Alta Equipment Group Inc. (ALTG) Earnings Call Transcript & Summary

Good day, ladies, and gentlemen. Thank you for standing by, and welcome to the Alta Equipment Group First Quarter 2021 Earnings Conference Call. [Operator Instructions] After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Sinem McDonald. Thank you. Please go ahead.

Thanks, Sadie. Good afternoon, everyone, and thank you for joining us today. A press release detailing Alta's first quarter 2021 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 first 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 nonhistorical 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 indicated in today's press release and can be found on our website at investors.altaequipment.com. Before Ryan makes his opening comments, I want to remind everyone that our Annual Shareholders' Meeting is scheduled for Wednesday, June 9 at 9:30 a.m. Eastern Daylight Time and will be held in a virtual-only meeting format. With that, I will now turn the call over to Ryan.

Thank you, Sinem. Welcome, everyone, and thank you for joining the call today. The strong momentum we established in the second half of last year continued in the first quarter as the post-pandemic recovery takes hold and our market share -- sorry, our market shows notable improvement. We are pleased to report that the year is off to a good start as labor productivity and rental utilization, our 2 most impactful operating metrics, now exceed 2019 pre-COVID levels. This is quite an accomplishment and a true testament to the dedication, hard work and determination of the Alta team members. I'm proud to lead such an outstanding company, and I'm genuinely thankful for their incredible contributions. Our strong first quarter financial performance in an industry that typically has a slow start is particularly encouraging and demonstrates the powerful platform we've built. As the operating environment continues to improve, we're confident we'll deliver increased results as the year unfolds. I'll begin by reviewing some key highlights from the quarter and then turn it over to Tony for a detailed financial review of our first quarter results and our outlook for the full year. In looking at our financial highlights, total revenue grew 49% to $268.8 million with 5.2% organic growth. For the second consecutive quarter, our new equipment and rental equipment sales came in above our internal plan. For those who followed the Alta story over the past year, you know that our business model is not focused on short-term or quarterly new equipment sales. We view this strong sales quarter as a positive indicator of future parts and service revenue, which provides a higher margin and is an important driver of profitability. We also had an exceptionally good quarter in our construction business due to strong contributions from prior acquisitions, particularly our Florida business as well as 20% plus organic growth. Adjusted EBITDA grew 38% to $22.9 million compared to $16.6 million in last year's first quarter, showing the diversity in our business and the breadth of our recovery since the start of the pandemic. I'd like to quickly touch on our recent debt offering and capital restructure. On April 1, we closed on an oversubscribed public debt offering that reduced our interest expense, increased liquidity and significantly improved our capital structure. While Tony will provide greater detail in his remarks, the key takeaway is that we lowered our cost of capital and now have fresh firepower to use as we pursue the acquisition opportunities that remain in our market. And looking at our operating performance, we are beginning to see the early benefits of our strategy to diversify our geographic footprint and expand our product lines. Our increased product portfolio has enabled us to meet customer demand despite supply chain disruptions. Last year, we took advantage of market conditions and executed 7 acquisitions, which are now in various stages of integration into Alta systems and infrastructure. Some regional markets are further along in the recovery than others, but the expanded presence in our established Midwest markets, along with our entry into the Florida and Northeast markets, position us well for strong growth as regional industry conditions continue to improve. Two great examples are the opportunities we see in Florida, a healthy construction market that operates during all 4 seasons, and the New York State region where we have complementary construction and material handling presence with Liftech and Vantage. Starting with Flagler in Florida. This business and region was a bright spot once again as construction activity was strong. Since our acquisition of Flagler early last year, we have seen steady growth, and we've built a regional gap in service demand and significantly grown our technician headcount. Late last year, we acquired the construction assets of Vantage Equipment, which operates 3 branches in the Northeast region of New York State. In addition to becoming the authorized distributor of Volvo products, this acquisition allowed us to diversify our customer base while providing a great opportunity to increase our regional presence and grow the aftermarket parts and service revenue streams. The construction market in New York is approximately the same size as our market in Michigan and is significantly underserved with roughly half the number of skilled technicians. This presents an attractive opportunity -- growth opportunity in the region. And in many respects, it is similar to the playbook we used in Florida, where we have grown headcount significantly since acquiring Flagler last year. Early in the first quarter, we took a major step in building our solutions capability in the material handling business by making a small but strategic acquisition. ScottTech provides warehouse management software to the logistics end market and serves as a great complement to PeakLogix, our national material handling systems integrator. We can now go to market with a full suite of products that provides a competitive advantage in the fast-growing warehouse and e-commerce market, where we expect continued growth opportunities. As we look ahead to the full year, we see macro-related tailwinds that can provide a positive framework for accelerating future growth. We anticipate improved business conditions to continue as the country reopens with pent-up demand for capital projects and a renewed focus on replacing aging infrastructure. We are well positioned to take advantage of these positive developments as our strong relationships with a growing number of leading OEMs and our proven capabilities in both construction and material handling make also the perfect partner to meet growing demand. Our focus remains centered on executing our strategy of expanding our presence in existing markets while seeking the right opportunity to add quality equipment products to the Alta family. In summary, our first quarter results put us on pace to meet our expectations for the full year 2021, and we are experiencing a weak shaped recovery and believe that our investments in expanding our geographic footprint and product lines position us well to benefit in an improving operating environment. I would like to thank our manufacturing partners for their support, our dedicated employees for their hard work and our shareholders for their continued confidence in the company. And with that, I'll turn the call over to Tony for the financial review.

