Custom Truck One Source Inc (CTOS) 2023 Q4 法說會逐字稿

Good afternoon, at this time I would like to welcome everyone to the Custom Truck One Source Inc. fourth-quarter and full year 2023 earnings conference call. (Operator Instructions)

下午好，現在我歡迎大家參加 Custom Truck One Source Inc. 第四季和 2023 年全年財報電話會議。（操作員說明）

I would now like to turn the conference over to Brian. Please, go ahead.

我現在想把會議交給布萊恩。請繼續。

Thank you. Before we begin, we would like to remind you that management's commentary and responses to questions on today's call may include forward-looking statements which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of the company's filings with the SEC.

謝謝。在開始之前，我們想提醒您，管理階層在今天的電話會議上的評論和對問題的回答可能包括前瞻性陳述，這些陳述本質上是不確定的，並且不在公司的控制範圍內。儘管這些前瞻性陳述是基於管理階層目前的預期和信念，但實際結果可能存在重大差異。有關可能導致實際結果不同的一些因素的討論，請參閱該公司向 SEC 提交的文件中的風險因素部分。

Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during the call in the press release we issued today. That press release and our quarterly investor presentation are posted on the investor relations section of our website. We filed our 2023 10-K with the SEC this afternoon.

此外，請注意，您可以在我們今天發布的新聞稿中找到電話會議期間討論的歷史非公認會計準則財務指標的調節表。新聞稿和我們的季度投資者介紹發佈在我們網站的投資者關係部分。我們今天下午向 SEC 提交了 2023 年 10-K。

Today's discussion of our results of operations for Custom Truck One Source, Inc., or Custom Truck, is presented on a historical basis as of or for the three months end of December 31, 2023, and prior periods.

今天我們對 Custom Truck One Source, Inc.（或 Custom Truck）的營運結果的討論是基於截至 2023 年 12 月 31 日止三個月及之前期間的歷史資料。

Joining me today are Ryan McMonagle, CEO, and Chris Eperjesy, CFO. I will now turn the call over to Ryan.

今天加入我的是執行長 Ryan McMonagle 和財務長 Chris Eperjesy。我現在將把電話轉給瑞安。

Thanks, Brian, and welcome, everyone, to today's call. Custom Truck's business continued to perform well in Q4, delivering revenue of $522 million, representing a 7% increase compared to Q4 of 2022, and our highest quarter of revenue ever. We finished the year with total revenue of $1.865 billion at the top end of our guidance range and up 19% versus 2022.

謝謝布萊恩，歡迎大家參加今天的電話會議。客製化卡車業務在第四季度繼續表現良好，實現收入 5.22 億美元，較 2022 年第四季成長 7%，是我們有史以來收入最高的季度。今年結束時，我們的總收入為 18.65 億美元，處於指導範圍的上限，比 2022 年增長 19%。

I'm very proud of the efforts of our team to deliver another record-setting year. We continue to demonstrate the value of our business model with our ability to pivot between product categories and between selling and renting equipment as the markets dictate.

我對我們團隊為再創紀錄的一年所做的努力感到非常自豪。我們能夠根據市場的需要在產品類別之間以及在銷售和租賃設備之間進行調整，從而繼續證明我們的商業模式的價值。

Our TES segment delivered 21% revenue growth in the quarter versus the previous year and 29% growth for the full year, well ahead of both consensus estimates for the segment and our guidance for the year. We delivered record levels of TES revenue and also saw a gross margin improvement of 150 basis points, highlighting the continued strong demand environment as well as the progress the team has made in continuous improvement in our production capabilities. The entire TES team performed extremely well, and our production team delivered the fourth consecutive quarter of record production, for which I am extremely grateful.

我們的 TES 部門本季營收較上年成長 21%，全年營收成長 29%，遠高於對該部門的普遍預期和我們今年的指導。我們的 TES 收入達到創紀錄水平，毛利率也提高了 150 個基點，凸顯了持續強勁的需求環境以及團隊在不斷改進生產能力方面取得的進展。整個TES團隊的表現都非常出色，我們的製作團隊連續第四個季度創造了創紀錄的產量，對此我非常感激。

As we discussed on several calls, we made the decision during 2023 to invest in significant inventory growth to ensure that we could meet customer demand heading into 2024. Growth in the TES segment was led by growth in our infrastructure in-market, which represents about 24% of total revenues. We continue to experience high levels of demand for certain products, like our specialty dump trucks, roll-off trucks, hydro excavators, and water trucks.

正如我們在幾次電話會議中討論的那樣，我們在 2023 年做出了投資於大幅增加庫存的決定，以確保我們能夠滿足 2024 年之前的客戶需求。TES 領域的成長是由我們市場基礎設施​​的成長所帶動的，該市場約佔總收入的 24%。我們繼續經歷對某些產品的高需求，例如我們的特殊自卸卡車、滾裝卡車、液壓挖土機和灑水車。

We believe we're in the early stages of the deployment of federal infrastructure investment and Jobs Act dollars for infrastructure projects, which is beginning to positively impact demand. We are well-positioned heading into 2024 to continue to meet customer demand in all the product categories we serve.

我們相信，我們正處於為基礎設施項目部署聯邦基礎設施投資和就業法案資金的早期階段，這正開始對需求產生積極影響。進入 2024 年，我們已做好充分準備，繼續滿足我們所服務的所有產品類別的客戶需求。

Approximately 60% of our revenue comes from the utility in-market, which includes both distribution and transmission work. We are seeing significant forecasted increases in electricity load growth in the US, which is being driven by a high level of data center development and by continued electrification trends. The amount of incremental power and grid enhancements required to meet the expected load growth, as well as the deferred maintenance that's required on our aging grid, creates significant demand momentum in the sector.

