Greetings, welcome to the Custom Truck One Source Inc. third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Perlo. Thank you, Mr. Perlo. You may begin. Thank you, 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 issued today. The press release we issued this afternoon and the presentation for today's call are posted on the investor relations section of our website. We will be filing our third quarter 2022 10-Q with the SEC this evening. Today's discussion of our results of operations for Custom Truck One Source Inc. or Custom Truck is presented on a historical basis as of or for the three months ended September 30th, 2022, and prior periods. While our reported results can only include Custom Truck One Source, L.P. for the period since the April 1st, 2021, merger date, we have presented and will be discussing today pro forma combined results as if Nesco and Custom Truck had operated together for all periods. We believe such combined information is useful to compare how the combined company has performed over time. Joining me today are Fred Ross, CEO, Ryan McMonagle, President and COO, and Christopher Eperjesy, CFO. I will now turn the call over to Fred. Thanks, Brian, welcome everyone to today's call. I'd like to begin by thanking all of our employees, customers, and suppliers who support our business and are helping us navigate the challenges our industry continues to face. The entire team continues to work tirelessly to maintain record levels of production so we can fulfill our goals of providing unrivaled service to our customers, growing our market share, and creating value for our shareholders. Compared to the prior year quarter, we delivered strong gross profits and adjusted EBITDA gains as well as modest revenue growth. We delivered $91.6 million of adjusted EBITDA, up 9% versus the prior year, while at the same time, Q3 revenue was up slightly versus Q3 of 2021. Supply chain issues continued to impact us in the third quarter. We were able to deploy $97 million into our rental fleet in the quarter, which is the most since the merger. Supply chain challenges impacted new equipment sales, which unfortunately did not see the sequential growth that we expected. While our supply chain continues to improve, issues remain, and we are working diligently to end the year ahead into 2023 on a much-improved footing. Our ERS business continues to perform very well, with utilization increased by 100 basis points for the quarter and by 250 basis points compared to Q3 of 2021. Our TES business continues to see very strong demand, with backlog growing to a record of $709 million, more than two times what it was a year ago. Strong demand for both rental and new sales provide us the opportunity to focus on improving profitability through margin expansion. Finally, we remain well-capitalized and are focused on reducing our net leverage, which Chris will discuss later. Our third quarter results provided continued momentum for us for Q4 and a very solid foundation as we've been looking forward towards next year. They reflect the realization of the benefits of our one-stop shop business model and our focus on end markets that consistently exhibit strong underlying fundamentals and are less susceptible to cyclicality. Our outlook for the rest of the year is tempered by the continued impact of global supply chain issues and inflation, we are confident that our team will continue to navigate these effectively. During the last quarter of the year, we expect to see continued strong revenue, adjusted EBITDA margin growth across business segments. With that, I will turn it over to Ryan. Thanks, Fred. Good afternoon, everyone. First, I want to echo Fred's comments regarding the tremendous efforts of our employees, who helped us deliver another solid quarter. Demand remains very strong in each of our strategically selected four primary end markets: T&D, telecom, rail, and infrastructure. We continue to believe that these markets offer compelling long-term growth opportunities well in excess of GDP and should for the foreseeable future. This can be seen in the reported backlogs of the utility and telecom contractors, our largest customer base, which continue to be extremely strong and at or near record levels. We see this reflected in both our TES backlog, which grew by more than $45 million, or 7%, in Q3, and in the performance of our rental fleet as well. As Fred mentioned, we added $97 million to our rental fleet in the quarter, the most we've added since the merger in early 2021. We are seeing utilization continue to improve. For the quarter, utilization averaged 83.8%, but we ended the quarter north of 87%. Additionally, we are experiencing very strong demand from our customers to purchase assets in the rental fleet, which we see as a positive indicator for sustained strong demand. Given the level of assets we added to the rental fleet in Q3, which has continued in Q4, we anticipate being able to sell more of the aged equipment in the rental fleet during the fourth quarter. Pricing across our end markets continues to hold steady, reflecting strong demand and our focus on driving margin expansion across our largest segments. We continue to put new assets out on rent at higher rates than our fleet average. Continued industry supply chain remains the only significant headwind to our ability to meet customer demand. We continue to experience intermittent issues receiving adequate supply of the major inputs for our trucks, which impacted our ability to deliver product to our customers during Q3. However, as Fred already mentioned, production in the third quarter remained near historically high levels. Overall, our inventory increased