0001709682-26-000008
SEC filingNotes show cancellable purchase commitments, $32.6M ECP buyback, $488.5M capex, and segment gross profit margins for ERS, TES, APS.
Custom Truck One Source, Inc. is a specialty equipment provider serving electric utility transmission and distribution (T&D), telecommunications, rail, forestry, waste management, and other infrastructure-related industries in North America. The company offers a differentiated "one-stop-shop" business model encompassing equipment rental, new and used equipment sales, and aftermarket parts and services. It operates more than 40 locations across the U.S. and Canada, supported by a 24/7 call center, approximately 90 mobile technicians, and over 2,600 third-party service partners. The company owns one of the industry's largest fleets of specialty rental equipment, with more than 10,400 units averaging 2.9 years of age, and achieved over 77% rental fleet utilization on average over the last two years.
As of December 31, 2025, the company manages three reporting segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS). ERS rents specialty equipment such as bucket trucks, digger derricks, and cranes primarily to electric utility T&D, infrastructure, rail, and telecom end-markets. TES sells new and used equipment, often highly customized, leveraging integrated production capabilities. APS provides a comprehensive range of parts, tools, accessories, test and repair services, and upfit/repair services. Beginning in the three months ending March 31, 2026, the company will realign into two segments: Specialty Equipment Rentals (SER) and Specialty Truck Equipment and Manufacturing (STEM), reflecting changes in management's internal financial reporting. SER will combine the historical ERS segment and a portion of APS, while STEM will combine TES and the remaining portion of APS.
The company offers over 250 product variations in its rental and sales fleet, including bucket trucks, digger derricks, boom trucks, cable placers, rail trucks, roll-off trucks, knuckleboom trucks, vacuum trucks, cranes, and underground equipment. These products serve various terrain options (truck-mounted, rail-mounted, track-mounted, all-wheel drive) and can reach heights over 200 feet, dig depths of 60 feet, and provide pulling capacity up to 40,000 pounds. A large percentage of the fleet is insulated for safe work on live electric lines. Aftermarket offerings include equipment parts, stringing blocks, augers, insulated tools, and other tools, along with test and repair services and upfit/repair services.
The company employs a nationwide direct sales team of over 120 members, with an average industry experience of more than 25 years. The sales organization includes Strategic Account Managers for key accounts and Territory Managers supported by Inside Rental Representatives. Marketing utilizes targeted digital advertising, trade shows, email distributions, a comprehensive equipment catalog, and the company website. The company serves approximately 8,000 customers, with top 15 customers representing about 23.6% of total revenue and no single customer exceeding 4%. Of the top 20 customers, 16 both rent and purchase equipment. Key customer relationships span approximately 20 years.
The filing does not name specific competitors but describes the company's competitive strengths as a market leader with a differentiated one-stop-shop platform, integrated large-scale production and customization capabilities, a young and well-maintained rental fleet, geographical diversity with a national footprint, strong and diverse client relationships, and attractive unit economics driving high returns. The company believes its ability to purchase equipment components separately with vertically-integrated assembly results in a cost advantage, and direct-to-customer sales channels achieve higher net resale values compared to competitors who typically sell used equipment through auctions.
The company's growth strategy includes capitalizing on favorable trends across a large addressable market driven by secular shifts from ownership to rental and infrastructure spending; investing in the rental fleet to meet growing demand; growing equipment sales across current and new customers, end-markets, and product offerings; increasing penetration of aftermarket parts and service by expanding service capacity domestically; and pursuing domestic geographic expansion through organic openings and opportunistic acquisitions. The company has identified new product categories for expansion and plans to add service capacity at multiple locations in 2026.
As of December 31, 2025, Custom Truck had approximately 2,500 employees across more than 40 locations, with about 2% covered by a collective bargaining agreement. The company emphasizes its culture rooted in core values (Care & Respect, Solve Problems Like A Mechanic, Driven to Deliver, Engage Collaboratively, Spark Innovation). Talent development includes a Service Technician Education Program (STEP) with over 100 courses, an ACE Leadership Model, and tuition assistance. The company offers competitive pay, medical/vision/dental insurance, 401(k) with match, health savings accounts, an employee stock purchase plan, telemedicine, virtual counseling, and an employee assistance program. Community giving focuses on education, military/veteran/public safety, community enrichment, and economic empowerment.
As of December 31, 2025, the Company held $6.3M in cash, a sharp contrast to total debt of $1.66B and equity of $809M. Inventory decreased 11.3% to $930.9M from $1.05B at year-end 2024. Deferred revenue and customer deposits totaled $23.5M, down from $26.3M. The ABL Facility had $248.1M in borrowing availability (subject to borrowing base), and the company was in compliance with all financial covenants.
Notes disclose that all purchase agreements with manufacturers and suppliers for rental fleet and inventory are cancellable within a specified notification period. Consequently, there are no material non-cancellable purchase commitments or contractual obligations reported beyond the routine operating lease liabilities ($193.5M total lease payments, $114.9M present value) and debt maturities outlined in Note 8.
Revenue by segment: ERS $701M (+17% YoY), TES $1,095M (+4%), APS $148M (-1%). Gross margins: ERS 29.8% (up from 29.8% prior), TES 15.3% (down from 16.9%), APS 23.7% (down from 22.5%). Geographic mix: U.S. $1,904M (98%), Canada $40M (2%). Note 19 also reveals a planned segment realignment to Specialty Equipment Rentals and Specialty Truck Equipment and Manufacturing starting Q1 2026.
The most detailed risk category covers supply chain disruptions (tariffs on steel/aluminum, shipping delays, raw material inflation) that could impair manufacturing and marketing of products. The company notes heavy reliance on timely delivery of finished goods (commercial vehicles) and chassis from customers. Rental fleet management is critical—average fleet age under 3 years but aging could raise maintenance costs; residual values may fluctuate, leading to write-downs. Inventory obsolescence and regional demand misalignment are also flagged.
Total indebtedness is $1,660.8 million with $1,355.4 million variable-rate ABL/floor plan financing. Interest rate sensitivity: each 1/8 point change impacts annual interest expense by ~$1.7 million. Restrictive covenants in the Indenture and ABL agreement limit incurrence of additional debt, dividends, and asset sales, potentially constraining growth. Springing fixed charge coverage ratio covenant (1.00x) could be triggered if availability drops. The company acknowledges that future cash flows may not be sufficient to service debt, requiring asset sales or refinancing.
Evolving threats—ransomware, AI-based attacks, third-party vendor vulnerabilities—pose material risks to IT systems and sensitive data. The company has experienced incidents in the past but states none have materially affected operations. However, risks from work-from-home environments and cloud dependencies are noted. Compliance with expanding data privacy laws (e.g., CCPA) could increase costs. No quantification of potential losses or insurance coverage limits.
Operations are subject to federal/state environmental and safety regulations (NHTSA, OSHA). Climate change risk includes physical risks (extreme weather) and transition risks (emissions standards, customer preference for low-emission vehicles). ESG scrutiny is increasing—failure to meet voluntary targets or adverse third-party ratings could harm reputation, access to capital, and talent acquisition. The company notes that both advocates and opponents of ESG are becoming more active, raising litigation and activism risks.
Highly competitive industry with large incumbents (national, multi-regional) that have greater resources. Reduction in government infrastructure spending could reduce revenue. Petroleum price increases may reduce demand for products and raise freight costs. Unionization (2% of hourly workers) presents risk of work stoppages, though the company highlights broader labor competition for skilled technicians as more material.
No mention of foreign exchange risk, IP litigation, or specific regulatory enforcement actions. The risk factors disclosure is comprehensive and consistent with prior filings; no new material risks were introduced in this 10-K.
The provided excerpt from the 10-K filing for Custom Truck One Source, Inc. (Ticker: CTOS) for the fiscal year ended December 31, 2025 does not include the Consolidated Statements of Cash Flows. The document contains the auditor's report, income statement, and balance sheet references, but the cash flow statement is not present in the given text. Therefore, no analysis of operating cash flow, investing activities, financing activities, or free cash flow can be performed. Users should refer to the full filing for the cash flow statement.