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01/10 05:51
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with a 13% YoY revenue increase and strong demand in core markets. Despite competitive pressures, the company sees robust growth in rental and asset sales. While TES margins are under pressure, the backlog and orders are strong. The Q&A suggests confidence in revenue growth and effective inventory management. The focus on reducing leverage and generating free cash flow is positive. Given the market cap of $1.04 billion, the stock is likely to react positively, with a predicted movement of 2% to 8% over the next two weeks.
Revenue $422 million, up 13% year-over-year from $373 million in Q1 2024, driven by strong demand in core T&D markets and robust performance in ERS and TES segments.
Adjusted Gross Profit $136 million, reflecting a year-over-year increase, with ERS adjusted gross profit at $93 million, up 13% from Q1 2024.
Adjusted EBITDA $73 million, with a focus on maintaining margins in the expected range despite macroeconomic challenges.
Average OEC on Rent Over $1.2 billion, a 13% increase year-over-year from under $1.1 billion in Q1 2024, driven by strong rental demand.
Average Utilization Rate Just under 78%, up 440 basis points from 73% in Q1 2024, indicating strong demand and effective fleet management.
ERS Segment Revenue $154 million, up more than 13% from $136 million in Q1 2024, driven by increases in rental revenue and asset sales.
Rental Revenue Growth 9% year-over-year increase, reflecting strong demand in the rental market.
Rental Asset Sales Growth 26% year-over-year increase, indicating strong performance in asset sales.
Total OEC Just under $1.55 billion, up $95 million from Q1 2024, reflecting strategic investments in the rental fleet.
TES Equipment Sales $232 million, down marginally compared to Q1 2024, but with strong sequential growth in February and March.
TES Gross Margin 15.1%, down from Q1 2024, impacted by product mix and inventory levels.
TES New Sales Backlog Increased by $51 million or 14% in the quarter, ending at just over $420 million.
Net Orders in TES $284 million, up more than 220% compared to Q1 2024, indicating strong order flow.
ATS Revenue $35 million, flat compared to Q1 2024, with adjusted gross profit margin at 22%, down due to higher material costs.
Borrowings under ABL $655 million, an increase of $73 million versus the end of Q4, primarily for equipment purchases and working capital needs.
Net Leverage Ratio 4.8x, with a target to reduce it below 3x by the end of fiscal 2026.
Levered Free Cash Flow Target $50 million to $100 million for 2025, aimed at reducing net leverage.
New Sales Backlog: TES new sales backlog increased by $51 million or 14% in the quarter, ending at just over $420 million.
Equipment Sales: TES saw good sales performance in the quarter with record March sales, ending with the highest level of equipment sales for March ever.
Average OEC on Rent: Average OEC on rent for Q1 was over $1.2 billion, a 13% year-over-year increase.
Rental Revenue Growth: Total ERS segment revenue was up 13% versus Q1 of last year, driven by strong rental demand.
Average Utilization Rate: Average utilization in the quarter was just under 78%, up 440 basis points versus Q1 of last year.
Fleet Investment: Total OEC was just under $1.55 billion, the highest quarter end level ever, with plans to continue investing in the rental fleet.
Tariff Monitoring: Tariffs remain an area of focus, with proactive mitigation strategies to shield operations from disruptions.
Long-term Demand Outlook: Despite macro challenges, the business outlook remains positive, buoyed by long-term demand drivers.
Economic Uncertainty: Evolving U.S. tariff policies have introduced greater economic uncertainty, which may deter some customers from committing to substantial capital investments for vehicle purchases.
Regulatory Challenges: Upcoming chassis emission regulations from CARB and the EPA are being monitored for potential changes that could impact operations.
Supply Chain Challenges: Continued high interest rates and caution regarding the economy are influencing smaller customers' decisions to rent instead of purchase vehicles.
Competitive Pressures: The company faces competitive pressures, particularly in the TES segment, where gross margins are under pressure due to product mix and inventory levels.
Inventory Management: The tactical pull forward of inventory purchases has resulted in a modest rise in inventory levels, which the company expects to reduce by the end of the year.
Financial Leverage: The company finished Q1 with a net leverage of 4.8x and aims to reduce this to below 3x by the end of fiscal 2026.
Revenue Growth: Custom Truck is reaffirming its fiscal 2025 revenue guidance in the range of $1.97 billion to $2.06 billion, driven by strong demand in core T&D markets.
Adjusted EBITDA: The company expects adjusted EBITDA to be in the range of $370 million to $390 million for fiscal 2025.
Net Rental CapEx: Net rental CapEx is projected to be just under $200 million for the year.
Order Backlog Growth: TES segment backlog increased by over $51 million or 14% in Q1, indicating strong future sales potential.
Fleet Investment: The company plans to continue investing in its rental fleet to meet current and projected demand.
Revenue Guidance: Total revenue is expected to be between $1.97 billion and $2.06 billion for fiscal 2025.
Adjusted EBITDA Guidance: Adjusted EBITDA is projected to be between $370 million and $390 million for fiscal 2025.
Levered Free Cash Flow: The company targets levered free cash flow of $50 million to $100 million in 2025.
Net Leverage Target: Custom Truck aims to reduce net leverage to below 3x by the end of fiscal 2026.
Shareholder Return Plan: The company intends to use its levered free cash flow this year to reduce net leverage, targeting a level below 3x by the end of fiscal 2026. They expect to generate meaningful levered free cash flow in 2025, setting a target of $50 million to $100 million.
The earnings call summary reflects strong financial performance, with significant growth in key segments and strategic investments. The Q&A highlights optimism in utility demand and transmission projects, though management was vague on some specifics. The reaffirmed guidance and positive market trends support a positive outlook. Given the small-cap nature of the company, the stock price is likely to react positively within the 2% to 8% range over the next two weeks.
The earnings call highlights strong financial performance with a 21% revenue increase, improved gross margins, and positive growth in key segments. The company is effectively managing tariff impacts and has a positive outlook despite backlog declines. The Q&A session reinforced confidence with clear responses, and the overall guidance remains optimistic. Given the company's market cap, these factors suggest a positive stock price movement of 2% to 8%.
The earnings call indicates strong financial performance with a 13% YoY revenue increase and strong demand in core markets. Despite competitive pressures, the company sees robust growth in rental and asset sales. While TES margins are under pressure, the backlog and orders are strong. The Q&A suggests confidence in revenue growth and effective inventory management. The focus on reducing leverage and generating free cash flow is positive. Given the market cap of $1.04 billion, the stock is likely to react positively, with a predicted movement of 2% to 8% over the next two weeks.
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