Custom Truck One Source, Inc. (NYSE: CTOS), a leading provider
of specialty equipment to the electric utility, telecom, rail and
other infrastructure-related end markets, today reported financial
results for its three and six months ended June 30, 2023.
CTOS Second-Quarter Highlights
- Total revenue of $456.8 million, an increase of $94.7 million
or 26.2%, compared to the second quarter of 2022 as a result of
continued strong demand across our end markets
- Gross profit of $110.6 million, an improvement of $27.8
million, or 33.7%, compared to $82.8 million for the second quarter
of 2022
- Adjusted Gross Profit of $154.2 million, an increase of $28.2
million, or 22.3%, compared to $126.1 million for the second
quarter of 2022
- Net income of $11.6 million, a decrease of $2.0 million or
14.8%, compared to net income of $13.6 million, in the second
quarter of 2022
- Adjusted EBITDA of $103.2 million, an increase of $17.8
million, or 20.8% compared to $85.4 million in the second quarter
of 2022
- Further reduction in Net Leverage Ratio from 3.4 at the end of
the last quarter to 3.3 as of June 30, 2023
- Increasing Full Year 2023 Revenue and Adjusted EBITDA
Guidance
“Our second quarter results reflect continued strong demand
across our primary end markets. The tremendous efforts of our team
allowed us to deliver the record levels of vehicle production
required to both add to our fleet and meet the demand for new
vehicle sales,” said Ryan McMonagle, Chief Executive Officer of
CTOS. “All three of our business segments continued to experience
strong year-over-year growth. The demand environment, the continued
improvement in the supply chain and the performance of our team,
together give us the confidence to improve our outlook for 2023. We
continue to believe that our one-stop-shop business model and
significant scale provide us with a competitive advantage that
allows us to deliver unequaled service to our customers,” McMonagle
added.
Summary Actual Financial Results
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Rental revenue
$
122,169
$
112,055
$
240,457
$
221,200
$
118,288
Equipment sales
302,117
218,506
603,407
445,692
301,290
Parts sales and services
32,544
31,545
65,129
61,690
32,585
Total revenue
456,830
362,106
908,993
728,582
452,163
Gross Profit
$
110,619
$
82,758
$
220,994
$
167,251
$
109,661
Adjusted Gross Profit1
$
154,235
$
126,082
$
304,226
$
255,539
$
149,991
Net Income
$
11,610
$
13,623
$
25,410
$
10,350
$
13,800
Adjusted EBITDA1
$
103,183
$
85,383
$
208,383
$
176,860
$
105,200
1
Each of Adjusted Gross Profit and Adjusted
EBITDA is a non-GAAP financial measure. Further information and
reconciliations for our non-GAAP measures to the most directly
comparable financial measure under United States generally accepted
accounting principles in the U.S. (“GAAP”) is included at the end
of this press release.
Summary Actual Financial Results by Segment Our results
are reported for our three segments: Equipment Rental Solutions
(“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts
and Services (“APS”). ERS encompasses our core rental business,
inclusive of sales of used rental equipment to our customers. TES
encompasses our specialized truck and equipment production and new
equipment sales activities. APS encompasses sales and rentals of
parts, tools and other supplies to our customers, as well as our
aftermarket repair service operations. Segment performance is
presented below for the three and six months ended June 30, 2023
and 2022 and three months ended March 31, 2023.
Equipment Rental Solutions
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Rental revenue
$
117,832
$
108,109
$
231,616
$
213,670
$
113,784
Equipment sales
50,694
37,200
142,830
96,553
92,136
Total revenue
168,526
145,309
374,446
310,223
205,920
Cost of rental revenue
31,341
27,851
60,401
52,642
29,060
Cost of equipment sales
39,802
30,418
110,883
73,648
71,081
Depreciation of rental equipment
42,805
42,384
82,317
86,350
39,512
Total cost of revenue
113,948
100,653
253,601
212,640
139,653
Gross profit
$
54,578
$
44,656
$
120,845
$
97,583
$
66,267
Truck and Equipment Sales
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Equipment sales
$
251,423
$
181,306
$
460,577
$
349,139
$
209,154
Cost of equipment sales
205,464
154,177
380,508
298,225
175,044
Gross profit
$
45,959
$
27,129
$
80,069
$
50,914
$
34,110
Aftermarket Parts and Services
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Rental revenue
$
4,337
$
3,946
$
8,841
$
7,530
$
4,504
Parts and services revenue
32,544
31,545
65,129
61,690
32,585
Total revenue
36,881
35,491
73,970
69,220
37,089
Cost of revenue
25,988
23,578
52,975
48,528
26,987
Depreciation of rental equipment
811
940
1,629
1,938
818
Total cost of revenue
26,799
24,518
54,604
50,466
27,805
Gross profit
$
10,082
$
10,973
$
19,366
$
18,754
$
9,284
Summary Combined Operating Metrics
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Ending OEC(a) (as of period end)
$
1,467,779
$
1,399,500
$
1,467,779
$
1,399,500
$
1,457,870
Average OEC on rent(b)
$
1,203,855
$
1,150,400
$
1,209,111
$
1,150,800
$
1,214,300
Fleet utilization(c)
81.7
%
82.8
%
82.6
%
82.6
%
83.6
%
OEC on rent yield(d)
40.1
%
39.2
%
39.8
%
39.1
%
39.6
%
Sales order backlog(e) (as of period
end)
$
863,757
$
663,619
$
863,757
$
663,619
$
855,049
(a)
Ending OEC — original equipment cost
(“OEC”) is the original equipment cost of units at the end of the
measurement period.
