Herc (HRI) 20 Oct 222022 Q3 Earnings call transcript

[Starts Abruptly] website at IR.HercRentals.com. Today we’re reviewing our third quarter results with comments on operations and our financials, including our view of the industry and our strategic outlook. The prepared remarks will be followed by an open Q&A.

Now, let’s move on to your Safe Harbor and GAAP reconciliation on Slide 3. Today's call will include forward-looking statements. on involve as risks based today, see are therefore and and statements the we environment it These uncertainties. call. statements I actual would on forward-looking results our this made could differ caution materially from you that our

our You should also year-ended on to the the Form for XX, Annual section XX-K Risk the December Report Factors refer of XXXX.

for to we is non-GAAP Reconciliations discussing we believe non-GAAP will useful operating the evaluating these information be results company's the conference on presented the equivalent financial addition call to be In a materials. basis, the in closest GAAP measures can in that performance. GAAP found

morning. Finally, through this the call instructions of a our on be this website. Replay replay our accessed or webcast in were via dial-in included can release earnings

any the President Senior call. President I'll morning, Larry Mark and Irion, We call of not and Officer; Senior permission Chief recording Larry. Vice the Chief do President over we by Birnbaum, Operating not this Officer. This of or Vice and given sanction transcribing Executive now and and Silber, approve Financial Chief to for other Officer; I’m turn joined any call have Aaron

and Leslie, you, morning, everyone. Thank good

relationship you. be the want to initiatives. who years, corporate Before elected call, nearly IR ESG not our at and our today, a over contributions started will and shepherding managing I but recognize many Elizabeth Elizabeth participating. in her our for to directly next executing everyone continue for commitment to year. Elizabeth, of I retire function behalf listening further and with sustainability building Elizabeth take our our want to strategy be we Herc, years today's thank to with as of to success get minute will after will all including her mentioned has developing was to seven On Herc Until then,

the analyst past focus, a to team. pleasure will she working and our in be her investor I've to I welcome great Elizabeth of community. As and with I'd the had Leslie know narrows like partner Leslie to the

and ahead expanding quarter X. go reflects our across to and operating of contributions as proud number of from network. let's started incredibly growth well growth strong I'm strong all report as organic branch get our Slide that performance. on regions, our pleased Now, financial I'm another

revenue, all Third quarter and for quarterly company. total EBITDA revenue, rental adjusted were the time highs

seven an to store focus addition, XX quarter growth we managing locations. locations, adding third to date the brings unwavering same to year locations, and existing more In XX of companies XX from the rapid companies on completed total the new our in acquisition which

You'll recall the our urban acquisition in revenues, million of strategy quarter, locations we in of and targeted $XXX the annual Through fill scale, a and acquisition strategy pipeline solid by our and $XXX have leverage and the fleet to end support third around helped our have in spent drive of operating million increasing markets. target. balance

strategy as equipment opened companies greenfields targeted the total leading to locations growth The our markets market our sustain to continue America. at we position year-to-date quarter, the we will of high the brings and which Additionally, of combination expand winning greenfield XX. third M&A solidify as seven in drive growth to one rental to share North and in

X.XX XXXX to of which XX% a billion, EBITDA based in results on our results. the guidance to you rest for our outlook adjusted and increase billion over As the we release, our for X.XX year, to saw press third quarter our XXXX trend XX% updated implies

in allocation X.X about stock our quarter, capital average will range net share. for excess When guidance an common we of third in comes million share it of of our also minutes. more fleet tightened repurchased price our spending. a in on capital at outlook We Mark few $XXX to shares per the

our enhance implies to believe return we Xx imbalance prospects, to to a our growth price advantage of worth. valuation maintaining take long-term to discounted continue targeted a range levels this leverage. and performance to stock net our Xx real intend of [ph] shareholders price to operating] [our within We debt while Given longer-term,

the financial Now, five our let's the highlights. move Slide to number on results X quarter third shows years. over last

Our we the and Total by continued lower our over grew results rental acquisitions. in in by with the third basis operating an of year we XX% adjusted margin performance up revenues of the impacted that driven the to share of margin by from growth specialty business, we prior points strategy. issues the sales driven executing used EBITDA from year, as high core growing demonstrate Adjusted rental chain higher prior related robust gear to tight contribution in A original made market equipment XXXX, decision EBITDA XXX supply experience to focus the businesses quarter increased of our business grew demand somewhat and growth from continue to on equipment. manufacturers. XX.X% sustained leverage. momentum the continue over third focus XX% on quarter to and XX% meet supply Equipment as equipment shift customer new rental our revenue

customers. ground in and the weeks. more the country, team several than never new to an of from had committed customer Herc stepping members are acquired to we especially performance the the our rental time expanding wake to our and on excellent a including We providing broad was our of pleased to for That and even up array colleagues, tenacity impacted Team success. the This over customers people. solutions Florida-based Hurricane greater with and We Ian past service support their across achieve branches communities, exciting industries and and is teams of evident are our the the

be and under circumstances reflection needed to equipment planning, difficult to get where operational collaboration, Our people and tirelessly essential of have The to execution, provide true services. a worked and it's excellence. responsiveness,

team our effectively optimal every industry, safely, work getting it's years not achieve equipment be X,XXX members efficiently, of but to With the are and and our surprising. ensure people day. I Our done in performance couldn't it prouder, XX hard history rental customers

build X. to turn brighter a please is to and built Now, and our on we future. promise do our Slide communities customers our commitment help Everything

of the across locations provinces. Canada As States third Canadian in X of the we XX operated and quarter, XXX the states United and end

to As we locations training and our third us It's integration their Herc our of culture. focus on we employees we who ensuring to Herc intend size acquired through our quarter businesses. in the and members like to Rentals, to mega great Every have to welcome North members other joined programs you on committed to American in personally are safety estimated team in are that fair and add is be new assist all billion new and new growing to Rental Association. to [new our I'd according board. [ph] North commercial projects of and American get the about other America. market XX% activity. to infrastructure] day share $XX addressable this throughout We XXXX The by announced industrial

