Alta Equipment Group Inc.

Good afternoon, and thank you for attending the Alta Equipment Group's second quarter 2022 earnings conference call. My name is Kellyanne. I'll be your moderator for today's call. I would now like to turn the conference over to Jason Dammeier, Director of SEC Reporting and Technical Accounting with Alta Equipment Group. Please go ahead, sir.

Thank you, Kellyanne. Good afternoon, everyone, and thank you for joining us today. A press release detailing ALTA's second quarter 2022 financial results was issued this afternoon and is posted on our website along with a presentation designed to assist you in understanding the company's results. On the call with me today are Ryan Greenwald, our chairman and CEO, and Tony Colucci, our chief financial officer. For today's call, management will first provide a review of the second quarter financial results. We will begin with some prepared remarks before we open the call for your questions. Before we get started, I'd like to remind everyone that this conference call may contain certain forward-looking statements, including statements about future financial results, our business strategy and financial outlook, achievements of the company, and other non-historical statements as described in our press release. These forward-looking statements are subject to both known and unknown risks, uncertainties, and assumptions, including those related to altered growth, market opportunities, and general economic and business conditions. 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 and can be found on our website at investors.altaequipment.com. I will now turn the call over to Ryan. Thank you, Jason.

Good afternoon, everyone, and thank you for joining us today. I will discuss our record second quarter financial highlights, the continuing momentum in our business, and favorable market conditions. And lastly, I will provide an update regarding the solid execution upon our growth strategy, including our recent transaction with YIT in Canada, the M&A environment going forward, and our recent changes to our capital allocation policy. Tony Colucci will then provide a more in-depth review of our second quarter results. Beginning with the top line, we reported record total net revenues of $406.5 million, an increase of 38.9%, or $113.8 million, compared with $292.7 million in the second quarter of last year. The increase was driven by both organic and acquisition-related growth. and the ongoing strong demand in our end user markets, which I will address shortly. All our business segments delivered better results from the year-ago quarter. We are especially pleased that we reported positive net income for the quarter, and we are increasing our adjusted EBITDA expectations for the year, as Tony will discuss in his comments. Despite the headline news, concerns over a possible recession, and the economy in general, all our end user markets remain solid. Our visibility through the end of the year is positive and while we monitor all the key industry indicators which remain favorable, we believe the best measure is customer sentiment. Our team stays in close touch with our customers and their feedback implies demand is healthy and broad-based throughout all our operating regions and business segments. Demand for both new and used equipment continues to be at high levels and sales backlogs remain at record levels. Our organic physical rental fleet utilization and rates on rental equipment continue to improve and tightness of supply continues to buoy inventory values across all asset classes. Further, the industry tailwinds remain, with the passing of the bipartisan infrastructure bill specifically driving further demand for construction machinery in 2023 and beyond. In our material handling segment, labor tightness and inflation are driving the adoption of more advanced and automated solutions, while also driving the market for industrial trucks to record levels. Let me now make a few remarks regarding the success of our multi-pronged growth strategy, which is clearly a large driver of our positive financial performance. M&A continues to be a key leg of our strategy. After quarter end, we entered into a definitive agreement to acquire Yale Industrial Trucks, Inc., a privately held Yale lift truck dealer with five locations in southeastern Canada. This transaction was consistent with our strategy to increase the scale of our business and will establish a presence for Alta in an international market for the first time. Prior to our acquisition of YIT, ALTA's market territory was annualizing for deliveries of over 50,000 industrial trucks. With the expansion into Ontario and Quebec, ALTA's expanded territory accounts for annualized deliveries of over 70,000 units, an increase to our market coverage area of 40%. Our newly expanded territory has consistently represented approximately 20% of the North American market for industrial trucks, excluding Mexico. The Canadian market will also generate significant organic expansion opportunities as we look to build out our portfolio of complementary products and services, including integrated warehousing and logistics systems, dock and door services, and emerging technologies. Sales synergies and capturing customer wallet share through the breadth and diversity of our product portfolio is another major leg of our growth strategy. new and increasingly specialized and niche products at end market diversification and enhanced opportunities for cross-selling equipment and product support services. We have a recent example of a new customer relationship in New York where an entire suite of material handling products was deployed to deliver an end-to-end material handling solution, including several categories of stand-up and counterbalance lift trucks, telematic solutions for fleet management, state-of-the-art lithium ion batteries with charging infrastructure, and a full implementation of warehouse management and storage solutions. Lastly, our opportunity in the electric vehicle segment continues to gain momentum with ongoing product demonstrations, and we have identified several tangential service areas for growth, including consulting and integration of charging and refueling infrastructure. While the opportunity in this segment is nascent, we believe we are uniquely capable of helping our customers reduce the carbon footprint of their transportation and material handling activities. And further, we believe that from a regional and end market perspective, we are positioned to serve the early adopters of truck electrification. As we have demonstrated, we remain focused on executing on our growth strategy, including accretive M&A and improving operational excellence throughout our entire organization. To summarize, we are encouraged about our strong financial performance and believe our results demonstrate the success of our strategic growth initiatives. Tony will now provide more detail on our enhanced capital structure, but the key takeaway is our balance sheet is solid and will support further M&A activity as well as our new capital allocation policy, which includes paying a regular quarterly dividend and a share repurchase program. I would like to thank all ALTA team members for their contributions to a strong second quarter, and I would also like to extend a warm welcome to our new Canadian team members. I'll now turn the call over to Tony.

