Custom Truck One Source, Inc 10-Q for FY2022 Q2

Custom Truck One Source, Inc. (CTOS)

10-Q 2022-08-09 For: 2022-06-30

Added on April 04, 2026

About this 10-Q

Custom Truck One Source, Inc filed this 10-Q on August 9, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $362.11M; down 3.5% from $375.11M a year earlier
Net income: $13.62M; compared with a net loss of $129.36M a year earlier
Diluted EPS: $0.05; compared with -$0.53 a year earlier

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Delaware			84-2531628
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	CTOS	New York Stock Exchange
Redeemable warrants, exercisable for Common Stock, $0.0001 par value	CTOS.WS	New York Stock Exchange


(in $000s, except share data)	June 30, 2022		December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	28,524	$	35,902
Accounts receivable, net	168,916		168,394
Financing receivables, net	35,496		28,649
Inventory	536,087		410,542
Prepaid expenses and other	13,800		13,217
Total current assets	782,823		656,704
Property and equipment, net	107,940		108,612
Rental equipment, net	834,164		834,325
Goodwill	705,973		695,865
Intangible assets, net	318,661		327,840

Operating lease assets	35,316		36,014
Other assets	29,538		24,406
Total Assets	$	2,814,415	$	2,683,766
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	127,635	$	91,123
Accrued expenses	52,400		60,337

Deferred revenue and customer deposits	28,820		35,791
Floor plan payables - trade	71,272		72,714
Floor plan payables - non-trade	239,514		165,239
Operating lease liabilities - current	5,266		4,987
Current maturities of long-term debt	3,177		6,354
Current portion of finance lease obligations	3,175		4,038
Total current liabilities	531,259		440,583
Long-term debt, net	1,349,964		1,308,265
Finance leases	3,335		5,109
Operating lease liabilities - noncurrent	30,623		31,514
Deferred income taxes	24,497		15,621
Derivative, warrants and other liabilities	4,612		24,164
Total long-term liabilities	1,413,031		1,384,673

Commitments and contingencies (see Note 15)

Stockholders' Equity
Common stock — $0.0001 par value, 500,000,000 shares authorized, 248,068,603 and 247,358,412 shares issued and outstanding, at June 30, 2022 and December 31, 2021, respectively	25		25
Treasury stock, at cost — 490,011 and 318,086 shares at June 30, 2022 and December 31, 2021, respectively	(4,463)		(3,020)
Additional paid-in capital	1,514,339		1,508,995
Accumulated other comprehensive loss	(2,636)		—
Accumulated deficit	(637,140)		(647,490)

Total stockholders' equity	870,125		858,510
Total Liabilities and Stockholders' Equity	$	2,814,415	$	2,683,766


	Three Months Ended June 30,				Six Months Ended June 30,
(in $000s, except per share data)	2022		2021		2022		2021
Revenue
Rental revenue	$	112,055	$	98,539	$	221,200	$	146,828
Equipment sales	218,506		247,675		445,692		265,662

Parts sales and services	31,545		28,897		61,690		40,920
Total revenue	362,106		375,111		728,582		453,410
Cost of Revenue
Cost of rental revenue	28,791		29,013		54,584		45,941
Depreciation of rental equipment	43,324		43,179		88,288		61,023
Cost of equipment sales	184,595		229,339		371,873		243,004

Cost of parts sales and services	22,638		26,890		46,586		36,533

Total cost of revenue	279,348		328,421		561,331		386,501
Gross Profit	82,758		46,690		167,251		66,909
Operating Expenses
Selling, general and administrative expenses	48,779		51,264		102,434		63,314
Amortization	6,871		13,332		20,206		14,086
Non-rental depreciation	2,317		951		5,364		972
Transaction expenses and other	6,046		24,575		10,694		35,023


