Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q3 2022 Earnings Presentation
25 slides from Custom Truck One Source's earnings presentation, Nov 8, 2022
Slide 1: Custom Truck One Source 3rd Quarter 2022 Investor Presentation
Custom Truck One Source 3rd Quarter 2022 Investor Presentation November 8, 2022 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, and Pro Forma Adjusted EBITDA (collectively, th
Slide 3: Solid Q3 2022 Financial Results
Solid Q3 2022 Financial Results • Delivered strong quarterly Adjusted Gross Profit and Adjusted EBITDA despite continued supply chain constraints • Adjusted Gross Profit and Adjusted EBITDA up 7% and 9%, respectively, vs. pro forma Q3 ’21 despite minimal revenue growth • Results reflect continued st
Slide 4: Unique Business Model = Strong Value Creation
Unique Business Model = Strong Value Creation Attractive end markets with long-term Infrastructure Bill will further supercharge secular growth drivers end-market tailwinds Differentiated one-stop shop business model with Best-in-class asset level returns: Rental Asset ROICs of strong unit economics
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 ~$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 6: Large Addressable Market with Strong Secular Growth
Large Addressable Market with Strong Secular Growth ~$30B Total Addressable Market1 Rental Penetration2 Key Drivers of Rental 65% • Improved asset utilization with significantly 57% reduced storage and maintenance costs Parts & Service ~$9B 42% • Better risk management with dedicated New Sales Marke
Slide 7: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights Diverse Customer Base • Serve more than 3,000 customers, with T&D Infrastructure / Telecom Rail the top 15 customers representing ~19% of revenue • No customer represents more than 3% of company revenue • Strong brand recognition and awareness among ind
Slide 8: Differentiated “One-Stop-Shop” Business Model
Differentiated “One-Stop-Shop” Business Model Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition Integrated Production Capabilities One-Stop-Shop Value Proposition Unit Economic Advantages Multiple Revenue Streams Strong, Consistent Returns Customer Benefit
Slide 9: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 35 locations and 350 technicians in the U.S. and Canada • 80 mobile technicians capable of being deployed across the country • Opportunity remai
Slide 10: Our ESG Strategy
Our ESG Strategy • With the integration largely complete, we have begun developing our Environmental, Social and Governance (ESG) strategy • Expect to issue our initial ESG report by early 2023 • Our Board is dedicated to, and actively involved in, the process • Our ESG plan will: • Build upon the c
Slide 11: Consolidated Pro Forma Operating Performance
Consolidated Pro Forma Operating Performance(1)(2)(3) ($ millions, except where indicated) Q3 Pro Forma Adjusted Gross Profit and Adjusted EBITDA and grew 7% and 9% year-over-year Pro Forma Revenue Pro Forma Adjusted Gross Profit $1,200 $1,127 $1,086 $450 $386 $90 $400 $1,000 Parts & Services $94 $3
Slide 12: CTOS Reporting Segments
CTOS Reporting Segments Reporting segments align with our go-to market strategies and capital allocation decisions Equipment Rental Solutions Truck & Equipment Sales Aftermarket Parts & Service (ERS) (TES) (APS) Includes results from core rental Includes results from new and Includes results f
Slide 13: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Rental revenue up 4% vs. Q2 2022, driven by continued strong utilization & pricing Revenue Adjusted Gross Profit(1) $160 $145 $149 $100 • ERS continues to perform at a high level, with utilization improving to ~84% and $95 OEC on
Slide 14: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) New sales decreased 4% due to supply chain and new sales order backlog grew by 7% over Q2 2022 Revenue Gross Profit $200 $30 $27 • Revenue decreased $8M in Q3 ’22 vs. Q2 ‘22, solely as a result of $181 $174 $27 $180 continued supply
Slide 15: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue down 2% vs. Q2 2022 Revenue Adjusted Gross Profit(1) • Total revenue decreased 2% in Q3 ‘22 vs. Q2 ’22 $40 $14 $35 $35 • Parts & Services revenue increased 1% vs. Q2 ‘22 $35 $12 $4 $3 $12 • Rental revenue decreased by
Slide 16: Balance Sheet & Capex
Balance Sheet & Capex(1) ($ 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 Improved leverage by 0.8x since the merger Available liquidity up $12M since the merger 5.0x $45
Slide 17: Updated 2022 Outlook
Updated 2022 Outlook FY21 Pro Forma FY22 Outlook Growth Consolidated Revenue $1.48 billion $1.505 - $1.585 billion 1% - 7% ERS $650 - $690 million TES $720 - $750 million APS $135 - $145 million Adjusted EBITDA $333 million $385 - $395 million 16% - 19% Highlights • Updates previous segment revenue
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
1 Appendix custom Tauck
Slide 20: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Quarter Year to Date Q3 21 Q2 22 Q3 22 Q3 21 Q3 22 (in $ millions) Pro Forma Net income (loss) $ (21) $ 14 $ (2) $ (88) $ 8 (1) Represents the non-cash impact of purchase accounting, net of accumulated depreciation, on the cost of equipment and inventory sold. The equi
Slide 21: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Quarter Year to Date Q3 21 Q2 22 Q3 22 Q3 21 Q3 22 (in $ millions) Pro Forma Pro Forma Revenue Rental revenue $ 109 $ 112 $ 115 $ 308 $ 336 Equipment sales 217 219 211 729 657 Parts sales and services 31 32 32 90 94 Total Revenue 357 362 358 1,127 1,086 Cost of r
Slide 22: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Q3 21 Q2 22 Q3 22 (in $ millions) Rental revenue $ 105 $ 108 $ 112 Equipment sales 27 37 37 Total revenue 132 145 149 Cost of revenue: Cost of rental revenue 25 28 27 Cost of equipment sales 20 30 27 Depreciation of rental equipment 49 42 42 Total cost of revenue 93
Slide 23: Supplementary Segment Data — TES
Supplementary Segment Data — TES Q3 21 Q2 22 Q3 22 (in $ millions) Equipment sales $ 190 $ 181 $ 174 Cost of equipment sales 172 154 147 Gross profit $ 18 $ 27 $ 27 Sum of individual line items may not equal subtotal and total amounts due to rounding. 23
Slide 24: Supplementary Segment Data — APS
Supplementary Segment Data — APS Q3 21 Q2 22 Q3 22 (in $ millions) Rental revenue $ 4 $ 4 $ 3 Parts and services revenue 31 32 32 Total revenue 35 35 35 Cost of revenue: Cost of revenue 25 24 26 Depreciation of rental equipment 1 1 1 Total cost of revenue 26 25 27 Gross profit $ 9 $ 11 $ 8 Sum of in
Slide 25: Leverage Ratio Calculation
Leverage Ratio Calculation Q4 21 Q1 22 Q2 22 Q3 22 (in $ millions) (As of Period End) Current Maturities of Long-Term Debt $ 6 $ 5 $ 3 $ 2 Current Portion of Finance Leases 4 5 3 2 Long-Term Debt, Net 1,308 1,324 1,350 1,363 Finance Leases 5 2 3 3 Add: Deferred Financing Costs 33 32 30 29 Total Debt
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