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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
Form 8-K   
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2023
CUSTOM TRUCK ONE SOURCE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 001-38186 84-2531628
(State or Other Jurisdiction
of Incorporation)		 (Commission
File Number)		 (IRS Employer
Identification No.)
 
7701 Independence Avenue
Kansas City, Missouri
64125
(Address of principal executive offices)(Zip code)
(816) 241-4888
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report) 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) 
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Exchange on Which Registered
Common Stock, $0.0001 par valueCTOSNew York Stock Exchange
Redeemable warrants, exercisable for Common Stock, $0.0001 par valueCTOS.WSNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition.
On August 8, 2023, Custom Truck One Source, Inc. (the "Company") issued a press release announcing its financial results for the quarter ended June 30, 2023. The press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1, shall be deemed "furnished" and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company's filings under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On August 8, 2023, the Company posted an updated investor presentation on its website at www.customtruck.com.
The information in this Item 7.01 shall be deemed "furnished" and not "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company's filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)    Exhibits.
Exhibit No.Description
104Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:
August 8, 2023
Custom Truck One Source, Inc.
   
/s/ Christopher J. Eperjesy
  Christopher J. Eperjesy
Chief Financial Officer




ctoslogojpg.jpg                                     

EXHIBIT 99.1

Custom Truck One Source, Inc. Reports Continued Strong Results for Second Quarter 2023
KANSAS CITY, Mo, August 8, 2023 – (BUSINESS WIRE) – 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)2023202220232022
Rental revenue$122,169 $112,055 $240,457 $221,200 $118,288 
Equipment sales302,117 218,506 603,407 445,692 301,290 
Parts sales and services32,544 31,545 65,129 61,690 32,585 
Total revenue456,830 362,106 908,993 728,582 452,163 
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)2023202220232022
Rental revenue$117,832 $108,109 $231,616 $213,670 $113,784 
Equipment sales50,694 37,200 142,830 96,553 92,136 
Total revenue168,526 145,309 374,446 310,223 205,920 
Cost of rental revenue31,341 27,851 60,401 52,642 29,060 
Cost of equipment sales39,802 30,418 110,883 73,648 71,081 
Depreciation of rental equipment42,805 42,384 82,317 86,350 39,512 
Total cost of revenue113,948 100,653 253,601 212,640 139,653 
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)2023202220232022
Equipment sales$251,423 $181,306 $460,577 $349,139 $209,154 
Cost of equipment sales205,464 154,177 380,508 298,225 175,044 
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)2023202220232022
Rental revenue$4,337 $3,946 $8,841 $7,530 $4,504 
Parts and services revenue32,544 31,545 65,129 61,690 32,585 
Total revenue36,881 35,491 73,970 69,220 37,089 
Cost of revenue25,988 23,578 52,975 48,528 26,987 
Depreciation of rental equipment811 940 1,629 1,938 818 
Total cost of revenue26,799 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)2023202220232022
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.
INVESTOR CONTACT
Brian Perman, Vice President, Investor Relations
(844) 403-6138
investors@customtruck.com




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)2023202220232022
Revenue
Rental revenue$122,169 $112,055 $240,457 $221,200 $118,288 
Equipment sales302,117 218,506 603,407 445,692 301,290 
Parts sales and services32,544 31,545 65,129 61,690 32,585 
Total revenue456,830 362,106 908,993 728,582 452,163 
Cost of Revenue
Cost of rental revenue31,981 28,791 61,880 54,584 29,899 
Depreciation of rental equipment43,616 43,324 83,946 88,288 40,330 
Cost of equipment sales245,266 184,595 491,391 371,873 246,125 
Cost of parts sales and services25,348 22,638 51,496 46,586 26,148 
Total cost of revenue346,211 279,348 688,713 561,331 342,502 
Gross Profit110,619 82,758 220,280 167,251 109,661 
Operating Expenses
Selling, general and administrative expenses58,028 48,779 115,019 102,434 56,991 
Amortization6,606 6,871 13,278 20,206 6,672 
Non-rental depreciation2,721 2,317 5,371 5,364 2,650 
Transaction expenses and other3,689 6,046 7,149 10,694 3,460 
Total operating expenses71,044 64,013 140,817 138,698 69,773 
Operating Income 39,575 18,745 79,463 28,553 39,888 
Other Expense
Interest expense, net31,625 20,281 60,801 39,437 29,176 
Financing and other income(5,048)(15,078)(8,999)(24,158)(3,951)
Total other expense26,577 5,203 51,802 15,279 25,225 
Income Before Income Taxes12,998 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, 2023December 31, 2022
Assets
Current Assets
Cash and cash equivalents$42,229 $14,360 
Accounts receivable, net 151,953 193,106 
Financing receivables, net41,957 38,271 
Inventory765,424 596,724 
Prepaid expenses and other27,587 25,784 
Total current assets1,029,150 868,245 
Property and equipment, net134,358 121,956 
Rental equipment, net920,676 883,674 
Goodwill704,012 703,827 
Intangible assets, net291,053 304,132 
Operating lease assets33,495 29,434 
Other assets25,900 26,944 
Total Assets$3,138,644 $2,938,212 
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable$117,104 $87,255 
Accrued expenses67,043 68,784 
Deferred revenue and customer deposits30,088 34,671 
Floor plan payables - trade139,723 136,634 
Floor plan payables - non-trade366,092 293,536 
Operating lease liabilities - current5,442 5,262 
Current maturities of long-term debt3,550 6,940 
Current portion of finance lease obligations247 1,796 
Total current liabilities729,289 634,878 
Long-term debt, net1,425,117 1,354,766 
Finance leases3,077 3,206 
Operating lease liabilities - noncurrent28,725 24,818 
Deferred income taxes31,078 29,086 
Derivative, warrants and other liabilities1,886 3,015 
Total long-term liabilities1,489,883 1,414,891 
Stockholders' Equity
Common stock25 25 
Treasury stock, at cost(21,438)(15,537)
Additional paid-in capital1,530,443 1,521,487 
Accumulated other comprehensive loss(6,383)(8,947)
Accumulated deficit(583,175)(608,585)
Total stockholders' equity919,472 888,443 
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)20232022
Operating Activities
Net income $25,410 $10,350 
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization107,532 117,120 
Amortization of debt issuance costs3,027 2,158 
Provision for losses on accounts receivable3,112 4,545 
Share-based compensation7,469 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 receivables27,344 (10,744)
Inventories(166,612)(125,021)
Prepaids, operating leases and other(2,747)(1,736)
Accounts payable29,325 32,480 
Accrued expenses and other liabilities(1,545)(8,099)
Floor plan payables - trade, net3,089 (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 equipment130,246 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 debt13,537 — 
Share-based payments(86)(1,247)
Borrowings under revolving credit facilities95,082 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-trade398,447 293,241 
Repayment of floor plan payables - non-trade(325,891)(218,965)
Net cash flow from financing activities131,622 106,654 
Effect of exchange rate changes on cash and cash equivalents249 21 
Net Change in Cash and Cash Equivalents27,869 (7,378)
Cash and Cash Equivalents at Beginning of Period14,360 35,902 
Cash and Cash Equivalents at End of Period$42,229 $28,524 



