Hello and welcome to today's webinar. Our speaker today is Dave Swan from TrackUnit. Before I turn it over to Dave, I'd like to let those of you who are live know that you may submit your questions during the webinar via the Q&A tab at the bottom of the screen. This webinar will also be recorded so that you may watch or rewatch on demand at your convenience. With that, I'll turn it over to Dave. Perfect, thank you very much. So I want to talk today about digital ecosystems coming together to build what's next. I'd like to be as conversational and transparent as possible. I want to tell you guys some real stories about what we're seeing in the industry when it comes to asset connectivity. And then what I want to do is move from a general conversation about the impact we're seeing from ecosystem participation into a very specific and emerging trend that we're seeing in requirements from contractors and rentals through ecosystem participation that's starting to drive selection of asset purchases when they're talking about reef leading and project specific asset purchases. So just some background on me, I'm a Senior Vice President of Products at TrackUnit and I've been working at TrackUnit for just over three years. And I oversee our OEM product roadmap as well as have responsibility for the business impact of our product function. So that means making sure that we're aligning with the actual industry requirements when it comes to the products that we're making and we're measuring carefully that are hooking into the business processes of OEMs, dealers, contractors, and rental companies. So before I came to TrackUnit, I spent five years running the technology innovation program at Skyjack Linamar. So for those of you that aren't familiar, Skyjack is probably the largest global producer of scissor lifts, and they would be a top five producer of telehandlers, like rough terrain reach forklifts in North America. So if we can go on to the next slide here. So I'll tell you a little bit about TrackUnit, I won't get too far into it, but TrackUnit is the largest IoT provider and platform provider for construction connectivity. So we are over 2 million plus connected devices. We provide connectivity to OEMs to build their digital products on top of. We also directly provide connectivity to dealers and rental fleets, as well as contractors. And this really puts us in a role as somebody that is serving the construction digital ecosystem as someone that is connecting this complex value chain that we have, where there's different interests and connectivity from the OEM, from the dealer for rentals, and from the contractor job site owner. So we really play the role here of being someone that each one of these parties can trust to facilitate the connectivity and scalability that's needed to execute all these big ideas we're always hearing about when it comes to machine connectivity and what it looks like to realize the job site of the future. So when we think about the size of Contractor or of TrackUnit, we work with about 200 plus OEMs, we have 5,000 plus rental companies, including all of the top eight rental companies in the world, as well as thousands of contractors use our connectivity products. So one thing that, one way that we can talk about the importance of participation in digital ecosystems is by looking at the gap between companies that are fully invested and are digitally advanced and are digitally behind. And what we've seen is since 2019, there's a 22 point difference in revenue growth between those that are digitally behind and those that are digitally advanced. And there's a very clear trend forming here where we see that value gap growing. And we can see this in the world of dealers very much related to service sales and spare part sales and those that are driving those processes, which are a huge contributor to revenue and the highest margin revenue for dealers, obviously, is the service and parts sort of program or component of those businesses are sometimes being heavily driven by digital and then sometimes are an afterthought. And that's obviously contributing to this gap significantly. So I think this is a great illustration of where things are at now, which is already significant, but the trend towards that gap widening and widening. So let's move on here. OK, and when we combine that with this fact, there's something that we need to pay attention to. So right now in the U.S. and Europe, 30 percent of equipment and off highway is connected. So if we sort of combine these two facts where we understand that the gap between digitally advanced and digitally behind businesses is already quite significant, is growing rapidly. There is a sort of conflicting piece of information here where we see that 30 percent of equipment is connected and that means 70 percent isn't. So machine and site connectivity is well underway, but it's still a long way to go. And that means that there is a great opportunity to accelerate businesses on the dealer side by fully digitizing processes, which ultimately means fully digitizing machine visibility and connecting the remainder of those machines. So some of this would be made up by smaller equipment categories where up until the last, say, five years, it's been seen as less urgent or less prioritized to connect those smaller equipment categories, which have like a lower amount of revenue tied to them potentially at sale, not necessarily in the service and parts and aftermarket world. And we're starting to see the pickup there. So that's part of the gap. And I think we'll start to see that close over the next couple of years. OK, another