Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q1 2023 Earnings Presentation
24 slides from Custom Truck One Source's earnings presentation, May 9, 2023
Slide 1: Custom Truck One Source 1st Quarter 2023 Investor Presentation
Custom Truck One Source 1st Quarter 2023 Investor Presentation May 9, 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: Q1 2023 – Continued Strong Financial Performance
Q1 2023 – Continued Strong Financial Performance • Delivered strong year-over-year growth, taking advantage of improved inventory flows and record levels of production • Revenue of $452M, +23% vs. Q1 ’22 • Adjusted Gross Profit of $150M, +16% vs. Q1 ’22 • Adjusted EBITDA of $105M, +15% vs. Q1 ’22 •
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 ~$80B 3.2% projects driven by need for grid implementation of 5G upgrades and renewable Annual Total S
Slide 6: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights Diverse Customer Base • Serve more than 3,000 customers, with T&D Infrastructure / Telecom Rail the top 15 customers representing ~25% of revenue • No customer represents more than 4% of company revenue • Strong brand recognition and awareness among ind
Slide 7: Differentiated “One-Stop-Shop” Business Model
Differentiated “One-Stop-Shop” Business Model Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition Integrated Production Capabilities One-Stop-Shop Value Proposition Unit Economic Advantages Multiple Revenue Streams Strong, Consistent Returns Customer Benefit
Slide 8: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 36 locations and 350 technicians in the U.S. and Canada • 80 mobile technicians capable of being deployed across the country • Opportunity remai
Slide 9: Our ESG Strategy
Our ESG Strategy • We have begun developing our Environmental, Social and Governance (ESG) strategy and expect to issue our inaugural ESG report in Q2 • Our Board is dedicated to, and actively involved in, the process • Our ESG plan will: • Build upon the core values shared across our organization •
Slide 10: Consolidated Operating Performance
Consolidated Operating Performance(1) ($ millions, except where indicated) Q1 Revenue, Adjusted Gross Profit and Adjusted EBITDA grew 23%, 16% and 15% year-over-year Revenue Adjusted Gross Profit $500 $452 $160 $150 $450 $33 $129 $366 $140 $400 $350 $30 $120 $300 $100 $301 $250 $80 $227 $200 $60 $15
Slide 11: CTOS Reporting Segments
CTOS Reporting Segments Reporting segments align with our go-to market strategies and capital allocation decisions Equipment Rental Solutions Truck & Equipment Sales Aftermarket Parts & Service (ERS) (TES) (APS) Includes results from core rental Includes results from new and Includes results f
Slide 12: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) ERS revenue up 25% vs. Q1 2022, driven by continued strong utilization, pricing and record used equipment sales Revenue Adjusted Gross Profit(1) • ERS continues to perform at a high level, with utilization at nearly 84% and OEC $2
Slide 13: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) TES revenue up 25% vs. Q1 2022 and new sales order backlog grew by 13% in the quarter Revenue Gross Profit $250 $40 • Revenue increased $41M in Q1 ’23 vs. Q1 ‘22, or 25%, as improved $209 $35 $34 inventory flows and record production
Slide 14: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue up 10% vs. Q1 2022 – strong year-over-year growth Revenue Adjusted Gross Profit(1) $40 $37 $12 • Total revenue increased 10% in Q1 ‘23 vs. Q1 ’22 $35 $34 $5 $10 • Parts & Services revenue increased 8% vs. Q1 ‘22 $10 $
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 ~1.2x since the combinati
Slide 16: Updated 2023 Outlook
Updated 2023 Outlook Previous Updated 2022 2023 Outlook 2023 Outlook Growth Consolidated Revenue $1.57 billion $1.61 - $1.73 billion $1.635 - $1.755 billion 4% - 12% ERS $661 million $665 - $705 million $670 - $710 million 1% - 7% TES $770 million $800 - $870 million $820 - $890 million 6% - 16% APS
Slide 17: Investment Highlights
Investment Highlights 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 Drives Cost Efficiencies and Creates Scale Benefits Our Purpose: 56 Demonstrated Performa
Slide 18: Appendix
Appendix 18
Slide 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 (in $ millions) Net income (loss) $ (3) $ 14 $ (2) $ 31 $ 14 Interest expense 17 18 19 21 22 Income tax expense (benefit) 3 — 4 1 1 Depreciation and amortization 63 55 54 52 52 EBITDA 80 86 75 105 89 Adjustments: Non-cash purchase accounti
Slide 20: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 (in $ millions) Revenue: Rental $ 109 $ 112 $ 115 $ 128 $ 118 Equipment sales 227 219 211 326 301 Parts sales and services 30 32 32 33 33 Total revenue 366 362 358 487 452 Cost of Revenue: Cost of revenue 237 236 227 318 302 Deprecia
Slide 21: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 (in $ millions) Revenue: Rental revenue $ 106 $ 108 $ 112 $ 123 $ 114 Equipment sales 59 37 37 78 92 Total revenue 165 145 149 202 206 Cost of revenue: Cost of rental revenue 25 28 27 27 29 Cost of equipment sales 43 30 27 58 71 Deprecia
Slide 22: Supplementary Segment Data — TES
Supplementary Segment Data — TES Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 (in $ millions) Equipment sales $ 168 $ 181 $ 174 $ 247 $ 209 Cost of equipment sales 144 154 147 203 175 Gross profit $ 24 $ 27 $ 27 $ 44 $ 34 Sum of individual line items may not equal subtotal and total amounts due to rounding. 22
Slide 23: Supplementary Segment Data — APS
Supplementary Segment Data — APS Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 (in $ millions) Revenue: Rental revenue $ 4 $ 4 $ 3 $ 4 $ 5 Parts sales and services 30 32 32 33 33 Total revenue 34 35 35 38 37 Cost of revenue: Cost of parts sales and services 25 24 26 30 27 Depreciation of rental equipment 1 1 1 1 1
Slide 24: Leverage Ratio Calculation
Leverage Ratio Calculation Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 (in $ millions) Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 5 $ 3 $ 2 $ 7 $ 5 Current Portion of Finance Leases 5 3 2 2 1 Long-Term Debt, Net 1,324 1,350 1,363 1,355 1,394 Finance Leases 2 3 3 3 3 Add
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