Custom Truck One Source(US:CTOS)2025-04-30 20:17PART I FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Custom Truck One Source, Inc. for the quarterly period ended March 31, 2025 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For Q1 2025, the company reported $422.2 million in total revenues, resulting in a $17.8 million net loss and $(0.08) basic loss per share Condensed Consolidated Statements of Operations (Q1 2025 vs Q1 2024) | (in $000s, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $422,232 | $411,307 | | Gross Profit | $85,536 | $90,709 | | Operating Income | $12,405 | $18,370 | | Income (Loss) Before Income Taxes | $(25,492) | $(16,283) | | Net Income (Loss) | $(17,791) | $(14,335) | | Basic EPS | $(0.08) | $(0.06) | | Diluted EPS | $(0.08) | $(0.06) | Unaudited Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $3.54 billion, total liabilities $2.73 billion, and stockholders' equity $813.4 million Condensed Consolidated Balance Sheet Highlights | (in $000s) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,542,908 | $3,501,967 | | Total current assets | $1,320,373 | $1,301,452 | | Rental equipment, net | $1,033,813 | $1,001,651 | | Total Liabilities | $2,729,489 | $2,640,658 | | Total current liabilities | $1,024,251 | $1,000,701 | | Long-term debt, net | $1,593,176 | $1,519,882 | | Total Stockholders' Equity | $813,419 | $861,309 | Unaudited Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly improved to $55.6 million in Q1 2025, while investing activities used $71.3 million and financing activities provided $17.2 million Condensed Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | (in $000s) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash flow from operating activities | $55,635 | $(14,375) | | Net cash flow for investing activities | $(71,306) | $(33,411) | | Net cash flow from financing activities | $17,196 | $45,495 | | Net Change in Cash and Cash Equivalents | $1,575 | $(2,319) | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed information on business segments, revenue recognition, inventory, financing, debt, equity transactions, and segment performance data - The company operates in three reporting segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS)21 Revenue by Geography (Q1 2025 vs Q1 2024) | (in $000s) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | United States | $413,552 | $397,697 | | Canada | $8,680 | $13,610 | | Total Revenue | $422,232 | $411,307 | Segment Gross Profit (Q1 2025 vs Q1 2024) | (in $000s) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | ERS | $43,629 | $39,433 | | TES | $35,010 | $43,160 | | APS | $6,897 | $8,116 | | Total Gross Profit | $85,536 | $90,709 | - On January 30, 2025, the Company repurchased 8,143,635 shares of its common stock from affiliates of ECP for an aggregate price of $32.6 million54 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, highlighting a 2.7% revenue increase to $422.2 million despite a 5.7% gross profit decrease and a larger net loss Results of Operations Total revenue increased 2.7% to $422.2 million in Q1 2025, but gross profit declined 5.7%, leading to a widened net loss of $17.8 million Consolidated Results of Operations (Q1 2025 vs Q1 2024) | (in $000s) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $422,232 | $411,307 | $10,925 | 2.7% | | Gross profit | $85,536 | $90,709 | $(5,173) | (5.7)% | | Operating income | $12,405 | $18,370 | $(5,965) | (32.5)% | | Net income (loss) | $(17,791) | $(14,335) | $(3,456) | 24.1% | - The Equipment Rental Solutions (ERS) segment saw a 13.5% increase in total revenue, driven by a 9.4% rise in rental revenue and a 26.4% increase in equipment sales from the rental fleet107 - The Truck and Equipment Sales (TES) segment experienced a 3.1% decline in equipment sales and an 18.9% decrease in gross profit to $35.0 million, attributed to pricing pressures and equipment mix110111 - The Aftermarket Parts and Services (APS) segment reported flat revenue year-over-year, but gross profit decreased by 15.0% to $6.9 million due to higher material costs112113 Operating Metrics Key operating metrics show mixed results, with ending OEC growing 6.6% and fleet utilization improving, but OEC on rent yield and sales order backlog declining Key Operating Metrics (Q1 2025 vs Q1 2024) | (in $000s except percentages) | March 31, 2025 | March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Ending OEC | $1,548,210 | $1,452,856 | 6.6% | | Average OEC on rent | $1,202,285 | $1,065,695 | 12.8% | | Fleet utilization | 77.7% | 73.3% | 6.0% | | OEC on rent yield | 38.5% | 40.5% | (4.9)% | | Sales order backlog | $420,149 | $537,292 | (21.8)% | Liquidity and Capital Resources The company maintains $5.4 million in cash and $289.9 million ABL facility availability, with Net Leverage Ratio increasing to 4.80x and improved operating cash flow - Principal sources of liquidity are cash from operations and borrowings under the ABL Facility, with $5.4 million in cash and $289.9 million availability as of March 31, 2025114 Adjusted EBITDA and Net Leverage Ratio | (in $000s) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Debt | $1,612,624 | $1,543,845 | | LTM Adjusted EBITDA | $335,707 | $339,657 | | Net Leverage Ratio | 4.80x | 4.55x | - Net cash from operating activities was $55.6 million for Q1 2025, a significant improvement from a use of $14.4 million in Q1 2024, driven by lower levels of inventory production128 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from interest rate fluctuations on variable-rate debt and foreign currency exchange rates, without using derivative instruments for hedging - The company has $1,440.6 million in variable-rate debt as of March 31, 2025, where a 0.125% change in interest rates would impact annual interest expense by approximately $1.8 million131 - The company generated $8.7 million in revenues denominated in Canadian dollars in Q1 2025, where a 100-basis point change in the CAD/USD exchange rate would change annual revenues by approximately $0.3 million133 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025134 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls135 PART II OTHER INFORMATION Legal Proceedings The company is involved in routine legal proceedings, which management does not expect to materially impact financial condition or results of operations - Management believes that no pending litigation, disputes, or claims against the Company would have a material adverse effect on its financial condition, cash flows, or results of operations if decided adversely137 Risk Factors No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes occurred to the risk factors as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024138 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 8,143,635 shares for $32.6 million in Q1 2025, with $1.9 million remaining available under the stock repurchase program - On January 30, 2025, the Company purchased 8,143,635 shares of its common stock from affiliates of Energy Capital Partners at $4.00 per share, for an aggregate price of $32.6 million142 - As of March 31, 2025, approximately $1.9 million was available for future repurchases under the company's stock repurchase program140 Other Information No Rule 10b5-1 trading arrangements were adopted or terminated, and cash retention award agreements were entered into with five key executives - On April 28, 2025, the Company entered into cash retention award agreements with five executives, including the CEO and CFO, with bonuses totaling over $1.0 million, contingent on continued employment and performance milestones146 Exhibits This section lists the exhibits filed with the 10-Q report, including the retention bonus letter agreements for key executives and the required CEO and CFO certifications