Custom Truck One Source Delivers Record Second-Quarter 2026 Performance, Raises Full-Year Revenue and EBITDA Outlook
Custom Truck One Source, Inc. (CTOS), a leading provider of specialty equipment and services for the electric utility, telecommunications, rail, forestry, waste management, and other critical infrastructure industries, has reported a record-breaking second quarter for 2026. The company delivered its strongest quarterly revenue in history while significantly improving profitability, strengthening its balance sheet, and increasing its full-year financial guidance.
The outstanding results underscore CTOS’s growing role in supporting infrastructure modernization across North America. Rising investments in electric transmission and distribution (T&D) networks, data centers, grid modernization, electrification projects, and industrial infrastructure continue to drive strong demand for the company’s rental fleet and specialty truck equipment.
Record Revenue Marks Strong Quarter
For the three months ended June 30, 2026, CTOS generated record revenue of $563.4 million, representing an increase of $52.0 million, or 10.2%, compared with the second quarter of 2025.
The company’s growth was supported by strong activity across both of its newly organized operating segments:
- Specialty Equipment Rentals (SER)
- Specialty Truck Equipment & Manufacturing (STEM)
Both divisions produced impressive performances, with rental utilization reaching record levels while manufacturing continued benefiting from healthy utility and forestry equipment demand.
Rental Business Continues to Drive Growth
CTOS’s rental operations remained the largest contributor to quarterly performance.
The company reported that the Average Original Equipment Cost (OEC) on rent increased by $158.5 million, representing 13.1% year-over-year growth.
This increase reflects continued expansion of the rental fleet combined with stronger customer demand throughout utility transmission and distribution projects.
Fleet utilization also improved considerably.
Average rental fleet utilization reached:
- 81.6% during Q2 2026
- Compared with 77.6% in Q2 2025
The nearly four-percentage-point improvement demonstrates that more equipment remained actively deployed throughout the quarter.
Higher utilization translated directly into stronger rental revenue while increasing operating efficiency.
Rental yields also strengthened.
The company achieved:
- Rental yield of 39.4%
- Up 80 basis points from the previous year
Improving yields alongside rising utilization created a favorable combination that significantly boosted margins.
Gross Profit Expands Rapidly
Strong revenue growth translated into even faster profit expansion.
Second-quarter gross profit reached $124.0 million, increasing 20.9% from the prior year.
Adjusted gross profit climbed even higher.
CTOS reported:
- Adjusted Gross Profit: $180.9 million
- Increase of 15.6% year over year
The growth reflects stronger pricing, increased rental activity, higher equipment utilization, and continued operational discipline.
Significant Improvement in Earnings
One of the most notable developments during the quarter was CTOS’s return to strong profitability.
The company generated:
- Net income of $10.4 million
This represented an improvement of $38.8 million compared with the second quarter of 2025.
Management attributed the turnaround primarily to:
- Higher rental revenues
- Increased equipment sales
- Strong operating margins
- Income tax benefit during the quarter
The previous year’s comparable quarter included an income tax expense related to adjustments in estimated effective tax rates.
Adjusted EBITDA Posts 25% Growth
Adjusted EBITDA reached:
$116.8 million
This represented an increase of:
- $23.3 million
- 25.0% year over year
The strong EBITDA performance exceeded revenue growth, demonstrating CTOS’s ability to expand profitability while growing sales.
Improved gross profit remained the primary contributor to higher EBITDA.
Management continues to emphasize Adjusted EBITDA as one of its key performance metrics because it better reflects operating performance across both business segments.
Balance Sheet Continues Improving
CTOS also made meaningful progress strengthening its financial position.
At June 30, 2026:
- Cash and cash equivalents totaled $10.3 million
- Total debt stood at $1.673 billion
- Net debt totaled $1.663 billion
Perhaps more importantly, the company’s net leverage ratio declined to 3.85x.
This represents:
- Improvement from 4.02x at the end of Q1 2026
- Improvement from 4.31x at year-end 2025
Crossing below the important 4.0x leverage threshold reflects management’s ongoing commitment to debt reduction.
The company also maintained significant financial flexibility.
Available liquidity included:
- $229.4 million under its senior secured credit facility
- Additional suppressed borrowing capacity of approximately $242 million
This liquidity provides ample capacity to support future fleet investments while continuing deleveraging efforts.
CEO Highlights Strong Market Fundamentals
Chief Executive Officer Ryan McMonagle described the second quarter as one of the strongest in company history.
According to McMonagle, sustained demand across utility transmission and distribution markets remains the primary engine behind CTOS’s performance.
He noted that:
- Quarterly revenue reached a record level.
- Adjusted EBITDA grew 25%.
- Rental utilization exceeded 81%.
- Total rental fleet OEC reached an all-time high of $1.68 billion.
Management believes these achievements position the company for continued rental growth throughout the remainder of 2026.
McMonagle also emphasized the strong contribution from the company’s manufacturing operations.
