Earnings call transcript: Custom Truck One Source Q3 2025 earnings miss

Custom Truck One Source (CTOS) reported its third-quarter earnings for 2025, revealing a slight miss on earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.03, compared to the forecasted -$0.02, resulting in a 50% negative surprise. Revenue came in at $482 million, below the expected $492.38 million, marking a -2.09% surprise. Following the report, CTOS shares fell by 15.28% to $6.19 in premarket trading. According to InvestingPro analysis, the stock appears undervalued despite recent challenges, with 7 key insights available to subscribers regarding the company’s valuation and growth prospects.

Key Takeaways

• Custom Truck One Source reported an EPS of -$0.03, missing forecasts by $0.01.
• Revenue was $482 million, falling short of the $492.38 million forecast.
• The stock dropped 15.28% post-earnings announcement.
• The company sees strong demand in the utility and transmission sectors.
• Full-year revenue guidance is between $1.97 billion and $2.06 billion.

Company Performance

Custom Truck One Source demonstrated a year-over-year revenue growth of 8% in Q3 2025, reaching $482 million. Despite the revenue miss, the company achieved a 13% increase in adjusted gross profit and a 20% rise in adjusted EBITDA, reflecting robust operational performance. The company continues to benefit from strong demand in its Equipment Rental and Sales (ERS) and Truck and Equipment Sales (TES) segments. InvestingPro data shows the company maintaining a healthy current ratio of 1.26 and achieving a 6.21% revenue growth over the last twelve months, though profitability remains a challenge with negative returns on assets.

Financial Highlights

• Revenue: $482 million, 8% YoY growth.
• Adjusted Gross Profit: $156 million, 13% YoY growth.
• Adjusted EBITDA: $96 million, 20% YoY growth.
• Net Leverage: 4.53x, with a target below 3x by the end of fiscal 2026.

Earnings vs. Forecast

Custom Truck One Source’s Q3 2025 EPS of -$0.03 was below the forecast of -$0.02, resulting in a 50% earnings surprise. Revenue of $482 million missed the forecast by $10.28 million, a -2.09% surprise. This performance contrasts with previous quarters where the company met or exceeded expectations.

Market Reaction

Following the earnings announcement, CTOS shares fell by 15.28% to $6.19 in premarket trading. This decline reflects investor disappointment with the earnings miss and revenue shortfall. The stock’s drop was significant, moving it closer to its 52-week low of $3.18, amid broader market concerns. Despite recent volatility, InvestingPro data reveals the stock has delivered impressive returns, with a 79.21% total return over the past year and a 53.73% gain in the last six months. The company’s comprehensive Pro Research Report, available to subscribers, provides detailed analysis of these price movements and future potential.

Outlook & Guidance

Custom Truck One Source has maintained its full-year revenue guidance between $1.97 billion and $2.06 billion and adjusted EBITDA of $370 to $390 million. The company anticipates continued strong demand in the transmission and distribution sectors, with expectations for sustained growth into 2026.

Executive Commentary

CEO Ryan McMonagle highlighted the strong demand in the utility sector, stating, "We’re seeing really good demand in the utility sector and transmission and distribution." CFO Chris Eperjesy expressed optimism about the industry’s long-term demand drivers despite macroeconomic uncertainties, saying, "Our year-to-date results and the continued strong fundamentals of our end markets allow us to be optimistic about the long-term demand drivers in our industry."

Risks and Challenges

• Supply Chain Disruptions: Potential delays in equipment and component deliveries could impact operations.
• Market Volatility: Fluctuations in utility and infrastructure spending may affect revenue.
• Economic Uncertainty: Broader macroeconomic pressures could dampen demand.
• Inventory Management: Achieving the targeted $125-$150 million inventory reduction by year-end remains a challenge.
• Leverage Reduction: Meeting the net leverage target of below 3x by the end of fiscal 2026 requires disciplined financial management.

Q&A

During the earnings call, analysts inquired about the impact of transmission projects on equipment demand, with management confirming strong demand. Questions also focused on the company’s inventory optimization efforts and the potential impact of the GreenLink project pause, which was noted to have minimal effect.

Full transcript - Custom Truck One Source Inc (CTOS) Q3 2025:

Colby, Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Colby, and I will be your conference operator today. At this time, I would like to welcome you to the Custom Truck One Source Inc. Third Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speakers’ remarks, there will be a question and answer session. If you’d like to ask a question at that time, please press star then the number one on your telephone keypad. If you would like to withdraw your question at any time, press star one again. Thank you. I’d like to turn the call over to your host today, to Brian Perman. Sir, you may begin.

