AGTI - Earnings call transcript Q1 2022

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Operator

Good afternoon, ladies and gentlemen and welcome to Agiliti’s First Quarter of 2022 Earnings Conference Call. Today’s call is being recorded and we have allocated 1 hour for prepared remarks and Q&A. At this time, I’d like to turn the conference over to Kate Kaiser, Senior Vice President of Corporate Communications and Investor Relations at Agiliti. Thank you.

You may begin.

Kate Kaiser

hello and operator you, everyone. Thank joining Thank we ending today’s as on an you March overview XXXX. quarter for provide the of call for us Agiliti’s XX, results

call, our will forward-looking could are consequently cause future may are and that begin, from those be factors expressed in release statements. affect statements recent forward-looking most risks risk and in Investors found section remind to can materially actual Certain we these be are making results I of website during Before and Specific today’s SEC detailed uncertainties. our differ press we the which subject our and corporate us will to that the you filings, factors in agilitihealth.com. at in

to and not referring accepted that will call. generally with also presented accordance principles certain calculated during accounting this be are measures in We

of release. visit Events a measures use to You at facilitate press our and reconciliation the please a we’ll at today’s presentation use of discussion agilitihealth.com, description Presentations. to then website that most GAAP screen these of the a and can those Investors why we section copy of the To directly table in comparable and select the our measures find download measures the

earnings presentation titled to Agiliti With Finally, over selected will QX slides. the Leonard. I call XXXX turn that, our Tom CEO,

Tom Leonard

quarter XXXX. to as we us of for review join and from Kate time Thank results the afternoon. Thanks, first you good our

leads CFO, our commercial is today and President, Boehning, me Pekarek; our Joining our Tom operations. Jim who

year challenges of guidance. of our we shortages ahead for the and review reaffirming our pressures. in are color and increasing full us capital observations in and We I’d system, the customers. provide well inflationary QX now, the results are aware facing track will We the rapidly our today a additional widespread brief expectations. are we on year with remain By QX, few financial like burdens and of all quarters of impacting on supply financial on labor our some work and performance trends our three minutes. with met the healthcare Jim start performance broad-based with to broader our still of pleased balance our our constraints, cost results

those medical the at manufacturing able Agiliti compelling devices, set is believe of propositions. intersection comes the maintenance a challenges, When to we Agiliti and Importantly, of deliver it of mobilization management, stands value to alone. broad

goal to to the standard. are they for maintained is of need, confidence access industry medical customers the delivered the with Our devices highest to to the our ensure simple they have clinicians point patient-ready care

examples me action to share of customers. and benefits quantify Let few a in these our capabilities the

employee team overtime their ability where Agiliti pandemic, to their of medical area equipment. quickly, a we technicians own or Agiliti Even generally devices to and more rental total operating supplement eliminate minimizing from is by centers customers’ caused improving owned biomed our one short-term excess impacts health making and expense. medical simple helping our to customers expense. a staffing back local unique shortages, example Our by And can with service for compensate service hospital’s deployed eliminating our as Similarly, burnout, medical other capital costs is prior device reducing availability lack systems device too the reduce and much utilization operational another difference. return

ongoing and and and healthcare, that and early Yet capital COVID. the COVID-XX ourselves up resulted and ventilators. on free in preventative customers meet Agiliti, census being many across the average At helping still demands making monitoring meet onsite more assets ensuring peace our in increasingly excess health we capital impact the repair. patients’ these systems giving equipment the for maintenance the on are infusion making the operating We the experienced in pandemic. and rapid related of compliance short-term and to from care health require Today, on operational of financial labor mind, knowing expenses efficient, of investments specialize pumps which many expense, delivery device customers maintains have the health and under meaning highest subsequently side systems even safer more across patient country are surge regulatory of we the like of pride showing in we of that utilization long-term to industry Agiliti’s idle previously shared programs categories management research the equipment XX% daily acquired systems devices to standard. serve clinicians the right below

able cost labor to XX% we is to our costs, in other our deliver profile. margin and rising of input struggle maintaining As XX% our manage average the still own customers while with an Agiliti a to best-in-class customers rapidly operating lower areas

