Alta Equipment Group Inc. · NYSE:ALTG
Alta Equipment — B. Riley Principal Merger — SPAC Merger (January 2020)
40 slides from Alta Equipment's SPAC merger presentation, Jan 13, 2020
Slide 1: Analyst Day Presentation January 14, 2020
Analyst Day Presentation January 14, 2020
Slide 2: Disclaimer
| 2 Disclaimer This investor presentation (this “ presentation ”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity or debt or other financial instruments of B. Riley Principal Merger Corp. (“ BR
Slide 3: Disclaimer (cont'd)
| 3 Disclaimer (cont’d) No Offer or Solicitation. This presentation shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Transaction. This presentation shall also not constitute an offer to sell or the solicitation of an offer t
Slide 4: Disclaimer (cont'd)
| 4 Disclaimer (cont’d) Additional Information About the Transaction and Where to Find It. In connection with the proposed Transaction, BRPM has filed a preliminary proxy statement and intends to file a definitive proxy statement with the SEC. The definitive proxy statement and other relevant do cum
Slide 5: Senior Management Team
| 5 Senior Management Team • Re - joined Alta in December 2008 • Serves on Hyster - Yale Dealer Council, Volvo Construction Equipment’s Dealer Advisory Council • BA from the University of Michigan, Ann Arbor; MBA from the Eli Broad Graduate School of Management at Michigan State University Ryan Gree
Slide 6: B. Riley Financial – Track Record of Value Creation
| 6 B. Riley Financial (Nasdaq:RILY) – Track Record of Value Creation ▪ B. Riley Financial, Inc. (Nasdaq: RILY) is a diversified holding company consisting of multiple operating subsidiaries in addition to on - balance sheet investments worth $900MM+ and focused on small cap companies ▪ RILY has a t
Slide 7: Transaction Overview
| 7 Transaction Overview ▪ B. Riley Principal Merger Corp. (NYSE:BRPM) to merge with Alta Equipment Holdings, Inc. (“Alta”) ▪ The combined company will be capitalized with ~$310MM of debt and ~$305MM of equity, which represents 5.9x 2019E Adj. EBITDA 1 and 5.0x 2020E Adj. EBITDA 2 - Implies 7% 2019E
Slide 8: Agenda
| 8 II. Company Overview III. Industry Dynamics IV. Financial Overview I. Investment Thesis V. Business Combination VI. Appendix
Slide 9: Investment Highlights
| 9 Investment Highlights ▪ High quality business - Dealership model highlighted by material barriers to entry and a stable, recurring cash flow stream through the Parts and Service operations - Skilled technicians represent a material intangible asset of the platform - One - stop - shop for highly
Slide 10: Track Record of Value Creation – Ryan Greenawalt
| 10 Track Record of Value Creation – Ryan Greenawalt Investment Thesis ▪ Ryan Greenawalt joined family - owned Alta Lift Truck Services Inc. in 2008, which had ~$60MM of revenue focused on industrial equipment (forklifts) in Michigan ▪ Mr. Greenawalt immediately focused on business operations and r
Slide 11: Agenda
| 11 II. Company Overview III. Industry Dynamics IV. Financial Overview I. Investment Thesis V. Business Combination VI. Appendix
Slide 12: Leading Equipment Dealership Platform
| 12 Leading Equipment Dealership Platform Broad End Market Coverage ▪ Residential Building Construction ▪ Specialty Trade Contractors ▪ Highway, Street, and Bridge Construction Construction ▪ Transportation and Warehousing ▪ Professional, Scientific, and Engineering Services ▪ Administration Suppor
Slide 13: Dealership Network Provides Diversified Product and Service Offerings
| 13 Dealership Network Provides Diversified Product and Service Offerings ▪ Alta’s business model consists of populating its geographies with new, used, and rental equipment and then harvesting the installed base to grow its parts and service revenue ▪ The Company has used its role as a one - stop
Slide 14: Financial Breakdown (Excluding Acquisitions Under LOI)
| 14 Financial Breakdown (Excluding Acquisitions Under LOI) Note: Breakdowns do not take into account the consummation of two potential acquisitions currently under LOI in Alta’s pipeli ne 1 End markets represented for all customers for FY2018 2 Includes New, Used, and Rental Disposal Sales for FY20
