Custom Truck One Source (CTOS) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $422.2 million, up 2.7–3% year-over-year, with strong rental revenue growth and robust demand in core T&D markets; ERS and TES segments showed year-over-year growth, while net loss widened to $17.8 million due to lower gross profit and higher interest expense.

• Adjusted EBITDA was $73.4 million, down 5.1% year-over-year, reflecting lower gross profit and increased costs from higher inventory levels, while adjusted gross profit was $136 million.

• The company operates a leading integrated specialty equipment platform with $1.81 billion LTM revenue and $336 million LTM Adjusted EBITDA as of March 31, 2025.

• Rental fleet utilization improved to just under 78%, with average OEC on rent up 13% year-over-year.

• 2025 guidance reaffirmed, with expectations for continued growth and strong end-market demand despite macroeconomic and tariff uncertainties.

Financial highlights

• Q1 2025 revenue was $422.2 million, adjusted gross profit $136 million, and adjusted EBITDA $73.4 million.

• ERS segment revenue grew 13% year-over-year to $154 million; TES equipment sales were $232 million, down 3% year-over-year but with record March sales and strong backlog.

• APS segment revenue was flat at $35 million, with adjusted gross margin at 22%, pressured by higher material costs and lower third-party service work.

• Net rental CapEx in Q1 was $60–$67 million; fleet age improved to 3.1 years.

• Net leverage ratio increased to 4.80x, with net debt at $1.61 billion.

Outlook and guidance

• 2025 guidance reaffirmed: total revenue $1.97–$2.06 billion, adjusted EBITDA $370–$390 million, net rental CapEx under $200 million.

• Targeting $50–$100 million in levered free cash flow for 2025 and a meaningful reduction in net leverage, aiming for below 3x by end of 2026.

• Expecting mid-single digit growth in rental fleet OEC and continued strong demand in ERS and TES segments.

• Cautiously optimistic for 2025 despite tariff and macroeconomic uncertainties.

• Management expects liquidity sources and operating cash flows to be sufficient for operating, debt service, and capital requirements over the next 12 months and beyond.