Custom Truck One Source, Inc. (NYSE: CTOS) has announced a robust financial performance for Q4 2023, with a record quarterly revenue of $522 million, marking a 7% increase from Q4 2022. The company's total revenue for the year reached $1.865 billion, aligning with the higher end of their forecasts and reflecting a 19% rise from the previous year.
Custom Truck's TES segment significantly contributed to this growth, with a 21% increase in quarterly revenue and a 29% surge for the full year. Looking ahead, the company is poised for expansion, targeting $2 billion to $2.18 billion in revenue and adjusted EBITDA between $440 million and $470 million for 2024.
Key Takeaways
- Record Q4 2023 revenue of $522 million, a 7% year-over-year increase.
- 2023 total revenue met guidance at $1.865 billion, up 19% from 2022.
- TES segment's strong growth with 21% and 29% revenue increases for the quarter and full year, respectively.
- Strategic investments in inventory and geographic expansion to drive future growth.
- Company anticipates 2024 revenue of $2 billion to $2.18 billion and adjusted EBITDA of $440 million to $470 million.
- Net leverage target of 3x set for 2024.
Company Outlook
- Custom Truck plans to meet the growing demand for electric vehicles and power grid enhancements.
- Geographic expansion includes a new facility in Casa Grande, Arizona, and new locations in Sacramento and Salt Lake City.
- Continued investment in the rental fleet is expected.
Bearish Highlights
- Backlog for TES decreased to just under $690 million, aiming for a more normalized level.
- Near-term headwinds in utility end markets and the infrastructure bill's rollout could impact the business.
Bullish Highlights
- TES segment exceeded revenue guidance for 2023.
- APS business showed consistent growth with $149 million in full-year revenue.
- Stock repurchase program has seen approximately $49.5 million in buybacks.
- Anticipated positive impact from improvements in TES supply chain and infrastructure bill in the long term.
Misses
- Slowdown in transmission work due to supply chain delays, regulatory approval, and cost of funds issues, expected to improve in late 2024 and 2025.
Q&A Highlights
- Backlog decrease of $60-65 million year-on-year is seen as positive, with good order volume and demand in early 2024.
- Net OEC growth by mid-single-digits and gross CapEx of around $400 million targeted for the year.
- Fleet utilization rates to follow historical trends, averaging around 75%.
- Revenue expected to be split 45% in H1 and 55% in H2, with EBITDA potentially deviating slightly from this pattern.
InvestingPro Insights
Custom Truck One Source, Inc. (NYSE: CTOS) has showcased a strong financial performance as per their latest quarterly earnings. To provide further insight, here are some key metrics and tips from InvestingPro that might be of interest to investors:
InvestingPro Data:
- The company's Market Cap stands at $1.51 billion, reflecting a sizeable presence in its sector.
- CTOS is currently trading with a Price-to-Earnings (P/E) Ratio of 22.86, which has adjusted down to 18.54 over the last twelve months as of Q3 2023.
- The Revenue Growth for the same period has been robust at 26.84%, indicating a healthy expansion in the company's business operations.
InvestingPro Tips:
- CTOS operates with a significant debt burden, which is an important factor for investors to consider when evaluating the company's financial health.
- Three analysts have revised their earnings downwards for the upcoming period, suggesting that investors may want to keep an eye on future earnings expectations.
These insights, combined with the article's analysis of Custom Truck's recent performance and outlook, can help investors gauge the potential risks and opportunities. For those interested in a deeper dive, there are additional InvestingPro Tips available that further explore the company's financial nuances. To access these tips, visit https://www.investing.com/pro/CTOS. Plus, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering even more detailed analytics to inform your investment decisions.
Full transcript - Capitol Invest IV A (CTOS) Q4 2023:
Operator: Good afternoon. At this time, I would like to welcome everyone to the Custom Truck One Source, Inc. Fourth Quarter and Full Year 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Brian. Please go ahead.
Brian Perman: 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. Although, these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of the company's filings with the SEC. 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 and our quarterly investor presentation are posted on the Investor Relations section of our website. We filed our 2023 10-K with the SEC this afternoon. Today's discussion of our results of operations for Custom Truck One Source, Inc., or Custom Truck is presented on a historical basis as of or for the three months ended December 31, 2023 and prior periods. Joining me today are Ryan McMonagle, CEO, and Chris Eperjesy, CFO. I will now turn the call over to Ryan.