thought is the return on digital investment versus the way you think about your business as digital first or digital as an add-on, right? So I was talking about the impact to aftermarket revenue being super significant because of the amazing, like proactive business you can drive when you have connected visibility to run hours and DCT errors like can faults and how that lets you to proactively drive part sales and service package sales. The same way that every car dealer would love to be able to do this with connected cars, right, and stop people from going to or sort of generic provider of those services. And so what we see is when you invest in digital and you see it as something that's on the outside of your business and you've kind of tacked on to the processes you already have exist, you see a one to two times return on digital investment is what we've seen with our customer base and track unit. Whereas when a company says we know that we can fundamentally transform our parts and service and aftermarket business if we make digital at the center of all of the people that are acting out that process, right? Like if I look at my staff and the people that are actually driving that revenue, if I build the process from digital being at the center of it and saying how can we build the most efficient and most revenue positive process based on the digital capability, we see a 10 to 20 times return on investment on that digital investment when we talk about the cost of connecting the machine and training your staff and building processes around it. So I want to keep those things in mind and pivot to when we talk about an ecosystem and what we're trying to do at TrackUnit is be agnostic when we can, and that is really represented by our eliminated downtime journey. So we do a lot of work at TrackUnit facilitating this downtime community, and this is the idea that we bring competitors of our own, we bring competitors at the OEM, dealer, rental, and contractor level all into a single space and have them participate in industry studies in these white papers we produce in different events to make sure that as much as there is conflicting interest and that there's competitors involved, that there is a shared interest in the digitization to just open up a giant revenue and growth opportunity that can't be there if we're not all, to some degree, heading in the same direction. So what I want to talk about as the specific example of this ecosystem effect today is the sustainability and how we're starting to see that drive, like I said, machine selection and refleeting decisions. And we've all of a sudden, even in North America, and I think that's been a bit of a surprise, is we thought sustainability was very much going to be driven by the European, but now we're seeing that it's driven by a lot of other countries. So we're starting to see that. And even in North America, and I think that's been a bit of a surprise, is we thought sustainability was very much going to be driven by the European construction business. And the development of our supporting products and capabilities was going to be something required by Europe. But we've really quickly seen a shift over the last, I would say, six to seven months. The national contractors in Canada and the U.S. require sustainability data on their machines. And all of a sudden, these guys have hard KPIs, which they're pushing down to the site level and the site project owners to say, you need to actively change manage to reduce your CO2 emissions versus the average. So let's say as a very public example, Bechtel, who speaks a lot about their plan to reduce their emissions by a certain percentage by 2025, they're not going to be able to do this strictly through refleeting. So if they have a dream of in 10 years replacing all their excavators with lithium-powered excavators, we all imagine there's some future where things are less and less combustion powered. But for the foreseeable future, they're going to have an existing fleet. And most of the assets produced by the OEMs are still combustion that meet the use cases for these companies. And so what they have to do instead is make sure that these machines are equipped with sustainability data capability so that they can actively drive this change management. And I think this is a really interesting thought. We all know about the talent problem that we have in construction. And what I mean is like the HR problem where we simply don't have the skilled labor that we're looking for to fulfill our needs in terms of mechanics and all different types of roles. So I first heard Soren Brogaard, our CEO, who's a very smart guy, talk about sustainability in this way. I think it was two years ago at Tracking It Next, our internal conference. And it's this way that it's a license to operate. And one, we see the requirement. We see the pull through from contractors. National contractors are very much saying like, I need to be able to report on this data. And the machines that I purchased need to be able to output meaningful sustainability and CO2 data because I have hard targets that I have to realize. And I can't have a job site that can't output those figures. But looking at these figures, so there's also a big part of this where potential employees want to work for a company that cares about the impact on the environment. So whether it's their whole identity and it's what they're about, or it's just something that's in their mind. This is like a generation that we're trying to access that is very future oriented and thinking about this. And they've grown up thinking about this. And it's been in their minds