ALTA EQUIPMENT GROUP INC. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ALTA EQUIPMENT GROUP INC.

(Exact name of registrant as specified in its charter)


Delaware	001-38864	83-2583782
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

13211 Merriman Road, Livonia, Michigan 48150

(Address of principal executive offices)

(248) 449-6700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒
Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	ALTG	The New York Stock Exchange
Depositary Shares representing a 1/1000^th fractional interest in a share of 10% Series A Cumulative Perpetual Preferred Stock, $0.0001 par value per share	ALTG PRA	The New York Stock Exchange

As of November 9, 2021, there were 32,363,376 shares of Common Stock, $0.0001 par value, and 1,200 shares of Preferred Stock, $0.0001 par value, which Preferred Stock is evidenced by 1,200,000 depositary shares, outstanding.

INDEX

			Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements		2
	Consolidated Balance Sheets (Unaudited)		2
	Consolidated Statements of Operations (Unaudited)		3
	Consolidated Statements of Stockholders Equity (Deficit) (Unaudited)		4
	Consolidated Statements of Cash Flows (Unaudited)		6
	Notes to Unaudited Consolidated Financial Statements		7
	Note 1.	Organization and Nature of Operations	7
	Note 2.	Summary of Significant Accounting Policies	7
	Note 3.	Revenue Recognition	9
	Note 4.	Related Party Transactions	13
	Note 5.	Inventories	13
	Note 6.	Property and Equipment	13
	Note 7.	Goodwill	14
	Note 8.	Intangible Assets	14
	Note 9.	Lines of Credit and Floor Plans	14
	Note 10.	Long-Term Debt	15
	Note 11.	Contingencies	17
	Note 12.	Income Taxes	17
	Note 13.	Equity	18
	Note 14.	Share Based Compensation	19
	Note 15.	Fair Value Instruments	20
	Note 16.	Business Combinations	21
	Note 17.	Segments	25
	Note 18.	Earnings Per Share	27
	Note 19.	Subsequent Events	28
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		47
Item 4.	Controls and Procedures		47
PART II
Item 1.	Legal Proceedings		48
Item 1A.	Risk Factors		48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 3.	Defaults Upon Senior Securities		48
Item 4.	Mine Safety Disclosures		48
Item 5.	Other Information		48
Item 6.	Exhibits		48
Signature			49

PART I

Item 1. Financial Statements

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except share and per share amounts)	September 30, 2021			December 31, 2020
ASSETS
CURRENT ASSETS
Cash	$	1.2		$	1.2
Accounts receivable, net of allowances of $9.9 and $7.1 as of September 30, 2021 and December 31, 2020, respectively		168.2			137.8
Inventories, net		204.9			229.0
Prepaid expenses and other current assets		21.6			13.6
Total current assets		395.9			381.6

PROPERTY AND EQUIPMENT, NET		338.3			311.9
OTHER ASSETS
Goodwill		25.2			24.3
Intangible assets, net		26.2			26.3
Other assets		1.8			2.1
Total other assets		53.2			52.7
TOTAL ASSETS	$	787.4		$	746.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Lines of credit, net	$	45.4		$	157.7
Floor plan payable – new equipment		105.0			127.6
Floor plan payable – used and rental equipment		44.5			29.8
Current portion of long-term debt		0.6			8.7
Accounts payable		52.6			58.9
Customer deposits		14.9			9.3
Accrued expenses		41.2			30.1
Other current liabilities		20.3			12.2
Total current liabilities		324.5			434.3

LONG-TERM LIABILITIES
Long-term debt, net of current portion		309.7			135.0
Capital lease obligations, net of current portion		0.2			0.6
Buyback residual obligations, net of current portion		0.5			0.7
Lease liability, net of current portion		1.9			2.5
Guaranteed purchase obligation, net of current portion		5.2			6.9
Other liabilities		9.5			9.3
TOTAL LIABILITIES	$	651.5		$	589.3
CONTINGENCIES - NOTE 11
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, 1,200,000 Depositary Shares representing a 1/1000th fractional interest in a share of 10% Series A Cumulative Perpetual Preferred Stock, $0.0001 par value per share, issued and outstanding at September 30, 2021 and December 31, 2020	$	—		$	—
Common stock, $0.0001 par value, 200,000,000 shares authorized; 32,363,376 issued and outstanding at September 30, 2021, 30,018,502 issued and outstanding at December 31, 2020		—			—
Additional paid-in capital		217.1			216.2
Treasury stock		(5.9	)		(5.9	)
Accumulated deficit		(75.3	)		(53.4	)
TOTAL STOCKHOLDERS’ EQUITY		135.9			156.9
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	787.4		$	746.2

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except share and per share amounts)	2021			2020			2021			2020
Revenues:
New and used equipment sales	$	136.8		$	97.9		$	392.6		$	275.2
Parts sales		44.8			35.5			130.3			92.3
Service revenue		41.9			35.5			123.0			94.1
Rental revenue		41.7			32.2			113.0			83.4
Rental equipment sales		29.8			19.5			97.6			48.2
Net revenue	$	295.0		$	220.6		$	856.5		$	593.2
Cost of revenues:
New and used equipment sales		114.3			84.4			333.3			240.3
Parts sales		30.5			24.3			89.8			63.3
Service revenue		17.3			13.5			48.2			35.9
Rental revenue		4.6			5.4			15.3			14.8
Rental depreciation		22.2			19.2			62.9			47.1
Rental equipment sales		25.0			17.1			81.7			41.7
Cost of revenue	$	213.9		$	163.9		$	631.2		$	443.1
Gross profit	$	81.1		$	56.7		$	225.3		$	150.1
General and administrative expenses		72.9			58.4			209.4			153.2
Depreciation and amortization expense		2.2			1.8			6.3			4.5
Total general and administrative expenses		75.1			60.2			215.7			157.7
Income (loss) from operations	$	6.0		$	(3.5	)	$	9.6		$	(7.6	)
Other income (expense)
Interest expense, floor plan payable – new equipment		(0.4	)		(0.5	)		(1.4	)		(1.8	)
Interest expense – other		(5.6	)		(5.6	)		(16.2	)		(15.9	)
Other income		0.2			8.0			0.3			8.7
Loss on extinguishment of debt		—			—			(11.9	)		(7.6	)
Total other (expense) income	$	(5.8	)	$	1.9		$	(29.2	)	$	(16.6	)
Income (loss) before taxes	$	0.2		$	(1.6	)	$	(19.6	)	$	(24.2	)
Income tax provision (benefit)		—			(1.9	)		0.5			(3.4	)
Net Income (loss)	$	0.2		$	0.3		$	(20.1	)	$	(20.8	)
Preferred stock dividends		(0.7	)		—			(1.8	)		—
Net (loss) income available to common shareholders	$	(0.5	)	$	0.3		$	(21.9	)	$	(20.8	)
Basic (loss) income per share	$	(0.02	)	$	0.01		$	(0.69	)	$	(0.81	)
Diluted (loss) income per share	$	(0.02	)	$	0.01		$	(0.69	)	$	(0.81	)
Basic weighted average common shares outstanding		32,363,376			29,221,460			31,484,906			25,689,145
Diluted weighted average common shares outstanding		32,363,376			29,310,674			31,484,906			25,689,145

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

	Three Months Ended September 30, 2021
	Preferred Stock				Common Stock
(amounts in millions, except share amounts)	Number of Shares		Amount		Number of Shares			Amount		Additional Paid-in Capital		Accumulated (Deficit)			Treasury Stock			Total Stockholders' Equity (Deficit)
Balance at June 30, 2021		1,200,000	$	—		32,363,376		$	—	$	216.7	$	(74.8	)	$	(5.9	)	$	136.0
Net income		—		—		—			—		—		0.2			—			0.2
Dividends on preferred stock		—		—		—			—		—		(0.7	)		—			(0.7	)
Share based compensation		—		—		—			—		0.4		—			—			0.4
Balance at September 30, 2021		1,200,000	$	—		32,363,376		$	—	$	217.1	$	(75.3	)	$	(5.9	)	$	135.9

	Three Months Ended September 30, 2020
	Preferred Stock				Common Stock
(amounts in millions, except share amounts)	Number of Shares		Amount		Number of Shares			Amount		Additional Paid-in Capital		Accumulated (Deficit)			Treasury Stock			Total Stockholders' Equity (Deficit)
Balance at June 30, 2020		—	$	—		29,511,359		$	—	$	180.4	$	(63.3	)	$	(2.9	)	$	114.2
Net income		—		—		—			—		—		0.3			—			0.3
Share based compensation		—		—		390,000			—		3.2		—			—			3.2
Repurchases of common stock		—		—		(390,000	)		—		—		—			(3.0	)		(3.0	)
Balance at September 30, 2020		—	$	—		29,511,359		$	—	$	183.6	$	(63.0	)	$	(5.9	)	$	114.7

	Nine Months Ended September 30, 2021
	Preferred Stock				Common Stock
(amounts in millions, except share amounts)	Number of Shares		Amount		Number of Shares			Amount		Additional Paid-in Capital		Accumulated (Deficit)			Treasury Stock			Total Stockholders' Equity (Deficit)
Balance at December 31, 2020		1,200,000	$	—		30,018,502		$	—	$	216.2	$	(53.4	)	$	(5.9	)	$	156.9
Net loss		—		—		—			—		—		(20.1	)		—			(20.1	)
Dividends on preferred stock		—		—		—			—		—		(1.8	)		—			(1.8	)
Share based compensation		—		—		—			—		0.9		—			—			0.9
Warrants exchanged into common stock		—		—		2,279,874			—		—		—			—			—
Issuance of restricted stock units to employees		—		—		65,000			—		—		—			—			—
Balance at September 30, 2021		1,200,000	$	—		32,363,376		$	—	$	217.1	$	(75.3	)	$	(5.9	)	$	135.9

	Nine Months Ended September 30, 2020
	Preferred Stock				Common Stock
(amounts in millions, except share amounts)	Number of Shares		Amount		Number of Shares			Amount		Additional Paid-in Capital		Accumulated (Deficit)			Treasury Stock			Total Stockholders' Equity (Deficit)
Balance at December 31, 2019		—	$	—		7,300,000		$	—	$	—	$	(23.2	)	$	—		$	(23.2	)
Net loss		—		—		—			—		—		(20.8	)		—			(20.8	)
Opening deferred tax liabilities under reverse recapitalization		—		—		—			—		—		(19.0	)		—			(19.0	)
Equity infusion from reverse recapitalization, net of transaction costs		—		—		21,911,359			—		175.7		—			—			175.7
Shares issued upon settlement of equity-linked incentive plan		—		—		300,000			—		3.1		—			—			3.1
Disgorgement of short swing profits		—		—		—			—		1.6		—			—			1.6
Share based compensation						390,000			—		3.2		—			—			3.2
Repurchases of common stock		—		—		(390,000	)		—		—		—			(5.9	)		(5.9	)
Balance at September 30, 2020		—	$	—		29,511,359		$	—	$	183.6	$	(63.0	)	$	(5.9	)	$	114.7

The accompanying notes are an integral part of these consolidated financial statements.

ALTA EQUIPMENT GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(amounts in millions)	2021			2020
OPERATING ACTIVITIES
Net loss	$	(20.1	)	$	(20.8	)
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:
Depreciation and amortization		69.2			51.6
Amortization of debt discount and debt issuance costs		1.3			1.2
Amortization of fair market rent		0.1			—
Imputed interest		0.2			—
Gain on sale of rental equipment		(15.9	)		(6.5	)
Inventory obsolescence		0.9			1.3
Provision for bad debt		3.4			2.8
Loss on debt extinguishment		11.9			7.6
Share based compensation		0.9			6.3
Changes in deferred rent		0.8			—
(Repayment) accrual of paid-in-kind interest		—			(11.2	)
Changes in deferred taxes		0.5			(3.4	)
Changes in:
Accounts receivable		(33.0	)		6.2
Inventories		(116.0	)		(102.8	)
Proceeds from sale of rental equipment		97.6			48.2
Prepaid expenses and other assets		(8.3	)		(5.5	)
Proceeds from floor plans with manufacturers		283.7			240.5
Payments under floor plans with manufacturers		(289.6	)		(273.1	)
Accounts payable, accrued expenses, customer deposits, and other current liabilities		17.8			15.9
Leases and other liabilities		(1.3	)		(3.1	)
Net cash provided by (used in) operating activities	$	4.1		$	(44.8	)
INVESTING ACTIVITIES
Proceeds from the sale of assets		1.4			1.0
Expenditures for rental equipment		(30.9	)		(34.5	)
Expenditures for property and equipment		(7.0	)		(4.0	)
Expenditures for acquisitions, net of cash acquired		(3.9	)		(128.8	)
Net cash used in investing activities	$	(40.4	)	$	(166.3	)
FINANCING ACTIVITIES
Expenditures for debt issuance costs		(1.5	)		(2.7	)
Extinguishment of floor plans and line of credit		—			(132.9	)
Extinguishment of long-term debt		(153.1	)		(82.0	)
Redemption of former shareholder notes payable		—			(6.7	)
Extinguishment of warrant liability		—			(29.6	)
Proceeds from lines of credit		242.5			334.5
Payments under lines of credit		(354.8	)		(187.1	)
Proceeds from floor plans with unaffiliated source		72.8			63.5
Payments under floor plans with unaffiliated source		(74.4	)		(61.3	)
Proceeds from issuance of long-term debt, net		—			149.4
Proceeds from issuance of notes		310.2			—
Preferred dividends paid		(1.8	)		—
Payment of promissory note		(1.0	)		—
Payments on long-term debt		(1.9	)		(4.8	)
Payments on capital lease obligations		(0.7	)		(0.5	)
Equity proceeds from reverse recapitalization, net		—			175.7
Proceeds from disgorgement of short swing profits		—			1.6
Repurchases of common stock		—			(5.9	)
Net cash provided by financing activities	$	36.3		$	211.2

NET CHANGE IN CASH		—			0.1

Cash, Beginning of year		1.2			—
Cash, End of period	$	1.2		$	0.1
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	9.1		$	26.0

The accompanying notes are an integral part of these consolidated financial statements.

NOTE 1 — ORGANIZATION AND NATURE OF OPERATIONS

Alta Equipment Group Inc. and its subsidiaries (“Alta” or the “Company”) is engaged in the retail sale, service, and rental of material handling and construction equipment in the states of Michigan, Illinois, Indiana, New York (including New York City in our Material Handling segment), Virginia and Florida as well as the New England region (including Boston) of the United States.

Alta Equipment Holdings, Inc. is the holding company for Alta Enterprises, LLC. Alta Enterprises, LLC is the holding company for Alta Industrial Equipment Michigan; LLC; Alta Industrial Equipment Company, LLC; Alta Industrial Equipment New York, LLC; PeakLogix, LLC; Alta Construction Equipment, LLC; Alta Construction Equipment Illinois, LLC; Alta Heavy Equipment Services, LLC; NITCO, LLC; Alta Construction Equipment Florida, LLC, Alta Material Handling Upstate New York, LLC, Alta Construction Equipment Ohio, LLC, and Alta Construction Equipment New York, LLC.

