NSCO - Earnings call transcript Q3 2020 | Custom Truck One Source, Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Nesco Holdings Third Quarter 2020 Earnings Call.

As a reminder, all participants are in listen-only mode, and the conference is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Investor Nesco of Parnell Relations. Preston begin. Sir, you may

Preston Parnell

filed Nesco's Thank Earnings XXXX press remarks, announcing results both by to our commentary are to we you, and welcome, release and quarter uncertain website may third Operator; questions to of Third our earnings Conference on outside prepared a presentation conference accompany Quarter call issued everyone, an available Relations Call. I'd company's which to afternoon, responses at on control. Nesco's are remind and like forward-looking their statements, of the which, include investors.nescospecialty.com. and Investor you Yesterday nature, that management's today's

Although these materially. and differ expectations forward-looking current statements based management's actual may on beliefs, results are

differ, please to Factors discussion filings the of Risk of with refer our of section a that some to could SEC. factors the For results the cause actual

note non-GAAP historical Chief the will Additionally, to call of can call financial release over measures you now issued please reconciliations and Jacobson. during Lee? yesterday. Officer, I Lee our the press find the that turn Executive discussed Nesco's

Lee Jacobson

Welcome, announce everyone, to earnings I Nesco. quarter call. to recovery the third of Nesco's pleased for Preston. quarter a the am beginning third that you, marked Thank

virtually trusted and safety our specialty enabled of a has interruptions of I highlight would procedures than lasted have pandemic. liked, us any new to our essential our no adaptability to of uncertainty our challenging have protocols deliver services strengthening partner. customers, contributions the relationships us operating this in our team locations While business to throughout and longer equipment with would kept of further the effects as environment performed Their the operational these COVID during to extraordinarily we times. like who workforce,

demand conditions, but crisis. the through safety the Nesco market as on pivot and quality, through in short-term and response to customers executing for and were growth reported it conditions We investing evolving provide impact is demand We to long-term. focused the focused our of market to challenging in cost-cutting the to for With preserve quarter. time despite and far liquidity with million. the of operating decreased X a that and solid investments disciplined culture $XX our and was economic for of outlook, well-positioned we quarter quickly both and and measured on in increased cut executed Nesco. so EBITDA capital the uncertainty, to adjusted a same flexibility our success million, future were last are for the results would recovered. environment Our improving careful reinforced to ability third quarter XX% X% months financial We first revenue reliability and reduced this our $XX.X year, our Compared not strong

before but these demand start to end projects to resumed. a $XXX some as second than release the positive early the the third typical quarter, some by the seasonal of impact pre-COVID of decline Utilities, to beginning revenue on result on Our delayed revenue. core rental due the improved uptick lows equipment million, in trends, Nesco improve the revenue from pent-up utilization of in delays. rent declined result August. and August, a of September on a revenues as increased acquisition rental high by from up caused and rent sales the not of to to hit in higher-margin profits July enough project experiencing COVID-related in capitalized late in Truck earned or of million, lower of as were on fleet and of XX% OEC more approaching the recovered $X.X OEC X%, addition utilization previously offset levels. the COVID the yearly our ERS quarters

activity in and end factors, seasonal In demand. ramp-up online increased early storm projects further back These new trends coming September, we in significant benefited projects late in relatively distribution, resulted was addition normal of and rent million. a August with and continued current $XXX in the the delayed transmission from to demand have telecom increasing the also stable fourth markets. OEC These throughout and quarter, into on start Rail positive of the trends quarter.

have we As Nesco environment. and our year, the through progress safely smarter COVID in customers about operating gotten the

take is that has While this we now taught and of COVID the behind year cautiously are granted, our us worst cannot we anything that optimistic company for industry.

