Q4 2020 Alta Equipment Group Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Alta equipment group fourth quarter 'twenty 'twenty earnings call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero.
On you touched on telephone.
As a reminder, this conference call is being recorded.
And now it is my pleasure to hand over the conference to your host MS. C. N N Mcdonald director of external reporting.
Thank you Kristian and good afternoon, everyone welcome to Alta <unk> fourth quarter and full year 2020 earnings conference call on.
On the call with US today are Ryan Greenawalt, our chairman and CEO and Tony Colucci, Our Chief Financial Officer for today's call management will first provide a review of the fourth quarter and full year financial results and then we will conduct a Q&A session.
We will begin with some prepared remarks before we open the call for your questions before we get started I'd like to remind everyone that this conference call may contain certain forward looking statements as defined in the private Securities Litigation Reform Act of 1995, reflecting managements current expectations.
Regarding future results of operations, our business strategy financial outlook Itchy months off the company and other non historical statements as described in our press release.
These forward looking statements are subject to both known and unknown risks uncertainties and assumptions, including those related to all sales growth market opportunities and general economic and business conditions.
We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business financial condition and results of operations.
We believe these expectations reasonable we undertake no obligation to revise any statements to reflect changes that occur after this call.
Scriptures of these and other risks that could cause actual results to differ materially from these forward looking statements are discussed in our reports filed with the SEC, including our press release that was issued today. During this call. We may present, both GAAP and non-GAAP financial measures and reconciliation.
Of GAAP to non-GAAP measures is included in today's press release and can be found on our website at investors thought Alta equipment Dot com and with that I'll now turn the call over to Ryan.
Thank you Saddam and welcome everyone. Thank you for joining Alta equipment group's fourth quarter 2020 earnings call, our strong performance and solid financial results in the fourth quarter capped off a transformative and very successful twenty-twenty. Despite the significant impact of the Covid pandemic we.
We achieved several important accomplishments, which I'll briefly touch on before turning the call over to Tony for a financial review of the fourth quarter and full year.
The operating environment for our services continued to improve from the prior quarter as customer demand increased consecutively each month in the fourth quarter labor productivity, which is the heartbeat of our operations increased to benchmark levels before the end of the year in response to increased sales activity and demand for labor hours, we added to our product support work for us both.
Organically and through acquisitions and ended the year with over 900 skilled technicians and increase of approximately 250 technicians, a year over year and representing roughly half of our total head count.
Our entire Alta team once again rose to the occasion during these difficult times, demonstrating incredible dedication and delivered on our commitment to exceptional service and equipment uptime.
A sincere thank you to all of our employees, who make Alta the great company. It is today.
And touching on our financial highlights fourth quarter adjusted EBITDA came in at 24.6 million on revenue of 284 million.
We reached a true milestone in delivering over 1 billion in revenue on a pro forma basis with adjusted pro forma EBITDA of $98 7 million for the year, our liquidity position remains strong and our balance sheet flexible and providing the support needed to execute our organic and acquisition growth strategy.
And looking at the full year, we overcame many challenges that we face due to the COVID-19 pandemic and navigated the business through unprecedented shutdowns, we were designated as an essential business and remain fully operational at all of our 54 branches across 11 states our variable cost structure and the dexterity of our business model allowed management to swiftly implement cost reduction.
As yours to efficiently manage the business and sustained positive adjusted EBITDA and mitigate against margin declines.
The revenue decline was less than anticipated and business activity began to pick up from the April trough through the end of the year.
As we move through the recovery in the second half of the year, we reduce some of the cost mitigation measures and began calling back skilled technicians, who are furloughed as big business activity returned to pre COVID-19 levels.
The diversity of both our geographies and our end markets enabled us to weather. The pandemic storm also is a reflection of our business model our product support revenue remained strong during this period and grew 47% in 2020 compared to the prior year when including our acquired revenues.
In 'twenty 'twenty consistent with our acquisition strategy, we expanded our geographic footprint establish relationships with new OEM partners and further diversified our end market reach in the fourth quarter. We completed two accretive acquisitions that increased our scale and strengthened our business profile, we acquired the construction dealership assets of vantage equipment, which.
Operates three branches in the Northern region of New York State Alta is now the authorized distributor Volvo products in most of New York State or region that offer significant additional expansion opportunities.
Vantage also diversifies, our customer base and serves as a great complement to our lift tech business, which serves the New York material handling market. This combination is powerful and allows us to bring our full resources to this large and growing market.