(b)
Average OEC on rent — Average OEC on rent
is calculated as the weighted-average OEC on rent during the stated
period.
(c)
Fleet utilization — total number of days
the rental equipment was rented during a specified period of time
divided by the total number of days available during the same
period and weighted based on OEC.
(d)
OEC on rent yield (“ORY”) — a measure of
return realized by our rental fleet during a 12-month period. ORY
is calculated as rental revenue (excluding freight recovery and
ancillary fees) during the stated period divided by the Average OEC
on rent for the same period. For period less than 12 months, the
ORY is adjusted to an annualized basis.
(e)
Sales order backlog — purchase orders
received for customized and stock equipment. Sales order backlog
should not be considered an accurate measure of future net
sales.
Management Commentary Total revenue in the second quarter
of 2023 was characterized by continued strong customer demand for
both rental and new equipment across our end markets. Second
quarter 2023 rental revenue increased 9.0% to $122.2 million,
compared to $112.1 million in the second quarter of 2022,
reflecting the continued expansion of our rental fleet, stable
utilization, and pricing gains. Equipment sales increased 38.3% in
the second quarter of 2023 to $302.1 million, compared to $218.5
million in the second quarter of 2022, reflecting continuing
improvements in the supply chain and our ability to replenish
inventory. Parts sales and service revenue increased 3.2% to $32.5
million, compared to $31.5 million in the second quarter of 2022.
On a sequential quarter basis, total second quarter of 2023 revenue
increased $4.7 million, or 1.0%, primarily due to the expansion of
rental fleet.
In our ERS segment, rental revenue in the second quarter of 2023
was $117.8 million compared to $108.1 million in the second quarter
of 2022, a 9.0% increase. Fleet utilization continued to be strong
at 81.7% compared to 82.8% in the second quarter of 2022, and
average OEC on rent increased 4.6% year-over-year. Total segment
gross profit in the second quarter of 2023 was $54.6 million, an
increase of 22.2% compared to $44.7 million in the second quarter
of 2022. Adjusted Gross Profit in the segment, was $97.4 million in
the second quarter of 2023, compared to $87.0 million in the second
quarter of 2022, representing 11.9% year-over-year growth. Rental
Gross Profit improved to $86.5 million in the second quarter of
2023 compared to $80.3 million in the second quarter of 2022, a
7.8% increase. On a sequential quarter basis, total segment second
quarter of 2023 revenue decreased $37.4 million, or 18.2%, driven
by a 45.0% decrease in rental equipment sales from the first
quarter’s record levels. Despite the decline, we experienced
favorable pricing, with OEC on-rent yield increasing to a record
40.1% in the second quarter of 2023, up from 39.6% in the first
quarter of 2023.
Revenue in our TES segment increased 38.7% to $251.4 million in
the second quarter of 2023, from $181.3 million in the second
quarter of 2022, primarily as a result of continued supply chain
improvements, greater order fulfillments as a result of record
production levels, and sustained strong customer demand. Gross
profit improved by 69.4% to $46.0 million in the second quarter of
2023 compared to $27.1 million in the second quarter of 2022. Gross
profit margin for the quarter was 18.3%, up from 15.0% in the
second quarter of 2022 and 16.3% to the first quarter of 2023. On a
sequential quarter basis, total revenue in the second quarter of
2023 increased $42.3 million, or 20.2%.
