Q4 2021 Custom Truck One Source Inc Earnings Call
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Hello, and welcome to the custom truck one source fourth quarter 2021 earnings conference call and webcast. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
And once you complier operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Bryan Erman, Vice President of Investor Relations. Please go ahead, Sir Thank you and good afternoon before we begin we would like to remind you that management's commentary and responses to questions on today's call may include forward.
Looking statements, which by their nature are uncertain and outside of the company's control. Although these forward looking statements are based on management's current expectations and beliefs actual results may differ materially for a discussion of some of the factors that could cause actual results to differ please refer to the risk factors section of the company's filings with the SEC. Additionally, please note that you can find it.
Reconciliations of the historical non-GAAP financial measures discussed during the call in the press release issued today. The press release, we issued this afternoon and the presentation for today's call are posted on the Investor Relations section of our website, we will be filing our 2021 10-K with the SEC next week today's discussion of our results of operations for custom truck one source.
Inc, or custom truck is presented on a historical basis.
As of or for the three months and full year ended December 31, 2021 prior periods. While our reported results can only include custom truck one source LP for the period since the April <unk> 2021 merger date, we have presented and we will be discussing today pro forma combined results as if nasco and custom truck that operated together for all periods.
We believe such combined information is useful to compare how the combined company has performed over time.
Joining me today are Fred Ross, CEO , Brian <unk>, President and COO and Brad meter CFO I will now turn the call over to Fred.
Thanks, Brian .
I'd like to welcome everyone to today's call.
As we report on our first fiscal year operating as a combined company. It was clear that the combination of mescaline custom truck has been successful.
With the integration of the business largely largely complete we can further focus on providing unparalleled service to our customers growing our market share and delivering value creation to our shareholders.
I'd like to thank all of our employees customers suppliers, who supported our business, particularly.
Given some of the challenges our industry is faced with for the last two years.
Strong Q4, and full year results highlight the incredible performance by our team.
Looking at Q4 on a pro forma basis compared to the prior year quarter adjusted EBITDA was up 15% despite slightly lower revenues.
On a full year basis, adjusted EBITDA was up 13% when you fully adjust for the inventory and accounts receivable reserve charges that we noted during Q2 of 2021.
Q4 revenue declined less than $1 million compared to the previous quarter and $49 million versus Q4 of 2020.
Decline reflects the impact of continued supply chain issues, particularly for new equipment sales in the early part of the quarter. Our E. R. S business continues to perform very well with utilization increases increasing to 83, 7% for the quarter up from 78, 2% for Q4 of 2020 and 81.
One 4% in Q3 of 2021.
Our <unk> business continues to see very strong demand with backlog growing to a record of $412 million up by 22% just since the end of Q3 and 169% since the end of 2020.
Demand for both rental and new sales has provided us the opportunity to push price up an appropriate degree.
Those price increases coupled with the fantastic job our team has done to control costs and operating efficiencies.
It's allowed us to expand margins across all key business segments.
Finally, we continue to make good progress towards reducing our pro forma leverage ending the year just below four times after fully adjusting for the previously mentioned reserve charges down from approximately four six times at the time of the merger.
Our strong 2021 results reflect the benefits of our unique business model and our focus on end markets that exhibit very strong underlying fundamentals.
Scale, a strong supplier relationships allowed us to meet our customers' rental and sales demand during 2021 to the greatest extent possible to navigate various external challenges.
Our outlook for 2022 reflects continued excellent diversity up demands across our end markets, which will be further extended as we began to see the benefits of the infrastructure Bill hopefully in late 2022 or early 2023.
While our outlook is tempered by the continued impact of supply chain issues and inflation. We are confident that we will continue to navigate these to the best extent possible. During 2022, we expect to see continued strong revenues adjusted EBITDA margin growth across our business segments overall I cannot.
Be more excited about the continued favorable prospects for custom trucks with that I will turn it over to Ryan.
Thanks, Fred and good afternoon, everyone first I want to Echo Fred's comments regarding the continued tremendous efforts of our employees to achieve the integration of the businesses, while delivering strong financial results last year.
Overall demand remains robust in each of our strategically selected for primary end markets transmission and distribution for T&D Telecom rail infrastructure.
We continue to focus on these markets because they provide strong long term growth opportunities well in excess of GDP and are far less cyclical than other truck related end markets. This is reflected in the growing backlogs at the utility and telecom contractors, which represent a significant portion of our customer base.
