What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 178 added, 142 removed, 696 unchanged (31% of the section changed)

4 unchanged sentences

(in millions, except share and per share amounts)

September 30,

CURRENT ASSETS

Accounts receivable, net of allowances of $ 9.4 and $ 7.1 as of June 30, 2021 and December 31, 2020, respectively

Accounts receivable, net of allowances of $ 9.9 and $ 7.1 as of September 30, 2021 and December 31, 2020, respectively

Inventories, net

25 unchanged sentences

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 June 30, 2021 and December 31, 2020

Common stock, $ 0.0001 par value, 200,000,000 shares authorized;

32,363,376 issued and outstanding at June 30, 2021, 30,018,502 issued and outstanding at December 31, 2020

32,363,376 issued and outstanding at September 30, 2021, 30,018,502 issued and outstanding at December 31, 2020

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in millions, except share and per share amounts)

18 unchanged sentences

Loss on extinguishment of debt

Total other income (expense)

Loss before taxes

Total other (expense) income

Income (loss) before taxes

Income tax provision (benefit)

Net Income (loss)

Preferred stock dividends

Net loss available to common shareholders

Basic loss per share

Diluted loss per share

Net (loss) income available to common shareholders

Basic (loss) income per share

Diluted (loss) income per share

Basic weighted average common shares outstanding

4 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Preferred Stock

3 unchanged sentences

Equity (Deficit)

Balance at March 31, 2021

Balance at June 30, 2021

Dividends on preferred stock

Share based compensation

Warrants exchanged into common stock

Issuance of restricted stock units to employees

Balance at June 30, 2021

Three Months Ended June 30, 2020

Balance at September 30, 2021

Three Months Ended September 30, 2020

Preferred Stock

3 unchanged sentences

Equity (Deficit)

Balance at March 31, 2020

Opening deferred tax liabilities under reverse recapitalization

Disgorgement of short swing profits

Balance at June 30, 2020

Six Months Ended June 30, 2021

Share based compensation

Repurchases of common stock

Balance at September 30, 2020

Nine Months Ended September 30, 2021

Preferred Stock

8 unchanged sentences

Issuance of restricted stock units to employees

Balance at June 30, 2021

Six Months Ended June 30, 2020

Balance at September 30, 2021

Nine Months Ended September 30, 2020

Preferred Stock

8 unchanged sentences

Disgorgement of short swing profits

Share based compensation

Repurchases of common stock

Balance at June 30, 2020

Balance at September 30, 2020

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(amounts in millions)

5 unchanged sentences

Imputed interest

Gain on sale of assets

Gain on sale of rental equipment

58 unchanged sentences

Alta Heavy Equipment Services, LLC;

Alta Construction Equipment Florida, LLC, and Alta Construction Equipment New York, 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.

6 unchanged sentences

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 six months ended June 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.

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 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 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.

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.

4 unchanged sentences

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 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.

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.

3 unchanged sentences

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 June 30, 2021.

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.

5 unchanged sentences

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 June 30, 2021.

The Company was formed in 2020 for income tax purposes.

23 unchanged sentences

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.

Management is currently assessing the impact the adoption of this standard will have on the Company’s consolidated financial statements as well as the available transition methods.

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)

7 unchanged sentences

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 on or after December 15, 2022.

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.

20 unchanged sentences

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 June 30, 2021 and December 31, 2020, the total lease liability relating to these various equipment sale transactions amounted to $ 3.1 million and $ 3.8 million, respectively.

The Company also recognized a liability for its guarantee to repurchase the equipment at the residual amounts of $ 7.7 million and $ 9.0 million as of June 30, 2021 and December 31, 2020, respectively.

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.

22 unchanged sentences

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 June 30, 2021 and December 31, 2020 was $ 13.1 million and $ 9.6 million, respectively.

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 June 30, 2021 and 2020 by revenue type, and by the applicable accounting standard.

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

June 30, 2021

September 30, 2021

Three Months Ended

June 30, 2020

September 30, 2020

New and used equipment sales

2 unchanged sentences

Rental equipment sales

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

Six months ended

June 30, 2021

Six months ended

June 30, 2020

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

New and used equipment sales

21 unchanged sentences

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 $ 21.4 million and $ 0.5 million in revenues for the six month period ended June 30, 2021 and 2020, respectively and approximately $ 13.5 million and $ 0.5 million in revenues for the three month period ended June 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.

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.

Revenues from the sale of parts are recognized at the time of pick-up by the customer for over-the-counter sales transactions.

5 unchanged sentences

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 $ 8.9 million and $ 7.8 million for the six-month period ended June 30, 2021, and 2020, respectively and $ 4.6 million and $ 3.8 million for the three-month period ended June 30, 2021, and 2020, respectively.