As we mentioned on our third quarter earnings call, we closed the hull tractor and equipment acquisition in late October health serves the northern Illinois on northwest, Indiana construction markets with a wide range of construction and crane equipment, how enjoys a strong relationship with leading manufacturers such as Senate Bogan, which is a new addition, delta's product line in the region looking.
Looking at the full year, we completed seven acquisitions, which in total contributed approximately $23 million to adjusted EBITDA in 2020, our most active year on the M&A front Alta has become the partner of choice in a fragmented equipment dealer market as we provide manufacturers the benefit of our scale liquidity and reputation to facilitate share growth and cash.
Customer loyalty, the structural supply demand imbalance between buyers and sellers in our industry remains intact and we continue to execute on our growth strategy.
As we noted in todays news release, we've rebranded our industrial segments of material handling.
Material handling is the recognized industry vernacular and better described for the range of our capabilities. The rebranding will have particular significance with messaging to the e-commerce sector, which values the integration of material handling equipment with the more sophisticated systems offerings.
Peak logics on national material handling systems integrator, we acquired in mid year has significantly enhanced our positioning in this area and provides us with a competitive advantage in the fast growing warehousing and logistics market, which has only continued to pick up steam as the recovery continues peak offers a complete material management solution and delivers efficiency and increased productivity for <unk>.
Its customers.
We've been able to cross sell and promote their services across our entire material handling customer customer base and integrate them with our other warehouse automation solutions. We also expanded our full service capabilities in this area more recently with a small but strategic acquisition and Softech, which provides warehouse control software and systems. It is important to highlight that these.
New systems integration services, our unconstrained by our dealership territories in both acquired businesses have customers throughout the U S and internationally.
And looking forward, we see a clear path to a full recovery as the recovery takes hold on the year progresses. The investments we've made in technology products and people position us well to continue our strong performance entering 2021, we're encouraged by the positive trends, we are seeing especially by the strong secular tailwind that are apparent in our material handling and construction segments E Commerce <unk>.
Both is driving higher volumes from large retailers, who weyerhaeuser products, which increases our opportunity to expand on lean into this area of the business the demand for automation and more complex systems and technology and warehousing and material handling has never been greater and we believe it is in the early stages, there's clearly upside from potential federal stimulus and pent up demand for capital projects to <unk>.
Our net our aging national infrastructure Alta has strong relationships with leading Oems and our recent geographic market expansion position us to be a great partner for both material handling and construction equipment markets.
This was truly a transformative year by any measure we believe our strong financial results on our first year as a public company demonstrates the outstanding execution of our resilient dealership model and our operational discipline through a difficult and unprecedented time, we're exciting excited and increasingly confident in our ability to deliver increased financial results at <unk>.
Hence shareholder value moving forward I'd like to thank our manufacturing partners for their support for dedicated employees for their hard work and our shareholders for their support and confidence in the company with that I'll now turn it over to Tony for his financial review.
Thank you Ryan and.
And good evening, everyone and thank you for your interest in Alta equipment group, and our fourth quarter and full year 2020 financial results before I start I first want to congratulate all of my Alta colleagues and all of Alta shareholders on our one year anniversary as a public company. The past year has been equal parts challenging and exciting NAV.
Getting a global pandemic certainly wasn't part of our plan as we entered the public markets 13 months ago, but our business and most importantly, Alta employees Road rose to Covid challenge and delivered a performance that Ryan and I are extremely grateful for and proud of Additionally, I want to welcome our new team members that vantage equipment and Sky.
Teck in upstate New York to the Alta family.
The senior leadership team is excited about integrating your talent into our business and it'll Alta as one team culture, we look forward to earning your trust.
My remarks today will focus on four key areas first I'll be presenting our fourth quarter performance, which we are pleased with.
As the business continues to close the Covid GAAP and gained ground year over year on some key metrics.
I'll be focusing in on specific departmental revenue figures organic cash flows and rental fleet fluctuations and outperformance on these metrics impacted the balance sheet and our leverage profile in a positive way.
Second I'll be discussing our full year 2020 performance and sequential quarter over quarter trends in two of our key performance indicators, specifically I'll discuss how those kpis trends correlated to EBITDA performance for the year and all those 2020 trends compared to 2019, a year reflective of a more <unk>.
