AGTI - Earnings call 3 2023

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Operator

Good afternoon, and welcome to Agiliti Third Quarter 2023 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 would 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.

Kathryn Kaiser

everyone. hello, and you, Thank We appreciate Agiliti's XXXX. an of we call for the as results XX, provide quarter overview today's ending September

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

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

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

company presentation Agiliti its X, a the prepared remarks. Leonard Chief XXXX XXXX, Leonard. beginning of over Tom final in immediately. call will April effective CEO, Earnings turn On Executive January Agiliti Slides. A as I before select Finally, served titled year. Agiliti XXXX our in this rejoin would now October we until QX Officer note to previously CEO as his Tom begin our of announced Mr. of announcing retirement Leonard the that

Thomas Leonard

like path at today It's be back to some our reflections and joining the good great and brief forward. afternoon. Agiliti. Kate, we you, that begin Thank company with to I'd

of What clear the operating first and into look me seeking that teams a solutions confidence the on I reenter and a our and and as need our with performance, has is systems, potential. my obstacles impacts to deep for our doing been focus the weeks, hurdle understanding across outside reconnecting growth company a of few long-term gives Over dive our its opportunities business don't structural faces part opportunities. near-term business that we no

for Agiliti In rebalancing to apparent deliver We've key in has words has with a to far other than of begins to mix our business it mix. once the room be quarters. company. execute our more selling again recent potential healthy the already to been teams and unlocking retrain focused begun The balanced

not sell. of the is Agiliti, solutions proportion mix relative individual we simply For

As an important point that bears repeating.

our short-term infrastructure, in we to efforts margin targeting third-party where selling have partners. teams, For engineering, Agiliti solutions. of proportion business, wins tools alliance with that our refocusing also our profile. It's to of mix market within from customers, for healthy and existing benefit improving individual meaningful it relative customers on clinical driver and our of margin we capture share markets a local of just our pre-existing It we business it and density not more and local efficiencies wallet reduce contribution our ensure the multiyear larger our to supplemental customer of capabilities sapping building solutions local balancing regaining growing combined a margin flow capabilities, opportunities key rental discipline the includes transactional, includes contract about including market of is steady high existing shared drive means overall best service utilize synergies the a about on

that best-in-class is post-COVID its recent history. This remains the accurate meant in they're variance expectations rebaseline reported potential more long periods. upfront margin the quarters, not generating actions same comprehensive larger prior been represent both in many management's much need the as these and will the business. of the around peak costs, in the revolved profile missed company In near- achieving deliver growth. has for longer-term rental implementation investors than discussion our Importantly, and financial be expectations from our before among potential. are But ever on an have growth a but company to goals as used contracts of impact levers management's description variance top not the key is has onboarded solution well to of the with those unlocking unrealized the over-indexed to entire line Also a delays of results list. Rather, and as as company

Equipment drive a in our prior Solutions couple beginning service performance Agiliti's of Let emerged examples, need with as me X Peak has over financial years. that line. within rental illustrate point significant a the

represents from demand company revenue again, this lowered total just device outsized a the that need purchases year. medical a moved we post First as peak rental COVID our as baseline company for pandemic. And of keep in as of utilization during equipment mind, But benefited X% during the customers medical result excess period. toward

include So service for well plans more levels SCS begin longer should and financial surfaces clinical of materials pandemic, volume, while than make our manufacturing contribution of line infrastructure, specialty current more level. Today, One services strategic this for Shortly prior after more at within support automation. ago, growth includes as critical clinically a in driver services us manufacturing in offering. we and refill investments. to support of began example, for muted acquired through we consistent P&R solution R&D, equipment in capability. be future to the long bucket surgical acquisition support our strategic systems forward benefits our importance offerings continuously variations and has our our performance our differentiated more services in and on Sizewise XXXX. transactional as capabilities this invest always the beds This and result SCS of with will those or represents as investment. product of the and was currently high as clear as solution of opportunities solutions to to it acquisition we'll be impact XXXX, Starting and margin to type variety growth as well runway the overall improvements X it XXX therapeutic years margin see a a a sizes, been results

first achieve is launch goals. as our supply launch we support product under will in we We a therapeutic margin the We're the brand key and manufacturing long-term streamlined for soon services and will increased family from simplify Agiliti chain our within new growth about line Agiliti sight a excited simplify that gross see of to provide our solution customers our scale. range best class to improvements process our decision significant of benefits