Ryan McMonagle: Thanks, Brian, and welcome, everyone, to today's call. 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. We finished the year with total revenue of $1.865 billion at the top end of our guidance range and up 19% versus 2022. I'm very proud of the efforts of our team to deliver another record setting year. We continue to demonstrate the value of our business model with our ability to pivot between product categories and between selling and renting equipment as the markets dictate. 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. As we discussed on several calls, we made the decision during 2023, to invest in significant inventory growth to ensure that we could meet customer demand heading into 2024. Growth in the TES segment was led by growth in our infrastructure end market, which represents about 24% of total revenues. We continue to experience high levels of demand for certain products like our specialty dump trucks, roll off trucks, hydro excavators, and water trucks. 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. Approximately 60% of our revenue comes from the utility end market, which includes both distribution and transmission work. We are seeing significant forecasted increases in electricity load growth in the U.S., which is being driven by a high level of data center development and by continued electrification trends. 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. Transmission line development and regional interconnection continue to be the bottlenecks in meeting this future energy demand. There is a significant backlog of transmission projects that are ready to go. However, work on these projects is advancing slowly as supply chain, regulatory approval, and ownership, and funding details get resolved. We believe we are at the forefront of the energy transition that is currently mandated in California and soon will be required in varying degrees in nine additional states. Custom Truck has an array of fully functional electric Class 7 and Class 8 trucks to serve multiple end markets, including bucket trucks and digger derricks, dump trucks, rough use trucks and tractors to serve the EV demands of our customers. We continue to work with our OEM partners Peterbilt and Battle Motors, with whom we have developed the majority of these trucks, to ensure that our customers' transition to EV is timely and efficient. Additionally, we are seeing continued early adoption of our ePTO, which is being used to electrically power our truck's attachments while on the job site, significantly reducing the amount of time the engine must be on idling and burning diesel fuel. 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. In the fourth quarter, we expected more transmission work to be underway than occurred. As a result, we saw lower utilization than we originally expected, but consistent with what we communicated to you in November. 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 will continue to invest in geographic markets where Custom Truck is currently underrepresented and which we believe offer compelling long-term growth opportunities for our business. As we've discussed previously, we know that the Western U.S. is one such area. I am proud to announce that we recently closed on the purchase of an existing facility in Casa Grande, Arizona to serve as an initial production hub for our Southwest expansion. We will also be opening two new locations, one in Sacramento and one in Salt Lake City, to capitalize on the growth we see out West and to be able to better serve our customers. We expect all these locations to be fully operational later this year. As we think about our 2024 guidance, we are going to be conservative on the degree of transmission uplift that we expect in 2024, and will provide updates on how transmission continues to develop throughout the year. Despite that uncertainty, we anticipate that 2024 will be another year of growth for Custom Truck and that we will eclipse $2 billion of total revenue. While Chris will provide additional details later, we are providing initial revenue guidance of $2 billion to $2.18 billion and are projecting adjusted EBITDA in the range of $440 million to $470 million. 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. With that, I'm going to turn it over to Chris to talk through the details of our fourth quarter results that contributed to our record setting 2023.
Chris Eperjesy: Thanks, Ryan. For the fourth quarter, we delivered solid year-over-year revenue, adjusted gross profit and adjusted EBITDA growth. We generated $522 million of revenue, $171 million of adjusted gross profit, and $118 million of adjusted EBITDA in Q4. For all of 2023, we generated $1.865 billion of revenue, $625 million of adjusted gross profit, and $427 million of adjusted EBITDA, up 19%, 13% and 9%, respectively versus 2022. Adjusted gross profit and adjusted EBITDA growth lagged revenue growth in 2023, primarily due to segment revenue mix. While all of our segments experienced year-over-year growth, rental asset sales and TES revenue, which have a lower average gross margin associated with them than our equipment rental business, comprise 67% of total revenue in 2023 versus 62% in 2022. SG&A was $59 million in Q4, or 11.4% of revenues, an improvement versus 12% in Q4 2022. For all of 2023, SG&A was 12.4% of revenues and approximate 100 basis point improvement compared to 2022. 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. Full year diluted earnings per share were up more than 30% year-over-year. The ERS segment experienced 10% growth for the full year, ending the year with $726 million of revenue, the middle of our guidance range. Adjusted gross profit for ERS was $107 million for Q4 and $409 million for all of 2023, up 3% from 2022. 