Company Overview - Custom Truck One Source operates one of the largest specialty rental equipment fleets in North America, with over 10,000 units and an average unit age of approximately 3.2 years[21]. - The company serves more than 8,000 customers, with the top 15 customers representing approximately 17% of total revenue, and no single customer exceeding 3% of total revenue in 2024[61]. - The company operates more than 40 locations across North America, with over 2,600 third-party service partners, enhancing its ability to provide local service and support[59]. - The company has a strong focus on enhancing its aftermarket parts and services, leveraging its service technicians to support both rental and customer-owned equipment[66]. - The company operates from its headquarters in Kansas City, Missouri, and maintains over 39 equipment rental and service locations across the U.S. and Canada[166]. Financial Performance - Total revenue for the year ended December 31, 2024, was $1,802.3 million, a decrease of 3.4% compared to $1,865.1 million in 2023[206]. - Rental revenue decreased by 7.5% to $442.9 million in 2024 from $478.9 million in 2023, primarily due to lower rental asset sales and supply chain constraints[206]. - Equipment sales revenue was $1,223.0 million, down 2.4% from $1,253.5 million in 2023, reflecting a decrease in sales volume[206]. - Gross profit decreased by 14.1% to $390.3 million in 2024, compared to $454.3 million in 2023[206]. - Operating income fell to $126.4 million in 2024, down from $170.9 million in 2023, a decrease of 26.1%[206]. - Net loss for the year was $28.7 million, compared to a net income of $50.7 million in 2023, representing a decline of $79.4 million[206]. Market and Industry Trends - The Infrastructure Investment and Jobs Act includes approximately $1.2 trillion in spending, positively impacting Custom Truck's end-markets, with less than 50% of the funds allocated as of November 2024[27]. - Capital expenditures in the electric utility T&D end-market are estimated to be approximately $95 billion in 2024, driven by the need for grid resiliency and renewable energy investments[28]. - The telecommunications infrastructure spending was approximately $95 billion in 2023, expected to grow due to the BEAD program and the expansion of wireless 5G technology[38]. - Total infrastructure capex spend in the U.S. in 2024 is estimated to be just over $300 billion, projected to increase to just under $350 billion by 2028[45]. - The municipal solid waste revenue in the U.S. is projected to grow at a CAGR of 4.7% from 2024 to 2030, driven by increasing waste generation per capita[46]. Operational Challenges - The company has experienced near-term pressure in demand in the utility market due to a lack of customer access to financing in a tight credit environment[120]. - Disruptions in supply chains, including semiconductor shortages and transportation delays, could significantly impact the company's ability to meet customer demand and generate revenue[116]. - The company faces risks related to supply chain disruptions, which could adversely affect its ability to manufacture and market products[101]. - Approximately 2% of the U.S. hourly workers are represented by a labor union, which poses risks of work stoppages and could impact production stability[107]. Strategic Initiatives - The company has identified several new product categories for expansion, focusing on electric utility T&D, telecom, infrastructure, rail, forestry, and waste management, which are increasing capital expenditures[65]. - The company plans to invest in its rental fleet to meet growing demand, particularly in the electric utility T&D and telecom industries[64]. - The company has launched an e-commerce platform to sell proprietary Load King™ equipment parts and other specialty equipment parts[66]. - The company maintains a diverse geographic footprint and has successfully opened five locations in new markets without relying solely on acquisitions[68]. Employee and Community Engagement - As of December 31, 2024, the company had approximately 2,619 employees across more than 40 locations in North America, with about 2% of U.S. employees covered by a collective bargaining agreement[78]. - In 2024, the company provided 26 paid internship opportunities to students from vocational high schools and university programs, aiming to attract early-career talent[86]. - The company has a network of approximately 100 Safety Ambassadors to promote workplace safety and engage employees in safety awareness[91]. - The company offers a comprehensive benefits program, including medical, vision, dental, life, and disability insurance, along with a 401(k) savings program with company matching[92]. - The company is committed to community giving, partnering with nonprofit organizations to support local communities through financial donations, volunteer time, and in-kind support[94]. Risk Factors - The company faces significant operating and financial restrictions that may limit its ability to capitalize on business opportunities[138]. - Compliance with evolving cybersecurity regulations may incur substantial expenses and require changes in business practices[145]. - The company is subject to complex environmental and safety regulations that could adversely affect operational costs and feasibility[147]. - Climate change may disrupt operations and require additional expenditures, impacting financial condition and results[149]. - Increased scrutiny on ESG initiatives could lead to higher compliance costs and affect the company's reputation[152]. Debt and Financial Obligations - As of December 31, 2024, the company's total indebtedness was $1,547.7 million, including $920.0 million in 2029 Secured Notes and $582.9 million under the Asset Based Lending Facility[132]. - The company has $1,384.2 million in variable rate debt under the ABL Facility and floor plan financing arrangements as of December 31, 2024[139]. - A one-eighth percentage point increase in interest rates would increase interest expense by approximately $1.7 million per year[139]. - The ABL Facility has a borrowing base that is subject to fluctuations based on the valuation of parts inventory, fleet inventory, accounts receivable, and unrestricted cash[137]. ESG and Cybersecurity - The company published its inaugural ESG report in 2023 and may engage in additional voluntary ESG initiatives, which could incur significant costs[153]. - The company has invested in cybersecurity safeguards and maintains a cybersecurity risk management program to protect its IT systems[158]. - The company has not identified any known cybersecurity threats that have materially affected its operations or financial condition, but ongoing risks remain[160]. - The company has committed to certain ESG initiatives, but achieving these commitments may be hindered by factors beyond its control, potentially harming its reputation and investor relations[154]. - Unfavorable ESG ratings could negatively impact investor sentiment and the company's share price, as well as its access to capital[155].

