Custom Truck One Source, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the three months ended September 30, 2026, was $495.2 million, an increase of 2.7% compared to $482.1 million in the prior year period.
• Rental revenue increased 20.1% year-over-year to $152.7 million.
• Gross profit was $113.3 million, up 12.4% from $100.8 million in the third quarter of 2025.
• Adjusted Gross Profit was $170.2 million, an increase of 9.4% compared to $155.5 million in the prior year period.
• Net income was $2.3 million, an improvement of $8.1 million compared to a net loss of $5.8 million in the third quarter of 2025.
• Adjusted EBITDA was $110.9 million, an increase of 15.6% compared to $96.0 million in the prior year period, with an Adjusted EBITDA margin of 22.4% (an expansion of approximately 250 basis points).
• Net leverage ratio decreased to 3.70x as of September 30, 2026, down from 4.53x at the end of the third quarter 2025 and 4.31x at year-end 2025.
• Total debt outstanding was $1,666.0 million, with cash and cash equivalents of $14.6 million.
• Net debt was $1,651.5 million.
• Availability under the senior secured credit facility was $234.3 million, with an additional $288.0 million of suppressed availability.
• For the nine months ended September 30, 2026, total revenue was $1,520.3 million compared to $1,415.8 million in the prior year period.
• Adjusted EBITDA for the nine months ended September 30, 2026, was $325.7 million compared to $262.8 million in the prior year period.
• Net income for the nine months ended September 30, 2026, was $8.6 million compared to a net loss of $51.9 million in the prior year period.

Guidance and Future Outlook:

• Raised 2026 SER segment revenue guidance to $870 million to $890 million from $850 million to $875 million.
• Raised 2026 Consolidated Adjusted EBITDA guidance to $447.5 million to $460 million from $437.5 million to $455 million, representing 17% to 20% growth over 2025.
• Raised 2026 net rental fleet investment guidance to $210 million to $230 million from $170 million to $200 million.
• Revised 2026 levered free cash flow expectation to slightly positive, compared to prior guidance of more than $50 million.
• Expects 2026 revenue to increase 8% to 13% year-over-year.
• Expects 2026 SER gross rental fleet investment to be approximately $400 million to $430 million.
• Expects 2026 STEM third-party new sales revenue to increase 3% to 10% year-over-year, with fourth quarter third-party new sales expected to increase at a mid-to-high-teens rate.
• Expects total STEM revenue for 2026 to be down marginally to up 3% year-over-year.
• Expects net leverage ratio to be meaningfully below four times at the end of fiscal 2026.
• Long-term target remains achieving a net leverage ratio below three times in 2027.
• Expects another year of double-digit Adjusted EBITDA growth in 2027.
• Expects average fleet age to remain approximately three years at the end of the third quarter 2026.
• Expects ending OEC to increase by a mid-to-high single digit percentage in 2026.
• Expects year-end 2026 inventory months on hand to be approximately flat with year-end 2025.

Business Segments and Product Lines:

• Specialty Equipment Rentals (SER):
  • Segment Adjusted EBITDA was $121.9 million, an increase of 22.5% compared to the third quarter of 2025.
  • SER Adjusted EBITDA margin expanded to 54.6% from 52.4% in the prior year period.
  • Average OEC on rent reached a record $1.39 billion, up 10.5% year-over-year.
  • Fleet utilization was 81.5%, up from 79.3% in the prior year period.
  • OEC on rent yield was 39.4%, up from 38.2% in the prior year period.
  • Rental revenue increased 20.1% year-over-year.
  • SER rental equipment sales increased 14.1% year-over-year.
  • Adjusted rental gross margin reached 78.7%.
  • OEC on rent surpassed $1.5 billion and utilization surpassed 84% in October 2026.
• Specialty Truck Equipment & Manufacturing (STEM):
  • Segment Adjusted EBITDA was $36.6 million, compared to $17.7 million in the third quarter of 2025.
  • Total STEM revenue increased 8% year-over-year, driven by higher intercompany sales to SER.
  • Third-party new equipment sales declined 5.5% due to lower unit sales volume.
  • STEM orders grew 22% year-over-year.
  • Sales order backlog reached $342 million, up 22% year-over-year and 6% sequentially.
  • Backlog sits at approximately 3.8 months of LTM third-party new sales, modestly below the targeted range of four to six months.
  • More than $20.0 million of third-party deliveries were shifted to the fourth quarter due to a vendor recall and a hailstorm.
  • STEM backlog includes units from the shifted deliveries expected to ship in the fourth quarter.

Market and Competitive Landscape:

• Demand across core Transmission and Distribution (T&D) markets remains at record levels, led by unprecedented transmission demand.
• The company cites a "once-in-a-generation transmission demand super-cycle" in utility end markets.
• Growth is driven by grid modernization, electrification, data center-driven load growth, and infrastructure spending.
• The vocational rental market saw OEC on rent increase approximately $45 million year-over-year.
• Orders were led by the utility, vacuum, refuse, rail, and trailer markets.
• The company prioritized production capacity for its own rental fleet over third-party sales.

Risks and Challenges:

• More than $20.0 million of third-party deliveries were delayed in the third quarter due to a vendor warranty recall and a hailstorm at the Kansas City facility.
• Inventory levels were impacted by the strategic decision to prioritize production for rental fleet investment.
• The company notes that sales order backlog may not be indicative of the level of future revenues.
• Forward-looking statements involve risks including increases in labor costs, changes in trade policy, inability to obtain raw materials, and supply chain disruptions.
• Risks include inability to manage rental equipment effectively, aging or obsolescence of equipment, and fluctuations in market value.
• Risks include increased price of fuel or freight, regulatory changes, and government spending impacts.
• Risks include inability to generate cash, significant indebtedness, and default risks.
• Risks include disruptions to information technology systems and security compromises.

Management Commentary and Tone:

• Ryan McMonagle, CEO, stated that record demand drove 16% year-over-year Adjusted EBITDA growth in the third quarter and 24% growth year-to-date.
• McMonagle noted the company is well-positioned to participate in secular trends including utility grid upgrades and transmission expansion.
• Chris Eperjesy, CFO, described the third quarter results as reflecting the early stages of a transmission demand super-cycle.
• Management emphasized a disciplined strategy focused on profitable growth, strategic capital deployment, free cash flow generation, and continued deleveraging.
• Management indicated that the incremental fleet investment is being deployed against visible, longer-term, high-return demand, with earnings contribution largely arriving in 2027.
• Management expressed confidence that the sales delayed by the hailstorm and vendor recall will be completed in the fourth quarter.
• The tone is confident regarding future growth, citing record OEC on rent, utilization, and yield levels.

Other Key Points:

• The company reported a record total OEC of $1.76 billion as of September 30, 2026, up $143.0 million year-over-year.
• Inventory ended the third quarter at $1.016 billion, down $26 million from the second quarter.
• The company is reporting results under two new reportable segments (SER and STEM) effective January 1, 2026, with prior periods recast.
• Intersegment sales between SER and STEM are accounted for on an arm's length basis using a cost-plus methodology.
• The company has a coast-to-coast rental fleet of more than 10,850 units.
• A conference call to discuss results was scheduled for October 27, 2026.
• The company expects the earnings benefit of the incremental fleet investment to be weighted to 2027.