Good morning. Today is Wednesday, February 15th, 2023. Welcome to the Toromont Industries Ltd. full year and fourth quarter 2022 results conference call. Please be advised that this call is being recorded and all lines have been placed on mute to prevent any background noise. Your host for today will be Mr. Michael McMillan, Executive Vice President and Chief Financial Officer. Please go ahead, Mr. McMillan. Great. Thank you, Michelle. Good morning, everyone. Thank you for joining us today to discuss Toromont's results for the fourth quarter and full year of 2022. On the call with me this morning is Scott Medhurst, President and Chief Executive Officer. Scott and I will be referring to the presentation that is available on our website. To start, I would like to refer our listeners to slide two, which contains our advisory regarding forward-looking information and statements. After our prepared remarks, we will be more than happy to answer questions. Let's get started. We can move to slide three, and Scott will start us off. Thank you, Mike. Good morning, everyone. Team delivered solid operating and financial performance in the fourth quarter and throughout the year, ending in a strong position. We continue to monitor supply and other uncertain market and economic variables. The Equipment Group continued to execute well, delivering strong rental and product support results while optimizing equipment and parts sales. Supply chain challenges persisted, albeit some product lines have shown recent improvement. Package revenue improved in the quarter on project construction and higher product support activity. Across our organization, our team remains committed to the disciplined execution of our operational model, adapting to changes in the business environment while remaining focused on executing our customer deliverables. In the fourth quarter of 2022, a Quebec property was sold, resulting in a pre-tax gain of CAD 17.7 million, CAD 15.4 million after tax, or approximately CAD 0.19 per share. This facility was previously a Battlefield branch acquired in the 2017 Hewitt acquisition. The disposition is an example of how our Battlefield Equipment Rental team continues to execute our Hewitt rental integration and operational excellence footprint focused on generating operating efficiencies and improved customer deliverables. 2022 has had its share of challenges. Over the last couple years, we have made some key organizational changes, which has enabled our team to manage well through pandemic challenges and a variety of economic dynamics we have not seen for some time. Our Toromont team has executed reasonably well, although there is always room to continuously improve, I am extremely proud of our team and how they are supporting our customers and building our business for the future. Turning now to our financial results highlighted on slide four. Company ended the year with solid fourth quarter results on strong execution from our teams. Net earnings in the fourth quarter of 2022 included the aforementioned property disposition gain. Higher revenue and good expense control drove positive results in the Equipment Group. Results at CIMCO were up modestly from the similar period last year, with higher revenue partially offset by higher expenses resulting in a 3% improvement to operating income. On a full year basis for 2022, the company delivered strong bottom-line results reflecting a favorable sales mix, higher rentals and product support revenue to total revenue, improved the gross margins and higher interest income. Rental and product support revenue increased on good market activity. Equipment revenue increased after a slow start to the year, mainly caused by delays in the product deliveries. Supply chain constraints and general macroeconomic factors such as inflation, high interest rates, and lingering pandemic concerns have challenged the business in 2022, as well as disrupted historical trends and seasonality patterns, and are expected to continue to do so for the near to mid-term as we progress into 2023. Backlog was healthy and relatively unchanged year-over-year at CAD 1.3 billion at year-end, with a decrease in the Equipment Group down 4% and an increase at CIMCO up 23%. Backlog is supportive and reflects strong order activity over the past year, coupled with tight but improving inflow of product. That said, ongoing supply constraints still persist for many product groups. On a consolidated basis, revenue increased 20% in the quarter and was up 9% for the year. Equipment and package sales increased in both the quarter and on a year-to-date basis, with good increases in both groups in the quarter. Although year-to-date revenue improved, revenue across the businesses continued to experience delays in deliveries and construction project schedules due to supply chain constraints throughout the year, which will continue into 2023. Product support and rental revenue increased in both the quarter and on a year-to-date basis. Product support increased on stronger demand and technician availability with work in process levels remaining high, while rental revenue increased on larger fleet and higher utilization. Operating income was up 43% in the quarter and up 31% year to date on higher revenue, a gain on the property disposal and improved gross margins, in part due to a favorable sales mix with a higher percentage of rentals and product support revenue to total revenue. Q4 expense levels decreased to 9.7% of revenue year to date, reflecting the property disposition in 2022. Expense management continues to be an area of focus and discipline given the economic environment. Earnings increased 51% in the quarter and 37% year to date versus 2021. Basic earnings per share was CAD 1.94 in the quarter, CAD 5.52 for the year. We are proud of our team as they remain committed to disciplined execution of our diverse operational model, adapting to changes in the business environment while remaining focused on executing the customer deliverables. Activity remains sound with a healthy backlog level supportive of future results. We continue to monitor specific product availability, inflationary and interest rate pressures, and dynamics in the business as the economic environment continues to evolve and change. Technician hiring improved throughout the year and remains a priority in order