Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $452 million, representing a 23% increase compared to Q1 2022 [6][16] - Adjusted gross profit was $150 million, up 16% year-over-year, resulting in an adjusted gross margin of 33.2% [6][16] - Adjusted EBITDA reached $105 million, a 15% improvement from Q1 2022 [6][16] - Net income for the quarter was $13.8 million, an increase of $17.1 million from Q1 2022 [6][16] - SG&A expenses were $57 million, or 13% of revenues, an improvement from 15% in Q1 2022 [6][16] Business Line Data and Key Metrics Changes - In the ERS segment, rental revenue was $114 million, an 8% increase from Q1 2022, with adjusted gross profit of $106 million and a gross margin of 51.4% [19][20] - TES segment revenues were $209 million, a 25% increase year-over-year, with strong backlog and inventory levels [19][20] - APS segment revenue was $37 million, up 10% compared to Q1 2022, with an adjusted gross profit margin of 27.2% [20] Market Data and Key Metrics Changes - The backlog grew by more than $100 million in Q1 2023, up 13% sequentially from Q4 2022 and 46% year-over-year [4][6] - Average OEC on rent increased by over $95 million compared to Q1 2022, with rental utilization at nearly 84%, up from 83% in Q1 2022 [19][20] Company Strategy and Development Direction - The company is focused on investing in and optimizing production capacity, including acquiring land for expansion and increasing manufacturing capabilities [17][20] - Continued investment in the rental fleet is planned, with $109 million deployed in Q1 2023 [19][20] - The company aims to maintain strong service levels while addressing supply chain issues and improving inventory levels [4][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand across primary end markets, including utility, telecom, rail, and infrastructure [16][20] - The company expects ERS revenue between $670 million and $710 million, TES revenue between $820 million and $890 million, and total revenue of $1.635 billion to $1.755 billion for 2023 [8][20] - Adjusted EBITDA guidance is projected to be between $420 million and $440 million [8][20] Other Important Information - The company has repurchased approximately $12 million of its stock since initiating the stock repurchase program [20] - As of March 31, the company had $285 million available under its ABL facility, with a net leverage of 3.4x, down from over 3.5x last quarter [20] Q&A Session Summary Question: What is the directional outlook on utilization? - Management indicated that utilization remains strong and typically increases in Q2 and Q3, expecting a similar trend in 2023 [21] Question: Can you provide an update on the backlog in TES? - Management noted that while supply chains are improving, backlog levels are still high, and they expect to manage it effectively [26] Question: How sensitive are margins to the sales component in the ERS segment? - Management explained that the shift in revenue mix from rental to sales impacted margins, with rental margins being significantly higher [28][29] Question: What is the expected EBITDA growth for Q2? - Management anticipates high single-digit growth in EBITDA year-over-year, with some seasonality expected [34]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited condensed consolidated financial statements for Q1 2023 report **$452.2 million in revenue**, a **$13.8 million net income**, and **$3.07 billion in total assets** [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2023, indicates total assets of **$3.07 billion**, an increase from **$2.94 billion**, primarily due to growth in inventory and rental equipment Condensed Consolidated Balance Sheet Data (in $000s) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $32,218 | $14,360 | | Inventory | $714,354 | $596,724 | | Rental equipment, net | $894,557 | $883,674 | | Total Assets | $3,069,383 | $2,938,212 | | **Liabilities & Equity** | | | | Total current liabilities | $711,328 | $634,878 | | Long-term debt, net | $1,394,039 | $1,354,766 | | Total Liabilities | $2,164,546 | $2,049,769 | | Total stockholders' equity | $904,837 | $888,443 | [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 2023, the company reported **$452.2 million in total revenue**, a **23.4% increase**, achieving a **$13.8 million net income** Statement of Operations Highlights (in $000s, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total revenue | $452,163 | $366,476 | | Gross Profit | $109,661 | $84,493 | | Operating Income | $39,888 | $9,808 | | Net Income (Loss) | $13,800 | $(3,273) | | Basic EPS | $0.06 | $(0.01) | | Diluted EPS | $0.06 | $(0.01) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2023, net cash from operating activities was **$3.9 million**, a