them canceled provide future Those hold. not are put have projects; ramp Our demand up. delays incremental expected customers continue these to on to many as only projects

demand record maintenance, to fire or look have and increase market customers XG. intact energy; are will distribution hardening we in in longer-term, the as projects and which grid End near-record alternative remain to and transmission connectivity telecom, backlogs. As and drivers support of rollout our continue pipeline, capital significant

maintained improve cost During and We cash consecutive and management the continued quarter, financial discipline. we liquidity flow $XX approximately to second of positive through cash million. quarter our flexibility the for generated free

these utilizing virtually. to I to be to changing focus credit hybrid business with learned ongoing continues the of culture our Our the our conditions. with the and successful adapt to a to adapting and adherence technology and working We team initiatives protocols. Nesco implementation entire to operational for rapidly customers each meet way company other, of safety

servicing we the capital expenditures expenses, to required quarters, We curtail second reduced continue repair numbers limited early working to third capital late and of In by the meet fleet expenditures. units demand. and manage

quickly rapidly meet quarter through improved, we to market we demand. As to deploy and increasing third the units conditions and rent-ready get progressed pivoted

Even taken would year. undertaken COVID. activity of effect initiatives $X are cumulative from we as these of approximately million seeking actions per address be to much maintain The returns, the savings to cost-cutting

travel, cost these activity temporary, rental are and XX% elimination of most cost to of are of we lower the maintaining least savings savings some at targeting related While indefinitely. these

preserve our million focused to flexibility $XX fleet returns. capital approximately capital we $XX units spending to net maximize underutilized in We and also on to slowed XXXX outlays for expect our reduce million as to and selling

through expect a that will expenditure to With come calculated of economics, opportunities plan XXXX we free EBITDA to there growth to deploy with customer XXXX, a units returns. maximize not In flow top-line We plenty expect end growth, expected we decisions. our growth engaged returns-based to growth in and business fundamental in-demand are planning or our COVID drive high positive online investments growth our focusing flow. in capital By the for outlook cash capital currently and impacted allocation be with projects capital our cash will many summary, markets. capital exercise develop margin has strategy attractive on

a end will We on offering markets, young, units. of fleet to continue infrastructure rental critical specialized focus

Nesco our each number the by projects from customers. among with markets, in tailwinds toward secular bolstered of have rental is We a Nesco's capital of place the management With in for will opportunities. expect to our turn continued strong be for detailed We additions increasing of This end time market fleet discussion trust is I Nesco. ongoing shift American and national an exciting North a our specialty the believe ownership of very rental that, significant ahead. most with company a Boone, With network, end entry at performance. to electric its near-term Nesco service pure-play and Josh market-leading our construction created significant a Josh? of more CFO, customers transmission in financial it with distribution, longer-term operate of reliability. reputation right and and has and team, broad equipment, rail markets telecom end markets. the our growth the barriers the very hard-earned we team attractive in young make rental We recent to to over to and

Josh Boone

good morning, everyone. Lee, Thanks, and

followed quarter, where during we the said, solidly significantly and the by swing a rent on we the of performed pandemic, reacted recovery. Lee to start As OEC our saw due

project These equipment delays day The Average Our to X% consolidated ERS late $XX.X on a to to $XX.X investments due million. equipment can result $XXX. rental projects X% improvements project of PTA Truck October. improvements the PTA a quarter. new rent a to on revenue to per grew aligned revenues result and many projects customer-specific through the rental telecom primarily acquisition in quarter-to-quarter, with which end of primarily sales increased due uptick $XXX.X decline increased segment new and the driven X.X% million, $XX.X of utilization establish as PTA in in and modest well, ramp-up in primarily September of Most began to to PTA. was and declining revenue activity transmission X% fleet seasonal delayed basis COVID. in Utilities. XX% million, revenues $XX.X rate national the to up and held during a project increased from to PTA markets sales, see Core million. primarily August, revenue market. starts, new utilization stem million, July transmission. XX% XXX% X% a We a decline XXXX were in $XX.X distribution to million. electric revenue and revenue increased XX% August a by rental made to and $XX.X vary the to in and million, due million during ERS of $X.X XX% decline declined for to service a into PTA to accelerated footprint to OEC grew our XX.X%.