primarily We on from procedures contracts Agiliti just year. Staying surgical revenue pay late several urology range lasers, including of on we engineering that by a acquisition the margin new unlocking Having clinical with offering integration of positioned competitive our focused I'll entire service position XXXX provide we're services segment modalities share a our X well of through HealthTronics, to an expansion exclusive to line. initiatives the teams the and modalities have of completed time case as surgical technologies, of model. basis a the broad to our enter -- technicians of strong on with the topic potential where certified example, prepare came this the manufacturer in and more gross business, this per #X enjoy a Our range access in laser is access and relationships. and

a recall XXXX repair, numbers These Mobile Medical segment You acquisitions surgical Northfield Agiliti by acquired and in of of fast-growing Instruments launched prior that X and market. we equipment in players early into the the XXXX. in X revenue

a proposition, with As business offer financial an their vendor the our needs, for working independent system. Mobile provider, during service a backed value Instrument repair X the of with case we and the strong device quality full country When solution confidence is were ISO values management below customers and that around certified pandemic. Northfield acquired Both a levels. XXXX normal the surgical medical by were along

expansion. In road took in the enjoy we as deliver and core solutions, believe growth. growth operations we our better accelerating opportunity and competitive We of our profitable on engine that hold for margin integrating a our time we are will So predictable focus momentum again and mix strong and map commercial Today, our positive position. rebalance to a on executing focus financial our and on summary, execution market we all highly across the once selling strategies. harmonizing our at

the our today, Our within ability rebuilding trust undervalues execute the the opportunities like portfolio within to the well our feedback of want performance confidence We recent and analyst of I received. We to and remarks control. and I'd equity significantly we've remains of of believe acknowledge engine. our financial prepared our recent the other these the on with my to conclude market. investor strength importance management appreciate

as and our our our to to of that in this role this unique company company lay the deeply and team. delivering model. the we're working I currently we markets our them. competitive on believe Agiliti infrastructure in through ability Agiliti device the position national and committed We our future return serve shareholders. to And I'll for returns advantages sustainable valuation our medical a plays the while in to in understand overhangs bright rebuild operating strong critical lead for Our

report the color prepared the complete expectations to of we we committed your level and providing are the for progress. review and of XXXX on as on So transparency year full business and strengthen set right our to

before returning to Jim on to detail your questions. to For results now, I'll call take pass QX provide our the

James Pekarek

I'll XXXX start on with the an outlook our year. QX comments our for financials and some offer of overview later

EBITDA total compared the For by adjusted margins increase of HHS decline over totaled as Adjusted year. XX%. EBITDA affected million, a need Adjusted the margins company were totaled renewal the revised QX as last lower an of contract well X% peak number quarter, scope the placements. prior rental $XX million year. $XXX And third a X% new representing EBITDA to revenue was

in for XXXX increase was closer quarter primarily each across by customer XX% Equipment year-over-year. solutions as with contribution SES adjusted In strong mix by partly rental were need lower addition, offset of by impacted $X.XX peak quarter. lower offset impact surgical the business December equipment primarily onboarding debt the by attributable a up quarter year, services, was effective a interest well revenue of the the the in amounted quarter revenue versus acquisition. Adjusted rental third Growth new prior million, adjusted per compared the The within at share $X.XX $XXX peak SES. service to the including year. growth driven solutions approximately our margins of EBITDA increase driven and both within surgical the Taking the totaled year in revenue, net Solutions to need prior growth revenue per equipment rental look negatively earnings new as on decline in share of in the prior to lines. acquisition partially our in by rate $X.XX the income, within the

Clinical representing revenue million, to of quarter. for XX% QX Engineering. was year-over-year Moving the $XXX increase a

customer as growth the the surgical primary our within onboard prior new line. year the and service we New continue including equipment was repair win of driver increase versus business to

Finally, Onsite the revenue $XX totaled Managed representing $XX year-over-year. Services dollars million, margin year-over-year for decrease X% decrease of the QX totaled X% P&L. quarter. a of Gross Continuing for down a million,

Our HHS of onboarding peak-need rental XX% primarily agreement. margin the gross pricing and was customers renewal was engineering clinical XX% decline a large lower margin to of due placements, in the year. The the the new in mix rate compared to of within rate our solution prior lower

a to projected by with were favorable in well due XXXX. partially We primarily $X.X staffing to will with expense incentive million QX totaled the million, quarter QX of costs in pricing point offset related renewal incentive associated associated HHS as in transition. These lower $XX reduction CEO of management payout. for costs increase costs the severance as year-over-year. anniversary increase The a an the was costs SG&A

the to sheet. with debt of billion. balance $X.XX closed Moving We net QX

Our X.XXx. months approximately cash QX the ratio and of for of at leverage year flow $XXX the was from first the our million end X operations was

support although healthy continuing on actively term, we through will operations our business a our and are into this capital pipeline. year allocation And course business proceed we reducing XXXX, focus our and M&A we on and focused continue our debt opportunities, have primarily to the on initiatives. In strategy ordinary As maintain to and in we pursuing short paused margins. our improving internally growth mix reinvestment

authorization current we future. Additionally, our the anticipate do under foreseeable not further buybacks share in

