Q4 2023 Alta Equipment Group Inc Earnings Call

Yeah.

Matt: Good afternoon, and thank you for attending the Alta Equipment Group fourth quarter and full year 2023 earnings conference call. My name is Matt, and I'll be your moderator for today's call.

Good afternoon, and thank you for attending to Alta equipment group fourth quarter and full year 2023 earnings Conference call. My name is Matt and I'll be your moderator for today's call.

Jason Dammeyer: I will now like to turn the call over to Jason Dammeyer, Director of SEC Reporting and Technical Accounting with Alta Equipment Group. Thank you, Matt. Good afternoon, everyone, and thank you for joining us today.

I'd now like to turn the call over to adjacent Dannemeyer director of SEC reporting and technical accounting with Alta equipment group.

Thank you Matt.

Good afternoon, everyone and thank you for joining us today.

Jason Dammeyer: A press release detailing Alta's fourth quarter and full year 2023 financial results was issued this afternoon and is posted on our website along with a presentation designed to assist you in understanding the company's results. On the call with me 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 our fourth quarter and full year 2023 financial results. We will begin with some prepared remarks before we open the call to your questions. Please proceed to slide two.

Really detailing Alta fourth quarter and full year 2023 financial results was issued this afternoon and is posted on our website along with a presentation designed to assist you in understanding the company to adult.

The call with me today are Ryan Greenwald, our chairman and CEO and Tony <unk>, Our Chief Financial Officer.

For today's call management will first provide a review of our fourth quarter and full year 2023 financial results. We will begin with some prepared remarks before we open the call for your questions.

Please proceed to slide two.

Yeah.

Jason Dammeyer: Before we get started, I'd like to remind everyone that this conference call may contain certain forward-looking statements, including statements about future financial results, our business strategy and financial outlook, achievements of 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 Alta's 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. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call.

Before we get started I'd like to remind everyone that this conference call may contain certain forward looking statements, including statements about future financial results, our business strategy and financial outlook achievements of 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 <unk> 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 operation.

Although we believe these expectations are reasonable we undertake no obligation to revise any statement to reflect changes that occur after this call.

Jason Dammeyer: Descriptions 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. A reconciliation of gap to non-gap measures is included in today's press release and can be found on our website at investors.altaequipment.com. I will now turn the call over to Ryan. Thank you, Jason. Good afternoon, everyone, and thank you for joining us today.

Descriptions 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.

Reconciliation of GAAP to non-GAAP measures is included in today's press release and can be found on our website at investors that Alta equipment Dot Com I will now turn the call over to Brian.

Thank you Jason Good afternoon, everyone and thank you for joining us today I'll begin with a quick overview of our fourth quarter and full year 2023 results then provide a current assessment regarding the business conditions in our end user markets followed by an update on our growth strategy. After I conclude Tony will provide a detailed analysis.

Ryan Greenawalt: I will begin with a quick overview of our fourth quarter and full year 2023 results, then provide a current assessment regarding the business conditions in our end user markets, followed by an update on our growth strategy. After I conclude, Tony will provide a detailed analysis regarding our financial and operating performance. I am pleased to report that we achieved record results in 2023. Our performance would not have been possible without the complete dedication and solid execution by the Alta team. I sincerely thank you.

Regarding our financial and operating performance.

I am pleased to report we achieved record results in 2023, our performance without a impossible without the complete dedication and solid execution by the Altra team I sincerely. Thank you the.

Ryan Greenawalt: The momentum in our business clearly continued during the fourth quarter as we capitalized on the broad-based strength in our end-user market. Total revenues grew 21.7% over the year-ago quarter to a quarterly record of $521.5 million for the fourth quarter and increased 19.4% to $1.9 billion for the year. Revenues for our construction segment increased 22% to $328.1 million in the fourth quarter and 12.9% to $1.1 billion for the year.

The momentum in our business clearly continued during the fourth quarter as we capitalize on the broad based strength in our end user markets total revenues grew 21, 7% over the year ago quarter to a quarterly record of $521 5 million for the fourth quarter and increased 19, 4% to $1 9 billion for the year.

Revenues for our construction segment increased 22% to $328 1 million in the fourth quarter and 12, 9% to $1 1 billion for the year.

Ryan Greenawalt: Material handling revenue increased 16% to $179 million for the quarter and 19.4% to $681.5 million for the year. New and used equipment sales grew 25.5 percent from 817.2 million in 2022 to just over 1 billion this year. This is an annual record, and as we celebrate this milestone, we should also highlight the versatility and resilience of our business model, which generated over 519.6 million in high-margin parts and service revenue across the business segment in 2023, an increase of 17.7 percent year over year. Alta is unique in the breadth of its product offerings, the scale of its addressable market, and the defensiveness of its market position.

<unk> handling revenue increased 16% to $179 million for the quarter and 19, 4% to $681 5 million for the year.

New and used equipment sales grew 25, 5% from $817 2 million in 2022 to just over $1 billion. This year.

This is an annual record and as we celebrate this milestone we should also highlight the versatility and resilience of our business model, which generated over $519 6 million and high margin parts and service revenue across the business segments in 2023, an increase of 17, 7% year over year.

Alta is unique and the breadth of our product offerings, the scale of our addressable market and the defensiveness of our market position our.

Ryan Greenawalt: Our focus is on driving and sustaining long-term equipment field population and driving aftermarket support penetration to an increasingly diversified customer base. Providing our customers with best-in-class support to keep their fleets highly utilized with as little downtime as possible remains the central focus of our operation. At the end of the year, we had over 1,300 factory trained and certified revenue-producing technicians.

Our focus is on driving and sustaining long term equipment field population and driving aftermarket support penetration so an increasingly diversified customer base, providing our customers with best in class support to keep their fleets highly utilized so theres little downtime as possible remains the central focus of our operations at the end of the year, we had over 1300 factory.

Trained and certified revenue producing technicians.

Ryan Greenawalt: Today's investor presentation includes, on slide 10, an overview of some of the attractive features of Alta's equipment dealership business model, including protected exclusive areas of primary responsibility or APRs, exclusive rights to OEM replacement parts, and proprietary diagnostic software to service the field population. Warranty repair work that must be performed by authorized dealers, factory training to assure expert product support capabilities, and annuitized product support revenue streams with pricing power given exclusivity for replacement parts and scarcity of skilled labor. Another important differentiator of a dealer-integrated rental business is our ability to utilize our extensive and professional sales team to get the most return on retailing used rental equipment to customers, rather than simply offloading it to an auction house.

Today's investor presentation includes on slide 10, an overview of some of the attractive features of offers equipment dealership business model, including protected exclusive areas of primary responsibilities are apr's <unk>.

Exclusive rights to OEM replacement parts.

Primary diagnostic software to service the field population.

Warranty repair work that must be performed by authorized dealers back.

<unk> III training to assure expert product support capabilities and our newest highest product support revenue streams with pricing power given exclusivity for replacement parts and scarcity of skilled labor.

Another important differentiator of a dealer integrated rental business is our ability to utilize our widespread and professional sales team to get the most return on retailing used rental equipment to customers rather than simply offloading to an auction house. This allows us to keep the valuable aftermarket returns from our parts and service expertise within our Apr's knocks it down.

Ryan Greenawalt: This allows us to keep the valuable aftermarket returns from our parts and service expertise within our APRs, not to downgrade our rental capabilities, but I want to reiterate that our business's core competency lies in our operational excellence as a top performing dealer, providing full-scope equipment solutions to our customers through professional sales and service capabilities. I'll now talk about our current business. Our outlook for 2024 is positive as there are multiple opportunities for continued growth in our business segments and expansive end-user markets. Most importantly, the positive sentiment from our customers is continuing into this year.

Our rental capabilities, but I want to reiterate that our business is core competency lies in our operational excellence is a top performing dealer, providing full scope equipment solutions to our customers through professional sale and service capabilities.

Now I'll talk about current business.

Our outlook for 2024 is positive positive is there are multiple opportunities for continued growth in our business segments and expansive end user markets. Most importantly, the positive sentiment from our customers is continuing into this year.

Ryan Greenawalt: Visibility is encouraging for our construction and material handling segment as supply chains have normalized, and we have strong equipment orders already on the books for the year. As a result, demand for our product support services will grow as well. Industry-related data also supports our view for this year. For example, total U.S. construction contracts increased significantly year over year in January.

Visibility is encouraging for our construction and material handling segment the supply chain to have normalized and we have strong equipment orders already on the books for the year as a result demand for our product support services will grow as well.

And just related data also supports our view for this year total U S. Construction.

<unk> increased significantly year over year on January.

Ryan Greenawalt: Non-residential construction starts are forecast to increase from $441 billion last year to $458 billion in 2024. Federal infrastructure spending is also expected to accelerate as many of these major projects have yet to break ground, and contract awards are strong in both the Northeast and Florida, where we operate. Additionally, state DOT 2024 fiscal year budgets are more than 10% higher than last year. The onshoring trend in manufacturing continues in much of our Northern Territory. And general contractors and subcontractors are extremely busy with full backlogs of met lack of manpower remaining an ongoing challenge.

Nonresidential construction starts are forecast to increase from $441 billion last year to 458 billion in 2024.

Federal infrastructure spending is also expected to accelerate as many of these major projects have yet to break ground.

Contract Awards are strong in both the northeast and Florida, where we operate.

Additionally, state Dot's 2020 for fiscal year budgets are more than 10% higher than last year.

The onshoring trended manufacturing continues and much of our northern territory.

And general contractors and subcontractors are extremely busy with bold backlogs with lack of manpower remaining an ongoing challenge.

Ryan Greenawalt: In the material handling segment, where we enjoy arguably the most diverse market and market exposure of any industry, we are focused on the themes of labor and energy efficiency as the market settles in at what were record levels pre-COVID. We are continuing to make progress on expanding our market share in the warehouse market, along with Heister Yale and our allies product lines. Additional sales in this market segment increased our opportunity to sell advanced technology solutions, leading to more complex and profitable customer relationships for both dealer and OEM. Our diversified growth strategy continues to prove very successful, as proven by our financial and operating growth over the last three years. We have demonstrated our ability to significantly expand our business organically through acquisition and entering new end-user markets.

