Executive Summary

Q4 2024 delivered strong sequential improvement: revenue $520.7M (+16.4% q/q), net income $27.6M (vs. loss in Q3), and Adjusted EBITDA $102.0M (+27.2% q/q); year-over-year revenue was flat, while Adjusted EBITDA declined on lower ERS used equipment sales .
ERS recovery persisted: utilization rose to 78.9% (from 73.2% in Q3), average OEC on rent exceeded $1.21B; TES posted a record quarter ($307.7M) and record year (> $1.0B) .
2025 guidance introduced: revenue $1.97–$2.06B, Adjusted EBITDA $370–$390M; segment revenue ranges ERS $660–$690M, TES $1.16–$1.21B, APS $150–$160M; levered FCF target $50–$100M and net leverage below 4x by FY-end .
Strategic normalization underway: inventory reduced >$150M q/q, sale-leaseback raised >$52M (gain $23.5M), supporting deleveraging despite $4.5–$5.0M annual lease expense headwind baked into 2025 guidance .
Estimate comparison unavailable: S&P Global consensus retrieval for Q4 2024 EPS/revenue failed due to request limits; results vs estimates could not be verified (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

ERS utilization and OEC on rent improved meaningfully, driving sequential increases in rental revenue and rental asset sales; “Average OEC on rent for Q4 was over $1.2 billion… average utilization… just under 79%… rental revenue was up 15% versus Q3” .
TES achieved record quarterly and annual revenue: “TES had a record quarter in Q4 and record year, exceeding $1 billion in annual sales for the first time” ; Q4 TES revenue rose 18.4% q/q to $307.7M .
Working capital actions: inventory reduced by >$150M; ABL borrowings down $45M; sale-leaseback net proceeds >$52M used to repay debt, supporting deleveraging efforts .

What Went Wrong

Year-over-year Adjusted EBITDA decreased 13.8% (to $102.0M from $118.4M) due to lower ERS used equipment sales and higher variable-rate financing costs .
Gross margin pressure in TES and APS from mix and industry-wide inventory normalization; TES gross margin down y/y; APS margin flat y/y but pressured earlier in 2024 .
Backlog declined vs prior year: TES backlog ended Q4 at $368.8M (down 46% y/y), reflecting improved supply chains; management emphasized normalized 4–6 months backlog is adequate but raises visibility concerns .

Financial Results

Consolidated Performance (quarterly)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$423.0	$447.2	$520.7
Gross Profit ($M)	$89.3	$91.8	$118.5
Adjusted Gross Profit ($M)	$133.9	$137.8	$167.6
Net Income ($M)	$(24.5)	$(17.4)	$27.6
Diluted EPS ($)	$(0.10)	$(0.07)	$0.12
Adjusted EBITDA ($M)	$80.1	$80.2	$102.0

Notes: CFO referenced “$521M of revenue, $168M adjusted gross profit, $102M adjusted EBITDA” consistent with press release rounding ($520.7M, $167.6M, $102.0M) .

Year-over-Year Comparison (Q4)

Metric	Q4 2023	Q4 2024
Revenue ($M)	$521.8	$520.7
Gross Profit ($M)	$126.8	$118.5
Net Income ($M)	$16.1	$27.6
Diluted EPS ($)	$0.07	$0.12
Adjusted EBITDA ($M)	$118.4	$102.0

Segment Breakdown

Segment Metric ($M)	Q4 2023	Q3 2024	Q4 2024
ERS Total Revenue	$184.6	$150.9	$172.5
ERS Gross Profit	$63.4	$42.5	$56.6
TES Equipment Sales	$298.9	$259.9	$307.7
TES Gross Profit	$52.9	$41.9	$51.0
APS Total Revenue	$38.2	$36.4	$40.6
APS Gross Profit	$10.6	$7.4	$10.9

KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Ending OEC ($M)	$1,455.7	$1,493.8	$1,515.5
Avg OEC on Rent ($M)	$1,159.2	$1,082.7	$1,211.1
Fleet Utilization (%)	77.6%	73.2%	78.9%
ORY (%)	41.1%	38.4%	38.6%
Sales Order Backlog ($M)	$688.6	$395.6	$368.8

