Good morning, everyone. I'm Scott Schneeberger, the Senior Industrial Services Analyst at Oppenheimer. Thank you all for joining us today. It's my pleasure to have from Custom Truck One Source, CEO Ryan McMonagle, CFO Chris Eperjesy, Vice President of Investor Relations Brian Perman, here to speak on the company's investment story. Custom Truck One Source is one of the largest providers of specialty equipment rental, such as bucket trucks, parts, tools, accessories, and services to the electric utility transmission and distribution market, telecommunications and rail as well, all in North America, with a differentiated one-stop shop business model. The company's coast-to-coast rental fleet of more than 10,000 units includes aerial devices, boom trucks, cranes, digger derricks, pressure drills, stringing gear, high rail equipment, repair parts, tools and accessories. We will be using today a fireside chat format, where I'll ask management some high-level questions up front, get us an overview of the business. Later in the session, I'll pivot to questions asked by you from the audience. With that, I'm gonna jump right in. First question, gentlemen. Could you please provide an overview of your portfolio of special rental fleet offerings and highlight their respective asset characteristics, such as asset life, rental durations, and fleet age? Thanks. Thanks, Scott. Thanks for having us, as always. We love telling the Custom Truck story. Sure, we'll jump right into what we call the SER, or Specialty Equipment Rental segment of the business. As you mentioned, it's just over 10,000 units, so it's about 10,400 units today. It's about $1.66 billion of capital, which is the largest that it's been. About 75% of the fleet is utility equipment, so that's primarily focused on the T&D end market. Think about that as some of the things that you mentioned, Bucket Trucks and Digger Derricks, which are used on power lines, and then Boom Trucks pulling and Stringing Gear in particular. The other 25% of the fleet is what we call more specialty equipment, so things like vacuum trucks, things like specialty dump trucks, heavy haul tractors, water trucks, roll-off trucks. That type of equipment. Overall today, Scott, the fleet is about 81%. In Q1, it was 81.4% utilized from a time utilization perspective. We said that it's increased at the beginning of Q2. And then the average piece of equipment stays out for about between 12 and 13 months. It's near the higher end of that right now. We're really happy obviously with the duration that a piece of equipment does stay out. And then as you mentioned, the fleet is under three years old today, so we think it's one of the youngest fleets, if not the youngest specialty rental fleet out there. That feels like a really good spot relative to a useful life, and obviously it depends on the specific piece of equipment, in that 10-year to 15-year range from a useful life perspective. Really happy with the composition of the fleet and the performance of the fleet too, which we'll get into now and a little bit later. Great. Thanks. Custom Truck has a unique one-stop shop business model. If you could please discuss how you're differentiated via your integrated production capabilities and broad offering of rental sales and aftermarket parts and services. Thanks. Yep. No, I just spoke about the SER, Specialty Equipment Rental segment. We also have what we are now referring to as STEM, or Specialty Truck Equipment and Manufacturing. You know, we believe that we're the number one outfitter of specialty trucks, certainly when you think about the breadth of product offering that we have, we think that really is a competitive moat all for us. It's all predicated on first-rate partners. We'll partner with kind of our chassis OEMs, with Freightliner or Peterbilt. We'll partner with our attachment OEMs, names like a Terex or a Tornado, who's now owned by Toro, or a Galbreath, who's owned by Wastequip, you know, are some examples of that. Where it makes sense, we will build our own equipment as well. We do that through our Lode King brand. Started out as heavy haul trailers. We've moved that and then we acquired the crane business from Terex, and now we build our own boom trucks and crossover cranes as well. Then we've started to build dump bodies and water tanks and backyard machines as well. To me, we go through a typical buy versus build. We love our partners. Those are important to who we are as Custom Truck. Where it makes sense, we'll build that equipment too. We have that integrated production capacity where we put our trucks together, and then we have 41 locations now across the U.S. and Canada where we take care of our customers. Whether they wanna rent equipment or purchase equipment, or they just wanna bring their truck back in for service, we take care of that through our locations across the U.S. and Canada. For us, that's what we think really makes us unique, is we will take care of the customer however they want to consume equipment. We have great relationships with our customers, a really diverse customer base. Today, no customer is more than 4% of our total revenue. We have really long-standing relationships with the customers that we serve each and every day. Excellent. Thanks for that. Let's go next to end markets. If you could just share an overview of the end markets you serve, maybe delve into the mixes also of each in the breakout. Thanks so much. Yep. We talk about two primary end markets. The first is T&D. T&D, or Transmission and Distribution, is our largest end market. It's about 60% of our overall revenue. As I mentioned in our SER segment, our Equipment and Rental segment, it's about 75% of revenue. That's where we're primarily serving utility contractors. We do rent to some power producers and IOUs as well. That's