and part of their world and what everyone's talking about. And a company that has a plan to actively address their sustainability is inherently going to be more attractive. And we see that in the survey results. I did a talk at the Association of Equipment Manufacturers, or sorry, Management Professionals, AMP, about a year and a half ago. And I was giving a talk to what was mostly mom and pop contractors. So I would describe that as these are contractors doing, you know, 200 million or less to business a year. And that's a pretty broad definition of mom and pop. So maybe I'm not quite categorizing that properly. But I was talking a little bit about sustainability. And at that time, it was in North America. It was down in Florida. I expected there to be a very lukewarm reception to this. And at some point, somebody in the audience stopped and sort of did a survey for me and said, let's just ask who here has an active ESG program as part of their business. And it must have been 95% of the 400 people in the audience that put up their hand and say, this is already something we're invested in as sort of small to mid-market contractors in the States. So I think that 92% of S&P 500 companies, and I think that might be, so that's from 2020. And I've already seen in the market a crazy shift in the expectation and acceptance that this is just part of our world and part of the business we're driving. So I think something that we've been focusing on and I think is interesting for the industry is what would it take to actually action CO2 in construction? So at the contractor level, what does it take to do that change management? And the most important thing that you need is transparency. So we're all familiar with this idea of I can't manage what I can't measure. And I can do one thing, which is I can look at the list of machines that is going to land on that job site and I can take the OEM estimate for, let's say, 20 run hours per week and the average fuel burn for that. And then I can give a paper estimate, which is static and can't actually be managed because I'm not measuring the actual usage. And then I'm stuck with providing that to the project owner as an estimate. And when they say, well, how do we do? The answer is going to be like, well, we put that many machines on the site, so our estimate remains the same. But then if I'm Bechtel or if I'm Ellis Don, if I'm one of these national contractors that has a hard KPI to reduce the CO2 on average per machine, even over the life of like a two-year condo build or something like that, what I actually need is connectivity and I need a CO2 figure being actively produced by that fleet so that I can distribute that to even sub-trades and incentivize the reduction of idling time and the reduction of CO2 emissions. So then I can say, hey, we're heading, we're turning towards this target or we're not. Otherwise, you know, like I mentioned earlier, there's one way that we can get out for reduction of CO2 that doesn't require transparency, but it's a long-term solution where we refleet our sort of entire fleet towards cleaner powertrains like lithium or hydrogen or just more efficient. Like when we think about like the tier four final engines that we all love and the stage five engines in Europe. So. OK, so then what else that we can get out of a digital ecosystem is this idea of benchmarking, right? So we have transparency. Now we're connected, but now we also want to know, am I doing well or am I not doing well against the industry? And if I'm not doing well, that can drive further change management activities at the contractor level, where if I know I'm in like the bottom 10 percent for average emissions per machine, maybe I need to put a bit more focus or I need to like go understand best practices so that I can compete because I know that I'm going to be bidding on jobs and using this to. Basically, sell to project owners on my ability to focus on those sustainability outcomes as well as just give a better, more accurate measurement towards embodied carbon. OK. So. What I'd like to do is just suggest that. I'm going to skip through some of these things and what I will invite us to do is everyone we've published a white paper, a report on sustainability, all based on survey data and concrete stuff that we've put together is very much agnostic. It's not a tracking and marketing paper. So after the webinar today, we can send out a link to that. You can find it on LinkedIn as well to make sure that this is very interesting to see how quickly this is becoming. The center of a lot of our business. So I think I want to close out what I'm talking about today and then I'll answer some questions with three steps towards this emissions reporting problem. Connectivity is key. So we talked about that 30 percent number. One thing we're seeing the pull through from the contractors that's going to quickly require that connectivity regarding the emissions problem where we've already seen national contractors say for some of these projects, we only want machines that are connected because we have to be able to live report on the emissions produced by these machines based on actual usage numbers. And I think that requires like this taking ownership and developing a culture in your organization that enables access to insights. Again, this back to this idea of putting digital at the center of processes and building up processes around digital capabilities as opposed to tacking it on and then understanding that reducing emissions is a key KPI to measure sustainability efforts. And I can imagine that like dealers are not a huge. I mean, there's logistics