Rental revenues 63.0 58.7 4.3 7.3 % Rental equipment sales 3.4 4.4 (1.0 ) (22.7 )% Total organic revenues $ 620.4 $ 551.0 $ 69.4 12.6 % Revenues: Material Handling segment revenues increased by $110.8 million to $681.5 million for the year ended December 31, 2023 as compared to the same period last year.
Material Handling Results Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Revenues: New and used equipment sales $ 365.2 $ 367.6 (2.4 ) (0.7 )% Parts sales 99.6 99.5 0.1 0.1 % Service revenues 135.9 132.8 3.1 2.3 % Rental revenues 76.2 76.4 (0.2 ) (0.3 )% Rental equipment sales 10.5 5.2 5.3 101.9 % Total revenues 687.4 681.5 5.9 0.9 % Cost of revenues: New and used equipment sales 300.2 294.3 5.9 2.0 % Parts sales 62.6 61.8 0.8 1.3 % Service revenues 56.2 57.3 (1.1 ) (1.9 )% Rental revenues 6.5 9.7 (3.2 ) (33.0 )% Rental depreciation 31.6 26.8 4.8 17.9 % Rental equipment sales 7.6 3.4 4.2 123.5 % Total cost of revenues 464.7 453.3 11.4 2.5 % Gross profit 222.7 228.2 (5.5 ) (2.4 )% Selling, general and administrative expenses 184.7 187.8 (3.1 ) (1.7 )% Non-rental depreciation and amortization 9.4 8.1 1.3 16.0 % Total operating expenses 194.1 195.9 (1.8 ) (0.9 )% Income from operations 28.6 32.3 (3.7 ) (11.5 )% Other (expense) income: Interest expense, floor plan payable – new equipment (3.6 ) (2.7 ) (0.9 ) 33.3 % Interest expense – other (20.6 ) (15.4 ) (5.2 ) 33.8 % Other income 0.6 0.5 0.1 20.0 % Total other expense, net (23.6 ) (17.6 ) (6.0 ) 34.1 % Income before taxes $ 5.0 $ 14.7 $ (9.7 ) (66.0 )% Segment adjusted EBITDA $ 70.1 $ 65.7 $ 4.4 6.7 % 29 Percent of Revenues Year Ended December 31, 2024 2023 Revenues: New and used equipment sales 53.1 % 53.9 % Parts sales 14.5 % 14.6 % Service revenues 19.8 % 19.5 % Rental revenues 11.1 % 11.2 % Rental equipment sales 1.5 % 0.8 % Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 43.7 % 43.2 % Parts sales 9.1 % 9.1 % Service revenues 8.2 % 8.4 % Rental revenues 0.9 % 1.4 % Rental depreciation 4.6 % 3.9 % Rental equipment sales 1.1 % 0.5 % Total cost of revenues 67.6 % 66.5 % Gross profit 32.4 % 33.5 % Non-GAAP Financial Measure: Organic Revenues Organic Revenues Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Total revenues $ 687.4 $ 681.5 $ 5.9 0.9 % Acquisitions revenues 1.8 — Organic revenues: New and used equipment sales 364.7 367.6 (2.9 ) (0.8 )% Parts sales 99.0 99.5 (0.5 ) (0.5 )% Service revenues 135.3 132.8 2.5 1.9 % Rental revenues 76.1 76.4 (0.3 ) (0.4 )% Rental equipment sales 10.5 5.2 5.3 101.9 % Total organic revenues $ 685.6 $ 681.5 $ 4.1 0.6 % Revenues: Material Handling segment revenues increased by $5.9 million to $687.4 million for the year ended December 31, 2024 as compared to the same period last year.
We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenues to prior periods as well as to industry peers.
We define organic revenue growth as revenue growth excluding the impact of acquisitions that do not appear fully in both periods in the current and prior years. We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenues to prior periods as well as to industry peers.
Despite the lower sales, a favorable pricing environment in 2023 on lightly-used equipment led to a 450 basis point increase in rental equipment sales margin when comparing the year-over-year periods (equating to rental equipment gross profits of $32.6 million compared to $27.9 million from the same period last year, on lower revenue).
Despite higher rental equipment sales, the softened and highly competitive used equipment pricing environment in 2024 led to a 250 basis point decrease in rental equipment sales margin when comparing the year-over-year periods (equating to rental equipment gross profits of $30.5 million compared to $32.6 million from the same period last year).
Generally, we assign the following useful lives to the below categories of Property and Equipment: Estimated Useful Life Transportation equipment (autos and trucks) 2 – 5 years Rental fleet 5 - 10 years Machinery and equipment, excluding rental fleet 3 – 20 years Office equipment 5 – 7 years Computer equipment 2 – 5 years Leasehold improvements 3 – 15 years The useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.
Generally, we assign the following useful lives to the below categories of Property and Equipment and Rental Fleet: Estimated Useful Life Transportation equipment (autos and trucks) 2 – 5 years Rental fleet 5 - 10 years Machinery and equipment excluding rental fleet 3 – 20 years Office equipment 5 – 7 years Computer equipment 2 – 5 years Leasehold improvements 3 – 15 years The useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate. 37 Acquisition Accounting We have made significant acquisitions in the past and we intend to make additional acquisitions in the future that meet our selection criteria with an objective of increasing our revenues, improving our profitability, diversifying our end market and geographic exposure and strengthening our competitive position.
These cash inflows were partially offset by $6.7 million related to preferred and common stock dividend payments.
These cash inflows were partially offset by payments of $10.6 million for preferred and common stock dividends and $2.1 million related to other financing activities.
This was mainly due to $123.3 million purchases of rental equipment, non-rental property and equipment, and equipment contracted under guaranteed purchase obligations, as well as Burris and Ault acquisition activity partially offset by $0.5 million proceeds from the sale of non-rental property and equipment. For the year ended December 31, 2022, our cash used in investing activities was $162.6 million.
This was mainly due to $123.3 million purchases of rent-to-rent equipment, non-rental property and equipment, Burris and Ault acquisition activity, and other investing activities partially offset by $5.4 million proceeds from the sale of rent-to-rent equipment and $0.5 million proceeds from the sale of non-rental property and equipment. Cash Flow from Financing Activities.
Construction Equipment Results Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Revenues: New and used equipment sales $ 597.9 $ 508.2 $ 89.7 17.7 % Parts sales 170.1 149.0 21.1 14.2 % Service revenues 108.2 94.4 13.8 14.6 % Rental revenues 124.8 116.6 8.2 7.0 % Rental equipment sales 123.7 127.6 (3.9 ) (3.1 )% Total revenues 1,124.7 995.8 128.9 12.9 % Cost of revenues: New and used equipment sales 515.5 436.7 78.8 18.0 % Parts sales 117.5 103.7 13.8 13.3 % Service revenues 45.9 41.2 4.7 11.4 % Rental revenues 15.1 16.3 (1.2 ) (7.4 )% Rental depreciation 81.8 75.9 5.9 7.8 % Rental equipment sales 91.1 99.7 (8.6 ) (8.6 )% Total cost of revenues 866.9 773.5 93.4 12.1 % Gross profit 257.8 222.3 35.5 16.0 % General and administrative expenses 211.6 178.8 32.8 18.3 % Non-rental depreciation and amortization 10.7 8.7 2.0 23.0 % Total operating expenses 222.3 187.5 34.8 18.6 % Income from operations 35.5 34.8 0.7 2.0 % Other (expense) income: Interest expense, floor plan payable – new equipment (4.8 ) (1.5 ) (3.3 ) 220.0 % Interest expense – other (28.3 ) (16.2 ) (12.1 ) 74.7 % Other income (expense) 4.6 (2.9 ) 7.5 (258.6 )% Total other expense, net (28.5 ) (20.6 ) (7.9 ) 38.3 % Income before taxes $ 7.0 $ 14.2 $ (7.2 ) (50.7 )% 29 Percent of Revenues Year Ended December 31, 2023 2022 Revenues: New and used equipment sales 53.2 % 51.0 % Parts sales 15.1 % 15.0 % Service revenues 9.6 % 9.5 % Rental revenues 11.1 % 11.7 % Rental equipment sales 11.0 % 12.8 % Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 45.9 % 44.0 % Parts sales 10.4 % 10.4 % Service revenues 4.1 % 4.1 % Rental revenues 1.3 % 1.6 % Rental depreciation and amortization 7.3 % 7.6 % Rental equipment sales 8.1 % 10.0 % Total cost of revenues 77.1 % 77.7 % Gross profit 22.9 % 22.3 % Non-GAAP Financial Measure: Organic Revenues Organic Revenues Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Total revenues $ 1,124.7 $ 995.8 $ 128.9 12.9 % Acquisitions revenues 11.0 — Organic revenues: New and used equipment sales 592.9 508.2 84.7 16.7 % Parts sales 167.4 149.0 18.4 12.3 % Service revenues 107.5 94.4 13.1 13.9 % Rental revenues 122.2 116.6 5.6 4.8 % Rental equipment sales 123.7 127.6 (3.9 ) (3.1 )% Total organic revenues $ 1,113.7 $ 995.8 $ 117.9 11.8 % Revenues: Construction Equipment segment revenues increased by 12.9% to $1,124.7 million for the year ended December 31, 2023 as compared to the same period last year.