Brian Perman, Investor Relations, Custom Truck One Source: Thank you. Before we begin, we would like to remind you that management’s commentary and responses to questions on today’s call may include forward-looking statements, which by their nature are uncertain and outside of the company’s control. Although these forward-looking statements are based on management’s current expectations and beliefs, actual results may differ materially. For 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 afternoon. That press release and our third quarter investor presentation are posted on the investor relations section of our website. We filed our third quarter 2025 10-Q with the SEC yesterday afternoon.

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 three months ended September 30, 2025, and prior periods. Joining me today are Ryan McMonagle, CEO, and Chris Eperjesy, CFO. I will now turn the call over to Ryan.

Colby, Conference Operator: Thank you, Brian, and welcome everyone to today’s call. Building on our momentum from the second quarter, Custom Truck One Source had a strong third quarter, delivering 20% adjusted EBITDA growth and 8% revenue growth versus Q3 2024. Third quarter performance was characterized by continued solid fundamental demand in our core T&D markets and excellent execution by our team, leading to strong results in both our ERS and TES segments and overall year-over-year revenue growth for the quarter. Custom Truck One Source powers the people who strengthen and build our nation’s infrastructure. Our trucks are used to build and maintain the grid on a daily basis. Our steady business activity and strong intra-quarter order flow continue to reinforce our optimism about achieving our expected growth targets in 2025. As a result, we are reaffirming our previous fiscal 2025 revenue and adjusted EBITDA guidance.

While Chris will discuss our segment’s performance in greater detail, I’d like to highlight some key trends. In ERS, our utility contractor customers continue to see sustained and increased levels of activity, which they expect to persist for the foreseeable future, driven largely by spending tied to unprecedented secular growth and electricity demand. As several recent articles highlight, the real bottleneck in the AI buildout is electricity. Current industry projections estimate that total T&D CapEx among U.S. investor-owned utilities for the five-year period from 2025 to 2029 to be approximately $600 billion. The overall annual growth rate of spending is expected to be almost 10%, with transmission spending expected to grow at more than 15% annually through 2029. We feel these trends in the utility in-market have been among the key factors driving the growth in our OEC on rents over the last year and position us well for 2026.

For the third quarter, average OEC on rent was more than $1.26 billion, a 17% year-over-year increase. We ended the third quarter with over $1.3 billion of OEC on rent and have continued to see growth so far in the fourth quarter. Average utilization in the quarter was just over 79%, up more than 600 basis points versus Q3 of last year and the highest level in more than two years. We continue to see mid-70% to mid-80% utilization rates across most of our fleet, demonstrating the long-term resilience of our in-markets. These trends drove a year-over-year increase in rental revenue of 18% in the quarter, with total ERS segment revenue up more than 12% versus Q3 of last year. Because of the sustained strong demand, we decided in the quarter to accelerate rental fleet CapEx, which Chris will discuss in more detail.

We believe this spending will position us well for continued growth in 2026. At the end of Q3, our total OEC was just over $1.62 billion, our highest quarter-end level ever. Coming off near-record segment sales last quarter, TES continued to see good sales performance in the third quarter, posting year-over-year growth of 6% and year-to-date growth of 8.5% versus the first three quarters of last year. While our backlog was down in the quarter, we continued to see strong intra-quarter order flow, particularly among our local and regional customers. This reflects the current availability of equipment broadly in the market, which decreases the need for customers to place orders far in advance. Signed orders in the quarter from this portion of our customer base were up more than 40% year-over-year, driving overall order growth of over 30%.

With the supply of certification vehicles remaining at elevated levels across the market, segment gross margin was down slightly in Q3 compared to the prior quarter. However, it remained within our expected range of 15% to 18%. Overall, our current pace of orders and the continued strong demand for vocational vehicles across our in-markets combine to provide us with confidence in our outlook for TES for the rest of the year. We continue to believe that accelerated depreciation provisions contained in the recent federal spending and tax bill will benefit Custom Truck One Source, particularly for sales of used and new vehicles in the fourth quarter. Since the end of the third quarter, we’ve seen this reflected in our backlog, which has grown so far in the fourth quarter to over $350 million.

