Alta Equipment Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Alta equipment third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the over to your speakers today. Samantha McDonald, Director of External Reporting. Thank you. Please go ahead, Madame.

Thank you. Good afternoon, everyone. Welcome to Alta's third quarter 2020 earnings conference call. With us today on the call are Ryan Greenewald, our chairman and CEO, and Tony Colucci, our chief financial officer. For today's call, management will first provide a review of the quarter, and then we will conduct a Q&A session. We will begin with some prepared remarks before we open the call for your questions. Before we get started, I would like to take this opportunity to remind you that today's call contains forward-looking statements, including statements about future financial results, our business strategy and financial outlook, and other non-historical statements as described in our press release. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to auto sales growth, market opportunities, and general economic and business conditions. These statements also include our expectations regarding risks related to the continued impact of the COVID-19 pandemic on our business, operations, and financial results. we have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in our reports filed with the SEC, including our press release that was issued today. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's press release, which is available at investors.altaequipment.com. And with that, I'll now turn the call over to Ryan.

Thank you, Tom, and welcome to Alta Equipment Group's third quarter 2020 earnings conference call. I will provide an update on the operating environment and progress on our growth initiatives, and then Tony Colucci, our CFO, will walk you through our third quarter financial results. First off, I hope you and your families are safe and healthy during these very challenging times due to the ongoing COVID-19 pandemic. We continue to be designated as an essential business and are pleased to report that all 51 branches remain fully operational today. The strict employee and customer safety protocols we implemented at the onset of the pandemic remain in place and provide a blueprint in the event our business is impacted by any subsequent COVID-related disruptions. Once again, the ALTA team rose to the occasion and delivered quality work in serving our customer base's diverse needs. Since our last conference call, ALTA suffered a tragic loss with the passing of Rob Childs, our head of construction. Rob was a mentor to countless individuals and an evangelist of our guiding principles. While Rob's energy and enthusiasm for our business will be missed, I'm deeply humbled and proud of how the ALTA family has rallied to carry on Rob's great work and move the business forward. I'll now provide some highlights of our third quarter. In looking at our third quarter results, we reported a sequential improvement in revenue driven by strong growth in our higher margin parts and service businesses. We have recovered from the dip in the summer months and experienced steady increases in customer demand as the third quarter progressed. In addition, we closed two accretive acquisitions that deepen our presence in the Midwest region and expand both our product lines and OEM relationships. We operated at near 100% capacity and we are at pre-COVID levels in terms of capacity and labor utilization across our business. Revenue was $220.6 million and we generated $21.9 million in adjusted EBITDA, a 10% increase over the second quarter and a slight increase over last year's comparable quarter. As business recovered, we loosened some of our cost mitigation efforts during the quarter to facilitate top-line growth. Our flexible cost structure and the dexterity of our business model allowed us to align expenses with revenue and increase profitability in the quarter. Our technician count increased by over 8% through a combination of internal growth in our Florida construction business and our acquisitions of both Hilo in New York City and Martin Implement in Chicagoland. We are continuing to actively recruit technicians in all markets to meet the growing need for equipment repair that exists across all regions. Turning now to operations. From a regional perspective, we saw improved demand and stability in both our construction and material handling businesses. In our manufacturing regions like Michigan and Indiana, we saw stabilization throughout the quarter as companies continued to increase production and we have seen our labor utilization return to pre-COVID levels. In Florida, our product support business continued to ramp up with increased demand for equipment repair. We see continued strength in high-tech healthcare and food and beverage markets, particularly in the Northeast. And our warehouse, e-commerce, and logistics customers are experiencing a period of high growth, particularly in large population-dense markets like New York City, Boston, Chicagoland, and Metro Detroit, and remain our fastest-growing end market. Moving to recent acquisitions. In late October, we announced the closing of Howell Tractor and Equipment, our sixth acquisition so far this year. House serves the northern Illinois and northwest Indiana market with a wide range of heavy construction, mining, and crane equipment. They enjoy a great reputation as a premier service provider and have a strong relationship with leading manufacturers such as Cenebog and a new addition to Alta's product line in the region. The acquisition is immediately accretive to adjusted EBITDA with strong sales synergies to increase volume and profitability going forward. Our third quarter results included Martin Implement Sales, which we closed on July 31st. Martin operates three branches in the Chicago area and sells rents and services a full range of equipment to the construction and municipal markets. In addition to expanding our branch footprint and manufacturing relationships, Martin accelerates Alta's penetration of the Illinois construction market, which is in its early stages. Peak Logic, a recent material handling acquisition, has exceeded our original expectations in its first three months as part of Alta. It serves a large national customer base and is focused on the growing warehousing end market. We have begun to cross-promote their services across our material handling customer base and to integrate their product and service offering with other warehouse automation solutions. Our balance sheet remains one of our best assets and our current liquidity position supports our robust acquisition pipeline. In summary, We are pleased to deliver another quarter of solid financial results driven by the great execution of our flexible dealership model. We are particularly proud that we have successfully navigated our business through the challenges brought on by the pandemic. Alta is poised to end the year with strong momentum, positioning us for growth in 2021 as the recovery takes place and the economic environment improves. There are many positive secular trends in our industry. The urgent need for infrastructure upgrades, the ongoing move towards e-commerce, the accelerated adoption of advanced technologies, and the increased electrification of mobile equipment. All these provide powerful tailwind for Alta's future growth. I would like to once again thank our manufacturing partners and customers for their support, our employees for their dedication and hard work, and our shareholders for their confidence in Alta. Now I'll turn the call over to Tony for his presentation.