CUSTOM TRUCK ONE SOURCE INC (NYSE:CTOS) Reports Mixed Q3 2025 Results Amid Strong Rental Demand

CUSTOM TRUCK ONE SOURCE INC (NYSE:CTOS) Reports Mixed Q3 2025 Results Amid Strong Rental Demand

Custom Truck One Source Inc (CTOS) unveiled its financial results for the third quarter of 2025, presenting a complex picture of operational strength overshadowed by a significant market disappointment. The company posted revenue and earnings that fell short of Wall Street's expectations, triggering a sharp decline in its stock price, even as it reaffirmed its full-year financial guidance.

Q3 Performance Versus Estimates

The company's performance in the quarter was marked by a clear divergence from analyst forecasts. While the business demonstrated underlying growth, it was not enough to meet the market's anticipated pace.

• Revenue: CTOS reported total revenue of $482.1 million for the quarter. This represents a 7.8% increase compared to the $447.2 million generated in the same period last year. However, this figure fell short of the analyst consensus estimate of approximately $502.0 million.
• Earnings Per Share (EPS): The company reported a GAAP loss of $0.03 per share. This was in line with the consensus estimate, which also projected a loss of $0.03 per share.

The market's reaction was swift and negative, with the stock dropping over 13% in after-hours trading following the earnings release. This sell-off appears to be a direct response to the revenue miss, as investors penalized the company for failing to meet top-line expectations despite the year-over-year growth.

Operational Highlights and Segment Analysis

Beyond the headline figures, the earnings report highlighted several areas of robust operational performance, particularly within the company's core rental business.

• Equipment Rental Solutions (ERS): This segment was the standout performer, with rental revenue surging 17.7% year-over-year to $124.0 million. This growth was driven by a significant increase in fleet utilization, which reached 79.3%—the highest level in over two years—and a 16.6% increase in the average original equipment cost (OEC) on rent.
• Truck and Equipment Sales (TES): Revenue in this segment grew 6.0% to $275.4 million, though gross profit saw a slight decline. The company noted strong intra-quarter order flow, especially from local and regional customers, with signed orders up 30% year-over-year.
• Profitability Metrics: Adjusted EBITDA, a key measure of operational profitability, saw substantial growth, increasing 19.6% to $96.0 million. This was largely driven by the higher rental revenue and lower interest expenses.

2025 Outlook and Analyst Comparison

Despite the Q3 revenue shortfall, management expressed confidence in the full-year trajectory by reaffirming its 2025 guidance. The company's outlook appears to be broadly aligned with, though slightly more conservative than, the market's expectations.

The company maintained its consolidated revenue guidance range of $1.97 billion to $2.06 billion. The midpoint of this range, $2.02 billion, is very close to the analyst consensus estimate of $2.047 billion for the full year. Management indicated it expects to hit the higher end of its guidance for the ERS segment but the lower end for the TES segment, citing macroeconomic uncertainty and high interest rates affecting smaller customers.

Conclusion

Custom Truck One Source's third-quarter results paint a tale of two stories. Operationally, the company is showing strong momentum, particularly in its rental division, which is benefiting from robust demand in utility and infrastructure markets. Financially, however, the failure to meet revenue targets for the quarter has dampened investor sentiment, as evidenced by the sharp stock decline. The reaffirmation of full-year guidance suggests management believes the Q3 miss is a temporary setback rather than a change in the fundamental growth story, positioning the company to potentially capitalize on long-term infrastructure spending trends.

For a detailed breakdown of future earnings estimates and historical performance, you can review the earnings and estimates page for CTOS.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.