by $20 million versus Q2, which we see as a positive indicator and positions us well as we finish the year. Through the strong vendor management efforts of our team, we continue to experience an increase in inventory flows from our suppliers, with deliveries up more than 28% during Q3 compared to Q3 last year, and up 40% year-to-date versus last year. We remain on target to add more gross CapEx to the rental fleet in the second half of this year than we did in the first half. Despite the improvement in the supply chain challenges we've been discussing over the past several quarters, we fell short of our goal of continued quarter-over-quarter revenue growth in TES. We remain dedicated to returning to both sequential quarterly and year-over-year revenue growth in TES in the fourth quarter. We continue to experience wage inflation consistent with the rest of the market, as well as higher costs for some of our production inputs. We are passing through certain input cost increases to our customers and implementing reasonable price increases where possible. From a strategic perspective, we remain focused on optimizing our production and how we deliver service to our customers. Our goal of producing continued strong revenue, gross margin, and adjusted EBITDA growth, and increasing shareholder value now define how we run our business. As we look ahead to the fourth quarter into next year, we believe that favorable end-market tailwinds, robust customer demand, improving supply chain, and continued solid execution by our team all position us to achieve these goals. While supply chain challenges and inflation remain obstacles, we look to fully take advantage of these growth opportunities. We currently have unprecedented demand for rental asset purchases that we will benefit from in the fourth quarter, and we expect this to continue into fiscal 2023. We know our employees are the key to delivering financial results and unmatched customer service, as demonstrated in the third quarter, and I'd like to extend a sincere thank you to them. I will now turn it over to Chris. Thanks, Ryan. As Fred and Ryan have indicated, Q3 was another strong quarter despite the supply chain challenges we continue to face. Total revenue of $358 million was up slightly compared to Q3 2021, despite these issues. Total revenue in Q3 decreased by 1% sequentially compared to Q2. Adjusted EBITDA was $92 million, a 9% improvement compared to pro forma Q3 2021 results. Year-to-date 2022 adjusted EBITDA is up 18% compared to the pro forma year-to-date period in 2021. Net loss for the quarter was $2.4 million. Gross profit, excluding rental depreciation, was $131 million, representing an adjusted gross margin for the quarter of 36.6%, up 220 basis points from 34.4% for Q3 2021, and up 175 basis points from last quarter. The gross margin improvement continues to be driven by favorable segment mix and our strategic focus on pricing across all of our revenue segments. SG&A was $50 million for Q3, or 13.9% of revenues, which is up slightly versus Q2, but in line with the expectations we set forth earlier in the year. Turning to our segment results, Fred referenced our continued strong utilization within our ERS segment for the quarter, which was 84%, up from 81% for Q3 2021, and up 100 basis points compared to last quarter. Despite the supply chain challenges, average OEC on rent increased by more than $32 million compared to the previous quarter. On-rent yield was just under 39% for the quarter, which was slightly lower than Q2, mainly as a result of mix, and up from 38% for Q3 2021. Our OEC ended Q3 at $1.43 billion, up by more than $29 million in the quarter. We will continue to invest heavily in the fleet in the fourth quarter. For Q3, ERS rental revenue was $112 million, a 3.6% increase versus Q2. ERS equipment sales for the quarter were $37 million, essentially flat from Q2. ERS gross profit, excluding rental depreciation, was $95 million for Q3, up 9% from Q2, and adjusted gross margin improved to 63.6%. Disappointingly, TES revenues of $174 million were down 4% sequentially from $181 million in Q2, as this segment continues to take the brunt of the impact from supply chain issues. Despite the lower revenues in the quarter, gross profit increased marginally in Q3, resulting in a gross margin of 15.7%, up from 15% in Q2. Our sales activity continues to be extremely strong, with backlog growing by 7% sequentially from Q2 to $709 million. This strength was very broad-based across our product portfolio. While supply chain issues are resulting in near-term headwinds to our ability to fully take advantage of the strong demand, we believe the continued growth in the TES sales backlog reflects growing demand for equipment, indicative of our strong market share gains and our pricing discipline. We have been successful in countering inflationary pressures through the implementation of ongoing production efficiency initiatives, in addition to gaining favorable price increases with our customers. As this quarter's TES results show, we are confident we will be able to hold or improve margins over the coming quarters, even with elevated levels of inflation. Our APS business posted revenue of $35 million, down 2% compared to Q2. Gross profit margin in the segment was negatively impacted by higher labor and facility costs, as well as shifts in product mix. Maintaining a strong liquidity position and improving leverage remain priorities for us, as do investing in the rental fleet and pursuing selective strategic growth through M&A. Pursuant to our previously announced stock repurchase program, we purchased $2.4 million of our stock in the open market during the