Passing of the infrastructure Bill last year, bolsters and extends the demand cycle and further strengthens our overall business fundamentals.
Pricing trends across our end markets continue to outpace inflation, reflecting strong demand and the continued implementation of our tiered rental pricing strategy from our key performance metrics perspective. In addition to our improved rental fleet utilization and growth in new sales backlog on a sequential basis, we can.
Can you to drive margin expansion as well as increase our OE C on rent.
On rate yield continues to improve rising to 39, 4% for the quarter up from 37% at the time of the merger.
The underlying fundamentals for our selected end markets continue to be incredibly strong today with industry supply chain issues, presenting the only significant limitation to our ability to meet customer demand.
Over recent quarters, we have experienced intermittent issues receiving adequate supply of the major inputs for our trucks, namely chassis attachments and bodies, there's certainly impacted our ability to deliver product to our customers and grow the rental fleet at our desired pace during Q4.
We did experience some improvement in inventory levels late in the quarter with whole good inventory growing by $28 million versus Q3, but still down $73 million compared to levels at the end of 2020.
Given our scale and strong relationships with the chassis and attachment Oems, we expect to receive more chassis and attachments and 2022 than we did last year base.
Based on current trends, we are hopeful that overall supply chain issues will continue to mitigate during the year and that we will see meaningful improvement during the back half of 2022.
Inflation is impacting our industry, we are seeing wage inflation consistent with the rest of the market, particularly for service technicians as well as higher cost for some of our production inputs, we've taken opportunities both to pass through certain input cost increases to our customers as well as to implement a reasonable price.
Increases where possible we continue to execute our objective of expanding margins across our revenue streams, while being mindful of the overall inflationary environment that our customers are operating in ensuring that we continue to take the long view and maintaining strong customer relationships.
From an integration perspective, the combination of the two companies is largely complete with most actions already taken at this point. These initiatives have become part of how we run the company and allow us to deliver the profitability gains expected from the combination as well as offset the ongoing inflationary pressures.
Mentioned above.
Focusing on M&A briefly in January of this year, we announced that we acquired high rail leasing a leading provider of rental equipment to the Canadian rail market. This acquisition fits well with our overall strategy to selectively expand into underserved areas in both the U S and Canada we.
To use both strategic acquisitions, and Greenfield site expansion to facilitate our revenue and fleet growth and to increase our market share.
Such a measured approach is expected to benefit all three of our business segments.
S Tes and Aps as.
As we look ahead to 2022, we believe we are well positioned to deliver strong revenue gross margin and adjusted EBITDA growth.
Cause of our favorable end market tailwind robust customer demand and solid execution by our team. We are hopeful that as many of the supply chain challenges that we continue to experience subside during the year, we will be able to fully take advantage of multiple opportunities that we see.
We know we Wouldnt have delivered results like we did last year without the efforts of all of our employees, who are working together to deliver unmatched customer service and I'd like to extend a sincere. Thank you to them I will now turn it over to Brad Thanks, Ryan and good afternoon, everyone as Fred and Ryan have indicated Q4 was.
Another strong quarter, while total revenue of 356 million was down 12% versus pro forma Q4, 2020, as a result of supply chain driven drop in new sales full year revenue of $1 48 billion was up 9% versus pro forma 2020.
Despite the year over year decrease in Q4 total revenue adjusted EBITDA was $96 million, a 15% improvement versus pro forma Q4, 2020, and up 13% versus last quarter.
<unk> adjusted EBITDA for 2021 was $323 million.
Which includes approximately $10 million of charges taken in Q2, which we discussed in our previous calls without these charges pro forma adjusted EBITDA for 'twenty, one would have been $333 million versus $295 million in 2020, a 13% improvement.
Our 2021 pro forma adjusted EBITDA is above the midpoint of the guidance. We previously provided.
Ported net loss for the quarter was $3 7 million, an improvement of almost $17 million versus Q3.
Pro forma gross profit, excluding rental depreciation was $125 million and adjusted gross margin for the quarter was 35, 1% up nicely compared to 34, 4% for Q3.
Sequential margin improvement was primarily driven by the continued focus on pricing across our revenue segments and a slight change in revenue mix with rentals accounting for 32% of revenue this quarter versus 31% for Q3.