to support our aftermarket strategy and value-added product offerings to meet and exceed our clients' long-term needs. The diversity of our geographic landscapes and markets serve extensive product and service offerings, technology investments, and financial strength, together with our disciplined operating culture continue to position us reasonably well. Mike, I'll turn it over to you for some more detailed comments on the Group results. Thanks, Scott. Let's start with the Equipment Group on slide five. Revenue was up 22% in the quarter and 10% year-to-date. Taken together, total new and used equipment sales were up 27% in the quarter and 4% for the year. New equipment sales increased 32% in the quarter on good deliveries in the mining, power systems, material handling, and agricultural markets, while ongoing inventory supply constraints continued to dampen deliveries in the construction market. Year-to-date, new equipment sales increased 5%, reflecting the slow start to the year, again, primarily due to supply chain dynamics. Used equipment sales increased 8% in the quarter and 2% year-to-date, mainly due to lower rental fleet dispositions. Used equipment demand has been relatively strong given product availability and economic conditions during the pandemic timeframe. In the quarter, total new and used equipment sales increased 275% in mining, 27% in power systems, 38% in material handling, and 24% in our agricultural market, while being lower in construction markets by approximately 2%. Rental revenue was up 10% in the quarter and 17% for the year, reflecting improved utilization on solid market activity. Growth was experienced in most areas for the year with the following increases: light equipment rentals were up 17%, heavy equipment rentals up 20%, power rentals up 15%, and material handling up 10%. The RPO fleet or rental with a purchase option was at CAD 44.7 million versus CAD 46.1 million a year ago, reflecting the slightly lower demand and continuing to trend at below pre-pandemic levels. Product support revenue grew 19% in the quarter and 15% in the year, with increases in both parts and service revenue across all markets in most regions. Looking at specific markets for the year, growth was as follows: construction up 16%, mining up 17%, material handling up 9%, power systems up 8%, and agricultural activity up 12%. Gross profit margins increased 10 basis points in the quarter and 180 basis points in the year compared to 2021. Rental margins have improved on the higher activity, which increases utilization. Product support margins have also improved with continued focus on efficiency as well as higher activity levels. Equipment margins continue to be competitive but also reflect strong demand and tight supply. Sales mix was a bit of a swing factor, being favorable in the year and unfavorable in the quarter. This is mainly reflective of timing of equipment delivery, which impacts the proportion of rental and product support revenue relative to total revenue. Selling and administrative expenses were down 9% in the quarter and were up 3% for the year. As Scott previously mentioned, during the quarter, our Quebec-based property was disposed of, leading to a pre-tax gain of CAD 17.7 million. Expenses in 2021 also included a CAD 5 million charge for the settlement of defined benefit pension obligations for certain retirees. Excluding these two items, expenses increased 15% in the quarter and 7% year-over-year. Compensation costs were higher in both the quarter and for the year, reflecting staffing levels, regular salary increases, and increased profit sharing accruals on the higher income, which was partially offset by the mark-to-market adjustment on DSUs. Other expenses such as training, travel, and occupancy costs have increased in light of activity levels and inflationary effects. Bad debt expense increased CAD 2.5 million in the quarter and CAD 5.6 million on a year-to-date basis, reflecting higher volume and an increase in age receivables. Selling and administrative expenses were lower at 11.7% as a percentage of revenue versus 12.5% last year. Operating income increased 47% for the quarter and 33% year-to-date, mainly reflecting the higher revenue, gross margin improvements, and the property disposition gain, partially offset by higher expenses. Bookings decreased 34% in the quarter and 29% year-to-date. Construction bookings were down 60% in the quarter, reflecting a strong prior year comparable that included several large orders. Power systems bookings were also down 25%. Higher orders were received in mining, up 45%, agriculture up 17%, material handling up 6%. Backlog of CAD 1.1 billion was 4% lower than last year, reflecting improved equipment delivery for manufacturers in the latter part of the year. Approximately 90% of the backlog is expected to be delivered in 2023, of course is subject to timing differences depending on vendor supply, customer activity, and delivery schedules. Turning now to CIMCO on slide 6. Revenue was up 7% in the quarter, lower 3% on a full year basis against a tough comparable last year. Supply chain dynamics and construction schedules have also dampened results in 2022. Package revenue increased 2% in the quarter on the advancement of construction projects. Also reflecting lower industrial and recreational activity in Canada. U.S. activity was higher in the quarter in both markets, however, varies due to the smaller base. For the year, package revenue was down 17% on lower industrial activity, with several large industrial projects in the prior year making for the tough comparable. Recreational activity remained relatively unchanged. Product support improved 14% in Q4 and 17% for the year, with increases in both Canada and the U.S. Activity levels have improved slowly with the easing of the pandemic restrictions and reopening of recreational centers after the prolonged pandemic closure period. The increased technician base continues to support activity levels. Gross profit margins were down 70 basis points in the quarter versus the comparable period last year. Lower package and product support margins more than offset the favorable sales mix. On a year-to-date basis, gross profit margins increased 180 basis points versus last year. Good project execution and a favorable sales mix offset inflationary factors and supply