FALSE000170968200017096822024-08-012024-08-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
Form 8-K   
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2024
CUSTOM TRUCK ONE SOURCE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 001-38186 84-2531628
(State or Other Jurisdiction
of Incorporation)		 (Commission
File Number)		 (IRS Employer
Identification No.)
 
7701 Independence Avenue
Kansas City, Missouri
64125
(Address of principal executive offices)(Zip code)
(816) 241-4888
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report) 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) 
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Exchange on Which Registered
Common Stock, $0.0001 par valueCTOSNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition.
On August 1, 2024, Custom Truck One Source, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended June 30, 2024. The press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1, shall be deemed "furnished" and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company's filings under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On August 1, 2024, the Company posted an updated investor presentation on its website at www.customtruck.com.
The information in this Item 7.01 shall be deemed "furnished" and not "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company's filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)    Exhibits.
Exhibit No.Description
104Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:
August 1, 2024
Custom Truck One Source, Inc.
  
/s/ Christopher J. Eperjesy
  Christopher J. Eperjesy
Chief Financial Officer




ctoslogojpg.jpg                                     

EXHIBIT 99.1

Custom Truck One Source, Inc. Reports Second Quarter 2024 Results and Updates Full-Year Guidance
KANSAS CITY, Mo, August 1, 2024 – (BUSINESS WIRE) – Custom Truck One Source, Inc. (NYSE: CTOS), a leading provider of specialty equipment to the electric utility, telecom, rail, forestry, waste management and other infrastructure-related end markets, today reported financial results for its three and six months ended June 30, 2024.
CTOS Second-Quarter Highlights
•Total revenue of $423.0 million, a decrease of $33.8 million, or 7.4%, compared to $456.8 million for the second quarter of 2023 primarily due to fewer rental asset sales and lower rental demand from the utility end market
•Gross profit of $89.3 million, a decline of $21.4 million, or 19.3%, compared to $110.6 million for the second quarter of 2023
•Adjusted Gross Profit of $133.9 million, a decrease of $20.4 million, or 13.2%, compared to $154.2 million for the second quarter of 2023
•Net loss of $24.5 million, compared to net income of $11.6 million in the second quarter of 2023
•Adjusted EBITDA of $80.1 million, a decrease of $23.1 million, or 22.4%, compared to $103.2 million in the second quarter of 2023

“Despite a sequential decline in net income, we delivered sequential Adjusted EBITDA growth in the second quarter compared to the first quarter of 2024. While we are not satisfied with our financial results for the first half of the year, we believe CTOS is well-positioned to capitalize on the secular tailwinds we see in the end markets we serve, driven by AI and data center investment, electrification, and utility grid upgrades. As we have discussed on our recent earnings calls, we continue to be impacted by a slow-down in work in our core T&D markets, which primarily impacts our ERS segment. We believe that this decline is temporary, and we are already seeing signs of improvement in the third quarter. We anticipate a return to growth in 2025,” said Ryan McMonagle, Chief Executive Officer of CTOS. “We continue to see good demand in our infrastructure, rail and telecom end markets, which all contributed to our TES segment performance. Segment sales are up 6% for the first half of 2024, on top of the nearly 30% growth we experienced in fiscal 2023. Our sales backlog has returned to a more normalized level of just under six months, as OEM production and overall supply chain continue to improve,” McMonagle added.
Summary Actual Financial Results
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Rental revenue$102,997 $122,169 $209,168 $240,457 $106,171 
Equipment sales285,633 302,117 558,235 603,407 272,602 
Parts sales and services34,383 32,544 66,917 65,129 32,534 
Total revenue423,013 456,830 834,320 908,993 411,307 
Gross Profit$89,267 $110,619 $179,976 $220,280 $90,709 
Adjusted Gross Profit1
$133,852 $154,235 $268,305 $304,226 $134,453 
Net Income (Loss)$(24,478)$11,610 $(38,813)$25,410 $(14,335)
Adjusted EBITDA1
$80,056 $103,183 $157,432 $208,383 $77,376 
1 - Each of Adjusted Gross Profit and Adjusted EBITDA is a non-GAAP measure. Further information and reconciliations for our non-GAAP measures to the most directly comparable measure under United States generally accepted accounting principles (“GAAP”) are included at the end of this press release.
Summary Actual Financial Results by Segment
Our results are reported for our three segments: Equipment Rental Solutions (“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts and Services (“APS”). ERS encompasses our core rental business, inclusive of sales of used rental equipment to our customers. TES encompasses our specialized truck and equipment production and new equipment sales activities. APS encompasses sales and rentals of parts, tools, and other supplies to our customers, as well as our aftermarket repair service operations.


