Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q4 2022 Earnings Presentation
25 slides from Custom Truck One Source's earnings presentation, Mar 14, 2023
Slide 1: Custom Truck One Source 4th Quarter 2022 Investor Presentation
Custom Truck One Source 4th Quarter 2022 Investor Presentation March 14, 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, EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, Adjusted Gross Profi
Slide 3: 2022 — A Year of Record Results and Strong Execution
2022 — A Year of Record Results and Strong Execution • Delivered record annual Revenue, Adjusted Gross Profit and Adjusted EBITDA despite supply chain constraints • Revenue of $1.57B, +6% vs. pro forma 2021 • Adjusted Gross Profit of $555M, +18% vs. pro forma 2021 • Adjusted EBITDA of $393M, +18% vs
Slide 4: Record Q4 2022 Financial Results
Record Q4 2022 Financial Results • Delivered record quarterly Revenue, Adjusted Gross Profit and Adjusted EBITDA, taking advantage of better inventory flows and continued strong production • Revenue of $487M, +37% vs. pro forma Q4 ’21 • Adjusted Gross Profit of $169M, +35% vs. pro forma Q4 ’21 • Adj
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 Best-in-class asset level returns: Rental Asset RO
Slide 6: 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 ~$70B 6.8% Build-out and ~$80B 3.0% projects driven by need for grid implementation of 5G upgrades and renewable Annual Total S
Slide 7: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights Diverse Customer Base • Serve more than 3,000 customers, with T&D Infrastructure / Telecom Rail the top 15 customers representing ~25% of revenue • No customer represents more than 4% of company revenue • Strong brand recognition and awareness among ind
Slide 8: Differentiated “One-Stop-Shop” Business Model
Differentiated “One-Stop-Shop” Business Model Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition Integrated Production Capabilities One-Stop-Shop Value Proposition Unit Economic Advantages Multiple Revenue Streams Strong, Consistent Returns Customer Benefit
Slide 9: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 35 locations and 350 technicians in the U.S. and Canada • 80 mobile technicians capable of being deployed across the country • Opportunity remai
Slide 10: Our ESG Strategy
Our ESG Strategy • We have begun developing our Environmental, Social and Governance (ESG) strategy and expect to issue our inaugural ESG report soon • Our Board is dedicated to, and actively involved in, the process • Our ESG plan will: • Build upon the core values shared across our organization •
Slide 11: Consolidated Pro Forma Operating Performance
Consolidated Pro Forma Operating Performance(1)(2)(3) ($ millions, except where indicated) Q4 Pro Forma Revenue, Adjusted Gross Profit and Adjusted EBITDA grew 37%, 35% and 30% year-over-year Pro Forma Revenue Pro Forma Adjusted Gross Profit $1,800 $600 $555 $1,573 $1,600 $1,484 $472 Parts & Service
Slide 12: CTOS Reporting Segments
CTOS Reporting Segments Reporting segments align with our go-to market strategies and capital allocation decisions Equipment Rental Solutions Truck & Equipment Sales Aftermarket Parts & Service (ERS) (TES) (APS) Includes results from core rental Includes results from new and Includes results f
Slide 13: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) ERS revenue up 35% vs. Q3 2022, driven by continued strong utilization, pricing and record used equipment sales Revenue Adjusted Gross Profit(1) $250 $140 • ERS continues to perform at a high level, with utilization improving to o
Slide 14: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) TES revenue up 42% and new sales order backlog grew by 6% over Q3 2022 Revenue Gross Profit $300 $50 • Revenue increased $73M in Q4 ’22 vs. Q3 ‘22, as production remained at $44 $247 $45 near-record levels $250 $40 • New sales backlo
Slide 15: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue up 8% vs. Q3 2022 Revenue Adjusted Gross Profit(1) $40 $38 $10 • Total revenue increased 8% in Q4 ‘22 vs. Q3 ’22 $35 $9 $35 $4 $9 • Parts & Services revenue increased 4% vs. Q3 ‘22 $3 $8 $7 • Rental revenue increased
Slide 16: Balance Sheet & Capex
Balance Sheet & Capex(1) ($ 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 1.1x since the combina
Slide 17: 2023 Outlook
2023 Outlook FY2022 FY2023 Outlook Growth Consolidated Revenue $1.57 billion $1.61 - $1.73 billion 2% - 10% ERS $661 million $665 - $705 million 1% - 7% TES $770 million $800 - $870 million 4% - 13% APS $142 million $145 - $155 million 2% - 9% Adjusted EBITDA $393 million $415 - $435 million 6% - 11
Slide 18: Summary
Summary 11 Favorable End-Market Dynamics with Secular Growth Drivers 22 Differentiated “One-Stop-Shop” Business Model 34 CTOS Well-Positioned for Continued Growth & Margin Expansion 45 Integration is Largely Complete and Driving Cost Efficiencies CTOS is Well Positioned 56 Demonstrated Performance a
Slide 19: Appendix
Appendix 19
Slide 20: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Quarter Year to Date Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21 Q4 22 (in $ millions) Pro Forma Pro Forma Net income (loss) $ (3) $ (3) $ 14 $ (2) $ 31 $ (91) $ 39 (1) Represents the non-cash impact of purchase accounting, net of accumulated depreciation, on the cost of equip
Slide 21: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Quarter Year to Date Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21* Q4 22 (in $ millions) Pro Forma Pro Forma Revenue: Rental $ 114 $ 109 $ 112 $ 115 $ 128 $ 422 $ 464 Equipment sales 213 227 219 211 326 941 982 Parts sales and services 30 30 32 32 33 120 127 Total revenue
Slide 22: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Quarter Year to Date Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21* Q4 22 (in $ millions) Revenue: Rental revenue $ 110 $ 106 $ 108 $ 112 $ 123 $ 355 $ 449 Equipment sales 35 59 37 37 78 105 212 Total revenue 145 165 145 149 202 460 661 Cost of revenue: Cost of rental revenue
Slide 23: Supplementary Segment Data — TES
Supplementary Segment Data — TES Quarter Year to Date Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21* Q4 22 (in $ millions) Equipment sales $ 177 $ 168 $ 181 $ 174 $ 247 $ 590 $ 770 Cost of equipment sales 154 144 154 147 203 528 648 Gross profit $ 23 $ 24 $ 27 $ 27 $ 44 $ 62 $ 123 * YTD Q4 ‘21 information inc
Slide 24: Supplementary Segment Data — APS
Supplementary Segment Data — APS Quarter Year to Date Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21* Q4 22 (in $ millions) Revenue: Rental revenue $ 5 $ 4 $ 4 $ 3 $ 4 $ 16 $ 15 Parts sales and services 30 30 32 32 33 102 127 Total revenue 34 34 35 35 38 117 142 Cost of revenue: Cost of parts sales and service
Slide 25: Leverage Ratio Calculation
Leverage Ratio Calculation Q4 21 Q4 22 (in $ millions) Pro Forma Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 6 $ 7 Current Portion of Finance Leases 4 2 Long-Term Debt, Net 1,308 1,355 Finance Leases 5 3 Add: Deferred Financing Costs 33 28 Total Debt and Fi
Custom Truck One Source — Q4 2022 Earnings Presentation on 6ix