Financial Data and Key Metrics Changes - The company generated $422 million in revenue for Q1 2025, with adjusted gross profit of $136 million and adjusted EBITDA of $73 million [16] - Average utilization of the rental fleet was just under 78%, up from 73% in Q1 2024, indicating improved operational efficiency [16][17] - Total OEC (Original Equipment Cost) in the rental fleet reached $1.55 billion, marking a $95 million increase year-over-year [19] Business Line Data and Key Metrics Changes - The ERS (Equipment Rental Services) segment reported revenue of $154 million, a 13% increase from $136 million in Q1 2024, driven by strong rental demand [17][18] - PES (Product Equipment Sales) segment saw equipment sales of $232 million, slightly down from the previous year, but with a backlog increase of $51 million or 14% [20][21] - APS (Aftermarket Parts and Services) business revenue remained flat at $35 million, with adjusted gross profit margin at 22% [22] Market Data and Key Metrics Changes - The company noted sustained demand in core T&D (Transmission and Distribution) markets, with strong order flow and rental demand expected to persist through 2025 [6][10] - The backlog in the PES segment is at just over $420 million, aligning with historical averages, indicating a healthy pipeline for future sales [21] Company Strategy and Development Direction - The company plans to continue investing in its rental fleet to meet current and projected demand, with a focus on maintaining strong relationships with suppliers [9][22] - Management expressed confidence in achieving growth targets for 2025, reaffirming revenue guidance of $1.97 billion to $2.06 billion and adjusted EBITDA guidance of $370 million to $390 million [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic uncertainties due to evolving U.S. tariff policies but maintained a positive outlook based on strong demand drivers and customer engagement [6][14] - The company is monitoring potential impacts of chassis emission regulations and believes its current inventory levels will support production needs [12][13] Other Important Information - Borrowings under the ABL (Asset-Based Lending) at the end of Q1 were $655 million, with a net leverage of 4.8 times [23] - The company aims to reduce net leverage to below three times by the end of fiscal 2026, targeting significant free cash flow generation in 2025 [24] Q&A Session Summary Question: What gives conviction in the acceleration of revenue growth? - Management highlighted strong demand in the ERS segment, with a 13% revenue growth in Q1 and a robust backlog, indicating positive trends for the remainder of the year [28][31] Question: Does the IJ pause by the Trump administration pose any issues? - Management indicated that they are not seeing delays in projects from customers and emphasized the flexibility of their rental model [32] Question: Can you provide more color on tariff mitigation strategies? - Management discussed strong relationships with chassis suppliers and proactive inventory management to mitigate tariff impacts [40][41] Question: How should we think about inventory reduction by year-end? - Management stated that inventory reduction will be more second-half weighted, with continued inventory purchases expected in Q2 [43] Question: How quickly do orders convert to sales revenue? - Management noted that conversion times vary by product category, with some converting within a month and others taking three to six months [54]

Financial Data and Key Metrics Changes - The company generated $422 million in revenue for Q1 2025, with adjusted gross profit of $136 million and adjusted EBITDA of $73 million [16] - Average utilization of the rental fleet was just under 78%, up from 73% in Q1 2024, indicating improved operational efficiency [16][17] - The total OEC (Original Equipment Cost) in the rental fleet reached $1.55 billion, marking a $95 million increase year-over-year [18] Business Line Data and Key Metrics Changes - The ERS (Equipment Rental Services) segment reported $154 million in revenue, a 13% increase from $136 million in Q1 2024, with both rental revenue and rental asset sales showing significant year-over-year growth [17][18] - The PES (Product Equipment Sales) segment saw equipment sales of $232 million, slightly down from the previous year, but with a backlog increase of $51 million or 14% [19][20] - The APS (Aftermarket Parts and Services) segment maintained revenue at $35 million, flat compared to Q1 2024, with a gross profit margin of 22% [21] Market Data and Key Metrics Changes - The company noted strong demand in core T&D (Transmission and Distribution) markets, driven by increased electricity demand and maintenance spending [6][7] - Average OEC on rent for Q1 was over $1.2 billion, reflecting a 13% year-over-year increase [7][16] - The backlog in the PES segment ended at just over $420 million, consistent with historical averages [20] Company Strategy and Development Direction - The company plans to continue investing in its rental fleet to meet current and projected demand, with a focus on maintaining strong relationships with suppliers [9][21] - Management expressed confidence in achieving growth targets for 2025, reaffirming revenue guidance of $1.97 billion to $2.06 billion and adjusted EBITDA guidance of $370 million to $390 million [23][24] - The company is monitoring U.S. tariff policies closely and has implemented strategies to mitigate potential impacts on operations [11][12] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about achieving growth targets despite economic uncertainties related