where we talk about obviously grid modernization, data centers, electrification, a lot of really good trends there. We think we really are kind of that pick and shovel opportunity to invest in what's happening, right, in that space. I think that's our largest end market. Infrastructure more broadly is about 40% of revenue. In there, we include waste, we include rail, we include telecom, are all some of those end markets. Of those three, waste is the largest of those three for us, and then more broadly kind of roads and bridges. And so regardless of, you know, all of those end markets, right, are mission-critical end markets, and so we like that about it. Obviously that's been intentional in how we've put the business together and how we've focused on products, you know, that we think have really compelling end market dynamics for sure. Excellent. Thanks. Rental of weight has been particularly strong. How much of that is due to power generation associated with data center development? A kind of a follow-up I'll put to you at the same time, what are you seeing from other drivers such as utility grid upgrades and/or manufacturing onshoring? Thanks. We see all those as really good tailwinds for transmission and distribution work. It's tough to allocate exactly how much of demand is coming from data centers. I think data centers are driving a lot of the transmission work that is being done across the country and that's what is really good work for us. We're seeing major project starts continue to pick up. We've seen that so far in 2026. We're talking with customers about major project starts into 2027 as well, feel really good about that. You obviously hear that from our public companies when you look at Quanta and MYR Group and MasTec and Centuri Group and look at their backlogs and how they're talking about that. I think that's really strong for us from a demand standpoint on the transmission side of things. For distribution, you know, we're seeing steady demand as IOUs continue to release more work under their MSA agreements. Those are, you know, those are the two primary drivers that we're tracking. Ultimately, the use of a lot of that is for data center development, you know, but we call that really a secondary driver of what's really strong about transmission and distribution right now. We think it's gonna continue to be a powerful catalyst certainly for several years to come, as you think about kind of the backlog that our customers are reporting, as you think about how transmission cycles generally are multiyear cycles, and then just the backlog in data center work that has to be done as well. Thanks. How is that visibility now versus how it's been in the past, particularly with the addition of some of these larger projects? I'd say it's improving, Scott. You know, as you know, we like to say, rental, it's you know, what have you done for me lately, or what do you need tomorrow generally. I would say that is certainly improving as you think about these transmission projects. I mentioned that our team is now quoting projects out into with start dates out into 2027 and even some into late 2027. You know, I think we would say that the visibility on the transmission side of things in particular is as good as it's been in a really long time. We think that, you know, it's I think why we have a bullish call on transmission and the utility end market more broadly. Excellent. Thanks. let's talk now about the backlog. the perspective on that, how that compares to historical time periods in this, in this very solid demand environment you're in? It's getting back into what we historically have said is kind of the normal range for backlog. Certainly over the last 11 years that I've been here, we've talked about four to six months really is where backlog generally sits. Obviously, it peaked kind of post-COVID and a lot of the supply chain challenges right after COVID. You know, it peaked, it was at very elevated levels for a while. We saw it decline through 2025, it's been building back so far at the end of 2025 and into 2026. It's at 4.5 months as of the end of Q1. We said on our earnings call that it had increased so far in Q2 as well. Feel really good that the backlog was up over $70 million during Q1. We feel like it's in a good spot. We feel like supply chain is in a good spot and so it's getting back into what I would say is a more normal level for us, which is, to your point, Scott, it's a good indicator of demand. The demand seems to be healthy right now. Clearly, T&D is very strong, you know, and then we're seeing demand in our infrastructure and vocational product categories continue to improve as well. Thanks. Curious, you know, we're now a year past Liberation Day and the onset of this tariff atmosphere. Also there's obviously a war in the Middle East. How are these global issues impacting the business at this point, if you're seeing anything? Yeah. I'm gonna maybe split it into two thoughts. The first is really on our cost structure. I'd say our team has done a very good job managing kind of the impact of tariffs. I think we've talked about on a call, a previous quarterly call, that it was about a $10 million-$15 million increase in overall spend. On north of a $1.5 billion of spend, it's about 1%, right, in aggregate that it impacted us in different parts of the business. I think the team has done a very good job at obviously managing that overall cost. Some of the new changes recently, you know, we're continuing to work through, and there will be some cost increases, right, that we're dealing with. Again, it'll be minimal from an overall cost perspective. I think feel good about how we're managing it directly. Where we're seeing a little bit of impact, we've said it now for a couple of quarters, I would put the war in the Middle East and