分组1 - Custom Truck One Source, Inc. (CTOS) reported a quarterly loss of $0.13 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.05, marking an earnings surprise of -160.00% [1] - The company posted revenues of $511.48 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 12.94%, compared to revenues of $423.01 million a year ago [2] - Custom Truck One Source shares have increased by approximately 20.2% since the beginning of the year, outperforming the S&P 500's gain of 8.3% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $505.81 million, and for the current fiscal year, it is -$0.08 on revenues of $1.97 billion [7] - The Zacks Industry Rank for Automotive - Original Equipment is currently in the top 30% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, notes, management's discussion, market risks, and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 [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(Loss)) This section details the company's financial performance, including revenue, gross profit, operating income, and net income **Three Months Ended June 30, 2025 vs. 2024 (in thousands of dollars):** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Total Revenue | 511,483 | 423,013 | 88,470 | 20.9% | | Gross Profit | 102,542 | 89,267 | 13,275 | 14.9% | | Operating Income | 27,931 | 17,674 | 10,257 | 58.0% | | Net Income (Loss) | (28,380) | (24,478) | (3,902) | 15.9% | | Basic EPS | (0.13) | (0.10) | (0.03) | 30.0% | | Diluted EPS | (0.13) | (0.10) | (0.03) | 30.0% | **Six Months Ended June 30, 2025 vs. 2024 (in thousands of dollars):** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Total Revenue | 933,715 | 834,320 | 99,395 | 11.9% | | Gross Profit | 188,078 | 179,976 | 8,102 | 4.5% | | Operating Income | 40,336 | 36,044 | 4,292 | 11.9% | | Net Income (Loss) | (46,171) | (38,813) | (7,358) | 19.0% | | Basic EPS | (0.20) | (0.16) | (0.04) | 25.0% | | Diluted EPS | (0.20) | (0.16) | (0.04) | 25.0% | [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity **As of June 30, 2025 vs. December 31, 2024 (in thousands of dollars):** | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | 3,576,924 | 3,501,967 | 74,957 | 2.1% | | Total Current Assets | 1,330,915 | 1,301,452 | 29,463 | 2.3% | | Inventory | 1,089,245 | 1,049,304 | 39,941 | 3.8% | | Rental Equipment, net | 1,055,115 | 1,001,651 | 53,464 | 5.3% | | Total Liabilities | 2,786,797 | 2,640,658 | 146,139 | 5.5% | | Total Current Liabilities | 1,059,640 | 1,000,701 | 58,939 | 5.9% | | Long-term debt, net | 1,589,883 | 1,519,882 | 70,001 | 4.6% | | Total Stockholders' Equity | 790,127 | 861,309 | (71,182) | (8.3)% | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash flows from operating, investing, and financing activities **Six Months Ended June 30, 2025 vs. 2024 (in thousands of dollars):** | Cash Flow Activity | 2025 | 2024 | Change ($) | | :-------------------------------- | :----- | :----- | :--------- | | Net cash flow from operating activities | 181,353 | 23,408 | 157,945 | | Net cash flow for investing activities | (139,807) | (98,688) | (41,119) | | Net cash flow from financing activities | (39,889) | 72,973 | (112,862) | | Net Change in Cash and Cash Equivalents | 1,454 | (2,250) | 3,704 | | Cash and Cash Equivalents at End of Period | 5,259 | 8,059 | (2,800) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, including net income, repurchases, and share-based payments **Changes in Stockholders' Equity (in thousands of dollars):** | Metric | Dec 31, 2024 | Mar 31, 2025 | Jun 30, 2025 | | :-------------------------------- | :----------- | :----------- | :----------- | | Total Stockholders' Equity | 861,309 | 813,419 | 790,127 | | Net income (loss) | (586,528) | (17,791) | (28,380) | | Common stock repurchases | (88,229) | (32,575) | (1,798) | | Share-based payments | 1,550,785 | 2,404 | 2,120 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements [Note 1: Business and Organization](index=9&type=section&id=Note%201:%20Business%20and%20Organization) Custom Truck One Source, Inc. provides specialty