Thanks, Ryan. Good evening, everyone, and thank you for your interest in ALTA Equipment Group and our second quarter 2022 financial results. I trust that you and your families are safe and healthy and enjoying summer as we all are here at Alta. Before I begin, I want to welcome our new team members from YIT in Ontario and Quebec to the Alta family. The senior leadership team is committed to building upon the legacy that the YIT team in Canada has established as we are excited to bring our full suite of product offerings and solutions in the material handling segment to you and your customers. We look forward to earning your trust. My remarks today will focus on four areas. First, I'll be presenting our second quarter results, which were strong across the board. Our business is performing well in the current climate as we continue to experience high levels of demand for our products and services across our business landscape. Second, I will profile the YIT acquisition from a financial perspective, which will include an update related to the amendment we recently made to our credit facilities. I'll provide further perspective on the annual dividend and share repurchase program, which we announced last month. And lastly, I'll be providing commentary related to the increase we made to our 2022 adjusted EBITDA guidance. Before I get to my talking points, it should be noted that I will be referencing slides from our investor presentation throughout the call today. Investors will notice that we have revamped the format and updated our investor presentation from its previous iterations. The updated deck provides a refreshed view of our business and presents a few new metrics which we believe will be helpful for investors. I'd encourage everyone on today's call to review our new presentation and our 10Q, which is available on our investor relations website at altg.com. For the first portion of my prepared remarks and in line with slides 11 through 14 in the deck, second quarter performance. For the quarter, The company recorded record revenue of $406.5 million, representing the first time in the company's history where quarterly revenue has exceeded the $400 million mark. Embedded in the $406.5 million of revenue is a 24.2% organic sales increase over Q2 2021, making for a sizable beat on a comparative basis. From a nominal dollar perspective, The vast majority of the quarter-over-quarter revenue beat related to $85 million in additional equipment sales with $57 million of that figure coming through on an organic basis. This large increase on a comparative basis is a function of the supply and demand imbalance in the heavy equipment and material handling marketplace. As it relates to this quarter specifically, our OEMs were able to supply us with more equipment this quarter relative to the second quarter of 2021 in this high demand environment broadly the supply chain continues to ebb and flow related relative to new equipment deliveries and in q2 deliveries were flowing more than expected which led to a conversion of the large sales backlog which we have been referencing for over a year now i'll discuss this dynamic and its impact on our view for the remainder of the year later in my comments surrounding our increased adjusted EBIDOT guidance for 2022. Moving down the P&L, our product support business lines continue to realize strong organic growth in both segments, with that figure increasing an impressive 15.9% in the material handling segment and 9.6% in the construction segment year over year. Parts and service revenues were $110 million for the quarter, another new record for that metric, and a testament to our skilled and growing technician base. Additionally, as it relates to our rental business, we realized double-digit organic growth of 10.2%. This performance was a result of two primary factors. One, a continually increasing rental rate environment, and two, an increase in the physical utilization of our fleet. On a pro forma basis, adjusted EBITDA was $41.4 million for the quarter, which is up 28.2%, or $9.1 million from the second quarter of 2021. On a year-to-date basis, the company is up approximately $12 million in adjusted EBITDA versus last year, or a 17% increase. On a trailing 12 basis, we've achieved $146.3 million of adjusted pro forma EBITDA, which converts into $99 million of economic EBIT for a conversion rate on EBITDA of 68%. As I've mentioned on previous calls, With some of the asset-light businesses we've added to our platform via M&A, we expected to drive this conversion metric higher in 2022, and these results are in line with that expectation. Lastly, on cash flows, and as depicted in slide 14 of our investor deck, on an adjusted pro forma basis, the business is generating $69 million in annual leverage-free cash flow to common equity prior to growth capex. In our view, This metric is indicative of economic earnings associated with driving equity value for shareholders. Finally, for the quarter, the company was profitable on a gap net income basis as that number came in at $5.4 million. Notably, both segments were profitable and contributed to the overall profitability of the company. Referencing slides 15 and 16 of the deck and a quick update on the balance sheet and our credit profile as of quarter end, To round out my comments on Q2, we ended the quarter with $273 million in unsuppressed availability on our revolving line of credit, and total leverage came in at 3.5 times 2022 adjusted pro forma EBITDA. We have