管理層發言
Ladies and gentlemen, thank you for standing by, and welcome to Custom Truck One Source's Second Quarter 2026 Earnings Conference Call. Please note, this conference call is being recorded. I would now like to hand the conference call over to your host today, Brian Perman, Vice President of Investor Relations for Custom Truck One Source.
Thank you, operator, and good morning. Before we begin, we would like to remind you that management's commentary and responses to questions on today's call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of the company's filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during the call in the press release we issued yesterday after the market closed. That press release and our second quarter investor presentation are posted on the Investor Relations section of our website. Yesterday afternoon, we also filed our second quarter 2026 10-Q with the SEC. Today's discussion of our results of operations for Custom Truck One Source Inc., or Custom Truck, is presented on a historical basis as of or for the 3 months ended June 30, 2026, and prior periods. Also a reminder that beginning last quarter, our financial reporting now reflects our two new reportable segments: Specialty Equipment Rentals, or SER, and Specialty Truck Equipment and Manufacturing, or STEM. While our 2026 results in our earnings press release and SEC filing reflect the application of intersegment pricing and margins as per accounting requirements for intersegment sales, the segment results for 2025 reflect the intersegment sales with no margin as no intersegment agreement was in place in the period. For an illustrative comparison of what the 2025 results would have been had intersegment sales been reflected with the appropriate gross margin and had other internal accounting policies been in place at the time, please see the appendix of the Q2 investor presentation posted on our Investor Relations website. Joining me today are Ryan McMonagle, Chief Executive Officer; and Chris Eperjesy, Chief Financial Officer. I will now turn the call over to Ryan.
Thanks, Brian, and good morning, everyone. We delivered record revenue in the second quarter, capping a strong first half, driven by continued strong momentum in our core end markets and outstanding execution by our team. In the second quarter, we generated revenue of $563 million and adjusted EBITDA of $117 million, up 10% and 25% year-over-year, respectively. Our Specialty Equipment Rental segment continues to deliver consistently strong performance, driven by sustained and growing demand in the transmission and distribution, or T&D, markets. Our rental fleet averaged 81.6% utilization during the quarter, up 400 basis points from Q2 of last year. This was supported by continued robust levels of OEC on rent, which averaged $1.37 billion in Q2, up 13% year-over-year. So far in Q3, both measures have continued to show year-over-year growth. We believe that we are in the early stages of what could be a once-in-a-generation transmission demand super cycle. We ended the quarter with total OEC of $1.68 billion, the highest quarter-end level in our history, which will support our expected continued growth in SER revenues in the second half of this year. Also, our average fleet age is just over 3 years old, which we believe is one of the youngest fleets in the industry and positions us well to support our customers' needs across the country. Our trucks and equipment continue to power the people who strengthen and build critical infrastructure in the U.S. and Canada. The market has been focused on the durability of demand in T&D and our ability to convert improving rental KPIs into earnings and cash flow, and we believe our trending results over recent quarters speak directly to that. Bidding activity and ongoing conversations with our customers lead us to believe that these conditions will persist through the remainder of 2026 and beyond. Our Specialty Truck Equipment and Manufacturing segment had record performance in the second quarter, with equipment sales reaching an all-time quarterly high for the company and reflecting continued healthy end market demand and order flow. For Q2, STEM revenue, excluding sales to our SER segment, was up 5% versus Q2 of 2025, which at the time was a record for non-fourth quarter equipment sales. New sales order backlog ended the second quarter at $322 million, down $89 million from the end of Q1 on record Q2 deliveries. Despite the decrease in our backlog in Q2, intra-quarter order flow remains strong, and our backlog has grown so far in Q3. We continue to see strong sales demand in the utility end market, especially focused on transmission equipment. In the infrastructure end market, we have seen less growth, but our ongoing conversations with our customers and the pace of bidding and our order activity combined to provide us with the confidence to expect another year of growth in third-party customer revenue for STEM. With respect to the EPA '27 NOx emission regulations, the EPA introduced its proposed changes to the rules in early July, which maintained the 2027 NOx standards while adding non-conformance penalty provisions. The regulations are expected to be finalized later this year. Given our current inventory position, the chassis prebuy actions we have already taken and our strong relationships with our chassis OEM partners, we believe Custom Truck is well positioned to navigate the impact of the upcoming emission standards changes. Given our strong year-to-date performance, robust conditions in the T&D end markets and our outlook for the rest of the year, we are increasing our previous full year 2026 consolidated revenue and adjusted EBITDA outlooks. We expect consolidated revenue in the range of $2.1 billion to $2.2 billion and adjusted EBITDA in the range of $437.5 million to $455 million. Long-term sustained end market demand buoyed by secular megatrends, combined with our ability to provide exceptional execution on behalf of our customers, sets us apart from our competition. Our long-standing relationships with our strategic suppliers and customers continue to be keys to our success. I continue to have the highest degree of confidence in the Custom Truck team and want to thank everyone for their hard work and dedication that helped achieve our extraordinary results in the second quarter. We look forward to updating everyone soon. With that, I'll turn it over to Chris to walk through the numbers in more detail.
