Custom Truck One Source(CTOS) - 2025 Q4 - Annual Results

Revenue Performance - Record fourth quarter revenue of $528.2 million, an increase of $7.4 million or 1.4% compared to Q4 2024[5] - Full-year revenue reached $1.944 billion, an increase of 7.9% compared to 2024[5] - Total revenue for the twelve months ended December 31, 2025, was $1,943,957, an increase of 7.8% compared to $1,802,280 for the same period in 2024[33] - Total revenue for Q4 2025 was $528.184 million, slightly up from $520.740 million in Q4 2024, indicating a 0.9% growth[47] - Rental revenue increased to $506,198 for the twelve months ended December 31, 2025, up 14.3% from $442,953 in 2024[33] - Rental revenue increased to $141.981 million in Q4 2025 from $125.461 million in Q4 2024, marking a 13.3% increase[47] - Rental revenue for Q4 2025 reached $137,152,000, up from $120,863,000 in Q4 2024, representing a growth of 13.4%[48] - Equipment sales for Q4 2025 were $353.925 million, slightly down from $359.325 million in Q4 2024, a decrease of 1.1%[47] - Equipment sales for Q4 2025 were $69,968,000, compared to $51,612,000 in Q4 2024, reflecting a growth of 35.5%[48] Profitability Metrics - Adjusted EBITDA for Q4 was $120.7 million, an increase of $18.7 million or 18.4% compared to Q4 2024[5] - Adjusted EBITDA for Q4 2025 was $120.741 million, compared to $102.020 million in Q4 2024, representing a 18.3% increase year-over-year[43] - Gross profit for the twelve months ended December 31, 2025, was $411,892, representing a gross margin of 21.2% compared to 21.7% in 2024[33] - Adjusted Gross Profit for Q4 2025 was $179.823 million, compared to $167.633 million in Q4 2024, reflecting a 7.3% increase[47] - Gross profit for Q4 2025 was $68,770,000, compared to $56,551,000 in Q4 2024, showing a growth of 21.5%[48] Financial Position - Total OEC (Original Equipment Cost) at year-end was $1.64 billion, the highest in company history[3] - As of December 31, 2025, total debt outstanding was $1,660.8 million, with a net leverage ratio of 4.3 times[19] - Net debt as of December 31, 2025, was $1,654,486,000, an increase from $1,543,845,000 as of December 31, 2024[50] - The net leverage ratio improved to 4.31 as of December 31, 2025, down from 4.55 in the previous year[51] - Cash and cash equivalents increased to $6,273 as of December 31, 2025, from $3,805 at the end of 2024[34] - Total assets decreased to $3,441,454 as of December 31, 2025, down from $3,501,967 in 2024[34] - Total current liabilities decreased to $873,330 as of December 31, 2025, compared to $1,000,701 in 2024[34] Future Projections - For 2026, consolidated revenue is projected to be between $2,005 million and $2,120 million, with Adjusted EBITDA guidance of $410 million to $435 million[23] - Revenue from Equipment Rental Solutions (ERS) is expected to be between $725 million and $760 million, while Truck and Equipment Sales (TES) is projected at $1,125 million to $1,200 million[23] - Net rental fleet investment is anticipated to be approximately $150 million to $170 million, a significant reduction from over $250 million in 2025[27] - Levered free cash flow is expected to exceed $50 million, with a target net leverage ratio below four times by the end of fiscal 2026[27] Segment Performance - The Equipment Rental Solutions (ERS) segment saw a 13.5% increase in rental revenue in Q4 2025 compared to Q4 2024[14] - The Truck and Equipment Sales (TES) segment experienced a 7.7% revenue decrease in Q4 2025 compared to Q4 2024 due to earlier customer capital expenditures[15] - The Aftermarket Parts and Services (APS) segment revenue decreased by $3.4 million or 8.5% in Q4 2025, primarily due to lower demand[16] Operational Metrics - Average utilization of the rental fleet was 83.6%, the highest level in nearly three years[5] - Sales order backlog at the end of the year was $335.3 million, up $55.5 million sequentially[5] - Sales order backlog increased by over $55 million (nearly 20%) in Q4 2025, remaining within the targeted range of four to six months LTM TES new sales[27] - The average fleet age ended 2025 at just over 2.9 years, allowing for reduced rental fleet investment while pursuing growth[27] - Demand for equipment in the transmission and distribution utility market remains at record levels, with expectations for further growth in the vocational rental market[27] Accounting and Reporting Changes - A new segment reporting structure will be implemented in 2026, consisting of Specialty Equipment Rentals (SER) and Specialty Truck Equipment and Manufacturing (STEM) to better reflect business management and resource allocation[20][21] Loss and Cash Flow - Full-year net loss was $31.1 million compared to a net loss of $28.7 million in 2024[5] - Net loss for the twelve months ended December 31, 2025, was $(31,052), compared to a net loss of $(28,655) in 2024[35] - Net cash flow from operating activities for the twelve months ended December 31, 2025, was $310,112, significantly higher than $121,985 in 2024[35] - The company reported depreciation and amortization of $263,880 for the twelve months ended December 31, 2025, compared to $235,839 in 2024[35] - The company recognized a gain of $23.5 million from a sale leaseback transaction involving 8 properties with a net book value of $29.0 million[44]