Custom Truck One Source
1st Quarter 2024 Investor Presentation
May 2, 2024
Safe Harbor
This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States ("GAAP"), including, without limitation, Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA (collectively, the "non-GAAP financial measures"). These non-GAAP financial measures may exclude items that are significant in understanding and assessing the Company's financial results. Therefore, these measures should not be considered in isolation or as an alternative to measures of financial performance in accordance with GAAP. Management believes that these non-GAAP financial measures provide meaningful information to investors because they provide insight into how effectively we operate our business. You should be aware that these non-GAAP financial measures may not be comparable to similarly-titled measures used by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of this presentation.
This presentation includes market data and other statistical information from third-party sources. Although CTOS believes these third-party sources are reliable as of their respective dates, CTOS has not independently verified the accuracy or completeness of this information.
Forward-Looking Statements
This presentation 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, that are based on certain assumptions that 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. When used in this presentation, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "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 management's control, that could cause actual results or outcomes to differ materially from those discussed in this presentation. 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.
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CTOS at a Glance
Leading Integrated Provider of Specialty Equipment
• | True "One-Stop-Shop" platform, |
focused on rental and sales | |
• | Deep product knowledge and |
truck expertise |
$1.82B+ | $399M |
LTM Revenue | LTM Adj. EBITDA1 |
2,500+ | 10,300+ |
Employees2 | Fleet Units2 |
$1.45B
Fleet OEC3
New Location | Recent | |
New Location | Acquisition | |
Coming Soon | ||
New Location | 40 | |
Recent | Locations4 | |
Acquisition |
• Strong track record of consistent growth |
End Market & Business Mix
• Favorable end markets with positive tailwinds |
End Market5 | Revenue2 | |
Rental Fleet OEC2
• Proven integration experience and operational |
focus |
Telecom | Other 7% |
4% | |
Rail 6% |
Parts, Sales
& Service
7%New &
Used Sales
Other 11%
Telecom
4%Buckets
31%
• | Nationwide footprint, with recent expansion in |
underserved regions | |
• | Established track record of conservative balance |
sheet management and de-levering |
T&D 59%
Infrastructure
24%
Rental 26%
67%
Rail 7%
Cranes 8%
Other T&D | Diggers |
21% | 17% |
(1) | Adjusted EBITDA is a non-GAAP measure. Please refer to the supplemental information provided in Appendix for reconciliations to the most | |
comparable GAAP measure. | ||
(2) | As of, or for the twelve-month period ended, March 31, 2024. | |
(3) | OEC represents the original equipment cost exclusive of the effect of purchase accounting adjustments applied to rental equipment acquired in | |
business combinations and any rental equipment held for sale. As of March 31, 2024. | 3 | |
(4) | Excludes third-party service locations. As of May 2, 2024. |
- Based on FY23.
Q1 2024 - Consistent Demand & Strong New Sales Growth
- Continued strong demand from Infrastructure, Rail and Telecom end markets amid reduced, but stabilized, Transmission utilization:
- Revenue of $411M
- Adjusted Gross Profit(1) of $134M
- Adjusted EBITDA(1) of $77M
- TES business segment delivered very strong performance
- Revenue of $240M, +15% vs. Q1 '23
- New sales backlog of $537M stands at just over 6 months of sales
Near-record levels of production and strong new equipment sales allowed us to continue to make progress in reducing backlog to a more normalized and manageable level
Down from a peak of over 12 months and still above the historical average of 4 to 6 months
- Continued strategic investment in inventory
- Supports continued strong demand for new equipment sales for TES
- Catalyst for further investment in our ERS fleet in 2024, particularly for the Infrastructure end market
- Adjusted Gross Profit and Adjusted EBITDA are non-GAAP measures. Refer to the supplemental information provided in the Appendix for reconciliations to the most comparable GAAP measures.
