Custom Truck One Source (CTOS) J.P. Morgan Industrials Conference 2025 summary

End market trends and demand outlook

• Transmission and distribution (T&D) demand has improved since Q2 last year, with utilization metrics rising and customer conversations robust.

• Utilities and large contractors are starting to spend, especially on multi-year transmission projects like Greenlink, with distribution utilization also rebounding.

• Transmission is larger in the rental fleet, while distribution is larger overall when including sales.

• Data center build-outs and IIJA infrastructure spending are seen as long-term demand drivers, with about half of IIJA funds allocated and two-thirds of that in process.

• Mega projects and regulatory unlocks are supporting end market activity, with supply chain and financing issues largely resolved.

Tariffs, supply chain, and pricing

• 30% of purchases are from Canada and Mexico, with minimal exposure to China; inventory and a young rental fleet help mitigate tariff risks.

• Strategic inventory levels and supplier agreements provide runway to manage tariff impacts, with flexibility to shift production locations.

• Supply chain conditions have normalized for both chassis and attachments, with improved availability and shorter lead times.

• A 3-5% rental rate increase is being implemented in 2024, expected to impact results as assets turn; no significant price increases planned for new equipment sales.

• Cost increases, such as rising steel prices, are expected to be passed through, but margin expansion is not anticipated.

Utilization, rental trends, and CapEx

• No significant shift in customer preference between renting and owning; rental business rebounded quickly in late 2023.

• Utilization is expected to follow normal seasonal trends, with guidance in the high 70s to low 80s percent for 2024.

• On-rent yields are projected to remain in the high 30s to low 40s percent range.

• Maintenance CapEx is about $300 million, with $400 million for growth; net CapEx for 2024 is targeted at $180-200 million, with similar levels expected in coming years.

• One to two new greenfield locations are planned per year, with each requiring about $1 million in CapEx and reaching positive EBITDA within the first year.