Alta Equipment Group Inc.

Good afternoon, and thank you for attending the Alta Equipment Group fourth quarter and full year 2024 earnings conference call. My name is Joel, and I will be your moderator for today's call. I'll now turn the call over to Jason Demeyer, Director of SEC Reporting and Technical Accounting with Alta Equipment Group. Jason, you may proceed.

Thank you, Joel. Good afternoon, everyone, and thank you for joining us today. A press release detailing Alta's fourth quarter and full year 2024 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 fourth quarter and full year 2024 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.altiequipment.com. I will now turn the call over to Ryan.

Thank you, Jason. Good afternoon, everyone, and thank you for joining us today. I'd like to start by expressing my gratitude to our employees, customers, and shareholders for their continued trust and confidence. Despite a complex macroeconomic environment in 2024, Alt Equipment Group remains steadfast in executing our strategy, reinforcing our position as a leader in the heavy and industrial equipment sector. I'll begin today with a high-level overview of our fourth quarter and full year results before sharing insights on the current business environment and our strategic outlook for 2025. Following my remarks, our CFO, Tony Colucci, will walk through the financial details, including our cash flow performance and outlook for the year ahead. 2024 was a year of resilience and disciplined execution amid challenging market conditions. The impact of higher interest rates and oversupplied equipment market and election year uncertainty weighed on market demand across key end markets. Despite these headwinds, our diversified business model helped us to navigate market volatility and maintain revenue levels comparable to last year. For the full year, total revenue held steady at approximately 1.9 billion, underscoring the resilience of our dealership model and the enduring strength of our product support business. In the fourth quarter, revenue declined 4.5% year-over-year to $498.1 million, reflecting broader market trends. However, sequential growth over Q3 suggests a post-election rebound. Adjusted EBITDA for the year reached $168.3 million, a testament to our disciplined cost management and proactive strategies in optimizing our rental fleet and working capital. Entering the year, we faced a 2026 maturity wall on our ABL and high yield bonds. In June, we proactively addressed this by successfully raising $500 million in senior second lien bonds, refinancing our senior debt, and extending maturities to 2029. This strategic move strengthened our balance sheet, enhanced liquidity, and secured patient capital to support the business through the cycle, ensuring financial flexibility as we navigate the current market environment. I'll now talk about our business segments, starting with construction equipment. The construction equipment sector faced a challenging year, impacted by industry-wide oversupply, tightening credit conditions, and a slowdown in private non-residential construction activity. While infrastructure projects provided some stability, overall demand remained subdued. However, market dynamics varied significantly by region. The northern markets, particularly the Great Lakes area, saw steeper industry sales declines with double-digit contractions year-over-year. In contrast, Florida experienced a downturn, but fared better than the national average, highlighting the localized nature of the CE market and the diverse demand drivers across the geographies. In 2024, new and used equipment sales in our CE segment saw a 10.2% decline organically, a reduction of over $60 million, reflecting these macroeconomic challenges. However, organic product support revenues increased 3.7% year-over-year, driven by stronger service rate utilization. The backlog of federal infrastructure spending under the IIJA program remains a long-term catalyst with significant funds still to be deployed. Additionally, state DOT budgets in key ALTA regions, including Florida, the Northeast, and the Midwest remain elevated, reinforcing demand for heavy equipment rentals and service. Our master distribution felt a similar headwind in 2024 as supply demand imbalances and broader economic uncertainty weighed on sales. That said, we see momentum building. Channel partners are reporting stronger utilization and increased sales of environmental and specialty machines, setting the stage for growth in 2025. As the market adjusts to an equipment oversupply, we are confident that supply demand imbalance will normalize by mid-year 2025, creating a healthier environment for new equipment sales. Additionally, our rent-to-sell strategy continues to be a critical tool in optimizing fleet utilization and balance sheet efficiency. Now turning to the material handling segment. The material handling segment also faced headwinds primarily due to the moderation of backlog-driven growth. The North American lift truck market experienced a decline in new order bookings as the industry worked through record backlogs accumulated in prior years. As a result, while deliveries were strong, net new orders slowed, impacting future sales velocity. Alta's material handling revenue remained stable at $687.4 million for the year, a 0.9% increase from 2023, supported by sustained product support growth and stable equipment margins. However, pricing pressure, particularly in the used equipment market, presented challenges. Our warehouse solutions business also saw softness, reflecting cautious capital spending from large logistics and distributions customers. Despite these challenges, the long-term outlook for material handling remains strong. The continued growth of e-commerce, increased adoption of automation, and the transition to Class III electric equipment create opportunities for Alta. Our investment in warehouse automation, fleet electrification, and enhanced service offerings position us to capitalize on these trends in the market. Now turning to the electric vehicle segment. I want to provide an update on the current status of our e-mobility business. While recent industry developments have led to questions about the broader adoption of battery electric vehicles and fuel cell electric vehicles, we continue to see steady momentum in key markets. For example, major transportation hubs are making long-term commitments to hydrogen-powered fleets, reinforcing hydrogen's viability for high-utilization applications. That said, challenges remain, particularly around charging and fueling infrastructure, cost competitiveness, and supply chain constraints. As we evaluate opportunities in this space, our focus remains on ensuring we align with technologies that provide real-world value to our customers while maintaining a disciplined approach to investing in emerging solutions. And now to 2025 operational initiatives. As we enter 2025, we remain focused on three key priorities. First, operational efficiency. enhancing profitability through cost optimization, streamlining SG&A, and improving fleet utilization. Second, disciplined capital allocation. We successfully reduced net debt by over $60 million in the second half of 2024 through rental fleet rightsizing and working capital optimization. Our $20 million share repurchase program remains active, and we will deploy capital opportunistically based on market conditions. And third, strategic growth in M&A. Similar to 2024, we are taking a more opportunistic stance to acquisitions in 2025, prioritizing high margin, reoccurring the business lines with a focus on expanding our geographic footprint of exclusive distribution rights for world-class products. In closing, despite market challenges, Alta remains well positioned for long-term success. Our differentiated business model, disciplined execution, and customer-centric approach provide a solid foundation for growth. The fundamentals of our industry remain intact, and we are confident that our strategic priorities will enable us to navigate short-term uncertainties while driving long-term shareholder value. Now I'll turn it over to Tony for a detailed analysis of our financial and operating performance.