Good day and welcome to the Alamo Group Incorporated 4th quarter 2023 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone, and to withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Edward Rizzuti, Executive Vice President, General Counsel, and Secretary. Please go ahead, sir. Thank you. By now, you should have all received a copy of the press release. However, if anyone is missing a copy and would like to receive one, please contact us at 212-827-3746, and we will send you a release and make sure you're on the company's distribution list. There will be a replay of the call, which will begin one hour after the call and run for one week. The replay can be accessed by dialing 1-877-344-7529 with the passcode 1294689. Additionally, the call is being webcast on the company's website at www.alamo-group.com, and a replay will be available for 60 days. On the line with me today are Jeff Leonard, President and Chief Executive Officer, and Richard Wehrle, Executive Vice President, Chief Financial Officer, and Treasurer. Management will make some opening remarks, and then we'll open up the line for your questions. During the call today, management may reference certain non-GAAP numbers in their remarks. Reconciliations of these non-GAAP results to applicable GAAP numbers are included in the attachments to our earnings release. Before turning the call over to Jeff, I'd like to make a few comments about forward-looking statements. We will be making forward-looking statements today that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: adverse economic conditions, which could lead to a reduction in overall market demand, supply chain disruptions, labor constraints, competition, weather, seasonality, currency-related issues, geopolitical events, and other risk factors listed from time to time in the company's SEC reports. The company does not undertake any obligation to update the information contained herein, which speaks only as of this date. I would now like to introduce Jeff Leonard. Jeff, please go ahead. Thank you, Ed. I'd like to, again, thank everyone who's joined us on the conference call today and to express our appreciation for your continued interest in Alamo Group. The fourth quarter shaped up broadly in line with our expectations, and we were very pleased with the financial results we've reported today. Despite gathering headwinds in several of our served markets, our teams achieved record quarterly sales and earnings for the ninth consecutive quarter. I would now like to turn the call over to Richard Wehrle, who will take us through a review of our financial results for the fourth quarter. I will then provide additional comments on the results and say a few words about the outlook as we enter 2024. Following our formal remarks, we look forward to taking your questions. Richard, please go ahead. Thanks, Jeff, and good morning, everyone. Alamo Group's fourth quarter 2023 closed with an excellent performance that produced record net sales and net income driven by continued strong demand of our products. Fourth quarter consolidated net sales were $417.5 million, an increase of 8% compared to $386.6 million in the fourth quarter of last year. Gross margin dollars increased by $11 million, and gross margin percent was up almost 80 basis points in the quarter compared to the fourth quarter of 2022. Both margin dollars and percentage increase were driven by higher volume and price initiatives we've had in place along with improved productivity. Operating income for the fourth quarter came in at $44.8 million versus $42.7 million in the fourth quarter of 2022, an increase of 5%. Operating income as a percent of sales was just under 11% for the fourth quarter versus 11% for the same quarter last year. Consolidated net income for the fourth quarter was $31.5 million or $2.63 per share diluted share, an increase of 8% versus net income of $29.2 million or $2.44 per diluted share for the fourth quarter of 2022. Vegetation management was off in total sales compared to the fourth quarter of 2022. We expected this softness coming in both forestry and agricultural markets. Net sales were $214.4 million, a decrease of 8% compared to $232.5 million for the fourth quarter of 2022. As we have continued to monitor dealer inventory levels, which are up but not at historical levels, we honored dealer requests during the quarter to reschedule shipments until 2024, which was a big reason for lower sales. The division's operating income for the fourth quarter was $19.8 million, down 35% versus $30.2 million for the same period in 2022. Industrial equipment division net sales had a tremendous quarter, coming in at $203.2 million, up 32% compared to $154.1 million for the fourth quarter of 2022. This was due to a solid performance across all product lines, particularly vacuum trucks, sweepers, debris collectors, and snow removal equipment. While truck chassis deliveries and component part receipts returned to more consistent cadence, there were a few late component deliveries that impacted this division's operations, although not as significantly as in previous quarters. This resulted in a substantial rise in operating income in the fourth quarter of 2023 of just over $25 million compared to $12.5 million for the fourth quarter of 2022, an increase of over 100%. Consolidated net sales were a record for the full year of 2023, coming in at just under $1.7 billion, up 12% compared to $1.5 billion for the full year of 2022. Strong demand for our products in both divisions, along with positive impacts of pricing initiatives and improved supply chain and productivity, were the main drivers of the increase. Consolidated sales were the highest in the company history. 