Pro forma gross profit excluding rental depreciation was $462 million for the full year, a 9% increase versus 2020 S.
SG&A was 44 million for Q4 or 12, 3% of revenues, which includes $4 6 million of share based compensation expense.
Turning to our segment results Fred referenced our strong utilization within our <unk> segment for the quarter, which was 83, 7% up from 78, 2% for Q4 2020 and up.
From 81, 4% for Q3 2021 <unk>.
Average <unk> on rent was also up more than $48 million versus the previous quarter on rent yield was 39, 4% for the quarter up from 38% for Q3.
Our <unk> ended the year at 136 billion. Our team is doing an excellent job executing the pricing strategy. We discussed during our Q3 call there's still upside to be achieved upon contract renewals as we've only turned about 50% of the fleet today.
We have seen the pace of contract churn slow recently and as a result, we believe it will take a quarter or two longer than originally expected to see the full effect in our operating performance.
All these factors combined to push ear S rental revenue, excluding asset sales up more than 4% sequentially E. R. S. Gross profit, excluding depreciation was $88 million up slightly versus Q3.
Overall <unk> continues to see the benefits of the strong underlying end market fundamentals that Ryan discussed.
<unk> performance for the fourth quarter was strong but continued to be impacted by ongoing supply chain issues.
Revenues of $177 million were down from $190 million in Q3, while revenue was down our sales activity continues to be extremely strong with backlog growing by 22% sequentially to $412 million.
Growth continues to be very broad based across our product portfolio.
Supply chain issues are resulting in a temporary impediment to our being able to fully take advantage of the strong demand. We believe the growth in the <unk> sales backlog, primarily reflects growing demand for equipment as well as strong market share gains and our strong pricing discipline, we have been successful empowering inflationary pressures through the implementation of production.
<unk> initiatives put in place during 2021 in addition to passing through any net cost increases to our customers.
Based on our analysis of backlog, we believe margin improvement is still possible, even with the 5% to 7% underlying inflation overall, we were very happy with the performance of the <unk> business last quarter.
Our Aps business posted revenue of $34 million compared to $35 million in Q3.
Gross margin excluding rental depreciation was 35% continued improvement from 28% in Q3. This improvement reflects the benefit of the actions. We took earlier in 2021 to improve the Aps cost structure. We continue to believe that Aps presents an opportunity for us to capture a larger share of our customers' wallet and strengthen our.
Our position with customers and suppliers alike. While this quarter reflects continued progress in this regard we are dedicated to providing the resources necessary to execute a strong profitable business plan.
In addition to strong full year revenue and adjusted EBIT growth, we continue to focus on maintaining a strong liquidity position and improving leverage while at the same time investing in our rental fleet and pursuing selective growth through M&A.
We decreased the borrowings on the ABL by $11 million in the quarter with the outstanding balance ending at $394 million.
At year end, we had $347 million available under the ABL with the ability to upsize the facility if needed.
I should note we did use the ABL to fund the purchase of high rail leasing in January of this year. So the current balance is modestly higher than it was at year end.
When you're using adjusted EBIT of $333 million, we finished FY 'twenty, one with leveraged just below four times a reduction of <unk> three times from Q3.
Approximately three times leverage remains an achievable goal of ours by the end of 'twenty two early 'twenty three but we will also look to make incremental investments and prudent acquisitions. If we believe they create long term shareholder value.
With respect to the outlook for 'twenty two based on the continued market strength, our current backlog expectations for supply chain and our outlook for the rental fleet. We are providing the following guidance. We project total revenue to be between $1 $5 7 billion and $1 75 billion and adjusted EBIT of between $385 million.
$410 million, our adjusted EBIT guidance indicates year on year growth of 14% to 23%.
Recognizing the various margin profiles of our three segments. We're also providing segment level revenue guidance for the first time to provide added transparency to our outlook, we expect <unk> revenue of $610 million to $650 million.
Yes revenue of 825 million to $950 million and Aps revenue of $130 million to $150 million, we aren't providing specific guidance on cash flow, but we do expect to be cash flow positive in 'twenty, two excluding any incremental M&A, while still making steady investments in our rental fleet.
Believe that our FY 'twenty two outlook reflects the overall strength of the market and continued tremendous efforts by our team or by our team.
To drive margin expansion, but adequately reflects the supply chain challenges, we foresee for at least the first half of the year.