With respect to the tariff landscape, we continue to feel that as a result of our mitigation actions taken earlier this year, the tariffs will have a limited direct cost impact on our business this year. However, we continue to hear about hesitancy related to new equipment purchase decisions from some of our customers as a result of economic uncertainty, continued high interest rates, and the overall inflationary pricing environment to which the tariffs have contributed. We are reaffirming our full year 2025 guidance. Our strong year-to-date results, our robust order flow, and resilient in-market demand continue to drive our expected growth across our consolidated business this year. Despite some volatility in the macro environment, our business outlook remains positive. Long-term sustained in-market demand, buoyed by secular megatrends, and our ability to provide exceptional execution on behalf of our customers set us apart from our competition.

Our multi-decade relationships with strategic suppliers and our long-tenured and diversified customer base will continue to be key 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 these results this quarter. We look forward to updating everyone on our progress on next quarter’s call. With that, I’ll turn it over to Chris to discuss our third quarter results in detail.

Chris Eperjesy, CFO, Custom Truck One Source: Thanks, Ryan. For the third quarter, we generated $482 million of revenue, $156 million of adjusted gross profit, and $96 million of adjusted EBITDA, up 8%, 13%, and 20% respectively versus Q3 of 2024. On a year-over-year basis, all our rental segment KPIs improved in the quarter. Average utilization of the rental fleet for Q3 was over 79% compared to 73% in Q3 of the prior year. Average OEC on rent in the quarter was over $1.26 billion compared to under $1.1 billion in Q3 of 2024. Both metrics so far in Q4 are higher than the averages we experienced in Q3, currently standing at more than $1.3 billion and over 80% respectively. As of today, OEC on rent is up more than $180 million, or 15% versus a year ago.

The ERS segment had $169 million of revenue in Q3, up more than 12% from $151 million in Q3 of 2024. Rental revenue was up meaningfully on a year-over-year basis, showing 18% growth. Rental asset sales were essentially flat and are up 20% year to date compared to the first three quarters of last year. Segment adjusted gross profit was $104 million for Q3, up 19% from Q3 of last year. Adjusted gross margin for ERS was 62% in the quarter, more than 370 basis points higher versus the same period last year, driven by a higher mix of rental revenue as well as improved rental margins of almost 76% and sustained rental asset sales margins in the mid-20% range. On-rent yield was 38.2% for the quarter, down slightly from Q3 of last year, but still within our expected upper 30% to lower 40% range.

Net rental CapEx in Q3 was $79 million, and our fleet age is just below three years. Our OEC in the rental fleet ended the quarter at over $1.62 billion, up almost $130 million versus the end of Q3 2024, and up more than $60 million in the quarter, reflecting our strategic investment given the strong demand environment we continue to experience across our primary end markets, particularly in T&D. We expect to continue to invest in the fleet in the fourth quarter, resulting in high single-digit percentage OEC growth versus the end of 2024, which is higher than previously expected. In the TES segment, coming off near-record sales in Q2, we sold $275 million of equipment in Q3, up 6% year over year. Gross margin in the segment in Q3 was 15%, down from Q3 2024.

We expect TES gross margins to improve in the coming quarters as supply of vocational equipment in the market comes more into balance, reducing some of the pricing pressure we’ve seen this year. TES new sales backlog decreased by $55 million in the quarter, driven by continued strong sales activity. At three months of LPM TES sales, our TES backlog is slightly below our targeted historical average range. However, net orders in Q3 remain strong at $220 million, up more than 24% compared to Q3 of 2024. In Q4, which is historically our highest quarter of TES sales, we’ve continued to see strong order flow, and our backlog has grown to over $350 million.

That, combined with the ongoing feedback from our customers regarding their equipment needs for the remainder of the year, provides us with confidence that we will see strong revenue growth in TES this year, but we do believe it will be closer to the low end of our guidance range. Our strong and long-standing relationships with our chassis, body, and attachment vendors continue to be an important driver of TES production. Our current level of inventory positions us well to meet our production, fleet growth, and sales goals for the year, as well as help mitigate any impact from tariffs. Our APS business posted revenue of $38 million in the quarter, up 3% compared to Q3 of last year. Adjusted gross margin in the segment was over 26% for Q3, up both year over year and sequentially. Our year-to-date adjusted gross margin in APS remains in our expected mid-20% range.