quarter. During the quarter, we increased the borrowings under our ABL by $12 million, with the outstanding balance ending at $447 million, mainly to fund a portion of our working capital investments. At September 30th, we had $300 million available and $127 million of suppressed availability under the ABL, with the ability to upsize the facility. With the LTM adjusted EBITDA of $364 million, we finished Q3 with net leverage of 3.77 times, which is an improvement of almost a turn since the close of the transaction and down slightly from last quarter. Approximately three times leverage remains our goal and the one we will likely achieve later in 2023. We will continue to seek to make incremental investments and prudent acquisitions when we believe they create long-term shareholder value. With respect to our 2022 outlook, based on year-to-date results, current backlog, and our outlook for the rental fleet, we are adjusting our guidance as follows. We expect ERS revenue of $650 million-$690 million, TES revenue of $720 million-$750 million, and APS revenue of $135 million-$145 million. This results in total revenue of $1.505 billion-$1.585 billion. We are projecting adjusted EBITDA of $385 million-$395 million, which is within our previously provided guidance range. As Ryan noted previously, we will benefit from strong demand in the fourth quarter for rental asset purchases, particularly of older equipment in the rental fleet, that will favorably impact our results and partially offset the supply chain headwinds that continue to impact the TES segment. In closing, I want to echo Fred's and Ryan's comments regarding our strong performance. Despite ongoing challenges, we have executed a transformational integration with Nesco, delivered double-digit adjusted EBITDA growth, expanded margins in an inflationary environment, reduced leverage, and continued to deliver the highest levels of customer service. With that, I will turn it over to the operator to open the line for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star, then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Nicole DeBlase of Deutsche Bank. Please go ahead. Yeah, thanks. Good afternoon, guys. Hi, Nicole. How are you? Hi, Nicole. Hello. Good, thanks. Thank you. I guess maybe just starting with the utilization comment that you made, saying that you exited the quarter around 87%. Is the assumption that that 87% can kind of sustain through 4Q, or could you talk a little bit about the utilization that's baked into the 4Q outlook? Yeah, that's a great question. Yes, we did exit September at 87%, and we've seen it hold strong so far in the fourth quarter. Typically, utilization peaks sometime in October or early November, and then it will decline a bit after Thanksgiving and into the holidays. We'd expect that it would come back down to kind of a more historical normal average for the fourth quarter. In that kind of low to mid-80s would be what we'd expect for the year. Okay, got it. Just with respect to the CapEx outlook, I just wasn't clear on, are you guys actually raising the amount of gross CapEx that you're expecting to spend, or is it just second half stronger than first half as per your prior expectations? It's the latter. Second half is stronger than the first half. I think Q4 will probably come in a little lighter than where Q3 came in from a gross CapEx perspective. We'll still be strong. The second half will be meaningfully more than the first half of this year. Okay, perfect. Thanks. I'll pass it on. Thanks, Nicole. Our next question is from Justin Hauke of Baird. Please go ahead. Yes. Hi. Apologize for the background noise here. I guess my question is on the TES business. The revenue's been sequentially kind of in this $170-$180 range for the last year. The guidance is implying, I guess at the midpoint, like around $215, somewhere in there, for the fourth quarter, 20% growth. Obviously the backlog is there and demand is there, but just the visibility that you have almost halfway through the quarter here in terms of the deliveries on the sales side would be helpful. Thanks. Yeah, you're right on kind of historical performance. Things are trending well so far in the fourth quarter. That's why that's the number that we've had to bring guidance down today and on the last call. It is where the risk is of just what are we able to put out. We're trying to share kind of the best information we have with how the supply chain allows us to deliver. You're right, demand continues to build and is strong. You saw the backlog build in the third quarter, and it's even building still in October. We're seeing really good demand trends. It's just what we're able to get out. Okay. I guess the second question is, on the positive side, the margins were strong here, particularly in the rental business. I know previously you were talking about the price contribution on new fleet that was going out was up in the 10% range. I'm just curious if that's trended higher. Seems like it's offsetting maybe your cost inputs here, and you're able to recover some margins. Maybe just some commentary there. Sure, yeah. Rates on new things going out are still kind of in that range, Justin, it's still trending kind of double digits above where the overall fleet is averaging. We're seeing that trend. When utilization's increasing, we're putting a lot of assets out. What is happening though, is we're also seeing the duration of assets increase, some of the assets that have been out are not churning as much. Yes, we're still seeing good opportunity when it comes to rate, and obviously as the market dictates, we're trying to add as many assets as we can into the rental fleet. Okay, great. I'll