to tariff policies [7][14] - The company highlighted the resilience of its end markets and the importance of long-term relationships with suppliers and customers [14] - Management expects to see continued strong demand in the second half of the year, particularly in the ERS and TES segments [29] Other Important Information - Borrowings under the ABL (Asset-Based Lending) at the end of Q1 were $655 million, with a net leverage of 4.8 times [22] - The company aims to reduce net leverage to below three times by the end of fiscal 2026 [23] Q&A Session Summary Question: What gives you conviction in the acceleration in revenue growth? - Management highlighted strong demand in the ERS segment, with 13% revenue growth in Q1 and a robust backlog, indicating positive trends for the remainder of the year [26][29] Question: Does the IJ pause by the Trump administration create questions for customers? - Management noted that they are not seeing delays in projects from customers and emphasized the flexibility of their rental model [30] Question: Can you provide more color on agreements with vendors to mitigate tariff exposure? - Management discussed strong relationships with chassis suppliers and proactive inventory management to mitigate tariff impacts [38] Question: How should we think about inventory reduction by year-end? - Management indicated that inventory reduction will be more second-half weighted, with continued inventory purchases in Q2 [41] Question: How quickly do orders convert to sales revenue? - Management explained that conversion times vary by product category, with some converting quickly and others taking three to six months [51] Question: What is the target leverage by year-end? - Management aims for meaningful movement in leverage, potentially getting close to or below four times if high-end cash flow targets are met [55]

Financial Data and Key Metrics Changes - For Q1 2025, the company generated $422 million in revenue, $136 million in adjusted gross profit, and $73 million in adjusted EBITDA, reflecting strong year-over-year performance [17][25] - Average utilization of the rental fleet increased to just under 78%, up from 73% in Q1 2024, indicating improved operational efficiency [17][18] - The total OEC (Original Equipment Cost) in the rental fleet reached $1.55 billion, marking a $95 million increase year-over-year [19][20] Business Line Data and Key Metrics Changes - The ERS (Equipment Rental Services) segment reported $154 million in revenue for Q1, a 13% increase from $136 million in Q1 2024, driven by strong rental demand [18][22] - PES (Product Equipment Sales) segment saw equipment sales of $232 million, slightly down from the previous year, but with a significant backlog increase of $51 million or 14% [22][24] - APS (Aftermarket Parts and Services) revenue remained flat at $35 million, with a gross profit margin of 22%, down from the previous year due to higher material costs [23] Market Data and Key Metrics Changes - The company noted robust demand in core T&D (Transmission and Distribution) markets, with utility contractor customers experiencing sustained activity levels [6][7] - The backlog in the PES segment increased to over $420 million, aligning with historical averages, indicating strong future sales potential [22] Company Strategy and Development Direction - The company plans to continue investing in its rental fleet to meet current and projected demand, with a focus on maintaining strong relationships with suppliers and customers [8][15] - Management emphasized the importance of adapting to changing U.S. tariff policies and leveraging inventory strategies to mitigate potential disruptions [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about achieving growth targets for 2025, despite economic uncertainties related to tariff policies [7][15] - The company reaffirmed its full-year guidance for 2025, expecting total revenue between $1.97 billion and $2.06 billion and adjusted EBITDA between $370 million and $390 million [25][26] Other Important Information - The company reported borrowings under its ABL (Asset-Based Lending) facility of $655 million, an increase of $73 million from the previous quarter, primarily for equipment purchases and working capital needs [24] - The company aims to reduce net leverage to below three times by the end of fiscal 2026, with a target of $50 million to $100 million in levered free cash flow for 2025 [25][26] Q&A Session Summary Question: What gives you conviction in the acceleration in revenue growth? - Management highlighted strong demand in the ERS segment, with a 13% revenue growth in Q1 and a robust backlog, indicating positive trends for the remainder of the year [29][32] Question: Does the IJ pause by the Trump administration create questions for customers? - Management noted that they are not seeing delays in projects from customers and emphasized the flexibility of their rental model to adapt to changing customer needs [33] Question: Can you provide more color on agreements with vendors to mitigate tariff exposure? - Management confirmed proactive strategies with suppliers, including pulling forward inventory purchases to manage costs effectively [40][41] Question: How should we think about inventory reduction as we head towards the end of the year? - Management indicated that inventory reduction will be more second-half weighted, with continued adjustments based on customer demand [42][43] Question: How quickly do orders convert to sales revenue? - Management explained that conversion times vary by product category, with some converting quickly while others may take three to six months [55] Question: What is the target leverage by year-end? - Management stated that they aim for meaningful movement in leverage, potentially getting close to or below four times if they hit the high end of their cash flow target [58]

