Good morning, welcome to H&E Equipment Services' Q1 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's call is being recorded. At this time, I would like to turn the call over to Mr. Jeff Chastain, Vice President of Investor Relations. Please go ahead. Thank you. Good morning, everyone. Welcome to a review of H&E Equipment Services' Q1 2023 results. Your participation this morning and continued interest in H&E is appreciated. A press release reporting our results was issued earlier today and can be found along with all supporting statements and schedules at the H&E website, www.he-equipment.com. Our discussion this morning is accompanied by a slide presentation, which can also be found at the H&E website under the Investor Relations tab in Events and Presentations. Slide two, please. I'm joined this morning by members of our senior management team, including Brad Barber, Chief Executive Officer, John Engquist, President and Chief Operating Officer, and Leslie Magee, Chief Financial Officer and Corporate Secretary. Brad will begin today's call, and I will be turning the call over to him after I call your attention to slide three and remind you that today's call contains forward-looking statements within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing words such as may, could, believe, expect, anticipate, and other similar expressions constitute forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. A summary of these uncertainties is included in the safe harbor statement contained in the company's slide presentation for today's call and includes the risks described in the risk factors in the company's annual report on Form 10-K and other periodic reports. Investors, potential investors, and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on forward-looking statements. The company does not undertake to publicly update or revise any forward-looking statements after the date of this conference call. We are referencing non-GAAP financial measures during today's call. You will find a required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation as supporting schedules to our press release and in the appendix to today's presentation materials. I'll now turn the call over to Brad Barber, Chief Executive Officer of H&E Equipment Services. Thank you, Jeff. Good morning and welcome to our review of Q1 2023 financial results. We appreciate your participation and continued interest in H&E. Our Q1 performance was very encouraging, demonstrating strong contribution from our exceptional pricing gains achieved in 2022, with further progress already shown in 2023. Also, our robust fleet growth and branch expansion provided support to our strong year-over-year performance. Please proceed to slide four. I'll begin today with a brief review of some key financial metrics in the quarter before I shift the discussion to an update of our rental performance. Next, I'll share my thoughts on the equipment rental business and why we remain confident in the prospects for 2023. Finally, I'll provide an update on our strategic objectives, including fleet growth and branch expansion goals and our achievements in the Q1. Leslie will follow with a review of Q1 financials, including business segment performance data and updates you on our capital structure and liquidity. We'll be happy to take your questions. Slide six, please. Excellent rental rates, fleet growth, branch expansion, the addition of One Source, and the continuation of a fundamentally strong business environment were all significant components of our Q1 growth. Compared to the Q1 of 2022, these factors were primarily responsible for the better than 18% improvement in total revenues. Improvement was partially offset by lower new equipment sales revenues and to a lesser degree, part sales and service revenues. The lower sales from these three business segments were largely due to the December 2022 divestiture of our last exposure to the low-margin distribution business. Equipment rental revenues increased 31.5% in the Q1 as we captured strong year-over-year rental rate improvement with our exceptional rate achievement from 2022 carrying into the new year. Rates in the Q1, excluding One Source, were up 9.5% from the year ago quarter, despite an expected year-over-year decline in Q1 physical utilization. I'll provide additional details on fleet utilization in a moment. Our rental fleet experienced rapid growth with the Q1 original equipment cost or OEC of 28.1% or $534 million when compared to our fleet OEC in the Q1 of 2022. Additionally, we benefited from 14 more branches operating in the Q1 of 2023 compared to a year ago, which followed the record growth in 2022 of our branch network. This growth was achieved through our accelerated branch expansion program and the acquisition of One Source. The 14 branch increase reflects an adjustment for a recent branch consolidation. Finally, used equipment sales experienced a meaningful increase in the quarter as part of our fleet management strategy. Leslie will cover this point and others during our financial review. These same factors drove a strong year-over-year increase in EBITDA, which totaled $140.1 million in the Q1 of 35.4%, while an EBITDA margin of 43.4% was 540 basis points ahead of the same quarter in 2022. I will now cover some highlights from our rental business. Slide SEVEN, please. Rental revenues when compared to the year-ago