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spk00: Hello, and welcome to the Custom Truck OneSource fourth quarter 2021 earnings conference call and webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Brian Perman, Vice President, Investor Relations. Please go ahead, sir.
spk01: Thank you and good afternoon. Before we begin, we would like to remind you that management's commentary and responses to questions on today's call may include forward-looking statements which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of the company's filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during the call in the press release issued today. The press release we issued this afternoon and the presentation for today's call are posted on the investor relations section of our website. We will be filing our 2021 10-K with the SEC next week. Today's discussion of our results of operations for Custom Truck OneSource Inc. or Custom Truck is presented on a historical basis as of or for the three months and the full year end of December 31st, 2021, and prior periods. While our reported results can only include Custom Truck OneSource LP for the period since the April 1st, 2021 merger date, we have presented and will be discussing today pro forma combined results as if NESCO and Custom Truck had operated together for all periods. We believe such combined information is useful to compare how the combined company has performed over time. Joining me today are Fred Ross, CEO, Brian Cmonigle, President and COO, and Brad Meter, CFO. I will now turn the call over to Fred.
spk06: Thanks, Brian. I'd like to welcome everyone to today's call. As we report on our first fiscal year operating as a combined company, it is clear that the combination of Nesco and Custom Truck has been successful. With the integration of the business largely complete, we can further focus on providing unparalleled service to our customers, growing our market share, and delivering value creation to our shareholders. I'd like to thank all of our employees, customers, suppliers who supported our business, particularly given some of the challenges our industry has faced for the last two years. Strong Q4 and full-year results highlight the incredible performance by our team. Looking at Q4 on a pro forma basis compared to the prior year quarter, adjusted EBITDA was up 15% despite slightly lower revenues. On a full year basis, adjusted EBITDA was up 13% when you fully adjust for the inventory and accounts receivable reserve charges that we noted during Q2 of 2021. Q4 revenue declined less than $1 million compared to the previous quarter and $49 million versus Q4 of 2020. This decline reflects the impact of continued supply chain issues, particularly on new equipment sales in the early part of the quarter. Our ERS business continues to perform very well, with utilization increasing to 83.7% for the quarter, up from 78.2% for Q4 of 2020 and 81.4% in Q3 of 2021. Our TES business continues to see very strong demand with backlog growing to a record of 412 million, up by 22% just since the end of Q3 and 169% since the end of 2020. Strong demand for both rental and new sales has provided us the opportunity to push price up an appropriate degree. Those price increases coupled with the fantastic job our team has done to control cost and find operating efficiencies has allowed us to expand margins across all key business segments. Finally, we continue to make good progress towards reducing our pro forma leverage, ending the year just below four times after fully adjusting for the previously mentioned reserve charges down from approximately 4.6 times at the time of the merger. Our strong 2020 run results reflect the benefits of our unique business model, on our focus on end markets that exhibit very strong underlining fundamentals. Scale and strong supply relationships allowed us to meet our customers' rental and sales demands during 2021 to the greatest extent possible to navigate various external challenges. Our outlook for 2022 reflects continued excellent diversity of demands across our end markets, which will be further extended as we begin to see the benefits of the infrastructure bill. hopefully in late 2022 or early 2023. While our outlook is tempered by the continued impact of supply chain issues and inflation, we are confident that we will continue to navigate these to the best extent possible. During 2022, we expect to see continued strong revenues, adjusted EBITDA, margin growth across our business segments. Overall, I could not be more excited about the continued favorable prospects for Custom Trucks. With that, I will turn it over to Ryan.