equipment rentals, sales, parts, and services across three segments in North America - The Company is a specialty equipment provider to electric utility, telecommunications, rail, forestry, and waste management industries in North America[20](index=20&type=chunk) - The business is managed in three reporting segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS)[20](index=20&type=chunk) [Note 2: Revenue](index=10&type=section&id=Note%202:%20Revenue) Total revenue increased, driven by equipment sales and rental revenue, with most revenue from the United States **Total Revenue by Geographic Area (in thousands of dollars):** | Geographic Area | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | 499,582 | 414,066 | 913,134 | 811,763 | | Canada | 11,901 | 8,947 | 20,581 | 22,557 | | **Total Revenue** | **511,483** | **423,013** | **933,715** | **834,320** | **Total Revenue by Major Product and Service Line (in thousands of dollars):** | Product/Service Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total rental revenue | 120,814 | 102,997 | 237,075 | 209,168 | | Equipment sales | 356,112 | 285,633 | 629,975 | 558,235 | | Parts and services | 34,557 | 34,383 | 66,665 | 66,917 | | **Total revenue** | **511,483** | **423,013** | **933,715** | **834,320** | **Accounts Receivable, Net (in thousands of dollars):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accounts receivable | 206,499 | 233,688 | | Less: allowance for doubtful accounts | (17,505) | (17,815) | | **Accounts receivable, net** | **188,994** | **215,873** | [Note 3: Sales-Type Leases](index=13&type=section&id=Note%203:%20Sales-Type%20Leases) Sales-type lease revenue and gross margin decreased for both the three and six months ended June 30, 2025 **Sales-Type Lease Revenue and Gross Margin (in thousands of dollars):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Equipment sales | 984 | 1,554 | 3,145 | 4,572 | | Cost of equipment sales | 949 | 1,229 | 2,788 | 4,051 | | **Gross margin** | **35** | **325** | **357** | **521** | [Note 4: Inventory](index=13&type=section&id=Note%204:%20Inventory) Total inventory increased to **$1,089.2 million** as of June 30, 2025, driven by whole goods inventory **Inventory Composition (in thousands of dollars):** | Inventory Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Whole goods | 958,697 | 913,571 | | Aftermarket parts and services inventory | 130,548 | 135,733 | | **Total Inventory** | **1,089,245** | **1,049,304** | [Note 5: Floor Plan Financing](index=13&type=section&id=Note%205:%20Floor%20Plan%20Financing) Floor plan payables saw mixed changes, and interest expense decreased for both periods ended June 30, 2025 **Floor Plan Payables (in thousands of dollars):** | Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Trade floor plan payables | 408,274 | 330,498 | | Non-trade floor plan payables | 381,917 | 470,830 | | **Total Floor Plan Payables** | **790,191** | **801,328** | **Floor Plan Interest Expense (in thousands of dollars):** | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | 13,800 | 15,400 | | Six Months Ended June 30, | 27,100 | 28,300 | - The Company was in compliance with floor plan financing covenants as of June 30, 2025[37](index=37&type=chunk) [Note 6: Rental Equipment](index=15&type=section&id=Note%206:%20Rental%20Equipment) Net rental equipment increased to **$1,055.1 million** as of June 30, 2025 **Rental Equipment, Net (in thousands of dollars):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Rental equipment | 1,591,114 | 1,522,710 | | Less: accumulated depreciation | (535,999) | (521,059) | | **Rental equipment, net** | **1,055,115** | **1,001,651** | [Note 7: Long-Term Debt](index=16&type=section&id=Note%207:%20Long-Term%20Debt) Total debt outstanding increased to **$1,630.7 million** due to ABL borrowings, with **$275.7 million** availability **Debt Obligations and Interest Rates (in thousands of dollars):** | Debt Type | June 30, 2025 | December 31, 2024 | Interest Rate (June 30, 2025) | Interest Rate (Dec 31, 2024) | | :-------------------------- | :------------ | :---------------- | :---------------------------- | :--------------------------- | | ABL Facility | 670,475 | 582,900 | 6.4% | 7.1% | | 2029 Secured Notes | 920,000 | 920,000 | 5.5% | 5.5% | | 2023 Credit Facility | 17,474 | 17,648 | 5.8% | 5.8% | | Other notes payable | 22,753 | 27,102 | 3.1%-7.0% | 3.1%-7.0% | | **Total debt outstanding** | **1,630,702** | **1,547,650** | | | | Long-term debt, net | 1,589,883 | 1,519,882 | | | - Borrowing availability under the ABL Facility was **$275.7 million** as of June 30, 2025[47](index=47&type=chunk) [Note 8: Earnings (Loss) Per Share](index=16&type=section&id=Note%208:%20Earnings%20(Loss)%20Per%20Share) Basic and diluted net loss per share increased for both the three and six months ended June 30, 2025 **Net Income (Loss) Per Share:** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | (0.13) | (0.10) | (0.20) | (0.16) | | Diluted EPS | (0.13) | (0.10) | (0.20) | (0.16) | [Note 9: Equity](index=17&type=section&id=Note%209:%20Equity) The company has a stock repurchase program with **$1.9 million** remaining, and repurchased shares in January 2025 - As of June 30, 2025, **$1.9 million** was available under the stock repurchase program[54](index=54&type=chunk) - On January 30, 2025, the Company purchased **8,143,635 shares** of common stock from affiliates of ECP for **$32.6 million**, representing an approximately **23% discount** from the market price[56](index=56&type=chunk)[57](index=57&type=chunk) - Approximately **2.8 million** 'Minimum and Second Target Earnout Shares' were forfeited on July 31, 2024, as price targets were not met[55](index=55&type=chunk) [Note 10: Fair Value Measurements](index=18&type=section&id=Note%2010:%20Fair%20Value%20Measurements) Fair values of most financial liabilities approximated carrying values, while 2029 Secured Notes used Level 2 inputs **Carrying Value vs. Fair Value of Financial Liabilities (in thousands of dollars):** | Liability | June 30, 2025 Carrying Value | June 30, 2025 Fair Value (Level 2) | December 31, 2024 Carrying Value | December 31, 2024 Fair Value (Level 2) | | :-------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | ABL Facility | 670,475 | 670,475 | 582,900 | 582,900 | | 2029 Secured Notes | 920,000 | 887,800 | 920,000 | 859,050 | | 2023 Credit Facility | 17,474 | 17,474 | 17,648 | 17,733 | | Other notes payable | 22,753 | 22,753 | 27,102 | 27,102 | [Note 11: Income Taxes](index=18&type=section&id=Note%2011:%20Income%20Taxes) Income tax expense for the six months ended June 30, 2025, was **$9.8 million**, with an effective tax rate of **(26.9)%** - For the six months ended June 30, 2025, income tax expense was **$9.8 million**, with an effective tax rate of **(26.9)%**[61](index=61&type=chunk) - An adjustment of **$17.5 million** was recorded to income tax expense in Q2 2025 due to changes in expected taxable income across jurisdictions[61](index=61&type=chunk) - The recently signed One Big Beautiful Bill Act (OBBBA) is being evaluated for its potential impact on future financial position, results of operations, and cash flows[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 12: Commitments and Contingencies](index=20&type=section&id=Note%2012:%20Commitments%20and%20Contingencies) The company is involved in various legal matters and an IRS audit, but management expects no material adverse financial impact - Management believes that no pending litigation, disputes, or claims against the Company would have a material adverse effect on its consolidated financial condition, cash flows, or results of operations[68](index=68&type=chunk) - The Company is under IRS audit for federal excise taxes for 2015, with an assessment of **$2.4 million**, but management does not believe a loss is probable[67](index=67&type=chunk) [Note 13: Related Parties](index=20&type=section&id=Note%2013:%20Related%20Parties) Related party revenues decreased, while expenses in cost of revenue decreased and operating expenses showed mixed changes **Related Party Transactions (in thousands