Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q1 2024 Earnings Presentation
28 slides from Custom Truck One Source's earnings presentation, May 2, 2024
Slide 1: Custom Truck One Source 1st Quarter 2024 Investor Presentation
Custom Truck One Source 1st Quarter 2024 Investor Presentation May 2, 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 $1.82B+ $399M Recent New Location New Location Acquisition Specialty Equipment LTM Revenue LTM Adj. EBITDA1 Coming Soon 2,500+ 10,300+ • True “One-Stop-Shop” platform, Employees2 Fleet Units2 New Location 40 focused on rental and sales Recent Locations
Slide 4: Q1 2024 – Consistent Demand & Strong New Sales Growth
Q1 2024 – Consistent Demand & Strong New Sales Growth • Continued strong demand from Infrastructure, Rail and Telecom end markets amid reduced, but stabilized, Transmission utilization: o Revenue of $411M o Adjusted Gross Profit(1) of $134M o Adjusted EBITDA(1) of $77M • TES business segment deliver
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 ~$88B 10.5% Large and growing pent- up demand in North ~$268B 7.1% 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 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 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 • 40 locations in the U.S. and Canada, with recently announced additions: • Casa Grande, AZ • Sacramento, CA • Salt Lake City, UT • Two acquisitio
Slide 11: Our ESG Strategy
Our ESG Strategy • We issued our inaugural ESG report last 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 as the energy transition continues and adapting our products and services to a
Slide 12: Consolidated Operating Performance – Q1 2024
Consolidated Operating Performance – Q1 2024 ($ millions, except where indicated) Q1 2024 Revenue, Adjusted Gross Profit(1) and Adjusted EBITDA(1) all impacted by softness in Utility rental utilization Revenue Adjusted Gross Profit(1) $500 $452 $160 $150 $450 $411 $134 $33 $140 $400 $33 $120 $350 $3
Slide 13: Consistent Revenue and Adjusted EBITDA Growth
Consistent Revenue and Adjusted EBITDA Growth (1) ($ 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 9% and 11%, respect
Slide 14: 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 15: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Q1 2024 results impacted by temporary slowdown in Transmission-related work; strong utilization in Infrastructure, Telecom and Rail end markets continues Revenue $250 $206 • Total Revenue decreased $70M, or 34%, in Q1 ‘24 vs. Q1 ‘
Slide 16: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Except for the Transmission end market, utilization remains historically strong, with ORY near record levels Utilization & Average OEC on Rent $1,400 86.3% 90.0% • Utilization at just over 73% for Q1 ’24 83.7% 82.5% 82.8% 83.8% 83
Slide 17: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) Revenue up 15% in Q1 2024 vs. Q1 2023; Backlog continues to normalize, reflecting strong pace of sales Revenue New Sales Backlog $300 $1,000 12.6 14.0 12.2 11.7 11.8 11.1 12.0 $250 $240 $800 10.0 9.4 $855 $864 $209 $754 $779 8.3 10.0
Slide 18: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue down 5% in Q1 2024 vs. Q1 2023 – Impacted by lower Utility utilization Revenue Revenue $40 $37 • Total Revenue decreased 5% in Q1 ‘24 vs. Q1 ‘23 $35 $35 $5 $3 o Parts & Services revenue down marginally in Q1 ‘24 vs. Q
Slide 19: Balance Sheet & Capex
Balance Sheet & Capex ($ millions, except where indicated) Continue to focus on de-levering through cash flow generation and Adjusted EBITDA growth Available liquidity steady since the combination with Reduced leverage by 0.8x since the combination significant suppressed availability under the ABL f
Slide 20: Updated 2024 Outlook
Updated 2024 Outlook Updated 2023 2024 Outlook Growth Consolidated Revenue $1.865 billion $1.95 - $2.13 billion 5% - 14% ERS $726 million $680 - $710 million (6%) - (2%) TES $990 million $1.115 - $1.255 billion 13% - 27% APS $149 million $155 - $165 million 4% - 11% Adjusted EBITDA(1) $427 million $
Slide 21: 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 22: Appendix
Appendix 22
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 (in $ millions) Net income (loss) $ 14 $ 12 $ 9 $ 16 $ (14) Interest expense 22 24 24 25 25 Income tax expense (benefit) 1 1 — 5 (2) Depreciation and amortization 52 55 55 57 56 EBITDA 89 92 88 102 65 Adjustments: Non-cash purchase account
Slide 24: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 (in $ millions) Revenue: Rental $ 118 $ 122 $ 118 $ 120 $ 106 Equipment sales 301 302 283 367 273 Parts sales and services 33 33 33 35 33 Total revenue 452 457 434 522 411 Cost of Revenue: Cost of revenue 302 303 285 351 277 Deprecia
Slide 25: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 (in $ millions) Revenue: Rental revenue $ 114 $ 118 $ 115 $ 117 $ 103 Equipment sales 92 51 52 68 33 Total revenue 206 169 167 185 136 Cost of revenue: Cost of rental revenue 29 31 30 28 30 Cost of equipment sales 71 40 38 50 24 Deprecia
Slide 26: Supplementary Segment Data — TES
Supplementary Segment Data — TES Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 (in $ millions) Equipment sales $ 209 $ 251 $ 231 $ 299 $ 240 Cost of equipment sales 175 205 191 246 197 Gross profit $ 34 $ 46 $ 40 $ 53 $ 43 Sum of individual line items may not equal subtotal and total amounts due to rounding. 26
Slide 27: Supplementary Segment Data — APS
Supplementary Segment Data — APS Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 (in $ millions) Revenue: Rental revenue $ 5 $ 4 $ 3 $ 4 $ 3 Parts sales and services 33 33 33 35 33 Total revenue 37 37 36 38 35 Cost of revenue: Cost of parts sales and services 27 26 26 27 26 Depreciation of rental equipment 1 1 1 1 1
Slide 28: Leverage Ratio Calculation
Leverage Ratio Calculation Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 (in $ millions) Net Debt and Finance Leases (As of Period End): Current Maturities of Long-Term Debt $ 5 $ 4 $ 1 $ 8 $ 6 Current Portion of Finance Leases 1 — — — — Long-Term Debt, Net 1,394 1,425 1,426 1,487 1,492 Finance Leases 3 3 — — — Add
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