chain constraints. Selling and administrative expenses were up 7% in the quarter and 5% in the year. Bad debt expense decreased $2 million in the quarter and $1.1 million for the year, reflecting focused collection activities. Travel and training expenses increased to support activity and staffing levels. Expenses in the fourth quarter of 2021 were also comparatively lower, which reflected non-recurring accrual adjustments following the implementation of the new payroll and HRIS system last year. Occupancy costs increased in 2022 as a result of the relocation of the Canadian head office to Burlington, along with other related branch changes. As a percentage of revenue, selling and administrative expenses were unchanged at 15.9%. Expenditure control measures on discretionary spend remain a key focus area for the CIMCO team. Operating income was up 3% for the quarter, reflecting higher revenue dampened by lower gross margins and higher selling and administrative expenses. Operating income was up 6% year-to-date, reflecting a favorable sales mix and improved gross margins. Bookings decreased 19% in the quarter on lower orders in both Canada and the U.S. However, timing of decisions by customers and receipt of orders can vary from period to period. On a full-year basis, bookings were up 10% at just over CAD 200 million, with a 3% increase in Canada and a 31% increase in the U.S. Both markets were higher, with industrial bookings up 10% and recreational orders up 9%. Backlog of CAD 198.4 million was 23% higher versus last year. Both recreational industrial backlog increased, in part reflecting recent order activity and the deferral or delay of construction schedules resulting from supply chain constraints. Substantially all the backlog is expected to be realized in revenue in 2023. Again, this is subject to construction schedules and potential changes stemming from the supply chain dynamics. On slide 7, we'd like to touch on a few key financial highlights. Investment in non-cash working capital increased 55% versus a year ago, mainly driven by higher accounts receivable and inventory levels reflective of higher activity levels. Clearly, we are still not experiencing normal seasonal trends. As one would expect, however, our operating teams are keenly focused on allocating capital effectively and proactively managing working capital to respond to customer requirements, evolving market conditions, activity levels, and delivery timing. Accounts receivable continue to receive focus, while DSO increased up six days compared to last year, we are closely managing the aging of our receivables. Inventory levels are higher than prior year, driven by a number of factors, including a strong backlog, delivery timing, work in progress completion, driven mainly by parts availability, coupled with strong demand and inflation. We ended the year with ample liquidity, including cash of CAD 928 million and an additional CAD 471 million available to us under existing credit facilities. Our net debt to total capitalization ratio was negative 14%. Under our NCIB program, the company purchased and canceled 473,100 common shares for approximately CAD 48.5 million for the year, which supports good capital hygiene by mitigating option exercise dilution. Overall, our balance sheet remains well positioned to support operational needs, and we are prepared to manage challenges related to the economic variables we are all experiencing. We continue to exercise the operational financial discipline one would expect as we evaluate investment opportunities that may develop within this dynamic environment. Toromont targets a return on equity of 18% over a business cycle. Return on equity improved to 23.5% compared to 19.6% for 2021, and exceeds our five-year average of 19.8%. Return on capital employed was 32.3%, up from 26.6% last year. The improvement in both of these metrics reflect improved earnings and continued capital discipline. Finally, as announced yesterday, the board of directors increased the quarterly dividend by 10.3% to $0.43 per share. Toromont has paid dividends every year since 1968, and this is our 34th consecutive year of dividend increases. We continue to be proud of this track record and our disciplined approach to capital allocation. On slide eight, we conclude with some key takeaways as we look forward into 2023. We expect the business environment to remain uncertain with a number of macro and industry factors at play. While industry activity levels have improved as pandemic restrictions have eased in most markets, dynamics of the global supply chain, inflationary pressures, customer credit risk, higher interest rates, and other global factors are exerting pressures that overshadow normal seasonality and patterns. We continue to proactively monitor developments closely, and we are prepared to respond appropriately. As one would expect, we continue to focus on our three key priorities, leveraging our learnings, and focusing on protecting and building our business for the future. Our backlog levels are supportive, but subject to global supply challenges and related delivery schedules. Technician hiring also remains a top priority to support our aftermarket and value-added product and service offerings to meet and exceed client needs and build our team for the future. Operationally and financially, we are well positioned to effectively support our customer requirements and evaluate market opportunities, leveraging our operating disciplines and culture. It has been another year of perseverance through unique and challenging conditions, we appreciate our entire team's exceptional effort and commitment to continue to support our customers during this unique and challenging time. Thanks also to our valued customers, supply partners, and shareholders for their continued support. That concludes our prepared remarks. At this time, we will be pleased to take questions. Michelle, back to you to set up the first call, please. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by the number two. If you are using a speakerphone, please lift your handset before pressing any keys. Your first question will come from Jacob Bout at CIBC. Please go ahead. Good morning. Morning, Jacob. Just a question here on equipment backlog. You know, this is the third quarter that we're seeing quarterly sequential declines. just wondering how this translates into how we should be thinking about 2023. You know, is the expectation here that, you know, equipment sales could be somewhat softer versus 2022, but still higher than 2021 and 2020? Yeah. Thanks for the question, Jacob. I think, in context, a couple things to consider there. It is down sequentially, one of the benchmarks that we tend to look at. We did mention in our commentary that, you know, the economic factors and pandemic, sort of path that we've been through has really overridden normal seasonality. You know, the backlog and the orders coming in Q4, backlogs at strong levels, certainly probably three times what normally would be seasonally, which is a function of all the factors I mentioned. I think, when you look at what we would normally see seasonally in order input pre-pandemic like 2019, it is down a little bit. That's a good context as well, and it just demonstrates that we're, you know, we're in different conditions at this moment. I think, you know, if you look at some of the commentary and some of the disclosure we provide in terms of the composition, you'll see, you know, construction's down, but we are seeing, you know, reasonable order flows in the mining sector, in agriculture, in material handling and so forth. You know, I wouldn't speculate on how that's gonna transpire throughout the course of the year, but I think it's supportive as we enter into 2023 at this stage. Okay. Maybe just to my second question here, just on the rental market. You know, it looks like there was good growth in the quarter, but RPO was down, you know, substantially and, you know, trending below pre-pandemic levels. I'm just wondering why. That, Jacob, in terms of the rental, the rental activity remains very strong. We're really pleased with how our teams, both on the light, the heavy, and the power and material handling have executed. We allocated fairly significant capital in there last year, we're pleased with the market performance on the rental. Particularly, we're starting to get the traction that our team's been working on in Quebec and Maritimes. We saw some nice Growth in there with our change in go-to-market strategy. That was a positive in the rental. With regards to the RPO, I mean the RPO portfolio is slightly down again. You're at historically low levels when you compare to pre-pandemic. It's a reflection of, I think, availability, customer shifts in their buying patterns. You know, we've been operating in a bit of a unique environment and so it sort of is what it is in terms of the market. You know, it's just reflection of buying patterns really. Are you seeing any difference between how Battlefield is performing versus your heavy rents? Both are performing reasonably well. We're pleased. You saw the rental numbers for the quarter and the full year for rental Equipment Group was up 10%. Utilization, I mean the light rental, that utilization, we gained 2%, which is fairly significant in the utilization in the marketplace. We again, I think the teams have executed relative to capital allocation and really pleased along. Still ways to go. Pleased with how we've shifted with our Quebec and Maritime go-to-market approach and started to execute better in that environment. Leave it there. Thank you. Thank you. Great. Thanks, Jacob. Your next question comes from Michael Doumet at Scotiabank. Please go ahead. Hey, good morning, Scott and Mike. Good morning. Hey, you know, fantastic quarter and a fantastic year. I wanted to focus on the gross margin improvement. You know, that's up about 220 basis points versus 2019. I think the Equipment Group is even higher. You know, I think we're all trying to parse out how much of this expansion is driven by, you know, the improvements in the business, which we know you guys are really good at, and then the favorable market conditions that, you know, may have played out on the margin front for 2022. I mean, any way you can break that down for us, maybe at a high level? Maybe just comment on where some of the largest gains came from in terms of gross margins. Well, maybe just to start, Michael, as you look at our gross margins, I think a couple of underlying factors certainly. Like we continue to see, as you know, strong. Like, although on a year-over-year basis, used equipment still remains a very strong contributor to our equipment sales. We're starting to see a little better traction on new equipment and deliveries. We're seeing, you know, we're continuing to see strong results in terms of the used equipment segment, given the tightness of the market, no surprise there. I think when you look at the mix of the business as well, you know, product support, we're seeing good growth there, year over year, both in, you know, our CIMCO business and our Equipment Group. The mix contributes to that. I think, you know, we've been able to manage the pricing and so forth throughout the year and so forth. I think we just touched on rental as an example. When you look at rental, I mean, the utilization rates, the way the team has executed, and the contribution there has been quite strong as well, right? I think, you know, those factors all contribute to a stronger gross margin. I think, you know, we continue to see some operating leverage too, right? We're seeing inflationary factors creeping into certain areas. I would say that, you know, the team is doing a very good job at managing discretionary areas, right? I'll provide a little more color in there. I mean, the team did a reasonably good job in there on the execution. We call it operational excellence strategy. We had improvement in our material handling business. We had some improvement in ag. It's the sum of all parts, really. You know, we had some. We were fortunate in some areas. Giving a little more color on used, I mean, you've got rental disposition is down, right? Fairly significantly on the heavy and overall on the full year on the light. That's because of the availability. We had to, you know, even though we've allocated a lot of capital in there, we've had to go outside our normal operating practices because of the demand, which is good. When you get an increase there in utilization, that's reflective in the margin. Also on the used, you know, your used, we're pleased that the team shifted a few years ago with some of our strategies