Custom Truck One Source, Inc.
For the period ended Jun 30, 2025. Filed Jul 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 30, 2025
CTOS$9.33+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0001709682-25-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-30.
0001709682-25-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 103 current paragraphs.
77 unchanged; 22 reworded; 4 added; 4 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Three and six months ended June 30, 2025, compared to the same periods in 2024
Current report
Income Tax Expense (Benefit) - Income tax expense for the three and six months ended June 30, 2025 was $17.5 million and $9.8 million, respectively. Income tax expense for the three months ended June 30, 2025 reflects an adjustment to our estimated annual effective tax rate resulting from changes in expected taxable income in different tax jurisdictions. Despite this change, we expect annual cash taxes to be paid to remain at a level consistent with previous years.
Current report
Equipment Sales - Equipment sales increased for the three and six months ended June 30, 2025, compared to the same periods in 2024. The increase in new equipment sales is driven by robust demand for vocational vehicles across our end markets, particularly intra-quarter demand from local and regional customers.
Current report
Net cash used for financing activities was $39.9 million for the six months ended June 30, 2025, as compared to net cash from financing activities of $73.0 million in the same period of 2024. The increase in cash used for financing activities was primarily due to an increase in repayments on floorplan liabilities and long term debt of $64.1 million and lower proceeds from floorplan liabilities and long term debt of $40.0 million.
Removed paragraphs (4)
Previous report
Income Tax Expense (Benefit) - Income tax benefit for the three months ended March 31, 2025 was $7.7 million, resulting in an effective tax rate of 30.2%. Income tax benefit for the three months ended March 31, 2024 was $1.9 million, at an effective tax rate of 12.0%. The changes in the effective tax rates were primarily due to the impact of permanent adjustments partially offset by the valuation allowance.
Previous report
Equipment Sales - Equipment sales decreased for the three months ended March 31, 2025, compared to the same period in 2024. The decline in new equipment sales is driven by pricing pressures due to the ongoing high-interest rate environment and the mix of equipment sold.
Previous report
(4) During Q4 2024, the Company closed on a sale leaseback transaction with an unrelated third party. The Company sold eight properties with a combined net book value of $29.0 million for gross proceeds of $53.8 million, which was reduced by transaction costs and other fees of $1.3 million, for net cash proceeds of approximately $52.5 million. Additionally, $3.2 million from the proceeds were used to repay a note payable. The Company recognized a gain of $23.5 million on this transaction.
Previous report
Net cash provided by financing activities was $17.2 million for the three months ended March 31, 2025, as compared to $45.5 million in the same period of 2024. The decrease in cash provided by financing activities was primarily due to an increase in repurchases of common stock of $25.8 million.
Reworded paragraphs (22)
Previous wording
Cost of equipment sales — Cost of equipment sales reflects production and inventory costs associated with new units sold, parts costs, labor and other overheads related to production, and freight associated with the shipping and receiving of equipment and parts. Cost of equipment sales also includes the net book value of rental units sold, including active rental contracts which qualify to be accounted for as sales-type leases.
Current wording
Cost of equipment and parts and services sales — Cost of equipment sales reflects production and inventory costs associated with new units sold, parts costs, labor and other overheads related to production, and freight associated with the shipping and receiving of equipment and parts. Cost of equipment sales also includes the net book value of rental units sold, including active rental contracts which qualify to be accounted for as sales-type leases.
Previous wording
Interest expense — Interest expense consists of contractual interest expense on outstanding debt obligations, floorplan financing facilities, amortization of deferred financing costs and other related financing expenses.
Current wording
Interest expense — Interest expense consists of contractual interest expense on outstanding debt obligations, floor plan financing facilities, amortization of deferred financing costs and other related financing expenses.
Previous wording
Total Revenue - The increase in total revenue for the three months ended March 31, 2025, compared to the same period in 2024 is a result of higher rental revenue driven by higher average OEC on rent.
Current wording
Total Revenue - The increase in total revenue for the three and six months ended June 30, 2025, compared to the same periods in 2024 is a result of strong new equipment sales during second quarter of 2025 as well as higher rental revenue driven by higher average OEC on rent.
Previous wording
Cost of Revenue, Excluding Rental Equipment Depreciation - The increase in cost of revenue, excluding rental equipment depreciation for the three months ended March 31, 2025, compared to the same period in 2024, was driven primarily by the increase in equipment sales volume during the quarter.