quarter improved an impressive 31% to $232.1 million. Rental gross margins for the quarter were 48.4% compared to 49.9% over the same period of comparison with higher depreciation, the primary cause for the decline. Leslie will explain this further during her financial discussion. I noted earlier the positive impact on rental rates in the quarter as we continue to demonstrate excellent relative pricing performance across the equipment rental industry. In addition to the 9.5% year-over-year improvement, rental rates, excluding One Source, were up 0.7% on a sequential quarterly basis. Our expectation for modest sequentially quarterly rate improvement in 2023 remains unchanged. Consistent with our Q1 expectations, fleet utilization of 67.3% was in line with the typical Q1 measure. The 310 basis point decline compared to the year-ago quarter was largely due to persistent disruptive weather across several of our geographic regions. Dollar utilization in the Q1 was 38.6%, a 100 basis point improvement when compared to the Q1 of 2022. This favorable re-result, which has demonstrated strong improvement since late 2021, highlights our ability to effectively address critical factors for success. These success factors include rental rate discipline, fleet growth and effective fleet management, continued branch expansion, and other areas of operational excellence. We also benefited from a resilient business environment, we remain confident that sound fundamental conditions will persist in 2023. Next, I want to provide some facts behind our positive industry thesis. On to slide eight, please. Construction activity remains strong, contributing to the robust end market backlogs, especially the non-residential and industrial segments. These two important end markets accounted for 77% of our revenues over the last 12 months. We are witnessing an abundance of projects across our operating footprint entering various stages of execution and planning, and several key industry measures of future non-residential construction activity continue to support a positive outlook. Although certain measures have softened from peak levels in recent months, they continue to signal healthy activity throughout the balance of 2023 and into 2024. Large private and federally funded construction projects addressing a variety of manufacturing and infrastructure building programs are increasingly apparent across our operating footprint. These projects include, but are not limited to, LNG export terminals along the Gulf Coast, solar farms and chip factories, chip fabrication plants in the Central and Western U.S., electric vehicle battery facilities in the East, Central, and Western regions of the country, and data centers across all regions. Our participation in these extensive opportunities is expected to increase throughout the year. Lastly, a continuing equipment supply imbalance and the likelihood of further improvement in rental penetration represent favorable dynamics that reinforce a positive industry outlook. On the latter point, rental penetration is estimated to have exceeded 53% at the conclusion of 2022, as this important measure approaches its pre-pandemic highs. These numerous sources of customer demand are expected to support favorable business conditions, including higher physical fleet utilization and modest sequential rental rate improvements as the year proceeds. Finally, before I turn the call over to Leslie, I'll provide an update on progress towards our growth and expansion strategy. Slide nine, please. Significant improvement in our rental fleet, continued expansion of our branch network, and opportunistic M&A remain principal components of our growth strategy in 2023. Our gross fleet capital expenditure in the Q1 totaled approximately $128 million, with an expected expenditure for the full year remaining $500 million-$550 million. This sizable Q1 outlay attractively positions our existing branches with the equipment needed to address escalating customer demand as the seasonal expansion and construction activity begins, while ensuring we have the optimal fleet mix required to seamlessly execute our new location strategy. Regarding new locations, our previously reported goal in 2023 of no less than 10 new locations and possibly as many as 15 remains unchanged. We remain focused on greater density in key geographic regions. No new branches were added in the Q1. However, we currently expect to open as many as six new branches during the Q2. Slide 10, please. We closed the Q1 with 119 branches across 29 states. The modest reduction in branches from our year-end 2022 total reflects the consolidation of a One Source branch as we finalized our integration process. In summary, the combination of rental rate discipline, substantial fleet growth, effective fleet management, meaningful branch expansion, and superior operational execution concisely describes the storyline for the Q1, leading to another successful quarterly result. With the continued focus on these and other critical factors, we fully expect to demonstrate further financial improvement and operational achievement in 2003 while we advance our strategic growth objectives. On to slide 11, I'm going to turn the call over to Leslie for an extensive review of our Q1 financial performance. Leslie? Thank you, Brad. Good morning, welcome, everyone. I'll begin this morning on slide 12 with a review of