margin a combination of lower This PTA of significant locations. this experience Adjusted rental which increased will The lower our growth declined to and million in gross declined drive gross incremental million. partially from to As the offset in resulted future $XX to on EBITDA adjusted and expect new equipment the and quarter. by acquisition lower XX% $XX higher strong margins profit, we segment. utilization, revenues grow, was We reduced due leverage profit. EBITDA was operating decline believe depreciation, EBITDA excluding primarily SG&A growth PTA Truck in X% Rental to revenue during Utilities. sales sales, equipment decline third revenue

initiatives cost-cutting down to Our XX% sequentially during management compared SG&A disciplined quarter. prior XX% and second expense and drive quarter year from the the second helped the and third

XXXX. flow primarily million used decreased cash $X.X XXXX to $X.X Our the free million flow This improved result negative of cash free due increased capital million flow as of $XX.X a a compared in to of working sales. equipment was to outflow. capital well $XX.X quarter negative curtailed year-over-year as to third primarily Operating $X.X million expenditures improvement in cash

COVID significantly trend quarter. reducing on $XX.X to working this the expenditures as We of in fourth million. the $XX net cash to result as investing million This and million capital improved the was Cash continue to plan investing to now reverse operating source of in from and to cash and response in from year-over-year spend XXXX $X.X expect a units. quarter capital fourth flows our be $XX inflow. to underutilized a net between We be flows concerted full-year a rental million well estimate disposal CapEx of less

the months capital were total year, first of X net expenditures million. the For $XX

cash flows of free capital the resulting a further for combination reduced positive $XX cash million, in improving expenditures our management fourth than capital expect quarter will liquidity. in free and strong of working We year and drive flows the more

of of we the generation, third quarter, availability had capital We $X.X have debt and coming cash investments lending net business. includes quarters, at In the third liquidity will of targeted $XX.X on debt XXXX. deleveraging the until cash asset-based our flow This approximately the of maturities end and and quarter. focused with on million ample end the outstanding no At million $XXX million debt facility. million reduction remain the significant hand we returns, $XX accretive in under

We are of leverage X.Xx. the long-term to levels range in committed to achieving X.X

expect disciplined capital target and growth leverage our long-term achieve through We allocation. strategic to

management fleet said, our Lee have analyses. the investment financial we As and of enhanced rigor

XXXX returns incremental revenue, fleet cash have stronger will and growth. our flow drive historically expect and generate We they income level investments asset than even

increased We also up our to free returns and have assets divesting with assets underutilized and capital focus streamline on our operations. low

and I sentiment This Lee's debt fleet positive exciting flows to cash EBITDA prioritize that is resume into growth. we and new will maintaining result deleveraging continue debt paydown heading through an be it will paying XXXX. time We to in free Nesco. as down at investments both echo

company. marked quarter third for an point inflection the The

All of in pieces shareholder the are long-term value. place drive to

business management model. markets, winning We strong a have and team a end phenomenal

by pent-up demand ahead XXXX, we Looking in end projects indicators delayed markets our the positive as and pandemic and seeing are rescheduled. QX are growth to

owning near-record would to closing to remarks. continue our spending versus and capital With the is Our for levels as Lee that, anything, If the back on decade-long turn equipment call accelerate backlog their preservation. at renting I Lee? focus to plans. shift COVID likely like customers are to customers reiterate to

Lee Jacobson

at I future saying an in Josh. by high. conclude that my confidence Nesco will is the Thanks, of all-time

before. in operational of With have a hires not made, tier layers with and management recent world-class to decision-making expertise dynamics level we we've company. that the of made in same of These a individuals are have been great have At deep team every and the we Nesco all of analytics, maintained we multiple a our expertise bench function. time, have elevating the talent,

slowdown We the think the of very young of think equipment be services environment, capital very worst continuing markets cash generate curtailing now our resilient this we have pandemic by free of to We or ancillary perspective. just attractive a business have that challenging flow proven have business geared portfolio and end to a through can't drivers markets. a growth unprecedented despite than end suite are seen strong navigate. COVID specifically positive of disruptive able spending. rental more and challenging we the from And any Each that condition of we towards were experienced serving could our times. I have

seeing COVID on and up despite markets a are other end Our the recovery side. we slowdown, and demand now pent-up held the

very Capital investments young have additional available customer with during serve and equipment positioned XXXX. EBITDA that growth are revenue to XXXX this We capture XXXX and in mean investment. to drive limited and capacity rising made early well demand we and demand

this We for formulating investment are now growth. incremental to capital accelerate plans

continue to maintain invest, cash positive target flexibility. financial As costs we will and to generating we flow manage free

investments focus that, our turn enhance call to on the to Our portfolio. and questions. and make fleet continuing to is line open With competitive our long-term strengthen I'll decisions the growth, strategic advantages and operator for back support the

