Alta Equipment Group Inc. 2026 Q2 Earnings Call

Good afternoon, everyone, thank you for joining us today. A press release detailing Alta's second quarter 2026 financial results was issued this afternoon and is posted on our website, along with a presentation designed to assist you in understanding the company's results. On the call with me today are Ryan Greenawalt, our Chairman and CEO, and Tony Colucci, our Chief Financial Officer. For today's call, management will first provide a review of our second quarter 2026 financial results. We will begin with some prepared remarks before we open the call for your questions. Please proceed to slide two. Before we get started, I'd like to remind everyone that this conference call may contain certain forward-looking statements, including statements about future financial results, our business strategy and financial outlook, achievements of the company, and other non-historical statements as described in our press release.

These forward-looking statements are subject to both known and unknown risks, uncertainties, and assumptions, including those related to Alta's growth, market opportunities, and general economic and business conditions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in our reports filed with the SEC, including our press release that was issued today. During this call, we may present both GAAP and non-GAAP financial measures.

A reconciliation of GAAP to non-GAAP measures is included in today's press release and can be found on our website at investors.altaequipment.com. I will now turn the call over to Ryan.

Thank you, Jason, and good afternoon, everyone. I appreciate you joining us to review Alta Equipment Group's second quarter 2026 results. My comments will focus on our markets, booking and delivery trends, and progress on our strategic initiatives. Tony will cover the financials, capital structure, and our updated guidance. The central takeaway is that the momentum we discussed in Q1 became more visible in the second quarter. Revenue improved by approximately $65 million from the first quarter, with sequential growth across all three segments. Order activity is improving, deliveries are recovering, dealer inventory pressures are receding, and our operating initiatives are gaining traction. We believe improving industry indicators and stronger activity in our own markets represent a positive inflection point for Alta. The broader backdrop is becoming more supportive. Industrial spending remains elevated. Federal infrastructure funding continues to flow into state and local project pipelines, transportation budgets in our largest construction equipment markets remain strong.

The U.S. manufacturing PMI stayed in expansion territory through the quarter and strengthened further in July, a constructive leading signal for lift truck demand. Non-residential demand from energy infrastructure and onshoring continues to build, Volvo recently raised its 2026 North American market forecast by 5%. Tariff-related disruption has stabilized, benefiting master distribution and overall pricing. Material handling remains the clearest leading indicator of improving demand. As shown on slide seven, industry bookings in our areas of responsibility increased 12.3% in the first half versus a year ago, second quarter bookings held near the strong first quarter pace, up 4.9% from prior year quarter. This is not a one-month spike.

The improvement has been sustained across the first half, a trend Hyster-Yale also noted on their earnings call this week. The recovery is broad-based across regions and verticals, including food and beverage, manufacturing, building materials, energy, defense, distribution, and logistics. Those bookings are building backlog is what gives us confidence in the second half. Our material handling backlog now stands at approximately $143 million, its highest level since 2023. In this business, bookings convert to backlog converts to revenue over the following quarters. Today's order book provides meaningful visibility into second-half invoicing. As slide eight shows, our current booking pace points to a meaningful recovery in 2026, with volumes moving toward long-term regional norms. Two structural drivers support the trend. First, fleet age. Many operators deferred replacement over the last two years, as four and five-year-old fleets become more costly to maintain, quoting activity increases, driving both equipment sales and the recurring parts and service revenues that follow each unit.

Second, product breadth. Our OEM partners are introducing modular value-oriented configurations for lighter duty applications, allowing us to serve cost-conscious customers with fit-for-purpose equipment while preserving our premium offering where uptime and lifecycle support matter most. Our material handling share gains are being driven by three factors: stronger participation in the fast-growing warehousing segment, new products that allow us to recapture business previously lost to value-oriented brands, and PeakLogix's integration capabilities, which enable us to advise customers on and execute larger and more complex projects. Construction equipment entered the quarter with the delayed seasonal start, activity accelerated through the quarter, carrying the segment past its first quarter low point.

