Good afternoon, and thank you for attending the Alta Equipment Group Fourth Quarter and Full Year 2024 Earnings Conference Call. My name is Joule [ph] and I'll be your moderator for today's call. I'll now turn the call over to the Jason Dammeyer, Director of SEC Reporting and Technical Accounting with Alta Equipment Group. Jason, you may proceed.

Thank you, Joule [ph]. 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 Greenawalt, 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 2. 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 Alta's 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'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, Alta 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, an oversupplied equipment market and the 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 work working capital. Entering the year, we faced a 2026 maturity wall on our ABL and high yield bond. 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,…

Thank you, Ryan. Good evening everyone and thank you for your interest in Alta Equipment Group and our fourth quarter and full year 2024 financial results. Before I start, I first want to thank all of my Alta teammates for their hard work and dedication to our business and our customers in what was a unique 2024. More importantly, thank you for your commitment to one another in concert with Alta's guiding principles. My remarks today will focus on four key areas. First, I'll briefly present our fourth quarter results. Second, I'll present and comment on our full year 2024 results, focusing on key themes and the factors that led to the year-on-year reduction in EBITDA. Third, I'll provide guidance for 2025 adjusted EBITDA and discuss the assumptions that underpin the annual guide. Lastly, I'll be reiterating our cash flow profile, specifically resetting for investors why our rent to sell business model allows us to cash flow throughout the cycle as the 2023 and 2024 comparative is indicative of that theme. Before I get to my talking points, it should be noted that I'll be referencing slides from our investor presentation throughout the call today. I'd encourage everyone on today's call to review our presentation in our 10K, which is available on our investor relations website@altg.com. With that said, for the first portion of my prepared remarks and as presented in slides 10 to 12 in the earnings deck, fourth quarter performance. For the quarter, the company recorded revenue of $498.1 million, underpinned by a notable $69 million sequential increase in equipment sales when compared to Q3, indicative of a return to the equipment markets by our customer base post-election. While this increase was a welcome relief from the first three quarters of the year, gross margins on equipment sales…

Thank you. [Operator Instructions] The first question is from the line of Matt Summerville with DA Davidson. Your line is now open.

Hi there. You've got Canyon Hayes on for Matt Summerville tonight. Thanks for taking our questions. You had already moved it to a different degree in the guidance. I just wanted to double click a little bit on the equipment sales volume. What's the sort of underlying assumption for price capture imbued in that guide? And kind of along that lines, what are the base assumptions within each of all those markets? Should we be, should we be assuming this guidance assumes that inflection in any degree or any help there as far as underlying growth rates would be helpful?

Yes, I think, Canyon, the way that we're thinking about it and to go kind of segment by segment. One is, it’s important for everybody on the call to understand kind of the impact that was 2024 and we'll start in the construction segment. Whereas Ryan noted, we had markets like Florida and upstate New York that were down 10% to 15% in a market like Illinois, down 20% just selling equipment. So it's important to understand kind of the impact to the downside that happened to appreciate kind of what the guide represents. So overall in the CE segment, we're not making any grandiose prognostications if you will, on the size of the market in 2025 versus 2024. We do think that given the supply overhang, sort of melting away here over the first half will allow us to be more competitive from a market share perspective. So even if the markets are off a little bit here in 2024, we're thinking flattish at least because we can potentially take some share back. In the material handling -- and then that's not at all to say anything about what I mentioned on margins. In the material handling side, again, modest low single sort of growth there where we know that we've got, a half a year or so of backlog. Some of that is at risk maybe in the back half, but we think that the back half is going to be stronger bookings wise than the first half, as [Indiscernible] mentioned. So, but modest low single digit sort of numbers there in material handling. On the master distribution side, again, we've kind of gone back to an average of the last two years. That's more of an asset light Master distribution agreement business, right. Where they're more of a broker in between sub dealers and OEMs. And the way that we're thinking about sales there, sort of the average of 2023 and 2024, which puts that number at a 20% sort of year-on-year increase. The nominal dollars aren't as big given the size of the segment. That's, that's the, that's what the guide is based on.

Great, thank you. And with balance sheet leverage at 4:7, how should we think about kind of immediate actions and prioritizations to bring that leverage lower and maybe what you're thinking about ending the year out on the leverage profile. Thanks.