2023 gross margin percent was up almost 200 basis points, and gross margin increased $77 million versus 2022, an increase of 20%. The margin improvement resulted from continued improvement in supply chain conditions, which led to efficiencies and enhanced capacity utilization. Full year operating income for 2023 was just under $198 million or slightly below 12% of sales compared to a full year of 2022, which was $148.6 million, just under 10% of sales, a 33% increase in operating income dollars, and a 190 basis point increase in operating income as a percent of sales. Net income for 2023 was $136.2 million or $11.36 per diluted share versus net income of $101.9 million or $8.54 per diluted share for 2022, an increase of 34%. The company's backlog at the end of 2023 came in at just over $860 million. That's down 15% compared to backlog levels at the end of 2022. A few additional financial items I'd like to cover that relate to the balance sheet at the end of 2023, which continues to remain extremely strong. Working capital increased $53 million compared to the end of 2022, increased primarily from higher accounts receivable and to a lesser extent inventory. For the full year of 2023, we reduced our debt level on our credit facility by almost $67 million. Our bank leverage ratio at the end of 2023 was just under 1:1, which is at lowest level in just over eight years four years, excuse me. And finally, the company's trailing 12-month EBITDA was a record, coming in at just under $247 million, up 26% compared to calendar 2022. For 2024, cash flow should remain strong as our focus will be continued to reduce both inventory and debt. We will remain disciplined in execution, controlling costs and expenses as inflation is expected to continue to put pressure on our margins. Supply chain will continue to be a major focus to reduce the amount of work in process we hold. In summary, Q4 was a record for the quarter for Alamo Group. Sales were up 8%, which translated into an 8% increase in net income. We are also pleased that our board recently approved an increase of our regular quarterly dividend of $0.22-$0.26 per share for 2024. With that, I'll turn the call back over to Jeff. Thank you, Richard. We want to thank everyone who's joined us on the conference call today. In the fourth quarter, we produced solid financial results that were broadly in line with our expectations. We were especially pleased that our fourth quarter results established the company's ninth consecutive quarter of record sales and earnings. Overall, our markets continued to display significant strength during the fourth quarter, although they began to diverge directionally as we closed out the year. Municipal, county, and state agencies continued to accelerate their investment in renewal and modernization of their infrastructure maintenance fleets. State Rainy Day funds remained near all-time highs and ended 2023 nearly double what they were before the pandemic in 2019. The pace of spending by state and municipal governments continued to accelerate last year relative to 2022, and double-digit annual spending growth was reported again in 2023. This continued to drive robust demand across our full product offering in the industrial equipment division, as well as our roadside and specialty mowing products in the vegetation management division. The market for our forestry and tree care products was more challenging in the fourth quarter as negative trends emerged in the wood biomass market. According to the USDA, United States wood pellet exports increased 6% by weight, and the price per ton also increased 6% relative to 2022. Less positively, domestic suppliers are confronting cost pressures and tight supplies of wastewood feedstocks that are pressuring margins in the long-term supply contracts. This slowed planned investments in major equipment. Higher interest rates also constrained ordering activity related to these larger and more expensive products. While recent biomass market dynamics were less favorable in the final months of 2023, demand for our forestry products remained at a good level in the fourth quarter, although off from the peaks of the previous two years. In the hobby farm and ranch segment, fourth quarter trends were also mixed. After a long upward run spanning several years, cattle prices declined modestly in the fourth quarter but still ended the year with strong double-digit gains. Hog prices were lower in the fourth quarter and were down for the full year as well. Agricultural crop prices, including corn, soybeans, and wheat, all moved lower in the fourth quarter, although they remained at historically good levels. As a result of these commodity price trends, U.S. farmer sentiment declined in the fourth quarter. The higher interest rates that prevailed through the second half of the year caused dealers to push inventories lower. This was most notable in the hobby farm and ranch market, where dealers deferred certain planned equipment deliveries and canceled some longer lead-time orders. This dealer destocking pattern impacted orders within the vegetation management division. Dealers selling the products of our industrial