Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q3 2023 Earnings Presentation
29 slides from Custom Truck One Source's earnings presentation, Nov 7, 2023
Slide 1: 3rd Quarter 2023 Investor Presentation
Custom Truck One Source 3rd Quarter 2023 Investor Presentation November 7, 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: CTOS at a Glance
CTOS at a Glance Leading Integrated Provider of $1.83B+ $433M Specialty Equipment LTM Revenue LTM Adj. EBITDA1 • True “One-Stop-Shop” platform, 2,400+ 10,200+ 35 Employees2 Fleet Units2 Locations4 focused on rental and sales Kansas City, MO HQ $1.47B • Deep product knowledge and truck expertise Flee
Slide 4: Q3 2023 – Continued Strong Growth & Financial Results
Q3 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 $434M, +21% vs. Q3 ’22 o Adjusted Gross Profit(1) of $150M, +14% vs. Q3 ’22 o Adjusted EBITDA(1) of $100M, +9% vs.
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 ~$65B 8.3% Large and growing pent- up demand in North ~$225B 2.3% projects driven by need for
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 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 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 • 35 locations in the U.S. and Canada o Relocated our Fargo, ND location to an expanded site in Williston, ND o Relocated and expanded our Acheson
Slide 11: 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 o
Slide 12: Consolidated Operating Performance – Q3
Consolidated Operating Performance – Q3 ($ millions, except where indicated) Q3 Revenue, Adjusted Gross Profit(1) and Adjusted EBITDA(1) grew 21%, 14% and 9% year-over-year Revenue Adjusted Gross Profit(1) $500 $165 $150 $434 $450 $150 $131 $358 $33 $135 $400 $350 $120 $32 $105 $300 $283 $90 $250 $2
Slide 13: Consolidated Operating Performance – Year-to-Date
Consolidated Operating Performance – Year-to-Date ($ millions, except where indicated) YTD Revenue, Adjusted Gross Profit(1) and Adjusted EBITDA(1) grew 24%, 18% and 15% year-over-year Revenue Adjusted Gross Profit(1) $1,600 $500 $454 $1,343 $450 $1,400 $386 $98 $400 $1,200 $1,086 $350 $1,000 $94 $3
Slide 14: Consistent Revenue and Adjusted EBITDA Growth
Consistent Revenue and Adjusted EBITDA Growth (1) ($ millions, except where indicated) Produced strong and consistent Revenue and Adjusted EBITDA(1) growth since the closing of the combination with Nesco, resulting in Revenue and Adjusted EBITDA(1) CAGRs through the LTM period of 11.4% and 17.3%, re
Slide 15: 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 16: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Strong Q3 and YTD 2023 Revenue and Adjusted Gross Profit(1) growth vs. 2022, driven by continued strong utilization, pricing and strong used equipment sales Revenue • Total Revenue increased $18M, or 12%, in Q3 ‘23 vs. Q3 ‘22 $600
Slide 17: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Utilization near historic highs, with ORY at a record level Utilization & Average OEC on Rent $1,400 86.3% 90.0% • ERS continues to perform at a high level, with utilization at just 83.7% 82.5% 82.8% 83.8% 83.6% $1,300 80.9% 81.4%
Slide 18: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) Revenue up 33% in Q3 2023 vs. Q2 2022 and up 32% YTD 2023 vs. YTD 2023; Backlog normalizing Revenue New Sales Backlog $800 $1,000 12.6 14.0 12.2 11.7 11.8 $691 $900 11.1 $700 12.0 $800 $855 10.0 9.4 $864 $600 $700 10.0 $523 $754 $709
Slide 19: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue up 4% vs. Q3 2022 – consistent year-over-year growth Revenue Revenue • Total Revenue increased 4% in Q3 ‘23 vs. Q3 ’22 $120 $110 and 6% YTD‘23 vs. YTD‘22 $104 $12 $100 $11 o Parts & Services revenue increased 4% in Q3
Slide 20: Balance Sheet & Capex
Balance Sheet & Capex ($ 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 21: Updated 2023 Outlook
Updated 2023 Outlook Previous Updated 2022 2023 Outlook 2023 Outlook Growth Consolidated Revenue $1.573 billion $1.725 - $1.83 billion $1.765 - $1.87 billion 12% - 19% ERS $661 million $700 - $735 million $710 - $745 million 7% - 13% TES $770 million $880 - $940 million $910 - $970 million 18% - 26%
Slide 22: 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 23: Appendix
Appendix 23
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (in $ millions) Net income (loss) $ (3) $ 14 $ (2) $ 31 $ 14 $ 12 $ 9 Interest expense 17 18 19 21 22 24 24 Income tax expense 3 — 4 1 1 1 — Depreciation and amortization 63 55 54 52 52 55 55 EBITDA 80 86 75 105 89 92 88 Adjust
Slide 25: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (in $ millions) Revenue: Rental $ 109 $ 112 $ 115 $ 128 $ 118 $ 122 $ 118 Equipment sales 227 219 211 326 301 302 283 Parts sales and services 30 32 32 33 33 33 33 Total revenue 366 362 358 487 452 457 434 Cost of Revenue
Slide 26: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (in $ millions) Revenue: Rental revenue $ 106 $ 108 $ 112 $ 123 $ 114 $ 118 $ 115 Equipment sales 59 37 37 78 92 51 52 Total revenue 165 145 149 202 206 169 167 Cost of revenue: Cost of rental revenue 25 28 27 27 29 31 30 Cos
Slide 27: Supplementary Segment Data — TES
Supplementary Segment Data — TES Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (in $ millions) Equipment sales $ 168 $ 181 $ 174 $ 247 $ 209 $ 251 $ 231 Cost of equipment sales 144 154 147 203 175 205 191 Gross profit $ 24 $ 27 $ 27 $ 44 $ 34 $ 46 $ 40 Sum of individual line items may not equal subtotal
Slide 28: Supplementary Segment Data — APS
Supplementary Segment Data — APS Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (in $ millions) Revenue: Rental revenue $ 4 $ 4 $ 3 $ 4 $ 5 $ 4 $ 3 Parts sales and services 30 32 32 33 33 33 33 Total revenue 34 35 35 38 37 37 36 Cost of revenue: Cost of parts sales and services 25 24 26 30 27 26 26 Depre
Slide 29: Leverage Ratio Calculation
Leverage Ratio Calculation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (in $ millions) Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 5 $ 3 $ 2 $ 7 $ 5 $ 4 $ 1 Current Portion of Finance Leases 5 3 2 2 1 — — Long-Term Debt, Net 1,324 1,350 1,363 1,355 1,394 1,42
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