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenue ($B)	FY 2024	$1.80–$1.89	Actual reported $1.802	N/A (execution vs guide)
Adjusted EBITDA ($M)	FY 2024	$340–$350	Actual reported $339.7	N/A (execution vs guide)
ERS Revenue ($M)	FY 2024	$610–$625	Actual $597.8	N/A
TES Revenue ($M)	FY 2024	$1,050–$1,115	Actual $1,055.4	N/A
APS Revenue ($M)	FY 2024	$140–$150	Actual $149.1	N/A
Consolidated Revenue ($B)	FY 2025	N/A	$1.97–$2.06	Introduced
Adjusted EBITDA ($M)	FY 2025	N/A	$370–$390	Introduced
ERS Revenue ($M)	FY 2025	N/A	$660–$690	Introduced
TES Revenue ($M)	FY 2025	N/A	$1,160–$1,210	Introduced
APS Revenue ($M)	FY 2025	N/A	$150–$160	Introduced
Net Rental CapEx ($M)	FY 2025	N/A	~$200	Introduced
Levered Free Cash Flow ($M)	FY 2025	N/A	$50–$100	Introduced
Net Leverage Target (x)	FY 2025 YE	N/A	<4x	Introduced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Utility T&D recovery	Q2: softness, early signs of improvement; Q3: sustained OEC/utility uptick, storm support	Continued normalization; utilization high-70s/low-80s expected in 2025	Improving
AI/data centers & electrification tailwinds	Cited as load growth drivers in Q2/Q3	Reinforced as secular drivers for demand	Sustained tailwind
TES backlog/supply chain	Backlog normalizing; supply chain improved	Backlog ~4+ months; net orders +35% y/y; confidence in growth	Healthy order flow despite lower y/y backlog
Pricing/ORY	Q3 ORY down on mix; rates flat in Q2	Expect ORY hold/slight improvement in 2025	Stabilizing
Tariffs & emissions regs	Monitoring CARB/EPA, supplier mix in MX/CA	Natural hedge via fleet/inventory; modest cost increases underwritten	Managed risk
Working capital & leverage	ABL upsized; plan to reduce inventory, leverage	Inventory down >$150M; net leverage 4.5x; targeting <4x FY25 and <3x by FY26	Deleveraging underway
Sale-leaseback	Not present earlier	Q4: 8 properties, >$52M net proceeds; $23.5M gain; $4.5–$5.0M annual lease expense headwind	One-time liquidity unlock, ongoing cost headwind

Management Commentary

“TES had a record quarter in Q4 and record year, exceeding $1 billion in annual sales for the first time… We feel that our performance in Q4 sets us up well for the return to growth that we anticipate in 2025.” — CEO Ryan McMonagle .
“Average OEC on rent for Q4 was over $1.2 billion… average utilization… just under 79%… rental revenue was up 15% versus Q3.” — CEO .
“Net orders improved in Q4 to $280 million, up over 90% sequentially and up 35% y/y… backlog currently $445 million, up more than 20% since year-end.” — CFO Chris Eperjesy .
“We expect total revenue in the range of $1.97–$2.06 billion… adjusted EBITDA $370–$390 million… levered free cash flow $50–$100 million.” — CFO and press release .

Q&A Highlights

TES guidance confidence vs lower backlog: Management emphasized normalized backlog suffices; focus on orders and historical growth trajectory; cited prior instance of y/y lower backlog yet record TES quarter .
Seasonality and cadence: Expect 45%/55% H1/H2 split; Q1 likely the low point; model gradual improvement through the year .
Sale-leaseback impact: ~$4.5–$5.0M annual lease expense headwind in COGS (~80%) and SG&A (~20%); included in guidance .
Margins outlook: Rental margins low–mid 70%, used mid-20s, TES mid-teens; tariffs mitigated via fleet/inventory hedge and supplier actions .
Infrastructure bill (IIJA) benefit: Described as mid-innings; ongoing tailwind into 2025 .

Estimates Context

Attempted to retrieve S&P Global consensus for Q4 2024 EPS, revenue, EBITDA and estimate counts; data request failed due to daily limit, so results vs consensus could not be verified (S&P Global data unavailable).
Given unavailability, near-term estimate adjustments likely to reflect: sequential strength in ERS utilization/rental revenue, TES record quarter, and 2025 EBITDA guide ($370–$390M), with caution on year-over-year Adjusted EBITDA decline and backlog normalization .

Key Takeaways for Investors

Sequential momentum: ERS recovery in utilization/OEC and rental revenue, plus TES record sales, support a constructive near-term setup; watch utilization trending into spring/fall (seasonal upticks) .
Mix and margin dynamics: TES margins mid-teens and APS high-20s targeted; ORY expected to hold/slightly improve in 2025; sensitivity to mix warrants monitoring of product/regional sales composition .
Working capital and leverage path: Inventory down >$150M; sale-leaseback proceeds deployed to debt reduction; company targets net leverage <4x by FY25 and <3x by FY26 — a potential re-rating catalyst if executed .
2025 guide sets the bar: Revenue $1.97–$2.06B and Adjusted EBITDA $370–$390M imply double-digit EBITDA growth; track segment revenue ranges and net rental CapEx (~$200M) for execution risk .
Backlog and orders: Despite y/y backlog decline, net orders accelerated (+35% y/y); monitor order intake pace and backlog progression (management cited $445M early-2025) .
Regulatory/trade watch: Tariffs and emissions rules are manageable per management due to natural hedges and supplier coordination; still a variable to track for cost/margin impacts .
Trading implications: Positive sequential inflection and 2025 growth guide could support near-term sentiment; watch for confirmation via Q1 trajectory (seasonal dip) and updates on leverage reduction and ORY trends .

Sources searched and read:

Q4 2024 earnings press release: “Reports Fourth Quarter and Full-Year 2024 Results” –.
Q4 2024 earnings call transcript: full prepared remarks and Q&A –.
Other Q4 press releases (announcement and events): .
Prior two quarters for trend analysis: Q3 2024 press release and call – –; Q2 2024 call –.

Note: No 8-K Item 2.02 filing was located for Q4 2024; relied on the company’s earnings press release and call materials for primary source data [List results].

Custom Truck One Source, Inc. (CTOS)·Q4 2024 Earnings Summary