Q1 2024 Alamo Group Inc Earnings Call

Operator: Good day, and welcome to the Alamo Group first quarter 2024 earnings conference call. All participants will be in a listen-only mode.

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Speaker Change: Good day and welcome to the Alamo Group first quarter 2024 earnings Conference call.

Speaker Change: All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then one on your touch-tone phone.

Speaker Change: After today's presentation there'll be an opportunity to ask a question to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.

Speaker Change: Please note this event is being recorded.

Operator: To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Edward Rizzuti, Executive Vice President, General Counsel, and Secretary. Please go ahead.

Speaker Change: I would now like to turn the conference over to Edward Rizzuti.

Edward T. Rizzuti: Executive Vice President General Counsel and Secretary. Please go ahead.

Edward T. Rizzuti: Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746 and we will send you a release and make sure we are on the company's distribution list. There will be a replay of the call that will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-877-344-7529 using the passcode 9093220.

Edward T. Rizzuti: Thank you.

Edward T. Rizzuti: By now you should have all received a copy of the press release. However, I didn't want is missing a copy and would like to receive one please.

Speaker Change: Please contact us at 2128 to 70 374, six and we will see.

Speaker Change: And you're really to make sure you're on the company's distribution list.

Speaker Change: There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 18773445.

Speaker Change: 90932.

Speaker Change: Zero. Additionally, the call is being webcast on the company's website at Www Dot Alamo dashed green Dot com and a replay to see that.

60 days on the line with me today are Jeff Weiner, President and Chief Executive Officer, Richard worthy Executive Vice President Chief Financial Officer.

Speaker Change: Camps, Executive Vice President and Treasurer.

Edward T. Rizzuti: Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days. On the line with me today are Jeff Leonard, President and Chief Executive Officer, Richard Wehrle, Executive Vice President, Chief Financial Officer, and Agnes Camps, Executive Vice President and Treasurer. Management will make some opening remarks, and then we will open up the line for your questions.

Speaker Change: Management will make some opening remarks, and then we'll open up the line for your questions.

Speaker Change: During the call today management may reference certain non-GAAP numbers in their remarks.

Speaker Change: Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release.

Edward T. Rizzuti: During the call today, management may reference certain non-GAAP numbers in their remarks. Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release. Before turning the call over to Jeff, I would like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the company's actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following.

Speaker Change: Before turning the call over to Jeff I would like to make a few comments about forward looking statements.

Edward T. Rizzuti: Adverse economic conditions which could lead to a reduction in overall market demand, supply chain disruptions, labor constraints, competition, weather, currency-related issues, geopolitical events, and other risk factors listed from time to time in the company's SEC report. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. I would now like to introduce Jeff Leonard. Jeff, please go ahead.

Speaker Change: We will be making forward looking statements today that are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 forward looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results among those.

Speaker Change: Factors that could cause actual results to differ materially are the following adverse economic.

Speaker Change: Economic conditions, which could lead to a reduction in overall market demand supply chain disruptions labor constraints competition weather.

Currency related issues geopolitical events and other risk factors listed from time to time in the country SEC reports.

Speaker Change: The company does not undertake any obligation to update the information contained here in.

Speaker Change: It's only as of this date.

Speaker Change: I would now like to introduce Jeff Black Jack. Please go ahead. Thank you Ed we wanted to thank everyone, who has joined US on the conference call today and express our appreciation for your continued interest in Alamo group.

Jeffery A. Leonard: Thank you, Ed. We want to thank everyone who's joined us on the conference call today and express our appreciation for your continued interest in Alamo. The first quarter shaped up largely in line with our expectations, and we were pleased overall with the financial results we've reported today. I would now like to turn the call over to Richard, who will take us through a review of our financial results for the first quarter.

Speaker Change: First quarter shaped up largely in line with our expectations and we were pleased overall with the financial results. We reported today I would now like to turn the call over to Richard who will take us through a review of our financial results for the first quarter. I will then provide additional comments on the results and say a few words about the outlook for the second quarter and the balance of 'twenty four.

Speaker Change: Following our formal remarks, we look forward to taking your questions. Richard go ahead, thanks, Jeff and good morning, everyone. Alamo group's first quarter 2024, and with the solid performance that produced record net sales driven by continued strong demand for our products in the industrial equipment Division.

Jeffery A. Leonard: I will then provide additional comments on the results and say a few words about the outlook for the second quarter and the balance of 2024. Following our formal remarks, we look forward to taking your questions. Richard, please.

Richard J. Wehrle: Thanks, Jeff, and good morning, everyone. Alamo Group's first quarter, 2024, ended with a solid performance that produced record net sales, driven by continued strong demand for our products in the industrial equipment division. First quarter consolidated net sales were $425.6 million, an increase of 3% compared to $411.8 million in the first quarter of last year. Gross margin percentage fell by 110 basis points, and gross margin dollars decreased by just under $900,000 in the quarter compared to the first quarter of 2023.

Richard J. Wehrle: Both margin percent and dollars decreased were driven by underabsorption and productivity inefficiencies in vegetation management and, to a lesser extent, product mix in industrial equipment. Operating margin for the first quarter came at $47 million versus $49 million in the first quarter of 2023, a decrease of 4%. Operating margin as a percent of sales was 11% for the first quarter versus 12% for the same quarter last year. Consolidated net income for the first quarter was $32.1 million for $2.67 per diluted share, a decrease of 4% versus net income of $33.3 million for $2.79 per diluted share for the first quarter of 2023.

Richard: First quarter consolidated net sales were $425 6 million, an increase of 3% compared to 411 8 million in the first quarter of last year.

Gross margin percentage fell by 110 basis points gross margin dollars decreased by just under just under 900000 in the quarter compared to the first quarter of 2023.

The margin percent and dollars decrease were driven by under absorption and product for productivity inefficiencies and vegetation management and to a lesser extent product mix and the industrial equipment.

Richard: Operating margin for the first quarter came at 47 million versus 49 million in the first quarter of 2023, a decrease of 4%.

Richard: Operating margin as a percent of sales was 11% for the first quarter versus 12% from same quarter last year.

Richard: Consolidated net income for the first quarter was $32 1 billion or $2 67 per diluted share a decrease of 4% versus net income of $33 3 million or $2 79 per diluted share for the first quarter of 2023.

Richard J. Wehrle: Our vegetation management division was off in total sales compared to the first quarter of 2023. Softness in both the forestry and agricultural markets continued due to inflation and a higher interest rate in the higher interest rate environment.

Richard: Our vegetation management Division was off in total sales compared to the first quarter of 2023 <unk>.

Richard: Softness in both the forestry and agricultural markets continued due to inflation and a higher interest rate and the higher interest rate environment.

Richard J. Wehrle: Net sales were $223.7 million, a decrease of 13% compared to $256.4 million for the first quarter of 2023. We've been monitoring dealer inventory levels, which are up, but not at historical levels. The division's operating income for the first quarter was $21.7 million, almost 10% of sales, but down 40% versus $36.5 million, 14% of sales for the same period in 2023. This division reduced its labor force during the quarter at its larger manufacturing location and still almost hit 10% operating income, a solid accomplishment.

Richard: Net sales were $223 7 million, a decrease of 13% compared to $256 4 million for the first quarter of 2023.

Richard: We've been monitoring dealer inventory levels, which are up but not at historical levels.

Richard: Division's operating income for the first core was 21 7 million almost 10% of sales.

Richard: Down 40% versus 300 versus $336 5 million, 14% of sales for the same period in 2023.

Richard: This division reduced its labor force during the quarter. It had its larger manufacturing location and still almost a 10% operating income a solid accomplishment.

Richard J. Wehrle: This is also an improvement of 50 basis points compared to the fourth quarter of 2023. Industrial Equipment Division net sales had a tremendous quarter, coming in at $201.8 million, up 30% compared to $155.3 million for the first quarter of 2023. This was due to a large, due to a solid performance across all product lines, particularly backing trucks, sweepers, debris collectors, and snow removal equipment.

Richard: This is also an improvement of 50 basis points compared to the fourth quarter of 2023.

Richard: That's real equipment Division net sales had a tremendous quarter coming in at $201 8 million up 30% compared to 150 593, $155 3 million for the first quarter of 2023.

Richard: This was due to a large due to solid performance across all product lines, particularly vacuum trucks sweepers degreed collectors and snow removal equipment.

Richard J. Wehrle: While component part receipts continue to return to a more consistent cadence, the division continued to have a few late component deliveries which impacted operations, although not as significantly as previous quarters. This resulted in a substantial rise in operating margin in the first quarter of 2024 to $25.3 million, just under 13% of sales, compared to $12.5 million, 8% of sales for the first quarter of 2023, an increase of over 102%. The company's backlog at the end of 2023, at the end of the first quarter of 2024, came in at just over $831 million, down 16% compared to backlog levels at the end of the first quarter of 2023, but still at a healthy level.

Richard: Well component part receipts continued to return to a more consistent cadence.

Richard: We continue to have a few late component deliveries, which impacted operations, although not as not as significantly as previous quarters.

Richard: This resulted in a substantial rise in operating margin in the first quarter of 2024 to $25 3 million just under 13% of sales.

Compared to $12 5 million, 8% of sales for the first quarter of 2023, an increase of over 102%.

The company's backlog at the end of 2023 at the end of the first quarter above 224 came in at just over 80 $831 million down 16% compared to backlog levels at the end of the first quarter of 2023, but still at a healthy level.

Richard J. Wehrle: A few additional items I'd like to cover that are related to the balance sheet at the end of the first quarter of 2024, which will continue to remain strong. Working capital increased by about $61 million compared to the end of the first quarter of 2023.