We opportunities operational we by addressing greenfield supplemented grow continue Aaron expect overall organically and operations. industry progress. acquisitions to And our you by market in now and as momentum the select Birnbaum the on our update outperforming the will

Thanks, Larry, good everyone. and morning,

our and position Herc’s entire network of quarter dedication long-term and growth reflects our the expansion, making fleet by growth successful a trends These performance and of penetration improved industry Moreover, further for our are branch strategic initiatives benefit growth. of team us diversity in into secular the variety strong third the commitment difference equipment driven trajectory. scale a the of verticals. sustainable the in Herc clear Our

X. Now turn please Slide number to

with last comparable third OEC Our by prior the we year's fleet accelerating XX% quarter up the compared opportunity fleet period. with quarter over revenue results the rental average reflect see in quarter. investment XX%, year in increased Equipment

through leaders Rate on growth recovery new leveraging X% increased markets. commercial to the than regional managed and broad and line, economic of our an across and rising are team and entry incrementally and quarter end the capitalizing Our delivery inflationary equipment markets the fuel in offering equipment the quarter. drive excellent revenue while top refueling helped doing in recovery our job successfully expanded more charges offset into pressures costs

business our again double-digit core quarter. the And the equipment demand delivered Our benefited year-over-year all growth strong from across operations. in business our continued regional ProSolutions for third

ProSolutions margin fast control, is of As solutions that climate you This remediation know, distribution, high Herc. a equipment. support for targeted and mobile growing business power offers pump

share capturing existing on density core capitalizing customers opportunities increasing cross-selling faster new leveraging for by and and with are response. the network business here of We our branch

performance are core of our and grow proud this activities they our incredibly and company. successfully Herc building urban competency that integration I'm and are businesses team's acquisition new growth are for the the Rentals market and strategies. we the Our to on delivering core

side the of aftermath job Ian as of our of our Florida billion As X, in on XX, Slide composition fleet customers the and at fleets of end to see at incredible storm. $X.X meet Southwest and in XXXX. mentioned, quickly communities Bay of the OEC responding left immediately then the they and On Total page. of an and now the is needs fleet than you Hurricane ahead could supplies higher QX a the Larry XX% OEC Tampa record fleet mobilizing XXXX, September of did

represents fleet and see, can As room XX% there's about you specialty of to the grow.

quarter. OEC Our recent the total $XXX at million expenditures fleet third in totaled

year's pricing sales a continue the $XX sales chain and the XX more fleet average and channel demand XX% putting Please OEC third Proceeds the retail and quarter, in benefiting Slide were about it to in third stronger the in starts as about $XX project in to disposals fleet turn continue third equipment the from our meet mix rent. used of only and We are of improvement months address The and our supply to markets. an wholesale million of more our and we quarter customer from age quarter utilizing to XX XX. in strong quarter now last be number than fleet disposed our months. was age disposals constraints. strong teams is of purchased see managing OEC, on absorbing of quickly million We at fleet we prudent recent

In and rental mix expand goal. addition local variety quarter, contractors growth of across XX% with revenues. of to our wide In local a our have to North initiatives is coming that we from business we of base best-in-class accounts the up diverse achieved national a needs. balanced customer to third in a America well large sectors Equipment equipment all made customer fleet,

driving Specifically, investments fleet growth. and in M&A are core this

absolute core our maintaining while branch growth to offering. greater focused allows accounts on at are There with in equipment We us access between generate faster specialty national and also a customers revenues. cross-selling it opportunities business account XX% network broader significant to service density continuing of our and to are and

ramping secular also lot end Individual prospects. our have trends in manufacturing, on new macro markets see focused [ph] all can closely industrial see The are the gradually public our multi-year vehicle are You grid additions we we funding aligned in [re-shoring] The geographies of development, Detroit, of projects modernization, that place. surrounding Southeast growth, are offerings. acquisitions the greenfield driving private solid XX projects opportunities with renewables, the and as Moreover, both have strategic Texas, announced and but of power where number demand and Chicago. such the electric up as transportation, being in Arizona, Slide many also the being initiatives being of business to strong continuing our in put a we projects are Toronto, infrastructure from announced. increasing has and

opportunities the provides announcements starts, growth for view of We and in project visibility our our upcoming monitoring field. new support substantial these in the solid markets. project long-term are The construction closely

prepared and primed are turn number our Slide strategy. to operations regional continue Please to XX. growth Our

Before Mark, organization. perfect we I XXX% continue to at days everything to want the to of emphasize striving call focus the always do, we safety that on for over core is and throughout turn I the

quarter, Our no of DOT at internal perfect with the their that shows Herc achieved thank the customers as days XX% to reportable safety. team focuses professionalism measurement, of branch I'd major In at-fault up least execution services every program our day. on operations commitment motor branch-by-branch accidents, safety and our of OSHA violations. like in and our Their to all our third to for perfect. excellence is operational a incidents, days vehicle days on no no

on pass call Now, the I'll to Mark.