Construction Equipment Results Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Revenues: New and used equipment sales $ 574.4 $ 597.9 $ (23.5 ) (3.9 )% Parts sales 186.7 170.1 16.6 9.8 % Service revenues 117.1 108.2 8.9 8.2 % Rental revenues 125.7 124.8 0.9 0.7 % Rental equipment sales 127.5 123.7 3.8 3.1 % Total revenues 1,131.4 1,124.7 6.7 0.6 % Cost of revenues: New and used equipment sales 503.3 515.5 (12.2 ) (2.4 )% Parts sales 129.5 117.5 12.0 10.2 % Service revenues 48.8 45.9 2.9 6.3 % Rental revenues 16.0 15.1 0.9 6.0 % Rental depreciation 82.7 81.8 0.9 1.1 % Rental equipment sales 97.0 91.1 5.9 6.5 % Total cost of revenues 877.3 866.9 10.4 1.2 % Gross profit 254.1 257.8 (3.7 ) (1.4 )% Selling, general and administrative expenses 229.6 211.6 18.0 8.5 % Non-rental depreciation and amortization 15.2 10.7 4.5 42.1 % Total operating expenses 244.8 222.3 22.5 10.1 % Income from operations 9.3 35.5 (26.2 ) (73.8 )% Other (expense) income: Interest expense, floor plan payable – new equipment (7.3 ) (4.8 ) (2.5 ) 52.1 % Interest expense – other (41.2 ) (28.3 ) (12.9 ) 45.6 % Other income 2.4 4.6 (2.2 ) (47.8 )% Total other expense, net (46.1 ) (28.5 ) (17.6 ) 61.8 % (Loss) income before taxes $ (36.8 ) $ 7.0 $ (43.8 ) (625.7 )% Segment adjusted EBITDA $ 104.2 $ 128.6 $ (24.4 ) (19.0 )% 31 Percent of Revenues Year Ended December 31, 2024 2023 Revenues: New and used equipment sales 50.7 % 53.2 % Parts sales 16.5 % 15.1 % Service revenues 10.4 % 9.6 % Rental revenues 11.1 % 11.1 % Rental equipment sales 11.3 % 11.0 % Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 44.5 % 45.9 % Parts sales 11.4 % 10.4 % Service revenues 4.3 % 4.1 % Rental revenues 1.4 % 1.3 % Rental depreciation and amortization 7.3 % 7.3 % Rental equipment sales 8.6 % 8.1 % Total cost of revenues 77.5 % 77.1 % Gross profit 22.5 % 22.9 % Non-GAAP Financial Measure: Organic Revenues Organic Revenues Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Total revenues $ 1,131.4 $ 1,124.7 $ 6.7 0.6 % Acquisitions revenues 63.9 — Organic revenues: New and used equipment sales 537.2 597.9 (60.7 ) (10.2 )% Parts sales 174.0 170.1 3.9 2.3 % Service revenues 114.5 108.2 6.3 5.8 % Rental revenues 116.3 124.8 (8.5 ) (6.8 )% Rental equipment sales 125.5 123.7 1.8 1.5 % Total organic revenues $ 1,067.5 $ 1,124.7 $ (57.2 ) (5.1 )% Revenues: Construction Equipment segment revenues increased by 0.6% to $1,131.4 million for the year ended December 31, 2024 as compared to the same period last year, primarily related to the full-period impact from the Burris and Ault acquisitions made in the fourth quarter of 2023.
Parts sales margins for the year ended December 31, 2023 remained consistent when compared to the same time last year, increasing by 50 basis points. Service gross margins increased by 120 basis points from 2022 primarily related to positive trends in warranty services.
Parts sales margins for the year ended December 31, 2024 remained consistent when compared to the same time last year, decreasing by 30 basis points but within our expected range. Service gross margins increased by 70 basis points from 2023 primarily related to improved rate realization.
Principal Costs and Expenses Our cost of revenues are primarily related to the costs associated with the sale or rental of equipment and product support activities, which includes direct labor costs for our skilled technicians.
Rental equipment sales, like new and used equipment sales, generate customer-owned equipment field population within our territories that ultimately yield high-margin parts and service revenues for us. 24 Principal Costs and Expenses Our cost of revenues are primarily related to the costs associated with the sale or rental of equipment and product support activities, which include direct labor costs for our skilled technicians.
Additionally, there were net borrowings of $8.7 million related to non-manufacturer floor plans for the year. These cash inflows were partially offset by payments of $10.6 million for preferred and common stock dividends and $2.1 million related to other financing activities. For the year ended December 31, 2022, cash provided by financing activities was $136.9 million.
Additionally, there were cash outflows of $10.8 million for preferred and common stock dividends, $5.8 million for repurchases of common stock, and $1.5 million related to other financing activities. For the year ended December 31, 2023, cash provided by financing activities was $87.3 million.
Changes in intercompany allocation of shared service expenses also contributes to the year-over-year variance. Other (expense) income, net: Other expenses increased by $10.3 million to $17.6 million for the year ended December 31, 2023 as compared to the same period last year.
Other (expense) income, net: Other expenses increased by $6.0 million to $23.6 million for the year ended December 31, 2024 as compared to the same period last year.
Management uses this non-GAAP financial measure to monitor and evaluate financial results and trends. Revenues: Consolidated revenues increased by $305.0 million, or 19.4%, to $1,876.8 million for the year ended December 31, 2023 as compared to 2022.
This measure is supplemental to, and should be used in conjunction with, the most comparable U.S. GAAP measures. Management uses these non-GAAP financial measures to monitor and evaluate financial results and trends. Revenues: Consolidated revenues decreased by $0.2 million to $1,876.6 million for the year ended December 31, 2024 as compared to 2023.
Interest expense is driven by our OEM floor plan financing arrangements, a working capital line of credit, our second lien secured notes and our finance lease arrangements. 24 Results of Operations Years ended December 31, 2023 and 2022 Consolidated Results Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Revenues: New and used equipment sales $ 1,025.9 $ 817.2 $ 208.7 25.5 % Parts sales 278.3 234.8 43.5 18.5 % Service revenues 241.3 206.6 34.7 16.8 % Rental revenues 202.4 180.1 22.3 12.4 % Rental equipment sales 128.9 133.1 (4.2 ) (3.2 )% Total revenues 1,876.8 1,571.8 305.0 19.4 % Cost of revenues: New and used equipment sales 853.6 683.2 170.4 24.9 % Parts sales 183.2 157.4 25.8 16.4 % Service revenues 103.4 90.7 12.7 14.0 % Rental revenues 24.8 22.4 2.4 10.7 % Rental depreciation 110.1 95.5 14.6 15.3 % Rental equipment sales 94.5 103.0 (8.5 ) (8.3 )% Total cost of revenues 1,369.6 1,152.2 217.4 18.9 % Gross profit 507.2 419.6 87.6 20.9 % General and administrative expenses 430.3 362.3 68.0 18.8 % Non-rental depreciation and amortization 22.5 16.5 6.0 36.4 % Total operating expenses 452.8 378.8 74.0 19.5 % Income from operations 54.4 40.8 13.6 33.3 % Other (expense) income: Interest expense, floor plan payable – new equipment (8.4 ) (2.7 ) (5.7 ) 211.1 % Interest expense – other (48.6 ) (29.1 ) (19.5 ) 67.0 % Other income 5.1 1.6 3.5 218.8 % Total other expense, net (51.9 ) (30.2 ) (21.7 ) 71.9 % Income before taxes 2.5 10.6 (8.1 ) (76.4 )% Income tax (benefit) provision (6.4 ) 1.3 (7.7 ) NM Net income 8.9 9.3 (0.4 ) (4.3 )% Preferred stock dividends (3.0 ) (3.0 ) — — Net income available to common stockholders $ 5.9 $ 6.3 $ (0.4 ) (6.3 )% NM - calculated change not meaningful Percent of Revenues Year Ended December 31, 2023 2022 Revenues: New and used equipment sales 54.6 % 52.0 % Parts sales 14.8 % 14.9 % Service revenues 12.9 % 13.1 % Rental revenues 10.8 % 11.5 % Rental equipment sales 6.9 % 8.5 % Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 45.5 % 43.5 % Parts sales 9.8 % 10.0 % Service revenues 5.5 % 5.8 % Rental revenues 1.3 % 1.4 % Rental depreciation 5.9 % 6.0 % Rental equipment sales 5.0 % 6.6 % Total cost of revenues 73.0 % 73.3 % Gross profit 27.0 % 26.7 % 25 Non-GAAP Financial Measure: Organic Revenues Organic Revenues Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Total revenues $ 1,876.8 $ 1,571.8 $ 305.0 19.4 % Acquisitions revenues 139.4 25.0 Organic revenues: New and used equipment sales 941.0 808.0 133.0 16.5 % Parts sales 255.7 229.0 26.7 11.7 % Service revenues 228.3 202.5 25.8 12.7 % Rental revenues 185.2 175.3 9.9 5.6 % Rental equipment sales 127.2 132.0 (4.8 ) (3.6 )% Total organic revenues $ 1,737.4 $ 1,546.8 $ 190.6 12.3 % The above table contains a non-GAAP financial measure.