nature opportunity support have to we’ve systems evident Agiliti’s manage to federal patient’s recently as our emergency of scale is as capabilities As lapped these nation’s extend was country, unique now, And challenging excited helping with calls, service of to individual prior X-year our Reflecting in and healthcare this and story. maintenance, Agiliti as unique medical an of to last share the We of through essential infrastructure, we briefly an the period. ranging the anniversary capabilities all to supporting consisting remediation customers the repair to equally continue up to public work supporting extension bedside, We market medical in device device-focused logistics deliver our way offering. device and their from year capabilities. peer. largest repair operating by model throughout our the initial to company today this COVID-XX, relevant of I’m stockpiles. shared government The and period without the across increasingly, believe it’s local all and medical breadth health maintain clearly a our facilities system, their agencies and own from providers the benefits deploy healthcare manufacturers states supports defined

to the on our us of I a offer the turn ahead even Looking more opportunities company. Boehning strong perspective our momentum as forward, now business we’re his Tom performance. to enthusiastic about and call

Tom Boehning

these macro some customers. normalization equipment The everyone. relation and Well, of of context much volumes sides medical Likewise, additional areas customers’ demand. highlighted saw we’ve Tom, procedural discussed both expected, country. customers’ seen due focus on updates is shift forces initiatives, a increasing on surgical or seen significant the earlier. balance a economic The normalized demand canceled COVID business to emphasizing accelerating recovery correlation to inverse our last have play now on an an the toward as years of favorably of Tom’s levels These thanks, the facing we case We’ve the by offsetting across normalization our which our our the of throughout lower Tom progress and of from to as our impact from our share, We’ve utilization surge the in the return case of device of our The our continues a out as financial cases remarks of will to on with COVID customers, provider QX, clear build only expected today the operations. organizations and as tackle is COVID-driven ramping shown volumes and needs customers. shift financial short-term to cost X surgical business in of and operations. hello some very across in to in patients across trends previously external each much and our country. non-COVID wave early the routinely commercial We’ve In few evolving deferred described our quality also moved brief on of the I impact mind outcomes. economic performance. focus forces control customers’ patient longer-term strategic

like labor skilled we labor a our devices. categories education we moment agility. start skilled are significant of not with with shared example that risk our Now last quarter, chain to relatively from availability, healthcare-focused are from professionals macro earn within inflation seeing to technicians touch competes I’d Biomedical they’re availability, as to certificate a take and for on general critical helpful an and from subjects labor as a an before qualified labor market, wage one impact these Much medical to pool supply issues. impact on Starting their repair institution Agiliti understanding closed a talent. accredited of of

numerous within biomeds closed are for relatively high-paying healthcare talent. for jobs there market a is As

these high visibility are and health today hiring systems, employees enjoy working roles. in are Agiliti, hospitals frontline significant At jobs and a in While these advantage professionals. revenue-driving we most and of retaining these

Our they various our techs well plus through share plans. the earned competitive salaries in success company as the generous equity ownership plans of as incentive

higher advancing that as growing simply opportunities training career to Offered path management. a and a a a a Additionally, can’t and combination system rapidly from we of path match. it’s compensation nationwide benefits reach, within company to growth, with for opportunities health offer continued

overtime wage steady inflation the around impacts while retention operating flexibility picture, to absorbed has healthcare model, have that experienced minor in labor we difference our our unchanged. some over to X from today it work. lives are trends has career the that So patients the availability, remained itself system. a and levels on relatively years of and and employee that last nearly opportunity mission-driven makes been build a prides offer work Agiliti supports doing the We that Bigger rewarding of nation’s

across top our This extraordinary completed representing X industries. all our an of all employees overall the annual places recently of score companies survey. within of we we of evidence, us quartile further benchmark, nearly and responding, XX. engagement XX% As engagement the achieved employee points With company

to relatively supply supply risks, with from chain prior operates Agiliti agreements quarters. pricing. briefly under Turning fixed unchanged remains longer outlook our term generally