In the material handling segment, where we enjoy arguably the most diverse end market end market exposure of any industry. We are focused on the themes of labor and energy efficiency as the market settles in and what were record levels pre COVID-19.

We are continuing to make progress on expanding our market share in the warehouse market, along with Hyster, Yale and our allies product lines additional sales in this market segment increased our opportunity to sell advanced technology solutions, leading to more complex and profitable customer relationships for both dealer and OEM.

Our diversified growth strategy continues to prove very successful as proven by our financial and operating growth over the last three years, we have demonstrated our ability to significantly expand our business organically through acquisition and entering new end user markets.

Ryan Greenawalt: During 2023, we achieved organic growth of 12.3% by increasing our market share, expanding our product portfolio, and entering new territories. We will continue to expand our geographic footprint and product portfolio in our existing business segments by leveraging our existing OEM relationships and developing partnerships with new manufacturers. Our three acquisitions last year are representative of our strategy. In previous quarters, we discussed our acquisition of M&G Material Handling, expanding our lift truck market coverage in New England. In October, we acquired Burris Equipment Company, a premier supplier of compact construction and turf equipment with three locations in Illinois.

During 2023, we achieved organic growth of 12, 3% by increasing our market share expanding our product portfolio and entering new territories. We will continue to expand our geographic footprint and product portfolio in our existing business segments by leveraging our existing OEM relationships and developing partnerships with new manufacturers.

Our three acquisitions last year are representative of our strategy.

In previous quarters, we discussed our acquisition of LNG material handling expanding our lift truck market coverage in new England.

In October we acquired burst equipment company, a premier supplier of compact construction and turf equipment with three locations in Illinois.

This acquisition gives us further coverage and market penetration on the Metro Chicago market.

Further growth opportunities in the highly fragmented complex segment of the construction equipment market.

Ryan Greenawalt: This acquisition gives us further coverage and market penetration in the metro Chicago market and further growth opportunities in the highly fragmented compact segment of the construction equipment market. In November, we acquired Alt Industries, a privately held Canadian equipment distributor with locations in Ontario and Quebec. This was Alta's first investment in Canada for its construction equipment segment. ALT has built a high-performing equipment dealership in the aggregate and mining space, a growing end market in that region. Also in November, Alta established a new OEM relationship with Case Power and Equipment, which allowed Alta to enter the Central and Western Pennsylvania markets, initially serving Pittsburgh and surrounding areas, with plans to further expand into Central Pennsylvania in 2024, serving general construction, infrastructure, and residential and non-residential construction contractors. Both locations will sell in service the full lineup of Case heavy compact and subcompact equipment and attachments.

November we acquired also industries are privately held Canadian equipment distributor with locations in Ontario, and Quebec. This was also the first investment in Canada for our construction equipment segment.

<unk> has built a high performing equipment dealership in the aggregate and mining space, a growing end market in that region.

Also in November we established a new OEM relationship with case power and equipment, which allowed also to enter the central and Western Pennsylvania markets, initially serving Pittsburgh and surrounding areas with plans to further expand into central Pennsylvania in 2020 for serving.

Serving general construction infrastructure and residential and nonresidential construction contractors, both locations will sell and service. The full lineup of case heavy compact and sub compact equipment in attachments.

The 16 acquisitions, we completed since going public in 2020 are major contributors to our success, providing $537 million in revenue and $65 million and adjusted EBITDA, we are continuing to pursue accretive acquisitions and opportunities, which would further expand the scale and scope of product offerings for our customers.

We also remain committed to our E mobility strategy to leverage the emerging alternative energy related opportunities in the commercial trucking segment.

Ryan Greenawalt: The 16 acquisitions we completed since going public in 2020 are major contributors to our success, providing $537 million in revenue and $65 million in adjusted EBITDA. We are continuing to pursue accretive acquisitions and opportunities, which would further expand the scale and scope of product offerings for our customers. We also remain committed to our e-mobility strategy to leverage the emerging alternative energy-related opportunities in the commercial trucking segment. In addition to our current initiatives with Class VIII tractors, we're also evaluating additional segments, including both heavy-duty Class VI and VII and light-duty Class III-V EVs.

In addition to our current initiatives with class eight tractors. We're also evaluating additional segments, including both heavy duty class six and seven and light duty class three through five evenings are approach aligns with our current field population strategy and include sales parts and service and turnkey charging infrastructure solutions.

In closing 2023 within that.

It was an outstanding year for our business and we are focused on continued growth profitability and balanced capital allocation.

Lastly, we strive everyday to foster a culture of empowerment, and accountability and opportunity and we rally around the shared purpose delivering trusts that makes a difference I want to again, thank our employees for their dedication in delivering trust to our customers our business partners and so our valued shareholders. Our shared purpose is at the foundation of our corporate <unk>.

Ryan Greenawalt: Our approach aligns with our current field population strategy and includes sales, parts, and service, as well as turn-key charging infrastructure solutions. In closing, 2023 was an outstanding year for our business, and we are focused on continued growth, profitability, and balanced capital allocation. Lastly, we strive every day to foster a culture of empowerment, accountability, and opportunity, and we rally around the shared purpose, delivering trust that makes a difference.

Culture, which is ultimately what makes also the premier equipment dealership platform, we are today ill.

Ill now turn it over to Tony to discuss our financial performance in more detail.

Thanks, Ryan and good evening, everyone and thank you for your interest in Ulta equipment group and our fourth quarter and full year 2023 financial results. We're proud of our 2023 performance and before I start I first want to congratulate my teammates for their hard work and data.

Ryan Greenawalt: I want to again thank our employees for their dedication to delivering trust to our customers, our business partners, and to our valued shareholders. Our shared purpose is at the foundation of our corporate culture, which is ultimately what makes Alta the premier equipment dealership platform we are today. I'll now turn it over to Tony to discuss our financial performance in more detail. Thanks, Ryan. Good evening, everyone.

Case into the business into our customers in 2023.

Our results mirror, our culture, which is grounded in our guiding principles and all of us continuously developing our one team approach to the business day in and day out. Thank.

Thank you to all of <unk> employees, which now numbers.

<unk> strong and ranges from Illinois, Illinois to Maine, and from Florida to the northern regions of Quebec and Ontario.

Anthony J. Colucci: And thank you for your interest in Alta Equipment Group and our fourth quarter and full year 2023 financial results. We're proud of our 2023 performance. And before I start, I first want to congratulate my Alta teammates for their hard work and dedication to the business and to our customers in 2023. Our results mirror our culture, which is grounded in our guiding principles, and all of us are continuously developing our one-team approach to the business day in and day out. Thank you to all of Alta's employees, who now number 3,000 strong and range from Illinois to Maine and from Florida to the northern regions of Quebec and Ontario.

My remarks today will focus on three areas first I'll briefly present, our fourth quarter results, which will include specific comments on what was strong operating cash flow in Q4 second.

Second I'll present and comment on our full year 2023 results.

On several key themes and metrics for the year.

Lastly, I'll provide guidance for 2020 for adjusted EBITDA and discuss the assumptions and puts and takes that underpin. The annual guide as part of that discussion I'll provide some insights into Q1, given where we are in the calendar.

Before I get to my talking points. It should be noted that I'll be referencing slides from our presentation throughout the call 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 <unk> Dot com.

Anthony J. Colucci: My remarks today will focus on three areas. First, I'll briefly present our fourth-quarter results, which will include specific comments on what was a strong operating cash flow in Q4. Second, I'll present and comment on our full-year 2023 results, focusing on several key themes and metrics for the year. Finally, I'll provide guidance for 2024 adjusted EBITDA and discuss the assumptions and puts and takes that underpin the annual guidance. As part of that discussion, I'll provide some insights into Q1, given where we are on the calendar. Before I get to my talking points, it should be noted that I'll be referencing slides from our presentation throughout the call 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 altg.com. With that said, for the first portion of my prepared remarks, and as presented in slides 12 to 21 in the earnings deck. Fourth Quarter Performance

With that said for the first portion of my prepared remarks and is presented in slides 12 to 21 in the earnings deck.

Quarter performance.

For the quarter the company recorded record revenue of approximately $522 million.

Which is up a notable $93 million versus Q3 Q4 of last year and represents the first $500 million quarter in the company's history.

$522 million of revenue for the quarter reflects a 17% organic increase over Q4 2022, making for another comparatively strong quarter against increasingly more difficult comps.

Specifically equipment sales, which are usually very strong in Q4, and we are again this year increased $70 million for the quarter to $336 million.

Just to pause here for a moment because of the unprecedented level of equipment sales were a highlight for the quarter.

For the year, we placed approximately $205 million more equipment into field population when compared to 2022.

Anthony J. Colucci: For the quarter, the company recorded record revenue of approximately $522 million, which is up a notable $93 million versus Q4 of last year and represents the first $500 million quarter in the company's history. revenue for the quarter reflects a 17% organic increase over Q4 2022, making for another comparatively strong quarter against increasingly more difficult comps. Specifically, equipment sales, which are usually very strong in Q4 and were again this year, increased $70 million for the quarter to $336 million. Just to pause here for a moment because the unprecedented level of equipment sales was a highlight for the quarter. For the year, we placed approximately $205 million more equipment in the field population when compared to 2022. Why is that important?

Why is that important.

Recall that in Q1 represented information to investors that supported that for every incremental dollar of equipment, we were able to sell it to field population that we could expect approximately 50.

Annual high margin product support revenue overtime.

So it follows that in a year, where we sell $205 million more equipment than we did in the previous year, we have great confidence that additional product support revenues will be there for years to come.

Moving onto product support our products, our parts and service business lines.

In spite of the quarterly comp hurdles getting more difficult product support revenues were approximately $130 million for the quarter up $11 $5 million.

We're over 10% organically versus last year.

Turning to rental our rental business held up well for the quarter, given we typically see a falloff sequentially as we move from Q3 to Q4, each year rental revenues were a solid $55 million for the quarter.