efforts. There's every business contributes to CO2 footprint, but it's really that contractor that's going to be pulling this through. Right. As well as maybe some of the rental fleets that you might be selling into, although I imagine it's mostly contractor business that the dealers are concerned about. And it's going to be serving their goals that makes this a really big deal to contractors in the short term, I think. And that's going to be about understanding that connectivity. Number one, getting connected and making and providing upstream feedback to the OEMs to make sure that they're providing machines that can provide this data. As you see more and more contractors say, I only want a machine that can produce this kind of data or has this capability. So I think. That's really that's really my point today. I'm not seeing any questions come in right now, but if any, oh, looks like we do. Dave, are you able to see that question? There we go. I am. So the necessary data points to demonstrate CO2 levels and improvements are fuel usage data, idling data, and engine runtime data, right? So it's really the quality of the idling data and the fuel usage data that is the key for quality of CO2 data right now. Being able to identify productive time straight off the engine ECU is the ideal state right now. So we have a pretty broad spectrum where we have some machines that are just giving us run hours. We have some machines that are going to run hours plus RPM and really leaving it up to the either contractors or tech companies, whoever's building that solution to identify productive time based on the RPM. But it's that fuel usage and productive time that is the ideal set of data points combined with runtime, of course. So maybe an interesting question, if anyone has thoughts, I'd love to hear as well. If they've started to see this demand come through that I'm talking about, I would say that it's really within the last six or seven months that, like I said, we saw national contractors thinking this was going to be a nice thing to report to shareholders to saying we need to be able to manage this based on live data, provide us a solution and come to us as tech companies and say, how do we do this with live machine data? Have you guys started seeing that influence? So Dwayne asks, is this a play, is it approval within their own fleet or as compared to the industry standard? I would say both. And then there's a KPI. So let's say I'm an international contractor and our CEO has said as part of our ESG agenda, we are going to target a 30% reduction in emissions by 2025 and a 40% reduction in idling time. And just like any other thing, like they have a revenue target, now they have this ESG target. And the CEO wants a report on this every quarter from his regional leads that are making the refleeting decisions. Or in the cases of some contractors, that report will come direct from project owners where they're saying on this project, we've seen this reduction per machine of CO2 output over the last 12 months. And this has been how we're meeting the KPI that you laid out for us. So we're seeing these KPIs start to be disseminated, just like revenue targets, just like any other target that we'd see, like time to build targets, all these things. So it's versus targets, Dwayne, as well as we see people more at the corporate level, the org level, saying how do we compare to the rest of the industry. So what are you suggesting for streamlining multiple platforms, telematics, to be able to manage this data? I think you have to have an aggregator. So right now, the one thing that everybody knows is that if I have a JCB machine, a JLG telehandler, and a deer machine, and a cat machine, an attaching machine, I'm not going to run five different, did I name five there? Five different telematics platforms. And so it's absolutely critical that you have a mixed fleet solution to be able to, one, see the data. When I talked about the aftermarket opportunity with digital solutions and actually being able to live monitor and be notified of upcoming services and parts opportunities, you're only going to have your service and parts team log into a single solution. And so that's where you have to look at an aggregator. TrackUnit's an example of that. But someone's got to be normalizing that data and bringing all those feeds into one. And a company like TrackUnit will just have that capability. They'll have those relationships with JCB, and JLG, and CAD, et cetera, to bring all those feeds into one place. That should be your expectation for that kind of service. And then you run your processes on top of that layer of combined data. And contractors are in the same boat. There's no contractor out there that's logging into the 25 different OEM portals of different telematics solutions from different manufacturers. They're all invested in an aggregate platform that's like balancing out that data and putting it all in one spot for their different operational teams to get after. So I think the value proposition to the contractor is that it's required to meet their KPIs, right? So the value proposition of the contractor is they have change management initiatives to reduce CO2. They can't do it without this data. And so it's a category requirement for the machinery now. It allows you to pursue those KPIs that have been put in front of those fleet purchasers. And how do you monetize it? One, it's like the machine of choice. So it's understanding that when they come into that dealership that you know that they're looking for this and you can speak to that data, right? Or the availability of it on your machines. It's