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H&E Equipment Services (NASDAQ:HEES)
Q4 2019 Earnings Call
Feb 20, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning and welcome the H&E Equipment Services fourth-quarter 2019 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Kevin Inda, vice president of investor relations.

Please go ahead, sir.

Kevin Inda -- Vice President of Investor Relations

Thank you, Margaret, and welcome to the H&E Equipment Services conference call to review the company's results for the fourth quarter and year ended December 31, 2019, which were released earlier this morning. The format of today's call includes a slide presentation, which is posted on our website at www.he-equipment.com. Please proceed to Slide 2. Conducting the call today will be John Engquist, executive chairman of the board of directors; Brad Barber, chief executive officer and president; and Leslie Magee, chief financial officer and secretary.

Please proceed to Slide 3. During today's call, we'll refer to certain non-GAAP financial measures, and we reconcile these measures to GAAP figures in our earnings release and in the appendix to this presentation, each of which is available on our website. Before we start, let me offer the cautionary note that this 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 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 also includes the risks described in the risk factors in the company's most recent 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 such forward-looking statements.

The company does not undertake to publicly update or revise any forward-looking statements after the date of this call. With that stated, I will now turn the call over to Brad Barber.

Brad Barber -- Chief Executive Officer and President

Thank you, Kevin, and good morning, everyone. Welcome to H&E Equipment Services fourth-quarter 2019 earnings call. On the call with me today are John Engquist, executive chairman; Leslie Magee, our chief financial officer; and Kevin Inda, our vice president of investor relations. Slide 4, please.

My comments this morning will focus on the fourth-quarter results, our business and current market conditions, and then Leslie will review our financial results for both the quarter and year. When Leslie finishes, I will close with a few brief comments. After, we will take your questions. Slide 6, please.

Our business continued to produce solid results in the fourth quarter, achieving year-over-year increases in total revenue, gross profit and adjusted EBITDA despite a tough comparison from a year ago. For example, our rental business did not experience the typical seasonality in the fourth quarter of 2018, achieving record physical utilization of 72.9% for the period. Also, new equipment sales were exceptionally high during that period. A strong aerial and crane sales pushed our revenues to approximately $80 million.

Nonetheless, fourth-quarter 2019 earnings revenue improved to $348.1 million. Our rental business generated good results with higher rental revenues and positive rates from a year ago. Our total gross margin increased 130 basis points to 36.9%. Adjusted EBITDA increased 10.7% to $126.8 million and margins increased to 36.4% from 33.1% a year ago.

Overall, we're pleased with the performance of our business in the fourth quarter. Slide 7, please. As we discussed in our last call, we expected supply to come into balance with demand, which would pressure physical utilization in the fourth quarter. Despite a 390-basis point decline in physical utilization from 72.9% a year ago to 69% this quarter, our rental business performed well.

Rental revenues increased 8.2% to $176.3 million, and we achieved a 1.7% increase in rental rates from a year ago. Our fleet size was also considerably larger than a year ago, up 10.2% or $179.3 million. We will continue to be disciplined in the execution of our rental business. With stable end-user markets expected this year, as well as rational industry behavior, good returns are achievable for the rental business once again.

Slide 8, please. We currently have 94 branches in 23 states and believe our footprint is one of our key advantages. Based on industry data, nonresidential construction activity continues to be solid in the regions we serve. To better serve our customers and leverage the demand in our markets, we will continue to grow our rental business through acquisitions and organic expansion.

Slide 9, please. Our end markets and fleet composition continue to be strategic advantages for our business. In terms of our revenue mix, our significant exposure to the nonresidential markets continues to be a positive based upon industry data forecast. While our exposure to the industrial markets remains low at 10%, necessary ongoing maintenance work and new project starts are always good for our business.

Our exposure in the oil and gas market remains low at 6%. Fleet composition is a very important element of our business as we monitor mix on a daily basis to ensure the best possible returns on our fleet investment. Our fleet remains one of the youngest in the industry at 36.3 months, compared to an industry average of 46.8 months. Slide 10, please.

