Good afternoon, and thank you for attending the Alta Equipment Group’s Second Quarter 2022 Earnings Conference Call. My name is Kelly, and I’ll be your moderator for today's call. I would now like to turn the conference over to Jason Dammeyer, Director of SEC Reporting and Technical Accounting with Alta Equipment Group. Please go ahead sir.

Thank you, Kelly, and good afternoon, everyone. And thank you for joining us today. A press release detailing Alta's second quarter 2022 financial results was issued this afternoon and is posted on our website along with the 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 the second quarter financial results. We will begin with some prepared remarks before we open the call for your questions. 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 opportunity, and general economic and business conditions. We have based these forward-looking statements loosely 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. Description 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 discuss our record second quarter financial highlights, the continuing momentum in our business, and favorable market conditions. And lastly, I will provide an update regarding the solid execution of our growth strategy, including our recent transaction with YIT in Canada, the M&A environment going forward, and our recent changes to our capital allocation policy. Tony Colucci will then provide a more in-depth review of our second quarter results. Beginning with the top line, we reported record total net revenues of $406.5 million, an increase of 38.9% or $113.8 million compared with $292.7 million in the second quarter of last year. The increase was driven by both organic and acquisition-related growth and the ongoing strong demand in our end-user markets, which I will address shortly. All our business segments delivered better results from the year-ago quarter. We are especially pleased that we reported positive net income for the quarter, and we are increasing our adjusted EBITDA expectations for the year, as Tony will discuss in his comments. Despite the concerns over a possible recession in the general economy, all our end-user markets remain solid. Our visibility through the end of the year is positive. While we monitor all the key industry indicators, which remain favorable, we believe the best measure is customer sentiment. Our team stays in close touch with our customers, and their feedback implies demand is healthy and broad-based throughout all our operating regions and business segments. Demand for both new and used equipment continues to be at high levels, and sales backlogs remain at record levels. Our organic physical rental fleet utilization and rates on rental equipment continue to improve, and the tightness of supply continues to boost inventory values across all asset classes. Further, the industry tailwinds remain with the passing of the Bipartisan Infrastructure Bill specifically driving further demand for construction machinery in 2023 and beyond. In our Material Handling segment, labor tightness and inflation are driving the adoption of more advanced and automated solutions while also influencing the market for industrial trucks to record levels. Let me now make a few remarks regarding the success of our multi-pronged growth strategy, which is clearly a large driver of our positive financial performance. M&A continues to be a key leg of our strategy. After quarter-end, we entered into a definitive agreement to acquire Yale Industrial Trucks Inc. a privately held Yale lift truck dealer with five locations in Southeastern Canada. This transaction was consistent with our strategy to increase the scale of our business and will establish a presence for Alta in an international market for the first time. Prior to our acquisition of YIT, Alta's market territory was annualizing for deliveries of over 50,000 industrial trucks; with the expansion into Ontario and Quebec, Alta's expanded territory accounts for annualized deliveries of over 70,000 units, an increase to our market coverage area of 40%. Our newly expanded territory has consistently represented approximately 20% of the North American market for industrial trucks, excluding Mexico. The Canadian market will also generate significant organic expansion opportunities as we look to build out our portfolio of complementary products and services, including integrated warehousing and logistics systems, dock and door services, and emerging technologies. Sales synergies and capturing customer wallet share through the breadth and diversity of our product portfolio is another major leg of our growth strategy. New and increasingly specialized and niche products at end-market diversification enhance opportunities for cross-selling equipment and product support services. We have a recent example of a new customer relationship in New York, where our entire suite of material handling products was deployed to deliver an end-to-end material handling solution, including several categories of stand-up and counterbalanced lift trucks, telematic solutions for fleet management, state-of-the-art lithium-ion batteries with charging infrastructure, and a full implementation of warehouse management and storage solutions. Lastly, our opportunity in the electric vehicle segment continues to gain momentum with ongoing product demonstrations, and we have identified several tangential service areas for growth, including consulting and integration of charging and refueling infrastructure. While the opportunity in this segment is nascent, we believe we are uniquely capable of helping our customers reduce the carbon footprint of their transportation and material handling activities. Furthermore, we believe that, from a regional and end-market perspective, we are positioned to serve the early adopters of truck electrification. As we have demonstrated, we remain focused on executing our growth strategy, including accretive M&A and improving operational excellence throughout our entire organization. To summarize, we are encouraged about our strong financial performance and believe our results demonstrate the success of our strategic growth initiatives. Tony will now provide more detail on our enhanced capital structure, but the key takeaway is our balance sheet is solid and will support further M&A activity, as well as our new capital allocation policy, which includes paying a regular quarterly dividend and a share repurchase program. I would like to thank all Alta team members for their contributions to a strong second quarter, and I would also like to extend a warm welcome to our new Canadian team members. I'll now turn the call over to Tony.

