Gross profit (GP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
Consolidated |
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
New and used equipment sales |
|
|
16.2 |
% |
|
|
14.8 |
% |
|
|
1.4 |
% |
|
|
17.0 |
% |
|
|
14.4 |
% |
|
|
2.6 |
% |
Parts sales |
|
|
31.4 |
% |
|
|
30.6 |
% |
|
|
0.8 |
% |
|
|
31.3 |
% |
|
|
30.6 |
% |
|
|
0.7 |
% |
Service revenue |
|
|
57.6 |
% |
|
|
61.3 |
% |
|
|
(3.7 |
)% |
|
|
58.0 |
% |
|
|
61.9 |
% |
|
|
(3.9 |
)% |
Rental revenue |
|
|
34.2 |
% |
|
|
30.6 |
% |
|
|
3.6 |
% |
|
|
33.1 |
% |
|
|
27.9 |
% |
|
|
5.2 |
% |
Rental equipment sales |
|
|
21.6 |
% |
|
|
17.2 |
% |
|
|
4.4 |
% |
|
|
19.1 |
% |
|
|
16.4 |
% |
|
|
2.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated gross profit |
|
|
26.0 |
% |
|
|
26.3 |
% |
|
|
(0.3 |
)% |
|
|
26.7 |
% |
|
|
25.7 |
% |
|
|
1.0 |
% |
The consolidated gross profit for the three months ended June 30, 2022 was 26.0%, a 0.3% decrease from the 26.3% for the same period in 2021. Given the high amount of new and used equipment sales in the quarter, this overall decrease in gross profit
28
margin was largely related to our revenue mix shifting to lower profit equipment sales versus our higher profit revenue streams on a relative basis period over period. New and used equipment sales, as well as rental equipment sales, margins improved in the second quarter compared to the same time last year as retail pricing levels improved and our Material Handling segment’s design and build business, which realizes higher gross margins than traditional lift truck sales, continues to grow. We realized an increase in rental revenue gross margin in the second quarter of 2022, largely as a result improved physical utilization of the rental fleet and a favorable rental rate environment. Additionally, parts sales gross margins improved modestly while service gross margins reduced, partially due to a year-over-year labor cost allocation change in our Material Handling segment, described further in our segment-based discussion and analysis.
The consolidated gross profit for the six months ended June 30, 2022 was 26.7%, a 1.0% increase from the 25.7% for the same period in 2021
General and Administrative expenses: Consolidated general and administrative (G&A) expenses increased by $19.1 million to $92.8 million for the three months ended June 30, 2022 compared to the same period last year. This increase was mainly driven by the full period impact from our 2021 acquisitions as well as an increases in operating input costs, such as fuel and technician supplies, and an increase in certain sales-based expenses such as sales commissions and marketing expenditures which supported the large increase in equipment sales period over period. Further, employment costs such as wages and benefits increased due to the inflationary environment, a rise in self-insured healthcare costs, and overall growth in our employee headcount.
Consolidated general and administrative (G&A) expenses increased by $39.1 million to $179.6 million for the six months ended June 30, 2022 compared to the same period last year.
Other (expense) income: Consolidated other expense for the three months ended June 30, 2022 was $6.4 million compared to $17.9 million for the same period in 2021. The decrease is primarily due to the loss on debt extinguishment in the second quarter of 2021 of $11.9 million.
Consolidated other expense for the six months ended June 30, 2022 was $12.2 million compared to $23.6 million for the same period in 2021. The decrease is primarily due to the loss on debt extinguishment in the second quarter of 2021 of $11.9 million.
Provision for income taxes: The Company recorded an income tax provision of $0.5 million and $0.0 million for the three months ended June 30, 2022 and 2021, respectively, primarily driven by profitability in the current year that cannot be fully offset with net operating losses.
The Company recorded an income tax provision of $0.5 million and $0.5 million for the six months ended June 30, 2022 and 2021, respectively, primarily due to income in the current year that cannot be fully offset with net operating losses and establishing a full valuation allowance against the deferred tax asset in the prior year.
