CTOS Revenue Climbs, Net Loss Narrows on Strong Rental Demand

TL;DR

**CTOS is showing signs of a turnaround with solid revenue growth and narrowing losses, making it a cautiously optimistic play for infrastructure demand.**

AI Summary

Custom Truck One Source, Inc. (CTOS) reported a mixed financial performance for the three and nine months ended September 30, 2025. Total revenue increased by 7.8% to $482.06 million for the three months ended September 30, 2025, up from $447.22 million in the prior year, and by 10.5% to $1.42 billion for the nine months, compared to $1.28 billion in 2024. This growth was primarily driven by a 17.4% increase in rental revenue to $127.14 million for the quarter and a 14.7% increase to $364.22 million for the nine months. Equipment sales also saw an increase of 4.9% to $320.58 million for the quarter and 10.0% to $950.56 million for the nine months. Despite revenue growth, the company posted a net loss of $5.76 million for the three months ended September 30, 2025, an improvement from a $17.42 million loss in the same period of 2024. The nine-month net loss was $51.93 million, an improvement from $56.23 million in 2024. Operating income significantly improved, rising 41.6% to $32.63 million for the quarter and 23.5% to $72.97 million for the nine months. Cash and cash equivalents increased to $13.06 million as of September 30, 2025, from $3.81 million at December 31, 2024, largely due to $262.80 million in net cash flow from operating activities for the nine months.

Why It Matters

CTOS's improved operating income and reduced net losses, despite increased revenue, signal a potential turning point for investors. The strong growth in rental revenue, up 17.4% for the quarter, indicates robust demand for specialty equipment in infrastructure-related industries, which could be a positive long-term trend. For employees, this suggests business stability and potential for continued growth. Customers benefit from a reliable provider of critical equipment. In a competitive landscape, CTOS's ability to grow revenue and improve profitability metrics, even with significant interest expenses, positions it more favorably against peers in the specialty equipment rental and sales market.

Risk Assessment

Risk Level: medium — While CTOS improved its net loss from $17.42 million to $5.76 million for the quarter, it still reported a net loss. The company also carries significant long-term debt of $1.63 billion as of September 30, 2025, up from $1.52 billion at December 31, 2024, and incurred $119.36 million in net interest expense for the nine months ended September 30, 2025, indicating substantial financial leverage and sensitivity to interest rate fluctuations.

Analyst Insight

Investors should monitor CTOS's ability to sustain operating income growth and further reduce net losses, particularly given its high debt load. The strong performance in rental revenue is a positive indicator, suggesting a focus on this segment could drive future profitability. Consider CTOS for exposure to infrastructure spending, but be aware of the interest rate environment and its impact on debt servicing costs.

Financial Highlights

revenue

$1.42B

operating Margin

15.5%

total Assets

$3.54B

total Debt

$1.63B

net Income

$-51.93M

eps

$-0.23

gross Margin

20.4%

cash Position

$13.06M

revenue Growth

+10.5%

Revenue Breakdown

Key Numbers

• $482.06M — Total Revenue (Q3 2025) (Increased by 7.8% from $447.22 million in Q3 2024)
• $1.42B — Total Revenue (9M 2025) (Increased by 10.5% from $1.28 billion in 9M 2024)
• $127.14M — Rental Revenue (Q3 2025) (Increased by 17.4% from $108.32 million in Q3 2024)
• $364.22M — Rental Revenue (9M 2025) (Increased by 14.7% from $317.49 million in 9M 2024)
• $5.76M — Net Loss (Q3 2025) (Improved from a $17.42 million loss in Q3 2024)
• $51.93M — Net Loss (9M 2025) (Improved from a $56.23 million loss in 9M 2024)
• $32.63M — Operating Income (Q3 2025) (Increased by 41.6% from $23.04 million in Q3 2024)
• $1.63B — Long-term Debt (Sep 30, 2025) (Increased from $1.52 billion at Dec 31, 2024)
• $13.06M — Cash and Cash Equivalents (Sep 30, 2025) (Increased from $3.81 million at Dec 31, 2024)
• $262.80M — Net Cash Flow from Operating Activities (9M 2025) (Increased from $39.93 million in 9M 2024)

Key Players & Entities

• Custom Truck One Source, Inc. (company) — registrant
• New York Stock Exchange (regulator) — exchange where CTOS Common Stock is registered
• Delaware (regulator) — state of incorporation
• FASB (regulator) — Financial Accounting Standards Board
• Bloomberg (company) — publisher
• SEC (regulator) — Securities and Exchange Commission
• Kansas City, MO (company) — principal executive offices location

