Custom Truck One Source(CTOS) - 2025 Q3 - Quarterly Results

Financial Performance - Total revenue for Q3 2025 was $482.1 million, an increase of $34.8 million, or 7.8%, compared to Q3 2024[8] - Adjusted EBITDA for Q3 2025 was $96.0 million, a 19.6% increase compared to Q3 2024[19] - Net loss for Q3 2025 was $5.8 million, a decrease of $11.7 million, or 66.9%, compared to Q3 2024[8] - Operating income for Q3 2025 was $32,629,000, an increase from $23,037,000 in Q3 2024[30] - Net income for Q3 2025 was a loss of $5,756,000, compared to a loss of $17,416,000 in Q3 2024[30] - Adjusted Gross Profit for the three months ended September 30, 2025, was $155,528,000, up from $137,785,000 in 2024, reflecting a growth of 12.9%[44] - Gross Profit for the three months ended September 30, 2025, was $100,753,000, compared to $91,829,000 in 2024, indicating a 9.9% increase[44] Revenue Segments - Rental revenue in the Equipment Rental Solutions (ERS) segment increased by 17.7% in Q3 2025 compared to Q3 2024[16] - Revenue in the Truck and Equipment Sales (TES) segment increased by 6.0% in Q3 2025 compared to Q3 2024[17] - APS segment revenue in Q3 2025 increased by 3.0% compared to Q3 2024 due to higher rental revenue[18] - Rental revenue increased to $127,142,000 for the three months ended September 30, 2025, up from $108,324,000 in 2024, representing a growth of 17.4%[44] - Equipment sales reached $320,583,000 for the three months ended September 30, 2025, compared to $305,476,000 in 2024, marking a 4.0% increase[44] Debt and Leverage - Total debt outstanding as of September 30, 2025, was $1,666.4 million, with a net leverage ratio of 4.53x[20] - The net leverage ratio is a key performance measure, calculated as net debt divided by Adjusted EBITDA for the last twelve months, providing insight into the company's debt levels[39] - Long-term debt increased to $1,628,866 from $1,519,882, an increase of 7.2%[31] - The Net Leverage Ratio decreased to 4.53 as of September 30, 2025, down from 4.66 as of June 30, 2025[48] Guidance and Future Outlook - The company reaffirms its full-year revenue guidance for 2025, expecting consolidated revenue between $1,970 million and $2,060 million, with Adjusted EBITDA between $370 million and $390 million[22] - The ERS segment revenue guidance is set between $660 million and $690 million, while the TES segment is expected to generate revenue between $1,160 million and $1,210 million[22] - The company anticipates strong demand in its rental business to continue into 2026 and beyond, driven by core utility markets[21] - The company expects to achieve a meaningful reduction in its net leverage ratio by the end of the fiscal year, despite a lower levered free cash flow target than previously set at $50 million[21] Asset Management - Total assets increased to $3,540,707, up from $3,501,967 as of December 31, 2024, representing a growth of 1.1%[31] - Total current liabilities decreased to $989,493 from $1,000,701, a reduction of 1.1%[31] - Accounts receivable decreased to $182,217 from $215,873, a decline of 15.6%[31] - Inventory levels slightly decreased to $1,035,642 from $1,049,304, a reduction of 1.3%[31] - Inventory reduction is expected to be between $125 million and $150 million compared to the end of last year, reflecting a strategic unwinding of inventory investments[21] Cash Flow - The company reported net cash flow from operating activities of $262,804 for the nine months ended September 30, 2025, compared to $39,934 in 2024, an increase of 558.5%[32] - Cash and cash equivalents at the end of the period increased to $13,058 from $3,805 at the beginning of the period, marking a significant increase of 243.5%[32] Fleet and Utilization - Average fleet utilization increased to 79.3% in Q3 2025 compared to 73.2% in Q3 2024[12] - The company plans to invest an additional net $50 million in its rental fleet this year, leading to at least high-single digit fleet growth based on net OEC[21] - Average OEC on rent increased by $179.8 million, or 16.6%, compared to Q3 2024[8] - Average OEC on rent increased by $180 million, or 17%, in Q3 compared to the same period last year, indicating strong demand in the rental market[21] Orders and Market Activity - Signed orders in Q3 2025 were up 30% year-over-year, with over 40% growth among local and regional accounts[3]