我們大約 60% 的收入來自市場上的公用事業，其中包括配電和輸電工作。我們預計美國電力負載將大幅成長，這是由資料中心的高水準發展和持續的電氣化趨勢所推動的。滿足預期負載成長所需的增量電力和電網增強，以及老化電網所需的延期維護，為該行業創造了巨大的需求動力。

Transmission line development and regional interconnection continue to be the bottlenecks in meeting this future energy demand. There is a significant backlog of transmission projects that are ready to go, however, work on these projects is advancing slowly as supply chain, regulatory approval, and ownership and funding details get resolved.

輸電線路的發展和區域互聯仍然是滿足未來能源需求的瓶頸。大量積壓的輸電項目已準備就緒，但隨著供應鏈、監管審批以及所有權和融資細節的解決，這些項目的工作進展緩慢。

We believe we are at the forefront of the energy transition that is currently mandated in California and soon will be required in varying degrees in nine additional states. Custom Truck has an array of fully functional electric Class 7 and Class 8 trucks to serve multiple in-markets, including bucket trucks and digger derricks, dump trucks, refuse trucks, and tractors to serve the EV demands of our customers.

我們相信，我們處於加州目前強制實施的能源轉型的最前沿，很快其他九個州也將在不同程度上提出要求。Custom Truck 擁有一系列功能齊全的電動 7 級和 8 級卡車，可服務多個市場，包括斗式卡車和挖掘機井架、自卸車、垃圾車和拖拉機，以滿足客戶的電動車需求。

We continue to work with our OEM partners, Peterbilt and Battle Motors, with whom we have developed the majority of these trucks, to ensure that our customers' transition to EV is timely and efficient. Additionally, we are seeing continued early adoption of our ePTO, which is being used to electrically power our truck's attachments while on the job site, significantly reducing the amount of time the engine must be on, idling, and burning diesel fuel.

我們繼續與我們的 OEM 合作夥伴 Peterbilt 和 Battle Motors 合作（我們與他們一起開發了大部分卡車），以確保我們的客戶及時有效地過渡到電動車。此外，我們看到我們的 ePTO 繼續得到早期採用，它被用於在工作現場為我們的卡車附件提供電力，從而大大減少了引擎必須啟動、空轉和燃燒柴油的時間。

Chris will walk through the details of the performance of our ERS segment, which continued to see strong rental rates, to experience strong operational performance, and to perform at historically high levels of utilization for the majority of our fiscal year.

Chris 將詳細介紹我們 ERS ​​部門的業績詳情，該部門在我們財年的大部分時間裡繼續保持強勁的租金率、強勁的營運業績以及歷史上最高的利用率水平。

In the fourth quarter, we expected more transmission work to be underway than occurred. As a result, we saw lower utilization than we originally expected, but consistent with what we communicated to you in November.

在第四季度，我們預計正在進行的輸電工作比實際發生的要多。因此，我們發現利用率低於我們最初的預期，但與我們在 11 月向您傳達的情況一致。

As I mentioned previously, we are confident that the tailwinds that support this segment of our business are robust and will continue to provide significant growth in the years ahead as some of the delays currently impacting the large transmission projects begin to get resolved. We believe the breadth of our vehicle product offerings and our ability to meet our customers' rental and sales needs uniquely position Custom Trucks to capitalize on the future tailwinds created by this sustained demand, particularly as these transmission projects advance.

正如我之前提到的，我們相信，支持我們這一部分業務的強勁動力將在未來幾年繼續顯著增長，因為目前影響大型輸電項目的一些延誤開始得到解決。我們相信，我們的車輛產品系列的廣度以及滿足客戶租賃和銷售需求的能力使定制卡車能夠獨特地利用這種持續需求帶來的未來順風車，特別是隨著這些傳輸項目的進展。

We will continue to invest in geographic markets where Custom Truck is currently underrepresented and which we believe offer compelling long-term growth opportunities for our business. As we've discussed previously, we know that the western US is one such area. I am proud to announce that we recently closed on the purchase of an existing facility in Casa Grande, Arizona, to serve as an initial production hub for our southwest expansion. We will also be opening two new locations, one in Sacramento and one in Salt Lake City, to capitalize on the growth we see out west and to be able to better serve our customers. We expect all these locations to be fully operational later this year.

我們將繼續投資定制卡車目前代表性不足的地區市場，我們相信這些市場為我們的業務提供了引人注目的長期成長機會。正如我們之前討論的，我們知道美國西部就是這樣的地區之一。我很自豪地宣布，我們最近完成了對亞利桑那州卡薩格蘭德現有工廠的購買，作為我們西南擴張的初始生產中心。我們還將開設兩個新地點，一個在薩克拉門托，一個在鹽湖城，以利用我們看到的西部成長並能夠更好地服務我們的客戶。我們預計所有這些地點將於今年稍後全面投入營運。

As we think about our 2024 guidance, we are going to be conservative on the degree of transmission uplift that we expect in 2024 and will provide updates on how transmission continues to develop throughout the year. Despite that uncertainty, we anticipate that 2024 will be another year of growth for custom trucks and that we will eclipse $2 billion of total revenue.

在考慮 2024 年指引時，我們將對 2024 年預期的輸電提升程度持保守態度，並將提供全年輸電如何繼續發展的最新資訊。儘管存在這種不確定性，我們預計 2024 年將是客製化卡車又一個成長的一年，我們的總收入將超過 20 億美元。

While Chris will provide additional details later, we are providing initial revenue guidance of $2 billion to $2.18 billion in a projecting adjusted EBITDA in the range of $440 million to $470 million. Additionally, we are committed to demonstrating our ability to generate compelling cash flow during 2024, which will allow us to meet our three-times net leverage target and to continue to invest in our growth.