Unless the context otherwise requires, the use of the terms “the Company”, “we,” “us,” and “our” in these notes to the unaudited consolidated financial statements refers to Alta Equipment Group Inc. and its consolidated subsidiaries.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim 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 significant intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements. Certain amounts in the prior year have been reclassified to conform with the presentation in the current year.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. Operating results for the nine months ended September 30, 2021 is not necessarily indicative of the results that may be expected for the year ending December 31, 2021, and therefore, the results and trends in these interim consolidated financial statements may not be the same for the entire year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K.

The Company updated the depreciable useful lives of certain of its rental equipment product categories based on our 2020 year-end analysis of fair value relative to book value, prior-year utilization trends and a review of market participants approach to depreciation for similar products. The updates to depreciable useful lives were adjusted on prospective basis. Specifically, the notable changes for 2021 is extending the depreciable life on lift trucks in our Material Handling segment to 84 months, extending the depreciable life on certain aerial and crane related assets in our Construction Equipment segment to 120 months and applying straight-line depreciation to underutilized construction equipment assets that are being depreciated on a unit-of-activity basis to the extent the assets meet certain underutilization thresholds. These accounting policies of the Company were also described in Note 2 to the audited consolidated financial statements contained in the Company’s 2020 Annual Report on Form 10-K.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on assumptions that we believe are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. Additionally, the COVID-19 outbreak has had an impact on our approach to these estimates and assumptions, specifically in 2020 during the more acute phases of the pandemic, and any increased severity of the pandemic on our business could result in a reassessment of these estimates and assumptions which, in turn, could affect the reported amounts on our financial statements. Please see section titled Risk Factors in our 2020 Annual Report on Form 10-K for a discussion of risks associated with the COVID-19 pandemic.

Impairment of Long-lived Assets

The Company evaluates long-lived assets, such as property and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of any asset group may not be recoverable.

If the estimated future cash flow (undiscounted and without interest charges) from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the related asset to its estimated fair value. When reviewing long-lived assets for impairment, the Company groups long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. After evaluating and weighing all relevant events and circumstances, the Company did not identify any indications necessary to perform an interim impairment test for the long-lived assets as of and for the period ended September 30, 2021.

Goodwill

Pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 350, Intangibles-Goodwill and Other (“ASC 350”), goodwill is recorded as the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired.

The Company evaluates goodwill for impairment at least annually, or more frequently if triggering events occur or other impairment indicators arise which might impair recoverability. Impairment of goodwill is evaluated at the reporting unit level. A reporting unit is defined as an operating segment (i.e. before aggregation or combination), or one level below an operating segment (i.e. a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.

After evaluating and weighing all relevant events and circumstances, the Company concluded there was no triggering event that constitutes the need to perform a goodwill impairment test for the period ended September 30, 2021.

Income Taxes

The Company was formed in 2020 for income tax purposes. Alta Enterprises, LLC was historically and remains a partnership for federal income tax purposes, with each partner being separately taxed on its share of taxable income (loss). There is no federal income tax expense (benefit) reflected in the Company’s financial statements for any period prior to the reverse recapitalization on February 14, 2020. As the activity resides in Alta Enterprises, LLC, the income tax impact to the Company represents the current income tax calculated at the Consolidated Return level (“Alta Equipment Group Inc and Subsidiaries”), and the deferred impact of the interest in the lower tier partnership.

We use the guidance in FASB ASC Topic 740-270, Income Taxes in Interim Periods, where tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period. At the end of each interim reporting period, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected income (loss) before income taxes for the year, projections of the proportion of income (and/or loss) earned and taxed, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or the Company’s tax environment changes. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or to the extent that the expected annual effective income tax rate changes, the effect of the change on prior interim periods is included in the income tax provision in the period in which the change in estimate occurs. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not likely to allow for the use of the deduction or credit.

Share Based Compensation

The Board of Directors approved the Company’s 2020 Omnibus Incentive Plan, which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other share based awards and cash awards to directors, employees and consultants to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company.

We measure the employee stock-based awards at grant-date fair value using provisions of ASC 718 – Stock Compensation and record compensation expense over the vesting period of the award. The Company made an accounting election upon adoption of Accounting Standard Update (“ASU”) 2016-09 and will recognize forfeitures when they occur. The Company treated equity awards granted to non-employee directors similarly to the equity awards to employees upon adoption of ASU 2018-07.

New Accounting Pronouncements

Pronouncements Not Yet Adopted

Leases (Topic 842)

In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”) that replaces the existing leasing guidance. Topic 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance also expands the requirements for lessees to record leases embedded in other arrangements and the required quantitative and qualitative disclosures surrounding leases. Accounting guidance for lessors is largely unchanged.

The Company is still assessing the impact Topic 842 will have on its future revenue and expenses. The new accounting standard is effective for the annual reporting period ended December 31, 2021, with an effective date of January 1, 2021, and the interim reporting periods beginning January 1, 2022. The Company will adopt the guidance using the modified retrospective transition method whereby the cumulative effect of adopting the standard is recognized in equity on the date of initial application and Topic 842 will apply to all leases existing at, or entered into after, January 1, 2021. The Company continues to perform a comprehensive evaluation on the impacts of adopting Topic 842 and believes this standard will primarily result in a material increase in right-of-use assets and lease liabilities on its consolidated balance sheet. The Company is progressing in its implementation of lease administration software and continues to assess the impact to our accounting policies, systems, processes, and internal controls. While the Company’s evaluation is ongoing, existing processes, controls, and information systems are expected to be impacted. The Company continues to analyze all the practical expedients and plans to elect the package of practical expedients as of the effective date to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. The Company does not plan to apply Topic 842 to arrangements with lease terms of 12 months or less or elect the hindsight practical expedient.

Financial Instruments — Credit Losses (Topic 326)

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard prescribes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in the timely recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument from the date of initial recognition of the financial instrument.

Measurement of expected credit losses is to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. As amended by ASU 2019-10, the ASU 2016-13 is effective for the annual reporting period beginning January 1, 2023. The Company believes ASU 2016-13 will only have applicability to the Company’s receivables from revenue transactions, or trade receivables, except those arising from rental revenues as ASU 2016-13 does not apply to receivables arising from operating leases. The Company is currently evaluating whether the new guidance, while limited to our non-operating lease trade receivables, will have an impact on the consolidated financial statements or existing internal controls.

Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This guidance is intended to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform (e.g., discontinuation of LIBOR) if certain criteria are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The amendments of this ASU should be applied on a prospective basis. Our potential exposure related to the expected cessation of LIBOR is limited to the interest expense we incur on our Credit Facility. We cannot predict the effect of the potential changes to or elimination of LIBOR, the establishment and use of alternative rates or benchmarks, but do not expect a significant impact on our consolidated financial position, and results of operations.

NOTE 3 — REVENUE RECOGNITION

Revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the business expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services. The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. For agreements with multiple performance obligations, which are infrequent, judgment is required to determine whether performance obligations specified in these agreements are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of agreements, the Company generally allocates sales prices to each distinct performance obligation based on the observable selling price.

The Company enters into various equipment sales transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party. In some cases, the Company provides a guarantee to repurchase the equipment back at the end of the lease term between the customer and third-party lessee at a set residual amount set forth in the initial sales contract or pay the customer for the deficiency, if any, between the sale proceeds received for the equipment and the guaranteed minimum resale value. The Company is precluded from recognizing a sale of equipment if it guarantees to repurchase the sold equipment back or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases. Rather, these transactions are accounted for in accordance with ASC 840, Lease Accounting (“Topic 840”).

The lease liability, with respect to the aforementioned sale transactions, represents the net proceeds upon the equipment’s initial transfer. These amounts, excluding the guaranteed residual value, are recognized into rental revenue on a pro-rata basis over the leased contract period up to the first exercise date of the guarantee. At September 30, 2021 and December 31, 2020, the total lease liability relating to these various equipment sale transactions amounted to $3.2 million and $3.8 million, respectively. The Company also recognized a liability for its guarantee to repurchase the equipment at the residual amounts of $7.5 million and $9.0 million as of September 30, 2021 and December 31, 2020, respectively.

The Company also enters into various rental agreements whereby owned equipment is leased to customers. Revenue from the majority of rental agreements is recognized over the term of the agreement in accordance with Topic 840. A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period. Unbilled rental revenues are included as a component of “Accounts receivable” on the Consolidated Balance Sheets. Rental equipment is also purchased outright (“rental conversions”). Rental revenue and revenue attributable to rental conversions, are recognized in “Rental revenue” and “Rental equipment sales” on the Consolidated Statements of Operations, respectively.

The Company also enters into contracts with customers where it provides automated equipment installation and system integration services and installation and set-up of warehouse management systems and related hardware and software support services. Revenue from the installation services is recognized over time as the performance obligation is satisfied, determined using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs. Revenue from recurring support services is recognized ratably over the contract period.

Revenue from periodic maintenance service sales is recognized upon completion of the service. Revenue from guaranteed maintenance contracts is recognized over the contract period in proportion to the costs expected to be incurred in performing services under the contract, typically three to five years.

Payment terms vary by the type and location of the customer and the products or services offered. Generally, the time between when revenue is recognized, and payment is due is not significant. The Company does not evaluate whether the selling price includes a financing interest component for contracts that are less than a year, or if payment is expected to be received less than a year after the good or service has been provided. Sales and other taxes collected from customers and remitted to government authorities are accounted for on a net basis and, therefore, excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of revenue.

Costs to obtain contracts, such as sales commissions, are expensed as incurred given that the terms of the contracts are generally less than one year.

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.

Deferred Revenue

The Company recognizes deferred revenue with respect to automated equipment installation and system integration services, service sales and rental agreements. Deferred revenue with respect to service sales represents the unearned portion of fees related to guaranteed maintenance contracts for customers covering equipment they have previously purchased. These amounts are recognized based on an estimated rate at which the services are provided over the life of the contract. The Company also recognizes deferred revenue related to rental agreements.

Total deferred revenue relating to automated equipment installation and system integration services, service sales agreements and rental agreements as of September 30, 2021 and December 31, 2020 was $18.2 million and $9.6 million, respectively.

Disaggregation of Revenues

The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statements of Operations for the three months September 30, 2021 and 2020 by revenue type, and by the applicable accounting standard.

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	Topic 840		Topic 606		Total		Topic 840		Topic 606		Total
Revenues:
New and used equipment sales	$	—	$	136.8	$	136.8	$	—	$	97.9	$	97.9
Parts sales		—		44.8		44.8		—		35.5		35.5
Service revenue		—		41.9		41.9		—		35.5		35.5
Rental revenue		41.7		—		41.7		32.2		—		32.2
Rental equipment sales		—		29.8		29.8		—		19.5		19.5
Net revenue	$	41.7	$	253.3	$	295.0	$	32.2	$	188.4	$	220.6

The following table summarizes the Company’s disaggregated revenues as presented in the Consolidated Statements of Operations for the nine months September 30, 2021 and 2020 by revenue type, and by the applicable accounting standard.

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
	Topic 840		Topic 606		Total		Topic 840		Topic 606		Total
Revenues:
New and used equipment sales	$	—	$	392.6	$	392.6	$	—	$	275.2	$	275.2
Parts sales		—		130.3		130.3		—		92.3		92.3
Service revenue		—		123.0		123.0		—		94.1		94.1
Rental revenue		113.0		—		113.0		83.4		—		83.4
Rental equipment sales		—		97.6		97.6		—		48.2		48.2
Net revenue	$	113.0	$	743.5	$	856.5	$	83.4	$	509.8	$	593.2

The Company believes that the disaggregation of revenues from contracts to customers as summarized above, together with the discussion below, depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors.

Leases revenues (Topic 840)

New and used equipment sales: The Company enters into various equipment sale transactions with certain customers, whereby customers purchase equipment from the Company and then lease the equipment to a third party. In some cases, the Company provides a guarantee to repurchase the equipment back at the end of the lease term between the customer and third-party lessee at a set residual amount set forth in the initial sales contract or pay the customer for the deficiency, if any, between the sale proceeds received for the equipment and the guaranteed minimum resale value. The Company is precluded from recognizing a sale of equipment when it is obligated or has an option to repurchase or guarantees the resale value of the equipment to the customer for contracts determined to be operating leases. For these arrangements, because the Company generally receives the full amount of the consideration at the beginning of the arrangement, the Company initially records deferred revenue for the amount received and recognizes revenue on a pro-rata basis over the term of the contract under Topic 840.

Rental revenue: 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. A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, the Company records unbilled rental revenues and deferred rental revenues at the end of each reporting period.

Revenues from contracts with customers (Topic 606)

Accounting for the different types of revenues pursuant to Topic 606 are discussed below. Substantially all of the Company’s revenues under Topic 606 are recognized at a point in time rather than over time.

New and used equipment sales: With the exception of bill-and-hold arrangements, the Company’s revenues from the sale of new and used equipment are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good. 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. The bill-and-hold arrangements primarily apply to sales when physical shipment of heavy equipment to the customer is prohibited by law (e.g. frost laws) or requested by the customer due to their inability to arrange freight simultaneous to revenue being recognized, both are limited circumstances. The customer equipment sold under a bill-and-hold arrangement is physically separated from Company inventory and that equipment cannot be used by Alta or sold to another customer. The Company does not offer material rights of return. The Company recognized approximately $35.2 million and $7.1 million in revenues for the nine month period ended September 30, 2021 and 2020, respectively and approximately $13.8 million and $6.6 million in revenues for the three month period ended September 30, 2021 and 2020, respectively, from automated equipment installation and system integration services as the performance obligations were satisfied over time using the cost-to-cost input method, based on contract costs incurred to date to total estimated contract costs.

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. For parts that are shipped to a customer, the Company elected to use a practical expedient of Topic 606 and treat such shipping activities as fulfillment costs, thereby recognizing revenues at the time of shipment. The Company does not offer material rights of return.

Service revenue: The Company records service revenue primarily from guaranteed maintenance and periodic maintenance contracts with customers. The Company recognizes periodic maintenance service revenues at the time such services are completed, which is when the control of the promised services is transferred over to the customer. The Company recognizes guaranteed maintenance service revenues over-time using an input method of costs incurred to estimated costs over the life of the related contract. Revenue recognized from guaranteed maintenance contracts totaled $13.9 million and $12.0 million for the nine month period ended September 30, 2021, and 2020, respectively and $5.0 million and $4.2 million for the three-month period ended September 30, 2021, and 2020, respectively. The Company also records service revenue from warranty contracts whereby the Company performs service on behalf of the Original Equipment Manufacturer (“OEM”) or third-party warranty provider. The Company recognizes warranty revenues at the time such services are completed.

Rental equipment sales: The Company also sells rental equipment from our rental fleet. These sales are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good. 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. 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.

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). Most of the Company’s revenue is recognized at a point in time or over a period of one year or less, and the Company has used the practical expedient that allows it to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. The amount of the costs associated with the revenue recognized over a period of greater than one year is insignificant.

Receivables and contract assets and liabilities

The Company has contract assets associated with contracts with customers. Contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue. Deferred revenue associated with service contracts represents the unearned portion of revenue related to guaranteed maintenance contracts for customers covering equipment purchased. These amounts are recognized based on an estimated rate at which the services are provided over the life of the contract.

