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| Statement |
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| 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 |
| 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 revenue ever |
| But we're still seeing really good order flow |
| I'm very proud of the efforts of our team to deliver another record setting year |
| So we are still seeing very good order volume |
| 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 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 |
| We're really happy with that |
| And that certainly is an area that we're seeing continued really strong demand, Scott, 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 |
| 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 |
| 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 |
| 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 create significant demand momentum in the sector |
| 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 |
| Our 2024 outlook reflects the long-term strength of our end markets and the continued focus of our teams to profitably grow our business |
| Regarding TES supply chain improvements, healthy inventory levels exiting 2023 and historically high backlog levels will continue to improve our ability to produce and deliver even more units in 2024 than we did in 2023 |
| 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 |
| As I mentioned previously, we are confident that the tailwind 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 offering and our ability to meet our customers rental and sales needs uniquely positioned Custom Truck to capitalize on the future tailwinds created by this sustained demand, particularly as these transmission projects advance |
| We believe the ERS outlook from our rental customers for long-term demand and growth remains strong |
| We believe TES will continue to benefit from good demand and our strong backlog entering the year |
| 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 |
| 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 |
| Our intentional inventory build throughout 2023 positions us well to meet our production, fleet growth, and sales goals for 2024 |
| Our strong and longstanding relationships with our chassis, body and attachment vendors continue to be an important driver of our record results |
| For the fourth quarter, we delivered solid year-over-year revenue, adjusted gross profit and adjusted EBITDA growth |
| The year-over-year improvements highlight the continued benefits from our previously announced pricing actions implemented since the beginning of 2022 |
| Full year diluted earnings per share were up more than 30% year-over-year |
| Additionally, we are committed to demonstrating our ability to generate compelling cash flow during 2024, which will allow us to meet our 3x net leverage target and to continue to invest in our growth |
| Statement |
|---|
| As Ryan previously mentioned, we are currently experiencing some near-term headwinds in our utility end 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 |
| 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 |
| So the fact that backlog really year-on-year just came down, what about $60 million, $65 million |
| 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 |
| Transmission line development and regional interconnection continue to be the bottlenecks in meeting this future energy demand |
| As a result, we saw lower utilization than we originally expected, but consistent with what we communicated to you in November |
| 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 |
| But I wouldn't be surprised if backlog still comes down a bit |
| And in talking with customers, it's just a timing issue |
| 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 came down a little bit |
| Adjusted gross profit and adjusted EBITDA growth lagged revenue growth in 2023, primarily due to segment revenue mix |
| We did see it continue to come down at the end of the year |
| Guys, I guess just jumping in on the near-term headwinds in the utility end markets |
| So it's -- we're not seeing that dynamic |
| And I think that demand will just continue to hold |
| In line with our expectations, TES backlog continued to moderate, ending the quarter at just under $690 million |
| 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 |
| Nicole DeBlase Can we just talk a little bit about your expectations for TES backlog? Makes sense that it ticked down since supply chain is normalizing |
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