29
Material Handling Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
Increase (Decrease) |
|
|
Six Months Ended
June 30, |
|
|
Increase (Decrease) |
|
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
$ |
72.1 |
|
|
$ |
60.1 |
|
|
$ |
12.0 |
|
|
|
20.0 |
% |
|
$ |
139.0 |
|
|
$ |
117.5 |
|
|
$ |
21.5 |
|
|
|
18.3 |
% |
Parts sales |
|
|
20.1 |
|
|
|
15.7 |
|
|
|
4.4 |
|
|
|
28.0 |
% |
|
|
39.3 |
|
|
|
30.9 |
|
|
|
8.4 |
|
|
|
27.2 |
% |
Service revenue |
|
|
26.9 |
|
|
|
24.1 |
|
|
|
2.8 |
|
|
|
11.6 |
% |
|
|
53.6 |
|
|
|
46.7 |
|
|
|
6.9 |
|
|
|
14.8 |
% |
Rental revenue |
|
|
14.2 |
|
|
|
11.4 |
|
|
|
2.8 |
|
|
|
24.6 |
% |
|
|
27.0 |
|
|
|
22.5 |
|
|
|
4.5 |
|
|
|
20.0 |
% |
Rental equipment sales |
|
|
2.2 |
|
|
|
0.3 |
|
|
|
1.9 |
|
|
|
633.3 |
% |
|
|
2.2 |
|
|
|
0.8 |
|
|
|
1.4 |
|
|
|
175.0 |
% |
Total revenues |
|
$ |
135.5 |
|
|
$ |
111.6 |
|
|
$ |
23.9 |
|
|
|
21.4 |
% |
|
$ |
261.1 |
|
|
$ |
218.4 |
|
|
$ |
42.7 |
|
|
|
19.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
$ |
55.9 |
|
|
$ |
48.0 |
|
|
$ |
7.9 |
|
|
|
16.5 |
% |
|
$ |
108.4 |
|
|
$ |
95.0 |
|
|
$ |
13.4 |
|
|
|
14.1 |
% |
Parts sales |
|
|
12.7 |
|
|
|
10.1 |
|
|
|
2.6 |
|
|
|
25.7 |
% |
|
|
24.6 |
|
|
|
20.0 |
|
|
|
4.6 |
|
|
|
23.0 |
% |
Service revenue |
|
|
11.8 |
|
|
|
9.0 |
|
|
|
2.8 |
|
|
|
31.1 |
% |
|
|
22.5 |
|
|
|
17.1 |
|
|
|
5.4 |
|
|
|
31.6 |
% |
Rental revenue |
|
|
1.3 |
|
|
|
1.5 |
|
|
|
(0.2 |
) |
|
|
(13.3 |
)% |
|
|
2.7 |
|
|
|
3.2 |
|
|
|
(0.5 |
) |
|
|
(15.6 |
)% |
Rental depreciation |
|
|
4.2 |
|
|
|
3.4 |
|
|
|
0.8 |
|
|
|
23.5 |
% |
|
|
8.0 |
|
|
|
7.0 |
|
|
|
1.0 |
|
|
|
14.3 |
% |
Rental equipment sales |
|
|
1.4 |
|
|
|
0.2 |
|
|
|
1.2 |
|
|
|
600.0 |
% |
|
|
1.4 |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
133.3 |
% |
Cost of revenues |
|
$ |
87.3 |
|
|
$ |
72.2 |
|
|
$ |
15.1 |
|
|
|
20.9 |
% |
|
$ |
167.6 |
|
|
$ |
142.9 |
|
|
$ |
24.7 |
|
|
|
17.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
48.2 |
|
|
$ |
39.4 |
|
|
$ |
8.8 |
|
|
|
22.3 |
% |
|
$ |
93.5 |
|
|
$ |
75.5 |
|
|
$ |
18.0 |
|
|
|
23.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
$ |
39.9 |
|
|
$ |
35.0 |
|
|
$ |
4.9 |
|
|
|
14.0 |
% |
|
$ |
78.5 |
|
|
$ |
67.4 |
|
|
$ |
11.1 |
|
|
|
16.5 |
% |
Depreciation and amortization expense |
|
|
1.9 |
|
|
|
1.2 |
|
|
|
0.7 |
|
|
|
58.3 |
% |
|
|
3.4 |
|
|
|
2.2 |
|
|
|
1.2 |
|
|
|
54.5 |
% |
Total general and administrative expenses |
|
$ |
41.8 |
|
|
$ |
36.2 |
|
|
$ |
5.6 |
|
|
|
15.5 |
% |
|
$ |
81.9 |
|
|
$ |
69.6 |
|
|
$ |
12.3 |
|
|
|
17.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
$ |
6.4 |
|
|
$ |
3.2 |
|
|
$ |
3.2 |
|
|
|
100.0 |
% |
|
$ |
11.6 |
|
|
$ |
5.9 |
|
|
$ |
5.7 |
|
|
|
96.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, floor plan payable – new equipment |
|
$ |
(0.3 |
) |
|
$ |
(0.2 |
) |
|
$ |
(0.1 |
) |
|
|
50.0 |
% |
|
$ |
(0.4 |
) |
|
$ |
(0.4 |
) |
|
$ |
— |
|
|
|
— |
|
Interest expense – other |
|
|
(2.3 |
) |
|
|
(1.8 |
) |
|
|
(0.5 |
) |
|
|
27.8 |
% |
|
|
(4.5 |
) |
|
|
(3.8 |
) |
|
|
(0.7 |
) |
|
|
18.4 |
% |
Other income |
|
|
1.1 |
|
|
|
0.7 |
|
|
|
0.4 |
|
|
|
57.1 |
% |
|
|
2.2 |
|
|
|
1.5 |
|
|
|
0.7 |
|
|
|
46.7 |
% |
Total other expense |
|
$ |
(1.5 |
) |
|
$ |
(1.3 |
) |
|
$ |
(0.2 |
) |
|
|
15.4 |
% |
|
$ |
(2.7 |
) |
|
$ |
(2.7 |
) |
|
$ |
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
4.9 |
|
|
$ |
1.9 |
|
|
$ |
3.0 |
|
|
|
157.9 |
% |
|
$ |
8.9 |
|
|
$ |
3.2 |
|
|
$ |
5.7 |
|
|
|
178.1 |
% |
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Revenue |
|
|
Percent of Revenue |
|
Material Handling |
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
|
53.2 |
% |
|
|
53.8 |
% |
|
|
53.2 |
% |
|
|
53.8 |
% |
Parts sales |
|
|
14.8 |
% |
|
|
14.1 |
% |
|
|
15.1 |
% |
|
|
14.1 |
% |
Service revenue |
|
|
19.9 |
% |
|
|
21.6 |
% |
|
|
20.5 |
% |
|
|
21.4 |
% |
Rental revenue |
|
|
10.5 |
% |
|
|
10.2 |