Interest expense is driven by our floor plan facilities, line of credit, senior secured second lien notes, and finance lease arrangements. 25 Results of Operations Years ended December 31, 2024 and 2023 Consolidated Results Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Revenues: New and used equipment sales $ 987.0 $ 1,025.9 $ (38.9 ) (3.8 )% Parts sales 294.4 278.3 16.1 5.8 % Service revenues 253.8 241.3 12.5 5.2 % Rental revenues 203.4 202.4 1.0 0.5 % Rental equipment sales 138.0 128.9 9.1 7.1 % Total revenues 1,876.6 1,876.8 (0.2 ) — Cost of revenues: New and used equipment sales 837.9 853.6 (15.7 ) (1.8 )% Parts sales 196.2 183.2 13.0 7.1 % Service revenues 105.8 103.4 2.4 2.3 % Rental revenues 22.5 24.8 (2.3 ) (9.3 )% Rental depreciation 115.9 110.1 5.8 5.3 % Rental equipment sales 104.6 94.5 10.1 10.7 % Total cost of revenues 1,382.9 1,369.6 13.3 1.0 % Gross profit 493.7 507.2 (13.5 ) (2.7 )% Selling, general and administrative expenses 446.5 430.3 16.2 3.8 % Non-rental depreciation and amortization 28.6 22.5 6.1 27.1 % Total operating expenses 475.1 452.8 22.3 4.9 % Income from operations 18.6 54.4 (35.8 ) (65.8 )% Other (expense) income: Interest expense, floor plan payable – new equipment (12.1 ) (8.4 ) (3.7 ) 44.0 % Interest expense – other (69.2 ) (48.6 ) (20.6 ) 42.4 % Other income 3.1 5.1 (2.0 ) (39.2 )% Loss on extinguishment of debt (6.7 ) — (6.7 ) NM Total other expense, net (84.9 ) (51.9 ) (33.0 ) 63.6 % (Loss) income before taxes (66.3 ) 2.5 (68.8 ) NM Income tax benefit (4.2 ) (6.4 ) 2.2 NM Net (loss) income (62.1 ) 8.9 (71.0 ) NM Preferred stock dividends (3.0 ) (3.0 ) — — Net (loss) income available to common stockholders $ (65.1 ) $ 5.9 $ (71.0 ) NM Adjusted EBITDA (1) $ 168.3 $ 191.4 $ (23.1 ) (12.1 )% NM - calculated change not meaningful (1) Adjusted EBITDA is a non-GAAP measure.
Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 Revenues: New and used equipment sales $ 72.5 $ 5.0 $ 67.5 NM Parts sales 9.8 1.6 8.2 NM Service revenues 0.3 0.1 0.2 NM Rental revenues 1.2 — 1.2 NM Rental equipment sales — — — NM Total revenues 83.8 6.7 77.1 NM Cost of revenues: New and used equipment sales 54.4 4.6 49.8 NM Parts sales 5.0 1.0 4.0 NM Service revenues 0.2 — 0.2 NM Rental revenues — — — NM Rental depreciation 0.8 — 0.8 NM Rental equipment sales — — — NM Total cost of revenues 60.4 5.6 54.8 NM Gross profit 23.4 1.1 22.3 NM General and administrative expenses 12.3 1.5 10.8 NM Non-rental depreciation and amortization 3.6 0.6 3.0 NM Total operating expenses 15.9 2.1 13.8 NM Income (loss) from operations 7.5 (1.0 ) 8.5 NM Other (expense) income: Interest expense, floor plan payable – new equipment (0.7 ) — (0.7 ) NM Interest expense – other (2.7 ) (0.5 ) (2.2 ) NM Other expense — — — NM Total other expense, net (3.4 ) (0.5 ) (2.9 ) NM Income (loss) before taxes $ 4.1 $ (1.5 ) $ 5.6 NM NM - calculated change not meaningful 31 Percent of Revenues Year Ended December 31, 2023 2022 Revenues: New and used equipment sales 86.5 % 74.6 % Parts sales 11.7 % 23.9 % Service revenues 0.4 % 1.5 % Rental revenues 1.4 % — Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 64.9 % 68.7 % Parts sales 6.0 % 14.9 % Service revenues 0.2 % — Rental revenues — — Rental depreciation and amortization 1.0 % — Total cost of revenues 72.1 % 83.6 % Gross profit 27.9 % 16.4 % Gross profit (GP): Year Ended December 31, 2023 2022 GP% GP% New and used equipment sales 25.0 % 8.0 % Parts sales 49.0 % 37.5 % Service revenues 33.3 % 100.0 % Rental revenues 33.3 % NA Segment gross profit 27.9 % 16.4 % Overall Summary: Master Distribution segment revenues for the year ended December 31, 2023 were $83.8 million, made up primarily of new and used equipment sales and secondarily parts sales, representing 86.5% and 11.7% of total revenues, respectively.
The variance was mainly due to increased floor plan interest expense related to a combination of higher effective interest rates on higher levels of new inventory that were no longer within the subsidized period of our OEMs, higher effective interest rates on operating debt borrowings and increased debt from financed acquisitions within the segment (Ault and Burris purchased Q4 2023). 33 Master Distribution Results Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 Revenues: New and used equipment sales $ 48.0 $ 72.5 $ (24.5 ) (33.8 )% Parts sales 8.9 9.8 (0.9 ) (9.2 )% Service revenues 0.8 0.3 0.5 166.7 % Rental revenues 1.5 1.2 0.3 25.0 % Total revenues 59.2 83.8 (24.6 ) (29.4 )% Cost of revenues: New and used equipment sales 35.9 54.4 (18.5 ) (34.0 )% Parts sales 5.0 5.0 — — Service revenues 0.9 0.2 0.7 350.0 % Rental depreciation 1.1 0.8 0.3 37.5 % Total cost of revenues 42.9 60.4 (17.5 ) (29.0 )% Gross profit 16.3 23.4 (7.1 ) (30.3 )% Selling, general and administrative expenses 13.0 12.3 0.7 5.7 % Non-rental depreciation and amortization 3.5 3.6 (0.1 ) (2.8 )% Total operating expenses 16.5 15.9 0.6 3.8 % (Loss) income from operations (0.2 ) 7.5 (7.7 ) (102.7 )% Other (expense) income: Interest expense, floor plan payable – new equipment (1.4 ) (0.7 ) (0.7 ) 100.0 % Interest expense – other (3.1 ) (2.7 ) (0.4 ) 14.8 % Other expense (0.3 ) — (0.3 ) — Total other expense, net (4.8 ) (3.4 ) (1.4 ) 41.2 % (Loss) income before taxes $ (5.0 ) $ 4.1 $ (9.1 ) (222.0 )% Segment adjusted EBITDA $ 4.7 $ 12.5 $ (7.8 ) (62.4 )% Percent of Revenues Year Ended December 31, 2024 2023 Revenues: New and used equipment sales 81.1 % 86.5 % Parts sales 15.0 % 11.7 % Service revenues 1.4 % 0.4 % Rental revenues 2.5 % 1.4 % Total revenues 100.0 % 100.0 % Cost of revenues: New and used equipment sales 60.6 % 64.9 % Parts sales 8.5 % 6.0 % Service revenues 1.5 % 0.2 % Rental depreciation and amortization 1.9 % 1.0 % Total cost of revenues 72.5 % 72.1 % Gross profit 27.5 % 27.9 % 34 Revenues: Master Distribution segment revenues for the year ended December 31, 2024 were $59.2 million, a decrease of $24.6 million from the prior year same period.
This was mainly due to $76.7 million purchases of rental equipment and non-rental property and equipment and $86.7 million use of cash for the YIT and Ecoverse acquisitions and adjustments to the purchase prices of two of our 2021 acquisitions partially offset by $1.2 million of proceeds from the sale of non-rental property and equipment. Cash Flow from Financing Activities.