Thanks, Ryan, and good morning, everyone. I'll start with the consolidated results for the quarter, then discuss segment performance, our balance sheet, liquidity and leverage and finally, our updated 2026 outlook. Our second quarter 2026 results reflect stronger operating performance across the business and improved rental fundamentals, particularly in our T&D end markets. For the second quarter, total revenue was $563 million and adjusted EBITDA was $117 million, representing 10% and 25% growth, respectively, versus Q2 2025. On a GAAP basis, second quarter net income was $10 million or $0.05 per diluted share compared with a net loss of $28 million a year ago, bringing first half net income to $6 million. About $19 million of that year-over-year improvement reflects a favorable income tax swing as the prior year quarter carried a tax expense related to an adjustment in our estimated effective tax rate. The balance was driven by higher operating income. Turning to our segments. In SER, second quarter third-party revenue, excluding intersegment sales, was $219 million, up 20% year-over-year, driven by strong double-digit growth in both rental revenue and rental equipment sales activity. Rental sales activity benefited from an increase in RPO activity in Q2 versus the same period last year. Segment adjusted EBITDA of $117 million was up 26% year-over-year, with segment adjusted EBITDA margin of 53%, up more than 700 basis points versus Q2 2025. Our key rental KPIs in SER remained quite strong in Q2, continuing the momentum we've experienced in recent quarters. In Q2, utilization averaged 81.6%, up 400 basis points versus Q2 2025. Average OEC on rent in the quarter was $1.37 billion, up almost $160 million or 13% versus the same period in 2025. On-rent yield in the second quarter was 39.4%, reflecting both sequential and year-over-year increases for the quarter. On-rent yield remained within our targeted upper 30s to low 40s percent range, and we continue to see opportunities for rate improvement as transmission mix grows and pricing discipline holds. Our historically strong rental KPIs reflect both increased rental activity and the continued scaling of our fleet to meet demand. Net rental CapEx in Q2 was $36 million, and our fleet age at quarter end was just over 3 years, a modest increase from the end of last quarter, which is consistent with our plan to reduce maintenance CapEx and age the fleet somewhat this year. Our OEC in the rental fleet ended the quarter at almost $1.68 billion, up approximately $120 million versus the end of Q2 2025 and by almost $24 million sequentially. The increase reflects disciplined fleet investment in the face of strong demand, particularly in T&D. While we expect to continue to invest in the fleet in 2026, our planned decrease in maintenance CapEx in 2026 compared to 2025 should contribute to increased free cash flow generation this year versus last year. In STEM, second quarter third-party revenue was $345 million, a quarterly record and up 5% versus Q2 of 2025, which previously represented our highest non-fourth quarter revenue in our history. STEM segment adjusted EBITDA was $37 million and segment adjusted EBITDA margin was 8.5% in the quarter. Recall that our 2025 segment adjusted EBITDA does not include any margin on intersegment sales, while 2026 segment adjusted EBITDA does. STEM gross margins in the quarter were slightly lower as a result of increased sales to national accounts, which tend to carry modestly lower margins. Our new sales backlog ended Q2 at $322 million, down $89 million sequentially on record Q2 deliveries at approximately 3.5 months, just below our targeted range of 4 to 6 months of new sales. June quoting activity increased 26% year-over-year, supporting expected growth in our order intake in the second half. We've seen strong order growth so far in Q3, and our backlog currently stands at more than $340 million. Turning to the balance sheet and liquidity. With LTM adjusted EBITDA of more than $431 million and net debt of $1.66 billion, we finished Q2 with net leverage of 3.85x. This represents a sequential quarterly improvement of 0.17 turns and more than a 0.8 turn improvement versus the end of Q2 2025. Availability under our ABL was $229 million as of June 30. And based on our borrowing base, we have more than $240 million of additional availability that we can potentially access via our existing facility. Free cash flow generation and deleveraging remain key focus areas for us. The increase in our inventory during the first half was largely planned, reflecting chassis and whole goods positioning ahead of scheduled second half deliveries together with the chassis prebuy actions Ryan discussed. Even with that increase, we expect to reduce inventory and floor plan balances during the second half of 2026, which should support improved free cash flow generation. Through the first half of the year, levered free cash flow improved