% |
|
|
10.3 |
% |
|
|
10.3 |
% |
Rental equipment sales |
|
|
1.6 |
% |
|
|
0.3 |
% |
|
|
0.9 |
% |
|
|
0.4 |
% |
Total revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
|
41.2 |
% |
|
|
43.0 |
% |
|
|
41.6 |
% |
|
|
43.4 |
% |
Parts sales |
|
|
9.4 |
% |
|
|
9.1 |
% |
|
|
9.4 |
% |
|
|
9.2 |
% |
Service revenue |
|
|
8.7 |
% |
|
|
8.1 |
% |
|
|
8.6 |
% |
|
|
7.8 |
% |
Rental revenue |
|
|
1.0 |
% |
|
|
1.3 |
% |
|
|
1.0 |
% |
|
|
1.5 |
% |
Rental depreciation |
|
|
3.1 |
% |
|
|
3.0 |
% |
|
|
3.1 |
% |
|
|
3.2 |
% |
Rental equipment sales |
|
|
1.0 |
% |
|
|
0.2 |
% |
|
|
0.5 |
% |
|
|
0.3 |
% |
Cost of revenues |
|
|
64.4 |
% |
|
|
64.7 |
% |
|
|
64.2 |
% |
|
|
65.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
35.6 |
% |
|
|
35.3 |
% |
|
|
35.8 |
% |
|
|
34.6 |
% |
Revenues: Material Handling segment revenues increased by $23.9 million to $135.5 million for the three months ended June 30, 2022 as compared to the same period last year. Overall, organic revenue streams were up 19.8%. Despite supply chain delays, organic new and used equipment sales increased 21.9%. Additionally, organic aftermarket parts and service revenues increased 15.9%, and rental revenue increased 25.3% from the same period last year. Positive market conditions helped to influence a year over year improvement in rental fleet utilization, and an elevated pricing environment had a compounding effect on sales growth in the period.
Material Handling segment revenues increased by $42.7 million to $261.1 million for the six months ended June 30, 2022 as compared to the same period last year.
Gross profit (GP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
New and used equipment sales |
|
|
22.5 |
% |
|
|
20.1 |
% |
|
|
2.4 |
% |
|
|
22.0 |
% |
|
|
19.1 |
% |
|
|
2.9 |
% |
Parts sales |
|
|
36.8 |
% |
|
|
35.7 |
% |
|
|
1.1 |
% |
|
|
37.4 |
% |
|
|
35.3 |
% |
|
|
2.1 |
% |
Service revenue |
|
|
56.1 |
% |
|
|
62.7 |
% |
|
|
(6.6 |
)% |
|
|
58.0 |
% |
|
|
63.4 |
% |
|
|
(5.4 |
)% |
Rental revenue |
|
|
61.3 |
% |
|
|
57.0 |
% |
|
|
4.3 |
% |
|
|
60.4 |
% |
|
|
54.7 |
% |
|
|
5.7 |
% |
Rental equipment sales |
|
|
36.4 |
% |
|
|
33.3 |
% |
|
|
3.1 |
% |
|
|
36.4 |
% |
|
|
25.0 |
% |
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment gross profit |
|
|
35.6 |
% |
|
|
35.3 |
% |
|
|
0.3 |
% |
|
|
35.8 |
% |
|
|
34.6 |
% |
|
|
1.2 |
% |
Material Handling gross profit for the three months ended June 30, 2022 increased 0.3% to 35.6% compared to the same period in 2021. We realized improved new and used equipment gross margin in the second quarter of 2022 when compared to the same period in 2021 as retail pricing for equipment has strengthened amid increased demand for equipment and a dearth of new supply. Also driving the increase in new and used equipment gross margin is a continued shift in revenue mix to our PeakLogix design and build solutions business which realizes higher gross margins than our legacy lift truck business. We also realized an increase in rental revenue gross margin in the second quarter of 2022 as cost of revenues decreased and rental rates for material handling equipment continued to strengthen amid increased demand for equipment and the lack of new supply. Service revenue gross profit margins decreased by 6.6% while the parts sales gross profit margins increased by 1.1% in the second quarter of 2022 compared to the same period in 2021. The service margin declines in the Material Handling segment can be primarily attributed to the historic allocation of technician labor cost in our New York City-based business to general and administrative expense versus cost of labor while they
31
operated on their legacy accounting system. On June 1, 2021, the business unit was fully integrated into our ERP platform and cost of technician labor is properly allocated for this quarter and will continue to be going forward.