Cash Flow from Investing Activities . For the year ended December 31, 2024, our cash used in investing activities was $56.2 million. This was mainly due to $73.4 million purchases of rent-to-rent equipment, non-rental property and equipment, and other investing activities partially offset by $17.2 million proceeds from the sale of rent-to-rent equipment and non-rental property and equipment.
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. Market Overview 2023 Demand from the Company’s core markets remained strong and broad-based during 2023, as the economy performed better than anticipated. According to Stifel Research, in 2023 non-residential construction posted strong, widespread growth.
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.
The 110 basis point service margin increase for the year ended December 31, 2023 can be attributed to improved margins on customer service work, as well as improvements in fleet and warranty recovery levels with our OEMs.
Parts gross margins have remained relatively consistent year over year and in line with expectations. The 170 basis point service margin increase for the year ended December 31, 2024 can be attributed to margin improvements in major service categories, including customer and OEM warranty and fleet work, and on better pricing realization and technician productivity measures.
Gross profit (GP): Year Ended December 31, Increase (Decrease) 2023 2022 2023 versus 2022 GP% GP% GP% New and used equipment sales 13.8 % 14.1 % (0.3 )% Parts sales 30.9 % 30.4 % 0.5 % Service revenues 57.6 % 56.4 % 1.2 % Rental revenues 22.4 % 20.9 % 1.5 % Rental equipment sales 26.4 % 21.9 % 4.5 % Segment gross profit 22.9 % 22.3 % 0.6 % Construction Equipment gross profit increased by 60 basis points to 22.9% from 22.3% for the year ended December 31, 2023 as compared to 2022, with overall margin improvements reflective of the general business climate and positive demand factors of the industry.
Rental revenues decreased 6.8%, on an organic basis for the year ended December 31, 2024 as compared to the prior year on a reduced average fleet size, while rental equipment sales increased for the year ended December 31, 2024 by $1.8 million due to strategic sales of rental equipment to generate field population and right-sizing fleet levels to match realized levels of rental equipment demand. 32 Gross profit (GP): Year Ended December 31, Increase (Decrease) 2024 2023 2024 versus 2023 GP% GP% GP% New and used equipment sales 12.4 % 13.8 % (1.4 )% Parts sales 30.6 % 30.9 % (0.3 )% Service revenues 58.3 % 57.6 % 0.7 % Rental revenues 21.5 % 22.4 % (0.9 )% Rental equipment sales 23.9 % 26.4 % (2.5 )% Segment gross profit 22.5 % 22.9 % (0.4 )% Construction Equipment gross profit decreased by 40 basis points to 22.5% from 22.9% for the year ended December 31, 2024 as compared to 2023, with lower margins on equipment sales reflective of elevated new inventory levels at heavy machinery dealers throughout the industry combined with softening demand, both of which led to a highly competitive pricing environment and lower margins realized in 2024 when compared to history.
Rental revenues gross margin for the year ended December 31, 2023 increased by 150 basis points compared to the same period last year as repair and maintenance costs, freight, and costs of sub-rental activities each exhibited a comparatively lower percentage of rental revenues.
Rental revenues gross margin for the year ended December 31, 2024 decreased by 90 basis points compared to the same period last year as depreciation increased despite a lower level of average fleet size. Operating expenses: Construction Equipment operating expenses increased by $22.5 million to $244.8 million for the year ended December 31, 2024 as compared to 2023.
Operating expenses: Construction Equipment operating expenses increased by $34.8 million to $222.3 million for the year ended December 31, 2023 as compared to 2022.
Other (expense) income, net: Construction Equipment other expense, net increased by $17.6 million to $46.1 million for the year ended December 31, 2024 as compared to the same period in 2023.
The increase is mainly resulting from higher interest expense associated with an increase in total borrowings used to support a larger rental fleet, higher inventory levels, and debt-financed acquisitions combined with a rise in interest rates on our floating-rate debt and the aforementioned change in intercompany expense allocation for shared service functions.
The increase is mainly related to the aforementioned cumulative change in intercompany expense allocation for shared service functions and increased interest expense due to higher effective interest rates, inventory, and rental fleet levels realized in 2024 when compared to 2023.
Our cash flows from operating activities related to net income adjusted for non-cash income and expenses, primarily depreciation and amortization, the gain on sale of rental equipment, inventory obsolescence and bad debt reserves, and stock-based compensation, generated $101.0 million for the twelve months ended December 31, 2022. This was partially offset by $75.0 million of net working capital investments.
Our reported net loss of $62.1 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of rental equipment, inventory obsolescence and bad debt reserves, and stock-based compensation, provided net cash inflows of $63.5 million.
To note, despite the relatively flat gross margin, the increased sales volume of new and used equipment, led to new and used gross profit increasing to $82.4 million from $71.5 million in the same period last year.
Specifically, new and used equipment sales margins decreased by 140 basis points to 12.4%, given the aforementioned market dynamics, leading to new and used gross profit decreasing to $71.1 million from $82.4 million in the same period last year.
Rental revenues gross margins have declined 730 basis points due to replenishing and increasing the size of our rental fleet and the related incremental depreciation expense, and increased rental depreciation expense associated with the acquisition of YIT in the third quarter of 2022. Rental equipment sales margins decreased on low sales volumes.
Rental revenues gross margins declined 220 basis points primarily due to replenishing our rental fleet and the associated increase in depreciation expense as well as lower utilization levels.
We also sell rental equipment from our rental fleet. In our Construction Equipment segment, our rental equipment sales are primarily related to lightly-used equipment that is in the initial years of its useful life.
In our Material Handling segment, our rental equipment sales are primarily of rent-to-rent equipment and in our Construction Equipment segment, our rental equipment sales are primarily of rent-to-sell equipment.
As our customers focus on the “up-time” of their equipment, we continued to see strong demand for our product support capabilities, skilled technicians' labor and replacement parts in 2023, as evidenced by our increased technician headcount and growing organic product support revenues from 2022. 22 Business Description and Segments For detailed description of our business and segments, refer to Part I, Item 1, Business, and Note 17, Segments, respectively.
This initiative led to a $46.0 million reduction in rental fleet gross cost from June 30, 2024, bringing the total to $571.2 million as of December 31, 2024. 23 In terms of product support, as our customers focus on the “up-time” of their equipment, we continued to see strong demand for skilled technicians' labor and replacement parts in 2024, as evidenced by our growing organic product support revenues, despite certain industry indicators pointing to a reduction in equipment utilization (e.g. the amount of hours equipment was utilized) year over year.
Rental revenues increased 4.8% for the year ended December 31, 2023 as compared to the same period last year primarily attributable to an increased rental rate environment existing between the comparable periods and a greater amount of fleet on rent during 2023.
Rental revenues decreased 0.4% for the year ended December 31, 2024 as compared to last year primarily due to reduced physical utilization of our fleet.
The change is primarily due to the full year in 2023 compared to only two months of activity in 2022. Operating expenses: Master Distribution segment operating expenses were $15.9 million for the year ended December 31, 2023. Personnel costs, such as wages and commissions, and sales-related expenses are the primary operating expenses of the Master Distribution segment.
Operating expenses: Operating expenses decreased by $1.8 million to $194.1 million for the year ended December 31, 2024 as compared to the prior year, primarily due to a change in the intercompany allocation of costs and cost savings initiatives implemented during 2024 which primarily impacted personnel related expenses.
The income tax benefit in the current year was due to the full release of the valuation allowance during the third quarter while the prior year expense was primarily due to income that could not be fully offset with net operating losses.
The income tax benefit in the current year was primarily due to pre-tax losses partially offset by the valuation allowance recorded against a portion of the deferred tax asset relating to the U.S. disallowed interest expense carryforwards created by the provisions of the TCJA while the prior year benefit was due to the release of the valuation allowance on certain U.S. federal and state deferred tax assets.
Removed
Non-residential construction saw the lagging benefit of an economic recovery post-pandemic as well as tailwinds from onshoring, data centers, and fiscal stimulus (Infrastructure Investment and Jobs Act ("IIJA"), Inflation Reduction Act, Creating Helpful Incentives to Produce Semiconductors Act).
Added
Equipment Industry Overview 2024 The North American construction equipment market experienced a downturn in 2024, with overall sales declining by approximately 10%, while some of the regions we operate in experienced reductions of up to 20%. This decline aligns with the cyclical nature of the industry.
Removed
While non-residential construction spending was strong in 2023, concerns regarding the cycle increased over the course of the year, particularly towards the second half of 2023. 21 Following a pullback during the pandemic, public construction spending meaningfully accelerated in 2023.
Added
Notably, construction equipment manufacturers like Caterpillar and John Deere reported reduced sales in North America, attributed to slowing end-user demand and elevated inventory levels at machinery dealers throughout North America. Similarly, Volvo Construction Equipment reported a 20% decline in North American sales.