of dollars):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues from related parties | 1,325 | 7,945 | 5,997 | 11,604 | | Expenses in cost of revenue | 5 | 286 | 115 | 752 | | Expenses in operating expenses | 819 | 127 | 1,378 | 1,400 | | Accounts receivable from related parties (June 30, 2025 / Dec 31, 2024) | 343 | N/A | 3,688 | N/A | | Accounts payable to related parties (June 30, 2025 / Dec 31, 2024) | 204 | N/A | 211 | N/A | [Note 14: Segments](index=21&type=section&id=Note%2014:%20Segments) The company manages three segments: ERS, TES, and APS, with performance primarily evaluated based on gross profit **Segment Gross Profit (in thousands of dollars):** | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | ERS Gross Profit | 46,445 | 39,757 | 90,074 | 79,190 | | TES Gross Profit | 47,092 | 42,395 | 82,102 | 85,555 | | APS Gross Profit | 9,005 | 7,115 | 15,902 | 15,231 | | **Total Gross Profit** | **102,542** | **89,267** | **188,078** | **179,976** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, key metrics, segment results, and liquidity - Total revenue increased by **20.9%** for the three months and **11.9%** for the six months ended June 30, 2025, driven by strong new equipment sales and higher rental revenue[107](index=107&type=chunk) - Net loss increased for both periods primarily due to higher income tax expense[112](index=112&type=chunk) [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section outlines the cautionary nature of forward-looking statements and lists various risk factors affecting performance - Forward-looking statements are subject to risks, uncertainties, and assumptions, and readers should not place undue reliance on them[80](index=80&type=chunk) - Key risk factors include increases in labor costs, supply chain disruptions, competition, inability to attract and retain key personnel, material disruptions to operations, increases in new equipment costs, macroeconomic conditions, significant indebtedness, and changes in interest rates[82](index=82&type=chunk) [Financial and Performance Measures](index=27&type=section&id=Financial%20and%20Performance%20Measures) This section defines the key financial measures and operating metrics used to evaluate the company's performance - The company generates revenue through renting, selling, assembling, upfitting, and servicing heavy-duty trucks and cranes, as well as selling related parts[86](index=86&type=chunk) - Key operating metrics include Ending OEC, Average OEC on rent, Fleet utilization, OEC on rent yield, and Sales order backlog, which are consistent with American Rental Association definitions[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) [Operating Metrics](index=29&type=section&id=Operating%20Metrics) Operating metrics show increases in OEC and fleet utilization, but a significant decrease in sales order backlog **Key Operating Metrics (in thousands of dollars, except percentages):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($/%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($/%) | | :------------------- | :------------------------------- | :------------------------------- | :------------ | :----------------------------- | :----------------------------- | :------------ | | Ending OEC | 1,560,704 | 1,457,955 | 7.0% | 1,560,704 | 1,457,955 | 7.0% | | Average OEC on rent | 1,207,231 | 1,044,683 | 15.6% | 1,192,333 | 1,055,189 | 13.0% | | Fleet utilization | 77.6% | 71.7% | 5.9% pts | 77.3% | 72.4% | 4.9% pts | | OEC on rent yield | 38.6% | 40.0% | (1.4)% pts | 38.3% | 40.3% | (2.0)% pts | | Sales order backlog | 334,805 | 478,244 | (30.0)% | 334,805 | 478,244 | (30.0)% | [Operating Segments](index=29&type=section&id=Operating%20Segments) The company's ERS and TES segments saw revenue and gross profit increases, while APS had flat revenue but higher gross profit [Equipment Rental Solutions (ERS) Segment](index=33&type=section&id=Equipment%20Rental%20Solutions%20(ERS)%20Segment) The ERS segment saw significant revenue increases for both periods, driven by higher rental revenue