Material Handling gross profit for the six months ended June 30, 2022 increased 1.2% to 35.8% compared to the same period in 2021.
General and administrative expenses: Material Handling general and administrative (G&A) expenses increased by $5.6 million to $41.8 million for the three months ended June 30, 2022 as compared to the same period last year. This increase was mainly driven by the full period impact from the 2021 acquisition of Baron in September of 2021, as well as an increase in operating input costs, such as vehicle fuel, and an increase in personnel costs such as wages, sales commissions and bonuses, and employer-sponsored benefits alongside growth in employee headcounts into the segment overall.
Material Handling general and administrative (G&A) expenses increased by $12.3 million to $81.9 million for the six months ended June 30, 2022 as compared to the same period last year.
Other (expense) income: Material Handling other expense increased by $0.2 to $1.5 million for the three months ended June 30, 2022 as compared to the same period last year.
Material Handling other expense stayed at $2.7 million for the six months ended June 30, 2022 as compared to the same period last year.
Construction Equipment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
Increase (Decrease) |
|
|
Six Months Ended
June 30, |
|
|
Increase (Decrease) |
|
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 versus 2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
$ |
145.2 |
|
|
$ |
71.9 |
|
|
$ |
73.3 |
|
|
|
101.9 |
% |
|
$ |
229.9 |
|
|
$ |
138.3 |
|
|
$ |
91.6 |
|
|
|
66.2 |
% |
Parts sales |
|
|
38.2 |
|
|
|
28.4 |
|
|
|
9.8 |
|
|
|
34.5 |
% |
|
|
72.4 |
|
|
|
54.6 |
|
|
|
17.8 |
|
|
|
32.6 |
% |
Service revenue |
|
|
24.8 |
|
|
|
18.3 |
|
|
|
6.5 |
|
|
|
35.5 |
% |
|
|
46.3 |
|
|
|
34.4 |
|
|
|
11.9 |
|
|
|
34.6 |
% |
Rental revenue |
|
|
29.4 |
|
|
|
26.8 |
|
|
|
2.6 |
|
|
|
9.7 |
% |
|
|
54.3 |
|
|
|
48.8 |
|
|
|
5.5 |
|
|
|
11.3 |
% |
Rental equipment sales |
|
|
33.4 |
|
|
|
35.7 |
|
|
|
(2.3 |
) |
|
|
(6.4 |
)% |
|
|
74.2 |
|
|
|
67.0 |
|
|
|
7.2 |
|
|
|
10.7 |
% |
Total revenues |
|
$ |
271.0 |
|
|
$ |
181.1 |
|
|
$ |
89.9 |
|
|
|
49.6 |
% |
|
$ |
477.1 |
|
|
$ |
343.1 |
|
|
$ |
134.0 |
|
|
|
39.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
$ |
126.3 |
|
|
$ |
64.5 |
|
|
$ |
61.8 |
|
|
|
95.8 |
% |
|
$ |
197.7 |
|
|
$ |
124.0 |
|
|
$ |
73.7 |
|
|
|
59.4 |
% |
Parts sales |
|
|
27.3 |
|
|
|
20.5 |
|
|
|
6.8 |
|
|
|
33.2 |
% |
|
|
52.1 |
|
|
|
39.3 |
|
|
|
12.8 |
|
|
|
32.6 |
% |
Service revenue |
|
|
10.1 |
|
|
|
7.4 |
|
|
|
2.7 |
|
|
|
36.5 |
% |
|
|
19.5 |
|
|
|
13.8 |
|
|
|
5.7 |
|
|
|
41.3 |
% |
Rental revenue |
|
|
4.1 |
|
|
|
3.7 |
|
|
|
0.4 |
|
|
|
10.8 |
% |
|
|
8.1 |
|
|
|
7.5 |
|
|
|
0.6 |
|
|
|
8.0 |
% |
Rental depreciation |
|
|
19.1 |
|
|
|
17.9 |
|
|
|
1.2 |
|
|
|
6.7 |
% |
|
|
35.6 |
|
|
|
33.7 |
|
|
|
1.9 |
|
|
|
5.6 |
% |
Rental equipment sales |
|
|
26.5 |
|
|
|
29.6 |
|
|
|
(3.1 |
) |
|
|
(10.5 |
)% |
|
|
60.4 |
|
|
|
56.1 |
|
|
|
4.3 |
|
|
|
7.7 |
% |
Cost of revenues |
|
$ |
213.4 |
|
|
$ |
143.6 |
|
|
$ |
69.8 |
|
|
|
48.6 |
% |
|
$ |
373.4 |
|
|
$ |
274.4 |
|
|
$ |
99.0 |
|
|
|
36.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
57.6 |
|
|
$ |
37.5 |
|
|
$ |
20.1 |
|
|
|
53.6 |
% |
|
$ |
103.7 |
|
|
$ |
68.7 |
|
|
$ |
35.0 |
|
|
|
50.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
$ |
44.6 |
|
|
|
33.4 |
|
|
$ |
11.2 |
|
|
|
33.5 |
% |
|
$ |
86.1 |
|
|
$ |
63.1 |
|
|
$ |
23.0 |
|
|
|
36.5 |
% |
Depreciation and amortization expense |
|
|
2.1 |
|
|
|
1.4 |
|
|
|
0.7 |
|
|
|
50.0 |
% |
|
|
4.5 |
|
|
|
2.4 |
|
|
|
2.1 |
|
|
|
87.5 |
% |
Total general and administrative expenses |
|
$ |
46.7 |
|
|
$ |
34.8 |
|
|
$ |
11.9 |
|
|
|
34.2 |
% |
