Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q3 2024 Earnings Presentation
28 slides from Custom Truck One Source's earnings presentation, Oct 31, 2024
Slide 1: Custom Truck One Source 3rd Quarter 2024 Investor Presentation
Custom Truck One Source 3rd Quarter 2024 Investor Presentation October 30, 2024 CONFIDENTIAL DRAFT1
Slide 2: Safe Harbor
Safe Harbor This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States (“GAAP”), including, without limitation, Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA an
Slide 3: CTOS at a Glance
CTOS at a Glance Leading Integrated Provider of $1.8B+ $356M Recent New Location Acquisition Specialty Equipment LTM Revenue LTM Adj. EBITDA1 New Location 2,500+ 10,200+ • True “One-Stop-Shop” platform, Employees2 Fleet Units2 New Location 40 focused on rental and sales Recent Acquisition Locations4
Slide 4: Q3 2024 – Improving ERS KPIs & Strong TES Performance
Q3 2024 – Improving ERS KPIs & Strong TES Performance • Continued strong demand from Infrastructure, Rail and Telecom end markets with improved Utility utilization: o Revenue of $447M o Adjusted Gross Profit(1) of $138M o Adjusted EBITDA(1) of $80M • ERS saw greatly improved OEC on Rent and Utilizat
Slide 5: Unique Business Model = Strong Value Creation
Unique Business Model = Strong Value Creation Attractive end markets with long-term Infrastructure Bill and Inflation Reduction Act will secular growth drivers further supercharge end-market tailwinds Differentiated one-stop shop business model with strong Best-in-class asset level returns: Rental A
Slide 6: Favorable End-Market Dynamics
Favorable End-Market Dynamics Strong, Multi-Year End Market Tailwinds With Upside From 2021 Infrastructure Investment and Jobs Act T&D T&D Capex INFRASTRUCTURE Infrastructure Capex Rapidly increasing major projects driven by AI-driven data center ~$88B 10.5% Large and growing pent- up demand in Nort
Slide 7: Infrastructure Spending Bills Extend End-Market Growth
Infrastructure Spending Bills Extend End-Market Growth Infrastructure Investment and Jobs Act Allocates ~$420 Billion of Funding to Our End Markets ~$210 Billion ~$79 Billion ~$66 Billion Roads, Bridges & Major Projects: $111B Grid: $28B Passenger & Freight Water Infrastructure: $48B Hydrogen R&D: $
Slide 8: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights T&D Infrastructure / Telecom Rail • Serve more than 8,000 customers, with the top 15 customers representing ~16% of revenue • No customer represents more than 3% of company revenue • Strong brand recognition and awareness among industry-leading customer
Slide 9: Differentiated “One-Stop-Shop” Business Model
Differentiated “One-Stop-Shop” Business Model Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition Integrated Production Capabilities One-Stop-Shop Value Proposition Unit Economic Advantages Multiple Revenue Streams Strong, Consistent Returns Customer Benefit
Slide 10: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 40 locations in the U.S. and Canada, with recently announced additions: o Casa Grande, AZ o Sacramento, CA o Salt Lake City, UT o Two acquisitio
Slide 11: Our ESG Strategy
Our ESG Strategy • Our ESG plan is driven by our shared Purpose, Vision and Values • We are committed to staying at the forefront of technological innovations in our industry as the energy transition continues and adapting our products and services to align with our ESG objectives o Developed and de
Slide 12: Consolidated Operating Performance – Q3 2024
Consolidated Operating Performance – Q3 2024 ($ millions, except where indicated) Q3 2024 operating results reflect improvement in Utility rental utilization – 2nd quarter of sequential revenue growth Revenue Adjusted Gross Profit(1) $434 $447 $150 $138 $33 $33 $283 $305 $118 $108 Q3 23 Q3 24 Q3 23
Slide 13: Consistent Revenue and Adjusted EBITDA Growth
Consistent Revenue and Adjusted EBITDA Growth (1) ($ millions, except where indicated) Produced consistent Revenue and Adjusted EBITDA(1) growth since the closing of the combination with Nesco despite recent softness in Utility demand, resulting in Revenue and Adjusted EBITDA(1) CAGRs through the LT
Slide 14: CTOS Reporting Segments
CTOS Reporting Segments Reporting segments align with our go-to market strategies and capital allocation decisions Equipment Rental Solutions Truck & Equipment Sales Aftermarket Parts & Service (ERS) (TES) (APS) Includes results from core rental Includes results from new and Includes results f
Slide 15: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated; sum of individual items may not equal total amounts due to rounding) Q3 2024 showed sequential revenue growth resulting from improved T&D utilization and continued strong utilization in Infrastructure, Telecom and Rail end markets
Slide 16: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Q3 2024 saw a return to growth in average Utilization and OEC on Rent driven by improvements in T&D end markets Utilization & Average OEC on Rent $1,400 86.3% • 90.0% Average utilization at just over 73% for Q3 ’24 83.7% 83.8% 83.