Current wording
Cost of Revenue, Excluding Rental Equipment Depreciation - The increase in cost of revenue, excluding rental equipment depreciation for the three and six months ended June 30, 2025, compared to the same periods in 2024, was driven primarily by the increase in equipment sales volume during the quarter.
Previous wording
Depreciation of Rental Equipment - Depreciation of our rental equipment increased in the three months ended March 31, 2025, compared to the same period in 2024, as a result of higher rental equipment levels.
Current wording
Depreciation of Rental Equipment - Depreciation of our rental equipment increased in the three and six months ended June 30, 2025, compared to the same periods in 2024, as a result of higher rental equipment levels.
Previous wording
Operating Expenses - Operating expenses increased in the three months ended March 31, 2025, compared to the same period in 2024, primarily as a result of an increase in general and administrative expenses due to increased compensation.
Current wording
Operating Expenses - Operating expenses increased in the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily as a result of an increase in general and administrative expenses due to increased compensation.
Previous wording
Total Other Expense - Other expense increased for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to the increase in interest expense from variable rate debt and floor plan financing liabilities.
Current wording
Total Other Expense - Other expense remained flat for the three months ended June 30, 2025, compared to the same period in 2024, and increased for the six months ended June 30, 2025, compared to the same period in 2024 primarily due to a decrease in interest income from financing receivables.
Previous wording
Net Income (loss) - Net loss increased for the three months ended March 31, 2025, compared to the same period in 2024, due to decreased gross profit and higher interest expense on variable-rate debt and variable-rate floor plan liabilities.
Current wording
Net Income (loss) - Net loss increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily due to higher income tax expense.
Previous wording
Total Revenue - The increase in total revenue for the ERS segment for the three months ended March 31, 2025, compared to the same period in 2024, was due to an increase in rental revenue and rental equipment sales. Rental revenue increased as a result of higher fleet utilization of 4.4% driven by higher average OEC on rent. Used equipment sales increased as a result of the improved market demand for used equipment over new equipment due to the ongoing high-interest rate environment.
Current wording
Total Revenue - The increase in total revenue for the ERS segment for the three and six months ended June 30, 2025, compared to the same periods in 2024, was due to an increase in rental revenue and rental equipment sales. Rental revenue increased as a result of higher fleet utilization of 5.9% and 4.9% for the three and six months ended June 30, 2025, respectively; driven by higher average OEC on rent. Rental equipment sales increased due to steady performance and demand in the utility market for transmission and distribution jobs.
Previous wording
Cost of Revenue - The increase in total cost of revenue for the three months ended March 31, 2025, compared to the same period in 2024, was largely due to the increase in rental equipment sales volume.
Current wording
Cost of Revenue - The increase in total cost of revenue for the three and six months ended June 30, 2025, compared to the same periods in 2024, was largely due to the increase in rental equipment sales volume.
Previous wording
Depreciation - Depreciation of our rental equipment increased for the three months ended March 31, 2025, compared to the same period in 2024, as a result of higher rental equipment levels.
Current wording
Depreciation - Depreciation of our rental equipment increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, as a result of higher rental equipment levels.
Previous wording
Gross Profit - The increase in gross profit for the three months ended March 31, 2025, compared to the same period in 2024, was due to the increase in rental revenues and equipment sales for the period.
Current wording
Gross Profit - The increase in gross profit for the three and six months ended June 30, 2025, compared to the same periods in 2024, was due to the increase in rental revenues and equipment sales for the period.
Previous wording
Cost of Equipment Sales - Cost of equipment sales increased for the three months ended March 31, 2025, compared to the same period in 2024, due to the increase in equipment sales volume.
Current wording
Cost of Equipment Sales - Cost of equipment sales increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, due to the increase in equipment sales volume.
Previous wording
Gross Profit - The decrease in gross profit for the three months ended March 31, 2025, compared to the same period in 2024, was due to to the pricing pressures on new truck sales as well as the mix of equipment sold.
Current wording
Gross Profit - Gross profit increased for the three months ended June 30, 2025 compared to the same period in 2024 due to the mix of equipment sold. The decrease in gross profit for the six months ended June 30, 2025, compared to the same period in 2024, was due to the pricing pressures on truck sales as well as the mix of equipment sold.