雖然克里斯稍後將提供更多詳細信息，但我們提供的初始收入指引為 20 億美元至 21.8 億美元，預計調整後 EBITDA 為 4.4 億美元至 4.7 億美元。此外，我們致力於展示我們在 2024 年產生引人注目的現金流的能力，這將使我們能夠實現三倍的淨槓桿目標，並繼續投資於我們的成長。

With that, I'm going to turn it over to Chris to talk through the details of our fourth-quarter results that contributed to our record-setting 2023.

接下來，我將把它交給 Chris，詳細介紹我們第四季的業績，正是這些業績為我們在 2023 年創下了紀錄。

Thanks, Ryan. For the fourth quarter, we delivered solid year-over-year revenue, adjusted gross profit, and adjusted EBITDA growth. We generated $522 million of revenue, $171 million of adjusted gross profit, and $118 million of adjusted EBITDA in Q4. For all of 2023, we generated $1.865 billion of revenue, $625 million of adjusted gross profit, and $427 million of adjusted EBITDA, up 19%, 13%, and 9% respectively versus 2022.

謝謝，瑞安。第四季度，我們實現了穩健的年收入、調整後毛利和調整後 EBITDA 成長。第四季我們的營收為 5.22 億美元，調整後毛利為 1.71 億美元，調整後 EBITDA 為 1.18 億美元。2023 年全年，我們實現了 18.65 億美元的營收、6.25 億美元的調整後毛利和 4.27 億美元的調整後 EBITDA，分別比 2022 年成長 19%、13% 和 9%。

Adjusted gross profit and adjusted EBITDA growth lagged revenue growth in 2023 primarily due to segment revenue mix. While all of our segments experienced year-over-year growth, rental asset sales and TES revenue, which have a lower average gross margin associated with them than our equipment rental business, comprised 67% of total revenue in 2023 versus 62% in 2022.

2023 年調整後毛利和調整後 EBITDA 成長落後於營收成長，主要是由於分部營收組合。雖然我們所有的細分市場都經歷了同比增長，但租賃資產銷售和 TES 收入（其平均毛利率低於我們的設備租賃業務）佔 2023 年總收入的 67%，而 2022 年為 62%。

SG&A was $59 million in Q4, or 11.4% of revenues, an improvement versus 12% in Q4 2022. For all of 2023, SG&A was 12.4% of revenues, an approximate 100-basis-point improvement compared to 2022. Net income for the quarter was over $16 million, the fifth consecutive quarter of positive net income, and $51 million for all of 2023, up 30% versus 2022. Full-year diluted earnings per share were up more than 30% year-over-year.

第四季的銷售、行政管理費用為 5,900 萬美元，佔營收的 11.4%，較 2022 年第四季的 12% 有所改善。2023 年全年，SG&A 佔營收的 12.4%，與 2022 年相比約提高了 100 個基點。該季度淨利潤超過 1,600 萬美元，連續第五個季度實現正淨利潤，2023 年全年淨利潤為 5,100 萬美元，比 2022 年增長 30%。全年稀釋每股收益年增超過30%。

The ERS segment experienced 10% growth for the full year, ending the year with $726 million of revenue, the middle of our guidance range. Adjusted gross profit for ERS was $107 million for Q4, and $409 million for all of 2023, up 3% from 2022. Adjusted gross margin was 58% in the quarter and 56% for the full year, down from 2022, largely because rental revenue comprised a smaller percentage of total ERS revenue compared to rental equipment sales in 2023 than in 2022.

ERS 部門全年成長 10%，年終收入為 7.26 億美元，位於我們指導範圍的中間位置。第四季 ERS ​​調整後毛利為 1.07 億美元，2023 年全年調整後毛利為 4.09 億美元，比 2022 年成長 3%。調整後的本季毛利率為58%，全年調整後毛利率為56%，均低於2022 年，這主要是因為與2022 年相比，2023 年租賃收入佔ERS 總收入的比例小於租賃設備銷售額。

In the quarter, average utilization of the rental fee was just under 78% and was over 80% for all of 2023, which is historically still very strong, despite some of the headwinds Ryan discussed. On-rent yield was over 41% for the quarter, and was over 40% for all of 2023, compared to just over 39% for 2022. The year-over-year improvements highlight the continued benefits from our previously announced pricing actions implemented since the beginning of 2022.

本季度，租賃費的平均利用率略低於78%，2023 年全年的平均利用率超過80%，儘管存在Ryan 討論的一些不利因素，但從歷史角度來看，這一利用率仍然非常強勁。本季的租金收益率超過 41%，2023 年全年的租金收益率超過 40%，而 2022 年的租金收益率略高於 39%。年比改善突顯了我們先前宣布的自 2022 年初以來實施的定價行動所帶來的持續效益。

We continue to invest strategically in our rental fleet and sell certain-aged assets in the fourth quarter, which kept our fleet age steady at 3.5 years. Net rental CapEx in Q4 was $22 million and $135 million for the full year. Our OEC and the rental fleet ended the year at $1.46 billion, essentially flat with the end of 2022. We expect to continue to invest in the fleet in 2024, but have the flexibility to pivot our CapEx spending plans in 2024, depending on the trends we're seeing in our end markets.