equipment division have not been impacted as much by higher interest rates as they don't carry meaningful inventories of these made-to-order products. Looking at how these market forces drove our business in the fourth quarter, sales in the vegetation management division were down 8%, and new order bookings declined 34% compared to the fourth quarter of 2022. Year-end order backlog in this division declined 39% relative to the fourth quarter of 2022. These numbers need to be viewed with perspective, though, as the division's sales, orders, and backlog remained elevated compared to pre-pandemic levels. The division's fourth quarter EBITDA of 12.6% was 360 basis points lower than the prior year. However, on a full-year basis, EBITDA was 80 points higher versus 2022. The division's backlog represents a solid four months of sales at the current pace, two months longer than the level reported pre-pandemic. Fourth quarter sales were lower compared to the prior year in forestry, tree care, and the hobby farm and ranch markets, but sales of mowers to governmental agencies were sharply higher. Fourth quarter EBITDA was impacted by costs associated with sales incentives to motivate retail sales, although these incentives were more modest than those employed in the second and third quarters. Fourth quarter sales in the industrial equipment division were 32% higher than the prior year. The division's order bookings in the fourth quarter were down 9% just due to a difficult comparable. This was the result of an extraordinarily large snow removal equipment order that was received in the final quarter of 2022. The year-end order backlog in this division was 18% higher than the prior year. Fourth quarter EBITDA of 15.1% was 320 basis points higher than the prior year, with the improvement driven by better efficiency, better manufacturing flow, as the chassis supply situation continued to improve. Full-year EBITDA of 13.6% also marked a 320 basis point improvement versus 2022. And again, this was primarily the result of improved efficiency and higher chassis receipts. At the 2023 monthly sales pace, the division's backlog represents approximately nine months of sales. All of the product lines within this division achieved fourth quarter sales growth in excess of 20%. We were especially pleased that Royal Truck Equipment that we acquired in late October had a very strong fourth quarter, with sales more than 60% higher than the prior year. Royal Truck contributed nicely to the division's sales and EBITDA in the quarter. We're very excited about the new opportunities we have identified in the highway safety market and expect we can continue to grow in this area. We were also pleased that our teams were able to substantially complete the transfer of compact sweeper manufacturing from our Kent, Washington facility to our facility in Mukwonago, Wisconsin, in the fourth quarter, and then to divest the Kent facility. Overall, we were pleased with the results achieved in the fourth quarter despite a more mixed market environment. The fact that our teams were able to offset much of the impact of the more challenging conditions in vegetation management with performance improvements in industrial equipment clearly shows the strength of our product offering. As we enter 2024, the trends evident in the fourth quarter are expected to continue. The excess channel inventory and vegetation management will take some time to work through, and it now appears that the highly anticipated benefits of an interest rate reduction may not occur until later in the year. We are closely monitoring this and will not hesitate to adjust our capacity as needed to match current demand. We remain bullish on the prospects for our industrial equipment division and expect a good momentum evident in the fourth quarter to continue, driven by elevated spending by governmental agencies combined with a modest sustained tailwind from the federal infrastructure bill. We're expecting another sequential improvement in chassis receipts in the first half of 2024, and this will help sustain a reasonable level of organic growth. Our balance sheet is strong, and we reduced total debt by more than 22% or more than $67 million during 2023. This positions us well for what we expect will be a more active M&A market in 2024. In conclusion, we believe the company is in a good position as we enter 2024, and we're optimistic about our prospects for the new year. Before closing my remarks today, I'd like to thank our customers, dealers, suppliers, our thousands of exceptional employees, and our financial stakeholders for their continued support for the company. This concludes our prepared remarks. We're now ready to take your questions. Operator, please go ahead. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Mircea Dobre with Baird. Please go ahead. Good morning. Thank you for taking the question. Hey. Maybe we can start with vegetation management. Can you maybe give us a little more insight into the order cancellations that you experienced in the quarter? And it sounds like you expect dealer destocking to continue in 2024. Is there a way to sort of frame the overhang from the destock in dollar terms? I'm not sure I can give you that on this call. We can certainly put something together for you. The pace of order cancellations in the fourth quarter was actually down a bit from Q3, Mig, but it was still heavily concentrated in the hobby farm and ranch segment, where dealers cancel personally to reprice orders, as we've seen for a while, and then to partially replace those new orders. But we're also kind of an off-season period in that market at the moment. So I think the real tell of the tape will be how the early months of 2024 shape up as we head into the spring season. But it really wasn't that unusual compared to what we saw in Q3, for example. But the order softness remains, and that's really just because the inventory still remained too high out in the dealers. And we continued to run incentives, which elevated our marketing costs in that division to try to move those inventories out of dealer stocks. It's been pointed out to me repeatedly that the thing you got to think about here from a dealer perspective is a dealer's balance sheet is denominated in dollars, not units. And so as the price of those units has gone up over the years, it means less units of space on the balance sheet in inventory. So it tends to squeeze short-line suppliers like us, Mig, when those balance sheets start to come under pressure. So none of that is really surprising. We've been through it before. And I think we can still see some daylight sort of toward the middle of the year in this division. I'm still optimistic that this is going to clear up sort of toward the back end of Q2. That's just my latest hunch. If we look at your implied orders in the fourth quarter, or calculated, if you would, orders in vegetation management, our math is about $176 million in orders. And I'm sort of curious if you think that this level of order intake is what we should be thinking for 2024, at least for the front half of 2024, or if you expect another step down, for instance, as this destock continues to materialize. Yeah. That's a great question, Mircea. I think what I would say about it is the bookings that you see are net. So it's net of order cancellations. So it does tend to depress the order run rate. And I think we'll continue to see those order cancellations slow for the next quarter or two, which will drive the net booking number higher. So no, I don't believe this is the new normal long-term, certainly not for 2024. It's hard to call the bottom in the ag space, but I think when we look at what our dealers are telling us and where their inventories are, we're either at the bottom or close to it, really close to it right now. And so I think we should start to see those numbers ticking back up. I hope that helps you a little bit. Yeah. No, it is helpful. I'm trying to understand from a revenue standpoint if that's kind of where you are in terms of bookings and backlog. So from a revenue standpoint, how we should be thinking about the front half of 2024 relative to the $214 million that you put up in the fourth quarter. Mig, this is Richard. We kind of think the first quarter, as we move out, will be relatively what you've seen here in the fourth quarter in that general range and probably somewhat into the second quarter. Then from a margin standpoint, sequentially, are we looking at something similar to the fourth quarter? We're hoping to hold it right where it's at here. I think, as Jeff mentioned on the repricing, we're talking about, we think in standard gross margins, we think that will come down some. But overall, we think our efficiencies and we're working on reducing our purchase price variances that we can actually start getting, we're pushing back to our vendors to reduce costs. So our incoming costs should come down. And if that's the case, hopefully, we'll hold the margins roughly in the same area that we're at now. Mircea, remember, there's some seasonality here. The Q4 flex spend in the revenue stream tends to be lower, and that will start to increase toward the back of the first quarter and into the second. So that should support at least a modest improvement in the EBITDA. Normally, it does if you look at the pattern in this division. Okay. Understood. And then final question for me is, obviously, there's pressure on margin and vegetation management. We talked about the revenue and what's going on with destock. At that point in time, do you think you're going to have to adjust capacity or adjust the cost base to at least try to stabilize margins if these trends continue into the back half of 2024? Yeah. We're working on that right now, Mircea, because we've had some underabsorption flow through into the P&L, and we don't tolerate that long-term. So we're working on that right now. All right. Appreciate it. The next question will come from Chris Moore with CJS Securities. Please go ahead. Hey. Good morning, guys. Thanks for taking a couple. Hi, Chris. Good morning. Yeah. Maybe we'll stay on same similar lines. But just in terms of the 12% operating margin target for this year, is it fair to say that it'll be challenged in the first half of the year and with a little improvement on the vegetation side? You may be back up in that arena or just kind of any thoughts you have at this stage. I do, Chris. I think as we move toward the back end of Q2, we'll get back to that pace because, as we said a moment ago, the margins should trend upward in vegetation management, particularly notably in Q2. It'll start at the back end of this quarter in a couple of weeks' time. It's already starting to warm up down here in the south, so I think that'll bode well for us. So I think we'll be back there, certainly within the second quarter. That's my