gear good as bodes and well quarter provide growth, a execute we rest XXXX. Strong of of profitable year business. chain key XXXX metrics to in as deliver Aaron, to ongoing Thanks, challenges the continued performance on into create achieving third to metrics our and we supply everyone. maintain fast, are continue that in improvement strength momentum strong The The our focus for equipment manufacturers and end strategy long-term demand for in our record markets and high rental of in value our continue operating in the Herc for we to the and the our stakeholders. environment morning, the continues we team and operate key

steady As Aaron the year early, work fleet throughout mentioned, additional growth. have fleet arriving our new to revenue we a putting is so we pace at ordered been the and driving

growth a momentum. organic sustained team We're of rental has quarter, compared from Herc will and about our million utilization growth integrating strategies from high revenue million hard the dollar in XXXX for very due acquisitions. [XX%] fleet core and continued growth both led quarter an and momentum members, pricing of strong time growth grow a ability at fast the volume enjoying into and a to shows success. acquisition model. to rest organic that on of Taking customers primarily operations with performance rental maintaining strong to Slide XXXX, third to a This XX% a summary third our and new the Our Equipment paced, has lot pushing [ph] XXXX. and and continue by of done XXX.X excellent for impressive This the in our job, and increased our two-thirds beyond. was execution team environment, look consistent a the revenue results, XX while third validates business. XXX.X

believe organic our growth market to the and outpacing expand growth share. we market Our we is continue

supplement key and growth bring on retail Our successful to to allows talent to and our provides acquisition penetrate us a key strategy organic quickly markets. nice story

fast and but Our profitable. revenue impressive, only not is growth

to and per an share margins for basis per share, value. we $X.XX most or comparison quarter. net what long-term with Adjusted investors to the XXXX. XX.X% our EBITDA happy achieve XX% adjusted XXX our third diluted quarter set income million out flow were of very in third Adjusted quarter third of EBITDA the XXXX margin in All-in-all increased for expansion points creating excellent results record excellent Adjusted the to quarter to from in increased We XX% in XX.X% achieved income delivering XXX.X in a of are also improving QX XXXX. we're or and and XXXX diluted of XX.X of net through. We million XXXX. $X.XX with compared

a solid challenging and grown We are expanded a likely environment. in have inflation and model resistant to fast inflationary margins have

our drive in an revenues, when quarter. and in pricing continue last is trends price important growth. cost can we context and it's managing All XX, of always XX% of the to we to improve over in this adjusted on our graph business and consistently within important is highlight of illustrates clear our utilization the an and and Herc years our is and and to environment. upper left metric EBITDA pressures especially in growth by couple rate manage faced This ability with in our manageable success The our with the for as performance, rental the investor people invest our Slide momentum in margin returns. On inflationary

with We environment tight The to focus by supply rates in continues and of X.X% quarter. year-over-year current our have steady rate. maintained up demand market momentum the in current on equipment support pricing

professionalism tools larger We tool, disciplined benefit sales a as enjoying price and with The the seems market national negotiations. from we're our and also achieving our to of well contract pricing our success pricing our industry spot excellent in with momentum as team. and be

of clear. sorts operating clear. momentum all and our The rates in is price on executing of record track Our environments is

deliver in to running XXXX. expect which will We QX, improved result momentum into strong in rates

also savvy activity. fleet to early fleet conjunction size of ordering purchasing which supplemented Our in is integrated with steady quarter the has XXXX, about in billion, by of a X.X acquisition fleet the at combination contributed OEC closed and delivery

rent comparison average in on fleet XX% OEC to XX%. in growth QX up average by was fleet Our of at

[dipped] have of continued receiving improve. QX, We points year it Dollar in efficiently utilization on [ph] core basis rent. our to XX.X%. amounts been record all to business slightly putting have been in down fleet and XX utilization Dollar

of recalibrating comps impacted from XXXX tough of well utilization has The as some a bit. However, in business, protocols. momentum dealing in the spending we the as a with in COVID their of had lost latter lot [boom] XXXX, business [ph] other studios the some with entertainment parts half dollar which

activity QX In The specialty year, drive will QX. this in last the at QX as year in activity addition, Ian we which business. storm had utilization some may of landfall from Hurricane tends of utilization end hurricane to benefit Ian the

markets us improved XXXX. We are so our that in acquisitions year we've acquisitions another in are made targeting moves of location network. on XXXX annual on current in dollar the Slide that dollar utilization We growth far high summarizes XX for mid-XXs track that goal. focused and towards our utilization complement the

the acquired most multiple spent XX locations. see the third of through XX of the we an time term X.Xx. with XX, significant approximately synergies operations average see million Xx synergized We near generating companies can X.Xx. XXX more revenue in we've fleet far, over we multiples end Slide cash and XXXX, approximately quarter So maturities. efficiently We of of in net you have to [companies we acquire] On the in can in of [ph] run no

we capital capacity growth into Call, and during our our July extended As to on. of We're facility much liquidity a take the expenditures Net taking negative we QX capital fund deliveries cycle. before got flow future new announced we the in X.X the as into business and operations are as fleet ample in in at of usually we QX have we year. million our remainder our terms can the as the fleet continuing exceeded delivered amended hands maturity fleet puts capital XXXX deliveries growth to goals to and in our our credit commit and and for the and doubled invest cash billion from get revolving as XXX We've of timing flows XXXX. fleet to the the to we The Investor and quarter working on acquisitions. cash third suppliers drag for reported pay with drive