Thanks, Ryan. Good evening, everyone, and thank you for your interest in Alta Equipment Group and our second quarter 2022 financial results. I trust that you and your families are safe and healthy and enjoying summer, as we all are here at Alta. Before I begin, I want to welcome our new team members from YIT in Ontario and Quebec to the Alta family. The senior leadership team is committed to building upon the legacy that the YIT team in Canada has established, as we are excited to bring our full suite of product offerings and solutions in the material handling segment to you and your customers. We look forward to earning your trust. My remarks today will focus on four areas. First, I'll be presenting our second quarter results, which were strong across the board. Our business is performing well in the current climate, as we continue to experience high levels of demand for our products and services across our business landscape. Second, I'll provide an overview of the YIT acquisition from a financial perspective, which will include an update related to the amendment we recently made to our credit facilities. Third, I'll provide further perspective on the annual dividend and share repurchase program, which we announced last month. And lastly, I’ll provide commentary related to the increase we made to our 2022 adjusted EBITDA guidance. Before I get to my talking points, it should be noted that I will be referencing slides from our investor presentation throughout the call today. Investors will notice that we have revamped the format and updated our investor presentation from its previous iteration. The updated deck provides a refreshed view of our business and presents a few new metrics, which we believe will be helpful for investors. I'd encourage everyone on today's call to review our new presentation and our 10-Q, which is available on our Investor Relations website at altg.com. In line with slides 11 through 14 in the deck, for the quarter, the company recorded record revenue of $406.5 million, representing the first time in the company's history where quarterly revenue has exceeded the $400 million mark. Embedded in the $406.5 million of revenue is a 24.2% organic sales increase over Q2 2021, making for a sizable beat on a comparative basis. From a nominal dollar perspective, the vast majority of the quarter-over-quarter revenue beat related to $85 million in additional equipment sales, with $57 million of that figure coming through on an organic basis. This large increase on a comparative basis is a function of the supply and demand imbalance in the heavy equipment and material handling marketplace. As it relates to this quarter specifically, our OEMs were able to supply us with more equipment this quarter relative to the second quarter of 2021 in this high demand environment. Broadly, the supply chain continues to ebb and flow relative to new equipment deliveries, and in Q2, deliveries were flowing more than expected, which led to a conversion of the large sales backlog which we have been referencing for over a year now. I'll discuss this dynamic and its impact on our view for the remainder of the year later in my comments, surrounding our increased adjusted EBITDA guidance for 2022. Moving down the P&L, our product support business lines continued to realize strong organic growth in both segments, with that figure increasing an impressive 15.9% in the material handling segment and 9.6% in the construction segment year-over-year. Parts and service revenues were $110 million for the quarter, another new record for that metric and a testament to our skilled and growing technician base. Additionally, as it relates to our rental business, we realized double-digit organic growth of 10.2%. This performance was a result of two primary factors: first, a continually increasing rental rate environment, and second, an increase in the physical utilization of our fleet. On a pro forma basis, adjusted EBITDA was $41.4 million for the quarter, which is up 28.2% or $9.1 million from the second quarter of 2021. On a year-to-date basis, the company is up approximately $12 million in adjusted EBITDA versus last year or a 17% increase. On a trailing 12 basis, we've achieved $146.3 million of adjusted pro forma EBITDA, which converts into $99 million of economic EBIT for a conversion rate on EBITDA of 68%. As I've mentioned on previous calls, with some of the asset-light businesses we've added to our platform via M&A, we expected to drive this conversion metric higher in 2022, and these results are in line with that expectation. Lastly, on cash flows, the business is generating $69 million in annual leveraged free cash flow to common equity prior to growth CapEx. In our view, this metric is indicative of economic earnings associated with driving equity value for shareholders. For the quarter, the company was profitable on a GAAP net income basis as that number came in at $5.4 million. Notably, both segments were profitable and contributed to the overall profitability of the company. Referencing slides 15 and 16 of the deck and a quick update on the balance sheet and our credit profile as of quarter-end, we ended the quarter with $273 million in unspent availability on our revolving line of credit and total leverage