Equipment Rental Solutions
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Rental revenue$100,699 $117,832 $203,987 $231,616 $103,288 
Equipment sales37,712 50,694 70,452 142,830 32,740 
Total revenue138,411 168,526 274,439 374,446 136,028 
Cost of rental revenue29,281 31,341 59,081 60,401 29,800 
Cost of equipment sales25,792 39,802 49,890 110,883 24,098 
Depreciation of rental equipment43,581 42,805 86,278 82,317 42,697 
Total cost of revenue98,654 113,948 195,249 253,601 96,595 
Gross profit$39,757 $54,578 $79,190 $120,845 $39,433 
Truck and Equipment Sales
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Equipment sales$247,921 $251,423 $487,783 $460,577 $239,862 
Cost of equipment sales205,526 205,464 402,228 380,508 196,702 
Gross profit$42,395 $45,959 $85,555 $80,069 $43,160 
Aftermarket Parts and Services
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Rental revenue$2,298 $4,337 $5,181 $8,841 $2,883 
Parts and services revenue34,383 32,544 66,917 65,129 32,534 
Total revenue36,681 36,881 72,098 73,970 35,417 
Cost of revenue28,562 25,988 54,816 52,975 26,254 
Depreciation of rental equipment1,004 811 2,051 1,629 1,047 
Total cost of revenue29,566 26,799 56,867 54,604 27,301 
Gross profit$7,115 $10,082 $15,231 $19,366 $8,116 
Summary Combined Operating Metrics
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Ending OEC(a) (as of period end)
$1,457,955 $1,467,779 $1,457,955 $1,467,779 $1,452,856 
Average OEC on rent(b)
$1,044,683 $1,203,855 $1,055,189 $1,209,111 $1,065,695 
Fleet utilization(c)
71.7 %81.7 %72.4 %82.6 %73.3 %
OEC on rent yield(d)
40.0 %40.1 %40.3 %39.8 %40.5 %
Sales order backlog(e) (as of period end)
$478,244 $863,757 $478,244 $863,757 $537,292 
(a) Ending OEC — Ending original equipment cost (“OEC”) is the original equipment cost of units at the end of the measurement period.
(b) Average OEC on rent — Average OEC on rent is calculated as the weighted-average OEC on rent during the stated period.
(c) Fleet utilization — total number of days the rental equipment was rented during a specified period of time divided by the total number of days available during the same period and weighted based on OEC.
(d) OEC on rent yield (“ORY”) — a measure of return realized by our rental fleet during a period. ORY is calculated as rental revenue (excluding freight recovery and ancillary fees) during the stated period divided by the Average OEC on rent for the same period. For periods of less than 12 months, the ORY is adjusted to an annualized basis.
(e) Sales order backlog — purchase orders received for customized and stock equipment. Sales order backlog should not be considered an accurate measure of future net sales.


Management Commentary
In the second quarter of 2024, total revenue was $423.0 million, a decrease of 7.4% from the second quarter of 2023. Second quarter 2024 rental revenue decreased 15.7% to $103.0 million, compared to $122.2 million in the second quarter of 2023, due to lower utilization and average OEC on rent than we anticipated. Equipment sales decreased 5.5% in the second quarter of 2024 to $285.6 million, compared to $302.1 million in the second quarter of 2023, primarily driven by lower rental asset sales of used equipment. The Company continues to be impacted by end-market supply chain constraints, environmental, regulatory and customer financing factors affecting the timing of transmission job starts. These delays contributed to both lower than expected rental revenue and rental asset sales during this quarter.
In our ERS segment, rental revenue in the second quarter of 2024 was $100.7 million compared to $117.8 million in the second quarter of 2023, a 14.5% decrease. Fleet utilization declined to 71.7% compared to 81.7% in the second quarter of 2023. Average OEC on rent decreased 13% year-over-year, primarily as a result of the lower utilization in the quarter. Equipment sales decreased 25.6% in the second quarter of 2024 to $37.7 million compared to $50.7 million in the second quarter of 2023, due to market demand softness as a result of the current utility end market environment. ERS gross profit in the second quarter of 2024 and 2023 was $39.8 million and $54.6 million, respectively. Adjusted Gross Profit in the segment was $83.3 million in the second quarter of 2024, compared to $97.4 million in the second quarter of 2023. Adjusted gross profit from rentals, which excludes depreciation of rental equipment, decreased to $71.4 million in the second quarter of 2024 compared to $86.5 million in the second quarter of 2023.
Revenue in our TES segment decreased 1.4% to $247.9 million in the second quarter of 2024, from $251.4 million in the second quarter of 2023, as normalized supply chains have reduced product lead times and decreased the need for our customers to reserve equipment far in advance. Gross profit declined by 7.8% to $42.4 million in the second quarter of 2024 compared to $46.0 million in the second quarter of 2023. TES saw a reduction in backlog of 45% to $478.2 million compared to the second quarter of 2023, primarily as a result of utility market softness.
APS segment revenue remained flat in the second quarter of 2024 at $36.7 million, compared to $36.9 million in the second quarter of 2023. Gross profit margin decreased to 19.4% in the second quarter of 2024 from 27.3% in the second quarter of 2023 due to the lower levels of tools and accessories rentals and an increase in cost of revenue due to higher costs of materials.
Net loss was $24.5 million in the second quarter of 2024, compared to net income of $11.6 million for the second quarter of 2023. The $36.1 million decrease in net income is primarily due to lower revenue leading to decreased gross profit and higher interest expense on variable-rate debt and variable-rate floor plan liabilities.
Adjusted EBITDA for the second quarter of 2024 was $80.1 million, a decrease of 22.4%, compared to $103.2 million for the second quarter of 2023. The decrease in Adjusted EBITDA was largely driven by a decline in used equipment sales in our ERS segment as well as higher costs associated with variable-rate floorplan liabilities as a result of higher rates and inventory levels.
As of June 30, 2024, cash and cash equivalents was $8.1 million, Total Debt outstanding was $1,551.7 million, Net Debt was $1,543.7 million and Net Leverage Ratio was 4.11x. Availability under the senior secured credit facility was $159.5 million as of June 30, 2024, and based on our borrowing base, we have an additional $328.3 million of availability that we can potentially utilize by upsizing our existing facility. For the three months ended June 30, 2024, Ending OEC decreased by $5.099 million as we shifted allocation of new equipment builds in favor of our TES segment in order to capitalize on a continuing solid demand environment for vocational trucks. During the three months ended June 30, 2024, CTOS purchased $16.7 million of its common stock.