spk07: Thanks, Fred, and good afternoon, everyone. First, I want to echo Fred's comments regarding the continued tremendous efforts of our employees who achieved the integration of the businesses while delivering strong financial results last year. Overall, demand remains robust in each of our strategically selected four primary end markets, transmission and distribution, or T&D, telecom, rail, and infrastructure. We continue to focus on these markets because they provide strong, long-term growth opportunities well in excess of GDP and are far less cyclical than other truck-related end markets. This is reflected in the growing backlogs of the utility and telecom contractors, which represent a significant portion of our customer base. Passing of the infrastructure bill last year bolsters and extends the demand cycle and further strengthens our overall business fundamentals. Pricing trends across our end markets continue to outpace inflation, reflecting strong demand in the continued implementation of our tiered rental pricing strategy. From a key performance metrics perspective, in addition to our improved rental fleet utilization and growth in new sales backlog, on a sequential basis, we continue to drive margin expansion, as well as increase our OEC on rent. On-rent yield continues to improve, rising to 39.4% for the quarter, up from 37% at the time of the merger. The underlying fundamentals for our selected end markets continue to be incredibly strong today, with industry supply chain issues presenting the only significant limitation to our ability to meet customer demand. Over recent quarters, we have experienced intermittent issues receiving adequate supply of the major inputs for our trucks, namely chassis, attachments, and bodies. This certainly impacted our ability to deliver product to our customers and grow the rental fleet at our desired pace during Q4. We did experience some improvement in inventory levels late in the quarter, with whole good inventory growing by $28 million versus Q3. but still down $73 million compared to levels at the end of 2020. Given our scale and strong relationships with the chassis and attachment OEMs, we expect to receive more chassis and attachments in 2022 than we did last year. Based on current trends, we are hopeful that overall supply chain issues will continue to mitigate during the year and that we will see meaningful improvement during the back half of 2022. Inflation is impacting our industry. We are seeing wage inflation consistent with the rest of the market, particularly for service technicians, as well as higher costs for some of our production inputs. We have taken opportunities both to pass through certain input cost increases to our customers, as well as to implement reasonable price increases where possible. We continue to execute our objective of expanding margins across our revenue streams while being mindful of the overall inflationary environment that our customers are operating in, ensuring that we continue to take the long view in maintaining strong customer relationships. From an integration perspective, the combination of the two companies is largely complete, with most actions already taken. At this point, these initiatives have become part of how we run the company and allow us to deliver the profitability gains expected from the combination, as well as offset the ongoing inflationary pressures mentioned above. Focusing on M&A briefly, in January of this year, we announced that we acquired High Rail Leasing, a leading provider of rental equipment to the Canadian rail market. This acquisition fits well with our overall strategy to selectively expand into underserved areas in both the U.S. and Canada. We expect to use both strategic acquisitions and greenfield site expansion to facilitate our revenue and fleet growth and to increase our market share. Such a measured approach is expected to benefit all three of our business segments, ERS, TES, and APS. As we look ahead to 2022, we believe we are well-positioned to deliver strong revenue, gross margin, and adjusted EBITDA growth because of our favorable in-market tailwinds, robust customer demand, and solid execution by our teams. We are hopeful that as many of the supply chain challenges that we continue to experience subside during the year, we will be able to fully take advantage of multiple opportunities that we see. We know we wouldn't have delivered results like we did last year without the efforts of all of our employees who are working together to deliver unmatched customer service, and I'd like to extend a sincere thank you to them. I will now turn it over to Brad.
spk08: Thanks, Ryan, and good afternoon, everyone. As Fred and Ryan have indicated, Q4 was another strong quarter. While total revenue of $356 million was down 12% versus pro forma Q4 2020 as a result of supply chain-driven drop in new sales, full year revenue of $1.48 billion was up 9% versus pro forma 2020. Despite the year-over-year decrease in Q4 total revenue, adjusted EBITDA was $96 million, a 15% improvement versus pro forma Q4 2020, and up 13% versus last quarter. Performa adjusted EBITDA for 2021 was $323 million, which includes approximately 10 million of charges taken in Q2, which we discussed in our previous calls. Without these charges, Performa adjusted EBITDA for 2021 would have been $333 million versus $295 million in 2020, a 13% improvement. Our 2021 Performa adjusted EBITDA is above the midpoint of the guidance we previously provided. Reported net loss for the quarter was $3.7 million, an improvement of almost $17 million versus Q3. Performa gross profit, excluding rental depreciation, was $125 million, and adjusted gross margin for the quarter was 35.1%, up nicely compared to 34.4% for Q3. The sequential margin improvement was primarily driven by the continued focus on pricing