Borrowings under our AVL at the end of Q3 were $708 million, an increase of $38 million versus the end of Q2, largely to fund both rental and non-rental CapEx and certain other working capital needs. As of the end of Q3, we had $238 million available and over $230 million of suppressed availability under the AVL, resulting in substantial liquidity for the company. With LTM adjusted EBITDA of $365 million, we finished Q3 with net leverage of 4.53 times, a sequential improvement. We did make progress on our planned inventory reduction, with inventory down almost $54 million in the quarter. This contributed to a reduction in our floor plan balances of almost $57 million. We continue to expect to reduce our inventory in Q4 and into next year, which should contribute to lower balances on our floor plan lines as well as reduced borrowings on the AVL.

However, given the strong demand environment that we’re expecting to continue into 2026 and beyond, we now expect to reduce our inventory by $125 million to $150 million compared to the level at the end of last year. We intend to use our levered free cash flow to reduce our net leverage and to continue to target a level of below three times. This remains a primary and important goal for us and one that we expect to achieve by the end of fiscal 2026. We are reiterating our previous 2025 guidance with total revenue in the range of $1.97 to $2.06 billion and adjusted EBITDA in the range of $370 to $390 million. However, given the sustained rental demand in ERS, we now plan to invest more than previously expected in our rental fleet this year, resulting in net rental CapEx of approximately $250 million.

In addition, we expect our non-rental CapEx to be higher this year as well, as we have taken the opportunity to fund some additional production and manufacturing improvements at our Kansas City location, which should result in expanded production capacity and better position us for growth across our segments. While our segment guidance remains unchanged, we do expect ERS to finish the year with revenues in the upper half of our $660 to $690 million range and TES to finish the year with revenues closer to the lower end of the $1.16 to $1.21 billion range. The extent of the benefit we get from our customers spending on new and used equipment as a result of the accelerated depreciation provisions is likely to be a key determining factor as to where in our guidance ranges we end up for both ERS and TES.

As a result of higher than expected rental and non-rental CapEx, as well as a decrease in our planned inventory reduction, we now expect our levered free cash flow to be less than our previous $50 million target. However, we are confident that the incremental CapEx will yield strong returns that will result in higher sustained levels of levered free cash flow going forward. In closing, I want to echo Ryan’s comments regarding our continued strong business outlook. Despite some macroeconomic uncertainty this year, our year-to-date results and the continued strong fundamentals of our end markets allow us to be optimistic about the long-term demand drivers in our industry and our ability to produce double-digit adjusted EBITDA growth this year. With that, I will turn it over to the operator to open the line for questions. Operator?

Brian Perman, Investor Relations, Custom Truck One Source: Thank you. We will now begin the question and answer session. If you’d like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you’d like to withdraw your question at any time, again, simply press star one. Thank you. Your first question comes from a line of Scott Schoneberger from Oppenheimer. Your line is open.

Hey, good morning, guys. It’s Daniel from Scott. It seems like the momentum is really strong here. Can you guys please elaborate on the visibility you feel you have for 2026 to sustain this momentum, please? Thank you.

Ryan McMonagle, CEO, Custom Truck One Source: Sure. Yeah, good to hear from you, Daniel. Thanks for the question. Yes, we’re seeing really good demand in the utility sector and transmission and distribution. As we talked about on the call and our remarks, we’re seeing demand increase, especially around transmission in particular. As everybody’s hearing, it does feel like we’re heading into a strong cycle of transmission demand. The decisions that we made in Q3 were to invest more into the rental fleet. Some of that will carry into Q4 as well. We think that’s what sets us up really well for 2026. We said on the call that OEC on rent averaged $1.26 billion for the quarter. It finished the quarter at $1.3 billion and has continued to grow into October. Utilization on rental is back into the 80s, is north of 80% at this point.

That’s, I think, why we’re really comfortable with the impact of that heading into 2026.

Got it. Thank you. Honing in on the ERS and OEC on rent yield, could you discuss how you think about that going forward and how you feel about the pricing environment?

Yeah. We’ve guided, obviously, high 30s to low 40s from an on-rent yield perspective, Daniel. We’ve seen a yield increase a bit in September and into October versus what we averaged for the quarter. We’ve seen that as a positive thing. Two things in play there, right? One is as we shift more towards transmission, slightly higher yield that we’ve talked about. I would expect that to continue a bit. As utilization increases, we’ve been able to take advantage of some pricing opportunities where it makes sense. We have to price the market. We have to be competitive in the market. That’s what we’re dealing with on a day-to-day basis. I think it should be in the range that we’ve guided to. I would expect that it would increase a bit from where it was in Q3 of this year.