Removed
This acceleration is unsurprisingly in conjunction with the IIJA as well as healthy growth in federal, state and local tax receipts throughout 2022 and 2023. Additionally, street and highway spending accelerated throughout 2023 and was a big driver for public construction overall. Highway contract awards have seen particular strength in recent months.
Added
Elevated interest rates and volatile sentiment in the marketplace underpinned by the U.S. presidential election contributed to a decrease in equipment orders. Market participants have noted that specifically, smaller to mid-sized local contractors focused on privately funded non-residential projects, were negatively impacted by the aforementioned factors and thus hesitant to committing capital to new equipment in 2024.
Removed
Much of this strength is attributed to early benefits from the IIJA. Notably, nearly 90% of the $1.2 trillion federal infrastructure package resources are distributed to the states, and span over eight years. With this as the backdrop, earthmoving equipment saw strong demand over the course of 2023 in the U.S.
Added
This softening amongst local contractors and small privately funded projects was offset by continued growth amongst larger contractors working on multi-year publicly funded projects (e.g. state or federal funded infrastructure projects).
Removed
According to data supplied by ITR Economics, new construction machinery orders came in at a record high $47.4 billion, a 13.2% increase from a year ago. Demand primarily benefited from strong non-residential activity despite a slower single-family housing market. This healthy demand environment drove strong order activity throughout 2023 in our Construction Equipment segment.
Added
Lastly, with construction equipment supply in the OEM dealer channel at historically high levels in the face of weakening demand, competitive pricing, discounting and compressed margins were all thematic across the construction equipment industry in 2024.
Removed
Supply chain and production trends showed improvement relative to 2022 and backlogs moderated.
Added
In contrast, the North American lift truck market exhibited growth in 2024, in terms of shipments to end users, as the industry continued to deliver off of record levels of bookings in the 2021-2022 post-COVID timeframe.
Removed
As it relates to our Material Handling segment, while orders for new lift trucks declined in 2023 off of record levels of bookings reached in the previous two years, 2023 U.S. factory shipments in Class 1-5 lift trucks reached a record 300,000 units, according to the Industrial Truck Association, with shipments expected to increase again in 2024, as lift truck manufacturers, including our major OEM Hyster-Yale, continue to work through of high levels of sales backlog that originated post-pandemic.
Added
Robust manufacturing sectors and expanding logistics operations are driving investments in advanced material handling solutions, including trends toward lithium battery and fuel cell-powered lift trucks and autonomous solutions.
Removed
Additionally, the forklift industry continued to electrify in 2023, as approximately two-thirds of lift trucks sold in North America last year were delivered with electric power units versus internal combustion. For context, in the year 2000, the electric to internal combustion split was approximately one to one.
Added
Given the sales backlog overhang that the industry continued to navigate in 2024, bookings for future lift trucks declined in 2024 when compared to previous years, as lead times and production schedules at industry OEMs continued to normalize.
Removed
Lastly, the industry trend toward warehouse-based forklifts versus counterbalance-based forklifts also continued in 2023, a result of macroeconomic trends in e-commerce, logistics and distribution. We believe our material handling experience and expertise, and the Hyster-Yale product lineup are positioned well to take advantage of these two industry trends, electrification and warehousing, in 2024 and beyond.
Added
As backlogs reduced, lift truck manufacturing volumes are projected to be down in 2025 as supply and demand factors find their level with industry bookings expected to rebound in the second half of 2025. Although the North American lift truck industry faces production headwinds entering 2025, we remain generally optimistic about this segment.
Removed
Business trends providing uncertainty heading into 2024 include global supply chain disruptions, inflationary pressure, geopolitical tensions, industrial production declines, shrinking corporate profits, high borrowing costs and tight lending standards, any of which could cause cautious consumer behavior and result in the pullback of businesses willing to spend on capital projects.
Added
This confidence stems from the resilience of our material handling end markets - key pillars of the U.S. economy such as food production, retail, and logistics - as well as our ability to continue gaining market share.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

164 edited+31 added−53 removed105 unchanged
The interest rates applicable to any loans under various Floor Plan Facilities are based on a wide range of benchmark rates (including SOFR, Prime, Bloomberg Short-Term Bank Yield Index, and the Canadian Bankers' Acceptance Rate) plus an applicable margin.
The interest rates applicable to any loans under various Floor Plan Facilities ("Floor Plan Rates") are based on a wide range of benchmark rates (including SOFR, Prime, Bloomberg Short-Term Bank Yield Index, and the Canadian Bankers' Acceptance Rate) plus an applicable margin.
The three broad levels of the fair value hierarchy are as follows: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly • Level 3 — Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions 48 In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
The three broad levels of the fair value hierarchy are as follows: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly • Level 3 — Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
In rent-to-rent product categories, where asset utilization is more stable, like in our Material Handling segment, we use a straight-line depreciation methodology, where estimated useful lives can range from five to ten years. The Company capitalizes expenditures for equipment, leasehold improvements, and rental fleet. Expenditures for repairs, maintenance, and minor renewals are expensed as incurred.
In rent-to-rent product categories, where asset utilization is more stable, like in our Material Handling segment, we use a straight-line depreciation methodology, where estimated useful lives can range from five to ten years. The Company capitalizes certain expenditures for equipment, leasehold improvements, and rental fleet. Expenditures for repairs, maintenance, and minor renewals are expensed as incurred.
Due to the inherent uncertainty involved with estimates, actual results may differ. Refer to Critical Accounting Policies and Estimates within Item 7 for more information on items in the consolidated financial statements we consider require significant estimation or judgment. Inventory Valuation Inventories are stated at the lower of cost or net realizable value.
Due to the inherent uncertainty involved with estimates, actual results may differ. Refer to Critical Accounting Policies and Estimates within Item 7 for more information on items in the consolidated financial statements we consider require significant estimation or judgment. 47 Inventory Valuation Inventories are stated at the lower of cost or net realizable value.
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 (excluding New York City), Florida and the New England region of the U.S. as well as Ontario and Quebec provinces of Canada.
The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Illinois, Indiana, Ohio, Pennsylvania, New York (excluding New York City), Florida and the New England region of the U.S. as well as Ontario and Quebec provinces of Canada.
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.
Short-term lease expenses include leases with terms at lease commencement of 12 months or less and no purchase option is reasonably certain to be exercised, including leases with a duration of one month or less.
Low-value lease expense 47 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.
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 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 First Lien 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.
The Notes and the guarantors thereof 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 First Lien 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.
The fair values were determined by reference to transacted prices and quotes for these instruments and upon current borrowing rates with similar maturities, which are Level 2 fair value inputs.
The fair values were determined by reference to transacted prices and quotes for these instruments and based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs.
Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure.
Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive officer and our principal financial officer, to allow timely decisions regarding disclosure.
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 and for parts associated with periodic maintenance services at the time such services are completed.
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 and at the time services are completed for parts associated with periodic maintenance services.
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Alta Equipment Group Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for the years ended December 31, 2023 and 2022, and the related notes, and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Alta Equipment Group Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows, for the years ended December 31, 2024, and the related notes, and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
In accordance with the guidance in Topic 718-50 – Compensation – Stock Compensation , the ability to purchase shares of the Company’s common stock for 85 % of the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the purchase date) represents an option and, therefore, the ESPP is a compensatory plan under this guidance.
In accordance with the guidance in Topic 718-50 – Compensation – Stock Compensation , the ability to purchase shares of the Company’s common stock for 85 % of the lower of the price on the first or last day of the offering period (i.e. the purchase date) represents an option and, therefore, the ESPP is a compensatory plan.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, who audited the consolidated financial statements as of and for the year ended December 31, 2023 included in this Annual Report on Form 10-K has also audited the Company’s internal control over financial reporting as of December 31, 2023. Deloitte & Touche LLP’s report is included herein.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, who audited the consolidated financial statements as of and for the year ended December 31, 2024 included in this Annual Report on Form 10-K has also audited the Company’s internal control over financial reporting as of December 31, 2024. Deloitte & Touche LLP’s report is included herein.
The Company’s leases have remaining lease terms that range from less than one year to leases that mature through December 2037 and contain provisions to renew the leases for additional terms of up to 20 years . The Company leases and subleases certain lift trucks to customers under short and long-term operating lease agreements.
The Company’s leases have remaining lease terms that range from less than one year to leases that mature through December 2039 and contain provisions to renew the leases for additional terms of up to 20 years . The Company leases and subleases certain lift trucks to customers under short and long-term operating lease agreements.
We include all common share equivalents granted under our stock-based compensation plan which remain unvested and shares used as consideration in the Ault acquisition which remain unissued ("dilutive securities"), in the number of shares outstanding for our diluted EPS calculations using the treasury method.
