Custom Truck One Source, Inc. ((CTOS)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Custom Truck One Source, Inc. was marked by a generally positive sentiment, highlighting strong revenue growth and increased rental demand. The company also celebrated record-high equipment sales in its TES segment. Despite facing challenges such as pressure on gross margins and economic uncertainty due to tariff policies, the company remains cautiously optimistic, reaffirming its full-year guidance.
Strong Year-Over-Year Revenue Growth
The earnings call revealed that Custom Truck One Source, Inc. achieved a total revenue of $422 million for Q1 2025. This represents a significant increase, driven by robust demand in core T&D markets, resulting in a 13% year-over-year revenue growth for the ERS segment.
Increased Utilization and Rental Demand
The company reported an average OEC on rent for Q1 exceeding $1.2 billion, marking a 13% year-over-year increase. Utilization rates were just under 78%, up 440 basis points from the previous year, indicating a strong rental demand.
Record-High Equipment Sales Performance in TES
The TES segment experienced substantial net order growth, with a backlog increase of over $51 million or 14%. The quarter ended with the strongest March in the company’s history, underscoring the segment’s robust performance.
Reaffirmed Full Year 2025 Guidance
Custom Truck reaffirmed its fiscal 2025 revenue guidance, projecting total revenue between $1.97 billion and $2.06 billion, and adjusted EBITDA guidance of $370 million to $390 million. This reaffirmation highlights the company’s confidence in achieving its financial targets despite existing challenges.
Pressure on Gross Margins
The TES segment’s gross margin was reported at 15.1%, a decrease from Q1 2024, impacted by mix and improved inventory levels. However, the margin remains within the expected range of 15% to 18%.
Economic Uncertainty and Tariff Challenges
The company acknowledged the evolving U.S. tariff policies, which have introduced greater economic uncertainty. This has led to shifting cross-border production and increased inventory levels to mitigate potential impacts.
Flat ATS Segment Revenue
The ATS business reported revenue of $35 million, flat compared to Q1 of the previous year. The adjusted gross profit margin was down due to higher material costs, reflecting challenges in maintaining profitability.
Forward-Looking Guidance
Custom Truck One Source, Inc. remains optimistic about its growth targets for 2025, supported by strong order flow and sustained demand across its markets. Despite challenges such as evolving tariffs and high interest rates, the company projects total revenue between $1.97 billion and $2.06 billion, with adjusted EBITDA ranging from $370 million to $390 million.
In summary, the earnings call for Custom Truck One Source, Inc. highlighted a positive outlook with strong revenue growth and increased rental demand. The company faces challenges such as pressure on gross margins and economic uncertainty due to tariff policies, but remains optimistic about achieving its financial targets for 2025.