In closing I want to Echo friend Ryan's comments regarding the exceptional performance. Our team delivered this past year. They were asked to accomplish an incredible feat execute a transformational integration delivered double digit adjusted EBIT growth expand margins and an inflationary environment not seen in over 40 years and continue to deliver the highest level of customer service.
Truly remarkable.
With that I'll turn it over to the operator to open the line for questions.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before.
<unk> Star one one moment, please while we poll for questions. Our first question today is coming from Justin Hauke from Baird. Your line is now live.
Oh, great good afternoon, everyone.
Thanks for the rundown here.
Have a couple.
Well, let me ask a couple here and then I might jump back in but I.
I guess, maybe the first question just in Tes.
The backlog, obviously was really strong.
But you'd noted the revenue decline.
Is there I'm just curious.
Was the backlog increase a function where the orders up.
Strongly as well or is it just that you werent able to deliver some of that inventories in the backlogs continuing to increase.
Orders were up as well so it was a very strong quarter from an order perspective also.
Then.
Supply chain is what's just constraining our ability to deliver right now in Q4.
Okay.
And then I guess the next one just thinking about the 22 guide.
And specifically the margins I know this year, you guys had sort of elevated.
Repair and maintenance expense.
On the <unk> side.
I just was curious if you can kind of decline.
Maybe how much of a margin lift that is in 2022.
Just to kind of think about an area support that might be able to help those margins expand.
Yeah.
I think it's something.
That we felt certainly through most of 'twenty, two but I'd say when you look at our Q4 margin.
If you really break it down kind of just on core rental rate were in 70, 677% just on core rental I think that is a good level now and I think margin expansion.
All happened not so much from a decrease in R&M going into next year, because again I think we stabilize that in Q4, but more as the pricing improvement continues to make its way through our the revenue stream.
Okay. That's helpful and I guess the last one here before I turn it over.
Just staying on the guidance, but how much revenue are you assuming from from high rail in 2022.
Roughly.
In 'twenty two I mean in the hydro business is heavily on rental so it's not going to have as much of an impact on the overall revenue stream, but it's $15 million ish around there, adding a next year.
Okay. Thanks, I'll turn it over.
Thank you. Your next question is coming from Scott Schneeberger from Oppenheimer. Your line is now live.
Thanks, very much good afternoon.
Could we just talk a little bit about what youre seeing in each of the end markets that you serve from a demand perspective and kind of.
Comparing contrasting demand and also.
Where the supply chain issues are affecting you.
With regards to the end market, a little bit more relative to the customer wants and needs.
Sure Yeah, I'll start Scott good to talk to you, we're seeing really strong demand in all four of the end markets that we talk about so T&D. Although we're seeing demand continue to increase there you see that in backlog some of the reported backlog with some of the public publicly traded utility contractors.
We're seeing good growth there, we're seeing strong demand on telecom, we're continuing to see that we're seeing that.
Continue to hold.
Both on the contractor side and some are some of the telecom providers also.
And then we are seeing rail grow obviously now with the addition of high rail we're seeing some more opportunities to both rent and sell equipment on the railroad side.
And then more broadly in infrastructure, we're seeing robust demand there too. So we're seeing really strong demand in those areas to where we feel like the infrastructure Bill has not had any impact yet right. We anticipate that those will start to be <unk>.
<unk>, where people will be coming for asking for equipment.
At the very end of this year are really heading into 2023, So and then Scott from a supply chain perspective.
We mentioned in our comments that we actually saw whole goods inventory grow into the end of.
Into the end of the year, we are seeing a continued to build slightly.
So far in 2022, so those are positives, but Scott it's really just the match of the chassis and the attachment showing up at the right side at the same time for us to be able to build so.
We are seeing improvements for sure, but we think that will continue to continue to improve later this year.
Thanks, Tien tsin.
If we can talk to you about your ability to price.
And how how your interactions with customers are on that are they understanding in the environment. How are you approaching the cost or the price increases and then it sounds like the portfolio is not turning as fast due to the.
The supply chain constraints.
In and out sure but.
Ability to get completed product to the customer so is that the way the pricing increase to cover inflation.
Is that you mentioned it should be stronger in the back half of the year.
Just curious if you could delve in a little bit more on how the how that pricing is going and you mentioned in your guidance you feel confident that you've covered inflationary pressures just if you could provide a little bit more support on how you're doing that thanks.
