Custom Truck One Source, Inc. · NYSE:CTOS
Custom Truck One Source — Q1 2022 Earnings Presentation
26 slides from Custom Truck One Source's earnings presentation, May 10, 2022
Slide 1: Custom Truck One Source 1st Quarter 2022 Investor Presentation
Custom Truck One Source 1st Quarter 2022 Investor Presentation May 10, 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: Strong Q1 2022 Financial Results
Strong Q1 2022 Financial Results • Delivered record quarterly Adjusted Gross Profit and strong Adjusted EBITDA despite continued supply chain constraints • Pro forma Adjusted EBITDA and Adjusted Gross Profit up 26% and 13%, respectively, vs. Q1 ’21 despite lower revenues • Results reflect continued
Slide 4: Unique Business Model = Strong Value Creation
Unique Business Model = Strong Value Creation Attractive end markets with long-term Recently passed Infrastructure Bill will further secular growth drivers supercharge end-market tailwinds Differentiated one-stop shop business model with Best-in-class asset level returns: Rental Asset ROICs of stron
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 ~$9B 42% • Better risk management with dedicated New Sales Marke
Slide 7: Diverse, Highly Loyal Customer Base
Diverse, Highly Loyal Customer Base Highlights Diverse Customer Base • Serve more than 3,000 customers, with T&D Infrastructure / Telecom Rail the top 15 customers representing ~19% of revenue • No customer represents more than 3% of company revenue • Strong brand recognition and awareness among ind
Slide 8: Differentiated “One-Stop-Shop” Business Model
Differentiated “One-Stop-Shop” Business Model Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition Integrated Production Capabilities One-Stop-Shop Value Proposition Unit Economic Advantages Multiple Revenue Streams Strong, Consistent Returns Customer Benefit
Slide 9: National Branch Network
National Branch Network National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers • 37 locations and 350 technicians in the U.S. and Canada • 80 mobile technicians capable of being deployed across the country • Opportunity remai
Slide 10: Our ESG Strategy
Our ESG Strategy • With the integration largely complete, we have begun developing our Environmental, Social and Governance (ESG) strategy • Our Board is dedicated to, and actively involved in, the process • Our ESG plan will: • Build upon the core values shared across our organization • Highlight t
Slide 11: Consolidated Pro Forma Operating Performance
Consolidated Pro Forma Operating Performance(1)(2) ($ millions, except where indicated) Q1 Pro Forma Adjusted EBITDA and Adjusted Gross Profit grew 26% and 13% year-over-year, despite lower revenue Pro Forma Revenue Pro Forma Adjusted Gross Profit $500 Rental Equipment Sales Parts & Service $135 $45
Slide 12: CTOS Reporting Segments
CTOS Reporting Segments Reporting segments align with our go-to market strategies and capital allocation decisions Equipment Rental Solutions Truck & Equipment Sales Aftermarket Parts & Service (ERS) (TES) (APS) Includes results from core rental Includes results from new and Includes results f
Slide 13: Equipment Rental Solutions (ERS)
Equipment Rental Solutions (ERS) ($ millions, except where indicated) Revenue up 14% vs. Q4 2021, driven by strong utilization & higher rental sales Revenue & Adjusted Gross Profit(1) $180 $165 • ERS performance continues to perform at a high level, with utilization remaining $160 $145 Rental Sales
Slide 14: Truck & Equipment Sales (TES)
Truck & Equipment Sales (TES) ($ millions, except where indicated) New sales order backlog grew by 42% in Q1 2022 Revenue Gross Profit $200 $30 • Revenue declined $9MM in Q1 ‘22 due mainly to continued supply $180 $177 chain constraints $168 $25 $23 $24 $160 $140 • Given current production and visib
Slide 15: Aftermarket Parts & Service (APS)
Aftermarket Parts & Service (APS) ($ millions, except where indicated) APS revenue essentially flat for Q1 ‘22 Revenue Adjusted Gross Profit(1) • Total revenue has remained steady; however, service-related $40 $14 revenues continue to be negatively impacted by incremental rental $34 $34 $12 related
Slide 16: Balance Sheet & Capex
Balance Sheet & Capex ($ 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 Improved leverage by 0.8x since the merger Available liquidity up $41MM since the merger 5.0x $450
Slide 17: 2022 Outlook
2022 Outlook FY21 Pro Forma FY22 Outlook Growth Consolidated Revenue $1.48 billion $1.57 - $1.75 billion 6% - 18% ERS $610 - $650 million TES $825 - $950 million APS $130 - $150 million Adjusted EBITDA $333 million $385 - $410 million 16% - 23% Highlights • Maintaining previous guidance • Reflects y
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
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Slide 20: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Actual Pro Forma Three Months Three Three Months Ended Ended Months March 31, March 31, Ended December (in $ millions) 31, 2021 2021 2022 2021 Net income (loss) $ (4) $ (28) $ (3) $ (15) Interest expense 18 15 17 19 Income tax expense (benefit) (6) 4 3 7 Depreciation a
Slide 21: Adjusted Gross Profit Reconciliation
Adjusted Gross Profit Reconciliation Actual Pro Forma Three Months Three Three Months Ended Ended Months March 31, March 31, Ended December (in $ millions) 31, 2021 2021 2022 2021 Revenue Rental revenue $ 114 $ 48 $ 109 $ 100 Equipment sales 213 18 227 264 Parts sales and services 30 12 30 31 Total
Slide 22: Supplementary Segment Data — ERS
Supplementary Segment Data — ERS Three Three Three Three Months Months Months Months Ended Ended Ended Ended December 31, March 31, March 31, March 31, 2021 2021 2022 2021 Neso Custom (in $ millions) CTOS Inc. Holdings CTOS Inc. Truck LP Rental revenue $ 110 $ 45 $ 106 $ 52 Equipment sales 35 10 59
Slide 23: Supplementary Segment Data — TES
Supplementary Segment Data — TES Three Three Three Three Months Months Months Months Ended Ended Ended Ended December March 31, March 31, March 31, 31, 2021 2021 2022 2021 Nesco Custom (in $ millions) CTOS Inc. Holdings CTOS Inc. Truck LP Equipment sales $ 177 $ 8 $ 168 $ 197 Cost of equipment sales
Slide 24: Supplementary Segment Data — APS
Supplementary Segment Data — APS Three Three Three Three Months Months Months Months Ended Ended Ended Ended December March 31, March 31, March 31, 31, 2021 2021 2022 2021 Nesco Custom (in $ millions) CTOS Inc. Holdings CTOS Inc. Truck LP Rental revenue $ 5 $ 4 $ 4 $ — Parts and services revenue 30
Slide 25: Net Capex Reconciliation
Net Capex Reconciliation Actual Pro Forma Custom Truck Pro Forma Nesco LP Combined Three Months Ended Holdings Three Three Months Three Months March 31, Months Ended Ended Ended March 31, March 31, March 31, (in $ millions) 2021 2022 2021 2021 2021 Purchases of rental equipment $ 11 $ 46 $ 11 $ 49 $
Slide 26: Leverage Ratio Calculation
Leverage Ratio Calculation December 31, (in $ millions) 2021 March 31, 2022 (As of Period End) Current Maturities of Long-Term Debt $ 6 $ 5 Current Portion of Finance Leases 4 5 Long-Term Debt, Net 1,308 1,324 Finance Leases 5 2 Add: Deferred Financing Costs 33 32 Total Debt and Finance Leases 1,357
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