expectation as we sit here now. As I say, it's really hard to call the bottom exact because it really comes down to the sentiment of dealers. And to get this dealer sentiment improved, we need to get interest rates moving in a better direction for them because they're not really in a bad place right now. They're just pessimistic about what the short-term yields. Everybody was sort of factoring in this earlier in the year interest rate reduction, which gave us a moment of optimism, and I think that got crushed fairly quickly in the hobby farm and ranch segment. But in any event, we're still going to reassess our targets. We gather up our management team, typically in the second quarter, early in the second quarter, pull together the best brains in the company, revise our strategy, and at that point, we'll revise our targets. So I would say toward the back end of the second quarter, look for some news on revised targets. Chris, one other point to this too that I think we all kind of seem to forget about is how well the industrial equipment division is performing. I mean, their margins are up every single quarter that we've had here going back to Q2 of next year. And as Jeff mentioned earlier, our expectations is that's going to continue to go on as we move into balance into 2024 here. So I think that's the beauty of our business. We've got two businesses here, and we can't forget about the industrial piece because their performance has done really well. And Chris, it's Jeff. One other thing I'd like to point out, we had some extraordinarily high SG&A costs come through at the corporate level this quarter because of the changes that were announced in our board of directors yesterday. We had high recruiting costs. If you back those back out, that's clearly a one-time event. We'd have been right on what the analysts were expecting for us in the quarter. So that's why I said I'm still bullish. There's some things going on in the background here that we know about that are just causing us to say, "Look, okay, this is a bit of a one-time event in Q1 that won't repeat in Q2." So I still like where we sit very, very much. As I've said for the last couple of quarters, these two divisions would converge in a better place. Industrial made up a little more ground than I expected in Q1. I think our vegetation management guys did a really good job playing defense in the quarter and protecting their bottom line and did a little bit better maybe than I could have hoped they could do with the pressure on the top line in that division. Having said that, we do have some underabsorption we need to deal with, and we're going to deal with it promptly to make sure that we don't have that repeat in the second quarter. That's our plan forward. Got it. That's very helpful. Richard, the 11.6% industrial margins this quarter, is that about the top, or there's still room for even more improvement on that front? No, there's going to continue to be more room for that, Chris, because as we mentioned in there, we still got component issues on a few items that when you're dealing with something of that magnitude and the sheer size and volume of a unit that's pretty expensive from a cost standpoint, and you miss something that we can't complete that unit, it sits in WIP, which our WIP is still high. We're pushing $31+ million in WIP, and that's very difficult to get through. It does relieve itself as you move forward. But again, sometimes you just get those things that pop out, and I think if those continue to improve, which we're expecting, we're pushing our procurement folks to kind of get a little bit more level loading of those deliveries of those components that we need to complete these units. We'll continue to see margins moving in the right direction for them, and it should be up. Yeah. When you look at that division, Chris, the vacuum truck business continues to perform exceptionally well. The fleet utilization has been excellent all through the fourth quarter, and it is starting now in the first quarter as well. And then our sweepers group is starting to gain momentum too. They had a nice pickup year-over-year and a nice sequential pickup quarter-over-quarter. And our snow removal group, the margins continue to expand there, and their backlog is still rising. So I think when you look at the picture in the industrial division, it looks very bullish from my point of view. And we still haven't eliminated all of the costs related to the inefficiencies that Richard was referring to. So we've still got some running room to pick up there. So I think the outlook for industrial is bullish from my point of view. Yeah. And Chris, they came in at 12.3% EBIT for the quarter, which is a huge improvement over even Q3 by itself. And I think we've been asked the question, "Do we expect their margins to continue to go north above that?" And the answer is yes. Got it. Okay. Very helpful. I will leave it there. Thanks, guys. Thanks, Chris. Appreciate it. The next question will come from Mike Shlisky with D.A. Davidson. Please go ahead. Yes. Hi. Good morning. Thanks for taking my questions. Hi, Mike. Hey there. So another net reduction here in the fourth quarter and the back half of 2023. Given where your business is headed here in 2024 when you take both the segments together, I'm curious, Richard, if you can give us any thoughts, whether you think you can get to zero net debt by the end of the year or just any kind of brackets