for A we’re from primarily we would as any own short-term interruptions of stock own our Our the the fleet integration and our recent acquisition. Sizewise, few financial disruptions. management supports acquisition rental we critical that with we and purchasing of Sizewise report addition potential we repair parts our well. that we maintaining our are we through supply Further, our for acquisitions, with that likely devices and of noted potential am M&A customers. are fleet, centralized immaterial. both integration complete chain with short-term efficient great ensure chain adequate points service, through of that management we impact recent Further, believe processes last for progress our safety substantially capabilities I the manage for business our quarter and as be acquisition on devices that to supply of the pleased Northfield self-manufacture manufacturing the final that making for

selling I aligned commercial priority. we have our operations highest our shared, which have leadership, and our was As integration team already

we collaborating field directly our bring combined and to our benefits to customers, solution newly of team Our expanded successfully is results. the are in realizing the in that

financial are and personnel, operations We operating a our Agiliti steps as And to as our facilities, to combine we equipment beginning corporate are systems taking inventory functions. merge and just our fleet, now well maintains vehicle roughly reiterating project active M&A that and More – to the flexibility them. we pipeline will previously, of broadly an financial years. the that pursue span next shared and we’ve what opportunities X

nationwide and continue that provide things our we value see the to our financial over to our me competitiveness. can targets profitable our With enhance drive through that, turn Jim review infrastructure, We extend let to for at-scale performance. customers volume

Jim Pekarek

with some QX overview I’ll for an the of our on Thank start Tom. our outlook then comments and you, offer financials year.

the first Adjusted EBITDA total Medical. of impacted Sizewise Adjusted year. EBITDA million, totaled $XXX acquisition prior company the by a versus increase XXXX. increase acquisition million, were X% totaled For well Northfield year XX% QX revenue as as the of margins representing to for year. Adjusted the a prior of totaled QX quarter, EBITDA last $XX compared margins the XX% over

a You will Agiliti margin very generally enjoys strong recall that profile.

all companies pre-synergy lower the margins. acquired with have EBITDA adjusted So we start

in adjusted saw were we as contract margins the as the a medical return as quarter. renewal of impacted placements rental the device HHS to by EBITDA lower In pre-COVID utilization addition, well

guidance ago Equipment IPO strong an revenue strong in Taking we drove operating to service diluted and up at average $XXX Adjusted net the Equipment of expected to the performance the to first up earnings closer offset across previewed XX Solutions our QX. fully both March. and revenue across year XXX% outstanding totaled associated year. XXXX we in XX% provided earnings decline a income of per managed annual of with Clinical $XX over had $X.XX $X.XX when by Engineering Solutions growth, strong April services XXX lines, shares we Our last shares increase compared in of quarter share million growth year-over-year. onsite delivered revenue our in million, look our of weighted million, QX million as compares period, each with

X $XX Sizewise October in acquisition million Our QX. revenue in of contributed approximately

In addition, in COVID first QX. of continued demand the part

the versus approximately $X $X challenging favorable year million pre-COVID prior COVID to levels. million that experienced While impact million. estimate a impact $XX had net $XX and A to reminder of we from a in favorable of had period, quantify, between million we

the Moving the $XXX year-over-year, representing quarter. XX% previously of deployment our reflecting in-market year-over-year to and pricing Engineering, primary longer-term from In Revenue of from million, QX, to levels in favorability. maintenance reset year-over-year of the the which associated an last QX driver Medical, stockpile. Northfield growth lower acquisition, active derived from devices of contract the the with of support was stockpiled was the revenue Clinical was revenue ongoing closed HHS for year, described the contribution March

primarily our near-term totaled Finally, nearly the our revised driven onsite for quarter. agreement. been HHS $XX primarily services is scope benefited Solutions to our line. by COVID, of related of services a which on X for renewal our onsite the year-over-year customers years, focused managed service challenges pricing Reflecting revenue representing million, have This XX% Equipment decline and on

from customers on with again longer more COVID-dominated quality we cost emerge are we our term and As engaged period, their strategic this once initiatives.