on used, opportunistic on the buying. Our used purchased strategy I believe has been a good story, and that's added up a bit on the margin a bit in terms of buying equipment, rebuilding equipment. We've also really started to develop our offering of value proposition to customers on being an outlet for them on selling their equipment. That's up. You know, you've got some big shifts there on a full year basis, about 60-66% plus improvement there on this used purchasing environment. So that's really, really solid execution, which all adds up to the what you're talking about there. Our rebuilds, you know, in the Q4, our rebuilds are up another 120%. This all starts to add up in terms of the aftermarket strategy. We're, you know, we're fortunate in how the teams have executed there, but we never get ahead of ourselves. You know, that's what we saw in the quarter and the full year. There's some certainty in there, and we gotta continue to execute and prove it out. Again, that Quebec and Maritimes rental model did improve, but we have to continue on that front as well. So it's sort of the sum of all parts in there, a bit. Okay. Yeah, that totally makes sense. I appreciate the color, guys. Maybe the second question on the construction piece, now I'm trying to square some of the movement, you know, from the construction end market as it relates to kinda your backlog and your revenues. You did comment that there was some slippage You know, the product support trend, it was strong, but did slow down sequentially. The bookings were a little bit softer on the construction side. You know, and I'm assuming, like in the back of all our heads here, you know, we're seeing higher rates and we're assuming that, you know, that'll eventually have an impact to the construction end market. Maybe just to kinda comment on what you saw through the quarter and maybe what we could expect early in 23, just in terms of construction market. not gonna predict on 2023 with all the uncertainties and everything going on. I don't know how one would do that, but. we won't do that. what we saw in the quarter, yeah, there was slippage, okay? that showed a bit in the backlog. some of those availability constraints impacted our execution. there was some softening in the industry activities, okay? that's what we saw. still, reasonably, when you look at it historically, still reasonably solid numbers. there was some softening in that, C&I, industry activity levels, which, you know, you're coming off some high, you're coming off some tough comps in there. Mm-hmm ... on that construction side. That's what it is. That's what we saw in the quarter. Mm-hmm. We'll see. There were some larger orders in Q4 of last year, too, and particularly in that segment. Sometimes you see a little bit of lumpiness there, but I think it's more the former discussion that Scott mentioned. I mean, I think right now with these market dynamics, you know, we're really shifting to monitor and get the pulse from the front line on our pipeline forecasting just to see. We've gotta stay very close to that with some of the dynamics in play right now. Perfect. Can't blame me for asking about 2023, but thanks a lot for the details, guys. You're very welcome. Thanks, Mike. Your next question comes from Yuri Lynk at Canaccord Genuity. Please go ahead. Good morning, gentlemen. Good morning. Morning. I wanna talk a little bit about your real estate footprint. The monetization that opportunity that you had in the quarter. I mean, what made that piece of real estate available for sale? Do you have other opportunities like that? Can you provide an update on the new remanufacturing facility that you've got planned in Ontario? Share with us maybe the budget and if that's gonna allow for some growth, or is it replacing the facility that's nearby? I'll talk to the property, then Mike can take the reman, question. How's that? Okay. You know, I'll classify this as all part of our Hewitt integration. You know, we got slowed down on that integration, right? I'm really pleased with the team. This was on the rental services side. You know, we examined that footprint. We have a model we like to operate within, which identifies with the market in terms of the footprint. We've worked hard, particularly in Quebec, on expanding that footprint with operational size and efficiencies and how we run with broader lines. The teams. That's been a bit of a journey in there. We said it would take time. You know, this was in our plans. This was a very large facility for rental services that didn't meet our scope and dynamics of how we go to market and where it was located. What the team was able to do was, you know, actually expand the footprint, and we added a store in a proximity where we needed to be. We redeployed our people into some other areas or other locations and to improve the throughput there and the customer deliverables. I was delighted. Our people really identified with it. It was in a bit of a congested area, so that worked out well. Then we crystallized the value of the property. Nothing more, nothing less. Actually, we lowered some fixed operating costs in there. That's... It was really, I think, well executed. We were slowed down a bit with the pandemic. That's what we do. We're continuing to look at those operating efficiencies, our go-to-market strategy or approach to the market in Hewitt and. That's what it was. A great way of reallocating some capital. On the Bradford question that you had on reman, I think, Yuri, it's. Again, we mentioned, I think it was last quarter, we suggested that, you know, we own the land there, we're looking at an investment of about up to $70 million. It's progressing pretty well, I would say. You know, we're still targeting mid-2024 to be in the building. As far as capacity goes, as we look at that facility, I mean, it does provide us with great access off the 400, access to the northern territories, I think access to employment as well. Operationally, really importantly, we have a number of facilities where this is gonna provide us with better flow of material and product. You know, flexibility and capacity, both in square footage, I think a more modern facility. Yeah, more efficiency just generally when you think of flow. Also, you know, when you think of the operations conducted there, it'll be more efficient and newer