around your plans and targets for any debt reduction over the next couple of quarters. No, Chris. We've got roughly about. This is Mike. Mike, I'm sorry. We got about $240 million, $235 million in term, and the balance of it's in our revolver. The intent here is to continue to move forward in 2024 and reduce the revolver down. We do have that ability. If any excess cash does come in, we can pay on the term on the long-term piece of it on the back end. So that's our intent to continue. But will we have it off to zero? No. But we're going to do everything we can, obviously, to eliminate the revolving piece of that debt and then continue to any excess cash we have is to pay on the term permanently. Mike, we're obviously trying to keep this balance sheet in great shape for what we're expecting to be a better M&A market in 2024. We're already seeing some signs of that. Obviously, that's the most important thing. Be ready to jump on the opportunities when they come. Got it. And that's kind of where I was going to go with my next question, and that was how it's going with the Royal Truck business since you acquired it. I couldn't help but notice that your new chairman is someone who is no stranger to the highway infrastructure safety business, and you call this your next new platform. I know you mentioned it in some of your opening comments. So could you maybe give us a little more detail as to the number or sizing of the M&A candidates you could maybe add to that group over the next 12-18 months or so? Yeah. I mean. This space, Mike, is a typical kind of a market space we like. It's fairly fragmented. There's a lot of middling-sized companies, companies in that $30 million-$70 million annual revenue range. But then there's a couple of big players in that space that we like a great, great deal. And so you're right. Rick Parod, our new incoming chairman, announced this morning, has a background in that space. And he was with me out at the ATSSA show, the American Traffic Safety Show, a few days ago, kind of kicking the tires on a few things. So we like the space. We think we can grow there, and we think there's near-term opportunities there. Got it. And if I can maybe wrap up with a more broad question, when you put together the outlook for margins in both the groups and the outlook for potentially turning around in vegetation and obviously strong growth in industrial here, can you give us some kind of a sense as to whether you expect a year of growth net-net for revenues and margins in 2024 on a holistic basis? Richard, you want to take the first question? Yeah. I think probably if you want to look at the two divisions, the industrial, we expect revenue levels to be higher than they were in 2023. For the vegetation management, I think probably it's going to be a bit soft, as we mentioned, as you start the first half of the year. But we think we can gain some momentum and try to get something that's relatively in the general same ballpark of where we were in 2023. Yeah. I still think there's some net-net for growth, Mike. I'm the optimist in the group because I do believe we're near the bottom on ag. I was the first one to say, "Look, it's hard to call the bottom when you're immersed in the business. When the guys running the business are deep in it, it's hard to call the bottom." But all the signals that I see tell me we are either at the bottom or very, very, very close to it in the hobby farm and ranch segment. So I'm still an optimist on 2024. And as I said, I'm very, very bullish on where our industrial division is going. They've still got great momentum. They're still booking good orders. Again, they had kind of a difficult comparable from a booking point of view. I think I mentioned that snow removal order a year ago at this time. They had a great quarter, and their backlog is up like 18%. They're really well positioned to continue to gain ground here. That is our strategy. As one of our market segments softens, the others accelerate. If we can keep doing that, we're in a really nice place. I think you'll see us refresh our targets, Mike, here in a couple of months, and I think they'll be well received. That's my expectation. So just to call off there, so flat up in one segment, up nice in the other segment, and both do have margin opportunities in 2024 as well, both segments. Yes. That's my belief. All right. I'll leave it there. Thanks, guys. Thanks, Mike. Appreciate it. Again, if you have a question, please press 1. Please press star, then 1. Our next question will come from Tim Moore with EF Hutton. Please go ahead, sir. Thanks and grateful for your organic sales growth and wonderful backlog finish on the industrial equipment side. New orders definitely ahead of my forecast there. I just want to drill more into one topic that investors really weren't believing or maybe overlooking where your stock price was $160 in October based on some calls I was getting, but seems like a very good catalyst. I know Richard started highlighting this topic three questions ago, but just the industrial equipment operating margin runway. We know that you've got to you'll be getting operating leverage growth just from volumes. Richard mentioned getting the WIP down with the procurement team and more inefficiencies taken out. Can you maybe dive into more just on the inefficiencies front and any way to kind of ballpark if you're 80% back to maybe being recovered on normalization on supply