Richard: A few additional items I'd like to cover that are related to the balance sheet at the end of the first quarter of 'twenty 'twenty, four which will continue to remain strong working capital increased about 61 million compared to the first into the first quarter of 2023. The increase primarily resulted from higher accounts receivable and to a lesser extent inventory.

Richard J. Wehrle: The increase primarily resulted from higher accounts receivable and, to a lesser extent, inventory. During the first quarter of this year, as we expected, we had a slight increase in our credit facility, excluding paying back intercompany loans at the end of the year. Our bank leverage ratio for the first quarter of 2024 was just over 1.3 to 1, down from 1.7 to 1 at the end of the first quarter of 2023.

Richard: During the first quarter of this year as we expected we had a slight increase in our credit facility expecting excluding pay down paying back intercompany loans at the end of the year our bank leverage.

Richard: The ratio for the first quarter of 2024 was just over 1.3 to one down from one seven to one at the end of the first quarter of 2023.

Richard J. Wehrle: And finally, the company's trailing 12 months EBITDA came in at just over $246 million, flat to year-end of 2023, which was a record. For 2024, cash flow should remain healthy as our focus will be to continue to reduce both inventory and debt levels. We will remain disciplined in our execution, controlling costs and expenses, as inflation and interest rates are expected to continue to put pressure on our margins. Supply Chain Deliveries and Reduction in Freight Costs will be a major focus for the company in 2020.

Richard: Finally, the company's trailing 12 months EBITDA came in at just over $246 million.

Richard: <unk> to year end of 2023, which was a record.

Richard: 2024 cash flow should should remain so should cash flow should remain healthy as our focus will be to continue to reduce both inventory and debt levels. We will remain disciplined in our execution controlling costs and expenses as inflation and interest rates are expected to continue to put pressure on our margins.

Richard: Supply chain deliveries and reduction in freight crop freight costs book will be a major focus for the company in 2024.

Richard J. Wehrle: So in summary, Quarter 1 of 2024 was what we had anticipated for Alamo Group. Sales were up 3%, but the margins and net income were off mainly due to weak market conditions and vegetation management. We were pleased that our board recently approved a regular quarterly dividend of $0.26 per share, up 15% compared to $0.22 per share for the first quarter of 2023. With that, I'll turn the call back over to Jeff. Thank you, Richard.

Speaker Change: So in summary quarter. One of 2024 was what we had anticipated for Alamo group sales were up 3% the margins and net income are all mainly due to weak market conditions and vegetation management.

Speaker Change: We were pleased that our board recently approved a regular quarterly dividend of 26 per share up 15% compared to 22 cents per share for the first quarter of 2023.

Speaker Change: With that I'll turn the call back over to Jeff. Thank you Richard I'd like to add my personal thanks to everyone Who's joined us on the call. This morning.

Jeffery A. Leonard: I'd like to add my personal thanks to everyone who joined us on the call this morning. The company's first quarter results were broadly in line with our expectations, given the current dynamics of our markets. Net sales in the quarter established another all-time record, despite the ongoing impact of higher interest rates which are constraining activity, primarily in the markets for our vegetation management equipment. The market for Alamo's forestry and tree care equipment has been the most affected by the higher rates.

Jeff: Company's first quarter results were broadly in line with our expectations given the current dynamics of our markets net sales in the quarter established another all time record. Despite the ongoing impact of higher interest rates, which are constraining activity primarily in the markets for our vegetation management a quote.

Jeff: The market for almost four street three care equipment has been the most impacted by the higher rates. Many commercial tree care contractor. She purchased are totally shippers and stump riders are family owned small businesses that rely on third party financing for new equipment purchases higher interest rates have affected these customers in the form of higher prices when they walk into a dealership and.

Jeffery A. Leonard: Many commercial tree care contractors who purchase our towed chippers and stump riders are family-owned small businesses that rely on third-party financing for their equipment purchases. Higher interest rates have affected these customers in the form of higher prices when they walk into a dealership, as the dealer is forced to pass along their own higher floor plan financing costs. Then, potential buyers are impacted a second time when they seek third-party financing to purchase a piece of equipment and incur higher finance charges to do so.

Jeff: The dealer is forced to pass along their own higher floor plan financing cost than potential buyers were impacted a second time when they see third party financing to purchase a piece of equipment and incur higher finance charges to do so.

Jeffery A. Leonard: The result has been increasing caution in the market, with many buyers content to wait for lower interest rates before making a firm buying commitment. Dealers are implementing incentive programs in an effort to reduce inventory, but are facing an increasingly reluctant cash-strapped pool of potential buyers. At the upper end of our forestry and tree care range, demand for our large industrial whole tree chippers and grinders is largely driven by waste wood recycling and biomass production. The United States and Canada are ranked number one and number two among the world's producers and exporters of wood pellet biofuel.

Jeff: Result has been increasing coffee in the market with many buyers can tend to wait for lower interest rates, but we're making it a firm by commitment.

Jeff: You guys are implementing incentive programs in an effort to reduce inventory, but are facing an increasingly reluctant cash strapped pool of potential buyers.

Jeff: At the upper end of our forestry and treated care range demand for our large industrial Holtry Jefferson riders is largely driven by wastewater recycling and biomass production.

Jeff: And it stays in Canada ranked number one and number two among the world's producers and exporters of wood pellet biofuels.

Jeffery A. Leonard: North American pellet producers depend on logging and lumber production residue as primary sources of feedstock. Tighter residue supplies and higher prices have pressured the operating margins of North American pellet producers, causing them, in some cases, to postpone investment in new processing equipment. At the same time, dealer inventories remained elevated above contract levels during the first quarter. The agricultural equipment market is encountering similar dynamics. The combination of softer commodity crop prices and higher for longer interest rates constrained sales of ag equipment and other outdoor power equipment during the first quarter. After three solid years, well above the long-term average, inflation-adjusted U.S. net cash farm income is expected to decline in 2024 by approximately 5% compared to the 2003-2023 long-term trend.

Jeff: North American pellet producers depend on logging and lumber production recipe as primary sources of feedstock tighter residue supplies and higher prices have pressured the operating margins of North American pellet producers, causing them in some cases to postpone investment in new processing equipment.

Jeff: Same time dealer inventories remain elevated above contract levels during the first quarter.

Jeff: The agricultural equipment market is encountering similar dynamics, the combination of softer commodity crop by crop prices and higher for longer interest rates constrained sales of agri equipment and other outdoor power equipment during the first quarter.

Jeff: After three solid years, well above the long term average inflation adjusted U S. Net cash farm income is expected to decline in 2024 by approximately 5% compared to the 2023 22003 to 2023 long term trend.

Jeffery A. Leonard: U.S. two-wheel drive tractor sales in the first quarter were down 13.4% compared to the first quarter of 2023, with tractors in the 40 to 100 horsepower class down 8%, and tractors less than 40 horsepower were down 17% compared to the first quarter of 2023. In the face of these headwinds, the Vegetation Management Division reported net sales that were down 12.7% compared to the first quarter of 2023. The Division's order bookings were 41% lower than in the same period of the prior year.

Jeff: U S. Two wheel drive tractor sales in the first quarter were down 13, 4% compared to the first quarter of 2023 with tractors in the 40 to 100 horsepower class down 8% in tractors less than 41000 were down 17% compared to the first quarter of 2023.

Jeff: The face of these headwinds to education management to get into the reported net sales were down 12, 7% compared to the first quarter of 2023. The division's order bookings were down were 41% lower than in the same period of the prior year vegetation management backlog declined by about 48% primarily due to the combined effects of fewer.

Jeffery A. Leonard: The Vegetation Management backlog declined by about 48%, primarily due to the combined effects of fewer new orders during the first quarter and cancellation of orders during 2023, as previously reported. These were primarily in the forestry and tree categories.

Jeff: New orders during the first quarter and cancellation of awards during 2023 as previously reported equal primarily in the moisture and treat yet.

Jeffery A. Leonard: Backlog also declined in the Division of North American Agricultural Equipment Group that serves the Hobby Farm and Ranch Sector. In this group, both new orders and backlog declined year over year due to the combined effects of higher interest rates and higher channel inventory. However, we were encouraged that order bookings for our Moore products began to show early, modest signs of recovery in the final weeks of the third quarter. However, the slowing demand for these two groups adversely impacted absorption and efficiency of vegetation management's major manufacturing facilities.

Backlog also declined in the divisions North American agricultural equipment group that serves hobby farm and ranch segment and this group of new orders and backlog declined year over year due to the combined effects of higher interest rates and higher channel inventory.

We were encouraged that order bookings for our Mueller products began to show early modest signs of recovery in the final weeks of the fourth quarter.

Slowing demand in these two groups adversely impacted absorption and efficiency and vegetation management major manufacturing facilities to address this the division took actions to reduce production capacity at its largest U S facilities and further actions will be taken as warranted moving forward.

Jeffery A. Leonard: To address this, the division took actions to reduce production capacity at its largest U.S. facilities, and further actions will be taken as warranted moving forward. In addition, the division initiated the closure of a facility that produces spare and wear parts for classic agricultural equipment.

Jeff: In addition, the division initiated the closure of a facility that produces spare and wear parts for classic agricultural equipment. The benefits of these actions will begin to be evident in the company's second quarter results.

Jeffery A. Leonard: The benefits of these actions will begin to be evident in the company's second quarter results. Sales of vegetation management equipment to governmental agencies was a notable bright spot for this division in the first quarter. The division's governmental mowing businesses in North America, Europe, and the United Kingdom continue to perform well and at a brisk pace. Both sales and backlog remained elevated for this part of the business, and market activity remained bullish.

