Custom Truck One Source Inc., which provides specialty equipment to the electric utility, telecom, rail and other infrastructure-related end markets, reported big gains in revenue and profit for the third quarter, based on strong demand across those primary markets.
“A third consecutive quarter of record setting vehicle production by our team allowed us to both add to our fleet and post strong year-over-year growth in new vehicle sales,” CEO Ryan McMonagle said. “This level of production, together with the demand environment and continued improvement in the supply chain give us the confidence to improve our revenue outlook for 2023.
By business segment, the company reported truck and equipment sales (TES) realized 34% revenue growth compared to the third quarter of last year. Equipment rental solutions (ERS) realized 12% revenue growth, even while experiencing some “short-term slowdown” in the utility end market. Aftermarket Parts and Services (APS) posted 19% revenue growth for the period.
Looking ahead, the company suggested the ERS segment will continue to benefit from strong demand from rental customers, sustained levels of average OEC [original equipment cost] on rent and for resilient demand for purchases of rental fleet units, particularly older equipment for the remainder of the year.
Regarding our TES segment, supply chain improvements, improved inventory levels, record production and strong backlog levels continue to enhance CTOS’s ability to produce and deliver an even greater number of units in 2023 than the company did previously.
“Overall, we expect a seasonally strong fourth quarter and hope that the performance will exceed that of the fourth quarter of 2022, which benefited from the highest level of utilization in the company’s history, as well as noted supply chain improvements, which allowed for record levels of new equipment sales,” McMonagle added.
CTOS Third-Quarter Highlights
- Total revenue of $434.4 million, an increase of $76.6 million, or 21.4%, compared to $357.8 million for the third quarter of 2022 as a result of continued strong demand across our end markets
- Gross profit of $107.2 million, an improvement of $19.0 million, or 21.5%, compared to $88.2 million for the third quarter of 2022
- Adjusted Gross Profit of $149.6 million, an increase of $18.8 million, or 14.4%, compared to $130.8 million for the third quarter of 2022
- Net income of $9.2 million, an increase of $11.6 million, compared to net loss of $2.4 million, in the third quarter of 2022
- Adjusted EBITDA of $100.2 million, an increase of $8.6 million, or 9.3% compared to $91.6 million in the third quarter of 2022
- Increasing full year 2023 revenue guidance and affirming Adjusted EBITDA guidance