significant improvement, ending the quarter with **$32.2 million in cash** Cash Flow Summary (in $000s) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash flow from operating activities | $3,906 | $(29,771) | | Net cash flow from investing activities | $(39,948) | $(48,458) | | Net cash flow from financing activities | $53,849 | $66,138 | | **Net Change in Cash** | **$17,858** | **$(12,091)** | | **Cash at End of Period** | **$32,218** | **$23,811** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business structure, accounting policies, and financial activities, including segment performance and the 2022 HiRail acquisition - The company operates through three main segments: **Equipment Rental Solutions (ERS)**, **Truck and Equipment Sales (TES)**, and **Aftermarket Parts and Services (APS)**[291](index=291&type=chunk)[29](index=29&type=chunk)[51](index=51&type=chunk) - On January 14, 2022, the company acquired HiRail for **$51.0 million** to expand its presence in strategic markets, which is included in the **ERS** segment[64](index=64&type=chunk)[88](index=88&type=chunk) Revenue by Segment (in $000s) - Q1 2023 vs Q1 2022 | Segment | Q1 2023 Revenue | Q1 2022 Revenue | % Change | | :--- | :--- | :--- | :--- | | ERS | $205,920 | $164,914 | 24.9% | | TES | $209,154 | $167,833 | 24.6% | | APS | $37,089 | $33,729 | 10.0% | | **Total** | **$452,163** | **$366,476** | **23.4%** | Gross Profit by Segment (in $000s) - Q1 2023 vs Q1 2022 | Segment | Q1 2023 Gross Profit | Q1 2022 Gross Profit | % Change | | :--- | :--- | :--- | :--- | | ERS | $66,267 | $52,927 | 25.2% | | TES | $34,110 | $23,785 | 43.4% | | APS | $9,284 | $7,781 | 19.3% | | **Total** | **$109,661** | **$84,493** | **29.8%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **23.4% year-over-year revenue growth** to strong demand, with **Adjusted EBITDA increasing 15.0%** and sales order backlog growing **45.8%** [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Consolidated revenue for Q1 2023 increased by **23.4%** YoY, driven by equipment sales and rental revenue, resulting in a **$13.8 million net income** from a prior-year loss - The increase in total revenue was primarily due to strong customer demand for new and rental equipment, as well as for parts sales and services, and record levels of vehicle production[187](index=187&type=chunk) - Operating expenses decreased primarily due to the runoff of amortization expense associated with a prior trade name intangible asset and a reduction in post-acquisition integration expenses[215](index=215&type=chunk) - The improvement to net income was primarily the result of gross profit expansion, which was partially offset by higher interest expense on variable-rate debt and floor plan liabilities[190](index=190&type=chunk) [Key Performance Measures and Non-GAAP Financial Measures](index=32&type=section&id=Key%20Performance%20Measures%20and%20Non-GAAP%20Financial%20Measures) The company tracks key metrics including OEC, fleet utilization, and sales order backlog, with **ending OEC growing 6.8%** and **Adjusted EBITDA rising 15.0%** Key Performance Measures | Measure | March 31, 2023 | March 31, 2022 | % Change | | :--- | :--- | :--- | :--- | | Ending OEC (in $000s) | $1,457,870 | $1,364,660 | 6.8% | | Fleet utilization | 83.6% | 82.5% | 1.3% | | OEC on rent yield | 39.6% | 39.1% | 1.3% | | Sales order backlog (in $000s) | $855,049 | $586,368 | 45.8% | Adjusted EBITDA Reconciliation (in $000s) | Line Item | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income (loss) | $13,800 | $(3,273) | | EBITDA | $89,116 | $79,677 | | **Adjusted EBITDA** | **$105,200** | **$91,477** | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and its ABL Facility, with **$32.2 million in cash** and **$284.5 million available** under the ABL Facility - As of March 31, 2023, the company had **$32.2 million** in cash and cash equivalents and **$284.5 million** of borrowing availability under its **ABL Facility**[256](index=256&type=chunk)[205](index=205&type=chunk) - In Q1 2023, net cash from operating activities was **$3.9 million**, a significant improvement from a **$29.8 million** use of cash in Q1 2022, despite increased inventory purchases[264](index=264&type=chunk) - On April 17, 2023, the revolving credit facility with PNC Equipment Finance was increased from **$315.0 million** to **$370.0 million**[236](index=236&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from interest rate fluctuations on its variable-rate debt and foreign currency exchange rate changes - The company's principal market risk is from interest rate changes on its variable-rate debt, including the **ABL Facility** and floor plan financing[268](index=268&type=chunk) - A **0.125%** (one-eighth