maybe some of the impact on diesel fuel costs in particular, is some of our smaller customers are now starting to just say, we're just gonna pause for a little bit. We know that we need a new truck, but maybe we'll keep our oldest truck running for a little bit longer before we make that CapEx decision to purchase a new truck. I'd say that theme, which is kind of tariff related, kind of an interest rate, you know, what they perceive as high interest rate environment related, and now is a little bit of kind of a high cost of diesel. You know, we're seeing that show up. It's why in Q1, you know, we said third-party sales grew by about 5%, so it's good growth. It's very strong on T&D, but, you know, that's really impacting the smaller occasional truck buyer more than anything. They know they need the truck, the work's there, it's just when am I gonna make the decision to buy? I think that's something that we're watching closely, Scott, is how that materializes. It's not really impacting our large customers. They seem to be moving forward with projects and moving forward with purchase decisions. It's just really that smaller customer that we're continuing to watch closely. Got it. Thanks. Let's talk a little bit of price now. OEC on rent yields trended favorably in recent quarters. I think it inflected positive in fourth quarter, accelerating first quarter. Please discuss the current pricing environment across your primary asset classes, as well as any impacts from mix. Then I'll follow up with another pricing question in a moment. Yeah, Scott, I'll take that one. You know, as we've said historically, we think the sweet spot is high 30s to low 40s on ORY. Maybe to answer the last part of your question first, we, you know, it could get again into the low 40s, so we do think that's realistic. If you look over the last couple quarters, as you mentioned, it was up 40 basis points from Q4 to Q1 and up, I think 70 or 80 basis points from Q3. We've been, you know, making progress and living still in that space. I think the way I'd characterize the pricing environment is it, you know, continues to remain constructive, particularly as Ryan was talking about as you look at the transmission in T&D assets. We also did take a pricing, we did take pricing in December, roughly on average 5%. I think, you know, that, you know, that typically takes that 13 months that Ryan was saying that assets are typically churning. We'll continue to see that, you know, through the end of this year and into the beginning of next year, see that come through. I think the way I'd characterize it is really our strategy is, you know, disciplined market-based pricing, good asset level returns, but not necessarily chasing utilization, you know, at the expense of margin or customer relationships. You know, we think it's certainly in a much better position than it was last year, and you're seeing that come through in margins and on rent yield. Chris, can you discuss the competitive environment for pricing, and how that factors into your strategy? I'll start and then I'll let Ryan add. You know, clearly it's a competitive environment. There is pricing pressure. You know, the fact that, you know, utilization is high helps somewhat on that because there is a lot of demand from the product, but it certainly continues to be a very competitive, you know, market out there. Ryan, anything you'd add on that one? No. I'd say the same way as you're seeing. It depends a little bit by region and by type of asset too, Scott. And so, I think the depth of our relationships with our customers certainly helps us understand kind of what's going on in the market. As Chris said, you know, we'll do what makes the most sense for the business. Thanks. Just kind of another strategic question. You know, rental and sales, it's a decision on your part where you're gonna allocate resources. How do you think about that? Where's the, you know, what would be the mix of both these business lines of rental sales that you'd like ideally, and how do you balance it? What are the considerations you have to make to balance it? I think I would start with saying we're not really capital constrained, so I feel like we're able to, you know, invest in both of the businesses. As we said on the rental side, you know, for this year, we're going to invest roughly $150 million-$170 million in net rental CapEx, so gross CapEx less the proceeds from the sales. If you look at our non-rental CapEx, we had guided $40 million-$50 million, and I would estimate 2/3 to three quarters of that really relates to the STEM or the manufacturing side of the business. You know, we're not capacity constrained on that side. You know, as we see demand continue to grow, there is the potential, you know, that we would continue to invest or further invest on the rental side. You know, our guidance has been mid-single digits in terms of OEC growth. You know, as we look at the business, obviously, we reported, you know, north of 50% DSCR for the rental business, EBITDA margin, obviously that's really attractive returns. Certainly we're prioritizing, you know, investing in the fleet right now. We don't feel like we're capital constrained, and we have the ability to invest in both of those businesses. Good. Thanks. I'm gonna go to EBITDA now. You increased the guidance on the, on the most recent earnings call. Just kind of curious, it was on maintained revenue guidance, but it sounds like you're doing quite well and you have a strong demand environment. Just considerations for each of those on why you maintain one, increase the other. Then with some thought to the cost and profit lines, any productivity improvements in cost management in the quarter that you'd like to call out or discuss, as well as any opportunities looking forward? Yeah. I think the way I would