Anthony J. Colucci: Recall that in Q1, we presented information to investors that supported that for every incremental dollar of equipment we were able to sell into the field population, we could expect approximately 50 cents of annual high-margin product support revenue over time. So, it follows that in a year where we sell 205 million dollars more equipment than we did in the previous year. We have great confidence that additional product support revenues will be there for years to come. Moving on to product support, our products, and our parts and service business line. In spite of the quarterly comp hurdles getting more difficult, product support revenues were approximately $130 million for the quarter, up $11.5 million, or over 10% organically versus last year. Starting rental, our rental business held up well for the quarter, given we typically see a fall off sequentially as we move from Q3 to Q4. Rental revenues were a solid $55 million for the quarter.

From an EBITDA perspective, we realized $49 7 million and adjusted EBITDA for the quarter, which is up $7 million from the adjusted level.

Fourth quarter, 2022, and $3 $6 million on a pro forma basis.

All told an extremely strong quarter to end the year from a sales and EBITDA perspective, with the quarter coming in on the high end of our expectations again, primarily due to the large beat in equipment sales.

From a cash flow perspective, the quarter was extremely strong as free cash flows from operations as we defined it on slide 32, where approximately $50 million for the quarter as we benefited not only from the strong P&L performance, but from the leveling off of inventory and rental fleet levels versus Q3 <unk>.

The level of operating cash flow for the quarter and our view is indicative of the Companys steady state cash flow capability importantly, the cash flow for the quarter allowed us to deploy $45 million of capital into accretive.

<unk> and <unk> acquisitions without impacting liquidity and also allowed for some deleveraging in the quarter.

Anthony J. Colucci: From an EBITDA perspective, we realized $49.7 million in adjusted EBITDA for the quarter, which is up $7 million from the adjusted level for fourth quarter 2022 and $3.6 million on a pro forma basis. So all told, an extremely strong quarter to end the year from a sales and EBITDA perspective, with the quarter coming in on the high end of our expectations, again primarily due to the large beat in equipment.

Truly was an excellent quarter for the balance sheet.

Now turning over to <unk>, turning to our results for the full fiscal year. The company recorded $1 $88 billion in revenue in 2023, as we are now pacing towards $2 billion of revenue on a pro forma basis.

On the adjusted EBITDA line, the company achieved $191 4 million in 2022 coming in at the high end of our latest iteration of our guidance for the year.

Anthony J. Colucci: From a cash flow perspective, the quarter was extremely strong, as free cash flows from operations, as we define them on slide 32, were approximately $50 million for the quarter, as we benefited not only from the strong P&L performance but from the leveling off of inventory and rental plate levels versus Q3. The level of operating cash flow for the quarter, in our view, is indicative of the company's steady state cash flow capability. Importantly, the cash flow for the quarter allowed us to deploy $45 million of capital into accretive Burris and Alta acquisitions without impacting liquidity and also allow for some deleveraging in the quarter. Truly, it was an excellent quarter for the Bell.

Fortunately the $191 4 million of adjusted EBITDA converting into approximately $122 million of economic EBIT, our version of steady state Unlevered and Levered free cash flow.

On average invested capital of approximately $800 million in 2023, we finished the year at just over 15% economic EBIT yield or return on invested capital.

Key metric that measured our capital measures, our capital deployment, decisioning and directly impacts management's compensation.

Moving on to equity cash flows and as depicted on slide 15 of our investor deck.

On an adjusted pro forma basis. The business is now generating approximately $92 million in annual Levered free cash flow to common equity in.

Anthony J. Colucci: Now turning to our results for the full fiscal year, the company recorded $1.88 billion in revenue in 2023, as we are now pacing toward $2 billion of revenue on a pro forma basis. On the adjusted EBITDA line, the company achieved $191.4 million in 2022, coming in at the high end of our latest iteration of our guidance for the year. Importantly, the $191.4 million of adjusted EBITDA converted into approximately $122 million of economic EBIT, our version of steady-state unlevered free cash flow.

In our view this metric is indicative of economic earnings power associated with driving equity value for shareholders X growth Capex more on this metric momentarily.

Okay.

Quick check in on the balance sheet as of yearend and as depicted in slide 16, we ended the quarter with approximately $219 million of cash and availability on our revolving line of credit facility with $36 million depressed.

From a leverage perspective as mentioned previously we were able to delever in the quarter as total leverage came in at roughly three seven times 2022, adjusted pro forma EBITDA down two tenths from last quarter. Despite the two acquisitions.

Anthony J. Colucci: On average, invested capital is approximately $800 million in 2023. We finished the year at just over 15% economic EBIT yield or return on invested capital, the key metric that measures our capital deployment decisioning and directly impacts management's compensation. Moving on to equity cash flows, and as depicted on slide 15 of our investor deck, on an adjusted pro forma basis, the business is now generating approximately $92 million in annual leveraged free cash flow to common equity. In our view, this metric is indicative of the economic earnings power associated with driving equity value for shareholders x growth capital.

Lastly on the balance sheet I wanted to note the quarter over quarter flattening in our inventory and rental fleet levels. As we ended Q4 at $495 million of inventory and $590 million of rental fleet ex M&A.

Both of these figures are effectively flat versus where we ended Q3 2023.

As mentioned in previous calls as equipment supply chain to begin to normalize at the end of 2022 Alta like many other industry participants felt unprecedented level of inventory replenishment in the first half of 'twenty, three which put pressure on working capital and it led to redeployment of Floorplan lines.

As I mentioned on our Q2 call we expected the pace of this replenishment to moderate significantly in the second half of the year and we are seeing just that.

Anthony J. Colucci: More on this metric momentarily. A quick check-in on the balance sheet as of your end, and as depicted in slide 6. We ended the quarter with approximately $219 million of cash and availability on our revolving line of credit facility with $36 million to pay.

Before I leave 2023, I would focus participants to slide 23 of today's presentation that we presented last quarter.

Recaps, where the company stands today versus where we were just four years ago at our IPO in February of 2020.

Anthony J. Colucci: From a leverage perspective, as mentioned previously, we were able to de-lever in the quarter, as total leverage came in at roughly 3.7 times 2022 adjusted pro forma EBITDA, down two-tenths from last quarter despite the two acquisitions. Lastly, on the balance sheet, I wanted to note the quarterly flattening in our inventory and rental fleet levels, as we ended Q4 at $495 million of inventory and $590 million of rental Both of these figures are effectively flat versus where we ended Q3 2008.

I will let the recap speak for itself, but did want to note for investors that the company is now generating.

$92 million of free cash flow to equity on an annual basis ex growth Capex were approximately $2 84 per share as of year end.

This compares to <unk> 74 per share and this metric at the time of the IPO.

So in summary, we've grown this metric forex in four years with minimal dilution along the way, yes, we continue to see our stock price to not be reflective of this progress.

We are cognizant of this disconnect to what we believe to be fair value for our equity and as we head into 2024. This disconnection may inform our capital allocation decision decisioning as we balanced potential stock buybacks.

Anthony J. Colucci: As mentioned in previous calls, as equipment supply chains began to normalize at the end of 2022, Alta, like many other industry participants, saw an unprecedented level of inventory replenishment in the first half of 23, which put pressure on working capital and led to the redeployment of floor plan. As I mentioned on our Q2 call, we expected the pace of this replenishment to moderate significantly in the second half of the year, and we have seen just that. Before I leave 2023, I would focus participants on slide 23 of today's presentation that we presented last quarter, which recaps where the company stands today versus where we were just four years ago at our IPO in February of 2020. I will let the recap speak for itself, but I did want to note for investors that the companies are now generating $92 million of free cash flow to equity on an annual basis, X growth cap X, or approximately $2.84 per share as of year end. This compares to $0.74 per share on this metric at the time of the IPO.

Versus what is presented to us via the M&A pipeline.

Finally for the last area of my prepared remarks, I would like to discuss the 2024 adjusted EBITDA guidance, which was included in today's earnings release.

In terms of the guide range guidance range itself, we expect to report $207 5 million to $217 5 million of adjusted EBITDA for the full year 2020 for a.

A few observations on the Guy first and foremost as Ryan mentioned in his remarks, we continue to feel positive about the overall demand drop backdrop in our customer base and we believe the industry data supports our sentiment.

Second we again expect to drive organic growth and product support revenues in 2024 by an amount that we expect will be in line with our historic performance in parts and service, while adding skilled technicians is continually more difficult youre in in euro organic growth in product support is something we expect to rise to the challenge on into <unk>.

Pete annually and the $205 million of incremental field population generated in 2023 supports our views and product support.

Anthony J. Colucci: So, in summary, we've grown this metric 4X in four years with minimal dilution along the way, yet we continue to see our stock price not be reflective of this progress. We are cognizant of this disconnect between what we believe to be fair value for our equity. And as we head into 2024, this disconnection may inform our capital allocation decisioning as we balance potential stock buybacks versus what is presented to us via the M&A pipeline. Finally, for the last area of my prepared remarks, I'd like to discuss the 2024 adjusted EBITDA guidance, which was included in today's earnings report. In terms of the guidance range itself, we expect to report $207.5 million to $217.5 million of adjusted EBITDA for the full year 2024. A few observations on the guidance.

For 2024.

When it comes to rental our expectation is to at least hold rental utilization figures at 2023 levels.

Relative to rental rates much like the rest of industry participant participants, we arent expecting much more than inflationary increases in 2024.

Most importantly, when it comes to our rental business given our rents as cell business model. We have no plan to increase the size of the rental fleet in any material fashion in 2024 like we did in 2003.

Said investors should expect quarter to quarter ebbs and flows in the rental fleet size throughout the year, which is in line with our industry.

Lastly on the potential for equipment sales in 2024.

First we sold $1 $1 billion of equipment in 2023, as we along with equipment dealership industry overall saw record levels of sales. This year make no mistake make no mistake. This year's comps on equipment sales for our industry will be as challenging as they've ever been as Oems and industry analysts alike, maybe calling.

For flattish or even down equipment sales this year, we'd like to think that given our position in the market and the opportunities ahead of us to take share in certain regions that we are hopeful to at least hold if not exceed 2023 equipment sales levels. This year.

