Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Nesco Holdings — Q2 2020 Earnings Presentation
20 slides from Custom Truck One Source's earnings presentation, Aug 6, 2020
Slide 1: Q2 2020 Earnings Presentation
Q2 2020 EARNINGS PRESENTATION August 6, 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
Nesco at a Glance Founded in 1988 as a family owned rental and sales company Smaller scale provider Nesco is one of the largest specialty equipment rental providers to the electric transformed by large utility transmission and distribution, telecom and rail industries in North America investments st
Slide 4: Young, Specialized Fleet
Young, Specialized Fleet Nesco has a young, specialized fleet of over 4,500 rental units with an average unit age of 3.7 years, far below the average unit’s useful life # of % of Useful Average Equipment Equipment Description OEC Units OEC Life Age Cost Used to maintain and construct utility, rail o
Slide 5: 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 6: Why Our Customers Rent Instead of Own
Why Our Customers Rent Instead of Own Nesco’s growth is supported by the ongoing secular shift from equipment ownership to rental among its customers Rental Penetration Continues to Increase Why Customers Rent Instead of Own U.S. General Rental Penetration Nesco Estimated Penetration ● Key drivers f
Slide 7: Q2 2020 Highlights
Q2 2020 HIGHLIGHTS
Slide 8: Key Messages
Key Messages 1 Top priority remains the health and safety of employees while providing uninterrupted service to customers 2 Solid second quarter financial performance and cash generation despite project delays resulting from the pandemic 3 Enhanced senior leadership team to drive strategic execution
Slide 9: Building a World-Class Management Team
Building a World-Class Management Team Nesco’s management team has been bolstered through recent additions as we work to build a world-class team and great public company Lee Jacobson Josh Boone Kevin Kapelke Chief Executive Officer Chief Financial Officer Chief Operating Officer Joined: 2012 2020 2
Slide 10: Q2 2020 Highlights
Q2 2020 Highlights Results reflect the resiliency and sustainability of our business model • Total revenue of $68.5M increased 9.0% Financial Performance • Equipment Rental and Sales (ERS) segment revenue of $53.4M decreased 0.5% • Parts, Tools, and Accessories (PTA) segment revenue of $15.1M increa
Slide 11: Actions Taken to Mitigate COVID-19 Impact
Actions Taken to Mitigate COVID-19 Impact Proactive Reduced Capital Looking Cost Reductions Spending Ahead • Implemented a hiring freeze • Lowered planned net capital • Developed a playbook should the expenditures for the year to between current environment persist, including • Pulled back servicing
Slide 12: Rental Revenue by End Market
Rental Revenue by End Market Despite COVID-related project delays, transmission, distribution and telecom rental revenue in aggregate was flat year over year, offset by declines in rail and other end markets ($M) Transmission • Transmission was less impacted by COVID-19 social distancing measures, s
Slide 13: Q2 2020 Financial Results
MESLO SPECIALTY RENTALS Q2 2020 FINANCIAL RESULTS
Slide 14: Q2 2020 Financial Results
Q2 2020 Financial Results ($M) Revenue Gross Profit Rental Gross Profit Adj. EBITDA Free Cash Flow ERS PTA ERS PTA +9% (4%) (7%) (14%) +$42 $68.5 $62.9 $37.6 $15.0 $36.1 $9.2 $3.5 $4.2 $14.4 $35.3 $30.5 $32.7 $(27.6) $53.7 $53.4 $34.1 $26.2 $31.9 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 • E
Slide 15: ERS Fleet Metrics
ERS Fleet Metrics OEC on Rent1 Highlights ($M) ● OEC on rent is down $4M or less than 1% year over year due to project delays resulting from the COVID-19 $500 $484 $509 $465 $461 pandemic $452 ● Utilization of the fleet is down 8.9% from Q2 2019 and is more impacted than OEC on rent due to investmen
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 Total Debt Outstanding $771.2 Structure ● $24 million Capital Leases ● $3 million Notes Payable Less: Cash on Hand (5.3) Net Debt $765.9 LTM Adj.
Slide 17: Business Outlook
Business Outlook • Nesco is well capitalized and has the right assets and team to manage through this challenging environment and come out stronger on the other side • Management is balancing near-term uncertainty with positioning Nesco for accelerated growth as the recovery begins • Recent investme
Slide 18: Q&A
Q&A 17 © 2020 NESCO Specialty Rentals. All Rights Reserved. NESCO Specialty Rentals is a registered trademark of NESCO LLC.
Slide 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Year Ended ($M) December 31, Six Months Ended June 30, Three Months Ended June 30, 2019 2020 2019 2020 2019 Net Loss $(27.1) $(29.1) $(12.1) $(13.2) $(5.4) Interest expense 63.4 32.0 29.8 15.9 14.9 Income tax expense (benefit) (6.0) (0.3) 0.8 (1.1) 0.4 Depreciation and
Slide 20: Adjusted EBITDA including Truck Utilities
Adjusted EBITDA including Truck Utilities ($M) Year Ended June 30, 2020 Last Twelve Months Adjusted EBITDA as of June 30, 20201 $124.8 Truck Utilities Adjusted EBITDA for the four months ended October 31, 20192 2.4 Adjusted EBITDA including a Full Year of Truck Utilities $127.2 Note: 1 Adj. EBITDA i