Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Nesco Holdings — Q3 2020 Earnings Presentation
20 slides from Custom Truck One Source's earnings presentation, Nov 9, 2020
Slide 1: Q3 2020 Earnings Presentation
Q3 2020 EARNINGS PRESENTATION November 9, 2020
Slide 2: Safe Harbor
Safe Harbor SOME OF THE FINANCIAL INFORMATION AND DATA OF NESCO HOLDINGS, INC. (“NESCO”) CONTAINED HEREIN DOES NOT CONFORM TO SEC REGULATION S-X IN THAT IT INCLUDES CERTAIN FINANCIAL INFORMATION NOT DERIVED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”). ACCORDING
Slide 3: Nesco at a Glance (NYSE: NSCO)
Nesco at a Glance (NYSE: NSCO) Key Statistics Founded 1988 Headquarters Fort Wayne, IN Public Since 2019 Locations Nesco is one of the largest specialty equipment rental • ERS Facilities 12 providers to the electric utility transmission and distribution, • PTA Facilities 8 telecom and rail industrie
Slide 4: Critical Infrastructure End-Markets
Critical Infrastructure End-Markets Nesco provides specialty rental equipment to electric utilities, telecoms, railroads and related contractors for critical maintenance, repair, upgrade and installation work Electric Transmission Electric Distribution Telecom Rail 36% of Revenue 44% of Revenue 14%
Slide 5: Young, Specialized Fleet
Young, Specialized Fleet End Markets1 # of % of Useful Average Equipment Equipment Description OEC Units OEC Life Age Cost E T R Used to maintain and construct utility, rail or telecommunications Bucket lines or equipment at height with a $50K – Trucks bucket mounted on an insulated or ✓ ✓ ✓ 1,686 $
Slide 6: Secular Shift to Rental Supports Growth
Secular Shift to Rental Supports Growth Why Customers Rent Instead of Own Rental Penetration Continues to Increase Key Drivers Nesco Estimated Penetration 65% of Equipment Fleet • Avoidance of capital outlay 57% 42% • Improved asset utilization with significantly reduced storage and maintenance cost
Slide 7: Q3 2020 Highlights
Q3 2020 HIGHLIGHTS
Slide 8: Key Messages
Key Messages Maintained uninterrupted service to customers as they have adapted to operate safely in 1 the COVID environment Strong quarterly performance coupled with sequentially improving demand and return to 2 normal seasonality trends as delayed and new projects started to ramp up late in Q3 Foc
Slide 9: Q3 2020 Highlights
Q3 2020 Highlights Solid financial results reflect the resiliency and sustainability of our business • Total revenue of $69.3M increased 10.9% Financial Performance • Equipment Rental and Sales (ERS) segment revenue of $54.2M increased 5.0% • Parts, Tools, and Accessories (PTA) segment revenue of $1
Slide 10: Business Update
Business Update Disciplined Cost and Business Well-prepared for Recovery Management Since COVID Began • Disciplined cost-cutting and capital investments to preserve • Maintaining uninterrupted service to customers as they have liquidity and flexibility adapted to operate safely in the COVID environm
Slide 11: Rental Revenue by End Market
Rental Revenue by End Market Capitalized on pent-up demand from COVID project delays in Q2 and early Q3 that created a surge in demand in the distribution, transmission and telecom end markets Transmission • Lower sequentially as a result of normal seasonal quiet period during summer, somewhat exace
Slide 12: Building a World-Class Management Team
Building a World-Class Management Team Lee Jacobson Josh Boone Kevin Kapelke Chief Executive Officer Chief Financial Officer Chief Operating Officer Joined: 2012 2020 2012 More than 20 years of experience in the utility Experienced public company CFO with broad Leadership roles with more than 25 yea
Slide 13: Q3 2020 Financial Results
MESLO SPECIALTY RENTALS Q3 2020 FINANCIAL RESULTS
Slide 14: Q3 2020 Financial Results ($M)
Q3 2020 Financial Results ($M) Revenue Gross Profit Rental Gross Profit Adj. EBITDA Free Cash Flow ERS PTA ERS PTA +11% (10%) (10%) (9%) +$30 $69.3 $62.4 $39.0 $15.1 $35.1 $10.8 $4.4 $4.3 $0.5 $36.6 $30.7 ($29.3) $54.2 $34.5 $33.0 $28.0 $51.6 $30.8 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 •
Slide 15: ERS Fleet Metrics
ERS Fleet Metrics Highlights OEC on Rent1 ($M) • Average OEC on rent declined 4% to$464M year over year, but improved more than 10% from $500 $509 $465 $461 $484 $464 $452 the beginning of Q3, exiting September at $489M • Utilization of the fleet decreased 7.0% to 72.1% from Q3 2019, but improved th
Slide 16: Flexible Capital Structure
Flexible Capital Structure ● $269 million outstanding on $385 million ABL Facility Net Leverage ($M) Debt ● $475 million Senior Secured Second Lien Notes Structure ● $20 million Capital Leases Total Debt Outstanding $766.4 ● $3 million Notes Payable Less: Cash on Hand (1.6) Net Debt $764.8 LTM Adj.
Slide 17: Business Outlook
Business Outlook • Nesco is well capitalized and has the right assets and team to manage through this challenging environment and come out stronger on the other side • Recent investments in rental fleet and equipment allow Nesco to benefit from customers need to maintain and modernize critical infra
Slide 18: Q&A
Q&A 17 © 2020 NESCO Specialty Rentals. All Rights Reserved. NESCO Specialty Rentals is a registered trademark of NESCO LLC.
Slide 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Year Ended Nine Months Ended Three Months Ended ($M) December 31, September 30, September 30, 2019 2020 2019 2020 2019 Net Income (Loss) ($27.1) ($13.9) ($30.2) $15.2 ($18.0) Interest expense 63.4 47.8 46.4 15.9 16.5 Income tax expense (benefit) (6.0) (25.8) 1.3 (25.5)
Slide 20: Adjusted EBITDA including Truck Utilities
Adjusted EBITDA including Truck Utilities ($M) Year Ended September 30, 2020 Last Twelve Months Adjusted EBITDA as of September 30, 20201 $121.8 Truck Utilities Adjusted EBITDA for the one month ended October 31, 20192 0.4 Adjusted EBITDA including a Full Year of Truck Utilities $122.3 Note: 1 Adj.