Jeff: Sales of vegetation management equivalent to governmental agencies was a notable bright spot for this division in the first quarter. The division's governmental mowing businesses in North America, Europe, and the United Kingdom continued to perform well and at a brisk pace both sales and backlog remained elevated for this part of the business and market activity remains bullish, but we'll see.

Jeffery A. Leonard: But with this division's larger business groups facing strong headwinds that drove sales lower, vegetation management operating income declined 450 basis points and EBITDA also moved 380 points lower compared to the prior year first quarter. However, on a sequential basis, the division's operating income improved by nearly 10% and operating margin improved by 500 basis points compared to the fourth quarter of 2023. Our Industrial Equipment Division had an excellent first quarter. Additionally, state and county governments remained on a solid fiscal footing as they entered 2024.

Jeff: Division's larger business dreams facing strong headwinds that drove sales lower vegetation management operating income declined 450 basis points and EBITDA also moved 380 points lower compared with prior year first quarter on a sequential basis. The division's operating income improved by nearly 10% and operating margin improved by 500.

Jeff: Basis points compared to the fourth quarter of 2023.

Our industrial equipment Division had an excellent first quarter state and county governments remained on a solid physical putting as they ended 2024 forecast declines in state revenue for 2023 did not materialize in many states continued to report budget surpluses last year state.

Jeffery A. Leonard: Forecast declines in state revenue for 2023 did not materialize, and many states continued to report budget surpluses last year. State Rainy Day Funds Remain Historically Elevated At the municipal level, the situation was somewhat more nuanced as a number of American cities struggled with the cost of caring for rapidly growing migrant communities. However, governmental markets for the division's products remained very strong across the board, and both cloning and ordering activity remained historically elevated.

Jeff: State and rainy day funds remain historically elevated at the municipal level. The situation was somewhat more nuanced as the number of American cities struggle with the cost of carrying for rapidly growing migrant communities. However, governmental markers with the division's products remained very strong during the first quarter across the board and both quoting and ordering activity remained historically Ella.

Jeff: The weighted.

Jeffery A. Leonard: Against this backdrop, Industrial Equipment Division net sales improved by 30 percent.

Jeff: Against this backdrop industrial equipment Division net sales improved by 30% and backlog rose, 17% compared to the first quarter of 2023, litigations order bookings improved by over 25% compared to the first quarter of the prior year and where its highest quarterly bookings ever all of the divisions product groups reported higher sales strong.

Jeffery A. Leonard: and backlog rose 17% compared to the first quarter of 2023. The division's order bookings improved by over 25% compared to the first quarter of the prior year and were its highest quarterly bookings ever. All of the division's product groups reported higher sales, strong ordering activity, and higher backlogs. Non-governmental markets for industrial equipment also remain strong on the back of the continued durability of the North American economy and are mildly aided by the stimulus effect of the recent federal infrastructure investment and job creation.

Ordering activity and higher backlog.

Jeff: Non governmental markets for industrial equipment also remained strong on the back of the continued durability of the North American economy, and mildly aided by the stimulus effect of the recent federal infrastructure investment and jobs Act.

Jeffery A. Leonard: Efficiencies improved in the division's practice.

Jeff: Efficiencies improved in the division in the divisions primary production facilities as the pace of production increased with very strong momentum across all of its product groups industrial equipment Division operating income improved 440 basis points and EBITDA improved 410 basis points on a sequential basis. This division's operating.

Jeffery A. Leonard: production facilities as the pace of production increased, with very strong momentum across all of its product groups. Industrial Equipment Division Operating Income improved 440 basis points and even improved 410 basis points. On a sequential basis, this division's operating income improved slightly by 1%, and its operating margin improved by 20 basis points to 12.5% of sales. Turning our attention to the company's operations more broadly, supply chain performance in both divisions continued to improve during the first quarter, although a few challenges remained.

Jeff: Net income increased slightly by 1% and its operating margin improved by 20 basis points to 12, 5% of sales.

Jeff: Turning our attention to the company's operations more broadly supply chain performance in both divisions continued to improve during the first quarter. Although a few challenges for my truck chassis deliveries continued to be somewhat constrained by shortages of chassis frame rails, which again impacted production for nearly all of the truck chassis Oems a shortage of Allison transmitter.

Jeffery A. Leonard: Truck chassis deliveries continue to be somewhat constrained by shortages of chassis frame rails, which again impacted production for nearly all of the truck chassis OEMs. A shortage of Allison transmissions due to production disruptions late in 2023, and a shortage of transmission control modules further held back medium-duty truck chassis deliveries during the quarter.

Jeff: <unk> did have production disruptions late in 2023, and a shortage of transmission control modules further held back medium duty truck chassis deliveries during the quarter.

Jeffery A. Leonard: Cost for raw materials and industrial components stabilized during the quarter, and we're another bright spot. Steel prices remain volatile, but they generally trended slightly downward during the first quarter and have declined significantly since peaking in late 2021. Skilled labor availability, which has been very challenging in most areas where the company operates since the onset of the pandemic, has now improved in many areas, and this is helping to improve productivity. We were obviously extremely pleased that, through the determined work of our teams, both of our operating divisions were able to sequentially expand their operating margins relative to the fourth quarter of 2023.

Jeff: Cost for raw materials, and industrial components stabilized during the quarter and were another bright spot steel prices remain volatile, but generally trended slightly downward during the first quarter and have declined significantly since peaking in late 'twenty or 'twenty one.

Jeff: Skilled labor availability, which has been very challenging in most areas, where the company operating since the onset of the pandemic has now improved in many areas and this is helping your productivity.

Jeff: We were obviously extremely pleased that three of the determined work of our teams both of our operating divisions were able to sequentially expand their operating margins relative to the fourth quarter of 2023.

Jeffery A. Leonard: Regarding our outlook for the second quarter and the second half of 2024, we believe that the market conditions that we encountered in the first quarter, both negative and positive, are likely to persist. The headwinds that confronted us in vegetation management in the first quarter are not likely to meaningfully abate until inventory declines and entry freight reductions are announced.

Jeff: Regarding our outlook for the second quarter in the second half of 2024, we believe that the market conditions that we encountered in the first quarter, both negative and positive are likely to persist.

Jeff: The headwinds that confronted us in vegetation management in the first quarter are not likely to meaningfully abate until inventory declines in interest rate reductions that were announced.

Jeffery A. Leonard: Until then, we'll continue to collaborate closely with our dealers to incentivize retail sales and reduce inventory by doing so. While we expect sales growth to continue, we anticipate that the pace of growth will be somewhat more modest for the next several quarters. We will continue our determined actions to reduce costs and further simplify our structure through additional facility consolidation. Finally, we will not hesitate to further adjust our capacity as needed to match future demands on a timely basis.

Jeff: Till then we will continue to collaborate closely with our dealers to incentivize retail sales and reduce inventory by doing so while we expect sales growth to continue we anticipate that the pace of growth will be somewhat more modest for the next several quarters. We will continue our determined actions to reduce cost and further simplify our structure through additional facility.

Jeff: He consolidations finally, we will not hesitate to further adjust our capacity as needed to match future demand on a timely basis.

Jeffery A. Leonard: It's worth noting that our balance sheet strengthened during the first quarter as total debt and net-of-cash declined nearly 24% to its lowest level since we acquired the Moore-Bach business in 2019. Our balance sheet positions us well for what we believe will be a more active year for M&A, and we are optimistic about our M&A pipeline as we have more actionable opportunities than we've seen for the past couple of years. In summary, while the next couple of quarters are expected to be challenging, we expect favorable developments in the company to continue, albeit at a somewhat more modest pace, for the remainder of 2024.

Jeff: It's worth noting that our balance sheet strengthened during the first quarter as total debt net of cash declined nearly 24% to a slow rollout lowest level since we acquired the more bulk business in 2019.

Jeff: Alan sheet positions us well for what we believe will be a more active year for M&A and we are optimistic about our M&A pipeline as we have more actionable opportunities than we've seen for the past couple of years in summary, while the next couple of quarters are expected to be challenging we expect favorable development of the company to continue, albeit at a somewhat more modest pace for the rig.

Jeff: Major of 2024, we will continue to execute our strategy to grow the company at an attractive rate, while expanding operating margin.

Jeffery A. Leonard: We will continue to execute our strategy to grow the company at an attractive rate while expanding operating margins. Before closing my remarks today, I would like to thank our customers, dealers, suppliers, our thousands of exceptional employees, and our financial stakeholders for their continued support of the company. This concludes our prepared remarks. We're now ready to take your questions.

Before closing my remarks today I would like to thank our customers dealers suppliers are thousands of exceptional employees and our financial stakeholders for their continued support of the company. This concludes our prepared remarks, we're now ready to take your questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. The first question comes from Chris Moore from CJS Securities. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: The first question comes from Chris Moore from C. J S Securities. Please go ahead.

Christopher Paul Moore: Hey, good morning, guys. Great quarter. Thanks for taking a couple.

Christopher Paul Moore: Hey, good morning, guys, great quarter, and thanks for taking a couple of questions.

Christopher Paul Moore: Maybe we'll start, good morning, vegetation margin 9.7%, down significantly year over year, up a little bit sequentially. You mentioned actions to protect the margin. Can you stay around the 10% level for the bounce of 24, or is visibility just not there to make that?

Speaker Change: Uh huh.

Christopher Paul Moore: Good morning.

Christopher Paul Moore: Vegetation vegetation EBIT margin nine 7% down significantly year over year up a little bit sequentially. He mentioned actions you know to protect the margin.