Payment terms

The Company’s revenues do not include material amounts of variable consideration under Topic 606. Payment terms may vary by the type of customer, location, and the type of products or services offered. The time between invoicing and when payment is due is not significant, and contracts do not generally include a significant financing component. Contracts with customers do not generally result in significant obligations associated with returns, refunds or warranties.

Contract estimates and judgments

The Company’s revenues accounted for under Topic 606 generally do not require significant estimates or judgments as the transaction price is generally fixed and clearly stated in the customer contracts. Contracts generally do not include multiple performance obligations, and accordingly do not require estimates of the standalone selling price for each performance obligation.

Substantially all of the Company’s revenues are recognized at a point in time and the timing of the satisfaction of the applicable performance obligations is readily determinable. The Company’s revenues under Topic 606 are generally recognized at the time of delivery to, or pick-up by, the customer.

NOTE 4 — RELATED PARTY TRANSACTIONS

The Company leases a subset of its operating facilities from three real estate entities related through common ownership. Total rent expense under these lease agreements for both the nine months ended September 30, 2021 and September 30, 2020 was $3.6 million and for both the three months ended September 30, 2021 and September 30, 2020 was $1.2 million.

NOTE 5 — INVENTORIES

The components of inventories, net, consisted of the following (amounts in millions):

	September 30,			December 31,
	2021			2020
New equipment	$	122.4		$	153.5
Used equipment		32.4			31.4
Work in process		7.2			5.4
Parts		46.7			41.6
Gross Inventory	$	208.7		$	231.9
Inventory reserves		(3.8	)		(2.9	)
	$	204.9		$	229.0

Direct labor of $1.1 million and $1.7 million incurred for open service orders were capitalized and included in work in process at September 30, 2021 and December 31, 2020, respectively. The remaining work in process balances as of September 30, 2021 and December 31, 2020 primarily represent parts applied to open service orders. Rental depreciation expense in connection with our new and used equipment was $1.3 million and $4.5 million for the three and nine months ended September 30, 2021 and was $0.9 million and $2.4 million for the three and nine months ended September 30, 2020.

NOTE 6 — PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following (amounts in millions):

	September 30,			December 31,
	2021			2020
Land	$	2.1		$	0.1
Rental fleet		465.8			418.5
Equipment and leasehold improvements:
Machinery and equipment		6.4			5.5
Autos and trucks		6.5			7.0
Leasehold improvements		9.9			8.7
Office equipment		3.3			3.1
Computer equipment		10.8			9.4
Total Cost	$	504.8		$	452.3

Less: accumulated depreciation and amortization
Rental fleet		(147.8	)		(124.6	)
Equipment, auto and trucks, leasehold improvements and computer and office equipment		(18.7	)		(15.8	)
Total accumulated depreciation and amortization		(166.5	)		(140.4	)
	$	338.3		$	311.9

Total depreciation and amortization on property and equipment was $62.4 million and $47.8 million for the nine months ended September 30, 2021, and 2020 respectively and $22.3 million and $19.4 million for the three months ended September 30, 2021, and 2020, respectively. The Company had assets related to capital leases, which are included in the machinery and equipment balance above. Such assets had gross carrying values totaling $3.8 million and $4.0 million, and accumulated amortization balances totaling $2.8 million and $2.5 million, as of September 30, 2021, and December 31, 2020, respectively. Of the $465.8 million and $418.5 million of gross cost of rental fleet, $11.3 million and $13.0 million were represented by guaranteed purchase obligation (“GPO”) assets as of September 30, 2021, and December 31, 2020, respectively.

NOTE 7 — GOODWILL

The following table summarizes the changes in the carrying amount of goodwill in total and by reportable segment as of September 30, 2021, and December 31, 2020 (amounts in millions):

	Material Handling		Construction Equipment			Total
Balance, December 31, 2020	$	10.2	$	14.1		$	24.3
Additions		2.3		—			2.3
Adjustments to purchase price allocations		—		(1.4	)		(1.4	)
Balance, September 30, 2021	$	12.5	$	12.7		$	25.2

See Note 16, Business Combinations for further information.

NOTE 8 — INTANGIBLE ASSETS

The gross carrying amount of intangible assets and accumulated amortization as of September 30, 2021 and December 31, 2020 were as follows (amounts in millions):

	September 30, 2021							December 31, 2020
	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Customer relationships	$	28.2	$	(5.2	)	$	23.0	$	25.9	$	(3.1	)	$	22.8
Tradenames		1.8		(0.6	)		1.2		1.6		(0.4	)		1.2
Non-compete agreements		0.7		(0.2	)		0.5		0.8		(0.1	)		0.7
Favorable market rent		1.7		(0.2	)		1.5		1.7		(0.1	)		1.6
Total	$	32.4	$	(6.2	)	$	26.2	$	30.0	$	(3.7	)	$	26.3

Amortization of intangible assets were $0.8 million and $2.3 million for the three and nine months ended September 30, 2021, and $0.7 million and $1.4 million for the three and nine months ended September 30, 2020, respectively. The amortization of favorable market rent is recorded to rent expense.

NOTE 9 — LINES OF CREDIT AND FLOOR PLANS

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. The Amended and Restated ABL Credit Agreement, among other things, (i) increased the asset based revolving line of credit (the “ABL Facility”) borrowing capacity from $300 million to $350 million, (ii) modified certain financial covenants, and (iii) removed the limitation on credit line borrowings if floorplan facilities exceeded $225 million.

On January 11, 2021, the Company amended its Fifth Amended and Restated ABL First Lien 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 amendment generally allowed for dividend payments to be made on the Preferred Stock without having to meet a leverage threshold, it excluded the Preferred dividend payments from affecting the second lien prepayment requirement, and it increased vendor floor plan limits from $225 million to $250 million; however, credit line borrowings would begin to be limited in the instance amounts borrowed on floor plan facilities exceed $225 million. The Fifth Amended and Restated ABL First Lien Credit Agreement was superseded and replaced by the Sixth Amended and Restated ABL First Lien Credit Agreement.

On April 1, 2021, the Company entered into a Sixth Amended and Restated Floor Plan First Lien Credit Agreement (the

“Amended and Restated Floor Plan Credit Agreement”, which establishes the “First Lien Floor Plan Facility”, and together with the Amended and Restated ABL Credit Agreement, collectively the “Credit Agreements”) 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, which among other things, modified certain financial covenants.

Line of Credit and Floor Plan — First Lien Lender

The Company has an ABL Facility with its 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. The ABL Facility, which is collateralized by substantially all assets of the Company, has a maximum borrowing capacity of $350 million and interest cost is the London Interbank Offered Rate (“LIBOR”) plus an applicable margin or the CB Floating Rate, depending on the borrowing. As of September 30, 2021, the Company had an outstanding ABL Facility balance of $47.8 million, excluding unamortized debt issuance costs. The effective interest rate was 2.0% at September 30, 2021. As of December 31, 2020, the Company had an outstanding ABL Facility balance of $159.1 million, excluding unamortized debt issuance costs. The effective interest rate was 2.0% at December 31, 2020.

As of September 30, 2021, the Company had an outstanding balance on their First Lien Floor Plan Facility of $33.8 million, excluding unamortized debt issuance costs. The effective interest rate at September 30, 2021 was 2.8%. As of December 31, 2020, the Company had an outstanding balance on their First Lien Floor Plan Facility of $35.3 million, excluding unamortized debt issuance costs. The effective interest rate at December 31, 2020 was 2.9%.

Original Equipment Manufacturer (“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 $2 million to $102 million. Primarily, the Company utilizes the OEM Floor Plan Facilities for purchases of new equipment inventories. Certain OEM Floor Plan Facilities provide for up to twelve-months interest only or deferred payment periods. In addition, certain OEM Floor Plan Facilities provide for interest and principal free terms at the OEMs’ discretion. The Company routinely sells equipment that is financed under OEM Floor Plan Facilities prior to the original maturity date of the financing agreement. When this occurs, the payable under the applicable OEM Floor Plan Facility related to the financed equipment being sold becomes due to be paid at the time of sale.

With the recent acquisitions, some of the Company’s OEM Floor Plan Facilities were amended to include new locations and new entities. The OEM Floor Plan Facilities are secured by the equipment being financed, and contain operating company guarantees. The interest is LIBOR plus an applicable margin. The effective rates, excluding the favorable effect of interest-subsidies, as of September 30, 2021 ranged from 0.0% to 9.1%. As of September 30, 2021, and December 31, 2020, the Company had an outstanding balance on the OEM Floor Plan Facilities of $115.8 million and $122.2 million, respectively.

The total aggregate amount of financing under the Floor Plan Facilities cannot exceed $250.0 million at any time. The total outstanding balance under the Floor Plan Facilities as of September 30, 2021, and December 31, 2020, was $149.6 million and $157.5 million, respectively, excluding unamortized debt issuance costs. For the nine months ended September 30, 2021, and 2020, the Company recognized interest expense associated with new equipment financed under its Floor Plan Facilities of $1.4 million and $1.8 million, respectively and $0.4 million and $0.5 million for the three months ended September 30, 2021, and 2020 respectively.

Maximum borrowings under the floor plans and ABL Facility are limited to $600 million unless certain other conditions are met. The total amount outstanding as of September 30, 2021, and December 31, 2020, was $197.4 million and $316.6 million, exclusive of debt issuance and deferred financings costs of $2.6 million and $1.5 million, respectively.

NOTE 10 — LONG-TERM DEBT

On April 1, 2021, the Company completed a private offering of our Senior Secured Second Lien Notes (the “Notes”), for the purposes of, among other things, repayment and refinancing of a portion of the Company’s prior existing debt, reducing interest rate exposure and providing liquidity for financing of future growth initiatives.

Senior Secured Second Lien Notes

On April 1, 2021, the Company sold $315 million of our 5.625% Notes which are due in 2026. The Notes are guaranteed (the “Guarantees” and, together with the Notes, the “Securities”) by the guarantors that are party thereto (the “Guarantors”) on a second lien, senior secured basis. 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 are guaranteed by each of our existing and future domestic subsidiaries that becomes a borrower or guarantor under our or the Guarantors’ indebtedness, including the Credit Agreements, as amended and restated concurrently with the closing of the Notes offering. 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 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 bear interest at the rate of 5.625% per annum and will 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. The October 15, 2021 interest payment was made on or about October 15, 2021.

As of September 30, 2021, outstanding borrowings under the Notes were $309.7 million, which included $5.3 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%.

Term Loan

On February 14, 2020, the Company entered into a Note Purchase Agreement which comprised of a second lien term loan (the “Term Loan”) in an aggregate principal amount of $155.0 million with a second priority lien lender through syndication, with an initial maturity date of August 2025. The term loan was payable, at the lender’s option, in quarterly installments of $1.9 million plus interest at LIBOR plus 8%. On April 1, 2021, in connection with the issuance of the new Notes, the Company repaid all of its outstanding obligations under the Term Loan, $147.3 million, completely discharging the Company of any further obligations to the lender.

Extinguishment of Debt

In the second quarter of 2021, and in connection with the repayment of the Term Loan, the Company recorded a loss on the extinguishment of debt in the amount of $11.9 million in the line item “Loss on Extinguishment of Debt” in its Consolidated Statements of Operations. This was in accordance with ASC Topic No. 470-50, “Debt – Modifications and Extinguishments” (Topic No. 470), as the transaction was determined to be an extinguishment of the existing debt and an issuance of new debt.

In the second quarter of 2020, the Company recorded a loss on the extinguishment of debt in the amount of $7.6 million in the line item “Loss on extinguishment of debt” in its Consolidated Statements of Operations. This was in accordance with ASC Topic No. 470-50, “Debt – Modifications and Extinguishments” (Topic No. 470), as the transaction was determined to be an extinguishment of the existing debt and an issuance of new debt.

The Company’s long-term debt consists of the following (amounts in millions):

	September 30,			December 31,
	2021			2020
High yield notes	$	315.0		$	—
Term loan		—			149.2
Unamortized debt issuance costs		(1.1	)		(1.8	)
Debt discount		(4.2	)		(4.6	)
Capital leases		0.8			1.5
Total debt and capital leases	$	310.5		$	144.3
Less: current maturities		(0.6	)		(8.7	)
Long-term debt and capital leases, net	$	309.9		$	135.6

As of September 30, 2021, the Company was in compliance with the financial covenants set forth in its debt agreements.

Promissory Note

On June 12, 2020, the Company entered into an unsecured promissory note for $1.0 million at an interest rate of 6.0% on the unpaid principal sum in connection with the PeakLogix acquisition which was due one year from the date of the acquisition. During the second quarter of 2021, the Promissory Note of $1.1 million, inclusive of accrued interest, was paid in full.

Notes Payable – Non-Contingent Consideration

The Company acquired all the assets of PeakLogix on June 12, 2020. Pursuant to the asset purchase agreement, Sellers are entitled to additional cash payments of a minimum of $2.0 million throughout a 5-year earn-out period. As of September 30, 2021, the Company recorded a $1.8 million liability which included a $1.7 million related to present value of these minimum cash payments using a market participant discount rate and $0.1 million of imputed interest. This additional future liability is recorded as non-contingent liability in “Other current liabilities” and “Other liabilities” on the Consolidated Balance Sheets. See Note 15, Fair Value Instruments and Note 16, Business Combinations for further information.

NOTE 11 — CONTINGENCIES

Guarantees

As of September 30, 2021, and December 31, 2020, the Company was party to certain contracts in which it guarantees the performance of agreements between various third-party financial institutions. The terms of the guarantees range from two to six 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 obligations as specified in the contract. The estimated exposure related to these guarantees was $1.7 million and $2.4 million at September 30, 2021 and December 31, 2020, 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 Consolidated Balance Sheets at September 30, 2021 and December 31, 2020, respectively.

Legal Proceedings

During the nine months ended September 30, 2021 and September 30, 2020, various claims and lawsuits, incidental to the ordinary course of our business, were pending against the Company. In the opinion of management, after consultation with legal counsel, resolution of these matters is not expected to have a material effect on the Company’s consolidated financial statements.

Contractual Obligations

The Company does not believe there are any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company. As of each of September 30, 2021, and December 31, 2020 there was $1.4 million in outstanding letters of credits issued in the normal course of business.

NOTE 12 — INCOME TAXES

The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates in effect for the year in which the difference is expected to reverse. Additionally, the impact of changes in the tax rates and laws on deferred taxes, if any, is reflected in the financial statement in the period of enactment. The deferred tax liabilities and assets for the Company represent the difference between the financial statement and tax basis of the partnership interest in Alta Enterprises, LLC. As such, the Company is using the single line-item approach.

The income tax provision (benefit) for the three and nine months ended September 30, 2021 and 2020 consisted of the following:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
Federal taxes-current	$	—	$	—		$	—	$	—
Federal taxes-deferred		—		(1.4	)		0.4		(2.6	)
State taxes-current		—		—			—		—
State taxes-deferred		—		(0.5	)		0.1		(0.8	)
	$	—	$	(1.9	)	$	0.5	$	(3.4	)

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period. At the end of each interim reporting period, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

The Company recorded an income tax expense of $0.0 million and a benefit of $1.9 million for the three months ended September 30, 2021, and 2020 and an income tax expense of $0.5 million and an income tax benefit of $3.4 million for the nine months ended September 30, 2021 and 2020 respectively. As a result of Alta’s third quarter 2021 analysis of the realizability of its deferred tax asset, and after considering tax planning initiatives and other inputs, Alta determined that it was more likely than not that deferred tax asset would not be realized and has thus maintained a full valuation allowance against the deferred tax asset.