我們繼續對租賃機隊進行策略性投資，並在第四季度出售某些老化資產，使我們的機隊機齡穩定在 3.5 年。第四季淨租金資本支出為 2,200 萬美元，全年淨租金資本支出為 1.35 億美元。我們的 OEC 和租賃機隊年底達到 14.6 億美元，與 2022 年底基本持平。我們預計在 2024 年繼續投資於機隊，但可以根據我們在終端市場看到的趨勢靈活調整 2024 年的資本支出計畫。

In the TES segment, we sold a record $299 million of equipment in the quarter, and just under $1 billion for the year. A 29% increase compared to all of 2022. As Ryan mentioned, TES finished above the high end of our 2023 revenue guidance range. Gross margin in the segment was just under 18% in Q4. For the full year, TES gross margin was approximately 150 basis points higher, which we attribute to the ongoing production deficiencies resulting from our high level of production, as well as an improved mix related to our higher specialty and vocational truck sales.

在 TES 領域，本季我們銷售了創紀錄的 2.99 億美元設備，全年銷售量接近 10 億美元。與 2022 年全年相比成長 29%。正如 Ryan 所提到的，TES 的表現高於我們 2023 年收入指引範圍的上限。第四季該部門的毛利率略低於 18%。全年，TES 毛利率高出約 150 個基點，我們將其歸因於我們的高水平生產導致的持續生產缺陷，以及與我們更高的特種和職業卡車銷售相關的改進組合。

In line with our expectations, TES backlog continued to moderate, ending the quarter at just under $690 million. Record levels of both production and new equipment sales in the quarter allowed us to make headway toward reducing our backlog to a more normalized level, which currently stands at more than eight months of TES sales, down from a peak of more than 12 months in early 2023, but well above our historical average of four to six months.

與我們的預期一致，TES 積壓訂單持續減少，本季末訂單量略低於 6.9 億美元。本季生產和新設備銷售的創紀錄水準使我們能夠在將積壓訂單減少到更加正常化的水平方面取得進展，目前 TES 銷售量已超過 8 個月，低於年初超過 12 個月的峰值2023 年，但遠高於四到六個月的歷史平均。

Our strong and longstanding relationships with our chassis, body, and attachment vendors continue to be an important driver of our record results. Our intentional inventory build throughout 2023 positions us well to meet our production, fleet growth, and sales goals for 2024.

我們與底盤、車身和配件供應商之間牢固而長期的關係仍然是我們創紀錄業績的重要推動力。我們在 2023 年有意建立庫存，使我們能夠很好地實現 2024 年的生產、機隊成長和銷售目標。

Our APS business posted revenue of $38 million in the quarter and $149 million for the full year, up 5% versus 2022, and in the middle of our guidance range. Year-over-year growth was consistent for both parts and service and rental revenue within APS at 5% to 6% each. The adjusted gross profit margin in the segment finished the year strong at over 30% for Q4 and 29% for the full year, fully in line with our expectations.

我們的 APS 業務本季營收為 3,800 萬美元，全年營收為 1.49 億美元，比 2022 年成長 5%，處於我們指引範圍的中間位置。APS 內的零件和服務以及租賃收入的年增率均維持在 5% 至 6% 之間。該部門調整後的毛利率第四季超過 30%，全年達到 29%，完全符合我們的預期。

Since initiating our stock repurchase program in the third quarter of 2022, we have repurchased approximately $49.5 million of our stock through the end of 2023, including just under $19 million in the fourth quarter. We will maintain the flexibility to repurchase our stock when the market price provides a compelling opportunity to create long-term value for our shareholders.

自 2022 年第三季啟動股票回購計畫以來，到 2023 年底，我們已回購了約 4,950 萬美元的股票，其中第四季回購了近 1,900 萬美元。當市場價格提供了為股東創造長期價值的絕佳機會時，我們將保持回購股票的靈活性。

Borrowings under our ABL at the end of 2023 were $552 million, up versus the end of Q3 as we continue to invest in working capital during the quarter. As of December 31, we had $195 million available and approximately $324 million of suppressed availability under the ABL with the ability to upsize the facility.

截至 2023 年底，我們的 ABL 借款為 5.52 億美元，較第三季末增加，因為我們在本季繼續投資於營運資本。截至 12 月 31 日，我們在 ABL 下擁有 1.95 億美元的可用資金和約 3.24 億美元的抑制可用資金，並且有能力擴大設施規模。

With LTM adjusted EBITDA of $427 million, we finished 2023 with net leverage of 3.5 times, an improvement of 1.1 turns since the close of the transaction with Nesco in April 2021, and up slightly from last quarter. Achieving net leverage below three times remains a primary and important goal and that one we expect to achieve in 2024. The delay in achieving this target was primarily as a result of continued strategic investment in working capital, our 2023 adjusted EBITDA being at the lower end of our guidance range and the level of share repurchase activity last year.

LTM 調整後 EBITDA 為 4.27 億美元，2023 年結束時，我們的淨槓桿率為 3.5 倍，自 2021 年 4 月與 Nesco 交易結束以來提高了 1.1 倍，比上季度略有上升。實現淨槓桿率低於三倍仍然是一個主要且重要的目標，我們預計在 2024 年實現這一目標。實現這一目標的延遲主要是由於對營運資本的持續策略投資、我們的 2023 年調整後 EBITDA 處於我們指導範圍的下限以及去年的股票回購活動水準。

With respect to our guidance, we expect 2024 to be another year of growth. We believe TES will continue to benefit from good demand and our strong backlog entering the year. We believe the ERS outlook from our rental customers for long-term demand and growth remains strong.

根據我們的指導，我們預計 2024 年將是另一個成長的一年。我們相信，TES 將繼續受益於今年的良好需求和強勁的積壓訂單。我們相信租賃客戶對長期需求和成長的 ERS ​​前景仍然強勁。

As Ryan previously mentioned, we are currently experiencing some near-term headwinds in our utility and markets, largely related to our customer supply chain issues and the timing of the commencement of certain transmission projects, which is driving lower OEC on rent in our core T&D markets. As these markets recover and grow in 2024, we expect to further grow our rental fleet based on net OEC by mid-single digits.

