CTOS — Custom Truck One Source, Inc.

Summary of Custom Truck One Source, Inc. (CTOS) Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $462 million, up 933% year-over-year.
• Adjusted EBITDA: $98 million, reflecting significant growth.
• Specialty Equipment Rentals (SER) Revenue: $194 million, a 16% increase year-over-year.
• Specialty Truck Equipment and Manufacturing (STEM) Revenue: $268 million, up 5% year-over-year.
• Utilization Rate: Averaged 81.4%, up 370 basis points from Q1 2025.
• Order Backlog: Ended Q1 at $411 million, up 23% from Q4 2025.
• Net Debt: $1.65 billion, with a net leverage ratio of slightly over four times.

2. Strategic Updates and Business Highlights

• The company reported record revenue driven by strong demand in core end markets, particularly in transmission and distribution (T&D).
• The average age of the rental fleet is under three years, positioning the company favorably against competitors.
• The SER segment showed robust performance, with improved rental fundamentals and higher on-rent yield.
• STEM segment margins improved due to cost management and productivity enhancements.
• Strong relationships with chassis OEM partners are expected to help navigate upcoming EPA emission standards.

3. Forward Guidance and Outlook

• Revenue Guidance for 2026: Expected to be in the range of $2.005 billion to $2.12 billion.
• Adjusted EBITDA Guidance: Raised to $415 million to $440 million, reflecting strong conditions in T&D markets.
• The company anticipates continued growth in both SER and STEM segments, with SER projected revenue of $835 million to $870 million and STEM revenue of $1.58 billion to $1.655 billion.
• Expected to generate over $50 million in levered free cash flow and reduce net leverage to below four times by the end of 2026.

4. Bad News, Challenges, or Points of Concern

• Macroeconomic Volatility: Despite strong demand, there are concerns about broader economic conditions impacting future performance.
• Tariff Exposure: Some exposure to tariffs on equipment could affect pricing and margins.
• Potential Supply Chain Bottlenecks: The company is monitoring supply chain stability, particularly for transmission equipment and chassis, which could pose risks if issues arise.
• Competitive Pressures: While the company has a young fleet, ongoing competitive dynamics in the market could impact pricing and margins.

5. Notable Q&A Insights

• Tariff Impact: Management expressed confidence in managing tariff exposure, particularly with inventory on hand.
• Fleet Age Management: The average fleet age has increased slightly, but management believes it remains competitive and beneficial for cash generation.
• Cost Management: Significant productivity improvements have been made, contributing to margin expansion in STEM.
• Bidding Activity: Bidding remains robust, particularly in transmission, with strong customer sentiment for upcoming projects.
• Data Center Impact: Current discussions around data centers have not significantly affected demand for T&D equipment, and the company remains optimistic about future projects.

This summary encapsulates the key points from the earnings call, highlighting both the positive developments and potential challenges facing Custom Truck One Source, Inc.