Operator

our CJS the from Instructions] And Stefanos Crist first [Operator is line with of Securities. question

Stefanos Crist

on color progressed utilization QX like through give to wanted talk what QX? and us more that's First, utilization. looking you some how Could maybe I into about

Lee Jacobson

end high level July approaching to progressed August, mid-XXs call September. of see overall, really the for in that We this August, trough August the the a seasonal we're utilization And then into level, point low through we'd within we year. XXs. we to And the And continued past XXs succeeding We've we year-end. the We that of at and very run into at that. low is anticipated. sustained the uptick progressed somewhere by the late started in spot see typically of out good to time, sweet our this then,

Our the is things than that of that are we'll see just modest is into and have projects. off-take holiday demand spillover more to pent-up actually done. get People trying QX. a usual, we'll continued expectation of that's And

our solid the demand has QX be it a to So opportunity really start to well. as

Josh Boone

the really perspective, as as up, QX dampened on X really $XXX follow early like and OEC we and of OEC to the a quarters. to think in was that $XXX million utilization just it talked tale in From million Utilization we're revenue fleet August third of we and of about, at we relative And the time at million about or an communicated, rent trough you $XXX at overall hit period our quarter. that exited of QX, today at end rent, on quarter. July

projects momentum backlog and And I postponement like felt perspective XXs we're we continue when QX. the that well better, in momentum And that we in Lee XXs we could the about, and and track week-by-week. QX we And August. really late about do we the related the the leverage the early that right really year to really it of call, progressed spot in back here we that get to see now. of next and QX, of through so, hit first talked with from into say as on in half on sequentially July last utilization was a talked as And going COVID. to delays utilization, to sweet trough high would low

Stefanos Crist

going And we think utilization forward? should we gross about margins, improve, how color. see Great as

Josh Boone

Yes.

as pick rent-ready whipsaw rental in very we was equipment in to fixed got very first spilling coming gross the utilization gross impacted QX, over units QX, equipment little get up rapidly having rental in On centers. of margins cost in demand the from quickly. then a our were those decline off-rents to service of QX and of driver due saw But on bit part big side, we the margin the

due to third so the QX gross quarter. depressed in that really were margins And

QX, we levels. off-rent at look minimalized we going As more approach of normalization utilization to a more on-rent and have much we're

the an so just in PTA side. we in point as on gross September. ramp-up And PTA on side margin a sequential perspective, Jumping we improvement from equipment inflection to with rental the gross margin should well, see equipment over rental hit the transmission consistent of in

expand cost margin realize leverage should ultimately in well margins, in relative And PTA QX gross EBITDA operating so, both drive, cuts, and side, our point our with QX should quarter-over-quarter. sequentially we on the expansion to QX rental on as that combined equipment which with PTA, and inflection the in there

Stefanos Crist

And seeing can more they major on could the a affected maybe you maybe and progressing, are color if you're in, little any differences just have I squeeze by more and markets us one end give how been COVID?

