Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q4 2023 Earnings Presentation
29 slides from Custom Truck One Source's earnings presentation, Mar 7, 2024
Slide 1: Custom Truck One Source 4th Quarter 2023 Investor Presentation
Custom Truck One Source 4th Quarter 2023 Investor Presentation March 7, 2024 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 $1.87B+ $427M Specialty Equipment LTM Revenue LTM Adj. EBITDA1 2,500+ 10,300+ • True “One-Stop-Shop” platform, Employees2 Fleet Units2 38 focused on rental and sales Locations4 $1.46B • Deep product knowledge and truck expertise Fleet OEC3 • Strong tra
Slide 4: 2023 – A Year of Record Financial Results
2023 – A Year of Record Financial Results • Delivered strong year-over-year growth, taking advantage of improved inventory flows, record levels of production and strong customer demand o Revenue of $1,865M, +19% vs. 2022 o Adjusted Gross Profit(1) of $625M, +13% vs. 2022 o Adjusted EBITDA(1) of $427
Slide 5: Q4 2023 – Continued Growth & Strong Financial Results
Q4 2023 – Continued Growth & Strong Financial Results • Delivered record quarterly Revenue and Adjusted Gross Profit(1) o Revenue of $522M o Adjusted Gross Profit of $171M o Adjusted EBITDA(1) of $118M • TES business segment delivered record performance o Revenue of $299M, +21% vs. Q4 ‘22 New quar
Slide 6: 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 7: 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 ~$88B 10.5% Large and growing pent- up demand in North ~$268B 7.1% projects driven by need for
Slide 8: 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 9: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights Diverse Customer Base • Serve more than 8,000 customers, with T&D Infrastructure / Telecom Rail the top 15 customers representing ~16% of revenue • No customer represents more than 3% of company revenue • Strong brand recognition and awareness among ind
Slide 10: 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 11: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 38 locations in the U.S. and Canada, with recently announced additions: • Casa Grande, AZ • Sacramento, CA • Salt Lake City, UT o More than 300
Slide 12: Our ESG Strategy
Our ESG Strategy • We issued our inaugural ESG report last year • 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 as the energy transition continues and adapting our products and services to a
Slide 13: Consolidated Operating Performance – 2023
Consolidated Operating Performance – 2023 ($ millions, except where indicated) 2023 Revenue, Adjusted Gross Profit(1) and Adjusted EBITDA(1) grew 19%, 13% and 9% vs. 2022 Revenue Adjusted Gross Profit(1) $2,000 $1,865 $700 $625 $1,800 $1,573 $133 $555 $600 $1,600 $127 $1,400 $500 $1,200 $400 $1,253
Slide 14: Consistent Revenue and Adjusted EBITDA Growth
Consistent Revenue and Adjusted EBITDA Growth (1) ($ 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% and 15%, respec
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 Revenue and Adjusted Gross Profit(1) growth vs. 2022, driven by strong utilization, sustained pricing and strong used equipment sales Revenue $800 $726 $661 • Total Revenue increased $65M, or 10%, in 2023 vs. 2022 $700 o Re
Slide 17: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Utilization remains historically strong, 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 83.7% 82.5% 82.8% 83.8% 83.6% $1,300 80.9% 81
Slide 18: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) Revenue up 29% vs. 2022; Backlog continues to normalize Revenue New Sales Backlog $1,200 $1,000 12.6 14.0 12.2 11.7 11.8 $990 $900 11.1 12.0 $1,000 $800 $855 $864 10.0 9.4 $700 $779 8.3 10.0 $770 $754 $800 $600 $709 $664 8.0 6.4 $689
Slide 19: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue up 5% vs. 2022 – Consistent year-over-year growth Revenue Revenue $160 $149 • Total Revenue increased 5% in 2023 vs.2022 $142 $140 $16 o Parts & Services revenue increased 5% in 2023 vs. 2022 $15 $120 o Rental revenue
Slide 20: Balance Sheet & Capex
Balance Sheet & Capex ($ 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 1.1x since the combinatio
Slide 21: 2024 Outlook
2024 Outlook 2023 2024 Outlook Growth Consolidated Revenue $1.865 billion $2.0 - $2.18 billion 7% - 17% ERS $726 million $730 - $760 million 1% - 5% TES $990 million $1.115 - $1.255 billion 13% - 27% APS $149 million $155 - $165 million 4% - 11% Adjusted EBITDA(1) $427 million $440 - $470 million 3%
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 Quarter Year to Date Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q4 23 (in $ millions) Net income (loss) $ 31 $ 14 $ 12 $ 9 $ 16 $ 39 $ 51 Interest expense 21 22 24 24 25 76 95 Income tax expense (benefit) 1 1 1 — 5 8 7 Depreciation and amortization 52 52 55 55 57 223 219 EBIT
Slide 25: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Quarter Year to Date Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q4 23 (in $ millions) Revenue: Rental $ 128 $ 118 $ 122 $ 118 $ 120 $ 464 $ 479 Equipment sales 326 301 302 283 367 982 1,253 Parts sales and services 33 33 33 33 35 127 133 Total revenue 487 452 457 434 52
Slide 26: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Quarter Year to Date Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q4 23 (in $ millions) Revenue: Rental revenue $ 123 $ 114 $ 118 $ 115 $ 117 $ 449 $ 463 Equipment sales 78 92 51 52 68 212 263 Total revenue 202 206 169 167 185 661 726 Cost of revenue: Cost of rental revenue 2
Slide 27: Supplementary Segment Data — TES
Supplementary Segment Data — TES Quarter Year to Date Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q4 23 (in $ millions) Equipment sales $ 247 $ 209 $ 251 $ 231 $ 299 $ 770 $ 990 Cost of equipment sales 203 175 205 191 246 648 818 Gross profit $ 44 $ 34 $ 46 $ 40 $ 53 $ 123 $ 173 Sum of individual line items
Slide 28: Supplementary Segment Data — APS
Supplementary Segment Data — APS Quarter Year to Date Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q4 23 (in $ millions) Revenue: Rental revenue $ 4 $ 5 $ 4 $ 3 $ 4 $ 15 $ 16 Parts sales and services 33 33 33 33 35 127 133 Total revenue 38 37 37 36 38 142 149 Cost of revenue: Cost of parts sales and services
Slide 29: Leverage Ratio Calculation
Leverage Ratio Calculation Q4 22 Q4 23 (in $ millions) Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 7 $ 8 Current Portion of Finance Leases 2 — Long-Term Debt, Net 1,355 1,487 Finance Leases 3 — Add: Deferred Financing Costs 28 22 Total Debt and Finance Leas
Custom Truck One Source — Q4 2023 Earnings Presentation on 6ix