$XXX million facility. range. leverage continue credit target as liquidity our million maintaining $XX of a XXXX mid-Xx to September our cash in solid $XXX on maintained the with position million under to and We longer-term low of comprised of Agiliti available available hand ratio revolving

extension May, of $XX XXXX. we extended key a we LIBOR a and extended completed to SOFR term agreement transitioned and revolving maturity the benchmark early in our As April reminder, modification our from QX expanded XXXX. XXXX, our credit to million to by in and which Further, QX term the of loan, rate underlying

billion on for $X.XX of of of terms. floating maintain swap swaps rate agreement SOFR an interest Finally, effect rate expires million we terms the agreement end and our swap the with in $XXX X.XX%, rate has base fixing XXXX. rate our QX debt, This fixed at the of

our now the Turning to remainder for XXXX. outlook of

our reaffirming metrics. of our year for are each We full guidance

in Q&A. And revenue prepared billion to to And capital to over expenditures of our provide remarks. million. $X.XX $X.XX million adjusted $XX million in Specifically, our our and range now per for call at share EBITDA the concludes billion, the adjusted operator, earnings finally, per instructions turn range $XXX $X.XX of share. share of to the $X.XX per to I'll $XXX That

Operator

Thanks, Jim.

first question from Jason Citi. be The now of question-and-answer is We a will Cassorla session. [Operator Instructions] conducting

Jason Cassorla

'XX, XXXX coming and but year. reason you why sense at major swing for high longer-term on out shouldn't next as quarter, at And any outside the year the could expansion more we then businesses, the in hoping of for if give next think have to know in if to consider revenue just point? major there's a P&R X there was factors, headwinds about potential I any upswing for margin proxies demand? is us there's this just growth a you next of Great. for if tailwinds And targets level, leverage

Thomas Leonard

start. I'll So

James Pekarek

I'll follow.

Thomas Leonard

to eager in. both We're jump

our we rental business want those with local our of It's and simply that Jim, building that function on mix, most next driver to driving business core of around those ability as incremental in density actually you So driving local medical leverage expand in certain margins business and performance. me a need fleet, its generates on my areas delivery local being our about that, start as when that let revenue. part in across teams the margin on of market described and our and around right touch vehicle devices infrastructure of remarks service mix? I peak our not a in best prepared of the of a is say near focus facilities. It's dollar do to important really our

James Pekarek

that you've use for trend think the at see yet it -- we the guidance I a I to bend. look XXXX. XXXX, to we but come completed as though Yes, as for in more you is provided to Jason, XXXX What haven't just hit point ask and there, that our as Jason, starting round QX we

Jason Cassorla

then that trying how as the like if material would quarters implementation we turnaround should the And I Okay. the a about Got just and EBITDA focus of on X around we of get about there? those the of levers more mix the the sounds like it for as P&L, it. of about we And timing growth sense lead this just Just top and is the the SES against should transactional, look Surgical trying guess P&R like to a the the think outside follow-up just there, a Services the kind it too. maybe or of to solutions day think think magnitude this few of what flow-through plan shift think is take the see you a curious around priority, a shift? times of to but a shift

Thomas Leonard

the -- solutions next to that margin for of regard a this we really It's lot deliver and is it the it So we next contribution rental? engineering. that peak operating first less the dollar profile to against dollar source with revenue. around clinical is that capabilities business place need supplemental is and onboard more the it merging individual their if revenue as of Or about

capacity full-time work place in that would they that have parts that and where So other same is existing margin. bought with what haven't our that a able get been to the an is for done an have I our local flex a of can go my not who's have not flow been example, a customer the an clinical that street service less to parts local through example. If go centers, engineering more and who I I corporate piece profitable actually in already can have mean employees very capabilities sell X of revenue. do service he equipment by be that and help able behind fallen if to facility business -- we on that supplemental that high vehicles existing my a that's pumps that contribution paid to from if simplified. who's of infusion transporting have existing or business, for and somebody market down over to couple I to a need about very was put same at for has than customer dozen place of I Conversely, I may that as facility in time to contribution our airplane local don't that average or may

not sort them. -- the business d necessarily we leverage that or in we And what that what's sell change our the really capabilities can it think ways the that drive terms turnaround exactly which enjoy. of in the speed proportion of here's we how maximize solutions you of have is local market of these it. we So about which about It's

off, few the not about in getting us off or off course X% is at as of steering course. it day if first terms it this a have the maybe like a point, degrees compass might yards In of be noticeable, couple hundred off, we ship crossing I ocean, think just so,