APS segment revenue increased 3.9% in the second quarter of 2023
to $36.9 million, compared to $35.5 million in the second quarter
of 2022. Growth in demand for parts, tools and accessories sales
was augmented by increased tools and accessories rentals in the
Parts, Tools and Accessories (“PTA”) division. Gross profit margin
in the segment slightly declined to 27.3% in the second quarter of
2023 from 30.9% in the second quarter of 2022. On a sequential
quarter basis, total segment gross profit margin in the second
quarter of 2023 increased 230 bps from 25.0%.
Net income was $11.6 million in the second quarter of 2023,
compared to net income of $13.6 million for the second quarter of
2022. The $2.0 million or 14.8% decrease in net income is primarily
the result of higher interest expense on variable-rate debt and
variable-rate floor plan liabilities, the change in fair value of
the private warrants liability from a gain to a loss, and higher
operating expenses, largely offset by gross profit expansion. On a
sequential quarter basis, total second quarter of 2023 net income
declined $2.2 million for the reasons mentioned above.
Adjusted EBITDA for the second quarter of 2023 was $103.2
million, an increase of 20.8%, compared to $85.4 million for the
second quarter of 2022. The increase in Adjusted EBITDA was largely
driven by growth in rental revenue and new and used equipment
sales, all of which contributed to margin expansion. On a
sequential quarter basis, Adjusted EBITDA declined by $2.0
million.
As of June 30, 2023, cash and cash equivalents was $42.2
million, Total Debt outstanding was $1,453.8 million, Net Debt was
$1,414.9 million and Net Leverage Ratio was 3.3x. Availability
under the senior secured credit facility was $254.5 million as of
June 30, 2023, and $296.0 million of suppressed availability based
on the borrowing base calculation, with the ability to upsize the
facility. For the three months ended June 30, 2023, Ending OEC
increased by $68.3 million as our fleet additions were only
partially offset by our continued focus on selling older equipment
from our rental fleet at current advantageous residual values.
During the three months ended June 30, 2023, CTOS purchased $3.2
million of its common stock under the previously announced stock
repurchase program.
OUTLOOK We are updating our full-year revenue and
Adjusted EBITDA guidance for 2023 at this time. We believe our ERS
segment will continue to benefit from strong demand from our rental
customers, higher average OEC on rent and for purchases of rental
fleet units, particularly older equipment, in 2023. As we noted in
our initial 2023 guidance, we also expect to grow our rental fleet
(based on Ending OEC) by mid- to high-single digits this year.
Regarding our TES segment, supply chain improvements, improved
inventory levels, record production and backlog levels continue to
improve our ability to produce and deliver an even greater number
of units in 2023.
2023 Consolidated Outlook
Revenue
$1,725 million
—
$1,830 million
Adjusted EBITDA1
$425 million
—
$445 million
2023 Revenue Outlook by Segment
ERS
$700 million
—
$735 million
TES
$880 million
—
$940 million
APS
$145 million
—
$155 million
1
CTOS is not able to present a quantitative
reconciliation of its forward-looking Adjusted EBITDA for the year
ending December 31, 2023 to its most directly comparable GAAP
financial measure, net income, because management cannot reliably
present a quantitative reconciliation of its forward-looking
Adjusted EBITDA for the year ending December 31, 2023 to its most
directly comparable GAAP financial measure, net income, because
management cannot reliably forecast net income on a forward-looking
basis without unreasonable efforts due to the high variability and
difficulty in predicting certain items that affect GAAP net income
including, but not limited to, customer buyout requests on rentals
with rental purchase options, income tax expense and changes in
fair value of derivative financial instruments. Adjusted EBITDA
should not be used to predict net income as the difference between
the two measures is variable.
RECENT EVENT Effective July 31, 2023, the Company’s Board
of Directors appointed Paul Jolas to serve as Executive Vice
President, General Counsel. Mr. Jolas reports to Custom Truck CEO
Ryan McMonagle and directly oversees all legal affairs for the
Company, as well as its Environment, Health & Safety and Risk
Management functions. Mr. Jolas has almost 20 years of experience
serving as general counsel for publicly traded companies, most
recently for U.S. Concrete, Inc., where he advised on a wide range
of complex legal matters, including 35 mergers and acquisitions. He
received his Bachelor of Arts degree in Economics from Northwestern
University and his Juris Doctor degree from Duke University School
of Law. Mr. Jolas succeeds Adam Haubenreich, who left the Company
in July to pursue another opportunity.
