Custom Truck One Source, Inc.

Thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the Custom Truck OneSource Incorporated first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star 1 again. I will now hand the call over to your host today, Brian Perman, Vice President of Investor Relations for Custom Trucks. Please go ahead.

Thank you. 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 risk 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 you can find reconciliations of the historical non-GAAP financial measures discussed during the call in the press release we issued yesterday afternoon. That press release and our first quarter investor presentation are posted of our website. We filed our first quarter 2025 10Q with the SEC yesterday afternoon. Today's discussion of our results of operations for Custom Truck OneSource Inc. or Custom Truck is presented on a historical basis as of or for the three months ended March 31st, 2025 and prior periods. Joining me today are Ryan McMoneagle, CEO, and Chris Epperjesse, CFO. I will now turn the call over to Ryan.

Thank you, Brian, and welcome, everyone, to today's call. Custom Truck's strong financial performance at the end of last year carried over into the first quarter of this year, driven by solid fundamentals across our primary end markets. Demand in our core T&D markets remained robust, leading to strong results in both our ERS and TES segments and overall year-over-year revenue growth for the quarter. While evolving US tariff policies have introduced greater economic uncertainty, our ongoing engagement with customers, coupled with our steady business activity and strong order flow, reinforces our cautious optimism about achieving our expected growth targets in 2025. As a result, we are reaffirming our previous fiscal 2025 revenue and adjusted EBITDA guidance. While Chris will discuss our ERS segments performance in greater detail, I'd like to highlight some key trends. Our utility contractor customers continue to see sustained and increased levels of activity, which they expect to persist at least through the end of 2025, driven largely by unprecedented secular growth in electricity demand and the need for substantial maintenance spending. The strong rental demand in the utility end market and across our other primary end markets resulted in average OEC on rent for Q1 of over $1.2 billion, a 13% year-over-year increase. Average utilization in the quarter was just under 78%, up 440 basis points versus Q1 of last year. We continue to see mid-70s to low-80s utilization rates across most of our fleet, demonstrating the long-term resilience of our end markets. These trends resulted in significant year-over-year increases in both rental revenue and rental asset sales, driving total ERS segment revenue of 13% versus Q1 of last year. We continue to leverage the sustained rental demand in ERS to selectively invest in our rental fleet. At the end of Q1, our total OEC was just under $1.55 billion, our highest quarter end level ever. We plan to continue to invest throughout the year to ensure we have adequate equipment to meet current and projected rental demand. PDF saw good sales performance in the quarter, as well as significant year-over-year net order growth, with backlog increasing by over $51 million in the quarter, or 14%. Additionally, we experienced monthly sequential sales growth in February and March, ending with our strongest March in the history of the company. Segment gross margin continues to be under some pressure, impacted by mix and improved inventory levels across the broader industry. As we stated last quarter, we anticipate this will begin to normalize later in the year. We continue to see some hesitancy from our smaller customers to purchase vehicles who, in some cases, are choosing to rent a vehicle instead. Continued high interest rates and caution regarding the economy resulting from changing U.S. tariff policy appear to be the primary factors influencing this. Despite these trends, our strong order flow and the growth in our backlog in the first quarter, which has continued so far into Q2, provide us with confidence in our outlook for TES for the full year. Tariffs remain an area of focus for us. and we continuously monitor real-time changes in U.S. policy to assess their potential impact on our operations. Many of the goods we purchase from our vendors are either not currently or are not expected to be subject to specific tariffs targeting certain products or regions. Additionally, we believe that our existing whole goods inventory will sufficiently support our production needs in the near and medium term. Some OEMs have begun shifting portions of cross-border production for select products back to the U.S. where feasible. Other suppliers have introduced incentives tied to non-tariff pricing, a strategy we have leveraged as we tactically pull forward some inventory purchases during the first quarter, resulting in a modest rise in our inventory levels. We believe that our proactive mitigation strategies will largely shield us from significant disruption to our operations this year. Should increased economic uncertainty deter some customers from committing to substantial capital investment for vehicle purchases, our rental fleet serves as an additional hedge to meet their equipment needs. Regarding upcoming chassis emission regulations from CARB and the EPA, We continue to monitor any potential changes to those regulations under the new administration. Our current guidance for TES is not conditioned on any pre-buy ahead of changes in emission standards from either regulatory body. We are reaffirming our full year 2025 guidance. Our first quarter results, our strong order flow and resilient in-market demand continue to drive our expected growth across our consolidated business this year. Despite some of the challenges in the macro environment that have occurred so far this year, our business outlook remains positive. Long-term, sustained in-market demand, buoyed by secular megatrends and our ability to execute on behalf of our customers sets us apart from our competition. Our multi-decade relationship with strategic suppliers, our long-tenured and diversified customer base will continue to be keys to our success. I continue to have the highest degree of confidence in the Custom Truck Team and want to thank everyone for their hard work and dedication that helped get us to where we are today. We look forward to updating you on our progress on next quarter's call. With that, I'll turn it over to Chris to discuss our first quarter results in detail.