part of the sales process in that sense. It's going to help you to close more deals on machines. I think it's that machine of choice argument that's going to monetize this. I think it's unrealistic to think that you are going to sell forward telematics packages that you're buying from the OEM so that can be part of it. That's like the very basic, how are we adding revenue to a machine? Well, if everyone needs connectivity data, then everyone's going to get a telematics package, right? Because they need it to manage their mission stuff. And there is one answer. And then the more subtle answer is when you get that this is a requirement, just like if your salespeople understand the requirements for other add-ons and accessories and things like that, and how it supports different areas of contractor application, they're going to be more successful at selling more machines. How much time do we have left? Oh, you have until 11. Okay. If there's no other questions, and if we think it's relevant. I could share like what the process actually looks like for some of these contractors, how they're utilizing this. Yeah, we have enough time. Let's do it. Give me one moment here, I'll get it up. I think one more question, a question came through, Dave. Perfect. I'm not seeing that question there. Could you read it to me? Yeah. I don't know if you answered this one yet. Are contractors being required to demonstrate this in order to win bids? They are. So, in many like larger metropolitan areas embodied carbon is just part of what you have to provide. So, a contractor is going to have to say this is what our estimated like carbon addition is to the project while we're building it. Right. So, if I'm building on again like a condo build in any major European metropolitan city that embodied carbon is going to be part of it, that's becoming more and more true in North American metropolitan areas as well. Any publicly funded products are almost surely going to be asking some version of that question. And so when I say there's a big pull through from contractors, some of it's regulatory and some of it's just wanting to get ahead of it. Like I see the largest contractor in North America, Bechtel. They just want it to be part of their legacy and their corporate identity. So, it's not just about winning bids for them, it's about being a leader in the field. We often see this from some of the industry leaders when it comes to the largest companies in the space, saying we're going to get ahead of it, we're going to do it first and do it right. I want to be very cognizant of not making this a track unit commercial. That's not the purpose of this webinar, but I am going to end up showing you a track unit solution here just because that is what I can show you. a little bit unplanned here so give me a moment. I think it's pretty interesting. Okay I'm just going to share my screen here and you guys can see what this looks like. So this is basically an emissions dashboard driven completely by live machine data. You can see that what I've done is I've selected a site here so this is actual real machine data. This isn't dummy data. It's based on live machines in the field and I've now selected a site which is Denmark. So I have a predefined work site which is a geographical area as a contractor. I know that I have 258 machines. I actually come down and see all the different machines and what type of machine they are and their hours and fuel usage and their individual CO2 impact and then I can see my summary here for this group of machines is this is my total fuel usage over this time. This is my total CO2 emissions output over this time and I can select my dates here as well. I scroll back up there so this is for March 7th to March 21st and I can actually come through here and see my trend just like a stock ticker. I can go through and understand the percentage increase or decrease and how I'm trending against my goals by month. So when we're looking at sites that are more permanent like somewhere between a one and five-year job site when I'm thinking about things like condo bills or larger long-term projects I'm able to observe this trend and institute change management process as a contractor assigning emissions reductions targets to sub-trades to drive this kind of reduction in CO2 emissions. So what they're doing is they're exporting this or API-ing into other business systems, networking internally and using it to review targets and adjust targets the same way people do with revenue. Okay so it's quite a robust tool in that sense and this is the Dwayne asked the question I think about aggregating. So you know this is obviously totally mixed fleet data and if I look at my asset type I've got a generator as in aircraft service stairs and AWPs like booms and apparently we've got two bicycles in this because it is a test count two tracking employees probably have their bike in this group. That's a cool thing. Okay. Okay, any other questions? Hopefully this has been giving you an idea of the actual concrete steps that contractors are taking as well that are driving these equipment decisions and why it's become important to be aware of the capability to provide that data. OK, well, I don't think there's any more questions. So thank you, everyone, for hopping on today's webinar. Thank you, Dave, for being our speaker today. We will be sending a recording of the webinar shortly after this, shortly after we end. So everyone have a great day. Perfect. Thanks so much, guys.

digital ecosystems

asset connectivity

sustainability data

CO2 emissions

contractors

machine data dashboard

industry competitiveness