CONFERENCE CALL INFORMATION The Company has scheduled a
conference call at 5:00 P.M. Eastern Time on August 8, 2023, to
discuss its second quarter 2023 financial results. A webcast and a
presentation of financial information will be publicly available
at: investors.customtruck.com. To listen by phone, please dial
1-855-327-6837 or 1-631-891-4304. A replay of the call will be
available until midnight ET, Tuesday, August 15, 2023, by dialing
1-844-512-2921 or 1-412-317-6671 and entering passcode
10022174.
ABOUT CTOS CTOS is one of the largest providers of
specialty equipment, parts, tools, accessories and services to the
electric utility transmission and distribution, telecommunications
and rail markets in North America, with a differentiated
“one-stop-shop” business model. CTOS offers its specialized
equipment to a diverse customer base for the maintenance, repair,
upgrade and installation of critical infrastructure assets,
including electric lines, telecommunications networks and rail
systems. The Company's coast-to-coast rental fleet of more than
10,200 units includes aerial devices, boom trucks, cranes, digger
derricks, pressure drills, stringing gear, Hi-rail equipment,
repair parts, tools and accessories. For more information, please
visit customtruck.com.
FORWARD-LOOKING STATEMENTS This press release includes
“forward-looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities
Litigation Reform Act of 1995, as amended, and within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended,
and Section 27A of the Securities Act of 1933, as amended. When
used in this press release, the words “estimates,” “projected,”
“expects,” “anticipates,” “forecasts,” “plans,” “intends,”
“believes,” “seeks,” “may,” “will,” “should,” “future,” “propose”
and variations of these words or similar expressions (or the
negative versions of such words or expressions) are intended to
identify forward-looking statements. These forward-looking
statements are not guarantees of future performance, conditions or
results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of
which are outside the Company's management’s control, that could
cause actual results or outcomes to differ materially from those
discussed in this press release. This press release is based on
certain assumptions that the Company's management has made in light
of its experience in the industry, as well as the Company’s
perceptions of historical trends, current conditions, expected
future developments and other factors the Company believes are
appropriate in these circumstances. As you read and consider this
press release, you should understand that these statements are not
guarantees of performance or results. Many factors could affect the
Company’s actual performance and results and could cause actual
results to differ materially from those expressed in this press
release. Important factors, among others, that may affect actual
results or outcomes include: increases in labor costs, our
inability to obtain raw materials, component parts and/or finished
goods in a timely and cost-effective manner, and our inability to
manage our rental equipment in an effective manner; our sales order
backlog may not be indicative of the level of our future revenues;
increases in unionization rate in our workforce; our inability to
recruit and retain the experienced personnel, including skilled
technicians, we need to compete in our industries; our inability to
attract and retain highly skilled personnel and our inability to
retain our senior management; material disruptions to our operation
and manufacturing locations as a result of public health concerns,
equipment failures, natural disasters, work stoppages, power
outages or other reasons; potential impairment charges; any further
increase in the cost of new equipment that we purchase for use in
our rental fleet or for sale as inventory; aging or obsolescence of
our existing equipment, and the fluctuations of market value
thereof; disruptions in our supply chain; our business may be
impacted by government spending; we may experience losses in excess
of our recorded reserves for receivables; unfavorable conditions in
the capital and credit markets and our inability to obtain
additional capital as required; increases in price of fuel or
freight; regulatory technological advancement, or other changes in
our core end-markets may affect our customers’ spending; difficulty
in integrating acquired businesses and fully realizing the
anticipated benefits and cost savings of the acquired businesses,
as well as additional transaction and transition costs that we will
continue to incur following acquisitions; material weakness in our
internal control over financial reporting which, if not remediated,
could result in material misstatements in our financial statements;
the interest of our majority stockholder, which may not be
consistent with the other stockholders; our significant
indebtedness, which may adversely affect our financial position,
limit our available cash and our access to additional capital,
prevent us from growing our business and increase our risk of
default; our inability to generate cash, which could lead to a
default; significant operating and financial restrictions imposed
by our debt agreements; changes in interest rates, which could
increase our debt service obligations on the variable rate
indebtedness and decrease our net income and cash flows;
disruptions in our information technology systems or a compromise
of our system security, limiting our ability to effectively monitor
and control our operations, adjust to changing market conditions,
and implement strategic initiatives; we are subject to complex laws
and regulations, including environmental and safety regulations
that can adversely affect cost, manner or feasibility of doing
business; we are subject to a series of risks related to climate
change; and increased attention to, and evolving expectations for,
sustainability and environmental, social and governance
initiatives. For a more complete description of these and other
possible risks and uncertainties, please refer to the Company's
Annual Report on Form 10-K for the year ended December 31, 2022,
and its subsequent reports filed with the Securities and Exchange
Commission. All forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in
their entirety by the foregoing cautionary statements.