Our yard] as [ph]. are out soon volume growth as we shows on was putting it the rent XX% it [hits that

remains conservative target and our Xx. leverage of Our leverage to middle is our Xx X.Xx of range of current the in

a dividend $X.XX implies XXXX pay and payout there around rental The an revenue quarterly share. XXXX risks. sentiment per forecast of ARA We negative rate Clearly, $X.XXX, billion. forecast American North to industry steady [XX%]] continue annual XXXX. of current some of for The all also our is recession at cycle the strength XX despite the for now growth X% to which is

in Our XX% the market rental of industry whether have much are than organic and Two to look industrial and in consumer rate over in of as you key industry spending both our XXXX. growth as more XXXX, our the outperform driven other of end base both likely markets and taking XXXX. We non-residential top and revenue solid growth momentum broader eclipsing end our clearly organic well have forecast is markets line reflect or about is focus more construction rate that general customer growth share. markets the to for XX%. on growth Combined two-thirds these are are our

dip. broken It's XX% This the from new rates right. to XXXX chain. to towards is rebound with manufacturing Industrial as chart the to spending growth not additional oil chart, activity growth right top is of particularly well this in the still at and on activity construction charts XXXX to gas be in bottom downstream in of is growth XXXX. up sensitive as tailwind. strength of reflects X.X% the clearly the on onshoring cyclical shift is X.X% XXXX forecast industries, looks trying Looking forecasted at a has secular further year the non-residential ground on This chemical and the and supply for looks X% industrial that have interest XXXX. focus We to in construction movement and the short-term and and for

XXXX the construction current These analysts size lot historically in been years in with couple a activity a has of of place that almost and out for is there and a many forecasted Non-residential projects XXXX stats. which projects construction is XXX last in Xx new scope on has activity noted, there projects mega so into of is put As the change case. XXXX. more construction the of billion, filling mega plan have the those XXXX level

started non-residential which slated in rental funds projects XXXX, work through activity strength as construction non-residential mega [relative by top the activity for of is [ph] the of benefit companies projects The infrastructure benefits into non-res, is this buildings, read amounts package, fleets. Reduction for CHIPS, of in a increasing XXXX. there another the infrastructure gives approved or infrastructure So, billion the into year and Act. streak] a XXX construction On and supported recent Inflation bigger current us which good non-buildings XXXX, bigger rental with federal of

for leading American talk to the advantage strong trend. rental services, value this recession of strength lot and continued all current benefit create environment markets to our of strong our and cognizant current a to stakeholders. one rental of stands running focus There end continue in and We companies, playbook. is in our the As North from remain to have demand for Herc, long-term recession experience take our of the it's

With of and guidance confident robust However, strong a operating for raised our we business. more the strength our on services have right executing that, robust are we operating grow range results. now, we environment with and delivering are the our we demand in as

high growth intend in experiencing back trends and with execute our an Our of turn for on call results. Larry. X.XX to net over X.X is I'll to With which upcycle an performance to We're adjusted capital guidance strategy. to as to adjusted our translates We're increase that, the industry billion also guidance look an XXXX XX% EBITDA all X.XX XX% billion deliver continue to to billion. the billion, to narrowing of EBITDA to expenditures X excellent our now fleet we in consistent

are summary achieving This Mark. the our acceleration M&A. growth Thanks, we fleet investments in and demonstrates with in

strides since the six proud long made. we and way I'm shifted gear. we come see, can the a We've we've years went tremendous truly of As in have high you public into

and are can top growth showing adjusted accelerate improvement that demonstrating We line EBITDA margin. we in

I all but important our stakeholders, a I'd opportunity think and customer service. their we Herc for most provide like diligence, members team commitment professionalism, to for of thank all, our unique to of

Team mission, turn committed XX. Slide and vision, are are began values our to our a are Please companies We and We Herc. to proud purpose and equip statement right. day. future. we to this We responsibility. in We results We We're prove what's our do achieve ourselves for focusing communities on now customers together. of more Many and take purpose. every a brighter

Now, Hunziker I'd call to like open the the to turn back Leslie lines. before we

were I opening that my Larry. myself Thanks, off. remarks where understand introduced I cut

So, on let as do Corporate Higashi Herc and back responsibilities, would me more Investor minute have and news transitioned she Elizabeth Once before solidly her recently be the share name we've she's the expanding take to to recently to will recovery my I've to here her sustainability joined one company's I'll responsibilities in year. Relations Communications mode. IR is [indiscernible] support an today IR next been Elizabeth her Again, has retire this announced Elizabeth transitioning focus Hunziker. to with with driving that. herself emergency program. plans initiatives. Leslie you continue

come Hertz [ph]. with Fortune also led prior I of XXX [ph], Industrial recently me, I And forward I a WESCO, IR [Tenneco] For and Relations Distributor, most where for all to from working and Hertz] to I'm handled looking Communications. that, Investor [from you.