percentage point) increase or decrease in applicable interest rates would change the annual interest expense on the **ABL Facility** by approximately **$0.6 million**[268](index=268&type=chunk) - The company generated **$13.9 million** of U.S. dollar-denominated revenues in Canadian dollars during Q1 2023 and does not currently hedge this foreign currency exposure[245](index=245&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were **not effective** as of March 31, 2023, due to a **material weakness** in internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2023, the Company's disclosure controls and procedures were **not effective** due to a **material weakness** in internal control over financial reporting[246](index=246&type=chunk) - The **material weakness** stems from deficiencies in **IT general controls** (user access, change-management) and related business process controls, identified after the acquisition of **Custom Truck LP**[247](index=247&type=chunk)[270](index=270&type=chunk) - Remediation efforts are ongoing, including the implementation of a **new ERP system** in Q2 2022 to address segregation of duties and enhance controls. The weakness is **not yet considered fully remediated**[278](index=278&type=chunk)[1](index=1&type=chunk) [PART II - OTHER INFORMATION](index=47&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and litigation, which management does not expect to have a **material adverse financial impact** - Management does not expect any pending lawsuits, investigations, or claims to have a **material adverse impact** on the business[3](index=3&type=chunk) - The IRS is auditing Custom Truck LP's 2015 federal excise tax withholdings and issued a **$2.4 million** assessment, which the company has appealed and does not believe will probably result in a loss[135](index=135&type=chunk) [Item 1A. Risk Factors](index=47&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 for the year ended December 31, 2022 - **No material changes** occurred to the indicated risk factors as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[280](index=280&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **218,687 shares** under its **$30.0 million stock repurchase program** during Q1 2023, with **$18.4 million** remaining available - On August 2, 2022, the Board authorized a stock repurchase program for up to **$30.0 million** of common stock with no expiration date[281](index=281&type=chunk) Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining under Program (in $000s) | | :--- | :--- | :--- | :--- | | Jan 2023 | 65,178 | $6.37 | $19,311 | | Feb 2023 | 0 | $0.00 | $19,311 | | Mar 2023 | 153,509 | $6.44 | $18,394 | | **Total** | **218,687** | **$6.42** | **$18,394** | [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed with the Form 10-Q, including a Stockholders' Agreement, CEO and CFO certifications, and XBRL data files - Exhibits filed include **CEO and CFO certifications** (Sections 302 and 906 of Sarbanes-Oxley Act) and **XBRL interactive data files**[283](index=283&type=chunk)

Financial Performance Highlights - Record quarterly revenue of $487 million, a 37% increase compared to pro forma Q4 2021[35] - Adjusted Gross Profit reached $169 million, a 35% increase compared to pro forma Q4 2021[35] - Adjusted EBITDA reached $124 million, a 30% increase compared to pro forma Q4 2021[35] - Full year 2022 revenue was $1.57 billion, a 6% increase compared to pro forma 2021[147] - Full year 2022 Adjusted Gross Profit was $555 million, an 18% increase compared to pro forma 2021[147] - Full year 2022 Adjusted EBITDA was $393 million, an 18% increase compared to pro forma 2021[147] Segment Performance - Equipment Rental Solutions (ERS) revenue increased 35% compared to Q3 2022[21] - Truck & Equipment Sales (TES) revenue increased 42% compared to Q3 2022[21] - Aftermarket Parts & Service (APS) revenue increased 8% compared to Q3 2022[21] Balance Sheet and Outlook - Net capital expenditures were $46 million in Q4 2022[24] - New sales backlog grew by $45 million, or 6%, in Q4 2022, reaching $754 million[22, 35] - The company expects consolidated revenue between $1.61 billion and $1.73 billion for FY2023, representing a 2% to 10% growth[85]

Custom Truck One Source, Inc. (NYSE:CTOS) Q4 2022 Earnings Conference Call March 14, 2023 5:00 PM ET Company Participants Brian Perman - VP, IR Fred Ross - CEO Ryan McMonagle - President and COO Chris Eperjesy - CFO Conference Call Participants Scott Schneeberger - Oppenheimer Michael Shlisky - D.A. Davidson Companies Kenneth Chung - Citigroup Noelle Dilts - Stifel Justin Hauke - Robert W. Baird Operator Ladies and gentlemen, thank you for standing by and welcome to the Custom Truck One Sources. Fourth Quar ...

