Custom Truck One Source Inc (CTOS) 2024 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to Custom Truck One Source's second-quarter 2024 earnings conference call. Please note, this conference call is being recorded.

女士們、先生們，感謝你們的支持並歡迎參加 Custom Truck One Source 的 2024 年第二季財報電話會議。請注意，本次電話會議正在錄製中。

I'd like to hand the conference call over to your host today, Brian Perman, Vice President of Investor Relations for Custom Truck. Please go ahead.

我想將今天的電話會議交給主持人，客製化卡車投資者關係副總裁 Brian Perman。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.

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，不在公司的控制範圍內。

Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For discussion of some of the factors that could cause actual results to differ, please refer to the risk factor section of the company's filings with the SEC.

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 in our quarterly investor presentation are posted on the Investor Relations section of our website.

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。我們季度投資者介紹中的新聞稿發佈在我們網站的投資者關係部分。

We filed our second-quarter 2024 10-Q with the SEC this afternoon. Today's discussion of our results of operations, Custom Truck One Source Inc or Custom Truck, is presented on a historical basis as of or before the three months ended June 30, 2024, and prior periods.

今天下午，我們向 SEC 提交了 2024 年第二季 10-Q 報告。今天對 Custom Truck One Source Inc 或 Custom Truck 的營運表現的討論是基於截至 2024 年 6 月 30 日的三個月或之前的歷史數據以及之前的歷史數據。

Joining me today are Ryan Mcmonagle, CEO; and Chris Eperjesy, CFO.

今天加入我的是執行長瑞安·麥克莫納格爾 (Ryan Mcmonagle)；和財務長 Chris Eperjesy。

I will now turn the call over to Ryan.

我現在將把電話轉給瑞安。

Thanks Brian and welcome everyone today's call. Since we closed the combination of Custom Truck and Nesco about three and a half years ago, our management team and our employees have all worked tirelessly to combine the two businesses to pursue an aggressive growth strategy through substantial investment in the business and to grow our production operations, all while providing unparalleled service to our customers.

謝謝布萊恩，歡迎大家今天的來電。自從我們大約三年半前完成Custom Truck 和Nesco 的合併以來，我們的管理團隊和員工都不懈努力，將這兩個業務合併起來，透過對業務的大量投資和增加我們的產量來追求積極的成長策略性運營，同時為我們的客戶提供無與倫比的服務。

We have achieved these goals against the backdrop of strong secular tailwinds, driving robust demand in our end markets, as well as the impact of COVID and its subsequent effect on the global supply chain.

我們在強勁的長期順風的背景下實現了這些目標，推動了終端市場的強勁需求，以及新冠疫情的影響及其對全球供應鏈的後續影響。

Since merging the two businesses, we have added more than $393 million of revenue and more than $85 million of adjusted EBITDA on an LTM basis. While we delivered sequential revenue and adjusted EBITDA growth in the second quarter, we are not satisfied with our financial results in the first half of the year, and we know that they're not indicative of the earnings potential of our overall business.

自合併這兩項業務以來，我們在 LTM 基礎上增加了超過 3.93 億美元的收入和超過 8,500 萬美元的調整後 EBITDA。雖然我們在第二季度實現了連續收入和調整後 EBITDA 成長，但我們對上半年的財務業績並不滿意，而且我們知道它們並不能表明我們整體業務的獲利潛力。

We continue to see healthy demand in our infrastructure, rail, and telecom end markets, which all contributed to continued strong performance in our TES segment in Q2. High levels of demand for certain products like our specialty dump trucks, roll off trucks, hydro excavators, and water trucks supports our belief that overall demand within TES is being positively impacted by the early stages of the deployment of federal infrastructure investment and JOBS Act [dollars] for infrastructure projects.

我們繼續看到基礎設施、鐵路和電信終端市場的健康需求，這都有助於我們第二季 TES 部門的持續強勁表現。對某些產品（如我們的特種自卸卡車、滾卸卡車、液壓挖掘機和灑水車）的高需求支持了我們的信念，即聯邦基礎設施投資和就業法案部署的早期階段對TES 的總體需求產生了積極影響。

As we've discussed before, approximately 60% of our revenue comes from the utility end market, which includes both transmission and distribution work. We continue to observe significant growth in electricity demand driven by manufacturing on shoring, AI-driven data center development, current electrification trends, as well as the deferred maintenance that is required on the country's aging grid.

正如我們之前討論的，我們大約 60% 的收入來自公用事業終端市場，其中包括輸電和配電工作。我們繼續觀察到，由岸上製造業、人工智慧驅動的資料中心開發、當前電氣化趨勢以及該國老化電網所需的延期維護所推動的電力需求顯著增長。

Transmission line development and regional interconnection continue to be the bottlenecks in meeting this future energy demand and there is a significant backlog of transmission projects that are ready to go. However, the utility markets have been meaningfully impacted in recent quarters. As supply chain issues, continued high interest rates, and regulatory approval delays have all contributed to project delays, which can be seen in the low number of transmission line miles completed.

輸電線路的開發和區域互聯仍然是滿足未來能源需求的瓶頸，並且準備就緒的輸電項目大量積壓。然而，最近幾季公用事業市場受到了重大影響。由於供應鏈問題、持續高利率和監管審批延遲都導致了專案延誤，這可以從已完成的輸電線路里程數較低中看出。

Once these issues get resolved, the forecasted load growth demand provides strong tailwinds for future growth across our entire business.

一旦這些問題得到解決，預測的負載成長需求將為我們整個業務的未來成長提供強勁的推動力。

Additionally, we have seen, and our customers have confirmed a broad base slowdown in construction spending around electric distribution resulting from lower IOU CapEx and maintenance spend management. While these trends impacted our results in the second quarter, we believe these will normalize and expect them to improve in the second half of the year and into 2025.

此外，我們已經看到，而且我們的客戶也證實，由於 IOU 資本支出和維護支出管理的降低，圍繞配電的建設支出普遍放緩。雖然這些趨勢影響了我們第二季的業績，但我們相信這些趨勢將會正常化，並預計在下半年和 2025 年之前將有所改善。

Our TES segment delivered sequential revenue growth of more than 3% in the quarter, and revenue is up 6% year-to-date versus the same period in 2023, after more than 30% year-over-year growth in the first six months of last year. As I just mentioned, growth in the TES segment has been led by increased spending in our infrastructure, telecom, and rail end markets, resulting in net orders in the quarter showing an improvement versus Q1.