across our revenue segments, and a slight change in revenue mix, with rentals accounting for 32% of revenue this quarter versus 31% for Q3. Pro forma gross profit, excluding rental depreciation, was $462 million for the full year, a 9% increase versus 2020. SG&A was $44 million for Q4, or 12.3% of revenues, which includes $4.6 million of share-based compensation expense. Turning to our segment results, Fred referenced our strong utilization within our ERS segment for the quarter, which was 83.7%, up from 78.2% for Q4 2020 and up from 81.4% for Q3 2021. Average OEC on rent was also up more than $48 million versus the previous quarter. On-rent yield was 39.4% for the quarter, up from 38% for Q3. Our OEC ended the year at $1.36 billion. Our team is doing an excellent job executing the pricing strategy we discussed during our Q3 call. There's still upside to be achieved upon contract renewals, as we've only turned about 50% of the fleet today. We have seen the pace of contract churn slow recently, and as a result, we believe it will take a quarter or two longer than originally expected to see the full effect in our operating performance. All these factors combined to push ERS rental revenue, excluding asset sales, up more than 4% sequentially. ERS gross profit, excluding depreciation, was $88 million, up slightly versus Q3. Overall, ERS continues to see the benefits of the strong underlying and market fundamentals that Ryan discussed. TES performance for the fourth quarter was strong, but continued to be impacted by ongoing supply chain issues. Revenues of $177 million were down from $190 million in Q3. While revenue is down, our sales activity continues to be extremely strong, with backlog growing by 22% sequentially to $412 million. Growth continues to be very broad-based across our product portfolio. While supply chain issues are resulting in a temporary impediment to our being able to fully take advantage of this strong demand, we believe that growth in the TES sales backlog primarily reflects growing demand for equipment, as well as strong market share gains in our strong pricing discipline. We have been successful in countering inflationary pressures through the implementation of production efficiency initiatives put in place during 2021, in addition to passing through any net cost increases to our customers. Based on our analysis of backlog, we believe margin improvement is still possible, even with the 5% to 7% underlying inflation. Overall, we are very happy with the performance of the TES business last quarter. Our APS business posted revenue of $34 million compared to $35 million in Q3. Gross margin, excluding rental depreciation, was 35%, a continued improvement from 28% in Q3. This improvement reflects the benefit of the actions we took earlier in 2021 to improve the APS cost structure. We continue to believe that APS presents an opportunity for us to capture a larger share of our customers' wallet and strengthen our position with customers and suppliers alike. While this quarter reflects continued progress in this regard, we are dedicated to providing the resources necessary to execute a strong, profitable business plan. In addition to strong full-year revenue and adjusted EBITDA growth, we continue to focus on maintaining a strong liquidity position and improving leverage, while at the same time investing in the rental fleet and pursuing selective growth through M&A. We decreased the borrowings on the ABL by $11 million in the quarter, with the outstanding balance ending at $394 million. At year end, we had $347 million available under the ABL with the ability to upsize the facility if needed. I should note, we did use the ABL to fund the purchase of high-rail leasing in January of this year, so the current balance is modestly higher than it was at year end. When using adjusted EBIT at $333 million, we finished FY21 with leverage just below four times, a reduction of 0.3 times from Q3. Approximately three times leverage remains an achievable goal of ours by the end of 22 or early 23, but we will also look to make incremental investments and prudent acquisitions if we believe they create long-term shareholder value. With respect to the outlook for 22, based on the continued market strength, our current backlog, expectations for supply chain, and our outlook for the rental fleet, we are providing the following guidance. We project total revenue to be between $1.57 billion and $1.75 billion, and adjusted EBITDA between $385 million and $410 million. Our adjusted EBITDA guidance indicates year-on-year growth of 14% to 23%. Recognizing the various margin profiles of our three segments, we are also providing segment-level revenue guidance for the first time to provide added transparency to our outlook. We expect ERS revenue of $610 million to $650 million PES revenue of $825 million to $950 million, and APS revenue of $130 million to $150 million. We aren't providing specific guidance around cash flow, but we do expect to be cash flow positive in 2022, excluding any incremental M&A, while still making steady investments in the rental fleet. We believe that our FY22 outlook reflects the overall strength of the market and continued tremendous efforts by our team to to drive margin expansion, but adequately reflects the supply chain challenges we foresee for at least the first half of the year. In closing, I want to echo Fred and Ryan's comments regarding the exceptional performance our team delivered this past year. They were asked to accomplish an incredible feat, execute a transformational integration, deliver double-digit adjusted EBITDA growth, expand margins in an inflationary environment not seen in over 40 years, and continue to deliver the highest level of customer service. Truly remarkable. With that, I'll turn it over to the operator to open the line for questions.
