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Custom Truck One Source lifts 2026 guidance after Q2 momentum
The company expects Q3 results to come in modestly below Q2 due to pull forward of equipment deliveries and RPO buyouts into the second quarter.
Custom Truck One Source said it is in the early stages of a transmission demand super cycle, driving record results in Q2, including record OEC on rent and historically high utilization, according to a Yahoo Finance earnings call summary.
Management attributed record STEM revenue to strong utility end market demand and high delivery volumes, while noting that backlog decreased sequentially because of record Q2 deliveries.
The company reported a 700 basis point year over year margin expansion in its SER segment, tied to improved rental fundamentals and pricing discipline in transmission and distribution markets. To help manage operational risk around upcoming EPA 2027 NOx emission regulations, it has implemented strategic chassis prebuy actions and inventory positioning.
Custom Truck One Source raised full year 2026 guidance for both revenue and adjusted EBITDA, but expects Q3 to be modestly below Q2 levels as some equipment deliveries and RPO buyouts were pulled forward into Q2. The company also projected 2026 net rental CapEx of $170 million to $200 million, targeted net leverage below 4x by year end 2026 and toward 3x in 2027, and estimated 2027 NOx non conformance penalties for customers of $4,500 to $7,000 per unit.