Slide 15: Entry Valuation
| 15 Entry Valuation Company Overview Capital Structure 1 ($MM, except per share) Valuation 1 Excludes floorplan debt. Cost of floorplan is deducted from EBITDA. 2 Assumes the consummation of two potential acquisitions currently under LOI 3 ABL facility size of $300MM. Borrowing base of $245MM and
Slide 16: Deep Relationships with Key Stakeholders
| 16 Deep Relationships with Key Stakeholders Skilled Work Force ▪ Alta is consistently acknowledged by OEMs as a top dealership partner - 2018 Volvo dealer of the year - Top 4 Hyster - Yale dealer nationally - #1 Ranked JCB Dealer in Network ▪ Regional market share by product ranges from 20 - 40% i
Slide 17: Alta History and Key Facts
| 17 ▪ 2008 – Ryan Greenawalt joins Alta in chief decision - making capacity ▪ 2010 – Alta begins relationship with Volvo CE, entering the Michigan Construction Equipment market ▪ 2017 – Volvo CE appoints Alta as its authorized dealer in central and northern Illinois ▪ 2017 – Ryan Greenawalt complet
Slide 18: Construction and Industrial Customers
| 18 Construction Customers 2018 Revenue ($ in 000s) Revenue as a Percentage Customer 1 $4,385 2.0% Customer 2 3,070 1.4% Customer 3 3,065 1.4% Customer 4 2,989 1.3% Customer 5 2,873 1.3% Top 5 Construction Customers $16,381 7.3% Other 206,748 92.7% Total Construction $223,130 100.0% Highly Diversif
Slide 19: Expanding Footprint in Key Geographic Markets
| 19 Expanding Footprint in Key Geographic Markets Company Overview Geographic Footprint ▪ 31 locations throughout Michigan, Indiana, Illinois, Massachusetts, Maine, New Hampshire, and Connecticut with signed LOIs in New York, Vermont, and Florida ▪ Dealership platform with parts and service capab
Slide 20: Agenda
| 20 II. Company Overview III. Industry Dynamics IV. Financial Overview I. Investment Thesis V. Business Combination VI. Appendix
Slide 21: Competitive Landscape
| 21 Competitive Landscape (Pre NY and Florida Expansion) Competitive Product Region Name Competitive Brand Number of Locations in the Region Industrial Equipment Sales Construction Equipment Sales Rentals Parts & Service Lift Trucks MI, IL, IN, MA, CT Crown Lift Trucks Crown 10 MI & IN Morrison Ind
Slide 22: Regional Market Share
| 22 Regional Market Share (Pre NY and Florida Expansion) Industry Dynamics Industrial Market Share in Operating Geographies Alta 41% 15% 15% 17% 7% Others 5% East Michigan West Michigan Chicago Alta 23% 25% 12% 23% 7% Others 10% New England Alta 10% 35% 26% 17% Others 12% Al
Slide 23: Agenda
| 23 II. Company Overview III. Industry Dynamics IV. Financial Overview I. Investment Thesis V. Business Combination VI. Appendix
Slide 24: Historical and Projected Financial Summary
| 24 Historical and Projected Financial Summary Financial Overview Note: 2019E assumes the consummation of two potential acquisitions currently under LOI. 2020E and 2021E assume $75MM of EV ac qui red per year at 4.5x EV/Adj. EBITDA multiple 1 Based on contemplated structure and initial due dilige
Slide 25: Capital Allocation Policy
| 25 Capital Allocation Policy Financial Overview Projected Capital Allocation 1 Assumes no dividends paid to stockholders during the periods presented ▪ Cash generative nature of the business allows the Board and Management to allocate capital between growth capex, deleveraging, returning capital
Slide 26: Growth and Projection Assumptions
| 26 ▪ Execute on M&A pipeline, acquiring est. $521MM of revenue and $57MM of Adj. EBITDA over 3 years ▪ Grow Organic Revenue at approximately 8.0% CAGR, driving organic Adj. EBITDA growth of est. 10.1% CAGR ▪ Continue to prioritize Parts and Service penetration, generating predictable, recurring re
Slide 27: Aftermarket Growth through Field Population
| 27 ▪ Since 2010, Alta has aggressively populated the field with serviceable construction equipment, and is now capitalizing on the aftermarket sales driven by their maintenance cycles - New and Used sales have ramped as Alta has taken market share, now selling an incremental $70MM+ of serviceable