Alta reviews the realizability of its deferred tax asset on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results are considered, along with any other positive or negative evidence. All of the factors that Alta considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involve significant judgment.

The effective tax rate for the nine months ended September 30, 2021 was (2.3)% when compared to 24.1% for the period from February 14, 2020 to September 30, 2020 in connection with the reverse recapitalization. This was mainly due to the impact of the establishment of the valuation allowance during the first quarter of 2021.

As of December 31, 2020, the Company has federal net operating tax loss carryforwards of approximately $27.0 million, which may be carried forward indefinitely and are eligible to offset 80% of future taxable income.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property.

The CARES Act did not materially impact our effective tax rate for prior periods, although it will impact the timing of future cash payments for taxes. As of September 30, 2021, we have deferred employer payroll taxes of $5.6 million under the CARES Act, with half of the deferred amounts due by December 31, 2021, and the remaining half due by December 31, 2022.

NOTE 13 — EQUITY

Preferred Stock

On December 22, 2020, the Company closed its underwritten public offering of depositary shares, each representing 1/1000th of a share of 10% Series A Preferred Stock, par value $0.0001 per share. The liquidation preference of each share of Series A Preferred Stock is $25,000 ($25.00 per Depositary Share). At the closing, the Company issued 1,200 shares of Series A Preferred Stock represented by 1,200,000 Depositary Shares issued.

We will pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by our Board of Directors, at the rate of 10% of the $25,000 liquidation preference ($25.00 per depositary share) per year (equivalent to $2,500 or $2.50 per depositary share).

Dividends are payable quarterly in arrears, on or about the last day of January, April, July and October, beginning on or about April 30, 2021; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day, and no interest, additional dividends or other sums will accumulate. Dividends will accumulate and be cumulative from, and including December 22, 2020, the date of original issuance. On April 9, 2021, the Company declared a cash dividend $0.89 per depositary share, which was paid on April 30, 2021 to

holders of record as of the close of business on April 15, 2021. This dividend payment covered the period from and including December 22, 2020 through, but not including April 30, 2021. On July 2, 2021, the Company declared a cash dividend $.625 per depository share, which was paid on August 2, 2021 to holders of record as of the close of business on July 15, 2021. The dividend payment covered the period from and including April 30, 2021 through, but not including July 31, 2021.

Warrants

On April 12, 2021, we exchanged all 8,668,746 of our outstanding warrants into shares of our common stock at an exchange ratio of 0.263 shares of common stock per warrant, for an aggregate issuance of approximately 2,279,874 shares of common stock in the exchange.

As of December 31, 2020, there were warrants outstanding to acquire 8,668,746 shares of the Company’s Common Stock. These warrants were issued in connection with the equity infusion related to reverse recapitalization. The warrants entitle the registered holder to purchase one share of our Class A Common Stock at a price of $11.50 per share, subject to certain adjustments. The warrants were to expire five years after February 14, 2020, the date the reverse recapitalization was completed or earlier upon redemption or liquidation.

Prior to the reverse recapitalization, the Company granted warrants to purchase 33,333.33 shares of common units in connection with the stock purchase and redemption that occurred on December 27, 2017 (“the 2017 Warrants”). The 2017 Warrants had an exercise price of $0.01 and included a conditional put option, allowing the holder to require the Company to purchase the outstanding warrants, via a settlement upon the following events: (1) upon 75% repayment of senior indebtedness, (2) change in control from a sale transaction, and (3) the maturity of the related debt, which required the Company to settle the warrants in cash. The warrants were to expire December 27, 2027. The 2017 Warrants also included a limited call right, where in the event of a sale transaction, the Company had the right to redeem, in cash, all of the warrants simultaneously at a per common share price equal to the per unit set for the sale transaction.

On February 14, 2020, the Company consummated its reverse recapitalization. As a result, the Company redeemed all the 2017 Warrants outstanding upon closing of the reverse recapitalization and as of December 31, 2020, there were no warrant liabilities on the Consolidated Balance Sheets associated with the 2017 Warrants.

NOTE 14 — SHARE BASED COMPENSATION

During the second quarter 2021, the Compensation Committee of our Board of Directors approved the grant of 114,292 shares of Restricted Stock Units (“RSUs”) to certain directors, officers and employees of the Company under the 2020 Omnibus Incentive Plan. The Company’s plan is to have broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests. We calculated the fair value of the RSUs 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 vesting period of the award.

The Company recognized total compensation expense of $0.9 million and $3.2 million for the nine months ended September 30, 2021, and 2020 respectively.

As of September 30, 2021, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock awards was $2.3 million, which is expected to be recognized over a weighted average period of 2.2 years.

The following table summarizes our restricted stock unit activity as of September 30, 2021:

Restricted Stock Units	Number of units			Weighted average grant date fair value
Unvested as of December 31, 2020		300,000		$	7.60
Granted		114,292			13.31
Vested-issued		(65,000	)		7.60
Vested-unissued		(40,000	)		7.60
Forfeited		—			—
Unvested as of September 30, 2021		309,292		$	9.71

NOTE 15 — FAIR VALUE INSTRUMENTS

The carrying value of financial instruments reported in the accompanying Consolidated Balance Sheets for cash, accounts receivable, accounts payable and accrued expenses payable and other liabilities approximate fair value due to the immediate or short-term nature or maturity of these financial instruments. Based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs, the carrying value of lines of credit, long-term debt, and the guaranteed purchase obligations approximates the fair value as of September 30, 2021 and December 31, 2020.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis:

Contingent Consideration

The contingent consideration liability represents the fair value of the future earn-out liability that the Company may be required to pay in conjunction with the acquisitions upon the achievement of certain performance milestones. The earn-out for the acquisitions is measured at fair value in each reporting period, based on level 3 inputs, with any change to the fair value recorded in the Consolidated Statements of Operations.

PeakLogix LLC (“PeakLogix”)

The purchase agreement for the PeakLogix acquisition provides for earn-out payments of a minimum of $2.0 million up to $3.7 million which can be earned through June 30, 2025 based on meeting certain performance milestones. We estimated the fair value of the incremental $1.7 million earn-out payment based on a probability weighted range of outcomes analysis and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligation. This analysis considered the earn-out payment thresholds, the minimum and maximum range of earn-out payments per the agreement and the expected future cash flows of PeakLogix. The earn-out will be remeasured at each balance sheet date using this approach and any resulting increase or decrease will be reflected in the income statement. Going forward, volatility in the amount of PeakLogix’s actual results and forecasted scenarios could impact the fair value of this contingent consideration.

The Company concluded the future minimum cash payments of $2.0 million will be treated as a non-contingent liability and recorded a $1.7 million liability related to the present value of these minimum cash payments. See Note 10, Long-Term Debt and Note 16, Business Combinations for further information.

In addition to the non-contingent liability, there is a potential earn out payment of $1.7 million to be paid to Sellers over a five-year period. The Company recorded a $1.0 million earn out liability as the acquisition date fair value in “Other Liabilities” on the Consolidated Balance Sheet. See Note 16, Business Combinations for further information.

Hilo Equipment & Services (“Hilo”)

The purchase agreement for the Hilo acquisition provides an earn-out payment of $1.0 million based on meeting certain financial target which can be earned through July 1, 2023. We estimated the fair value of the earn-out liability based on the present value of probability weighted expected future results and recorded a $0.8 million liability. See Note 16, Business Combinations for further information.

The following table sets forth, by level of hierarchy, the Company’s recurring measures at fair value as of September 30, 2021 and December 31, 2020, which was presented in “Other Liabilities” on the Consolidated Balance Sheet:

	September 30, 2021
	Level 1		Level 2		Level 3
Liabilities: Contingent consideration	$	—	$	—	$	1.8

	December 31, 2020
	Level 1		Level 2		Level 3
Liabilities: Contingent consideration	$	—	$	—	$	1.8

The following is a summary of changes to Level 3 instruments as of September 30, 2021 and December 31, 2020:

	Contingent Consideration
Balance, January 1, 2020	$	—
Acquisition of PeakLogix		1.0
Acquisition of Hilo		0.8
Change in fair value		—
Balance, December 31, 2020		1.8
Change in fair value		—
Balance, September 30, 2021	$	1.8

NOTE 16 — BUSINESS COMBINATIONS

The following table summarizes the net assets acquired from the acquisitions in 2021 (amounts in millions):

	ScottTech			Baron
Cash	$	0.5		$	—
Accounts receivable		0.9			—
Inventory		0.3			0.3
Prepaid and other assets		0.1			0.3
Rental fleet, net		—			—
Property and equipment, net		0.4			0.2
Intangible assets		—			—
Goodwill		1.5			0.8
Total Assets	$	3.7		$	1.6

Floor plan payable		—			—
Accounts payable		(0.3	)		—
Accrued expenses		(0.1	)		—
Other current liabilities		(0.9	)		(0.3	)
Other liabilities		—			—
Total liabilities	$	(1.3	)	$	(0.3	)

Net Assets Acquired	$	2.4		$	1.3

Assets acquired net of cash	$	1.9		$	1.3

SCOTTTECH, LLC (“ScottTech”)

On March 1, 2021, the Company acquired all the assets of ScottTech, for a total purchase price of $2.4 million, paid out of available funds.

The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date. The Company expects the intangible assets recognized to be 100% deductible for income tax purposes. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

Baron Industries (“Baron”)

On September 1, 2021, the Company acquired all the assets of Baron for a total purchase price of $1.3 million, of which $1.2 million was paid out of available funds, and the remaining $0.1 million will be paid out subject to finalization of working capital adjustments.

The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired, and liabilities assumed have been recorded at the acquisition date at their respective fair values in our consolidated financial statements.

The estimated fair values of assets acquired, and liabilities assumed are provisional and are based on the information that was available as of the balance sheet date. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practical but no later than one year from the acquisition date. The Company expects the intangible recognized to be 100% deductible for income tax purposes. Costs and expenses related to the acquisition have been expensed as incurred in operating expenses.

The following table summarizes the net assets acquired from the acquisitions in 2020 (amounts in millions):

	Flagler			Liftech			Peak			Hilo			Martin			Howell			Vantage			Total
Cash	$	0.4		$	—		$	3.0		$	2.1		$	—		$	—		$	—		$	5.5
Accounts receivable		15.1			4.4			4.6			5.4			1.0			5.2			3.6			39.3
Inventory		37.5			9.6			0.4			4.7			6.8			6.3			7.5			72.8
Prepaid and other assets		0.5			1.0			0.2			0.2			—			—			—			1.9
Rental fleet, net		47.8			4.7			—			7.5			6.3			12.4			15.9			94.6
Property and equipment, net		2.9			1.2			0.2			1.7			—			1.1			1.0			8.1
Intangible assets		14.6			1.2			5.8			2.4			1.5			2.4			—			27.9
Goodwill		5.8			1.5			0.7			3.2			0.8			1.7			0.5			14.2
Total Assets	$	124.6		$	23.6		$	14.9		$	27.2		$	16.4		$	29.1		$	28.5		$	264.3

Floor plan payable		(29.0	)		(3.5	)		—			(4.4	)		—			(0.8	)		(2.1	)		(39.8	)
Accounts payable		(14.0	)		(1.6	)		(1.5	)		(2.8	)		(0.2	)		(1.0	)		(1.4	)		(22.5	)
Accrued expenses		(4.1	)		—			(0.1	)		(0.3	)		(0.1	)		(0.3	)		(0.6	)		(5.5	)
Other current liabilities		—			(0.1	)		(3.9	)		(0.4	)		—			—			(0.1	)		(4.5	)
Other liabilities		(1.3	)		—			—			—			—			—			—			(1.3	)
Total Liabilities	$	(48.4	)	$	(5.2	)	$	(5.5	)	$	(7.9	)	$	(0.3	)	$	(2.1	)	$	(4.2	)	$	(73.6	)

Net Assets Acquired	$	76.2		$	18.4		$	9.4		$	19.3		$	16.1		$	27.0		$	24.3		$	190.7

Assets acquired net of cash	$	75.8		$	18.4		$	6.4		$	17.2		$	16.1		$	27.0		$	24.3		$	185.2

Flagler

On February 14, 2020, in connection with the reverse recapitalization, the Company consummated its acquisition of Flagler for a total purchase price, net of cash, of $75.8 million, which was paid out of funds from the closing of the reverse recapitalization.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $79.0 million.

Liftech

On February 14, 2020, in connection with the reverse recapitalization, the Company consummated its acquisition of Liftech for a total purchase price of $18.4 million, which was paid out of funds from the closing of the reverse recapitalization.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $15.2 million.

PeakLogix

On June 12, 2020, the Company acquired all the assets of PeakLogix for a total purchase cash consideration of $5.7 million, which was paid out of available funds. Additional consideration includes $1.0 million in an unsecured one-year promissory note at 6% and earn-out payment of a minimum $2.0 million up to a $3.7 million to be paid out to former owners based on meeting certain financial targets throughout a 5-year earn-out period, collectively resulting in an estimated enterprise value of $6.4 million net of cash acquired. In connection with the purchase, PeakLogix LLC was created. See Note 10, Long-Term Debt and Note 15, Fair Value Instruments for further information.

The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of property, plant, and equipment were estimated to approximate their respective acquisition date net book values. Costs and expenses related to the acquisition were expensed as incurred in operating expenses.

The following table summarizes the components of the purchase price at June 12, 2020:

Cash consideration paid *	$	5.7
Promissory Note		1.0
Present value of non-contingent earn-out liability		1.7
Earn-out liability		1.0
Total purchase price	$	9.4

* Includes $3.0 million cash acquired as part of the Business Combination

Hilo

On July 1, 2020, the Company acquired all the assets of Hilo for total purchase price, net of cash, of $17.2 million which was paid out of available funds, and potential earn out payments of an additional $1.0 million.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $19.0 million.

The following table summarizes the component of the purchase price at July 1, 2020:

Cash consideration paid *	$	18.5
Earn-out liability		0.8
Total purchase price	$	19.3

* Includes $2.1 million cash acquired as part of the Business Combination

Martin Implement Sales, Inc. (“Martin”)

On September 1, 2020, the Company acquired all the assets of Martin for a total purchase price of $16.1 million, which included floorplan eligible new equipment inventories that was paid out of available funds.

Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $10.6 million.

Howell Tractor and Equipment, LLC (“Howell”)

On October 30, 2020, the Company acquired all the assets of Howell for a total cash consideration of $23.0 million. The Company also issued 507,143 shares of its common stock, valued at $4.0 million, in connection with the purchase agreement, yielding a total purchase price of $27.0 million. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $23.7 million.

The acquisition has been accounted for as a purchase business combination. The fair value of accounts receivable was determined based on the acquisition date net book value and an evaluation of amounts deemed recoverable through subsequent collection. The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

Subsequent to the 2020 year-end audit, before one year from the acquisition date, the Company recorded a purchase price allocation and working capital adjustment of $0.6 million which yielded a total purchase price of $27.0 million.