Anthony J. Colucci: First and foremost, as Ryan mentioned in his remarks, we continue to feel positive about the overall demand backdrop in our customer base, and we believe the industry data supports our sentiment. Second, we again expect to drive organic growth and product support revenues in 2024 by an amount that we expect will be in line with our historic performance in parts and service. While adding skilled technicians is continually more difficult, year in and year out, organic growth and product support is something we expect to rise to the challenge on and to rinse and repeat annually, and the $205 million of incremental field population generated in 2023 supports our views and product support for 2024. When it comes to rental, our expectation is to at least hold rental utilization figures at 2023 levels, relative to rental rates, much like the rest of industry participants. We aren't expecting much more than inflationary increases in 2024.

To close on the commentary on 2024 expectations I wanted to give some insights insights into Q1, given where we are in the calendar first Q1, given seasonality has long been our most difficult quarter of the year and given our experience Q1 performance Hasnt necessarily performed performed.

Over the remainder of the year.

With that as a backdrop a couple of things to note first investors as to what to expect for this quarter.

First as it relates to <unk>, which had a record debut under <unk> ownership.

In 2023, and they had a record quarter in Q1 of 2023 recall that eco versus as a master distributor selling equipment to sub dealers and in early 2023 and supply chains, we're normalizing eco versus sub dealers were restocking, which led to its record first quarter.

Currently at this point in the quarter and given that sub dealers' inventories are back to normal levels. We don't expect the eco versus to repeat what they did in Q1 of 2023 that said the expectation for the full year 2024 is that equal versus will come close to matching 2020 Three's performance.

Anthony J. Colucci: Most importantly, when it comes to our rental business, given our rent-to-sell business model, we have no plan to increase the size of the rental fleet in any material fashion in 2024, like we did in 2023. That said, investors should expect quarter-to-quarter ebbs and flows in the rental fleet size throughout the year, which is in line with our agenda. Lastly, on the potential for equipment sales in 2024. First, we sold $1.1 billion of equipment in 2023 as we, along with the equipment dealership industry overall, saw record levels of sales. Make no mistake; make no mistake; this year's comps on equipment sales for our industry will be as challenging as they've ever been.

Second as mentioned previously we had unprecedented Q4 on the equipment sales side, which exceeded internal expectations as customers took advantage of year end tax depreciation rules leftover budgets and we're generally more available to our sales team after the construction season to assess and replenish their fleets before the.

New year in summary, the record activity in Q4 in equipment sales led to a pull forward of equipment sales in December and a hangover that impacted January.

Anthony J. Colucci: As OEMs and industry analysts alike may be calling for flattish or even down equipment sales this year, we'd like to think that given our position in the market and the opportunities ahead of us to take share in certain regions, we are hopeful to at least hold if not exceed 2023 equipment sales levels. To close on the commentary on 2024 expectations, I wanted to give some insights into Q1, given where we are in the calendar. First, Q1, given seasonality, has long been our most difficult quarter of the year.

That said, we are confident that the January hangover was isolated as we saw snapback in February and are experiencing a solid march as our parts service and rental businesses are all very busy and on track to be clear the larger demand framework for 2024 that we've referenced here today are all solidly in place.

To summarize we are confident in the annual guidance and in our long term prospects, especially given all of the aforementioned factors, including the increased field population that was generated this past year and we are committed to the execution to execution and having 2024 be another year of growth for Alta equipment group.

In closing I again want to thank all of my teammates at also for your commitment to our business and to each other throughout 2023, you embodied our guiding principles in 2023, and our results are reflective of that.

Anthony J. Colucci: And given our experience, Q1 performance hasn't necessarily informed performance over the remainder of the year. With that as a backdrop, a couple things to note for investors as to what to expect for this quarter. First, as it relates to Ecoverse, which had a record debut under Alta's ownership in 2023, and they had a record quarter in Q1 of 2000. Recall that Ecoverse is a master distributor, selling equipment to sub

To our investors. We appreciate your support and confidence in 2023, and we look forward to driving shareholder value in 2024. Thank.

Thank you for your time and I'll turn it back over to the operator for Q&A.

If you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question press Star one as a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.

Anthony J. Colucci: And in early 2023, as supply chains were normalizing, Ecoverse's sub-dealers were restocking, which led to its record first quarter. Currently, at this point in the quarter, and given that sub-dealers' inventories are back to normal levels, we don't expect the Eco-Verse to repeat what they did in Q1 of 2023. That said, the expectation for the full year 2024 is that Eco-Verse will come close to matching 2023's performance. Second, as mentioned previously, we had an unprecedented Q4 for equipment sales, which exceeded internal expectations as customers took advantage of year-end tax depreciation rules, leftover budgets, and were generally more available to our sales team after the construction to assess and replenish their fleets before the new year. In summary, the record activity in Q4 in equipment sales led to a pull-forward of equipment sales in December and a hangover that impacted January. That said, we are confident that the January hangover was isolated, as we saw a snapback in February and are experiencing a solid March, as our parts service and rental businesses are all very busy and on track. To be clear, the larger demand framework for 2024 that we have referenced here today is all solidly in place.

Okay.

The first question is from the line of Matt Summerville with D. A Davidson your line is now open.

Thanks.

Couple of questions.

To be clear Tony can you sort of talk through your capital deployment priorities for 24 in the context of not only the stock price of course as you referenced but what specifically you guys are seeing in the M&A market from a multiple standpoint, if you still feel you can do leverage neutral.

<unk> acquisitions or leverage accretive like you did in Q4, and then how youre thinking about.

Maybe just using this year's cash to reduce leverage sort of knowing that the market's appetite for leverages thoughts maybe what it was a couple of years ago and then a follow up thank you.

Sure Matt Thank you.

The first well.

The first piece here on capital allocation and multiples I think it would be.

No.

To say that we'd be able to do deals sub 337 like we did in the.

Anthony J. Colucci: To summarize, we're confident in the annual guide and in our long-term prospects, especially given all of the aforementioned factors, including the increased field population that was generated this past year. And we are committed to execution and having 2024 be another year of growth for Alta Equipment. In closing, I again want to thank all of my teammates at Alta for your commitment to our business and to each other throughout 2023. You embodied our guiding principles in 2023, and our results are reflective of that. To our investors, we appreciate your support and confidence in 2023, and we look forward to driving shareholder value in 2024. Thank you for your time, and I will turn it back over to the operator for Q&A. If you would like to ask a question, please press star followed by one on your telephone keypad. If, for any reason, you would like to remove that question, please press star followed by two. Again, to ask a question, press star one.

In Q4, there and that was really the <unk> acquisition, we were able to get some equity into the deal which was great to partner up with that entrepreneur that wanted to join joining forces with Ulta.

And so with leverage accretive to.

To be sure and also accretive to shareholders, but I don't think we will see deals in the three <unk> range.

It wouldn't be appropriate for us to say that that would that would be something that would continue.

What I will say is we still believe that theres deals.

Deals out there that look very familiar with that.

Look very similar to how we've executed executed in the past.

$537 million of revenue 65 million of EBITDA that we bought at 4% to five times, we still think is in front of us.

And we.

<unk>.

<unk>.

The pipeline itself.

Continues to be to be active.

Now some of the growth as we've talked about before inside of each of our major dealer networks.

Yes.

Is sort of tempered the bigger you get.

But thats why relationships with case as Ryan mentioned in some of these other.

Oems that we're partnering with Ulta has partnered with a company called Mccluskey.

Operator: As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question is from the line of Matt Summerville with D.A. Davidson.

Which we hope to do more with.

On and on so.

We still think that the pipeline could be accretive relative to where we're trading at.

But to the extent, it's not or to the extent that the stock is.

Matt J. Summerville: Your line is now open. Thanks. A couple of questions. Tony, can you sort of talk through your capital deployment priorities for 24 in the context of not only the stock price, of course, as you referenced, but what specifically you guys are seeing in the M&A market from a multiple standpoint, if you still feel you can do leverage-neutral acquisitions or leverage accretive like you did in Q4, and then how you're thinking about maybe just using this year's cash to reduce And then I'd follow up.

Depressed relative to what we think is fair value, we wouldn't hesitate to.

Dip into the buyback program.

Here in place.

In terms of funding of M&A deals and taking on more debt.

You could see that we de levered in the quarter.

After what I have been referring to as the great replenishment rate, which was an increase of organically 80, some odd million in rental fleet in 'twenty three.

$100 million give or take.

Inventory.

That certainly we don't expect this year. So we do expect to maybe have some excess cash flows that we can continue to delever with again over the entirety of the year, maybe not necessarily quarter to quarter, especially in Q1.

Anthony J. Colucci: Thanks. Sure, Matt. Thank you. On the first, well, the first piece here on capital allocation and multiples, I think it would be, you know, to say that we'd be able to do deals, you know, sub three, three, seven, like we did in the, in, in Q4 there. And that was really the Burris acquisition.

And so we still think that we would be able to fund M&A deals.

To the to.

To the tune of 10 or $15 million of EBITDA.

With that anything beyond that in terms of size.

Scope, where it would be something sizeable.

Anthony J. Colucci: We were able to get some equity into the Alt deal, which was great to partner up with that entrepreneur that wanted to join forces with Alta. And so it was leverage accretive, to be sure, and also accretive to shareholders. But I don't think we'll see deals, you know, in the 3x range. It wouldn't be appropriate for us to say that that would, that would be something that would continue. What I will say is we still believe that there are deals out there that look very familiar, that look very similar to how we've executed in the past. The $537 million in revenue, $65 million of EBITDA that we bought at four to five times, we still think are in front of us.

We would be mindful of leverage wherever we're at in the calendar before we funded a larger deal with all that we want to be mindful of leverage so long answer Matt I apologize for that but hopefully it's helpful.

No those comprehensive I appreciate that.

Maybe Ryan if you can just take a minute and good.

A little bit more granularity around.

You mentioned material handling indeed being more diverse business segment.

Have you kind of a walk around what youre seeing in terms of the key end markets and maybe highlight what sounds like is a more concerted go forward.

Effort being put into in particular, the warehousing market.