Financial Performance - Custom Truck One Source, Inc. reported a quarterly loss of $0.08 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.07, and compared to a loss of $0.06 per share a year ago, indicating a decline in performance [1] - The company posted revenues of $422.23 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.96%, and showing an increase from year-ago revenues of $411.31 million [2] - Over the last four quarters, the company has not surpassed consensus EPS estimates and has consistently missed revenue estimates [2] Stock Performance - Custom Truck One Source shares have declined approximately 12.1% since the beginning of the year, while the S&P 500 has decreased by 5.5% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $470.2 million, and for the current fiscal year, it is -$0.03 on revenues of $1.96 billion [7] - The estimate revisions trend for Custom Truck One Source is mixed, which could change following the recent earnings report [6] Industry Context - The Automotive - Original Equipment industry, to which Custom Truck One Source belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting a challenging environment for the company [8]

Financial Performance - Q1 2025 - Revenue reached $422 million[19], with Equipment Rental Solutions (ERS) contributing $154 million[19], Truck & Equipment Sales (TES) $232 million[19], and Aftermarket Parts & Service (APS) $35 million[19] - Adjusted Gross Profit was $136 million[19] - Adjusted EBITDA amounted to $73 million[19] Segment Analysis - Q1 2025 - ERS revenue increased by 13% to $154 million[19], with rental revenue up 9% to $113 million[42] and rental sales up 26% to $41 million[42] - TES revenue decreased by 3% to $232 million[49], but net orders surged by 220% compared to Q1 2024, reaching $284 million[50] - APS revenue remained flat at $35 million[52] Fleet and Utilization - Q1 2025 - The company's rental fleet consists of over 10,000 vehicles with an original equipment cost (OEC) of $1.55 billion[19] - Average utilization for Q1 2025 was just under 78%[48], with OEC on Rent increasing by $137 million compared to Q1 2024[48] Outlook and Strategy - The company reaffirms its 2025 outlook, projecting consolidated revenue between $1.97 billion and $2.06 billion, representing a 9%-14% growth[58], and Adjusted EBITDA between $370 million and $390 million, also a 9%-15% increase[58] - The company anticipates net OEC to increase by a mid-single-digit percentage in 2025, with gross rental capex between $375 million and $400 million[58] - The company expects to reduce inventory later in 2025 and generate $50 million to $100 million of levered free cash flow[58]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Custom Truck One Source, Inc. for the quarterly period ended March 31, 2025 [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) For Q1 2025, the company reported **$422.2 million** in total revenues, resulting in a **$17.8 million** net loss and **$(0.08)** basic loss per share Condensed Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | (in $000s, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | **$422,232** | **$411,307** | | Gross Profit | $85,536 | $90,709 | | Operating Income | $12,405 | $18,370 | | Income (Loss) Before Income Taxes | $(25,492) | $(16,283) | | **Net Income (Loss)** | **$(17,791)** | **$(14,335)** | | Basic EPS | $(0.08) | $(0.06) | | Diluted EPS | $(0.08) | $(0.06) | [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$3.54 billion**, total liabilities **$2.73 billion**, and stockholders' equity **$813.4 million** Condensed Consolidated Balance Sheet Highlights | (in $000s) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,542,908** | **$3,501,967** | | Total current assets | $1,320,373 | $1,301,452 | | Rental equipment, net | $1,033,813 | $1,001,651 | | **Total Liabilities** | **$2,729,489** | **$2,640,658** | | Total current liabilities | $1,024,251 | $1,000,701 | | Long-term debt, net | $1,593,176 | $1,519,882 | | **Total Stockholders' Equity** | **$813,419** | **$861,309** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly improved to **$55.6 million** in Q1 2025, while investing activities used **$71.3 million** and financing activities provided **$17.2 million** Condensed Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | (in $000s) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash flow from operating activities | $55,635 | $(14,375) | | Net cash flow for investing activities | $(71,306) | $(33,411) | | Net cash flow from financing activities | $17,196 | $45,495 | | **Net Change in Cash and Cash Equivalents** | **$1,575** | **$(2,319)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information on business segments, revenue recognition, inventory, financing, debt, equity transactions, and segment performance data - The company operates in three reporting segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS)[21](index=21&type=chunk) Revenue by Geography (Q1 2025 vs Q1 2024) | (in $000s) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | United States | $413,552 | $397,697 | | Canada | $8,680 | $13,610 | | **Total Revenue** | **$422,232** | **$411,307** | Segment Gross Profit (Q1 2025 vs Q1 2024) | (in $000s) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | ERS | $43,629 | $39,433 | | TES | $35,010 | $43,160 | | APS | $6,897 | $8,116 | | **Total Gross Profit** | **$85,536** | **$90,709** | - On January 30, 2025, the Company repurchased **8,143,635** shares of its common stock from affiliates of ECP for an aggregate price of **$32.6 million**[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, highlighting a **2.7%** revenue increase to **$422.2 million** despite a **5.7%** gross profit decrease and a larger net loss [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Total revenue increased **2.7%** to **$422.2 million** in Q1 2025, but gross profit declined **5.7%**, leading to a widened net loss of **$17.8 million** Consolidated Results of Operations (Q1 2025 vs Q1 2024) | (in $000s) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | **$422,232** | **$411,307** | **$10,925** | **2.7%** | | Gross profit | $85,536 | $90,709 | $(5,173) | (5.7)% | | Operating income | $12,405 | $18,370 | $(5,965) | (32.5)% | | Net income (loss) | $(17,791) | $(14,335) | $(3,456) | 24.1% | - The Equipment Rental Solutions (ERS) segment saw a **13.5%** increase in total revenue, driven by a **9.4%** rise in rental revenue and a **26.4%** increase in equipment sales from the rental fleet[107](index=107&type=chunk) - The Truck and Equipment Sales (TES) segment experienced a **3.1%** decline in equipment sales and an **18.9%** decrease in gross profit to **$35.0 million**, attributed to pricing pressures and equipment mix[110](index=110&type=chunk)[111](index=111&type=chunk) - The Aftermarket Parts and Services (APS) segment reported flat revenue year-over-year, but gross profit decreased by **15.0%** to **$6.9 million** due to higher material costs[112](index=112&type=chunk)[113](index=113&type=chunk) [Operating Metrics](index=29&type=section&id=Operating%20Metrics) Key operating metrics show mixed results, with ending OEC growing **6.6%** and fleet utilization improving, but OEC on rent yield and sales order backlog declining Key Operating Metrics (Q1 2025 vs Q1 2024) | (in $000s except percentages) | March 31, 2025 | March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Ending OEC | $1,548,210 | $1,452,856 | 6.6% | | Average OEC on rent | $1,202,285 | $1,065,695 | 12.8% | | Fleet utilization | 77.7% | 73.3% | 6.0% | | OEC on rent yield | 38.5% | 40.5% | (4.9)% | | Sales order backlog | $420,149 | $537,292 | (21.8)% | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains **$5.4 million** in cash and **$289.9 million** ABL facility availability, with Net Leverage Ratio increasing to **4.80x** and improved operating cash flow - Principal sources of liquidity are cash from operations and borrowings under the ABL Facility, with **$5.4 million** in cash and **$289.9 million** availability as of March 31, 2025[114](index=114&type=chunk) Adjusted EBITDA and Net Leverage Ratio | (in $000s) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Debt | $1,612,624 | $1,543,845 | | LTM Adjusted EBITDA | $335,707 | $339,657 | | **Net Leverage Ratio** | **4.80x** | **4.55x** | - Net cash from operating activities was **$55.6 million** for Q1 2025, a significant improvement from a use of **$14.4 million** in Q1 2024, driven by lower levels of inventory production[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from interest rate fluctuations on variable-rate debt and foreign currency exchange rates, without using derivative instruments for hedging - The company has **$1,440.6 million** in variable-rate debt as of March 31, 2025, where a **0.125%** change in interest rates would impact annual interest expense by approximately **$1.8 million**[131](index=131&type=chunk) - The company generated **$8.7 million** in revenues denominated in Canadian dollars in Q1 2025, where a **100-basis point** change in the CAD/USD exchange rate would change annual revenues by approximately **$0.3 million**[133](index=133&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[134](index=134&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[135](index=135&type=chunk) [PART II OTHER INFORMATION](index=36&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, which management does not expect to materially impact financial condition or results of operations - Management believes that no pending litigation, disputes, or claims against the Company would have a material adverse effect on its financial condition, cash flows, or results of operations if decided adversely[137](index=137&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes occurred to the risk factors as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[138](index=138&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **8,143,635** shares for **$32.6 million** in Q1 2025, with **$1.9 million** remaining available under the stock repurchase program - On January 30, 2025, the Company purchased **8,143,635** shares of its common stock from affiliates of Energy Capital Partners at **$4.00** per share, for an aggregate price of **$32.6 million**[142](index=142&type=chunk) - As of March 31, 2025, approximately **$1.9 million** was available for future repurchases under the company's stock repurchase program[140](index=140&type=chunk) [Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated, and cash retention award agreements were entered into with five key executives - On April 28, 2025, the Company entered into cash retention award agreements with five executives, including the CEO and CFO, with bonuses totaling over **$1.0 million**, contingent on continued employment and performance milestones[146](index=146&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the retention bonus letter agreements for key executives and the required CEO and CFO certifications

