Custom Truck One Source (CTOS) Q2 2025 Earnings Call July 31, 2025 09:00 AM ET Speaker0Hello, and welcome to the Custom Truck OneSource, Inc. Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Now I would like to turn the call over to Brian Pearman.Brian, the floor is yours.Speaker1Thank you. Before we begin, we would like to remind you that management's comm ...

Financial Data and Key Metrics Changes - Total rental revenue grew by 4.5% year over year to $3.9 billion, with rental revenue increasing by 6.2% to $3.4 billion, both setting second quarter records [7][17] - Adjusted EBITDA reached a second quarter record of $1.8 billion, translating to a margin of nearly 46% [7][19] - Adjusted EPS was reported at $10.47 [21] Business Line Data and Key Metrics Changes - Specialty rental revenue grew by 14% year over year, with 21 cold starts opened in the second quarter [8] - Rental gross profit increased by $86 million, while used gross profit saw a decline of $36 million due to market normalization [19] - Ancillary and re-rent revenue grew by approximately 10% year on year, contributing an additional $59 million [18] Market Data and Key Metrics Changes - The construction end market experienced significant growth, particularly in infrastructure and non-residential construction [8] - The industrial end market showed strength in power, metals and minerals, and chemical processes [8] - The company sold $600 million of used equipment, maintaining healthy demand in the used market [9] Company Strategy and Development Direction - The company aims to drive profitable growth by partnering with customers and enhancing productivity through technology [12] - The utility vertical has become a significant revenue contributor, now accounting for over 10% of total revenue, up from 4% a decade ago [13] - The company continues to focus on M&A as a core strategy, seeking opportunities for attractive returns [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the remainder of the year, supported by strong customer demand and a positive Customer Confidence Index [5][6] - The updated guidance for total revenue growth is projected at 4% to 5% for the year, with EBITDA margins expected to remain above 46% [11][24] - Management noted that the inflationary environment and ongoing investments in technology and specialty services are expected to support future growth [21] Other Important Information - The company generated free cash flow of $1.2 billion year to date, with expectations to reach between $2.4 billion and $2.6 billion for the full year [9][25] - A total of $534 million was returned to shareholders through share buybacks and dividends in the quarter, with a full-year expectation of nearly $2.4 billion [10][22] Q&A Session Summary Question: Utilization and Price-Cost Dynamics - Management acknowledged that while utilization has improved, the price-cost dynamics and ancillary growth have been somewhat disappointing, with expectations for improvement in the second half of the year [27][30] Question: Free Cash Flow Outlook - Management confirmed that the new baseline for free cash flow is expected to be around $2.4 billion, influenced by recent tax reforms [43][45] Question: Equipment Recovery and Market Dynamics - Management indicated that used equipment recovery has stabilized, with a sequential improvement in recovery rates, reflecting a balanced supply-demand dynamic [86] Question: CapEx Guidance and Market Conditions - Management reiterated that CapEx guidance remains unchanged, with no expected price increases, and expressed confidence in maintaining the same number of units planned for the year [95][96] Question: M&A Pipeline and Growth Drivers - Management highlighted a robust M&A pipeline and indicated that multiple paths to growth, including large projects and market conditions, are being pursued [68][99]

Core Viewpoint - Analysts forecast that United Rentals (URI) will report quarterly earnings of $10.54 per share, reflecting a year-over-year decline of 1.5%, with anticipated revenues of $3.91 billion, an increase of 3.6% compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 0.4% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts project 'Revenues- Equipment rentals' to reach $3.34 billion, a change of +3.8% from the year-ago quarter [5]. - 'Revenues- Service and other revenues' are expected to be $96.27 million, indicating a +7% change from the prior year [5]. - 'Revenues- Contractor supplies sales' are estimated at $41.45 million, reflecting a -1.3% year-over-year change [6]. - 'Revenues- Sales of new equipment' are projected to be $66.89 million, showing a +9.7% change [6]. - 'Revenues- Sales of rental equipment' are expected to be $358.01 million, indicating a -1.9% change [6]. - 'Revenues- Specialty- Contractor supplies sales' are estimated at $18.21 million, reflecting a -4.2% change [7]. - 'Revenues- Specialty- Equipment rentals' are projected to reach $1.09 billion, indicating an +8.4% change [7]. - 'Revenues- Specialty- Sales of new equipment' are expected to be $33.08 million, reflecting a -2.7% change [8]. - 'Revenues- Specialty- Sales of rental equipment' are projected at $49.22 million, indicating a -5.4% change [8]. - 'Revenues- Specialty- Service and other revenues' are expected to be $10.08 million, reflecting an +11.9% change [9]. - 'Total Revenues- General rentals' are projected to reach $2.71 billion, indicating a +2% change [9]. - 'Revenues- General Rentals- Service and other revenues' are expected to be $93.63 million, reflecting a +15.6% change [9]. Stock Performance - Shares of United Rentals have increased by +14.6% in the past month, outperforming the +5.4% move of the Zacks S&P 500 composite [10].