Slide 28: Grow Illinois Construction Using Michigan Playbook
| 28 ▪ Entered the Illinois Construction market in 2018 through acquisition of Elite Heavy Equipment ‒ Executing a service - first strategy. Will be more capital - efficient than Michigan’s rental - first approach, necessitated by lack of service expertise and field population. ▪ Deploying skilled t
Slide 29: M&A Objectives
| 29 M&A Objectives ▪ Alta platform has been created through 16 acquisitions in the last 10 years and expect acquisitions to accelerate based on public currency and expanding pipeline ▪ Alta is benefitting from multiple structural trends in the equipment marketplace ‒ OEMs consolidating their dealer
Slide 30: Capital Structure and De-Leveraging Over Time
| 30 Capital Structure and De - Leveraging Over Time Financial Overview Capital Structure 1 ($MM, except per share) ▪ Closing capital structure includes $105MM of undrawn ABL capacity ▪ Company will draw ABL to fund growth capex and M&A ‒ ABL capacity will expand as acquired companies’ assets are
Slide 31: Bridge for Stock Returns
| 31 Bridge for Stock Returns Financial Overview ▪ Adj. EBITDA grows organically by $18.7MM (9.5% CAGR), inorganically by $34.3MM ▪ Valuation multiple closes the gap to peers at 6.5x Adj. EBITDA, implying Levered FCF Yield of 9% ▪ Company de - levers through FCF generation ▪ 8.67MM 2 In the Money
Slide 32: Agenda
| 32 II. Company Overview III. Industry Dynamics IV. Financial Overview I. Investment Thesis V. Business Combination VI. Appendix
Slide 33: Business Combination Transaction Overview
| 33 Business Combination Transaction Overview ▪ $145MM BRPM cash held in trust, $35MM PIPE, and $25MM B. Riley Principal Investments Forward Purchase Agreement will be used to support the acquisition pipeline, provide liquidity to existing investors, pay transaction expenses, and provide excess c
Slide 34: Attractive Valuation
| 34 Attractive Valuation Business Combination 5.9x 9.2x 8.2x 5.5x 8.3x Alta Specialty Rental Heavy Equipment Dealer Heavy Equipment Rental Auto Dealers 5.0x 8.1x 6.8x 5.3x 7.6x Alta Specialty Rental Heavy Equipment Dealer Heavy Equipment Rental Auto Dealers Source: Company filings, Wall Street Re
Slide 35: Attractive Valuation (cont'd)
| 35 Attractive Valuation (cont’d) Business Combination 12.0x 20.3x 14.9x 12.2x 9.5x Alta Specialty Rental Heavy Equipment Dealer Heavy Equipment Rental Auto Dealers 9.3x 14.6x 10.8x 11.5x 8.7x Alta Specialty Rental Heavy Equipment Dealer Heavy Equipment Rental Auto Dealers 2 Source: Company filin
Slide 36: Dealerships are More Resilient than Pure Rental
| 36 Dealerships are More Resilient than Pure Rental Business Combination Rental Rates: North American Dealers vs. URI 1 1 Source: Evercore ISI Wall Street Research, October 7 th , 2019
Slide 37: Agenda
| 37 II. Company Overview III. Industry Dynamics IV. Financial Overview I. Investment Thesis V. Business Combination VI. Appendix
Slide 38: Adjusted EBITDA Reconciliation
| 38 Adjusted EBITDA Reconciliation Appendix Note: Excludes the consummation of two potential acquisition under LOI 1 Per 2018 audit 2 Adjustment to recognize depreciation of new equipment rental not reflected as depreciation on the 2018 audit 3 Owner compensation and non - continuing personnel co
Slide 39: CapEx Reconciliation
| 39 CapEx Reconciliation Appendix Note: Excludes the consummation of two potential acquisition under LOI 1 Management estimate based upon average rental asset life of approximately 8.5 years. Includes Capitalized Repairs. ($MM) 2016PF 2017PF 2018PF Rental Gross Maintenance Capex 1 $43.6 $53.7 $62
Slide 40: FCF Reconciliation
| 40 FCF Reconciliation Appendix Note: Excludes the consummation of two potential acquisition under LOI ($MM) 2016PF 2017PF 2018PF Adjusted EBITDA $42.1 $52.6 $67.2 Rental Net Maintenance Capex (21.5) (25.6) (28.1) PP&E Capex (3.2) (4.4) (4.2) Adjusted EBITDA-Net Maintenance Capex $17.3 $22.6 $34.
B. Riley Principal Merger — SPAC Merger (January 2020) on 6ix