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 @investors.alta equipment.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 upon 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 headline news, concerns over a possible recession in the economy in general, all our end-user markets remain solid. Our visibility through the end of the year is positive. And 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 tightness of supply continues to buy 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 driving 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 we'll 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 and enhanced 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. And further, 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 on 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 -- I will profile 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 be providing 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. For the first portion of my prepared remarks and in line with slides 11 through 14 in the deck, second quarter performance.

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 related -- 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.

One, a continually increasing rental rate environment and two, 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 expect to drive this -- we expected to drive this conversion metric higher in 2022, and these results are in line with that expectation.

Lastly, on cash flows and as depicted on slide 14 of our investor deck, on an adjusted pro forma basis, 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.

Finally, 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 year-end -- quarter end to round out my comments on Q2, we ended the quarter with $273 million and unsuppressed 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.

First, 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.

As shown on slide eight of the deck, 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 -- to help facilitate the YIT deal and with an eye on funding future growth initiatives, 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 and a diverse -- and in some instances, historically challenging environment. In our view, the past two years has validated the flexibility and strength of our business model.

We also believe that the investments that 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, allows for the dry powder necessary to both 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 for shareholders.

For the last area of my prepared remarks and as presented on Slide 19, I'd like to discuss the increase we made to our 2022 adjusted EBITDA guidance. First, in terms of the guidance, we increased the range on both the high and the 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. One, we closed YIT on July 29. And thus, we have incorporated our expectations for IoT over the last five months of the year into the new guidance range.

Two, we are really pleased with our second quarter results, especially as it relates to new equipment sales as OEM deliveries and our ability to convert those deliveries into revenue exceeded our internal expectations.

Third, we feel very confident that the strength we've seen thus far in the year 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 boluses 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'll 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 bit 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?.

Kevin -- sorry, 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. So, 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.

So we -- 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, again, with the caveat of variability that in this quarter, our supply matched that demand for the first time.

So -- we continue -- I guess our view hasn't changed in terms of the global issues or the issues really that are impacting, primarily our major OEMs, Volvo, Hyster, Yale, JCB in that. The backlog is there for new equipment. And if we can get supply, we can deliver it and generate a really solid margin.

So thematically, again, everything still is intact for the second half of the year. If we believe that we can get supply that 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 then provide parts and services over time.

Can you talk a little bit 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. So, one of the themes that we've had on every call is that labor tightness is not a new thing 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 of trades is part of our lifeblood. So it remains a focus.

We haven't fallen behind our recruiting efforts or kind of our budget for adding headcount. What I will say though, in terms of the tightness, we're having a harder time with retention and with recruiting on more just general administrative type positions.

So we are feeling that, and we've put a big focus on our culture and on retention, especially as it relates 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 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 push you harder these days on sale multiples here.

Do you think there's a reason why 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 that 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 really has changed.

We are seeing that some of the – the more, I would say, asset-light 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.

And so to the extent that we want to add complementary services that -- to the more kind of traditional dealerships that we've seen multiples maybe elevate.

But when it comes to the down the middle of the fairway dealership multiples or rental multiples that we've seen, we have -- there have been some deals that we – that have gotten away from us, and that's okay because we've got such a robust pipeline that we can maybe pass on deals that we think get too expensive. So we're really selected that way.

But by and large, the trading through Alta pipeline, the multiples, I think that’s been intact.

I don't know, Brian, if you want to say what's the pipeline in June?.

The themes around the pipeline also remain intact. There's a demographic tailwind to our strategy, where there are more family business is 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..

Thank you very much..

Thanks a lot..

[Operator Instructions] And we’ll hear next from Bryan Fast with Raymond James..

Yes, good afternoon. Just following on Alex's question there.

Just 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..

So that item it remains tight. So backlogs or lead times rather remain at record levels for a lot of the categories of product. And we believe that demand has not been eroded. And it's a pretty level playing field across the competitive landscape. The other manufacturers are challenged with some of the same constraints of their materials.

So we think that this is going to create an environment where the demand is there longer, but there's not really enough supply to take care of surge demand per se. We think we have healthy demand and we – the receiving of the equipment will be variable, and I think there was evidence of that this past quarter. That could be lumpy.

But in terms of our budget, how we look at the business in terms of the product support and hitting our numbers, we – we have visibility where we think that we're -- the trend is intact..

And Bryan, maybe you mentioned kind of stress testing was the first thought that I had was Ryan and I have made it a point to say that we don't lose sleep over the next new equipment sale. Our business -- 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, though, you can have a quarter like we just did and kind of exceed expectations. But when we think about stress testing the backlog I just keep coming back to the business model that new equipment sales line can be volatile, one way or the other.

And -- but the rest of the business, the product support and the rental is really what we focus on in terms of continuing to generate organic growth and have to be steady and less variable..

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 made special note in the queue to talk about. We had part of the ERP cutover that we did for our New York businesses in 2021. Caused a little bit of disvariability in how we reported gross margin.

Overall, the only thing that I would note is that we are seeing a higher level of warranty write-offs where previously, an OEM would refund us, if you will or reimburse us for warranty claims. And they're getting a little bit more less lenient, I would say, on some warranty claims. So we have experienced some write-offs that way.

The other thing to mention, Brian, is that the overall mix of our service revenue is continually higher mixing higher towards the construction segment, which in pockets has a little bit of a different gross margin profile. So nothing other than those two items, nothing certainly significant to read into there..

Okay. That's it for me. Thanks for the color..

[Operator Instructions] We'll hear next from Matt Summerville with D.A. Davidson..