revenues, gross profit, and profit margins. Q1 revenues totaled $322.5 million or 18.4% better than the Q1 of 2022. The $50 million improvement was due primarily to higher revenues in both rental and used equipment sales. At the business segment level, rental revenues in the quarter were up 31% to $232.1 million, compared to $177.2 million in the year ago quarter. Growth in our rental fleet and appreciation in rental rates contributed meaningfully to the improvement. As Brad noted earlier, our rental fleet grew 28.1% or $533.8 million when compared to the Q1 of 2022, and we continue to demonstrate excellent rate achievement, with rental rates 9.5% higher than the Q1 of 2022 and 0.7% better on a sequential quarterly basis. Unlike the year-ago quarter, when we recorded physical fleet utilization of 70.4%, Q1 of 2023 utilization of 67.3% reflected a more typical Q1 outcome. Revenues from used equipment sales rose 49.2% in the quarter to $32.1 million, compared to $21.5 million in the year-ago quarter. The execution of our fleet management strategy, together with our decision to capitalize on a strong market for used equipment, resulted in increased sales in the quarter. New equipment sales in the quarter declined 70% to $7.8 million, compared to $26 million in the Q1 of 2022. The decline was due primarily to our reduction in the sale of earthmoving equipment. As a reminder, in December 2022, we sold our Komatsu earthmoving distribution business, representing a final step in our planned exit from distribution activities. Consolidated gross profit in the Q1 increased $29.8 million or 26.7% to $141.4 million compared to $111.6 million in the year-ago quarter. Our consolidated gross margin improved to 43.8% compared to 41% over the same period of comparison. An improved revenue mix and higher gross margins on used equipment sales were the primary contributors to the improvement. Total equipment rental margins were 43.6% in the Q1 of 2023 compared to 44.9% in the year-ago quarter. Comparing other results to the year-ago quarter, rental margins were 48.4% compared to 49.9%. The lower margins resulted from higher depreciation expense on the fair market value of recently acquired fleet from One Source. Used equipment margins increased to 58.6% compared to 41.7%, with fleet-only margins, which exclude used equipment obtained through trade-in, at 59.1% compared to 45.2%. Margins on new equipment sales were 13.3% compared to 14.2%. Finally, margins on parts sales improved to 28.8% compared to 27.1%, while service margins finished the quarter at 64% compared to 65.4%. Slide 13, please. Income from operations closed the Q1 at $46.7 million compared to $34.7 million in the Q1 of 2022. The 34.7% increase resulted in a margin of 14.5% compared to 12.7% in the year-ago quarter. Favorable revenue mix and higher gross margins on used equipment sales contributed to the improved margin, which was partially offset by lower rental margins, as discussed previously, and higher SG&A costs. Proceed to slide 14, please. Net income in the Q1 increased 57.5% to $25.7 million or $0.71 per diluted share, compared to $16.3 million or $0.45 per diluted share in the year-ago quarter. Our effective income tax rate in the Q1 was 26.1% compared to 26.3% for the same quarter in 2022. Proceed to slide 15, please. Q1 EBITDA totaled $140.1 million compared to $103.4 million in the year-ago quarter, and a 35.4% improvement compared to an 18.4% increase in total revenues. EBITDA margin in the Q1 improved 540 basis points to 43.4%. The favorable outcome was again the result of improved revenue mix and higher gross margins on used equipment sales. These factors were partially offset by an increase in SG&A expense. Slide 16, please. SG&A expense in the Q1 increased $17.1 million, or 21.8% to $95.3 million. The result compared to $78.3 million in the year-ago quarter. The increase was due primarily to employees' salaries, wages, and variable compensation, as well as increased headcount. Higher professional fees and facility expenses added to the quarter-over-quarter increase. Expressed as a percentage of revenues, SG&A expenses in the Q1 were 29.6% compared to 28.7% in the prior year quarter. Approximately $3.5 million of the expense increase in the quarter was attributable to our branch expansion strategy since the close of the prior year quarter. Over this period, we opened eight new branches excluding branches acquired in the One Source acquisition. Slide 17, please. Gross rental fleet capital expenditures in the Q1, inclusive of non-cash transfers from inventory, totaled $127.7 million. Net rental fleet capital expenditures were $96 million. Gross PP&E capital expenditures in the quarter were $12.4 million or $11.5 million net of sales of PP&E. Net cash provided by operating activities totaled $43.2 million in the quarter and compared to $38.5 million in the year ago quarter. Free cash flow used in the quarter was $13.2 million compared to free cash flow of $4.8 million over the same period of comparison. The average age of our rental fleet at March 31st, 2023, was 43.7 months and compared favorably to the industry average fleet age of 51.9 months. Slide 18, please. Our rental fleet size based on original equipment cost at March 31st, 2023, exceeded $2.4 billion and was approximately $533.8 million or 28.1% larger than our fleet size at the conclusion of the Q1 of 2022. Average dollar