Six Months Ended June 30,
(in $000s)20232022
Supplemental Cash Flow Information
Interest paid$56,164 $38,417 
Income taxes paid1,450 — 
Non-Cash Investing and Financing Activities
Rental equipment and property and equipment purchases in accounts payable575 — 
Rental equipment sales in accounts receivable2,294 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)2023202220232022
Net income $11,610 $13,623 $25,410 $10,350 $13,800 
Interest expense23,575 18,050 45,938 35,495 22,363 
Income tax expense (benefit)1,388 (81)2,251 2,924 863 
Depreciation and amortization55,441 54,620 107,531 117,120 52,090 
EBITDA92,014 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 $000s)2023202220232022
Equipment sales$(19,603)$(7,671)$(43,775)$(19,908)$(24,172)
Cost of equipment sales19,415 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 invoiced7,887 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)2023202220232022
Revenue
Rental revenue$122,169 $112,055 $240,457 $221,200 $118,288 
Equipment sales302,117 218,506 603,407 445,692 301,290 
Parts sales and services32,544 31,545 65,129 61,690 32,585 
Total revenue456,830 362,106 908,993 728,582 452,163 
Cost of Revenue
Cost of rental revenue31,981 28,791 61,880 54,584 29,899 
Depreciation of rental equipment43,616 43,324 83,946 88,288 40,330 
Cost of equipment sales245,266 184,595 491,391 371,873 246,125 
Cost of parts sales and services25,348 22,638 51,496 46,586 26,148 
Total cost of revenue346,211 279,348 688,713 561,331 342,502 
Gross Profit110,619 82,758 220,280 167,251 109,661 
Add: depreciation of rental equipment43,616 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)2023202220232022
Revenue
Rental revenue$117,832 $108,109 $231,616 $213,670 $113,784 
Equipment sales50,694 37,200 142,830 96,553 92,136 
Total revenue168,526 145,309 374,446 310,223 205,920 
Cost of Revenue
Cost of rental revenue31,341 27,851 60,401 52,642 29,060 
Cost of equipment sales39,802 30,418 110,883 73,648 71,081 
Depreciation of rental equipment42,805 42,384 82,317 86,350 39,512 
Total cost of revenue113,948 100,653 253,601 212,640 139,653 
Gross profit54,578 44,656 120,845 97,583 66,267 
Add: depreciation of rental equipment42,805 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)2023202220232022
Rental revenue$117,832 $108,109 $231,616 $213,670 $113,784 
Cost of rental revenue31,341 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 obligations247 
Long-term debt, net1,425,117 
Finance leases3,077 
Deferred financing fees25,144 
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, 2023March 31, 2023
Net Debt (as of period end)$1,414,906 $1,397,617 
Divided by: Adjusted EBITDA$424,501 $406,701 
Net Leverage Ratio3.33 3.44 


v3.23.2
Cover Page
Aug. 08, 2023
Document Information [Line Items]  
Document Type 8-K
Document Period End Date Aug. 08, 2023
Entity Registrant Name CUSTOM TRUCK ONE SOURCE, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38186
Entity Tax Identification Number 84-2531628
Entity Address, Address Line One 7701 Independence Avenue
Entity Address, City or Town Kansas City
Entity Address, State or Province MO
Entity Address, Postal Zip Code 64125
City Area Code 816
Local Phone Number 241-4888
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001709682
Common Stock  
Document Information [Line Items]  
Title of 12(b) Security Common Stock, $0.0001 par value
Trading Symbol CTOS
Security Exchange Name NYSE
Redeemable Warrants  
Document Information [Line Items]  
Title of 12(b) Security Redeemable warrants, exercisable for Common Stock, $0.0001 par value
Trading Symbol CTOS.WS
Security Exchange Name NYSE
Custom Truck One Source (NYSE:CTOS)
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