我們的 TES 部門本季營收季增超過 3%，今年迄今營收與 2023 年同期相比成長 6%，前六個月年增超過 30%去年的。正如我剛才提到的，TES 領域的成長是由我們的基礎設施、電信和鐵路終端市場支出增加所帶動的，導致本季的淨訂單較第一季有所改善。

While segment gross margin is down slightly both year-over-year and sequentially, it remains within our expected range and represents a substantial improvement since the close of the combination with Nesco.

儘管該部門的毛利率同比和環比均略有下降，但仍處於我們的預期範圍內，並且自與 Nesco 合併結束以來已有大幅改善。

Our significant inventory investment last year has positioned us to meet the continued strong customer demand for new equipment sales and also allows us to grow our fleet to quickly serve our customers rental and rental asset sales needs when demand returns to our core utility end market.

去年我們的大量庫存投資使我們能夠滿足客戶對新設備銷售持續強勁的需求，並且還使我們能夠擴大我們的機隊，以便在需求返回到我們的核心公用事業終端市場時快速滿足客戶的租賃和租賃資產銷售需求。

We continue to closely follow the upcoming chassis emission regulations and are well-positioned for the anticipated demand increase resulting from the change in emission standards that is coming between now and 2027. The entire TES team continues to perform extremely well and to deliver production near record levels, something the entire organization is very proud of.

我們將繼續密切關注即將出台的底盤排放法規，並為從現在到 2027 年排放標準變化帶來的預期需求成長做好準備。整個 TES 團隊繼續表現出色，並交付接近創紀錄水平的產量，整個組織對此感到非常自豪。

Chris will walk through the details of the performance of our ERS segment, which continue to see strong utilization rates in the mid-70% to high 80% range for all end markets other than the transmission portion of utility. We are actively tracking transmission project starts, IOU rate-based approvals, and are in regular communication with our customers about their expectations for the remainder of 2024 and 2025.

Chris 將詳細介紹我們 ERS ​​細分市場的業績，除公用事業輸電部分外，所有終端市場的利用率繼續保持在 70% 中至 80% 的強勁水平。我們正在積極追蹤輸電項目的啟動、基於 IOU 費率的批准，並定期與客戶溝通，以了解他們對 2024 年剩餘時間和 2025 年的期望。

Based on this, we have growing confidence that the slowdown in the utility end market is indeed temporary and should begin to reverse itself in the next few quarters. We are already seeing signs of improvement in our ERS segments so far in the third quarter, particularly in fleet utilization and OEC on rent.

基於此，我們越來越有信心公用事業終端市場的放緩確實是暫時的，並且應該在未來幾季開始扭轉。到目前為止，第三季我們已經看到 ERS ​​領域出現改善的跡象，特別是在機隊利用率和租金 OEC 方面。

Our rental CapEx plan for the second half of the year reflects investment in our fleet to meet demand across our end markets with a focus on those sectors where we see continued strength, particularly in our specialty vocational trucks.

我們下半年的租賃資本支出計畫反映了對我們車隊的投資，以滿足終端市場的需求，並專注於我們認為持續強勁的領域，特別是我們的特種職業卡車。

We are confident that the secular demand drivers that support the ERS segment are robust and will continue to provide significant growth in the years ahead. The breadth of our vehicle product offering and our ability to meet customers' rental and sales needs uniquely positions Custom Truck to capitalize on the future tailwinds created by the sustained demand, particularly a certain delayed transmission projects advance.

我們相信，支持 ERS ​​細分市場的長期需求驅動力強勁，並將在未來幾年繼續帶來顯著成長。我們的車輛產品供應範圍廣泛，並且能夠滿足客戶的租賃和銷售需求，這使得定制卡車能夠利用持續需求帶來的未來順風車，特別是某些延遲的傳輸項目的推進。

With respect to our 2024 guidance, while we continue to have confidence in the long-term strength of our end markets and the continued execution by our teams to profitably grow our business, our updated outlook reflects the risks associated with the near-term challenges for our rental customers in the utility sector, which have been deeper and more prolonged than we anticipated, and which we expect will persist through the balance of the fiscal year.

就我們的 2024 年指導而言，雖然我們仍然對終端市場的長期實力以及我們團隊的持續執行能力充滿信心，以實現業務的盈利增長，但我們更新的前景反映了與近期挑戰相關的風險。在公用事業領域的租賃客戶比我們預期的更深入、更持久，我們預計這種客戶將持續到本財年的剩餘時間。

As such, we are lowering our revenue guidance for ERS by $70 million to $610 million to $640 million. Regarding TES supply chain improvements, healthy inventory levels, and continued strong backlog levels continue to improve our ability to produce and deliver more units in 2024 than in 2023.

因此，我們將 ERS ​​的收入指導下調 7,000 萬美元至 6.1 億至 6.4 億美元。關於 TES 供應鏈的改進、健康的庫存水平和持續強勁的積壓水平，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。

However, persistently high interest rates and uncertainty over the upcoming election are impacting our smaller customers' purchase decisions. As a result, we are lowering our revenue guidance for TES by $65 million to $1.05 billion to $1.19 billion, the midpoint of which reflects another year of double-digit revenue growth.

然而，持續的高利率和即將到來的選舉的不確定性正在影響我們小客戶的購買決定。因此，我們將 TES 的收入指引下調了 6,500 萬美元，至 10.5 億美元至 11.9 億美元，其中中點反映了另一年的兩位數收入成長。

We are also lowering our revenue guidance for APS by $15 million to $140 million to $150 million. Consolidated revenue guidance is now $1.8 billion to $1.98 billion. Given these changes, we are lowering our adjusted EBITDA guidance range to $340 million to $375 million.

我們也將 APS 的收入指引下調了 1,500 萬美元至 1.4 億美元至 1.5 億美元。目前綜合收入指引為 18 億至 19.8 億美元。鑑於這些變化，我們將調整後的 EBITDA 指引範圍降低至 3.4 億美元至 3.75 億美元。

While we are reducing our consolidated revenue and adjusted EBITDA guidance for the year, we continue to focus on generating positive free cash flow in 2024, but expect to generate less levered free cash flow than our previous $100 million target.

雖然我們正在減少今年的合併收入和調整後的 EBITDA 指導，但我們繼續專注於在 2024 年產生正的自由現金流，但預計產生的槓桿自由現金流將低於我們之前 1 億美元的目標。

In closing, I continue to have the highest degree of confidence in the entire Custom Truck team and our ability to navigate the current softness in the utility end market and to deliver profitable growth and long-term value to our shareholders.