Slide 17: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated; sum of individual items may not equal total amounts due to rounding) Revenue up 13% in Q3 2024 vs. Q3 2023 and up 8% YTD 2024 vs. YTD 2023 Revenue New Sales Backlog $1,000 12.2 12.6 14.0 $260 $900 11.7 11.8 11.1 12.0 $231 $800 $855 1
Slide 18: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue flat in Q3 2024 vs. Q3 2023 – Impacted by lower Utility utilization Revenue Revenue • Total Revenue flat in Q3 ‘24 vs. Q3 ‘23 $36 $36 $3 $3 o Parts & Services and Rental revenue both flat in Q3 ‘24 vs. Q3 ‘23 • Adjust
Slide 19: Balance Sheet & Capex
Balance Sheet & Capex ($ millions, except where indicated; sum of individual items may not equal total amounts due to rounding) Continue to focus on de-levering through cash flow generation and Adjusted EBITDA growth Strong available liquidity with significant suppressed Remain Committed to 3.0x Net
Slide 20: Updated 2024 Outlook
Updated 2024 Outlook Updated 2023 2024 Outlook Growth Consolidated Revenue $1.865 billion $1.8 - $1.89 billion (3%) - 1% ERS $726 million $610 - $625 million (16%) - (14%) TES $990 million $1.05 - $1.115 billion 6% - 13% APS $149 million $140 - $150 million (6%) - 1% Adjusted EBITDA(1) $427 million
Slide 21: Investment Highlights
Investment Highlights 11 Favorable End-Market Dynamics with Outstanding Secular Growth Drivers 22 Differentiated “One-Stop-Shop” Business Model 34 CTOS Well-Positioned for Continued Growth & Free Cash Flow Generation 45 Integration Drives Cost Efficiencies and Creates Scale Benefits Our Purpose: 56
Slide 22: Appendix
Appendix 22
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (in $ millions) Net income (loss) $ 14 $ 12 $ 9 $ 16 $ (14) $ (24) $ (17) Interest expense 22 24 24 25 25 27 27 Income tax expense (benefit) 1 1 — 5 (2) 3 (1) Depreciation and amortization 52 55 55 57 56 58 59 EBITDA 89 92 88 1
Slide 24: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (in $ millions) Revenue: Rental $ 118 $ 122 $ 118 $ 120 $ 106 $ 103 $ 108 Equipment sales 301 302 283 367 273 286 305 Parts sales and services 33 33 33 35 33 34 33 Total revenue 452 457 434 522 411 423 447 Cost of Revenue
Slide 25: Supplemental Segment Data – ERS
Supplemental Segment Data – ERS Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (in $ millions) Revenue: Rental revenue $ 114 $ 118 $ 115 $ 117 $ 103 $ 101 $ 105 Equipment sales 92 51 52 68 33 38 46 Total revenue 206 169 167 185 136 138 151 Cost of revenue: Cost of rental revenue 29 31 30 28 30 29 29 Cost
Slide 26: Supplemental Segment Data – TES
Supplemental Segment Data – TES Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (in $ millions) Equipment sales $ 209 $ 251 $ 231 $ 299 $ 240 $ 248 $ 260 Cost of equipment sales 175 205 191 246 197 206 218 Gross profit $ 34 $ 46 $ 40 $ 53 $ 43 $ 42 $ 42 Sum of individual line items may not equal subtotal
Slide 27: Supplemental Segment Data – APS
Supplemental Segment Data – APS Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (in $ millions) Revenue: Rental revenue $ 5 $ 4 $ 3 $ 4 $ 3 $ 2 $ 3 Parts sales and services 33 33 33 35 33 34 33 Total revenue 37 37 36 38 35 37 36 Cost of revenue: Cost of parts sales and services 27 26 26 27 26 29 28 Deprec
Slide 28: Leverage Ratio Calculation
Leverage Ratio Calculation Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (in $ millions) Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 5 $ 4 $ 1 $ 8 $ 6 $ 4 $ 1 Current Portion of Finance Leases 1 — — — — — — Long-Term Debt, Net 1,394 1,425 1,426 1,487 1,492 1,52
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