see to of down P&L, our onsite funnel. gross million managed or an the year-over-year. $XX moving million, opportunities continue XX% totaled sales new through increase $XXX for We QX Continuing margin

XXX driven primarily prior in XX%, rate Northfield The down the by points acquisition the year. margin decline of gross rate from basis the margin Our was in was year. prior

a net SG&A prior In XXXX QX had was increase SG&A synergies. revenue costs also totaled of a the addition, impact. year was as placements for levels expenses achieved an to increase or our an of XX%. due which SG&A from device totaled return with percentage XX%, consistent million million, The lower primarily $XX $XX medical to results. costs acquisitions, pre-COVID of from

less cash QX on million which Moving balance we closed sheet, on debt, to $XX sheet. $X.XX includes the hand of debt balance with net billion of our billion, $X.XX in

of results resulting the was second operating facility million, costs lien Our from over our lower interest strong IPO. operations driven pay-down as quarter part from cash flow by $XX for the debt and the of

the cash our activities adjusted in represents QX. flow leverage growth which from In in $XX X.Xx a in less Strong flow net totaled cash quarter. operations flow our ratio EBITDA and cash reported million, of addition, a X.Xx from conversion generation of over resulted income investing

$XX utilized cash on the over debt to In quarter, our addition, in we hand pay in million obligations. down

cash is payments forward, million Looking remain for annually. principal diligent optimal reduce to our we determining more strong in by This expected uses the reduction $X will our cash generation. interest than

low- We with range maintains M&A as strong to revolving continue our expect hand. balance XXXX. generation a position use to includes well as our million target March sheet leverage we in liquidity significant credit cash flow the on fund million cash mid-Xx and available as to to $XXX opportunistic of $XXX Agiliti over as facility of This time.

fixed $XXX an terms for our increases. provides given on rate of on for has debt floating near-term increases. reminder hedge market a of partial anticipated any rate rate agreement of on our we million of Finally, the macro our swapped rate interest the view which terms. likely In total, a $X.XX terms billion debt, rate maintain swap This debt, interest

outlook, now we year Turning financial full reaffirming XXXX our our are to guidance.

to $X.XX XXXX We line we to representing the range anticipate deliver Specifically, XX% adjusted of $X.XX billion, to EBITDA to in range revenue XX%. top million. in the growth of of $XXX $XXX million expect billion

be revenue CapEx range X% cash is higher in our slightly million. each reflects normally X% CapEx of million the to should into $XX to in business net in but Our $XX XXXX. of reinvestment guidance planned range expected of the year,

due our we an equipment investment As increase to manufacturing in shifted manufacturer to investment tied three discussed acquisition, IT fleet device Sizewise targeted growth in year infrastructure, supply the last purchases increase this meet specific a investments, XXXX. are to our to quarter, ensure is our in of unable some goals to when XXXX longer prepared to fully targeted and was timing term incremental

calls, XXXX. our adjusted million will earnings Finally, the From qualitative share shared and to we tailwinds XXXX, per have as to prior range revenue expect $X.XX in results million in share. high-margin comp of $XX the we earnings from continue of to our COVID-driven per against a financial in much perspective, $XX throughout $X.XX

QX the COVID-driven the saw year. to demand While plan early equipment assumes very return this levels some utilization our year, we pre-COVID for a in of of XXXX balance

have of previously its agreements, narrowed and device scope and contract stockpile without Additionally, reflects management several shared, new we prior associated standup the the ongoing as our HHS activities incremental initial consolidate maintenance its the for deployment. with