and equipment sales **ERS Segment Performance (in thousands of dollars):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Total Revenue | 170,472 | 138,411 | 32,061 | 23.2% | | Rental revenue | 117,728 | 100,699 | 17,029 | 16.9% | | Equipment sales | 52,744 | 37,712 | 15,032 | 39.9% | | Gross Profit | 46,445 | 39,757 | 6,688 | 16.8% | **ERS Segment Performance (in thousands of dollars):** | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total Revenue | 324,820 | 274,439 | 50,381 | 18.4% | | Rental revenue | 230,693 | 203,987 | 26,706 | 13.1% | | Equipment sales | 94,127 | 70,452 | 23,675 | 33.6% | | Gross Profit | 90,074 | 79,190 | 10,884 | 13.7% | - Rental revenue increased due to higher fleet utilization (**5.9%** for Q2, **4.9%** for YTD) and higher average OEC on rent[115](index=115&type=chunk) [Truck and Equipment Sales (TES) Segment](index=34&type=section&id=Truck%20and%20Equipment%20Sales%20(TES)%20Segment) The TES segment's equipment sales increased, but gross profit showed mixed results due to pricing pressures and equipment mix **TES Segment Performance (in thousands of dollars):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Equipment sales | 303,368 | 247,921 | 55,447 | 22.4% | | Gross Profit | 47,092 | 42,395 | 4,697 | 11.1% | **TES Segment Performance (in thousands of dollars):** | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Equipment sales | 535,848 | 487,783 | 48,065 | 9.9% | | Gross Profit | 82,102 | 85,555 | (3,453) | (4.0)% | - The decrease in gross profit for the six months was due to pricing pressures on truck sales and the mix of equipment sold[121](index=121&type=chunk) [Aftermarket Parts and Services (APS) Segment](index=34&type=section&id=Aftermarket%20Parts%20and%20Services%20(APS)%20Segment) The APS segment's revenue remained flat, but gross profit increased due to higher rental revenue with lower associated costs **APS Segment Performance (in thousands of dollars):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Total Revenue | 37,643 | 36,681 | 962 | 2.6% | | Gross Profit | 9,005 | 7,115 | 1,890 | 26.6% | **APS Segment Performance (in thousands of dollars):** | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total Revenue | 73,047 | 72,098 | 949 | 1.3% | | Gross Profit | 15,902 | 15,231 | 671 | 4.4% | - The increase in gross profit was primarily driven by the increase in rental revenue, which has lower associated costs[123](index=123&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and credit facilities, with cash increasing and the company in compliance with loan covenants - Principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities[125](index=125&type=chunk) - As of June 30, 2025, cash and cash equivalents were **$5.3 million**, an increase of **$1.5 million** from December 31, 2024[125](index=125&type=chunk)[139](index=139&type=chunk) - Borrowing availability under the ABL Facility was **$275.7 million** as of June 30, 2025[125](index=125&type=chunk) [Loan Covenants and Compliance](index=36&type=section&id=Loan%20Covenants%20and%20Compliance) The company was in compliance with all loan covenants, with the Consolidated Total Debt Ratio allowing for unlimited dividends - As of June 30, 2025, the Company's distribution conditions were satisfied under the ABL Credit Agreement, and the Consolidated Total Debt Ratio was not greater than **5.00 to 1.00** under the Indenture, indicating no restrictions on distributions[126](index=126&type=chunk)[127](index=127&type=chunk) **Net Debt and Net Leverage Ratio (in thousands of dollars):** | Metric | June 30, 2025 | March 31, 2025 | | :-------------------------- | :------------ | :------------- | | Net Debt | 1,625,443 | 1,612,624 | | LTM Adjusted EBITDA | 349,079 | 335,707 | | **Net Leverage Ratio** | **4.66** | **4.80** | [Historical Cash Flows](index=40&type=section&id=Historical%20Cash%20Flows) Operating cash flow significantly increased due to lower inventory production, while investing cash use increased and financing shifted to outflow **Summary of Cash Flows (in thousands of