utilization in the Q1 of 2023 improved to 38.6% compared to 37.6% in the prior year quarter, with the improvement due largely to rental rate improvement and fleet mix. Moving on to slide 19, please. Net debt at March 31st, 2023, was approximately $1.2 billion, essentially unchanged when compared to the measure at December 31st, 2022. We concluded the Q1 with a net leverage measure or up 2.1x compared to 2.2x at December 31st, 2022. We have no maturities before 2028 and our $1.25 billion of senior unsecured notes. Slide 20, please. Our liquidity position at March 31st, 2023, totaled $789.4 million, including a cash balance of $89.9 million and borrowing availability under our amended ABL facility of $699.4 million. Excess availability under the ABL facility of approximately $1.5 billion was unchanged from the measure on December 31st, 2022. Our minimum availability, as defined by the ABL agreement, remains $75 million. Note that excess availability is the measurement used to determine if our screening fixed charge coverage is applicable. With excess availability of $1.5 billion, we continue to have no covenant concerns. We paid our regular quarterly dividend of twenty-seven and a half cents per share of common stock in the Q1 of 2023. While dividends are subject to board approval, it is our intent to continue to pay the dividend. Slide 21, please. To conclude, we are encouraged by the strong start to 2023. Our financial performance demonstrates the significance of a successful rental rate strategy, sound operations performance, and disciplined growth and expansion objectives. Many key financial metrics continue to record strong year-over-year improvement. Now we benefit from a position of greater financial stability through the cycle. We've scrutinized prevailing business conditions given inflationary pressures, interest rate actions, and recent banking system instability. We believe a fundamentally sound environment remains in place, supported by strong project backlogs and emerging opportunities. The environment is favorable for the execution of our 2023 growth initiatives. These initiatives are supported by our excellent financial resources and a conservative capital structure. We recently extended our senior secured credit facility into 2028, and we have no senior net maturities until 2028, and our leverage ratio and EBITDA interest coverage ratio stand at 2.1x and 10.5x, respectively. Thank you for your interest in H&E, and we look forward to keeping you apprised of our progress. We are now ready to begin the Q&A period. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Steven Ramsey with Thompson Research Group. Please go ahead. Hi, good morning. Seems like a strong environment out there still. I guess, if you think about customer feedback, maybe how did it change through the Q1? Are they still as bullish as they were entering the year? Maybe a follow-on to that, the projects in hand or in the pipeline of your customers, are there more projects with multiyear time frames than a year ago or than in normal times? Good morning, Steven. Customer sentiment has not changed one bit. It remains very strong. You know, the consistent feedback from customers is really around their ability to field enough employees to do the work that's in front of them. Their backlogs remain strong, and there's no inflection point that we've witnessed at this point in time. The second part of your question. I'm sorry, remind me. Sure. More projects. Yeah. I see it here. I'm sorry. More projects with multiyear. I don't think there's a doubt there are more multiyear projects in front of us today than there were 12 months ago. Some of these have broken ground. Some broke ground late last year. Many more are scheduled to start here this quarter, Q3, Q4, and into 2024. I think it's quantifiable. There are more multiyear projects in front of us as we sit here today than certainly there was a year ago. Okay. Helpful. The fleet deliveries you received in the Q1 of $128 million, how did this compare to your original views of 2023 deliveries? If it is ahead of your prior views, does this cause you to increase your rental revenue expectations for the year? It's within range of what we were planning for internally. We're very pleased that the planning we've placed with the manufacturers for capital this year appears that it's going to be on time and as expected. We're very encouraged by what we've seen in Q1. We're very encouraged by what we're seeing in Q2 with availability, meaning that it's aligning with our plans and expectations. I mean, what will our revenues do? The quicker we get this fleet, the quicker it's going to go on rent. As I've mentioned in my prepared comments, we've got a slate. We think we're probably open six locations this year on the heels of the 20 locations we've opened over the last two years, and of course, One Source that we've spoken about previously, with their nine locations now that we've had one consolidation and finalized that integration. Very happy with where we are with our CapEx. Okay. Helpful. Then one more for me on SG&A as a percentage of sales. I think you've talked about flattish this year relative to last year. Given the major revenue growth and the strong rental rates helping contribute there, what are the factors for not getting SG&A leverage this year? At what revenue levels do you expect to start getting leverage on that