Question-and-Answer SessionAnd with that, we'll kick it off to Ryan and Chris to kind of just give us an overview of Custom Truck One Source and kind of recent developments.Ryan McMonagleCEO & Director Sure. Abe, thanks for having us, and we appreciate you all coming. We love telling the Custom Truck One Source story. But when we talk about just kind of a broad overview, we love to talk about our business on what we call the one-stop shop of taking care of our customers. And really, as we get into it, there ...

Custom Truck One Source (NYSE:CTOS) 2025 Conference December 02, 2025 11:30 AM ET Speaker1I think this is the last panel for the morning sessions before we all break out to lunch. Here we have representing Custom Truck One Source, we have Ryan and Chris from the team. If anyone in the audience has any questions, please raise your hand. We'll get a mic over to you. With that, we'll kick it off to Ryan and Chris to kind of just give us an overview of Custom Truck One Source and kind of recent developments.Spe ...

Summary of Custom Truck One Source (CTOS) FY Conference Call Company Overview - **Company**: Custom Truck One Source (CTOS) - **Industry**: Industrial Machinery, specializing in vocational trucks and specialty rental fleets - **Key Products**: Vocational trucks, rental services, truck upfitting Core Business Segments - **Truck Upfitting**: Custom Truck builds, sells, services, and rents vocational trucks, which account for 55% of revenue from utility contractors and 30% from infrastructure projects [7][8] - **Specialty Rental Fleet**: The company has over 10,000 trucks in its rental fleet, valued at approximately $1.6 billion [13][14] Market Position and Competitive Advantages - **Market Share**: Custom Truck is about 1.5 times larger than its closest competitor, Altec, in terms of rental fleet size [17] - **Unique Offering**: The company provides a broad range of products across multiple end markets, including utility, infrastructure, rail, and telecom, which are not offered by competitors [18] - **Scale and Service Network**: Custom Truck operates about 40 service locations across the U.S. and Canada, enhancing its service capabilities [15] Growth Drivers and Market Outlook - **Utility and Infrastructure Demand**: The utility market, which constitutes 55% of revenue, is experiencing growth due to new transmission projects and aging infrastructure requiring modernization [21][23] - **Data Center Development**: Increased demand for energy to support new data centers is driving the need for Custom Truck's products [24] - **Market Share Gains**: The company is focused on capturing new customers and expanding into new regional markets [67] Financial Performance and Utilization Trends - **Rental Fleet Utilization**: Utilization rates fluctuated between 60% and 90% over the past two years, with current rates stabilizing in the high 70s to low 80s [30][34] - **Investment in Fleet**: Custom Truck has made significant investments in its rental fleet, with a net investment of approximately $260 million over the past year [50] Gross Margins and Pricing Strategy - **Sales Division Margins**: Gross margins for the sales division have been targeted between 15% and 18%, with recent pressures due to increased inventory and pricing competition [70][72] - **Rental Division Margins**: The rental business has seen improvements in gross margins, with a target range in the mid-70s [74] Parts and Service Segment - **Growth Potential**: The parts and service segment is expected to grow as the installed base increases, providing opportunities for upselling tools and accessories [78][81] Balance Sheet and Leverage - **Debt Levels**: The company reported a leverage ratio of 4.5 times, with a focus on reducing this to 3 times by 2026 through EBITDA expansion and inventory reduction [84][88] - **Asset Valuation**: The rental fleet's orderly liquidation value is estimated at $1.3 billion, providing a cushion against debt levels [85] Tariff Impact - **Minimal Effect**: The impact of tariffs on chassis and parts has been minimal, with the company successfully mitigating risks by purchasing chassis in advance [94][96] Conclusion Custom Truck One Source is well-positioned in the industrial machinery sector, with a strong focus on utility and infrastructure markets. The company is leveraging its scale, diverse product offerings, and service capabilities to capture market share and drive growth, while managing financial performance and navigating external challenges such as tariffs.