Agiliti $XX within $XX While revenue approximate details confidential, million clinical services. is will guidance remain see that difference the our engineering is in accounted financial of for to and the in million reduction XXXX. both onsite That an managed contract implicit

role. within the of where onsite. impact continue HHS important and the continues and rate. we contract majority ordinary COVID high is pre-COVID and for with adjusting customers contracts as our for consistent of So their course the annualized impact initiatives throughout signing mid to our expected strategic organic to implementing financial long-term in and solutions growth our guidance business, an imply play back Consistent to revenue in new turn to expect historical made the the Net range, year impact attention XXXX, single-digit our acquisitions of growth our of the the with rescoped solutions

be for device XX%. year normalization from range XX% adjusted to margins, Our of the levels. are XXXX the will of pre-COVID calculated be implied Primary the back to in balance to which that the drivers guidance expected our of utilization impact rental margins year full can EBITDA include

of to lower Northfield contract margins of average. Medical and of the compared Our Sizewise EBITDA internal our and impact when assumptions both historical with which HHS Agiliti’s pre-synergy on the acquisitions new start

the based quarters on business generally does flu our the with and historical the seasonality some experience first our of strongest season. timing Finally, annual representing quarters fourth

HHS going now in At QX. I’ll demand with to similar in confident late which occurred trend in year pre-COVID quarter the recently outlook year. this time, the call for a turn return first and We Q&A. to are operator, over provide our for remain instructions signed the expect our results, we pleased our with renewal, a and seasonality to

Operator

much, comes Markets. The Borsch from Thank [Operator Capital question you first very Matthew Instructions] BMO of sir.

Matthew Borsch

you. Thank Yes.

your to full be that COVID just impact neutral? are I if although from curious saying we changed. clear, through So just first I you been view, the quarter the still was was I’m net think mean, that quarter. the hadn’t in had that earlier

Jim Pekarek

It line to year. full in No, was Matt. $X right as what was QX for million. we expected we impact planned the actually The $X million had with

Matthew Borsch

for that’s then it full the And Okay. year.

Jim Pekarek

that’s right. Yes,

Matthew Borsch

was on-site just expecting to pick And Okay. a the I I’m up question on just curious, quarter you’re decline, figure got XX% it me services, see managed or first I’ve That I’m yet the if wrong? a if that in there, wrong revenue year-over-year. things in I that as think got you sorry XX% the I normalize. think decline didn’t but suggested that correct

Jim Pekarek

from Matt. right, million of shared what terms majority the $XX in And we the you was remarks, In math specifically, about full my said on-site. the $XX that have was that for that math, renewal in mind, reduction prepared Keep I of HHS to expect the the of a I million the the from year. prior be what in terms impact would year, within

had prior so is shared in shared, that And impact I I March, piece. as I script that the will on-site that, expect the think negatively I in

customer see growth. the goodness So from hard new it’s that to

Tom Leonard

not by that government impacted our broadly, reflect not you on by to is all were M&A, the organic more by ‘XX historical business. COVID, impacted not to just period, ‘XX Matt, performance which impacted if

assumption how to that as much use see a is to today about high There – model grower. a more about think was demand how business. ever consistently different business, was probably that or single-digit to nothing that And fundamentally and solution. you that’s that – when good think with as You’d very it on-site

Matthew Borsch

Thank you. Fantastic.

Jim Pekarek

Matt. it, question. got Thanks You the for

Operator

of The next Bank question comes from Kevin America. Fischbeck of

Joanna Gajuk

Good afternoon. Joanna in filling today. Gajuk is Actually, this for Kevin

question. So taking thanks the for

I so – your And in more first the first, So quarter. question I on the guess, guidance. on a guess

Because $X revenue kind your mean line, I EBITDA million versus like internal obviously, COVID-related to of you it – quarter estimate, year quarter full much expectations? in was you in better. implies sounds was million the the was versus your the came So how guidance the kept as might expected, but you contribution but consensus $X the overall estimate,

if So I whether know it of terms in incorrectly just seasonality. we don’t were modeling

the your versus question did So yes, in came is guess I internal how QX expectations?

Jim Pekarek

much with out the it seasonality, as Yes. internal it in play script a I called question. our seasonality to line Good definitely part. very It was in relates does expectations.

have to mind. think is you quarter-to-quarter. about in just timing from that And keep then when you So some the there normal quarters that occurs yes,

– with was seasonality the bottom much But of prior in planned making what we’ve in timing are line piece talked in. sure for. had that that about some piece the that is factored and quarters modeling terms biggest of the the very in So we things internally line as

Joanna Gajuk

in I If rising the labor, part P&L your assuming Thank costs. a I is fuel on the what but And you your color you. guess, really also Thank on essentially? mentioned around discussion curious, you I’m may, of are of the you. that, guidance fuel any big cost? How

Jim Pekarek

question. Good Yes.