Pickle business climate third I want to touch on year end on our year end acquisition of vantage equipment, how we thought about the return profile of our investment when compared to the cost of capital associated with the preferred stock we raised to fund the transaction.
I also want to provide some high level financial figures on the Scott Tech acquisition that we closed at the beginning of this month.
Lastly, I'll discuss the balance sheet and in particular, our leverage and liquidity position as we entered 2021.
Real quickly it should be noted that there are some slides on our presentation, which was released prior to our call today that presents our fourth quarter and full year numbers in greater detail than what I will discuss today I'd encourage everyone on today's call to review our presentation and our 10-K, which is available on our Investor Relations website.
At Alta equipment dotcom.
For the first portion of my prepared remarks fourth quarter performance for.
First let's talk about the profit and loss statement for the quarter. The company recorded revenue of $280 million, which is a record sales number for Alta.
I will get into what drove that figure to such a high level on a moment, but the $280 million represents a $60 million sequential increase over Q3, and a $9 four per cent increase on an organic organic basis versus Q4 2019.
From an EBIT perspective, we realized $24 6 million in adjusted EBITDA for the quarter up from 21.9 million in the third quarter of 2020 importantly, our adjusted pro forma EBITDA for Q4, which assumes we had owned vantage in hull for the entire quarter was $26 2 million or two points.
$7 million less than Q4 of 2019.
I'll come back to that $2 $7 million EBITDA variance a little later in my comments.
Next I'd like to talk about organic cash flows in the fourth quarter first I mentioned, the $280 million in revenue a moment ago and how that was a record sales number for the business just to focus in on that briefly on previous calls I've mentioned, how the fourth quarter is typically the largest equipment sales quarter of the year for Alta and in.
<unk>, it's extortion been our largest rental equipment sales quarter of the year.
Really in a bit further.
New and used equipment sales were $135 million for the quarter of $37 million increase over Q3, another record number.
But importantly, we recorded an additional $38 million of rental equipment sales for the quarter. A number that is two times the amount sold in Q3 2020.
The reason why I focus on the $38 million rental disposal number is because it led to a net decrease of 10.5 million in rental fleet, which when coupled with our EBITDA for the quarter led to an organic delevering of approximately $15 million and an unlevered free cash flow conversion on EBITDA factor of over 100 per se.
<unk> for Q4 2020.
We believe this organic delevering to be the to be a powerful indication on the marketability of our rental fleet assets and our ability to generate cash flow on liquidity by optimizing our rental fleet in a short period of time on.
On an organic basis, we believe this to be the story of the quarter.
Few other P&L highlights before I move on.
And just to jump back to the equipment sales number in Q4, just for a second let's keep in mind, our razor and blade business model the $103 million on equipment sales for the quarter is now customer field population, which bodes well for the future of our high margin product support departments.
Another encouraging metric for from the P&L, we saw a $2.5 million rental revenue increase over Q3 2020 on an organic basis, an indication of continued strengthening in our red rental business.
And importantly continued year over year organic growth in our parts and service departments in our construction segment.
Moving on to the second key area of my prepared remarks.
I'd like to focus on some high level pro forma numbers for the full year 2020, and certain quarter over quarter trends and key performance indicators, we observed throughout the year.
First for the fiscal for the fiscal year 2020, as Ryan mentioned on a pro forma basis. Our annual revenue is now slightly above the 1 billion dollar Mark and on an adjusted pro forma basis, our EBITDA as of the year as of year end was nearly a $100 million.
A few key points and trends to point out is we do a look back on 2020 and I'd like to refer everyone to slide 19 of our earnings presentation, which depicts the data I'll be referring to for.
First as we've discussed on previous calls two major drivers of EBITDA and cash flow within our business correlate to two key performance indicators, we track labor productivity and rental fleet utilization.
Of note and discussed on prior calls calls we saw the bottom and later labor productivity in Q2 2020.
Began to recover on the metric in Q3.
And I'm happy to report that we were able to achieve pre COVID-19 labor productivity levels in Q for.
That trend has continued as we moved into Q1.
So for labor labor productivity, a V V shaped recovery to be sure and with positive trends headed into 2021.
Second rental utilization, which I've, which as I have mentioned previously has lagged historic levels realized in our business and as you will note on slide 19, our physical utilization variance versus prior years, followed a similar similar trend that labor productivity followed in 2020.
We began to see the fall off toward the end of Q1 the year on year variance was most acute in Q2, we started to recover in Q3 and continued to close the gap in Q4.
