Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Nesco Holdings — Merger or Acquisition (March 2021)
37 slides from Custom Truck One Source's merger presentation, Mar 16, 2021
Slide 1: Nesco and Custom Truck One Source Investor Presentation
T 1 Nesco and Custom Truck One Source Investor Presentation March 16, 2021
Slide 2: Disclaimer
This document and any related presentation has been prepared byNesco Holdings, Inc. (“Nesco” or the “Company”) in connection with its proposed acquisition of Custom Truck One Source, L.P. (together with its subsidiaries, “Custom Truck”), and does not constitute an offer or invitation to subscribe fo
Slide 3: Presenters
L o u i s S a m s o n Partner, Platinum Equity P r e s en t e r s 3 Fred Ross CEO, Custom Truck One Source Ryan McMonagle President & COO, Custom Truck One Source B r a d M e ad e r CFO, Custom Truck One Source J o s h B o o n e CFO, Nesco K e v i n S m i t h Managing Director, Platinum Equity D a v
Slide 4: Agenda
A g e n d a 4 I. T r a n s a ct i o n O v e r v i e w II. C o m p a n y O v e r v i e w III. K e y C r e d i t H i g h li g h t s IV. H i s t o r i c al F in a n c i al O v e r v i e w V. Appendix
Slide 5: I. Transaction Overview
5 5 I . T r a n s a c t i o n O v e r v i e w
Slide 6: Sources & Uses and Pro Forma Capitalization
7 New ABL Revolver ($750M) $400 New 8 - year Second Lien Secured Notes 920 Nesco Rolled Other Debt / Capital Leases 12 CTOS Rolled Other Debt / Capital Leases 43 Follow - On Primary Equity 140 Blackstone & CTOS Management Rollover 100 Platinum Equity Investment 742 E x i s t i n g N e sco E q u i t
Slide 7: Pro Forma Organizational Chart
9 Pro Forma Organizational Chart Note: Structure simplified for illustrative purposes and does not reflect all legal entities. (1) To be confirmed whether the Blackstone GPs will continue to hold limited partnership interests in Custom Truck. Nesco Holdings, Inc. (US) Platinum Equity PE One Source H
Slide 8: Platinum Equity Overview
1 0 Financial Sponsor with a Strong Track Record and Deep Operational Capabilities Platinum Equity Overview O p e r a t i o n a l l y - fo c u s e d i n v e s t m e n t s t r a t e g y • Operationally - focused investment firm with deep capabilities (~70 dedicated operations professionals at the fir
Slide 9: Platinum Equity Investment Thesis
Platinum Equity Investment Thesis 11 Invest in businesses / sector we know and have had success in • Leverage proven operational playbook in specialty rental • Prior track record of success with Nesco C r e a t e s a d i f f e r e nt i a t e d s p e c i a l ty p l a t f o r m w i th a n a t t r a c
Slide 10: II. Company Overview
2 1 1 2 II . C o m p a n y O v e r v i e w
Slide 11: Nesco at a Glance
1 3 20 Locations 3 L e a d i n g P r o v i d e r o f Sp e c i a l t y E q u i p m e n t Re n t al t o T & D , T e l e c o m and Rail End - Markets • D i ff e r e n t i a te d p a r ts , too l s a n d a c c e ss o r i e s o ff e r i n g h i g h l y c o m p l e m e n t a r y t o N e sc o ’ s core rent
Slide 12: CTOS at a Glance
1 4 Leading Integrated Provider of Sp e c i a l t y E q u i p m e n t • D i ff e r e n t i a te d b u s i n e s s m o d e l combining full - service specialty e q u i p m e n t o ff e r i n g w i t h l a rg e - sc a l e production and customization capabilities • “One - stop - shop” platform offerin
Slide 13: Highly Complementary Companies
1 5 M H i g h l y C o m p l e m e n t a r y C o m pa n i e s • Customers, end markets, fleets and operations well - aligned • ~$50M in run - rate annual cost synergies expected to be achieved within two years of closing Business Model Transformation • Integrated business model expected to significan
Slide 14: III. Key Credit Highlights