Thanks, Ryan. Good afternoon, everyone, and thank you for your interest in Alta Equipment Group and our first quarter 2021 financial results. I trust that you and your families are safe and healthy and anticipating a well-deserved summer. My remarks today will focus on 3 key areas. First, I'll be presenting our first quarter results, which we are pleased with, as we close the COVID gap and look forward to continued recovery across our business landscape and a better 2021 for Alta, our employees and our investors. Second, I want to highlight and discuss our recent bond raise, which closed right after the quarter end on April 1 and detail out the balance sheet flexibility and other benefits the bond financing gives us both now and for years to come. Lastly, for the first time in our brief history as a public company, I'll provide guidance on 2021 adjusted EBITDA and discuss the relevant elements and assumptions that drive the metric. Before I begin, it should be noted that there are some slides in our presentation, which was released prior to our call, that presents our first quarter numbers in greater detail than what I will discuss here today. I'd encourage everyone on today's call to review our presentation and our 10-Q, which is available on our Investor Relations website at altaequipment.com. For the first portion of my prepared remarks, first quarter performance. Starting with the income statement, a few key items of note. For the quarter, the company recorded revenue of $269 million, which is a solid start to the year and especially notable after posting record fourth quarter results -- sales results of $280 million. Embedded in the $269 million of revenue for the quarter is a 5.2% organic sales increase over Q1 2020, which recall, was largely unaffected by the COVID pandemic, making for a comparatively sound quarter. Similar to the fourth quarter of 2020, we saw continued strength in equipment sales, especially as it relates to used equipment and rental disposals as rental equipment sales for the quarter came in at $32 million. Additionally and notably, as it relates to our product support business model, we continue to realize organic growth in our parts and service departments in our Construction segment with that figure increasing 14.3% year-over-year. From an EBITDA perspective, we realized $23 million in adjusted pro forma EBITDA for the quarter, which is just $800,000 off from the adjusted pro forma level of first quarter 2020. The $800,000 variance is the closest the business has come to completely closing the COVID gap on a year-over-year basis since the pandemic began. Breaking down the segments in more detail. As we analyze the trends of our traditionally more stable parts service and rent-to-rent revenues, we can see our Construction -- in our Construction segment, the V-shape recovery has now surpassed its COVID starting point with tailwinds behind it. In our material handling segment, which continued to be cash flow positive and profitable for the quarter, while it has yet to reach its COVID starting point, it has continued to close the gap again in Q1, like it has in each sequential quarter since the second quarter of last year. Before I move to the next key area of my remarks, I want to spend a moment revisiting the strongest equipment sales result for the quarter, a touch on the market and Alta's specific dynamics that are driving the numbers. First, I'll reiterate our razor and blade business model. Our strategy is to drive market share for our OEM partners through equipment sales, which in turn build field population that yields future high-margin product support business. I've also mentioned in the past that Alta has a rent to cell approach to certain product categories of heavy equipment, which allows us to create different price points of lightly used equipment for customers, which we sell out of to meet customer demand and drive field population. With that business model as a backdrop, given some of the near-term supply chain constraints that the industry is experiencing on new equipment, we saw increased demand for our used and rental equipment in the first quarter, and we expect that trend to continue over the coming quarters. All told, when considering just our equipment sales over the last 2 quarters, we have populated nearly $330 million of equipment into the field, which bodes extremely well for the future of our high-margin product support departments and our longer-term prospects. We believe that our flexible approach with customers when it comes to our rent to sell model, the breadth of our expanded product portfolio, which is currently derisking the impact of the OEM supply chain constraints, revealed itself in the first quarter as we were able to deliver equipment solutions to customers despite the challenges impacting the supply chain. Another encouraging metric for the quarter and another positive byproduct of the current supply-demand imbalance in the equipment markets is the continued increase in the physical utilization of our rental fleet, which is up approximately 10% when we compare equipment on rent in March of 2020 versus March of 2021. And as it relates to rental fleet in CapEx, as mentioned on previous calls and in concert with our plan for 2020, we have kept the size of the rental fleet effectively flat for the quarter. During the quarter, all capital expenditures