正如Ryan 之前提到的，我們目前在公用事業和市場方面遇到了一些近期阻力，這主要與我們的客戶供應鏈問題以及某些輸電項目的啟動時間有關，這導致我們核心輸電和發展的租金OEC降低市場。隨著這些市場在 2024 年復甦和成長，我們預計基於淨 OEC 的租賃車隊將進一步成長中個位數。

Regarding TES, supply chain improvements, healthy inventory levels exiting 2023, and historically high backlog levels, we'll continue to improve our ability to produce and deliver even more units in 2024 than we did in 2023. Further, after a year of significant strategic investment in inventory levels in 2023, we expect to generate meaningful free cash flow in 2024, setting a target to generate more than $100 million of levered free cash flow and to deliver a net leverage ratio of less than three times by the end of the fiscal year.

關於 TES、供應鏈改進、2023 年退出的健康庫存水平以及歷史上較高的積壓水平，我們將繼續提高我們在 2024 年生產和交付比 2023 年更多單位的能力。此外，經過一年對 20​​23 年庫存水準的重大戰略投資，我們預計將在 2024 年產生有意義的自由現金流，設定目標為產生超過 1 億美元的槓桿自由現金流，並實現低於到財政年度結束時已進行三次。

Our 2024 outlook reflects the long-term strength of our end markets and the continued focus of our teams to profitably grow our business. As Ryan mentioned earlier, we continue the expansion of our geographic footprint, opening several new locations out west, better positioning the company for future growth, and exceptional customer service.

我們的 2024 年展望反映了我們終端市場的長期實力以及我們團隊對業務獲利成長的持續關注。正如瑞安之前提到的，我們繼續擴大我們的地理足跡，在西部開設了幾個新地點，更好地定位公司以實現未來的成長，並提供卓越的客戶服務。

We are providing guidance for our segment as follows. We expect ERS revenue of between $730 million and $760 million, TES revenue in the range of $1.115 billion to $1.255 billion, and APS revenue of between $155 million and $165 million. This results in total revenue in the range of $2 billion to $2.18 billion, up approximately 7% to 17% versus 2023.

我們為我們的細分市場提供以下指導。我們預計 ERS ​​收入在 7.3 億至 7.6 億美元之間，TES 收入在 11.15 億至 12.55 億美元之間，APS 收入在 1.55 億至 1.65 億美元之間。這導致總收入在 20 億美元至 21.8 億美元之間，比 2023 年增長約 7% 至 17%。

We are projecting adjusted EBITDA in the range of $440 million to $470 million, up approximately 3% to 10% compared to 2023.

我們預計調整後 EBITDA 在 4.4 億至 4.7 億美元之間，比 2023 年成長約 3% 至 10%。

In closing, I want to echo Ryan's comments regarding our continued strong performance. Despite some unforeseen volatility in certain utility markets, we continue to deliver strong revenue and adjusted EBITDA growth. To hold or expand margins in an inflationary environment and to reduce leverage, all while providing the highest levels of service to our customers.

最後，我想回應 Ryan 對我們持續強勁表現的評論。儘管某些公用事業市場出現一些不可預見的波動，我們仍繼續實現強勁的收入和調整後的 EBITDA 成長。在通貨膨脹環境下保持或擴大利潤並降低槓桿，同時為我們的客戶提供最高水準的服務。

With that, I will turn it over to the operator to open the line for questions. Operator?

這樣，我會將其轉交給接線員以開通提問線路。操作員？

(Operator Instructions) Scott Schneeberger, Oppenheimer.

（操作員說明）Scott Schneeberger，Oppenheimer。

Guys, I guess just jumping in on the near-term headwinds in the utility end markets, can you talk us through a little bit more of your customer conversations, what you're hearing, what you're seeing there? And it sounds like you are, with this guidance in the mid-single digits growing the rental fleet, net OEC, that you feel that there's going to be a recovery and there's some confidence there. So if you could just elaborate on what you're hearing from customers that we pull out of this hiccup and it drives further and it drives improvement later in the year. Thanks.

夥計們，我想您只是想談談公用事業終端市場的近期不利因素，您能否向我們介紹一下您與客戶的對話以及您所聽到的、所看到的情況？聽起來，在租賃車隊淨 OEC 成長到中個位數的指引下，您感覺將會出現復甦，並且有一定的信心。因此，如果您能詳細說明您從客戶那裡聽到的情況，我們將擺脫這一困境，並在今年稍後進一步推動改進。謝謝。

Sure. Scott, good to hear from you and happy to address it. And you're right, it feels very much like it's just a timing issue here. So I mean, if you look at kind of any macro trend of how much transmission has to be done and the number of projects that are -- what some consolidators call kind of ready to go, it's significant and it will be a significant boost. And if you look at all the macro underlying drivers around data centers and electrification and just grid upgrades that have to happen, we feel like it is significant.

當然。斯科特，很高興收到你的來信並很高興解決這個問題。你是對的，感覺這只是一個時間問題。所以我的意思是，如果你觀察一下需要完成多少傳輸以及項目數量的宏觀趨勢——一些整合者稱之為準備就緒，那麼它是重要的，並且將是一個顯著的推動。如果你看看圍繞資料中心和電氣化的所有宏觀潛在驅動因素以及必須發生的電網升級，我們覺得這很重要。

And in talking with customers, it's just a timing issue. I think a lot of people are thinking later this year, many of those jobs will begin and that it will be very good demand for an extended period of time when they do begin.