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:

24 unchanged sentences

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 six months ended June 30, 2021 and June 30, 2020 was $ 2.4 million and for both the three months ended June 30, 2021 and June 30, 2020 was $ 1.2 million.

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,

New equipment

3 unchanged sentences

Inventory reserves

Direct labor of $ 0.7 million and $ 1.7 million incurred for open service orders were capitalized and included in work in process at June 30, 2021 and December 31, 2020, respectively.

The remaining work in process balances as of June 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 $ 1.2 million and $ 3.2 million for the three and six months ended June 30, 2021 and was $ 0.7 million and $ 1.5 million for the three and six months ended June 30, 2020.

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,

Equipment and leasehold improvements:

7 unchanged sentences

Total accumulated depreciation and amortization

Total depreciation and amortization on property and equipment was $ 40.1 million and $ 28.4 million for the six months ended June 30, 2021, and 2020 and $ 21.4 million and $ 14.6 million for the three months ended June 30, 2021, and 2020, respectively.

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 $ 2.6 million and $ 2.5 million, as of June 30, 2021, and December 31, 2020, respectively.

Of the $ 445.4 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 June 30, 2021, and December 31, 2020, respectively.

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 June 30, 2021, and December 31, 2020 (amounts in millions):

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):

Balance, December 31, 2020

Adjustments to purchase price allocations

Balance, June 30, 2021

Balance, September 30, 2021

See Note 16, Business Combinations for further information.

NOTE 8 — INTANGIBLE ASSETS

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

June 30, 2021

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

4 unchanged sentences

Favorable market rent

Amortization of intangible assets were $ 0.8 million and $ 1.5 million for the three and six months ended June 30, 2021, and $ 0.6 million and $ 0.7 million for the three and six months ended June 30, 2020, respectively.

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.

8 unchanged sentences

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.

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.

1 unchanged sentence

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 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 June 30, 2021, the Company had an outstanding ABL Facility balance of $ 33.8 million, excluding unamortized debt issuance costs.

The effective interest rate was 2.2 % at June 30, 2021.

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.

4 unchanged sentences

The First Lien Floor Plan Facility is collateralized by substantially all assets of the Company.

As of June 30, 2021, the Company had an outstanding balance on their First Lien Floor Plan Facility of $ 30.0 million, excluding unamortized debt issuance costs.

The effective interest rate at June 30, 2021 was 2.8 %.

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.

10 unchanged sentences

The interest is LIBOR plus an applicable margin.

The effective rates, excluding the favorable effect of interest-subsidies, as of June 30, 2021 ranged from 0.0 % to 10.4 %.

As of June 30, 2021, and December 31, 2020, the Company had an outstanding balance on the OEM Floor Plan Facilities of $ 127.7 million and $ 122.2 million respectively.

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 June 30, 2021, and December 31, 2020, was $ 157.7 million and $ 157.5 million, respectively, excluding unamortized debt issuance costs.

For the six months ended June 30, 2021, and 2020, the Company recognized interest expense associated with new equipment financed under its Floor Plan Facilities of $ 1.0 million and $ 1.3 million, respectively and $ 0.5 million and $ 0.3 million for the three months ended June 30, 2021, and 2020 respectively.

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 June 30, 2021, and December 31, 2020, was $ 191.5 million and $ 316.6 million, exclusive of debt issuance and deferred financings costs of $ 2.7 million and $ 1.5 million, respectively.

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

2 unchanged sentences

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 guarantor’s party thereto (the “Guarantors”) on a second lien, senior secured basis.

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.

4 unchanged sentences

Interest on the Notes is payable in cash on April 15 and October 15 of each year, beginning on October 15, 2021.

As of June 30, 2021, outstanding borrowings under the Notes were $ 315.0 million, which included $ 5.7 million deferred financing costs and original issue discounts.

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 %.

1 unchanged sentence

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 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 .

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

8 unchanged sentences

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

September 30,

High yield notes

1 unchanged sentence

Debt discount

Current maturities of long-term debt, net

Long-term debt, net

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

Capital leases

Total debt and capital leases

current maturities

Long-term debt and capital leases, net

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.

As of June 30, 2021, the Promissory Note of $ 1.1 million, inclusive of accrued interest, was paid in full.

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 through-out 5 -year earn-out period .

As of June 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 Sheet.

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

As of June 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 three to five years .

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 $ 1.3 million and $ 2.4 million at June 30, 2021 and December 31, 2020, respectively.

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 June 30, 2021 and December 31, 2020, respectively.

therefore, no amount has been accrued on the Consolidated Balance Sheets at September 30, 2021 and December 31, 2020, respectively.