OUTLOOK
We are updating our full-year revenue and Adjusted EBITDA1, 4 guidance for 2024. Our ERS segment has continued to experience near-term pressure in demand in the utility market as a result of financing, supply chain, and regulatory factors. These headwinds in our utility end markets are driving lower than anticipated OEC on rent in our core ERS segment and will likely continue for the remainder of this year. Regarding TES, supply chain improvements, healthy inventory levels, and more normalized backlog levels continue to improve our ability to produce and deliver more units in 2024, albeit at a lower growth rate than previously expected. Our customers continue to need our equipment but are choosing to delay purchase decisions influenced by both their expectation of lower interest rates to come and the uncertainty surrounding the upcoming election. While we are lowering our consolidated revenue and Adjusted EBITDA1, 4 guidance for the year, we continue to focus on generating positive free cash flow in 2024, but expect it to be lower than our previous target of generating more than $100 million of levered free cash flow2, 4. Also, we now expect to deliver a net leverage ratio3, 4 that will modestly decrease from current levels by the end of the fiscal year. “We continue to have confidence in the long-term strength of our end markets and the continued execution by our teams to profitably grow our business, better serve our customers and position CTOS for future growth. Our updated outlook reflects the risks associated with some near-term challenges for our customers in the T&D sector, which we now expect could persist through the balance of the fiscal year.” said Ryan McMonagle, Chief Executive Officer of CTOS.
2024 Consolidated Outlook
Revenue$1,800  million—$1,980 million
Adjusted EBITDA1, 4
$340  million—$375 million
2024 Revenue Outlook by Segment
ERS$610  million—$640 million
TES$1,050  million—$1,190 million
APS$140  million—$150 million
1 - Adjusted EBITDA is a non-GAAP performance measure that we use to monitor our results of operations, to measure performance against debt covenants and performance relative to competitors. Refer to the section below entitled “Non-GAAP Financial and Performance Measures” for further information about Adjusted EBITDA.
2 - Levered Free Cash Flow is defined as net cash provided by operating activities, less cash flow for investing activities, excluding acquisitions, plus acquisition of inventory through floor plan payables – non-trade less repayment of floor plan payables – non-trade, both of which are included in cash flow from financing activities in our Consolidated Statements of Cash Flows.
3 - Net leverage ratio is a non-GAAP performance measure used by management, and we believe it provides useful information to investors because it is an important measure to evaluate our debt levels and progress toward leverage targets, which is consistent with the manner our lenders and management use this measure. Refer to the section below entitled “Non-GAAP Financial and Performance Measures” for further information about net leverage ratio.
4 - CTOS is unable to present a quantitative reconciliation of its forward-looking Adjusted EBITDA, Net Leverage Ratio and Levered Free Cash Flow for the year ending December 31, 2024 to their respective most directly comparable GAAP financial measure due to the high variability and difficulty in predicting certain items that affect such GAAP measures including, but not limited to, customer buyout requests on rentals with rental purchase options and income tax expense. Adjusted EBITDA, Net Leverage Ratio and Levered Free Cash Flow should not be used to predict their respective most directly comparable GAAP measure as the differences between the respective measures are variable and unpredictable.
CONFERENCE CALL INFORMATION
The Company has scheduled a conference call at 5:00 p.m. ET on August 1, 2024, to discuss its second quarter 2024 financial results. A webcast will be publicly available at: investors.customtruck.com. To listen by phone, please dial 1-800-715-9871 or 1-646-307-1963 and provide the operator with conference ID 2976854. A replay of the call will be available until 11:59 p.m. ET, Thursday, August 8, 2024, by dialing 1-800-770-2030 or 1-609-800-9909 and entering passcode 2976854.
ABOUT CTOS
CTOS is one of the largest providers of specialty equipment, parts, tools, accessories and services to the electric utility transmission and distribution, telecommunications, and rail markets in North America, with a differentiated “one-stop-shop” business model. CTOS offers its specialized equipment to a diverse customer base for the maintenance, repair, upgrade, and installation of critical infrastructure assets, including electric lines, telecommunications networks, and rail systems. The Company's coast-to-coast rental fleet of approximately 10,200 units includes aerial devices, boom trucks, cranes, digger derricks, pressure drills, stringing gear, Hi-rail equipment, repair parts, tools, and accessories. For more information, please visit customtruck.com.
FORWARD-LOOKING STATEMENTS
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “suggests,” “plans,” “targets,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future


performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's management’s control, that could cause actual results or outcomes to differ materially from those discussed in this press release. This press release is based on certain assumptions that the Company's management has made in light of its experience in the industry, as well as the Company’s perceptions of historical trends, current conditions, expected future developments and other factors the Company believes are appropriate in these circumstances and at such time. As you read and consider this press release, you should understand that these statements are not guarantees of performance or results. Many factors could affect the Company’s actual performance and results and could cause actual results to differ materially from those expressed in this press release. Important factors, among others, that may affect actual results or outcomes include: increases in labor costs, our inability to obtain raw materials, component parts and/or finished goods in a timely and cost-effective manner, and our inability to manage our rental equipment in an effective manner; competition in the equipment dealership and rental industries; our sales order backlog may not be indicative of the level of our future revenues; increases in unionization rate in our workforce; our inability to recruit and retain the experienced personnel, including skilled technicians, we need to compete in our industries; our inability to attract and retain highly skilled personnel and our inability to retain or plan for succession of our senior management; material disruptions to our operation and manufacturing locations as a result of public health concerns, equipment failures, natural disasters, work stoppages, power outages or other reasons; potential impairment charges; any further increase in the cost of new equipment that we purchase for use in our rental fleet or for sale as inventory; aging or obsolescence of our existing equipment, and the fluctuations of market value thereof; disruptions in our supply chain; our business may be impacted by government spending; we may experience losses in excess of our recorded reserves for receivables; uncertainty relating to macroeconomic conditions, unfavorable conditions in the capital and credit markets and our inability to obtain additional capital as required; increases in price of fuel or freight; regulatory technological advancement, or other changes in our core end-markets may affect our customers’ spending; difficulty in integrating acquired businesses and fully realizing the anticipated benefits and cost savings of the acquired businesses, as well as additional transaction and transition costs that we will continue to incur following acquisitions; the interest of our majority stockholder, which may not be consistent with the other stockholders; our significant indebtedness, which may adversely affect our financial position, limit our available cash and our access to additional capital, prevent us from growing our business and increase our risk of default; our inability to generate cash, which could lead to a default; significant operating and financial restrictions imposed by our debt agreements; changes in interest rates, which could increase our debt service obligations on the variable rate indebtedness and decrease our net income and cash flows; disruptions or security compromises affecting our information technology systems or those of our critical services providers could adversely affect our operating results by subjecting us to liability, and limiting our ability to effectively monitor and control our operations, adjust to changing market conditions or implement strategic initiatives; we are subject to complex laws and regulations, including environmental and safety regulations that can adversely affect cost, manner or feasibility of doing business; material weakness in our internal control over financial reporting which, if not remediated, could result in material misstatements in our financial statements, we are subject to a series of risks related to climate change; and increased attention to, and evolving expectations for, sustainability and environmental, social and governance initiatives. For a more complete description of these and other possible risks and uncertainties, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and its subsequent reports filed with the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements.
INVESTOR CONTACT
Brian Perman, Vice President, Investor Relations
(816) 723 - 7906
investors@customtruck.com