came in at 3.5 times 2022 adjusted pro forma EBITDA. We have now gone multiple quarters where the business has been able to grow on both an organic and inorganic basis while holding liquidity and leverage in check. Now, for the second area of my talking points, I wanted to briefly touch on the recent acquisition of YIT in Canada and the related amendments that we made to our credit agreements. With YIT, we've added approximately $47 million of revenue and $9.4 million of EBITDA to the material handling segment for a total implied purchase price of $33.5 million, indicative of a 3.5 times EBITDA purchase multiple, which is immediately accretive to Alta shareholders. Since the IPO, we have now acquired approximately $42 million of EBITDA at an average multiple of approximately 4.4 times. As it relates to the recent amendment on the credit facilities, we exercised $80 million of $150 million accordion within our existing asset-based revolving line of credit agreement. This increases our borrowing capacity from $350 million to $430 million and also released some suppressed availability on the revolver, giving us full access to leverage borrowing base collateral in the future. Alongside the increase in the revolver, we also increased our borrowing capacity on our floor plan facility with JPMorgan by $10 million, from $50 million to $60 million. Our debt structure is more fully detailed on slide 16 of the investor presentation. For the next area of my talking points and referring to slide 17 of the deck, I would like to provide some additional background on our decision to start paying an annual dividend to shareholders and the relaunch of our share buyback program. Over the past 2.5 years, we have both executed on our growth strategy and demonstrated the ability to generate solid free cash flows even in historically challenging environments. In our view, the past two years have validated the flexibility and strength of our business model. We also believe that the investments we've made since the IPO have taken the business and our cash flow profile to a level where it is appropriate to pay a dividend. In the end, we have always believed the dealership model, especially at our current size and scale, should be a yielding asset for the investment community and we are excited to now provide that for Alta's shareholders. As it relates to how we view the dividend relative to other uses of our capital and cash flows, our view is that paying a $7.5 million annual dividend should in no way signal a pullback from our M&A growth strategy, and we don't view the dividend versus M&A decision as binary. We can do both. We continue to view the M&A pipeline as the highest and best use of the majority of our cash flows and will continue along those lines. Our growth, access to capital, modest leverage profile, and the method by which we finance acquisitions allow for the dry powder necessary to continue on the M&A path for the foreseeable future without that strategy being impacted by the amount of the dividend. In addition to the dividend, the share repurchase program will provide us with an opportunistic mechanism to buy back shares when the market value of the stock is trading at a notable discount to intrinsic value and where that market value is attractive relative to other uses of our cash flow, mainly our M&A opportunities. We view the share repurchase program as both objectively and subjectively supportive of enhancing shareholder value. In total, we believe this to be a very balanced and pragmatic approach to capital allocation for both the company and shareholders. For the last area of my prepared remarks, as presented on Slide 19, I’d like to discuss the increase we made to our 2022 adjusted EBITDA guidance. We increased the range on both the high and low-end by $10 million as we now expect 2022 adjusted EBITDA to be between $147 million to $152 million. A few observations and assumptions on the new guide: we closed YIT on July 29, and thus, we have incorporated our expectations for YIT over the last five months of the year into the new guidance range. We are really pleased with our second quarter results, especially regarding new equipment sales as OEM deliveries and our ability to convert those deliveries into revenue exceeded our internal expectations. We feel very confident that the strength we've seen thus far in parts, service, and rental will continue in the second half of the year. We are also confident in the continued demand for equipment. Having said that, our outlook on new equipment sales is still tempered by the variability associated with OEM supply chains. This variability worked in our favor in Q2, but could act as a modest governor on continuing year-over-year growth in equipment sales over the last six months of the year. As always, to the extent any of the underlying assumptions or macro factors related to the guidance change, we will update investors accordingly, and we will likely revisit guidance again when we report Q3. In closing, I want to congratulate my colleagues at Alta on a great quarter. These positive results would not be possible without your commitment to each other and to our customers. Thank you for your time and attention, and I'll turn it back over to the operator for Q&A.