Now unlike labor productivity as of the end of the year, we had yet to fully close the gap on rental utilization, having said that and importantly, the early signs in Q1 are encouraging and suggest a continued closing of the GAAP.
So in summary, as we look to these two kpis and how they trended throughout 2020, and we correlate them against our EBITDA performance throughout the year, we noticed similar trend in terms of the GAAP versus historic norms again, referring to slide 19, you will note that our year on year EBITDA performance mimics the trends observed in the two.
Kpis.
In summary of the $13 7 million in EBITDA variance for the year, approximately 75% was incurred in Q2 and Q3.
Importantly, as with both the Kpis, we continued to narrow the debt.
Year on year EBITDA gap here in Q4, with the GAAP being $2 7 million on a pro forma basis for the quarter versus a $6 $7 million GAAP in Q3 2020.
Last item of note in this section of my commentary.
The turbulence of 2020 disguise the typical seasonality in our business and in particular, the seasonality of our EBITDA.
In.
In the EBITDA look back chart on Slide 19, you will note that almost 25% of our pro forma 2020 EBITDA came in Q1. This is atypical for our business more typically and expectedly given our construction presence in the north Q1 delivers about roughly 20% of our annual EBITDA.
Q2, and Q4 delivered 25 percentage in Q3 around 30% on.
On balance assuming macro the macro backdrop continues to remain stable, we are expecting to get back to that typical seasonal mix in 2021.
For the third area area of my prepared remarks, I'd like to briefly touch on our recent M&A activity in the preferred stock offering we contemplated or I'm sorry, we completed at the end of Q4.
At the end of the year, we completed our acquisition of vantage equipment. This acquisition adds an additional $40 million of revenue and close to $5 million of incremental adjusted EBITDA to the group on an annualized basis.
The acquisition further expands our territorial reach with Volvo and provides for natural synergies with Lyft Tech our material handling operation in upstate New York.
At a total enterprise value of about $23 million, we believe the deal to be accretive from an EBITDA multiple standpoint, as well as in comparison to the cost of capital we source to fund the transaction, which was the preferred stock offering we completed in concert with the acquisition.
With approximately 30 technicians, serving a market territory known to be greater in size than our established for Michigan territory, where we staff more than 100 technicians, we see we see a tremendous aftermarket opportunity and expect to double the size of that business over time, thereby furthering the accretion over the cost of capital.
Used to fund the deal.
On to step on to Scott Tech.
On March one we completed the acquisition of Scott debt.
Integrated solutions.
As a complement to our peak logics acquisition completed in the middle of 2020.
Specializing in warehousing management software and systems integrations, we believe the combination of peak logic and Scott Tech further expands our full solution product offerings and increases our commitment to the emerging technology space.
At a purchase price of approximately $2 5 million the acquisition adds approximately $10 million of revenue and close to $1 million of annual EBITDA to the enterprise.
For my last for the last part of my prepared remarks, I want to give a quick update on the balance sheet and our credit profile at the end of Q4, two key factors here to discuss leverage and liquidity first leverage.
Mentioned early in the call we realize on organic deleveraging in the business by virtue of our big quarter and rental equipment sales that factor alongside solid EBITDA performance in the quarter and the use of the preferred stock offering to fund the vantage acquisition, all led to total leverage reducing from about three six times.
EBITDA in Q3, 234 times at year end, which with senior leverage dropping to one eight times.
With both leverage ratio as being well inside our leverage covenants touchy.
Touching on liquidity and we feel really good about our position here.
Recall that we closed the IPO with roughly $150 million in cash and revolving liquidity since the IPO in mid February we've acquired five and now its sixth strategic business funded growth Capex in our rental fleet, specifically in an emerging market like Florida and service the cash cost of our debt as of the end of Q.
For I'm happy to report the business held the same level of liquidity that it had at the IPO or approximately $150 million, we believe holding liquidity at these levels given all the challenges and activity that 2020 presented to be an impressive result, a reflection of our cash flow profile and a strong collateral.
<unk>, which we used to fund important strategic investments. This is also a testament to how we've thoughtfully position our capital structure and how we fund M&A.
In closing I want to thank all of my teammates at Alta for your commitment to the business and to each other throughout 2020 to our investors. We appreciate the opportunity to be stewards of your capital and I. Appreciate your support as we navigated our first year as a public company I have great faith in our proven business model our leadership team.