Revenue Performance - Total quarterly revenue reached $520.7 million, an increase of $73.5 million or 16.4% compared to the third quarter of 2024[5] - Full-year revenue was $1.802 billion, a decrease of 3.4% compared to 2023[5] - Total revenue for the twelve months ended December 31, 2024, was $1,802,280, a decrease of 3.4% compared to $1,865,100 for the same period in 2023[31] - Total revenue for Q4 2024 was $520.7 million, slightly down from $521.8 million in Q4 2023[45] Net Income and Loss - Quarterly net income was $27.6 million, compared to a net loss of $17.4 million for the third quarter of 2024[5] - Full-year net loss was $28.7 million compared to a net income of $50.7 million in 2023[5] - Net income for the twelve months ended December 31, 2024, was a loss of $28,655 compared to a net income of $50,712 in 2023[31] - Net income for Q4 2024 was $27.6 million, up from $16.1 million in Q4 2023, primarily due to a gain on a sale leaseback transaction[18] Adjusted EBITDA - Adjusted EBITDA for the fourth quarter was $102.0 million, an increase of $21.8 million or 27.2% compared to the third quarter of 2024[5] - Adjusted EBITDA for Q4 2024 was $102.0 million, a sequential increase of $21.8 million (27.2%), but a decrease of $16.3 million (13.8%) compared to Q4 2023[19] - Adjusted EBITDA decreased to $339,657,000 in 2024 from $426,930,000 in 2023, a decline of approximately 20.4%[49] Revenue by Segment - TES segment revenue exceeded $300 million for the quarter and $1 billion for the year, up more than 16% sequentially[3] - TES segment revenue increased by $47.8 million (18.4%) sequentially to $307.7 million, with a 2.9% increase compared to Q4 2023[15] - APS segment revenue rose by $4.1 million (11.3%) sequentially to $40.6 million, and increased by $2.4 million (6.2%) compared to Q4 2023[16] - The 2025 revenue outlook by segment includes ERS at $660 million to $690 million, TES at $1,160 million to $1,210 million, and APS at $150 million to $160 million[22] Debt and Leverage - As of December 31, 2024, total debt outstanding was $1,547.7 million, with a net leverage ratio of 4.5 times[20] - The net leverage ratio increased to 4.55 as of December 31, 2024, compared to 3.53 in 2023, indicating a significant rise in leverage[49] - Net Debt as of December 31, 2024, was calculated as total debt minus cash and cash equivalents, providing a clearer picture of the company's financial position[39] - Long-term debt, net, rose to $1,519,882,000 in 2024, up from $1,487,136,000 in 2023, indicating an increase of approximately 2.2%[48] Cash Flow and Assets - The company reported a net cash flow from operating activities of $121,985 for the twelve months ended December 31, 2024, compared to a negative cash flow of $30,883 in 2023[33] - Total assets increased to $3,501,967 as of December 31, 2024, compared to $3,367,797 as of December 31, 2023, representing a growth of 4.0%[32] - Cash and cash equivalents decreased to $3,805 as of December 31, 2024, from $10,309 as of December 31, 2023[33] Inventory and Backlog - Inventory declined by more than $150 million in the fourth quarter, positioning the company well for 2025[3] - The company experienced a 46.4% reduction in backlog to $368.8 million compared to Q4 2023, attributed to improved supply chain conditions[15] Other Financial Metrics - Adjusted Gross Profit for Q4 2024 was $167.6 million, down from $171.1 million in Q4 2023[45] - Adjusted Gross Profit from rentals for Q4 2024 was $92.6 million, compared to $88.4 million in Q4 2023, showing an increase of 2.5%[47] - The company recognized a gain of $23.5 million from a sale leaseback transaction involving 8 properties with a net book value of $29.0 million[42]