[First Quarter 2025 Highlights and Overview](index=1&type=section&id=First%20Quarter%202025%20Highlights%20and%20Overview) This section provides an overview of CTOS's Q1 2025 performance, highlighting revenue growth, improved fleet utilization, and reaffirmed 2025 guidance [CEO Commentary on Performance](index=1&type=section&id=CEO%20Commentary%20on%20Performance) In Q1 2025, CTOS achieved year-over-year revenue growth driven by strong fundamentals in its primary end markets - Revenue growth was driven by strong fundamentals in utility, infrastructure, rail, and telecom end markets[2](index=2&type=chunk) - Rental fleet utilization improved to just under **78%**, a significant increase compared to the same period last year[2](index=2&type=chunk) - Total Original Equipment Cost (OEC) reached a record **$1.55 billion**, expected to support 2025 growth[2](index=2&type=chunk) - The TES segment saw significant year-over-year net order growth, increasing the company's backlog[2](index=2&type=chunk) - The company reaffirmed its 2025 guidance, expressing cautious optimism despite challenges from new tariff policies[2](index=2&type=chunk) [Financial & Operating Performance](index=1&type=section&id=Financial%20%26%20Operating%20Performance) This section details the company's consolidated and segment-specific financial results, along with key operational metrics for Q1 2025 [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) For the first quarter of 2025, Custom Truck One Source reported total revenue of $422.2 million, a 2.7% increase year-over-year, but recorded a net loss of $17.8 million Q1 2025 Consolidated Financial Results (in $ millions) | | 2025 | 2024 | | :--- | :--- | :--- | | **Total revenue** | $422.2 | $411.3 | | **Gross Profit** | $85.5 | $90.7 | | **Adjusted Gross Profit** | $135.6 | $134.5 | | **Net Income (Loss)** | $(17.8) | $(14.3) | | **Adjusted EBITDA** | $73.4 | $77.4 | - Year-over-year changes for Q1 2025: Total revenue increased by **2.7%**, gross profit decreased by **5.7%**, net loss increased by **$3.5 million**, and Adjusted EBITDA decreased by **$4.0 million**[5](index=5&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) The company's three segments, ERS, TES, and APS, showed varied performance in Q1 2025, with ERS revenue growing 13.5% while TES revenue slightly decreased - The company's operations are divided into three segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS)[4](index=4&type=chunk) [Equipment Rental Solutions (ERS)](index=3&type=section&id=Equipment%20Rental%20Solutions%20(ERS)) The ERS segment's total revenue increased by 13.5% year-over-year to $154.3 million, driven by growth in rental revenue and used equipment sales ERS Segment Financials (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Rental revenue** | $113.0 | $103.3 | | **Equipment sales** | $41.4 | $32.7 | | **Total revenue** | $154.3 | $136.0 | | **Gross profit** | $43.6 | $39.4 | | **Adjusted Gross Profit** | $93.0 | $82.1 | [Truck and Equipment Sales (TES)](index=3&type=section&id=Truck%20and%20Equipment%20Sales%20(TES)) The TES segment reported a 3.1% decrease in revenue to $232.5 million for Q1 2025, with gross profit declining by 18.9% TES Segment Financials (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Equipment sales** | $232.5 | $239.9 | | **Gross profit** | $35.0 | $43.2 | [Aftermarket Parts and Services (APS)](index=3&type=section&id=Aftermarket%20Parts%20and%20Services%20(APS)) The APS segment's revenue remained nearly flat at $35.4 million, while gross profit decreased to $6.9 million due to higher material costs APS Segment Financials (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | $35.4 | $35.4 | | **Gross profit** | $6.9 | $8.1 | [Key Operating Metrics](index=3&type=section&id=Key%20Operating%20Metrics) Key operating metrics showed positive trends in fleet growth and utilization, with Ending OEC reaching $1.55 billion and fleet utilization improving to 77.7% Summary Combined Operating Metrics (in $ millions, except percentages) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Ending OEC** | $1,548.2 | $1,452.9 | | **Average OEC on rent** | $1,202.3 | $1,065.7 | | **Fleet utilization** | 77.7% | 73.3% | | **OEC on rent yield** | 38.5% | 40.5% | | **Sales order backlog** | $420.1 | $537.3 | [Management Commentary](index=5&type=section&id=Management%20Commentary) Management discusses the drivers behind Q1 2025 financial performance, including rental revenue growth, TES segment decline, increased net loss, and current leverage ratio - Consolidated rental revenue increased **9.5%** YoY due to higher OEC on rent and utilization[13](index=13&type=chunk) - ERS segment rental revenue grew **9.4%** YoY, with fleet utilization increasing to **77.7%** from **73.3%**[14](index=14&type=chunk) - TES segment revenue decreased **3.1%** YoY due to pricing pressures from the high-interest rate environment and equipment mix[15](index=15&type=chunk) - The increase in net loss was primarily due to decreased gross profit and higher interest expense on variable-rate debt[16](index=16&type=chunk) - As of March 31, 2025, Total Debt was **$1,618.0 million** and the Net Leverage Ratio was **4.80x**[18](index=18&type=chunk) - On January 30, 2025, the company repurchased **8,143,635 shares** of its common stock from affiliates of Energy Capital Partners for **$32.6 million**[19](index=19&type=chunk) [2025 Outlook](index=6&type=section&id=2025%20Outlook) The company reaffirmed its full-year 2025 guidance, anticipating continued growth, increased rental fleet, and a reduction in