spk00: Thank you. And I'll be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions. Our first question today is coming from Justin Houck from Baird. Your line is now live.
spk04: Oh, great. Good afternoon, everyone. Thanks for the rundown here. I have a couple. Let me ask a couple here, and then I might jump back in. But I guess maybe the first question, just in TES, the backlog obviously was really strong. But, you know, you noted the revenue decline that was there. I'm just curious – Was the backlog increase a function? I mean, were the orders up strongly as well, or is it just that you weren't able to deliver some of that inventory, so the backlog's continuing to increase?
spk07: Orders were up as well, so it was a very strong quarter from an order perspective also. And then the supply chain is what's just constraining our ability to deliver right now in Q4. Okay.
spk04: And then I guess the next one, just thinking about the 22 guide and specifically the margins, I know this year you guys had sort of elevated repair and maintenance expense, mostly on the NESCO side. I just was curious if you could kind of define, you know, maybe how much of a margin lift that is in 2022, just to kind of think about, you know, an area of support that might be able to help those margins expand.
spk08: Yeah, I think it's something that we felt certainly through most of 22, but I'd say when you look at our Q4 margin, and if you really break it down kind of just on core rental, right, we're hitting 76%, 77% just on core rental. I think that is a good level now, and I think margin expansion is Will happen not so much from a decrease in R&M going into next year, because again, I think we stabilized that in Q4, but more as the pricing improvement continues to make its way through the revenue stream.
spk04: Okay, that's helpful. And I guess my last one here before I turn it over, just staying on the guidance, but how much revenue are you assuming from high rail in 2022, roughly? Okay.
spk08: In 22, I mean, the high-roll business is heavily on rental, so it's not going to have as much of an impact on the overall revenue stream. But it's, you know, $15 million-ish around there, I think, next year.
spk00: Okay. Thanks. I'll turn it over. Thank you. Next question is coming from Scott Schneeberger from Hoppenheimer. Your line is now live.
spk03: Thanks very much. Good afternoon. Could we just talk a little bit about what you're seeing in each of the end markets that you served? from a demand perspective and kind of comparing, contrasting demand and also where the supply chain issues are affecting you with regard to the end market a little bit more relative to the customer wants and needs. Thanks.
spk07: Sure. Yeah, I'll start, Scott. Good to talk to you. We're seeing really strong demand in all four of the end markets that we talk about, so T&D, Our vote, we're seeing demand continue to increase there. You see that in backlogs, some of the reported backlogs of some of the publicly traded utility contractors. So we're seeing good growth there. We're seeing strong demand on telecom. We're continuing to see that. We're seeing that continue to hold both on the contractor side and some of the telecom providers also. and then we are seeing rail grow. Obviously now with the addition of high rail, we're seeing some more opportunities to both rent and sell equipment on the railroad side. And then more broadly in infrastructure, we're seeing robust demand there too. So we're seeing really strong demand, and those are areas too where we feel like the infrastructure bill has not had any impact yet. We anticipate those will start to be projects where people will be coming for asking for equipment, um, really at the very end of this year are really heading into 2023. So, and then Scott, from a supply chain perspective, um, uh, we mentioned in our comments that, that we actually saw Holgan's inventory grow into the end of, um, into the end of the year, we are seeing it continue to build slightly, uh, so far in 2022. So that's, those are positives, but Scott, it's really just the match of, of the chassis and the attachment showing up at the right time at the same time for us to be able to build. So it's, um, uh, you know, we are seeing improvements for sure, but we think that will continue to continue to improve later this year. Uh,
spk03: Thanks, Ed. Just if we could talk, too, about your ability to price and how your interactions with customers are on that. Are they understanding in the environment? How are you approaching the cost or the price increases? And then it sounds like the portfolio is not turning as fast due to the supply chain constraints in and out, sure, but an ability to get a completed product to the customer. So that delays the pricing increase to cover inflation. You mentioned it should be stronger in the back half of the year. I'm just curious if you could delve in a little bit more on how that pricing is going. And you mentioned in your guidance you feel confident that you've covered inflationary pressures. Just if you could provide a little bit more support on how you're doing that. Thank you.