Costs and expenses related to the acquisition were expensed as incurred in operating expenses.

Vantage Equipment, LLC (“Vantage”)

On December 31, 2020, the Company acquired all the assets of Vantage for a total purchase price of $24.3 million. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the Company estimates total enterprise value at close to be $22.6 million.

Subsequent to the 2020 year-end audit, before one year from the acquisition date, the Company recorded a purchase accounting adjustment to its Vantage acquisition that increased net assets acquired by $0.1 million which yielded a total purchase price of $24.3 million.

Costs and expenses related to the acquisition were expensed as incurred in operating expenses.

Pro forma financial information – 2021

The financial effect of the 2021 acquisitions were not material to the consolidated financial statements. As such, pro forma results of operations have not been presented.

Pro forma financial information – 2020

The Company completed the Flagler acquisition on February 14, 2020. Therefore, operating results of Flagler are included in the Company’s Consolidated Statement of Operations from February 14, 2020. Pursuant to ASC 805, pro forma disclosures should be reported whenever the year or interim period of the acquisition is presented. The pro forma information below gives effect to the Flagler acquisition as if the acquisition occurred on January 1, 2020.


(amounts in millions)	The Company			Flagler			Total
Total revenues	$	593.2		$	25.8		$	619.0

Net loss	$	(20.8	)	$	(0.1	)	$	(20.9	)

The financial effect of the other acquisitions, individually and in the aggregate, was not material to the consolidated financial statements. As such, pro forma results of operations including other acquisitions have not been presented.

NOTE 17 — SEGMENTS

The Company has two reportable segments: Material Handling and Construction Equipment. The “Material Handling” segment has been previously reported as our “Industrial” segment. The Company’s segments are determined based on management structure, which is organized based on types of products sold, as described in the following paragraph. The operating results for each segment are reported separately to the Company’s Chief Executive Officer to make decisions regarding the allocation of resources, to assess the Company’s operating performance and to make strategic decisions.

The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks and other material handling equipment in Michigan, Illinois, Indiana, New York (including New York City), Virginia as well as the New England region (including Boston) of the United States. As of September 30, 2021, the Material Handling segment included the ScottTech and Baron acquisitions and its related results for the quarter.

The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Illinois, New York (not including New York City), Florida and the New England region (including Boston) of the United States.

The Company retains various unallocated expense items at the general corporate level, which the Company refers to as “Corporate” in the table below. Corporate holds corporate debt and has minor activity all together. For the quarter ended September 30, 2021, Corporate incurred expenses associated with compensation (including shared based compensation) of our directors, corporate officers and certain members of our shared-services leadership team, consulting and legal fees related to acquisitions and capital raising activities, corporate governance and compliance related matters, certain corporate development related expenses and interest expense associated with original issue discounts and deferred financing cost related to previous capital raises, which were offset with income tax benefit. Corporate incurred $11.9 million and $7.6 million in debt extinguishment fees for the nine months ended September 30, 2021 and September 30, 2020 respectively. Corporate incurred an additional $7.6 million in transaction costs and other expenses associated with the reverse recapitalization for the nine months ended September 30, 2020.

Additionally, as it relates to certain allocated corporate level expenses (e.g. audit, tax and other professional fees, interest, IT and HR related expenses, certain corporate marketing expenses, etc.), the Company evaluates and analyzes the appropriateness of expense allocations to each of its business units (and therefore segments) on an annual basis and makes necessary adjustments to these allocations at year-end. The Company uses metrics such as headcount, revenue and total assets, where appropriate, to develop these allocations.

In connection with the purchase of NITCO LLC in 2019, the Company expanded its full-service material handling and construction equipment dealer operations into New England market. Given that the sales of the business were more heavily weighted to material handling versus construction and that NITCO’s reporting systems made it difficult for the construction business to be observed separate from the Material Handling operation, NITCO’s total financial results were historically presented within our Material Handling segment. On January 1, 2021, with the migration of the NITCO business to the Company’s main ERP system, the Company is now able to report the results for the Material Handling and Construction Equipment results within their respective segments for the NITCO business unit. As such, the Company has re-casted certain prior period segment-level results for the NITCO business unit to be consistent with the current period presentation for appropriate period-over-period comparability.

The following table presents the Company’s results of operations by reportable segment for the nine months ended September 30, 2021 (amounts in millions):

	Nine Months Ended September 30, 2021
	Material Handling		Construction Equipment			Corporate			Total
New and used equipment sales	$	174.7	$	217.9		$	—		$	392.6
Parts sales		47.7		82.6			—			130.3
Service revenue		70.4		52.6			—			123.0
Rental revenue		35.1		77.9			—			113.0
Rental equipment sales		0.8		96.8			—			97.6
Total revenue	$	328.7	$	527.8		$	—		$	856.5
Interest expense		6.1		10.1			1.4			17.6
Depreciation and amortization		13.6		55.6			—			69.2
Net income (loss)	$	6.7	$	(5.2	)	$	(23.4	)	$	(21.9	)

The following table presents the Company’s results of operations by reportable segment for the three months ended September 30, 2021 (amounts in millions):

	Three Months Ended September 30, 2021
	Material Handling		Construction Equipment			Corporate			Total
New and used equipment sales	$	57.2	$	79.6		$	—		$	136.8
Parts sales		16.8		28.0			—			44.8
Service revenue		23.7		18.2			—			41.9
Rental revenue		12.6		29.1			—			41.7
Rental equipment sales		—		29.8			—			29.8
Total revenue	$	110.3	$	184.7		$	—		$	295.0
Interest expense		2.0		3.4			0.6			6.0
Depreciation and amortization		4.6		19.8			—			24.4
Net income (loss)	$	3.4	$	(0.2	)	$	(3.7	)	$	(0.5	)

The following table presents the Company’s results of operations by reportable segment for the nine months ended September 30, 2020 (amounts in millions):

	Nine Months Ended September 30, 2020
	Material Handling		Construction Equipment			Corporate			Total
New and used equipment sales	$	137.5	$	137.7		$	—		$	275.2
Parts sales		40.2		52.1			—			92.3
Service revenue		58.5		35.6			—			94.1
Rental revenue		31.2		52.2			—			83.4
Rental equipment sales		6.0		42.2			—			48.2
Total revenue	$	273.4	$	319.8		$	—		$	593.2
Interest expense		4.0		8.1			5.6			17.7
Depreciation and amortization		15.0		36.6			—			51.6
Net income (loss)	$	5.7	$	(12.6	)	$	(13.9	)	$	(20.8	)

The following table presents the Company’s results of operations by reportable segment for the three months ended September 30, 2020 (amounts in millions):

	Three Months Ended September 30, 2020
	Material Handling		Construction Equipment			Corporate		Total
New and used equipment sales	$	53.1	$	44.8		$	—	$	97.9
Parts sales		15.4		20.1			—		35.5
Service revenue		22.1		13.4			—		35.5
Rental revenue		11.0		21.2			—		32.2
Rental equipment sales		1.4		18.1			—		19.5
Total revenue	$	103.0	$	117.6		$	—	$	220.6
Interest expense		1.3		2.8			2.0		6.1
Depreciation and amortization		5.6		15.4			—		21.0
Net income (loss)	$	2.1	$	(7.9	)	$	6.1	$	0.3

The following table presents the Company’s identified assets by reportable segment for the period ending September 30, 2021 and December 31, 2020 (amounts in millions):

	September 30, 2021		December 31, 2020
Segment assets:
Material handling	$	249.6	$	221.5
Construction equipment		533.7		523.4
Corporate		4.1		1.3
Total assets	$	787.4	$	746.2

NOTE 18 — EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. We include all common shares granted under our share-based compensation plan which remain unvested (“restricted stock units”), in the number of shares outstanding for our diluted EPS calculations using the treasury method.

Basic and diluted earnings per share for the three months ended September 30, 2021, and 2020, and for the nine months ended September 30, 2021 and 2020 were calculated as follows (amounts in millions, except per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
(in millions, per share amounts)	2021			2020		2021			2020
Basic net (loss) income per share:
Net (loss) income	$	(0.5	)	$	0.3	$	(21.9	)	$	(20.8	)
Basic weighted average common shares outstanding		32,363,376			29,221,460		31,484,906			25,689,145
Basic net (loss) income per share of common stock:	$	(0.02	)	$	0.01	$	(0.69	)	$	(0.81	)
Diluted net (loss) income per share:
Net (loss) income	$	(0.5	)	$	0.3	$	(21.9	)	$	(20.8	)
Basic weighted average common shares outstanding		32,363,376			29,221,460		31,484,906			25,689,145
Effect of dilutive securities:
Effect of dilutive non-vested restricted stock units		—			89,214		—			—
Diluted weighted average common shares outstanding		32,363,376			29,310,674		31,484,906			25,689,145
Diluted net (loss) income per share of common stock:	$	(0.02	)	$	0.01	$	(0.69	)	$	(0.81	)

Securities excluded from the calculation of diluted loss per share were approximately 157,000 for the three months ended September 30, 2021, and approximately 155,000 and 54,000 for the nine months ended September 30, 2021 and 2020, respectively, because the inclusion of such securities in the calculation would have been anti-dilutive. There were no anti-dilutive securities during the three months ended September 30, 2020.

NOTE 19 — SUBSEQUENT EVENTS

On October 1, 2021, the Company closed its acquisition of all the assets of Gibson Machinery, LLC (“Gibson”), a privately held premium equipment distributor based in Oakwood Village, near Cleveland, Ohio. The purchase price for the acquisition was $15.5 million and consisted of $11.1 million of cash paid at closing. The Company assumed $4.4 million of equipment financing at closing. The purchase price is subject to certain post-close adjustments. Included in the purchased assets of Gibson are approximately $1.2 million worth of floorplan-eligible new equipment inventory, yielding an enterprise value at close of approximately $14.3 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report, and the audited consolidated financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. This discussion contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 reflecting Alta’s current expectations, estimates and assumptions concerning events and financial trends that may affect its future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward- looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict. 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.

Recent Developments

COVID-19

The economic volatility and disruptions caused by the COVID-19 pandemic caused an adverse effect on our business and our financial results in 2020. Our business activity levels, with the exception of rental utilization in certain geographies, stabilized in the third quarter of 2020 to near pre-COVID levels, and since that time have generally held at or, in certain geographies and departments, have gone beyond pre-COVID levels. Currently, our business is experiencing “recovery-related” supply-chain constraints that have affected some of our OEM equipment suppliers. Specifically, lead-times from OEMs for new equipment has been pushed beyond historic norms. While we believe our diversified cash flow streams, the breadth of our product portfolio, geographic reach and our ability to source used equipment will help mitigate the impact of the current supply-chain disruptions we are facing, an extended period or worsening of the supply chain issues our OEM equipment providers are experiencing could impact our financial results adversely. Although based on current business levels we believe the worst of the pandemic’s effect on our business to be behind us, uncertainty remains regarding emerging variant strains of COVID-19 and how long it will take for the COVID-19 pandemic to subside, including how quickly and completely vaccines will be broadly administered in the United States and the rest of the world, and the effectiveness of such vaccines in reducing the spread of COVID-19.

While our operations in the third quarter of 2021, in general, performed beyond pre-COVID levels, we will continue to monitor key performance metrics such as labor hour demand and rental utilization and, in-turn, rationalize our skilled labor and rental fleet levels to match expected demand for the remainder of 2021 and through the end of the COVID-19 pandemic.

We believe that the acquisitions and investments made in the calendar year 2020 and through the first three quarters of 2021, expanded our service capabilities, geographic reach, end market diversification and product offerings; each of which will ultimately strengthen our resiliency to economic shocks and will help to preserve liquidity over the long term.

Exchange of Warrants

Issuance of 5.625% Senior Secured Second Lien Notes due 2026

On April 1, 2021, we completed a private offering of $315 million of our 5.625% Senior Secured Second Lien Notes due 2026 (the “Notes”). 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 party thereto (the “Guarantors”) and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed by the Guarantors (the “Guarantees” and, together with the Notes, the “Securities”) on a second lien, senior secured basis. The Notes are guaranteed by each of our existing and future domestic subsidiaries that becomes a borrower or guarantor under our or the Guarantors’ indebtedness, including the Credit Agreements (as defined below), amended and restated concurrently with the closing of the Notes offering. 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 (as defined below) and the First Lien Floor Plan Facility (as defined below) 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 were issued pursuant to an indenture dated April 1, 2021 (the “Indenture”), among us, the Guarantors and Wilmington Trust, National Association, as trustee and as collateral agent. The Notes will bear interest at the rate of 5.625% per annum and will 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.

Amended and Restated Credit Arrangements

On April 1, 2021, in connection with the offering of the Notes, we entered into:

(i) a Sixth Amended and Restated ABL First Lien Credit Agreement, dated April 1, 2021, among us, our subsidiaries, JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders who are parties to the agreement (the “ABL Credit Agreement” and the facility thereunder, the “ABL Facility”); and

(ii) a Sixth Amended and Restated Floor Plan First Lien Credit Agreement among us, certain of our subsidiaries, JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders who are parties to the agreement (the “Floor Plan Credit Agreement” and the facility thereunder, the “First Lien Floor Plan Facility”).

The ABL Facility is an asset-based revolving loan facility that provides for borrowings of up to the lesser of $350 million or the borrowing base, in each case, less outstanding loans and letters of credit. The ABL Facility has a maturity date of the earlier of (a) April 1, 2026, or (b) December 1, 2025 if the Notes remain outstanding on December 1, 2025.

The Floor Plan Facility is an asset-based revolving loan facility related to the floor plan equipment that provides for borrowings of up to $40 million. 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.

Forward-Looking Statements

This Form 10-Q contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of federal securities laws, and are based on our current expectations and assumptions. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements are not intended to guaranty future performance and are subject to risks and uncertainties. Actual results may differ materially due to factors such as:

•

the impact of the COVID-19 outbreak or future epidemics on our business, including the potential for facility closures or work stoppages, supply chain disruptions, inflationary pressures resulting from supply chain disruptions or a tightening labor market, negative impacts on customer payment policies and adverse banking and governmental regulations, resulting in a potential reduction to the fair value of our assets;

•

federal, state, and local budget uncertainty, especially as it relates to infrastructure projects;

•

the performance and financial viability of key suppliers, contractors, customers, and financing sources;

•

economic, industry, business and political conditions including their effects on governmental policy and government actions that disrupt our supply chain or sales channels;

•

our success in identifying acquisition targets and integrating acquisitions;

•

our success in expanding into and doing business in additional markets;

•

our ability to raise capital at favorable terms;

•

the competitive environment for our products and services;

•

our ability to continue to innovate and develop new business lines;

•

our ability to attract and retain key personnel, including, but not limited to, skilled technicians;

•

our ability to maintain our listing on the New York Stock Exchange;

•

the impact of cyber or other security threats or other disruptions to our businesses; and

•

our ability to realize the anticipated benefits of acquisitions or divestitures, rental fleet investments or internal reorganizations.