Yes, sure. I think, we did a lot throughout the second half in terms of being mindful of the leverage and I think of leverage on a nominal dollar basis sometimes versus just the leverage ratio. If you look at Slide 6, sorry, 15 in our deck, a year ago we would have been sitting at mid-threes and now we're mid fours. And that gets to the rent to sell sort of model that I laid out for, for investors here, which means, that's all to say that the leverage ratio can be fleeting, but we worked hard to kind of take care of the nominal leverage. So to get the leverage ratio down, we'll continue to pour cash flows against, against the debt as they, as they come in and be mindful of the leverage. We have no grand intentions to grow the fleet, rent-to-sell or rent-to-rent this year. And so there should be some cash left over to pay down nominal debt. How EBITDA plays out. We've given you kind of our prognostication there and so we're hopeful that we can have some accretion on the leverage ratio. I would also point out for investors that we've provided a new slide on tangible asset coverage in slide 16. That is another way to think about the leverage profile of the business where we believe that the debt is covered by over $250 million on a fair market value basis.

Great, thanks for the detail.

Thanks, Canyon.

Thank you. The next question is from Steven Ramsey with Thompson Research Group. Your line is now open.

Hi, good evening. Wanted to start on the product support operating expenses moves. Maybe can you clarify how much you have already done in that area to make that those business lines more efficient? How much of a guide is based on what you've done versus what you plan to do in 2025?

Yes, Steven, I think, I think of it in two ways. The cost out of the 8 million that was more fixed cost, sort of administration expenses. So I would say that that's done. But on the, let's just say the first kind of wave, if you will, is done. The rest that's left in product support is sort of embedded in the guide and is started in earnest probably in Q4. And then we expect to realize some gains in 2025 related to technician productivity. And this is where things like training, rework, non-billable time and just being more efficient or productive with every hour and price realization that is all yet still out there I would say. And that's one of the bars that's in our bridge here in the slide deck. That would be bar number three parts and service efficiency. So that's a go get for us in 2025.

Okay, that's great. And then wanted to think about for construction customers purchasing equipment, how you think that unfolds in 2025. Do you think the key lever there is optimism around in market activity. Clearly that's somewhat tied to interest rates or do you think it's more about borrowing rates being more conducive to purchasing or, I'm sure it's a mix of both. But curious how you're assessing that backdrop.

Even. I'll weigh in. Maybe Ryan might have a thought here. I think so much of what we saw and observed in 2024 was what we believe to be kind of sentiment driven uncertainty related to the election and that's gone. And we saw the pop that we were kind of expecting in the fourth quarter relative to our customer base committing to capital assets. Now whether it continues in the face of additional uncertainty with what's going on tariff wise, etcetera, is creating a bit of a cloud. What I would say is what we're observing in our construction segment is sort of a tale of two customer bases. One is those that are DOT infrastructure based are, not as much tied to the cyclo or interest rates. Those projects are fully funded. We feel pretty bullish about that side of our construction business. Whereas on the private non res projects, that's where the pressure sort of continues.

All right, and then last one for me, I'm curious your take on the warehouse solutions business. Maybe the context of where it stands versus the prior peak and then what your outlook on this business is for 2025?

Good evening Steven. This is Ryan. I'll take this one. Relative to the prior peak, we think that we can get back there in the next probably 12 months just through, organic growth. We are excited about that business segment. We know that that market is forecast to nearly triple by the end of the decade. And we believe that it could be a powerful part of our platform. As, you know, our material handling customers embrace automation. So we're, we're committed to it. We think long-term we can really grow that business both on an organic and potentially an M&A basis. And, our near term goal is to kind of get back to that peak level from previous years.

Yes, Steve, just to maybe weigh into you, we're not going to, we won't give guidance on peak logic specifically, but we've got kind of a reinvigoration and a renewed kind of stance on that business, and we're in it for the long haul.

Thank you.

Thank you. The next question is from Ted Jackson with Northland Securities. Your line is now open.

Thanks. My questions have all been basically answered, but I was curious, Tony, and this could just be, something wrong with my model, but did you do any reclassifications of anything so restatements of anything in the from in historic periods just because things in my model aren't footing. And when I go back into. Like I...

Ted, we broke out rent-to-sell, rent-to-sell gain. I'm sorry, rent-to-sell CapEx and proceeds between investing and operating cash flows and we broke those out from rent-to-rent. So there's now two lines where there used to be one and that may be.

I saw that.

But my, like...

No, I know, but so. But it's nothing that would change like your historic net income on any given period. Because my fourth quarter fits and when I look at the first three quarters of it, it flips and then, but it doesn't. Okay. All right, well, that answers it for me. Thanks.

Thanks, Ted.

Thank you. There are no further questions. [Operator Instructions]

I think, operator That would conclude the analyst questions and We can conclude the call here. Thank you everybody for joining and we look forward to talking to you all after Q1.

Thank you. Good evening.

That concludes today's call. Thank you for your participation. You may now disconnect your lines.