ALTG - Earnings call transcript Q1 2022 | Alta Equipment Group Inc.

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Operator

Good afternoon and thank you for attending the Alta Equipment Group First Quarter 2022 Earnings Conference Call. My name is Florien and I will be your moderator for today's call. I will now turn the call over to Jason Dammeyer, Director of SEC Reporting and Technical Accounting with Alta Equipment Group. Please go ahead.

Jason Dammeyer

Thank you, Florien. everyone. afternoon, Good for you today. And joining thank us you press was issued detailing website with to first company's posted Alta's results financial along assist designed presentation XXXX quarter the understanding this our the results. A on release in afternoon is and

call are Ryan with CEO, Chairman Greenawalt, Officer. Financial today, our Colucci, Tony Chief me the our and On and

For and full-year fourth-quarter today's of review the call, management a will results. first provide financial

for some prepared remarks we your We questions. call will with begin open before the

like I'd may company risks, started, financial Before remind statements, everyone statements Alta’s call get we business of financial conditions. non-historical and and our statements and release. conference this to business statements contain and subject including the that outlook forward-looking growth, achievements general strategy forward-looking described certain other including economic results, These about press in future our those related and market uncertainties assumptions, and opportunity to to as unknown are both known

We future our have may business, based these results and financial we condition, and of affect trends events, projections believe our and on that expectations current financial operations. forward-looking statements loosely about

that these could Although, with after statement differ revise SEC, call. other that to changes issued filed the forward-looking in we these was occur are release materially cause today. that including statements and actual of these no results any reports obligation from reflect Description risks expectations we undertake our discussed our believe to this reasonable, to press are

found website to financial equipment.com. A non-GAAP is press turn measures Ryan. this now can release, today's call, present to over on GAAP call @investors.alta During reconciliation included of and our may will GAAP be measures. we I the both in non-GAAP and

Ryan Greenawalt

joining afternoon, thank you us Thank you, everyone. And Jason. today. Good for

the of will to provide will then in quarter. our some results quarter revenues ongoing an I $XX.X the first regarding the continues on continues solid increased organic a quarter related and first the trends and M&A markets a user dedicated first and million results. laser growth quarter first result to driven then environment. the Our execution Alta top as review industry upon or we was in-depth encouraging will highlights our be million unique flexible Tony serve including discuss both and our model. more financial team our all operational the excellence acquisition provide by Beginning to business validate in line, The strength strategy, the with end update growth. $XXX.X total year-over-year XX.X% and of the and improvement reflect focused

handling combined revenue produce material construction on year-over-year and significant growth a segments Our basis.

In fact, would XXXX all all economic issues favorable year in despite our our $XXX in performance, seasonality mind, weakest quarter we of in headwinds. to $XXX deliver a better of increase midpoint the which guide EBITDA business be for million ongoing favorable issues the continue period Based now are results. of we into period to year our a results business and quarter range to as and markets continues the first quarter the our to user adjusted XX% environment first at million due is Keep chain the maintain markets. XXXX over on peak segments end historically other be supply from ago the activity

me Let now few provide conditions. a on market observations

Customer and these user belief in some continue indicators are anytime decelerating Our takeaways project activity all no remains also for sentiment there markets very that and our cycle end near term. signs current visibility and the demand regarding current our up positive. support that high regions Key will is across the extremely time. industry is

hover new and and eclipsed backlogs levels trends at Demand operating pre-pandemic for performance our continue rental equipment these well. to now peak topic, the on record track equipment and record has used levels. Our reflects

utilization job fleet streams. have our up cycle our fleet in rental passed incremental year Infrastructure business on are our our percentage opportunistic also The conditions was fundamentally service on benefit substantially to revenue more product higher increase rental should our ago, also on robust than in example, Overall, equipment be With from organic five sites, and profitability. an future. at some the bill benefiting and to improved. more parts and physical a operating a Bipartisan recently these focus support we rates point and points expansion leveraging For grow also margin from businesses business

our In our million adjusted six continuing $XX.X that positive $XXX terms included into in in achievements which last added revenue remain and on growth focused of acquisitions million XXXX, intensely from strategy year EBITDA.