by approximately $40 million versus the prior year period. With respect to our 2026 guidance, the demand environment across our key end markets remains very strong. We expect the STEM segment to continue to benefit from an overall favorable macro demand environment as well as our strong relationship with our key customers and chassis and attachment suppliers. Our order backlog supports this. In our SER segment, what we see on rent and utilization reached historically high levels in the second half of fiscal 2025, and consistent with our year-to-date results, we expect those levels to continue building sequentially in the second half of 2026. Demand for our equipment that serves the T&D utility markets continues at record levels, and we expect the vocational rental market to provide incremental growth as we further penetrate this expanding end market. Given our young fleet age, we continue to expect to be able to significantly reduce our overall investment in our rental fleet in 2026 versus 2025, while continuing to generate growth. The small increase in our fleet age to just over 3 years in the second quarter reflects this. However, given demand trends in our T&D end markets, we plan to modestly increase our net investment in our rental fleet from our previous estimate and now expect a range of $170 million to $200 million, which supports mid-single-digit net OEC growth this year. This represents a meaningful reduction from over $250 million in net fleet CapEx in 2025. After prior year's investments in inventory, driven by the strong demand environment, we expect to continue making progress on further net working capital improvements in 2026, as we continue on our path of reducing inventory levels on hand to our target level of below 6 months. As a result, we continue to expect to generate more than $50 million of levered free cash flow and reduce our net leverage ratio to meaningfully below 4x by year-end 2026, while progressing towards our 3x net leverage target in 2027. Our increased 2026 revenue guidance reflects consolidated revenue in the range of $2.1 billion to $2.2 billion or year-over-year growth of 8% to 13%. Given the strong environment in the T&D end markets and overall strength across both of our segments, we are also raising both the bottom and top ends of our adjusted EBITDA guidance and now project a range of $437.5 million to $455 million, resulting in year-over-year growth of 14% to 19%. We still expect non-rental CapEx of $40 million to $50 million. We are increasing our segment guidance for 2026 as well. We are projecting SER revenue of $850 million to $875 million and STEM revenue of $1.63 billion to $1.7 billion, with STEM third-party new sales revenue growth of 3% to 10%. Overall STEM sales are expected to be down marginally to up 3%, with the variance attributable solely to a year-over-year reduction in intersegment sales due to lower SER maintenance rental CapEx spending this year. For the third quarter, we expect consolidated revenue and adjusted EBITDA to be up year-over-year, though modestly below second quarter levels. A portion of our second quarter new and used equipment deliveries, including RPO buyouts, have been planned for the second half. That timing shifted results between quarters but did not reduce the full year expectations reflected in the ranges we raised today. Our rental business enters the third quarter with OEC on rent and utilization above prior year levels. We expect both to grow sequentially with year-over-year growth rates naturally moderating from here as we lap a second half of 2025 that posted the largest increase in OEC on rent in our history. The fourth quarter remains our historically strongest quarter. In closing, I want to echo Ryan's comments regarding our continued strong business outlook. Despite broader macroeconomic uncertainty, recent results and end market fundamentals support our confidence in the long-term demand drivers and our ability to deliver meaningful adjusted EBITDA growth this year. With that, operator, we can open the line for questions.
分析師問答
Ryan and Chris, Swetha here on behalf of Manish. Congrats on the great quarter. My first question is on the quarterly cadence given that you've indicated that third-party new equipment sales and used equipment sales and RPO buyouts have shifted from the second half into Q2. Can you help us quantify the revenue and the adjusted EBITDA that is being pulled forward and clarify how much of it came from Q3 versus Q4?
Brian, just making sure you're unmuted on your end. We are currently experiencing some technical difficulties. One moment while we deal with these difficulties. Everybody, thank you so much for standing by while we dealt with those technical difficulties. We are back in the Q&A portion. Just a reminder that the question is from Swetha Rakhecha from Cantor Fitzgerald. Swetha, if you could just ask your question one more time so we could get the Q&A portion rolling.