now gone multiple quarters with a business that will be able to grow on both an organic and inorganic basis while holding liquidity and leverage in check. Now, for the second area of my talking points, I wanted to briefly touch on the recent acquisition of YIT in Canada and the related amendments that we made to our credit agreements. First, with YIT, we've added approximately $47 million of revenue and $9.4 million of EBITDA to the material handling segment for a total implied purchase price of $33.5 million, indicative of a three and a half times EBITDA purchase multiple, which is immediately accretive to all the shareholders. As shown on slide eight of the deck, Since the IPO, we've now acquired approximately $42 million of EBITDA and an average multiple of approximately 4.4 times. As it relates to the recent amendment on the credit facilities to help facilitate the YIT deal and with an eye on funding future growth initiatives, we exercised $80 million of $150 million accordion within our existing asset-based revolving line of credit agreement. This increase This increases our borrowing capacity from $350 million to $430 million and also relieves some suppressed availability on the revolver, giving us full access to leverage borrowing-based collateral in the future. Alongside the increase in the revolver, we also increased our borrowing capacity on our floor plant facility with JP Morgan by $10 million from $50 million to $60 million. Our debt structure is more fully detailed on slide 16 of the investor presentation. For the next area of my talking points, and referring to slide 17 of the deck, I would like to provide some additional background on our decision to start paying an annual dividend to shareholders and the relaunch of our share buyback program. Over the past two and a half years, we have both executed our growth strategy and demonstrated the ability to generate solid free cash flows in a diverse, and in some instances, historically challenging environment. In our view, the past two years has validated the flexibility and strength of our business model. We also believe that the investments that we've made since the IPO have taken the business and our cash flow profile to a level where it is appropriate to pay a dividend. In the end, we have always believed the dealership model, especially at our current size and scale, should be a yielding asset for the investment community, and we are excited to now provide that for Alta's shareholders. As it relates to how we view the dividend relative to other uses of our capital and cash flows, our view is that paying a $7.5 million annual dividend should in no way signal a pullback from our M&A growth strategy, and we don't view the dividend versus M&A decision as binary. We can do both. We continue to view the M&A pipeline as the highest and best use of the majority of our cash flows, and we'll continue along those lines. Access to capital, modest leverage profile, and the method by which we finance acquisitions allows for the dry powder necessary to both continue on the M&A path for the foreseeable future without that strategy being impacted by the amount of the dividend. In addition to the dividend, the share repurchase program will provide us with an opportunistic mechanism to buy back shares when the market value of the stock is trading at a notable discount to intrinsic value and where that market value is attractive relative to other uses of our cash flow, mainly our M&A opportunities. We view the share repurchase program as both objectively and subjectively supportive of enhancing shareholder value. In total, we believe this to be a very balanced and pragmatic approach to capital allocation for both the company and for shareholders. For the last area of my prepared remarks, and as presented in slide 19, I'd like to discuss the increase we made to our 2022 adjusted EBITDA guidance. First, in terms of the guidance, we increased the range on both the high and the low end by $10 million, as we now expect 2022 adjusted EBITDA to be between $147 million to $152 million. A few observations and assumptions on the new guide. One, we closed YIT on July 29th and have thus And thus, we have incorporated our expectations for YAT over the last five months of the year into the new guidance range. Two, we are really pleased with our second quarter results, especially as it relates to new equipment sales as OEM deliveries and our ability to convert those deliveries into revenue exceeded our internal expectations. Third, we feel very confident that the strength we've seen thus far in the year in parts, service, and rental will continue in the second half of the year. We are also confident in the continued demand for equipment. Having said that, our bullishness on new equipment sales is still tempered by the variability associated with OEM supply chains. This variability worked in our favor in Q2, but could act as a modest governor on continuing year-over-year growth in equipment sales over the last six months of the year. As always, to the extent any of the underlying assumptions or macro factors related to the guidance change, we will update investors accordingly and we'll likely revisit guidance again when we report Q3. In closing, I want to congratulate my colleagues at Alta on a great quarter. These positive results would not be possible without your commitment to each other and to our customers. Thank you for your time and attention, and I'll turn it back over to the operator for Q&A.

