ALTG Q3 Deep Dive: Equipment Sales Weakness and Cautious Optimism for Rebound

Equipment distribution company Alta Equipment Group (NYSE:ALTG) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 5.8% year on year to $422.6 million. Its non-GAAP loss of $1.10 per share was significantly below analysts’ consensus estimates.

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StockStory’s Take

Alta Equipment Group’s third quarter results were met with a significant negative market reaction, as the company’s sales and non-GAAP earnings came in well below Wall Street expectations. Management attributed the underperformance primarily to softness in equipment sales, which they linked to customers delaying purchases amid uncertainty around interest rates and tax incentives. CEO Ryan Greenawalt described the period as “turbulent,” explaining that many customers pushed capital spending into the following quarter while awaiting more clarity on economic policy and funding. The company also cited persistent headwinds from tariffs and manufacturing sector weakness, but noted that their product support and services business provided some stability during the quarter.

Looking ahead, Alta Equipment Group’s guidance is shaped by expectations for a rebound in equipment demand as deferred purchases flow into future quarters and infrastructure funding accelerates. Management pointed to early signs of recovery, including a strong start to the fourth quarter in new equipment sales and a stable backlog in material handling. CFO Anthony Colucci stated, “We believe Q3 will be an anomaly as customers pushed ahead decisioning in Q4 given the expectations for interest rate reductions and year-end tax plan.” The company expects that improvements in supply chain conditions, favorable policy incentives, and normalization of industry volumes will underpin a gradual return to growth, while ongoing cost discipline supports profitability.

Key Insights from Management’s Remarks

Management attributed the quarter’s underperformance to delayed equipment purchases, ongoing tariff impacts, and continued softness in key industrial sectors, while emphasizing operational cost reductions and a streamlined business portfolio.

• Delayed equipment purchases: Management noted that many customers postponed equipment purchases from the third quarter into the fourth, seeking more clarity around interest rates and year-end tax incentives. This shift led to a decline in equipment sales but was described as a timing issue rather than a sign of weakening demand.
• Tariff and supply chain pressures: Ongoing tariffs and trade uncertainty particularly affected the Master Distribution segment (Ecoverse), with rapid implementation of tariffs on European-sourced products causing supply disruptions and margin erosion. Management described mitigation efforts, including supplier cost-sharing and pricing adjustments, as largely in place by quarter end.
• Segment performance divergence: The Construction Equipment segment was impacted by volatility in private capital spending and delayed project funding, while the Material Handling segment experienced stable performance in food and beverage and distribution end markets. Automotive and general manufacturing demand remained soft, though there were early signs of recovery tied to reindustrialization trends in key U.S. regions.
• Portfolio streamlining: The divestiture of the Dock and Door division was highlighted as a strategic move to focus resources on core dealership operations and improve capital discipline. Management emphasized that this sale had minimal impact on EBITDA but sharpened the company’s strategic focus.
• Cost discipline and margin focus: Structural cost savings led to a $25 million year-to-date reduction in SG&A expenses. Management stressed that these efficiencies are now embedded in the company’s operating model, providing leverage for future margin improvement as volumes recover.

Drivers of Future Performance

Alta Equipment Group’s outlook is driven by anticipated demand rebound, infrastructure funding, and the company’s continued focus on operational efficiency and portfolio optimization.

• Deferred demand recovery: Management expects that equipment purchases delayed in the third quarter will boost sales volumes in the next quarter, particularly as customers take advantage of interest rate reductions and new tax incentives. This is seen as a potential catalyst for growth in both the Construction and Material Handling segments.
• Infrastructure and industrial tailwinds: Significant infrastructure funding, especially in regions like Michigan and Florida, is expected to accelerate project activity and drive demand for construction equipment. Additionally, trends in U.S. reindustrialization and increased grid modernization investments are creating long-term growth opportunities in Alta’s end markets.
• Operational leverage and margin normalization: Ongoing cost discipline and a shift toward recurring product support revenues are expected to support margin expansion as equipment sales volumes and gross margins revert to historic norms. Management also highlighted mitigation of tariff-related pressures and portfolio streamlining as key to improving profitability.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether deferred equipment purchases convert to higher sales volumes and gross margins, (2) the pace and impact of infrastructure project spending in core Alta regions, and (3) further evidence of margin improvement from ongoing cost reductions and business portfolio optimization. Successful execution in these areas will be critical for validating management’s recovery narrative.

Alta currently trades at $5.17, down from $5.89 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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