We include all common share equivalents granted under our stock-based compensation plan, including ESPP, which remain unvested, and shares used as consideration in the Ault acquisition which remain unissued ("dilutive securities"), in the number of shares outstanding for our diluted EPS calculations using the treasury method.
Ite m 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 66 It em 9A. Controls and Procedures.
Ite m 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. It em 9A. Controls and Procedures.
Our annual goodwill impairment testing conducted as of October 1, 2023, 2022 and 2021 indicated that all our reporting units had estimated fair values which exceeded their respective carrying amounts. Based on the results of the tests, there was no goodwill impairment.
Our annual goodwill impairment testing conducted as of October 1, 2024, 2023 and 2022 indicated that all our reporting units had estimated fair values which exceeded their respective carrying amounts. Based on the results of the tests, there was no goodwill impairment.
The Notes were 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, and J.P. Morgan Securities LLC, as representative of the initial purchasers.
The Notes were 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 domestic subsidiaries of the Company (as guarantors), and J.P. Morgan Securities LLC, as representative of the initial purchasers.
The Company then opened enrollment for the first offering period that started July 1, 2023 and continues through December 31, 2023. There are two six month offering periods each year starting January 1 and July 1 with the purchase date on the last business day of each offering period.
The Company then opened enrollment for the first offering period that started July 1, 2023 and continued through December 31, 2023. There are two six-month offering periods each year starting January 1 and July 1, with the purchase date on the last business day of each offering period.
The Company’s participation in multiemployer plans for the annual periods ended December 31, 2023, 2022 and 2021 is outlined in the table below. For each plan that is individually significant to the Company, the following information is provided: • The “Pension Protection Act Zone Status” available is for plan years that ended in 2023 and 2022.
The Company’s participation in multiemployer plans for the annual periods ended December 31, 2024, 2023 and 2022 is outlined in the table below. For each plan that is individually significant to the Company, the following information is provided: • The “Pension Protection Act Zone Status” available is for plan years that ended in 2024 and 2023.
See Note 17, Segments, for further information. Leases revenues (Topic 842) Rental revenues: 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.
See Note 17, Segments, for further information. 52 Leases revenues (Topic 842) Rental revenues: Owned equipment rentals represent revenues from renting equipment. The Company accounts for these rental contracts as operating leases. The Company recognizes revenues from equipment rentals in the period earned, regardless of the timing of billing to customers.
The Company reviewed our finite-lived intangible assets for impairment and determined that none of the assets were impaired during the years ended December 31, 2023, 2022 and 2021. See Note 2, Summary of Significant Accounting Policies, for more information on the impairment testing.
The Company reviewed our finite-lived intangible assets for impairment and determined that none of the assets were impaired during the years ended December 31, 2024, 2023 and 2022. See Note 2, Summary of Significant Accounting Policies, for more information on the impairment testing.
Basis of Presentation The accompanying 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 intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements.
Basis of Presentation The accompanying consolidated financial statements include the consolidated accounts of the Company and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements.
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.
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 concurrently with the title.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. Our exposure to market risk primarily consists of interest rate risk associated with our variable and fixed rate debt, prices of certain commodities and foreign currency exchange rate risks.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. Our exposure to market risks primarily consist of interest rate risk associated with our variable and fixed rate debt, prices of certain commodities, and foreign currency exchange rate risks.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Based on our most recently completed qualitative assessment in the fourth quarter 2023 , there were no indications of impairment associated with our long-lived assets. 46 Business Combinations We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values on the acquisition date.
Based on our most recently completed qualitative assessment in the fourth quarter 2024 , there were no indications of impairment associated with our long-lived assets. Business Combinations We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values on the acquisition date.
While the Company does not believe a qualitative assessment would have triggered the required quantitative assessment, the Company bypassed the optional qualitative assessments for each reporting unit and performed quantitative assessments at October 1, 2023, 2022 and 2021.
While the Company does not believe a qualitative assessment would have triggered the required quantitative assessment, the Company bypassed the optional qualitative assessments for each reporting unit and performed quantitative assessments at October 1, 2024, 2023 and 2022.
NOTE 11 — CONTINGENCIES Guarantees As of December 31, 2023 and 2022, the Company was party to certain contracts in which we guarantee the performance of agreements with various third-party financial institutions.
NOTE 11 — CONTINGENCIES Guarantees As of December 31, 2024 and 2023, the Company was party to certain contracts in which we guarantee the performance of agreements with various third-party financial institutions.
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. Revenues recognized from bill-and-hold agreements totaled $ 27.7 million and $ 15.6 million for the years ended December 31, 2023 and 2022, respectively.
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. Revenues recognized from bill-and-hold agreements totaled $ 29.4 million, $ 27.7 million, and $ 15.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
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 $ 0.1 million to $ 148.5 million.
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 $ 0.1 million to $ 160.0 million.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 5, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
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 obligations as specified in the contract. The estimated exposure related to these guarantees was not material as of December 31, 2023 and 2022 .
In the event of a default by a third-party, the Company would be required to pay all or a portion of the remaining unpaid obligations as specified in the contract. The estimated exposure related to these guarantees was not material as of December 31, 2024 and 2023 .
Legal Proceedings During the years ended December 31, 2023 and 2022, various claims and lawsuits, incidental to the ordinary course of our business, were pending against the Company.
Legal Proceedings During the years ended December 31, 2024 and 2023, various claims and lawsuits, incidental to the ordinary course of our business, were pending against the Company.
The Company intends to indefinitely reinvest the undistributed earnings of our foreign subsidiaries and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs. The undistributed earnings of foreign subsidiaries and related unrecognized 58 deferred tax liability are not material as of December 31, 2023 and 2022.
The Company intends to indefinitely reinvest the undistributed earnings of our foreign subsidiaries and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs. The undistributed earnings of foreign subsidiaries and related unrecognized deferred tax liability are not material as of December 31, 2024 and 2023.
It is anticipated that the third parties will have the ability to repay the 57 debt without the Company having to honor the guarantee; therefore, no amount has been accrued on the Consolidated Balance Sheets as of December 31, 2023 and 2022.
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 as of December 31, 2024 and 2023.
Based upon balances and exchange rates as of December 31, 2023, holding other variables constant, we believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates would not have a material impact on our results of operations or cash flows. 36 Ite m 8. Financial Statements and Supplementary Data.
Based upon balances and exchange rates as of December 31, 2024, holding other variables constant, we believe that a hypothetical 10% increase or decrease in all applicable foreign exchange rates would not have a material impact on our results of operations or cash flows. 39 Ite m 8. Financial Statements and Supplementary Data.
The Company reviews counterparty credit risks at regular intervals and has not experienced any significant credit loss as a result of counterparty nonperformance in the past. Currency Derivative Contracts Starting in 2022, from time to time we used foreign currency forward contracts to reduce the effects of fluctuations in exchange rates relating to foreign currencies for certain inventory purchases.
The Company reviews counterparty credit risks at regular intervals and has not experienced any significant credit loss as a result of counterparty nonperformance in the past. Currency Derivative Contracts From time to time we use foreign currency forward contracts to reduce the effects of fluctuations in exchange rates relating to foreign currencies for certain inventory purchases.
The purchase price on the asset-structured acquisition was $ 16.7 million in cash paid, which includes $ 2.7 million of excess net working capital.
The purchase price on the asset-structured acquisition was $ 16.7 million in cash paid, which included $ 2.7 million of excess net working capital.
For the years ended December 31, 2023, 2022 and 2021, the Company recognized interest expense associated with new equipment financed under our Floor Plan Facilities of $ 8.4 million, $ 2.7 million, and $ 1.7 million, respectively.
For the years ended December 31, 2024, 2023 and 2022, the Company recognized interest expense associated with new equipment financed under our Floor Plan Facilities of $ 12.1 million, $ 8.4 million, and $ 2.7 million, respectively.
The interest rates applicable to any loans under the ABL Facility are based, at our option, on (i) a floating rate based on the SOFR (for loans denominated in U.S. dollars) or Canadian Dollar Offered Rate (for loans denominated in Canadian dollars) plus an initial margin of 1.75% or (ii) CBFR (for loans denominated in U.S. dollars) or the Canadian Prime Rate (for loans denominated in Canadian dollars) less an initial margin of 0.75%, in each case, where margin is adjusted under the ABL Facility based on the quarterly average excess availability under the ABL Facility.
The interest rates applicable to any loans under the ABL Facility are based, at the option of the borrowers, on (i) a floating rate based on the Secured Overnight Financing Rate ("SOFR") (for loans denominated in U.S. dollars) or Canadian Dollar Offered Rate (for loans denominated in Canadian dollars) plus an initial margin of 1.75% or (ii) CBFR (for loans denominated in U.S. dollars) or the Canadian Prime Rate (for loans denominated in Canadian dollars) less an initial margin of 0.75%, in each case, where margin is adjusted under the ABL Facility based on the quarterly average excess availability under the ABL Facility.