Market deliveries in our areas of responsibility increased 20.1% in the second quarter versus the prior year, and were up 7.5% for the first half. Florida was a notable area of strength, particularly in articulated haulers and quoting activity is benefiting from road and bridge work, municipal projects, energy infrastructure, and manufacturing investment. The competitive environment is healthier than a year ago. Dealer inventories have declined, OEM discounting has moderated, and used equipment values have improved from their 2025 lows, all supporting better equipment margins. Our rental fleet initiatives continue to progress. The goal is matching fleet investment to local demand, improving utilization and returns, and avoiding under-productive assets. Tony will detail the results.

Product support remains one of the most important differentiators in Alta's dealership model, with 85 locations, approximately 1,100 factory-trained technicians, and more than 1,000 field service vehicles creating recurring revenue streams that pure-play rental models do not replicate. Through our Customer Value Mapping initiative, we are aligning capacity with customers who value uptime and lifecycle support while improving rate realization and service productivity. Our strategic vision for 2028 focuses on generating more value from the platform we have built. Since our IPO, we have completed 17 acquisitions and grown from 43 to 85 locations. The next phase centers on organic growth, operating consistency, and disciplined capital allocation, gaining share in attractive markets, scaling PeakLogix and Ecoverse, improving product support productivity, increasing inventory and fleet returns, and using technology to drive efficiency and accountability.

As we enter the second half, demand indicators remain constructive, led by material handling bookings and backlog, construction equipment project activity, and healthier channel conditions. We are maintaining a measured outlook, and Tony will discuss our revised guidance. The second quarter does not complete the recovery, but it provides clear evidence that one is underway and that our operating model is responding as expected. I want to thank our approximately 2,600 employees for their commitment to our customers. Their expertise is the foundation of Alta's value proposition. With that, I'll turn the call over to Tony.

Thanks, Ryan. Good evening, everyone, and thank you for your interest in Alta Equipment Group and our second quarter 2026 financial results. Before getting into the quarter, I'd like to thank our employees, customers, OEM partners, and shareholders for their continued support. We entered 2026 facing a number of challenges, including the pull-forward buying activity that benefited late 2025, difficult winter conditions, and softer equipment markets. While Q1 was challenging, our second quarter performance and the trending KPIs suggest all of those headwinds are behind us as the second quarter reflected a return to more normalized operating conditions and showcased the fundamental earnings power of our dealership model. My remarks today will focus on three areas. First, I'll report our second quarter financial performance and discuss the significant improvement we saw versus the first quarter, along with the key drivers behind our results.

Second, I'll discuss capital efficiency, which remains an important priority as we continue to optimize inventory levels, rental fleet investment, and improve returns on capital. Lastly, I'll provide perspective on our outlook for the balance of the year and discuss the indicators that continue to give us confidence in our ability to deliver within our previously communicated guidance. As always, I'll be referencing slides from our earnings presentation throughout today's call. I encourage investors to review our earnings presentation as well as our 10-Q, both of which are available on our investor relations website at altg.com. With that, let me begin with our financial performance for the quarter, which corresponds with slides 12 through 22 of the earnings presentation. For the quarter, Alta generated revenue of $475.5 million and adjusted EBITDA of $48.6 million.

Nominal gross profit increased year-over-year, total gross margins expanded approximately 70 basis points to 26.1%, while EBITDA margins increased to 10.2%. While revenue remained modestly below prior year levels, the more important takeaway is the sequential improvement versus Q1, the results were encouraging. Revenue increased by approximately $65 million compared to the first quarter, while adjusted EBITDA increased by approximately $20.5 million, from $28.1 million in Q1 to $48.6 million in Q2. EBITDA margins expanded 340 basis points sequentially. While some of that increase reflects normal seasonality as construction and rental activity improve entering the summer months, it also reflects the strengthening equipment market conditions, improved equipment margins, and solid execution across our operating businesses. One area I'd specifically highlight is equipment margin performance.