Custom Truck One Source(US:CTOS)2023-08-07 16:00Business Segments - The company operates in three segments: Equipment Rental Solutions, Truck and Equipment Sales, and Aftermarket Parts and Services[98]. - Revenue is generated through rentals, sales, and services related to heavy-duty trucks and cranes, with rental revenue primarily from rental agreements and freight charges[83]. - The company’s business model includes rental purchase options, allowing customers to buy equipment at a predetermined price after rental[99]. Fleet and Equipment - As of June 30, 2023, the rental fleet consists of over 10,200 units, providing a diverse range of specialty equipment[99]. - The company emphasizes fleet utilization as a key performance indicator, calculated as the total rental days divided by total available days, expressed as a percentage[95]. Financial Performance - Total revenue for the three months ended June 30, 2023, increased by 26.2% to $456.83 million compared to $362.11 million in the same period of 2022[106]. - Equipment sales rose by 38.3% to $302.12 million for the three months ended June 30, 2023, up from $218.51 million in the prior year[106]. - Net income for the three months ended June 30, 2023, decreased by 14.8% to $11.61 million compared to $13.62 million in the same period of 2022[112]. - Operating income for the six months ended June 30, 2023, increased by 178.3% to $79.46 million from $28.55 million in the same period of 2022[106]. - Gross profit for the six months ended June 30, 2023, increased by 31.7% to $220.28 million compared to $167.25 million in the same period of 2022[106]. Backlog and Orders - Sales order backlog consists of purchase orders for customized and stock equipment, but should not be considered an accurate measure of future net sales[97]. - The sales order backlog increased by 30.2% to $863.76 million as of June 30, 2023, compared to $663.62 million in the same period of 2022[114]. Revenue by Segment - Total revenue for the Equipment Rental Solutions (ERS) segment increased by 16.0% to $168,526 in Q2 2023, compared to $145,309 in Q2 2022[126]. - Equipment sales in the Truck and Equipment Sales (TES) segment rose by 38.7% to $251,423 in Q2 2023, compared to $181,306 in Q2 2022[130]. - Total revenue for the Aftermarket Parts and Services (APS) segment grew by 3.9% to $36,881 in Q2 2023, compared to $35,491 in Q2 2022[133]. Profitability Metrics - Gross profit for the ERS segment increased by 22.2% to $54,578 in Q2 2023, compared to $44,656 in Q2 2022[126]. - Gross profit for the TES segment increased by 69.4% to $45,959 in Q2 2023, compared to $27,129 in Q2 2022[130]. - The company reported a 9.0% increase in rental revenue for the ERS segment, reaching $117,832 in Q2 2023, compared to $108,109 in Q2 2022[126]. Tax and Financial Risks - The company’s effective tax rate differs from the federal statutory tax rate due to valuation allowances on net operating loss carryforwards[92]. - The effective tax rate for the three months ended June 30, 2023, was 10.7%, influenced by discrete items including derivative mark-to-market adjustments[111]. - The company faces risks including labor cost increases, supply chain disruptions, and potential impairment charges that may affect future performance[80]. - The company’s financial performance is impacted by significant indebtedness, which may limit cash availability and increase default risk[80]. Cash Flow and Debt - As of June 30, 2023, the company had $42.2 million in cash and cash equivalents, an increase of $27.9 million from $14.4 million as of December 31, 2022[135]. - The company reported net cash used by operating activities of $1.1 million for the six months ended June 30, 2023, compared to $21.4 million in the same period of 2022[148]. - Net cash used in investing activities was $102.9 million for the six months ended June 30, 2023, an increase from $92.7 million in the same period of 2022[149]. - Net cash provided by financing activities was $131.6 million for the six months ended June 30, 2023, compared to $106.7 million in 2022[150]. - The company had $492.4 million of outstanding borrowings under its ABL Facility as of June 30, 2023, up from $437.7 million as of December 31, 2022[135]. - Borrowings under the ABL Facility bear interest at a floating rate, with applicable margins ranging from 0.50% to 2.00% depending on the type of loan[136]. - The company issued $920.0 million in aggregate principal amount of 5.50% senior secured second lien notes due 2029[137]. - As of June 30, 2023, the company had $366.1 million in borrowings under the PNC Equipment Finance revolving credit facility, an increase from $293.5 million as of December 31, 2022[144]. - The company has an inventory financing agreement with PACCAR Financial Corp, with borrowings of $46.5 million as of June 30, 2023, compared to $31.2 million as of December 31, 2022[143]. - Each one-eighth percentage point change in interest rates would correspondingly change the interest expense on the ABL Facility by approximately $0.6 million annually[152].