On our visit vision for the future and look forward to a successful 2021.
Thank you for your time and I'll turn it back over to the operator for Q&A.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your telephone keypad again that is far one well.
We'll pause for just a moment to compile the roster.
Your first question is from Alex Weigle from B Riley Your line is open.
Thank you, Ryan and Tony very nice quarter, and a strong year congratulations.
Thank you Alex Alex.
A couple of quick questions.
Adjusted EBITDA margins today around 10 per Se can you talk about some of the drivers to margin expansion in 2021 on beyond.
Yeah.
Sure Alex.
You know when we look back at the fourth quarter. There I made special note in my comments about.
The large amount of rental equipment sales.
And so for the quarter, it's going to it's going to feel like it's going to it's going to look like that our EBITDA margins were depressed, but it really was a function of all of the equipment sales.
And to refer back to the razor and the blades.
Concept, that's inherent in our business model.
As you know raisers don't have as good a margin as the blades.
And so that that mix got thrown out of whack there in the fourth quarter.
As we as we drive forward here.
You know obviously the business model is to is to continue to grow field population.
Build the product support business, which is higher margin.
In the future.
And so we would think that the mix as we continue to move along won't be the same as it was in the fourth quarter and shift more more kind of appropriately back toward a more regular mix of parts and service, thereby kind of driving that EBITDA margin a little bit further north in the future.
Think about rental.
EBITDA margins on rental are very high as well we had some positive news there and continue to trend in the appropriate direction. So so long as rental continues to trend that will also drive.
The EBITDA margin higher.
And then could you maybe talk a little bit about which customer categories are rebounding the quickest post COVID-19 here and which ones are rebounding slower.
And maybe add some thoughts on whether or not there's slower customer categories.
Could catch up.
Sure Alex This is Ryan.
A couple of areas that are that are.
Rebounding faster on our home turf, the automotive industry and in our home state of Michigan.
And then throughout our our material handling dealership footprint anything related to the warehousing market.
Has been has remained steady and as and is accelerating.
Also with the supply constraints anything related to steel the scrap industry is hot right now we have you know that.
Component of our business scrap demolition on the steel industry.
And on the construction side.
And then lastly on M&A can you talk a little bit about your M&A pipeline.
Both within sort of your core.
Business lines as well as thoughts about adding a third leg.
Sure. So you know we think about the first leg being territorial expansion with our tool.
Most significant OEM partners.
And those those opportunities we're always watching for but there has to be a catalyst you know some kind of a succession planning issue or a catalyst for a reason for one of the ownership groups to be looking for.
And exit.
What we have.
A lot of is the infill opportunities, which there were several examples of that last year as we as we look to some of these markets, where we're less mature where the new entrant and taking over territories, where.
We can grow share we'll be looking to build the product portfolio in there there could certainly be on M&A component of that.
Tucking in smaller dealerships in our existing footprint.
And in terms of the third segment we are.
As we mentioned on the last call, we're very focused on kind of watching the the the evolution of transportation on the electrification of the over the road fleet.
Over the road.
Truck segment is something that we'd like to be in long term and as the business evolves. We think that we're really well positioned with our experience in both electric on the.
The battery side and the fuel cell side from our material handling business. So those those are conversations that we're open to it it's sort of a very active time, a lot of new companies coming to market and that we do envision something long term in that sector.
Very helpful. Thank you.
Your next question is for my ski from colleague Securities. Your line is open.
Good afternoon guys.
Okay.
Can we just step back for the personal.
For instance for a second I might have missed it.
Can you repeat back with the organic growth was in the quarter.
And all the various revenue categories that Youre, having your releases and then your channel.
Which ones were the biggest drivers of that well the other thing seem to be off for sure.
Yeah.
Mike I'll take the first half of that is I think your question was.
The organic growth for the quarter I think the number was nine 4%.
As an enterprise yeah nine 4%.
What was the second half for your question, Mike I was just curious as to which categories of.
Revenue drove drove the organic growth for most oh.
Yeah, Dave.
Bye bye and large Mike it was the equipment sales.
As I mentioned rental equipment sales.
As customers, we get towards year end customers have capital budgets that are maybe they're looking to kind.
Kind of.
Get rid of for the year, if you will.
We also have customers that have historically looked to take advantage of bonus depreciation from a tax perspective.
And so if the fourth quarter is usually.
Overweight equipment sales and it was again this year probably more than we expected.