Previous wording
Total Revenue - Total revenue was flat for the three months ended March 31, 2025, compared to the same period in 2024.
Current wording
Total Revenue - Total revenue was flat for the three and six months ended June 30, 2025, compared to the same periods in 2024.
Previous wording
Cost of Revenue - Cost of revenue increased for the three months ended March 31, 2025, compared to the same period in 2024, as a result of higher costs of materials.
Current wording
Cost of Revenue - Cost of revenue was flat for the three and six months ended June 30, 2025, compared to the same periods in 2024.
Previous wording
Gross Profit - The decrease in gross profit for the three months ended March 31, 2025, compared to the same period in 2024, was primarily driven by the decrease in parts and services revenue with an increase in costs of materials driving gross profit down.
Current wording
Gross Profit - The increase in gross profit for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily driven by the increase in rental revenue which has lower costs associated with it.
Previous wording
Our principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities as described below. We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service and capital requirements, including investments in our rental fleet, over the next 12 months and beyond. As of March 31, 2025, we had $5.4 million in cash and cash equivalents compared to $3.8 million as of December 31, 2024. As of March 31, 2025 and December 31, 2024, we had $655.5 million and $582.9 million of outstanding borrowings under our ABL Facility, respectively. Availability under the ABL Facility was $289.9 million as of March 31, 2025, and based on our borrowing base, we have an additional $161.4 million of suppressed availability that we can potentially utilize by upsizing our existing facility. For further information on the ABL Facility, see Note 7: Long-Term Debt in the Notes to the Unaudited Condensed Consolidated Financial Statements.
Current wording
Our principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities as described below. We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service and capital requirements, including investments in our rental fleet, over the next 12 months and beyond. As of June 30, 2025, we had $5.3 million in cash and cash equivalents compared to $3.8 million as of December 31, 2024. As of June 30, 2025 and December 31, 2024, we had $670.5 million and $582.9 million of outstanding borrowings under our ABL Facility, respectively. Availability under the ABL Facility was $275.7 million as of June 30, 2025, and based on our borrowing base, we have an additional $231.1 million of suppressed availability that we can potentially utilize by upsizing our existing facility. For further information on the ABL Facility, see Note 7: Long-Term Debt in the Notes to the Unaudited Condensed Consolidated Financial Statements.
Previous wording
(1) The following tables present the calculation of LTM Adjusted EBITDA for the period ended March 31, 2025 and December 31, 2024:
Current wording
(1) The following tables present the calculation of LTM Adjusted EBITDA for the periods ended June 30, 2025 and March 31, 2025:
Previous wording
As of March 31, 2025, we had cash and cash equivalents of $5.4 million, an increase of $1.6 million from December 31, 2024. Generally, we manage our cash flow by using any excess cash, after considering our working capital and capital expenditure needs, including paying down the outstanding balance under our ABL Facility, and availability under our credit facilities.
Current wording
As of June 30, 2025, we had cash and cash equivalents of $5.3 million, an increase of $1.5 million from December 31, 2024. Generally, we manage our cash flow by using any excess cash, after considering our working capital and capital expenditure needs, including paying down the outstanding balance under our ABL Facility, and availability under our credit facilities.
Previous wording
Net cash from operating activities was $55.6 million for the three months ended March 31, 2025, as compared to net cash used in operating activities of $14.4 million in the same period of 2024. The change year over year is driven by lower levels of inventory production in 2025 compared to 2024.
Current wording
Net cash from operating activities was $181.4 million for the six months ended June 30, 2025, as compared to $23.4 million in the same period of 2024. The change year over year is driven by lower levels of inventory production in 2025 compared to 2024.
Previous wording
Net cash used in investing activities was $71.3 million for the three months ended March 31, 2025, as compared to $33.4 million in the same period of 2024. The increase in cash used in investing activities was primarily due to an increase in purchases of rental equipment of $36.4 million.
Current wording
Net cash used in investing activities was $139.8 million for the six months ended June 30, 2025, as compared to $98.7 million in the same period of 2024. The increase in cash used in investing activities was primarily due to an increase in purchases of rental equipment of $60.1 million.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Three months ended March 31, 2025, compared to the same period in 2024