CTOS — Custom Truck One Source, Inc.

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

1. Key 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.