dollars):** | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash flow from operating activities | 181,353 | 23,408 | | Net cash flow for investing activities | (139,807) | (98,688) | | Net cash flow from financing activities | (39,889) | 72,973 | | Net change in cash and cash equivalents | 1,454 | (2,250) | - The increase in operating cash flow was driven by lower levels of inventory production in 2025 compared to 2024[140](index=140&type=chunk) - The increase in cash used in investing activities was primarily due to a **$60.1 million** increase in purchases of rental equipment[141](index=141&type=chunk) - The shift to net cash used in financing activities was due to increased repayments on floorplan liabilities and long-term debt, and lower proceeds from these sources[142](index=142&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on variable-rate debt and foreign currency risk from Canadian revenues, with no hedging - The company has **$1,460.7 million** in variable rate debt, primarily from floor plan financing and the ABL Facility[143](index=143&type=chunk) - A one-eighth percentage point change in interest rates would impact annual interest expense by approximately **$1.8 million**[143](index=143&type=chunk) - Canadian dollar revenues of **$20.6 million** for the six months ended June 30, 2025, expose the company to foreign currency risk, with a **100-basis point change** impacting annual revenues by approximately **$0.4 million**[145](index=145&type=chunk) - The company does not currently hedge its interest rate or exchange rate exposures[144](index=144&type=chunk)[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Disclosure controls and procedures were effective as of June 30, 2025[146](index=146&type=chunk) - No material changes occurred in internal control over financial reporting during the fiscal quarter ended June 30, 2025[147](index=147&type=chunk) [PART II OTHER INFORMATION](index=42&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters, but management expects no material adverse impact on its financial condition or operations - Management believes that no pending litigation, disputes, or claims against the Company would have a material adverse effect on its consolidated financial condition, cash flows, or results of operations[149](index=149&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors previously disclosed in the Annual Report on Form 10-K - 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[150](index=150&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a stock repurchase program with **$1.9 million** remaining, and no shares were repurchased in Q2 2025 - As of June 30, 2025, **$1.9 million** was available under the stock repurchase program[153](index=153&type=chunk) - No shares were purchased under the program during the three months ended June 30, 2025[153](index=153&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[154](index=154&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[155](index=155&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[156](index=156&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Exhibits include various retention bonus letter agreements, restricted stock unit agreements, and certifications from the CEO and CFO[157](index=157&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Label Linkbase Documents are also filed[157](index=157&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) This section contains the official signatures of the CEO and CFO, certifying the accuracy of the report [SIGNATURES](index=45&type=section&id=SIGNATURES) The report was signed by Ryan McMonagle (CEO) and Christopher J. Eperjesy (CFO) on July 30, 2025 - The report was signed by Ryan McMonagle, Chief Executive Officer, and Christopher J. Eperjesy, Chief Financial Officer, on July 30, 2025[162](index=162&type=chunk)