而在與客戶交談時，這只是一個時間問題。我認為很多人都在想，今年晚些時候，其中許多工作將會開始，當它們開始時，在很長一段時間內都會有很好的需求。

So everyone seems to be talking about timing later this year and we've got the equipment ready to go. But as we mentioned on the November call and certainly we just referenced again, we are seeing a little bit of a slowdown now from a transmission utilization standpoint. And it seems to be specific to transmission. All of the other end markets are continuing to perform very well, which is what we noted and saw on the TES side of the business, certainly in the infrastructure side and the vocational side. And then even distribution utilization is still staying in a very good level as well.

所以每個人似乎都在討論今年稍後的時間安排，我們已經準備好了設備。但正如我們在 11 月的電話會議上提到的，當然我們剛剛再次提到，從傳輸利用率的角度來看，我們現在看到了一些放緩。而且它似乎是特定於傳輸的。所有其他終端市場都繼續表現良好，這就是我們在 TES 業務方面注意到和看到的，當然在基礎設施方面和職業方面。甚至分銷利用率也仍然保持在非常好的水平。

All right. Thanks. Thanks for that. Just kind of a follow-up on that and then I'll have one other. But the follow-up is, in your early remarks, Ryan, you mentioned early infrastructure bill rollout. I just wanted to delve in a little bit more there, anecdotally, what you're seeing on that front with regard to that stimulus. Thanks.

好的。謝謝。感謝那。只是一種後續行動，然後我會再做一個。但接下來是，瑞安，在您早期的演講中，您提到了早期基礎設施法案的推出。有趣的是，我只是想更深入地研究你在這方面看到的關於刺激措施的情況。謝謝。

Yeah. Look, I think we're starting to see it. We're seeing it more on the infrastructure side. So for us, that shows up in dump trucks and water trucks and roll-offs and some of our hydro-excavators.

是的。聽著，我想我們已經開始看到這一點了。我們在基礎設施方面看到的更多。所以對我們來說，這齣現在自卸卡車、灑水車、滾裝車和我們的一些液壓挖土機。

And yes, I think we're starting to see some of those dollars flow. We would say when we talk to our customers there, and certainly when we listen to some of the other companies in the space, we're saying maybe it's 15% to 20% kind of those funds are starting to show up in backlog. And that certainly is an area that we're seeing continued really strong demand, Scott.

是的，我認為我們開始看到其中一些美元流動。我們會說，當我們與那裡的客戶交談時，當然，當我們聽取該領域其他一些公司的意見時，我們會說，這些資金中可能有 15% 到 20% 開始出現積壓。斯科特，這無疑是一個需求持續強勁的領域。

And so that was a big driver of why TES had such a strong fourth quarter, when you think about 21% growth for the quarter and 29% growth for the full year there. And we're continuing to see that type of trend here, even in the beginning, even in January and into February as well on the TES side of the business.

因此，這就是 TES 第四季表現如此強勁的一個重要推動因素，該季度成長 21%，全年成長 29%。我們繼續看到這種趨勢，即使在一開始，甚至在一月份和二月份，在 TES 業務方面也是如此。

Thanks. Appreciate it. Last one for me, and then I'll turn it over, probably more for Chris. With regard to the free cash flow outlook, $100 million, it sounds good. It sounds like a strong bounce back. I think what I'm really looking to delve into here is inventory levels and just kind of the progression, the work through there, just going a layer deeper and a sense of, well, why that guidance number and level of confidence. Thanks.

謝謝。欣賞它。最後一張給我，然後我會把它翻過來，可能會給克里斯更多。至於自由現金流前景，1億美元，聽起來不錯。聽起來像是強勁的反彈。我認為我真正想要深入研究的是庫存水平以及進展情況，那裡的工作，只是更深入一層，以及為什麼會有這樣的指導數字和信心水平。謝謝。

Yeah, Scott. I think we had said a number of times throughout the year that we really were strategically making the decision to invest in inventory because we saw the demand coming. And so we feel comfortable that we're going to have an opportunity here as the year progresses to unwind some of that investment. And so certainly, as we look at levered or unlevered free cash flow, there was a significant investment this year and last year, this year being '23 and last year being '22, that we think in terms of net working capital, we'll be able to unwind some of that in '24. So that will be a big driver of it.

是的，斯科特。我想我們在這一年中曾多次說過，我們確實是在策略性地做出投資庫存的決定，因為我們看到了需求的到來。因此，隨著時間的推移，我們將有機會撤銷部分投資，對此我們感到很放心。因此，當然，當我們考慮槓桿或無槓桿自由現金流時，今年和去年都有大量投資，今年是“23”，去年是“22”，我們認為就淨營運資本而言，我們” 24 年我們就能擺脫其中的一些困境。所以這將是它的一個重要驅動力。

Okay. Thanks very much.

好的。非常感謝。

Thanks, Scott.

謝謝，斯科特。

Thanks, Scott.

謝謝，斯科特。

Nicole Deblase, Deutsche Bank.

妮可‧德布萊斯，德意志銀行。

Can we just talk a little bit about your expectations for TES backlog? Makes sense that it ticked down since supply chain is normalizing. I guess, is your expectation that you could possibly exit 2024 with a more normalized lead time and amount of backlog? Or do you think that backlog will remain elevated based on what you're seeing in the supply chain?

我們能否簡單談談您對 TES 積壓的期望？由於供應鏈正在正常化，它的下降是有道理的。我想，您是否期望在 2024 年結束時能夠以更標準化的交貨時間和積壓數量？或者，根據您在供應鏈中看到的情況，您認為積壓訂單會繼續增加嗎？

That's a great question. Look, we delivered over $200 million of additional revenue on the TES segment this year. So the fact that backlog really year on year just came down, what, about $60 million, $65 million? We're really happy with that. So we are still seeing very good order volume. And so I think that will continue.