She's not able to; I can repeat the question. Basically, she was asking—this is Chris—she was asking about the cadence, Q2, Q3, first half, second half. I think the way I'd answer that, Swetha, is typically—especially in Q2 and Q3—we have seen historically some push forwards and pushouts. So to quantify the net is a little more challenging. But maybe just to give you a little bit of color, what we're expecting in Q3—if you look back last year, we saw Q3 growth of roughly 20% EBITDA year-over-year. What we're expecting this year is we're expecting both revenue and EBITDA to grow kind of in the high single-digit percentage range, while coming in below the second quarter levels that we had mentioned, which really reflects the delivery and RPO buyouts that shifted into Q2 from the second half. And then historically, we've given guidance of the split first half, second half, which has been anywhere 45% to 47% first half and then 55% to kind of 57% in the second half of the year. This year, we think because of that pull forward and just the timing of last year's ramp-up on OEC on rent in the second half of the year that it's likely to be more of a 48%, 52% kind of split: 48% first half, 52% second half. And then looking at Q4, that typically is our seasonally strongest quarter, and we'd expect that to continue to be the same this year.
Can you hear me okay? Because I couldn't hear you for a few moments there. Okay. You had mentioned intra-quarter order flow was strong. Perhaps I missed this, but could you maybe just share with us how much were orders up year-over-year in the STEM segment, whether they were put in the backlog or they made through within the quarter? And I also wanted to ask about the emissions standard changes. Basically, your customers aren't really hauling freight; they're not looking to be out on the road 12 hours a day driving around. Do you consider the recent changes really just an inflation item that you need to pass along? And if so, have customers had a really negative reaction to the fact that because of things that are out of your control you're going to have to raise prices a bit? And maybe lastly, the map in the slide deck—how close are you to opening up some of those lesser-served markets right now, like the New York, New Jersey metro area, the Carolinas, etc.? I did see an opening in the Northwest. What might be next on the calendar for you for your footprint?
Yes, it's a good question, Mike. We saw converted orders up kind of in that low single-digit range and then orders or quotes were up in the double-digit range. So it's a good leading indicator for the back half of the year. Regarding emissions, it's an interesting one to work through, and some of the regulation is still being finalized. The non-conformance penalties have been announced, and we're estimating those are in the $4,500 to $7,000 range depending on spec and a few of the factors in there. That's to continue running on the same engines we run on today. We've taken the position, Mike, to buy forward a bit—the economics of the non-conformance penalty to us makes sense to carry more inventory heading into 2027. For us, the engine most impacted is the Cummins L9, which is shifting to the X10 engine. Cummins is now saying they'll be in full production on the X10 later in Q3 of next year. So we're watching that closely. Yes, it's going to be a cost increase for our customers, and we're doing everything we can to mitigate that heading into '27. On markets, we're working on all those areas you mentioned. Those are areas where there's clearly opportunity to grow. We're not expecting any other openings this year, so those would be in the years ahead. That would be fairly consistent with how we guided a couple of locations—opening a couple of locations this year.
This is Naim on for Nicole DeBlase. My first question: you've consistently highlighted that your long-term demand is underpinned by major federal funding packages, including the IIJA, the IRA and the CHIPS Act. Given that we're getting later into 2026, can you describe how these federal dollars are translating into actual order flow? What percentage of the $322 million STEM backlog or SER booking pipeline is directly tied to projects receiving federal subsidies or grants? And in which fiscal year do you project the legislative tailwinds could reach their peak contribution to top-line growth? And then one question on SER: SER average fleet utilization reached 81.6%. This utilization is at the very high end of your historical target ranges with a young average fleet of about 3 years. Is 81% to 82% a sustainable run rate in the current supply environment, or should we model a normalization back down to the high 70s as you bring new fleet online in the second half?
Good question. Broadly, we're seeing really strong demand in transmission and distribution. Transmission is less directly backstopped by federal funding programs; obviously, there are grants and approvals, but transmission demand is being driven by regulatory improvements and a lot of planning activity—new lines being designed and staged where equipment is being prepared. Those projects can begin in 2027 and go into 2028, so the tone of our customer conversations has changed meaningfully and supports our view this is early innings of a long cycle. The infrastructure side of things would be more directly impacted by federal spending, and we have yet to see that pick up in a meaningful way. I would expect that as those dollars are released, that benefit could appear later this year or into next year and begin to impact backlog and revenue. On SER utilization, I think low 80s is a good spot to live. A couple of things are benefiting us: the fleet age is short, and transmission projects generally have longer durations, which should benefit utilization staying where it is or even climbing into the fall, which is generally what happens in our business.