Thank you. [Operator instructions] We'll hear first today from Alex Rygiel with B. Riley.

Thank you. Fantastic quarter, gentlemen, and thank you for the detail on your slide deck; it's fantastic. A couple of questions here. First, you talked a little about the supply and demand imbalance, helping your new equipment sales line item, but then talked a little bit about maybe some cautious comments about the second half as it relates to that as well. In your view, how do you think about the net positive or negative from the global supply chain imbalance issues and how that's affecting your business? And how long might that last?

Alex, our view of the second quarter is that we didn't pull forward demand. These were sales coming out of backlog for the most part. It's almost as if the demand was existing, and we recorded sales in Q2 2022 that frankly could have occurred had we had the supply earlier, whether it’d be earlier in 2022 or even 2021. Number one is we don't feel like this is a pull forward of demand by any means. We think this is finally, at least in this quarter, with the caveat of variability, that our supply matched that demand for the first time. We continue—our view hasn't changed in terms of the global issues impacting primarily our major OEMs, Volvo, Hyster, Yale, and JCB. The backlog is there for new equipment. If we can get supply, we can deliver it and generate a solid margin. Thematically, again, everything is still intact for the second half of the year. If we believe that we can get supply, we'll be able to convert that into sales quickly.

And then secondly, you've always talked about the success of selling new equipment into your existing markets to provide parts and services over time. Can you talk a little about your access to labor these days in such a tight labor market and labor inflation and how you're managing through that?

Alex, this is Ryan. I'll take that one. One of the themes that we've had on every call is that labor tightness is not a new situation for our industry. So we don't feel it as starkly on the skilled trade side as we are experiencing it maybe in the rest of the business. Recruiting trades is part of our lifeblood. It remains a focus. We haven't fallen behind our recruiting efforts or our budget for adding headcount. What I will say, though, regarding the tightness, we're having a harder time with retention and with recruiting on more general administrative type positions. So we are feeling that, and we've put a big focus on our culture and retention, especially related to onboarding and integrating new businesses through the M&A strategy.

And lastly, if I can get one more question in. Your M&A program over the last couple of years has been very successful, and you've done a really good job of keeping the purchase multiples at an accretive level. The economy has been pretty good for the last couple of years. Are you finding sellers pushing you harder these days on sale multiples? Do you think there's a reason you may have to start to pay out for acquisitions? And what does the broader pipeline of M&A look like right now?

I'll speak to the purchase multiples, Alex, and it's a good question. Some of the tailwinds that we're benefiting from, a lot of the target companies we're looking at are benefiting from as well in terms of their earnings profile. When it comes to the multiple, I would say that nothing has really changed. We are seeing that some of the more asset-light companies where you're looking for intellectual property in terms of design and build and more of that service offering, we're seeing multiples go up. To the extent that we want to add complementary services to more traditional dealerships, we’ve seen multiples maybe elevate. But when it comes to the dealership or rental multiples that we've seen, there have been some deals that have gotten away from us, and that’s okay because we have such a robust pipeline that we can maybe pass on deals that we think get too expensive. By and large, the trading through Alta pipeline's multiples, I think, that’s been intact. But I don't know, Ryan, if you want to say what the pipeline looks like now?

The themes around the pipeline also remain intact. There's a demographic tailwind to our strategy, where there are more family businesses in need of succession than there are buyers like Alta. So as Tony said, we're being very selective on where we go, but we see what we continue to call a robust pipeline for our industry.

Yes, good afternoon. Just following on Alex's question there. Given the shifting macro backdrop, could you provide some comments just on the strength of the backlog? And have you done, I guess, stress testing on that strength?

Are you speaking to the backlog of our new equipment?

Yes.

That item remains tight. Lead times remain at record levels for many categories of products. We believe that demand has not been eroded; it's a level playing field across the competitive landscape. Other manufacturers are challenged with the same constraints on their materials. We think this creates an environment where demand is there longer, but there's not enough supply to meet the surge demand. We believe we have healthy demand, and our receipt of the equipment will be variable; there was evidence of that this past quarter. But when we budget, we think that the trend is intact.

And Bryan, maybe you mentioned kind of stress testing was the first thought that I had. Ryan and I have made it a point to say that we don't lose sleep over the next new equipment sale. The vast majority of our cash flows are based on parts, service, and rental. When you have a big quarter like we just did with new equipment sales, you can exceed expectations. But when we think about stress testing the backlog, I keep coming back to the business model: that new equipment sales line can be volatile. The rest of the business, product support, and rental is what we focus on for continuing organic growth.

Okay. Thanks. Yes, that's great color. And then just maybe some more details here. It looked like service revenue margins for material handling and construction trended in opposite directions. Is there anything to read into there?

No. We noted in the Q that part of the ERP cutover we did for our New York businesses in 2021 caused some disvariability in how we reported gross margin. Overall, the only thing to note is that we are seeing a higher level of warranty write-offs, where previously, an OEM would refund us for warranty claims. They are getting less lenient on some warranty claims, so we have experienced some write-offs that way. Additionally, we are mixing our service revenue more towards the construction segment, which has a different gross margin profile. So, other than those two items, there's nothing significant to read into there.