Christopher Paul Moore: Can you stay around the 10% level for the bounce at 'twenty four or is visibility just just not there to make that.

Speaker Change: That didn't make that up.

Jeffery A. Leonard: I'm fairly confident we can, and that's what we're expecting to do, to be honest with you. That's why we are adjusting our capacity now. And we've taken some further steps-given actions and some that we haven't announced yet, so I have to be a little bit careful what I say here, but no, we're taking enough actions to make sure we can protect that bottom line of vegetation management. That's the whole intent, Chris. No matter what the market does to us, whatever our sales call, we need to maintain 10% in this division.

Speaker Change: Colin I'm fairly confident we can and that's what we're expecting to do to be honest with you. That's why we are adjusting our capacity now.

Speaker Change: And we've taken some fairly significant actions and some that we haven't announced yet so I did a little bit careful what I say here, but no. We're taking it up actions to make sure. We can protect that bottom line and vegetation. That's the whole intent Chris no matter, what the market does to us and whatever our sales call we need to maintain 10% in this division.

Christopher Paul Moore: Terrific. Thank you. That's helpful. Industrial bookings backlog both increased significantly. What did lead times look like at this point in that segment?

Speaker Change: Terrific. Thank you that's helpful industrial bookings backlog, both up significantly what is lead times look like at this point in that segment.

Jeffery A. Leonard: You know, they're actually normalizing quite a bit, Chris. They're out about 120 days for the vacuum trucks and the bigger equipment and falling fairly rapidly. The truck OEMs are really getting on set. Some of the problems I mentioned in my remarks on the call are beginning to clear a little bit, and we're very optimistic about our deliveries of chassis, which really drives that whole division, as you know. So I think three months is pretty typical right now for us, and we have more than adequate capacity.

Speaker Change: Those are actually normalizing quite a bit of cliffs are out about a 120 days for the vacuum trucks into bigger equipment and falling fairly rapidly, though the truck Oems are really getting one step.

Speaker Change: Some of the problems I mentioned in my remarks on the call are beginning to clear a little bit and we're very optimistic about our deliveries and chassis, which really drives that whole division as you know.

Speaker Change: So I think three months, it's pretty typical right now for us and we have more than adequate capacity reservation.

Christopher Paul Moore: God, you mentioned still, you know, a few kind of lingering issues on the supply chain side. Any worries at this point, from where you sit today, any reason to think that they won't? We kind of marginally continue to improve versus, you know, some..., you know, go the other way. I'm trying to get this thing to show you how much visibility we have.

Speaker Change: Got it Yeah, you mentioned, it's still you know a few kind of lingering issues on the supply chain side.

Speaker Change: Any.

Speaker Change: Any worries at this front from where you sit today any reason to think that that you know.

Speaker Change: They won't be.

Speaker Change: Marginally continuing to improve versus you know some.

Speaker Change: Go the other way.

Speaker Change: I'm trying to get to I know I don't have much visibility widened.

Jeffery A. Leonard: Yeah, Chris, I don't see the situation getting any worse, and I think it will continue to improve. And I expect the pace of improvement will pick up as well. We are seeing notable improvements across the board in the supply chain, and it's not just truck chassis. It's things like hydraulic components and cylinders, all kinds of things that we consume. You know, as the economy starts to, as a whole, normalize now, lead times are coming down in both parts of our supply chain.

Speaker Change: Yeah, Chris I don't see the situation getting any worse and I think it will continue to improve and I expect the pace of improvement will pick up as well.

Speaker Change: We are seeing notable improvements across the board in the supply chain and it's not just truck chassis in things like hydraulic components cylinders all kinds of things. So you know as.

Speaker Change: As the economy starts to as a whole all normalized now lead times are coming down in most parts of our supply chain.

Christopher Paul Moore: Got it. I appreciate it, guys. I will leave it there.

Speaker Change: Got it.

Speaker Change: I appreciate it guys I will leave it there.

Speaker Change: Thanks, Chris.

Operator: The next question comes from Mike Shlisky from D.A. Davidson. Please go ahead.

Speaker Change: The next question comes from Mike Sison Suski from D. A Davidson. Please go ahead.

Michael Shlisky: Yes, hi, good morning. Thanks for taking my question. Mike?

Speaker Change: Yes, hi, good morning, Thanks for taking my question.

Michael Shlisky: Can you maybe..., kind of remind us, what percentage of your business serves the public sector or serves private players that serve the public sector? I'd imagine that group of customers is seeing fewer problems than the private sector. It sounds like you actually said almost anything that's public is doing pretty decently. Anything that's private is a little more challenged. So what are the – what's the broad breakdown there?

Speaker Change: By May and.

Speaker Change: Could you maybe.

Speaker Change: Kind of remind us what percentage of your business as it serves the public sector.

Or service private players that sort.

Speaker Change: The public sector I would imagine that group of customers is seeing fewer.

Speaker Change: Fewer problems and then the private sector. It sounds like you actually said.

Speaker Change: Almost anything that's public sector is doing pretty decently picking is private and cause us a little more challenge, but one of the.

Speaker Change: He brought what's the broad breakdown there.

Jeffery A. Leonard: It's still, I think what we've said before, it's roughly between 20 and 25 percent. All of that is from the hobby to the hobby farmer and ranch. And then the balance is made up between industrial and...

Speaker Change: It's still I think what we've said before it's roughly between 20 and 25% of that.

Speaker Change: That is from the hobby to the hobby farmer.

Speaker Change: And ranch.

Speaker Change: And there's no alcohol.

Speaker Change: Industrial and governmental.

Michael Shlisky: I'm sorry? Yes, I'm sorry.

Speaker Change: I'm, sorry, I'm, sorry, I was asking a it's kind of a overall the overall business.

Jeffery A. Leonard: I was asking kind of overall, your overall business. What percent of it serves the public sector, and what serves the private sector? NASA's education is probably number one.

What percent of it serves the public sector, and what what sort of the province.

Speaker Change: Not to say it.

Speaker Change: Probably the number.

Jeffery A. Leonard: Right, I think, like I said, I think we're 20 to 25% in that space where we're talking about the balances between governmental and industrial, and it's split. The pure governmental, my friends, 40-45% total revenue. Okay.

Speaker Change: Right I think like I said, I think we're 20% to 25% in that in that space, we're talking about the balances in governmental and industrial and it's split.

Speaker Change: Yes, it did appear governmental my friends, 40% to 45% total revenue.

Okay got it and then there are contractors have struggled as you and I have discussed before with the contractors that buy a mower and use it for both private and public works when they've got a contract to mow along a state highway so the numbers not fewer.

Jeffery A. Leonard: And then there are contractors that straddle that, as you and I have discussed before. We have contractors that buy a mower and use it for both private and public works when they get a contract to mow along the state highway.

Jeffery A. Leonard: So the number's not pure, and there is, but that's the best number we've been able to come up with.

Speaker Change: Is that that's the best number we've been able to produce.

Speaker Change: Got it thank you for that color I appreciate it.

Michael Shlisky: Got it. Thank you for that color. I appreciate it. Tina, tell us a little bit about the health of your dealer network, especially the dealers that mainly serve the private sector. My guess is that a lot of those are simply ag dealers or larger other brand dealers that make the prime mover. I just want to make sure that you're not seeing viewers, you know, unable to even take inventory at this point.

Speaker Change: Hum.

Speaker Change: What about the health and your and your dealer network, especially the dealers that.

Mainly serve the private sector.

Speaker Change: My guess is a lot of those are simply add dealers or larger other brand dealers that.

The prime mover.

Speaker Change: Just want to make sure that you're not seeing dealers.

Speaker Change: Unable to even take inventory at this point.

Jeffery A. Leonard: Actually, we're not, Mike. We haven't seen any pressure on our accounts receivable. We had one large forester dealer last year that we thought we were going to lose. We thought he was going to go insolvency and return quite a bit of inventory to us. That was one of the large cancellations I mentioned on the call. However, that dealer has since gotten back on his feet and is ordering some equipment from us again, so that's been a positive move.

Actually we're not we haven't seen any pressure on our accounts receivable, we had one large sports to deal with the last year that we bought.

Speaker Change: It was gonna go insolvent returned quite a bit of inventory that was one of the large cancellations I mentioned on the call.

Speaker Change: That would be on a same starting it back out of season ordering some equipment from US again, so that's been a positive move I mean, I, obviously deals are being very cautious right now might be below that because you've got the space closely but I don't see any near or under particular Jurassic and like in any profitability to fail at this point.

Jeffery A. Leonard: I mean, obviously, dealers are being very cautious right now, Mike. You know that because you track the space closely. But I don't see any that are under particular duress or any probability of failing at this point.

Speaker Change: Got it.

Michael Shlisky: Maybe one last one for me, you know, during the first quarter, one of the large machinery players, a bit larger than Alamo, kind of served adjacencies like quarry and aerial work platforms. But that company launched its own brand of Meditation Management Equipment with, you know, mulchers, chippers, and so on. I'm not even sure if their products overlap, but I don't know if you've heard of it. I wanted to kind of see if there was any overlap and tell us a little bit about, you know, In the past, I wouldn't normally have any issues with some startup company trying to displace, you know, Moore, Barker, or other Alamo brands, but this is a pretty large and well-funded parent company So, can you just maybe give us some commentary on the strength of... The Moore Bark Grant, your distribution? Thank you.

Speaker Change: Maybe one last one for me.

Speaker Change: During the first quarter, one of the large machinery players a bit larger than the Alamo kind of sort of Adjacencies Macquarie.

Speaker Change: Aerial work platforms.