$XXX,XXX may costs. our be the increase did year’s in So $XXX,XXX costs ish math, I and think to also we But would a quarter. prior about said to quick on XX-K, we of our this we that XX% just increased it again in the quarter mention

a of it. big not is and overall, factor So short long the

Joanna Gajuk

some are presumably. you there in inflation is what guidance, assuming year-over-year, And the

Tom Leonard

out don’t comfortable covered. assumption we We have break that make, we it are that we every

Joanna Gajuk

Okay, great. Thanks so much. That’s Thanks. really all have. I

Jim Pekarek

Yes.

got You it.

Operator

Cassorla The next Citi. of question you. Jason from comes Thank

Jason Cassorla

at for a and different developing how you the the this given having are of services, maybe can conversations your in just towards Thanks for and be your continued wanted conversations with any I Just hospitals backdrop? just the differently perhaps they on to conversations demand color delve with helpful. very if shift go little deeper strategic just their longer-term point to with hospitals into approaching relationship Great. bit are questions. those you would maybe those you’re terms initiatives,

Tom Boehning

is yes. you for the answer question. Thank Yes. The

them our different have because full Our course and offerings while us our are finding that outreaching been of see services. to hospital socializing about are of demand they for we learning if And full a they to our equipment are as capabilities mentioned we’re XX%, Tom could help XX% to his breadth only range individual customers seeing in between across wanting their perhaps XX%. and savings. in entire management, we It with to can And identify not doing facilities, IDN. anywhere so, medical able remarks, within but material

so certain And enthusiastic customers the speak becoming great our compelling us, is and markets really in opportunities what we’re seeing pretty is that that where viral to to we it’s creating for more customers are. about and capabilities more

Jason Cassorla

Got price contracts it, maybe Thanks. backdrop, you Maybe your you’re that? already would the that? color. for you’re like That’s renewing would frame for submit agreements And then Or providing that seeing from term with are pressure concessions helpful this a on services customers pricing, for. with that at And just how just I customers they hospitals towards bit supply this just have fixed you are to commentary you – longer as better already around point? thanks. your generally pricing guess, little

Tom Leonard

Yes. kind I that to want separate comment to supply our of agreements. related just

longer-term to parts for example, pricing, our seeing on and manufacturers, relative discussions So reflecting we reduced source But is not with fixed that generally but change with value we have need, them, proposition from to agreements customers pressure the important and no, to pricing. customers. understand for we those our we’re spare supply on

flip for could hospitals badge back hired to don’t the So same to try themselves. sell have we’re they shop. and We a bodies body the not

of the themselves an saving margin typically for in described work shared, that for a of for I delivering still were when what we’re able XX% as environment company. one over examples best-in-class As do we over to we the to a gave, I profile while XX% them hospital, take they

– their when and costs we to have their customers, is go take in XX% work alternative we’re reducing The themselves this go with to on our So up. and costs, operating XX%.

costs model, well. what significantly our you not models already – frankly, And really just than possibly the up We’re having. pricing? your body end badge it’s we they what So them nature adjust flipping themselves. could that’s business do do as shop that for a discussion with others lower down could of for Can

Jason Cassorla

Got it.

you’re for the to seeing already make just at XX%, to you incrementally them So suggesting I to want price point to clarify, XX% not just customers come sure this saving back concessions. you’re right.

