Financial Data and Key Metrics Changes - Custom Truck One Source reported $482 million in revenue for Q3 2025, an 8% increase year-over-year, with adjusted gross profit of $156 million and adjusted EBITDA of $96 million, reflecting increases of 13% and 20% respectively compared to Q3 2024 [11][4][9] - Average OEC on rent was over $1.26 billion, a 17% year-over-year increase, with average utilization at just over 79%, up more than 600 basis points from Q3 2024 [6][11] - The company reaffirmed its fiscal 2025 revenue guidance in the range of $1.97 to $2.06 billion and adjusted EBITDA guidance of $370 to $390 million [18][19] Business Segment Data and Key Metrics Changes - The ERS segment generated $169 million in revenue, up more than 12% from $151 million in Q3 2024, with rental revenue increasing by 18% year-over-year [12][4] - The TES segment reported $275 million in equipment sales, a 6% increase year-over-year, with a gross margin of 15%, down from the previous year [14][15] - APS business revenue was $38 million, up 3% year-over-year, with an adjusted gross margin over 26% [16] Market Data and Key Metrics Changes - The utility contractor customers in the ERS segment are experiencing sustained activity levels, driven by increased electricity demand and projected T&D CapEx of approximately $600 billion from 2025 to 2029 [5][4] - The overall annual growth rate of spending in the T&D market is expected to be nearly 10%, with transmission spending projected to grow over 15% annually through 2029 [5] Company Strategy and Development Direction - The company plans to invest more than previously expected in its rental fleet, with net rental CapEx projected at approximately $250 million for the year [18][19] - Custom Truck One Source aims to reduce inventory by $125 million to $150 million compared to the end of the previous year, targeting a reduction to six months of inventory by the end of fiscal 2026 [18][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustained demand in the utility sector and the overall positive business outlook despite macroeconomic uncertainties [9][20] - The company noted that strong year-to-date results and robust order flow support expected growth across its consolidated business [9][20] Other Important Information - The company has seen a significant increase in signed orders, with a year-over-year growth of over 30% in the TES segment [7][39] - Management highlighted the importance of long-term relationships with strategic suppliers and a diversified customer base as key to success [10] Q&A Session Summary Question: Visibility for 2026 to sustain momentum - Management noted strong demand in the utility sector, particularly in transmission, and investments made in Q3 are expected to support growth into 2026 [22][23] Question: Clarification on inventory reduction timing - Management clarified that the $125 million to $150 million reduction in inventory is expected by the end of the current year, with a target of six months of inventory by the end of next fiscal year [27][29] Question: Update on utility T&D customers' project execution - Management confirmed that distribution and transmission projects are back on track, with good demand for new equipment [33][34] Question: Drivers of organic growth within TES - Management indicated strong demand from utility and forestry contractors, with a notable increase in signed orders [35][39] Question: Update on large transmission pipeline projects - Management reported good demand for transmission utilization and ongoing projects that are driving demand [42][43]

Financial Data and Key Metrics Changes - The company reported a revenue of $511 million for Q2 2025, representing a 21% increase compared to 2024. Adjusted gross profit and adjusted EBITDA both grew by 17% to $157 million and $93 million, respectively [14][21]. - Average utilization of the rental fleet improved to just under 78%, up from 72% in Q2 2024, while average OEC on rent increased to over $1.2 billion, a 16% year-over-year rise [14][15]. Business Line Data and Key Metrics Changes - The ERS segment generated $170 million in revenue, up more than 23% from $138 million in Q2 2024, with significant increases in both rental revenue and rental asset sales [15][17]. - The PES segment achieved over $100 million in sales for two consecutive months, marking a historical milestone, with year-over-year sales growth exceeding 22% [8][17]. - The APS segment reported revenue of $38 million, reflecting a 3% increase year-over-year [19]. Market Data and Key Metrics Changes - Demand in core T and D markets remained strong, contributing to robust results across ERS and TES segments [6][12]. - Signed orders from local and regional customers increased by more than 45% year-over-year, driving overall signed order growth of just under 35% [9][18]. Company Strategy and Development Direction - The company plans to continue investing in its rental fleet to meet current and projected demand, with a focus on maintaining adequate equipment levels [8][16]. - The management expressed confidence in achieving expected growth targets for 2025, reaffirming revenue and adjusted EBITDA guidance [6][21]. Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment remains volatile but expressed optimism due to strong fundamentals and order flow [6][12]. - The company is closely monitoring legislative and regulatory changes, particularly regarding tariffs and emission standards, which are expected to have minimal impact on business this year [10][11][25]. Other Important Information - The company finished Q2 with net leverage of 4.66x, an improvement from the end of Q1, and aims to reduce net leverage to below three times by the end of fiscal 2026 [20][21]. - The company expects to generate meaningful levered free cash flow in 2025, targeting over $50 million [21]. Q&A Session Summary Question: Update on tariff impact for 2025 and quarterly cadence - Management indicated that the tariff impact will be minimal this year, with some costs expected to hit in Q3 and Q4, but overall, the business is well-managed regarding supply base [24][25]. Question: Concern regarding backlog decline - Management acknowledged the backlog decline but emphasized that revenue growth of 21% is a positive trend, with strong order volume still being observed [26][28].