Given the current macro industry data points, customer feedback, project pipelines and the nonresidential construction markets we serve are expected to remain stable in 2020. I'll now turn the call over to Leslie to discuss our financial results in more detail. Leslie?

Leslie Magee -- Chief Financial Officer and Secretary

Good morning, everyone, and thank you, Brad. Let's proceed to Slide 12 for more details of our financial results. Slide 12, please. Before I discuss the financials, a noncash goodwill impairment charge of $12.2 million was identified in connection with the company's annual fourth-quarter 2019 goodwill impairment test.

The $12.2 million goodwill impairment charge consists of a $10.7 million impairment to our new equipment goodwill reporting unit and a $1.5 million impairment to our service revenues goodwill reporting unit. Our goodwill reporting units related to rental revenues, used equipment revenues and parts revenues were not impaired. The impairment charge will not result in any cash expenditures and will not affect the company's cash position, liquidity, availability or covenant test under its senior secured credit facility. Our business delivered solid results in 2019, and we're especially pleased with the results in our rental business.

Total revenues increased 0.6% or $2.2 million in the fourth quarter, compared to the same period a year ago to $348.1 million, primarily driven by the strength in our rental business and partially offset by declines in new equipment sales. As Brad mentioned, rental revenues, as previously reported, increased 8.2% to $176.3 million. Our average time utilization based on OEC of 69% for the quarter, compared to a tough comp of 79.2% a year ago. The size of our fleet increased by 10.2% or $179.3 million versus a year ago.

In addition, rental rates improved this quarter, up 1.7% year over year, and rates improved in all product lines. Rates decreased 0.1% sequentially. Due primarily to lower physical utilization, our dollar returns declined 100 basis points to 36% versus last year. Our new equipment sales decreased 23% or $18.3 million to $61.4 million, compared to $79.7 million last year with lower new sales in all product lines with the exception of earthmoving.

The decrease was primarily driven by lower new crane sales, which were down 28.7% or $12 million and lower new aerial sales, which decreased 29.8% or $4.9 million. Used equipment sales increased 12.1% or $4.6 million to $42.4 million, increasing in all product lines except aerials. The increase was largely a result of higher used earthmoving and crane sales. Sales from our rental fleet comprised 91% of total-used equipment sales this quarter, compared to 88% a year ago.

Our parts and service segments generated $47.6 million in revenue on a combined basis, up 4% from a year ago. At this time, let's move on to gross profit and margin. Gross profit increased 4.4% to $128.6 million from a year ago. Consolidated margins were 36.9%, compared to 35.6% a year ago, an increase of 130 basis points, primarily as a result of a positive mix shift to rentals and higher margins on used-equipment sales.

These gains were partially offset by lower gross margins in other business segments. For growth margin in detail by segment, rental gross margins, as previously reported, were 50.3% during the quarter, compared to 51.5% a year ago and were impacted by the nearly 400 basis point decline in time utilization. Margins on new equipment sales decreased 10.8% for the fourth quarter, compared to 12.7% a year ago. Used-equipment sales gross margins increased to 33.3% from 29.1% last year largely due to the change in the mix of equipment sold.

Margins on pure rental fleet-only sales increased to 36% from 32.3% a year ago. Our parts and service gross margins on a combined basis increased to 41.4%, compared to 40% a year ago. Slide 13, please. As a result of the $12.2 million impairment charge, income from operations for the fourth quarter of 2019 decreased 18.8% to $41.3 million or 11.9% of revenue, compared to $50.9 million or 14.7% of revenues in the year-ago quarter.

Excluding the charge, income from operations increased 5.1% to $53.5 million or 15.4% of revenues. The change in margins, excluding the charge, was primarily a result of a shift in revenue mix to rentals and higher used-equipment sales margins, which were partially offset by lower gross margins in other segments and higher SG&A costs. Proceed to Slide 14. Net income was $21.9 million or $0.61 per diluted share in the fourth quarter of 2019, compared to net income of $25.1 million or $0.70 per diluted share in the fourth quarter of 2018.