這是一個很好的問題。瞧，今年我們在 TES 領域實現了超過 2 億美元的額外收入。事實上，積壓訂單逐年下降，大約是 6,000 萬美元、6,500 萬美元？我們對此感到非常高興。所以我們仍然看到非常好的訂單量。所以我認為這種情況將會持續下去。

But I wouldn't be surprised if backlog still comes down a bit. I've said historically that four to six months is where it has been historically. I don't know that I have a reason to think it will be all the way down to that by the end of the year. But we're still seeing really good order flow. We're still seeing really good demand here, even for the first two months of 2024. And I think that demand will just continue to hold.

但如果積壓訂單仍然減少一點，我不會感到驚訝。我從歷史上說過，四到六個月是歷史上的情況。我不知道我是否有理由認為到今年年底它會一路下降。但我們仍然看到非常好的訂單流。即使在 2024 年前兩個月，我們仍然看到這裡的需求非常旺盛。我認為這種需求將持續下去。

Okay. Got it. Thank you. And then with respect to CapEx, how are you guys thinking about '24 on both replacement CapEx as well as growth CapEx?

好的。知道了。謝謝。然後就資本支出而言，你們如何看待 24 年的替代資本支出和成長資本支出？

Yeah. I think we said in our prepared remarks, Nicole, our expectation is we'll grow OEC by a net mid-single digits this year. And our gross CapEx number is going to be similar to this year in that we're targeting in that $400 million range, so 5%. If I pick the mid-single digit, you're looking at a net $75 million, $80 million of growth CapEx.

是的。我想我們在準備好的發言中說過，Nicole，我們的預期是今年 OEC 的淨成長將達到中個位數。我們的資本支出總額將與今年相似，我們的目標是 4 億美元，即 5%。如果我選擇中間個位數，您將看到淨 7500 萬美元、8000 萬美元的成長資本支出。

Very helpful. Thank you. I'll pass it on.

很有幫助。謝謝。我會把它傳遞下去。

Justin Hoffman, Robert Baird.

賈斯汀·霍夫曼，羅伯特·貝爾德。

I guess I wanted to go back to the transmission market and the demand levels there. Has there been a shift? I mean, are you seeing that clients are asking more to buy the equipment rather than rent it given the demand visibility that they see? And so maybe that's part of what's driving the fleet utilization rate down a little bit on the rental side is people are opting to buy it and hold it for longer. I think one of the dynamics you guys talked about when you first came to the public markets was that rental was kind of under-traded and there was an opportunity for that to be a greater usage of fleet. So I guess I would just ask for an update on that.

我想我想回到變速箱市場和那裡的需求水平。有轉變嗎？我的意思是，鑑於客戶看到的需求可見性，您是否發現客戶對購買設備而不是租賃設備的要求更高？因此，也許這就是租賃方面車隊利用率略有下降的部分原因，因為人們選擇購買並持有更長時間。我認為你們第一次來到公開市場時談論的動態之一是租賃交易不足，並且有機會更多地利用車隊。所以我想我只想要求更新。

Yeah, that's a great question. And you're right. We've said and we'll continue to say that as we see people buy, it's a good indicator of long-term demand. Transmission probably is a bit of an exception there. Transmission is primarily significantly rented. So we don't sell a lot of the transmission equipment that we consume that we buy from our vendors that we put together.

是的，這是一個很好的問題。你是對的。我們已經說過並將繼續說，當我們看到人們購買時，這是長期需求的良好指標。傳輸可能是個例外。變速箱主要是大量出租的。因此，我們不會出售大量從供應商購買的消耗的傳輸設備。

So it is a heavily rented product. So maybe a little bit different dynamic there just because of the use case of that equipment. So we're not seeing that dynamic. And it really does feel like it's just timing, right, of when the projects begin. And that seems to be consistent with all of our conversations with customers and certainly what a lot of the industry is talking about right now as well.

所以它是一個重度出租的產品。因此，由於該設備的用例，可能會出現一些不同的動態。所以我們沒有看到這種動態。確實感覺現在正是專案開始的時機，對吧。這似乎與我們與客戶的所有對話一致，當然也與許多行業目前正在談論的內容一致。

But it's a great question. And it is true in other product categories. It's something we watch closely. We talk a lot about when RPO buyouts happen or when buyouts happen from the rental fleet. That's a good indicator of long-term demand. You saw those levels that were high in the fourth quarter. So we're still -- all signs are still very good kind of long-term demand. It's just a short-term indicator of when the transmission work really begins.

但這是一個很好的問題。在其他產品類別中也是如此。這是我們密切關注的事情。我們談論了很多關於 RPO 收購何時發生或租賃車隊何時發生收購的問題。這是長期需求的一個很好的指標。你看到第四季的水平很高。因此，所有跡象仍然表明長期需求仍然非常良好。這只是傳輸工作何時真正開始的短期指標。

Okay. So on that basis, I mean, the utilization level, the [77.6-year] order, you guys ended 3Q at 80.4. And I think, kind of the expectation for 4Q is even with this you were going to kind of hold in that range and obviously it came down a little bit. So that still is a high utilization rate, I guess, versus history. But what's -- you gave the fleet growth. But what's your expectation for kind of utilization rates throughout the year? Are they more like 75? Are they more like 80? Just kind of trendline where you expect them to go.