Tom Leonard

That’s with alternative more it what themselves, hire rising even experience. have nature costs the the bodies, do a go the cost customers, it XX% have up be Exactly. to consider is, which – of that to XX% would environment kind would they of in not that or it’s direct because and be conversation employ we their the model to

we’ve we be before with our for conversations more costs ever have operating we our We model, customers model. had do, than business in of our Otherwise, because unique the reduces that everything that customers. wouldn’t

that customers. contract So the that our counter enjoy with completely runs to of type business model and relationships that we

Jason Cassorla

it. Got

the Okay, thank you. time. Thanks for

Operator

of Mishan The you. comes question from next KeyBanc. Matthew Thank

Matthew Mishan

guys. taking the questions. good for Thanks Hey, afternoon,

broader of sense And how hospital cautious for your how think spending? hospital XXXX, be the of the get get you the bit you Agiliti? may think more wanted it’s that one that may just capital help here, incrementally spending you capital for Sorry and I to progressing kind sense but around hospitals little benefit do a through environment

Tom Leonard

if Matt, the a broad what good short-term the excess owned a up saw to with up hear of see you. tended all spending. tied And that us excess to of need. during Yes. too pandemic see they expense I’d question, I to from much medical them here’s hospitals equipment. spending owning the for bit been already already hospital Thanks was have meet hospital value brush, paint good in proposition buy and capital We the equipment for can We What free say, It’s to on help a associated don’t capital do capital we operating a more equipment. with that.

point think capital flush Okay. So conversations as equipment with our hospitals I medical programs our on-site many we of with go in this at are generally and are

our excess? flush that Now out imagine Can of saying medical typically get this help of expensive I’m themselves Can I costs Can we out it, of help fairly in can that our So stuck you this more us position with you is you because healthcare take some see all us would reaching help what view system? I’ve overbought Can to make with have them equipment have run find that us? to less is hospitals us this rid I’ve the where help help us we got we’re these efficiently? us? too of conversations you generally, you are we because much.

Matthew Mishan

Northfield is the Sizewise mix a Thank mentioned you then margins. is for you a couple times that of driving headwind between mix and that. some of year-over-year And or

the Just – you average take realize Agiliti’s long previous them acquisitions made, to where and it did guys have sits? up get in synergies the margin to how

Tom Leonard

So we are the so benchmark. two first scale done of that real can’t these we’ve and

I what year right right be selling rationalize needed the of a people, integrated Sizewise, ours, markets the is points take remarks we’ve the their vehicle of journey. in we with prepared going the to equipment an right isn’t out their it’s physical think to our footprint sure with equipment, the teams, the example, it commercial as one made fleet making couple the right in merge of it, fleets, facilities their but we work have

about a way So I it. think think that’s to good

we the shared What in incremental initial over of the in think example at was we making very are year year cost to comfortable acquisition of when with $XX synergies did I million would we progress couple X. in we until time first done. acquisition. is deliver Sizewise that to the X, And we the guidance that years growing by work be $X guided will that of million that we

Matthew Mishan

Alright. Thank you.

Operator

question Jefferies. next comes Weiner from of Thank you. The Zach

Zach Weiner

CFOs labor for pricing. and survey looking at on Hey, hospital did everyone. Thanks We the CEOs question. taking a

Just be high and pricing curious hearing some could to high quarters. is if the on color We’re several will that you that? give continue labor for next

Just curious business will how the that broader impact here? Thanks.

Tom Leonard

Yes.

a agree it’s So basis. that apples-to-apples for up us. tailwind an labor pricing on We is

We isn’t say our that in comparison. I are and apples-to-apples on fortunate directly very dependent operating fortunate, model that uniquely

based ago. same Biomed may do operating it X% for analysis a about our did for our – our to biomed. X% one a hire, mean call we work a Xs, Let role repair the X. on cost some me That something of Because half of that is we semi as about to cost experience, we under lower-level don’t We did hire I seeing year-over-year use technicians. much your Level need about a model through exact these Level about technicians, P&L, of exact Level just hiring biomed months equipment flow medical if couple labor But not? largest work supervision explain. me I that some we I level complex same the X. to of take In groups, isn’t see what higher why of we’re

our We equipment have several technicians, cost customer even techs, support support thousand and technicians. less these medical lower-level our hospital techs me

we real a my we’re are we no P&L centers through street into the model. of of but from of our The blends model wage feeling meaningful, blended X% physician that impact not today as – ultimately that inflation P&L impact works, one the in resourcing We of the perhaps model down no bleeds that blended this the elegantly as our out the cost we’re have our me customers for year. that as per is have because operating this flexibility seeing not deploy in stated, P&L year, whether individual service local all the from it higher type means way might our