I guess, Chris, you kind of answered this question with the seasonality, but I was wondering if you could quantify the pull forward of orders that you saw in Q2 that were expected in Q3? And then a broader question: is some of that due to customers converting from what would otherwise have been a rental because they want to own equipment ahead of long-term visibility? What's driving that? And I guess my second question—sorry if you gave this number, I didn't hear it—on levered free cash flow guidance: you talked about holding inventories up and investing a bit more there; inventories were up sequentially. Are you still expecting kind of $100 million of inventory benefit for the year? I think on a working capital basis it was supposed to be closer to $30 million to $40 million. I'm just trying to see if there was any change in inventory expectations.
Justin, it's hard to quantify because there would have been pull forward and push out last year as well, so I don't want to give a gross number when it really should be a net number. But it was tens of millions between both new sales and used sales. Last year, there would have been a similar pull forward related to some of the prebuy to get ahead of the tariff prebuy last year.
We've talked about this in the past. Some of that prebuy is just a good indicator of long-term demand. Some of that showed up in our rental asset sales line—customers who wanted to own their equipment for the long term. You can take that as a positive indicator for future demand.
Great. And just the follow-up on inventory: are you still targeting that benefit and the working capital improvements you discussed earlier?
Sitting here today, that is still our target. We feel comfortable we'll be above the $50 million of levered free cash flow. How that comes—EBITDA growth versus net working capital versus other potential cash flow triggers—there are moving parts, but we still feel like there's a path to get the numbers that you referenced.
Congratulations on the strong quarter. Ryan, I appreciate the 'transmission demand super cycle' phrase. Could you take us a little deeper into what's driving transmission? How sustainable is it? Why call it a super cycle? And can you dig into other verticals that are strong—are you seeing a lot of data center-related activity and transmission-related enabling of power tied to that?
Good to talk to you, Scott. A couple of things: first, a lot of what we're hearing comes from direct conversations with our customers, including public company customers, and how they are talking about their pipelines. There's a lot of planning going on—new lines being designed and staged—and equipment is starting to be prepared. Many projects don't begin until 2027 and into 2028. That planning activity and the tone of those conversations give us confidence this is the beginning, or early innings, of a long cycle. Industry indicators such as line miles and expected starts are also strong and encouraging. Distribution is still good, though we have seen some IOU dollars shift from distribution to transmission in the short term to meet transmission demand. Data centers are a tailwind for us, but they're not the primary driver of the growth we're seeing in T&D.
I appreciate that, Ryan. Then can we talk a little bit about pricing? Obviously, a lot of dynamics are impacting pricing now and going forward. OEC yield on rent has been accelerating in each of the quarters in the first half, coming into tougher comps and engine changes into next year. Can you speak about customers' appetite for taking pricing? It seems pretty good right now, and customers understand cost pressure. Where do you think pricing can go over the next 2 to 6 quarters?
Two things are happening: when demand is strong, we want to be competitive and take price where we can. Second, transmission mix generally carries a higher on-rent yield than distribution, and as transmission grows, you see a mix shift that helps yields. We took price up about 5% at the end of last year and beginning of this year. Pricing isn't applied uniformly across all assets, but we continue to see opportunities for rate improvement as transmission mix grows and pricing discipline holds.
We have talked about wanting to live in that 15% to 18% range on new sales; we're at the lower end of that range right now. That was driven this quarter by very high volume with some mix to larger customers and product mix, but we still feel comfortable operating within that range and getting toward the higher end as demand continues to be strong.
How important is pricing as a driver of margin expansion? What do you see as the primary drivers of margin expansion in the SER segment?
We've historically lived in the mid-70% gross margin range on the rental side, which we think is a good spot. We're at the higher end of that range today. We think that's sustainable, and there could be upside, but we feel comfortable where we're living in that mid-70s percent range.
Thanks, everyone, for your time today and your interest in Custom Truck. We appreciate the continued engagement and look forward to updating you next quarter. In the meantime, please don't hesitate to reach out with any questions. Thank you again, and have a great day.
This concludes today's call. Thank you for attending. You may now disconnect.