CUSTOM TRUCK ONE SOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s except per share data)2024202320242023
Revenue
Rental revenue$102,997 $122,169 $209,168 $240,457 $106,171 
Equipment sales285,633 302,117 558,235 603,407 272,602 
Parts sales and services34,383 32,544 66,917 65,129 32,534 
Total revenue423,013 456,830 834,320 908,993 411,307 
Cost of Revenue
Cost of rental revenue29,295 31,981 59,120 61,880 29,825 
Depreciation of rental equipment44,585 43,616 88,329 83,946 43,744 
Cost of equipment sales231,318 245,266 452,118 491,391 220,800 
Cost of parts sales and services28,548 25,348 54,777 51,496 26,229 
Total cost of revenue333,746 346,211 654,344 688,713 320,598 
Gross Profit89,267 110,619 179,976 220,280 90,709 
Operating Expenses
Selling, general and administrative expenses55,697 58,028 113,692 115,019 57,995 
Amortization6,692 6,606 13,270 13,278 6,578 
Non-rental depreciation3,360 2,721 6,280 5,371 2,920 
Transaction expenses and other5,844 3,689 10,690 7,149 4,846 
Total operating expenses71,593 71,044 143,932 140,817 72,339 
Operating Income 17,674 39,575 36,044 79,463 18,370 
Other Expense
Interest expense, net42,401 31,625 80,316 60,801 37,915 
Financing and other expense (income)(3,319)(5,048)(6,581)(8,999)(3,262)
Total other expense39,082 26,577 73,735 51,802 34,653 
Income (Loss) Before Income Taxes(21,408)12,998 (37,691)27,661 (16,283)
Income Tax Expense (Benefit)3,070 1,388 1,122 2,251 (1,948)
Net Income (Loss)$(24,478)$11,610 $(38,813)$25,410 $(14,335)
Net Income (Loss) Per Share
Basic$(0.10)$0.05 $(0.16)$0.10 $(0.06)
Diluted$(0.10)$0.05 $(0.16)$0.10 $(0.06)




CUSTOM TRUCK ONE SOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)


(in $000s) June 30, 2024December 31, 2023
Assets
Current Assets
Cash and cash equivalents$8,059 $10,309 
Accounts receivable, net 166,701 215,089 
Financing receivables, net15,225 30,845 
Inventory1,170,486 985,794 
Prepaid expenses and other20,041 23,862 
Total current assets1,380,512 1,265,899 
Property and equipment, net158,305 142,115 
Rental equipment, net947,630 916,704 
Goodwill705,220 704,011 
Intangible assets, net266,139 277,212 
Operating lease assets46,134 38,426 
Other assets19,628 23,430 
Total Assets$3,523,568 $3,367,797 
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable$119,786 $117,653 
Accrued expenses53,350 73,847 
Deferred revenue and customer deposits22,480 28,758 
Floor plan payables - trade385,501 253,197 
Floor plan payables - non-trade472,611 409,113 
Operating lease liabilities - current7,026 6,564 
Current maturities of long-term debt3,779 8,257 
Total current liabilities1,064,533 897,389 
Long-term debt, net1,528,433 1,487,136 
Operating lease liabilities - noncurrent40,295 32,714 
Deferred income taxes33,625 33,355 
Total long-term liabilities1,602,353 1,553,205 
Commitments and contingencies
Stockholders' Equity
Common stock25 25 
Treasury stock, at cost(82,094)(56,524)
Additional paid-in capital1,544,884 1,537,553 
Accumulated other comprehensive loss(9,447)(5,978)
Accumulated deficit(596,686)(557,873)
Total stockholders' equity856,682 917,203 
Total Liabilities and Stockholders' Equity$3,523,568 $3,367,797 



