CTOS — Custom Truck One Source, Inc.

Summary of Custom Truck One Source, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 Revenue: $528 million, a record for the quarter.
• Adjusted EBITDA: $121 million, up 18% year-over-year.
• Full Year Revenue: $1.944 billion, an 8% increase from 2024.
• Full Year Adjusted EBITDA: $384 million, a 13% increase.
• GAAP Net Income: $21 million for Q4; net loss of $31 million for the full year, impacted by a prior-year sale-leaseback gain.
• Utilization Rate: Averaged 84% in Q4, the highest in nearly three years.
• Order Backlog: Ended Q4 at $335 million, up 20% from Q3, with current backlog at approximately $370 million.

2. Strategic Updates and Business Highlights

• The company reported strong performance in its rental business, particularly in transmission and distribution (T&D) markets.
• A new partnership with HyAV will enhance product offerings and service capabilities, supporting long-term growth.
• Investment in aftermarket services is aimed at improving post-sale support and increasing parts and service revenue.
• Transitioning to a two-segment reporting structure (Specialty Equipment Rentals and Specialty Truck Equipment and Manufacturing) for better transparency and alignment with business operations.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected between $2.005 billion and $2.120 billion, indicating growth of 3% to 9%.
• 2026 Adjusted EBITDA Guidance: Expected between $410 million and $435 million, representing growth of 7% to 13%.
• Anticipated net investment in rental fleet to be reduced to approximately $150 million to $170 million, down from over $250 million in 2025.
• Expected levered free cash flow generation of over $50 million and a reduction in net leverage ratio to below 4x by the end of 2026.

4. Bad News, Challenges, or Points of Concern

• The TES segment experienced an 8% year-over-year revenue decline in Q4 due to customers pulling forward capital spending and deferring deliveries.
• Pricing pressure in the TES segment remains a concern, although gross margins improved slightly in Q4.
• The company noted potential risks from macroeconomic uncertainties and political factors that could impact demand.
• The impact of upcoming emission standards (2027) remains uncertain, with potential pre-buy activity from customers yet to be fully realized.

5. Notable Q&A Insights

• Management expressed confidence in sustaining high utilization rates but acknowledged that typical levels are in the high-70s to low-80s range.
• The first half of 2026 is expected to show strong revenue growth, driven primarily by the rental business.
• There is a focus on maintaining cost discipline in SG&A, with modest growth anticipated in 2026.
• Management is closely monitoring order trends and backlog dynamics, with positive indicators from recent order growth and backlog improvements.
• The re-segmentation of reporting is aimed at providing clearer insights into the business's operational structure without associated costs or structural changes.

Overall, Custom Truck One Source, Inc. demonstrated strong performance in 2025, with optimistic guidance for 2026, despite facing some challenges in specific segments and external market conditions.