Alta Equipment Group Inc.

Good afternoon, and thank you for attending the Alta Equipment Group fourth quarter and full year 2023 earnings conference call. My name is Matt, and I'll be your moderator for today's call. I would now like to turn the call over to Jason Danmeyer, 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 fourth quarter and full year 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 Greenewald, our chairman and CEO, and Tony Kalushi, our chief financial officer. For today's call, management will first provide a review of our fourth quarter and full year 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 risk 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 begin with a quick overview of our fourth quarter and full year 2023 results, then provide a current assessment regarding the business conditions and our end-user markets, followed by an update on our growth strategy. After I conclude, Tony will provide a detailed analysis regarding our financial and operating performance. I am pleased to report we achieved record results in 2023. Our performance would not have been possible without the complete dedication and solid execution by the Alta team. I sincerely thank you. The momentum in our business clearly continued during the fourth quarter as we capitalized on the broad-based strength in our end-user markets. Total revenues grew 21.7% over the year-ago quarter to a quarterly record of $521.5 million for the fourth quarter and increased 19.4% to $1.9 billion for the year. Revenues for our construction segment increased 22% to $328.1 million in the fourth quarter and 12.9% to $1.1 billion for the year. Material handling revenue increased 16% to $179 million for the quarter and 19.4% to $681.5 million for the year. New and used equipment sales grew 25.5% from $817.2 million in 2022 to just over $1 billion this year. This is an annual record, and as we celebrate this milestone, we should also highlight the versatility and resilience of our business model, which generated over $519.6 million in high-margin parts and service revenue across the business segment in 2023, an increase of 17.7% year over year. ALTA is 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. Providing our customers with best-in-class support to keep their fleets highly utilized with as little downtime as possible remains the central focus of our operations. At the end of the year, we had over 1,300 factory-trained and certified revenue-producing technicians. Today's investor presentation includes on slide 10 an overview of some of the attractive features of ALTA's equipment dealership business model, including protected exclusive areas of primary responsibilities, or APRs, exclusive rights to OEM replacement parts, proprietary diagnostic software to service the field population, warranty repair work that must be performed by authorized dealers, factory training to assure expert product support capabilities, and annuitized product support revenue streams with pricing power given exclusivity for replacement parts and scarcity of skilled labor. Another important differentiator of a dealer-integrated rental business is our ability to utilize our widespread and professional sales team to get the most return on retailing used rental equipment to customers rather than simply offloading to an auction house. This allows us to keep the valuable aftermarket returns from our parts and service expertise within our APRs. Not to downgrade our rental capabilities, but I want to reiterate that our business's core competency lies in our operational excellence as a top-performing dealer, providing full-scope equipment solutions to our customers through professional sales and service capabilities. I'll now talk about current business. Our outlook for 2024 is positive as there are multiple opportunities for continued growth in our business segments and expansive end user markets. Most importantly, the positive sentiment from our customers is continuing into this year. Visibility is encouraging for our construction and material handling segments as supply chains have normalized and we have strong equipment orders already on the books for the year. As a result, demand for our product support services will grow as well. Industry related data also supports our view for this year. Total U.S. construction contracts increased significantly year over year in January. Non-residential construction starts are forecast to increase from $441 billion last year to $458 billion in 2024. Federal infrastructure spending is also expected to accelerate as many of these major projects have yet to break ground and contract awards are strong in both the Northeast and Florida where we operate. Additionally, state DOT 2024 fiscal year budgets are more than 10% higher than last year. The onshoring trend in manufacturing continues in much of our northern territory. And general contractors and subcontractors are extremely busy with full backlogs with lack of manpower remaining an ongoing challenge. In the material handling segment where we enjoy arguably the most diverse and market exposure of any industry, We are focused on the themes of labor and energy efficiency as the market settles in at what were record levels pre-COVID. We are continuing to make progress on expanding our market share in the warehouse market, along with Hyster Yale and our allied product lines. Additional sales in this market segment increase our opportunity to sell advanced technology solutions, leading to more complex and profitable customer relationships for both dealer and OEM. Our diversified growth strategy continues to prove very successful as proven by our financial and operating growth over the last three years. We have demonstrated our ability to significantly expand our business organically through acquisitions and entering new end user markets. During 2023, we achieved organic growth of 12.3% by increasing our market share, expanding our product portfolio, and entering new territories. We will continue to expand our geographic footprint and product portfolio in our existing business segments by leveraging our existing OEM relationships and developing partnerships with new manufacturers. Our three acquisitions last year are representative of our strategy. In previous quarters, we discussed our acquisition of M&G Material Handling, expanding our lift truck market coverage in New England. In October, we acquired Burris Equipment Company, a premier supplier of compact construction and turf equipment with three locations in Illinois. This acquisition gives us further coverage and market penetration in the Metro Chicago market and further growth opportunities in the highly fragmented compact segment of the construction equipment market. In November, we acquired Alt Industries, a privately held Canadian equipment distributor with locations in Ontario and Quebec. This was Alt's first investment in Canada for our construction equipment segment. Alt has built a high-performing equipment dealership in the aggregate and mining space, a growing end market in that region. Also in November, we established a new OEM relationship with Case Power and Equipment, which allowed also to enter the central and western Pennsylvania markets, initially serving Pittsburgh and surrounding areas, with plans to further expand into central Pennsylvania in 2024. Serving general construction, infrastructure, and residential and non-residential construction contractors, both locations will sell and service the full lineup of Case heavy, compact, and subcompact equipment and attachments. The 16 acquisitions we completed since going public in 2020 are major contributors to our success, providing $537 million in revenue and $65 million in adjusted EBITDA. We are continuing to pursue accretive acquisitions and opportunities which would further expand the scale and scope of product offerings for our customers. We also remain committed to our e-mobility strategy to leverage the emerging alternative energy-related opportunities in the commercial trucking segment. In addition to our current initiatives with Class 8 tractors, we're also evaluating additional segments including both heavy-duty Class 6 and 7 and light-duty Class 3 through 5 EVs. Our approach aligns with our current field population strategy and includes sales, parts, and service, and turnkey charging infrastructure solutions. In closing, 2023 was an outstanding year for our business, and we are focused on continued growth, profitability, and balanced capital allocation. Lastly, 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 their dedication and delivering trust to our customers, our business partners, and to our valued shareholders. Our shared purpose is at the foundation of our corporate culture, which is ultimately what makes Alta the premier equipment dealership platform we are today. I'll now turn it over to Tony to discuss our financial performance in more detail.