net leverage ratio 2025 Consolidated Outlook (in $ millions) | | Guidance Range | | :--- | :--- | | **Revenue** | $1,970 — $2,060 | | **Adjusted EBITDA** | $370 — $390 | 2025 Revenue Outlook by Segment (in $ millions) | Segment | Guidance Range | | :--- | :--- | | **ERS** | $660 — $690 | | **TES** | $1,160 — $1,210 | | **APS** | $150 — $160 | - The company expects to generate **$50 million to $100 million** of levered free cash flow in 2025[20](index=20&type=chunk) - A meaningful reduction in the net leverage ratio is targeted by the end of the fiscal year[20](index=20&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) This section presents the company's primary financial statements, including income, balance sheet, and cash flow statements for the period [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $17.8 million for Q1 2025, despite increased total revenues, primarily due to higher interest expense Statement of Operations Highlights (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | $422.2 | $411.3 | | **Gross Profit** | $85.5 | $90.7 | | **Operating Income** | $12.4 | $18.4 | | **Interest expense, net** | $38.9 | $37.9 | | **Net Income (Loss)** | $(17.8) | $(14.3) | | **Diluted EPS** | $(0.08) | $(0.06) | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $3.54 billion, with inventory and long-term debt rising, while total stockholders' equity decreased Balance Sheet Highlights (in $ millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $3,542.9 | $3,502.0 | | Inventory | $1,075.6 | $1,049.3 | | Rental equipment, net | $1,033.8 | $1,001.7 | | **Total Liabilities** | $2,729.5 | $2,640.7 | | Long-term debt, net | $1,593.2 | $1,519.9 | | **Total stockholders' equity** | $813.4 | $861.3 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to $55.6 million, while investing activities used more cash, partly offset by financing activities Cash Flow Highlights (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash flow from operating activities** | $55.6 | $(14.4) | | **Net cash flow for investing activities** | $(71.3) | $(33.4) | | **Net cash flow from financing activities** | $17.2 | $45.5 | | **Net Change in Cash and Cash Equivalents** | $1.6 | $(2.3) | [Non-GAAP Measures and Reconciliations](index=13&type=section&id=Non-GAAP%20Measures%20and%20Reconciliations) This section provides reconciliations of non-GAAP financial measures such as Adjusted EBITDA, Adjusted Gross Profit, Net Debt, and Net Leverage Ratio [Adjusted EBITDA Reconciliation](index=14&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q1 2025 was $73.4 million, a decrease from the prior year, reconciled from net loss by adding back depreciation, interest, and other adjustments Adjusted EBITDA Reconciliation (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net income (loss)** | $(17.8) | $(14.3) | | Depreciation and amortization | $62.5 | $56.2 | | Interest expense | $25.6 | $25.0 | | Other Adjustments | $10.8 | $9.5 | | **Adjusted EBITDA** | $73.4 | $77.4 | [Adjusted Gross Profit Reconciliation](index=15&type=section&id=Adjusted%20Gross%20Profit%20Reconciliation) Total Adjusted Gross Profit slightly increased to $135.6 million in Q1 2025, with the ERS segment showing improved underlying profitability Total Adjusted Gross Profit Reconciliation (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Gross Profit** | $85.5 | $90.7 | | Add: depreciation of rental equipment | $50.1 | $43.7 | | **Adjusted Gross Profit** | $135.6 | $134.5 | ERS Segment Adjusted Gross Profit (in $ millions) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Gross profit** | $43.6 | $39.4 | | Add: depreciation of rental equipment | $49.3 | $42.7 | | **Adjusted Gross Profit** | $93.0 | $82.1 | [Net Debt and Net Leverage Ratio Reconciliation](index=16&type=section&id=Net%20Debt%20and%20Net%20Leverage%20Ratio%20Reconciliation) Net Debt increased to $1.61 billion as of March 31, 2025, resulting in a higher Net Leverage Ratio of 4.80x compared to the previous quarter Net Debt Reconciliation (in $ millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Debt (Current + Long-term) | $1,599.1 | $1,527.7 | | Deferred financing fees | $18.9 | $19.9 | | Less: cash and cash equivalents | $(5.4) | $(3.8) | | **Net Debt** | $1,612.6 | $1,543.8 | Net Leverage Ratio Reconciliation | | Twelve Months Ended March 31, 2025 | Twelve Months Ended December 31, 2024 | | :--- | :--- | :--- | | **Net Debt (as of period end)** | $1,612.6 | $1,543.8 | | **LTM Adjusted EBITDA** | $335.7 | $339.7 | | **Net Leverage Ratio** | 4.80x | 4.55x |

Financial Data and Key Metrics Changes - Custom Truck One Source, Inc. generated $521 million in revenue for Q4 2024, with adjusted gross profit of $168 million and adjusted EBITDA of $102 million [26] - Average utilization of the rental fleet for Q4 was just under 79%, compared to 73% in Q3 and under 78% in Q4 of the prior year [27] - Total OEC (Original Equipment Cost) in the rental fleet ended the year at $1.52 billion, up $60 million versus year-end 2023 and up $22 million versus the end of Q3 [31] Business Line Data and Key Metrics Changes - The ERS segment had $172 million of revenue in Q4, down from $185 million in Q4 of 2023, but rental revenue was up 15% sequentially [28] - TES segment revenue for Q4 was over $308 million, a quarterly record, and total TES revenue for the year exceeded $1 billion for the first time, up almost 7% versus 2023 [15][32] - APS business posted revenue of $41 million in Q4, up more than 6% from Q4 of the previous year [35] Market Data and Key Metrics Changes - Approximately 55% of total revenue comes from the utility end