Total operating expenses	64,013		90,122		138,698		113,395
Operating Income (Loss)	18,745		(43,432)		28,553		(46,486)
Other Expense
Loss on extinguishment of debt	—		61,695		—		61,695
Interest expense, net	20,281		19,723		39,437		34,629
Financing and other expense (income)	(15,078)		(2,058)		(24,158)		3,799
Total other expense	5,203		79,360		15,279		100,123
Income (Loss) Before Income Taxes	13,542		(122,792)		13,274		(146,609)
Income Tax Expense (Benefit)	(81)		6,564		2,924		10,654
Net Income (Loss)	$	13,623	$	(129,356)	$	10,350	$	(157,263)

Other Comprehensive Income (Loss):
Unrealized foreign currency translation adjustments	$	(2,636)	$	—	$	(2,636)	$	—
Other Comprehensive Income (Loss)	(2,636)		—		(2,636)		—
Comprehensive Income (Loss)	$	10,987	$	(129,356)	$	7,714	$	(157,263)

Net Income (Loss) Per Share:
Basic	$	0.05	$	(0.53)	$	0.04	$	(1.07)
Diluted	0.05		$	(0.53)	$	0.04	$	(1.07)
Weighted-Average Common Shares Outstanding:
Basic (in thousands)	247,745		243,752		247,403		146,997
Diluted (in thousands)	248,614		243,752		248,239		146,997


	Six Months Ended June 30,
(in $000s)	2022		2021
Operating Activities
Net income (loss)	$	10,350	$	(157,263)
Adjustments to reconcile net income (loss) to net cash flow from operating activities:
Depreciation and amortization	117,120		79,163
Amortization of debt issuance costs	2,158		2,239
Loss on extinguishment of debt	—		61,695
Provision for losses on accounts receivable	4,545		6,177
Share-based compensation	5,148		7,860
(Gain) loss on sales and disposals of rental equipment	(22,905)		2,882
Loss (Gain) on insurance proceeds - damaged equipment	—		(650)

Change in fair value of derivative and warrants	(18,822)		6,880

Deferred tax expense (benefit)	2,575		9,849
Changes in assets and liabilities:

Accounts and financing receivables	(10,744)		(13,141)
Inventories	(125,021)		43,553
Prepaids, operating leases and other	(1,821)		(2,852)
Operating lease assets and liabilities	85		220
Accounts payable	32,480		11,937
Accrued expenses and other liabilities	(8,099)		(13)
Floor plan payables - trade, net	(1,441)		(6,927)
Customer deposits and deferred revenue	(6,972)		5,616
Net cash flow from operating activities	(21,364)		57,225
Investing Activities
Acquisition of business, net of cash acquired	(49,832)		(1,334,285)
Purchases of rental equipment	(127,237)		(65,873)
Proceeds from sales and disposals of rental equipment	96,143		41,708

Other investing activities, net	(11,763)		(1,777)

Net cash flow from investing activities	(92,689)		(1,360,227)
Financing Activities
Proceeds from debt	—		947,420
Proceeds from issuance of common stock	—		883,000
Payment of common stock issuance costs	—		(6,386)
Payment of premiums on debt extinguishment	—		(53,469)
Share-based payments	(1,247)		(586)
Borrowings under revolving credit facilities	75,000		441,084
Repayments under revolving credit facilities	(34,945)		(307,055)
Repayments of notes payable	(3,791)		(494,220)
Finance lease payments	(2,639)		(2,579)
Acquisition of inventory through floor plan payables - non-trade	293,241		84,619
Repayment of floor plan payables - non-trade	(218,965)		(130,334)
Payment of debt issuance costs	—		(34,694)

Net cash flow from financing activities	106,654		1,326,800
Effect of exchange rate changes on cash and cash equivalents	21		—
Net Change in Cash and Cash Equivalents	(7,378)		23,798
Cash and Cash Equivalents at Beginning of Period	35,902		3,412
Cash and Cash Equivalents at End of Period	$	28,524	$	27,210




☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity (Deficit)
	Shares
(in $000s, except share data)	Common	Treasury
Balance, December 31, 2021	247,358,412	(318,086)	$	25	$	(3,020)	$	1,508,995	$	—	$	(647,490)	$	858,510
Net income (loss)	—	—	—		—		—		—		(3,273)		(3,273)
Share-based payments	102,630	(21,505)	—		(287)		3,559		—		—		3,272