go and with Q&A. let's So, ahead started Operator? get

Revich Jerry of line Goldman the Sachs. from is question first with Your Instructions] [Operator

the we to quarter that just I if much midpoint a than we Good much the the which EBITDA implied from business, wonder for of seasonality. versus wondering of about talk everyone, XQ could the I'm of of the parts at send our Elizabeth quick that expand recovery. and Hi. how of on outlook? the full-year is is talk morning, fourth just just up can benefit Yes. is if about drivers guidance please we sequentially, EBITDA the storm other X% implies range normal better the best impact can the

that's against last a of QX. in this Hi, I we the the this worth bit year. to mean typically Yes. different so a got generate EBITDA, $X QX massive $X won timing not storms in comps of year. QX million We've the is Jerry. it driver had million little year I mean,

us and that into of as, been quarter throughout that most fleet during come QX of to as that's was So, the well continues consummated builds received coming the sort acquisition into growth steadily QX. from year activity

already into it's business roll continues in QX. to baked QX that So, growth that's by the in

it. sorry, Yes, ahead. Larry. go Got Please

Elizabeth I hear going your heard She's in mode, say, to can was just listen she comment. you. so

and looks And you. in it momentum the in folks October that the about points quarter about continuing better can looks pricing? seasonal I normal got It acceleration? than right the up increase ask quarter. on year-over-year Mark Is Thank is you like pricing based like into was It your-end? X.X and in that

think mid-single-digits the rather of sort of maintain Yes. No, I spikes looking mean, for mean, sure I terms in term of for year. this medium too I'm not about I that looking than momentum. we've sharps pricing sort talked about to,

So, level around and will probably we'll into QX XXXX. look roll we to zone that into maintain It's through off going pricing. as high maintain we to the

limited So, terms want negotiations. coming in we in growth that's how far We've really of spot We've that. of more the pricing. managing had the got push to sort in from strong tailwind ongoing it's contract a,

and we as into and So, of XXXX. rolling get sort move we pricing spot increase contracts our of are continued, QX sort to the those, strength closer

to model, Thanks. mentioned lastly, on about the And you firm you business your then vendors? flexibility make your to you the orders? in XXXX, just have commitments can and you'd date changes outlook purchase have need CapEx for – you about talk what's talk how Super. And to when you do can flexibility initial which views around to

Aaron. it's Jerry,

very robust. still for view is XXXX Our

for So, markets the so we number, fleet. billion are we've and of have for – that about agreed robust. got of new XXX XX% called already about million planned pricing POs CapEx We've of that and X.X on billion on a ordered

if So, we pull be going change, to need back of a is ever to. have year think as to things lot do we year we if a flexibility next terrific well, but

you. Super. Thank

with Wertheimer Research. next is Melius Your question line Rob of from the

that about a and Hey, up industry you questions, freeing I base. of loosening And we've good talk supply I suppose in don't the not next aerials, rate generally characterize seen dynamic. morning rising in evident? And whether you following Can time. long, on have availability then does more everybody. a for or there's know up I diverse supply up people a just expected long kind yet this mean a environment constraints lot but that's you lot two had just year fleet pretty like the a

how or to So, rental I'm curious about funding purchase desire about with ability have the affects may of higher companies it any opinions smaller cost? you

again. take that first is one. This Aaron I'll

As supply as be or to how the the they're chain produce market, been equipment industry specifically, the I about all able think in long. the to it's year wants going still everything availability is XXXX. that don't far the aerial

if the kind to capital smaller might if of – smaller second right but question, to up, that buy none of fleet Now, evidenced. accessing that we that's equipment operators as have loosen [indiscernible] the difficulty some been your rental of of have now,

that loosening of you do aerials, think you up or have any outside And not?

sometime seen it I yet, if that the No. occur. happen things Look, could but we haven't next mentioned year

far Rob, … chain as see constrained next be the we chain into supply expect We as year. looks can to the supply

some to dealing no by progress, there's the with loosening year, year. of we've next up we are environment similar this been there's So, end but maybe expecting what

somebody Thanks. chance. there stop let great. Okay, Actually, and a else have I'll

Thanks, Rob.

Neil with Tyler is Redburn. from line Your the next of question

questions, A morning, Good everyone. please. couple of

how infrastructure the Act perhaps guys to at and then do able to about sort of not? us the that my the I'm the whether strategic, around you you the in of whether remind rationale And Firstly, benefits of – of Act, to wondering can [indiscernible] targeting of Aaron, like the, I water Inflation question. the different industrial same the and of link you Larry bill, you think, customer thoughts poured groups? or or point in that done you pointed remember benchmark at terms work want Reduction I thing the, cold XX do? on and done penetration orders any any on this but the the are first of some secondly, ago, on things you the months just And have rates you relative you enthusiasm you as and – That's mix mix, you mentioned sort size potential customer scaling bill? infra the – sort scale? cross-selling but the the to

local Well, you about mix between talking about… look, you are the business account are talking national business and or

I am, Yes. yes.

markets tended totally not reduce and account, base. account from we got local keep local exactly national more higher a reliant flip we XX% time was opposite. XX% here, said Well, national our to our growing, the the and to said go that account not and where more was XX% look, but It and national desire numbers that the we accelerate go because could customers turnover we faster, and of that and be mix local penetrate business, that on to margin rapid be were

do how on continuous them business grow to where on continue areas we've where seems the more appropriate to and both geographic of and be and regular density large how and that feel work we to of mix basis. focused gotten a want we So, where for there's people metropolitan to is we're point the

where that's there. So, at we're

throwing [Technical we're the consumer as see that progress of that consumer spending some far know I'll XXXX give infrastructure you beginning ground. we going you side. letting certainly and the funds think to add to As know of slowing of that'll, as water those project. for we There's that, the more have as see Difficulty] some into you warming folks replace of the perhaps cold water, and into about on We'll concerns been

we side. EV data and So, acts projects in to other about then centers world and and spending us on in certainly through other not slowing think to things, concerns Mark mentioned the the any demand mention the the Act the combination mega that push momentum of the federal the the a we Infrastructure will think give consumer

Thank great. Very you. helpful. That's

from El-Sabbahy next Your is question of Bank the Sherif with line America. of

Hi, good morning everyone.