最後，我仍然對整個客製化卡車團隊以及我們應對公用事業終端市場當前疲軟狀態以及為股東帶來獲利成長和長期價值的能力充滿信心。

With that, I'm going to turn it over to Chris to talk through the details of our first quarter (sic - second quarter) results.

有了這個，我將把它交給克里斯來討論我們第一季（原文如此 - 第二季）結果的細節。

Thanks, Ryan. For the first (sic - second) quarter, we generated $423 million of revenue, $134 million of adjusted gross profit, and $80 million of adjusted EBITDA. Relative to last year, our second quarter results were significantly impacted by a decline in average utilization of the rental fleet to just under 72% from almost 82% in Q2 of last year.

謝謝，瑞安。第一季（原文如此，第二季）的營收為 4.23 億美元，調整後毛利為 1.34 億美元，調整後 EBITDA 為 8,000 萬美元。與去年相比，我們第二季的業績受到租賃車隊平均利用率從去年第二季的近 82% 下降至略低於 72% 的顯著影響。

In addition, average OEC on rent in a quarter was $1.04 billion, down from just over $1.2 billion in Q2 of 2023. These declines reflect the impact of the slowdown in utility utilization that continued in the quarter, which Ryan mentioned.

此外，一個季度的平均租金 OEC 為 10.4 億美元，低於 2023 年第二季的略高於 12 億美元。瑞安提到，這些下降反映了本季公用事業利用率持續放緩的影響。

On rent yield was 40% for the quarter, essentially flat compared to Q2 of 2023. Given the trends in utilization and average OEC on rent, the ERS segment had $138 million of revenue in Q2, down from $169 million in Q2 of last year. While rental revenue was down marginally on a sequential basis, rental sales were up 15% sequentially, resulting in overall revenue growth for the ERS segment versus Q1.

該季度的租金收益率為 40%，與 2023 年第二季相比基本持平。考慮到利用率和平均租金 OEC 的趨勢，ERS 部門第二季的營收為 1.38 億美元，低於去年第二季的 1.69 億美元。雖然租賃收入較上季略有下降，但租賃銷售額較上季成長了 15%，導致 ERS ​​部門的整體收入較第一季成長。

Adjusted gross profit for ERS was $83 million for Q2, down from $97 million in Q2 of 2023. Adjusted gross margin was more than 60% in the quarter, up from just under 58% in the same period last year, largely because rental revenue, which has a higher margin associated with it than rental equipment sales, comprised that larger percentage of total ERS revenue in this quarter than in Q2 2023.

第二季 ERS ​​調整後毛利為 8,300 萬美元，低於 2023 年第二季的 9,700 萬美元。本季調整後毛利率超過 60%，高於去年同期的略低於 58%，這主要是因為租賃收入佔 ERS ​​總額的比例較高，而租賃收入的利潤率高於租賃設備銷售本季度的收入高於2023 年第二季。

We continue to invest strategically in our rental fleet and sell certain age assets in the quarter, and our fleet age improved slightly to 3.4 years in the quarter. Net rental CapEx in Q2 was $50 million. Our OEC in the rental fleet ended the quarter at $1.46 billion, down marginally versus the end of Q2 of last year, but up sequentially versus the end of Q1 this year.

我們繼續對租賃機隊進行策略性投資，並在本季出售某些機齡資產，本季我們的機隊機齡略有改善至 3.4 年。第二季的淨租賃資本支出為 5,000 萬美元。本季末，我們租賃機隊的 OEC 為 14.6 億美元，與去年第二季末相比略有下降，但與今年第一季末相比有所上升。

We expect to continue to invest in the fleet in 2024 but have lowered our expected growth CapEx given the trends we're seeing in the utility end market.

我們預計到 2024 年將繼續投資於機隊，但鑑於我們在公用事業終端市場看到的趨勢，我們降低了預期的成長資本支出。

In the TES segment, we sold $248 million of equipment in the quarter, down 1% compared to Q2 of last year, but up more than 3% sequentially from the last quarter. Gross margin in the segment was 17.1% for the quarter, down from Q2 2023, but in line with our expected margin range for the segment. TES backlog continued to moderate, ending the quarter at just under $480 million. Net orders improved sequentially versus Q1 of this year, and just under $190 million.

在TES領域，我們本季銷售了2.48億美元的設備，與去年第二季相比下降了1%，但比上季連續成長了3%以上。該部門本季的毛利率為 17.1%，低於 2023 年第二季度，但符合我們對該部門的預期利潤範圍。TES 積壓持續放緩，本季結束時積壓金額略低於 4.8 億美元。淨訂單較今年第一季環比有所改善，略低於 1.9 億美元。

Strong levels of production and new equipment sales in the quarter allowed us to make headway towards reducing our backlog to a more normalized level, which currently stands in more than five and a half months of LTM TES sales. This is down from a peak of more than 12 months in early 2023, and consistent with our targeted historical average of four to six months.

本季強勁的生產和新設備銷售水準使我們能夠在將積壓訂單減少到更正常化的水平方面取得進展，目前 LTM TES 銷售量已超過五個半月。這低於 2023 年初超過 12 個月的峰值，並且與我們四到六個月的歷史平均目標一致。

Our strong and longstanding relationships with our chassis, body and attachment vendors continue to be an important driver of our record TES production. Our intentional inventory build throughout 2023 and into 2024 positions us well to meet our production, fleet growth, and sales goals for 2024 and beyond. Our APS business posted revenue of $37 million in the quarter, down slightly from Q2 of last year.

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的 TES 產量的重要推動力。我們有意在 2023 年和 2024 年建立庫存，使我們能夠很好地實現 2024 年及以後的生產、機隊成長和銷售目標。我們的 APS 業務本季營收為 3,700 萬美元，比去年第二季略有下降。

Adjusted gross profit margin in this segment was 22% for Q2. Overall, in Q2 the APS business was impacted by a decrease in rentals of tools and accessories, which were affected by the previously discussed utility end market softness, as well as higher material costs.

第二季該部門調整後毛利率為 22%。總體而言，第二季的 APS 業務受到工具和配件租金下降的影響，而工具和配件租金下降則受到先前討論的公用事業終端市場疲軟以及材料成本上漲的影響。

Borrowings under our ABL at the end of Q1 were $587 million, an increase of $35 million versus the end of last quarter, primarily as a result of the increase in inventory and the lower than anticipated adjusted EBITDA performance in the quarter. We expect to begin to see a meaningful reduction in inventory levels at the end of this fiscal year and into next year, which should contribute to reducing the borrowings on the ABL.

