Summary of Custom Truck OneSource (CTOS) FY Conference Call Company Overview - **Company**: Custom Truck OneSource (CTOS) - **Industry**: Specialty equipment rental and sales, focusing on electric, utility transmission and distribution, communications, and rail markets in North America - **Business Model**: One-stop shop offering rental, sales, and aftermarket parts and services [1][2] Key Points and Arguments Rental Fleet Characteristics - **Fleet Size**: Over 10,000 units, with 70% focused on utility markets, 10% on rail and telecom, and the remainder on specialty vocational trucks [5][6] - **Asset Life**: Equipment has a useful life of 10 to 20 years, with an average rental duration of just over one year [7][8] - **Fleet Age**: The average age of the fleet is just over three years, which is considered a competitive advantage [9] Integrated Production Capabilities - **Production Model**: Custom Truck sources attachments and chassis directly from major suppliers, allowing for economies of scale and cost advantages [11][12] - **Customer Flexibility**: The company caters to customer needs through rentals, sales, and aftermarket services, enhancing customer retention [13][14] End Markets and Demand Trends - **Revenue Breakdown**: 55% from utility, just under 30% from infrastructure, and each rail and telecom contributing just under 5% [15][16] - **Market Drivers**: Strong demand for utility grid upgrades, infrastructure projects, and ongoing investments in rail and telecom, with a noted softness in telecom [17][19] Growth Opportunities - **Future Drivers**: Anticipated growth from utility grid upgrades, electrification, manufacturing onshoring, and data center investments [20][21] - **Q1 Performance**: Reported a 13% growth in the ERS segment, with improved rental fleet utilization at 78% [25] Tariff Impact and Procurement Strategy - **Tariff Resilience**: The company is well-positioned with a young rental fleet and significant pre-tariff inventory, minimizing the impact of potential tariffs [26][27] - **Supplier Relationships**: Strong relationships with suppliers have allowed for proactive procurement strategies to mitigate cost increases [28][30] Capital Allocation and Free Cash Flow - **Free Cash Flow Target**: Aiming for $50 million in levered free cash flow, with significant investments in the rental fleet projected between $375 million and $400 million [52][53] - **Debt Reduction Priority**: Focus on reducing net leverage to below three times by the end of 2026 [54][56] Backlog and Long-Term Growth - **Backlog Status**: Increased backlog by over $51 million in Q1, with a healthy range of four to six months on hand [60][62] - **Growth Projections**: Expected long-term growth rates in the high single digits to low double digits, with targeted gross profit margins of 15% to 18% for new sales [66][68] Customer Dynamics - **Demand from Customers**: Both larger and smaller customers are showing good demand, with smaller customers leaning towards rentals due to capital expense hesitancy [70][72] Additional Important Insights - **Greenfield Strategy**: The company is expanding its footprint with new locations and acquisitions, targeting areas with customer demand [45][49] - **Pricing Strategy**: Adjusted gross profit margins targeted at low to mid-seventy percent for rentals and mid-twenty percent for asset sales, with recent price increases reflecting market conditions [41][42][43] This summary encapsulates the key insights and strategic directions discussed during the Custom Truck OneSource FY Conference Call, highlighting the company's operational strengths, market dynamics, and future growth potential.

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]