market, which is experiencing significant growth due to increased electricity demand driven by AI and grid upgrades [10] - Net orders improved in Q4 to $280 million, up over 90% on a sequential basis and up 35% compared to Q4 of 2023 [34] - The company expects total revenue for 2025 to be between $1.97 billion and $2.06 billion, with projected adjusted EBITDA between $370 million and $390 million [22][39] Company Strategy and Development Direction - The company plans to continue investing in its rental fleet and expanding its physical presence, including opening a new branch in Portland, Oregon [14][24] - Management emphasized the importance of long-term relationships with strategic suppliers and a diversified customer base as key to success [23] - The company aims to achieve a net leverage ratio below three times by fiscal 2026, with a target to get below four times by the end of fiscal 2025 [40][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand drivers in the industry, despite some demand weakness experienced in certain utility markets [41] - The company anticipates double-digit adjusted EBITDA growth across its consolidated business in 2025, driven by strong market tailwinds [25][41] - Management noted that high interest rates and economic caution influenced customer purchasing behavior, but they are closely monitoring order intake [17] Other Important Information - The company closed on a sale-leaseback transaction on eight properties for net proceeds of over $52 million, which were used to reduce borrowings [21] - Inventory management efforts resulted in a reduction of more than $150 million in Q4, contributing to lower balances on floor plan lines and reduced borrowings [37] - The company is monitoring developments involving tariffs and chassis emission regulations, with approximately 30% of total purchases coming from Mexico and Canada [19][20] Q&A Session Summary Question: Concerns about TES Revenue guidance and backlog - Management explained that the normalized backlog is four to six months and emphasized the increase in net orders as a positive indicator for revenue growth [45][46] Question: Seasonality of revenue and EBITDA - Management expects a similar split of revenue and EBITDA between the first and second halves of the year, with slight variations [52][54] Question: Impact of sale-leaseback on lease expenses - Management clarified that the sale-leaseback will result in an incremental lease expense of approximately $4.5 to $5 million annually, primarily affecting cost of goods sold [56] Question: Margin outlook and tariff impacts - Management provided insights on margin targets, indicating low to mid-seventy percent margins for rental and mid-teens for TES, while also discussing strategies to mitigate tariff impacts [65][69] Question: Infrastructure bill benefits - Management noted that benefits from the infrastructure bill are still emerging and described the current situation as mid-innings in terms of impact [74] Question: Utilization progression in the full year guide - Management indicated that utilization is expected to remain in the high seventies to low eighties range, driven by strong demand from utility customers [78][82]

分组1 - Custom Truck One Source, Inc. (CTOS) reported quarterly earnings of $0.04 per share, matching the Zacks Consensus Estimate, but down from $0.07 per share a year ago [1] - The company posted revenues of $520.74 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 4.80% and slightly down from $521.75 million year-over-year [2] - Custom Truck One Source shares have declined approximately 13.9% since the beginning of the year, contrasting with the S&P 500's decline of -0.5% [3] 分组2 - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The estimate revisions trend for Custom Truck One Source is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $421.56 million, and for the current fiscal year, it is -$0.04 on revenues of $1.87 billion [7] 分组3 - The Automotive - Original Equipment industry, to which Custom Truck One Source belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may negatively impact stock performance [8]

Company Overview - Custom Truck One Source operates one of the largest specialty rental equipment fleets in North America, with over 10,000 units and an average unit age of approximately 3.2 years[21]. - The company serves more than 8,000 customers, with the top 15 customers representing approximately 17% of total revenue, and no single customer exceeding 3% of total revenue in 2024[61]. - The company operates more than 40 locations across North America, with over 2,600 third-party service partners, enhancing its ability to provide local service and support[59]. - The company has a strong focus on enhancing its aftermarket parts and services, leveraging its service technicians to support both rental and customer-owned equipment[66]. - The company operates from its headquarters in Kansas City, Missouri, and maintains over 39 equipment rental and service locations across the U.S. and Canada[166]. Financial Performance - Total revenue for the year ended December 31, 2024, was $1,802.3 million, a decrease of 3.4% compared to $1,865.1 million in 2023[206]. - Rental revenue decreased by 7.5% to $442.9 million in 2024 from $478.9 million in 2023, primarily due to lower rental asset sales and supply chain constraints[206]. - Equipment sales revenue was $1,223.0 million, down 2.4% from $1,253.5 million in 2023, reflecting a decrease in sales volume[206]. - Gross profit decreased by 14.1% to $390.3 million in 2024, compared to $454.3 million in 2023[206]. - Operating