|
$ |
90.6 |
|
|
$ |
65.5 |
|
|
$ |
25.1 |
|
|
|
38.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
$ |
10.9 |
|
|
$ |
2.7 |
|
|
$ |
8.2 |
|
|
|
303.7 |
% |
|
$ |
13.1 |
|
|
$ |
3.2 |
|
|
$ |
9.9 |
|
|
|
309.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, floor plan payable – new equipment |
|
$ |
(0.2 |
) |
|
$ |
(0.4 |
) |
|
$ |
0.2 |
|
|
|
(50.0 |
)% |
|
$ |
(0.4 |
) |
|
$ |
(0.7 |
) |
|
$ |
0.3 |
|
|
|
(42.9 |
)% |
Interest expense – other |
|
|
(3.6 |
) |
|
|
(3.3 |
) |
|
|
(0.3 |
) |
|
|
9.1 |
% |
|
|
(6.9 |
) |
|
|
(6.1 |
) |
|
|
(0.8 |
) |
|
|
13.1 |
% |
Other expense |
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
14.3 |
% |
|
|
(1.6 |
) |
|
|
(1.4 |
) |
|
|
(0.2 |
) |
|
|
14.3 |
% |
Total other expense |
|
$ |
(4.6 |
) |
|
$ |
(4.4 |
) |
|
$ |
(0.2 |
) |
|
|
4.5 |
% |
|
$ |
(8.9 |
) |
|
$ |
(8.2 |
) |
|
$ |
(0.7 |
) |
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
6.3 |
|
|
$ |
(1.7 |
) |
|
$ |
8.0 |
|
|
|
(470.6 |
)% |
|
$ |
4.2 |
|
|
$ |
(5.0 |
) |
|
$ |
9.2 |
|
|
|
(184.0 |
)% |
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Revenue |
|
|
Percent of Revenue |
|
Construction Equipment |
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
|
53.6 |
% |
|
|
39.7 |
% |
|
|
48.2 |
% |
|
|
40.3 |
% |
Parts sales |
|
|
14.1 |
% |
|
|
15.7 |
% |
|
|
15.2 |
% |
|
|
15.9 |
% |
Service revenue |
|
|
9.2 |
% |
|
|
10.1 |
% |
|
|
9.7 |
% |
|
|
10.0 |
% |
Rental revenue |
|
|
10.8 |
% |
|
|
14.8 |
% |
|
|
11.4 |
% |
|
|
14.2 |
% |
Rental equipment sales |
|
|
12.3 |
% |
|
|
19.7 |
% |
|
|
15.5 |
% |
|
|
19.6 |
% |
Total revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
New and used equipment sales |
|
|
46.6 |
% |
|
|
35.6 |
% |
|
|
41.4 |
% |
|
|
36.1 |
% |
Parts sales |
|
|
10.1 |
% |
|
|
11.3 |
% |
|
|
10.9 |
% |
|
|
11.5 |
% |
Service revenue |
|
|
3.7 |
% |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
4.0 |
% |
Rental revenue |
|
|
1.5 |
% |
|
|
2.0 |
% |
|
|
1.7 |
% |
|
|
2.2 |
% |
Rental depreciation and amortization |
|
|
7.0 |
% |
|
|
10.0 |
% |
|
|
7.5 |
% |
|
|
9.8 |
% |
Rental equipment sales |
|
|
9.8 |
% |
|
|
16.3 |
% |
|
|
12.7 |
% |
|
|
16.4 |
% |
Cost of revenues |
|
|
78.7 |
% |
|
|
79.3 |
% |
|
|
78.3 |
% |
|
|
80.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
21.3 |
% |
|
|
20.7 |
% |
|
|
21.7 |
% |
|
|
20.0 |
% |
Revenues: Construction Equipment segment revenues increased by $89.9 million to $271.0 million for the three months ended June 30, 2022 as compared to the same period last year. This increase was mainly attributable to the full period results from the Ginop, Ambrose, Midwest Mine, and Gibson acquisitions that occurred throughout the second half of 2021. On an organic basis, new and used equipment sales increased 64.4% over the same period last year as market demand for equipment remains high while we were able to take delivery of more new equipment relative to the same period last year. Parts and service revenues increased 9.6% on an organic basis when compared to the same period last year primarily based on higher counter parts sales and a growing technician headcount. Rental revenue has increased 3.8% on an organic basis when compared to the prior year, and rental equipment sales declined 9.1% organically as we strategically balance the decision to retain fleet to benefit from the elevated rental rate environment but still accommodate sales into our territories to bolster field population for longer term returns in our product support departments. Our rental department experienced improvements in both physical utilization and rental rates from the same time a year ago, and demand remained high for customers seeking the purchase of lightly used equipment amid OEM production shortages for new equipment.
