Alta Equipment Group (NYSE:ALTG) Q1 2026 Earnings Call

0:00 Impact first quarter when you were exiting 2025. And when I look at, like, say, the last five years, and just I just kind of wanted to see differential. The average sequential decline over the last five years has been 18.5% and the median has been down 26.5% and you were down almost 40%. I guess the question is, do you see or maybe you haven't even thought about it, that this change with regards to depreciation and being able to expense is going to change the seasonality of the equipment business to where you would have perhaps more robust fourth quarters than you might have had historically in weaker first quarters for the same reason?

0:51 Ed, I think the one big beautiful bill here in the declines or the increases and decreases, I think the numbers, as I recall, Q3, we did roughly $300,000,000 of new and used equipment sales I'm sorry, 200,000,000. Q4, we did $300,000,000 and then Q1 here, we do another $200,000,000 or so. And so that radical sort of or violent, if you will, up and down. I do think the one big beautiful bill, now that we have it was new for 2025. And so I do I don't expect it to be as violent going forward. I would be surprised. I think this was a lot of people that were waiting for that to be in place, maybe for a couple of years. But now that it is in place, I wouldn't we're always going to have year end buyers to take advantage of tax depreciation. But I my gut is telling me in my history that this year was a little bit of an anomaly.

1:57 Okay. And then my last question shifting over to the rental fleet and it's been touched on. I mean, I think it's admirable and it's actually it's going to be pretty exciting as you bring this fleet in line and start improving the utilization rates of your rental fleet. You brought it down sequentially, looks like the last four quarters. Right now your ending rental fleet is at $525,000,000 At what point do you find that your fleet is right sized? I mean is it $500,000,000 Is it $450,000,000 Is there some kind of way for us to kind of think about that? And maybe a timeline of where you think you're going to get there?

2:47 Yes, Ted. I think the plan based on the plan for this year, which as I mentioned, we're a little we were several million dollars off in Q1 on just rental revenue. But for us, it's not necessarily based on the plan, should say this to answer your question. We expect it to be sub-five $100,000,000 by the end of the year on that what was what is at the end of Q1 five twenty five based on what we know about rental the rental revenues in the plan. Now we're a little bit below that, which potentially means we will drop even further below the 500,000,000 But for us, it's finding utilization targets versus nominal levels of fleet. And we've got to go out and compete for business too and start to drive revenue. So it's more about the numerator denominator than it is hitting a target.

3:45 So that's a long way of saying the original plan was to be sub $500,000,000 We've given Q1 performance that's still intact and we expect to be there by the end of the year. What would be your target in terms of that utilization rate? We want to be in the high 60s from a sort of what we would call dollar weighted time utilization, like physical utilization of fleet on rent over a calendar year divided by total fleet. And what that typically means is that we're our rental revenue is trading divided by average acquisition cost is something in the mid to high 30s, what we would call dollar utilization or financial utilization.

4:34 We're just not there yet. Okay. Thank you. We have reached the end of the Q and A session. This concludes today's call. Thank you for attending. You may now disconnect.