Got it. Thank you. I’ll pass it over. Thanks so much.

Thanks, Daniel.

Brian Perman, Investor Relations, Custom Truck One Source: Your next question comes from the line of Justin Hauke from Baird. Your line is open.

Oh, great. Good morning, everybody. I guess I wanted to ask a little bit about the cash flow. I appreciate all the color on the uptick in the CapEx to kind of capitalize on the growth that you’re seeing. Maybe just a little bit more clarification on the inventory reduction and the timing of that. You said kind of end of 2026 to get that down by the $125 to $150 million from year-end 2024. Just trying to think about what that means. Is that more second half of 2026? I just don’t know how long this kind of elevated CapEx is going to be before those inventory levels start coming down. Maybe the corollary to that would be just on the free cash flow guidance saying the leverage being under the $50 million. I guess it’s been kind of a use of cash all year.

I’m just trying to think about the fourth quarter and do you expect to kind of continue to use cash in 2024 or will that be a cash inflow quarter? Thanks.

Chris Eperjesy, CFO, Custom Truck One Source: Yeah, thanks, Justin. This is Chris. Maybe I wasn’t clear. The $125 million to $150 million reduction versus the start of the year will occur by the end of this year. We do expect to see, I think through Q3, we’re only down $14 million or $15 million. You should expect another $110 million to, I guess it’d be $135 million of further reduction in Q4. At peak last summer, we said we were just under 11 months of whole goods inventory on hand. Now we’re just under 8. We’ve set a target of trying to get to 6. The into and beyond into 2026 relates to getting that further, getting down to six months by the end of next fiscal year.

I do expect we’ll generate free cash flow in the fourth quarter, but given the incremental investment in the rental fleet and the timing of some of that inventory reduction, we’re not going to have, for the full year, any meaningful free cash flow.

Thank you for clarifying that. I guess just on the non-rental CapEx, the uptick on the production capabilities, can you quantify just kind of how much that is as we kind of think about, I don’t know, the difference for next year versus that investment?

Yeah. The answer is it really is just expanding some of our capabilities here on our Kansas City campus. I would think of it in the magnitude of $10 to $15 million kind of impact. It really is land, building, and putting some equipment in those facilities. I think next year we get back, I think historically we’ve been $25 to $40 million of non-rental CapEx. I think it’ll continue to be similar as we move forward.

Got it. Okay. Appreciate that. Those are my questions for now. Thank you.

Thanks, Justin.

Brian Perman, Investor Relations, Custom Truck One Source: Your next question comes from a line of Niamh Kaplan from Deutsche Bank. Your line is open.

Hi, good morning. This is Niamh Kaplan on for Nicole DeBlase. I was wondering, what was the latest on your utility T&D customers’ ability to execute projects? I know you kind of touched on this, but just like to have a little bit of elaboration. It seems like also the industry is back on track after delays in 2024 and 2025. Basically, is that kind of the right way to think about it, that we’re back on track?

Ryan McMonagle, CEO, Custom Truck One Source: Yeah, I think that’s a great way to think about it. I think we’re seeing distribution really pick up throughout the year, and I think it’s back in a very good spot from the utilization and from the demand to purchase new equipment. We’re seeing transmission pick up. It’s been a significant pickup as it normally is in the fall. Obviously, that’s what we’ve been investing into, and it feels like it’s got very good tailwinds behind it when it comes to transmission projects that are in process and under construction and will continue to need our equipment. Yes, I’d say it’s back to normal and continuing to improve on the transmission side.

Okay. Perfect. Can you provide more color on the drivers of the 30% organic growth within TES? Maybe we could touch on the customer types as well. On the backlog, was that only down year over year due to a prior year comp because you had some past due backlog last year?

Chris Eperjesy, CFO, Custom Truck One Source: Yeah. I’ll take the second question. You may have to repeat the first part of your first question because I don’t think we heard you gave a percentage that I don’t think we’re familiar with. On the backlog, we’ve said historically we’re not really a backlog-driven business. We’re kind of an order-driven business. If you go back and look at the history, we’ve continued to post, in 2023, we posted 30% new sales growth. Last year, 7%. This year, on a year-to-date basis, almost 9%. In that period, the backlog has come down almost $600 million. We’ve continued to post growth quarter after quarter. Ryan did talk about in his prepared remark, we have seen the backlog grow almost 25% or a little over 25% a year in the first three weeks of October. We’re back close to $360 million of backlog.