scale increasing improving our Our goal profitability. is and

pipeline new density market we this and excellence that end portfolio, flexible throughout demonstrated on new robust region, our to and markets improving diversification and states business our increasing continuing broaden each have of equipment operational accretive leverage expanding adding opportunities. expanding organization, and our existing model, execute includes strategic our growth within opportunities, entire relationships As OEMs to M&A both and into continuing to solid present our

speak track -- a an We that not on Our and the to M&A disciplined itself. pursue of opportunity does financial that approach strategic topic fit acquisitions for record our criteria. should not take and not will

grow initiatives in to are continued can our scale We we and acquisitions a solid sheet continue growth further support have confident balance we to through and for expansion XXXX. business our that

and Our industry of -- is progressing entrance electrical partnership well. product portfolio, electric service is very our vehicle expanding in with Nikola this the commercial initiative and representative into

truck in accelerates. a in an don't densest country truck of results be commercial as the market we markets to material this vehicles electric an puts of our to XXXX, While the contributor to in uptake it venture some be in us leader position expect EV excellent

closely late Nikola been product and are prospective on with demonstrations opportunities. has conducting team we working Our sales several and customers stage

to history Craig forward brings contributions Alta as to the look will excited now the about our In Chief drive will the opportunities hard to joined Operating shareholder very to early on XXXX. the role. In announced Brubaker in best of practices we position of units, the to in share are businesses, success a operating continue team Thank we new our of expanded part after at term the and the And controls and Craig company. drive call we Lastly, XXXX Officer, Craig this our future he once of to lead as for structure to April, long experience closing, and leadership again Alta improving success you family. appointment efficiencies enterprise. working team business. operational Chief make his a across operational strong completing I value. the Operating as over integrations in Craig and continue Alta Tony. acquired turn And Mechanical across will Engineering, BS Officer, great we entire

Tony Colucci

Thanks financial Alta all Ryan. interest you you Good I our at and evening, here as quarter today families XXXX to on for Alta. thank three your in summer, will and are everyone. that forward and we trust My focus first results. Group remarks healthy are safe looking And your and Equipment areas.

our to across end quarter demand are as in of positioned current I'll with, results to presenting experience as and all we for which continues business be well be high we markets. services geographies First, first products climate, and pleased continue levels our our the business

quarter a first been of be handling Alta’s I'll efficiency segment’s from this and Second, pillar capital our as perspective. segment performance, strength material highlighting historically profitability has

reiterate we which release press I'll reaffirmed earlier in adjusted today. our thoughts Lastly, our guidance, around XXXX EBITDA our

portion XX-Q, some and in which to it our presentation, our my quarter today's released was first in, there our dig I of I everyone should in call our be discuss to noted is @altg.com call that slides our performance. first which I on here are numbers detail our on presentation review encourage than that Before what website the today. remarks, prior presents greater first Investor quarter prepared Relations for available will

the investors seasonal on numbers, business. our to reminder a into quick the elements get I of Before

QX Specifically, key the the to in a about in appropriate year-over-year construction outperformed Thus, sequential which are XXXX. is comparison, every more on weather the metric. comparison northern comparison geographies QX QX for subject just XXXX difficult. QX makes we a segment QX to And constraints of

a revenue the is XX.X% a for organic full year our start the relates increase the revenue equipment I the XXXX, of million, year theme the historically, in saw the of to as QX good in it a sales, it quarter solid $XXX.X over to disposals. leading of indicator the for recorded making to for as comparatively Now, we million relates Similar just company performance. and $XXX.X in considering QX strong for which a used strength numbers, of rental to a XXXX, a is business continued the sales quarter Embedded mentioned, seasonality quarter. as equipment especially sound

sales equipment approximately for came million. $XX at in rental quarter As the

increasing the parts in an organic and handling support to lines, business both year-over-year. segment, construction we with Importantly, XX.X% that segments, XX.X% figure relates in in as the it growth in product segment departments and service our material continue to impressive realize our

as to realize our with rental material growth year-over-year. in in handling Additionally, in revenues construction segment, relates the XX.X% it segments organic to business, XX.X% continue and rental both the as we segment increasing well,