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 kind of what are the major end markets outside of maybe e-commerce logistics being addressed by the company? 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. So in my earlier comments, I referenced the unit deliveries for the industry. So what I'm referencing there is ITA figures -- Industrial Truck Association.

And entering the Southeastern Canadian market, which is heavily concentrated around Toronto and Montreal, it's 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.

We -- part of what our organic opportunity is to take Yale to the national share in Ontario, and there's -- Ontario and Quebec, which it lags today.

And then there's the opportunity to build out a portfolio of ancillary products, where in our mature markets, the Yale branded and Aster branded forklifts are the core of our strategy, but they may only represent three-fourth of our machine sales where we're doing a lot of Allied equipment sales, both vehicles and also non-vehicular allied equipment.

So we'll be -- we have basically now a playing field in Canada that's completely untapped for us, where we can bring in PeakLogix and the material handling piece, ScottTech and the software, the PickPro software.

I highlighted an account in New York where we sold the full suite of products, everything from the forklifts to the warehousing product, and that's the type of offering we'll be able to now take to those Canadian customers. In terms of the end markets, it is a very dense warehousing and logistics market.

It would look a lot like our Chicago business, just the density of warehousing around the Toronto in particular market. And then the other thing around about Ontario is it looks an awful lot like our Northern Midwest footprint list of auto manufacturing and other types of manufacturing.

So really, in terms of end market coverage right in our warehouse and legacy accounts on the Yale side heavily in automotive, which is -- we'll hit the ground running in that regard as well. So, very excited about it.

We also think of it as kind of a geographic bridge across our territory on a map now we can drive across our territory from the headquarters to Buffalo. So -- and then, Tony, I'll let you take the back half of that question..

Sure, Matt. The -- on the EBITDA profile, the cash flow -- sorry, the revenue mix is going to be more heavily weighted to rental for YIT relative to the rest of our material or Legacy Material Handling segment. And so you're going to have higher EBITDA margins just by virtue of the depreciation in rental.

What we found through due diligence is that the Canadian market is a little bit more akin to rental versus just sales. So that's what you're seeing there. But to Ryan's point, we view this as absolutely a big -- probably our biggest market that we operate in from a material handling perspective.

It's important to note that we just have the Yale line Hyster, Yale there with this opportunity. But nonetheless, $47 million of revenue, we plan to absolutely grow that figure..

Got it. And then as a follow-up, as I'm sure you've seen everyone has seen it right. Amazon is slowing down their e-com and warehousing logistics related infrastructure build out.

Have you seen any impact from that on your business? And can you talk specifically because I think you've done it in the past, around how backlog and revenue metrics look like for that specific end market grouping for Alta?.

Matt, this is Tony. I'll take that one. It's a good question, and I'll answer it, I guess, our PeakLogix subsidiary, which, of course, is engaged in kind of the end market that you're referencing there with Amazon. Our business has not been impacted on an anecdotal level from any sort of pullback in building new warehouses.

The majority of our work comes from automating existing facilities. I think last quarter, I made mention of the fact that still 80% of warehouses and manufacturing facilities in the US still don't have any form of automation.

So we are still -- our backlog in that business is still very much heavily weighted on existing facilities rather than new build.

And what we continue to hear from customers is that the automation is becoming not a nice to have, but a need to have because of the dearth of labor to kind of come full circle to Alex's first question, where the idea of not having labor on the line, if you will, at a new manufacturing facility or a distribution facility is posing a risk to revenue streams for some of our customers, where they're saying we need the robot rather than the robot makes sense from an ROI perspective, almost like it's becoming existential to their own businesses.

So we're -- our backlog is more heavily weighted toward what I would call existing infrastructure versus new builds..

Got it. Maybe I'll just ask one more.

How are you guys thinking from here on your ability to further push rental pricing and further capture new and used equipment pricing relative to where you're at today?.

So 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 as participating in the market and making sure that we're taking care of our customers, but we're also using our scale to go after new business. So it's kind of like a -- it's a triage exercise.

It's like do you take the deal, or do you save the rental assets to take care of customers and drive utilization. And it's something that we're constantly looking at, and it's not, it's just asset class by asset class. We just try to optimize and it's a continual process..

The other thing I would mention, Matt, is just on new equipment sales. We don't have much risk if at all, in the backlog. Our customers are ordering through us to Volvo or Hyster, Yale and they've agreed to pricing. We take very little kind of pricing risk in the backlog.

And so, if there are price increases in the end, it becomes up to the customers to whether they want to accept it or not. And as Ryan alluded to, it's the market and all of the OEMs at this point are at some level of 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. So, feeling about it that way. What do you think made this quarter so much better for you guys than you've been experiencing from your OEMs being able to deliver to you. And we're obviously sitting here in August.

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 then on the other hand, you said you still have a record backlog.

So maybe just kind of bring that full circle for me?.

Yeah. Matt, it's a better question for the OEMs. But we – what I would say is, there was kind of this under-promise over-deliver from a lot of the OEMs, and our OEMs have been able to kind of over deliver in Q2.

The other thing that, I would say about the first half of the year typically is – which we were concerned about is typically that is when we're taking inventory for the sales season. And kudos to our OEM for being able to hit and in some cases, actually exceed delivery schedule.

So I would say, we are seeing Q2 is indicative of some sort of throughput through – in terms of new equipment deliveries, certainly better than what we've seen. But we would also say that, we're not out of the woods either. We – we continue to see delivery dates move one way or the other, again, lots of variability.

And so I mentioned that, at the end of my remarks that, Q2 we were flowing, but that doesn't mean there maybe an ebb somewhere in the back half of the year..

Got it. Thanks, guys..

Thanks, Matt..

And 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..