Speaker Change: But that company launched their own.

Speaker Change: <unk>.

Speaker Change: Medication management equipment with Hino Motors shippers and so on I'm not even sure if they're priced overlap with yours I know if you've heard of it I wanted to just to kind of see if there was an overlap.

Speaker Change: Tell us a little bit about you know in.

Speaker Change: In the past they wouldn't normally have any issues with some startup you're trying to get in place.

Speaker Change: More of Aqua or or other animal brands, but this is a pretty large and.

Speaker Change: Well funded parent company. So can you just maybe give us some commentary on the strength of.

Speaker Change: The more background your your distribution in your customer base and you know if you have any plan to kind of help defend your market share. If this trend makes any kind of traction.

Jeffery A. Leonard: Mike, I'm pretty confident I know the brands you're talking about, and we know those products very well. That product line needs a significant refresh that it hasn't received yet, not from us, but from the competitors. So we don't see any short-term threat from that at all.

Speaker Change: I'm pretty confident I know the brands are talking about and we know those products very well.

Speaker Change: Needless to say it doesn't get refresh, but it hasn't received yet not ours to competitors.

Speaker Change: So we don't see any short term threat from that at all as far as the strength of our dealer network. We have long term loyal dealers a ballpark that had been with US a very long time are deeply invested in the aftermarket business related to those machines, which is where most of the money is made.

Michael Shlisky: As far as the strength of our dealer network is concerned, we have long-term loyal dealers at Horvath that have been with us for a very long time and are deeply invested in the aftermarket business related to those machines where most of the money is made. Those big machines are long-lived. They run 15, 20 years. So the parts revenue stream runs for a long time, which is a fairly big barrier to switching for any large dealer in the space. So no, I'm not particularly concerned about that. We know that company well. They've always been there. This is not a new thing. They're just sort of refreshing their space.

Speaker Change: Big machines are long lived and they they run 15 20 years or so the parts revenue stream runs a long time, which is a fairly big barriers to switching for any large dealer in the space. So no I'm not particularly concerned about that he knows our company well.

Speaker Change: Always been there this is not a new thing in the sort of refreshing those days.

Okay. That's.

Operator: Okay. That's a great color. I appreciate it. I'll pass it along.

Speaker Change: That's great color I appreciate it I'll pass it along thank you.

Mircea Dobre: The next question comes from Mig Dobre from Baird. Please go ahead.

Mega Debris: Thanks. The next question comes from Mega debris from Baird. Please go ahead.

Mircea Dobre: Hi, good morning. In the industrial... Hi, Gregory. And industrial equipment, can you guys confirm what the contribution from acquisitions was in a quarter, revenue wise? We normally don't, but probably

Mega Debris: Oh, hi, good morning.

Mega Debris: In the industrial.

Mega Debris: In industrial equipment.

Mega Debris: Can you guys confirm what the contribution from acquisitions was in the quarter.

Revenue wise, we do.

Mega Debris: Normally don't but probably.

Mega Debris: Christine, but same day, it's probably up roughly.

Richard J. Wehrle: $15 million. Okay. That's just a number.

Speaker Change: 15 million Okay. That's.

Speaker Change: That's to say I'll make a contribution to sales was 15 million. If you back that out the industrial division was still up 20.

Richard J. Wehrle: If you faxed that out, the industrial division was still up 20%.

Speaker Change: 20%.

Mircea Dobre: Yep, yep, yep.

Speaker Change: Yep Yep Yep.

Speaker Change: And.

Mircea Dobre: You know, Jeff, you spent quite a bit of time on this.

Speaker Change: You know, Jeff you spent quite a bit of time on on.

Mircea Dobre: on the whole supply chain issue and chassis and so on. I was kind of hoping that we'd be done having these kinds of discussions, but apparently we're not. Yeah, me too, me too, baby.

Speaker Change: On the whole supply chain issue in chassis and so on.

Jeff: Yes, I was kind of hoping that we'd be done having these kinds of discussions but apparently whatnot.

Jeff: Yeah me too.

Jeff: Lisa.

Jeff: [laughter].

Mircea Dobre: It sounds like there were some issues in the quarter, but things are getting better. Can't really see where that impacted you. Would you have been able to recognize higher revenue in industrial equipment if it wasn't for that? I mean, what was the net impact?

Jeff: It sounds like there were some issues in the quarter, but things are getting better I mean.

Jeff: Can't really see where that impacted you.

Jeff: Would you have been able to recognize higher revenue in industrial equipment.

Jeff: That I mean, what was the net impact yes supply chain issues, yeah, there's sort of answered it but yes, we would've been able to get more revenue out of the quarter. Our this their silicon issue under this framework also the trucks I've mentioned before is you can certainly talk with what time what are the other big guys about it they all share a common supplier in Mexico, but having production problems for them.

Jeffery A. Leonard: Yes.

Jeffery A. Leonard: Yeah, the short answer is yes, we would have been able to get more revenue out in the quarter. This silly issue of these frame rails for the trucks, I've mentioned before, as you can certainly talk with Daimler and the other big guys about it; they all share our common supplier in Mexico, who's been having production problems for a long time. It is getting better though, Nick, for sure, and we got quite a bit more chassis during the first quarter than we did during the fourth and third quarters of last year.

Jeff: Long time, it is getting better at automating for sure and we've got quite a bit more chassis. During the first quarter than we did during the fourth at the start of last year and for a year I mean, all I can tell you once the chassis supply situation improved industrial really hit its stride and I think he's doing that so I don't want to say there are no constraints, but I also don't want to say these are drop dead serious with their lives.

Jeffery A. Leonard: And for a year now, I've been telling you, once the chassis supply situation improved enough, it would really hit its stride, and it is doing that. So I don't want to say there are no constraints, but I also don't want to say these are dropped dead serious. We've been living with them for a while, and they are steadily improving.

Jeff: And with them for a while and they are steadily improving.

Jeffery A. Leonard: The Allison transmission, what is another really strange one; Allison is normally a very, very reliable supplier. They've had some quality problems that are related to castings and other things, but the main issue is that the transmission control modules are in short supply, and I don't know who their supplier is, but it's been a significant problem for them. And that affects sort of the high end of the vacuum truck, but we did a pretty good job scrambling around that day to find chassis from lots of other places to keep our production rolling. So, I don't think that really had a big constraining impact. We probably could have done another perhaps $5 million a quarter without those...

Jeff: Allison transmission was another really strange when Allison is normally a very very reliable supplier they've had some quality problems that are related to castings and other things, but the main issue is the translation control modules are in short supply and I don't know who their supplier is that it has been a significant problem for them.

Jeff: That affects that is sort of the high end of the vacuum truck business.

Jeff: But we've done a pretty good job scrambling around that may define chassis off lots of other places to keep our production rolling So I don't think that really haven't been constraining impact, we probably should've done another perhaps 5 million a quarter without those challenges in industrial just to take a ballpark guess at it yeah nothing else to add to that maybe if you look at our 10-Q.

Jeffery A. Leonard: Any challenges in industrial, just to take a ballpark guess at it?

Jeff: <unk> with its like $30 million, which continues to remain too high for our liking with over half of that is gonna be industrial and as Jeff mentioned, if you could just get a few things just before.

Listing cadence.

Jeff: They change every quarter, we have something else, that's causing some sort of an issue for a delay but normally that division there about half of that does that $12 million to $15 million.

Jeff: Of that our industrial division they are normally around about half of that so that as Jeff said it maybe between five and 7 million of extra sales that we could potentially could have had during the quarter.

That's interesting so.

Mircea Dobre: Given the fact that things are getting better on the supply chain side, I mean, you have a healthy amount of backlog in this segment. What's the right way to think about revenue sequentially as the year progresses here?

Jeff: Given the fact that things are getting better on the supply chain side. I mean, you have healthy amount of backlog in the segment.

Jeff: What's the right way to think about revenue sequentially as the year progresses here.

Jeffery A. Leonard: Yeah, I think we'll continue to see high single-digit revenue growth in that division for the balance of this year, maybe even slightly better.

Speaker Change: I think we'll continue to see high single digit revenue growth in that division for the balance of this year, maybe a little bit better than that depending on how things play out over time, we have.

The strike running at the moment, which is obviously, where we need to get that resolved and as that gets resolved in a timely manner. Then I think by saying it'll be probably correct and I said high single digit Buffalo So.

Mircea Dobre: But I'm curious, and I'm sorry to press you on this a little bit. You know, there's a pricing element to all of this, right? You can grow at least high single-digit, does that really imply any real volume growth coming out of your... Maybe some, but it doesn't sound like a lot. And I'm wondering why, why not more, more love. Well, I mean, I think that we're still having to just kind of pace the buildup in our plants.

But I'm I'm I'm curious and I'm sorry to press you on this a little bit because you know there's a there's a pricing element to all of this right.

Speaker Change: Oh, sure and backlog, presumably has a pricing tailwind so if you're sort of saying that we can grow at least high single digits.

Speaker Change: Does that really imply any real volume growth coming out of your plans.

Speaker Change: Maybe some but it doesn't sound like a lot and I'm wondering why.

Speaker Change: Why not more and more leverage there.

Speaker Change: Well I mean, I think that we're still having to just kind of pace. The build in our plants that we're building at a rate that actually was a very attractive rate right now and that has the added effect of improving efficiencies across our operations.

Mircea Dobre: I mean, we're building at a rate that actually is a very attractive rate right now, and that has the added effect of improving the efficiencies across those operations. You know, Richard made reference to the under-absorption in our vegetation management facilities. We have the opposite effect going on in our industrial facilities. It's improved absorption that continues to improve it.