CUSTOM TRUCK ONE SOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended June 30,
(in $000s)20242023
Operating Activities
Net income (loss)$(38,813)$25,410 
Adjustments to reconcile net income (loss) to net cash flow from operating activities:
Depreciation and amortization113,958 107,532 
Amortization of debt issuance costs2,879 3,027 
Provision for losses on accounts receivable7,058 3,112 
Share-based compensation6,329 7,469 
Gain on sales and disposals of rental equipment(23,589)(32,643)
Change in fair value of derivative and warrants(527)(1,129)
Deferred tax expense 270 1,849 
Changes in assets and liabilities:
Accounts and financing receivables24,605 27,344 
Inventories(182,751)(166,612)
Prepaids, operating leases and other4,853 (2,747)
Accounts payable3,138 29,325 
Accrued expenses and other liabilities(20,045)(1,545)
Floor plan payables - trade, net132,304 3,089 
Customer deposits and deferred revenue(6,261)(4,586)
Net cash flow from operating activities23,408 (1,105)
Investing Activities
Acquisition of business, net of cash acquired(6,015)— 
Purchases of rental equipment(165,214)(210,360)
Proceeds from sales and disposals of rental equipment99,576 130,246 
Purchase of non-rental property and cloud computing arrangements(27,035)(22,783)
Net cash flow for investing activities(98,688)(102,897)
Financing Activities
Proceeds from debt4,200 13,537 
Share-based payments(1,451)(86)
Borrowings under revolving credit facilities97,520 95,082 
Repayments under revolving credit facilities(62,521)(40,402)
Repayments of notes payable— (4,061)
Finance lease payments— (472)
Repurchase of common stock(23,014)(4,532)
Principal payments on long-term debt(5,259)— 
Acquisition of inventory through floor plan payables - non-trade320,325 398,447 
Repayment of floor plan payables - non-trade(256,827)(325,891)
Net cash flow from financing activities72,973 131,622 
Effect of exchange rate changes on cash and cash equivalents57 249 
Net Change in Cash and Cash Equivalents(2,250)27,869 
Cash and Cash Equivalents at Beginning of Period10,309 14,360 
Cash and Cash Equivalents at End of Period$8,059 $42,229 



Six Months Ended June 30,
(in $000s)20242023
Supplemental Cash Flow Information
Interest paid$76,175 $56,164 
Income taxes paid4,105 1,450 
Non-Cash Investing and Financing Activities
Rental equipment and property and equipment purchases in accounts payable1,128 575 
Rental equipment sales in accounts receivable8,937 2,294 




CUSTOM TRUCK ONE SOURCE, INC.
NON-GAAP FINANCIAL AND PERFORMANCE MEASURES
In our press release and schedules, and on the related conference call, we report certain financial measures that are not required by, or presented in accordance with, United States generally accepted accounting principles (“GAAP”). We utilize these financial measures to manage our business on a day-to-day basis and some of these measures are commonly used in our industry to evaluate performance by excluding items considered to be non-recurring. We believe these non-GAAP measures provide investors expanded insight to assess performance, in addition to the standard GAAP-based financial measures. The press release schedules reconcile the most directly comparable GAAP measure to each non-GAAP measure that we refer to. Although management evaluates and presents these non-GAAP measures for the reasons described herein, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for revenue, operating income/loss, net income/loss, earnings/loss per share or any other comparable measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP performance measure that we use to monitor our results of operations, to measure performance against debt covenants and performance relative to competitors. We believe Adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of operating performance, without regard to financing methods or capital structures. We exclude the items identified in the reconciliations of net income (loss) to Adjusted EBITDA because these amounts are either non-recurring or can vary substantially within the industry depending upon accounting methods and book values of assets, including the method by which the assets were acquired, and capital structures. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) determined in accordance with GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historical costs of depreciable assets, none of which are reflected in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an indication that results will be unaffected by the items excluded from Adjusted EBITDA. Our computation of Adjusted EBITDA may not be identical to other similarly titled measures of other companies.
We define Adjusted EBITDA as net income or loss before interest expense, income taxes, depreciation and amortization, share-based compensation, and other items that we do not view as indicative of ongoing performance. Our Adjusted EBITDA includes an adjustment to exclude the effects of purchase accounting adjustments when calculating the cost of inventory and used equipment sold. When inventory or equipment is purchased in connection with a business combination, the assets are revalued to their current fair values for accounting purposes. The consideration transferred (i.e., the purchase price) in a business combination is allocated to the fair values of the assets as of the acquisition date, with amortization or depreciation recorded thereafter following applicable accounting policies; however, this may not be indicative of the actual cost to acquire inventory or new equipment that is added to product inventory or the rental fleets apart from a business acquisition. We also include an adjustment to remove the impact of accounting for certain of our rental contracts with customers containing a rental purchase option that are accounted for under GAAP as a sales-type lease. We include this adjustment because we believe continuing to reflect the transactions as an operating lease better reflects the economics of the transactions given our large portfolio of rental contracts. These, and other, adjustments to GAAP net income or loss that are applied to derive Adjusted EBITDA are specified by our senior secured credit agreements.
Adjusted Gross Profit. We present total gross profit excluding rental equipment depreciation (“Adjusted Gross Profit”) as a non-GAAP financial performance measure. This measure differs from the GAAP definition of gross profit, as we do not include the impact of depreciation expense, which represents non-cash expense. We use this measure to evaluate operating margins and the effectiveness of the cost of our rental fleet.
Net Debt. We present the non-GAAP financial measure “Net Debt,” which is total debt (the most comparable GAAP measure, calculated as current and long-term debt, excluding deferred financing fees, plus current and long-term finance lease obligations) minus cash and cash equivalents. We believe this non-GAAP measure is useful to investors to evaluate our financial position.
Net Leverage Ratio. Net leverage ratio is a non-GAAP performance measure used by management, and we believe it provides useful information to investors because it is an important measure to evaluate our debt levels and progress toward leverage targets, which is consistent with the manner our lenders and management use this measure. We define net leverage ratio as net debt divided by Adjusted EBITDA for the previous twelve-month period (“last twelve months,” or “LTM”).


