ALTA EQUIPMENT GROUP INC
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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Sep 30, 2024 · Filed Nov 12, 2024
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Leases
NOTE 10 — LEASES
The Company primarily has third-party operating and finance leases for branch facilities, corporate office, and certain equipment. The Company hasone operating lease with a related party. The Company’s leases have remaining lease terms that range from less thanone year to leases that mature through June 2039 and contain provisions to renew the leases for additional terms of up to 20 years.
The Company leases and subleases certain lift trucks to customers under short and long-term operating lease agreements. The sublease income is included in "Rental revenues" on our Condensed Consolidated Statements of Operations. Sublease income below includes subleases of primarily facilities that are not included in "Rental revenues" due to being outside our normal business operations. The costs of the head lease for these subleases are included in Operating lease expense below.
At September 30, 2024 and December 31, 2023, assets recorded under finance leases, net of accumulated depreciation, were $44.6 million and $37.6 million, respectively. The assets are depreciated over the lesser of their remaining lease terms or estimated useful lives.
The components of lease expense were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Operating lease expense | $7.2 | $6.8 | $20.4 | $20.2 |
| Short-term lease expense | 0.8 | 0.9 | 4.7 | 3.8 |
| Low-value lease expense | 0.3 | 0.3 | 1.0 | 0.8 |
| Variable lease expense | 2.4 | 2.2 | 7.7 | 6.4 |
| Finance lease expense: | ||||
| Amortization of right-of-use assets | 2.7 | 1.7 | 7.5 | 4.4 |
| Interest on lease liabilities | 1.0 | 0.6 | 2.8 | 1.7 |
| Sublease income | (0.1) | (0.1) | (0.3) | (0.2) |
| Total lease expense | $14.3 | $12.4 | $43.8 | $37.1 |
Additional information related to leases is presented in the table below:
| Nine Months Ended September 30, | ||
|---|---|---|
| Supplemental Cash Flows Information | 2024 | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | ||
| Operating cash flows for operating leases | $19.6 | $19.4 |
| Operating cash flows for finance leases | 2.8 | 1.7 |
| Financing cash flows for finance leases | 6.7 | 3.9 |
| Non-cash right-of-use assets obtained in exchange for lease obligations: | ||
| Operating leases | 10.5 | 4.9 |
| Finance leases | 14.4 | 17.3 |
| Weighted Average Remaining Lease Term (in years): | ||
| Operating leases | 8.7 | 9.0 |
| Finance leases | 4.5 | 4.7 |
| Weighted Average Discount Rate (in %): | ||
| Operating leases | 10.4 | 10.2 |
| Finance leases | 8.6 | 8.2 |
Minimum future lease payments under non-cancellable operating and finance leases described above as of September 30, 2024 were as follows:
| Year ending December 31, · Operating Leases · Finance Leases | ||||
|---|---|---|---|---|
| Remainder of 2024 | $6.6 | $3.4 | ||
| 2025 | 24.2 | 13.4 | ||
| 2026 | 21.2 | 12.7 | ||
| 2027 | 19.6 | 11.1 | ||
| 2028 | 17.9 | 9.1 | ||
| Thereafter | 87.9 | 6.1 | ||
| Total future minimum lease payments | 177.4 | 55.8 | ||
| Less: imputed interest | (63.1) | (9.1) | ||
| Total | $114.3 | $46.7 | ||
| Balance Sheet Location | September 30, 2024 | December 31, 2023 | ||
| Current portion of long-term debt | $10.1 | $7.7 | ||
| Current operating lease liabilities | 15.1 | 15.9 | ||
| Finance lease obligations, net of current portion | 36.6 | 31.1 | ||
| Long-term operating lease liabilities, net of current portion | 99.2 | 99.6 | ||
| Total | $161.0 | $154.3 | ||
As of September 30, 2024, the Company had additional leases, substantially all real estate, that were executed but had not yet commenced with undiscounted lease payments of$3.7 million. These leases are expected to commence in 2024 and the first quarter of 2025 with lease terms up to 10 years.
See Note 11, Contingencies, for more information on certain contracts where the Company guarantees the performance of the third-party lessee.
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