第一季末 ABL 下的借款為 5.87 億美元，比上季末增加 3,500 萬美元，主要是由於庫存增加以及本季調整後 EBITDA 業績低於預期。我們預計，從本財年末到明年，庫存水準將開始大幅下降，這將有助於減少 ABL 的借款。

As of June 30, we had approximately $160 million available and $328 million of suppressed availability under the ABL with the ability to upsize the facility. With LTM adjusted EBITDA of $376 million, we finished Q2 with net leverage of 4.1 times. Achieving net leverage below 3 times remains a primary and important goal.

截至 6 月 30 日，我們在 ABL 下擁有約 1.6 億美元的可用資金和 3.28 億美元的抑制可用資金，有能力擴大設施規模。LTM 調整後 EBITDA 為 3.76 億美元，第二季結束時，我們的淨槓桿率為 4.1 倍。實現淨槓桿率低於3倍仍是首要且重要的目標。

With respect to our guidance, given the current conditions in the utility markets, we continue to expect TES to be the primary growth driver for 2024. We believe our ERS segment will continue to experience near-term pressure and demand in the utility market as a result of regulatory approval delays and financing and supply chain factors affecting the timing of job starts.

根據我們的指引，考慮到公用事業市場的當前狀況，我們仍然預期 TES 將成為 2024 年的主要成長動力。我們認為，由於監管審批延遲以及影響工作開始時間的融資和供應鏈因素，我們的 ERS ​​部門將繼續承受公用事業市場的近期壓力和需求。

These headwinds in our utility end markets are driving lower OEC on rent in our core ERS segment that will continue for the remainder of the year. As a result, we are lowering our ERS revenue guidance by $70 million. We also expect our rental fleet based on OEC to be flat this year versus the low single digit growth we discussed on last quarter's call.

我們公用事業終端市場的這些不利因素正在導致我們核心 ERS ​​細分市場的租金 OEC 下降，這種情況將在今年剩餘時間內持續下去。因此，我們將 ERS ​​收入指引下調了 7,000 萬美元。我們也預計今年基於 OEC 的租賃機隊將持平，而我們在上季度電話會議中討論的低個位數成長。

Regarding TES, supply chain improvements and healthy inventory and backlog levels continue to improve our ability to produce and deliver more units in 2024 than in 2023.

關於 TES，供應鏈的改進以及健康的庫存和積壓水準繼續提高我們在 2024 年生產和交付比 2023 年更多單位的能力。

However, we are experiencing a bit of a reduction in demand from our smaller regional customers, who are choosing to delay purchase decisions until later this year as a result of their expectation of lower interest rates. As a result, we are reducing our 2024 revenue guidance for TES by $65 million, which still reflects another year of double-digit revenue growth in the middle of the range.

然而，我們的小型區域客戶的需求減少，由於預期利率較低，他們選擇將購買決定推遲到今年稍後。因此，我們將 TES 2024 年的收入指引減少了 6,500 萬美元，這仍然反映出又一年在該範圍的中間實現了兩位數的收入成長。

We are also reducing our revenue guidance for our APS segment by $15 million, reflecting the softness in the utility end market.

我們還將 APS 部門的收入指導減少了 1500 萬美元，反映出公用事業終端市場的疲軟。

While this all combines to reduce our consolidated revenue and adjusted EBITDA guidance for the year, we continue to focus on generating positive levered free cash flow this year but expect it to be lower than the a $100 million we detailed in our last call.

雖然這一切綜合起來減少了我們今年的綜合收入和調整後的EBITDA 指導，但我們今年繼續專注於產生正的槓桿自由現金流，但預計將低於我們在上次電話會議中詳細說明的1億美元。

Updated guidance for our segments is as follows: we expect ERS revenue of between $610 million and $640 million; TES revenue in the range of $1.05 billion to $1.19 billion; and APS revenue of between $140 million and $150 million. This results in total revenue in the range of $1.8 billion to $1.98 billion. We are projecting adjusted EBITDA in the range of $340 million to $375 million.

我們部門的最新指導如下：我們預計 ERS ​​收入在 6.1 億美元至 6.4 億美元之間； TES收入在10.5億美元至11.9億美元之間； APS 收入介於 1.4 億至 1.5 億美元之間。這導致總收入在 18 億美元至 19.8 億美元之間。我們預計調整後 EBITDA 將在 3.4 億至 3.75 億美元之間。

In closing, I want to echo Ryan's comments regarding our continued strong business outlook. Despite some temporary demand weakness in certain utility markets, we continue to be optimistic about the long-term demand drivers in our industry and our ability to return to strong revenue and adjusted EBITDA growth next year.

最後，我想回應 Ryan 關於我們持續強勁的業務前景的評論。儘管某些公用事業市場出現暫時的需求疲軟，但我們仍然對我們行業的長期需求驅動因素以及我們明年恢復強勁收入和調整後 EBITDA 成長的能力持樂觀態度。

With that, I will turn it over to the operator to open the lines for questions.

這樣，我會將其轉交給接線員以打開提問線路。

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions)

女士們、先生們，我們現在開始問答環節。（操作員說明）

Justin Hauke, Robert W. Baird.

賈斯汀·豪克，羅伯特·W·貝爾德。

Great. Good afternoon guys. I appreciate taking the call here. I guess not overly surprising to see the slowness given what some of your customers have been reporting and some utilities have been saying about the ongoing weakness in 2Q.

偉大的。各位下午好。我很高興在這裡接聽電話。考慮到一些客戶的報告和一些公用事業公司對第二季度持續疲軟的說法，我認為看到這種緩慢並不太令人驚訝。

But I would be curious if you could elaborate a little bit more on the anecdotal comments you gave about some of your core utility T&D markets coming back so far in 3Q. Just a little more color on that. Is it geographic-based? What's driving that? Just anything you can give us on that?

但我很好奇您能否詳細說明您對第三季迄今為止一些核心公用事業 T&D 市場回歸的軼事評論。只是再多一點顏色而已。是基於地理的嗎？是什麼推動了這一點？您能給我們什麼嗎？

Yeah, happy to do it and thanks for the question, Justin. I'll give you may be, kind of, an initial cut from what we're seeing already in July and then maybe give you some more commentary too around it, but we're seeing, for us, OEC on rent is up just over $30 million already in July.

是的，很高興這樣做，謝謝你的提問，賈斯汀。我會給你一些我們在 7 月所看到的初步削減，然後可能會給你一些更多的評論，但我們看到，對我們來說，租金的 OEC 只上漲了7月份已經超過3000萬美元。

So, we are seeing it come back and it's coming back primarily in utility. So, I think that's where we're starting to see some positive trends there. So, I think that's important, which obviously improves utilization. So, utilization is up by about 200 basis points already. So, I think that's some of kind of the immediate facts that we're seeing.