Zach Weiner

to further And of terms that, you seeing are any new of helpful. environment? tailwind I guess then current that’s to in the extension current contracts or contracts labor No, due

Tom Leonard

hard because greater without of today the labor we kind employ. mixed to even is scale to to to we that the the apply and direct have kind skill source that for those value them ability of hire provide sets model a it we that when can The resources customers for is just these our it’s

it their seeing have rate in see year. like Our rates up customers are can customers blend don’t per – our of the that locally go costs our It’s we only across it that do. in these we model scale labor we at or experience deployed that that where operating X% X%,

of is So activity customers. that’s for a value the lot our that driving field. proposition in And the have we increased yes,

Zach Weiner

taking questions. Thanks for my

Operator

next Sachs. The from Amit of you. comes Thank Hazan question Goldman

Amit Hazan

afternoon Good folks.

in government governments, having and it, I with prepared if local And prepared mentioned your a think me side, is One you remarks, for to your remarks, contract just Just always and at just don’t I’ve in progress talk be that’s if missed contracts state too. couple maybe is the and able that know I qualitatively? but out on any call you’ll that anything stockpiling I’m there you’re state or local just curious to level to it here.

Tom Leonard

right. Yes,

been that company. a in So since while periodically remarks threshold, a we nothing our that have public we’ve we for had and

level. been over I stand company the years of minds out stockpiles in arrangements. on think the hopefully any types not of is, other these course actually I’ve aware taking supports any we’ve that been at And of business, folks’ X the I’m should with what

cities have Some stockpiles.

that’s those. number We’re called stockpiles one have of A as states to well. manage generally on the

We’re as a for the manage, well. then to federal number upon support of And those. stockpiles taken company called on and generally the government deploy we’ve

contract, is is singular for So the doing, and best and stockpiles been something for X years made of been of here. my us our part amount focus again, choice perhaps always while ordinate HHS fact the the it’s types an on have managing there the of we’ve always capabilities better these unique the

Amit Hazan

XQ. else Yes. just the And Obviously, you helpful be called you to heard in trying divisions but consider would color we to piece, just a through that guidance you modeling? from call COVID in margins? flow piece, perspective seasonality kind on super you’d and out that on folks. out ask terms model anything a you XQ the on appreciated. for Thanks just to the of on That’s to XQ, anything of Maybe seasonality want us specifically would follow-up

Jim Pekarek

at variation, couple service But say look most QX things area I’d that you Solutions the each sees of of Look, when in to a Yes. QX, keep Equipment is typically lines, strongest. just historically, our the the mind. and

point. that we to as $X that, I the that we’ve some guidance, had pre-COVID and So year for million a level, in COVID the the that’s what balance described further, returned we’ve a And is assumed million. then of knowing to $X

with some amount where that the there other is of would of QX to the T&M Engineering, and mean, – Clinical QX, work area some it’s tell in about the X respect point a point too, quarter-to-quarter talked be bit lumpy one is a that’s this lumpiness you All I would to. work we I pieces be a I Equipment bit would of that’s the that within fair balance the Solutions. which upon is, you T&M little performed, there before, a would that So based we and did between and year. those That

Tom Leonard

driven And by not normally that really it’s is HHS T&M the contract, work a lumpy...

Jim Pekarek

color, Is That’s good TL. Very you? that for helpful the related It was to right. agreement. HHS

Amit Hazan

Yes. That’s helpful. Thanks, very much.

Jim Pekarek

You got it.

Operator

session. end have and reached This teleconference. the you. Thank Ladies our Q&A today’s gentlemen, of concludes we

may Thank now Thank this participation. you your at time. You your you. lines disconnect for

Agiliti (AGTI) 15 May 222022 Q1 Earnings call transcript