Custom Truck One Source, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Custom Truck OneSource Second Quarter 2023 Earnings Conference Call. Please note that this conference call is being recorded. I would like to hand the conference over to your host today, Brian Perman, Vice President of Investor Relations for Custom Truck. 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 discussion of some of the factors that could cause actual results to differ, please refer to the risk factor 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 second 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 June 30th, 2023, in prior periods. Joining me today are Ryan McMoneagle, CEO, and Chris Epperjesse, CFO. Owen, I'll 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 help us deliver another strong quarter. The entire custom truck team continues to deliver record levels of production, which enables us to continue 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 second quarter of the year, we delivered strong year over year revenue, adjusted gross profit and adjusted EBITDA growth. We generated $457 million of revenue, $154 million of adjusted gross profit, and $103 million of adjusted EBITDA in Q2, up 26%, 22%, and 21%, respectively, versus Q2 2022. Our second quarter results align with our expectations that our business this year would reflect the benefits of moderating inflation, improved supply chain performance, and continued operational excellence. Demand remains strong in each of our strategically selected end markets, utility or T&D, telecom, rail, and infrastructure. These markets continue to 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 own new sales backlog and in the performance of the rental fleet. Additionally, in the second 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. The rental segment experienced 16% revenue growth year over year. We continue to see strong demand for rental equipment, and we remain focused 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 margin. In the quarter, utilization finished at just under 82%, which is historically very strong. We experienced a decline in utility distribution equipment utilization, which we believe is temporary, and primarily related to our customer supply chain delays. We continue to invest in our rental fleet and sell certain aged assets. This resulted in the reduction of our fleet age to under 3.6 years, which we believe remains the youngest in the industry. We expect to continue to invest in the fleet for the remainder of the year as demand remains robust. In the TES segment, we sold $251 million of equipment in the quarter, a 39% increase compared to Q2 2022, and the highest level of quarterly sales in the company's history. Additionally, gross margin improved significantly versus Q2 of last year, and our backlog continued to grow, ending the quarter at $864 million, up 30% versus a year ago, and up modestly versus the end of Q1. As we continue to achieve record TES sales and production levels, we should experience slower growth in our backlog, which we expect will eventually return to a more normalized level. This past quarter's TES 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. We continue to see an increase in equipment availability from our chassis and attachment suppliers, which positions us well to meet our production fleet growth and sales goals for the remainder of the year and beyond. Strategically, we remain focused on investing in and optimizing our production capacity and service footprint to ensure that we deliver the product and service levels our customers expect from us. On last quarter's call, we discussed the expansion projects that are Kansas City, Missouri and Union Grove, Wisconsin locations. The work at the Union Grove location is complete and the new capacity is largely online, while the expansion in Kansas City is expected to be complete later this year. These investments 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 segments. As we look ahead to the rest of the year, we believe that our first half 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 guidance range to $1.725 to $1.83 billion, and our adjusted EBITDA range to $425 to $445 million. In closing, we know our employees are the key to delivering the unequaled customer service and outstanding financial results we saw in the second quarter, and I'd like to extend a sincere thank you to them. I will now turn it over to Chris.