所以，我們看到它回來了，而且主要是在實用性上回來了。所以，我認為這就是我們開始看到一些正面趨勢的地方。所以，我認為這很重要，這明顯提高了利用率。因此，利用率已經上升了約 200 個基點。所以，我認為這是我們所看到的一些直接事實。

And then when we really segregate transmission versus distribution -- Justin, transmission, what we're seeing for the back half is we're seeing a lot more quoting activity now that's starting to happen, which is a good leading indicator. Like for us, seems to be consistent with what we're watching from an expected line mile start standpoint as well on the transmission side.

然後，當我們真正將傳輸與分配分開時 - 賈斯汀，傳輸，我們在後半段看到的是，我們看到更多的報價活動現在開始發生，這是一個很好的領先指標。就像我們一樣，這似乎與我們從預期的線路英里起點以及傳輸方面觀察到的情況一致。

So, I think that's where we have, I'd say, a favorable view on the back half and certainly a positive view heading into 2025 on the transmission side.

因此，我認為這就是我們對下半年的樂觀看法，當然對進入 2025 年變速箱方面也持正面看法。

Distribution is a little bit of a different story. Distribution is where we're saying that it's -- as we said in our comments up front that it seems to be normalizing. But that's where there's been a bit of a tick down, which really is seems to be consistent with our conversations now with IOUs as well as they're thinking about how they're planning their O&M spend and their CapEx spend.

分佈情況則略有不同。正如我們在前面的評論中所說，分配是我們所說的，它似乎正在正常化。但這就是出現了一些下降的地方，這似乎確實與我們現在與 IOU 的對話一致，以及他們正在考慮如何規劃其營運和維護支出以及資本支出支出。

And then the impact, the other big piece for us to understand is the impact, they've experienced from inflation on some of these core products, whether it's transformers or conductor or even the cost of third-party labor for them.

然後是影響，我們要了解的另一個重要部分是他們從通貨膨脹中經歷的一些核心產品的影響，無論是變壓器還是導體，甚至是第三方勞動力的成本。

So, hopefully that helps and happy to go into more detail, if we can provide anything else.

因此，希望這對您有所幫助，並且如果我們可以提供其他任何信息，我們很樂意提供更多詳細信息。

Yeah, I mean, what's the lead-time to turn around an equipment rental on some of this work? I mean, they call you up and it's there next week? Do they need a month notice? I mean, just trying to see what that increase in activity, how long that trickles into actually getting fleet out the door?

是的，我的意思是，扭轉部分工作的設備租賃需要多長時間？我的意思是，他們會打電話給你，下週就到了？他們需要一個月通知嗎？我的意思是，只是想看看活動增加了多少，這需要多長時間才能真正讓車隊出去？

Yes, it always depends is the answer. There we have some activity that's immediate that we're quoting and shipping now, which is why I made that comment about OEC on rent that's already up so far in July. And then there's some that is still planning for still later this fall. So, it's a mix, but we're starting to see some of the pickup there already.

是的，這總是取決於答案。我們有一些立即報價和發貨的活動，這就是為什麼我對 7 月迄今為止已經上漲的租金發表有關 OEC 的評論。還有一些仍在計劃於今年秋天晚些時候進行。所以，這是一個混合體，但我們已經開始看到一些回升。

Okay. And then, I guess, the comment about the leveraged free cash flow being less than $100 million that you guys were talking about before. I know previously the year-end target for leverage was around 3.5 times with the lower cash flow and the lower EBITDA contribution here.

好的。然後，我想，你們之前談論的關於槓桿自由現金流低於 1 億美元的評論。我知道之前的年終槓桿目標約為 3.5 倍，現金流量較低，EBITDA 貢獻也較低。

What are you thinking, I mean, that way we'd be able to back in, I guess, to what you're thinking for pre-cash flow. What do you think you had the balance sheet this year?

你在想什麼，我的意思是，這樣我們就能夠回到你對預現金流的想法。您認為今年的資產負債表是多少​​？

Yeah. Hi, Justin. It's Chris. We're not expecting it to meaningfully move versus where we are. We do think, as we get towards year end, we're going to start to see some of that inventory start to turn. We've obviously been focusing a lot on our incoming receipts.

是的。嗨，賈斯汀。是克里斯。我們並不期望它會與我們目前的情況相比發生有意義的變化。我們確實認為，隨著年底的臨近，我們將開始看到部分庫存開始週轉。顯然，我們非常關注我們的收據。

So, we should start to see the impact of some of that net working capital unlock at the end of the year, and then certainly more significantly next year. But I wouldn't model any significant reduction from the current leverage levels. There'll be a modest decrease, but which certainly won't get to the 3.5 times.

因此，我們應該開始看到年底釋放的部分淨營運資本的影響，明年肯定會更加顯著。但我不會對當前槓桿水平的任何顯著下降進行建模。會有小幅下降，但肯定不會達到3.5倍。

And just if I could squeeze it in one more quick one. It looked like in the 10-Q, you guys had a new floor financing plan with Ford. Give a little more detail on that?

如果我能再快點把它塞進去就好了。看起來在 10-Q 中，你們與福特有一個新的融資計劃。能提供更多細節嗎？

Yeah, it's a dedicated line that we have for Ford just to have that flexibility. In terms of favorable, I believe there's a free floor planning period, which I think is described in the Q.

是的，我們為福特提供了一條專用生產線，就是為了擁有這種彈性。就優惠而言，我相信有一個免費的樓層規劃期，我認為這在問題中有所描述。

And originally it was a $30 million line, and I think we just recently increased that I think to $42 million. So, it's just to have additional flexibility. Historically, we had done it on the PNC line, we just separated it out into a dedicated Ford line.

最初的額度是 3000 萬美元，我想我們最近剛剛將其增加到 4200 萬美元。因此，這只是為了獲得額外的靈活性。從歷史上看，我們是在 PNC 生產線上完成的，我們只是將其分成專用的福特生產線。

Okay, all right. Good to know. I will jump back in the queue, let anybody ask question and I might jump back after. Thank you.

好吧，好吧。很高興知道。我會跳回到隊列中，讓任何人提問，然後我可能會跳回來。謝謝。

Thanks Justin.

謝謝賈斯汀。

Tami Zakaria, JPMorgan.