These are only some of the factors that may affect the forward-looking statements contained in this Form 10-Q. For a discussion identifying additional important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see our filings with the SEC including, but not limited to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, our Quarterly Report on form 10-Q for the first two quarters of 2021 and in this Quarterly Report on Form 10-Q. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise.

Business Description

The Company owns and operates one of the largest integrated equipment dealership platforms in the U.S. Through our branch network, we sell, rent, and provide parts and service support for several categories of specialized equipment, including lift trucks and aerial work platforms, cranes, earthmoving equipment and other Material Handling and Construction Equipment. We engage in five principal business activities in these equipment categories:

(i)

new equipment sales;

(ii)

used equipment sales;

(iii)

parts sales;

(iv)

repair and maintenance services; and

(v)

equipment rentals.

We have operated as an equipment dealership for 37 years and have developed a branch network that includes over 55 locations in Michigan, Illinois, Indiana, Massachusetts, Maine, Connecticut, New Hampshire, Vermont, New York, Virginia, and Florida. We offer our customers a one-stop-shop for most of their equipment needs by providing sales, parts, service, and rental functions under one roof. More recently, with the acquisition of PeakLogix and subsequent acquisition of ScottTech, we have entered the warehouse design, automated equipment installation and system integration sector, which we believe has natural synergies with our Material Handling business and positions us to take advantage of the macroeconomic trend in warehousing and logistics, and e-commerce.

Within our territories, we are the exclusive distributor of new equipment and replacement parts on behalf of our OEM partners. We enjoy long-standing relationships with leading Material Handling and Construction Equipment OEMs, including Hyster-Yale, Volvo, and JCB, among more than 30 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.

Business Segments

We have two reportable segments: Material Handling and Construction Equipment. Our “Material Handling” segment has been previously reported as our “Industrial” segment. Our segments are determined based on management structure, which is organized based on types of products sold and customer end markets, as described in the following paragraph. The operating results for each segment are reported separately to our Chief Executive Officer (our chief operating decision maker) to make decisions regarding the allocation of resources, to assess our operating performance and to make strategic decisions.

The Material Handling segment is principally engaged in operations related to the sale, service, and rental of lift trucks in Michigan, Illinois, Indiana, New York, Virginia and throughout the New England states. The Material Handling segment is made up of the legal entities Alta Industrial Equipment Michigan, LLC, Alta Industrial Equipment Company, LLC, Alta Material Handling Upstate New York, LLC, PeakLogix, LLC, and Alta Industrial Equipment New York, LLC. The Construction Equipment segment is principally engaged in operations related to the sale, service, and rental of construction equipment in Michigan, Indiana, Illinois, New York, Florida and throughout the New England States. The Construction Equipment segment is made up of the legal entities Alta Construction Equipment, LLC, Alta Construction Equipment Illinois, LLC, Alta Heavy Equipment Services, LLC, Alta Construction Equipment Florida, LLC, Alta Construction Equipment Ohio, LLC and Alta Construction Equipment New York, LLC. As further explained below, NITCO, LLC, engages in operations related to both the Material Handling and the Construction Equipment segment within a common legal entity.

Alta Equipment Group Inc., Alta Equipment Holdings, Inc. and Alta Enterprises, LLC (individually or as sometimes collectively referred to as “Corporate”) are the holding companies for the legal operating entities noted above that make up each segment. In addition to being a holding company, Alta Enterprises, LLC also holds compensation (including shared based compensation) of our directors, corporate officers and certain members of our shared-services leadership team, consulting and legal fees related to acquisitions and capital raising activities, corporate governance and compliance related matters, certain corporate development related expenses and interest expense associated with original issue discounts and deferred financing cost related to previous capital raises and the Company’s income tax provision.

In connection with the purchase of NITCO LLC in 2019, the Company expanded its full-service material handling and construction equipment dealer operations into New England market. Given that the sales of the business was more heavily weighted to material handling versus construction and that NITCO’s reporting systems made it difficult for the construction business to be observed separate from the material handling operation, NITCO’s total financial results were historically presented within our Material Handling segment. On January 1, 2021, with the migration of the NITCO business to the Company’s main ERP system, the Company is now able to report the results for the Material Handling and Construction Equipment results within their respective segments for the NITCO business unit. As such, the Company has re-casted certain prior period segment-level results for the NITCO business unit to be consistent with the current period presentation for appropriate period-over-period comparability.

Acquisitions

Baron Industries

On September 1, 2021, the Company acquired Baron Industries (“Baron”), a privately held dock & door company, for a total purchase price of $1.3 million. Baron specializes in commercial overhead loading dock doors and equipment, hydraulic lifts, and vertical reciprocating conveyors. The acquisition is another step in the Company’s strategy to build out a full-service warehousing and logistics offering within the material handling segment.

SCOTTTECH, LLC (“ScottTech”)

On March 1, 2021, the Company acquired the assets of ScottTech, a Material Handling, warehouse control software, and turn-key warehouse system integration services provider, for a total purchase price of $2.4 million. The acquisition has natural synergies with the Company’s prior year acquisition of PeakLogix and further bolsters our capabilities with customers in the warehousing and logistics, distribution and e-commerce end-markets.

Vantage Equipment, LLC

On December 31, 2020, the Company acquired the assets of Vantage, a construction equipment dealer in Upstate New York, for a total purchase price of $24.3 million. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the total enterprise value at close was $22.6 million. The acquisition expands our construction equipment segment into the Upstate New York market, scales our relationship with a major OEM and diversifies the Company’s end markets.

Howell Tractor and Equipment, LLC

On October 30, 2020, the Company acquired the assets of Howell, a construction equipment and crane dealer in the greater Chicagoland area, for cash consideration of $23.0 million. Additionally, the Company issued 507,143 shares of its common stock in connection with the purchase agreement, valued at $4.0 million, yielding a total purchase price of approximately $27.0 million. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the total enterprise value at close was $23.7 million. This acquisition expands our presence in the Northern Illinois and Northwest Indiana markets adding a best-in-class product to our portfolio and additional service offerings.

Martin Implement Sales, Inc.

On September 1, 2020, the Company acquired the assets of Martin, a compact equipment dealer in the greater Chicagoland area, for a total purchase price of $16.1 million. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the total enterprise value at close was $10.6 million. This acquisition enhances our position in the Illinois construction market, broadens our product portfolio in the compact segment of the construction equipment market and adds valuable service capabilities in the region.

Hilo Equipment & Services

On July 1, 2020, the Company acquired the assets of Hilo, a Material Handling equipment dealer with three branches in the New York City metro area, for a total purchase price, net of cash, of $17.2 million, and potential additional earn-out payments of $1.0 million tied to post closing performance of the Hilo business. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the total enterprise value at close was $19.0 million. The acquisition aligns with our growth strategy by expanding our distribution footprint with a major OEM, giving us a strategic presence in yet another densely populated major market and strengthens our overall coverage of the Northeastern United States.

PeakLogix, Inc.

On June 12, 2020, the Company acquired the assets of PeakLogix, a warehouse design, automated equipment installation and systems integrator, for a total purchase price, net of cash, of $6.4 million, which includes $1.0 million in an unsecured one-year promissory note at 6% and earn-out payment of a minimum $2.0 million up to $3.7 million to be paid out to former owners based on meeting certain financial targets throughout the 5-year earn-out period. The acquisition represents the Company’s entrance into the automated equipment installation and system integration sector, which we believe has natural synergies with our Material Handling business and positions us to take advantage of the macroeconomic trend in warehousing and logistics, and e-commerce.

Liftech Equipment Companies, Inc.

On February 14, 2020, the Company acquired the assets of Liftech, a Material Handling equipment dealer in Upstate New York, for a total purchase price of $18.4 million, which was paid out of funds from closing of the reverse recapitalization. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the total enterprise value at close was $15.2 million. The acquisition primarily expands our materials handling segment into the Upstate New York market, scales our relationship with a major OEM and provides an opportunity for Alta to drive market share with allied products in the region.

FlaglerCE Holdings, LLC

On February 14, 2020, the Company acquired the assets of Flagler, a construction equipment dealer in Florida, for a total purchase price, net of cash, of $75.8 million, which was paid out of funds from the closing of the reverse recapitalization. Based on the purchase price and the amount of floorplan eligible new equipment inventory acquired in the transaction, the total enterprise value at close was $79.0 million. The acquisition expands our heavy equipment business into the Florida construction market, scales our relationship with a major OEM and provides an opportunity for us to deploy our aftermarket strategies in a robust and growing construction market in the southeastern United States.

Financial Statement Components

Our revenues and related costs are primarily derived from sale or rental of equipment and related activities, and consist of:

New Equipment Sales. We sell new heavy construction and Material Handling equipment and are a leading regional distributor for over 30 nationally recognized equipment manufacturers, including Hyster, Yale, Volvo, and JCB. 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. The sale of new equipment to customers, while profitable, acts as a means of generating equipment field population and activity for our higher-margin aftermarket revenue streams, specifically service and parts. We also sell tangential products related to our Material Handling equipment offerings and, with the acquisition of PeakLogix and ScottTech, we provide warehouse design, automated equipment installation, system integration and warehouse controls software.

Used Equipment Sales. 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 or financing lease arrangement, or, as is primarily the case in our Material Handling segment, equipment that has been designated for disposal and has been transferred to our used inventory from our rental fleet. Used equipment sales made in our territories, like new equipment sales, generate parts and services business for the Company, as well.

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 majority of our parts inventory is made up of OEM replacement parts for those OEM’s with which we have exclusive dealership agreements to sell new equipment.

Service Support. We provide maintenance and repair services for customer-owned equipment and we maintain our own rental fleet. 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 half of our employees are skilled service technicians. Training, paid time off, and other non-billable costs of maintaining our expert technicians flow through this department in addition to the direct customer-billable labor.

Equipment Rentals. We rent heavy construction, aerial, material handling, and compact equipment to our customers on a daily, weekly and monthly basis. 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 $454.4 million. The original acquisition cost of our rental fleet excludes the value 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. We also sell rental equipment from our rental fleet. Customers often have options to purchase equipment after or before rental agreements have matured. Rental equipment sales, like new and used equipment sales, generate customer-based equipment field population within our territories and ultimately yield high-margin parts and services revenue for us.

General and Administrative Expenses. These costs are comprised of three main components: personnel costs, operational costs, and occupancy costs. Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation, and employee benefits, including medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, personal property related insurance, information technology, office and shop supplies, general corporate costs, depreciation on non-sales and rental related assets, and intangible amortization. Occupancy costs are comprised of all expenses related to office and administrative working space, including rent, utilities, property taxes, and building insurance.

Other Income (Expense). This section of the financial statements is mostly comprised of interest expense and other miscellaneous items that result in income or expense. Interest expense is mostly driven by our OEM floorplan financing arrangements, a working capital line of credit, and a second lien term loan. Also included in this section of the financials are non-recurring costs, in particular expenses associated with the extinguishment of debt.

Results of Operations

Three and nine months ended September 30, 2021 compared to three and nine months ended September 30, 2020

Consolidated Results

	Three Months Ended September 30,						Increase (Decrease)						Nine Months Ended September 30,						Increase (Decrease)
	2021			2020			2021 versus 2020						2021			2020			2021 versus 2020
Revenues:
New and used equipment sales	$	136.8		$	97.9		$	38.9			39.7	%	$	392.6		$	275.2		$	117.4		42.7	%
Parts sales		44.8			35.5			9.3			26.2	%		130.3			92.3			38.0		41.2	%
Service revenue		41.9			35.5			6.4			18.0	%		123.0			94.1			28.9		30.7	%
Rental revenue		41.7			32.2			9.5			29.5	%		113.0			83.4			29.6		35.5	%
Rental equipment sales		29.8			19.5			10.3			52.8	%		97.6			48.2			49.4		102.5	%
Net revenue	$	295.0		$	220.6		$	74.4			33.7	%	$	856.5		$	593.2		$	263.3		44.4	%

Cost of revenues:
New and used equipment sales		114.3			84.4			29.9			35.4	%		333.3			240.3			93.0		38.7	%
Parts sales		30.5			24.3			6.2			25.5	%		89.8			63.3			26.5		41.9	%
Service revenue		17.3			13.5			3.8			28.1	%		48.2			35.9			12.3		34.3	%
Rental revenue		4.6			5.4			(0.8	)		(14.8	)%		15.3			14.8			0.5		3.4	%
Rental depreciation		22.2			19.2			3.0			15.6	%		62.9			47.1			15.8		33.5	%
Rental equipment sales		25.0			17.1			7.9			46.2	%		81.7			41.7			40.0		95.9	%
Cost of revenue	$	213.9		$	163.9		$	50.0			30.5	%	$	631.2		$	443.1		$	188.1		42.5	%

Gross profit	$	81.1		$	56.7		$	24.4			43.0	%	$	225.3		$	150.1		$	75.2		50.1	%

General and administrative expenses		72.9			58.4			14.5			24.8	%		209.4			153.2			56.2		36.7	%
Depreciation and amortization expense		2.2			1.8			0.4			22.2	%		6.3			4.5			1.8		40.0	%
Total general and administrative expenses	$	75.1		$	60.2		$	14.9			24.8	%	$	215.7		$	157.7		$	58.0		36.8	%

Income (loss) from operations	$	6.0		$	(3.5	)	$	9.5			(271.4	)%	$	9.6		$	(7.6	)	$	17.2		(226.3	)%

Other (expense) income
Interest expense, floor plan payable – new equipment		(0.4	)		(0.5	)		0.1			(20.0	)%		(1.4	)		(1.8	)		0.4		(22.2	)%
Interest expense – other		(5.6	)		(5.6	)		—			—			(16.2	)		(15.9	)		(0.3	)	1.9	%
Other income		0.2			8.0			(7.8	)		(97.5	)%		0.3			8.7			(8.4	)	(96.6	)%
Loss on extinguishment of debt		—			—			—		NA				(11.9	)		(7.6	)		(4.3	)	56.6	%
Total other (expense) income	$	(5.8	)	$	1.9		$	(7.7	)		(405.3	)%	$	(29.2	)	$	(16.6	)	$	(12.6	)	75.9	%

Income (loss) before taxes	$	0.2		$	(1.6	)	$	1.8			(112.5	)%	$	(19.6	)	$	(24.2	)	$	4.6		(19.0	)%

Income tax provision (benefit)		—			(1.9	)		1.9			(100.0	)%		0.5			(3.4	)		3.9		(114.7	)%

Net Income (loss)	$	0.2		$	0.3		$	(0.1	)		(33.3	)%	$	(20.1	)	$	(20.8	)	$	0.7		(3.4	)%

Preferred stock dividends		(0.7	)		—			(0.7	)		100.0	%		(1.8	)		—			(1.8	)	100.0	%
Net (loss) income available to common shareholders	$	(0.5	)	$	0.3		$	(0.8	)		(266.7	)%	$	(21.9	)	$	(20.8	)	$	(1.1	)	5.3	%

	Percent of Revenue						Percent of Revenue
Consolidated	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues:
New and used equipment sales		46.4	%		44.4	%		45.8	%		46.4	%
Parts sales		15.2	%		16.1	%		15.2	%		15.6	%
Service revenue		14.2	%		16.1	%		14.4	%		15.9	%
Rental revenue		14.1	%		14.6	%		13.2	%		14.0	%
Rental equipment sales		10.1	%		8.8	%		11.4	%		8.1	%
Net revenue		100.0	%		100.0	%		100.0	%		100.0	%

Cost of revenues:
New and used equipment sales		38.7	%		38.3	%		38.9	%		40.5	%
Parts sales		10.3	%		11.0	%		10.5	%		10.7	%
Service revenue		5.9	%		6.1	%		5.6	%		6.1	%
Rental revenue		1.6	%		2.4	%		1.8	%		2.5	%
Rental depreciation		7.5	%		8.7	%		7.4	%		7.9	%
Rental equipment sales		8.5	%		7.8	%		9.5	%		7.0	%
Cost of revenue		72.5	%		74.3	%		73.7	%		74.7	%

Gross profit		27.5	%		25.7	%		26.3	%		25.3	%

Revenues: Consolidated revenues increased by $74.4 million, or 33.7%, to $295.0 million for the three months ended September 30, 2021 as compared to the same period last year. The primary drivers of this period over period increase were the favorable full period impact from the acquisitions completed in 2020, the favorable business climate existing in the quarter, and the relative impact COVID-19 had on the 2020 comparative period. If excluding the effects of acquisition by observing the consolidated results on an organic basis, thereby including only the results of the entities that appear fully in both periods, new and used equipment sales increased 27.8% over the same period last year as market demand for equipment remains high, but lead time delays within the supply chain have limited our ability for even greater new equipment throughput, resulting in a large sales order backlog. Organic parts and service revenues increased by 8.7% and 9.2%, respectively, over the same period last year, as the impact of COVID-19 had an acute reduction on the aftermarket revenue streams in 2020. Similarly, rental revenue exhibited growth on an organic basis of 15.1% period over period as physical utilization trends improve and rental rates have increased amidst industry-wide delays in new equipment deliveries. Lastly, and in following with the pattern from the first and second quarter of 2021, rental equipment sales increased organically by 32.0% as we continue to actively manage our fleet mix, and our rent-to-sell model enables us to meet customer demand for lightly used equipment while lead times for new equipment are extended amid the global supply chain issues of many manufacturers. Importantly, despite macro-level supply chain issues, our robust parts inventory and ongoing parts availability from key OEMs has allowed us to continue to service customers and maintain profitability in our high margin product support departments.