We’re feeling really good about the guidance we’re given and overall just the health of the new sales business. Maybe if you could just clarify the first question for us.

Ryan McMonagle, CEO, Custom Truck One Source: I think, yeah, was it the 30, you’re talking about 30% inter-quarter order growth? Is that what you were referring to?

Yeah, within TES, I’m pretty sure that’s what you had in the relationship.

Yeah. No, we just wanted to make sure we were asking the right question. The thing that, in addition to backlog, what we’re watching really closely and what we have good visibility to is how orders are coming in within the quarter. There is a meaningful, that 30% is an increase in signed orders when we compare Q3 of 2025 to Q3 of 2024. I think that’s where we’re feeling comfortable about the growth we expect in Q4 and obviously the performance, the 8.5% growth we’ve seen year to date in the TES segment. In addition to backlog, we’re watching the inter-quarter order flow in a real-time basis. That’s what we wanted to share with you all too. That’s why I think we have comfort in the full year number that we’ve talked about for TES.

Okay. Very helpful. Just to follow up on that, if I may, any details on the customer type?

Yeah, we’re seeing really strong demand in the utility segment. That’s both our utility contractors and our forestry contractors where we’re seeing really strong demand. As we talked about in the comments, we’re seeing a bit more hesitation in some of the infrastructure markets. I think things like refuse and some of our dump truck, where there’s a bit more inventory in the market that we talked about in the prepared remarks. There’s still a good mix of our large national customers and our smaller customers as well. No significant shift there other than maybe skewing a little bit more towards T&D where we’re seeing a stronger demand and infrastructure is a little bit softer from a demand perspective.

All right. Got it. Thank you very much for your time. I will pass it on.

Thanks.

Brian Perman, Investor Relations, Custom Truck One Source: Your next question comes from a line of Brian Brophy from Stifel. Your line is open.

Ryan McMonagle, CEO, Custom Truck One Source: Yeah, thanks. Good morning, everybody. You touched on this a little bit, but hoping to get a little bit more color. Hoping you can give us an update on what you’re seeing from a large transmission pipeline perspective. What’s the latest you’re hearing from your customers regarding when some of these large projects that have been discussed are going to come to fruition? Thanks.

Yeah. We’re seeing good demand there, Brian, for sure. We have seen a meaningful uptick in our transmission utilization late in the third quarter and into the fourth quarter. I think that’s driving a lot of the increase that we talked about on the call. I think we have strong expectations for 2026 there as well. There are a couple of very specific projects right there that are in process now that are driving that demand. There’s a lot of floating going on too that is for early 2026 also. Really good demand there. I think that’s where we made some additional CapEx investment. That’s where we did add to the rental fleet to grow that part of the rental fleet further because we’re seeing the good demand that our customers are talking about.

Okay, thanks. Just to touch on one project in particular, I wanted to ask on GreenLink. Obviously, it’s been discussed as a project you guys have been involved with. We saw some headlines in your quarter regarding a pause in activity. It doesn’t seem like it’s impacting your fourth quarter based on some of the comments you made, but just maybe any updated thoughts you can provide on this project and if we could see an impact this quarter. Thanks.

Yeah, no, it’s still been, it’s not impacting the fourth quarter. We’re still seeing good demand on transmission. I think that’s what’s always interesting when you get into these strong transmission cycles, is I think customers don’t want to return gear because they know that they may not see it again too. I think it should not be an impact in our fourth quarter. That transmission sector, as I said, is staying very strong from an overall utilization perspective.

Okay, thank you. I’ll pass it on.

Thanks, Brian.

Brian Perman, Investor Relations, Custom Truck One Source: Your next question comes from a line of Mike Schlitzky from D.A. Davidson. Your line is open.

Chris Eperjesy, CFO, Custom Truck One Source: Good morning. Can we back up a couple of questions? You had mentioned some comments about the infrastructure sector and how that’s going. Can you maybe kind of round it out by just talking a few sentences on how it’s going in the telecom world and in rail as well?