FAQ

Risk Factors

• High Debt Levels [high — financial]: The company carries significant long-term debt, totaling $1.63 billion as of September 30, 2025. While interest expense has decreased, the substantial debt burden could impact financial flexibility and profitability, especially in a rising interest rate environment.
• Inventory Management [medium — operational]: Inventory levels remain high at $1.04 billion as of September 30, 2025. While this supports equipment sales, it ties up significant capital and carries risks related to obsolescence, storage costs, and potential write-downs.
• Net Loss Despite Revenue Growth [medium — financial]: Despite a 7.8% increase in total revenue for Q3 2025, the company reported a net loss of $5.76 million. This indicates ongoing challenges in converting revenue into profitability, potentially due to high operating costs or interest expenses.
• Economic Sensitivity [medium — market]: The company's performance is tied to the health of industries that rely on heavy equipment, such as construction and infrastructure. Economic downturns or reduced capital spending in these sectors could negatively impact demand for rentals and equipment sales.
• Depreciation of Rental Equipment [medium — operational]: Depreciation of rental equipment is a significant cost, amounting to $54.78 million for Q3 2025. While necessary for maintaining the rental fleet, it directly impacts gross profit margins.
• Cash Position [low — financial]: While cash and cash equivalents increased to $13.06 million from $3.81 million, the absolute amount remains relatively low compared to total assets and liabilities, especially given the company's debt obligations.

Industry Context

Custom Truck One Source operates in the highly competitive heavy equipment rental and sales market. Key industry trends include increasing demand for specialized equipment, a focus on fleet modernization, and the impact of infrastructure spending. Competitors range from large national rental companies to smaller regional players, all vying for market share.

Regulatory Implications

The company is subject to various regulations related to equipment safety, environmental standards, and financial reporting. Compliance with these regulations is crucial to avoid penalties and maintain operational licenses. Changes in environmental regulations could impact the cost of maintaining and operating its fleet.

What Investors Should Do

1. Monitor debt reduction strategies
2. Analyze operating margin improvement
3. Assess inventory turnover and management
4. Evaluate rental revenue growth sustainability

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the unaudited condensed consolidated financial statements, showing revenue growth but a net loss.
• 2025-09-30: Balance Sheet Date — Reflects increased cash position and high inventory and debt levels.
• 2024-09-30: End of Q3 2024 — Prior year comparison period for Q3 2025 results, showing improvement in net loss and operating income.
• 2024-12-31: Year-End 2024 — Prior year-end balance sheet comparison for Q3 2025, highlighting changes in cash, inventory, and debt.

Glossary

Rental revenue

Income generated from leasing equipment to customers for a specified period. (A key growth driver for CTOS, showing a significant increase of 17.4% in Q3 2025.)

Equipment sales

Revenue generated from the sale of new or used heavy equipment. (CTOS's largest revenue segment, contributing $320.58 million in Q3 2025 with a 4.9% increase.)

Depreciation of rental equipment

The systematic allocation of the cost of rental equipment over its useful life, reflecting its wear and tear. (A substantial operating expense impacting profitability, increasing by 19.2% in Q3 2025.)

Operating Income

Profitability from a company's core business operations before accounting for interest and taxes. (Significantly improved by 41.6% in Q3 2025, indicating better operational efficiency.)

Net Income (Loss)

The company's profit or loss after all revenues and expenses, including interest and taxes, have been accounted for. (CTOS reported a net loss in Q3 2025, though it narrowed compared to the prior year.)

Cash and cash equivalents

Highly liquid assets that can be readily converted into cash. (Increased substantially to $13.06 million, primarily due to strong operating cash flow.)

Net Cash Flow from Operating Activities

The cash generated or used by a company's normal business operations. (Showed a dramatic improvement, reaching $262.80 million for the nine months ended September 30, 2025.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Custom Truck One Source has demonstrated significant revenue growth, with total revenue up 7.8% for Q3 2025 and 10.5% for the nine months. Operating income has also seen substantial improvement, rising 41.6% in Q3. While the company has narrowed its net loss from $17.42 million to $5.76 million for the quarter, it continues to operate at a loss. A key positive development is the dramatic increase in net cash flow from operating activities, which has bolstered the cash position from $3.81 million to $13.06 million.