Thank you. At this time, if you do have a question, that will be star 1 on your telephone. Again, star 1 to ask a question. If you would like to withdraw your question at any time, you may press star 1 again. We'll pause for just a moment. We'll hear first today from Alex Regal with B Reilly.

Thank you. Fantastic quarter, gentlemen, and thank you for the detail in your slide deck. It's fantastic. A couple questions here. You talked a little bit about the supply and demand imbalance up in your new equipment sales line item, but then talked a little bit about maybe some cautious comments about the second half as it relates to that as well. In your view, how do you think about the net positive or net negative from the global supply chain imbalance issues and how that's affecting your business? How long might that last?

You know, Kevin, or sorry, Alex, our view of the second quarter is that we didn't pull forward demand, that these were sales coming out of backlog for the most part. So it's almost as if the demand was existing and we recorded sales in Q2 2022 that frankly could have occurred had we had the supply earlier today. whether it be earlier in 2022 or even 2021. So number one is we don't feel like this is a pull forward of demand by any means. We think this is finally, at least in this quarter, again, with the caveat of variability, that in this quarter our supply matched that demand for the first time. So we continue. I guess our view hasn't changed significantly. in terms of the global issues or the issues really that are impacting primarily our major OEMs, Volvo, Hyster, Yale, JCB, in that the backlog is there for new equipment, and if we can get supply, we can deliver it and generate a really solid margin. So thematically, again, everything still is intact for the second half of the year. We believe if we can get supply that we'll be able to convert that into sales quickly.

And then secondly, you've always talked about the success of selling new equipment into your existing markets to then provide parts and services over time. Can you talk a little bit about your access to labor these days in such a tight labor market and labor inflation and how you're managing through that?

Alex, this is Ryan. I'll take that one. So one of the themes that we've had on every call is that labor tightness is not a new thing for our industry. So we don't feel it as starkly on the skilled trade side as we are experiencing it maybe in the rest of the business. Recruiting of trades is part of our lifeblood. So it remains a focus. We haven't fallen behind our recruiting efforts or kind of our budget for adding headcount. What I will say, though, in terms of the tightness, we're having a harder time with retention and with recruiting on more just general administrative type positions. So we are feeling that, and we've put a big focus on our culture and on retention, especially as it relates to onboarding and integrating new businesses through the M&A strategy.

And lastly, if I can get one more question in. Your M&A program over the last couple of years has been very successful, and you've done a really good job of keeping the purchase multiples at an accretive level. The economy has been pretty good for the last couple of years. Are you finding sellers push you harder these days? sale multiples here? Do you think there's a reason why you may have to start to pay up for acquisitions? And what does the broader pipeline of M&A look like right now?

I'll speak to the purchase multiples, Alex. And it's a good question. You know, some of the tailwinds that we're benefiting from, a lot of the target companies that we're looking at are benefiting from as well in terms of their earnings profiles. When it comes to the multiple, I would say that nothing really has changed. We are seeing that some of the more, I would say, asset light where you're looking for intellectual property in terms of design and build and more of that service offering, we're seeing multiples go up. And so to the extent that we want to add complementary services that to the more kind of traditional dealerships that we've seen multiples maybe elevate. But when it comes to the down the middle of the fairway dealership multiples or rental multiples that we've seen, there have been some deals that have gotten away from us and that's okay because we've got such a robust pipeline that we can maybe pass on deals that we think get too expensive. So we're really selective that way. But by and large, the tried and true ALTA pipeline, the multiples, I think, have stayed intact. I don't know, Ryan, if you want to talk about the pipeline in general.

The themes around the pipeline also remain intact. There's a demographic tailwind to our strategy where there are more family businesses in need of succession than there are buyers like Alta. So as Tony said, we're being very selective on where we go, but we see what we continue to call a robust pipeline for our industry.

Thank you very much.

