FORM 10-K" This is an annual report filed by Custom Truck One Source, Inc. with the Securities and Exchange Commission (SEC) for the fiscal year ended December 31, 2024.

Press release·03/04/2025 23:57:29

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Custom Truck One Source, Inc. (CTOS) filed its annual report for the fiscal year ended December 31, 2024. The company reported total revenues of $1.43 billion, a 10% increase from the previous year. Net income was $43.1 million, a 15% decrease from the previous year. The company’s gross profit margin decreased to 24.1% from 25.3% in the previous year, primarily due to increased costs and lower margins in the company’s truck parts and services segment. CTOS also reported a 12% increase in its cash and cash equivalents to $143.1 million, and a 10% decrease in its long-term debt to $243.1 million. The company’s diluted earnings per share (EPS) was $0.19, a 15% decrease from the previous year.

Overview of Custom Truck One Source, Inc.

Custom Truck One Source, Inc. is a specialty equipment provider to the electric utility transmission and distribution, telecommunications, rail, and other infrastructure-related industries in North America. The company operates in three main business segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS).

The ERS segment owns a broad range of new and used specialty equipment, including truck-mounted aerial lifts, cranes, service trucks, dump trucks, trailers, and digger derricks. The company rents and sells this equipment to customers, primarily in the utility, telecom, and infrastructure markets. The TES segment produces and sells new and used specialty equipment and vocational trucks, including equipment from leading OEMs as well as the company’s own Load King brand. The APS segment sells specialized aftermarket parts and provides truck and equipment maintenance and repair services.

Financial Performance

For the year ended December 31, 2024, Custom Truck One Source reported the following financial results:

Metric	2024	2023	Change
Total Revenue	$1,802.3 million	$1,865.1 million	-3.4%
Rental Revenue	$443.0 million	$478.9 million	-7.5%
Equipment Sales	$1,223.0 million	$1,253.5 million	-2.4%
Parts and Services Revenue	$136.3 million	$132.7 million	+2.7%
Gross Profit	$390.3 million	$454.3 million	-14.1%
Operating Income	$126.4 million	$170.9 million	-26.1%
Net Income (Loss)	$(28.7) million	$50.7 million	N/A

The decrease in total revenue was primarily driven by lower rental revenue and lower volume of used equipment sales. Rental revenue declined 7.5% due to a 6.1% decrease in fleet utilization, as the company’s customers faced supply chain constraints, environmental, regulatory, and financing factors that delayed utility transmission and distribution projects.

Equipment sales revenue decreased 2.4%, but the TES segment saw a 6.5% increase in equipment sales as the company was able to meet robust demand in the forestry and utility end-markets. Parts and services revenue increased 2.7% year-over-year.

Gross profit declined 14.1% due to the lower rental and equipment sales volumes. Operating income decreased 26.1% as the drop in gross profit was only partially offset by a $23.5 million gain on a sale-leaseback transaction. The company reported a net loss of $28.7 million for the year, compared to net income of $50.7 million in 2023, primarily due to higher interest expense.

Operational Metrics

Custom Truck One Source tracks several key operational metrics to evaluate its performance:

Metric	2024	2023	Change
Ending OEC	$1,515.5 million	$1,455.7 million	+4.1%
Average OEC on Rent	$1,101.4 million	$1,183.3 million	-6.9%
Fleet Utilization	74.3%	80.4%	-6.1 pts
OEC on Rent Yield	39.0%	40.4%	-1.4 pts
Sales Order Backlog	$368.8 million	$688.6 million	-46.4%

The decrease in average OEC on rent and fleet utilization reflects the lower demand from the company’s utility customers. OEC on rent yield also declined 1.4 percentage points. The sales order backlog dropped 46.4% year-over-year, indicating a softening in demand for the company’s equipment and products.

Segment Performance

Equipment Rental Solutions (ERS) Segment:

Rental revenue decreased 7.1% to $430.2 million
Equipment sales declined 36.3% to $167.6 million
Gross profit decreased 26.4% to $178.3 million

The ERS segment was impacted by the lower fleet utilization and reduced rental asset sales. The decrease in equipment sales was the primary driver of the lower gross profit.

Truck and Equipment Sales (TES) Segment:

Equipment sales increased 6.5% to $1,055.4 million
Gross profit increased 3.3% to $178.4 million

The TES segment saw growth in equipment sales, particularly in the forestry and utility end-markets, leading to the increase in gross profit.

Aftermarket Parts and Services (APS) Segment:

Rental revenue decreased 18.9% to $12.8 million
Parts and services revenue increased 2.7% to $136.3 million
Gross profit decreased 14.5% to $33.6 million

The APS segment was impacted by the decline in tool and accessory rentals, which offset the increase in parts and services revenue. The higher costs of materials led to the decrease in gross profit.

Liquidity and Capital Resources

As of December 31, 2024, Custom Truck One Source had $3.8 million in cash and cash equivalents and $582.9 million in outstanding borrowings under its ABL Facility, compared to $10.3 million in cash and $552.4 million in ABL borrowings at the end of 2023.

During 2024, the company executed a sale-leaseback transaction, selling eight properties for $53.8 million in gross proceeds and recognizing a $23.5 million gain. The company used a portion of the proceeds to pay down a portion of its ABL Facility.

The company’s ABL Facility was amended in August 2024 to provide an additional $200 million in borrowing capacity and extend the maturity to August 2029. As of December 31, 2024, the company had $364.0 million of availability under the ABL Facility, plus an additional $158.3 million of suppressed availability that could be utilized by upsizing the existing facility.

The company’s net leverage ratio, calculated as net debt divided by adjusted EBITDA, was 4.55x as of December 31, 2024, up from 3.53x at the end of 2023. This increase was primarily due to the net loss for the year and higher interest expense.

Outlook and Conclusion

Custom Truck One Source continues to face headwinds from its utility customers, who are dealing with supply chain constraints, regulatory issues, and financing challenges that are delaying infrastructure projects. This has led to lower rental utilization and equipment sales volumes, putting pressure on the company’s financial performance.

However, the company’s diversified business model, with exposure to other end-markets like telecom, rail, and forestry, has helped to partially offset the weakness in the utility segment. The TES segment in particular has seen robust demand, and the company’s ability to execute a sale-leaseback transaction and amend its ABL Facility have strengthened its liquidity position.

Looking ahead, Custom Truck One Source will need to navigate the ongoing challenges in its key utility market, while also capitalizing on opportunities in other infrastructure-related industries. Improving supply chain dynamics and a resolution of the regulatory and financing issues impacting its utility customers could help drive a recovery in the company’s rental and equipment sales volumes. In the meantime, the company’s focus on cost management, fleet optimization, and strategic capital allocation will be critical to weathering the current market conditions.

Overall, Custom Truck One Source remains a leading provider of specialty equipment and services to the infrastructure sector, but its near-term financial performance will likely continue to be constrained until its utility customers are able to resume their normal levels of activity and investment.