equipment and so forth. It allows us for capacity in terms of shift and pattern management and things like that. That's kinda where we stand for now. We'll provide some more updates as we progress through the year. We've done some initial site grading and so forth, we'll be starting construction and we've done a bunch of tendering already. We expect to be making great progress here this year. It's all part of the, again, the sort of East, the central Eastern Canada, strategy for the aftermarket. Mm-hmm. Okay. Okay, that's helpful. Maybe just my last question. You know, you're pushing almost CAD 300 million in net cash. Just wondering on the acquisition side, I mean, would you consider adding to either the rental business or CIMCO via M&A? We always keep our eyes and ears open. That, you know, that's something that is, I'll say, normal. In terms of. Nothing to report. Priority or... Yeah, I mean, we've got lots of operational focus right now. Mm-hmm. As you can see. We certainly with market dynamics, you keep your eyes open and that's what we do. We've done that historically and that's where we are. Yeah. Okay. Yeah. Yeah. Okay, guys. Thanks. I'll turn it over. Thank you. Thank you, Yuri. Your next question comes from Cherilyn Radbourne at TD Securities. Please go ahead. Thanks very much, and good morning. Good morning, Cherilyn. I was wondering if you could enlighten us a little bit about how you're thinking about net rental adds in 2023, just given improving equipment availability and an environment of some macro uncertainty where customers may pivot to rental over purchasing. Sure. Yeah, great question, Cherilyn. So maybe I'll start on that. You know, if you look at where we are last year, you know, the team did a really terrific job of managing the rental fleets broadly, the light and the heavy. If you think of Battlefield for example, I mean, utilization, managing the fleet as well as the retail component, given the tightness, especially in CCE and frankly, even the allied product was very tight. So, you know, we did add significantly to the capital in that sense. I think as availability improves, and we look at the economic conditions which, you know, are pretty uncertain at the moment. We, you know, the team is prepared to invest and add to that fleet. You know, we've kinda held back. If we go back a couple of years, especially in the Quebec and Maritimes, you know, we did taper back capital. Over the last two years, we've been incrementally increasing that, but again, trying to optimize, you know, customer requirements and customer demand in that space. You know, we're prepared to invest there, as demand warrants, right, as we see market activity demand. In uncertain conditions, you know, you might see that business perform, you know, a little more consistently in that manner until customers can make decisions on capital investment. Just one little more color on there, Cherilyn. I mean, we've been balancing, right, with some of this tight supply. Particularly on the rental service, we did allocate more units over the last two years, we had to, into the rental fleet. We were balancing that retail to rental side on the, on the smaller equipment. You know, we chose to really allocate more into that rental. I think it was, I think it was the right decision and the team executed. As you know, we believe in this rental model. We're gonna continue to try and continue to make a difference for our customers here. We will be, as Mike said, allocating capital in there appropriately and as aggressively as we think we can execute. Great. That's helpful. I was wondering if you could also speak to the composition of your mining backlog? We're certainly reading a lot more about nickel activity in your territory. I'm just curious whether that has started to show up in your bookings? Yeah. We've got more diversity in now relative to base and precious metals. I think it's fairly balanced in there in the backlog. Certainly, as you pointed out, there's some drivers of nickel, gold, iron ore. It's fairly balanced in there. Okay. If I could sneak one last one in. It just strikes me that in coping with supply chain constraints, the Equipment Group has probably embedded some related shop process efficiencies that you'll try to preserve as parts and prime product availability improve. I was just hoping you could comment on that train of thought. That's something we always strive for is efficiencies in that product support area. I would say our efficiencies haven't been where we want them when we look at our ordering process relative to demand signals. Actually, we're better there. Sure, good point. In terms of, I think we're doing a better job analyzing our data, talking to our customers to get the repair schedules. The problem has been our ordering process hasn't always lined up with those repair schedules. You'd actually have created some inefficiencies in there just the way it's been working out. You see that a bit in our WIP is high, which shows the demand, which is good. Again, how we're scheduling those rebuilds, I think we've improved our strategy there and our go-to-market approaches. That's good lessons learned in there as you pointed out. There's a lot of dynamics in there. I think we've improved in some areas reasonably well, but there's also, you know, we're still not where we wanna be in terms of that data lining up on how we do our ordering process, because sometimes we're just taking as we can get, even though it doesn't line up from a timing perfectly or we're waiting. There's how we've seen it so far. Okay. Great. Thank you. I'll pass it over to someone else. Thank you. Your next question comes from Devin Dodge at BMO Capital Markets. Please go ahead. Thanks. Good morning, guys. Good morning. Morning, Devin. I wanted to come back to Michael's question on gross margins. Look, if you put aside mix and look at the individual lines of business within that Equipment Group, look, I think there has been some benefit from, you know, the tight market conditions. Do you think you're in a position where you can retain the higher gross margins or should we expect at least some of that benefit to fade over time as availability improves for equipment and parts? Yeah, I mean, there's no question when you're in a tight supply, you get some outcomes there relative to market dynamics, market-based