related to the fleet was for replenishment purposes to replace the aforementioned assets, which were sold out of the fleet in the quarter, preserving our ability to meet rental demand with the appropriate amount of equipment supply. Now moving on to the second key area of my prepared remarks. I'd like to provide an overview of our recent bond issuance and provide detail on its terms and highlight our belief that this is a game changer for our capital structure and a big win for our business and shareholders as we go forward. Before I launch into the details of the new bond, I'd like to reset our former capital structure and certain relevant metrics that existed prior to the new issuance. Recall that we had a $300 million ABL facility that was bearing interest at LIBOR plus 175 basis points in the first lien position of our capital structure. This facility was drawn $160 million prior to the refinancing and thus, with a borrowing base of $300 million, the business had $140 million in liquidity available in the previous structure. Next, recall that in the second lien spot, Alta had a 5.5-year $155 million term loan, which was entered into at the IPO that had an interest rate of LIBOR plus 800 basis points, which in retrospect was an out-of-market coupon. The term loan also amortized at 5% a year and subjected the company to leverage covenants, which ratcheted down over the life of the loan. Focusing in on that last piece, the covenants. The covenants over time would have made it increasingly more prohibitive for us to access liquidity on our ABL loan to fund our growth initiatives, potentially forcing us to source more expensive equity-like capital to fund these important investments. Now keeping the previous capital structure and some of its prohibitions in mind, let's get into the bond. First, some of the high-level terms of the issuance. The bond is $350 million in size, has a 5 and 5/8 fixed interest rate, a 5-year tenure, no amortization and importantly, has no material financial or leverage covenants, allowing us to access to our first lien liquidity. A few other key positive impacts of the bond, both for today and more importantly, what this means for our future financing activities. One, liquidity impact. We free up an additional $140 million worth of liquidity as we used the bond proceeds to pay off the $155 million, 10% term loan and also paid down most all of our line of credit draw. Post refi, the company now has approximately $280 million of liquidity available. Number two, immediate cost of debt reduction and elimination of interest rate risk. While the accretion on cash savings is modest initially and our calculation suggests we reduce our weighted average cost of debt by 50 basis points, the fixed rate nature of the bond has also eliminated any of our interest rate risk going forward. Third, there will be no cash leak on the bond. Given that there is no amortization schedule on the bond, we're able to keep more cash flow in the business over the next 5 years. Lastly and most significantly, we believe this new capital structure gives us tremendous runway for the future. This runway will be accretive to shareholders when it comes to financing the next dollar of capital needed to execute on M&A opportunities. Our calculation suggests that the new capital structure allows us to pursue $300 million worth of enterprise value at an incremental cost of capital of what is effectively 2% while still maintaining an appropriate amount of liquidity to run the business and also being responsible with leverage. Finally, and for the last part of my prepared remarks, I would like to discuss the 2021 adjusted EBITDA guidance, which is mentioned in today's earnings release. First, we've chosen to provide guidance on annual adjusted EBITDA, as we believe this metric is most indicative of the cash flow generation of the business and is a familiar comparable metric for the investing public. Additionally, we believe annual EBITDA figure is appropriate versus quarterly given seasonality and what sometimes can be ebbs and flows in equipment sales month-to-month and quarter-to-quarter in our business. Second, in terms of the number, we expect to report $110 million to $115 million of adjusted EBITDA for the full year 2021. A few observations here. One, we felt like with all the M&A activity in 2020, with COVID hopefully in the rearview mirror from a business perspective and our first quarter performance, that this was an appropriate time to provide guidance on 2021 adjusted EBITDA. Second, pursuant to previous comments I've made and investor materials we've produced, we've been focused on how we'll be able get the business, including our 2020 acquisitions, back to 2019 levels, which was $113 million of adjusted pro forma EBITDA. After analyzing each of our businesses, relative performance in the first quarter and the expected trends for the remainder of the year, we feel confident in our ability to return to 2019 EBITDA levels here in 2021. In closing, given our first quarter results, the ever improving business landscape we see ahead and the impacts of the recent bond raise, we feel our business is in a great position right now, and we're excited about executing our business plan for Alta's shareholders over the remainder of 2021. Thank you for your time and attention, and I'll turn it back over to the operator for Q&A.