Construction Equipment segment revenues increased by $134.0 million to $477.1 million for the six months ended June 30, 2022 as compared to the same period last year.
Gross profit (GP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
|
GP% |
|
New and used equipment sales |
|
|
13.0 |
% |
|
|
10.3 |
% |
|
|
2.7 |
% |
|
|
14.0 |
% |
|
|
10.3 |
% |
|
|
3.7 |
% |
Parts sales |
|
|
28.5 |
% |
|
|
27.8 |
% |
|
|
0.7 |
% |
|
|
28.0 |
% |
|
|
28.0 |
% |
|
|
— |
|
Service revenue |
|
|
59.3 |
% |
|
|
59.6 |
% |
|
|
(0.3 |
)% |
|
|
57.9 |
% |
|
|
59.9 |
% |
|
|
(2.0 |
)% |
Rental revenue |
|
|
21.1 |
% |
|
|
19.4 |
% |
|
|
1.7 |
% |
|
|
19.5 |
% |
|
|
15.6 |
% |
|
|
3.9 |
% |
Rental equipment sales |
|
|
20.7 |
% |
|
|
17.1 |
% |
|
|
3.6 |
% |
|
|
18.6 |
% |
|
|
16.3 |
% |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment gross profit |
|
|
21.3 |
% |
|
|
20.7 |
% |
|
|
0.6 |
% |
|
|
21.7 |
% |
|
|
20.0 |
% |
|
|
1.7 |
% |
Construction Equipment gross profit increased by 0.6% to 21.3% in the three months ended June 30, 2022 from 20.7% in the same period in 2021. New and used equipment sales margins as well as rental equipment sales margins improved compared to the same period in 2021 amidst a supply-constrained marketplace causing retail prices to rise. Parts sales margins improved 0.7% in the second quarter of 2022 compared to the same period in 2021. Service revenue margins were 59.3% in the second quarter of 2022, in line with the same period last year. Rental revenue gross margins improved amid strengthening physical utilization and a positive rental rate environment.
Construction Equipment gross profit increased by 1.7% to 21.7% in the six months ended June 30, 2022 from 20.0% in the same period in 2021.
33
General and Administrative expenses: Construction Equipment general and administrative (G&A) expenses increased by $11.9 million to $46.7 million for the three months ended June 30, 2022 as compared to the same period in 2021. The quarter over quarter increase was mainly attributable to the full period G&A impact as a result of the construction segment acquisitions of Ginop, Ambrose, Midwest Mine and Gibson throughout the second half of 2021. Beyond the influence of the acquisitions, we experienced increases in operating input costs, such as fuel and technician supplies, and an increase in certain sales-based expenses such as sales commissions and marketing expenditures, which supported the large increase in new and used equipment sales for the quarter. Additionally, we realized increases in personnel costs such as wages, sales commissions and bonuses, and employer-sponsored benefits, a result of inflationary factors and general headcount increases in the segment.
Construction Equipment general and administrative (G&A) expenses increased by $25.1 million to $90.6 million for the six months ended June 30, 2022 as compared to the same period in 2021.
Other (expense) income: Construction Equipment other expense increased by $0.2 million to $4.6 million for the three months ended June 30, 2022 as compared to the same period in 2021. The quarter over quarter increase was mainly due to the interest expense related to the 2021 acquisitions, as the acquisitions were largely financed through our line of credit and floorplan financing facilities.
Construction Equipment other expense increased by $0.7 million to $8.9 million for the six months ended June 30, 2022 as compared to the same period in 2021.