morning. Good

own of own their supplies then last the how few do reverting secular much impacts looking from the rental back years, And the some owning do equipment, their to costs? customers equipment? you at supplier see but from do typically they coming expect you just growth So, to improve, to these over to from shift cannot any who expect might customers prefer is ownership once do

in they in I hands down it. you sort people, into up the back and then another wanted to getting Sherif. in morning, to the see secular environment, if necessarily Good like fleet on see And then you're step Hi. you pickup of to shift due not even Yes. tend the difficulties and mean, going in this saw cycle that new do XXXX fleet the to. and getting see a – take extend you just with unloading the probably

the of on margin. kind So, it's incremental

pieces who pieces rental them our You of a of worth we're environment, billion four and might of of off a without rents and current get the but owns have more into then doubt, moves and plus doesn't and two, replace equipment equipment, few pieces sells fleet. dollars equipment struggling four someone

waiting trying or it's going buy to and two store very one you're If you're expensive; a year retail a to retail, probably and two that. for

driving current a secular suspect it in So, happens, right. I change revert, shift. that increase And doesn't their without is step an the doubt, once environment

cycle, look you history, likely as sort and go that down up. of but it to to continues inventory more So, it's just dealers a normal the over might at slow up reverse. not go It return to

Got it. Thank you.

from of Your Gabelli Funds. Brian the next is question with line Sponheimer

Brian. Hi,

Larry question now stay seen there see just going two here? going what industry still speak Hi, far If the to Larry, once the a to wanting a you little too lower-end just below as be obviously, Elizabeth. here. confidence [ph] it – there. CapEx leverage cash even considerable towards a start back the and hope heavy, heavy soon. at to is stock I We've Any hi could Leslie. and doing in [X.X] buying that others in being with quarter fourth into or three thoughts fairly And as you to well. cycle generating hello you're start times you're I levels to I'll this on

of we to how towards is our headwinds, bit environment, how keep Mark of we we're range. said there end but I'll a I utilize in Xx we an And desirable level. the think we've Yes. Xx mind Look, top certainly, And economic environment going in the feel up where don't strong the any range, the bit a would is our lower let that might comment capital to going he allocation. end try on towards be and viewing that to a that

Xx that. No, that zone. I Yes. to pretty much risk in comfortable sheet's balance we're to of There's not mean, bulletproof. a lot Xx The

[ph]. recent, As drill] of the sort in you've seen [XXXX

in in working peak just quarter terms We leverage the of at drain are funding the capital CapEx. given the

does into that So QX. decrease slightly going

given current we money So, end range, two the but the lower of amount it just dropping unlikely be in will manage at below business. and our in we're of growth trajectory investing environment the the to the it

you, any have thresholds of are I while profitability, absolute minimum tax Mark, you from profitability, level Sure. level subject of the a cash given all to perspective?

not this at Not Yes, stage. this at stage.

mean, I accelerated from on coming in, depreciation we for the So, that us protects the fleet Texas still so benefit short-term. on

position, not next it continues year two we this three tax if moving cash not So, years, start to a year. and then but another for into

Understood.

very Okay, I'll get in you line. much. back Thank

Brian. Thanks

next Weber Your from the with Wells question Fargo. Seth of is line

Seth. on morning, good This guys. Larry for is Hi, Stavitski actually

Hi, Larry.

Hi, about wanted ask to acquisitions. just the guys. I

how that contributed about of that of raise? million EBITDA mentioned you think in think main to revenues, the the total quarter? was acquisitions third the about I XXX one we And sources should quarter fourth

that I Yes, don't know got that number right. you've

the activity and completed growth and mentioned of was XXXX one-third from we that's XXXX. think our for that acquisition from acquisitions I all

I comment So, And that looking ratio that's a the have you might that construe little we're bit. at. think must

in continued two-thirds about of two-thirds driving was to one-third the strength and of of the acquisitions that's additional Part organic it's of So, business and a sort that's likely growth. growth of raise of growth about the part be from the contribution organic QX. acquisition and and

it. makes equipment for the then it, pricing. Got to Thanks on I sense. touch got wanted And clarification. used just That

guys you guys out kind you what used of regarding your can If there take and on give it equipment seeing are pricing?

there's It's demand if categories when wholesale it's used equipment still retail vibrant market. limited look you a at very still Most There's – lot strong. because still very, of supply. a

still them over, gradually roll the auction you a but on normal category, already If and depending prices probably at to of than starting they're the baseline. higher look peaked most

market. So, it's overall – still a good used really good equipment

just contrast are but Ritchie and wondering them you if how what okay, I there's disparity release understand guys the I'm Bros out that Yes. came what this and earlier any between seeing, from to that. week

that's picking maybe the seeing And what auction believe I one too. assets said, to. read of believe And accurate. that that's We're being mean, that, was same you're I they volume I up that No, referring stated. they the I sold.

a Thanks great. Okay, guys. lot,

you. Thank

from with Thompson next of question Group. is Ramsey Steven Your the line Research

of next on morning. supply this net back spend year, then expect are is to fleet. of will to circle that that total be fleet lower The you conditions topic fleet used sales a next good X.X basis? or Maybe in Hey, on if billion year year? the And is similar

more useful next on be of of pick selling up for far year, since did start That's and towards life. need we'll year, we And this to we our that a believe next than page year we number, year its [ph] Steve. degree – a it as sell out fleet. next of as and back [$X.X] half rental we'll We've really based more to gross a disposals sweated

macro seller's conditions, that do is Okay, helpful. two it to at? the the or markets appetite next willingness in do And changing others the deals willing picture changing to multiples about or And four transact then thinking to deals? quarters? changing changing your acquisitions, in to Are you is

multiples Not unchanged. into of maintain level really. is at. a I pretty steady pipeline of XXXX sort we'll We're the that to, robust, say, going that I mean, we're this be able confident remain opportunities and at would pretty looking stream

that year. look and that lens environment we, there of ones we've And I'd with sense it's strategic similar, sort us. don't the our approach us it's We robust of So, it for sort at make pretty, changing. a to of go of opportunities see for and really seen all that sort line after say

you. Thank Great.

