Custom Truck One Source's Q2 2025: Navigating Contradictions in Tariff Impact and Revenue Growth Expectations

Tariff impact and management, backlog and revenue growth, backlog and revenue growth expectations, impact of tariffs on business, and backlog and revenue growth are the key contradictions discussed in Custom Truck One Source's latest 2025Q2 earnings call.



Revenue and EBITDA Growth:
- Custom Truck One Source (CTOS) reported 21% revenue growth and 17% adjusted EBITDA growth for Q2 2025 compared to Q2 2024.
- Growth was driven by continued strong demand in core T&D markets and excellent execution by the team.

ERS Segment Performance:
- The ERS segment had $170 million in revenue, up 23% from the previous year, with rental revenue up 17% and rental asset sales up 40%.
- The increase was due to sustained utility contractor activity and strong rental demand across primary end markets.

TES Sales and Order Activity:
- TES experienced 2 consecutive months of sales over $100 million, the second highest quarterly sales ever, and signed orders were up just under 35% year-over-year.
- Sales growth was driven by strong order flow from local and regional customers, and the backlog remains within the targeted average range.

Fleet Investment and Utilization:
- Average utilization of the rental fleet was just under 78%, up almost 600 basis points from the prior year, with total OEC on rent over $1.2 billion.
- Investment in the rental fleet was driven by strong rental demand and the need to meet current and projected demand.

Tariff Impact and Mitigation:
- CTOS managed to minimize the tariff impact through proactive inventory purchases and supply chain management.
- The minimal cost impact is expected to be seen in Q3 and Q4, with TES gross margin improving from Q1 to Q2.