Alta Equipment Group Inc.

Good afternoon, and thank you for attending the Alta Equipment Group's second quarter 2023 earnings conference call. My name is Matt, and I'll be your moderator for today's call. I will now turn the call over to Jason Demeyer, Director of SEC Reporting and Technical Accounting with Alta Equipment Group.

Thank you, Matt. Good afternoon, everyone, and thank you for joining us today. A press release detailing Alta's second quarter 2023 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 Greenewalt, our Chairman and CEO, and Tony Colucci, our Chief Financial Officer. For today's call, management will first provide a review of our second quarter 2023 financial results. We will begin with some prepared remarks before we open the call for your questions. Please proceed to slide two. 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. First, I will discuss our second quarter financial highlights and current business conditions and will then provide an update on our growth strategy and current M&A pipeline. But before I begin, I want to recognize our employees because without their hard work and dedication, our continued strong performance would not be possible. I will begin with a quick review of our second quarter financial highlights. Total revenue increased 15.2% to $468.4 million, a record for our business. The increase was attributable to construction revenue of $281.5 million and material handling revenue of $169.1 million. We also benefited from our newest segment, Master Distribution, which contributed $21.4 million in revenue. Our e-mobility business is gaining traction, generating $3.1 million in revenue for the quarter, which represents our first significant sales of Nicholas Tray Bev tractors, and we expect additional orders throughout the balance of this year. Lastly, we achieved organic revenue growth of 11.2% year to date, as well as the significant contributions from our acquisitions. As a result, adjusted EBITDA grew 20.5% to $49.9 million compared to a year ago. Before I discuss business conditions and forward trends, let me provide a few brief comments on our business model and segment trends. As a reminder, our model is versatile and resilient. and we are unique in the breadth of our product offerings, the scale of our addressable market, and the defensiveness of our market position. Our focus is on driving and sustaining long-term equipment field population and driving aftermarket support penetration to an increasingly diversified customer base. At the end of the second quarter, we had approximately 1,300 factory-trained and certified revenue-producing technicians. Trends in our material handling segment remain positive throughout all our major end user markets, including manufacturing, biotech, government, food and beverage, automotive manufacturing, and others. Our exclusive Hyster Yale territory, which now includes eastern Canada, covers the densest population region in North America and provides access to a diverse group of industries and end markets for our products. We continue to benefit from the sales synergies with the PeakLogix business, and have the capabilities in-house to solve our customers' most complex material handling needs. One important aspect of our strategy in the material handling segment is to bring our full suite of products and services from the most mature markets into our new regions. This includes integrating in-house capabilities such as industrial tire distribution, industrial battery distribution and maintenance, engineered products, and safety and operator training, to name a few. We also assemble a portfolio of allied and specialty equipment lines that are appropriate for the specific end markets within each region. Our construction equipment segment continues to benefit from both high non-residential demand as well as infrastructure and other federal and state governmental legislation in all our operating regions. In the Northeast specifically, we are seeing positive impacts due to onshoring projects like CHIP and EV-related battery and other facilities. Our Florida operations remain particularly strong, with phosphate mining as a significant business, and there we are heavily embedded with the largest producer in the state. Projects related to DOT spending and wetlands restoration are also strong markets for us and will continue for years to come. As a result, demand for our heavy Volvo earth moving equipment, both new and used, specifically articulated hauler trucks and excavators, is particularly high. Both of these equipment categories have seen double digit growth in unit volume in the Florida market year over year. We remain excited about growth opportunities for the EcoVerse business, which reports within our newly created master distribution segment. The recycling equipment market will continue to experience significant growth, driven by several factors, including increased focus on sustainable waste management practices, regulatory mandates, and resource scarcity. Advancements in recycling technology have significantly enhanced the efficiency and effectiveness of reclamation efforts. State of the art sorting and separation technologies facilitate the reclamation of a broader array of materials, intensifying the need for specialized recycling equipment. While still in its infancy, forecasts indicate this could be a multi-billion dollar industry in the future. Lastly, our e-mobility business is beginning to gain some traction as noted by the Nikola orders and revenue contribution during the second quarter. The Illinois based customer purchased a fleet of battery electric semi trucks and the network of chargers to support the fleet. The customer is a food producer and invested in the fleet to distribute to their customers using zero tailpipe emissions vehicles. We are already hearing enthusiastic demand for the hydrogen fuel cell powered Nikola semi which will be available late this year. Importantly, Our exclusive Nikola territory mirrors our footprint within the U.S., allowing us to market the product to Alta's existing customers throughout the country. We are excited about the prospect of putting our nearly 40 years of experience helping customers convert their fleets away from fossil fuels and internal combustion engines to work in the vast market for heavy-duty and long-haul commercial vehicles. Now let me provide a few brief comments on current and forward-looking business conditions. One of the most important indicators is feedback from customers, and their sentiment is strong for the balance of this year and into next year. We're also pleased that supply chain constraints have eased, allowing inventory levels to return to more normalized levels, resulting in higher new and used equipment sales, which will yield high margin parts and service business over time. Federal initiatives will also extend the cycle with approximately a trillion dollars estimated over the next decade. Many state DOT budgets where we operate are forecasting significant increases in fiscal year 2024. For example, Florida recently released its fiscal 2024 Moving Forward project to address more than 20 congestion-related infrastructure projects across the state, with total spending of over $7 billion over the next four years. In terms of our growth strategy, the pipeline remains strong for accretive acquisitions. We have added $446 million in total revenue and $53.3 million in adjusted EBITDA since we went public in 2020. We have expanded our dealership network as well as entering into new end user markets and will continue to follow this strategic path. We have a unique platform to grow and consolidate in adjacent markets with significant barriers to entry and long-term growth prospects. We have a disciplined approach to M&A and fertile prospecting conditions And we have a proven and repeatable execution and integration process led by a seasoned team of industry veterans. And as we have demonstrated, we are executing these transactions with attractive multiples. Lastly, I'd like to again touch on Alta's corporate culture. As a company, we strive every day to foster a culture of empowerment, accountability, and opportunity. And we rally around the shared purpose, delivering trust that makes a difference. I want to again thank our employees for delivering trust to our customers, our business partners, and to our valued shareholders. Our shared purpose is the foundation of our commitment to these key areas. Our commitment to environmental sustainability, including a focused strategy to drive customer adoption and commercial viability of various electromobility solutions, the safety of our employees and technicians, and the dedicated and inclusive culture that we continue to develop with each day. In closing, I'd like to thank the Alta team for all your hard work in delivering another solid quarter. I'll now turn the call over to Tony, our CFO.