Lee Jacobson

Sure.

but across one thing the end think consistent is I markets that not equal the cancellations. does delay,

So to finish the as robust XXXX. deal is project planned 'XX in we very we 'XX a the has scenario been activity from be of solid where, planned a year. a be there. year, to actually And activity It's believe likely planned is great or kicked always project

become that, may terrific are those. and X being is I kicking to X, also are down and OEC even too several sustained few realize to let sustained MSAs on In guessing. that break over those enough it. reality to transmission, I you in make years say do those soapbox though, sure of to haven't that going strongly a X, Anybody projects multiyear telecommunications, deploy rolled we're X, And opportunity These which fourth years we're will and to see are is and We're stands more under as multiyear on our rent. when a wish allocate to to could position contractors, and utilization a to projects, position MSAs years, projects, and that a projects talks great utilization. extended. are think, really XG again, distribution in leading equipment still distribution be seeing again, of And If we off helpful. large-scale are is for are spill participate up real. this to we in seen extremely into 'XX their going is projects quarter that markets; who And in or QX the there

of of got see course great that space. that its carriers engage in the manufacturers the enough a Isn't a basically That's sneaky a has equipment. retail remains equipment friction the at this of demand diminish at their Nesco of deterrent engage turn look point surprise together? pull of get expect got of the the see carriers has all has themselves create ongoing going do to would county don't most any that a been out get that phones over COVID market a they've and and supply thing, some act on the that the certainly you the a companies If basis, and to a that and market realize, standpoint, simplest themselves, and there. that the or And been issues to out telecom contractors there our we in home? like an way, with From think I continued workforce city How rail will the to simple to the thing. steady difficult momentum we loose all permit time, a you finally

Operator

of from is Thein the Group. question Tim Citi line with next Our

Tim Thein

backdrop about just a just utilization obviously, you environment point circle sequential and change it's you thus think as think around anchor the exited do earlier, So ways. kind you back us is different far, pent-up you all last the for quarter? about you where kind XQ good year; in to XX% you versus demand, pointed, But of a seen what on very many given as visibility through one that number the think and the utilization fourth to have you've for the of

Josh Boone

Josh. is this Tim,

normal realizable. definitely I is in a true state think XX%

make customers. work XXs For sure. XXs spot, high blended say to XX% with sustain enough to We're our talked our demand meet definitely sure would low with through the that to fleet and work-in-process our XX% low right at a where QX, and it's To I we today there in XXs. average. have to high mean, to in flexibility about gives XX% XX% for sweet XXs the Lee quarter achievable. we're us hit for the knocking at I

we as of versus October end think up into to exited sequentially million at got ramping we the into rent at at today You of September million where $XXX on September. were we're OEC $XXX

XX% the think would we quarter, a at we could little blended definitely we but where maybe to achieve, the So point than touch expect any XX% higher in quarter. here for

Tim Thein

directionally to to XX% investment EBITDA that comments project maybe you're runway combined And see, just you you and but and about target 'XX? with and XX% know fleet in of thinking how about year and how on big and come the growth; I some terms the also visibility you're balancing thinking then it's of to early back this activities level the kind for help -- to Josh, de-levering still spending and of while in just just given any CapEx trying are planning,

Josh Boone

Yes.

going curtail to in capital forward. So our strategy, here de-lever think business Capex, very QX debt We're to or, two one, about disciplined the either; allocation assets. COVID going to And redeploy if to capital those CapEx and take We're of and back underutilized, disposing underperforming pay want cash look business. we that proceeds into QX. we into related the in be we down

well. think million amount, XXXX. so $XX net 'XX as we going CapEx a and spend $XX to 'XX, $XX XXXX, to million As even considerable amount We're we significant spent in about in of million pretty in

level demand the with a to with on we with invest make very returns we going be highest the the market asset at fleet that the is what level focused on taking sure to looking investing. want utilization, asset we're we fleet combined right XXXX, highest I in targeted, about think as think think we're the in effort trends. with returns, We the

perspective, higher at a could net XXXX, than for a of not yet. so And think probably but, number levels XXXX, CapEx 'XX CapEx from you

going us to to our that going so our cash And it's with level, going to at allow keep age debt reduce balance continue generating what fleet, the an to the free fleet, but and appropriate flow to that's do, grow in to to de-lever we're reinvest through and we're debt. executing EBITDA ultimately, And both reduction really We we growth de-lever XXXX exclusive. and do capital to of those strategy for And aren't next going allocation both X this can driving like a mutually business. business with in and disciplined feel year.