[Operator Instructions] For our first question, we have Michael Shlisky from Colliers Securities.

I wanted to maybe just touch on some of your comments earlier about the -- some of the supply chain issues in the Lift truck world or in probably both categories at any construction. You touched on how it really drives some of the used sales, which makes a lot of sense, substitution to get -- whether you can get from the OEMs or from the business at the OEM to have anything available. I'm curious whether the shortage of new equipment has also led to some really strong products and service as well. I think you briefly mentioned it, but just a detail as to whether your guidance and really boost folks trying to fix their old equipment rather than buying new?

Yes, Mike, this is Ryan. I'll take that. The demand is definitely there. The thing that is the governor on parts and service revenue is going to be headcount and mechanics, which is one of the reasons we highlight that so often. So the demand is there, but our ability to meet that demand will be predicated on our ability to continue to onboard mechanics. The other thing that's happening is some flexibility in terms of the used inventory in the rental business. So to meet rental demand, if we're seeing really high use utilization on particular assets, we might look to our remarketing department to put assets into the rental fleet that we normally wouldn't. And then in addition to that, we're looking to lease returns and things like that as a flexible model of trying to bring additional equipment into the fleet if lead times are too stretched. So it's really, we're just trying to maintain flexibility to meet our customer demand. But the way that we think about the parts and service is going to be kind of governed by headcount.

Mike, this is Tony. One quick follow-up for -- based on Ryan's comments and for everyone to understand is we are not seeing any real issues in the supply chain relative to parts, which is everybody is aware it's an important part of our business. So where we're seeing it maybe with some of the new equipment, like Ryan alluded to, we're not seeing that same effect in parts. It's just good.

Got it. That's an important question, too. I also want to turn to the COVID-19 situation. I keep hearing some folks that it's really been tough still in the State of Michigan. I'm not sure if that's true or not. You guys certainly have a better view on than I do. Has COVID been an issue as far as I can see or is there any other issues during Q1 and the first part here of Q2? Or is -- are the headlines I'm reading not quite accurate?

No, Mike, that's a good question and it's probably a good time to highlight. The headlines are in relation to the infection rates in Michigan. We did have a very tough spring in regards to that. But it hasn't translated to a headwind in the business. We're seeing a V-shaped recovery in all of the markets. . The shape of the V is not as steep in Michigan, but it appears -- to us, it appears more related to supply chain issues and are still heavy concentration in the auto sector versus COVID-related issues. So again, it's a V-shaped recovery, not as steep, but the auto industry is making cars. And so when we were in the worst on the eye of the storm of COVID, the whole industry was shut down.

Okay, sure. And then I also wanted to kind of piece together statement you made during your prepared remarks. First of all, thanks for giving us the guidance here for the full year. And Ryan, your comments were about improving results throughout the year. Should we take that literally? Do you sort of see each quarter be a little bit better from that perspective between now and the fourth quarter? Or is that -- am I reading too much into it?

Like, this is -- I realize you were referring to Ryan's comments, but I'll take the question. We, last quarter, had a slide on kind of relative kind of EBITDA breaks, if you will, by quarter kind of in a historically normal basis, and we expect to kind of get back to those levels this year. And so what that has typically meant for our business and part of Ryan's comments, I believe, is that Q1 is usually rough or -- I'm sorry, I shouldn't say rough, but relatively speaking to the other quarters, we just kind of trend up from there. So when we think about the guidance that we're giving at 110 to 115, you can kind of do the rough math. Even on average, right, we would expect each of the quarters from here to be better than Q1.