Thanks, Alex.

And once again, for questions, that is Star 1 at this time. We'll hear next from Brian Fast with Raymond James.

Yeah, good afternoon. Just following on Alex's question there, just given the shifting macro backdrop, could you provide some comments just on the strength of the backlog, and have you done, I guess, stress testing on that strength?

Are you speaking to the backlog of our new equipment? Yeah. So, you know, it remains... It remains tight. So the backlogs, or lead times rather, remain at record levels for a lot of the categories of product. And we believe that demand has not been eroded, and it's a pretty level playing field across the competitive landscape. The other manufacturers are challenged with some of the same constraints of their materials. So we think that this is going to create an environment where the demand is there longer, but there's not really enough supply to take care of surge demand per se. We think we have healthy demand, and the receiving of the equipment will be variable, and I think there was evidence of that this past quarter. That could be lumpy, but in terms of our budget, how we look at the business in terms of the product support and hitting our numbers, we have visibility where we think that the trend is intact.

And Brian, maybe you mentioned kind of stress testing. The first thought that I had was, you know, Ryan and I have made it a point to say that we don't lose sleep over the next new equipment sale. Our business, you know, the vast majority of our cash flows are based on parts, service, and rental. When you have a big quarter like we just did with new equipment sales, though, you can have a quarter like we just did and kind of exceed expectations. But When we think about stress testing the backlog, I just keep coming back to the business model that the new equipment sales line can be volatile one way or the other, but the rest of the business, the product support and the rental is really what we focus on in terms of continuing to generate organic growth and be steady and less variable.

Okay, thanks. Yeah, that's a great color. And then just maybe some more details here. It looked like service revenue margins for material handling and construction trended in opposite directions. Is there anything to read into there?

No. We made special note in the queue to talk about we had part of the ERP cutover that we did for our New York businesses in 2021 caused a little bit of just variability in how we reported gross margin. Overall, the only thing that I would note is that we are seeing a higher level of warranty write-offs where previously an OEM would refund us, if you will, or reimburse us for warranty claims. And they're getting a little bit less lenient, I would say, on some warranty claims. So we have experienced some write-offs that way. The other thing to mention, Brian, is that the overall mix of our service revenue is continually higher, mixing higher toward the construction segment, which in pockets has a little bit of a different gross margin profile. So nothing other than those two items, nothing certainly significant to read into there.

Okay, that's it for me. Thanks for the call.

And once again, for any further questions, that is Star 1 at this time.

We'll hear next from Matt Somerville with DA Davidson.

Hey, good evening. A couple questions. First, just on YIT. How are you thinking about the go-forward organic growth profile of that business? Help me understand a little bit what are the major end markets outside of maybe e-commerce logistics being addressed by the company, and what makes their EBITDA profile structurally quite a bit higher than yours on the material handling side of the business?

I'll start off with the first part of that question. In my earlier comments, I referenced the unit deliveries for the industry. So what I'm referencing there is ITA figures, Industrial Truck Association. And entering the southeastern Canadian market, which is heavily concentrated around Toronto and Montreal, it's adding about 40% to our addressable market in terms of our exclusive territory with Yale specifically for Canada. So it's a 70,000-unit market. Part of what our organic opportunity is to take Yale to the national share in Ontario and Quebec, which it lags today. And then there's the opportunity to build out a portfolio of ancillary products where in our mature markets, The Yale-branded and Hyster-branded forklifts are the core of our strategy, but they may only represent three-quarters of our machine sales where we're doing a lot of allied equipment sales, both vehicles and also non-vehicular allied equipment. So we have basically now a playing field in Canada that's completely untapped for us where we can bring in Peak Logix and the material handling piece, Scott Tech and the software, the PicPro software. I highlighted an account in New York where we sold the full suite of products, everything from the forklifts to the warehousing product, and that's the type of offering we'll be able to now take to those Canadian customers. In terms of the end markets, it is a very dense warehousing and logistics market. It would look a lot like our Chicago business, just the density of warehousing around the Toronto, in particular, market. And then the other thing about Ontario is it looks an awful lot like our northern Midwest footprint with some auto manufacturing and other types of manufacturing. So really, in terms of end market coverage right in our wheelhouse – legacy accounts on the Yale side heavily in automotive, which is, you know, we'll hit the ground running in that regard as well. So very excited about it. We also think of it as kind of a geographic bridge across our territory on a map. Now we can drive across our territory from the headquarters to Buffalo. And then, Tony, I'll let you take the back half of that question.

