TRG | The Bottom Line – 11/15

Who would think that Alta Equipment (ALTG) and HNI Corp. (HNI) would have much in common? The recent commonality is that within the B2B world (HNI selling to SMBs, Alta is only B2B), given the election season and economic uncertainty, many companies pulled back on discretionary spending in the months leading up to the election. This hampered Q3 sales for both Alta and HNI to a degree. Alta reported Q3’24 earnings this past week, and while Q3 was lackluster, the company noted a positive change in trends in October, specifically citing better trends versus September and a notable uptick post-election day. We believe many business owners and managers wanted to get a better feel for who would win and the potential policies of the elected candidate, before committing capital. Alta has seen this play out before – demand picked up meaningfully in the final weeks of 2016 after Trump was elected. Looking to 2025, many building product companies are still uncertain about the demand backdrop, while non-res companies exposed to local market activity also have the same uncertainty. To be clear, few are downright negative but seem to be experiencing a soft landing. As such, we continue to believe that finding undervalued companies with specific profit improvement opportunities over 1-2 years are important for investors at this juncture. And this is another thing that, in our view, HNI and Alta share.