好的。因此，在此基礎上，我的意思是，利用率水平，[77.6 年]訂單，你們第三季結束時為 80.4。我認為，對第四季度的預期是，即使如此，你也會保持在這個範圍內，顯然它會下降一點。所以我想，與歷史相比，這仍然是一個很高的利用率。但什麼是——你讓機隊成長了。但您對全年利用率的預期是多少？他們更像75歲嗎？他們更像80歲嗎？只是您期望它們走向的趨勢線。

Yeah. It's a great question. And you're right. That is a high utilization if you look in historical context. We did see it continue to come down at the end of the year. And so we are back to kind of that if 75 is the average, we were just below 75 kind of at the end of the year.

是的。這是一個很好的問題。你是對的。如果你看看歷史背景的話，這是一個很高的利用率。我們確實看到它在年底繼續下降。所以我們又回到如果 75 是平均值的話，我們到年底就略低於 75。

And that's where we are kind of currently at the beginning of Q1. And we'll expect that to kind of follow the same type of line that it typically follows, which means it should build some in the spring, level off a bit in the summer, and then continue to build into the end Q3 and the beginning of Q4 to kind of follow that general flow. But, yes, I think somewhere around that 75 is probably a good spot to think about it.

這就是我們目前在第一季初的情況。我們預計它會遵循通常遵循的相同類型的路線，這意味著它應該在春季建立一些，在夏季趨於平穩，然後繼續在第三季度末和開始時建立Q4 有點遵循一般流程。但是，是的，我認為 75 左右的某個位置可能是考慮這個問題的好地方。

Okay. All right. I'll leave it there. Thank you, guys.

好的。好的。我會把它留在那裡。感謝你們。

Tami Zakaria, JPMorgan.

塔米·扎卡里亞，摩根大通。

So my first question is I just wanted to get a sense of how you're thinking about the cadence throughout the four quarters. Typically, I think you've mentioned in the past EBITDA is called 45% in the first half and the remaining in the second half. So should we think about the guide in terms of typical or historical seasonality or any seasonality to think about as we model 2024?

所以我的第一個問題是我只是想了解您如何看待整個四個季度的節奏。通常，我認為您過去提到過，上半年的 EBITDA 稱為 45%，下半年剩下的。那麼，我們是否應該根據典型或歷史季節性或在我們建模 2024 年時考慮的任何季節性來考慮該指南？

Yeah, Tami, this is Chris. I think the 45%, 55% generally still holds. I do think what we're going to see certainly it holds for revenue. I think as Ryan was just talking about kind of what we expect to see this year in ERS, which is more of a historical norm versus what we saw maybe in '23 or certainly in '22, is that there's probably it'd be a little bit wider range, probably first half, second half on EBITDA. So it's probably a little less than 45% and a little more than 55% on EBITDA, but 45%, 55% on revenue.

是的，塔米，這是克里斯。我認為45%、55%總體上還是成立的。我確實認為我們將看到的情況肯定會影響收入。我認為，正如瑞安剛剛談論的那樣，我們預計今年在ERS 中會看到什麼，這更多的是一種歷史常態，而不是我們在23 年或肯定在22 年看到的情況，這可能範圍有點廣，可能是上半年、下半年的 EBITDA。因此，EBITDA 可能略低於 45%，略高於 55%，但收入可能佔 45%、55%。

Got it. Okay. Got it. That is very helpful. And then for the ERS segment, I think you've mentioned a few times some slowdown in transmission work caused by your customers' supply chain delays. Just wanted to get a sense, what exactly is this delay? Is it funding or is it availability of some other equipment or they're just waiting for the Fed rate to get cut? What exactly is this supply chain delay or, like, what's exactly driving this delay?

知道了。好的。知道了。這非常有幫助。對於 ERS ​​部分，我想您已經多次提到由於客戶的供應鏈延誤而導致傳輸工作放緩。只是想了解一下，這個延遲到底是什麼？是資金問題還是其他設備的可用性，或者他們只是在等待聯準會降息？這種供應鏈延遲到底是什麼，或是到底是什麼導致了這種延遲？

Yep. No, that's a great question, and I would tell you yes, yes, and yes, right? So the conversation we're having is all three of those, Tami, that some of it is regulatory approval, right? And so they're waiting on some rate increases to be passed kind of through their regulatory body.

是的。不，這是一個很好的問題，我會告訴你是的，是的，是的，對吧？所以我們正在進行的對話是所有這三個，塔米，其中一些是監管部門的批准，對吧？因此，他們正在等待監管機構通過一些加息措施。

Some of it is supply chain, right? They're still waiting on some superstructure or structure or transformers to be available. And then some is just a cost of funds issue, right, which I think they're waiting on interest rates.

其中一些是供應鏈，對吧？他們仍在等待一些上層建築或結構或變壓器可用。有些只是資金成本問題，對吧，我認為他們正在等待利率。

So it feels like it's all three, Tami. It feels like there's a lot that's ready to go. And so as each of those break, we anticipate that it will be a great tailwind as they begin later this year and into 2025.

所以感覺就像三者兼而有之，塔米。感覺好像有很多東西已經準備好了。因此，隨著這些技術的突破，我們預計這將是一個巨大的推動力，因為它們將從今年稍後開始一直持續到 2025 年。

Got it. Okay. Thank you so much.

知道了。好的。太感謝了。

No further questions at this time. Brian, I'll turn the call back over to you.

目前沒有其他問題。布萊恩，我會把電話轉回給你。

Great. Thanks, everyone, for your time today and your interest in Custom Truck. We look forward to speaking with you on our next quarterly earnings call. And in the meantime, please don't hesitate to reach out with any questions. Thanks again and have a good evening.

偉大的。感謝大家今天抽出寶貴的時間以及對訂製卡車的興趣。我們期待在下一個季度的財報電話會議上與您交談。同時，如有任何問題，請隨時與我們聯繫。再次感謝，祝您晚上愉快。