Balance, March 31, 2022	247,461,042	(339,591)	$	25	$	(3,307)	$	1,512,554	$	—	$	(650,763)	$	858,509
Net income (loss)	—	—	—		—		—		—		13,623		13,623
Other comprehensive loss	—	—	—		—		—		(2,636)		—		(2,636)
Share-based payments	607,561	(150,420)	—		(1,156)		1,785		—		—		629

Balance, June 30, 2022	248,068,603	(490,011)	$	25	$	(4,463)	$	1,514,339	$	(2,636)	$	(637,140)	$	870,125






			Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity (Deficit)
	Shares
(in $000s, except share data)	Common	Treasury
Balance, December 31, 2020	49,156,753	—	$	5	$	—	$	434,917	$	—	$	(465,989)	$	(31,067)
Net loss	—	—	—		—		—		—		(27,907)		(27,907)
Share-based payments	62,630	—	—		—		597		—		—		597
Warrants liability	—	—	—		—		(10,290)		—		—		(10,290)
Balance, March 31, 2021	49,219,383	—	$	5	$	—	$	425,224	$	—	$	(493,896)	$	(68,667)
Net loss	—	—	—		—		—		—		(129,356)		(129,356)
Share-based payments	1,118,846	(235,856)	—		(2,256)		9,618		—		—		7,362
Shares issued in business combination	196,700,000	—	20		—		1,064,529		—		—		1,064,549
Balance, June 30, 2021	247,038,229	(235,856)	$	25	$	(2,256)	$	1,499,371	$	—	$	(623,252)	$	873,888


(in $000s, except share and per share data)
Common stock issued	20,100,000
Common stock per share price as of April 1, 2021	$	9.35
Fair value of common stock issued	$	187,935
Cash consideration paid to equity interest holders	790,324
Repayment of debt obligations	552,600
Total purchase price	$	1,530,859


(in $000s)
Accounts and financing receivables (a)	$	115,325
Inventory	431,648
Other current assets	13,201
Property and equipment (b)	104,721
Rental equipment	556,569
Intangible assets (c)	301,018
Operating lease assets	23,793
Other assets	18,223
Total identifiable assets acquired	1,564,498
Current liabilities	(410,276)
Long-term debt	(28,607)
Operating lease liabilities-noncurrent	(21,308)
Deferred tax and other liabilities	(31,261)
Total identifiable liabilities assumed	(491,452)
Total net assets	1,073,046
Goodwill (d)	457,813
Net assets acquired (purchase price)	$	1,530,859


	Three Months Ended		Six Months Ended
(in $000s)	June 30, 2021		June 30, 2021
Revenue	$	375,111	$	769,881
Net income (loss)	$	(57,613)	$	(51,284)


(in $000s)	January 14, 2022		Changes		June 30, 2022
Current assets	$	2,891	$	(108)	$	2,783
Property, equipment and other assets	819		(681)		138
Rental equipment	34,224		—		34,224
Total identifiable assets acquired	37,934		(789)		37,145

Total identifiable liabilities assumed	(6,011)		(1,314)		(7,325)
Total net assets	31,923		(2,103)		29,820
Goodwill	8,685		1,422		10,107
Intangible assets	11,027		—		11,027
Net assets acquired (purchase price)	51,635		(681)		50,954
Less: cash acquired	(1,122)		—		(1,122)
Net cash paid	$	50,513	$	(681)	$	49,832


	Three Months Ended June 30, 2022					Three Months Ended June 30, 2021
(in $000s, except per share data)	Net Income (Loss)		Weighted Average Shares	Per Share Amount		Net Income (Loss)		Weighted Average Shares	Per Share Amount
Basic earnings (loss) per share	13,623		247,745	$	0.05	$	(129,356)	243,752	$	(0.53)
Dilutive common share equivalents	—		869	—		—		—	—
Diluted earnings (loss) per share	$	13,623	248,614	$	0.05	$	(129,356)	243,752	$	(0.53)