Liquidity and Capital Resources
Six months ended June 30, 2022 compared with six months ended June 30, 2021 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 six months ended June 30, 2022, operating activities resulted in net cash provided by operations of $3.4 million. Our reported net income of $4.9 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, inventory obsolescence and bad debt reserves, and share-based compensation, provided net cash inflows of $47.9 million. Changes in working capital included $131.7 million of net new inventory purchased, and a $30.7 million increase in accounts receivable. Cash flows from operating activities were favorably impacted by $76.4 million due to proceeds from the sale of rental equipment, $31.7 million in net inflows related to manufacturer floor plans and a $16.7 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities and unfavorably impacted by $6.9 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.
For the six months ended June 30, 2021, operating activities resulted in net cash provided by operations of $10.2 million. Our reported net loss of $20.4 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, inventory obsolescence and bad debt reserves, loss on debt extinguishment, and share-based compensation, provided net cash inflows of $30.4 million. Changes in working capital included a $85.6 million increase in inventories, a $18.6 million increase in accounts receivable, a $19.2 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities, and $6.0 million net increase on manufacturer floor plans payable. Cash flows from operating activities were favorably impacted by a $67.8 million change in proceeds from the sale of rental equipment, and unfavorably impacted by a net $9.0 million change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.
Cash Flow from Investing Activities. For the six months ended June 30, 2022, our cash used in investing activities was $37.4 million. This was mainly due to $35.9 million purchases of rental equipment, non-rental property and equipment, and equipment contracted under guaranteed purchase obligations offset by proceeds from the sale of assets and $1.5 million use of cash for adjustments to the recent Ambrose and Gibson acquisitions purchase prices.
For the six months ended June 30, 2021, our cash used in investing activities was $28.8 million. This was mainly due to $26.2 million purchases of rental equipment, non-rental property and equipment, and equipment contracted under guaranteed purchase obligations offset by proceeds from the sale of assets and $2.6 million use of cash for the ScottTech acquisition and Howell working capital adjustment.
Cash Flow from Financing Activities. For the six months ended June 30, 2022, cash provided by financing activities was $32.2 million. The favorable impact was mainly due to $24.9 million of net proceeds under our lines of credits and net proceeds of $12.1 million related to floor plans with an unaffiliated source (i.e. a non-vendor). This was partially offset by $1.6 million payments on finance lease obligations, $1.5 million related to preferred dividend payments and $1.7 million related to other financing activities.
For the six months ended June 30, 2021, cash provided by financing activities was $19.2 million. The favorable impact was mainly due to $310.2 million net proceeds from the Notes issuance partially offset by $153.1 million payments related to the extinguishment of term loan, $126.2 million of net payments under our lines of credits, $5.4 million payments related to floor plans with an unaffiliated source (i.e. a non-vendor), $2.6 million payments on long-term debt and finance lease obligations, $2.1 million payments related to preferred dividend and promissory note, and $1.6 million of payments related to debt issuance costs.
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Sources of Liquidity
The Company reported $0.5 million in cash for the six months ended June 30, 2022. As of June 30, 2022, we had $327.0 million of available borrowings under the revolving line of credit and floor plans.
Senior Secured Second Lien Notes
On April 1, 2021, the Company completed a private offering of $315.0 million of its 5.625% Notes due 2026. The Notes were offered and 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 party thereto and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed by the guarantors on a second lien, senior secured basis. The Notes were issued pursuant to an indenture dated April 1, 2021 among the Company, the guarantors and Wilmington Trust, National Association, as trustee and as collateral agent. The Notes mature on April 15, 2026. Interest on the Notes is payable in cash on April 15 and October 15 of each year, beginning on October 15, 2021. As of June 30, 2022, outstanding borrowings under the Notes were $310.4 million, which included $4.6 million deferred financing costs and original issue discounts. The effective interest rate on the Notes, taking into account the original issue discount, is 5.93%.
Line of Credit and First Lien Floor Plan Facility
Effective April 1, 2021, the Company amended and restated its credit facility with its first lien lender by entering into the Sixth Amended and Restated ABL First Lien Credit Agreement (“Amended and Restated Credit Agreement” and the revolving line of credit facility thereunder, the “ABL Facility”) 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 ABL Facility are supported by eligible accounts receivable, parts, and otherwise unencumbered new and used equipment inventory and rental equipment. The ABL Facility, which is collateralized by substantially all assets of the Company, has a maximum borrowing capacity of $350.0 million, subject to the borrowing base limitation in the Amended and Restated Credit Agreement, and interest cost is the SOFR plus an applicable margin on the CB Floating Rate, depending on borrowing levels. The ABL Facility matures on the earlier of April 1, 2026 or December 1, 2025 if any of the Notes remain outstanding as of December 1, 2025. As of June 30, 2022, the Company had an outstanding ABL Facility balance of $125.6 million, excluding unamortized debt issuance costs.
