Custom Truck One Source(US:CTOS)2025-10-27 20:12Business Segments - The company operates in three segments: Equipment Rental Solutions, Truck and Equipment Sales, and Aftermarket Parts and Services[97]. - Revenue is generated through rentals, sales, and services of new and used heavy-duty trucks and cranes, with rental revenue primarily from rental agreements and freight charges[82]. Fleet and Utilization - As of September 30, 2025, the rental fleet consists of more than 10,350 units, providing a diverse range of specialty equipment[98]. - The company emphasizes the importance of fleet utilization, defined as the percentage of time the rental fleet is on rent, as a key performance indicator[94]. - Fleet utilization improved to 79.3% for the three months ended September 30, 2025, up from 73.2% in 2024[109]. Financial Performance - Total revenue for the three months ended September 30, 2025, increased by 7.8% to $482,058,000 compared to $447,220,000 in 2024[101]. - Rental revenue for the three months ended September 30, 2025, rose by 17.4% to $127,142,000, up from $108,324,000 in 2024[101]. - Equipment sales for the three months ended September 30, 2025, increased by 4.9% to $320,583,000 compared to $305,476,000 in 2024[101]. - Gross profit for the three months ended September 30, 2025, was $100,753,000, reflecting a 9.7% increase from $91,829,000 in 2024[101]. - Net loss for the three months ended September 30, 2025, decreased to $5,756,000 from a loss of $17,416,000 in 2024, representing a 66.9% improvement[101]. - Adjusted EBITDA for the three months ended September 30, 2025, was $95,963,000, compared to $80,205,000 in 2024, reflecting a significant increase[128]. - Adjusted EBITDA for the twelve months ended September 30, 2025, was $364.8 million, compared to $339.7 million for the prior fiscal year[133]. Equipment Costs - Ending OEC (Original Equipment Cost) for the three months ended September 30, 2025, was $1,621,725,000, an 8.6% increase from $1,493,799,000 in 2024[109]. - Average OEC on rent for the three months ended September 30, 2025, increased by 16.6% to $1,262,477,000 compared to $1,082,679,000 in 2024[109]. - The cost of equipment sales for the three months ended September 30, 2025, was $234,038,000, a 7.4% increase from $218,012,000 in 2024[114]. Sales and Backlog - The sales order backlog consists of purchase orders for customized and stock equipment, although it may not accurately predict future net sales[96]. - Total revenue for the Equipment Rental Solutions segment for the three months ended September 30, 2025, increased by 12.1% to $169,105,000 compared to $150,891,000 in 2024[110]. - Equipment sales for the three months ended September 30, 2025, increased to $275,423,000, a 6.0% rise from $259,902,000 in 2024[113]. - Total revenue for the Aftermarket Parts and Services segment for the three months ended September 30, 2025, was $37,530,000, up 3.0% from $36,427,000 in 2024[116]. - Gross profit for the Aftermarket Parts and Services segment increased by 22.9% to $9,095,000 for the three months ended September 30, 2025, compared to $7,402,000 in 2024[116]. Cash Flow and Debt - As of September 30, 2025, the company had $13.1 million in cash and cash equivalents, up from $3.8 million as of December 31, 2024[120]. - Outstanding borrowings under the ABL Facility increased to $708.5 million as of September 30, 2025, from $582.9 million as of December 31, 2024[120]. - The net debt as of September 30, 2025, was $1,653.3 million, with a net leverage ratio of 4.53[133]. - The company's Consolidated Total Debt Ratio was not greater than 5.00 to 1.00 as of September 30, 2025, allowing for no restrictions on distributions[122]. Risks and Uncertainties - The company faces risks including labor cost increases, supply chain disruptions, and competition in the equipment dealership and rental industries[79]. - Future performance is subject to various uncertainties, including macroeconomic conditions and government spending impacts[79]. - Each one-eighth percentage point change in interest rates would affect interest expense by approximately $1.8 million annually, given the $1,442.1 million of variable rate debt outstanding[138]. Sustainability and Taxation - The company is committed to sustainability and is subject to evolving expectations for environmental, social, and governance initiatives[79]. - The company expects annual cash taxes to remain consistent with previous years despite fluctuations in income tax expense[106].