environment, quarter, flat and we under of QX we XX% realized revenue, factors. while is $XX an On end. three We $XX a when effectively expectations, in rental basis. From $X.X year EBIT drove holding with categories or which higher the EBITDA utilization million approach prudent level size adjusted rate flow pro and our million the that One converts rental investment. to levered focus on on of an the of up fleet, rate on a $XXX.X an drive physical which adjusted fleet result EBITDA million free cash first returns of QX rental a Importantly, line increased of perspective, EBITDA. million in in economic attractive product XX in our This a increasing into for trailing and a from two, three, our conversion for size compared EBITDA achieved was XXXX. rental quarter the fleet our adjusted forma

quarter. in light driving organic QX drive call, mentioned are profitable product to metric departments expect did in we free Increases which the ultimately business fleet, margin asset our XXXX, we I growth rental conversion higher organic of such in growth first units, PeakLogix. as As metric this on from and flow a the in utilization our support cash function on this high

balance of update line metrics. $XXX yearend, ended quarter came we for as In sheet shareholders. depicted is our million of with associated as to metric driving basis, indicative levered growth in equity XX value revolving our $XX credit at availability and A the prior approximately in XXXX generating EBITDA, our above leverage slide certainly credit with comfortable adjusted on of CapEx. is on end, pro just unsuppressed and annual total equity cash both the earnings quarter our from roughly X.Xx in and of free economic and adjusted profile this business quick view, on the common deck to positions Lastly, investor forma flow million an

to moving second handling our in Now, prepared material quarter. to highlight I'd my segment of like the first its area and performance remarks, the

annual population, then segment addressable of foundational high include as cash been several field segment of business, XX% a product return pillar Alta’s to presents out element in built six of its which slide -- First, our XXX%, flows the cash cash point material to our flow has has decades the which handling profile, deployed. income a over the which QX, margin strength yield costs been invested would terms historically, include which $X.X yield performance which market recently and from share strength in absorption strong Metro This I Detroit, our capital indicators for areas market XX quarter, of York reported for markets, key these Chicago, markets, support recurring City. for of urban in investors million on rate, historic leads Boston, key deck, dense in an share high and of used operating New departments. estimated in large the more

X.X%. segment is While it space, large warehouse segment’s industry need intend rate demand, that and it's points reliable center PeakLogix lead at its suggests acquisition continued of distribution as automation Point warehouse. North truck XXXX opportunity and units tailwinds electrification estimated trend warehouses the no support by operation as up the $XXX has experiencing deliberately in our this relates space the labor, fiscal levels to in the coupled teammates follow. is approximately lift of less by technological number message the metric our industry cash using these indicating for take Point handling on we view XXXX. provides three The of US with view, to out XXXX. a material their immediate the years XXXX. guidance continuing form that of a dilute material lease growth, on view. is in positions XXXX. to the logistics sector share to of warehouse we warehousing of warehouse forward. the warehouse now there the to customers one, orders range primarily material in should focusing segment due come. since the is handling billion currently Alta’s XXXX. number in square our of suggest record mantra. mantra go on Alta XXX,XXX manage for with XX Point suggests in XXX,XXX XXXX, feet number the few on In last approximately amount to of reaffirming strong Industry and electrify years automate currently to In to of figure And sight. that with of is are are the to business our customers solutions a are flows, that billion And expected start quarter in pillar record in business a of is this and In made XXXX I'll secular trajectory, the [XPL] of This our This not with advantage and first handling three, from at tailwinds of projected QX US as estimates to inputs, we our assisting Internally, material as increase handling our advancement metrics the space. strategic operational X we in uses industry. to strength not their five for of two annually. another is Point to reliability of want ecommerce, solidify that automation, will automation nearly at number warehousing, better two, rates ScottTech at adjusted coming low points necessity, strength. vacancy to given In XXX,XXX the XX% units. deliver lift are number for the XX% the was XX% a will key And ecommerce. US units investments closing, great beginning their lastly, truck this America double upward to electric, growth four, of over market some end results, XX% the point strength, million capability annual to we time that Congratulations pillar real of our $XXX for through EBITDA more segment, million energy prior in

and remain elements XXXX. shareholders believe the alike last and place Thank your discussed of the us we our all and we landscape As remainder time quarter, on I'll operator to drive tailwinds of for confidently over back plan, execute current business as headwinds allow returns And Alta’s you to the today, Q&A. over in attention. for turn for it will the