But that's that equipment sales number is what's driving a lot of the organic growth. We did have organic growth as we mentioned in the rental line.
In parts and service and construction as well.
Which all which all kind of bodes well when you kind of Peel the layers back here.
Got it.
I also wanted to ask about your rental fleet here in 2021 allow for those patients spent some time during the downturn on kind of pairing assets, making sure that what they had in there if it was the best performers.
And the best outlook.
We do that that during Q2 Q4 on do you because you have a better.
Performance ahead for the rental fleet from a margin perspective in 2021.
Yeah, Mike This is Tony I'll take that one so when we.
When we think about rental we're thinking almost always about utilization and cash flow is off of it not necessarily gross margin because there's so much depreciation in there.
But as we moved through Q2 and Q3.
We had already kind of committed to making some investments down in Florida, with the Flagler acquisition, and adding rental fleet down there.
We think we think long term net debt that's still the right thing to do.
And you know what we what we did here in the fourth quarter was kind of optimize a little bit I mentioned, the reduction of about $10 million in inorganic kind of acquisition cost here.
As we left the year and as you'll see in our numbers. We've got we have roughly a $400 million fleet headed into 2021.
We feel good about that fleet level.
It may it may ebb and flow as you know.
We turned over if we have a $400 million fleet you will see in our numbers, we talked we turned over.
A quarter of that fleet in the year, which is part of our part of our business model is that rent to sell.
With the heavy equipment to get it out into field population. So at any rate the fleet may ebb and flow a little bit but by and large the expectation here is that we're going to keep the fleet kind of in that at that same level, let the market kind of decide demand to see if we're going to expand.
Or if we have to pair back some more so but we don't we don't at this point have you know.
The of growing the fleet in any material way.
Great.
Maybe one last one for me.
EBITDA that we saw in Q4.
And maybe the.
For the year.
Good like sort of baseline.
Minimum for the for the full year, adding and perhaps maybe 90 10 day for the last two deals you did in the fourth quarter.
And from there you have any sense as to what you might get for Mercury.
On a growth perspective in 2021.
Yes.
Yeah. Good question, Mike the number that I would refer you to two in the fourth quarter is kind of a good metric to maybe build off of for the as.
We move along here.
Is the $26 2 million of pro forma EBITDA for the fourth quarter.
It made special mention of kind of the seasonality.
Here as we as we go along.
And how that got that seasonality kind of get flipped around a little bit in 2020.
But I think I think that fourth quarter numbers, a good one to build off of.
Relative to organic growth.
Coming off of 2020, we would we would we would expect some I mean, we were we were impacted by Covid. So we certainly think we'll be.
Jumping off of 2020 levels.
How much kind of remains to be seen.
I'm not sure we're prepared to give a number at this point.
Just to clarify the exit rate of 26.2 does that include vantage, which was on 12 31 it yes.
Yes, yeah perfect. Thanks, so much guys I appreciate it.
Thanks, Mike sure.
Your next question is from Brian <unk> from Raymond James Your line is open.
Good afternoon, Thanks for taking my questions here.
Just just trying to get a gauge of how supply channels are looking right. Now have you had any issues sourcing parts or equipment quickly.
Or are you seeing some delays here.
We're debt, we're definitely seeing delays in areas. So equipment lead times are starting to stretch in certain product categories. The constraints on steel and other.
Materials are definitely being felt.
We always try to remind that we.
We can withstand short term variability and things like that we use our rental fleet to fill in for for our customer needs and we're seeing that the.
The flip side of that as we we see firming up of pricing and utilization on both rental rates and time utilization, but also on the used side.
Things that are.
Definitely appreciating today.
Okay. Thanks, Brian.
If we look at debt.
Technician additions.
Are you able to break out the organic growth.
The acquisition growth I'm, just trying to get a gauge of the recruiting landscape out there.
You know this is Tony Brian Thanks for joining the one metric that I think we could.
We don't have the debt number kind of top top of mind in terms of how many organic.
Hires we had if you will throughout the year and it gets a little foggy with given COVID-19 and the furloughs and so on and so forth. The one metric that we are kind of pointing to is.
We we've talked a lot about the aftermarket opportunity. We saw we saw down at Flagler in Florida. When we took that dealership over they had 63 technicians I think we closed the year with 83 technicians.
On on staff.
Down there so growing in all the right areas, where theres a lot of opportunity now.
Now that same.
