Alta Equipment Group Inc. (ALTG) Cash Flow Statement

The gap between the income statement and the cash statement is the single defining feature of Alta's financials: reported accounting losses coexist with consistently positive operating cash flow, a pattern typical of capital-heavy lessors whose depreciation charges dwarf interest and below-the-line costs. Cumulative operating cash flow of $92.9M against cumulative operating income of roughly $48M implies non-cash charges in the $40M+ range per ten-quarter window beyond interest, consistent with the reported D&A. Investors should not read positive operating cash flow as proof of economic profitability here; it substantially reflects the non-cash add-back of an asset base that must eventually be replaced.

For an equipment rental business, the physical fleet is the primary revenue-generating asset, and a persistent gap of roughly $19M per quarter between depreciation and CapEx suggests the company is running down its fleet faster than it rebuilds it. The CapEx intensity of 0.6%–4.2% of revenue is extremely low for a rental operator that peers like Titan Machinery typically run at 5%+ replacement levels. This dynamic may artificially inflate operating cash flow in the near term while undermining future rental revenue capacity, a risk that warrants close monitoring as a potential source of secular margin compression.

The relationship between operating cash flow and net income is driven almost entirely by the depreciation add-back, which at $33.8M in 2026Q2 alone exceeds the reported operating income of $12.0M by a wide margin. This pattern suggests that Alta's accounting earnings reflect the economic consumption of a large, aging asset base, while its cash generation reflects underinvestment relative to that consumption. The quality-of-earnings signal is negative: excluding the D&A add-back and working capital movements, underlying pre-tax cash generation appears thin to absent at current revenue levels.

The working capital pattern is highly seasonal and suggests that Alta front-loads fleet and inventory purchases ahead of the spring/summer rental season, generating cash inflows in the fourth quarter as receivables collect and payables normalize. This creates an illusion of strong cash generation in the fourth quarter (OCF of $34.9M and $33.9M in 2024Q4 and 2025Q4 respectively) that reverses sharply in the first half of each year. Investors should view Q4 cash flow strength as a working capital timing effect rather than a structural improvement in operating performance.

The trajectory of Alta's free cash flow is defined less by underlying operating trends than by the timing of fleet acquisitions and working capital movements, making forward cash flow forecasting highly unreliable from quarterly data alone. Cumulative FCF over the last ten quarters of roughly $51M compares to cumulative net losses of $169M, a gap that underscores the distortion between accounting and cash performance in this business model. The apparent FCF improvement in 2025Q4 and 2026Q1 reflects a combination of working capital release and reduced CapEx intensity rather than a durable improvement in rental economics, and should be treated with caution until operating income growth can sustain positive FCF without working capital tailwinds.