chain components and delays, not needing to restart those lines of production to finish off the final assembly steps? How far back in that position are you there? Yeah. Let me take the first crack at that. And I think Richard wants to add a comment or two as well. He's giving me that eyeball look like he does. When you look at the chassis situation, Tim, there are still problems that all the truck builders are having getting frame rails out of Mexico. They all share one supplier. And so believe it or not, kind of the straight piece of bent steel, the frame rail, is holding up production for all the major OEMs in North America. That's issue number one. And issue number two is Allison Transmission has been having difficulties at the moment getting the transmissions that we need for the vacuum trucks. And that has set back the pace of recovery in the truck chassis market a little bit. Having said that, we're going to get hundreds more chassis in 2024 than we were in 2023. I think we are in a very, very strong position, and we are finally starting to get a nice diversity of chassis coming in after working to diversify our supply channels six months or so ago. So I think we're probably better than 80% back in terms of the supply chain itself, but we still have these shop floor inefficiencies when something like a frame rail doesn't come or a transmission doesn't come, and suddenly a chassis that you're expecting to receive doesn't show up on your door. And then there's still some labor issues in some of our bigger plants, not labor unrest, just shortage of getting enough people to be able to run these plants the way we want to run them, the way we want to run them. But I would say it's much better now than it was a quarter ago, and I think it's going to continue to improve. Go ahead, Richard. Yeah. I think, Tim, the key to me here is not as it is chassis. But our WIP is high not because of chassis. Our WIP is high because of component parts or lack of them when we need them. If they're here on time and they're efficient, when we open the work order, we run right through it, and we complete and close. But when we end up missing something, we have to go park that unit, and it could be less, as I've said before, 90%-95% complete, and we can't finish it, and we have to go start on something else until the component gets in. That's the efficiency that we keep pushing back on, that we have to work on, that procurement needs to do a better job and help us out there in trying to make sure that those components are delivered to us on time with a good quality cost price item in there. So that helps us because stopping and starting is probably about the worst thing you can do, and it's worse in the industrial division than it is in vegetation management. Thanks for that color, Richard and Jeff. Add a little bit of just add a little more color for you, Tim. The supply chain problems were actually more of an issue in the fourth quarter in vegetation management. Some of the bigger components that we need for the forestry side started to be more disruptive than we had seen for a while. And that caused some real headaches in forestry up in our Morbark business that we were not anticipating. So we're battling our way through that. But net-net, as you look across the company, we are in a much better place. Steel prices are looking a little bit favorable as we ended the year. So that could be a little bit of a tailwind for us for at least the first few months of 2024. So on balance, as I said, I think I've called the bottom. You guys can all tell me I'm wrong a quarter or two from now in the ag space, but I'm calling bottom. And I think I'm optimistic about where the next couple of quarters may go. And I certainly think we're going to be back to very nice running by about the middle of this year in the vegetation management division. Great. That's really good. We always appreciate your candor. It's just such a good improvement, though, even on industrial equipment compared to a year and a half or two years ago with going back to the final step. It's just nice for investors to know that you're not there yet 100%, but there's still that extra operating margin level expansion just from it when you get there. One other. As I said, when you go into the industrial equipment division, Tim, the vacuum truck business is our steady performer, and they're doing great. We were able to add nicely to the rental fleet and expect to add significantly to the rental fleet as we go into 2024. That's going to be very positive. That's a very profitable business for us. Our sweeper and debris collector business, which has been running okay, not perfectly the last couple of quarters of 2023, really picked up the pace in the fourth quarter, and it's got a really good start as we came out of the gate in 2024, also with a very good backlog. That's an improvement. Our snow removal group was at its best point in years from a profitability point of view with an exceptionally strong backlog. The outlook and snow is very nice for us right now too. That's great. And I can't wait till things are firing on all cylinders for industrial, and it gets back to the 12%-plus operating margin pretty easily, you should, with the outlook for them. Just switching gears since most of my questions are already answered on the vegetation side, what about just any updates on upcoming launches or trade shows for hybrid and electric product offerings, US