The third consecutive guidance raise for Adjusted EBITDA and record rental metrics signal strong execution in the SER segment. The incremental fleet investment moderates near-term free cash flow but positions the company for 2027 earnings growth. Watch Q4 for the delayed STEM deliveries (over $20M) to confirm the temporary nature of the shortfall and for continued rental fleet momentum into 2027.
Price Chart
Executive Summary
Custom Truck One Source reported Q3 2026 revenue of $495.2M (+2.7% YoY) and net income of $2.3M (vs a loss of $5.8M in Q3 2025). The SER rental segment drove record average OEC on rent of $1.39B and 20.1% rental revenue growth. The company raised full-year 2026 Adjusted EBITDA guidance to $447.5M-$460M (the third increase this year) and SER revenue guidance to $870M-$890M, while increasing net rental fleet investment to $210M-$230M. STEM third-party sales were impacted by a hailstorm and vendor recall, shifting over $20M of deliveries into Q4.
Key Financial Metrics
Key Facts
- Q3 2026 total revenue of $495.2M, up 2.7% YoY
- Rental revenue of $152.7M, up 20.1% YoY
- Net income of $2.3M vs net loss of $5.8M in Q3 2025
- Adjusted EBITDA of $110.9M, up 15.6% YoY, margin expanded 250 bps to 22.4%
- SER segment Adjusted EBITDA of $121.9M, up 22.5% YoY, margin expanded to 54.6%
- Record average OEC on rent of $1.39B, up 10.5% YoY; fleet utilization 81.5%
- Record ending OEC of $1.76B, up $143M YoY
- Net leverage ratio reduced to 3.70x from 4.31x at year-end 2025 and 4.53x a year ago
- Full-year 2026 Adjusted EBITDA guidance raised to $447.5M-$460M (third increase this year)
- SER segment revenue guidance raised to $870M-$890M from $850M-$875M
- Net rental fleet investment guidance raised to $210M-$230M from $170M-$200M
- 2026 levered free cash flow now expected to be slightly positive vs prior guidance of >$50M
- STEM backlog up 22% YoY to $342M; over $20M of third-party deliveries shifted to Q4 due to hailstorm and vendor recall
- OEC on rent surpassed $1.5B and utilization exceeded 84% in October
Financial Impact
Adjusted EBITDA guidance raised by $10M-$5M to $447.5M-$460M, representing 17%-20% YoY growth. Net rental fleet investment increased by $40M to $210M-$230M, with earnings benefit weighted to 2027.
Segment Breakdown
| Segment | Revenue | Growth |
|---|---|---|
| Specialty Equipment Rentals (SER) | $212.0M | +15.9% |
| Specialty Truck Equipment and Manufacturing (STEM) | $283.2M | -5.3% |
Risk Factors
- STEM third-party sales declined 5.5% YoY due to a hailstorm and vendor recall; delayed deliveries may not fully recover in Q4
- 2026 levered free cash flow guidance cut to slightly positive from >$50M due to higher fleet investment
- Net leverage at 3.70x remains elevated despite improvement; target of below 3x in 2027 depends on sustained EBITDA growth
- Inventory months on hand expected flat YoY, with pre-buy ahead of 2027 emissions regulations tying up working capital
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001709682-26-000045 |
| Document: ctos-20261026.htm | 0001709682-26-000045 |
| Document: 0001709682-26-000045-index-headers.html | 0001709682-26-000045 |
| Document: 0001709682-26-000045-index.html | 0001709682-26-000045 |
| Document: 0001709682-26-000045.txt | 0001709682-26-000045 |
| 8-K Data (Synthetic) | 0001709682-26-000045 |
US Market Status
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