hundred already number see little intended perpetuity true areas, port for by it course margin but your these a a you is business a places big making time Getting small course need of don't of do ocean, force. by started can anything clearly about today. We that of And up by need might have our back side a sales the some we bit business. which entirely changes. already reach is we've adjustments, our new that the the the we doesn't we've financial profile. to in other you make that It's don't side, the portfolio. in be that don't variety our It's on same a in not the in not adjustments increasingly a gotten results. destination, small of seen couple will a We off while within miss miles. have our you So course is about off always wrong within blowing being off and It's anything thing of

as steady right living you report So or give card indicator impact. be a should as back week, say, to a the would I expect start few which some to but consistently, most seen of clearly gross a it progression in We'll happen will we you doesn't give a margin impacts happens business. will this as it in the of time happen see it over a some us rate point slow but proceed. But day a of will the quarters direction, to in

Operator

we question from next have is The Jefferies. Brian Tanquilut of

Nur Robleh

strategic This first back a just forward is we QX into forward high-level now I the into of Brian. and your priorities want Nur view as get to are helm, you I in at Robleh XXXX? Tom, for are go moving what that guess

Thomas Leonard

to teams time to business. great watch is things exactly to of heart what right engine me where what amazing business the that to excited gives working this What achieving, one is to back doing return set I it's we and need its about by going with which This extraordinary is. degree, an wide that it's to I we the your joy understand true The be business as into my I'm under and It business. wide-open most really think, able are that a too, deep used of something getting spending are, potential about adjustments things make is financial well make the I'm now the excited the question. and

on a have. drive when managing, local today, or So maintaining, the a is I getting might comes business enjoy, the devices. it. to has what and term, is financial not others we opportunity a is bet to acquire It's really single on the but in a capabilities continue bet infrastructure technology. priority medical there untapped quickly that build the mobilizing for short-term near-term repairing, of trend. for agility teams solutions it this this unique business makes potential again, profitable terms powers is biggest we of volume, to of enjoy in engine just and that longer-term What that not what The Longer a a future is this we market

to So growth infrastructure, and than back driving it's near term, by through where volume profitably anyone. organically about local getting it more our can without inorganically a healthy term, meaningful it's driving profile. margin Longer we and really peer do better market

Nur Robleh

Jim, Great. I'm allocation I of know priorities. some for And curious capital to then guess, your

debt aren't variable You any noted and paying in you doing a company thinking the share buybacks. the But that the you the overall is down paused at M&A business? of half investing of rate, debt how given that versus about are

James Pekarek

I we'll cost gone we Obviously, very Look, our thoughtful think about debt it. of Yes. know up. has be

That's well that I So about both well pretty paying reinvesting in business we'll out down it. the as pointed the think balanced reasons his script. Tom way as all for debt to think our in with be

Operator

Instructions] Fischbeck America. from Bank Kevin [Operator of The we next is of question have

Nabil Gutierrez

where on hospitals have money can conversations for on that at This professional your from is it. with from is conversations fees. pressure save on been distracted labor they Recently, you about Is elsewhere? they're preventing by with clients talking them and Or all Nabil cost it impact Kevin. because having having

James Pekarek

on comes runs which for means ourselves badge to facilities our flip do they have can go it to and just we risk the work prided the long take is as of when cost help model the our time adding it have that themselves we for side try employees their Rather, employees, don't opportunity where care. a really we right trade the every What into a fundamentally do a some one on medical health for of is have outsourced in us of we of being they company them. What for that We on own. devices to them different the we way. customers'

up own. devices on for We costs place attending and repairing we devices, medical medical tied the hard and up with costs they focus feel equipment the costs on because delivering come -- reduce and our their return can by Free excess our many they it's reliance precisely dollar rental driving can reduce maintaining the owning those their the utilization customers, capital financial the of that too supporting of devices their a we solutions when pressure. this financial when they're that in that

that think customers. our are I most powerful our conversations with

Operator

turn at no to are comments. There the over back questions like I to Tom for time. closing this floor Leonard further would

Thomas Leonard

first, our speak and a I future. business the is weeks now back I'm with today. be with a for truly to business. This the thank And I I'm opportunity obvious very here. in bright to very So excited both everyone to think challenges near-term want you the have X to are opportunity manageable.

So to go ahead forward update share with goals today's corner turn And we're we and to as year. new call. progress XXXX. as And we that, our complete conclude into providing the an on as a going we our I'll look

Operator

you conference. today's concludes for joining Thank This us.

now You disconnect may your lines.

Agiliti (AGTI) 7 Nov 232023 Q3 Earnings call transcript