CUSTOM TRUCK ONE SOURCE, INC.
ADJUSTED EBITDA RECONCILIATION
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Net income (loss) $(24,478)$11,610 $(38,813)$25,410 $(14,335)
Interest expense27,003 23,575 52,018 45,938 25,015 
Income tax expense (benefit)3,070 1,388 1,122 2,251 (1,948)
Depreciation and amortization57,797 55,441 113,958 107,531 56,161 
EBITDA63,392 92,014 128,285 181,130 64,893 
   Adjustments:
   Non-cash purchase accounting impact (1)5,260 469 8,220 7,668 2,960 
   Transaction and integration costs (2)5,844 3,689 10,690 7,149 4,846 
   Sales-type lease adjustment (3)1,961 3,293 4,435 6,096 2,474 
   Share-based payments (4)3,599 4,322 6,329 7,469 2,730 
Change in fair value of warrants (5)— (604)(527)(1,129)(527)
Adjusted EBITDA$80,056 $103,183 $157,432 $208,383 $77,376 
Adjusted EBITDA is defined as net income (loss), as adjusted for provision for income taxes, interest expense, net, depreciation of rental equipment and non-rental depreciation and amortization, and further adjusted for the impact of the fair value mark-up of acquired rental fleet, business acquisition and merger-related costs, including integration, the impact of accounting for certain of our rental contracts with customers that are accounted for under GAAP as sales-type lease and stock compensation expense. This non-GAAP measure is subject to certain limitations.
(1)    Represents the non-cash impact of purchase accounting, net of accumulated depreciation, on the cost of equipment and inventory sold. The equipment and inventory acquired received a purchase accounting step-up in basis, which is a non-cash adjustment to the equipment cost pursuant to our ABL Credit Agreement and Indenture.
(2)    Represents transaction and process improvement costs related to acquisitions of businesses, including post-acquisition integration costs, which are recognized within operating expenses in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). These expenses are comprised of professional consultancy, legal, tax and accounting fees. Also included are expenses associated with the integration of acquired businesses. These expenses are presented as adjustments to net income (loss) pursuant to our ABL Credit Agreement and Indenture.
(3)    Represents the impact of sales-type lease accounting for certain leases containing rental purchase options (or “RPOs”), as the application of sales-type lease accounting is not deemed to be representative of the ongoing cash flows of the underlying rental contracts. The adjustments are made pursuant to our ABL Credit Agreement and Indenture. The components of this adjustment are presented in the table below:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Equipment sales$(1,554)$(19,603)$(4,572)$(43,775)$(3,018)
Cost of equipment sales1,229 19,415 4,051 42,640 2,822 
Gross profit(325)(188)(521)(1,135)(196)
Interest income(3,283)(4,406)(6,025)(7,834)(2,742)
Rental invoiced5,569 7,887 10,981 15,065 5,412 
Sales-type lease adjustment$1,961 $3,293 $4,435 $6,096 $2,474 
(4) Represents non-cash share-based compensation expense associated with the issuance of stock options and restricted stock units.
(5) Represents the charge to earnings for the change in fair value of the liability for warrants.




Reconciliation of Adjusted Gross Profit
(unaudited)
The following table presents the reconciliation of Adjusted Gross Profit:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Revenue
Rental revenue$102,997 $122,169 $209,168 $240,457 $106,171 
Equipment sales285,633 302,117 558,235 603,407 272,602 
Parts sales and services34,383 32,544 66,917 65,129 32,534 
Total revenue423,013 456,830 834,320 908,993 411,307 
Cost of Revenue
Cost of rental revenue29,295 31,981 59,120 61,880 29,825 
Depreciation of rental equipment44,585 43,616 88,329 83,946 43,744 
Cost of equipment sales231,318 245,266 452,118 491,391 220,800 
Cost of parts sales and services28,548 25,348 54,777 51,496 26,229 
Total cost of revenue333,746 346,211 654,344 688,713 320,598 
Gross Profit89,267 110,619 179,976 220,280 90,709 
Add: depreciation of rental equipment44,585 43,616 88,329 83,946 43,744 
Adjusted Gross Profit$133,852 $154,235 $268,305 $304,226 $134,453 