The following table sets forth the Company’s contingent consideration liabilities recorded at fair value as of December 31, 2023 and December 31, 2022, and their presentation on the Consolidated Balance Sheets: Level 3 Balance Sheet Location December 31, 2023 December 31, 2022 Other current liabilities $ 0.4 $ 1.8 Other liabilities 4.2 8.0 The following is a summary of changes to Level 3 instruments for the years ended December 31, 2023 and 2022: Contingent Consideration Balance, December 31, 2021 $ 2.8 Acquisitions 6.9 Changes in fair value 0.5 Payments ( 0.4 ) Balance, December 31, 2022 $ 9.8 Acquisitions — Changes in fair value 1.1 Payments ( 1.2 ) Non-contingent reclass ( 5.1 ) Balance, December 31, 2023 $ 4.6 Derivative Financial Instruments In the normal course of business, we are exposed to market risk associated with changes in foreign currency exchange rates, commodity prices and interest rates.
The following table sets forth the Company’s contingent consideration liabilities recorded at fair value and their presentation on the Consolidated Balance Sheets: Level 3 Balance Sheet Location December 31, 2024 December 31, 2023 Other current liabilities $ — $ 0.4 Other liabilities 5.7 4.2 The following is a summary of changes to Level 3 instruments for the years ended December 31, 2024 and 2023: Contingent Consideration Balance, December 31, 2022 $ 9.8 Changes in fair value 1.1 Payments ( 1.2 ) Non-contingent reclass ( 5.1 ) Balance, December 31, 2023 $ 4.6 Changes in fair value 1.1 Balance, December 31, 2024 $ 5.7 Derivative Financial Instruments In the normal course of business, we are exposed to market risks associated with changes in foreign currency exchange rates, commodity prices and interest rates.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Year Ended December 31, 2023 2022 2021 Net income (loss) $ 8.9 $ 9.3 $ ( 20.8 ) Other comprehensive income (loss): Foreign currency translation adjustments 1.6 ( 1.5 ) — Change in fair value of derivative, net of tax ( 0.5 ) ( 1.4 ) — Total other comprehensive income (loss) (1) 1.1 ( 2.9 ) — Comprehensive income (loss) $ 10.0 $ 6.4 $ ( 20.8 ) (1) There were no material reclassifications from accumulated other comprehensive income (loss) reflected in Total other comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in millions) Year Ended December 31, 2024 2023 2022 Net (loss) income $ ( 62.1 ) $ 8.9 $ 9.3 Other comprehensive (loss) income: Foreign currency translation adjustments ( 3.6 ) 1.6 ( 1.5 ) Change in fair value of derivative, net of tax 0.5 ( 0.5 ) ( 1.4 ) Total other comprehensive (loss) income (1) ( 3.1 ) 1.1 ( 2.9 ) Comprehensive (loss) income $ ( 65.2 ) $ 10.0 $ 6.4 (1) There were no material reclassifications from Accumulated other comprehensive loss reflected in Total other comprehensive (loss) income for the years ended December 31, 2024, 2023 and 2022.
The effective interest rate at December 31, 2023 and 2022 was 8.2 % and 7.0 % , respectively. The Company routinely sells equipment that is financed under the First Lien Floor Plan Facility. When this occurs the payable under the First Lien Floor Plan Facility related to the financed equipment being sold becomes due to be paid.
The effective interest rate at December 31, 2024 and December 31, 2023 was 7.4 % and 8.2 % , respectively. The Company routinely sells equipment that is financed under the First Lien Floor Plan Facility. When this occurs the payable under the First Lien Floor Plan Facility related to the financed equipment being sold becomes due to be paid.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated March 14, 2024, expressed an unqualified opinion on those financial statements.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 5, 2025, expressed an unqualified opinion on those financial statements.
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.
Under bill-and-hold arrangements, revenues are 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.
There were no material taxes associated with Total other comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021 . The accompanying notes are an integral part of these consolidated financial statements. 42 ALTA EQUIPMENT GROUP INC.
There were no material taxes associated with Total other comprehensive (loss) income for the years ended December 31, 2024, 2023 and 2022 . The accompanying notes are an integral part of these consolidated financial statements. 44 ALTA EQUIPMENT GROUP INC.
Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Alta Equipment Group Inc. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Alta Equipment Group Inc. and subsidiaries (the "Company") as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Unbilled rental revenues are included as a component of "Accounts receivable, net" on the Consolidated Balance Sheets. Rental equipment may also be purchased outright (“rental equipment sales”). Rental revenue and revenue attributable to rental equipment sales are recognized in "Rental revenues" and "Rental equipment sales" on the Consolidated Statements of Operations, respectively.
Unbilled rental revenues are included as a component of "Accounts receivable, net" on the Consolidated Balance Sheets. Rental equipment may also be purchased outright (“Rental equipment sales”) by our customers. Rental revenues and revenues attributable to rental equipment sales are recognized in "Rental revenues" and "Rental equipment sales" on the Consolidated Statements of Operations, respectively.
NOTE 9 — LONG-TERM DEBT Line of Credit — 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.
NOTE 9 — LONG-TERM DEBT Line of Credit — First Lien Lender In April 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.
The Company also files tax returns in numerous states for which various tax years are subject to examination and currently involved in audits. Typically states remain open for three years from filing, with the majority of the open years being 2020 to 2023.
The Company also files tax returns in numerous states for which various tax years are subject to examination and currently involved in audits. Typically states remain open for three years from filing, with the majority of the open years being 2021 to 2024.
This revenue is recognized as the performance obligations are satisfied over time using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs. The Company recognizes deferred revenue with respect to project-based services.
These revenues are recognized as the performance obligations are satisfied over time using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs. The Company recognizes deferred revenue with respect to project-based services.
The remaining work in process balances as of December 31, 2023 and 2022, primarily represent parts applied to open service orders. Rental depreciation expense, for new and used equipment inventory under short-term leases with purchase options, was $ 12.4 million, $ 7.6 million and $ 5.8 million for the years ended December 31, 2023, 2022 and 2021 , respectively.
The remaining work in process balances as of December 31, 2024 and 2023, primarily represent parts applied to open service orders. Rental depreciation expense for new and used equipment inventory under short-term leases with purchase options was $ 15.2 million, $ 12.4 million and $ 7.6 million for the years ended December 31, 2024, 2023 and 2022 , respectively.
Total deferred revenue relating to project-based revenues, service maintenance contracts and equipment rental agreements as of December 31, 2023 and 2022 was $ 18.4 million and $ 16.0 million, respectively. Deferred revenue also includes the net proceeds upon sale of equipment with certain guaranteed purchase obligations.
Total deferred revenue relating to project-based revenues, guaranteed maintenance contracts and equipment rental agreements as of December 31, 2024 and 2023 was $ 16.3 million and $ 18.4 million, respectively. Deferred revenue also includes the net proceeds upon sale of equipment with certain guaranteed purchase obligations.
All changes in the fair value of the interest rate cap are deferred in AOCI and subsequently recognized in earnings in the period when the derivative contract settles. The unrealized gain on the interest rate cap for the years ended December 31, 2023 and 2022 is disclosed in the Consolidated Statements of Other Comprehensive Income.
All changes in the fair value of the interest rate cap are deferred in AOCI and subsequently recognized in earnings in the period when the derivative contract settles. The unrealized impact on earnings on the interest rate cap for the years ended December 31, 2024, 2023 and 2022 are disclosed in the Consolidated Statements of Other Comprehensive (Loss) Income.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We did not have significant exposure to changing interest rates as of December 31, 2023 on the fixed rate Notes. For additional information concerning the terms of our fixed rate debt, see Note 9, Long-Term Debt. Commodity price risk: The market prices of diesel and unleaded fuels are unpredictable and can fluctuate significantly.
We do not have any exposure to changing interest rates as of December 31, 2024 on the Notes. For additional information concerning the terms of our fixed rate debt, see Note 9, Long-Term Debt. Commodity price risk: The market prices of diesel and unleaded fuels are unpredictable and can fluctuate significantly.
We identified the Company’s revenue recognition processes for new and used equipment sales, parts sales, service revenues, and rental equipment sales as a critical audit matter as the Company has a significant volume of revenue transactions throughout the year that rely 37 on manual processes to generate accurate data to record revenue when the customer obtains control of the promised good or when services are completed.
The processing and recording of the Company’s revenue transactions involves a combination of automated and manual processes. 40 We identified the Company’s revenue recognition processes for new and used equipment sales, parts sales, service revenues, and rental equipment sales as a critical audit matter as the Company has a significant volume of revenue transactions throughout the year that rely on manual processes to generate accurate data to record revenue when the customer obtains control of the promised good or when services are completed.