塔米·扎卡里亞，摩根大通。

Hey, thank you so much for the time. So, a couple of questions. The first one is, I think your gross rental CapEx is expected to be down this year given the demand weakness. And so as we think about next year, should we model more of a catch up -- So, bigger than usual CapEx or, basically, I'm trying to understand how should we think about CapEx in 2025 if your expectation right now is that demand is eventually going to rebound?

嘿，非常感謝您抽出時間。那麼，有幾個問題。第一個是，鑑於需求疲軟，我認為今年的總租金資本支出預計會下降。因此，當我們考慮明年時，我們是否應該更多地進行追趕——因此，比平時更大的資本支出，或者基本上，我試圖了解如果您現在的期望是，我們應該如何考慮2025 年的資本支出需求最終會反彈嗎？

Yes, Tami, it's good to talk to you, and it's a great question. And it is one of the beauties of the models that we can quickly pivot, right. So, when things are coming slower than we expected, like what we've talked about, we can hold back on deploying some of that CapEx.

是的，塔米，很高興與你交談，這是一個很好的問題。我們可以快速調整模型，這是模型的優點之一，對吧。因此，當事情進展慢於我們的預期時，就像我們所說的那樣，我們可以推遲部署一些資本支出。

We haven't provided guidance for 2025 yet. I would expect it would be a returning to normal where we talked -- at some of the levels that we've talked about in the past. But if demand comes back faster, we certainly can react to that and grow the fleet more quickly. But we haven't provided guidance, but would expect something along those lines would be about where we settle for 2025.

我們尚未提供 2025 年的指導。我預計我們談話的情況將會恢復正常——在我們過去討論過的某些層面上。但如果需求恢復得更快，我們當然可以對此做出反應並更快地擴大機隊規模。但我們尚未提供指導，但預計我們將在 2025 年達成一致。

Understood. That is helpful. And then quickly, I'm sorry if I missed it, but rental rate growth, can you speak to what you're expecting for rental rate growth through the rest of the year and what it was in the second quarter?

明白了。這很有幫助。然後很快，如果我錯過了，我很抱歉，但是租金增長，你能談談你對今年剩餘時間的租金增長以及第二季度的租金增長的預期嗎？

Yeah, in terms of our OEC on rent yield, it's been in that 40% to 41% range. I think going back four or five quarters now, I wouldn't expect it to materially be different. So, if you're modeling it, I think it's going to be in line with where it's been.

是的，就我們的 OEC 租金收益率而言，它一直在 40% 到 41% 的範圍內。我認為現在回顧四、五個季度，我不認為情況會發生重大變化。所以，如果你要對它進行建模，我認為它會與它原來的位置保持一致。

Yeah, that’s helpful. But I was more wondering about the rental rate inflation, that's what I'm trying to understand. Like did rental rates go up in the quarter?

是的，這很有幫助。但我更想知道租金上漲，這就是我想要理解的。例如本季租金上漲了嗎？

No, they've been relatively flat for the past few quarters.

不，過去幾個季度它們的表現相對持平。

And is it expected to be flat for the remainder of the year?

預計今年剩餘時間會持平嗎？

I wouldn't expect it to materially move, no.

我不希望它發生實質性的變化，不。

Got it. Okay. Thank you.

知道了。好的。謝謝。

Michael Shlisky, D.A. Davidson.

邁克爾·什利斯基，D.A.戴維森。

Hi, good afternoon. Hi there, thanks for taking my questions. You mentioned in your release and in your comments that some customers are waiting for the election to make any decisions. I think it was mainly on purchasing.

嗨，下午好。您好，感謝您回答我的問題。您在新聞稿和評論中提到，有些客戶正在等待選舉做出任何決定。我認為主要是採購。

Does your fourth quarter or your first quarter 2025 results depend on who wins? And is there a real difference you think in the outlook for T&D maintenance and activity with either party in the White House?

2025 年第四季或第一季的業績取決於誰獲勝？您認為與白宮任何一方在 T&D 維護和活動的前景方面是否存在真正的差異？

Mike, good to talk to you. Certainly we're not making any assumption about who wins. I think the comment was really around two things there as expected rate cuts have not occurred. I think a lot of our smaller customers are waiting on those rate decreases to happen and therefore expect their borrowing cost to be down. So, I think that's a piece.

麥克，很高興與你交談。當然，我們不會對誰獲勝做出任何假設。我認為這一評論實際上是圍繞著兩件事展開的，因為預期的降息並未發生。我認為我們的許多小客戶正在等待降息的發生，因此預計他們的借貸成本會下降。所以，我認為這是一個片段。

And then we are hearing that from those same customers who it'd say the smaller contractors that we service. I think they're just waiting on some certainty around the election. Certainly, no strong view one way or the other with regards to results there, but I think there's just certainty around it.

然後我們從那些說我們服務的小型承包商的客戶那裡聽到了這樣的說法。我認為他們只是在等待選舉的確定性。當然，對於那裡的結果沒有強烈的看法，但我認為這是確定的。

And two things I'd point you to typically the fourth quarter is always our strongest sales quarter, so that is normal for us. And certainly, when we look back on prior election years, that seems to have been what's happened where we've seen a meaningful uptick in the fourth quarter after the election. So, that's what it's based on, not anything about who might win given the current environment.

我想向您指出兩件事，通常第四季度始終是我們銷售最強勁的季度，所以這對我們來說很正常。當然，當我們回顧之前的選舉年時，這似乎就是發生的情況，我們在選舉後的第四季度看到了有意義的上升。所以，這就是它的基礎，而不是關於在當前環境下誰可能獲勝的任何內容。

Got it. Also, can you walk us through the CapEx plan and the idea of potentially holding off on investing for some period of time? If you haven't had things out in the field, on rent that haven't been used as much, I'd be curious why you want to go half a year or a year older in your asset base if there's no real difference in how it might look or perform because it hasn't been used?

知道了。另外，您能否向我們介紹一下資本支出計劃以及可能推遲一段時間投資的想法？如果你還沒有在現場有東西，租金也沒有被使用太多，我很好奇為什麼你想在你的資產基礎上增加半年或一年，如果沒有真正的區別的話由於尚未使用，它的外觀或性能如何？

Yeah, I think the thought on holding back on some CapEx is for growth CapEx there Mike. So, you're right, we've been continuing to keep the age of the fleet about where it's been. I think the age of the fleet today is just under three and a half years, so it's continuing to hold there. It's where will flex from a CapEx perspective is on growth CapEx. And that's what the comment was about.