Adjusted net income was $31.9 million or $0.88 per diluted share on a lower effective income tax rate of 18.4% in the fourth quarter of 2019, compared to 27.9% a year ago due to discrete items in the current period. Please move to Slide 15. Adjusted EBITDA was $126.8 million in the fourth quarter, compared to $114.6 million a year ago, an increase of 10.7%. Adjusted EBITDA margins expanded 330 basis points to 36.4% this quarter compared to a year ago primarily due to the shift in revenues to rentals, higher used-equipment sales margins, higher gain on sale of property and equipment and an increase in other income.

Partially offsetting these improvements were lower new sales margins and higher SG&A costs versus a year ago. Next, on Slide 16. SG&A expenses for the fourth quarter of 2019 were $77.2 million, compared with $73 million for the prior year, a $4.2 million or 5.8% increase. SG&A expenses in the fourth quarter of 2019, as a percentage of total revenues, were 22.2%, compared to 21.1% a year ago.

Employee salaries, wages, payroll taxes, employee benefit costs and other employee-related expenses increased $1.4 million largely due to our acquisition since December 31, 2018, a larger workforce and higher incentive compensation related to improved profitability. Facility-related expenses, primarily rent expense, increased $1 million. Costs for outside services increased $0.9 million. Depreciation and amortization increased $0.8 million.

And expenses related to Greenfield branch expansion costs increased $0.4 million compared to a year ago. Next on Slide 17. On this slide, you'll find our 2019 fleet capex and cash flow. But in addition, our gross fleet capex in the fourth quarter was $41.7 million, including noncash transfers from inventory.

Net rental fleet capex for the quarter was $3.2 million. Gross PP&E capex for the quarter was $11.7 million and net was $8.7 million. Our average fleet age as of December 31 was 36.3 months. Free cash flow for the fourth quarter of 2019 was $100.9 million, compared to free cash flow of $69.8 million a year ago.

The increase in free cash flow was primarily due to lower net fleet investment. Next, on Slide 18. At the end of the fourth quarter, the size of our rental fleet based on OEC was $1.9 billion, a 10.2% or $179.3 million increase from a year ago. Average dollar utilization was 36%, compared to 37% a year ago.

Proceed to Slide 19, please. At the end of the fourth quarter, the outstanding balance under the amended ABL facility was $216.9 million. We had $525.4 million of cash borrowing availability at quarter-end, net of $7.7 million of outstanding letters of credit. Proceed to Slide 20, please.

Our business again delivered strong operational and financial results for the year. We were especially pleased with the performance of our rental business, which accomplished good results on solid demand in the nonresidential markets. Let me quickly review our full-year 2019 results. Our total revenues increased 8.8% or $109.4 million to $1.3 billion in 2019 from $1.2 billion in 2018 mainly due to the growth of our rental business.

Our gross profit increased $60.6 million or 13.8% to $499.2 million from $438.5 million in 2018. Our gross profit margin increased 160 basis points to 37% largely due to a shift in revenue mix to rentals and higher used-equipment sales margins. Our adjusted EBITDA for 2019 increased to 16.7% to $473.2 million from $405.4 million in 2018, and adjusted EBITDA as a percentage of revenues increased to 35.1% compared with 32.7% in 2018 primarily due to a shift in revenue mix to rentals and higher used-equipment sales margins, which were partially offset by higher SG&A compared to a year ago. Our net income was $87.2 million or $2.42 per diluted share, compared to net income of $76.6 million or $2.13 per diluted share in 2018.

And on an adjusted basis, net income was $96.4 million or $2.67 per diluted share. The effective income tax rate was 24.7% in 2019, compared to 26.8% in 2018. Our free cash flow was a use of $6.7 million in 2019, compared to a use of free cash flow of $279 million in 2018. The improvement in our free cash flow was largely the result of lower acquisition investment and lower net capital expenditures in 2019 compared to a year ago.

And during 2019, we did complete one acquisition for $106.7 million, compared to $196 million for two acquisitions in 2018. Our net capex in 2019 declined to $221.5 million, compared to $328.9 million in 2018. We also continued our dividend payment each quarter with total dividends paid of $1.10 per common share during 2019. And at this time, I'm going to turn the call back to Brad.