Our management, with the participation of the Chief Executive Officer and the Chief Financial Officer, as our principal financial and accounting officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.
Our management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.
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. /s/ Deloitte & Touche LLP Detroit, Michigan March 14, 2024 69 Item 9B. Other Information. None. Item 9C.
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. /s/ Deloitte & Touche LLP Detroit, Michigan March 5, 2025 71 Item 9B. Other Information. None . Item 9C.
Approximate minimum rentals receivable, none of which are recorded in our Consolidated Balance Sheets, under such leases for each of the next five years and thereafter are as follows: Year ending December 31, Amount 2024 $ 5.8 2025 2.8 2026 2.0 2027 1.4 2028 0.1 Thereafter — Total $ 12.1 Sublease income recorded in "Rental revenues" in our Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 was $ 6.2 million, $ 7.0 million, and $ 7.5 million, respectively.
Approximate minimum rentals receivable, none of which are recorded in our Consolidated Balance Sheets, under such leases for each of the next five years are as follows: Years ending December 31, Amount 2025 $ 7.3 2026 5.4 2027 2.5 2028 0.3 2029 0.1 Total $ 15.6 Sublease income recorded in "Rental revenues" in our Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 was $ 6.2 million, $ 6.2 million, and $ 7.0 million, respectively.
The Company has contract assets and contract liabilities associated with project-based contracts with customers. Contract assets are fulfilled contractual obligations prior to receivables being recognizable for project-based revenues. Contract assets as of December 31, 2023 and 2022 were $ 4.5 million and $ 3.6 million, respectively.
The Company has contract assets and contract liabilities associated with project-based contracts with customers. Contract assets are fulfilled contractual obligations prior to receivables being recognizable for project-based revenues. Contract assets as of December 31, 2024 and 2023 were $ 4.2 million and $ 4.5 million, respectively.
The weighted average rate, excluding the favorable effect of interest-free periods, on the Company's Floor Plan Facilities was 8.0 % and 6.7 % as of December 31, 2023 and 2022 , respectively.
The weighted average rate, excluding the favorable effect of interest-free periods, on the Company's Floor Plan Facilities was 7.9 % and 8.0 % as of December 31, 2024 and 2023 , respectively.
As of December 31, 2023 and 2022, the Company had federal net operating tax loss carryforwards of approximately $ 194.6 million and $ 30.5 million, respectively, primarily due to taking bonus depreciation. These federal net operating tax loss carryforwards may be carried forward indefinitely and are eligible to offset 80 % of future taxable income.
As of December 31, 2024 and 2023, the Company had federal net operating tax loss carryforwards of approximately $ 160.9 million and $ 194.6 million, respectively, primarily due to taking bonus depreciation. These federal net operating tax loss carryforwards may be carried forward indefinitely and are eligible to offset 80 % of future taxable income.
At December 31, 2023 and 2022, assets recorded under finance leases, net of accumulated depreciation were $ 37.6 million and $ 19.0 million, respectively. The assets are depreciated over the lesser of their related lease terms or estimated useful lives.
At December 31, 2024 and 2023, assets recorded under finance leases, net of accumulated depreciation were $ 43.6 million and $ 37.6 million, respectively. The assets are depreciated over the lesser of their related lease terms or estimated useful lives.
We calculated the fair value of the restricted stock units ("RSUs") and performance stock units ("PSUs") at grant date based on the closing market price of our common stock at the date of grant. The compensation expense is recognized on a straight-line basis over the requisite service period of the award.
We calculate the fair value of the RSUs and PSUs at grant date based on the closing market price of our common stock at the date of grant. The compensation expense is recognized on a straight-line basis over the requisite service period of the award.
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.
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.
The total outstanding balance under the Floor Plan Facilities as of December 31, 2023 and 2022, was $ 397.5 million and $ 256.9 million, respectively, excluding unamortized debt issuance costs.
The total outstanding balance under the Floor Plan Facilities as of December 31, 2024 and 2023 was $ 374.9 million and $ 397.5 million, respectively, excluding unamortized debt issuance costs.
The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company. As of December 31, 2023 and 2022, the Company had an outstanding balance on our First Lien Floor Plan Facility of $ 67.4 million and $ 58.6 million, respectively, excluding unamortized debt issuance costs.
The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company. As of December 31, 2024 and December 31, 2023, the Company had an outstanding balance on our First Lien Floor Plan Facility of $ 54.7 million and $ 67.4 million, respectively, excluding unamortized debt issuance costs.
As of December 31, 2023, estimated amortization expense for intangible assets for each of the next five years and thereafter was as follows: Year ending December 31, Amount 2024 $ 10.3 2025 10.1 2026 9.9 2027 9.1 2028 8.3 Thereafter 18.6 Total $ 66.3 53 NOTE 8 — FLOOR PLANS Floor Plan — First Lien Lender On April 1, 2021, the Company entered into a 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.
As of December 31, 2024, estimated amortization expense for intangible assets for each of the next five years and thereafter was as follows: Years ending December 31, Amount 2025 $ 9.9 2026 9.7 2027 8.9 2028 8.1 2029 7.3 Thereafter 10.8 Total $ 54.7 56 NOTE 8 — FLOOR PLANS Floor Plan — First Lien Lender In April 2021, the Company entered into a 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.
Balance Sheet Location December 31, 2023 December 31, 2022 Other current liabilities $ 7.4 $ 0.8 Other liabilities 6.5 6.2 Total $ 13.9 $ 7.0 See Note 14, Fair Value of Financial Instruments, and Note 15, Business Combinations, for further information.
December 31, December 31, Location on Balance Sheet 2024 2023 Other current liabilities $ 2.7 $ 7.4 Other liabilities 4.9 6.5 Total $ 7.6 $ 13.9 58 See Note 14, Fair Value of Financial Instruments, and Note 15, Business Combinations, for further information.
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).
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 (e.g., a sales commission).
As of December 31, 2023 and 2022, 54 the Company had an outstanding ABL Facility balance of $ 317.5 million and $ 219.5 million, respectively, excluding unamortized debt issuance costs. The effective interest rate was 7.2 % and 6.2 % at December 31, 2023 and 2022, respectively.
As of December 31, 2024 and December 31, 2023, the Company had an outstanding ABL Facility balance of $ 182.9 million and $ 317.5 million, respectively, excluding unamortized debt issuance costs. The effective interest rate was 6.2 % and 7.2 % at December 31, 2024 and December 31, 2023, respectively.
These leases are expected to commence in 2024 with lease terms up to 15 years. The Company leases and subleases certain lift trucks to customers under long-term operating lease agreements which expire at various dates through 2028.
These leases are expected to commence in 2025 with lease terms up to 10 years. The Company leases and subleases certain lift trucks to customers under long-term operating lease agreements which expire at various dates through 2029.
As of December 31, 2023, the total unrecognized compensation expense related to the non-vested portion of the Company's RSUs was $ 1.4 million , which is expected to be recognized over a weighted average period of 0.6 years.
As of December 31, 2024, the total unrecognized compensation expense related to the non-vested portion of the Company's PSUs was $ 1.7 million, which is expected to be recognized over a weighted average period of 0.4 years.
A portion of the deferred revenue is recognized based upon usage of the equipment and therefore may vary from our current expectation. For the years ended December 31, 2023 and 2022, the Company recognized revenue of $ 13.9 million and $ 12.6 million, respectively, from the prior year ending deferred revenue balance.
A portion of the deferred revenue is recognized based upon usage of the equipment and therefore may vary from our current expectation. For the years ended December 31, 2024 and 2023, the Company recognized revenues of $ 14.0 million and $ 13.9 million, respectively, from the prior year ending deferred revenue balance.
Fuel Purchase Contracts During June 2023, we entered into fixed price swap contracts to purchase gasoline and diesel fuel to protect cash flows from the risks associated with fluctuations in fuel prices on a portion of anticipated future purchases.
Fuel Purchase Contracts From time to time, we enter into fixed price swap contracts to purchase gasoline and diesel fuel to protect cash flows from the risks associated with fluctuations in fuel prices on a portion of anticipated future purchases.
At December 31, 2023 and 2022, we had $397.5 million and $256.9 million, respectively, outstanding borrowings under the Floor Plan Facilities.
At December 31, 2024 and 2023, we had $374.9 million and $397.5 million, respectively, outstanding borrowings under the Floor Plan Facilities.
Under the Amended and Restated ABL Credit Agreement, the Company has an asset based revolving line of credit (the “ABL Facility”) with our 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.
Under the Amended and Restated ABL Credit Agreement, the Company has an ABL Facility with our 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.

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