Market Overview - The annual capital expenditure in the electric utility T&D end-market is approximately $65 billion, driven by the need for grid resiliency and renewable energy investments [28]. - Telecommunications infrastructure spending has exceeded approximately $80 billion annually, with a projected growth due to the deployment of 5G technology [33]. - The spend required by key telecom operators to deploy 5G technology is expected to grow at a 47.6% CAGR from 2022 to 2030, totaling approximately $198 billion [35]. - The total infrastructure capital expenditure spend annually exceeds $200 billion, indicating a positive outlook for the infrastructure end-market [40]. - The backlog of projects required to attain a "state of good repair" for public transit is estimated at $90 billion, projected to grow to $122 billion by 2032 [38]. - The municipal solid waste revenue is projected to grow at a CAGR of 3.3% from 2020 to 2027, driven by increasing waste generation per capita [41]. - The six largest public railroads in North America spend more than $10 billion annually in capital expenditures, with growth expected as freight demands increase [36]. Company Operations - Custom Truck operates one of the industry's largest specialty rental equipment fleets, comprising over 10,000 units with an average age of approximately 3.7 years [21]. - The rental fleet consists of over 10,000 units, with an average age of 3.7 years, achieving over 80% utilization on average over the last two years [51]. - The company serves more than 3,000 customers, with the top 15 customers representing approximately 25% of total revenue, and no single customer exceeding 4% of total revenue in 2022 [53]. - The company has identified additional attractive geographic markets for potential expansion, despite already operating more than 35 locations [52]. - The company maintains a diverse geographic footprint with over 100 third-party service locations to enhance customer service [52]. - The company has a diverse geographic footprint with over 35 equipment rental and service locations across the U.S. and Canada, focusing on a one-stop shop approach [151]. - The company has launched an e-commerce platform to sell proprietary Load King™ equipment parts and other specialty equipment parts [60]. - The company focuses on four primary end-markets: Electric Utility Transmission and Distribution, Telecom, Rail, and Infrastructure, with continued demand observed in these sectors [200]. Financial Performance - Total revenue for the year ended December 31, 2022, was $1,573,086, a 34.8% increase from $1,167,154 in 2021, driven by strong customer demand and the addition of Custom Truck LP's revenues [204]. - Rental revenue increased to $464,039, representing 29.5% of total revenue, up from $370,067 (31.7%) in 2021, reflecting higher utilization and pricing gains [204]. - Equipment sales rose to $982,341, accounting for 62.4% of total revenue, a 41.3% increase from $695,334 in 2021, aided by improved supply chain conditions [204]. - Gross profit for 2022 was $383,748, an 82.7% increase from $210,013 in 2021, resulting in a gross profit margin of 24.4% [204]. - Net income for the year was $38,905, a significant recovery from a net loss of $181,501 in 2021, marking a change of $220,406 [210]. - Adjusted EBITDA for 2022 was $392,978, a 41.5% increase from $277,784 in 2021, reflecting improved operational performance [216]. - The overall effective tax rate for 2022 was 16.7%, with a tax expense of $7.8 million recognized, compared to a negative rate of (2.5)% and $4.4 million tax expense in 2021 [207]. Debt and Financial Risks - As of December 31, 2022, the company's total indebtedness was $1,394.4 million, including $920.0 million in 2029 Secured Notes and $437.7 million under the Asset Based Lending Facility [117]. - The company faces significant risks related to its high level of indebtedness, which could limit its ability to obtain future financing and affect its operational flexibility [118]. - The company has variable rate debt of $437.7 million under the ABL Facility, exposing it to interest rate risk; a one-eighth percentage point increase in interest rates would increase interest expense by approximately $0.5 million per year [127]. - The company is subject to significant operating and financial restrictions under its debt agreements, which may limit its ability to capitalize on business opportunities [126]. - The company may need to adopt alternatives such as refinancing or selling assets if it cannot generate sufficient cash flows to meet its obligations [122]. Operational Challenges - The company faces risks related to supply chain disruptions, including semiconductor shortages, which could adversely affect revenue generation [104]. - Uncertainty in macroeconomic conditions, including rising inflation and supply chain disruptions, may adversely affect demand for the company's products and services [107]. - Regulatory changes in core end-markets could lead to reduced spending by customers on the company's products and services, impacting revenues [109]. - The company may encounter difficulties in integrating acquired businesses, which could lead to higher costs and delays in realizing anticipated benefits [110]. - Cybersecurity risks have increased, with the company experiencing ongoing cyberattacks that could