leave it there. Thank you. Thanks. Our next question is from Stefanos Crist of CJS Securities. Please go ahead. Hi. Thanks for taking our questions. Could you just talk about free cash flow expectations for the year and just in terms of working capital as well? Thanks. Yeah. This is Chris. In terms of free cash flow, I guess I'll focus on levered free cash flow. If you look through the first three quarters, I think year to date, if you adjust out for the Hi-Rail acquisition, we're right around zero. I would point out that we're at levered free cash flow of zero, but we've been able to cover pretty significant investment in the rental fleet. I think in the third quarter alone, it was a net of $60 million of CapEx, net of any proceeds we had. For the year, we expect to be able to be positive from a levered free cash flow standpoint. We should see that flow through in Q4. In terms of networking capital, you've seen we've invested significantly, in particular in inventory. That's partially offset by some of that being on floor plan. We really think that, to some of Ryan's comments, that's really going to set us up well as we enter Q1 and Q2 of next year. You'll remember last year, our inventory levels were at rather low levels, and that created some constraint as we entered the year. Expect that we'll have some of that investment as we exit the year. It's going to set us up well for the first half of next year. Got it. Thanks. Another one for you, Chris. I think on the timing of the last call, you were just getting started. Can you just talk about your time so far at Custom Truck? Anything you're seeing that you'd like to improve on or any changes you'd like to make? I'm now counting months instead of days, so I'm two and a half months at this point. I think the way I would describe it is, I did a lot of diligence before I joined, and all the things I loved about the company end up being true. I loved the end markets. I love the positioning of the company. I love the business that he's created and given me an opportunity to be a part of. Like any business, there's always opportunities for improvement, especially as you've grown quickly and going through the challenges of being a public company, and that's kind of my background. I think that's an area where I can help. In terms of the story and the strategy that you've heard, it's exactly what brought me here. No pearls of wisdom today, but just, I guess, a confidence and a reassurance that all the things you guys like about the business is why I'm here, and I really like what I've seen so far. Great. Thanks for taking my questions. Thanks, Stefanos. Our next question is from Nathaniel Bolton of Stifel. Please go ahead. Hi, thanks. I wanted to dig into ERS a little bit, looking at implied fourth quarter guidance that I think suggests about a 38% increase to over revenue levels and kind of average revenue levels in the first three quarters. I'm assuming most of that is coming from rental equipment sales. Could you just help us kind of understand again what's giving you the confidence in that strong fourth quarter jump? Sure. Yeah. This is Ryan. I'll start, and Fred or Chris can certainly add in. You're right. We think, and we mentioned it in some of our prepared remarks about. Yeah The demand we're seeing about fourth quarter buyouts. Two things are going on. One, we've got really strong demand from the customer for that equipment, which we see as just a really good indicator of sustained demand heading into next year. Two, as we've been able to increase what we've been able to deploy into the rental fleet, so the $97 million of gross CapEx that we talked about this quarter. We're comfortable being able to take out some of the older equipment that we've talked about for the last several quarters. We're seeing really strong demand for it, and we think it makes sense with the amount of CapEx we're able to put into the fleet last quarter in Q3 and then that we're planning for this quarter and Q4. Right. again Oh, sorry. Go ahead. No, I was going to say, and then again, it's just an indication on our customer base won't spend CapEx if they don't believe that they're in a good position to get the return on it. It's mostly distribution, and we don't see any end in sight to that business. Again, we like selling our older equipment off to get into the newer equipment. Okay. Yeah, I understand those dynamics. I guess, I don't know if you can give us any guidance here, but I'm assuming you're kind of paying more for the newer equipment than you would've been in the past. Can you give us a sense of sort of where rental fleet units you think will wind up sort of heading into 2023? I'm just trying to get a sense of sort of how we should think about the fleet size and growth potential heading into next year. A couple things in there, right? Yeah, we've talked about rate increasing on rental units. Some of that Yeah offset the increase from an input cost standpoint. You're right, the cost of a unit today is kind of mid-single digits, higher than it was in years past, just because of inflation and what we're receiving from our OEM partners there. We're comfortable that price can offset that, and we're also putting, as we add new assets, we're putting those out at the higher rates. There's a good trade that happens there. In the fourth quarter, from a count standpoint, I don't have a perfect number to give you there, but we're expecting a significant out of equipment, which is kind of your comment, the first question you asked. Yeah As I said, we'll see gross CapEx that will be less than it was in the third quarter, but still significant. I think it will be about the same from just