Consolidated revenues increased by $263.3 million, or 44.4% to $856.5 million for the nine months ended September 30, 2021 as compared to the same period last year. The primary drivers of this period over period increase were the favorable full period impact from the acquisitions completed in 2020, the favorable business climate existing throughout much of 2021 and our ability to grow organically, and the relative influence the COVID-19 pandemic had on our 2020 comparative period.

	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
Consolidated	GP%			GP%			GP%			GP%			GP%			GP%
New and used equipment sales		16.4	%		13.8	%		2.6	%		15.1	%		12.7	%		2.4	%
Parts sales		31.9	%		31.5	%		0.4	%		31.1	%		31.4	%		(0.3	)%
Service revenue		58.7	%		62.0	%		(3.3	)%		60.8	%		61.8	%		(1.0	)%
Rental revenue		35.7	%		23.6	%		12.1	%		30.8	%		25.8	%		5.0	%
Rental equipment sales		16.1	%		12.3	%		3.8	%		16.3	%		13.5	%		2.8	%

Consolidated gross profit		27.5	%		25.7	%		1.8	%		26.3	%		25.3	%		1.0	%

Gross profit (GP):

The consolidated gross profit for the three months ended September 30, 2021 was 27.5%, a 1.8% increase from the 25.7% for the same period in 2020, which represents an increase of 1.2% in comparison to the second quarter of 2021. New and used equipment sales, as well as rental equipment sales, margins improved slightly in the third 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, was a larger portion of equipment sales for the quarter versus the same period last year. We realized an increase in rental revenue gross margin in the third quarter of 2021, largely as a result improved physical utilization of the rental fleet and our updated depreciation method as described in our Note 2 to the Consolidated Financial Statements. Additionally, parts sales gross margins improved modestly while service gross margins reduced, in part 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 nine months ended September 30, 2021 was 26.3%, a 1.0% increase from the 25.3% for the same period in 2020.

General and Administrative expenses: Consolidated general and administrative (G&A) expenses increased by $14.9 million to $75.1 million for the three months ended September 30, 2021 compared to the same period last year. This increase was mainly driven by the full period impact from our 2020 acquisitions as well as an increases in certain sales-based expenses such as sales commissions and technician operating costs (i.e. vehicle leases, repairs, and fuel), along with benefits-related costs from a rise in employees seeking healthcare postponed from 2020 due to the COVID-19 pandemic. Further, certain temporary cost-saving measures were in place in the three months ended September 30, 2020, including but not limited to a reduction in executive-level compensation, travel and entertainment restrictions, discretionary spending freezes, and a suspension of matching contributions into the 401(k), which assisted in defraying the reductions in revenue amid the more acute phases of the COVID-19 pandemic, while such measures were not in place in the three months ended September 30, 2021.

Consolidated general and administrative (G&A) expenses increased by $58.0 million to $215.7 million for the nine months ended September 30, 2021 compared to the same period last year.

Other (expense) income: Consolidated other expense for the three months ended September 30, 2021 was $(5.8) million compared to $1.9 million income for the same period in 2020. This change was mainly attributed to the $8.0 million in key man life insurance proceeds received in the third quarter of 2020 as a result of the passing of our Construction Group President.

Consolidated other expense for the nine months ended September 30, 2021 increased by $12.6 million compared to the same period last year. The year over year change was primarily attributable to the $11.9 million loss on debt extinguishment realized in the nine months ended September 30, 2021 and the aforementioned key man life insurance proceeds received in the third quarter of 2020.

Provision for income taxes: The Company recorded an income tax provision of $0.0 million and benefit of $1.9 million for the three months ended September 30, 2021, and 2020, respectively. Income tax provision for the nine months ended September 30, 2021 was $0.5 million compared to the income tax benefit of $3.4 million for the nine months ended September 30, 2020. This change is due to establishing valuation allowance within the period against the deferred tax assets associated with losses for which we may not realize a related tax benefit in 2021.

Preferred Stock Dividend: Preferred stock dividends were $0.7 million for the three months ended September 30, 2021. This relates to the Company’s dividend payout on its Series A Preferred Stock that it issued on December 22, 2020. The dividend payment paid on August 2, 2021, covered the period from and including April 30, 2021 through, but not including July 31, 2021.

Preferred stock dividends were $1.8 million for the nine months ended September 30, 2021.

Material Handling Results:

	Three Months Ended September 30,						Increase (Decrease)					Nine Months Ended September 30,						Increase (Decrease)
	2021			2020			2021 versus 2020					2021			2020			2021 versus 2020
Revenues:
New and used equipment sales	$	57.2		$	53.1		$	4.1		7.7	%	$	174.7		$	137.5		$	37.2		27.1	%
Parts sales		16.8			15.4			1.4		9.1	%		47.7			40.2			7.5		18.7	%
Service revenue		23.7			22.1			1.6		7.2	%		70.4			58.5			11.9		20.3	%
Rental revenue		12.6			11.0			1.6		14.5	%		35.1			31.2			3.9		12.5	%
Rental equipment sales		—			1.4			(1.4	)	(100.0	)%		0.8			6.0			(5.2	)	(86.7	)%
Net revenue	$	110.3		$	103.0		$	7.3		7.1	%	$	328.7		$	273.4		$	55.3		20.2	%

Cost of revenues:
New and used equipment sales		44.3			43.6			0.7		1.6	%		139.3			116.4			22.9		19.7	%
Parts sales		10.8			9.7			1.1		11.3	%		30.8			25.5			5.3		20.8	%
Service revenue		9.8			8.1			1.7		21.0	%		26.9			21.2			5.7		26.9	%
Rental revenue		1.2			2.0			(0.8	)	(40.0	)%		4.4			5.6			(1.2	)	(21.4	)%
Rental depreciation		3.5			4.6			(1.1	)	(23.9	)%		10.5			12.5			(2.0	)	(16.0	)%
Rental equipment sales		—			0.8			(0.8	)	(100.0	)%		0.6			4.4			(3.8	)	(86.4	)%
Cost of revenue	$	69.6		$	68.8		$	0.8		1.2	%	$	212.5		$	185.6		$	26.9		14.5	%

Gross profit	$	40.7		$	34.2		$	6.5		19.0	%	$	116.2		$	87.8		$	28.4		32.3	%

General and administrative expenses		35.0			29.8			5.2		17.4	%		102.6			76.0			26.6		35.0	%
Depreciation and amortization expense		1.1			1.0			0.1		10.0	%		3.1			2.5			0.6		24.0	%
Total general and administrative expenses	$	36.1		$	30.8		$	5.3		17.2	%	$	105.7		$	78.5		$	27.2		34.6	%

Income from operations	$	4.6		$	3.4		$	1.2		35.3	%	$	10.5		$	9.3		$	1.2		12.9	%

Other (expense) income
Interest expense, floor plan payable – new equipment		(0.2	)		(0.2	)		—		—			(0.5	)		(0.7	)		0.2		(28.6	)%
Interest expense – other		(1.8	)		(1.1	)		(0.7	)	63.6	%		(5.6	)		(3.3	)		(2.3	)	69.7	%
Other income		0.8			—			0.8		100.0	%		2.3			0.4			1.9		475.0	%
Total other (expense) income	$	(1.2	)	$	(1.3	)	$	0.1		(7.7	)%	$	(3.8	)	$	(3.6	)	$	(0.2	)	5.6	%

Net income	$	3.4		$	2.1		$	1.3		61.9	%	$	6.7		$	5.7		$	1.0		17.5	%

	Percent of Revenue						Percent of Revenue
Material Handling	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues:
New and used equipment sales		51.9	%		51.5	%		53.2	%		50.3	%
Parts sales		15.2	%		14.9	%		14.5	%		14.7	%
Service revenue		21.5	%		21.5	%		21.4	%		21.4	%
Rental revenue		11.4	%		10.7	%		10.7	%		11.4	%
Rental equipment sales		—			1.4	%		0.2	%		2.2	%
Net revenue		100.0	%		100.0	%		100.0	%		100.0	%

Cost of revenues:
New and used equipment sales		40.1	%		42.3	%		42.4	%		42.6	%
Parts sales		9.8	%		9.4	%		9.4	%		9.3	%
Service revenue		8.9	%		7.9	%		8.2	%		7.8	%
Rental revenue		1.1	%		1.9	%		1.3	%		2.0	%
Rental depreciation		3.2	%		4.5	%		3.2	%		4.6	%
Rental equipment sales		—			0.8	%		0.1	%		1.6	%
Cost of revenue		63.1	%		66.8	%		64.6	%		67.9	%

Gross profit		36.9	%		33.2	%		35.4	%		32.1	%

Revenues: Material Handling segment revenues increased by 7.1% to $110.3 million for the three months ended September 30, 2021 as compared to the same period last year. Overall, revenue streams were up primarily from the ScottTech acquisition, overall growth in PeakLogix’s design and build project revenue and a recovery from the COVID-19 impact that negatively influenced Material Handling revenues in the third quarter of 2020. On an organic basis, and despite supply chain delays, new and used equipment sales increased 0.5%. Aftermarket parts and service revenues increased 5.0% organically when comparing to the same period last year. Rental revenue increased 14.2% on an organic basis from the same period last year as a result of improved fleet utilization and an increased rental rate environment.

Material Handling segment revenues increased by 20.2% to $328.7 million for the nine months ended September 30, 2021 as compared to the same period last year, attributable to the influence of the two acquisitions made in 2021 and a recovery from the influence of COVID-19 on 2020 results.

Gross profit (GP):

	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
	GP%			GP%			GP%			GP%			GP%			GP%
New and used equipment sales		22.6	%		17.9	%		4.7	%		20.3	%		15.3	%		5.0	%
Parts sales		35.7	%		37.0	%		(1.3	)%		35.4	%		36.6	%		(1.2	)%
Service revenue		58.6	%		63.3	%		(4.7	)%		61.8	%		63.8	%		(2.0	)%
Rental revenue		62.7	%		40.0	%		22.7	%		57.5	%		42.0	%		15.5	%
Rental equipment sales	NA				42.9	%	NA				25.0	%		26.7	%		(1.7	)%

Segment gross profit		36.9	%		33.2	%		3.7	%		35.4	%		32.1	%		3.3	%

Material Handling gross profit for the three months ended September 30, 2021 increased 3.7% to 36.9% compared to the same period in 2020. We realized improved new and used equipment gross margin in the third quarter of 2021 when compared to the same period in 2020 as retail pricing for equipment has strengthened amid increased demand for equipment and a dearth of new supply. Increased equipment margins for the three months ended September 30, 2021 are also attributable to Peaklogix and ScottTech’s influence, as their design and build projects realize higher margins than traditional lift truck sales. We also realized an increase in rental revenue gross margin in the third quarter of 2021 as cost of revenues decreased, mainly due to our updated depreciation method as described in our Note 2 to the Consolidated Financial Statements. Service revenue gross profit margins decreased by 4.7% while the parts sales gross profit margins decreased by 1.3% in the third quarter of 2021 compared to the same period in 2020. 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 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 margins for the nine months ended September 30, 2021 increased 3.3% to 35.4% compared to the same period in 2020 for the aforementioned reasons.

General and administrative expenses: Material Handling general and administrative (G&A) expenses increased by $5.3 million to $36.1 million for the three months ended September 30, 2021 as compared to the same period last year. This change was mainly driven by the ScottTech acquisition in Q1 2021 and higher employee benefit related expenses attributable to the growing number of medical expenditures, and the impact of increased technology expenses associated with the launch of our mobile tech platform for field technicians. Additionally, many cost-saving measures were enacted in the second and third quarters of 2020 which assisted in defraying the reductions in revenue amid the most acutely impacted periods of the COVID-19 pandemic. These measures were not in place during the three months ended September 30, 2021.

Material Handling general and administrative (G&A) expenses increased by 34.6% to $105.7 million for the nine months ended September 30, 2021, as compared to the same period last year for the same reasons as discussed above.

Other (expense) income: Material Handling other expense decreased by $0.1 to $1.2 million for the three months ended September 30, 2021, as compared to the same period last year.

Material Handling other expense increased by $0.2 million to $3.8 million for the nine months ended September 30, 2021, as compared to the same period last year.