Brad Barber -- Chief Executive Officer and President

Thank you, Leslie. Please proceed to Slide 22. To conclude, 2019 was a solid year for our business, and we're focused on generating solid returns for our shareholders this year as well. Now let's get into some questions.

Operator, please provide instructions for the Q&A session.

Questions & Answers:


Operator

Thank you, sir. [Operator instructions] We can now take our first question from Stanley Elliott from Stifel. Please go ahead.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Good morning, everybody. Thank you for taking my question. A quick question on the time utilization piece. Is there a way to parse out how much of that was oil and gas specific versus anything else that you could tell that would come to mind?

Brad Barber -- Chief Executive Officer and President

Not particularly. I would point to oil and gas as, you know, traditionally run 6% to 7% of our total revenues. I've mentioned before, our heavy exposure is really more in the Eagle Ford shale. That utilization in general continues to run much higher than the rest of the company.

So it's not been a tremendous impact.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

OK. And then how should we think about SG&A cost, your anniversary of some of the M&A done, I guess the M&A transaction in early 2019. Should we expect some sort of leverage within that or just conceptually how to think about that?

Leslie Magee -- Chief Financial Officer and Secretary

Well, we do expect some pressure on SG&A as a percentage of revenues in 2020 and, I would say, at similar levels as we saw for the full year of 2019. There is one significant item in SG&A that I should mention, and specifically, we experienced a significant increase in our excess insurance renewal program at 12/31 of 2019. During what some would say is undoubtedly the worst excess insurance market that they have ever seen, and all I could say to that is we have taken further action. We've replaced our broker, and we are currently working on a plan to reduce as much of that cost as possible.

In addition to that, as we grow our rental business, we've talked about this before, but you will see SG&A increase as a percentage of revenue slightly just purely based on that. And then this insurance item on top of that, which gives us, of course, no help.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Perfect. And then lastly for me, you mentioned a stable non-res environment. I mean, should we think about any regions within your portfolio doing better than others? And then I'd be curious also to get your take on submarkets. We've heard very good things about highway spending.

Just trying to think about that as we're parsing out the parts of the business.

Brad Barber -- Chief Executive Officer and President

Sure. Thank you for the question. Not really. Our utilization trends continue to be very similar across all of our geographies across most of our product types, like you were seeing some brighter life with certain project types that are likely to come online or that are coming online.

But now, there's nothing distinct about a geography that I could point out that's dissimilar to the rest of our geographies.

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Perfect. Thank you very much for the time.

Operator

Thank you. Next question comes from Steven Ramsey with Thompson Research Group. Please go ahead.

Steven Ramsey -- Thompson Research Group -- Analyst

Good morning. I wanted to start with just the stable commentary on 2020. Does this mean more modest growth maybe than what we've seen in the past couple of years? And does this type of market provide a backdrop to increase investments in fleet and new branches? Or would you be more moderate on growth investments and, therefore, drive greater free cash flow?

Brad Barber -- Chief Executive Officer and President

Good morning. So, look, our view is that our revenues in 2020 will be similar to our 2019 revenues. I can tell you, as it pertains to growth capital, our current view is the only place we're going to spend growth capital will be with our Greenfield locations. Our existing locations, we're going to continue to monitor utilization.

And as utilization returns to levels that are appropriate with associated rate improvement, then we'll make those decisions then. But, right now, we're forecasting -- our view for the year is low single-digit revenue increases. And anywhere we're going to spend growth capital will be related to warm start expansion opportunities.

Steven Ramsey -- Thompson Research Group -- Analyst

Excellent. And are you seeing more areas where fleet is getting too high? We have heard from some that certain regions, there's too much fleet in those regions. Do you feel like your fleet is in good shape to drive rates as is, or do you need to shift fleet to drive better rates overall for the company?

Brad Barber -- Chief Executive Officer and President

Sure. In our last quarterly call, I spoke and really repeatedly said that our view is that supply was catching up with demand. And as evidenced by our fourth-quarter utilization, we had a really nice quarter. And let me say again, I think we're going to have a nice year in 2020, but supply had caught up with demand.

It is our view that there's a little bit more capacity in certain markets. It's not heavily weighted to any individual market. As we sit here toward the middle end of February, this is probably our seasonal low point. It's raining today across most of the country as I see.