	Six Months Ended June 30, 2022					Six Months Ended June 30, 2021
(in $000s, except per share data)	Net Income (Loss)		Weighted Average Shares	Per Share Amount		Net Income (Loss)		Weighted Average Shares	Per Share Amount
Basic earnings (loss) per share	$	10,350	247,403	$	0.04	$	(157,263)	146,997	$	(1.07)
Dilutive common share equivalents	—		836	—		—		—	—
Diluted earnings (loss) per share	$	10,350	248,239	$	0.04	$	(157,263)	146,997	$	(1.07)


	Carrying Value		Fair Value
(in $000s)			Level 1		Level 2		Level 3
June 30, 2022
ABL Facility	$	435,000	$	—	$	435,000	$	—
2029 Secured Notes	920,000		—		775,100		—
Other notes payable	28,425		—		28,425		—
Warrant liabilities	4,612		—		—		4,612

December 31, 2021
ABL Facility	$	394,945	$	—	$	394,945	$	—
2029 Secured Notes	920,000		—		949,900		—
Other notes payable	32,619		—		32,619		—
Derivative and warrant liabilities	24,164		—		2,388		21,776


	Three Months Ended June 30,				Three Months Ended March 31, 2022
(in $000s)	2022		2021
Equipment sales	$	(7,671)	$	(6,806)	$	(12,237)
Cost of equipment sales	6,765		4,995		10,370
Gross profit	(906)		(1,811)		(1,867)
Interest income	(2,220)		(1,519)		(2,888)
Rentals invoiced	5,158		2,820		5,284
Sales-type lease adjustment	$	2,032	$	(510)	$	529


(in $000s)
ERS	$	261,607
TES	167,307
APS	28,899


	Three Months Ended
(in $000s)	June 30, 2022			June 30, 2021			Change			% Change		March 31, 2022			% Change
Ending OEC	$	1,399,500		$	1,338,700		$	60,800		4.5	%	$	1,364,660		2.6	%
Average OEC on rent	$	1,150,400		$	1,084,709		$	65,691		6.1	%	$	1,119,100		2.8	%
Fleet utilization	82.8		%	80.9		%	1.9		%	2.3	%	82.5		%	0.4	%
OEC on rent yield	39.2		%	37.9		%	1.3		%	3.4	%	39.1		%	0.3	%
Sales order backlog	$	663,619		$	222,661		$	440,958		198.0	%	$	586,368		13.2	%


	Three Months Ended
(in $000s)	June 30, 2022		June 30, 2021		$ Change		% Change		March 31, 2022		% Change
Net income (loss)	$	13,623	$	(129,356)	$	142,979	(110.5)	%	$	(3,273)	(516.2)	%
Interest expense	18,050		17,602		448		2.5	%	17,445		3.5	%
Income tax expense (benefit)	(81)		6,564		(6,645)		(101.2)	%	3,005		(102.7)	%
Depreciation and amortization	54,620		60,062		(5,442)		(9.1)	%	62,500		(12.6)	%

EBITDA	86,212		(45,128)		131,340		(291.0)	%	79,677		8.2	%
Adjustments:
Non-cash purchase accounting impact (1)	2,367		21,387		(19,020)		(88.9)	%	9,026		(73.8)	%
Transaction and integration costs (2)	6,043		24,601		(18,558)		(75.4)	%	4,648		30.0	%
Loss on extinguishment of debt (3)	—		61,695		(61,695)		(100.0)	%	—		—	%

Sales-type lease adjustment (4)	2,032		(510)		2,542		(498.4)	%	529		284.1	%
Share-based payments (5)	1,784		7,162		(5,378)		(75.1)	%	3,364		(47.0)	%
Change in fair value of derivative and warrants (6)	(13,055)		1,034		(14,089)		(1362.6)	%	(5,767)		126.4	%
Adjusted EBITDA	$	85,383	$	70,241	$	15,142	21.6	%	$	91,477	(6.7)	%


	Three Months Ended
(in $000s)	June 30, 2022		June 30, 2021		$ Change		% Change		March 31, 2022		% Change
Rental revenue	$	108,109	$	95,081	$	13,028	13.7	%	$	105,561	2.4	%
Equipment sales	37,200		32,555		4,645		14.3	%	59,353		(37.3)	%