CUSTOM TRUCK ONE SOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s except per share data)
2023
2022
2023
2022
Revenue
Rental revenue
$
122,169
$
112,055
$
240,457
$
221,200
$
118,288
Equipment sales
302,117
218,506
603,407
445,692
301,290
Parts sales and services
32,544
31,545
65,129
61,690
32,585
Total revenue
456,830
362,106
908,993
728,582
452,163
Cost of Revenue
Cost of rental revenue
31,981
28,791
61,880
54,584
29,899
Depreciation of rental equipment
43,616
43,324
83,946
88,288
40,330
Cost of equipment sales
245,266
184,595
491,391
371,873
246,125
Cost of parts sales and services
25,348
22,638
51,496
46,586
26,148
Total cost of revenue
346,211
279,348
688,713
561,331
342,502
Gross Profit
110,619
82,758
220,280
167,251
109,661
Operating Expenses
Selling, general and administrative
expenses
58,028
48,779
115,019
102,434
56,991
Amortization
6,606
6,871
13,278
20,206
6,672
Non-rental depreciation
2,721
2,317
5,371
5,364
2,650
Transaction expenses and other
3,689
6,046
7,149
10,694
3,460
Total operating expenses
71,044
64,013
140,817
138,698
69,773
Operating Income
39,575
18,745
79,463
28,553
39,888
Other Expense
Interest expense, net
31,625
20,281
60,801
39,437
29,176
Financing and other income
(5,048
)
(15,078
)
(8,999
)
(24,158
)
(3,951
)
Total other expense
26,577
5,203
51,802
15,279
25,225
Income Before Income Taxes
12,998
13,542
27,661
13,274
14,663
Income Tax Expense (Benefit)
1,388
(81
)
2,251
2,924
863
Net Income
$
11,610
$
13,623
$
25,410
$
10,350
$
13,800
Net Income Per Share
Basic
$
0.05
$
0.05
$
0.10
$
0.04
$
0.06
Diluted
$
0.05
$
0.05
$
0.10
$
0.04
$
0.06
CUSTOM TRUCK ONE SOURCE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in $000s)
June 30, 2023
December 31, 2022
Assets
Current Assets
Cash and cash equivalents
$
42,229
$
14,360
Accounts receivable, net
151,953
193,106
Financing receivables, net
41,957
38,271
Inventory
765,424
596,724
Prepaid expenses and other
27,587
25,784
Total current assets
1,029,150
868,245
Property and equipment, net
134,358
121,956
Rental equipment, net
920,676
883,674
Goodwill
704,012
703,827
Intangible assets, net
291,053
304,132
Operating lease assets
33,495
29,434
Other assets
25,900
26,944
Total Assets
$
3,138,644
$
2,938,212
Liabilities and Stockholders'
Equity
Current Liabilities
Accounts payable
$
117,104
$
87,255
Accrued expenses
67,043
68,784
Deferred revenue and customer deposits
30,088
34,671
Floor plan payables - trade
139,723
136,634
Floor plan payables - non-trade
366,092
293,536
Operating lease liabilities - current
5,442
5,262
Current maturities of long-term debt
3,550
6,940
Current portion of finance lease
obligations
247
1,796
Total current liabilities
729,289
634,878
Long-term debt, net
1,425,117
1,354,766
Finance leases
3,077
3,206
Operating lease liabilities -
noncurrent
28,725
24,818
Deferred income taxes
31,078
29,086
Derivative, warrants and other
liabilities
1,886
3,015
Total long-term liabilities
1,489,883
1,414,891
Stockholders' Equity
Common stock
25
25
Treasury stock, at cost
(21,438
)
(15,537
)
Additional paid-in capital
1,530,443
1,521,487
Accumulated other comprehensive loss
(6,383
)
(8,947
)
Accumulated deficit
(583,175
)
(608,585
)
Total stockholders' equity
919,472
888,443
Total Liabilities and Stockholders'
Equity
$
3,138,644
$
2,938,212
CUSTOM TRUCK ONE SOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Six Months Ended June
30,
(in $000s)
2023
2022
Operating Activities
Net income
$
25,410
$
10,350
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation and amortization
107,532
117,120
Amortization of debt issuance costs
3,027
2,158
Provision for losses on accounts
receivable
3,112
4,545
Share-based compensation
7,469
5,148
Gain on sales and disposals of rental
equipment
(32,643
)
(22,905
)
Change in fair value of derivative and
warrants
(1,129
)
(18,822
)
Deferred tax expense
1,849
2,575
Changes in assets and liabilities:
Accounts and financing receivables
27,344
(10,744
)
Inventories
(166,612
)
(125,021
)
Prepaids, operating leases and other
(2,747
)
(1,736
)
Accounts payable
29,325
32,480
Accrued expenses and other liabilities
(1,545
)
(8,099
)
Floor plan payables - trade, net
3,089
(1,441
)
Customer deposits and deferred revenue
(4,586
)
(6,972
)
Net cash flow from operating
activities
(1,105