[Report Overview](index=1&type=section&id=Report%20Overview) [CTOS Second-Quarter Highlights](index=1&type=section&id=CTOS%20Second-Quarter%20Highlights) CTOS reported strong Q2 2025 results with significant revenue and Adjusted EBITDA growth, improved rental fleet utilization, and record OEC, reaffirming 2025 guidance - Achieved strong year-over-year **revenue growth of 21%** and **adjusted EBITDA growth of 17%**, driven by growth in every segment[3](index=3&type=chunk) - Rental fleet average utilization reached just under **78%**, a significant improvement from the prior year and in line with expectations[3](index=3&type=chunk) - Ended the quarter with total OEC of **$1.56 billion**, the highest in company history, expected to support future growth[3](index=3&type=chunk) - TES sales increased over **22% year-over-year**, marking the second-highest quarter of sales ever, driven by robust demand for vocational vehicles[3](index=3&type=chunk) - Signed orders in the quarter were up **30% year-over-year**, positioning the company well for expected segment growth[3](index=3&type=chunk) [Summary Actual Consolidated Financial Results](index=1&type=section&id=Summary%20Actual%20Consolidated%20Financial%20Results) CTOS reported a 20.9% increase in total revenue and 16.7% Adjusted EBITDA growth for Q2 2025, despite an increased net loss Consolidated Financial Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($000s) | Q2 2024 ($000s) | Change ($000s) | % Change | Source Chunk | | :----------------- | :-------------- | :-------------- | :------------- | :------- | :----------- | | Rental revenue | 120,814 | 102,997 | 17,817 | 17.3% | 4, 6 | | Equipment sales | 356,112 | 285,633 | 70,479 | 24.7% | 4, 6 | | Parts sales & services | 34,557 | 34,383 | 174 | 0.5% | 4, 6 | | Total revenue | 511,483 | 423,013 | 88,470 | 20.9% | 4, 6 | | Gross Profit | 102,542 | 89,267 | 13,275 | 14.9% | 4, 6 | | Adjusted Gross Profit | 156,549 | 133,852 | 22,697 | 17.0% | 4, 6 | | Net Income (Loss) | (28,380) | (24,478) | (3,902) | 15.9% | 4, 6 | | Adjusted EBITDA | 93,428 | 80,056 | 13,372 | 16.7% | 4, 6 | [Summary Financial Results by Segment (Introduction)](](index=1&type=section&id=Summary%20Financial%20Results%20by%20Segment%20(Introduction))) CTOS reports financial results across Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS) segments - ERS encompasses the core rental business, including sales of used rental equipment[5](index=5&type=chunk) - TES covers specialized truck and equipment production and new equipment sales[5](index=5&type=chunk) - APS includes sales and rentals of parts, tools, and supplies, as well as aftermarket repair services[5](index=5&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) [Equipment Rental Solutions (ERS)](index=3&type=section&id=Equipment%20Rental%20Solutions%20(ERS)) ERS segment showed strong Q2 2025 growth, with total revenue up 23.2% year-over-year, driven by higher rental revenue and equipment sales ERS Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($000s) | Q2 2024 ($000s) | Change ($000s) | % Change | Source Chunk | | :----------------- | :-------------- | :-------------- | :------------- | :------- | :----------- | | Rental revenue | 117,728 | 100,699 | 17,029 | 16.9% | 7 | | Equipment sales | 52,744 | 37,712 | 15,032 | 39.9% | 7 | | Total revenue | 170,472 | 138,411 | 32,061 | 23.2% | 7 | | Gross profit | 46,445 | 39,757 | 6,688 | 16.8% | 7 | | Adjusted Gross Profit | 99,748 | 83,338 | 16,410 | 19.7% | 7 | [Truck and Equipment Sales (TES)](index=3&type=section&id=Truck%20and%20Equipment%20Sales%20(TES)) The TES segment experienced robust Q2 2025 equipment sales growth of 22.0% year-over-year, driven by strong demand for vocational vehicles TES Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($000s) | Q2 2024 ($000s) | Change ($000s) | % Change | Source Chunk | | :-------------- | :-------------- | :-------------- | :------------- | :------- | :----------- | | Equipment sales | 303,368 | 247,921 | 55,447 | 22.4% | 8 | | Gross profit | 47,092 | 42,395 | 4,697 | 11.1% | 8 | [Aftermarket Parts and Services (APS)](index=3&type=section&id=Aftermarket%20Parts%20and%20Services%20(APS)) The APS segment showed modest Q2 2025 revenue growth of 2.6%, driven by increased