For our next question, we have Alex Rygiel from B. Riley.

Very nice quarter, gentlemen. Couple of quick questions here. Can the new equipment sales continue at this dollar level sort of quarterly through the remainder of the year?

Alex, this is Tony. The -- we hope so. I think it definitely won't be demand related. If the new equipment sales take a dip, it will be supply related and probably more acute on the material handling side versus the construction side. What we made -- we alluded to or I alluded to it in my comments, but what we're finding is that our product portfolio, if you think about one end of the spectrum, if we were just the Volvo dealer and we didn't have other compact lines, for instance, that we've supported, if Volvo was out of something, we would be sunk. What we're finding is that the breadth of our product portfolio is that not everybody is out of new equipment all at once with all of these OEMs. So the breadth of our product portfolio is really helping on the construction side. On the material handling side, we're a little bit more heavily anchored to Hyster-Yale. I think they've been pretty upfront with what's going on with them. The good news on that end for us relative to maybe what an OEM's perspective is, is we can wait. As we've said all along, if a customer has to extend a lease on an existing fleet to wait for their new Hyster-Yale to show up, we're happy to continue to service them throughout that period. I'd remind you what kind of margins we make on selling forklifts is unfortunately, it might be a little bit softer for some of our sales guys as they wait for things to invoice. But there's not a lot of impact EBITDA-wise in the material handling segment when -- if we get behind in new sales.

And the one thing I would just add to Tony's comment is that the backlog is continuing to build really right now approaching record levels. It's -- the demand is there. So when we're talking about equipment sales this year, it's really a function of taking receipt of the equipment and turning around, prepping and delivering it. And that will eventually happen. It's just where, timing-wise, it hits in terms of revenue recognition.

And then as it relates to M&A, does the new balance sheet capacity change sort of the relative size of acquisition that you're pursuing?

No, we wouldn't really think of it that way, Alex. What we're pursuing on all fronts, we -- big moves in our territory will probably be anchored with expansion of -- with our OEM partners versus some of the infill opportunities that we gave examples of last year. But we're looking for opportunities on all fronts. COVID last year pulled some deals forward. It was a catalyst for deals that were in the pipeline to transact and more of a tight timeline. So this is -- we remain very focused on M&A, and that was a big part of this whole strategy with raising the bond was to have the dry powder to continue our strategy.

[Operator Instructions] For our next question, we have Matt Summerville from D.A. Davidson.

A couple of questions. Talk about your ability given where the labor market is right now and how tight it is. Are you still able to organically add to your service tech base? And the reason I'm asking that is it look like organic parts and service was only up 1.4% year-over-year total for the company. I know it was up more than that in construction. But I'm trying to kind of square that up. I guess I would have thought up organically, it would have been up a little bit more than 1%.

Ryan, do you want to talk about the labor markets and...

So in terms of the labor market, we don't really perceive any additional tightness that's been in our industry, something we've navigated for many years, a dearth of people coming into the trades. So in our industry, we're all seeking the same talent. And we remain focused on it. We are successfully on-boarding technicians. One of the benchmarks that we shared in the third quarter last year was that we had all of our employees back from furlough. We're hitting benchmark levels of labor utilization. And today, the labor utilization is there, and we are actively recruiting and hiring in all markets.

Yes, Matt. This is Tony to touch on the numeric -- the numerical part of your question there. The -- when we talk about organically, I think it's important to define that when we talk -- when we think organically, we're thinking about basically everything pre-IPO, which would have included our Michigan and Illinois construction business because recall, last year, we didn't have the 8 acquisitions in. So that business was up like we said, 14%. And it's important to think about the nominal dollars, too, associated with it. Our parts and service revenues, given the maturity of the material handling segment, our nominal dollars are much bigger on that side of the house. And we made -- I made special comments on the material handling business, parts and service specifically, has really started to close the gap. I think it was up on an organic basis, something like 6%. And when you roll all that up, you're only up 1.4% organically. But the parts and service business in material handling, it's a big number. And that business just continues to -- even though it's off year-over-year, it's not like that business is suffering. It's very cash flow generative and profitable given its maturity.