6 1 1 6 III . K e y Cr e d i t H i g h li g h t s
Slide 15: Key Credit Highlights
17 C o m p l e m e n t a r y B u s i n e s s M o d e l s w i t h a C o mm o n C o r e F o c us Di f f e r e n t i a t e d “ O n e - S t o p - S h o p ” B u s i n e s s M o d e l M a r k e t L e a d i ng R e n t a l F le e t D i v e r s i f i e d, H i g h l y L o y a l C u s t o m e r B a s e F a v o
Slide 16: Highly Attractive Combined Company Profile
18 Highly Attractive Combined Company Profile Note: All metrics as of and for the year ended 12/31/20. Adj. EBITDA reconciliations available in the Appendix. (1) Includes $50M of run - rate annual cost synergies. See slides 25 - 26 for additional information regarding cost synergies. (2) Excludes th
Slide 17: Differentiated One-Stop-Shop Business Model
19 Production and Customization R e n t a l New and Used Sales Aftermarket Parts and Service Financing D i s p o s a l x E n d - t o - e n d c u s t o m e r solution x S in g l e p o in t o f c o n t a c t for customer x Advantages of scale x Production efficiencies x A b ili t y t o c u s t o m i z
Slide 18: One of the Industry's Largest Specialty Equipment Fleets
Creates One of the Industry’s Largest and Most Diverse Specialty Equipment Fleets Market Leading Rental Fleet Bucket Truck Digger Derrick Note: Excludes Nesco PTA leased parts and accessories. All metrics as of 12/31/20. (1) Includes underground equipment, pressure diggers and line equipment for Nes
Slide 19: Diverse, Highly Loyal Customer Base
21 C o m b i n e d C u s t om e r O ve r v i e w Note: Metrics are as of and for the year ended 12/31/20, unless otherwise noted. T & D Infrastructure / Telecom R a i l H i g h l i g h t s • Serve more than 3,000 customers, with the top 15 customers representing ~16% of revenue • No customer represe
Slide 20: Favorable End-Market Dynamics
22 Favorable End - Market Dynamics 5 T e l e c o m C a p e x R a i l C ap e x T & D I n f r a s t r u c t u r e C a p e x Rapidly increasing major projects driven by need for grid upgrades and renewable energy investment, coupled with frequent, often government mandated, maintenance Aging rail infra
Slide 21: Large Addressable Market with Strong Secular Growth
23 (1) Market size based on management estimates. Market share calculated based on 2019 revenue as a percentage of total addressable market . (2) Rental percentage of equipment fleet. K e y D r i v e r s o f R e n t a l New Sales ~$15B Rental & Used Sales ~$5B P a r ts & S e r v ic e ~$9B Market Siz
Slide 22: Well-Positioned for Growth
24 Well - Positioned for Growth 6 R e a l i z e C o s t S y n e r g i e s & O p e r a t i o n a l E f f i c ie n c i e s • D r i v e i n cr e m e n t al c o st s yn e r g i e s a n d o t h e r efficiencies via continued focus on o p e r a t i o n al i m pr o v e m e n t s a n d optimization R e n t
Slide 23: Significant Synergy Opportunity
2 5 ~50% 1 00 % Y e a r 1 Y e a r 2 25 Additional Upside Opportunity via Identified Potential Revenue Synergies Expanded Service Offerings Cross - Selling Opportunities (1) Represents timeline to achieve run - rate synergy realization subsequent to closing of the acquisition. ~$50M of Anticipated Ru
Slide 24: Significant Synergy Opportunity Summary
26 Significant Synergy Opportunity 7 S u mm a ry Procurement ~$14M ~$7M • Nesco to leverage Custom Truck’s purchasing scale and in - house production capabilities to lower its cost of equipment purchased for new sales (cost) and rental fleet (capex) • Renegotiate purchasing contracts for heavy duty
Slide 25: Improved Financial Profile Positions the Combined Company for Growth
27 Improved Financial Profile Positions the Combined Company to Capitalize on Growth Opportunities L o w e r N e t L e v e r a g e Im p r o v e d L i q u i d i t y P r of i l e ( $ i n m illi o n s ) $94 3 $300 4 Current Pro Forma at Close 6.2x 1 4.0x 2 C u rr e n t Pro Forma at Close 2.2x of levera