Tim Thein

on battery about in of big focus category, hydro you're some in wind Obviously, and how just The plays Nesco And record an that that activity the for transmission listening last one some of your or I world. pointing just renewables, of Lee, just in renewables-focused maybe but offshore customers one some like referring me. to you don't whole seems solar some and to projects. backlogs renewable development, it increasingly talk discussion energy-driven larger they're even the maybe to referenced, projects imagine world

Lee Jacobson

place generation, We but that renewables. to absolutely renewable existing of generation likely highly energy a substation, and be welcome served any Any is geographic change breaking it distribution in transmission, our by put so particularly source, not location to infrastructure. is in down in the sources source,

level XX the sources of the decades. investment generation up or XXX% of the support states that escalating the in have the followed blend in result, way with a concurrent contractors either count the of traditional a XXXX. I California next mandates range major generation by significant with And online to that's of now somewhere sources of as with believe is to development XXXX believe now any renewables, the and to each coming all is I renewable over activity. commenting, they renewable As is those or expect transmission are

Accord. a So construction participate solar a with the the primary solar. result be all we followed will something appears renewables, secondary generation, to in That a both participation the be in around the historical so the of of still and tremendous development, by and of will obviously, wind do both years. wind farms renewables, the political see, in love from participate several off, the case, to And and and a joining it's fields, the renewables. renewables of again, forefront we We over first on. incentives Climate It's tax contribution we of be amount the Paris but to line of that transmission that change transmission construction, conversion probably continuation again, And forms plus. intense fully to next comes in should

Operator

Our next Mike from with Colliers question Instructions] the be of [Operator Schilsky Securities. will line

Mike Shlisky

I the quarter prior about off a here see did huge, maybe in down so rates? want for they in over It the bit to rail by asking QX see rental rates. any did bounce-back year. were little the We wasn't start but you far

Lee Jacobson

quick enough And really we a isolated Mike, in has bounce the we've demand that seen but saw decline. I wouldn't over of that's think we been say back, that significant it. very the pricing challenges the end rebound of timeframe

demand wanted tends retain a to again, challenge. moved to in to to And background And Obviously, from bit when to decisions are a not we but going around how in pricing you're and and it's it's where exactly to Our standpoint, was availability didn't, adjust business list. me made pretty down of support and have you the impacts, field. paramount, where availability industry a far is soft face availability solidly with the we its acknowledge, and going we responsiveness falling pandemic the price modest getting impact. have there who focus little fairly the around it on first from, they're did to I equipment we the

to look we're, at think, increases. be So I at the a take opportunity steady next and a will step state,

Josh Boone

overall, rapidly, rail, latter the and greatest price And is performed the blended and mix. pretty us we has bounced the if part back rate equipment quarter. was that's for actually day. What the is for transmission that component September. QX, other of lease was least down the Mike, most look the show and also at and one But And the highest of rate expensive expensive you the day. It a equipment in I'll that August price. add per market per the market function quarter for

per challenges down biggest quarter up, maybe in wasn't So commented transmission distribution on say It and the kind the and would expensive pricing challenges. and less impact and necessarily elements of the a function was on to I mix, more equipment within with less the was related price being impact. had rail those have But an isolated that Lee pricing rate just quarter-over-quarter being of day. quarter

Mike Shlisky

adjustments and get same the certain of to do making? renting a CapEx own their you They to they're year units. competitors also a how units, that budget of this I curious, some in fleets for wanted their different I'm out your but gone there you're making sense think kind are are position. far. out turn I are that ones manufacturing it's to so

Or you competition have of the other ahead done given So the things there. out same done? that step here, the company's they maybe you've challenges have gotten one

Lee Jacobson

that, of We in of into a any relative see fleet Overall, steady-state short curtailed in equipment equipment nobody everyone whether or creating but they've pricing rental their stage competitive support And approaches. same manufacturing reasonable leading I competitors equipment, the it's landscape. transact state They around Our obviously to pipeline use used processes. say primary stability to to equipment different been our their chaos, they within the the time, degree; did manufacturers manufacturing the X the see sales. some pricing rental and did inventory We appears looking got dumping or not used so a of manufacturer. way on. existing to market guess flood new. be more their and around markets to there's are a clearly final at