describe Q1 is, you know, clearly we had meaningful operating leverage in that revenue grew 9%, while adjusted EBITDA grew 33%. Certainly there's some mix in there. We did see significant growth year-over-year. I think it was just south of 20% on rental revenue, which obviously carries very high margins. We felt comfortable moving up the EBITDA with that mix shift and just seeing what we're seeing on the rental side, but still felt comfortable with the ranges we gave on the revenue side. You know, certainly, the rental business or SER benefited from strong utilization, higher OEC on rent. You know, we're continuing to see the benefit of the price increase in mix. As you touched on, you know, across the business, whether it's on the manufacturing side or in operations, and as Ryan touched on, as kind of an offset to tariffs, you know, we've definitely been looking at our cost structure and, you know, taking opportunities to manage that where we can. STEM, you know, we have continued to see improved margins there, so we're closer to 16% now. We said, you know, on the third party, new sales, our targeted range is between 15% and 18%. We think we can continue to make some progress there the second half of the year. You know, across the board, you know, we think continued execution on, you know, the rental business, which is really driving a lot of the growth, manufacturing productivity, you know, continuing to have discipline around our SG&A, some of the unlock that we can get from floor plan expense by continuing to make progress on the working capital side. Great. Thanks. Let's talk now about, you have a relatively young fleet and been managing it recently. Discuss how you can let it age, and correspondingly, you know, lower CapEx to accelerate free cash flow, while still being competitive in the market with the rental offerings that you have. Thanks. Yeah. We talked about this year, maybe I'll go back to last year first. Last year, our net CapEx into the rental fleet was $250 million, which was about a $60 million increase over 2024. This year, we feel like we can pull back on some of the maintenance CapEx, 'cause, you know, as we've talked about, four years ago, our rental fleet was a little over four years. We finished last year at 2.9. It aged slightly, just under three, at the end of Q1. You know, that's gonna unlock, you know, between $80 million and $100 million in terms of net investment in the fleet, but we don't think it'll impact growth. You know, as we've said, we'll grow the overall OEC by mid-single digits, and we feel like, you know, it's the right thing to do and that we'll be able to unlock some free cash flow there. You know, I think Ryan touched on it earlier. You know, the sweet spot, we think, you know, we think we continue to age the fleet a little bit, and so really just reducing the maintenance CapEx, but at the same time, continue to provide some incremental free cash flow and grow the fleet. You know, some growth CapEx as well. Great. What is the free cash flow outlook? Then can you just talk about the drivers a little bit more beyond what you've mentioned here and just how you think about it long term as well? Yeah. There's really three, I would say, main drivers. Clearly year-over-year EBITDA growth. If you just take the midpoint of our guidance, that would be roughly $45 million of incremental EBITDA. The other two big buckets are the one I just talked about, the reduction, you know, in the net investment in the rental fleet while still growing it. You know, that could unlock $80 million-$100 million year-over-year. The last one would be further progress on our inventory reduction. We finished last year at, you know, just a little over 7.5 months of inventory on hand. Our target is to get below six months. We've said this year, in terms of gross inventory, a reduction of, you know, over $100 million on our gross inventory. That is gonna be offset by the floor plan that would be paid off on that, and that typically is 75%-85% of that $100 million. That would unlock, you know, let's call it $20 million. Really it's gonna be the combination of those three that are gonna get us to our targeted free, you know, levered free cash flow target of over $50 million, which would be an increase of roughly $130 million year-over-year. Thanks. Just, let's talk about uses of capital and balance sheet management. Please address your capital allocation priorities as you balance deleveraging, the balance sheet with other objectives. Yeah. If you look back, I think year-over-year, our leverage has come down from our peak of 4.8. We're now just over four. You know, we've targeted to get meaningfully below four by the end of this year, and then to get below three by the end of next year. Deleveraging really is our priority, and it's, you know, the last question or last conversation we just had in terms of generating free cash flow, using that free cash flow to pay down debt. You know, I think the path to getting below three is gonna be a combination of both. It's gonna be continued EBITDA expansion, but also generating, you know, that incremental free cash flow and paying down debt. You know, I would not anticipate any large M&A. You know, we'll continue to look for some of the tuck-ins that we've done over the past couple years, but I wouldn't expect us to be doing anything, you know, large there. It'll continue to be, you know, managing working capital, you know, being optimizing our investment in our rental fleet, continued expansion on EBITDA growth, and then, you know, using that free cash flow that we're gonna generate to pay down our debt and get below three times by the end of next year. Excellent, thanks. All right, that's all I had for the prepared questions. Just give me a moment to check on questions. Okay. A question on size