Q1 2024 Custom Truck One Source Inc Earnings Call Transcript
Key Points
- Custom Truck One Source Inc reported strong demand in infrastructure, rail, and telecom end markets, contributing to double-digit revenue growth for the sixth consecutive quarter in the TES segment.
- The company has made significant inventory investments, positioning it well to meet resilient customer demand for new equipment sales and rental asset sales as demand returns to core utility end markets.
- Custom Truck One Source Inc saw a 170 basis point improvement in segment gross margin compared to Q1 of 2023, reflecting strong demand and production efficiency improvements.
- The company continues to expand geographically with new branch openings and acquisitions, increasing its location count to 40, up from 35 at the end of Q3 last year.
- Custom Truck One Source Inc reaffirmed its revenue guidance for TDS of $1.115 billion to $1.255 billion, reflecting confidence in continued double-digit revenue growth.
- The company experienced project delays in the utility end market due to supply chain issues, regulatory approvals, and funding details, impacting rental revenue and rental asset sales in Q1.
- Custom Truck One Source Inc lowered its revenue guidance for the ERS segment by $50 million to $680 million to $710 million due to near-term challenges in the T&D sector.
- Adjusted EBITDA guidance was also lowered to $400 million to $440 million, reflecting the impact of the current headwinds affecting the transmission and distribution sectors.
- The company reported a decline in average utilization of the rental fleet to just over 73% from almost 84% in Q1 of the previous year, indicating a slowdown in transmission utilization.
- Despite strategic investments in the rental fleet, the company faced challenges in used equipment sales, with lower than expected sales and some pricing pressure in the used equipment market.
Ladies and gentlemen, thank you for standing by, and welcome to Custom Truck One Source's first quarter 2024 earnings conference call. Please note, this conference call is being recorded.
I'd like to hand the conference call over to your host for today, Brian Perman, Vice President of Investor Relations for Custom Truck One Source. Please go ahead.
Thank you. Before we begin we would like to remind you that management's commentary and responses to questions on today's call may include forward-looking statements, which by their nature are uncertain and outside of the company's control Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ please refer to the Risk Factors section of the company's filings with the SEC.
Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during the call in the press
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