Ryan McMonagle, CEO, Custom Truck One Source: Yeah, I think we’re seeing, look, across the board, we’re seeing growth, right? I think that’s important to say. We’re seeing the strongest growth in transmission and distribution just given what’s going on there. We are within telecom and rail. We’re seeing some activity pick up. As you know, telecom and rail are less than 5% of our revenue. We’re seeing some growth in rail. We’re seeing telecom, a lot of discussion, a lot of quoting happening. Expect that should pick up some in the fourth quarter and then into 2026 as well. Overall, it’s growth. The strongest growth is in transmission and distribution. Where there’s more competition from an inventory perspective in things like dump trucks or water trucks or some of our refuse product categories, we’re seeing less growth, or is the right way to say it, Mike.

Chris Eperjesy, CFO, Custom Truck One Source: Got it. Turning to the T&D, we started to see headlines from some data center operators as they build the data center. They’re also building or contracting for energy production assets, either close by, on-site, or a few miles away, not a long grid connection as far as distance is concerned, I guess. Not all of the data centers, but some of them are trying to co-locate the energy. Does Custom Truck One Source still play a role in a project like that? Does it accelerate the pipeline opportunities when people are just saying, "We can’t wait for the utilities when it builds at least on our own infrastructure"? Does it have an impact on pricing and margins when you have a project where it’s much closer to the data center than others?

Ryan McMonagle, CEO, Custom Truck One Source: Yeah, that’s a great question, Mike. I think the way we’re thinking about it is it is very good overall demand, right, for T&D for us, right? To me, it feels like there’s a lot of generation that’s coming online. In some cases, it’s temporary generation too. To me, that’s why I think we’re getting comfortable that there should be a sustained period of long demand here. In some cases, it’s temporary generation, right, to get the data center up. The expectation is the utility will come back through and bring a transmission line or a substation or whatever is needed, right, for that particular project. That’s where I think it feels like it’s going to be good sustained demand for Custom Truck One Source and for our trucks in both of those cases.

Chris Eperjesy, CFO, Custom Truck One Source: Got it. Got it. Chris, can I get some more comments on your CapEx plan that you put out here for the rest of 2025? Does any of this pull forward from 2026? I’m trying to figure out, is there a point where you pause in the CapEx, kind of harvest what you’ve got and then pay down some more debt at some point? The answer is yes. As you know, the age of our fleet going back three or four years ago was a little over four years. We’re now, I think, at 2.9 or right around 2.9 years. That’s a half a billion dollar, $600 million investment to do that over time. The short answer to your question is we should start to see some improved free cash flow, certainly, as we’re able to pull back on some of that net investment. Great.

Chris, can I just follow up? You had said you were once four years. I think you were once a little bit above four years, thinking about how far back you count NESCO and so forth. How far would you take it? I guess I’m curious what the competition is with their average age and how close would you get to the competition while still being the newest? I’m trying to figure out how long you might be able to rent your assets for, if you were to try to find a way to harvest some cash flow.

Ryan McMonagle, CEO, Custom Truck One Source: Yeah, it’s a great question. Look, there’s not great data out there, but we do think that we are the youngest fleet, the youngest utility rental fleet that’s out there. You’re right, Mike, there is the ability to age it. To me, if you kind of use the bounds of where we are today, if under three, $2.9 million or whatever the exact number is right now, if you think about the fact that we were over four just a few years ago, to me, that’s a pretty good band that you can live in, you know, and allow to age, and allow ourselves to age our fleet and therefore generate cash flow that way.

I’d give you that as a pretty good band to think about and still have a very strong performing fleet where we take care of the customer and are very competitive from an overall age perspective.

Chris Eperjesy, CFO, Custom Truck One Source: Great. Thank you. I appreciate you’ve got a lot of opportunities coming in, so no one wants to make sure you’re balanced. I appreciate it. I’ll pass it along. Thank you.

Ryan McMonagle, CEO, Custom Truck One Source: Thanks, Mike.

Brian Perman, Investor Relations, Custom Truck One Source: Thank you. Again, if you’d like to ask a question, please press star and then the number one on your telephone keypad. There are no further questions in queue. I’d like to turn the conference back over to Ryan McMonagle for any closing remarks.

Ryan McMonagle, CEO, Custom Truck One Source: Great. Thanks, everyone, for your time today and your interest in Custom Truck One Source. We look forward to speaking with you on our next quarterly earnings call. In the meantime, please don’t hesitate to reach out with any questions. Thank you again and have a good day.

Brian Perman, Investor Relations, Custom Truck One Source: This concludes today’s conference call. You may now disconnect.

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