Custom Truck One Source Q1 earnings soar
Custom Truck One Source Inc. kicked off 2026 with a record-breaking first quarter, signaling robust demand in the infrastructure and utility sectors.
The company reported total revenue of $461.6 million, a 9.3% increase compared to the first quarter of 2025, marking the highest Q1 revenue in the company’s history. This growth was primarily fueled by sustained momentum in the transmission and distribution (T&D) markets, which continue to benefit from secular tailwinds like grid upgrades and data center expansion.
The company’s profitability also saw a significant boost, with Adjusted EBITDA rising 33.4% to $98 million. Under the company's newly implemented segment reporting structure, this performance represented a staggering 933% year-over-year increase in certain metrics.
CTOS successfully narrowed its net loss by nearly 77%, finishing the quarter with a loss of $4.1 million compared to $17.8 million in the prior year. On the strength of these results, management raised its full-year 2026 Adjusted EBITDA guidance to a range of $415 million to $440 million.
This quarter served as the debut for CTOS’s realigned reporting segments: Specialty Equipment Rentals (SER) and Specialty Truck Equipment and Manufacturing (STEM).
- The SER segment was a standout performer, with third-party revenue growing 16% to $194 million. Rental fleet utilization reached 81.4%, a 370-basis-point improvement over the previous year, while the total Original Equipment Cost (OEC) on rent reached a record $1.66 billion.
- The STEM segment reported third-party revenue of $268 million, up 5% year-over-year. Notably, the segment’s sales order backlog surged 23% sequentially to $411 million, with management indicating that the "far majority" of these orders are scheduled for delivery within the current year.
CEO Ryan McMonagle attributed the strong performance to excellent operational execution and cost-management initiatives, which drove gross margin expansion despite macroeconomic volatility.
“We continue to be optimistic about the remainder of 2026, as CTOS remains well-positioned to benefit from secular tailwinds driven by data center investments, electrification, utility grid upgrades and infrastructure investment,” McGonagle said. “For 2026, we remain focused on Adjusted EBITDA growth, working capital management, free cash flow generation and continued deleveraging.”
Looking toward the future, CTOS is strategically positioning itself for the EPA 2027 emission standards. With an average fleet age of just under three years, CTOS maintains one of the youngest specialty rental fleets in the industry, which management believes provides a significant competitive advantage during regulatory transitions.
Additionally, the company plans to optimize liquidity by reducing inventory from 7.5 months on hand to below six months by year-end, a move expected to contribute to a projected $50 million in levered free cash flow for 2026.