line? Let me give some commentary to the whys we're not showing more leverage. It's really around this rapid growth. I mean, you know, we're posting better than 10% new unit growth per year. I've stated that our expectations are 10-15 locations this year as we're continuing to build out One Source that we purchased, I think in October of last year. That's why we're not seeing the leverage you may be referring to. As far as that flattish type guidance, we're comfortable with that. If we were more focused on reducing SG&A, we could accomplish that. I think we're doing a nice job of balancing substantial fleet growth, unit location count that's going to serve us for decades to come. The markets we're moving to are all primary markets that will serve H&E for many, many years to come. Leslie, would you add anything to that? No, I think that answered it perfectly. I mean, I would just concur that, you know, our expectation is still that we'll be flat to 2022, which was 27.6% for the full year. Very helpful. Thank you. Thank you. The next question is from Seth Weber with Wells Fargo Securities. Please go ahead. Hey, guys. Good morning. I wanted to follow up on a couple of Steven Ramsey's questions. The positive customer sentiment, I guess I'm just trying to, you know, tie that together with, is sentiment good, but have you heard anything about customers having challenges getting financing for projects? Is that potentially a, you know, just a governing factor on stuff going forward? Do you have any sense for, you know, what, how many, you know, what% of the projects in your area are maybe financed locally versus, you know, money center banks or bigger banks or anything like? Are you hearing anything on the financing side? I guess maybe start there. Yeah. Seth, good morning to you. No, no, we are not. I mean, we spoke to investors. We spoke to others who have asked the same question and for very obvious and logical reasons. In our engagement with regional banks and more specifically with customers and focus on our projects, we've seen 0 impact so far. I've not received feedback about any projects that may not go due to financing or the current environment we're in. We're aware, we're paying attention, but the answer to your question is no, there has been 0 change. Okay. That's helpful. Just, you know, Brad, how should we think about the economics on some of these longer term projects? You know, is it a lower gross margin, but maybe, you know, there's less, you know, back and forth of the fleet or less maintenance or something like that, so the operating margin is about the same? Or is there any kind of rule of thumb that you guys think about if the project duration gets longer, the impact, that might have on the margin? Yeah, well, as you just adequately outlined, the longer the project, the larger the project, you know, stated more plainly, the more product you put on a project for a long period of time, you typically see a flex in rates. It's a supply and demand environment. We see a lower rental rate on a project that's gonna go multi years, that may consume hundreds of machines, than we would on a project that's gonna consume a handful of machines for a month or so. Those are just kind of the simple economics around that. That being stated, we're very happy with the yield that these projects produce. I'll also say to you that the price increase to 10% last year, the 9.5% we're showing in the quarter, the 0.7% we're showing sequentially, we're really proud of that number, you know, coming up in Q1 where it was as wet as it was. That reflects increase in rates among all of our project types and all of our customer types. We're not, we're certainly not looking to discount any products, but certainly in the rental business, you look at yield and you consider the duration and the quality of the job. Got it. Okay. Then just maybe lastly, you know, used sale margins were surprisingly high. It's obviously been a point of concern for investors that kinda look at the auction pricing. Is there anything out there that's suggesting to you know, that used prices might start to soften, whether it's more new equipment coming online or shifting more towards the auction channel or anything like that? There's not. I mean, we were very proud of the performance of our operations and their achievement. I think, you know, margins in that low to mid 50%, and similar rate of fleet sales going forward for the rest of the year are right in line with our expectations, and I have no concerns that we're going to see any type of softening in the used equipment margins. We're happy, again, as I stated to Steven Ramsey, that we're gathering the equipment as early as we are into our plan. There's not an abundance of equipment in the marketplace, so it's going to keep it constrained for, you know, the foreseeable future. Got it. Okay. Thank you, guys. I appreciate it. The next question is from Alex Rygiel with B. Riley. Please go ahead. Thank you, and good morning. You know, if investors felt the cycle had peaked and/or utilization or rates had peaked, how would you respond to that? I can assure you that rates have not peaked at this point in time. I don't think that utilization as an industry has peaked. It's interesting, Alex, when you ask the question, of course, speaking specifically with H&E, you know, the number of new locations we've added over the last few years, coupled