)
(21,364
)
Investing Activities
Acquisition of business, net of cash
acquired
—
(49,832
)
Purchases of rental equipment
(210,360
)
(127,237
)
Proceeds from sales and disposals of
rental equipment
130,246
96,143
Purchase of non-rental property and cloud
computing arrangements
(22,783
)
(11,763
)
Net cash flow from investing
activities
(102,897
)
(92,689
)
Financing Activities
Proceeds from debt
13,537
—
Share-based payments
(86
)
(1,247
)
Borrowings under revolving credit
facilities
95,082
75,000
Repayments under revolving credit
facilities
(40,402
)
(34,945
)
Repayments of notes payable
(4,061
)
(3,791
)
Finance lease payments
(472
)
(2,639
)
Repurchase of common stock
(4,532
)
—
Acquisition of inventory through floor
plan payables - non-trade
398,447
293,241
Repayment of floor plan payables -
non-trade
(325,891
)
(218,965
)
Net cash flow from financing
activities
131,622
106,654
Effect of exchange rate changes on cash
and cash equivalents
249
21
Net Change in Cash and Cash
Equivalents
27,869
(7,378
)
Cash and Cash Equivalents at Beginning
of Period
14,360
35,902
Cash and Cash Equivalents at End of
Period
$
42,229
$
28,524
Six Months Ended June
30,
(in $000s)
2023
2022
Supplemental Cash Flow
Information
Interest paid
$
56,164
$
38,417
Income taxes paid
1,450
—
Non-Cash Investing and Financing
Activities
Rental equipment and property and
equipment purchases in accounts payable
575
—
Rental equipment sales in accounts
receivable
2,294
1,145
CUSTOM TRUCK ONE SOURCE, INC.
NON-GAAP FINANCIAL AND PERFORMANCE MEASURES In our press
release and schedules, and on the related conference call, we
report certain financial measures that are not required by, or
presented in accordance with, United States generally accepted
accounting principles (“GAAP”). We utilize these financial measures
to manage our business on a day-to-day basis and some of these
measures are commonly used in our industry to evaluate performance.
We believe these non-GAAP measures provide investors expanded
insight to assess performance, in addition to the standard
GAAP-based financial measures. The press release schedules
reconcile the most directly comparable GAAP measure to each
non-GAAP measure that we refer to. Although management evaluates
and presents these non-GAAP measures for the reasons described
herein, please be aware that these non-GAAP measures have
limitations and should not be considered in isolation or as a
substitute for revenue, operating income/loss, net income/loss,
earnings/loss per share or any other comparable operating measure
prescribed by GAAP. In addition, we may calculate and/or present
these non-GAAP financial measures differently than measures with
the same or similar names that other companies report, and as a
result, the non-GAAP measures we report may not be comparable to
those reported by others.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial
performance measure that we use to monitor our results of
operations, to measure performance against debt covenants and
performance relative to competitors. We believe Adjusted EBITDA is
a useful performance measure because it allows for an effective
evaluation of operating performance, without regard to financing
methods or capital structures. We exclude the items identified in
the reconciliations of net income (loss) to Adjusted EBITDA because
these amounts are either non-recurring or can vary substantially
within the industry depending upon accounting methods and book
values of assets, including the method by which the assets were
acquired, and capital structures. Adjusted EBITDA should not be
considered as an alternative to, or more meaningful than, net
income (loss) determined in accordance with GAAP. Certain items
excluded from Adjusted EBITDA are significant components in
understanding and assessing a company’s financial performance, such
as a company’s cost of capital and tax structure, as well as the
historical costs of depreciable assets, none of which are reflected
in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not
be construed as an indication that results will be unaffected by
the items excluded from Adjusted EBITDA. Our computation of
Adjusted EBITDA may not be identical to other similarly titled
measures of other companies.