Core Insights - The article emphasizes the importance of value investing as a successful strategy across various market conditions, focusing on fundamental analysis and traditional valuation metrics to identify undervalued stocks [2] Company Analysis - Custom Truck One Source (CTOS) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [3] - CTOS has a PEG ratio of 0.76, significantly lower than the industry average of 1.54, suggesting it may be undervalued relative to its expected earnings growth [4] - The P/B ratio for CTOS is 1.33, which is favorable compared to the industry average of 3.43, indicating a solid market value relative to its book value [5] - The Shyft Group (SHYF) also holds a Zacks Rank of 2 (Buy) and a Value grade of A, with a P/B ratio of 1.56, again lower than the industry average [6] - Both CTOS and SHYF are highlighted as likely undervalued stocks, supported by their strong earnings outlooks [7]

Group 1: Company Overview - Custom Truck One Source, Inc. (CTOS) is part of the Auto-Tires-Trucks sector, which includes 100 individual stocks and currently holds a Zacks Sector Rank of 15 [2] - CTOS has a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimate revisions and improving earnings outlooks [3] Group 2: Performance Metrics - The Zacks Consensus Estimate for CTOS' full-year earnings has increased by 4.8% over the past quarter, reflecting stronger analyst sentiment and an improving earnings outlook [4] - CTOS has returned 8.1% year-to-date, outperforming the average loss of 1.9% in the Auto-Tires-Trucks sector [4] - In the Automotive - Original Equipment industry, which includes 50 companies, CTOS is performing better than the average gain of 1.8% so far this year [6] Group 3: Comparative Analysis - Another stock in the Auto-Tires-Trucks sector that has outperformed is Garrett Motion (GTX), which is up 6.3% year-to-date and also holds a Zacks Rank of 2 (Buy) [5] - Both CTOS and Garrett Motion are positioned well within their respective industries, suggesting potential for continued solid performance [7]

Company Performance - Custom Truck One Source Inc (CTOS) is showing signs of recovery after three consecutive quarters of declines in both revenue and profitability [1] - The company demonstrated similar potential for growth a year ago, but demand subsequently weakened [1] Analyst Background - Robert F Abbott has managed his family's investment accounts since 1995 and incorporated options trading strategies in 2010 [1] - The analyst holds a Bachelor of Arts degree and a Master of Business Administration (MBA) [1] - Abbott operates a website providing investment information for mutual fund investors at beginner and intermediate levels [1]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Custom Truck One Source (CTOS) as a strong candidate for value investors due to its favorable financial metrics and Zacks Rank [2][3][7] Financial Metrics - CTOS has a PEG ratio of 0.76, which is significantly lower than the industry average of 1.59, indicating potential undervaluation [4] - The stock's P/B ratio stands at 1.29, compared to the industry's average of 1.92, suggesting an attractive valuation relative to its book value [5] - CTOS's P/S ratio is 0.62, which is slightly below the industry average of 0.63, reinforcing the notion of the stock being undervalued [6] Investment Outlook - The combination of CTOS's strong earnings outlook and its favorable valuation metrics positions it as an impressive value stock at the moment [7]

Core Insights - Long-term follow-up data from the Phase 3 DeFi trial of nirogacestat in adults with progressing desmoid tumors indicate further reductions in tumor size, increased objective response rate (ORR), and sustained improvement in symptoms, with a median treatment duration of approximately 3 years [1][2][3] Efficacy and Safety - The long-term treatment with nirogacestat resulted in an ORR of 45.7%, with 34.3% achieving partial responses (PRs) and 11.4% achieving complete responses (CRs) [4] - The median best percent reduction in target tumor size was −32.3% at year one and −75.8% for patients completing at least four years of treatment [4] - Patient-reported outcomes (PROs) showed early and sustained improvements in pain and physical functioning, with significant benefits reported by patients [5][6] Clinical Trial Details - The DeFi trial involved 142 patients, with 70 receiving nirogacestat and 72 receiving placebo, focusing on progression-free survival (PFS) as the primary endpoint [8] - The ongoing open-label extension phase allows for continued assessment of nirogacestat's efficacy and safety beyond the double-blind portion of the study [8] Subgroup Analysis - A post-hoc analysis indicated that nirogacestat treatment led to consistent improvements in PFS, ORR, and PROs across various subgroups with poor prognostic factors [6] - The ORR risk difference between nirogacestat and placebo ranged from 18.1% to 56.0%, favoring nirogacestat [6] Patient Population Insights - Desmoid tumors are rare, aggressive tumors primarily affecting individuals aged 20 to 44, with a higher prevalence in females [9] - The estimated annual incidence of new cases in the U.S. is between 1,000 and 1,650 [9] Company Overview - SpringWorks Therapeutics is focused on developing treatments for severe rare diseases and cancer, with OGSIVEO (nirogacestat) being its first FDA-approved therapy for desmoid tumors [10][16] - The company is also exploring nirogacestat for other indications, including ovarian granulosa cell tumors and multiple myeloma [11]

