Custom Truck One Source(CTOS)2025-03-04 22:16Company Overview - Custom Truck One Source operates one of the largest specialty rental equipment fleets in North America, with over 10,000 units and an average unit age of approximately 3.2 years[21]. - The company serves more than 8,000 customers, with the top 15 customers representing approximately 17% of total revenue, and no single customer exceeding 3% of total revenue in 2024[61]. - The company operates more than 40 locations across North America, with over 2,600 third-party service partners, enhancing its ability to provide local service and support[59]. - The company has a strong focus on enhancing its aftermarket parts and services, leveraging its service technicians to support both rental and customer-owned equipment[66]. - The company operates from its headquarters in Kansas City, Missouri, and maintains over 39 equipment rental and service locations across the U.S. and Canada[166]. Financial Performance - Total revenue for the year ended December 31, 2024, was 1,865.1 million in 2023[206]. - Rental revenue decreased by 7.5% to 478.9 million in 2023, primarily due to lower rental asset sales and supply chain constraints[206]. - Equipment sales revenue was 1,253.5 million in 2023, reflecting a decrease in sales volume[206]. - Gross profit decreased by 14.1% to 454.3 million in 2023[206]. - Operating income fell to 170.9 million in 2023, a decrease of 26.1%[206]. - Net loss for the year was 50.7 million in 2023, representing a decline of 1.2 trillion in spending, positively impacting Custom Truck's end-markets, with less than 50% of the funds allocated as of November 2024[27]. - Capital expenditures in the electric utility T&D end-market are estimated to be approximately 95 billion in 2023, expected to grow due to the BEAD program and the expansion of wireless 5G technology[38]. - Total infrastructure capex spend in the U.S. in 2024 is estimated to be just over 350 billion by 2028[45]. - The municipal solid waste revenue in the U.S. is projected to grow at a CAGR of 4.7% from 2024 to 2030, driven by increasing waste generation per capita[46]. Operational Challenges - The company has experienced near-term pressure in demand in the utility market due to a lack of customer access to financing in a tight credit environment[120]. - Disruptions in supply chains, including semiconductor shortages and transportation delays, could significantly impact the company's ability to meet customer demand and generate revenue[116]. - The company faces risks related to supply chain disruptions, which could adversely affect its ability to manufacture and market products[101]. - Approximately 2% of the U.S. hourly workers are represented by a labor union, which poses risks of work stoppages and could impact production stability[107]. Strategic Initiatives - The company has identified several new product categories for expansion, focusing on electric utility T&D, telecom, infrastructure, rail, forestry, and waste management, which are increasing capital expenditures[65]. - The company plans to invest in its rental fleet to meet growing demand, particularly in the electric utility T&D and telecom industries[64]. - The company has launched an e-commerce platform to sell proprietary Load King™ equipment parts and other specialty equipment parts[66]. - The company maintains a diverse geographic footprint and has successfully opened five locations in new markets without relying solely on acquisitions[68]. Employee and Community Engagement - As of December 31, 2024, the company had approximately 2,619 employees across more than 40 locations in North America, with about 2% of U.S. employees covered by a collective bargaining agreement[78]. - In 2024, the company provided 26 paid internship opportunities to students from vocational high schools and university programs, aiming to attract early-career talent[86]. - The company has a network of approximately 100 Safety Ambassadors to promote workplace safety and engage employees in safety awareness[91]. - The company offers a comprehensive benefits program, including medical, vision, dental, life, and disability insurance, along with a 401(k) savings program with company matching[92]. - The company is committed to community giving, partnering with nonprofit organizations to support local communities through financial donations, volunteer time, and in-kind support[94]. Risk Factors - The company faces significant operating and financial restrictions that may limit its ability to capitalize on business opportunities[138]. - Compliance with evolving cybersecurity regulations may incur substantial expenses and require changes in business practices[145]. - The company is subject to complex environmental and safety regulations that could adversely affect operational costs and feasibility[147]. - Climate change may disrupt operations and require additional expenditures, impacting financial condition and results[149]. - Increased scrutiny on ESG initiatives could lead to higher compliance costs and affect the company's reputation[152]. Debt and Financial Obligations - As of December 31, 2024, the company's total indebtedness was 920.0 million in 2029 Secured Notes and 1,384.2 million in variable rate debt under the ABL Facility and floor plan financing arrangements as of December 31, 2024[139]. - A one-eighth percentage point increase in interest rates would increase interest expense by approximately $1.7 million per year[139]. - The ABL Facility has a borrowing base that is subject to fluctuations based on the valuation of parts inventory, fleet inventory, accounts receivable, and unrestricted cash[137]. ESG and Cybersecurity - The company published its inaugural ESG report in 2023 and may engage in additional voluntary ESG initiatives, which could incur significant costs[153]. - The company has invested in cybersecurity safeguards and maintains a cybersecurity risk management program to protect its IT systems[158]. - The company has not identified any known cybersecurity threats that have materially affected its operations or financial condition, but ongoing risks remain[160]. - The company has committed to certain ESG initiatives, but achieving these commitments may be hindered by factors beyond its control, potentially harming its reputation and investor relations[154]. - Unfavorable ESG ratings could negatively impact investor sentiment and the company's share price, as well as its access to capital[155].