and European cities and towns? They're starting to pursue better duty cycles and more environmentally-friendly fleet mixes. Anything you talk about there in launches and introductions? Yeah. Well, we launched an electric mower in our French operations about a year ago. That's starting to really gain momentum now and sell very, very well. We've started to expand the production of the hybrid Timberwolf chipper that we make in the UK and are going to bring that to the North American market here very shortly. So that's positive. Our small compact hybrid street sweeper has come out of the gate very, very well and actually surprised us with the momentum behind that. So that's looking very positive. And then I think you probably saw our all-electric street sweeper, the M6, at the show at CONExpo. And we've had a little bit of a setback there in that the electric chassis are delayed from the supplier. We're not going to get as many of those in the first quarters as we'd hope. But I mean, we're talking about chassis you count on one hand, so it's not a needle mover from that point of view. But the momentum is very, very good, and I continue to believe this company is in a very good position. The really bright news was our larger electric sweeper has proven to give more operating hours than we expected on a charge of the batteries. The battery packs are performing better, so we're getting a more net yield productivity time out of that product than we were expecting. And the early customers that have seen it have been very, very impressed with that. And I was too, from an engineering point of view, how well that's turned out. So we're in a great position there from my perspective. Yeah. That's great color on the battery packs. And I'm a big fan of that hybrid Timberwolf chipper. I think it's going to do phenomenally well in North America as it rolls out. But thanks a lot. Yeah. That's a neat machine. Okay, Tim. Thanks. The next question is a follow-up from Mircea Dobre with Baird. Please go ahead. Thanks for the follow-up. In industrial, is there a way to frame for us pricing in your backlog? So if we're looking at the 18% increase year-over-year in backlog, how much of that would be priced relative to volume? I would probably tell you two-thirds of that is more volume than it is for price. But our price has gone up every single month. We've made adjustments in every single quarter on our backlog. So yeah, it's in there. The purchase cost side of that equation is flat, meaning we're not seeing much price escalation from our suppliers at the moment. A little bit on the chassis, but it's very, very modest. So most of that gain is, in fact, just good running in the business from my point of view. So I think the majority of that is true growth. I see. I asked the question because I'm trying to figure out what's a reasonable expectation for revenue growth in industrial in 2024, right? I mean, your backlog is high. It sounds to me that while there's still some supply chain issues, you're expecting more chassis in 2024 than you had in 2023. So your volume should be up. Pricing is positive and should help you. So can you maybe help us understand what's a reasonable expectation for revenue in 2024? Yeah. I think when you look at that division, Mircea, a couple of things. I mean, in terms of the chassis we have available, some parts of the business were actually sold out for 2024, which is great. Those machines haven't been delivered yet. So I think you will see nice revenue growth out of the industrial division. They're feeling bullish about where they sit right now, and they've come out of the gate very strongly in the first quarter so far. I can't be specific about that, obviously, but we like the momentum and what we see there. So I think there's plenty of room for organic revenue growth in the industrial division. We were with that division head yesterday at our board meeting, and Mike likes where he's sitting. And the backlog has never been higher in that business. It's a beautiful spot to be in. And then, as you point out, with regard to the chassis, we're going to get hundreds more chassis in 2024. At least that's what we've been promised than what we saw in 2023. That will flow through in a couple of nice ways. Our rental fleet should go up very nicely, hopefully by triple digits, but certainly by double digits in terms of unit count. And that helps because we're running that fleet so hard right now, it's hard to keep up with it. The utilization is so high, you're putting a lot of wear and tear on the trucks in the fleet. But secondly, it's helping our sweeper business that has a big backlog and has been constrained on that. We're building trucks now on our debris collector group in Richmond, and they've sort of been the poor guys waiting at the back of the line to get chassis. They're starting to get chassis flowing through again. So I think we're going to see nice organic growth in the industrial division. Yeah. One other thing too to that, Mircea, in 2024 will be a full year of Royal Truck, and that will probably definitely push their sales above a double-digit increase, above 10%. Okay. Thank you. Okay. Yep. This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead. Okay. Thank you very much. I appreciate everybody joining the call today. We look forward to having you join our first-quarter conference call in May of 2024. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.