Financial Data and Key Metrics Changes - In Q4 2025, the company generated revenue of $528 million, with adjusted EBITDA of $121 million, reflecting an 18% year-over-year increase [4][12] - For the full year 2025, revenue reached a record $1.944 billion, up 8% from 2024, and adjusted EBITDA was $384 million, a 13% increase [4][12] - GAAP net income for Q4 was approximately $21 million, while the full year showed a net loss of about $31 million, impacted by a prior year gain on a sale leaseback transaction [14] Business Line Data and Key Metrics Changes - In the Equipment Rental Services (ERS) segment, Q4 revenue was $207 million, up 20% year-over-year, driven by strong rental revenue and sales activity [14] - The Total Equipment Sales (TES) segment saw Q4 revenue of $284 million, down 8% year-over-year, but full year revenue was up 4% to $1.1 billion, marking a record [6][17] - The Aftermarket Parts and Services (APS) segment reported Q4 revenue of $37 million, with a stable gross margin of 27% [18] Market Data and Key Metrics Changes - The rental fleet utilization averaged just under 84% in Q4, the highest in almost three years, with average OEC on rent at nearly $1.4 billion, up 14% year-over-year [5][15] - The new sales order backlog for TES ended the year at $335 million, up 20% from Q3, and has continued to grow into 2026, currently around $370 million [7][18] Company Strategy and Development Direction - The company plans to move to a two-segment reporting structure starting Q1 2026, aligning with how the business is currently managed and providing clearer insights for investors [10][24] - A strategic partnership with Hiab aims to enhance service capabilities and broaden the product portfolio, supporting long-term growth strategies [8][9] - The company expects to invest approximately $150 million-$170 million in its rental fleet in 2026, a significant reduction from over $250 million in 2025 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand across key end markets, particularly in transmission and distribution, and anticipates continued growth in 2026 [20][21] - The company expects revenue for 2026 to be in the range of $2.005 billion to $2.12 billion, with adjusted EBITDA between $410 million and $435 million, indicating year-over-year growth [10][23] - Management highlighted the importance of strong relationships with strategic suppliers and customers as key to success [11] Other Important Information - The company aims to reduce inventory levels to below six months on hand, targeting a decrease of approximately $100 million in gross inventory by the end of 2026 [80] - The company reported a net leverage ratio of 4.3 times at the end of 2025, with plans to reduce it to below 4x by the end of 2026 [19][22] Q&A Session Summary Question: What do you expect to see in the market to achieve the high end of the guidance range? - Management indicated strong demand in P&D and vocational markets, with potential upside from reduced political and economic uncertainty [28][30] Question: How do you view the pricing environment and its contribution going forward? - Management noted good demand and opportunities for price increases, with OEC on rent showing positive year-over-year growth [31][32] Question: Can you comment on the sustainability of the high utilization rates? - Management acknowledged that while utilization peaked in Q4, they expect to maintain strong levels due to fleet de-aging and operational execution [36][38] Question: How do you expect the TES segment to perform throughout the year? - Management expressed confidence in growth, supported by a strong backlog and increased orders won, despite previous pull-forward effects [46][50] Question: What is the outlook for gross margins in ERS and TES? - Management indicated that ERS gross margins are expected to remain strong, while TES margins may stabilize within a targeted range [62][65]

Financial Data and Key Metrics Changes - Custom Truck One Source reported $482 million in revenue for Q3 2025, an 8% increase compared to Q3 2024. Adjusted gross profit was $156 million, up 13%, and adjusted EBITDA was $96 million, reflecting a 20% growth year-over-year [12][4][10] - Average OEC on rent increased to over $1.26 billion, a 17% year-over-year rise, with average utilization reaching just over 79%, up more than 600 basis points from Q3 2024 [7][12] - The company reaffirmed its fiscal 2025 revenue guidance in the range of $1.97 billion to $2.06 billion and adjusted EBITDA guidance of $370 million to $390 million [19][21] Business Line Data and Key Metrics Changes - In the ERS segment, revenue was $169 million, up more than 12% from $151 million in Q3 2024, with rental revenue increasing by 18% year-over-year [13][14] - The TES segment reported $275 million in equipment sales, a 6% increase year-over-year, with a gross margin of 15%, slightly down from the previous year [15][16] - The APS segment generated $38 million in revenue, up 3% compared to Q3 2024, with an adjusted gross margin exceeding 26% [17] 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][6] - The overall annual growth rate of spending in the T&D sector is expected to be nearly 10%, with transmission spending anticipated to grow over 15% annually through 2029 [6] 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 [19][21] - 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 the next fiscal year [19][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the sustained demand in the utility sector, particularly in transmission, and indicated that the decisions made in Q3 to invest in the rental fleet will support growth into 2026 [24][10] - Despite macroeconomic uncertainties, the company remains confident in its ability to achieve double-digit adjusted EBITDA growth this year [21][10] Other Important Information - The company reported borrowings under its AVL at $708 million, an increase of $38 million from the previous quarter, with substantial liquidity available [18] - The company noted that tariffs will have a limited direct cost impact due to mitigation actions taken earlier in the year, although some customers are hesitant about new equipment purchases due to economic uncertainty [10] Q&A Session Summary Question: Visibility for 2026 to sustain momentum - Management noted strong demand in the utility sector, particularly in transmission, and expressed confidence in the growth trajectory heading into 2026 [24] Question: Clarification on inventory reduction timing - Management clarified that the $125 million-$150 million reduction in inventory is expected by the end of the current year, with a target to reach six months of inventory by the end of next fiscal year [30] Question: Update on utility T&D customers' project execution - Management confirmed that the utility sector is back on track, with significant demand for transmission projects and improved project execution [36] Question: Drivers of organic growth within TES - Management highlighted strong demand from utility and forestry contractors, with a 30% increase in signed orders year-over-year in the TES segment [40][41] Question: Update on large transmission pipeline projects - Management reported good demand for transmission utilization and noted specific projects driving this demand, with expectations for continued growth [46][47]