That's helpful. And then just going through your Q very quickly, it looked like within the Construction segment, that gross margins on the rental side took a bit of a hit on a year-over-year basis. And I guess that surprises me a little bit is of rates -- if utilization rates are good and seemingly, if utilization rates are good, perhaps you can start charging more.

Are you referring to gross margin?

Yes, gross margin.

So gross margin in the rent-to-rent business includes depreciation. And if you go down a few -- into our segment reporting, actually, we refer to that kind of concept. Because Flagler, which is more heavy construction coming on, they depreciate their assets pretty heavily. Anyway, it's depreciation, which is driving the year-over-year depressed margin, which is obviously noncash. Our rental revenues are on the mend, if you will, as I mentioned, related to utilization.

Got it. And then just from an end market standpoint, obviously, nonresidential construction, particularly in the Southeast, I would imagine there's a bright spot perhaps in parts of the Midwest and Northeast as well. So we would put that obviously in the very good column. Would we put logistics warehousing e-commerce in that same column? And then conversely, outside of automotive, are you seeing sort of the less -- what was the right word I would use, less steep recovery in what markets besides automotive place. So kind of the good and the still good, but maybe not as good is really what I'm asking.

Matt, and this is Ryan. I think the best way to think about the markets that are recovering, but not as quickly are the markets tied to manufacturing, where the supply chain constraints are actually muting demand because they're just waiting for products to come in. So upstate New York, Michigan, parts of our Chicago land that are tied to manufacturing are softer than the markets you addressed, which are definitely seeing surge demand and more secular long-term growth.

For our next question, we have Bryan Fast from Raymond James.

I was disconnected, so I apologize if this was already addressed. But can we just get some color on the warehouse solution space? And I guess the kind of synergies you're seeing between material handling business and then PeakLogix and the most recent ScottTech's acquisition?

Sure. So that is essentially a vertical integration of previous group of vendors. So NITCO, that was an acquisition we made in New England, that's our Hyster-Yale dealership in the Northeast, had a legacy relationship with PeakLogix. So they work together to do warehouse solutions for their customers. After we acquired NITCO, we looked at that as a strategic asset to bolster our capabilities and have more tools in our bag. One of the ways to think about the growth opportunities that we now have 100 material handling sales professionals out there looking for opportunities for a business that used to have a half dozen sales reps on the street. ScottTech is a further driving down of that strategy. So that -- sorry, ScottTech was actually a vendor to PeakLogix, so more specialized software and warehouse management type systems. And now that's again, a vertical integration where it's -- we've added that to the product portfolio. Today, there's no missing part of that capability. We have essentially a design-build warehouse solutions group where we can -- with the vendors that are part of our portfolio and then also with outside vendors kind of design and fully implement a solution for our warehousing customers. So this will be a fast-growing part of the business, and it's asset-light. It's essentially we're selling solutions, and it will have great cross-selling opportunities across the rest of the material handling product portfolio.

Bryan, this is Tony. Just to follow that up with maybe some anecdotal news, if you will. But one of the things that we know is happening and then we've gotten feedback kind of from our salespeople is that the acumen, the skill set that Peak and ScottTech now bring to the table with customers is getting us into deals that we otherwise would not have been able to touch historically prior to adding that sort of talent to the team. . And we can't speak specifically about different customers and things that we're quoting on. But we are -- we can say that we're getting in on deals that we otherwise wouldn't have for warehouse build-outs, retrofit, so on and so forth because of those deals.

Okay. That's very helpful. And then I think you kind of addressed it with Alex's question, but are you seeing customers pull ahead buying decisions in an effort to get ahead of any pending supply constraints?

It's too late. So the supply constraints are upon us. If there are certain products today that if you wanted to order a brand new from the factory, you're out more than a year. So the companies that we're thinking about that may be coming right out of COVID last summer could have gotten in front of that. But today, the supply constraints are real for our industry. They're here, and we just like to remind that we have a very flexible structure, that we're here to service our customer needs. We'll use our rental fleet. We'll use new and used inventory to make sure that we can keep them up and running.

And we don't have any further questions at this time. And ladies and gentlemen, I'll now hand back to...

If that's the -- if there are no further questions, we'll have that conclude the meeting this afternoon. And thank you, everyone, for joining.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.