of customer. Sounds like there's a lot of large project activity that's driving demand. What are you seeing from smaller customers? I guess just a, you know, my add-on is of compare and contrast just this large and small customer demand environment at the moment. I'd say transmission right now maybe is skewing towards some of the larger projects, which are typically being done by larger customers. I think that certainly is happening. There are plenty though of small customers, maybe they're doing maintenance work on transmission lines, who are looking to rent, you know, a smaller number of kind of tall bucket trucks. That continues to be the case. On the rental side, we're seeing really good demand. On the distribution side for rental, we're seeing good demand for both large and small customers, as well. In the STEM segment in particular, I'd say large customers are still planning on kind of their orders. A few of those customers are starting to talk about 2027 pre-buy and what that might mean from their chassis needs for the balance of this year. As I mentioned earlier, where we're just watching things closely is where tariff or interest rates are now kind of the what's going on in the Middle East, where that seems to be influencing decisions or in our smaller customers who are maybe delaying their purchase decision. We're watching that closely 'cause a lot of the backlog, a lot of the increase in backlog that we've seen has come from our smaller customers. They know they need the equipment, they're just kind of making their decision as to when they're going to take the equipment. You know, that hopefully is some color on what we're seeing between large and small customers involved. Thanks. All right, we got another. What is the long-term growth profile of the business on a steady state basis, and what type of margins do you expect this business to achieve? Uh, this one is. You right. Yeah, go ahead, Chris. In terms of the margins, you know, we've given broad kind of guidance on by the different segments. If you look at the rental business in terms of the rental revenue, you know, low to mid-70s is kind of the long term through a cycle margin that we've given in terms of adjusted gross profit. On the new sales to third party side, 15%-18%, we're kind of living, you know, closer to 16% right now. If you look at the used sales, you know, it depends on the business, but, you know, that's gonna be kind of in the low to mid-20s kind of range. In terms of the segment EBITDA margins, you know, we've reported this quarter adjusted EBITDA margins for the SER segment of 50%, right around 10% for STEM. You know, I think there's room for expansion clearly on the STEM margin. I think we're comfortable in kind of that high 40s, low 50s range for the rental business. Maybe just to hit the growth side. You know, I think we've obviously we've guided high single-digit, low double-digit growth for this year, and I think those are pretty good proxies. We obviously have not given guidance for 2027 or forward. When you just think about kind of the end markets that we're playing into, I think there's been some intentionality in choosing those end markets because we think they have pretty compelling growth dynamics. In our, in our new IR deck that's out, we talked about some of the, the expectation for IOU CapEx and some of the T&D demand that we're seeing, which is kind of that high single-digit, low double-digit, depending on what part of that you're playing into. I think those are realistic growth targets, you know, as we think about what Custom Truck can look like in the years ahead. Okay. Last one I have in here. H ow do you select amongst your suppliers? Please describe your supply chains. I mean, this business has had some issues with that in the past, going back about three or four years. My follow on is just how is that, how are the supply chains right now and how are the supplier relationships? Yeah, look, we think, look, ultimately our customers choose or who, what type of equipment they want, and then we think we have the best kind of lineup of suppliers in the industry which take care of what our customers want. You know, as I mentioned, I think the supplier relationships are very strong right now on the chassis side and on the attachment side. We'll, we'll bring the loading in when we need to. Maybe if we can't get enough of some sort of product kind of on the back end, we'll think about where to build that as well. Scott, you're right, attachment and chassis supply availability was really hard back in kind of the 2020, late 2022, 2023, really into early 2024 time period. I think, you know, we've learned a lot to be able to dual source where it makes sense on things like our body suppliers, which were constrained for a period of time as well. I think the status of the supply chain is in much better shape than it was a few years ago. You know, I think we feel like we're in a good position to be able to deliver on the growth that we talked about this year in 2026, and certainly as we think about 2027 as well. Excellent. Well, guys, I think we have a minute or two left, but I think I'm gonna wrap it up there. That's all the questions I see in the queue. Great job with a great overview. Got a good sense of the business. Anything final you'd like to add, or do you think we covered pretty much it for the viewers? Yeah, I think you did a great job. Thanks, Scott, for continuing to give us the opportunity to tell the story. We appreciate it. Excellent. Nice job telling it. Glad to see the demand environment's quite strong. Looks like it's going to persist. Looking forward to seeing what you guys produce financially over the course of 2026. With that everyone, let's go ahead and wrap it up. Thanks, viewers. We appreciate you as well. Thanks, everyone. Thanks.