Legal Proceedings

During the six months ended June 30, 2021 and June 30, 2020, various claims and lawsuits, incidental to the ordinary course of business, were pending against the Company.

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.

1 unchanged sentence

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 June 30, 2021, and December 31, 2020 there was $ 1.4 million in outstanding letters of credits issued in the normal course of business, respectively.

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

4 unchanged sentences

As such, the Company is using the single line-item approach.

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

Three Months Ended June 30,

Six Months Ended June 30,

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,

Federal taxes-current

4 unchanged sentences

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 $ 0.4 million for the three months ended June 3 0 , 2021 , and 2020 and an income tax expense of $ 0.5 million and an income tax benefit of $ 1.5 million for the six months ended June 30 , 20 2 1 and 2020 respectively .

As a result of Alta’s second 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.

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.

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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 six months ended June 30, 2021 was ( 2.2 )% when compared to 22.7 % for the period from February 14, 2020 to June 30, 2020 in connection with the reverse recapitalization.

This was mainly due to the impact of the application of the valuation allowance during the first quarter.

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.

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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 June 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.

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

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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.

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 holder s of record as of the close of business on July 15, 2021.

The dividend payment covered the period from and includ ing April 30, 2021 through, but not including July 31, 2021.

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.

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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 $ 0.5 million and $ 0 million for the six months ended June 30, 2021, and 2020 respectively.

As of June 30, 2021, the total unrecognized compensation expense related to the non-vested portion of the Company's restricted stock awards was $ 2.7 million, which is expected to be recognized over a weighted average period of 2.5 years.

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

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

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Vested-unissued

Unvested as of June 30, 2021

Unvested as of September 30, 2021

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 June 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:

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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 June 30, 2021 and December 31, 2020, which was presented in “Other Liabilities” on the Consolidated Balance Sheet:

June 30, 2021

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

Contingent consideration

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Contingent consideration

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

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

Contingent Consideration

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Change in fair value

Balance, June 30, 2021

Balance, September 30, 2021

NOTE 16 — BUSINESS COMBINATIONS

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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 goodwill recognized to be 100 % deductible for income tax purposes.

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 inta n gible 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):

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The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100 % deductible for income tax purposes.

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

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.

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The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100 % deductible for income tax purposes.

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

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 $ 15.2 million.

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The fair value of property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100 % deductible for income tax purposes.

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

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:

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The fair value of inventory and property, plant, and equipment were estimated to approximate their respective acquisition date net book values.

The Company expects the goodwill recognized to be 100 % deductible for income tax purposes.

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

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 $ 19.0 million.

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The estimated fair values are provisional and are based on the information that was available as of the balance sheet date .

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 goodwill 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 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 $ 10.6 million.

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The acquisition has been accounted for as a purchase business combination.

The estimated fair values are provisional and are based on the information that was available as of the balance sheet date.

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.

The Company expects the goodwill recognized to be 100 % deductible for income tax purposes.

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

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

Vantage Equipment, LLC (“Vantage”)

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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.

The Company expects the goodwill recognized to be 100 % deductible for income tax purposes.

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

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 acquisition, was not material to the consolidated financial statements.

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.

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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 June 30, 2021, the Material Handling segment included the ScottTech acquisition and its related results for the quarter.

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.

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Corporate holds corporate debt and has minor activity all together.

For the quarter ended June 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 quarters ended June 30, 2021 and June 30, 2020 respectively.

Corporate incurred an additional $ 7.6 million in transaction costs and other expenses associated with the reverse recapitalization for the quarter ended June 30, 2020.

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.

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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.

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 six months ended June 30, 2021 (amounts in millions):

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

New and used equipment sales

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Net income (loss)

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

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

New and used equipment sales

6 unchanged sentences

Net income (loss)

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

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

New and used equipment sales

6 unchanged sentences

Net income (loss)

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

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

New and used equipment sales

6 unchanged sentences

Net income (loss)

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

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,

Segment assets:

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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 June 30, 2021, and 2020, and for the six months ended June 30, 2021 and 2020 were calculated as follows (amounts in millions, except per share amounts):

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

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in millions, per share amounts)

Basic net income (loss) per share:

Basic net (loss) income per share:

Net (loss) income

Basic weighted average common shares outstanding

Net income (loss) per share of common stock - basic:

Diluted net income (loss) per share:

Basic net (loss) income per share of common stock:

Diluted net (loss) income per share:

Net (loss) income

Basic weighted average common shares outstanding

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Effect of dilutive non-vested restricted stock units

Basic weighted average common shares outstanding - diluted

Net income (loss) per share of common stock - diluted

Diluted weighted average common shares outstanding

Diluted net (loss) income per share of common stock:

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

We do not have any subsequent events to disclose.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements