third quarter 2026
Filed Oct 26, 2026Custom Truck One Source, Inc. Reports Record Third Quarter 2026 Results and Increases Full Year 2026 Adjusted EBITDA and SER Revenue Guidance
Third-quarter revenue increased 2.7%, gross profit increased 12.4%, net income improved to $2.3 million from a $5.8 million loss, and Adjusted EBITDA increased 15.6%. The company raised full-year SER revenue and Adjusted EBITDA guidance while net leverage declined to 3.70x.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended September 30, 2026GAAP | $495,224 (in $000s) | – | 2.7% |
| Rental revenue, three months ended September 30, 2026GAAP | $152,696 (in $000s) | – | 20.1% |
| Equipment sales, three months ended September 30, 2026GAAP | $309,597 (in $000s) | – | – |
| Parts sales and services, three months ended September 30, 2026GAAP | $32,931 (in $000s) | – | – |
| Gross Profit, three months ended September 30, 2026GAAP | $113,280 (in $000s) | – | 12.4% |
| Adjusted Gross Profit, three months ended September 30, 2026non-GAAP | $170,198 (in $000s) | – | 9.4% |
| Operating Income, three months ended September 30, 2026GAAP | $38,079 (in $000s) | – | – |
| Net Income (Loss), three months ended September 30, 2026GAAP | $2,305 (in $000s) | – | an improvement of $8.1 million |
| Net Income (Loss) Per Share, Basic, three months ended September 30, 2026GAAP | $0.01 | – | – |
| Net Income (Loss) Per Share, Diluted, three months ended September 30, 2026GAAP | $0.01 | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $110,942 (in $000s) | – | 15.6% |
| Adjusted EBITDA margin, three months ended September 30, 2026non-GAAP | 22.4% | – | expanded approximately 250 basis points |
| Total revenue, nine months ended September 30, 2026GAAP | $1,520,292 (in $000s) | – | – |
| Gross Profit, nine months ended September 30, 2026GAAP | $340,317 (in $000s) | – | – |
| Operating Income, nine months ended September 30, 2026GAAP | $116,163 (in $000s) | – | – |
| Net Income (Loss), nine months ended September 30, 2026GAAP | $8,602 (in $000s) | – | – |
| Net Income (Loss) Per Share, Diluted, nine months ended September 30, 2026GAAP | $0.04 | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $325,682 (in $000s) | – | 24% growth year to date |
| Ending OEC, as of September 30, 2026other | $1,764,963 (in $000s) | – | $143.0 million |
| Average OEC on rent, three months ended September 30, 2026other | $1,394,661 (in $000s) | – | 10.5% |
| Fleet utilization, three months ended September 30, 2026other | 81.5% | – | – |
| OEC on rent yield, three months ended September 30, 2026other | 39.4% | – | – |
| Sales order backlog, as of September 30, 2026other | $341,920 (in $000s) | 6% sequentially | 22% |
| Net leverage ratio, as of September 30, 2026non-GAAP | 3.70 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Specialty Equipment Rentals (SER) total segment revenue, three months ended September 30, 2026Rental revenue increased 20.1% as average fleet utilization increased to 81.5%, average OEC on rent increased by 10.5% year-over-year, and OEC on rent yield improved to 39.4%. | $223,350 (in $000s) | – | – |
| Specialty Truck Equipment & Manufacturing (STEM) Total Segment Revenue, three months ended September 30, 2026Higher intercompany sales to SER supported increased rental activity, partially offset by a 5.5% decline in new equipment sales driven by lower third-party unit sales volume. | $442,158 (in $000s) | – | 8% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
full year 2026 outlook
- Revenue$2,100 million — $2,200 million
- NoteAdjusted EBITDA: $447.5 million — $460 million
- NoteRevenue is expected to increase 8% to 13% year-over-year.
- NoteAdjusted EBITDA is expected to increase 17% to 20%.
- NoteSER revenue: $870 million — $890 million
- NoteSTEM revenue: $1,630 million — $1,700 million
- NoteNet rental fleet investment: approximately $210 million to $230 million
- NoteGross rental fleet investment: approximately $400 million to $430 million
- NoteLevered free cash flow is expected to be slightly positive.
- NoteNet leverage ratio is expected to be meaningfully below four times at the end of fiscal 2026.
- NoteThird-party new sales revenue is expected to increase 3% to 10% in 2026 compared to 2025.
- NoteTotal STEM revenue is expected to be down marginally to up 3% year-over-year.
- NoteFourth quarter third-party new sales are expected to increase at a mid-to-high-teens rate year-over-year.
- NoteEnding OEC is expected to increase by a mid-to-high single digit percentage in 2026.
Capital returns
- Repurchase of common stock: — for the nine months ended September 30, 2026.
- Repurchase of common stock: $(32,575) (in $000s) for the nine months ended September 30, 2025.
What drove it
- Record demand across core transmission and distribution markets.
- Rental revenue increased through higher rental volume, improved fleet utilization, increased average OEC on rent, and improved OEC on rent yield.
- SER equipment sales increased 14.1% because of increased buyout activity of rental contracts with purchase options.
- STEM intercompany sales increased to support increased rental activity.
- Lower floor plan interest expense resulted from lower inventory levels.
- Transmission demand, electrification, data center-driven load growth, and infrastructure spending were identified as secular trends supporting demand.
Concerns
- More than $20.0 million of third-party STEM deliveries shifted into the fourth quarter following a vendor recall and unusual hailstorm damage to finished vehicle inventory at the Kansas City location.
- Third-party new equipment sales declined 5.5% because of lower third-party unit sales volume as production was prioritized for rental-fleet investment.
- Sales order backlog of approximately 3.8 months of LTM third-party new sales was modestly below the targeted range of four to six months.
- Levered free cash flow for 2026 is now expected to be slightly positive, compared to prior guidance of more than $50 million, reflecting higher net rental fleet investment and working capital associated with growth.
- Total debt outstanding was $1,666.0 million and net debt was $1,651.5 million as of September 30, 2026.
What to watch
- Completion of more than $20 million of third-party deliveries expected in the fourth quarter.
- Whether OEC on rent and utilization, which surpassed $1.5 billion and 84%, respectively, in October, continue to support SER growth.
- Conversion of the $342 million sales order backlog and fourth-quarter third-party new-sales growth expected at a mid-to-high-teens rate year-over-year.
- Execution of approximately $400 million to $430 million of gross rental fleet investment, with the larger revenue and earnings contribution expected in 2027.
- Progress toward a net leverage ratio meaningfully below four times at fiscal year-end 2026 and below three times in 2027.
Balance sheet and cash flow
- Cash and cash equivalents: $14,564 (in $000s) as of September 30, 2026, compared to $6,273 (in $000s) as of December 31, 2025.
- Total debt outstanding: $1,666.0 million as of September 30, 2026.
- Net debt: $1,651.5 million as of September 30, 2026.
- Inventory: $1.016 billion at the end of the third quarter, down $26 million from the second quarter.
- Availability under the senior secured credit facility: $234.3 million as of September 30, 2026.
- Additional suppressed availability accessible by upsizing the existing facility: $288.0 million.
- Net cash flow from operating activities: $231,660 (in $000s) for the nine months ended September 30, 2026, compared to $262,804 (in $000s) for the nine months ended September 30, 2025.
- Net cash flow for investing activities: $(232,914) (in $000s) for the nine months ended September 30, 2026, compared to $(233,786) (in $000s) for the nine months ended September 30, 2025.
- Purchases of rental equipment: $(352,578) (in $000s) for the nine months ended September 30, 2026, compared to $(348,923) (in $000s) for the nine months ended September 30, 2025.
- Proceeds from sales and disposals of rental equipment: $153,819 (in $000s) for the nine months ended September 30, 2026, compared to $138,749 (in $000s) for the nine months ended September 30, 2025.
- Net cash flow from financing activities: $8,406 (in $000s) for the nine months ended September 30, 2026, compared to $(19,697) (in $000s) for the nine months ended September 30, 2025.
Analysis
Custom Truck One Source reported third-quarter revenue of $495,224 (in $000s), up 2.7% from $482,058 (in $000s), while rental revenue rose 20.1% to $152,696 (in $000s). Gross Profit increased 12.4% to $113,280 (in $000s), and Adjusted EBITDA increased 15.6% to $110,942 (in $000s). Net Income was $2,305 (in $000s), compared with a Net Loss of $(5,756) (in $000s) in the prior-year quarter. The company cited higher operating income from rental-revenue growth and lower interest expense as the primary drivers of the earnings improvement.
SER was the principal operating contributor. Average OEC on rent reached $1,394,661 (in $000s), fleet utilization was 81.5%, and OEC on rent yield was 39.4%. Ending OEC was a record $1,764,963 (in $000s), up $143.0 million year-over-year. SER Segment Adjusted EBITDA was $121,856 (in $000s), compared with $99,465 (in $000s), while the segment Adjusted EBITDA margin expanded to 54.6% from 52.4%. Management attributed rental growth to increased volume, improved utilization, a 10.5% increase in average OEC on rent, and improved yield.
STEM results reflected a shift in mix toward intercompany activity supporting rental-fleet growth. Total Segment Revenue was $442,158 (in $000s), up 8% year-over-year, while STEM Segment Adjusted EBITDA was $36,636 (in $000s), compared with $17,664 (in $000s). Third-party new equipment sales declined 5.5% amid lower unit volume, as CTOS prioritized production for its rental fleet. A vendor recall and hailstorm damage delayed more than $20.0 million of third-party deliveries into the fourth quarter, though management stated the units remain in backlog and are expected to ship in the fourth quarter.
Cash generation funded substantial fleet investment. Net cash flow from operating activities was $231,660 (in $000s) for the first nine months, while purchases of rental equipment were $(352,578) (in $000s). Cash and cash equivalents were $14,564 (in $000s), total debt outstanding was $1,666.0 million, and net debt was $1,651.5 million at September 30, 2026. Net leverage declined to 3.70 from 4.53 at the end of the third quarter of 2025, despite the year-over-year increase in fleet OEC.
The company raised its full-year 2026 revenue outlook to $2,100 million to $2,200 million and Adjusted EBITDA outlook to $447.5 million to $460 million. SER revenue guidance increased to $870 million to $890 million from $850 million to $875 million. CTOS also increased expected net rental fleet investment to approximately $210 million to $230 million from $170 million to $200 million. The increased investment changes expected 2026 levered free cash flow to slightly positive from more than $50 million, with management positioning the incremental fleet for a larger earnings contribution in 2027.
Management, verbatim
In the third quarter, record demand across our core T&D markets drove 16% year-over-year Adjusted EBITDA growth and 24% growth year to date, and we are raising our full-year Adjusted EBITDA outlook for the third time this year.
Ryan McMonagle, Chief Executive Officer of CTOS
In STEM, orders grew 22% year-over-year and backlog reached $342 million, and the third-party deliveries that shifted out of the quarter are scheduled to ship in the fourth quarter.
Ryan McMonagle, Chief Executive Officer of CTOS
Third quarter results reflect what we believe are the early stages of what could be a once-in-a-generation transmission demand super-cycle in our utility end markets.
Chris Eperjesy, Chief Financial Officer of CTOS
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so no reported-period comparison with prior guidance is available.
- GAAP gross margin was not reported.
- Non-GAAP EPS was not reported.
- Quarterly operating cash flow was not reported.
- Quarterly free cash flow and quarterly levered free cash flow were not reported.
- A quantitative full-year 2026 levered free cash flow figure was not reported.
- Dividend information was not reported.
- Full-year 2026 gross margin, operating-expense, and tax-rate guidance was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.