Operator

from comes Our the Davidson. first line question Summerville Instructions] Matt [Operator with D.A. of

Will Jellison

and I will. And in Matt is about growth the is between bigger what What we're business that today? does that approximately picture, market the look volume of of the aftermarket Hi, first today. to digits I'm little is Summerville the more. a Ryan pricing still I in component learn bit the ask like? for kind power you first rate Especially Will growth want quarter. double this the on Tony, breakdown, trying seeing the of and price to component and aftermarket

Tony Colucci

to material then of in but I'll one, support take Will, kind we XX% almost organic I that mentioned on into product when remarks, the in XX% prepared handling, – we have it roughly and segments, my and construction. Yes, break growth

right, population then of start trending have as new specifically specifically, where quantity, you business of believe direction. counterparts. good the say we this are would upticks over given material to is a what both the to they're we're historically. so the about parts kind aging equipment really in talked to is, I is related field handling about in And at there, we've you service. that and the the parts supply and we right We when equipment, and in think Parts out think price that suffering, that's the when look seeing components, look I off at

say so that increases much growth that at in the volume were the I would the of we're handling less material the again, that than price seeing organic we XX% counter. something seeing in just And end business. probably high the a of lot Because on

roughly is So on say, I quantity. versus would XX% well, end the high pricing

Will Jellison

the and your recent want position? your And Chief areas does of Officer how you. was ask great. to then reasoning creating to Okay, Ryan's the the up I Operating yours, Tony business? in and on appointment that focus ultimately, learn thinking it trying about other of Thank tree business, And to behind part just responsibilities what you on

Ryan Greenawalt

Well, I'll is take that Greenawalt. this Ryan

career. enterprise his us appointment of you his a So of new Craig role this role. could an corporate think be wide been has the beginning since with expanding and role And as to

in he's now the the and vehicle. also construction expanded vertical across So vertical, of for but functioning new responsibilities, the set same much electric

taking practices So now of standardization. dealerships our to whole best the we're efficiency how and and it that areas can we drive to thought that and run enterprise, looking applying leadership for

not company Tony's terms out whole the pulling a basically, of our lot. executives In day-to-day and more it one operating a how role. into my of affects It's of responsibilities, corporate

role that the within So in expanding organization.

Will Jellison

I'll internal thank congrats well, queue, Understood, to seems you. be back candidate finding for what on a job. that get great

Operator

Rygiel Riley. comes of Our next B. question Alex with from the line

Alex Rygiel

quick really you. And nice questions Thank quarter. of gentlemen. a couple A Good evening, here.

bullish, Your visibility. of why user good strong commentary in light obviously But only markets, guidance EBITDA such reiterate demand end very was strong commentary?

Ryan Greenawalt

of we the to guidance of month there or that when going the end guidance be it of way we're we of on I seeing the ago, and is is going mentioned built lines, still predicated the a upside to the at so to supply of delivery the same we, a equipment, the tail we new kind those feel my is One volatility really the two really did to which be equipment Alex, in kind of factors. predicated chain. specifically, lot remarks

of it's stopped point. in guidance a So this out our I second. for us think that just, of at the kind bullishness of delivery, it's sort you to terms for Because control it's hard there of the increase taking

control, we on point second product is support. good is in start. The something a that can't organically the to off increase related we to think And we're

I kind piece. equipment able quarter keep on directly line see to I here upside we of of to the correlated the guidance to probably back another where think first the growth coming being to the to need be is going that items. But point the

I demand about here bullishness might versus the to year. itself the more were manifest -- that you're think P&L this that trying on this the we is convey what

And what ground was the so what articulate kind hearing bullishness seeing were just what of from customers. in we're that trying of we're we on terms with to the and

Tony Colucci

helpful. Okay, that's outlook more couple other commentary term maybe other EV in that that's it longer then of you little relationship or first detail it and Can any Nicola. how we relationships as the And developing, on sales, relates to bit or see the go might relates into when the market? to a intermediate thoughts as for