Construction Equipment Results

	Three Months Ended September 30,						Increase (Decrease)					Nine Months Ended September 30,						Increase (Decrease)
	2021			2020			2021 versus 2020					2021			2020			2021 versus 2020
Revenues:
New and used equipment sales	$	79.6		$	44.8		$	34.8		77.7	%	$	217.9		$	137.7		$	80.2		58.2	%
Parts sales		28.0			20.1			7.9		39.3	%		82.6			52.1			30.5		58.5	%
Service revenue		18.2			13.4			4.8		35.8	%		52.6			35.6			17.0		47.8	%
Rental revenue		29.1			21.2			7.9		37.3	%		77.9			52.2			25.7		49.2	%
Rental equipment sales		29.8			18.1			11.7		64.6	%		96.8			42.2			54.6		129.4	%
Net revenue	$	184.7		$	117.6		$	67.1		57.1	%	$	527.8		$	319.8		$	208.0		65.0	%

Cost of revenues:
New and used equipment sales		70.0			40.8			29.2		71.6	%		194.0			123.9			70.1		56.6	%
Parts sales		19.7			14.6			5.1		34.9	%		59.0			37.8			21.2		56.1	%
Service revenue		7.5			5.4			2.1		38.9	%		21.3			14.7			6.6		44.9	%
Rental revenue		3.4			3.4			—		—			10.9			9.2			1.7		18.5	%
Rental depreciation		18.7			14.6			4.1		28.1	%		52.4			34.6			17.8		51.4	%
Rental equipment sales		25.0			16.3			8.7		53.4	%		81.1			37.3			43.8		117.4	%
Cost of revenue	$	144.3		$	95.1		$	49.2		51.7	%	$	418.7		$	257.5		$	161.2		62.6	%

Gross profit	$	40.4		$	22.5		$	17.9		79.6	%	$	109.1		$	62.3		$	46.8		75.1	%

General and administrative expenses		35.5			26.8			8.7		32.5	%		99.0			65.1			33.9		52.1	%
Depreciation and amortization expense		1.1			0.8			0.3		37.5	%		3.2			2.0			1.2		60.0	%
Total general and administrative expenses	$	36.6		$	27.6		$	9.0		32.6	%	$	102.2		$	67.1		$	35.1		52.3	%

Income (expense) from operations	$	3.8		$	(5.1	)	$	8.9		(174.5	)%	$	6.9		$	(4.8	)	$	11.7		(243.8	)%

Other (expense) income
Interest expense, floor plan payable – new equipment		(0.2	)		(0.3	)		0.1		(33.3	)%		(0.9	)		(0.9	)		—		—
Interest expense – other		(3.2	)		(2.5	)		(0.7	)	28.0	%		(9.2	)		(7.2	)		(2.0	)	27.8	%
Other (expense) income		(0.6	)		—			(0.6	)	(100.0	)%		(2.0	)		0.3			(2.3	)	(766.7	)%
Total other (expense) income	$	(4.0	)	$	(2.8	)	$	(1.2	)	42.9	%	$	(12.1	)	$	(7.8	)	$	(4.3	)	55.1	%

Net loss	$	(0.2	)	$	(7.9	)	$	7.7		(97.5	)%	$	(5.2	)	$	(12.6	)	$	7.4		(58.7	)%

	Percent of Revenue						Percent of Revenue
Construction Equipment	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues:
New and used equipment sales		43.1	%		38.1	%		41.3	%		43.1	%
Parts sales		15.2	%		17.1	%		15.6	%		16.3	%
Service revenue		9.8	%		11.4	%		10.0	%		11.1	%
Rental revenue		15.8	%		18.0	%		14.8	%		16.3	%
Rental equipment sales		16.1	%		15.4	%		18.3	%		13.2	%
Net revenue		100.0	%		100.0	%		100.0	%		100.0	%

Cost of revenues:
New and used equipment sales		37.9	%		34.7	%		36.7	%		38.7	%
Parts sales		10.7	%		12.4	%		11.2	%		11.8	%
Service revenue		4.1	%		4.6	%		4.0	%		4.6	%
Rental revenue		1.8	%		2.9	%		2.1	%		2.9	%
Rental depreciation and amortization		10.1	%		12.4	%		9.9	%		10.8	%
Rental equipment sales		13.5	%		13.9	%		15.4	%		11.7	%
Cost of revenue		78.1	%		80.9	%		79.3	%		80.5	%

Gross profit		21.9	%		19.1	%		20.7	%		19.5	%

Revenues: Construction Equipment segment revenues increased by 57.1% to $184.7 million for the three months ended September 30, 2021 as compared to the same period last year. This increase was mainly attributable to the full period results from the Martin, Howell and Vantage acquisitions that occurred throughout the second half of 2020. The Construction Equipment segment, which was less operationally impacted by COVID-19 versus our Material Handling segment, was also quicker to recover from the impact of the COVID-19 pandemic than our Material Handling segment and from an equipment sales perspective has been relatively less impacted by the supply chain constraints. On an organic basis, new and used equipment sales increased 65.8%, with a sharp increase in our Florida region, and parts and service revenues are up 14.8% when comparing to the same period last year, as we have realized increased technician headcount on an organic basis. Rental revenue has increased on an organic basis of 15.8%, and rental equipment sales increased 43.3% from the same time a year ago on an organic basis. Our rental department experienced an increase in both utilization and rate improvement, along with an increase in the demand for customers seeking the purchase of lightly used equipment amid OEM production shortages for new equipment. Sustaining our rental fleet size throughout the COVID-19 pandemic has proven beneficial to our 2021 results as we are well-positioned to secure rental and sales opportunities in a strong pricing environment.

Construction Equipment segment revenues increased by 65.0% to $527.8 million for the nine months ended September 30, 2021 as compared to the same period last year.

Gross profit (GP):

	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change
	GP%			GP%			GP%			GP%			GP%			GP%
New and used equipment sales		12.1	%		8.9	%		3.2	%		11.0	%		10.0	%		1.0	%
Parts sales		29.6	%		27.4	%		2.2	%		28.6	%		27.4	%		1.2	%
Service revenue		58.8	%		59.7	%		(0.9	)%		59.5	%		58.7	%		0.8	%
Rental revenue		24.1	%		15.1	%		9.0	%		18.7	%		16.1	%		2.6	%
Rental equipment sales		16.1	%		9.9	%		6.2	%		16.2	%		11.6	%		4.6	%

Segment gross profit		21.9	%		19.1	%		2.8	%		20.7	%		19.5	%		1.2	%

Construction Equipment gross profit increased by 2.8% to 21.9% in the three months ended September 30, 2021, from 19.1% compared to the same period in 2020. New and used equipment sales margins as well as parts margins improved compared to the same period in 2020 amidst a supply-constrained marketplace causing retail prices to rise. Service revenue margins were down 0.9% in the third quarter of 2021 compared to the same period in 2020, but remain in line with expectations. Rental revenue gross margins improved amid strengthening physical utilization and a positive rate environment. Additionally, rental equipment sales gross margin improved by 6.2% as favorable pricing conditions exist in the market for lightly used equipment.

Construction Equipment gross profit increased by 1.2% to 20.7% in the nine months ended September 30, 2021, from 19.5% compared to the same period in 2020.

General and Administrative expenses: Construction Equipment general and administrative (G&A) expenses increased by $9.0 million to $36.6 million for the three months ended September 30, 2021, as compared to the same period in 2020. The quarter over quarter increase was mainly attributable to the full period G&A impact as a result of the construction segment acquisitions of Martin, Howell and Vantage throughout the second half of 2020, alongside employee healthcare costs and growth in sales-related expenses such as commissions and the impacts of increasing technician headcount, such as vehicle costs.

Construction Equipment general and administrative (G&A) expenses increased by $35.1 million to $102.2 million for the nine months ended September 30, 2021, as compared to the same period in 2020 for the same reasons as discussed above.

Other Income (expense): Construction Equipment other expense increased by $1.2 million to $4.0 million for the three months ended September 30, 2021, as compared to the same period in 2020. The quarter over quarter increase was mainly due to the interest expense respective to the 2020 acquisitions, as assets were financed through our line of credit and floorplan financing facilities.

Construction Equipment other expense increased to $12.1 million for the nine months ended September 30, 2021, as compared to $7.8 million for the same period in 2020, primarily for the same reasons as discussed above.

Liquidity and Capital Resources

Nine months ended September 30, 2021 compared with nine months ended September 30, 2020 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 nine months ended September 30, 2021, operating activities resulted in net cash provided by operations of $4.1 million. Our reported net loss of $20.1 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, debt extinguishment, changes in deferred taxes and the share-based payments, provided net cash inflows of $53.2 million. Changes in working capital included $116.0 million of net new inventory purchased which was offset by transfers of $135.2 million to used and rental fleet, a $33 million increase in accounts receivable, $9.6 million unfavorable change in prepaid expenses and other assets and leases and other liabilities and $5.9 million in net payments related to manufacturer floor plans. Cash flows from operating activities were favorably impacted by $97.6 million due to proceeds from the sale of rental equipment, a $17.8 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities.

For the nine months ended September 30, 2020, operating activities resulted in net cash used in operations of $44.8 million. Our reported net loss of $20.8 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, former debt extinguishment, and the share-based payments, provided net cash inflows of $28.9 million. Changes in working capital included a $102.8 million increase in inventories, $32.6 million in net payments on manufacturer floor plans, and an $8.6 million cash outflow in prepaid expense and other assets and other liabilities. Cash flows from operating activities were impacted by a $48.2 million favorable change in proceeds from the sale of rental equipment, a $6.2 million favorable change in accounts receivable, and a $15.9 million cash inflows from accounts payable, accrued expenses, customer deposits, and other current liabilities.

Cash Flow from Investing Activities. For the nine months ended September 30, 2021, our cash used in investing activities was $40.4 million. This was mainly due to $36.5 million purchases of rental equipment and non-rental property and equipment offset by proceeds from the sale of assets and $3.9 million use of cash for the recent ScottTech and Baron acquisitions and Howell and Vantage acquisitions working capital adjustments.

For the nine months ended September 30, 2020, our cash used in investing activities was $166.3 million. This was mainly due to $128.8 million use of cash as a result of the 2020 acquisitions and $38.5 million for purchases of rental equipment and non-rental property and equipment.

Cash Flow from Financing Activities. For the nine months ended September 30, 2021, cash provided by financing activities was $36.3 million. The favorable impact was mainly due to $310.2 million net proceeds from the Notes issuance. This was partially offset by $153.1 million payments related to the extinguishment of term loan, $112.3 million of net payments under our lines of credits, net payments of $1.6 million related to the floor plans with an unaffiliated source (i.e. a non-vendor), $2.6 million payments

on long term debt and capital lease obligations, $2.8 million payments related to preferred dividend and promissory notes, and $1.5 million of payments related to debt issuance costs.

For the nine months ended September 30, 2020, cash provided by financing activities was $211.2 million. The favorable impact was mainly due to $175.7 million proceeds from the completion of the reverse recapitalization. Net proceeds under our lines of credits and floor plans with an unaffiliated source (i.e. a non-vendor) were $147.4 and $2.2 million, respectively. Net proceeds under long-term debt amounted to $149.4 million. Additionally, proceeds from disgorgement of short swing profits was $1.6 million. This was partially offset by payments related to the extinguishment of former debt, a line of credit and redemption of former shareholders’ notes payable all of which totaled $221.6 million, an extinguishment of a warrant liability of $29.6 million, expenditures of debt issuance costs of $2.7 million, repurchases of common stock of $5.9 million and a $5.3 million payment on long term debt and capital lease obligations.

Sources of Liquidity

The Company reported $1.2 million in cash for the nine months ended September 30, 2021.

On April 1, 2021, the Company completed a private offering of $315 million of its 5.625% Senior Secured Second Lien Notes due 2026 (the “Notes”). 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 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.

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 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. Subject to the borrowing base limitation in the Amended and Restated Credit Agreement, the ABL Facility provides borrowings of up to $350 million and matures on the earlier of April 1, 2026 or December 1, 2025 if any of the Notes remain outstanding as of December 1, 2025.

In connection with the offering of the Notes and the Amended and Restated Credit Agreement, 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, 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 the floor plan equipment that provides for borrowings of up to the lesser of $40 million 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.

Line of Credit and First Lien Floor Plan Facility

The Company has a revolving line of credit with its 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. The revolving line of credit has a maximum borrowing capacity of $350 million and interest cost is the London Interbank Offered Rate (“LIBOR”) plus an applicable margin or the CB Floating Rate, depending on the borrowing. As of September 30, 2021, the Company had an outstanding revolving line of credit balance of $47.8 million, excluding unamortized debt issuance costs.

The Company has a First Lien Floor Plan Facility with its first lien lender to primarily finance new inventory. This First Lien Floor Plan Facility has a maximum borrowing capacity of $40 million. The interest cost for the First Lien Floor Plan Facility is LIBOR plus an applicable margin. The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company. As of September 30, 2021, the Company had an outstanding balance on their First Lien Floor Plan Facility of $33.8 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 $2.0 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.

Maximum borrowings under the floor plans and the revolving line of credit are limited to $600 million. The total amount outstanding as of September 30, 2021 and December 31, 2020 was $197.4 million and $316.6 million, exclusive of debt issuance and deferred financings costs of $2.6 million and $1.5 million, respectively

Senior Secured Second Lien Notes

As of September 30, 2021, outstanding borrowings under the Senior Secured Second Lien Notes were $309.7 million, which included $5.3 million deferred financing costs and original issue discounts. As of September 30, 2021, the effective interest rate on the Notes, taking into account the original issue discount, is 5.93%.

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 flooring plans payable, fund acquisitions, and meet debt service requirements. 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 September 30, 2021 was approximately $166.1 million, including $ 135.2 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 $97.6 million for the period ended September 30, 2021 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. As of September 30, 2021, we had $371.6 million of available borrowings under the revolving line of credit and floor plans.

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 September 30, 2021, there was $1.4 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 various third-party leasing companies. The terms of the guarantees range from two to six 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 $1.7 million and $2.4 million at September 30, 2021 and December 31, 2020, 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 Consolidated Balance Sheets at September 30, 2021 and December 31, 2020, respectively.

Critical accounting policies

In the preparation of consolidated financial statements prepared in conformity with U.S. generally accepted accounting principles (“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 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.

The Company updated the depreciable useful lives of certain of its rental equipment product categories based on our year-end analysis of fair value relative to book value, prior-year utilization trends and a review of market participants approach to depreciation for similar products. Per our accounting policy the updates to depreciable useful lives will be adjusted on prospective basis. Specifically, the notable changes for 2021 will be extending the depreciable life on lift trucks in our Material Handling segment to 84 months, extending the depreciable life on certain aerial and crane related assets in our construction segment to 120 months and

applying straight-line depreciation to underutilized construction equipment assets that are being depreciated on a unit-of-activity basis to the extent the assets meet certain underutilized thresholds. Refer to Part I, Item 1, Note 2 of the Notes to our Consolidated Financial Statements for disclosures regarding the use of estimates and assumptions.

See Note 2 to the audited consolidated financial statements contained in the Company’s 2020 Annual Report on Form 10-K for a summary of our significant accounting policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Rule 10(f)(1) of Regulation S-K, the Company is not required to provide this information.

Item 4. Controls and Procedures.

Management’s Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) and 15d-15(e)) that are designed to provide reasonable assurance that information required to be disclosed by us 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 SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Other than routine legal proceedings incident to our business, there are no material legal proceedings to which we are a party or to which any of our property is subject.

Item 1A. Risk Factors.

We face a number of uncertainties and risks that are difficult to predict and many of which are outside of our control. For a detailed discussion of the risks that affect our business, please refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. There have been no material changes from the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number		Description
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
EX-104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ALTA EQUIPMENT GROUP INC.

Date: November 12, 2021	By:	/s/ Anthony J. Colucci
		Anthony J. Colucci
		Chief Financial Officer (Principal Financial Officer)