Josh Boone

just that the expense would is us business. of curtailing add at Mike, the not I CapEx growing

very healthy our have significantly healthy front-loaded in age. $XX of invested We've net a million fleet, Capex. of this We XXXX We year. CapEx

a and the to so XXXX, organization And QX disciplined that's a fleet solid are financial in we're we our capital as strategy QX, to put allocation exit highest capital drives positioning going that in and as highest the we invest then to the as right spending in position forth returns with disciplined be here utilization. the

plenty little of we're business. of we see through this us the our a related our growth COVID today, in believe But of don't fleet we upside CapEx here to curtailing expense a for bit just that planned have of within We in investments it's And environment, navigating XXXX. it's transition addition business. what still so and the we momentum in what to backstage the have on the as at

Mike Shlisky

Maybe have goals it any PTA to lastly, Or might percent for out for revenues figure as of early penetration rental XXXX? business. turn of is still you the to a turning here Do out? how that too PTA the

Lee Jacobson

the from but goal, precise solid a with alliances in across of position across We're to identify strong country. to our got in certainly standpoint anticipate early infrastructure the super-regional too the growth being number. a performance we good place locations. super-regional still contractors, the country a major We've that the the grow It's in with the contractors able

And so that really sustained in multiyear solid we think we'll growth basis. a on see a

us business, in really the the that and Our at goal need. will locations. in to of additional of put intermediate But looking that the step doubled-plus, literally a position of term until have is don't we've we next that scope double

great in an in because the to invest so invest fleet. to the attractive it's team It's place in it. place upside rental develop an business, to there's And attractive right

Operator

Our Jefferies next of Co. line is & from Rich Kus question with the

Rich Kus

of is down about the looks X%. They've on-rent already have were that gotten I X%, to like about still Rate talking but down guys you most your here your down X%. question rental was but one being fleet it them, was revenue do

to that difference Is into go something else? you QX mix what expect and So that as related? how QX is next year? that it And drives through you there? trend do Or

Josh Boone

talked the Yes, that's provided Josh. rate be XX% significantly, down transmission presentation OEC. being highlights driver didn't of and going down we timeframe. transmission largest our the and is going be about supplemental that back mix-related. largest in quarter the September driver We until It's this And the to to really the and snap of

that's so revenue of side things. And impact really going the to

October that expect and shift. which and transmission ramping it up shift As mix seen are experiencing think help. November we in with we We've going QX now to in we September, the shift about considerably, should forward,

flip We other that will way. the

Lee Jacobson

executed transmission 'XX. or of part even a to the the be really participation continuing some latter 'XX in 'XX, this starting of most that got in projects visibility will We've in year, clear and significant

is And earned. position just those gear we've that big that the we're with great supply rates, opportunity the projects. to about excited And so in long-term a overall, equipment that and high to we're

Rich Kus

buy to you have projects, or have extent And the actually do you guys you guess, Or I into for those more sense would it? the magnitude that participate equipment you do that of are going to to guys have participate? those projects, in of a able OEC be to already that

Lee Jacobson

discrete the we are progress where and deploy coming you going look 'XX, expect several for We've to to as projects the obvious where is opportunity. transmission some match the we some through to to be. of our the a first list got needed, the and of cases we've you'll to fleet XXXX opportunity and that be then, of As purchase simply remainder planning our to that typically see the focused of really to and And address we to got online, keenly it us utilization demand. is get in clear in in what at additional of pretty large sequence we're supply equipment

Operator

is Our with JPMorgan. the Abebe question of from line Yilma next

Yilma Abebe

me. little the at quarter for quarter; on like the what's borrowing Just one related, quick June And a It looks base? the maybe base from seasonality borrowing end. in I guess, quarter the bit the that? September behind one What's declined driver the

Josh Boone

is This Josh.

offset our it's for planning how $XX is of The at $XX about QX it plenty twofold. We time-based the of That's timing the From about the depreciating by million, the $XX liquidity where with a element is a at perspective. we just quarter. think cash significant outflow, exited have for there timing liquidity. payments really pretty the to we through we're is flow of borrowing liquidity of here we business So and sit cash inflows base and from QX a of million interest first pretty assets. of QX, in going capital that's perspective, which The be to function with quarter. today million, in working cash what significant kind a as progress decline of we