It's really hard to make those predictions. I can say to you, we do not plan on moving out or transferring a lot of equipment. I don't see that need. I think that as the seasonality passes, we're going to continue to see discipline, particularly from our larger competitors.

I hope to continue to see discipline from our manufacturers, and our utilization will return to more typical levels. But until that point, we're going to focus on what we have. And as I stated to the last question, our any additional growth investment will be around warm start opportunities.

Steven Ramsey -- Thompson Research Group -- Analyst

Excellent. And last for me on kind of your 12 -- your rolling 12-month future outlook. Has this shifted much in the past few months? Just the tone is that the next 12 months not as positive maybe as the tone we heard on the Q3 call. So just wondering if that has evolved in the last few months.

Brad Barber -- Chief Executive Officer and President

I believe it has slightly. I will also say that I think the opportunity for -- and it's really around utilization, our current view of utilization. I believe the opportunity for that to improve absolutely exist. We believe the markets are very stable.

As we've talked to our branch locations, our salespeople, our customers, they have a very robust outlook for the year. And so we share their optimism, but until I see our utilization pick back up to where it was and our ability to achieve solid positive incremental rates going forward, we're going to be a little more muted with our capital spend.

Steven Ramsey -- Thompson Research Group -- Analyst

Great. Thanks for the color.

Operator

We can now take our next question from Seth Weber from RBC Capital Markets. Please go ahead.

Brendan Shea -- RBC Capital Markets -- Analyst

Hi. Thanks. This is Brendan on for Seth. I guess I'd like to start with the goodwill impairment charge, was that on any particular kind of equipment, or is it more broad-based?

Leslie Magee -- Chief Financial Officer and Secretary

No, it's not on the type of equipment. It's on reporting unit, which is the new equipment sales reporting units and service revenues reporting units. So it's not specific to any type of -- it's not an impairment charge on our equipment. It's more the accounting standard and the discounted cash flow modeling that you have to do.

It's not specific to our equipment at all.

Brendan Shea -- RBC Capital Markets -- Analyst

OK. All right. And then I guess what does the M&A pipeline look like right now? Are you favoring any industry verticals over others as you look or just kind of taking a look at what's available and keeping the open mind there?

Brad Barber -- Chief Executive Officer and President

Yes. So it's all the above. Obviously, with 94 locations in 23 states, there's a lot of geography for us to fill in. We like the general rental construction markets that represent typical fleet mix that you see with us and on most of our larger competitors.

We're not adverse to considering specialty rental businesses, and I'll tell you that we're kicking a lot of tires and looking forward to finding another one or two possibly this year that it lands. These are primarily small tuck-in type acquisitions. But it's all the above.

Brendan Shea -- RBC Capital Markets -- Analyst

OK. And then last for me. And to the extent you're willing to comment, it sounded like you're continuing to expect to be able to push rental rates a little bit higher in the coming year with maybe some small improvement in time utilization. But just any comments you're willing to share there?

Brad Barber -- Chief Executive Officer and President

Sure. I will tell you my view of rental rates would be flattish to slightly up at this point in time. We talked about -- we ended the year 1.7% of last year. We thought we would be somewhere in the 1.5% to 2%, so we were right within our own range.

Right now, I would tell you that flat to slightly up is our expectation. And as I think about physical utilization on a year-over-year 2020 compared to 2019, I think we're going to have a little headwind to achieve the same annual physical utilization. But sitting here in February, weather conditions as they are currently basically across the country, it's very difficult to call it, but similar utilizations, maybe we're going to have a little pressure to push us down slightly. Rates are going to be a little less opportunistic than last year, and that's primarily driven by this utilization situation.

Brendan Shea -- RBC Capital Markets -- Analyst

OK. Great. Thank you.

Operator

Thank you. [Operator instructions] We'll our next question from Ross Gilardi from Bank of America. Please go ahead.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

Good morning, guys.

Brad Barber -- Chief Executive Officer and President

Good morning, Ross.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

Brad, just on your rate comment right there, I mean, the quarterly progression over the course of the year, I mean, could you see rate slightly down year on year in the first half, kind of improving to positive in the second half? Or do you think you'll sustain flat to slightly up rates throughout the year?

