On August 1, 2024, Custom Truck One Source Inc (CTOS, Financial) released its 8-K filing for the second quarter of 2024. Custom Truck One Source Inc is a one-stop-shop provider of specialty equipment in the electric utility transmission and distribution, forestry, telecom, waste management, rail, and infrastructure end-markets in North America. The company's segments include Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS), with the TES segment generating the maximum revenue. The majority of its revenue is derived from the United States.
Performance Overview
Custom Truck One Source Inc (CTOS, Financial) reported total revenue of $423.0 million for Q2 2024, a 7.4% decrease from $456.8 million in Q2 2023. This decline was primarily due to fewer rental asset sales and lower rental demand from the utility end market. The company posted a net loss of $24.5 million, compared to a net income of $11.6 million in the same quarter last year. Gross profit also saw a significant decline, falling 19.3% to $89.3 million from $110.6 million in Q2 2023.
Segment Performance
In the ERS segment, rental revenue decreased by 14.5% to $100.7 million from $117.8 million in Q2 2023. Fleet utilization dropped to 71.7% from 81.7% in the same period last year. Equipment sales in this segment also fell by 25.6% to $37.7 million. The TES segment saw a slight revenue decrease of 1.4% to $247.9 million, while the APS segment's revenue remained flat at $36.7 million.
Financial Metrics and Achievements
Adjusted EBITDA for Q2 2024 was $80.1 million, a 22.4% decrease from $103.2 million in Q2 2023. The company attributed this decline to lower used equipment sales in the ERS segment and higher costs associated with variable-rate floorplan liabilities. As of June 30, 2024, Custom Truck One Source Inc (CTOS, Financial) had cash and cash equivalents of $8.1 million and total debt outstanding of $1,551.7 million.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenue | $423.0 million | $456.8 million |
| Gross Profit | $89.3 million | $110.6 million |
| Net Income (Loss) | $(24.5) million | $11.6 million |
| Adjusted EBITDA | $80.1 million | $103.2 million |
Management Commentary
"Despite a sequential decline in net income, we delivered sequential Adjusted EBITDA growth in the second quarter compared to the first quarter of 2024. While we are not satisfied with our financial results for the first half of the year, we believe CTOS is well-positioned to capitalize on the secular tailwinds we see in the end markets we serve, driven by AI and data center investment, electrification, and utility grid upgrades," said Ryan McMonagle, Chief Executive Officer of CTOS.
Analysis and Outlook
The company's performance in Q2 2024 highlights several challenges, including lower rental demand and market softness in the utility end market. These factors have led to a significant decline in revenue and profitability. However, management remains optimistic about the long-term prospects, citing improvements in supply chain conditions and continued demand in infrastructure, rail, and telecom end markets.
Custom Truck One Source Inc (CTOS, Financial) has updated its full-year revenue and Adjusted EBITDA guidance for 2024, reflecting the ongoing challenges in the utility market. The company now expects consolidated revenue to range between $1,800 million and $1,980 million, with Adjusted EBITDA between $340 million and $375 million.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Custom Truck One Source Inc for further details.