Yeah, Scott this is Bryan.
I think there's a lot of questions embedded in there and I'll start with the churn comment I will turn it over to Fred in terms of customer reaction and in those conversations but on the churn comment yes, we've seen the contract churn starts to slow a little bit and what all attributed to is.
The demand is so strong supply is so tight we're a contractor historically if he had a project gap of 60 to 90 days.
Maybe in the longer he would turn a piece of equipment back and take it back out when he needs. It theyre holding those now just add at a fear that they won't be able to give the equipment, which is real now there is a benefit to that and in it.
In the to the extent that we're not touching the equipment and that we incur in the R&M and holding utilization. So if a unit comes back it takes us 25 days.
Roughly to turn a piece and get it back out on rent in the we incur the R&M expense.
Without the revenue flowing through that so while we're not seeing the price increase there is some benefit to us by slowing the churn just because it does extend the duration and you're not getting that R&M costs.
But we do think that at some point all the contracts youre going to have to turn right and that's where they will it will just take a little bit longer than we had anticipated getting next year. When you look at the growth on rate and look at our or why I think in the majority of the price increases come through.
Because it was it was kind of low hanging fruit right. So if you compare Q2 to Q4 <unk> were up like 657%, we'd said before we were pushing high singles low doubles.
So we're over halfway there, but still more room to come but I'll turn to Fred in terms of kind of market reaction to the price increase on sales and backlog and everything so mark the market's accepting all of the price increases without any problem.
Everybody's living in the same we're all living in the same world. They see everything every day, whether it's cars trucks fuel it doesn't really seem to matter.
As far as.
Our customers are mostly happy to get the equipment because because of our relationships. We believe were getting far more equipment that our competitors are.
And our and our and our.
Customers understand that look theyre going to have to pay more money.
We're not gigging gigging anybody we're just passing on the fair fair amount and we're not really getting any pushback.
Sure.
Matter of fact, I think they are just happy to get it and so we don't we don't believe that will have any trouble continued continue to be able to expand the margin when it when it makes sense.
And pass on any of the any of the increases.
Still continue to build our backlog.
We know that we're able to pick up a lot of we've been able to pick up more and more employees because our competition doesn't have the trucks are the equipment to build them and we are getting them now.
It's going to we'll get even better as the weeks and months go by.
Hopefully to be normalized by the end of the year.
Thanks, Ed I appreciate that Friday actually covered covered what I was going to follow up within that in that answer I'm going to sneak one more in if I may and that would be.
On the M&A appetite saw you did high rail.
And you alluded in the prepared.
Our prepared remarks or maybe in the release that more to come. It's certainly a possibility can you just talk to what areas you would see potential M&A this year and size and what's embedded in that question is how much are you willing to move the leverage needle.
In the current environment.
If the right opportunity presents itself.
Just curious how you.
The way that that factor thanks.
Sure Scott, It's Ryan I'll start and then I'll, let Brad finish on leverage, but we'll still be opportunistic. So as we talked about we think there's a couple places that makes sense as we expand our footprint and as we continue to grow the rental side of the business too. So we will still be opportunistic, but these are small transactions.
I would say are similar size to high rail.
From an overall dollar standpoint, and I don't think that it will increase leverage much right on the transactions that we're looking at yes, I mean, most of that most of those the.
<unk>, we're evaluating are we will be able to pick them up I think at attractive multiples.
That's where we are leverage wise right now it wont move the needle very much at all if at all would really do I think in our opinion is slow the progression I don't think it takes leverage up.
Again based on the target list that we have at this point.
Got it thanks appreciate it guys.
Thank you next question is coming from Noelle Dilts from Stifel. Your line is now live.
Yes.
Congrats on a strong year.
I was hoping that.
You could.
Discuss just how youre thinking about capex for the year I recognize that a lot of that is probably dependent on.
How the supply chain sort of said he says, but but could you just speak to how youre thinking about sort of a range of potential investments.
Yeah.
Yeah No this is Brad.
Thanks for joining us.
From a capex standpoint, I think our view on 'twenty two will be consistent with what we said our longer term goal is in that from a fleet growth standpoint targeting that mid to upper single digit number. So the fleet size today is about $1 four.
So growth Capex call it against $70 million to $100 million.