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Unique Business Model = Strong Value Creation
Attractive end markets with long-term | Infrastructure Bill and Inflation Reduction Act will | |
secular growth drivers | further supercharge end-market tailwinds | |
Differentiated one-stop shop business model with strong | Best-in-class asset level returns: Rental Asset ROICs of 20%+ | |
unit economics for rent or buy | and New Sales margins of 15%-18% | |
Market leading specialty rental fleet | Youngest, highest quality equipment in the industry | |
Long-term relationships with blue-chip customer base | Demonstrated ability to grow with our customers | |
and win new logos | ||
Nationwide footprint provides superior | 40 branches with more than 300 technicians, | |
customer service and operating flexibility | with ability to expand further | |
CTOS/Nesco combination created multiple | Improved operating and production efficiency with | |
operating synergy opportunities and scale benefits | increased scale resulting in enhanced vendor relationships | |
Executing on a well-defined growth strategy | Value creation for shareholders | |
Solid balance sheet and consistent | Financial flexibility to both reduce leverage | |
cash flow generation | and invest for growth | |
5
Favorable End-Market Dynamics
Strong, Multi-Year End Market Tailwinds With Upside From 2021 Infrastructure Investment and Jobs Act
T&D
Rapidly increasing major projects driven by need for grid upgrades and renewable energy investment, coupled with frequent, often government mandated, maintenance
T&D Capex
~$88B 10.5%
Annual Total Spend '23E | '20-'23E CAGR |
IIJA Impact: $79B
INFRASTRUCTURE
Large and growing pent- up demand in North America with growing bipartisan support to address
Infrastructure Capex
~$268B 7.1%
Annual Total Spend '23E | '20-'23E CAGR |
IIJA Bill Impact: $210B
RAIL
Aging rail infrastructure drives extensive replacement / refurbishment spend, while increasing consumer usage and freight transportation needs are driving investment
Rail Capex
~$12B 8.1%
Annual Total Spend '23 | '20-'23 CAGR |
IIJA Bill Impact: $66B
TELECOM
Build-out and implementation of 5G technology driving investments over next decade while significant recurring maintenance of existing networks required
Telecom Capex
~$102B 8.2%
Annual Total Spend '22 | '19-'22 CAGR |
IIJA Bill Impact: $65B
Source: Edison Electric Institute, FactSet, FMI and US Telecom.
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Infrastructure Spending Bills Extend End-Market Growth
Infrastructure Investment and Jobs Act Allocates ~$420 Billion of Funding to Our End Markets
~$210 Billion | ~$79 Billion | ~$66 Billion |
Roads, Bridges & Major Projects: $111B | Grid: $28B | Passenger & Freight |
Water Infrastructure: $48B | Hydrogen R&D: $10B | |
Airports: $25B | Carbon Capture: $9 | |
Ports & Waterways: $17B | Nuclear: $6B | |
Other: $9B | Other Utility: $18B |
~$65 Billion
Broadband
Source: White House & US Chamber of Commerce
The CHIPS & Science Act and the Inflation Reduction Act both result in significant additional funding that will indirectly impact our end markets through:
- The expansion of US manufacturing capacity (Utility & Infrastructure)
- Certain conservation efforts (Infrastructure)
- The promotion of growth and adoption of electric vehicles, electrification and renewable energy (Utility & Infrastructure)
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Diverse, Highly Loyal Customer Base
Highlights | Diverse Customer Base | |||
T&D | Rail | |||
• Serve more than 8,000 customers, with | Infrastructure / Telecom | |||
the top 15 customers representing | ||||
~16% of revenue |
- No customer represents more than 3% of company revenue
- Strong brand recognition and awareness among industry-leading
customers
• 15+ year tenure with top customers
• Breadth of equipment and geographic reach enables servicing of largest national customers with recurring business tied to long-term engagements
Note: Metrics are as of and for the year ended 12/31/23, unless otherwise noted.
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Differentiated "One-Stop-Shop" Business Model
Integrated Production Capabilities and Rental + Sales Model Provides Unique Value Proposition
Integrated Production Capabilities
Unit Economic Advantages
Chassis OEM | Completed Unit |
Body OEM
Attachment OEM
Boom Cable Placer Bucket
One-Stop-Shop Value Proposition | |||||||
Multiple Revenue Streams | Strong, Consistent Returns | ||||||
Service Offering | End Markets Served | Customer Benefits | |||||
| End-to-end customer | ||||||
Production and Customization | solution | ||||||
Single point of contact for | |||||||
TRANSMISSION & DISTRIBUTION | |||||||
customer | |||||||
Rental | (T&D) | ||||||
| Ability to customize | ||||||
New and Used Sales | equipment to meet | ||||||
INFRASTRUCTURE | customer needs | ||||||
CTOS Benefits | |||||||
Aftermarket Parts and Service | RAIL | ||||||
| Superior unit economics | ||||||
Financing | | Size and Scale | |||||
TELECOM | | Production efficiencies | |||||
Disposal | |||||||
and cost leverage | |||||||
WASTE | | Increased opportunity for | |||||
customer share-of-wallet | |||||||
Note: Graphic shows representative components and is not intended to be exhaustive. | 9 |
National Branch Network
National footprint provides flexibility in managing the rental fleet and superior customer service for rental and sales customers
New Location
New Location
Coming Soon
New Location
Recent
Acquisition
Recent
Acquisition
- 40 locations in the U.S. and Canada, with recently announced additions:
- Casa Grande, AZ
- Sacramento, CA
- Salt Lake City, UT
- Two acquisitions in 2024:
- Alexandria, LA
- Long Island, NY
- More than 300 technicians located throughout our branches
- 90+ mobile technicians capable of being deployed across the country
- Opportunity remains to invest in underserved regions
- Pacific Northwest
- Northern California o NY/NJ Metro
- Carolinas
- Targeting several additional sites over the next few years
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Disclaimer
Custom Truck One Source Inc. published this content on 02 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 22:13:07 UTC.