Custom Truck One Source, Inc. Reports Financial Results for the Quarter Ended March 31, 2025

Overview of Custom Truck One Source’s Financial Performance

Custom Truck One Source, Inc. is a specialty equipment provider that rents, sells, and services a range of trucks, cranes, and other machinery used for 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).

For the three months ended March 31, 2025, Custom Truck One Source reported total revenue of $422.2 million, up 2.7% from the same period in 2024. This increase was driven by higher rental revenue in the ERS segment, which offset declines in the TES and APS segments.

However, the company’s profitability declined during the quarter. Net loss was $17.8 million, compared to a net loss of $14.3 million in the prior year period. This was primarily due to lower gross profit, higher operating expenses, and increased interest expense.

Revenue and Profit Trends

Looking at the performance by segment:

Equipment Rental Solutions (ERS)

• Rental revenue increased 9.4% to $113.0 million, driven by higher fleet utilization and average equipment on rent.
• Equipment sales also rose 26.4% to $41.4 million, as demand for used equipment increased.
• Gross profit in the ERS segment grew 10.6% to $43.6 million.

Truck and Equipment Sales (TES)

• Equipment sales declined 3.1% to $232.5 million, due to pricing pressures and changes in the product mix.
• Gross profit in the TES segment fell 18.9% to $35.0 million.

Aftermarket Parts and Services (APS)

• Parts and services revenue was relatively flat at $32.1 million.
• Gross profit in the APS segment decreased 15.0% to $6.9 million, impacted by higher material costs.

The overall decline in profitability was driven by a 5.7% decrease in gross profit, as the company faced higher costs of equipment sales and rental equipment depreciation. Operating expenses also increased 1.1%, primarily due to higher compensation costs.

Additionally, total other expense rose 9.4% due to increased interest expense on the company’s variable-rate debt and floor plan financing liabilities.

Analysis of Strengths and Weaknesses

Strengths:

• Diversified business model across equipment rental, sales, and aftermarket services
• Strong market position as a specialty equipment provider to infrastructure-related industries
• Ability to effectively manage and optimize the rental fleet to meet customer demand
• Integrated production capabilities and industry expertise supporting the equipment sales business

Weaknesses:

• Exposure to pricing pressures and product mix changes in the equipment sales segment
• Rising interest rates impacting demand and profitability in the TES segment
• Increasing costs of materials and labor putting pressure on margins in the APS segment
• Reliance on variable-rate debt leading to higher interest expense

Outlook and Future Prospects

Looking ahead, Custom Truck One Source faces a mixed outlook. The company’s rental business appears poised for continued growth, with strong demand and high fleet utilization. However, the equipment sales segment may continue to face headwinds from the high-interest rate environment.

The company’s ability to effectively manage its costs and optimize its product mix will be crucial in navigating the current market conditions. Investments in the rental fleet and continued focus on aftermarket services could help offset challenges in the equipment sales business.

Overall, Custom Truck One Source remains a diversified player in the specialty equipment market, but will need to carefully navigate the evolving industry dynamics to drive improved profitability and shareholder value going forward.