And then from a replacement standpoint, I think the net spend there.
Is is similar size right I think we're targeting fleet churn or turnover.
Kind of in the mid teens to keep in line with our five to seven year hold on most of the assets.
But to your point right. It is very heavily dependent upon supply chain and timing.
And.
I think that you could see.
Plus or minus a few points there depending on when things come in but I feel I think we as we're sitting here today feel pretty comfortable.
As we look at supply chain I do think capex spend not a whole lot different than we saw in 2021 is going to be back half weighted just.
Just because we do think the supply chain is a bit disrupted here in the first half and then as that improves we will look to ramp up the capex spend as we get into Q3 Q4, hopefully in in the later stages of Q2.
But at this point call it more back half weighted.
Okay great.
And then you know.
Utilization here, you talked about theoretical Max being in the in the mid eighties getting to that point.
Could you just maybe speak to how you're thinking about the sustainability of utilization into the early part of next year and how that trends.
Yeah.
Potentially some supply chain easing.
Yeah, I'll start and then I'll add the Ryan you for any additional costs, but we finished Q4, we were kind of the <unk> hundred 84% for the quarter, which to your point is getting near our what we believe to be a theoretical Max given the demand where it is right now and it really kind of the exceptional performance that our team is is putting through in the field to keep the app.
So it's up and running and turn right. We're not seeing much of a pullback Q4 for US. This past year was the strongest Q4 utilization, we even Ryan Fred myself, we've seen since we've been here.
In Q1 it.
Didn't slow down either you normally see a December dip that really didn't happen. So we started out of the gate pretty strong in Q1, we don't see much of a pullback happening in at this point aren't anticipating.
Those traditional seasonal dips.
Like we have in the past.
Okay. Thanks very much.
Thank you. Our next question today is coming from Stefan with Chris <unk> from CJS Securities. Your line is now live.
Hey, guys. Thanks for taking my questions.
Hey, Steph.
Can we talk a little bit more about high rail.
What about that acquisition was attractive to you and maybe you know as <unk>.
<unk> bin.
Feeling with the acquisition any unknown synergies or challenges you've run into.
Yes, the acquisition is going well I'd say what was interesting for US is really two things one we've been looking in eastern Canada. So we like the idea of having a footprint in eastern Canada, and we like the rail sector. So for US those were the two reasons that I think it made a lot of sense.
We're really impressed with the team up there and the relationships they have with their customers.
From an integration standpoint, I think it's going well I think we feel good about the opportunity now to sell product into some of that customer base and then also to grow more.
More broadly kind of the Canadian opportunity for custom truck more broadly so we're feeling really good about things so far.
From a synergy standpoint, it was a it was a small deal and it was.
Family held they ran it pretty lean so from a cost standpoint, not a lot of the synergy opportunity, where we see the upside no different in some ways in combining <unk> and <unk> Das is the revenue portion where they were really focused on a certain product category.
Limited in their ability to expand that from capital.
And then you can look at the customer base. It's some of the existing customer base, we have but they're released relationships that we've come to find out are extremely deep.
We think it will just wrapping it represent more revenue upside with some of those customers.
Great.
And then just touching on the guidance for 2022.
I guess can you talk about what kind of growth in the fleet you're expecting there.
And if if supply chain issues were to persist throughout the end of year do you think you'll still be able to hit that guidance.
Yeah, I'd say from a fleet standpoint the.
The midpoint, there assumes kind of that mid single low to mid single digit growth fleet wise on the upper end, you can kind of get into that seven day.
9% growth is what's assumed in there if the supply chain stays where it is exactly today.
I you know I think that the it could be a bit challenging we see a lot of opportunity there still from pricing.
Brian mentioned, we are seeing some some green shoots from the supply side. So there is improvement I think we have appropriately sized kind of the range the EBITDA range.
To reflect some downside and further downside risk on supply chain.
Or limited improvement based on kind of what we're seeing right now.
So again, we could get surprised but I think we feel we feel very comfortable with that.
The guidance ranges that we've put out there.
Perfect. Thanks, guys.
Thank you as a reminder, that star one to be placed in the question queue. One moment. Please while we poll for further questions.
We have reached the end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Well that concludes our call today, thanks, everyone for the interest in custom truck. We look forward to speaking with you on our next quarterly earnings call in the meantime, please don't hesitate to reach out with any questions. Thank you.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.