We define Adjusted EBITDA as net income or loss before interest
expense, income taxes, depreciation and amortization, share-based
compensation, and other items that we do not view as indicative of
ongoing performance. Our Adjusted EBITDA includes an adjustment to
exclude the effects of purchase accounting adjustments when
calculating the cost of inventory and used equipment sold. When
inventory or equipment is purchased in connection with a business
combination, the assets are revalued to their current fair values
for accounting purposes. The consideration transferred (i.e., the
purchase price) in a business combination is allocated to the fair
values of the assets as of the acquisition date, with amortization
or depreciation recorded thereafter following applicable accounting
policies; however, this may not be indicative of the actual cost to
acquire inventory or new equipment that is added to product
inventory or the rental fleets apart from a business acquisition.
Additionally, the pricing of rental contracts and equipment sales
prices for equipment is based on OEC, and we measure a rate of
return from rentals and sales using OEC. We also include an
adjustment to remove the impact of accounting for certain of our
rental contracts with customers containing a rental purchase option
that are accounted for under GAAP as a sales-type lease. We include
this adjustment because we believe continuing to reflect the
transactions as an operating lease better reflects the economics of
the transactions given our large portfolio of rental contracts.
These, and other, adjustments to GAAP net income or loss that are
applied to derive Adjusted EBITDA are specified by our senior
secured credit agreements.
Adjusted Gross Profit. We present total gross profit
excluding rental equipment depreciation (“Adjusted Gross Profit”)
as a non-GAAP financial performance measure. This measure differs
from the GAAP definition of gross profit, as we do not include the
impact of depreciation expense, which represents non-cash expense.
We use these measures to evaluate operating margins and the
effectiveness of the cost of our rental fleet.
Net Debt. We present the non-GAAP financial measure “Net
Debt,” which is total debt (the most comparable GAAP measure,
calculated as current and long-term debt, excluding deferred
financing fees, plus current and long-term finance lease
obligations) minus cash and cash equivalents. We believe this
non-GAAP measure is useful to investors to evaluate our financial
position.
Net Leverage Ratio. Net Leverage Ratio is a non-GAAP
financial performance measure used by management and we believe it
provides useful information to investors because it is an important
liquidity measure that reflects our ability to service debt. We
define net leverage ratio as net debt divided by Adjusted
EBITDA.
CUSTOM TRUCK ONE SOURCE, INC.
ADJUSTED EBITDA RECONCILIATION
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Net income
$
11,610
$
13,623
$
25,410
$
10,350
$
13,800
Interest expense
23,575
18,050
45,938
35,495
22,363
Income tax expense (benefit)
1,388
(81
)
2,251
2,924
863
Depreciation and amortization
55,441
54,620
107,531
117,120
52,090
EBITDA
92,014
86,212
181,130
165,889
89,116
Adjustments:
Non-cash purchase accounting impact
(1)
469
2,367
7,668
11,393
7,199
Transaction and integration costs (2)
3,689
6,043
7,149
10,691
3,460
Sales-type lease adjustment (3)
3,293
2,032
6,096
2,561
2,803
Share-based payments (4)
4,322
1,784
7,469
5,148
3,147
Change in fair value of derivative and
warrants (5)
(604
)
(13,055
)
(1,129
)
(18,822
)
(525
)
Adjusted EBITDA
$
103,183
$
85,383
$
208,383
$
176,860
$
105,200
Adjusted EBITDA is defined as net income plus interest
expense, provision for income taxes, depreciation and amortization,
and further adjusted for non-cash purchase accounting impact,
transaction and process improvement costs, including business
integration expenses, share-based payments, the change in fair
value of derivative instruments, sales-type lease adjustment, and
other special charges that are not expected to recur. This non-GAAP
measure is subject to certain limitations.
(1)
Represents the non-cash impact of purchase
accounting, net of accumulated depreciation, on the cost of
equipment and inventory sold. The equipment and inventory acquired
received a purchase accounting step-up in basis, which is a
non-cash adjustment to the equipment cost pursuant to our credit
agreement.
(2)
Represents transaction and process
improvement costs related to acquisitions of businesses, including
post-acquisition integration costs, which are recognized within
operating expenses in our Condensed Consolidated Statements of
Income and Comprehensive Income. These expenses are comprised of
professional consultancy, legal, tax and accounting fees. Also
included are expenses associated with the integration of acquired
businesses. These expenses are presented as adjustments to net
income pursuant to our ABL Credit Agreement.
(3)
Represents the adjustment for the impact
of sales-type lease accounting for certain leases containing rental
purchase options (or “RPOs”), as the application of sales-type
lease accounting is not deemed to be representative of the ongoing
cash flows of the underlying rental contracts. This adjustment is
made pursuant to our credit agreement.