The STEM segment produced:
- External customer revenue of $345 million
- Equipment sales totaling $332 million
Together, both segments helped accelerate debt reduction while positioning CTOS to benefit from several long-term infrastructure investment trends.
These include:
- Utility grid modernization
- Electrification projects
- Data center expansion
- Infrastructure spending
- Transmission and distribution investment
New Segment Reporting Structure
Beginning January 1, 2026, CTOS implemented a new reporting structure designed to better reflect how management operates the business.
The company now reports under two primary segments:
Specialty Equipment Rentals (SER)
This segment combines:
- Historical Equipment Rental Solutions
- Portions of Aftermarket Parts and Services
SER focuses primarily on rental operations and related services.
Specialty Truck Equipment & Manufacturing (STEM)
This segment combines:
- Historical Truck & Equipment Sales
- Selected used equipment sales
- Manufacturing operations
- Remaining aftermarket services
Management believes the new reporting approach better aligns financial reporting with operational strategy, capital allocation decisions, and long-term profitability objectives.
Historical financial results have been recast to match the updated segment structure.
SER Segment Posts Exceptional Results
The Specialty Equipment Rentals business continued outperforming expectations.
Rental revenue increased:
20.1% year over year
The improvement was driven by:
- Higher fleet utilization
- Increased rental volumes
- Larger fleet deployment
- Improved rental pricing
Equipment sales within SER also surged.
Rental equipment sales increased:
30.3%
Much of this growth resulted from customers exercising rental purchase options and buying equipment previously under lease agreements.
The segment’s Adjusted EBITDA increased:
26.2%
This reflected the strong combination of expanding rental demand and higher fleet efficiency.
STEM Segment Maintains Healthy Momentum
The Specialty Truck Equipment & Manufacturing business also posted solid gains.
Equipment sales increased:
4.9%
Growth was primarily driven by:
- Utility vehicles
- Forestry equipment
Adjusted EBITDA improved by:
$13.2 million
Although the segment backlog declined modestly by 3.7%, management explained that the decrease reflected exceptionally strong deliveries during the quarter rather than weakening demand.
Sales backlog ended the quarter at approximately:
$322 million
This represents roughly:
3.5 months of trailing twelve-month third-party sales
While modestly below management’s target range of four to six months, quoting activity during June increased 26% year over year, suggesting healthy future order intake.
Raising Full-Year 2026 Guidance
Following record first-half performance, CTOS increased its financial outlook for the remainder of 2026.
Updated Revenue Guidance
Previous guidance:
- $2.005 billion to $2.12 billion
New guidance:
- $2.10 billion to $2.20 billion
Updated Adjusted EBITDA Guidance
Previous guidance:
- $415 million to $440 million
New guidance:
- $437.5 million to $455 million
The revised outlook reflects continued strength across rental markets and confidence in customer demand.
Expectations for the Rental Business
Management expects the rental division to remain the company’s primary growth engine.
Key expectations include:
- Continued strong utility T&D demand
- Mid-single-digit OEC fleet growth
- High utilization rates
- Strong gross margins
- Further penetration into vocational rental markets
Despite increasing fleet investment, CTOS expects rental capital spending to remain below 2025 levels due to the relatively young age of its fleet.
Average fleet age remains approximately:
Three years
This enables continued growth without excessive capital expenditure.
Manufacturing Outlook Remains Positive
The STEM business is expected to continue benefiting from:
- Stable supply chains
- Strong customer relationships
- Healthy demand from utility customers
- Forestry equipment demand
Management expects:
- Third-party new equipment sales to increase 3%–10%
- Total STEM revenue to range from slightly lower to up 3% year over year
Cash Flow and Capital Allocation
CTOS expects continued improvements in working capital throughout 2026.
Inventory levels are projected to decline toward the company’s target of:
Below six months on hand
This improvement should support stronger cash generation.
The company now expects:
- Levered free cash flow exceeding $50 million
- Net leverage well below 4.0x by year-end
- Long-term leverage target below 3.0x during 2027
Management continues prioritizing:
- Debt reduction
- Cash generation
- Efficient capital allocation
- Disciplined fleet investment
CFO Provides Outlook for Second Half
Chief Financial Officer Chris Eperjesy noted that while third-quarter revenue and EBITDA are expected to remain above prior-year levels, they may be modestly below the exceptionally strong second quarter.
He explained that several equipment deliveries, including rental purchase option buyouts, occurred earlier than originally anticipated, shifting revenue into the second quarter.
Importantly, management emphasized that this timing difference does not reduce expected full-year results.
Instead, the stronger-than-expected first-half performance supported the decision to increase full-year guidance.
Eperjesy also highlighted that rental demand remains exceptionally healthy, supported by rising OEC on rent and fleet utilization.
With a younger fleet, improving working capital, declining leverage, and strong infrastructure demand, management believes CTOS is well positioned to generate higher returns on invested capital while maintaining sufficient financial flexibility to support future growth.
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