Speaker Change: You made reference to the under absorption in our vegetation management facilities, we have the opposite effect going on in our industrial group and absorption is continuous improvement.

Jeffery A. Leonard: I'm just being a bit cautious here. I think there's a lot going on right now. And that new Philadelphia plant where we have the strike is a big plant for us. We're continuing to negotiate there. We were negotiating again yesterday. You know, that one needs to get solved.

Speaker Change: I'm, just being a bit cautious here because there's a lot going on right now in that new Philadelphia, Atlanta, where we have the strike was a big flat for US we're continuing to negotiate there when we're negotiating again yesterday.

Jeffery A. Leonard: We need to get that strike settled, and I think we can do a bit better than that. But we've already lost a couple of weeks of production in the second quarter as a result of that strike, and we're not going to get that back, obviously, hence the caution. But you're right.

Speaker Change: You know that what needs to get solved, but maybe get that strike settled but I think we can do a bit better than that but we've already lost a couple of weeks of production in the second quarter as a result of that strike and we're not going to get that back obviously, hence the caution.

Jeffery A. Leonard: Momentum is really, really good in industrial right now, both in terms of sales and orders and, obviously, efficiency in the operations. Our snow removal group is just doing an amazing job right now at a profit level we've never seen before. Very strong backlog, very strong order book, and we are considering taking some steps to expand their capacity at the moment, which will involve some investments. At the same time, our Streets of Weaver group at Presidio City here is running at a level of profit we haven't seen in that business before, and it is running very, very well. And then we have the added boost from the Royal Truck Acquisition, which has been very nice. Maybe I'm just being too cautious here. Maybe I don't want to over-forecast.

Speaker Change: But youre right. The momentum is really really good and industrial right now both in terms of sales and orders and obviously efficiencies in the operations.

Speaker Change: Our snow removal group is just doing an amazing job right now at a profit level, we've never seen before very strong backlog very strong offering.

Speaker Change: And we are considering taking some steps to expand our capacity at the moment, which will involve some investments at the same time, our street sweeper group, but sitting.

Speaker Change: Sitting here, it's funny you asked them all the players at a level of profit we haven't ever seen in that business before running very very well and then we've got the added boost from the from the Royal truck acquisition, which has been very nice so I guess.

Speaker Change: Maybe I'll just keep cautious here, maybe I don't want to over forecast, but I think the growth is going to be very very high for the rest of the year something else to add to that this division just like the vegetation. They put their price increases in the first part of January like 2.5% to 3% range and maybe some some areas, maybe a little bit more but nothing huge.

Jeffery A. Leonard: There's nothing else to add to that, Meg. This division, just like the...

Speaker Change: Average its about 3%.

Speaker Change: Industrial did $250 million worth of new orders that kind of tells you we're still getting some pretty good volumes coming through in the order pace that we've gotten in all product lines in that division.

Mircea Dobre: [inaudible] No, I appreciate it.

No I I appreciate all the detail here and and you know you kind of got to so many things that I've been wondering because.

Mircea Dobre: [inaudible]

Mircea Dobre: Some of the things that I've been wondering, because there's a question to be asked about capacity, right? I mean, are you at the point now where you're just operating at full capacity, and you might be struggling a little bit to increase the volume that's coming out of the plant? So while you have a great backlog, you might have some constraints elsewhere. That's kind of what I'm wondering.

Speaker Change: There was a question to be asked about capacity right. I mean, it's a you know are you to the point now where.

Operating at full capacity and you're you might be struggling a little bit to increase the volume that's coming coming out of the plan. So while we get a.

Speaker Change: Great backlog.

Speaker Change: You you you might have some constraints elsewhere, that's kind of what I was trying to figure out.

Speaker Change: But theres a lot of moving pieces like knowledge, we've mentioned in previous quarters, we closed our sweeper planned out all the in Washington State and we moved up production, regardless concept planners or I can for a plant there that's getting settled down now and that production is starting to ramp up very nicely. So we are moving things around within the company, that's causing us to see some.

Speaker Change: I think the revenue build that you're expecting to see them.

Speaker Change: But I'm sure like the direction in industrial right now, it's looking really really positive in all parts of that division are running very well at the moment. The only negative I can say about that division as the strike and I think that's just the times that we're in at the moment, but the parties are continuing to negotiate in good faith with our hot and high goodwill together you get a contract in place so I'm fairly confident that that's all true.

Mircea Dobre: And I think that's just the times that we're in at the moment, but the parties are continuing to negotiate in good faith with high goodwill to get a contract put in place. So I'm fairly confident that it'll get solved. Okay. I do want to ask a couple of questions about vegetation management.

Speaker Change: Understood.

Speaker Change: I do want to ask a couple of questions about vegetation management and.

Mircea Dobre: Sure. As you discussed here,

Speaker Change: Sure.

Speaker Change: You discussed here.

You know there they're still they're still challenged in Torrey that has to be to be worked through.

Mircea Dobre: There's still channel inventory that has to be worked through, but it sounds like you're highlighting some things, like interest rates, for instance, that who knows what the path is going to be on a go-forward basis. So I guess my question to you is this: if nothing changes, if nothing changes in the broader macro environment, how are you thinking about your production and your revenue in this segment? For the rest of the year, is Q1 at 123 million high watermark, and should we be seeing a gradual sort of production decline here to destock the channel, or are you... That's a great question. I think as you look at it piece by piece, and I'm going to slice it here because it's the only way I know how to answer your question.

But it sounds like you know you're highlighting some things like interest rates for instance that.

Speaker Change: Who knows where what the path is going to be on a go forward basis. So I guess my question to you is that if nothing changes.

Speaker Change: If nothing changes in the broader macro environment.

Speaker Change:

Speaker Change: How are you thinking about your production and your revenue in this segment for the rest of the year.

Speaker Change: Is Q1 'twenty.

Speaker Change: 23 million.

Speaker Change: High watermark, and we shouldn't be seeing a gradual sort of production decline here at the Destocking to channel or are you thinking differently.

Speaker Change: You know maybe Thats a great question I think as you look at it piece by piece I'd want to slice it there because it's the only way I know how to.

Speaker Change: To answer your question.

Jeffery A. Leonard: I think that we're going to see the large end of forestry recover sooner because there's a need for those machines. And again, the fundamentals in that business remain pretty positive. The only negative is the feedstock side, which I gave some color on during the call.

Speaker Change: I think that we're going to see the large end of forestry recover sooner.

Speaker Change: There's a need for those machines, but again the fundamentals in that business remained pretty positive we are doing that they get as feedstock side that I gave some color on during the call.

Jeffery A. Leonard: And as I said, we're starting to see some rebirth in that business already. They added it to the first quarter, as did our mower business. Our traditional mower business, particularly our bush hog business, had a very nice first quarter and a nice end to it as well. So that's coming back.

Speaker Change: So we're starting to see some summary, bourbon that business already they had a good answer to the first quarter as did our Lora business is our traditional lower business, particularly our <unk> business had a very nice first quarter and a nice end to it as well so that's coming back but some of our other brands, particularly in the AG space are still struggling a lot with excess channel inventory.

Speaker Change: I know you know that story as well as the IV. So as I think about how vegetation management revenue was supposed to be going forward a lot depends on whether the orders continue to flow into at least the same pace that we saw in Q1 for the next couple of quarters. We have a couple of quarters worth of backlog in that space and what we got a hold on to that level of backlog.

Jeffery A. Leonard: But some of our other brands, particularly in the ag space, are still struggling a lot with excess channel inventory, but I know you know that story as well as I do. So as I think about how vegetation revenue is going to be going forward, a lot depends on whether orders continue to flow in at at least the same pace that we saw in Q1. You know, we have a couple of quarters' worth of backlog in that space, and if we can hold on to that level of backlog, which is a very traditional level for that division from a long-term point of view, then I think revenue will be stable.

Speaker Change: It's a very traditional level for that division from a long term point of view, but I think the revenue will be stable. If the orders don't flow in the second quarter and a third that I think you're going to see a tapering of rather than an activation until we can clear the channel inventory out, but it's not going to be a collapse given the given the backlog that we have there again the order rate in parts of that business are already picking up.

Jeffery A. Leonard: If the orders don't flow in in the second quarter and in the third, then I think we're going to see a tapering of revenue in that division until we can clear the channel inventory out. But it's not going to be a collapse, given the backlog that we have there. Again, the order rate and parts of that business are already...

Speaker Change: So it just depends a lot on how the next few weeks shape up in terms of the order book, particularly in the Hobby Farm <unk> Ranch segment from my point of view I think something else maybe.

Speaker Change: Do you need to keep in mind, what we tried to say in her part of the script is no matter. What this division does if they have that falloff as Jeff mentioned net sales in the backlog falls down a requirement here is to try to do everything we can to maintain that 10% operating margin, which is or is it our goal for this year no matter what the revenue cut.

Jeffery A. Leonard: for this year, no matter what the revenue comes out in this division.

Out of this division.

Mircea Dobre: No, I appreciate those last comments, and I did hear that. It's just that I'm trying to understand what you're sort of doing now, maybe proactively, to be able to deliver that.

Speaker Change: No I appreciate those last comments and I did I did hear that it's just that I'm I'm I'm trying to understand what you're sort of doing now maybe proactively to be able to deliver that because.

Jeffery A. Leonard: Well, I'm going to be trying to answer that. Yeah, what we're doing big is what we've been doing for a couple of quarters, offering retail incentives to our customers to walk into a dealership and buy a piece of equipment, which works pretty well in the ag side of the space. And while I was a little uncertain whether that was going to pay off from the actions we took last year, we did see that bump up in orders in our BushHawk division in the first quarter, and they actually produced a very, very nice first quarter from my point of view at a very historical level of both revenue and profit. So that was positive.