question Research. is of Healy Northcoast Your John from next the line with

and I the be? to have expecting I date be to Mark. there about be or what kind we are slides, EBITDA a target And you. Quick in Thank are that little of relates M&A pro would we to as about do maybe then kind year? multiple next like not nothing creation amount wanted the buying for you've synergies ask to getting to How should of it forma you spend When guys the of bit. talked question as think kind gotten of think in timing and of to about, EBITDA that strategy kind one these there's you those anything get that our, anything just of that? your you the properties, look

Yes.

– clearly mean, and I we're So, tuck-in deals. type doing smaller

market deals. more into additional straight So, away part of sales customers being a by that key district got moving single got are already that's other and benefit available branches, that's read or they're typically so fleet network guys [indiscernible] a other renting. our the now and of right focused big They couple that's not in on branches market one got classes to

year of to we So, of might starting it's got, fleet realizing the I start synergies, the start year roll cross-sell if and you two, to we into within then say, XX% a the away. big months. look of efficiencies but synergies And would lift, by we've the XX if roll have, straight some the know Most end them of one.

pricing versus And of are your there on pricing just these I'm buying when how to properties, and harmonize running Is or how business? then acquired your one you anything, question, the curious kind pricing there of you're kind are strategies you kind operators running how of between the kind the been just get Great. of thoughts pricing? these the in to, properties and learned terms guys lessons have of opportunities business

Yes.

they markets, competing strategy. they're don't so a tools – the a on sort across have. niche their a small mean and So, big base pricing or stores focus in of against can in geographic XXX national to of markets a players as in there's have players got lot customer just that's we've big – niche lot of platform They operating that national have a a I

in We of So, as efficiently we straight network that pricing we base. as just can our typically as change change well as terms as not part don't operating fleet can, look as part cultural and that's moving that into do. we as away to of assimilating margins a of customer operating and them

we've if rest we shock but sort over and with sort like, system, our lift hold, to into So, the if year we pricing of tools model the, operating time, like. you into plugged that of of the get and of we're them the operate not looking second you

Makes sense. Thank you.

next with is the question Your from line Baird. Dobre Mig of

thinking and net well? year, about all for you. the CapEx talked CapEx best well maybe want net to as to next Good us as about to but Thank I you're clarify and morning to gross presumably Elizabeth. mean, Yes. go as fleet back CapEx, XXXX would you be the relative I up

be look, up. will year like of availability used a of some through it No, sale we'll relieve constrained to off older Yes. determine equipment But we We're to we back sell if probably can take to fleet. somewhat to half Yes. be what the looks rent first just it not going and it. on to still have fleet rent, have of we're going into our the it see certainly if the on half the

all So, gear depend from it new in the availability comes our suppliers. OEM will that upon of

Understood. Yeah.

we're it trying some at you're seems we're about XXXX. Analyst out a while way framework the also And doing maybe The to that. talking I'm you laid deplete earlier the little and of for through into XXXX, year that as thinking back plan thanks kind So, think of XXXX. CapEx your a about XXXX into Day like

is if us curious anticipated overall Again, to have that, been, like that to anything of robust you out? you seems maybe else seeing kind that more plan than It to that initially, relative business. the a pieces relative there's your that laid what I'm what well? moving want for I'm of little that you might kind demand of plan the to environment differs wondering highlight but you're to, kind related that as So,

Mig. Yes. Hi, Right.

So, organic that that laid was out. we plan

the probably end. $XXX almost a since since end billion of M&A So, and more there's the million dollars

branches replacement fleet fleet So, need those growth. need and

in off a plan. So, base we're bigger that working

But weren't front as you XXXX. loaded anticipating was of obviously seen. into XX% loaded in Now front-end growth front that the that we plan, was we've plan or the which mentioned, growth

fleets the bigger stronger. for been that more that and to base with We've and more into a So, creates M&A has going XXXX. demand responded us

rate the So, which than [indiscernible]. be the in was is growth kind of that down, XXXX, slowed was, likely in new model higher it anticipated CapEx but to

So, a bigger fleet it's base with. to work

year fluid working With real sort into just, demand replacement the for a tight environment. of this

of next our into the but towards year that the potentially, adjust that's, at up as end I more and with the more XXXX first we growth accordingly that this deal So we've XXXX We’ll the start stage. CapEx think of sort will got look and kind year. ground loosening facts of into creates on

sense. one makes final me. That for One

curious of if we Thank looking sort age pre-COVID comments exiting of fleet at kind convert plan, XXXX back should say you're on your you. remains age, current you do kind based actually As closer expectations be see what your you of regarding on your to levels for that thinking that are that levels? the and CapEx XXXX, fleet around or

that sub-XX like be are months. range in of months quarter we and a we of XX where XX of It'd reported to this kind

not I selling fleet rate But normally at same we it'll mean, that the So, drop. do. old that we're

as same benefit we're we're putting not from the in. of giving fleet we that's So normally the would – new amount that

what of was sort that's mean, I I But wondering.