looking at the fourth quarter alone, from what's coming out to what's going in. Some of that will just be resolved not until December, as we think about exactly what pieces are coming out. Okay. The other thing to remember is if the cost of R&M goes down substantially on the new equipment, and the older equipment always costs more money to maintain, and it's easy to replace that older equipment with new equipment that we're not chasing and repairing. Good point. Thank you. Our last question is from Scott Schneeberger of Oppenheimer. Please go ahead. Thanks very much. Good afternoon. I'm curious, can we delve into the supply chain issues a little bit more? Could you speak to, obviously, it's impacting TES the most, but could you kind of give us a little insight into each of the segments, how it's impacting and it remains persistent. There have been points of optimism from you all this year that it would improve, and it seems like that hasn't panned out. Just thoughts on has it improved? Are we still mired in this for a good bit longer? Thanks. Yeah. I'll give you a couple numbers, and then Fred can give you some more color too, Scott. Look, inflow, it has improved, but it hasn't improved as fast as we expected, certainly this time last year. It is improving, right? A couple things. Inventory is up $140 million today at the end of the third quarter than it was at the beginning of the year, right? We are seeing more inflows. On the quarter, inflows were up just under 30%, kind of Q3 versus Q3 last year. I think year to date, inflows have been up about 40%. We are seeing more product come in, which is to Chris' comment earlier, it's why we're feeling good about how it will set us up for next year. The challenge continues to be having all of the things we need to build a completed unit, and that's what we're dealing with now. In certain situations, we've got chassis, we have better inflows of chassis. In other situations, we've got the attachment, but we're waiting on the right chassis that would match with it. That's what's made it challenging to predict exactly what we're going to be able to build in a quarter. Macro, it is getting better. We are seeing more inflows, I think it's setting us up reasonably well, kind of heading into Q1 2023. The truck side has gotten quite a bit better. Really excited on where we're at and the product that we're getting now. It's more small parts that are holding us back versus the big parts, which is a big deal because a lot of times we can flex on the small parts or come up with different ideas that could work in lieu of. I'm super excited on where we're at and how we're set up to go into the first quarter of next year. This is the most trucks I've seen in a while and the most attachments. I'm really bullish on it. I feel really good about it. It is getting here. Do we wish it would've got here a month earlier or two months earlier? Sure. We are getting it, and it is coming in now. It sounds like it's not one or two or three items. It sounds like it's various that is the issue, it sounds like it's getting better for you. Are there any particular parts that don't have clarity, and are still uncertain? Just one more after that, but just a follow-up there. Again, it's smaller pieces. Maybe it's a cylinder here or pumps or valving or something versus the major componentry that you really can't change anything. If the digger doesn't get here or the dump body doesn't get here, there's nothing you can do about it. These are smaller parts that it still takes to put the truck together with, that's why you've seen, again, our inventory has grown because all those bigger pieces are now showing up, which is going to allow us to build the trucks out. Again, it's happening. Again, wish it was earlier, pretty happy with where it is today. Actually pretty excited about where it is today. Great. Thanks. Just in ERS, it sounds like you'll be selling a lot of aged units in the fourth quarter, and I think I just heard you say a lot of that will be determined in December, so it sounds like it's still on the come. How do you anticipate pricing to be and margin on those used fleet sales? You sound confident, but any commentary there? This kind of was discussed before, but is there a concern maybe if you can't get the CapEx you have on order and you sell too much, that you might be very capacity-constrained heading into the new year? Just thoughts on that as well. That's all for me. Thank you. Sure. Yeah, I'll start, Scott. It's a good question. I think we're seeing high residual values right now, we feel like it is a good time to continue to sell some of the used equipment out of the fleet. Because the demand environment is so strong, we're seeing good residual values there. Feel comfortable with that and kind of how we're modeling margin flowing through there. Look, we are comfortable with our CapEx plans as we're heading into next year, too. We believe, it's the optimism that Fred just talked about. We feel good kind of about what we'll be able to put in in this quarter and what we'll be able to add to the fleet heading into next year as well. Thanks very much. Thanks, Scott. Ladies and gentlemen, we have reached the end of the question and answer session, and I would now like to turn the call back over to Fred Ross for closing comments. Please go ahead, sir. Thanks. Thanks, everyone, for the time today and your interest in Custom Truck. We look forward to speaking with you on our next quarterly earnings call. In the meantime, please don't hesitate to reach out with any questions. Thank you again. Good night. That concludes today's conference. Thank you for joining us. You may now disconnect your lines.