是的，我認為抑制一些資本支出的想法是為了成長資本支出，麥克。所以，你是對的，我們一直在繼續保持艦隊的年齡。我認為今天機隊的年齡還不到三年半，所以它會繼續保持在那裡。從資本支出的角度來看，這就是成長資本支出。這就是評論的內容。

If we're not seeing a meaningful uptick in utility demand, we won't invest more heavily there to grow that part of the segment. And so there'll still be some swapping or some replacement that does happen in that segment.

如果我們沒有看到公用事業需求顯著上升，我們就不會增加投資來發展該領域的這一部分。因此，該細分市場中仍會發生一些交換或替換。

And then where there are opportunities we will continue to invest to grow. Where we're seeing that now is really around some of the specialty vocational trucks. So, that's been a more meaningful portion of the additions that we've made this year, which I think is an encouraging sign as you think about 2025 and beyond.

然後，只要有機會，我們就會繼續投資以實現成長。我們現在看到的確實是一些特殊職業卡車。因此，這是我們今年添加的內容中更有意義的部分，我認為當您考慮 2025 年及以後時，這是一個令人鼓舞的跡象。

Okay. And then maybe lastly, and I'm sorry for the very, very basic question, but I think I'd like to hear it from you on an earnings call here. Is there a world where data centers can get all the power that they need, EVs can get all the power that they need given the growth rates that are expected of these two areas in the future and the AI as well as a corollary there?

好的。也許最後，我對這個非常非常基本的問題感到抱歉，但我想我想在這裡的財報電話會議上聽到你的回答。考慮到未來這兩個領域的預期成長率以及人工智慧及其推論，是否存在一個資料中心可以獲得所需的所有電力、電動車可以獲得所需的所有電力的世界？

Is there a world in which all these things can get the power they need without using Custom Truck at a much higher level than they are today, either utilization or more fleet assets?

是否有一個世界，所有這些東西都可以在不使用比現在更高水平的定制卡車的情況下獲得所需的動力，無論是利用率還是更多的車隊資產？

Not the way we see it, Mike, for sure. No, I think to me it's the unlock some of those things that I think will be a great tailwind for our business. We believe that they will come, certainly all conversations point that way, but we are just waiting for those things to happen which is both an increase in the transmission line mile complete that needs to occur.

麥克，當然不是我們所看到的那樣。不，我認為對我來說，這是解鎖一些我認為將為我們業務帶來巨大推動力的東西。我們相信它們會來，當然所有的談話都指向這個方向，但我們只是在等待這些事情發生，這既是需要發生的輸電線路里程的增加。

And then obviously the additional investment as you're thinking about some of these other things like AI data centers coming online and obviously electrification. So, those are the great tailwinds.

然後顯然是額外的投資，因為你正在考慮其他一些事情，例如人工智慧資料中心的上線和顯然的電氣化。所以，這些都是巨大的推動力。

We know that we will be able to take advantage of them. It's just when they come and as we've said, we're seeing it now start to build in the latter half of this year and feel optimistic about where 2025 will be for both sides, for both the rental fleet and for the sales side of our business.

我們知道我們將能夠利用它們。就在它們到來的時候，正如我們所說，我們現在看到它在今年下半年開始建設，並對 2025 年租賃車隊和銷售雙方的情況感到樂觀我們的業務。

Okay. Thanks. I'll pass it along.

好的。謝謝。我會把它傳遞下去。

Brian Brophy, Stifel

布萊恩布羅菲、斯蒂菲爾

Yes, thanks. Good afternoon. Appreciate you taking my question here. So, just on TES, gross margins were a little bit lower than a year ago. Is there anything to call out specifically there or is this just in the range of normal? And then how should we be thinking about those margins here in the back half?

是的，謝謝。午安.感謝您在這裡提出我的問題。因此，僅就 TES 而言，毛利率略低於一年前。有什麼需要特別注意的嗎？那我們該如何考慮後半部的利潤呢？

Yes, Brian, this Chris Eperjesy. We've guided coming into the year in that 16% to 18% range, and I know that's a broad range, but for us, this right within in line with expectations. Q1 and then also Q2 of last year were two of the best quarters we've ever had. We wouldn't model anything different than where we've been at in that 16.5% to 18% range is going to be pretty consistent.

是的，布萊恩，這個克里斯·埃佩爾傑西。我們預計今年的成長率將在 16% 到 18% 的範圍內，我知道這是一個很大的範圍，但對我們來說，這完全符合預期。去年的第一季和第二季是我們經歷過的最好的兩個季度。我們不會對 16.5% 到 18% 範圍內的情況進行任何不同的建模，這將非常一致。

Okay. Thank you. That’s helpful. And then more of a housekeeping modeling item. The equipment sales within ERS obviously have been volatile here the past couple of quarters, how should we be thinking about revenue there in the back half?

好的。謝謝。這很有幫助。然後更多的是一個家務建模專案。過去幾個季度，ERS 內的設備銷售顯然波動很大，我們該如何考慮下半年的收入？

It is the most volatile of our segments and within the ERS segment is the rental asset sales, just given that there's RPO sales, which are the customer's right, to purchase a unit that's on rent, and then there's other assets that get sold off of rent.

這是我們的細分市場中波動性最大的部分，在 ERS ​​細分市場中是租賃資產銷售，考慮到有 RPO 銷售，這是客戶購買出租單位的權利，然後還有其他資產被出售租。

And then we also have other rental assets sales that we pull out of the fleet. And so it does, it is typically the hardest one to predict. And then accounting -- there's accounting convention, there was sales type lease accounting that can somewhat change those figures that makes it difficult to predict.

然後我們也從機隊中撤出其他租賃資產銷售。事實確實如此，這通常是最難預測的。然後是會計——有會計慣例，有銷售類型的租賃會計，它們可以在某種程度上改變那些難以預測的數字。

Having said all that certainly the first two quarters were unusually low. If you go back and look at what we've done over the past eight, nine, 10 quarters, I think we've averaged in a quarter around $60 million a quarter, and I think the last two quarters have averaged about $35 million. So, we would expect to see some meaningful growth in the second half of the year. I hope that answered your question.

話雖如此，前兩季的業績確實異常低。如果你回頭看看我們在過去八、九、十個季度所做的事情，我認為我們每個季度的平均收入約為 6000 萬美元，我認為過去兩個季度的平均收入約為 3500 萬美元。因此，我們預計下半年會出現一些有意義的成長。我希望這回答了你的問題。

Yes, and the only thing I'll add, Brian, too is the fourth quarter is normally the biggest and there's a lot of different reasons for that, but that historically has been the case. So, some pickup in the third quarter and then a bigger lift in the fourth quarter would be more normal.

