Custom Truck One Source, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Custom Truck OneSource's first quarter 2023 earnings conference call. Please note, this conference call is being recorded. I would now like to hand that conference call over to your host today, Brian Perman, Vice President of Investor Relations for Custom Truck. Thank you, sir. Please go ahead.

Thank you, and good afternoon. Before we begin, we would like to remind you that management's commentary and responses to questions on today's call may include forward-looking statements which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of the company's filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during the call in the press release we issued today. The press release we issued this afternoon and our quarterly investor presentation are posted on the investor relations section of our website. We filed our first quarter 2023 10Q with the SEC this afternoon. Today's discussion of our results of operations for Custom Truck OneSource, Inc., or Custom Truck, is presented on an historical basis as of or for the three months ended March 31st, 2023 and prior periods. Joining me today are Ryan McMoneagle, CEO, and Chris Epperjesse, CFO. I will now turn the call over to Ryan.

Thanks, Brian, and welcome everyone to today's call. I'd like to begin by thanking all of our employees, customers, and suppliers who continue to support our business, and helped us deliver such a strong quarter. The entire custom truck team continues to work tirelessly to maintain record levels of production, enabling us to grow our rental fleet, to meet continued strong demand for new equipment, and to fulfill our goal of providing unrivaled service to our customers. For the first quarter of the year, we delivered strong year-over-year revenue, adjusted gross profit, and adjusted EBITDA growth. We generated $452 million of revenue, $150 million of adjusted gross profit, and $105 million of adjusted EBITDA in Q1, up 23%, 16%, and 15%, respectively, versus Q1 2022. Overall demand remains very strong in each of our strategically selected primary end markets, utility or T&D, telecom, rail, and infrastructure. These markets offer compelling long-term growth opportunities well in excess of GDP, which we believe should continue for the foreseeable future. The reported backlogs of the utility and telecom contractors, our largest customer base, continue to be good proxies for this sustained growth and remain at or near record levels. We see continued strong demand in our new sales backlog and in the performance of the rental fleet. Additionally, in the first quarter, we continue to experience strong demand from our customers to purchase assets in the rental fleet. We see all of these as positive leading indicators for sustained future demand. Rental utilization in the ERS segment remains near record high levels, and we continue to focus on rental pricing and the amount of time it takes to turn a piece of equipment and make it available to go back on rent. both of which positively impact adjusted gross margins. Investment of $109 million into the rental fleet and sales of certain aged assets in Q1 resulted in the reduction of our fleet age to under 3.7 years, which we believe remains the youngest in the industry. As we stated on last quarter's call, we expect to continue to aggressively invest in the fleet for the remainder of the year. In the TES segment, we sold $209 million of equipment in the quarter, a 25% increase compared to Q1 2022. Additionally, our backlog grew by more than $100 million in the quarter, or more than 13% versus the end of 2022. Our backlog is up 46% versus the end of Q1 last year. These results point to continued strong demand for new equipment. We are proud of the relationships we have with our chassis, body, and attachment vendors, and we continue to work closely with them to address supply chain issues as they arise. Progress in this area resulted in our inventory growing by $118 million in the quarter, which we see as a positive indicator of improving supply chain conditions and positions us well to meet our production, fleet growth, and sales goals for the remainder of the year. Strategically, we remain focused on investing in and optimizing our production capacity to ensure that we deliver the product and service levels our customers expect from us. In Kansas City, Missouri, we acquired approximately 60 acres adjacent to our facility and are in the process of bringing more than 200,000 square feet of manufacturing, production, and PTA warehouse capacity online. In Union Grove, Wisconsin, we are investing to nearly double production capacity. These investments, which we expect to be complete in the second half of the year, will ensure that we have sufficient capacity to meet our growth targets for both our rental fleet and new equipment sales, as well as be a catalyst for growth in our APS segment. As we look ahead to the rest of the year, we believe that our first quarter results, favorable in-market tailwinds, robust customer demand, improving supply chain dynamics, and continued outstanding execution by our team all provide Custom Truck with the momentum to deliver strong revenue, adjusted gross profit, and adjusted EBITDA growth. While Chris will discuss our 2023 outlook in greater detail based on year-to-date performance and the outlook for the remainder of the year, We are increasing our projected total revenue range to $1.635 to $1.755 billion, and our adjusted EBITDA range to $420 to $440 million. In closing, we know our employees are the key to delivering the exceptional financial results and unmatched customer service we saw in the first quarter, and I'd like to extend a sincere thank you to them. I will now turn it over to Chris.