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Equipment sales
$
(19,603
)
$
(7,671
)
$
(43,775
)
$
(19,908
)
$
(24,172
)
Cost of equipment sales
19,415
6,765
42,640
17,135
23,225
Gross profit
(188
)
(906
)
(1,135
)
(2,773
)
(947
)
Interest income
(4,406
)
(2,220
)
(7,834
)
(5,108
)
(3,428
)
Rentals invoiced
7,887
5,158
15,065
10,442
7,178
Sales-type lease adjustment
$
3,293
$
2,032
$
6,096
$
2,561
$
2,803
(4)
Represents non-cash share-based
compensation expense associated with the issuance of stock options
and restricted stock units.
(5)
Represents the credit to earnings for the
change in fair value of the liability for private warrants.
Reconciliation of Adjusted Gross
Profit
(unaudited)
The following table presents the
reconciliation of Adjusted Gross Profit:
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Revenue
Rental revenue
$
122,169
$
112,055
$
240,457
$
221,200
$
118,288
Equipment sales
302,117
218,506
603,407
445,692
301,290
Parts sales and services
32,544
31,545
65,129
61,690
32,585
Total revenue
456,830
362,106
908,993
728,582
452,163
Cost of Revenue
Cost of rental revenue
31,981
28,791
61,880
54,584
29,899
Depreciation of rental equipment
43,616
43,324
83,946
88,288
40,330
Cost of equipment sales
245,266
184,595
491,391
371,873
246,125
Cost of parts sales and services
25,348
22,638
51,496
46,586
26,148
Total cost of revenue
346,211
279,348
688,713
561,331
342,502
Gross Profit
110,619
82,758
220,280
167,251
109,661
Add: depreciation of rental equipment
43,616
43,324
83,946
88,288
40,330
Adjusted Gross Profit
$
154,235
$
126,082
$
304,226
$
255,539
$
149,991
Reconciliation of ERS Segment Adjusted
Gross Profit and Rental Gross Profit
(unaudited)
The following table presents the
reconciliation of ERS segment Adjusted Gross Profit:
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Revenue
Rental revenue
$
117,832
$
108,109
$
231,616
$
213,670
$
113,784
Equipment sales
50,694
37,200
142,830
96,553
92,136
Total revenue
168,526
145,309
374,446
310,223
205,920
Cost of Revenue
Cost of rental revenue
31,341
27,851
60,401
52,642
29,060
Cost of equipment sales
39,802
30,418
110,883
73,648
71,081
Depreciation of rental equipment
42,805
42,384
82,317
86,350
39,512
Total cost of revenue
113,948
100,653
253,601
212,640
139,653
Gross profit
54,578
44,656
120,845
97,583
66,267
Add: depreciation of rental equipment
42,805
42,384
82,317
86,350
39,512
Adjusted Gross Profit
$
97,383
$
87,040
$
203,162
$
183,933
$
105,779
The following table presents the
reconciliation of ERS Rental Gross Profit:
Three Months Ended June
30,
Six Months Ended June
30,
Three Months
Ended March 31,
2023
(in $000s)
2023
2022
2023
2022
Rental revenue
$
117,832
$
108,109
$
231,616
$
213,670
$
113,784
Cost of rental revenue
31,341
27,851
60,401
52,642
29,060
Rental Gross Profit
$
86,491
$
80,258
$
171,215
$
161,028
$
84,724
Reconciliation of Net Debt
(unaudited)
The following table presents the
reconciliation of Net Debt:
(in $000s)
June 30, 2023
Current maturities of long-term debt
$
3,550
Current portion of finance lease
obligations
247
Long-term debt, net
1,425,117
Finance leases
3,077
Deferred financing fees
25,144
Less: cash and cash equivalents
(42,229
)
Net Debt
$
1,414,906
Reconciliation of Net Leverage
Ratio
(unaudited)
The following table presents the
reconciliation of the Net Leverage Ratio:
Twelve Months Ended
(in $000s)
June 30, 2023
March 31, 2023
Net Debt (as of period end)
$
1,414,906
$
1,397,617
Divided by: Adjusted EBITDA
$
424,501
$
406,701
Net Leverage Ratio
3.33
3.44
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808211724/en/
INVESTOR CONTACT Brian Perman, Vice President, Investor
Relations (844) 403-6138 investors@customtruck.com
Custom Truck One Source (NYSE:CTOS)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Custom Truck One Source (NYSE:CTOS)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024