是的，布萊恩，我唯一要補充的是，第四季通常是最大的，這有很多不同的原因，但歷史上一直是這樣。因此，第三季度有所回升，然後第四季度出現更大的提升將更為正常。

Appreciate it. Very helpful. I will pass it on. Thanks.

欣賞它。非常有幫助。我會把它傳遞下去。謝謝。

Nicole DeBlase, Deutsche Bank.

妮可‧德布拉斯 (Nicole DeBlase)，德意志銀行。

Yes, thanks. Good afternoon guys.

是的，謝謝。各位下午好。

Good afternoon Nicole.

午安妮可。

Maybe just starting with the revised guidance, does it still embed a half-on-half step up in EBITDA in the second half? So, just trying to get a sense of to what extent you guys feel like you've de-risked the guidance for the push outs that you've seen in utility relative to embedding a step up since you've seen a recovery in July?

也許從修訂後的指引開始，下半年的 EBITDA 是否仍將實現一半的成長？因此，只是想了解你們在多大程度上感覺自己已經降低了實用性推出指導的風險，相對於自 7 月看到復甦以來嵌入的升級？

Yes, we feel comfortable with the range. Obviously, there's different things have to happen in terms of getting to the top of the range. We talked about the fact that we've seen pretty meaningful increase in OEC on rent in the month of July. I think we're up close to $35 million, 200 basis points on utilization. You'd have to see a trend like that continue to get to the high end of our range.

是的，我們對這個系列感到滿意。顯然，要達到最高水平，必須發生不同的事情。我們談到了這樣一個事實，即我們看到 7 月的租金 OEC 出現了相當大的增長。我認為我們的利用率接近 3500 萬美元，提高了 200 個基點。您必須看到這樣的趨勢繼續達到我們範圍的高端。

Certainly that's not what we're modeling internally, but that's what it would take to get there. As Ryan just touched on, Q4 is always our strongest quarter. I think the last three years, it's ranged from just under 20% to almost 40% higher than any other quarter or average of the first three quarters. We would expect to see a similar phenomenon this year as well.

當然，這不是我們內部建模的內容，但這就是實現這一目標所需要的。正如瑞安剛剛提到的，第四季始終是我們最強勁的季度。我認為過去三年，它比任何其他季度或前三個季度的平均值高出略低於 20% 到近 40%。我們預計今年也會看到類似的現象。

I think one difference is if we get past the election, if there are some rate cuts, if some of the regulatory and funding issues are solved, clearly we have the inventory, which would've been a constraint in the past, just given some supply chain issues that we will not have now, including finished products. And so that also could be a potential tailwind as we look at being able to get closer to the higher end of the range.

我認為一個區別是，如果我們通過了選舉，如果有一些降息，如果一些監管和融資問題得到解決，顯然我們有庫存，這在過去會是一個限制，只是考慮到一些我們現在不會有供應鏈問題，包括成品。因此，當我們希望能夠更接近該範圍的高端時，這也可能是一個潛在的推動力。

So, if I could just finish that off, like does that mean that the low end of the range doesn't really embed a recovery at all and it's just a normal half-on-half seasonal EBITDA uplift? Am I interpreting that correctly?

那麼，如果我能結束這個問題，這是否意味著該範圍的低端根本沒有真正體現出復甦，而這只是正常的半季節性 EBITDA 增長？我的解釋正確嗎？

Yes, I mean, I think, yes, I think in terms of magnitude, certainly the seasonal fourth quarter strength is going to be a part of it. We are expecting to see sequential improvement in Q3 although somewhat moderate, low-to-mid single-digit growth on revenue and EBITDA in the third quarter. And so a lot of the growth that we're expecting is going to come in the fourth quarter.

是的，我的意思是，我認為，是的，我認為就規模而言，第四季度的季節性強勁肯定將成為其中的一部分。我們預計第三季將出現環比改善，儘管第三季營收和 EBITDA 的成長較為溫和，為中低個位數成長。因此，我們預期的大部分成長將出現在第四季。

And then the OEC on rent, we are expecting to see some recovery. It's just the magnitude. So, the lower end would be a much more modest recovery on OEC on rent and the higher end would be a more accelerated trend we've seen in July.

然後是租金方面的 OEC，我們預計會看到一些復甦。這只是規模。因此，較低端將是 OEC 租金的溫和復甦，而較高端將是我們在 7 月看到的更加速的趨勢。

Okay, got it. Thank you. That’s helpful. And then just on the APS business there, the growth margins contracted quite a bit year-on-year, definitely came in lower than our expectations. Anything going on there and how to think about the rest of the year?

好的，明白了。謝謝。這很有幫助。然後就 APS 業務而言，成長率同比大幅收縮，肯定低於我們的預期。那裡發生了什麼以及如何思考今年剩下的時間？

I think in our comments, we talked about the fact that rental was down, we're continuing to prioritize the rental fleet over third-party service. And so both of those would have a negative impact on margins. There is some cost increases that we're seeing there as well.

我認為在我們的評論中，我們談到了租金下降的事實，我們將繼續優先考慮租賃車隊而不是第三方服務。因此，這兩者都會對利潤率產生負面影響。我們也看到了一些成本增加。

So, I wouldn't model anything significant there. I think we're going to see some of the same of what we've seen in the first half. There could be a slight improvement in the second half.

所以，我不會在那裡建模任何重要的東西。我認為我們將會看到一些與上半場相同的情況。下半年可能會略有改善。

And Nicole, we probably should have even guided a little bit better there. But part of the APS business is a block rental business, which is highly correlated with transmission, so which is obviously very high from a gross margin percentage standpoint.

妮可，我們可能應該在那裡提供更好的指導。但APS業務有一部分是塊租賃業務，與輸電相關性很高，從毛利率來看顯然很高。

So, that's a portion of that business that has been weaker in the first half of the year, so, which is impacting margin there as well.

因此，這是該業務的一部分在今年上半年表現疲軟，因此，這也影響了那裡的利潤率。

Got it. Thanks. I'll pass it on.

知道了。謝謝。我會把它傳遞下去。

I'll now turn the call back over to Ryan McMonagle for closing remarks.

現在，我將把電話轉回瑞安·麥克莫納格爾 (Ryan McMonagle) 作結束語。

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

偉大的。感謝大家今天抽出時間以及對客製化卡車的興趣。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。再次感謝您，祝您晚上愉快。

Ladies and gentlemen, this concludes today's call. Thank you all for joining and you may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝大家的加入，現在可以斷開連線了。