Financial Data and Key Metrics Changes - The company generated $422 million in revenue for Q1 2025, with adjusted gross profit of $136 million and adjusted EBITDA of $73 million [16] - Average utilization of the rental fleet was just under 78%, up from 73% in Q1 2024, indicating improved operational efficiency [16][17] - The total OEC (Original Equipment Cost) in the rental fleet reached $1.55 billion, marking a $95 million increase year-over-year [18] Business Line Data and Key Metrics Changes - The ERS (Equipment Rental Services) segment reported $154 million in revenue, a 13% increase from $136 million in Q1 2024, with both rental revenue and rental asset sales showing significant year-over-year growth [17][18] - The PES (Product Equipment Sales) segment saw equipment sales of $232 million, slightly down from the previous year, but with a backlog increase of $51 million or 14% [19][20] - The APS (Aftermarket Parts and Services) segment maintained revenue at $35 million, flat compared to Q1 2024, with a gross profit margin of 22% [21] Market Data and Key Metrics Changes - The company noted strong demand in core T&D (Transmission and Distribution) markets, driven by increased electricity demand and maintenance spending [6][7] - Average OEC on rent for Q1 was over $1.2 billion, reflecting a 13% year-over-year increase [7][16] - The backlog in the PES segment ended at just over $420 million, consistent with historical averages [20] Company Strategy and Development Direction - The company plans to continue investing in its rental fleet to meet current and projected demand, with a focus on maintaining strong relationships with suppliers [9][21] - Management expressed confidence in achieving growth targets for 2025, reaffirming revenue guidance of $1.97 billion to $2.06 billion and adjusted EBITDA guidance of $370 million to $390 million [23][24] - The company is monitoring U.S. tariff policies closely and has implemented strategies to mitigate potential impacts on operations [11][12] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about achieving growth targets despite economic uncertainties related to tariff policies [7][14] - The company highlighted the resilience of its end markets and the importance of long-term relationships with suppliers and customers [14] - Management expects to see continued strong demand in the second half of the year, particularly in the ERS and TES segments [29] Other Important Information - Borrowings under the ABL (Asset-Based Lending) at the end of Q1 were $655 million, with a net leverage of 4.8 times [22] - The company aims to reduce net leverage to below three times by the end of fiscal 2026 [23] Q&A Session Summary Question: What gives you conviction in the acceleration in revenue growth? - Management highlighted strong demand in the ERS segment, with 13% revenue growth in Q1 and a robust backlog, indicating positive trends for the remainder of the year [26][29] Question: Does the IJ pause by the Trump administration create questions for customers? - Management noted that they are not seeing delays in projects from customers and emphasized the flexibility of their rental model [30] Question: Can you provide more color on agreements with vendors to mitigate tariff exposure? - Management discussed strong relationships with chassis suppliers and proactive inventory management to mitigate tariff impacts [38] Question: How should we think about inventory reduction by year-end? - Management indicated that inventory reduction will be more second-half weighted, with continued inventory purchases in Q2 [41] Question: How quickly do orders convert to sales revenue? - Management explained that conversion times vary by product category, with some converting quickly and others taking three to six months [51] Question: What is the target leverage by year-end? - Management aims for meaningful movement in leverage, potentially getting close to or below four times if high-end cash flow targets are met [55]

Financial Data and Key Metrics Changes - For Q1 2025, the company generated $422 million in revenue, $136 million in adjusted gross profit, and $73 million in adjusted EBITDA, reflecting strong year-over-year performance [17][25] - Average utilization of the rental fleet increased to just under 78%, up from 73% in Q1 2024, indicating improved operational efficiency [17][18] - The total OEC (Original Equipment Cost) in the rental fleet reached $1.55 billion, marking a $95 million increase year-over-year [19][20] Business Line Data and Key Metrics Changes - The ERS (Equipment Rental Services) segment reported $154 million in revenue for Q1, a 13% increase from $136 million in Q1 2024, driven by strong rental demand [18][22] - PES (Product Equipment Sales) segment saw equipment sales of $232 million, slightly down from the previous year, but with a significant backlog increase of $51 million or 14% [22][24] - APS (Aftermarket Parts and Services) revenue remained flat at $35 million, with a gross profit margin of 22%, down from the previous year due to higher material costs [23] Market Data and Key Metrics Changes - The company noted robust demand in core T&D (Transmission and Distribution) markets, with utility contractor customers experiencing sustained activity levels [6][7] - The backlog in the PES segment increased to over $420 million, aligning with historical averages, indicating strong future sales potential [22] Company Strategy and Development Direction - The company plans to continue investing in its rental fleet to meet current and projected demand, with a focus on maintaining strong relationships with suppliers and customers [8][15] - Management emphasized the importance of adapting to changing U.S. tariff policies and leveraging inventory strategies to mitigate potential disruptions [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about achieving growth targets for 2025, despite economic uncertainties related to tariff policies [7][15] - The company reaffirmed its full-year guidance for 2025, expecting total revenue between $1.97 billion and $2.06 billion and adjusted EBITDA between $370 million and $390 million [25][26] Other Important Information - The company reported borrowings under its ABL (Asset-Based Lending) facility of $655 million, an increase of $73 million from the previous quarter, primarily for equipment purchases and working capital needs [24] - The company aims to reduce net leverage to below three times by the end of fiscal 2026, with a target of $50 million to $100 million in levered free cash flow for 2025 [25][26] Q&A Session Summary Question: What gives you conviction in the acceleration in revenue growth? - Management highlighted strong demand in the ERS segment, with a 13% revenue growth in Q1 and a robust backlog, indicating positive trends for the remainder of the year [29][32] Question: Does the IJ pause by the Trump administration create questions for customers? - Management noted that they are not seeing delays in projects from customers and emphasized the flexibility of their rental model to adapt to changing customer needs [33] Question: Can you provide more color on agreements with vendors to mitigate tariff exposure? - Management confirmed proactive strategies with suppliers, including pulling forward inventory purchases to manage costs effectively [40][41] Question: How should we think about inventory reduction as we head towards the end of the year? - Management indicated that inventory reduction will be more second-half weighted, with continued adjustments based on customer demand [42][43] Question: How quickly do orders convert to sales revenue? - Management explained that conversion times vary by product category, with some converting quickly while others may take three to six months [55] Question: What is the target leverage by year-end? - Management stated that they aim for meaningful movement in leverage, potentially getting close to or below four times if they hit the high end of their cash flow target [58]