spk08: Yeah, Scott, this is Brad. And I think there's a lot of kind of questions embedded in there. And I'll start with the churn comment. I'm going to turn it over to Fred in terms of customer reaction in those conversations. But on the churn comment, yes, we've seen the contract churn start to slow a little bit. And what I'll attribute it to is the demand is so strong, supply is so tight, where a contractor historically, if he had a project gap of 60, 90 days, maybe even longer, he would turn a piece of equipment back in, take it back out when he needs it. They're holding those now just out of fear that they won't be able to get the equipment, which is real. Now, there is a benefit to that to the extent that we're not touching the equipment and incurring the R&M in holding utilization. So, if a unit comes back, it takes us 25 days roughly to turn a piece and get it back on rent, and then we incur the R&M expense without the revenue flowing through on that. So, Well, we're not seeing the price increase. There is some benefit to us by slowing the churn just because it does extend the duration and you're not getting that R&M cost. But we do think at some point all the contracts are going to have to turn, right? And that's where it will just take a little bit longer than we had anticipated getting next year. When you look at the growth on rate and look at our ROI, I think the majority of the price increases come through because it was kind of a low-hanging fruit, right? So if you compare Q2... To Q4, for ORY, we're up like 6.5%, 7%. We'd said before we were pushing high singles, low doubles. So we're over halfway there, but still more room to come. But I'll turn to Fred in terms of kind of market reaction to price increase on sales and backlog and everything.
spk06: So the market's accepting all of the price increases without any problem. Everybody's living in the same, you know, we're all living in the same world. They see everything every day, whether it's cars, trucks, fuel, it doesn't really seem to matter. as far as our customers are mostly happy to get the equipment because of our relationships, we believe we're getting far more equipment than our competitors are and our customers understand that, look, they're going to have to pay more money. We're not gigging anybody. We're just passing on the fair amount and we're not really getting any pushback. Matter of fact, I think they're just happy to get it. And so We don't believe that we'll have any trouble continuing to be able to expand the margin when it makes sense and pass on any of the increases and still continue to build our backlog. We know that we're able to pick up a lot of – we've been able to pick up more and more employees because our competition doesn't have the trucks or the equipment to build them, and we are getting them. Now, it's going to get even better as the weeks and months go by, hopefully to be normalized by the end of the year.
spk03: Thanks. I appreciate that, Fred. You actually covered what I was going to follow up with in that answer. I'm going to sneak one more in, if I may, and that would be on M&A appetite. So you did, you know, high rail. And you alluded, and I think it was in the prepared remarks or maybe in the release, that more to come is certainly a possibility. Can you just talk to what areas you would see potential M&A this year and size and what's embedded in that question is, you know, how much are you willing to move the leverage needle in the current environment if the right opportunity presents itself? Just curious how you weigh that factor. Thanks.
spk07: Sure, Scott. It's Ryan. I'll start and then I'll let Brad finish on leverage. But we'll still be opportunistic. So as we talked about, we think there's a couple places that make sense as we expand our footprint. and as we continue to grow the rental side of the business, too. So we'll still be opportunistic, but these are small transactions, you know, that I would say are a similar size to high rail from an overall dollar standpoint, and I don't think that it will increase leverage much, right, on the transactions that we're looking at.
spk08: Yeah, I mean, most of the opportunities that we're evaluating are we will be able to pick them up, I think, at attractive multiples, right? Where we are leverage-wise right now, it won't move the needle very much at all. All it would really do, I think, in our opinion, is slow the progression. I don't think it takes leverage up, again, based on the target list that we have at this point.
spk03: Got it. Thanks. Appreciate it, guys.
spk00: Thank you. Next question is coming from Noelle Diltz from Stiefel. Your line is now live. Hi, guys.
spk02: Congrats on the strong year. I was hoping that you could discuss just how you're thinking about CapEx for the year. I recognize that a lot of that is probably dependent on how the supply chain sort of eases, but could you just speak to how you're thinking about sort of the range of potential investments? Thanks.
