Alta Equipment’s Revenues Decline 4.5 Percent in Challenging Fourth Quarter
Alta Equipment posted $498.1 million in total revenue in the fourth quarter of 2024 compared to $521.5 million in the fourth quarter of 2023, a 4.5-percent decline. Rental revenue dropped from $55.3 million in the fourth quarter of 2023 to $47.5 in the same period of 2024, a 14.1-percent dip. New and used equipment sales declined 3.7 percent from $298.1 to $287.1 million, a 3.7-percent skid. Service revenue dropped from $60.8 million to $59.0 million, a 3 percent decrease, while parts revenue decreased 1.7 percent from $69.1 million to $67.9 million.
For the full year, total revenue was flat, dipping from $1,876.8 million in 2023 to $1876.6 million in 2024. Rental revenue increased slightly from $202.4 million in 2023 to $203.4 in the just concluded year, a 0.5-percent incline. New and used equipment sales dropped from $1,025.9 million in 2023 to $987 million in 2024, a 3.8-percent skid. Parts sales increased from $278.3 million in 2023 to $294.4, a 5.8-percent jump, while service revenues went from $241.3 million to $253.8 million, a 5.2-percent hike.
High interest rates and uncertainty impact 2024
“Overall, our 2024 performance was impacted by several factors including elevated interest rates and uncertainty regarding the U.S. presidential race, both of which contributed to a moderation of construction spending and a reduction of non-residential project starts in the U.S., when compared to 2023,” said Ryan Greenawalt, Alta CEO. “This backdrop resulted in an overall decline in the North American construction equipment market, as equipment volumes within some of our regional markets were off approximately 10 to 20 percent, year over year. Additionally, in the face of waning demand, construction pricing was further pressured throughout the year as industry dealer channels were overstocked across the landscape, impacting gross margins and market share in our Construction segment. The factors that challenged our Construction segment also impacted our Master Distribution segment in 2024, negatively affecting equipment volumes and gross margins year over year. In contrast, our Material Handling segment showed more resiliency, as North American lift truck deliveries grew in 2024 as the industry continued to work through record backlogs generated post-COVID. As a result, revenues for our Material Handling segment were $687.4 million, a slight increase from a year ago.
“Post-election, customer sentiment improved, which drove increased demand for equipment as evidenced by our fourth quarter equipment sales results where we registered our best equipment sales quarter of 2024. Despite the notable sequential increase in equipment sales in the fourth quarter, gross margins on equipment sales continued to be pressured as market participants aimed to right-size their inventory and rental fleet levels heading into the new year. Additionally, rental equipment seasonality in our northern regions as well as employee and customer downtime due to the holiday schedule also negatively impacted our results in the fourth quarter.”
Nonetheless, Greenawalt sees some positive indications for 2025. “Despite the contraction in the construction equipment markets and other macroeconomic concerns, our total revenues for 2024 were essentially flat from last year, at $1.9 billion, which demonstrated the resilience of our dealership model during market cyclicality and the strength of our multiple revenue streams, customer relationships, diversified product portfolio and attractive geographic footprint in the U.S. and Canada. Indications of this resilience from a financial perspective in 2024 are two-fold. First, our product support business continued to perform well in 2024, with combined revenues increasing 5.5 percent year-over-year with parts and service sales growing to $294.4 million and $253.8 million, respectively. Importantly, despite the challenges that 2024 presented to our team, we successfully achieved organic growth for the fifth consecutive year in product support since going public five years ago. Second, given our rent-to-sell business model we were able to quickly right-size fleet levels in the second half of 2024, which allowed for strong operating cash flows in 2024, when compared to 2023, and deleveraging of the balance sheet of over $60 million since June 30, 2024. Our confidence in the business model’s resiliency and our ability to produce cash flows throughout the cycle allowed us to return $13.6 million to shareholders in 2024, despite an otherwise challenged overall business climate.
“Despite the current lack of clarity regarding interest rate levels and the proposed policy impacts of the new administration, our outlook for 2025 remains positive relative to 2024. We expect the oversupply of new equipment to normalize in the coming quarters, enhancing our competitiveness in the construction segment in 2025, with long-term stability driven by sustained capital investment in end-user construction markets. Lastly, we believe that the prudent cost and inventory optimization initiatives undertaken in 2024 provide a solid foundation for our business as we launch into 2025 and further create operating leverage for our business in the future.”
Based in Livonia, Mich., Alta Equipment Co. is No. 22 on the RER 100.
