Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q2 2023 Earnings Presentation
24 slides from Custom Truck One Source's earnings presentation, Aug 8, 2023
Slide 1: Custom Truck One Source 2nd Quarter 2023 Investor Presentation
Custom Truck One Source 2nd Quarter 2023 Investor Presentation August 8, 2023 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: Q2 2023 – Continued Strong Growth & Financial Results
Q2 2023 – Continued Strong Growth & Financial Results • Delivered strong year-over-year growth, taking advantage of improved inventory flows and record levels of production o Revenue of $457M, +26% vs. Q2 ’22 o Adjusted Gross Profit of $154M, +22% vs. Q2 ’22 o Adjusted EBITDA of $103M, +21% vs. Q2 ’
Slide 4: 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 5: Favorable End-Market Dynamics
Favorable End-Market Dynamics Strong, Multi-Year End Market Tailwinds With Upside From 2021 Infrastructure Bill T&D T&D Capex TELECOM Telecom Capex Rapidly increasing major ~$65B 8.3% Build-out and ~$80B 3.2% projects driven by need for grid implementation of 5G upgrades and renewable Annual Total S
Slide 6: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights Diverse Customer Base • Serve more than 3,000 customers, with T&D Infrastructure / Telecom Rail the top 15 customers representing ~25% of revenue • No customer represents more than 4% of company revenue • Strong brand recognition and awareness among ind
Slide 7: Differentiated “One-Stop-Shop” Business Model
Differentiated “One-Stop-Shop” Business Model Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition Integrated Production Capabilities One-Stop-Shop Value Proposition Unit Economic Advantages Multiple Revenue Streams Strong, Consistent Returns Customer Benefit
Slide 8: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 35 locations and 350 technicians in the U.S. and Canada o 80 mobile technicians capable of being deployed across the country • Opportunity remai
Slide 9: Our ESG Strategy
Our ESG Strategy • We issued our inaugural ESG report in early July • Our ESG plan is driven by our shared Purpose, Vision and Values • We are committed to staying at the forefront of technological innovations in our industry and adapting our products and services to align with our ESG objectives •
Slide 10: Consolidated Operating Performance
Consolidated Operating Performance(1) ($ millions, except where indicated) Q2 Revenue, Adjusted Gross Profit and Adjusted EBITDA grew 26%, 22% and 21% year-over-year Revenue Adjusted Gross Profit $500 $457 $180 $154 $450 $33 $160 $400 $362 $126 $140 $350 $32 $120 $300 $302 $100 $250 $219 $80 $200 $1
Slide 11: CTOS Reporting Segments
CTOS Reporting Segments Reporting segments align with our go-to market strategies and capital allocation decisions Equipment Rental Solutions Truck & Equipment Sales Aftermarket Parts & Service (ERS) (TES) (APS) Includes results from core rental Includes results from new and Includes results f
Slide 12: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) ERS revenue up 16% vs. Q2 2022, driven by continued strong utilization, pricing and strong used equipment sales Revenue Adjusted Gross Profit(1) • ERS continues to perform at a high level, with utilization at just under 82% and OE
Slide 13: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) TES revenue up 39% vs. Q2 2022 and new sales order backlog continued to grow in the quarter Revenue Gross Profit $300 $50 $46 • Revenue increased $70M in Q2 ’23 vs. Q2 ‘22, or 39%, as improved $251 $45 inventory flows and record prod
Slide 14: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue up 4% vs. Q2 2022 – solid year-over-year growth Revenue Adjusted Gross Profit(1) $40 $37 $14 • Total revenue increased 4% in Q2 ‘23 vs. Q2 ’22 $35 $12 o Parts & Services revenue increased 3% vs. Q2 ‘22 $35 $4 $12 $4 $
Slide 15: Balance Sheet & Capex
Balance Sheet & Capex ($ millions, except where indicated) Continue to strengthen the balance sheet and demonstrated ability to de-lever quickly through cash flow generation and Adjusted EBITDA growth Available liquidity steady since the combination with Reduced leverage by 1.3x since the combinatio
Slide 16: Updated 2023 Outlook
Updated 2023 Outlook Previous Updated 2022 2023 Outlook 2023 Outlook Growth Consolidated Revenue $1.57 billion $1.635 - $1.755 billion $1.725 - $1.83 billion 10% - 16% ERS $661 million $670 - $710 million $700 - $735 million 6% - 11% TES $770 million $820 - $890 million $880 - $940 million 14% - 22%
Slide 17: 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 & Margin Expansion 45 Integration Drives Cost Efficiencies and Creates Scale Benefits Our Purpose: 56 Demonstra
Slide 18: Appendix
Appendix 18
Slide 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (in $ millions) Net income (loss) $ (3) $ 14 $ (2) $ 31 $ 14 $ 12 Interest expense 17 18 19 21 22 24 Income tax expense (benefit) 3 — 4 1 1 1 Depreciation and amortization 63 55 54 52 52 55 EBITDA 80 86 75 105 89 92 Adjustments: Non-
Slide 20: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (in $ millions) Revenue: Rental $ 109 $ 112 $ 115 $ 128 $ 118 $ 122 Equipment sales 227 219 211 326 301 302 Parts sales and services 30 32 32 33 33 33 Total revenue 366 362 358 487 452 457 Cost of Revenue: Cost of revenue 237 2
Slide 21: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (in $ millions) Revenue: Rental revenue $ 106 $ 108 $ 112 $ 123 $ 114 $ 118 Equipment sales 59 37 37 78 92 51 Total revenue 165 145 149 202 206 169 Cost of revenue: Cost of rental revenue 25 28 27 27 29 31 Cost of equipment sales 4
Slide 22: Supplementary Segment Data — TES
Supplementary Segment Data — TES Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (in $ millions) Equipment sales $ 168 $ 181 $ 174 $ 247 $ 209 $ 251 Cost of equipment sales 144 154 147 203 175 205 Gross profit $ 24 $ 27 $ 27 $ 44 $ 34 $ 46 Sum of individual line items may not equal subtotal and total amounts du
Slide 23: Supplementary Segment Data — APS
Supplementary Segment Data — APS Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (in $ millions) Revenue: Rental revenue $ 4 $ 4 $ 3 $ 4 $ 5 $ 4 Parts sales and services 30 32 32 33 33 33 Total revenue 34 35 35 38 37 37 Cost of revenue: Cost of parts sales and services 25 24 26 30 27 26 Depreciation of rental e
Slide 24: Leverage Ratio Calculation
Leverage Ratio Calculation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (in $ millions) Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 5 $ 3 $ 2 $ 7 $ 5 $ 4 Current Portion of Finance Leases 5 3 2 2 1 — Long-Term Debt, Net 1,324 1,350 1,363 1,355 1,394 1,425 Finance Le
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