Key Financial Figures

• $0.0001 — ange on which registered Common Stock, $0.0001 par value per share CTOS New York Stock
• $000 — 0, Nine Months Ended September 30, (in $000s, except per share data) 2025 2024 2025

Filing Documents

• ctos-20250930.htm (10-Q) — 1464KB
• a09302025ctosex311.htm (EX-31.1) — 18KB
• a09302025ctosex312.htm (EX-31.2) — 18KB
• a09302025ctosex32.htm (EX-32) — 6KB
• 0001709682-25-000039.txt ( ) — 6808KB
• ctos-20250930.xsd (EX-101.SCH) — 41KB
• ctos-20250930_cal.xml (EX-101.CAL) — 65KB
• ctos-20250930_def.xml (EX-101.DEF) — 197KB
• ctos-20250930_lab.xml (EX-101.LAB) — 507KB
• ctos-20250930_pre.xml (EX-101.PRE) — 376KB
• ctos-20250930_htm.xml (XML) — 1028KB

FINANCIAL INFORMATION Page Number

PART I FINANCIAL INFORMATION Page Number

Financial Statements 3

Item 1. Financial Statements 3 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2025 and 2024 4 Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 5 Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 6 Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Nine Months Ended September 30, 2025 and 2024 7 Notes to Unaudited Condensed Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations 20

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20

Quantitative and Qualitative Disclosures About Market Risk 30

Item 3. Quantitative and Qualitative Disclosures About Market Risk 30

Controls and Procedures 31

Item 4. Controls and Procedures 31

OTHER INFORMATION

PART II OTHER INFORMATION

Legal Proceedings 32

Item 1. Legal Proceedings 32

Risk Factors 32

Item 1A. Risk Factors 32

Unregistered Sales of Equity Securities and Use of Proceeds 33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33

Defaults Upon Senior Securities 33

Item 3. Defaults Upon Senior Securities 33

Mine Safety Disclosures 33

Item 4. Mine Safety Disclosures 33

Other Information 33

Item 5. Other Information 33

Exhibits 34

Item 6. Exhibits 34 SIGNATURES 35

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 3 Custom Truck One Source, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in $000s, except per share data) 2025 2024 2025 2024 Revenue Rental revenue $ 127,142 $ 108,324 $ 364,217 $ 317,492 Equipment sales 320,583 305,476 950,558 863,711 Parts sales and services 34,333 33,420 100,998 100,337 Total revenue 482,058 447,220 1,415,773 1,281,540 Cost of Revenue Cost of rental revenue 30,434 29,439 91,172 88,559 Depreciation of rental equipment 54,775 45,956 158,873 134,285 Cost of equipment sales 268,377 251,987 793,526 704,105 Cost of parts sales and services 27,719 28,009 83,371 82,786 Total cost of revenue 381,305 355,391 1,126,942 1,009,735 Gross Profit 100,753 91,829 288,831 271,805 Operating Expenses Selling, general and administrative expenses 54,863 54,630 173,479 168,322 Amortization 6,683 6,696 20,274 19,966 Non-rental depreciation 3,332 3,472 9,904 9,752 Transaction expenses and other 3,246 3,994 12,209 14,684 Total operating expenses 68,124 68,792 215,866 212,724 Operating Income 32,629 23,037 72,965 59,081 Other Expense Interest expense, net 40,247 43,875 119,364 124,191 Financing and other expense (income) ( 874 ) ( 2,818 ) ( 3,261 ) ( 9,399 ) Total other expense 39,373 41,057 116,103 114,792 Income (Loss) Before Income Taxes ( 6,744 ) ( 18,020 ) ( 43,138 ) ( 55,711 ) Income Tax Expense (Benefit) ( 988 ) ( 604 ) 8,789 518 Net Income (Loss) $ ( 5,756 ) $ ( 17,416 ) $ ( 51,927 ) $ ( 56,229 ) Other Comprehensive Income (Loss): Unrealized foreign currency translation adjustments $ ( 1,769 ) $ 1,310 $ 3,069 $ ( 2,159 ) Other Comprehensive Income (Loss) ( 1,769 ) 1,310 3,069 ( 2,159 ) Comprehensive Income (Loss) $ ( 7,525 ) $ ( 16,106 ) $ ( 48,858 ) $ ( 58,388 ) Net Income (Loss) Per Share: Basic $ ( 0.03 ) $ ( 0.07 ) $ ( 0.23 ) $ ( 0.24 ) Diluted $ ( 0.03 ) $ ( 0.07 ) $ ( 0.23

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