adversely affect operating results and reputation [135]. - The company maintains insurance coverage for cybersecurity risks, but there is no guarantee that all costs or losses will be covered [137]. - The company may incur significant costs to comply with evolving climate-related regulations and standards, impacting financial condition and operations [145]. Employee and Corporate Governance - The company has a workforce that includes 8% military veteran employees, contributing valuable skills and attributes [75]. - The company emphasizes safety with a network of approximately 100 Safety Ambassadors to promote a safe workplace [80]. - The company is committed to lifelong learning, providing tuition assistance and training for employee development [77]. - The company offers competitive pay and benefits, including a 401(k) savings program with company matching [81]. - The company provided 20 paid internships and hired 11 full-time employees from a local behavior support organization in 2022 [76]. - The company has established reserves for legal claims and believes that existing legal matters will not materially affect its financial condition [85]. - The company does not expect any pending lawsuits or claims to have a material adverse impact on its financial condition [155]. Acquisitions and Stock Information - Custom Truck One Source, Inc. completed the acquisition of Custom Truck One Source, L.P. for a purchase price of $1.5 billion on April 1, 2021 [169]. - The company issued 148.6 million shares of common stock to Platinum at a price of $5.00 per share as part of the acquisition financing [169]. - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future [162]. - A stock repurchase program was authorized for up to $30 million of the company's common stock, with no expiration date [163]. - During Q4 2022, the company purchased 1,443,797 shares at an average price of $6.31 per share [164]. - The company has approximately 68 holders of record of its common stock and 14 holders of record of warrants as of March 8, 2023 [159]. - The company operates a total of 68 properties, with a mix of owned and leased locations across the United States and Canada [153].

Custom Truck One Source, Inc. (NYSE:CTOS) Q3 2022 Results Conference Call November 8, 2022 5:00 PM ET Company Participants Brian Perman - VP, IR Fred Ross - CEO Ryan McMonagle - President and COO Chris Eperjesy - CFO Conference Call Participants Nicole DeBlase - Deutsche Bank Justin Hauke - Baird Stefanos Crist - CJS Securities Noelle Dilts - Stifel Scott Schneeberger - Oppenheimer Operator Greetings. And welcome to the Custom Truck One Source Inc. Third Quarter 2022 Earnings Conference Call. [Operator Inst ...

Table of Contents _______________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38186 _______________________________ CUSTOM TRUCK ONE ...

1 CONFIDENTIAL DRAFT Custom Truck One Source 2nd Quarter 2022 Investor Presentation August 9, 2022 2 2 Forward-Looking Statements This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States ("GAAP"), including, without limitation, EBITDA, Adjusted EBITDA, and Pro Forma Adjusted EBITDA (collectively, the "non-GAAP financial measures"). These non-GAAP financial measures are not measures of financ ...

Custom Truck One Source, Inc. (NYSE:CTOS) Q2 2022 Earnings Conference Call August 9, 2022 5:00 PM ET Company Participants Brian Perman - Vice President-Investor Relations Fred Ross - Chief Executive Officer Ryan McMonagle - President and Chief Operating Officer Todd Barrett - Interim Chief Financial Officer Conference Call Participants Scott Schneeberger - Oppenheimer Nicole DeBlase - Deutsche Bank Stefanos Crist - CJS Securities Noelle Dilts - Stifel Justin Hauke - Robert W. Baird Operator Ladies and gentl ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Custom Truck One Source, Inc.'s unaudited condensed consolidated financial statements and related notes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.81 billion** by June 30, 2022, with liabilities rising to **$1.94 billion** and equity slightly increasing Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$2,814,415** | **$2,683,766** | | Total Current Assets | $782,823 | $656,704 | | Inventory | $536,087 | $410,542 | | Goodwill | $705,973 | $695,865 | | **Total Liabilities** | **$1,944,290** | **$1,825,256** | | Total Current Liabilities | $531,259 | $440,583 | | Long-term debt, net | $1,349,964 | $1,308,265 | | **Total Stockholders' Equity** | **$870,125** | **$858,510** | [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)) The company achieved **$13.6 million** net income in Q2 2022, a significant improvement from a **$129.4 million** net loss in Q2 2021 Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$362,106** | **$375,111** | **$728,582** | **$453,410** | | Gross Profit | $82,758 | $46,690 | $167,251 | $66,909 | | Operating Income (Loss) | $18,745 | $(43,432) | $28,553 | $(46,486) | | **Net Income (Loss)** | **$13,623** | **$(129,356)** | **$10,350** | **$(157,263)** | | Diluted EPS | $0.05 | $(0.53) | $0.04 | $(1.07) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$21.4 million** for the six months ended June 30, 2022, primarily due to increased inventories Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash flow from operating activities | $(21,364) | $57,225 | | Net cash flow from investing activities | $(92,689) | $(1,360,227) | | Net cash flow from financing activities | $106,654 | $1,326,800 | | **Net Change in Cash** | **$(7,378)** | **$23,798** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's three segments, acquisition impacts, revenue disaggregation, debt structure, and an IRS audit - The company operates in three reportable segments: **Equipment Rental Solutions (ERS)**, **Truck and Equipment Sales (TES)**, and **Aftermarket Parts and Services (APS)**[23](index=23&type=chunk)[100](index=100&type=chunk) - On April 1, 2021, the company acquired **Custom Truck One Source, L.P.