Custom Truck One Source (CTOS) Q4 2024 earnings summary

Executive summary

• Ended 2024 with strong Q4 momentum, driven by utility, infrastructure, rail, and telecom demand, and record TES segment performance surpassing $1 billion in annual sales for the first time.

• Achieved record annual revenue of over $1.8 billion, with all segments reaching significant milestones and benefiting from prior inventory investments.

• Sequential improvements in rental KPIs, net income, and Adjusted EBITDA supported by customer optimism and strong end-market demand.

• Opened 40th branch, with a new Portland, OR location set for June 2025 to reinforce growth in underserved regions.

• Sale leaseback transaction in Q4 generated a $23.5 million gain, boosting net income.

Financial highlights

• Q4 2024 revenue was $521 million, up 16% sequentially; Adjusted Gross Profit $168 million; Adjusted EBITDA $102 million, up 27% sequentially.

• Full-year 2024 revenue exceeded $1.8 billion; Adjusted Gross Profit $574 million; Adjusted EBITDA $340 million; net leverage at 4.5x by year-end.

• TES segment achieved record quarterly revenue of $308 million in Q4 and annual revenue over $1.1 billion.

• Inventory reduced by over $150 million in Q4, supporting improved free cash flow.

• Cash and cash equivalents at year-end were $3.8 million; net debt was $1.54 billion.

Outlook and guidance

• 2025 total revenue expected between $1.97 billion and $2.06 billion; Adjusted EBITDA projected at $370–$390 million.

• Segment guidance: ERS revenue $660–$690 million, TES $1.16–$1.21 billion, APS $150–$160 million.

• Targeting net leverage below 4x by end of 2025 and 3x by fiscal 2026.

• Free cash flow generation targeted at $50–$100 million in 2025.

• Management expects continued strong demand in TES and ERS, with improved supply chain and normalized backlog.