Brad Barber -- Chief Executive Officer and President

I think it's going to be somewhere in between both of your questions or the comments within your questions. Let me say I believe we can achieve positive rates for the year, but it's going to be more loaded into Q2, 3 and 4. And that's going to be heavily reliant on utilization loans. So we think the markets that we're serving are very stable.

The jobs are there. The workflow is there. And if everyone remains disciplined, that I think there is an opportunity. But it's going to be a little bit more difficult in 2020 than it was in 2019 if we can achieve positive rates.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

OK. And your free cash flow, I think as you go into the numbers, you said it was slightly negative for the overall year, without which -- was less negative in the prior year, but I expect you guys to generate some cash this year overall. I mean, were you surprised by that at all? And as you're thinking about further M&A, you want to make sure you're free cash flow positive before you lever up the business further in this type of environment. And at one point, you and John Engquist had talked about comfort of taking leverage up to the 3.5 to four times range for this right acquisition.

I mean, do you still feel comfortable enough to do that, or have you sort of reset where you wanted to be through the cycle?

John Engquist -- Executive Chairman

Ross, this is John. We're not going to lever up. Our leverage is going to come down this year. We're going to generate significant free cash flow.

We generated $100 million of free cash in the fourth quarter. That was in line with our expectations. But I can tell you our leverage will come down this year. We're not levering up.

Brad Barber -- Chief Executive Officer and President

Let me add, Ross, I think what you've heard us say before about where we would consider taking leverage was more with a much larger acquisition opportunity than has been represented in these tuck-in opportunities that we've taken advantage of so far and are likely to continue to look to take advantage of. So don't confuse the two that that high end of the range you gave, we spoke about was for something much more significant than a tuck-in.

John Engquist -- Executive Chairman

Yes, these tuck-in acquisitions we're doing will not change our leverage. And I would point out relative to leverage, we ended the year at 2.4 turns. That's really low leverage in our sector, so we're not levering up.

Brad Barber -- Chief Executive Officer and President

We're going to remain conservative.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

OK. Got it. And then in the used equipment market, I was just curious to get your thoughts on what you're seeing in the auction channel versus the retail channel. I mean, it seems, broadly speaking, the retail channel has been a lot more stable than the auction channel.

Would you agree with that? And as the industry tries to sort of rebalance and absorb some of that excess supply, do you expect that to continue?

Brad Barber -- Chief Executive Officer and President

So we utilize the auction very little. I read the same reports, talked to the same folks I suspect you had toward the end of last year. And we saw a little bit of acceleration in price deterioration, very small but noticeable. Anecdotally, there's a large auction going on right now, and I've been talking to folks who are on-site and watching the auction progress this week down in Florida.

And the general consensus has been pricing seems to be returning. It's more favorable. It's better. Unless these prepared remarks you talked about, we've disclosed our used revenues in total.

And then we talk about how much of our used revenues come from rental fleet sales, that margin was 36%. Right in our sweet spot of good, healthy margin. So let me say our margins on new sales are absolutely expected to be good relative to how we normally perform. I do believe we're going to see some firming of pricing.

But no doubt in Q3, I saw the same reporting. There were more units and more dollars auctioned, I think, as people try to rationalize their fleet on the tail end of last year.

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

And I would now like to turn the call back to Brad for any additional or closing remarks.

Brad Barber -- Chief Executive Officer and President

We'd like to thank everyone for taking time to join the H&E Equipment Services call today and look forward to speaking to you in our next quarterly call. Thank you, operator.

Operator

[Operator signoff]

Duration: 36 minutes

Call participants:

Kevin Inda -- Vice President of Investor Relations

Brad Barber -- Chief Executive Officer and President

Leslie Magee -- Chief Financial Officer and Secretary

Stanley Elliott -- Stifel Financial Corp. -- Analyst

Steven Ramsey -- Thompson Research Group -- Analyst

Brendan Shea -- RBC Capital Markets -- Analyst

Ross Gilardi -- Bank of America Merrill Lynch -- Analyst

John Engquist -- Executive Chairman

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