income fell to $126.4 million in 2024, down from $170.9 million in 2023, a decrease of 26.1%[206]. - Net loss for the year was $28.7 million, compared to a net income of $50.7 million in 2023, representing a decline of $79.4 million[206]. Market and Industry Trends - The Infrastructure Investment and Jobs Act includes approximately $1.2 trillion in spending, positively impacting Custom Truck's end-markets, with less than 50% of the funds allocated as of November 2024[27]. - Capital expenditures in the electric utility T&D end-market are estimated to be approximately $95 billion in 2024, driven by the need for grid resiliency and renewable energy investments[28]. - The telecommunications infrastructure spending was approximately $95 billion in 2023, expected to grow due to the BEAD program and the expansion of wireless 5G technology[38]. - Total infrastructure capex spend in the U.S. in 2024 is estimated to be just over $300 billion, projected to increase to just under $350 billion by 2028[45]. - The municipal solid waste revenue in the U.S. is projected to grow at a CAGR of 4.7% from 2024 to 2030, driven by increasing waste generation per capita[46]. Operational Challenges - The company has experienced near-term pressure in demand in the utility market due to a lack of customer access to financing in a tight credit environment[120]. - Disruptions in supply chains, including semiconductor shortages and transportation delays, could significantly impact the company's ability to meet customer demand and generate revenue[116]. - The company faces risks related to supply chain disruptions, which could adversely affect its ability to manufacture and market products[101]. - Approximately 2% of the U.S. hourly workers are represented by a labor union, which poses risks of work stoppages and could impact production stability[107]. Strategic Initiatives - The company has identified several new product categories for expansion, focusing on electric utility T&D, telecom, infrastructure, rail, forestry, and waste management, which are increasing capital expenditures[65]. - The company plans to invest in its rental fleet to meet growing demand, particularly in the electric utility T&D and telecom industries[64]. - The company has launched an e-commerce platform to sell proprietary Load King™ equipment parts and other specialty equipment parts[66]. - The company maintains a diverse geographic footprint and has successfully opened five locations in new markets without relying solely on acquisitions[68]. Employee and Community Engagement - As of December 31, 2024, the company had approximately 2,619 employees across more than 40 locations in North America, with about 2% of U.S. employees covered by a collective bargaining agreement[78]. - In 2024, the company provided 26 paid internship opportunities to students from vocational high schools and university programs, aiming to attract early-career talent[86]. - The company has a network of approximately 100 Safety Ambassadors to promote workplace safety and engage employees in safety awareness[91]. - The company offers a comprehensive benefits program, including medical, vision, dental, life, and disability insurance, along with a 401(k) savings program with company matching[92]. - The company is committed to community giving, partnering with nonprofit organizations to support local communities through financial donations, volunteer time, and in-kind support[94]. Risk Factors - The company faces significant operating and financial restrictions that may limit its ability to capitalize on business opportunities[138]. - Compliance with evolving cybersecurity regulations may incur substantial expenses and require changes in business practices[145]. - The company is subject to complex environmental and safety regulations that could adversely affect operational costs and feasibility[147]. - Climate change may disrupt operations and require additional expenditures, impacting financial condition and results[149]. - Increased scrutiny on ESG initiatives could lead to higher compliance costs and affect the company's reputation[152]. Debt and Financial Obligations - As of December 31, 2024, the company's total indebtedness was $1,547.7 million, including $920.0 million in 2029 Secured Notes and $582.9 million under the Asset Based Lending Facility[132]. - The company has $1,384.2 million in variable rate debt under the ABL Facility and floor plan financing arrangements as of December 31, 2024[139]. - A one-eighth percentage point increase in interest rates would increase interest expense by approximately $1.7 million per year[139]. - The ABL Facility has a borrowing base that is subject to fluctuations based on the valuation of parts inventory, fleet inventory, accounts receivable, and unrestricted cash[137]. ESG and Cybersecurity - The company published its inaugural ESG report in 2023 and may engage in additional voluntary ESG initiatives, which could incur significant costs[153]. - The company has invested in cybersecurity safeguards and maintains a cybersecurity risk management program to protect its IT systems[158]. - The company has not identified any known cybersecurity threats that have materially affected its operations or financial condition, but ongoing risks remain[160]. - The company has committed to certain ESG initiatives, but achieving these commitments may be hindered by factors beyond its control, potentially harming its reputation and investor relations[154]. - Unfavorable ESG ratings could negatively impact investor sentiment and the company's share price, as well as its access to capital[155].