with the 10- 15 we'll open this year, our persistent but balanced approach on increasing rental rates going forward, and the substantial fleet growth, it's gonna be a slight headwind on our year-over-year physical utilization. I wouldn't wanna indicate that we feel like the opportunity for our peak utilization is over, what that's a factor of or the variety of things we're focused on now that we're a pure play rental business. Specifically, I'd wanna point out, you know, the full year impact of those rental rates, all of these locations we're opening, we're exceeding our internal expectations consistently with warm starts. I would point you to dollar utilization and other return metrics just to prove out how strong we can be with utilization. While I do think we're gonna have a little headwind on our year-over-year utilization, I think the net result is gonna be hugely positive. Nothing is peak-ish for us yet, with the exception of if we run utilization similar to or less than last year while we get these other performance enhancements, we're gonna be really happy, and I think that's what's going to happen. Can you discuss the expectation for improved rental penetration? Other than your warm starts, are there any other pressures on more favorable rental rates? In other words, to gain some of this, penetration or market share, do you find yourself having to reduce rates to a modest extent that might be a headwind to the even more positive rental rate number you're printing? No, absolutely not. When we refer to penetration, it's a measure of the dollars spent by the customer base in the marketplace for rental assets as opposed to purchasing of assets. You know, being that we were founded as a crane distributor, we were one of the largest commodity earthmoving distributors for the better part of our 60+ year history. You know, we've witnessed when there's times of economic uncertainty, people rent and they don't buy. They buy, I shouldn't say they don't buy, they buy less. There's much less volatility, and when we're talking about penetration, it's really speaking of a shift. Secondarily from that, I think you can look that we're taking more market share. While I don't get into quoting hypothetical market shares, you can look at our growth rates, and we would compare favorably with anyone in the industry, and we'll continue to do so when it comes to growth. Coming back to that last comment that you just made. In a hypothetical scenario, if customers were not to buy, but they pursued a rental option given some uncertainty in the future, have you noticed any of those decisions being made at this point in time yet in the cycle? Look, it's no. It's very anecdotal and short windows of time, and that's why it's measured over broader periods of time. I can tell you, I've been at working here at H&E for 25 years, and we have consistently seen our traditional distribution customers, some slowly, some more rapidly migrate to the rental process. The one thing you can count on is when a customer moves to using the rental process with any consistency, they do not go back to their buying habits. Very helpful. Thank you. Next quarter. Thank you. The next question is from Stanley Elliott with Stifel. Please go ahead. Hi, good morning. This is Brian Brophy on for Stanley. Was hoping you could talk about the One Source integration, how that's gone relative to your expectations, and then any updated thoughts on how you're thinking about M&A and M&A pipeline. Thanks. Sure. I'll take that, Brian. First off, One Source, you know, we fully integrated One Source last year from a system standpoint. You know, we have them up and running on our platform, and they are performing well, as expected. As far as M&A, you know, the M&A pipeline still, you know, remains strong. You know, there's lots of opportunities out there. You know, we're consistently vetting deals and, hopefully we'll be able to capitalize on that this year. We're gonna continue to pursue acquisitions that meet our needs and fit what we're looking for. Yeah. Brian, let me add, as John just stated, our pipeline for acquisition opportunities is, relatively speaking, as strong as it has ever been. At the same time, we're as disciplined as we've ever been. We just simply will not overpay for poor assets in questionable markets or old rental fleets. You know, we hope to continue to do one or two tuck-in acquisitions a year. When you see us do an acquisition, you can know that it checked all of the boxes for us and that we take a somewhat conservative approach to deploying capital because we know we can continue to stamp out 10-15 locations a year and get substantial returns on those assets. Now, it's not a one or the other. We can do both. We've got more than enough adequate bandwidth for both internally, operationally. You can look at our balance sheet and see it supports, you know, substantially more than we're investing. As John stated, hopefully get one or two done this year. Pipeline is strong, we're gonna remain disciplined with where we deploy our capital with acquisitions. Thanks. That's really helpful. Then kind of touching on a comment you made, thinking about the longer term outlook for warm starts, how much visibility is there in the ability to open 10-15 a year? Is this a multi-year opportunity? I guess, how do we think about that? Yeah. Look, I think this is our opportunity going