Ryan Greenawalt

we're really so beyond announcement speak be because stage sales on are as described technologies. I what an wanting We think imminent. they actively working Alex, that an the late be would this reiterate to of emerging Ryan, the be neighborhood as of we us XX% order and going were to prospects can't we of in are is confidential opportunities volume, Nikola’s pursue we somewhere that could

Ryan Greenawalt

interest that Tony, helpful. how about cap and maybe And can risk structure? across you you on lastly, is your manage think you rate comment risk That how

Tony Colucci

floor period spread lines which X:XX:XX.X floorplan rates, about before, go index a of think churns some there's an inventory, of of short I given back launched, kind eighths liquidity the impactful we rate, here, those I'll fixed of to OEMs, we're -- the kind bond, plan SOFOR, that structure. not the P&L. be some lines, over a the list over and rates, subsidized and tied When from term short amount little and the go The paying here that five the really a of a liquidity on index and bond floor back in the rate capital to down given used we've interest being that's manifest bit at to that right usually lines, for time, in we're by today. with that to we're term ago structure, obviously typically, risk interest end plan would year end the our to of of where And as materially and itself the experiencing just are backwards the Sure. I capital increasing floor amount now of relative the plan five on our into LIBOR discussed lot are

end, it think, $XXX the so draw million at bond, years, rate feel piece, our terms quarter we middle and million interest good which four to leaves next I going we're up loan, we that kind is wise. on of locked $XXX the generating profile were in is in our low And grid leverage which utilization drawn, ABL pricing relative that the the for of here again, the kind here where vary of or

all floating. to we customers do we're costs holistically, that this are and we about on of can pass of that some and along inflation, that we rates, little pass can increased so that's these kind constantly with business to higher of suggests So in talking form think we Whether higher model $XXXmillion, to our pricing. hedge of forth, whether along. the really just interest is this some so a think that I $XXX but material the again, moment, At about million impact, bit, what piece, that thinking any

we it. So it's think about how

Operator

with line Fast question from the Raymond next Our comes of Bryan James.

Bryan Fast

guys. afternoon, Good thanks. Yes,

increases in those see issues customers? there suppliers, on been price you to has any from As your passing

Tony Colucci

business down that say, then line. would I kind What is verticals again, Bryan, into really and about, the the into thinking breaking of

through, is when the kind of there's kind potentially of they that I the here, happens. say cancel not material where business, of side of I could about they sales, accept which would equipment, either they're the when equipment handling move some backlog, if on it, where just things price think, the there's Or customers So the order. you're if in terms They OEM the increases come thinking and of headliner fixed two along. one with

I think what's What we competition can competition. some today out So important is all we've some the our that this because mention what we're relative think we're backlog and customers to and of to to is making seen to opportunistic, are the relative other is part, right? here the so of paying customers attention making have equipment what the for some drop guy, seeing seen But to decision stickiness. they're find most relative maybe is I pricing elsewhere.

point other that's to of on interest our the in things is the rates. of Alex's One kind increase mind

an on lease customers is typically fleet to won't so and some their are our increase buyer So customers so we the sell that what equipment trying are financing lease payment ton their in move needle necessarily payment. operating and the really loan through a sometimes buying lease to pricing, or

that parts we're then when that say either, Certainly, it thus in rates. in been we've we've seen been to we've along to the relative been able would increases able along along. far. I P&L, to pricing market pass to pass any so seen the And and by large, increased we've rest of it to comes rental to we've pass able And able

to cash little intensive, in where to our where kind is Equipment rental, on. are a business mean along more of we are a to difficult it EBITDA, the part triangulate flow our customers. And pass the of to areas they able bit service and absolutely lot we so

Bryan Fast

enough. fair Okay, helpful. That’s

Ryan Greenawalt

we that we're market it liquid, when about pricing is very talk I that new we because being talk is would time, being, real I add used would more and add just talking just about equipment, then when it about difficult,

Tony Colucci

drive in and to we our say What that to, if I margins just able are on we've gross new across new up of able notice primarily handling you increased Bryan, we're value the reality you'll to sales. kind margins too, yield used is added PeakLogix business, equipment, the margins. to able equipment, when Q expanding and have particular where we equipment ScottTech new primarily we're used that would line have And of selling material we're that high in used and margin been on gross but equipment, in used if dig is the because into here, margin on seeing highlight so because constantly board. projects you, that is the side, in construction line is And the focus higher iron,