So we're It's depreciation have element not standard of through to function the we the going there's base. that don't from borrowing when pretty borrowing a really be seasonality spending, no significant quarter. base. to capital adding But

we And to expect which so million QX. generate in in peaked and liquidity in in at and XXXX $XX QX to with the we to more million, From [$XX] $XX navigate perspective, plenty we an liquidity, where today, is in from flow than we're we're million, XXXX QX, $XX quarter. in as early liquidity $XX free to add at down significant expect million of exit million of fourth cash

Operator

Stifel. Our will the Abe next of be from with question Landa line

Abe Landa

Most left. just questions have but of I my were one do answered,

So stated to it you looks have is X.Xx. leverage of current like and net X.Xx, your a X.X goal

that mentioned achieve that next growth. maybe to repaying going years, just of progressing Maybe couple the You do debt how few you goal? EBITDA reach of kind you're to timing see through your over the and and years

Josh Boone

is Josh. This

Those but growth debt. free both capital talked about reduce to drive So cash we're investments into X we going the to business like our EBITDA flow balancing through EBITDA growth, generating and to de-lever that the business generate mutually of higher right fleet, aren't exclusive. and as reinvesting can that level highest dispose returns. capital of mix we forward assets XXXX right think moving underperforming we into returns the with the underutilized, in We the elements back

we're exceptional we we doing and allocate as with that it. EBITDA amplify think can to by so and going be drive disciplined that, capital And we growth,

that of sequencing As X get to of of leverage X.X X X.Xx. goal and years the we next range think is you the to a of that to over estimate reasonable our the target cadence de-levering, think to

XXXX bit hopefully, it's slow every year. tick We for think inflection little but improving quarter; of as just as as on saw point just to an carried through that sure, sequentially well. latter hit going here QX, leverage in I and you But the every a XXXX, we into EBITDA it's decline. the sequentially think talked September, be improving a we part up LTM in down step XXXX us really and has inflection about, with QX point of

have XXXX. really and we're on capitalizing this momentum in so forward into we expect And that carry to that QX

Operator

Rhoads from is the question Bank. next of Robert with line Our Deutsche

Robert Rhoads

This on growth? I just answered. is just I know touched longer-term or debt appreciate on Robert debt guys you or but Is do other? I reduction the But, Wondrack. the Rhoads was X you it, for through kind My mostly Sean question there target envision hitting mean, it. EBITDA of

Josh Boone

ability we to tremendous business, say, would the power. I about de-lever the if earnings have you think

on that our have fleet We have in power hand. earnings we tremendous

capitalizing markets We have assets, the of our and have power tailwinds tremendous capital and believe in high we in earnings XXXX end utilization here allocating high-return that on beyond. phenomenal and QX

double as ultimately revenues earnings which talked that facilities with And rental, footprint. with expanding a combined business in potential, with we're our power out added X equipment that near-term the without about the penetration at super-regional so of rate we've like that footprint PTA PTA our -- the Lee now national and we had can in double would to the

we think think it's de-levering that tremendous of to outperforms have And that probably would can from to EBITDA so other, that had We have, period. we and We the growth reduction capital a be one we really allocation those to our weight power time earnings with over the target of disciplined I going if both say that can leverage debt can business. strategy. that But we hit do do you both.

Operator

And you. back that it appears no call at we I'll turn time. further questions have this the to

You closing may presentation continue or remarks. with your

Lee Jacobson

a That day. In can be investors@nescospecialty.com. concludes everyone, our We interest for look Thanks, to the Josh if full-year today. with questions, your Nesco. call. meantime, our call you at you have earnings great speaking Have reached in XXXX on forward

Operator

all for call We that you disconnect the lines. your does for a day, This kindly conference your ask conclude Have everyone. and participation thank you today. great please

Custom Truck One Source (CTOS) 11 Nov 202020 Q3 Earnings call transcript