pricing. The operational leverage has been favorable, has played out really well. We continue to work hard at that in terms of the lessons learned. You know, I that's something we have to continue to work at, but it's a, it's a very... You have to be, in our view, balanced because you know, you still want to be attentive to your market. It's all about executing relative to the market, right? With your value proposition. We'll continue to work hard at that. Certainly, as we know, historically, these dynamics change. It's how you execute through the dynamics of the market and your value propositions. We'll continue to do our best at that. That's where we are. We were fortunate with some outcomes, there's no question. We saw it. Okay, that makes sense. Okay. I was gonna ask about AgWest. You know, we saw that product support, I think, was up, you know, pretty meaningfully in the second half of the year. Seems like a generally positive backdrop for the Ag sector. Just, can you give an update on the, on the AgWest platform and your plans for this business over the next, you know, call it 2-3 years? What we saw last year was favorable market dynamics in the Ag segment. Our teams executed reasonably well, particularly with market penetration with our combines and some of our tractor lines. Aftermarket, as you saw, we started to execute better in there. Yeah, I mean, it was favorable market dynamics in there that led to some favorable outcomes, combined with some improvement in our operational operating efficiencies. Still a ways to go in there, but some improvement that we were pleased with. Mm-hmm. Yeah, I think the. Thank you. Sorry, Devin. The only other thing to mention, like, as Scott mentioned, like over the last couple of years, the team has done a really nice job managing inventories there. That's positioned us well, you know, in terms of the aging and managing used and so forth. They've done a really nice job. We're starting to see some of those results, and the backlog is very consistent with the other parts of our business, right? We've got some decent numbers there, as we mentioned. Yeah. Do you think that business is at a point where we could start to invest in growth in a more meaningful way? We're monitoring our business activities in there closely, and we're pleased with some of the progress. I'd say we've improved with the market dynamics that were presented. Mm-hmm. Okay. Makes sense. Thanks. Your next question comes from Bryan Fast at Raymond James. Please go ahead. Yeah, thanks. Good morning. Hey, Bryan. Just on mining, I mean, what led to the nearly threefold increase in mining equipment sales year-over-year? Was that just reflective of growth off a low base, or is there something else that led to that? Well, you're lumpy in there, right? Part of it is the rebuild activities. you know, you get into those mining, you get into tough comps, so it was favorable. Our teams executed well in the aftermarket. you know, we've been fortunate in there over the last, year and a half bit with how the team has executed some, awards and through some RFQ processes. you're seeing some of that dynamics with the installed base. Mm-hmm. Mining is lumpy, right? It was favorable, and we're pleased with how the team executed. Okay, thanks. Have you seen an uptick in rebuild activity? I mean, just as equipment prices increase or take hold here. A couple of things in there. Like, really pleased with the execution of the strategy in the in the rebuild. Again, full year, we're on the heavy side, we're up over 80% if on volume. These are some big shifts. I think those value propositions are really making sense for customers, particularly when you saw the dynamics in the market on the inflationary factors. Also, I mean, it's I mean we like to think that's a value proposition with the way that iron is built, you're able to rebuild it. We think that's a differentiation for us, and we're starting to leverage it better with good data points on how to take that proposition to market. I mean, the team executed well last year, and it's a key aftermarket strategy, and we'll continue to do our best to deliver good value propositions to our customers in there. That's what we saw last year, good improvement. It's a good sustainability model as well, right? Mm-hmm. Good. That's it for me. Thanks. Thank you. Thanks, Bryan. Your next question comes from Maxim Sytchev of National Bank Financial. Please go ahead. Hi. Good morning, gentlemen. Morning. Morning, Max. I was wondering if it'll be possible to get a bit of an update on the materials handling progress in that business. Thanks. Yeah. Again, continuous improvement in there is the way I'll frame it for the full year and in the quarter. We really felt tight availability on the new side there last year, so it improved a bit in the fourth quarter. Again, where we, I think, wanna acknowledge some operational excellence was in the rental side of the business. We've invested capital in there over the last 2 years in that rental. We believe in that rental model. The team started executing reasonably well in there with the products we were able to secure. That was a real positive and you're starting to see some of that, those positive outcomes due to rental, as well as we saw improvement in some of the aftermarket sales. We still got a ways to go in there, Max. We're not where we wanna be on operational, performance in there, particularly on the service side. We have improved with our technician headcounts in there and our deliverables with customers, in some of those operating practices, we still, we need to do better in there, as well. I would say overall continuous improvement in material handling. As you know, we expanded the footprint. The OEM was, is I think recently pleased with us, we went out to Saskatchewan and so expanded that footprint a bit more. Okay. I mean, are you like, I don't know, like a second, third inning of kind of improvements or how should we just think about it, you know, directionally? I wouldn't wanna frame it in innings. I'll frame it that we have a ways to go, but we're on a continuous improvement basis we were satisfied with last year. Mm-hmm. Okay. Still more work and strategically some more work in there as well on that. Okay. Helpful. ...go-to-market approach. Okay. Okay. Thank you. Just wanted to come