Utility demand is fueling file rental fleet development. Customized Truck One Supply stated its Specialty Tools Rental fleet has grown to about 10,400 models and $1.66 billion in capital, with roughly 75% of the fleet tied to utility transmission and distribution work.
Backlog and venture visibility are enhancing. Backlog reached 4.5 months on the finish of Q1 and has risen additional in Q2, whereas administration stated transmission-side visibility is the strongest it has been in a very long time with venture begins extending into 2027.
The corporate is specializing in money movement and deleveraging. CTOS expects greater than $50 million in levered free money movement and plans to cut back leverage beneath 4x by year-end and beneath 3x subsequent yr, supported by larger EBITDA, decrease rental capex and stock reductions.
Customized Truck One Supply (NYSE:CTOS) executives outlined a robust demand backdrop for specialty rental gear, notably in utility transmission and distribution, throughout an Oppenheimer hearth chat hosted by Senior Industrial Providers Analyst Scott Schneeberger.
CEO Ryan McMonagle stated the corporate’s Specialty Tools Rental, or SER, section has grown to about 10,400 models and represents roughly $1.66 billion of capital, the biggest stage within the firm’s historical past. About 75% of the fleet is utility gear targeted totally on transmission and distribution, together with bucket vehicles, digger derricks, increase vehicles and stringing gear. The remaining 25% consists of specialty gear resembling vacuum vehicles, dump vehicles, heavy haul tractors, water vehicles and roll-off vehicles.
McMonagle stated fleet time utilization was 81.4% within the first quarter and had elevated early within the second quarter. The typical rental period is between 12 and 13 months, presently close to the excessive finish of that vary. He added that the fleet is underneath three years outdated, with helpful lives typically within the 10- to 15-year vary relying on the asset.
Utility Demand Stays a Core Development Driver
McMonagle stated transmission and distribution, or T&D, is Customized Truck’s largest finish market, representing about 60% of complete income and roughly 75% of income throughout the rental section. He cited grid modernization, information facilities and electrification as key long-term drivers.
Infrastructure extra broadly accounts for about 40% of income, together with waste, rail, telecom, roads and bridges. McMonagle stated waste is the biggest of the three named infrastructure verticals.
Requested how a lot rental power is tied to information center-related energy era, McMonagle stated it’s troublesome to isolate, however information facilities are serving to drive transmission work throughout the nation. He stated main venture begins have continued to select up in 2026, and the corporate is talking with clients about begins extending into 2027, together with late 2027.
“The visibility on the transmission aspect of issues specifically is nearly as good because it’s been in a very very long time,” McMonagle stated.
Backlog Returning to Regular Historic Vary
McMonagle stated the corporate’s backlog is shifting again towards what Customized Truck traditionally considers a standard vary of 4 to 6 months. Backlog peaked after COVID-19 amid provide chain disruptions, declined via 2025 and started rebuilding late in 2025 and into 2026.
As of the top of the primary quarter, backlog stood at 4.5 months, and McMonagle stated it had elevated to date within the second quarter. He additionally stated backlog rose by greater than $70 million in the course of the first quarter.
The corporate stated demand is very robust in T&D, whereas infrastructure and vocational product classes are additionally enhancing.
Pricing, Tariffs and Buyer Habits
In response to a pricing query, the corporate stated its most well-liked on-rent yield vary is within the excessive 30s to low 40s and that current tendencies have been optimistic. On-rent yield elevated 40 foundation factors from the fourth quarter to the primary quarter and was up 70 to 80 foundation factors from the third quarter. The corporate additionally took a mean worth improve of about 5% in December, which is predicted to proceed flowing via as property flip over.
The corporate described the pricing surroundings as constructive, notably for transmission and T&D property, whereas acknowledging that the market stays aggressive and varies by area and asset sort.
McMonagle stated tariffs have added roughly $10 million to $15 million to general spend, or about 1% on greater than $1.5 billion of spending. He stated the corporate has managed these impacts effectively, although some newer adjustments might create further value will increase.
McMonagle additionally stated smaller clients are exhibiting extra warning due to tariffs, rates of interest and diesel prices, together with considerations tied to the Center East battle. Some smaller consumers are delaying truck purchases and holding older autos operating longer. He stated massive clients proceed to maneuver forward with tasks and buy selections.
Free Money Circulation and Deleveraging Prioritized
The corporate stated it’s not capital constrained and plans to put money into each rental and manufacturing. For 2026, it expects $150 million to $170 million of internet rental capital expenditures, whereas non-rental capital expenditures are guided at $40 million to $50 million, with two-thirds to three-quarters associated to the Specialty Truck Tools and Manufacturing, or STEM, enterprise.
The corporate stated first-quarter income grew 9% whereas adjusted EBITDA rose 33%, reflecting working leverage and blend advantages from rental income, which grew slightly below 20% yr over yr. It raised EBITDA steering on its most up-to-date earnings name whereas sustaining income steering.
Executives stated free money movement ought to profit from three major elements:
12 months-over-year EBITDA development, with about $45 million of incremental EBITDA on the midpoint of steering;
A discount in internet rental fleet funding, anticipated to unlock $80 million to $100 million yr over yr;
Stock discount, with gross stock anticipated to say no by greater than $100 million, partially offset by ground plan paydowns.
The corporate is concentrating on greater than $50 million of levered free money movement, an enchancment of roughly $130 million yr over yr.
On capital allocation, the corporate stated deleveraging is the precedence. Leverage has fallen from a peak of 4.8 instances to simply over 4 instances, with a goal to maneuver meaningfully beneath 4 instances by the top of this yr and beneath 3 instances by the top of subsequent yr. The corporate doesn’t anticipate massive M&A, although it could proceed to pursue tuck-in acquisitions.
Provide Chain Situations Enhance
McMonagle stated provider relationships are robust throughout chassis and attachment suppliers, and that the corporate has discovered from provide constraints skilled from 2020 via early 2024. He stated the availability chain is in significantly better form and that Customized Truck is positioned to ship on its development expectations for 2026 and 2027.
Requested about long-term development, McMonagle stated the corporate has guided to high-single-digit to low-double-digit development for the present yr and stated these ranges are “fairly good proxies,” although the corporate has not supplied steering for 2027 or past.
About Customized Truck One Supply (NYSE:CTOS)
Customized Truck One Supply, Inc (NYSE: CTOS) is a North American supplier of specialty rental gear, elements and providers. The corporate’s fleet encompasses a variety of property, together with cranes, aerial work platforms, trench security and shoring gear, fluid administration options, mills and different industrial equipment. Clients depend on Customized Truck One Supply to assist tasks in building, vitality, telecommunications, industrial manufacturing, municipalities and large-scale occasions.
Headquartered in Plano, Texas, Customized Truck One Supply has expanded via a mixture of natural development and strategic acquisitions to determine a community of greater than 140 department areas throughout the USA and Canada.
This immediate information alert was generated by narrative science know-how and monetary information from MarketBeat with a purpose to present readers with the quickest reporting and unbiased protection. Please ship any questions or feedback about this story to contact@marketbeat.com.