50% increase or whatever whatever the numbers there 30% maybe.
We would not have realized that in other areas it would've been more muted than that but.
But the Florida kind of experienced stands out.
No that's helpful.
That's it for me thanks.
Thanks, Brian.
Your next question is from Matt Summerville from D. A Davidson.
Yeah.
Thanks couple of questions first you just mentioned that Youre seeing.
Pricing for our main on the rental utilization on the used side of things with that then when would you expect the rental utilization GAAP to be fully closed at this point or maybe you're already seeing that in early 'twenty. One so maybe talk about that a little bit.
Yeah.
Matt Thanks for joining this is Tony good question.
As I've mentioned in my prepared remarks on the Q1, where we're kind of off to a good start in terms of.
Continued closing up the GAAP if you will.
Will we get there in Q1, I think still still remains to be seen I like to say by the end of Q1, we would we would see that utilization GAAP close I think.
The comment that I would make is if we continue to see trends.
What we see here in Q1 that utilization GAAP will get closed here.
Hopefully by the middle of the year or in Q2 at some point, but.
We're gaining on it every day.
And then with respect to the actual utilization rate can you give us a sense as to where they are currently maybe versus where they were pre <unk>.
Just pre Covid and maybe we're at a trough during COVID-19 just to kind of frame that up a little better and more specifically.
Yes, I think the way that I would answer that.
Matt is if we if we have 100, if we had $100 of rental fleet.
On hand acquisition costs.
In a in a in a more normal situation, we might have $60 or $65 of that.
Out on out on rent.
The variance the variance that we saw in the shocks that we saw was something like <unk>.
<unk> 10 or <unk>.
Take 10% off of that figure so the 60 becomes 50 for if.
You will.
And then you can kind of extrapolate that into into our business.
And you can you can kind of see what happens to EBITDA, so on and so forth thereafter, but again rough rough math, that's that's kind of what we saw.
And it was in the pockets of that.
It was in pockets of the fleet read our material handling fleet didn't see as big of a shock.
Debt, our construction fleet did in Q2 and Q3.
So the 10% figure that I gave you is kind of the mix and the most acute debt. We saw when you kind of fully mix the entire fleet together.
Got it and then.
Two more quick ones, we can do the algebra later, but just to save the time can you provide us what the organic revenue number was for material handling and then can you also comment from an M&A perspective, I would imagine.
The assets that are serving.
The materials handling side of warehousing logistics E Commerce, maybe we're starting to see some multiple inflation there.
So is it.
Are those transactions do you have anything sort of in the pipeline serving that market or is that something that you're happy with the asset base you have and the organic opportunity in front of you that maybe youre not looking inorganically now there. Thank you.
I'm going to take the second part of that question, while Tony does the math on the on the first part of the question so for.
For the for the kind of non mobile equipment.
Warehouse solutions in the the more systems oriented businesses that we acquired.
Last year and then the <unk>.
Earlier this year.
We are looking for opportunities we would be opportunistic if we saw something but we think that we have the platform that we need. We this is a business that we acquired intellectual property and know.
You could think of it as we've taken a group that had half a dozen and salespeople on the street and today. They have over 100 material handling sales professionals out looking for mining for opportunities.
We think that there'll be very busy for <unk>.
For the foreseeable future off of the platform, we already have but that said we're always looking for.
For interesting assets.
Okay.
Matt just to play off that we.
I'm not sure we've seen an expansion in multiples or deal multiples.
Because of the kind of the.
The demand in the ecommerce space or the kind of the activity in that space, we haven't necessarily seen that play out.
And Matt I'm going to have to actually hang on one.
No problem. Thank you.
Matt What your question was it quarter over quarter in the material handling segment or annual what was your what.
What was your question, we may have to come back.
Yeah, the fourth quarter year over year organic you gave it in construction at 31, eight and I was curious what it was for material handling.
Hum.
We.
Hang on one thing so it.
It looks like material handling that same figure is down 5%.
No.
We'd have to break that down by department.
And keep in mind net.
The material handling segment was hit.
With coke with kind.
Kind of Covid and shutdowns and so on and so for the little bit harder, but anyway, that's the number.
Perfect. Thank you guys very much.
I'm showing no further questions at this time I would like to turn the conference back to Mr. Brian came on for any closing or additional remarks.
No further remarks, thank you everyone for joining and we look forward to continued success in 2021 good evening.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a great day.
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