Bryan Fast

when you we you last then about maybe any And last But months then I some relative, current build fair had you the Okay, enough. chain just how with Thanks. even And during know guess conference call? to demand? saw comfortable the robust nice meeting inventory I had there. in as inventory commentary you are two are you seeing quarter, the improvement in that supply levels, think

Ryan Greenawalt

opportunistic segment. we are we're as as on today And twice times take which we the the area any say second of. across in opportunity. part times, that I something for advantage And would is fastest significant call, that are of part Ryan. first. is the an take the an long segment that equipment, there it's to an lead handling see the improvement. positioned But growing is leading of not competitively of is terms I'll that segment that This board, we warehouse out the of lead material brands nearly trying

Tony Colucci

delivery line, the as Yes, first we when $XX actually, to the season, of of we sales -- specifically construction take part along saw on into something question. build head is is historically, which think we your to our this million, your business. Bryan, And, first the of I inventory in $XX new quarter equipment million

kind ended that of So see that to actually the we the that was year low good from at. levels

in it that the see And becomes What generate the say, some inventory, if we pretty question have on into construction house fits that type and less delivered business. material increase starts come in certainly we pleased And more be customers. on guidance, in visibility get the on to we supply we of play. breaking we the see comfortable of segments, a And just we side to now. the where and -- demand? right to have So Because we were like then side, relative revenue that's equipment handling that's you out kind we I of to to can and mix. out would holding know the to we'd would to volatility chain, Alex's the feel can prepped relative where like where we see, of

Operator

next question D.A. is Matt question with Our Davidson. follow up a Summerville from

Will Jellison

is Thank This my XXXX and on got taking during to I It little historically has service want like business. here and today gross again. percentage you a zoom those in line in the item the And mid-XX follow range. generated Will that to margins Jellison bit stand below just XX%. looks low for business up. that soft

is mid-XX% about low talk that that path can So the getting you what forward margin back to to level historical range? to gross

Tony Colucci

the number I the that Q, in into of couple look mapping an of accounting, you specifically low, for costs way of is did, this had is we material of one acquisitions Yes, segments. going of at you'll was more of function a the system which point in each high because the their each What is shift if notice A that that that's working. business, kind a would of we things, there's that. one, nothing, there's Will, on not, out thanks just something handling

is we segment, And of material XX% in XXs expect margins quarter, which handling what going the saw could forward. this low we kind so gross

it to with of technician and orders being lot York to the so our system. not apply work do for old And able a in that businesses we, to accounting New but just time, has

no real that So on lower impact businesses the there. our the in then a And some there's construction versus existing business of vertical, margin business. here purchased really construction, the have gross we've

think than our see bit. we come on are hits had has warranty impacting the QX, experiencing a mix some, previously. that's of from historically line one, is the recovering warranty But The little terms And in margin this we in then of warranty the of the of lower more So more, a kind we I work pressure little margin. claims. number a less up revenue bit warranty, did perspective,

think in winter What on, nuanced in QX similarly areas is to holidays, indicative along. and little bit cost XX%. QX it's just the of experienced QX is construction ability in QX did more say It's I that's the technician our business going So XX%, it's too, a a months, with we then non-billable. non-billable really would don't training, of these it with high not was month typically I anything the pass business. existential more of some

So I that continue that to ramp XX% you're of to numbers expect up, kind level. would those back

Will Jellison

got Understood. That's and love last we great. what Thank market on or end you. And then have whether March. get not in since changes the acquisition lastly, update noticeable there at to of phone on you're observing the been I'd an any the

Ryan Greenawalt

the to Ryan, earnings same. is think a still changes, with noticeable Their family of for And out sell active are There Equipment This this landscape lot pipeline. a I XXXX continuing you still a very This Group quarter don't there's businesses participation. motivations we're Thank questions for sellers there. at there further are waiting the call. are no Alta your to time. currently first concludes pursue

line. You now your disconnect may

Alta Equipment (ALTG) 11 May 222022 Q1 Earnings call transcript