Hey. Good evening. A couple of questions. First, just on YIT, how are you thinking about the go-forward organic growth profile of that business? Help me understand a little bit about what the major end markets outside of maybe e-commerce logistics being addressed by the company are, and what makes their EBITDA profile structurally quite a bit higher than yours on the material handling side of the business.

I'll start off with the first part of that question. In my earlier comments, I referenced the unit deliveries for the industry. The Industrial Truck Association figures show that entering the Southeastern Canadian market, which is heavily concentrated around Toronto and Montreal, is adding about 40% to our addressable market in terms of our exclusive territory with Yale specifically for Canada. So it's a 70,000 unit market. Part of our organic opportunity is to take Yale to the national share in Ontario and Quebec, which it lags today. There's also the opportunity to build out a portfolio of ancillary products. In mature markets, the Yale branded and Aster branded forklifts are at the core of our strategy but may only represent three-fourths of our machine sales. Now we have a completely untapped playing field in Canada to bring in PeakLogix and the material handling piece, ScottTech and the software, including PickPro software. I highlighted an account in New York where we sold the full suite of products from forklifts to warehousing products—this is the type of solid offering we'll now have for Canadian customers. In terms of end markets, there's a very dense warehousing and logistics market—similar to our business in Chicago. Ontario's market looks a lot like our Northern Midwest in terms of automotive and other manufacturing. We're very excited about it. We see it as a bridge across our territory now; we can drive across our territory from the headquarters to Buffalo.

On the EBITDA profile, the cash flow from YIT will be more heavily weighted to rental compared to our Legacy Material Handling segment. So you're going to see higher EBITDA margins just because of the depreciation in rental. During due diligence, we found that the Canadian market is more inclined toward rental versus just sales.

Got it. And then as a follow-up, as I'm sure you've seen, Amazon is slowing down their e-com and warehousing logistics-related infrastructure build-out. Have you seen any impact from that on your business? Can you talk specifically about how backlog and revenue metrics look for that specific end-market grouping for Alta?

It's a good question, and I'll answer it regarding our PeakLogix subsidiary, which, of course, is engaged in the end market you mentioned concerning Amazon. Our business has not been impacted from any anecdotal level regarding any pullback in building new warehouses. The majority of our work comes from automating existing facilities. Last quarter, I mentioned that still, 80% of warehouses and manufacturing facilities in the US still don't have any form of automation. Our backlog in that business is still heavily focused on existing facilities rather than new builds. We do hear that automation is becoming necessary due to a lack of labor on the line at new manufacturing or distribution facilities; this poses risks to revenue streams for our customers. So our backlog is more heavily weighted toward existing infrastructure versus new builds.

Got it. Maybe I'll just ask one more question. How are you guys thinking from here about your ability to further push rental pricing and capture new and used equipment pricing relative to where you're at today?

Matt, that's a balance. We don't think about that in terms of opportunistically grabbing the next point of margin as much as we think about participating in the market and ensuring we're taking care of our customers while also using our scale to pursue new business. It's kind of a triage exercise; do you take the deal or save the rental assets to take care of customers and drive utilization? We're constantly optimizing, and it's not just asset class by asset class; it's a continual process.

Additionally, on new equipment sales, we don't face much risk regarding backlog pricing. Our customers order through us and agree to pricing with Volvo, Hyster, Yale, etc. We take very little pricing risk in the backlog. Should there be price increases at the end, it will be up to the customers to accept them. All OEMs have seen some pricing increase over the last two years.

Got it. And then, I'll just ask one more. What do you think made this quarter from an inbound equipment supply chain feel so much better for you all than you've experienced from your OEMs being able to deliver to you? I mean, is that continuing so far into Q3? Do you sense that maybe things have actually started to get better on one hand, but on the other hand, you said you still have a record backlog. So maybe just bring that full circle for me?

It's a better question for the OEMs, but I would say there was kind of an under-promise and over-deliver from a lot of the OEMs; they were able to exceed their delivery schedules in Q2. What I think was typically concerning in the first half of the year is when we take inventory for sales season. Kudos to our OEM for being able to hit and, in some cases, exceed delivery schedules. Q2 is indicative of some sort of throughput concerning new equipment deliveries—certainly better than what we've seen. We also aren’t out of the woods; we still see delivery dates moving one way or the other, again, lots of variability. At the end of my remarks, I mentioned that Q2 was flowing, but Q3 may experience some ebb.

With no other questions at this time, that will conclude today's conference. We do thank you all for your participation, and you may now disconnect.