Anthony J. Colucci: And we, and, and, you know, the, the, the, pipeline itself continues to be active. Now, some of the growth, as we've talked about before, inside of each of our, you know, our major dealer networks, is sort of tempered the bigger you get, but that's why relationships with CASE, as Ryan mentioned, and some of these other OEMs that we're partnering with, Alta is partnered with a company called McCloskey, which we hope to do more with on and on. So, we still think that the pipeline could be accretive relative to where we're trading at, but to the extent it's not, or to the extent that the stock is depressed relative to what we think is fair value, we wouldn't hesitate to dip into the buyback program, here and in place. In terms of funding M&A deals and taking on more debt, you can see that we de-levered in the quarter after what I've been referring to as the great replenishment, right, which was an increase of, you know, organically $80-some-odd million in the rental fleet in 2023, and $100 million, give or take, in inventory. That certainly we don't expect this year.

I'm not sure.

If youre on mute.

Sorry, I was on mute.

Okay, sorry about that guys.

Sure.

I'll start with the first piece of that which is the question about the diversity of the end markets. So we do believe that with our product portfolio. Our end market exposure is.

As diverse as it could be it.

Everything from the supply chain from raw materials that go into manufacturing.

And our upper Midwest footprint, a lot of manufacturing and advanced manufacturing.

All the way through to obviously distribution and logistics.

And the focus on the warehousing market is something that we are doing right alongside hyster, Yale they've been putting a lot of.

Effort into product development for that end market fast growing end market and.

It's an opportunity for us to get closer to our customer to be.

Help them take cost out of their business through.

Better labor utilization.

Anthony J. Colucci: So we do expect to maybe have some excess cash flows that we can continue to de-lever with, again, over the entirety of the year, maybe not necessarily quarter to quarter, especially in Q1. And so we still think that we would be able to fund M&A deals to the tune of $10 or $15 million of EBITDA. With debt, anything beyond that in terms of size. [inaudible] Long answer, Matt. I apologize for that.

And the price points of those trucks tends to be lower there.

But more of a high volume lower price point per unit, but it still has the high touch aspect of reoccurring revenue through planned maintenance and contract maintenance.

And then Matt there was a second part to your question.

Yes, yes, yes, thanks, Ryan I was more looking for just some give some color on some of the end market trends you're seeing across.

Ryan Greenawalt: No, that was comprehensive, and I appreciate that. Maybe, Ryan, if you could just take a minute and get a little bit more granular around, you mentioned material handling being a more diverse business segment, just maybe kind of a walk around what you're seeing in terms of the key end markets and maybe highlight what sounds like is a more concerted go forward effort being put into, in particular, the warehousing market. Ryan, I'm not, I'm not sure. If you're on mute, or...

Whether it be automotive food beverage medical et cetera. The places you play in and material handling.

Just in terms of demand I would say that the demand is healthy and I referenced in the call that it's kind of leveling off at pre Covid would have been record levels, but it is coming off of the peak of Covid.

Ryan Greenawalt: Sorry, I was on mute. Okay, sorry about that, guys. Yeah. I'll start with the first piece of that, which is the question about the diversity of end markets. So we do believe that with our product portfolio, our end market exposure is as diverse as it could be. It's everything from the supply chain, the raw materials that go into manufacturing, to in our upper Midwest footprint, a lot of manufacturing and advanced manufacturing, all the way through to, obviously, distribution and logistics.

Last year, we were coming off record back record bookings in the previous year. So that it ended up being record deliveries for us which is.

Reflected in the revenue.

Going forward, we see.

A plateauing of that phenomenon, which is why we're focused on really market penetration and driving share in the faster growing end of the market, which we think is the warehouse market.

Got it thank you.

Thank you for your question.

Next question is from the line of those Steven Ramsey with Thompson Research Group. Your line is now open.

Hey, good evening, maybe to continue the line of thought on in market.

Ryan Greenawalt: And the focus on the warehousing market is something that we are doing right alongside Hyster Yale. They've been putting a lot of effort into product development for that end market. It's a fast growing end market, and it's an opportunity for us to get closer to our customers to help them take costs out of their business through, you know, better labor utilization, and the price point of those trucks tends to be lower. And then, Matt, there was a second part to your question. Yeah, yeah, thanks, Ryan. I was more looking for just some color on some of the end market trends you're seeing across, you know, whether it be automotive, food, beverage, medical, etc., the places you play in material handling. Thanks.

Some of the large rental companies have talked about local projects growing but at a more modest pace, while mega projects are ramping up.

You talked about some of the some of the highway work state Dot funding that being strong, but curious how you think about the local more normal sized projects versus the large mega projects impacting your results this year.

Stephen I'll take that.

Historically tried it's really difficult for us to delineate by by market whats federally stimulated versus local demand but.

But I think what we're seeing is.

There is a little bit of a pullback but.

Lengthening of the sales cycle for your kind of your general contractor with core product that.

Is.

Not true on the on the Big visible highway type jobs I think we're seeing one of the things that's true is that right.

Ryan Greenawalt: Just in terms of demand, I would say that demand is healthy. I referenced in the call that it's kind of leveling off at what pre-COVID would have been record levels, but it is coming off of the peakiness of COVID. Last year, we were coming off record bookings in the previous year, so that ended up being record deliveries for us, which is reflected in the revenue. Going forward, we see a plateauing of that phenomenon, which is why we're focused on market penetration and driving share in the faster-growing end of the market, which we think is the warehouse market. Got it, thanks.

<unk> utilization is the key to construction right now you can't stimulate something when everyone's already got a job you can't sell a excavator whenever no. One has an operator to put in the seat and so any softening that we're seeing kind of a non res just general construction I think that youre seeing that there is like this kind of pent up demand for big.

They have been stalled by all the local demand and Thats the way that I would think we always talk about it as earnings to the cycle that we haven't really been in a trough we have been more in this too. So we keep adding earnings to the game and I think that phenomenon is playing out with some other pivot to larger larger type jobs right now.

Matt J. Summerville: Thank you for your question. The next question is from the line of Steven Ramsey with Thompson Research Group. Your line is now open. Hey, good evening.

Steven Ramsey: Maybe to continue the line of thought on in-markets, some of the large rental companies have talked about local projects growing, but at a more modest pace, while mega projects are ramping up. You talked about some of the highway work, state DOT funding that being strong, but I'd like to know your thoughts on the local, more normal-sized projects versus the large megaprojects impacting your results this year. Steven, I'll take that, you know, that we've historically tried; it's been, it's really difficult for us to delineate by market, you know, what's kind of federally stimulated versus local demand.

Okay. That's helpful and then I'm curious on the complementary service lines curious how those performed in the fourth quarter and what is the outlook for <unk>.

That unit in 2024.

Steve just so I have it where are you.

When you say ancillary service slides I just wanted to make sure. We answer your question appropriately define that for me.

Sorry more of the complementary products Scott had peak logic there.

Ryan Greenawalt: But I think what we're seeing is, There is a little bit of a, it's not a pullback, but a lengthening of the sales cycle for kind of your general contractor with core product that is not true on the big, visible highway type jobs. I think we're seeing, you know, one of the things that's true is that labor utilization is the key to construction right now. You can't stimulate something when everyone's already got a job.

Those companies that how those are expected to perform in 2024.

Yes, I mean peak logics.

We've said that.

And I think the whole industry rate it was white hot.

When we bought that business. It was that combined business, which is now peak logic Scott taking peak are now kind of combined one and the same but.

Ryan Greenawalt: You can't sell an excavator when no one has an operator to put in the seat. And so any softening that we're seeing in the non-res, just general construction, I think that you're seeing that there is this kind of pent-up demand for big projects that have been stalled by all the local demand. And that's the way that I would think. We always talk about it as innings in the cycle, so we haven't really been in a trough.

Call it revenues of roughly.

$30 million to $35 million combined back in 2020.

That doubled more than doubled in 'twenty, one and 'twenty two and in 'twenty three we saw a bit of a pullback.

And these are these are larger projects that are probably a little bit more interest rate sensitive.

Steven Ramsey: We've been more in this just to keep adding innings to the game, and I think that phenomenon is playing out with some of the pivots to larger type jobs right now. Okay, that's helpful. And then I'm curious about the complementary service lines, curious how those performed in the fourth quarter and what is the outlook for that unit in 2024. Steve, just so I have it, when you say ancillary service lines, I just want to make sure we answer your question appropriately. Define that for me.

Because there are larger capex projects for our customers.

And so if there is a part of our business, where we do think that there was an impact of interest rates.

It was in that <unk> business.

What I will say is peak logics.

Was part of the strategy and rationale for that deal was to take us from the JV to the varsity relative to just intellectual capabilities design.

Anthony J. Colucci: Sorry, more of the complementary products, Scott Tech, Peak Logic, Baron, where those companies are, how those are expected to perform in 2024. Yeah, I mean, Peak Logics, you know, we've we've said that they and I think the whole industry, right, it was, it was white hot. When we bought that business, it was that combined business, which is now Peak Logics. Scott Tech and Peak are now kind of combined, one in the same, but call it revenues of roughly $35 million combined back in 2020. That doubled, more than doubled in 21 and 22.

Design build and getting us into some customers that we otherwise would not have.

And we've been able to do that and so.

Judging judging Pete just kind of on its own with or without <unk>.

Including kind of some of the synergies generated with our legacy material handling business, probably isn't isn't fair. So we're still very bullish.

Slide 23 is kind of being a down year.

For peak and we've got backlog.

Taking customers a little bit longer to to pull the trigger we think thats interest rate related but that's how that's going I will say Midwest mind, just to kind of round it out I'd put that in the.

Anthony J. Colucci: And in 23, we saw a bit of a pullback. And, you know, these are larger projects that are probably a little bit more interest rate sensitive because they're larger CapEx projects for our customers. And so if there is a part of our business where we do think that there was an impact of interest rates, it was in that Peak Logics business. What I will say is Peak Logics was part of the strategy and rationale for that deal was to take us from the JV to the varsity relative to just intellectual capabilities, design, build, and getting us into some customers that we otherwise would not have, and we've been able to do that And so judging Pete just kind of on its own without including kind of some of the synergies generated with our legacy material handling business probably isn't fair.

A similar a similar kind of ancillary projects.

In the aggregate space, it's probably immaterial to our overall kind of revenue line.

But it is performing very well.

And we've definitely generate some synergies.