rental revenue and improved gross profit margin APS Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($000s) | Q2 2024 ($000s) | Change ($000s) | % Change | Source Chunk | | :---------------------- | :-------------- | :-------------- | :------------- | :------- | :----------- | | Rental revenue | 3,086 | 2,298 | 788 | 34.3% | 9 | | Parts and services revenue | 34,557 | 34,383 | 174 | 0.5% | 9 | | Total revenue | 37,643 | 36,681 | 962 | 2.6% | 9 | | Gross profit | 9,005 | 7,115 | 1,890 | 26.6% | 9 | [Operating Metrics](index=3&type=section&id=Operating%20Metrics) [Summary Combined Operating Metrics](index=3&type=section&id=Summary%20Combined%20Operating%20Metrics) CTOS reported increased Ending OEC, Average OEC on rent, and improved fleet utilization for Q2 2025, despite a decrease in sales order backlog Combined Operating Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($000s) | Q2 2024 ($000s) | Change ($000s) | % Change | Source Chunk | | :----------------- | :-------------- | :-------------- | :------------- | :------- | :----------- | | Ending OEC | 1,560,704 | 1,457,955 | 102,749 | 7.0% | 10 | | Average OEC on rent | 1,207,231 | 1,044,683 | 162,548 | 15.6% | 10 | | Fleet utilization | 77.6% | 71.7% | 5.9 pp | 8.2% | 10 | | OEC on rent yield | 38.6% | 40.0% | (1.4 pp) | (3.5%) | 10 | | Sales order backlog | 334,805 | 478,244 | (143,439) | (30.0%) | 10 | [Definitions of Operating Metrics](index=3&type=section&id=Definitions%20of%20Operating%20Metrics) This section defines key CTOS operating metrics: Ending OEC, Average OEC on rent, Fleet utilization, OEC on rent yield (ORY), and Sales order backlog - Ending OEC is the original equipment cost of units at the end of the measurement period[10](index=10&type=chunk) - Average OEC on rent is the weighted-average OEC on rent during the stated period[11](index=11&type=chunk) - Fleet utilization is the total number of days rental equipment was rented divided by total days available, weighted by OEC[11](index=11&type=chunk) - OEC on rent yield (ORY) measures return realized by the rental fleet, calculated as annualized rental revenue (excluding freight/ancillary fees) divided by Average OEC on rent[12](index=12&type=chunk) - Sales order backlog represents purchase orders for customized and stock equipment, but is not an accurate measure of future net sales[13](index=13&type=chunk) [Management Discussion & Analysis](index=5&type=section&id=Management%20Discussion%20%26%20Analysis) [Consolidated Performance Commentary](index=5&type=section&id=Consolidated%20Performance

Group 1: Stock Performance - Custom Truck One Source, Inc. (CTOS) shares increased by 10.1% to close at $5.67, with trading volume significantly higher than usual [1] - The stock has gained 9.1% over the past four weeks, indicating a positive trend [1] Group 2: Analyst Upgrade - Wall Street firm Stifel upgraded Custom Truck from Hold to Buy and raised its price target, citing improved equipment availability and stronger rental utilization in the Transmission and Distribution market [2] - The upgrade reflects rising optimism for Truck Equipment Sales, which supports a positive earnings outlook [2] Group 3: Earnings Expectations - Custom Truck is expected to report a quarterly loss of $0.05 per share, representing a year-over-year change of +50% [3] - Revenues are projected to be $452.87 million, up 7.1% from the same quarter last year [3] Group 4: Earnings Estimate Revisions - The consensus EPS estimate for Custom Truck has been revised 93.4% lower over the last 30 days, indicating a negative trend in earnings estimate revisions [4] - A negative trend in earnings estimate revisions typically does not lead to price appreciation, suggesting caution moving forward [4] Group 5: Industry Context - Custom Truck One Source is part of the Zacks Automotive - Original Equipment industry, which includes Ferrari (RACE) [5] - Ferrari's consensus EPS estimate has remained unchanged at $2.56, reflecting a year-over-year change of +4.1% [6]

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]