Reconciliation of ERS Segment Adjusted Gross Profit and Rental Gross Profit
(unaudited)
The following table presents the reconciliation of ERS segment Adjusted Gross Profit:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Revenue
Rental revenue$100,699 $117,832 $203,987 $231,616 $103,288 
Equipment sales37,712 50,694 70,452 142,830 32,740 
Total revenue138,411 168,526 274,439 374,446 136,028 
Cost of Revenue
Cost of rental revenue29,281 31,341 59,081 60,401 29,800 
Cost of equipment sales25,792 39,802 49,890 110,883 24,098 
Depreciation of rental equipment43,581 42,805 86,278 82,317 42,697 
Total cost of revenue98,654 113,948 195,249 253,601 96,595 
Gross profit39,757 54,578 79,190 120,845 39,433 
Add: depreciation of rental equipment43,581 42,805 86,278 82,317 42,697 
Adjusted Gross Profit$83,338 $97,383 $165,468 $203,162 $82,130 



The following table presents the reconciliation of Adjusted ERS Rental Gross Profit:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31, 2024
(in $000s)2024202320242023
Rental revenue$100,699 $117,832 $203,987 $231,616 $103,288 
Cost of rental revenue29,281 31,341 59,081 60,401 29,800 
Adjusted Rental Gross Profit$71,418 $86,491 $144,906 $171,215 $73,488 

Reconciliation of Net Debt
(unaudited)
The following table presents the reconciliation of Net Debt:
(in $000s) June 30, 2024March 31, 2024
Current maturities of long-term debt$3,779 $6,066 
Long-term debt, net1,528,433 1,492,346 
Deferred financing fees19,527 20,975 
Less: cash and cash equivalents(8,059)(7,990)
Net Debt$1,543,680 $1,511,397 

Reconciliation of Net Leverage Ratio
(unaudited)
The following table presents the reconciliation of the Net Leverage Ratio:
Twelve Months Ended
(in $000s)June 30, 2024March 31, 2024
Net Debt (as of period end)$1,543,680 $1,511,397 
Divided by: LTM Adjusted EBITDA (1)
$375,979 $399,106 
Net Leverage Ratio4.11 3.79 

(1) The following tables present the calculation of LTM Adjusted EBITDA for the periods ended June 30, 2024 and March 31, 2024:
Current Year To Date PeriodLess: Prior Year To Date PeriodAdd: Prior Fiscal YearLTM Adjusted EBITDA
(in $000s)June 30, 2024June 30, 2023December 31, 2023June 30, 2024
Net income (loss)$(38,813)$25,410 $50,712 $(13,511)
Interest expense52,018 45,938 94,694 100,774 
Income tax expense (benefit)1,122 2,251 7,364 6,235 
Depreciation and amortization113,958 107,531 218,993 225,420 
EBITDA128,285 181,130 371,763 318,918 
Adjustments:
Non-cash purchase accounting impact8,220 7,668 19,742 20,294 
Transaction and integration costs10,690 7,149 14,143 17,684 
Sales-type lease adjustment4,435 6,096 10,458 8,797 
Share-based payments6,329 7,469 13,309 12,169 
Change in fair value of warrants(527)(1,129)(2,485)(1,883)
Adjusted EBITDA$157,432 $208,383 $426,930 $375,979 



Current Year To Date PeriodLess: Prior Year To Date PeriodAdd: Prior Fiscal YearLTM Adjusted EBITDA
(in $000s)March 31, 2024March 31, 2023December 31, 2023March 31, 2024
Net income (loss)$(14,335)$13,800 $50,712 $22,577 
Interest expense25,015 22,363 94,694 97,346 
Income tax expense (benefit)(1,948)863 7,364 4,553 
Depreciation and amortization56,161 52,090 218,993 223,064 
EBITDA64,893 89,116 371,763 347,540 
Adjustments:
Non-cash purchase accounting impact2,960 7,199 19,742 15,503 
Transaction and integration costs4,846 3,460 14,143 15,529 
Sales-type lease adjustment2,474 2,803 10,458 10,129 
Share-based payments2,730 3,147 13,309 12,892 
Change in fair value of warrants(527)(525)(2,485)(2,487)
Adjusted EBITDA$77,376 $105,200 $426,930 $399,106 

v3.24.2.u1
Cover Page
Aug. 01, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 01, 2024
Entity Registrant Name CUSTOM TRUCK ONE SOURCE, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38186
Entity Tax Identification Number 84-2531628
Entity Address, Address Line One 7701 Independence Avenue
Entity Address, City or Town Kansas City
Entity Address, State or Province MO
Entity Address, Postal Zip Code 64125
City Area Code 816
Local Phone Number 241-4888
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.0001 par value
Trading Symbol CTOS
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001709682
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