With customers or been able to get customers to to recognize our capabilities in the.

The larger quantities et cetera. So.

Yes.

Ill still running volume.

That's excellent and then last one for me your G&A as a percentage of gross profit.

Continues to trend down on a total basis and in both material handling and construction equipment unit.

Is this expected to continue again next year this cost discipline of G&A versus GT.

Anthony J. Colucci: So we're still very bullish despite 23 kind of being a down year for peak, and we've got a backlog. It's taking customers a little bit longer to pull the trigger. We think that's interest rate related, but that's how that's going. I will say Midwest just to kind of round it out. I put that into a similar kind of ancillary projects. They're in the aggregate space that's probably immaterial to our overall revenue line, but it's performing very well, and we've definitely generated some synergies with customers or been able to get customers to recognize our capabilities in the larger quarries, etc. Yeah, all still running fine.

Yes, Steven Thanks for the question I've got some numbers in front of me and I'm, just going to read them out here.

G&A ex <unk>.

Ex M&A ex depreciation and amortization Q2, 105, Q Q3 107.

And then Q4 here about $111 million again ex M&A.

That increase in Q4 is almost going to be exclusively related to the increase that we saw.

Equipment sales because we have commissions primarily in bonuses those sales that impacted that line item. So.

Anthony J. Colucci: That's excellent. And last one for me, your GNA as a percentage of gross profit continues to trend down on a total basis and in both material handling and construction equipment units. Is this expected to continue again next year, this cost discipline of GNA versus GP? Yeah, Steven, thanks for the question. I've got some numbers in front of me, and I'm just gonna read them out here.

I wouldn't expect Q4 to be indicative of the go forward certainly.

We've added some G&A because of the acquisitions.

And the way that I think about G&A is a little bit more as a percentage of revenue or EBITDA.

Or I'm, sorry, gross profit ex depreciation then I would just gross profit overall just because.

Anthony J. Colucci: GNA, XMNA, and X depreciation amortization, Q2, 105, Q3, 107, and then Q4 here about $111 million, again, XM&A. That increase in Q4 is almost going to be exclusively related to the increase that we saw in equipment sales because we have commissions primarily and bonuses on those sales that impacted that line item. So I wouldn't expect Q4 to be indicative of the go forward. Certainly, we've added some G&A because of the acquisitions. And the way that I think about G&A is a little bit more as a percentage of revenue or EBITDA or, I'm sorry, gross profit X depreciation than I would just gross profit overall just because the rental business has so much depreciation in the gross profit line.

The rental business with so much depreciation and the gross profit line. So.

I think Q4 is a little bit of an anomaly there at the 111.

We'd expect that to come down and kind of even out a little bit.

Excellent. Thank you for the color.

Thank you for your question.

Next question is from the line of Steve Hansen with Raymond James Your line is now open.

Okay.

Yes, thanks, guys. Thanks for the time.

Wanted to go back to your guidance.

Wasn't sure if it was aspirational or not but I think you suggested you wanted to hold the line on equipment sales for the year, maybe just a bit of additional color on there.

I am sorry difficult I think as you suggest but what does the guide assuming effectively on the new equipment side.

Yes, Hey, Steve.

Anthony J. Colucci: So I think Q4 is a little bit of an anomaly there at $111. We'd expect that to come down and kind of even out a little bit. Excellent. Thank you for the color.

New equipment as we've said since we started doing these calls for years ago is always as part of the reason we do an annual guide number one.

Steven P. Hansen: Thank you for your question. The next question is from the line of Steve Hansen with Raymond James. Your line is now open.

The other part of the reason, we don't guide to revenue because as we saw in the fourth quarter things can really kind of ebb and flow and sometimes these ebbs and flows are difficult to just project quarter over quarter.

Steven P. Hansen: Yeah, thanks for the time. I wanted to go back to your guidance. I wasn't too sure if it was aspirational or not, but I think you suggested you wanted to hold the line on equipment sales for the year, maybe just a bit of additional color on there. The comps are difficult, I think, as you suggest, but what is the guide assuming effectively on the new equipment side? Yeah. Hey, Steve.

And the other thing when we when we sit down and we budget we have great confidence.

In our in our parts and service lines.

Relative confidence I should say.

Versus the equipment line item, which can be more impact impacted by macro trends and interest rates.

Anthony J. Colucci: New equipment, as we've said since we started doing these calls four years ago, is part of the reason we only do an annual guide, number one. And the other part of the reason we don't guide to revenue, because, as we saw in the fourth quarter, things can really kind of ebb and flow, and sometimes these ebbs and flows are difficult to just project quarter over quarter. And the other thing, when we sit down and we budget, we have great confidence in our parts and service line, or relative confidence, I should say, versus the equipment line item, which can be more impacted by macro trends, interest rates, you know, sentiment, etc., etc.

Sentiment.

Et cetera, et cetera, now all the things all the signs point toward.

Our strong 2024 as Ryan mentioned in his remarks, Dod budgets looking strong talking to our customers. We've been working on these projects kind of ready to.

Ready to let it let it fly here.

As the spring hits Us and so we feel we feel pretty good.

The reason that we feel like we can hold that line, rather to maybe being down and I will caveat all of this and saying being down a little bit off of peak wouldn't be wouldn't be the worst thing ever.

Anthony J. Colucci: Now all the things, all the signs point toward a strong 2024, as Ryan mentioned in his remarks, DOT budgets looking strong, talking to our customers who are working on these projects, kind of ready to, you know, ready to let it fly here as spring hits us. And so we feel pretty good. The reason that we feel like we can hold that line rather than maybe being down, and I'll caveat all of this and say, you know, being down a little bit off of peak wouldn't be the worst thing ever, especially given the GPs and how impactful they are to EBITDA relative to, you know, rental revenue or parts and service. But that said, we do have some areas of our business where we expect to take share.

Especially given the GPS.

Impactful they already to EBITDA relative to.

Rental revenue or parts and service.

But that said, we do have some areas of our business, where we expect to take share.

And that's I guess, what I would highlight to answer your question specifically so we've got places that we've just entered two.

<unk> entered into in the past 18 months like Toronto and the material handling.

Space, where we expect to take share.

And there are some other pockets.

In upstate New York on the construction side and.

The list goes on so it would be it would be us taking share that.

Could you help maybe offset what might be flat to down.

Anthony J. Colucci: And that's, I guess, what I would highlight to answer your question specifically. So, we've got places that we've just entered into, you know, in the past 18 months, like Toronto and the material handling space, where we expect to take a share. And there are some other pockets in upstate New York on the construction side. And, you know, the list goes on, so it would be it would be us taking share that could help maybe offset what might be flat to down markets. That's helpful.

Market.

That's helpful. Thank you.

And just as a follow up to your capital allocation.

Decision for the year I mean, how do you view that that framework between buyback and growth.

Or even deleveraging for that point I mean, how are you viewing that window right now I mean, the stock is completely disconnected I think as you suggest does it not make sense to maybe focus on the buyback and some deleveraging as opposed to more growth I mean, how are you really thinking about that for the year relative to this M&A pipeline.

Steven P. Hansen: Thank you. And just as a follow-up to your capital allocation decision for the year, I mean, how do you view that framework between buyback and growth? Or even deleveraging at that point? I mean, how are you viewing that window right now?

Yes, Steve.

Yes.

We've got a slide in the deck that suggests we're trading at that also would be trading at something like <unk>.

Anthony J. Colucci: I mean, the stock is completely disconnected, I think, as you suggest. Does it not make sense to maybe focus on the buyback and some deleveraging as opposed to more growth? I mean, how are you really thinking about that for the year relative to the 7a pipeline? Yeah, Steve, you know, it's, it's, You've got a slide in the deck that suggests we're trading at, you know, that Alta would be trading at something like... 5.8. I think the number is in the deck, forward EBITDA.

Five eight I think the numbers in the deck.

<unk> forward EBITDA.

That that multiple despite it being something maybe that we feel is not appropriate.

Still a bit higher than where we've transacted at in the past.

And in the M&A pipeline right four to five so we still think even if we're trading at six is a turn or two of spread there relative to the M&A pipeline and Thats before you get into any sort of synergies or.

Anthony J. Colucci: So that multiple, despite it being something maybe that we feel is not appropriate, is still a bit higher than where we've transacted at in the past in the M&A pipeline, right, 4 to 5. So we still think that even if we're trading at six, there's a turn or two of spread there relative to the M&A pipeline. And that's before you get into any sort of synergies or discussions about what we can do with the business versus where it might be today. So, you know. Some of it is just time, right?

Discussions about what we can do with the business versus where it might be today. So.

Yes.

Yeah.

Some of it is time right what does the pipeline look like in the.

Over the near term.

And what what where are we at in the calendar right. We've talked about Q1 being a little bit rougher.

Anthony J. Colucci: What does the pipeline look like in the near term? And, and what, you know, where are we at on the calendar? Right?

And so we just kind of monitor the situation.

And kind of.

On a real time basis are always kind of thinking about that.

Anthony J. Colucci: We've talked about Q1 being a little bit rougher. And so we just kind of monitor the situation and, and, and kind of, you know, on a real-time basis are always. Kind of thinking about that decision, that decision that the other element that you mentioned was leverage, and we also want to be mindful of that. And so, especially where interest rates are, we may have felt differently 2 years ago.

That decisioning the other element that you mentioned to us.

Our leverage and we also want to be mindful of that and so.

Especially where interest rates are we may have had felt differently two years ago about that.

Tenant of the framework of this decision.

Because interest rates were much lower so.

I'm not trying to evade your answer but there is all of the different dynamics that.

Anthony J. Colucci: About that, tenant of the framework of this decision because interest rates were much lower. So I'm not trying to evade your answer, but there are, you know, all of the different dynamics that come into that scenario, but we still think that M&A would, you know, we could do M&A in a creative fashion. Interest rates being higher would suggest we'd want to de-lever, but if those two things aren't there, then we wouldn't hesitate to buy. No, I appreciate that. That's a pretty color,

<unk>.

Come into that scenario, but we still think that M&A would we could do M&A the accretive fashion.

Interest rates being higher would suggest we want to delever.