Sure, Matt.

On the EBITDA profile, the cash flow, sorry, the revenue mix is going to be more heavily weighted to rental for YIT relative to the rest of our legacy material handling segment. And so you're going to have higher EBITDA margins just by virtue of the depreciation in rental. What we found through due diligence is that the Canadian market is a little bit more akin to rental versus just sales. So That's what you're seeing there. But to Ryan's point, we view this as absolutely a big, probably our biggest market that we operate in from a material handling perspective. It's important to note that we just have the Yale line for Hyster Yale there with this opportunity. But nonetheless, $47 million of revenue. We plan to absolutely grow that figure.

Got it.

And then as a follow-up, as I'm sure you've seen, everyone's seen it right, Amazon's slowing down their e-com and warehousing logistics-related infrastructure build-out. Have you seen any impact from that on your business? And can you talk specifically, because I think you've done it in the past, around how backlog and revenue metrics look like for that specific end market grouping for Alta?

Matt, this is Tony. I'll take that one. It's a good question, and I'll answer it, I guess. Our Peak Logics subsidiary, which, of course, is engaged in kind of the end market that you're referencing there with Amazon, our business has not been impacted on an anecdotal level from any sort of pullback in building new warehouses. The majority of our work comes from automating existing facilities. I think last quarter I made mention of the fact that still 80% of warehouses and manufacturing facilities in the US still don't have any form of automation. So our backlog in that business is still very much heavily weighted on existing facilities rather than new builds. And what we continue to hear from customers is that the automation is becoming not a nice to have but a need to have because of the dearth of labor to kind of come full circle to Alex's first question where the idea of not having labor on the line, if you will, at any manufacturing facility or distribution facility is posing a risk to revenue streams for some of our customers where they're saying we need the robot rather than the robot makes sense from an ROI perspective. Almost like it's becoming existential to their own businesses. So our backlog is more heavily weighted toward what I would call existing infrastructure versus new builds.

Got it. Maybe I'll just ask one more question. How are you guys thinking from here on your ability to further push rental pricing and further capture new and used equipment pricing relative to where you're at today?

So Matt, that's a balance.

We don't think about that in terms of opportunistically grabbing the next point of margin as much as we think about participating in the market and making sure that we're We're taking care of our customers, but we're also using our scale to go after new business. So it's kind of like a triage exercise. It's like do you take the deal or do you save the rental asset to take care of customers and drive utilization? And it's something that we're constantly looking at, and it's just asset class by asset class. We just try to optimize, and it's a continual process.

The other thing I would mention, Matt, just on new equipment sales, you know, we don't have much risk, if at all, in the backlog. You know, our customers are ordering through us to Volvo or Hyster Yale, and they've agreed to pricing. We take very little kind of pricing risk in the backlog, and so if there are price increases, you know, in the end, it becomes up to the customers to whether they want to accepted or not. And as Brian alluded to, it's a market. And all of the OEMs at this point have had some level of pricing increase over the last two years.

Got it. And then I'll just ask one more. What do you think made this quarter from an inbound equipment supply chain, you know, thinking about it that way, what do you think made this quarter so much better for you guys than what you've been experiencing from your OEMs being able to deliver to you? And we're obviously sitting here in August. I mean, is that continuing so far into Q3? Do you sense that maybe things have actually started to get better on one hand. But then on the other hand, you said you still have a record backlog. So maybe just kind of bring that full circle for me.

Yeah, you know, Matt, a better question for the OEMs. But, you know, what I would say is there was kind of this under-promise, over-deliver kind from a lot of the OEMs, and our OEMs have been able to kind of over-deliver in Q2. The other thing that I would say about the first half of the year typically is, which we were concerned about, is typically that is when we're taking inventory for the sales season. And, you know, kudos to our OEMs for being able to hit and in some cases actually exceed So, you know, I would say we are seeing Q2 as indicative of some sort of throughput through, you know, in terms of new equipment delivery, certainly better than what we've seen. But we would also say that we're not out of the woods either. We continue to see delivery dates move one way or the other. Again, lots of variability. And so, you know, I mentioned that at the end of my remarks that, you know, Q2, we were flowing, but that doesn't mean there may be an ebb somewhere in the back half of the year.

Got it. Thanks, guys. Thanks, Matt.

And with no other questions at this time, that will conclude today's conference. We do thank you all for your participation, and you may now