Speaker Change: Well, obviously, I mean, I'm gonna be shutting them down.

Speaker Change: Yeah, what we're doing Vegas, what we didn't do it for a couple of quarters offer offering retail incentives to our customers to walk into a dealership and buy a piece of equipment, which works pretty well in the AG side of the space in a while I was a little uncertain, whether that was going to pay off from the actions. We took last year, we did see that bump up in orders in our books observation in the first quarter and they are.

We produced a very very nice first quarter for my point of view and a very historical level of both revenue and profit. So that was positive. We just have to do that now across some of the other brands and see if we can get the same impact which targets an icon brand as you know make so it's natural that that we would see the biggest uplift some of our other brands are probably not going to see the same immediate lift.

Jeffery A. Leonard: We just have to do that now across some of the other brands and see if we can get the same impact. BushHawk is an iconic brand, as you know, MIG, so it's natural that we would see the biggest uplift. Some of our other brands are probably not going to see the same immediate lift in both orders and backlog from those incentives. But that's the tool that we have, right? Because we have to clear the channel inventory.

Speaker Change:

Speaker Change: Orders in backlog from those incentives, but thats the tool that we have right because we have to do the channel inventory you know that and I know that we have to clear that in order to get to better running reordering in a rising backlog well and also as we mentioned as I mentioned too as well as the Labor Force we've made reductions.

Jeffery A. Leonard: You know that, and I know that. We have to clear that in order to get to better running, reordering, and a rise in backlog. Well, and also, as I mentioned, as well, the labor force, we made reductions in this, and the labor force because we want to try to get...

Richard J. Wehrle: in the labor force because we want to try to get ahead of this. This train a little bit so that we're allowing ourselves to try to do everything we can to maintain that 10%. If the orders continue to soften, as Jeff reported, we're going to continue to make more, take more actions to make sure that we reduce our costs and control our expenses.

Speaker Change: There's a labor force because we want to try to get ahead of this.

Speaker Change: The strain a little bit so that that we're allowing ourselves to try to do everything we can to maintain that 10%. If it if the orders continue to soften as Jeff reported we're going to continue to make more take more actions to make sure that we reduce our cost and control our expenses.

Understood.

Speaker Change: Final question for me I'm going back to the discussion that you had earlier with with Mike on the government exposure that we have.

Mircea Dobre: Final question. Going back to the discussion that you had earlier with Mike about government exposure. I'm kind of curious as to how you guys are thinking about funding in that sector more broadly. I mean, you know, we're coming off a couple of really strong years here. Do you think this is sort of sustainable as we think about it being well funded and continuing to grow, or should we kind of temper our expectations at some point?

Speaker Change: I'm kind of curious as to how you guys are thinking about about.

Speaker Change: Funding and debt in that sector and more broadly I mean, you know we were.

Speaker Change: We're coming off a couple of really strong years here.

Speaker Change: Do you think this is sort of sustainable as we think about.

Speaker Change: <unk> 24, and then into 'twenty five here in terms of this set of customers continually continuing to be well funded and contained order.

Speaker Change: Or should we kind of I don't know if temporary our expectations at some point cause something to some degree.

Mircea Dobre: You know, obviously, at some point, there's going to be a need to temper expectations because we're coming out of a series of very extraordinary circumstances following the pandemic and all of the federal government incentives that have been put out there.

Speaker Change: You know obviously at some point, there's going to be a need to temper expectations, because we're coming out of a series of very extraordinary circumstances. Following the pandemic at all of the federal government incentives that have been put out there, but before joining this call and before writing my comments in my remarks, I took a pretty deep dive into where governmental finances are right now and when.

Jeffery A. Leonard: But before joining this call and before writing my comments and my remarks, I took a pretty deep dive into where governmental finances are right now. And when you look at it, at least in the U.S., the states are in very, very good shape. They're in a very strong condition, and they're going to continue to invest. I'm quite certain of that. The municipalities are more mixed. You know, some of the bigger cities are incurring lots of costs related to resettling immigrants.

Speaker Change: You look at it at least in the U S. The states are in very very good shape, there and a very strong condition that theyre going to continue to invest I'm quite certain of that the municipalities are more mixed you know some of the bigger cities are incurred and lots of costs related to re settling immigrants to you, though that when you read the news St is either.

Jeffery A. Leonard: You know that. You read the news, same as I do. And they're under some fiscal pressure as a result of that. But remember, most of their funding comes from housing costs and property taxes, and housing has not stumbled at all. But I see at least another 12 months of really good running on the governmental side.

Speaker Change: And they are under some fiscal pressure as a result of that but remember most of their funding comes from housing costs property taxes and housing is not stumbled at all.

Speaker Change: In terms of prices coming down now, obviously, that's going to sustain municipal incomes out of traditional level for a long time. So I think you will eventually see it taper I certainly don't see it coming this year I think we're in a strong running all through 2024 and the governmental side of our business and the tapering may come in 2025, and you don't find out the answer in my head.

Speaker Change: Whether this is going to be a soft landing in our economy.

Speaker Change: A stumble I'd be able to give you a much more clearer answer to that but I see at least another 12 months of really good running on the governmental side.

Speaker Change: Yeah.

Mircea Dobre: All right, thank you for all the color. I know I asked a lot of questions. Thanks, Pete; I appreciate it.

Speaker Change: Alright. Thank you for all the color I know I asked a lot of questions I appreciate it.

Speaker Change: Oh, Thanks I appreciate it.

Operator: As a reminder, if you have a question, please press star 1. The next question comes from Tim Moore from EF Hutton.

Speaker Change: As a reminder, if you have a question. Please press star one. The next question comes from Tim Moore from E. F. Hutton. Please go ahead.

Timothy M. Moore: All right, thanks. I want to wish Richard the best in his retirement, time with his family. I'm going to miss him. He's always so great and a straight shooter, which is really helpful for investors to have. Maybe I'll start with a question for Jeff.

Timothy M. Moore: Alright, Thanks, I want to wish Richard the best in retirement.

Timothy M. Moore: With his family.

Timothy M. Moore: Don.

Timothy M. Moore: Okay.

Timothy M. Moore: No.

Timothy M. Moore: So great in a straight shooter, which is really helpful for investors.

Timothy M. Moore: On industrial equipment, you know, as you look out on this division, and you know, historically, it wasn't too long ago, the operating margin was, you know, higher, and you've done a great job getting it back to close to that. But what do you think is kind of a realistic operating margin ceiling? You know, looking out to maybe next year, you know, without giving formal guidance, if there's no recession, do you think it can do a 13 and a half percent margin next year?

Speaker Change: So maybe I'll start with a question for Jeff on industrial equipment.

Jeff: No you know as you look out on this division and you know historically you know it wasn't too long ago operating margin was higher and you've done a great job getting it back to close to that but what do you think is kind of a realistic operating margin ceiling. Yeah. It's you know looking out to maybe next year, you know without giving formal guidance, but there's no recession do you think.

Speaker Change: It can do a 13, 5% op margin next year Oh, yeah.

Jeffery A. Leonard: Yeah, I do, Tim. Confidently, yes.

Speaker Change: Yeah, I do too.

Speaker Change: Confidently, yes, I think that when you look at our most notable competitors name I wont mention.

Jeffery A. Leonard: I think that when you look at our most notable competitor, a name I won't mention, and the oft-mentioned references to their higher operating margins, if you actually do a side-by-side comparison and we allocate our corporate costs out to our two divisions, as you probably know, or most of it, our main competitor is not. So when you correct for that, we are neck-and-neck in terms of operating income as Bright Neck and Neck. So, I think we are running very well right now, and I do believe there's further opportunity to expand the margin.

Speaker Change: And you also mentioned references to their higher operating margins. If you actually do a side by side comparison and Tioga.

Speaker Change: Our corporate costs out to our two divisions as you probably know or most of it.

Speaker Change: Main competitors not so when you correct for that we are neck and neck in terms of operating income as a percentage of sales right neck and neck. So I think we are running very well right now and I do believe there's further opportunity to expand margins in that group for sure because there's still some inefficiencies there that will pick up as the volume continues to build.

Timothy M. Moore: as the volume continues to build.

Jeffery A. Leonard: That's great. Yeah, I was doing some of that math myself. It didn't seem like the ceilings were close to what you have now, but that's good news. And maybe, just switching gears, you know, I'm just trying to think through other operating margin drivers. Obviously, the supply chain will hopefully get better in general. Farming and hobby and agriculture will come back and normalize, but just switching gears to maybe your made-in-country efforts, you know, specifically maybe for Europe, rather than shipping heavy machinery from the U.S. over there, that costs, you know, how's that going?

Speaker Change: That's great Yeah, I was going from that math myself.

Speaker Change: It didn't seem like the ceiling close to even have now but that's good news and then maybe just switching gears you know.

Speaker Change: I'm just trying to think through of other operating margin drivers obviously, the supply chain will hopefully get better in general farming and hobby and agile to come back and normalize, but just switching gears to maybe your meat in country efforts, you know specifically maybe for Europe, rather than shipping heavy machinery.

Speaker Change: I'll ask over there that cost you know how's that going and is that really more focused on forestry landscaping and sweepers.

It's not focused on sleepers in particular at the moment, it's mainly focused on the vegetation management side and mostly in motoring products and to some degree and forestry.

