Custom Truck One Source (CTOS) Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $563 million, up 10% year-over-year.

Adjusted EBITDA: $117 million, a 25% increase from Q2 2025.

Net Income: $10 million ($0.05 per diluted share), compared to a net loss of $28 million in the prior year.

Specialty Equipment Rentals (SER) Revenue: $219 million, a 20% increase year-over-year.

Specialty Truck Equipment and Manufacturing (STEM) Revenue: $345 million, up 5% year-over-year.

Average Fleet Utilization: 81.6%, up 400 basis points from Q2 2025.

Total Outstanding Equipment Cost (OEC): $1.68 billion, the highest in company history.

2Strategic Updates and Business Highlights

The SER segment is benefiting from strong demand in the transmission and distribution (T&D) markets, with expectations of a "once-in-a-generation transmission demand super cycle."

The average fleet age is just over 3 years, positioning the company favorably for customer needs.

The STEM segment achieved record equipment sales, reflecting healthy demand and order flow.

The company is well-prepared for upcoming EPA '27 NOx emission regulations, having taken preemptive actions regarding inventory and supplier relationships.

The company is increasing its full-year 2026 revenue guidance to a range of $2.1 billion to $2.2 billion and adjusted EBITDA to $437.5 million to $455 million.

3Forward Guidance and Outlook

Revenue Guidance: Expected to grow 8% to 13% year-over-year.

Adjusted EBITDA Guidance: Projected growth of 14% to 19% year-over-year.

STEM Revenue Guidance: $1.63 billion to $1.7 billion, with third-party new sales growth of 3% to 10%.

The company anticipates continued strong performance in the T&D markets and expects to generate over $50 million in levered free cash flow by year-end 2026.

4Bad News, Challenges, or Points of Concern

The STEM segment backlog decreased by $89 million from Q1 to $322 million, although intra-quarter order flow remains strong.

The company faces potential cost increases due to new emission regulations, which may lead to higher prices for customers.

There is uncertainty regarding the impact of federal funding on order flow, particularly in infrastructure projects, which may not materialize until later.

5Notable Q&A Insights

Management noted that the shift of equipment sales from Q3 to Q2 would result in lower revenue and EBITDA growth in Q3 compared to Q2, but overall full-year expectations remain intact.

Order flow in the STEM segment was up in low single digits, while quoting activity increased by 26% year-over-year, indicating positive momentum.

The company is monitoring the impact of emission standards closely, with estimated non-conformance penalties expected to range between $4,500 and $7,000.

Management expressed confidence in sustaining high fleet utilization rates, supported by ongoing demand in T&D projects. This summary encapsulates the key aspects of CTOS's Q2 2026 earnings call, highlighting both the positive performance metrics and the challenges ahead.