forward. The only reason we do not open 10- 15 locations on a go-forward basis would be an economic disruption that we don't see yet. you know, if we were to see a severe recessionary period, we're not gonna continue opening at the same pace. Bar that type of a situation, you should expect us to open 10- 15 locations a year in high growth markets that are stable and will, you know, serve the company and our investors well for decades to come. Got it. Thanks. That's helpful. Last one for me. Obviously, your fleet age continues to creep higher. You guys have historically run a much younger fleet. Kind of curious as to how you're approaching that. Any changes in how you're thinking about fleet age and how we should think about fleet age changing going forward as equipment availability improves? Sure. Our fleet age is really not. I mean, I think it creeped forward a tenth of a month or something quarter-over-quarter. If you were to look at last quarter when One Source came on, you saw a little bit of a notable increase then because they had an aged rental fleet. That being said, we're closer to a year younger than industry average than we are away from it. You know, we have a very young fleet. If we want to age our fleet further, we're in position to do so. Again, I don't know if it's if we're 10, 11 months younger than industry average today. Stated differently, we could age it that much and be like everyone else. We kinda like this younger profile with our rapid growth we have planned with this branch expansion and some same store growth. I think you should expect to see us kind of continue to hover in the range we are and not have a material aging issue. Please be reminded, we have a very young rental fleet relative to our competitors. Got it. Thanks. I'll pass it on. Thank you. If you have a question, please press star then one. The next question is from Avi Jaroslawicz with UBS. Please go ahead. Hey, good morning, guys. This is Steven Fisher. just wanna, you know, get into time utilization a little bit. As we're thinking about the year progressing, we expect utilization to build seasonally, but, you know, you also called out weather impacts for Q1. How should we be thinking about the, you know, change year-over-year in time utilization? 310, I think, in Q1. Do you expect that to narrow as the year goes on or stay about the same? I think it would probably narrow a little bit, but I think, as I stated earlier, I think we're gonna have a little headwind on our physical utilization peak. You should expect between now and the end of October, where we traditionally peak, that we continue to get incremental gains in physical utilization. As we sit here in Baton Rouge this morning, we're bumping up against 70% utilization this week. You know, we're not in the busy part of our season yet. I mean, it's, you know, we are right where we expect it to be, including with the rate gains and the growth. You know, we're gonna be a little behind on a year-over-year utilization comp, but I think more importantly, well ahead on all of the other drivers and subsequently our return metrics and profitability. Got it. Thanks for that. Just turning to CapEx, looking at your fleet mix, AWP is down from 3% same period last year. Fleet age is up for AWP, flat material handling, down in earthmoving. Just as we think about the mix within CapEx, yeah, how should we be thinking about that? I'm assuming you're trying to rebalance the fleet, seem to imply that everything besides AWP would be down in terms of volumes. Is that the right way to think about it? Well, I don't think it's a volume issue as much as it's a percent of the mix, right. So, we have been very intentional. We love our aerial work platform. It's still a very meaningful piece of our overall investment, and will continue to be. We're not having a reconfiguration, but what you see is very thoughtful fleet management, and we clearly are going to manage to where the opportunities are to improve returns and serve our customers. Over the last 12-month period that you're referring to, you know, we intentionally brought down some of the AWP components and redeployed more capital into other areas where we see higher returns and better future opportunity. Okay. That makes sense. Just lastly for me, looking at your end market mix, the residential vertical has really kept pace with the rest of the business, which I think is a little surprising. Can you just discuss some of the dynamics that you're seeing there? Also, can you remind us how much of your non-res exposure is commercial? How much of our non-res exposure is rental? Was that the last one? No, commercial. Oh, commercial. It's commercial. It's a small piece. It's, you know, it's certainly larger than residential, which is, like, almost nothing in our business, and anything we have is tied to multifamily. Commercial, it varies depending on the region and the projects that are going on at a particular point in time. We do plenty of commercial work, but it would depend on what type of commercial work you're speaking of. That's fair. Thanks, guys. Congrats on the quarter. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Jeff Chastain for any 1closing remarks. Okay. Well, thank you, and we appreciate everyone taking the time today to join us, and we look forward to speaking with you again. Good day, everyone. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.