Jeffery A. Leonard: It's not focused on sweepers in particular at the moment; it's mainly focused on the vegetation management side and mostly in mowing products and to some degree in forestry. You know that chipper that we produce in the UK under the Chipper Wolf brand will have a very nice hump in the US, and we're just ramping that up now. So we haven't really seen the benefits of that yet; we will start to see them in the second quarter coming through on the forestry side. So it's going well, but obviously all the...

Speaker Change: You know that timber that we produce in the U K under the Kimball brand will have a very nice Hoffman are you asking we're just ramping that up now so we haven't really seen the benefits of that yet we will start to see it in the second quarter coming through on this work, we saw and so it's going well, but obviously all the.

Speaker Change: Other headwinds masturbation are gaining a lot of our attention right now as I'm sure you can understand.

Speaker Change: No that makes sense they're.

Timothy M. Moore: Does that make sense? And not to ask about another distraction, but, you know...

Speaker Change: They're not going to ask about another distraction, but you know I'm pretty excited about the rent to own fleet. You know it seems like just back of the envelope comparing to peers. You know it seems like you'd have something like a 35% ROI and I was just wondering do you think you can add 100 more trucks chassis. This year that maybe get the fleet up to about 400, maybe by the end of the year.

Timothy M. Moore: I'm pretty excited about the Rent-to-Own fleet, you know, it seems like just by back of the envelope comparing some peers, it seems like it would have something like a 35% ROI, and I was just wondering, do you think you can add a hundred more trucks and chassis this year to that? Maybe get the fleet up to, I don't know, 400, maybe by the end of the year?

Jeffery A. Leonard: It ramped up fairly nicely during the first quarter, and we expect that to continue all through the year. I think we were up 17 or 18, something like that, in Q1.

Speaker Change: It ramped up pretty nicely during the first quarter, we expect that continue all through the year I think we were up 17 or 18, something like that in Q1.

Jeffery A. Leonard: And we do plan to open a couple of additional rental locations this year. We've got those pretty well mapped out and know where we're going. So, yeah, I think we're going to see very nice growth in the rental space from superproducts this year. Our expectations, Tim, are to get north of 300 units out there, and I think we'll close the year roughly.

Speaker Change: And we do plan to open a couple of additional rental locations. This year, we've got them pretty well not gotten nowhere, we're going so yeah, I think we're going to be very nice for the rental space from Super products. During this year, our expectations are to get north of 300 units out there and I think we closed the year roughly two to 10 to 15 to 17 something like that.

Timothy M. Moore: Okay, it's 300. Yeah, that's actually the number I was thinking of.

Speaker Change: Okay 300, yeah, that's another Texas number I was thinking of them, but now that makes sense. That's a really good opportunity because the airline up and helps customers makes them happy but.

Timothy M. Moore: But now that makes sense. That's a really good opportunity to get the ROI up, and it helps customers, makes them happy. But maybe just switching gears to one other topic. I mean, snow removal has been amazing. It's a wide-wing innovation, taking market share, it's pretty clear. But when does that slow down? I mean, when does that kind of normalize, and how does that look this year?

Speaker Change: Maybe just switching gears to one other topic I mean this is snow removal has been amazing wing innovation.

Speaker Change: Market share, it's pretty clear when does that slow down I mean, one when does that kind of normalize in the hotel.

Speaker Change: I fear.

Jeffery A. Leonard: You know, the outlook from that team is so bullish that I almost have to pinch myself when I talk to them.

Speaker Change: You know.

Speaker Change: The outlook from that seems so bullish I almost pinch myself when I talk to them and.

Jeffery A. Leonard: They just see opportunity everywhere. You know, we struggled in the airport snow global space for a while, Tim. We just came out of a big show in Buffalo and got a very nice reception there.

Speaker Change: They just see opportunity everywhere, we struggled in the airports know mobile space for a while Tim We just came out of a big show in Buffalo.

<unk> got a very nice reception, there and customers are finally, starting to see the strength of our products in that space, which is a huge turnaround from what would work three or four years ago. Our wide weighing cloud is selling like hotcakes right now you can't build them fast enough.

Jeffery A. Leonard: Customers are finally starting to see the strength of our products in that space, which is a huge turnaround from where we were three or four years ago. Our wide-wing cloud is selling like hotcakes right now. We can't build them fast enough. So that's really interesting. And we're still getting large fleet orders out of the country.

Speaker Change: So that's really interesting and we're still getting modest leap orders out out of contracts.

Jeffery A. Leonard: We're also picking up some really big interest now back in our airport area, orders for different airports right now for our snow equipment, which is really good. We had some struggles with that about three or four years ago, but we made a tremendous amount of improvements there, and that's now actually showing a lot of interest for us right now. I mean, I can share with you...

Speaker Change: We're also picking up some really big interest now back in our airport area.

Speaker Change: So orders for different airports right now for snow equipment, which is really good and we've had some struggles with that about three or four years ago.

Speaker Change: A tremendous amount of improvements in there and that's now actually.

Speaker Change: Showing a lot of interest for us right now.

Speaker Change: And I think I can share one number would share what I can share one number with you Tim we believe in fairly short order here.

Speaker Change: Our snow removal segment can be $250 million a year in revenue.

Timothy M. Moore: I'll be disappointed if it doesn't get through. And that's phenomenal compared to just three years ago. That's amazing. Just one clarification question. I just want to make sure I understood this from the previous comments. For the high single-digit sales growth comment... Um, that's, You know, I know you got the strike, but you know, it clearly impacts you. But what, you know, if you're factoring in kind of the Royal Trucking Acquisition as an anniversary until early October? I think it was October 10th or something.

Timothy M. Moore: Oh, Wow, that's great and honest.

Timothy M. Moore: I'll be disappointed if it doesn't get there.

Timothy M. Moore: That's phenomenal compared to just three years ago.

Timothy M. Moore: Bryan just one clarification question I, just want to make sure I understood. This on the previous comments for.

Speaker Change: For the you know the high single digit sales growth comments.

That's.

Speaker Change: You know I know, we got to strike you know clearly impacts you, but what if you factor in kind of the Royal trucking acquisitions definitely anniversary.

Speaker Change: Material early October I think it was October 10th or something that seems like that would have an 8% to 9% sales growth a quarter by itself, but I was just kind of thinking about this the right way is are you maybe being a little conservative.

Timothy M. Moore: That seems like that would add eight to 9% sales growth a quarter by itself. Am I just kind of thinking about this the right way? Or are you maybe being a little conservative?

Jeffery A. Leonard: That is, I think if you back them out, I think that's what we're trying to say is probably closer to that single-digit increase without Boyle in there. Okay, without... Okay.

Speaker Change: That is I think if you back them out I think that's what we're trying to say is probably closer to that single digit increase without oil in there yes.

Speaker Change: Okay, Okay without any uncertainty.

Jeffery A. Leonard: The uncertainty isn't around industrial at all; it's in vegetation management. We're waiting to kind of see how the orders flow in the second quarter. If the orders pick up nicely, then I can be more optimistic about sales growth for the rest of the year. But we just don't know, as we sit here today, how that's going to play out. You know, we're encouraged; we see some positive signs right at the end of the first quarter in terms of how that business is developing. But I don't want to confidently say we've turned a corner there yet, because I don't believe we have.

The uncertainty isn't around industrial at all it's in vegetation management, where we need to kind of see how the orders flow in in the second quarter, if the orders picked up nicely.

Timothy M. Moore: No, that's fair enough. I was just making sure that kind of high single-digit number was excluding Royall's contribution of 8% to 9% with $15 million a quarter. So that really clarifies that. Thanks so much, and that's it for my questions.

Speaker Change: Mystic about sales growth for the rest of the year, but we just don't know as we sit here today, how that's going to play out.

Speaker Change: We're encouraged we see some positive signs right at the end of the first quarter in terms of how that business develops but I don't want to confidently say, we've turned the corner there yet because I don't believe we have.

Speaker Change: No. That's fair enough I was just making sure that kind of high single digits, excluding Royals contribution of 8% to 9% with 15 million a quarter, so that that really clarifies that thanks, so much and that's it for my questions.

Operator: Thank you, Tim.

Speaker Change: Okay. Thanks, Tim.

Jeffery A. Leonard: This concludes our question and answer session. I would like to turn the conference back over to management for closing remarks.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to management for closing remarks.

Jeffery A. Leonard: Thank you very much. Before closing the call today, I would like to express my deep gratitude to our Executive Vice President and Chief Financial Officer, Mr. Richard Wehrle, who retires today after more than 36 years of service with our company. Richard is an exceptional colleague and a great friend. He's been extremely instrumental in the positive development of this company since its earliest days. While I will certainly miss him, I want to wish him a very well-deserved, long, healthy, and happy retirement. I will miss him very much.

Speaker Change: Thank you very much before closing the call today I would like to express my deep gratitude to our executive Vice President and Chief Financial Officer, Mr. Richard Worley, who retires today after more than 36 years of service with our company.

Management: Richard This is an exceptional colleague and a great friend, it's been extremely instrumental in the positive development of this company since its earliest days, while I will certainly miss him I want to wish him, a very well deserved long healthy and happy retirement, and I will miss him very much English camps will take over the reins as our CFO from today and will join us on our <unk>.

Jeffery A. Leonard: Agnes Camps will take over the reins as our CFO for today and will join us on our second quarter 2024 conference call in August to present our results and to take your questions. So we look forward to that. Thanks again, one more time, for joining us today. We look forward to speaking with you on our second quarter conference call in August 2024.

Management: Second quarter 2024 conference call in August to present, our results and to take your questions. So we look forward to that they could get one more time for joining US today, we look forward to speaking with you on our second quarter conference call in August 2020.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Management: Yeah.