Effective April 1, 2021, the Company amended and restated its floor plan facility with its first lien lender by entering into the Sixth Amended and Restated 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. The Floor Plan Credit Agreement is an asset-based revolving loan facility related to specific equipment that provides for borrowings of up to the lesser of $50.0 million, as a result of the December 20, 2021 First Amendment to the Amended and Restated Floor Plan Credit Agreement, or the borrowing base. The Floor Plan Facility has an expiration date of the earlier of (a) April 1, 2026, or (b) December 1, 2025 if the Notes remain outstanding on December 1, 2025. The interest cost for the First Lien Floor Plan Facility is SOFR plus an applicable margin. The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company. As of June 30, 2022, the Company had an outstanding balance on their First Lien Floor Plan Facility of $42.7 million, excluding unamortized debt issuance costs.
Original Equipment Manufacturer (“OEM”) Captive Lenders and Suppliers’ Floor Plans
OEM captive lender and suppliers’ floor plans payable are financing arrangements for new and used inventory and rental equipment. We have such arrangements with several OEM captive lenders and suppliers each with borrowing capacities ranging from $0.1 million to $102.0 million. Certain floor plans provide for a five to twelve-month interest only or deferred payment period. In addition, these floor plan agreements provide for interest or principal free terms at the supplier’s discretion. The Company routinely sells equipment that is financed under OEM captive lender floor plans prior to the original maturity date of the financing agreement. The related OEM captive lender floor plans payable is then due and payable at the time the equipment being financed is sold. As of June 30, 2022 and December 31, 2021, the Company had an outstanding balance on the OEM Floor Plan Facilities of $156.0 million and $124.3 million, respectively.
Maximum borrowings under the floor plans and the revolving line of credit are limited to $700.0 million. The total amount outstanding as of June 30, 2022 and December 31, 2021 was $324.3 million and $255.6 million, exclusive of debt issuance and deferred financings costs of $2.1 million and $2.4 million, respectively.
Cash Requirements Related to Operations
Our principal sources of liquidity have been from cash provided by our service-related operations and the sales of new, used and rental fleet equipment along with rentals of such equipment, proceeds from the issuance of debt, and borrowings available under our lines of credit and floor plans. 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 lines of credit and floor plans payable, fund acquisitions, meet debt service requirements and funding the Preferred Stock dividend. In the future, we may pursue additional strategic acquisitions and seek to open new start-up locations. We anticipate that the uses described above encompass the principal demands on our cash and availability under our lines of credit in the future.
The amount of our future capital expenditures will depend on a number of factors including general economic conditions and growth prospects. Our gross rental fleet capital expenditures for the period ended June 30, 2022 was approximately $100.2 million,
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including $69.9 million of transfers from new and used inventory to rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of approximately $76.4 million for the period ended June 30, 2022 as our business model is to sell lightly used inventory to customers from our rental fleet so as to increase field population in our geographies. 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. Our ability to pay interest and principal on our indebtedness, will depend upon our future operating performance and the availability of borrowings under the lines of credit and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flow from operations, available cash, and available borrowings under the lines of credit will be adequate to meet our future liquidity needs for the foreseeable future.
We cannot provide absolute assurance that our future cash flow from operating activities will be sufficient to meet our long-term obligations and commitments. If we are unable to generate sufficient cash flow from operating activities in the future to service our indebtedness and to meet our other commitments, we will be required to adopt one or more alternatives, such as refinancing or restructuring our indebtedness, selling material assets or operations, or seeking to raise additional debt or equity capital. Given current economic and market conditions, including the volatility in the global capital markets, we cannot assure investors that any of these actions could be affected on a timely basis or on satisfactory terms or at all, or that these actions would enable us to continue to satisfy our capital requirements. In addition, our existing debt agreements, as well as any future debt agreements, contain or may contain restrictive covenants, which may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt.
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company. As of June 30, 2022, there was $4.9 million in outstanding letters of credits issued in the normal course of business.
The Company was also party to certain contracts in which it guarantees the performance of lease agreements between third-party lessees and various third-party leasing companies. The terms of the guarantees range from two to five years. 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 lease obligation as specified in the contract. The estimated exposure related to these guarantees was $1.4 million and $1.7 million at June 30, 2022 and December 31, 2021, respectively. 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 Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021, respectively.
Critical accounting policies
In the preparation of condensed consolidated financial statements prepared in conformity with U.S. GAAP, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures. Our management, on an ongoing basis, reviews these estimates and assumptions. While we believe the estimates and judgments we use in preparing our condensed consolidated financial statements are appropriate, they are subject to future events and uncertainties regarding their outcome and, therefore, actual results may materially differ from these estimates. Refer to Part I, Item 1, Note 2 of the notes to our condensed consolidated financial statements for disclosures regarding the use of estimates and assumptions.
Additionally, see Note 2 to the audited consolidated financial statements contained in the Company’s 2021 Annual Report on Form 10-K for a summary of our significant accounting policies.
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