But if those two things arent there that we wouldn't hesitate to do.

Buyback.

No I appreciate it that's good color thanks for the framework.

Thank you for your question.

Next question is from the line of Min Cho with B Riley. Your line is now open.

Min Chung Cho: Thanks for the framework. Thank you for your question. The next question is from the line of Min Cho with B Reilly. Your line is now open.

Great. Thank you, Hey, Ryan Tony and congrats on the strong end to a strong year.

Couple of questions. Thank you ma'am.

Anthony J. Colucci: Great, thank you. Hey, Ryan, Tony, congrats on a strong end to a strong year. A couple of questions. In terms of the 4Q rental rates, can you talk about kind of what the trends were on a year-over-year basis? And it sounds like, for 2024. Tony, I think that you said that you expected it to be pretty flat, excluding any inflationary impact, but if you could just confirm that.

Joseph <unk> rental rates can you talk to kind of what the trends were on a year over year basis and it sounds like.

For 2024.

Tony I think that you said that you expect it to be pretty flat, excluding any inflationary impacts, but if you could just confirm that please.

Yes, I think I think I can just to take your question in reverse I think we can confirm that we would expect inflationary maybe a little bit more.

Anthony J. Colucci: Yeah, I think I can just to take your question in reverse, I think we can confirm that we would expect inflationary maybe a little bit more there. So much, I want to just point out too though, so much of our rental business is a function of our service prowess and when we're renting large, you know, 40 ton articulated dump trucks, effectively customers are renting our technicians in a lot of ways and so while if there's an asset to be rented that has you know cost of capital and return on capital that need to develop a rental rate we also have this other component of labor that we need to be compensated for and so I say that because sometimes we feel you know we feel like we may be able to give a premium relative to you know some of the things that you might see in in the industry what relative to you know maybe URI talking to rental rates or some of the other publicly traded pure play rental.

More there.

No.

So much I wanted to just pointed out two though so much of our rental business is a function of our service promise and when we're renting large.

<unk> 40 ton articulated dump trucks.

Effectively customers are renting our technicians.

And a lot of ways and so while if theres an asset to be rented that has cost of capital and return on capital.

You need to develop a rental rates. We also have this other component of labor that we need to be compensated for it so.

I say that because sometimes we feel like.

We may be able to give a premium relative to <unk>.

Some of the things that you might see in the industry relative to maybe you are talking to rental rates are some of the other publicly traded pure play rental houses. So maybe we can do a little bit better, but I don't think we're expecting to I guess.

Anthony J. Colucci: So maybe we can do a little bit better, but I don't think we're expecting to, I guess, is the... The first part of your question on rates and how they played out in 23, I would say mid-single digits is probably where we landed there. I saw something the other day that said the last 3 years, you know, around 20%, give or take, of total increase in rental rates. I would put us in that category, you know, over the last 3 years, with this year being, you know, mid-single digits. Maybe a tick north of that.

Is the point there when we talk about the guide.

The first part of your question on rates and how they played out in 'twenty three.

I would say mid single digits is probably where we landed there.

I saw something the other day that said the last three years.

Around 20% give or take a total.

Increase in rental rates I would put us in that category.

Over the over the last three years.

With this year being mid single digits, maybe maybe a tick north of there.

Okay.

Anthony J. Colucci: In terms of your material handling side of the business, I know Ryan mentioned kind of a focus on the warehousing, which does tend to be a little bit lower margin, but I would imagine that you're seeing an increased shift into electric or electric lifts. I was just wondering, how does that impact your margins? Is that more or less positive for your parts and service opportunities in the longer term? I can I can. I can take that one as well.

And in terms of any material handling side of the business I know, Brian mentioned kind of a focus on the way our housing which does tend to be a little bit lower margin.

I would imagine that youre seeing an increased shift into like electrical or electric lifts I was just wondering how does that impact your margin.

Is that more or less positive for your parts and service opportunities longer term.

I can I can I can take that one as well.

Anthony J. Colucci: We actually have some data in our 10k or a reference in our 10k min that the International Truck Association put out some data the other day that suggests 67 percent, two-thirds, let's call it of all forklifts sold in the US are electrified. You can probably flip that versus gas or diesel, or I should have propane or diesel, you could flip that on its head 20 years ago, something like that. And so the trend continues. It's leveled off a little bit, but the electrification of forklifts has kind of already come to the market. So any impact on our business would be minimal. What we know just because of cost accounting exercises internally is that we think an electric truck basically yields 65 to 70% of what a gas truck would relative to parts and service.

We actually have some.

Some data in our 10-K referenced in our 10-K men that.

The International Truck Association put out some some data the other day that suggests 67% two thirds, let's call. It of all forklifts sold in the U S. Our electrified.

You can probably flipped that versus versus gas or diesel.

Alright, and propane or diesel.

You could flip that on its head.

20 years ago, something like that and so.

The trend continues it's leveled off a little bit.

But the electrification of forklifts is kind of already come to the market. So any any impact on our business would be minimal what we know just because of.

Cost.

The accounting exercises internally is that we think an electric truck basically yields.

65% to 70% of what a what a gas truck would relative to parts and service, but that's been the case for <unk>.

Ryan Greenawalt: But that's been the case in our business for quite some time. So. The further electrification, we'd like to think that we could, you know, any offset in product support or any impact in product support of any furtherance of electrification in the material handling business would be more than offset by our prowess in charging and alternative energy and some of these things that are a little bit more cutting-edge. Lithium, for example, our prowess in lithium batteries. Min, this is Ryan.

Business for quite some time so.

The further electrification, we'd like to think that we could.

Any offset in product support or any impact in product support of any further rents of electrification in the material handling business would be more than offset by our prowess in charging and alternative energy and some of these things that are a little bit more cutting edge lithium.

Promising lithium batteries et cetera.

Yeah.

Okay.

Okay Man. This is Ryan another thing I wanted to just make sure we correct is that the.

Ryan Greenawalt: Another thing I wanted to just make sure we correct is that on the warehouse product, the margins are actually higher on selling the new vehicle versus rider forklifts. So I'm, might have been a misunderstanding there. Less product support yield on an electric vehicle, but certainly more margin on the front end. Okay. Got it.

The warehouse product.

So the margins are actually higher telling the new vehicle versus Ryder forklifts.

Might've been a misunderstanding, there, but less product support yield electric but.

Certainly more margin on the front end.

Oh, Okay, I must have missed something there.

Ryan Greenawalt: I must have missed your, um, and then I guess just an update on Nikola saw that they had produced and sold some of their hydrogen fuel trucks, and looks like some of their BEV trucks, you know, should be kind of back in the market second half. Probably not a big impact for you in 2024, but just wondering if you could talk about kind of how you're doing with that release. Yeah, I can take that. This is Ryan.

And then.

I guess, just an update on Nicola saw that day.

They produced and sold some of their hydrogen fuel trucks and it looks like somebody there be EV trucks.

Being kind of back in the market second half probably not a big impact for you in 2024 I was just wondering if you could talk to how you are doing with that relationship.

Yes, I can take that this is Brian.

Ryan Greenawalt: So we've been, along with our customers, patiently waiting for the recall to be executed upon. And as you know, that's going to start in earnest in Q2. What we're really excited about continues to be the, you know, we think in our marketplace, where our footprint is in the north, the proposition for long haul transportation on battery electric is a very narrow strike zone of application relative to the opportunity for longer haul and for heavier duty, which is going to point towards a hydrogen solution. And we, you know, they've sold their first fleet of trucks. Right now, they're focused on California, where there is a little bit of infrastructure.

So we've been along with our customers' patiently waiting for the the recall to be executed upon as you Brad that's going to start in earnest in Q2.

What we're really excited about it continues to be.

We think in our marketplace.

Footprint is in the north that.

The proposition for long haul transportation.

Battery electric that it's a very narrow strike zone of application relative to the opportunity for longer haul and for heavier duty, which is going to point towards a hydrogen solution.

And they've.

Sold their first fleet of trucks right now they are focused on California, where theres a little bit of infrastructure, but we remain very excited about our strategic footprint. We think outside of the west coast, where we reside is going to be where theres early adoption of these types of vehicles and we think we're well positioned to be part of it.

Ryan Greenawalt: But we remain very excited about our strategic footprint. We think that, you know, outside of the West Coast, where we reside, is going to be where there's early adoption of these types of vehicles, and we think we're well-positioned to be part of it. But to answer the 1st part of your question, probably not a huge material impact this year. It's going to really start in the 2nd half.

But to answer the first part of your question, probably not a huge material impact this year, it's going to really start in the second half.

Min Chung Cho: This recall on the electric side feels like it cost us almost a calendar year of momentum, but it's not dead. There's still a building pipeline of demand, and we're hopeful that they can execute on this next piece of the strategy, which is to get those trucks back in the field. All right, great. Thank you.

This recall on the electric side it feels like it cost us almost a calendar year of.

Momentum, but it's but it is it's not that there is still a building pipeline of demand and where.

We're hopeful that they can execute on this next piece of the strategy, which is to get those trucks back in the field.

Alright, great. Thank you.

Yeah.

Edward Randolph Jackson: Thank you for your question. The next question is from the line of Ted Jackson with Northland Securities. Your line is now open.

Thank you for your question.

The next question is from the line of Ted Jackson with Northland Securities. Your line is now open.

Edward Randolph Jackson: Thanks, and I'd like to echo congratulations on the quarter and the year. Thanks, Tom. So my first question is rolling over. So rolling over to, you know, some kind of M&A pipeline. I'm just kind of curious when you're looking through the opportunities there in front of you, are you seeing more opportunities on the construction side or on the material handling side? And then within those opportunities, is it more of a tuck in and, you know, filling in, you would, your geographic footprint, or is it pushing you into new geographies? It's question number one, two parts.

Thanks, and good luck.

To echo congratulations on the quarter and the year.

Thanks, Tom So my first question just rolling over.

Rolling Rolling over to kind of M&A pipeline I'm, just kind of curious when youre looking through the opportunities. There in front of you are you seeing more opportunity on the construction side or on the material handling side and then within those opportunities is it.

More kind of tuck in and.