spk08: Yeah, Noel, this is Brad. Thanks for joining us. From a CapEx standpoint, I think our view on 22 will be consistent with what we said our longer-term goal is, in that from a fleet growth standpoint, targeting that mid to upper single-digit number. So the fleet size today is about 1.4 billion. So growth CapEx, you would call it, again, $70 to $100 million. And then from a replacement standpoint, I think the net spend there is similar size. I think we're targeting fleet churn or turnover kind of in the mid-teens to keep in line with our five- to seven-year hold on most of the assets. But to your point, it is very heavily dependent upon supply chain and timing. And I think that you could see plus or minus a few points there, depending on when things come in. But I feel, I think we, as we're sitting here today, feel pretty comfortable. As we look at supply chain, I do think CapEx spend, not a whole lot different than we saw in 2021, is going to be back half weighted, just because we do think the supply chain is a bit disrupted here in the first half. And then as that improves, we'll look to ramp up the CapEx spend as we get into Q3, Q4, hopefully in the later stages of Q2. but at this point call it more back half-weighted.
spk02: Okay, great. And then, you know, utilization here, you've talked about theoretical max being in the mid-80s, getting to that point. Could you just maybe speak to how you're thinking about the sustainability of utilization into the early part of next year and how that trends, again, with potentially some supply chain easing? Thanks.
spk08: Yeah, I'll start and then I'll end it for Ryan for any additional comments. But we finished, you know, in Q4 we were kind of 83-84% for the quarter, which to your point is getting near what we believe to be a theoretical max. Given the demand where it is right now and really kind of the exceptional performance that our team is putting through in the field to keep the assets up and running and turned, Right. We're not seeing much of a pullback. Q4 for us this past year was the strongest Q4 utilization we, Ryan, Fred, myself have seen since we've been here. And Q1 didn't slow down either. You normally see a December dip. That really didn't happen. So we've started out of the gate pretty strong in Q1. We don't see much of a pullback happening and at this point aren't anticipating those traditional seasonal dips like we have in the past.
spk02: Okay.
spk00: Thanks very much. Thank you. Our next question today is coming from Stephanos Christ from CGS Securities. Your line is now live.
spk05: Hey, guys. Thanks for taking my questions.
spk08: Hey, Steph.
spk05: Can we talk a little bit more about high rail? You know, what about that acquisition was attractive to you? And maybe, you know, as you've been dealing with the acquisition, any unknown synergies or challenges you've run into? No.
spk07: Yeah, no, the acquisition's going well. I'd say what was interesting for us is really two things. One, we've been looking in eastern Canada, so we like the idea of having a footprint in eastern Canada, and we like the rail sector. So, you know, for us, those were the two reasons that I think it made a lot of sense. We're really impressed with the team up there and the relationships they have with their customers. And from an integration standpoint, I think it's going well. I think we feel good about the opportunity now to sell product into some of that customer base and then also to grow more broadly kind of the Canadian opportunity for custom truck more broadly. So we're feeling really good about things so far.
spk08: Yeah, from a synergy standpoint, it was a small deal and it was, You know, family held, they ran it pretty lean. So from a cost standpoint, not a lot of synergy opportunity. Where we see the upside, no different in some ways in combining Nesco and CTOS is the revenue portion, where they were really focused on a certain product category, somewhat limited in their ability to expand that from capital to and it needs to look at the customer base. It's some of the existing customer base we have, but their relationships, we've come to find out, are extremely deep, which we think will just represent more revenue upside with some of those customers.
spk05: Great. And then just touching on the guidance for 2022, I guess, can you talk about what kind of growth in the fleet you're expecting there? And if if supply chain issues were to persist throughout the end of the year, do you think you'll still be able to hit that guidance?
spk08: Yeah, I'd say from a fleet standpoint, the midpoint there assumes kind of that mid-single, low to mid-single digit growth fleet-wise. On the upper end, you're kind of getting to that 7% to 8%, 9% growth is what's assumed in there. If the supply chain issues stays where it is exactly today. You know, I think that it could be a bit challenging. We see a lot of opportunities still from pricing. As Ryan mentioned, we are seeing some green shoots from the supply side, so there is improvement. I think we have appropriately sized kind of the range, the even range. to reflect some downside, further downside risk on supply chain or limited improvement based on kind of what we're seeing right now. So, again, we could get surprised, but I think we feel very comfortable with the guidance ranges that we've put out there.
spk05: Perfect. Thanks, guys.
spk00: Thank you. As a reminder, that's star one to be placed into question Q. One moment, please, while we poll for further questions. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.
spk06: Well, that concludes our call today. Thanks, everyone, for the interest in Custom Truck. We look forward to speaking with you on the next quarterly earnings call. In the meantime, please don't hesitate to reach out with any questions. Thank you.
spk00: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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