Total revenue	145,309		127,636		17,673		13.8	%	164,914		(11.9)	%

Cost of rental revenue	27,851		27,524		327		1.2	%	24,791		12.3	%
Cost of equipment sales	30,418		34,529		(4,111)		(11.9)	%	43,230		(29.6)	%

Depreciation of rental equipment	42,384		42,192		192		0.5	%	43,966		(3.6)	%
Total cost of revenue	100,653		104,245		(3,592)		(3.4)	%	111,987		(10.1)	%
Gross profit	$	44,656	$	23,391	$	21,265	90.9	%	$	52,927	(15.6)	%


(in $000s)	Custom Truck Once Source, Inc.		Pro Forma Adjustmentsa			Pro Forma Combined
Rental revenue	$	98,539	$	—		$	98,539
Equipment sales	247,675		—			247,675
Parts sales and services	28,897		—			28,897
Total revenue	375,111		—			375,111
Cost of revenue	285,242		(9,388)		b	275,854
Depreciation of rental equipment	43,179		—			43,179
Total cost of revenue	328,421		(9,388)			319,033
Gross profit	46,690		9,388			56,078
Selling, general and administrative	51,264		—			51,264
Amortization	13,332		—			13,332
Non-rental depreciation	951		—			951
Transaction expenses and other	24,575		(24,575)		c	—
Total operating expenses	90,122		(24,575)			65,547
Operating income (loss)	(43,432)		33,963			(9,469)
Loss on extinguishment of debt	61,695		(61,695)		d	—
Interest expense, net	19,723		—			19,723
Finance and other expense (income)	(2,058)		—			(2,058)
Total other expense	79,360		(61,695)			17,665
Income (loss) before taxes	(122,792)		95,658			(27,134)
Taxes	6,564		23,915		e	30,479
Net income (loss)	$	(129,356)	$	71,743		$	(57,613)


(in $000s)	Nesco Holdings		Custom Truck LP		Pro Forma Adjustmentsa			Pro Forma Combined
Rental revenue	$	90,561	$	108,240	$	—		$	198,801


Equipment sales	27,572		484,045		—			511,617
Parts sales and services	23,226		36,237		—			59,463
Total revenue	141,359		628,522		—			769,881
Cost of revenue	74,924		470,387		(1,342)		b	543,969
Depreciation of rental equipment	33,358		45,891		7,257		c	86,506
Total cost of revenue	108,282		516,278		5,915			630,475
Gross profit	33,077		112,244		(5,915)			139,406
Selling, general and administrative	29,943		67,798		—			97,741
Amortization	8,508		1,990		9,170		d	19,668
Non-rental depreciation	42		2,241		(894)		d	1,389
Transaction expenses and other	28,539		11,738		(40,277)		e	—

Total operating expenses	67,032		83,767		(32,001)			118,798
Operating income (loss)	(33,955)		28,477		26,086			20,608
Loss on extinguishment of debt	61,695		—		(61,695)		f	—
Interest expense, net	32,054		12,567		(9,042)		g	35,579
Finance and other expense (income)	6,929		(5,476)		—			1,453
Total other expense	100,678		7,091		(70,737)			37,032
Income (loss) before taxes	(134,633)		21,386		96,823			(16,424)
Taxes	10,084		570		24,206		h	34,860
Net income (loss)	$	(144,717)	$	20,816	$	72,617		$	(51,284)




		CUSTOM TRUCK ONE SOURCE, INC. (Registrant)

Date:	August 9, 2022	/s/ Fred Ross
		Fred Ross, Chief Executive Officer

Date:	August 9, 2022	/s/ R. Todd Barrett
		R. Todd Barrett, Interim Chief Financial Officer



1			I have reviewed this Quarterly Report on Form 10-Q of Custom Truck One Source, Inc. for the quarterly period ended June 30, 2022;



2			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4			The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



a.			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b.			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c.			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d.			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



a.			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



b.			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.





August 9, 2022			/s/ Fred Ross
			Fred Ross
			Chief Executive Officer


August 9, 2022			/s/ R. Todd Barrett
			R. Todd Barrett
			Interim Chief Financial Officer