back for a second to AgWest. I mean, is there scope to, you know, leverage that platform and grow it from an M&A perspective down the line? What are maybe your thoughts there? Well, right now our focus is on improving on the operational side. You know, it's been. That's a different segment. I think as Mike pointed out, the team, we've got more discipline in there in terms of how we're managing the asset, the asset management. I think that showed there. That's where our focus is right now, is really customer deliverables in there and the operational excellence. Those are the key areas for us in Ag. That's where our focus is right now. Makes sense. Maybe just one quick one. Do you mind maybe commenting in terms of pricing, any pushback from, you know, potential customers on Prime product maybe? Just any color on that, please. I think that's all relative to the. Yeah, that's something we are monitoring closely, right? When you get into these economic uncertainties, that's an ongoing pulse that we have to monitor closely relative to our value propositions and customer behaviors. you know, what we saw in the quarter was, you know, the market dynamics were still reasonably good. There was some softening, that's an area, you know. You can't speculate on it. You just gotta make sure you're staying focused on your value propositions relative to the market dynamics and the customer deliverables. It's a delicate thing in there and we're. Mm-hmm. We're monitoring things closely, right? Mm-hmm. that's why I wouldn't wanna predict, outcomes right now. Okay. Okay, super helpful. Thank you so much. Great. Thanks, Max. Max. Thank you. Ladies and gentlemen, once again, if you would like to ask a question, please press star one at this time. Your next question will come from Sabahat Khan of RBC. Please go ahead. Great. Thanks and good morning. You made a comment- Hello. Hey. You made a comment earlier around, you know, some of the progress around the, you know, Quebec Maritimes integration is still going on, obviously delayed a bit by the pandemic. Can you give some perspective on, you know, I think rentals is a big focus on kind of the improvement on that? Can you maybe talk about where you are on the journey towards rental margin improvement? Do you still see a runway? Could that be, you know, a driver of improvement going forward the next couple of years, whether it's across your entire platform or even in the Hewitt region? Maybe any of the big bucket, kind of final integration things you still have left to do with that kind of Hewitt platform? I mean, we don't wanna get ahead of ourselves, but the team did execute favorably last year in terms of the execution of that strategy and relative to the capital that we allocated in there and our go-to-market approach, which was a real shift on the rental, both on the heavy power as well as the light, right? Particularly the rental services concept. That was a dramatic shift in there. We knew it would take time, and we're still... I would say we're still not where we wanna be, but we've got to continue to prove it out, don't wanna get ahead of ourselves. We've got some more work to do in there. That disposition of that facility was part of it. There's still more work to do there, on many fronts. Even, you know, on our service departments, we still have some work to do in there, with our customer deliverables. Still some work, and we've got to prove it out. Mm-hmm. So far, we're pleased with how things have been executed. Yeah. Particularly how we're operating in the marketplace. Yeah. Okay. Just one on, I guess, product availability and supply. I know you'd call out in the outlook commentary that it's still a bit uncertain. Can you maybe talk about whether it's just kind of the broad availability and that's just a comment on the state of the kind of environment? Or is it, you know, maybe certain categories or certain products, maybe it's, you know, machines versus parts, et cetera, that might be a bit of an issue? Or might you be seeing some of the gaps relative to... So- Where your backlog might be now? Some models and parts and components still very tight. Other areas we started to see some improvement. You know, we're gonna monitor it closely. You know, these are things. It's not like we haven't seen this before, been here before, so you just continue to monitor work closely with your customers and the demand signals and then with our OEM partners. There was some improvement with certain models. Some components, but still some tightness in there as well. Yeah, I think you see that a little bit in our commentary too, Max, on the inventory side, right? When you look at work in progress, for example, parts and certain parts, you know, still some tightness there. As Scott mentioned, the equipment side and parts are both, you know, both improving, but there's still areas of focus that need to improve much further. Okay, great. Just one quick one. I guess, you know, there's been some commentary from the OEMs, and I think you called out on the last quarter just some softness in housing, but then infrastructure generally seems okay. Can you maybe parse out maybe the construction market a little bit and, you know, how maybe infrastructure versus maybe urban development might be trending for you? Well, there was some softening in the quarter and some of the construction activity. We're gonna monitor that closely. Overall, I think, you know, infrastructure, the signal we have, like it's still... We'll have a better signal here in the next little while, but you're only in the beginning of February. What we saw in the quarter was a bit of softening but, you know, again, you're coming off some historically strong industry activities. We're monitoring the infrastructure spend closely as well as the housing and the post dynamics. That's really just staying close to it. Great. Thanks very much. Yep. Thanks, Max. At this time, we have no further questions, so I will turn the conference back to Michael McMillan for any closing remarks. Great. Thank you again, Michelle. Thanks to everyone for your participation today. That concludes our call. Please be safe and have a great day. Ladies and gentlemen, this does indeed conclude your conference call for this morning. We would like to thank you all for participating and ask you to please disconnect your lines.