** for **$1.53 billion**, and on January 14, 2022, acquired **HiRail** for **$51.0 million**[34](index=34&type=chunk)[38](index=38&type=chunk)[50](index=50&type=chunk) Segment Gross Profit (in thousands) | Segment | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | ERS | $44,656 | $23,391 | $97,583 | $39,444 | | TES | $27,129 | $20,310 | $50,914 | $20,887 | | APS | $10,973 | $2,989 | $18,754 | $6,578 | | **Total** | **$82,758** | **$46,690** | **$167,251** | **$66,909** | - The Board of Directors authorized a stock repurchase program of up to **$30 million**, commencing in Q3 2022[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2022 revenue decline due to supply chain issues, improved gross profit, and a return to net profitability, highlighting strong demand - The decrease in total revenue for Q2 2022 compared to Q2 2021 was primarily due to a decline in equipment sales as a result of supply chain challenges, despite strong customer demand[152](index=152&type=chunk) - Gross profit for Q2 2022 increased by **77.2%** year-over-year to **$82.8 million**, driven by higher rental revenues and improved margins in the TES and APS segments[150](index=150&type=chunk)[170](index=170&type=chunk)[174](index=174&type=chunk) Key Performance Measures | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Ending OEC (in thousands) | $1,399,500 | $1,338,700 | 4.5% | | Fleet utilization | 82.8% | 80.9% | 2.3% | | OEC on rent yield | 39.2% | 37.9% | 3.4% | | Sales order backlog (in thousands) | $663,619 | $222,661 | 198.0% | Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Net income (loss) | $13,623 | $(129,356) | | Adjustments | $71,760 | $199,597 | | **Adjusted EBITDA** | **$85,383** | **$70,241** | [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include interest rate exposure on variable-rate debt and unhedged foreign currency fluctuations - The company's principal market risk is interest rate exposure on its **$435.0 million** of variable-rate debt under the ABL Facility as of June 30, 2022[225](index=225&type=chunk) - A one-eighth percentage point (**12.5 bps**) change in applicable interest rates would change annual interest expense by approximately **$0.5 million**[225](index=225&type=chunk) - The company has unhedged foreign currency exposure from its Canadian operations, which generated **$19.4 million** in revenue during the first half of 2022[228](index=228&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of June 30, 2022, due to material weaknesses in IT general controls, with remediation underway - The CEO and Interim CFO concluded that disclosure controls and procedures were not effective as of June 30, 2022[230](index=230&type=chunk) - Material weaknesses were identified in IT general controls (**ITGCs**) related to user access, segregation of duties, and program change-management for key financial systems following the Custom Truck LP acquisition[231](index=231&type=chunk)[232](index=232&type=chunk) - A remediation plan is in process, highlighted by the implementation of a new ERP system in Q2 2022 to address segregation of duties and improve user access controls[233](index=233&type=chunk) [PART II - OTHER INFORMATION](index=51&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal claims and lawsuits, none expected to materially impact its financial condition or operations - No pending litigations, disputes, or claims against the Company are expected to have a material adverse effect on its financial condition, cash flows, or operations[237](index=237&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2021 Annual Report, except for a new risk concerning macroeconomic uncertainty - No material changes to risk factors from the 2021 Annual Report, except for a newly highlighted risk related to **macroeconomic uncertainty**[238](index=238&type=chunk) - The new risk factor warns that negative economic conditions, credit market tightening, and commodity volatility could reduce demand for products and services and limit access to capital[239](index=239&type=chunk)[240](index=240&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[242](index=242&type=chunk) [Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None[242](index=242&type=chunk) [Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[242](index=242&type=chunk) [Other Information](index=52&type=section&id=Item%205.%20Other%20Information) No other material information is reported for the period - None[242](index=242&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including employment agreements, compensatory plans, and required certifications - Exhibits filed include employment agreements, compensatory plans, and required CEO/CFO certifications[244](index=244&type=chunk)