Overview of Custom Truck One Source, Inc.

Custom Truck One Source, Inc. is a specialty equipment provider that rents, sells, and services a wide range of trucks, cranes, and other machinery used in infrastructure development and maintenance. The company operates in three main business segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS).

Financial Performance

For the three and nine months ended September 30, 2025, Custom Truck One Source reported strong financial results compared to the same periods in 2024. Total revenue increased by 7.8% and 10.5% for the three and nine month periods, respectively, driven by growth in both rental revenue and equipment sales.

Rental revenue increased by 17.4% and 14.7% for the three and nine month periods, respectively, due to higher fleet utilization and average equipment on rent. Equipment sales also grew, up 4.9% and 10.1% for the three and nine month periods, as demand remained robust across the company’s end markets.

The increase in revenue flowed through to higher gross profit, which was up 9.7% and 6.3% for the three and nine month periods. However, net income declined in the three month period due to higher interest expense and income tax expense, while net loss improved in the nine month period.

Segment Performance

The Equipment Rental Solutions (ERS) segment, which includes the company’s rental fleet, saw a 12.1% and 16.1% increase in total revenue for the three and nine month periods, respectively. This was driven by the higher rental revenue as well as increased sales of rental equipment. Gross profit for the ERS segment grew 18.2% and 15.3% for the three and nine month periods.

In the Truck and Equipment Sales (TES) segment, equipment sales increased 6.0% and 8.5% for the three and nine month periods, respectively, due to strong demand. However, gross profit was flat in the three month period and declined 3.1% in the nine month period, as the company faced some pricing pressure.

The Aftermarket Parts and Services (APS) segment saw a 3.0% and 1.9% increase in total revenue for the three and nine month periods. Gross profit grew 22.9% and 10.4% as the higher revenue mix came from the higher-margin rental business.

Liquidity and Capital Resources

As of September 30, 2025, Custom Truck One Source had $13.1 million in cash and $237.6 million of available borrowing capacity under its $950 million asset-based lending (ABL) facility. The company also had $708.5 million in outstanding borrowings under the ABL facility.

The company’s debt agreements contain certain financial covenants related to leverage ratios and restrictions on activities like paying dividends. As of September 30, 2025, the company was in compliance with all applicable covenants.

Cash flow from operating activities was $262.8 million for the nine months ended September 30, 2025, up significantly from $39.9 million in the prior year period. This was driven by lower inventory production compared to the prior year. Cash used in investing activities increased to $233.8 million due to higher purchases of rental equipment.

Strengths and Weaknesses

Strengths:

• Diversified business model across equipment rental, sales, and aftermarket services
• Strong demand for infrastructure-related equipment across the company’s end markets
• High fleet utilization and returns on rental equipment
• Solid liquidity position and access to capital through ABL facility

Weaknesses:

• Pricing pressure in the Truck and Equipment Sales segment
• Reliance on debt financing and exposure to interest rate risk
• Concentration of revenue in the utility and telecommunications end markets

Outlook

Looking ahead, Custom Truck One Source appears well-positioned to capitalize on continued strong demand for its specialty equipment and services. The company’s diverse business model, healthy rental fleet metrics, and solid liquidity provide a strong foundation.

However, the company will need to navigate potential headwinds such as pricing pressure, rising interest rates, and potential softening in certain end markets. Maintaining discipline around pricing, fleet management, and cost control will be critical.

Overall, Custom Truck One Source seems poised for continued growth, but will need to carefully manage its operations and capital structure to deliver consistent financial performance for shareholders.