Custom Truck One Source 3rd Quarter 2024 Investor Presentation October 30, 2024 CONFIDENTIAL DRAFT1 2 Safe Harbor This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States ("GAAP"), including, without limitation, Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA (collectively, the "non-GAAP financial measures"). These non-GAAP financial measur ...

Financial Data and Key Metrics Changes - For Q3 2024, the company generated $447 million in revenue, $138 million in adjusted gross profit, and $80 million in adjusted EBITDA [23] - Average OEC on rent decreased year-over-year from just over $1.16 billion in Q3 2023 to $1.08 billion in Q3 2024, but improved sequentially from $1.04 billion in Q2 2024 [23][24] - The company expects total revenue for 2024 to be between $1.8 billion and $1.89 billion, with adjusted EBITDA projected between $340 million and $350 million [20][36] Business Line Data and Key Metrics Changes - The ERS segment had $150 million in revenue for Q3 2024, down from $167 million in Q3 2023, but rental revenue increased by 5% sequentially [24] - The TES segment saw a 13% revenue growth compared to Q3 last year, with year-to-date revenue up 8% [17] - The APS business posted revenue of $36 million in Q3, a slight increase from the previous year [31] Market Data and Key Metrics Changes - The utility end market, which accounts for about 60% of revenue, is experiencing robust demand due to increased electricity needs driven by AI and electrification trends [10][11] - The company anticipates a 24% to 29% increase in U.S. electricity demand by 2035, nearly double last year's forecast [11] - The TES backlog moderated to just under $400 million, down from a peak of over 12 months in early 2023 [28] Company Strategy and Development Direction - The company is strategically investing in its rental fleet to meet current and projected demand, with total OEC at just under $1.5 billion, the highest quarter-end level [16][27] - Management is optimistic about the long-term demand drivers in the industry and expects to return to double-digit adjusted EBITDA growth next year [21][38] - The company is closely monitoring upcoming chassis emission regulations and is prepared for anticipated demand increases [19] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain issues are resolving, interest rates are moderating, and regulatory delays are subsiding, leading to expected improvements [12] - The company is confident that current activity levels and strong market tailwinds will drive growth in 2025 [21][38] - Management acknowledged challenges in the used equipment market but expects improvements in Q4 due to seasonal buying patterns [39] Other Important Information - The company upsized its ABL facility by $200 million to $950 million and extended the maturity to August 2029 [32] - Borrowings under the ABL increased to $628 million, primarily due to inventory increases and lower-than-expected adjusted EBITDA performance [31] Q&A Session Summary Question: Comments on the used market - Management noted some demand in the used market with sequential growth, but there is pricing pressure. They expect improvement in Q4 [39] Question: Fleet utilization expectations - Management indicated that high 70s to low 80s utilization rates are desirable and reflect current market conditions [40][41] Question: Class 8 vocational truck demand - Management confirmed good availability of Class 8 chassis and does not anticipate significant pre-buy orders at the beginning of 2025 [42][46] Question: Growth CapEx and OEC growth outlook - Management expects mid-single-digit fleet growth as T&D market conditions improve, with formal guidance to be provided in March [62] Question: ERS segment revenue guidance - Management clarified that the guidance reflects a normalization of backlog and anticipates growth in Q4 [55][50] Question: Telecom segment activity - Management reported increased activity in telecom, with larger orders for rental equipment, although it remains a small segment [58]

Financial Performance - Custom Truck One Source, Inc. reported a quarterly loss of $0.07 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, and compared to earnings of $0.04 per share a year ago, indicating an earnings surprise of -133.33% [1] - The company posted revenues of $447.22 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.64%, and this represents an increase from year-ago revenues of $434.35 million [2] - Over the last four quarters, the company has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2] Stock Performance - Custom Truck One Source shares have declined approximately 41.3% since the beginning of the year, while the S&P 500 has gained 22.3% [3] - The current Zacks Rank for the stock is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $564.8 million, and for the current fiscal year, it is -$0.13 on revenues of $1.85 billion [7] - The trend for estimate revisions ahead of the earnings release has been unfavorable, which could impact future stock performance [6] Industry Context - The Automotive - Original Equipment industry, to which Custom Truck One Source belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, suggesting a challenging environment [8]