Slide 26: IV. Historical Financial Overview
8 2 2 8 I V . H i s t o ri c a l F i n a nc ia l O v e r v i e w
Slide 27: Strong Historical Growth Trends and Resilience Through COVID-19
29 Strong Historical Growth Trends and Resilience Throughout COVID - 19 Pandemic Compelling Financial Profile Pro Forma Revenue ( $ i n m illi o n s ) Pro Forma Adj. EBITDA ( $ i n m illi o n s ) $864 $1 , 10 5 $1 , 29 4 $1 , 35 6 660 859 1,030 1,054 204 246 264 303 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 C
Slide 28: Strong Free Cash Flow Generation
30 222 50 $ 5 7 $ 1 0 7 $7 3 $ 2 72 2 0 17 2018 PF Adj. EBITDA - Net Capex 2 0 20 2019 Synergies 2 Strong Free Cash Flow Generation Pro Forma Net Capex ( $ i n m illi o n s ) Pro Forma Adj. EBITDA – Net Capex 1 ( $ i n m illi o n s ) Capex Spent in 2017 to 2019 Reduces Projected Near - Term Spend an
Slide 29: 2020 Performance Commentary
31 2020 Performance C o mm e n t a r y P r o F o r m a R e v e n ue P r o F o r m a A v e r a g e O E C o n R e n t • Year - over - year revenue increase driven by growth in sales of new & used equipment and PTA business at NESCO and an increase in CTOS used equipment sales • Revenue growth was part
Slide 30: Conclusion
3 2 Conclusion 32 C o m b i n e d C o m p a n y W e l l P o s i t i o n e d t o D r i v e V a l ue C r e a t i o n Combination of Two Leading Specialty Equipment Providers Focused on High - Growth End - Markets I n te g r a te d P l a t f o r m w i t h S c a l e a n d D i ff e r e n t i a te d O ff
Slide 31: V. Appendix
V. Appendix gz ELLE
Slide 32: Adj. EBITDA Reconciliation – Nesco
35 Adj. EBITDA Reconciliation – Nesco Reconciliation of Net Income (Loss) to Adjusted EBITDA 1 ( $ i n m illi o n s ) Y e a r E n d e d 1 2 / 3 1 2017 2018 2019 (1) EBITDA and Adj. EBITDA are non - GAAP financial measures. See reconciliation above that reconciles to the most comparable GAAP measures
Slide 33: Adj. EBITDA Reconciliation – CTOS
36 Adj. EBITDA Reconciliation – CTOS Reconciliation of Net Income (Loss) to Adjusted EBITDA 1 ( $ i n m illi o n s ) Y e a r E n d e d 1 2 / 3 1 2017 2018 2019 (1) EBITDA and Adj. EBITDA are non - GAAP financial measures. See reconciliation above that reconciles to the most comparable GAAP measures.
Slide 34: Net Capex Reconciliation – Nesco
37 Net Capex Reconciliation – Nesco Reconciliation of Total Capital Expenditures to Net Capital Expenditures ( $ i n m illi o n s ) 2017 Y e a r E nd e d 1 2 / 3 1 2018 2019 2020 Purchase of equipment - rental fleet $47.1 $58.5 $106.6 $67.5 Purchase of other property and equipment 0.4 0.7 3.1 0.9 To
Slide 35: Net Capex Reconciliation – CTOS
38 Net Capex Reconciliation – CTOS Reconciliation of Total Capital Expenditures to Net Capital Expenditures ( $ i n m illi o n s ) 2017 Y e a r E nd e d 1 2 / 3 1 2018 2019 2020 Additions of rental equipment $167.9 $171.7 $210.2 $155.3 Purchase of other property and equipment 6.0 21.8 10.6 10.7 Tota
Slide 36: Gross Profit Reconciliation – Nesco
39 Reconciliation to Percentage of Gross Profit Excluding Depreciation and Major Repairs – Nesco Reconciliation from Revenue and Cost of Revenue to Percentage of Gross Profit Excluding Depreciation and Major Repairs ( $ i n m illi o n s ) Y e a r E n d e d 1 2 / 3 1 2018 2019 2020 Rental revenue $18
Slide 37: Gross Profit Reconciliation – CTOS
2019 2020 Rental revenue $233.5 $215.0 New sales revenue 599.9 602.6 Used sales revenue 117.6 161.7 Parts and service revenue 78.9 74.4 Revenue $ 1 , 02 9 . 9 $ 1 , 05 3 . 7 Cost of rental revenue 44.3 50.6 Deprecation of rental equipment 105.5 97.7 Cost of new sales 525.5 533.9 Cost of used sales 8