Filling in you would your geographic footprint or is it pushing you into new geographies is question number one two parts.

Ryan Greenawalt: Yeah, I'll take the first part of that because it's pretty easy to delineate material handling versus construction in terms of the growth strategy. With Heister Yale, the lines of our exclusivity are much, Firmware. And we can't compete with any other dealer network globally outside of, you know, we have our APR that's exclusive with them.

Yes, I'll take the first part of that because it's pretty easy to delineate.

Material handling versus construction in terms of the growth strategy.

With Hyster Yale.

<unk> of our exclusivity.

Exclusivity or much.

Sure.

Firmer and we can't compete with any of their dealer networks globally outside of we have our APR, that's exclusive with them and that's our that's our APR for our material handling for forklifts.

Ryan Greenawalt: And that's our APR for material handling, for forklifts, kind of that piece of the business. Our growth with Hysterial, you know, there is potential growth with them. We're the second largest dealer in the world for Hysterial.

That piece of the business.

Our growth with Hyster, Yale there is potential growth with them. We're the second largest dealer in the world for Hyster Yale today, we cover north of 20% of the <unk>.

Ryan Greenawalt: Today we cover north of 20% of the addressable market for U.S. and Canada. And, you know, they've been very open about trying to get their dealer network down to a manageable size. And there's still, there's a little room to go there.

Addressable market for U S and Canada.

And.

They've been very open about trying to get their dealer network down to a manageable size and there's still there's a little room to go there.

Ryan Greenawalt: And there's also the opportunity to grow internationally, which we started with the investment in Canada with YIT. On the construction side, it's a much broader category, you know, what we define as construction equipment. It's everything from the small turf and agricultural type things that we sell in northern Michigan through our Kubota dealership and in areas of Chicago, all the way up to the link belt cranes that we represent in Michigan. And so it's a much more open playing field.

And there's also the opportunity to grow internationally, which we started with.

The investment in Canada.

With it.

On the construction side, it's a much broader category.

What we define as construction equipment, it's everything from the small.

Turf and agricultural type things that we sell in northern Michigan through our Kubota dealership in areas of Chicago, all the way up to the link belt cranes that we represent in Michigan and so it's a much more open playing field. There are many more types of equipment dealers.

Edward Randolph Jackson: There are many more types of equipment dealers. It's a much more, I guess, fertile area for consolidation for us today. We're in the, you know, later innings of that consolidation strategy and material handling, and we're just getting started in construction, I guess that's the way I would characterize it. Okay, I'm shifting over to the next question kind of sticking in the broader themes. You know, I was at Modex this week, and I got a couple of questions around things that came out of that. One is, you know, spending three days there.

More I guess fertile.

Area for consolidation for US today, we are in the later innings of that consolidation strategy in material handling and we're just getting started in construction I guess is the way I would characterize it.

Okay.

Shifting over next question's kind of sticking in the broader themes.

That moat ex this week.

I've got a couple of questions around things that came out of that one is spin.

<unk> spending three days there.

Ryan Greenawalt: It was amazing to me how much, you know, Forespace was taken up by automation and robots, and clearly, you know, that's a trend. It's not that it's that much of a secret, but as you think about the move towards automation and the move towards more robotics, how does that, you know, challenge you in terms of your ability to find, you know, the kind of technician that would service that? Is it, you know, does it make it harder for you to recruit? I mean, I could see that being the case.

Amazing to me how much.

Demo ing how much.

Yeah.

For space was taking and have taken up by automation and robotics.

And clearly that's a trend its not that its not much of a secret, but as you would think about the move towards automation and the move towards more robotics, how does that.

Does it challenge you in terms of your ability to find.

The kind of technician that would service that is it does it make it harder for you to recruit I mean, I could see that being the case I could see it making it easier for you to recruit and then kind of.

Ryan Greenawalt: I could see it making it easier for you to recruit. And then, you know, kind of my tie-in question to that is that I know that you guys have, you know, some exposure to and do some distribution around some robotics and some automated products. From where you sit, where are we within the deployment of that kind of technology? I mean, I know we're in the early innings, but I mean, is this stuff actually really getting deployed?

Tie in question to that is is that I know that you guys have some exposure and do some distribution around some robotics in some automated products as you know.

From where you sit is where are we within.

The deployment of that kind of technology I mean, I know, we're early innings, but I mean is this stuff actually really getting deployed.

Ryan Greenawalt: You know, kind of what kind of pie does it take in your material handling world? So we see automation and robotics as an opportunity in our core business segment, which is, as we highlighted today, we really think it's all about product support in the aftermarket. And we think that the same thing will play out in robotics and other advanced material handling solutions. The question of technical aptitude or ability or how to recruit ability is actually it's the second thing you posited, which is that it's actually easier. It's harder to train someone to be a full, you know, fully functional heavy diesel engine mechanic that works on all types of, you know, the breadth of heavy equipment that we have in our portfolio. That's harder to train and takes longer to train than some of these, you know, electric material handling machines, which, you know, it is, there's less diagnostics, it's going to be more component replacement, it's just, it's a different skill set.

What kind of.

Material handling is a world what kind of.

Like how much of the pie does it take.

Yeah.

Well, let's start with the first piece of the question so the.

We see.

Automation and robotics as an opportunity in our core business segment, which is as we've highlighted today, we really think it's all about product support and the aftermarket and we think that that same thing will play out.

In robots robotics, and other advanced material handling solutions.

The question of technical aptitude or ability or recruit ability is actually it's the second it was the second think positioning positive which is that it's actually easier.

It's harder to train someone to be a full.

You know fully functional heavy diesel engine mechanics. It works on all types of all the breath of heavy equipment that we have in our portfolio.

Harder to train it takes longer to train than some of these electric material handling machines, which.

Is there.

Theres less diagnostics it is going to be more component replacement. It's just it's a different skill set and it's going to be more happening with a laptop and with heavy tools and machinery I guess is the.

Ryan Greenawalt: It's going to be more happening with a laptop than with heavy tools and machinery, so I guess that is the, you know, the best way to delineate the two. And then just, sorry, Ted, there was a multi-part question. What was the second part? Yeah, well, that goes into like, you know, I mean, you know, like, I've seen some of your, you know, marketing literature that you have around, and you guys do have product offerings that, you know, in your, in your, What do you call it? You know, where we're at in the life cycle. Yeah. Right. It's just getting started. We're in the early innings, and we're in the early days.

The best way to to.

To delineate the two.

And then just.

Sorry.

There was a multi part question what was the second.

Yes.

Like.

I mean.

I've seen some of your marketing literature that you have around you guys do have.

Product offerings.

In your in your.

What to call it.

Where we're at in the lifecycle.

Right.

Yes.

Robotics.

Mhm.

We're early innings and we're early days in it.

Ryan Greenawalt: There's a lot to come, and we're well positioned, but we're just scratching the surface. And we're excited about that we have allied lines and we have some parts of our portfolio that are more emerging technologies. But what we're really excited about is what Hyster Yale is working on. They're our flagship partner, and you can see their commitment to that market and being innovators, and we're excited to be part of that. We feel like us and a couple of other peers in their dealer network are really well positioned to capitalize on that. No, I spent about an hour and a half at their booth this week, and they had a good story and they had a nice demo of some stuff in there.

There is a lots of calm and we were well positioned but we're.

We're just scratching the surface and we're excited about.

That we have we have allied lines and we have some some some parts of our portfolio that are more emerging.

Technologies, but what we're really excited about is what hyster yale's working on as are.

Our flagship partner and you can see their commitment to that market and being innovators and we're excited to be part of that.

Feel like us in a couple of our other peers and their dealer network are really well positioned to capitalize on that.

No I spent about an hour and a half into them in their booth. This weekend.

<unk> had a good story and they had a nice demo of some stuff in there.

Edward Randolph Jackson: My final questions, which are really just kind of nitpicky and really for Tony, but is Tony, in 24, you hit part of it with regard to what you're expecting for rental equipment, but what's your capex for 24 going to be, ex-rental? Ten million dollars is a good number for that figure. This would be for things like, you know, leasehold improvements at a branch, parking lot, you know, a new roof, this kind of stuff, refurbishing office space if needed, et cetera, $10 million, not bad.

My My final questions, which are really just kind of nitpicky.

For Tony but Tony in 'twenty, four you hit part of it with regards to what Youre expecting for rental equipment, but whats your capex for 'twenty, we're going to be X rental.

$10 million is a good number for that figure.

<unk>.

This would be for things like <unk>.

Lease hold improvements at a branch.

Parking lot a new roof. This this kind of stuff.

Refurbishing on this space if needed.

<unk> <unk> et cetera to $10 million of that event is a good number there.

Anthony J. Colucci: Okay, and then my last question, which is really nitpicky, I just, it's more out of curiosity. On the cash flow statement, what is the gain on the bargain? Purchase of this. Gain on Bargain Purchase is brought to us by general accounting principles and the fair valuing of assets in the purchase price allocation. It effectively is saying, Ted, that the assets that were purchased in the BRRRS transaction were worth more than we paid for them. And there's obviously judgment that comes into that, different factors that I won't get into, but that's.

Okay and then my last question, which is really nitpicky is just too small.

Out of curiosity on the cash flow statement, what is gain on bargain.

Purchase a business.

Okay.

Gain gain on bargain.

Gain on bargain purchase is brought to us by <unk>.

General accounting principles.

Fair valuing of assets and purchase price allocation it as effectively as saying that the assets that were purchased in the boroughs transaction.

Worth.

Worth more than more than your payable paid for it.

And there's obviously judgment that comes into that.

Different factors that I won't.

Anthony J. Colucci: All right. Well, again, congrats on the quarter in the year. Look forward to 2024. Thank you, Ted.

I won't get into but that's what that was.

Alright, well again, congrats on the quarter and the year I look forward to 2024.

Sure.

Thank you Ted.

Operator: Thank you for your question. There are no additional questions waiting at this time. That will conclude the conference call. On behalf of the company, thank you for your participation. You may now disconnect your lines.

Thank you for your question there are no additional questions waiting at this time that will conclude the conference call on behalf of the company. Thank you for your participation you may now disconnect your lines.

Thank you for your question there are no additional.