the is coming really, start fleet that down? replacement sales your the age of you this this average towards of more at kind here have really half XXXX, demand Are see given back replacement And up stepping we the do point? demand you're If naturally implication to age right? satisfying you

that not we at correct. we are No, And normally do. Yes. the replacing that's same pace

be replacement pace. loosens – be once this we'll there'll So, normal supply, of our market more back to terms up then in reverting

Thank you. Understood.

of is Markets. question next Your with the Ken Capital KeyBanc from line Newman

the I This Fleischer about this Ken on Katie Hi, for wanted SG&A to everyone. quarter. Newman. is ask

do bit driven to a that should So, know most normal see about it And I by that acquisitions. forward? was think How we of think, more you the little it elevated, I was going level? normalizing

of do. volume expanding driven. would it most Yes. as much that typically didn't We is mean of out get and SG&A say leverage as is I I we

sort little bit and into provision. variable receivables of of coming sort and of selling it's So, expenses a comp

step-ups the made the of Some of we terms were selling expenses done in half last back year. in of

so should rate on going won't forward. of those, QX, extent anniversarying so be more to, that of same that we'll to as was So, increase be sort revert we over SG&A leverage normal in line the it

Okay, have I about in being you've the great. from that of some good about for you Can so last question. for been through with And of then able as just conversations talked call you them customers? quick customers pretty having to pass more year XXXX. feedback know your next far? had cost been concerns you one you there pricing about finalized the those or that any getting Are talk

stepped off just delay a lot mean, I in the of we of February sort So, us in sort fuel. guard just that up one really caught big was leap month that charges. a of that ancillary

out. costs Fuel fuel So, QX, certain increase To They extent, as increasing have dropped a into were not costs. charges. of we've increased flattened recovery in cost been a fuel increasing volume, even in bit. that ancillary our unit increase an have is dramatic little but there's our the might still

on the we're portion and a focus cost delivery, our success fuel continue So in fuel yes, great ancillaries. we year-over-year basis. a charges, We've to recovering of had big on increased

Thanks. Okay.

got it. You

the next question Your Steven of from UBS. line Fisher is with

any soon swings just kind market are what prepare be to if a softer you might of see housing you or doing now, is from Wondering of on to market? morning. for too business kind a what And impact if seeing Good your it it's that Thanks. too anything much? that really,

doesn't very at residential business swing The housing market market, really our much all.

So…

potential… Any ahead. Go

multifamily, mind the of big not only but Yes. that in at all. in track kind I mean, construction, purely, homes place is like

have our multifamily with balanced did very but – watching government, of commercial contractors, projects. We're that larger on been really I I a – industrial So, some we've and statistics down, smaller slowed it's has piece business.

commercial And at lighter impact on, any, this of it's is from you're seeing sort housing point the there not or really? side sort of

every to out the month the single month. all. Actually, I field get half nothing at

at activity a the see there now field the in point. lot no is slowdown and mention to I So, of this

you very Thank much. Okay.

Raso next ISI. the is of question Evercore line David with Your from

of some you that than my to if is Hi. unique Thank taking hearing be reason a for get normal XX% about and the anything pricing of gross year, cadence XX% slots later having roughly how suppliers The for for are your that missed this, opened CapEx of it chain or have that ship, on I normal much apologize supply question. maybe growth, you but to up I also cadence? can you to whatever next it

Yes.

at into that to high to to year basis single So, drive looking change years single it going I of of most on pricing. or is cadence what think we've We due several probably seen take fleet from efforts not the round year. QX. fleet began And from the than, rather sort team mid-to-high this of suppliers all the – of the we're digits, in significantly digits ago our probably terms QX a cadence

our with our next XX XX tier the in on to And we of able won't second acceptable to we're our I levels, next supply and in year into use that still to get anticipating a anything half year, work fleet the even their parentheses. the hear consequently, of hopeful and for And but allow the side from suppliers third back of line of to which to type XX quarter to input chain. hopeful the other supply into their their side a our going much of days, business. different us don't different throughout they're about them this but half this hopeful year, year, half been balance the and suppliers planning going although delays change nor any that word than not the of we've we see year improve and demand into They're first improve, supply suppliers of will and able and so, been we've level normalized to fairly on first

of up [ph] be some helpful. to quarter are are where will can quickly what's are your to some be significant repriced pretty the increase get Thank the first being for there or renewed, step real more decent should sense that account biggest just you. and a fourth national it contracts the us what on the stale] give [dated still you That’s And or of that a of contracts Is quarter price lot trying sense that be cadence? significant a most impact?

pretty It's renewal. of pretty of just have to even, of sort monthly worked hard a, We've sort level. sort a

ongoing and ongoing an monthly that's So an renewal.

[ph] at or in, of QX. QX big coming there's [lumps] So, year and the no real in end into the

So but that it's – a set] [flywheel right. [ph]

So, starts we the the contracts now we're and three months getting ago negotiated running sort that from picking momentum. up of benefit and through

benefit help the us all that does into XXXX. done the So, work disproportionately so we've XXXX far from in

Terrific. it. Thank you. Appreciate

Leslie come Q&A now At our session. conclusion of the call any to closing will hand have remarks. Hunziker today's for this time, to I back we over

Thank you the for on joining today. call us

We If hesitate forward all me. you. you have questions, look to any further Thank seeing soon. don't please to to reach you out and Elizabeth

joining. you for call. today's Thank This concludes

You now lines. disconnect may your