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. In the quarter, average utilization of the rental fleet was just under 78% and was over 80% for all of 2023, which is historically still very strong despite some of the headwinds Ryan discussed. On-rent yield was over 41% for the quarter and was over 40% for all of 2023, compared to just over 39% for 2022. The year-over-year improvements highlight the continued benefits from our previously announced pricing actions implemented since the beginning of 2022. We continued to invest strategically in our rental fleet and sell certain aged assets in the fourth quarter, which kept our fleet age steady at 3.5 years. Net rental CapEx in Q4 was $22 million and $135 million for the full year. Our OEC and the rental fleet ended the year at $1.46 billion, essentially flat with the end of 2022. We expect to continue to invest in the fleet in 2024, but have the flexibility to pivot our CapEx spending plans in 2024 depending on the trends we're seeing in our end markets. In the TES segment, we sold a record $299 million of equipment in the quarter and just under $1 billion for the year, a 29% increase compared to all of 2022. As Ryan mentioned, TES finished above the high end of our 2023 revenue guidance range. Gross margin in the segment was just under 18% in Q4. For the full year, TES gross margin was approximately 150 basis points higher, which we attribute to the ongoing production deficiencies resulting from our high level of production, as well as an improved mix related to our higher specialty and vocational truck sales. In line with our expectations, TES backlog continued to moderate, ending the quarter at just under $690 million. Record levels of both production and new equipment sales in the quarter allowed us to make headway toward reducing our backlog to a more normalized level, which currently stands at more than eight months of TES sales, down from a peak of more than 12 months in early 2023, but well above our historical adage of four to six months. Our strong and longstanding relationships with our chassis, body and attachment vendors continue to be an important driver of our record results. Our intentional inventory build throughout 2023 positions us well to meet our production, fleet growth, and sales goals for 2024. Our APS business posted revenue of $38 million in the quarter and $149 million for the full year, up 5% versus 2022 and in the middle of our guidance range. Year-over-year growth was consistent for both parts and service and rental revenue within APS at 5% to 6% each. 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. Since initiating our stock repurchase program in the third quarter of 2022, we have repurchased approximately $49.5 million of our stock through the end of 2023, including just under $19 million in the fourth quarter. 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. Borrowings under our ABL at the end of 2023 were $552 million, up versus the end of Q3, as we continued to invest in working capital during the quarter. As of December 31, we had $195 million available and approximately $324 million of suppressed availability under the ABL with the ability to upsize the facility. With LTM adjusted EBITDA of $427 million, we finished 2023 with net leverage of 3.5x, an improvement of 1.1 turns since the close of the transaction with Nesco in April 2021, and up slightly from last quarter. Achieving net leverage below 3x remains a primary and important goal, and that one we expect to achieve in 2024. 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. With respect to our guidance, we expect 2024 to be another year of growth. We believe TES will continue to benefit from good demand and our strong backlog entering the year. We believe the ERS outlook from our rental customers for long-term demand and growth remains strong. 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. As these markets recover and grow in 2024, we expect to further grow our rental fleet based on net OEC by mid-single-digits. 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. Further, after a year of significant strategic investment in inventory levels in 2023, we expect to generate meaningful free cash flow in 2024, setting a target to generate more than $100 million of levered free cash flow and to deliver a net leverage ratio of less than 3x by the end of the fiscal year. Our 2024 outlook reflects the long-term strength of our end markets and the continued focus of our teams to profitably grow our business. 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. We are providing guidance for our segments as follows. We expect ERS revenue of between $730 million and $760 million, TES revenue in the range of $1.115 billion to $1.255 billion and EPS revenue of between $155 million and $165 million. This results in total revenue in the range of $2 billion to $2.18 billion, up approximately 7% to 17% versus 2023. We are projecting adjusted EBITDA on the range of $440 million to $470 million, up approximately 3% to 10% compared to 2023. In closing, I want to echo Ryan's comments regarding our continued strong performance. 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. With that, I will turn it over to the operator to open the line for questions. Operator?
Operator: Yes. The floor is now open for your questions. [Operator Instructions]. And our first question comes from the line of Scott Schneeberger from Oppenheimer. Please go ahead.
Scott Schneeberger: Thank you very much. Good afternoon, everyone. Guys, I guess just jumping in on the near-term headwinds in the utility end markets. Can you talk us through a little bit more of your customer conversations, what you're hearing, what you're seeing there, and it sounds like you with this guidance in the mid-single-digits growing the rental fleet net OEC that you feel that there's going to be a recovery and there's some confidence there. So if you could just elaborate on what you're hearing from customers that we pull out of this hiccup and it drives improvement later in the year. Thanks.
Ryan McMonagle: Sure, Scott, good to hear from you. And yes, happy to address it. And you're right; it feels very much like it's just a timing issue. Here so, I mean, if you look at kind of any macro trend of how much transmission has to be done and the number of projects that are what some consolidators call kind of ready to go, it's significant and it will be a significant boost. And if you look at all the macro underlying drivers around data centers and electrification and just grid upgrades that have to happen, we feel like it is significant. And in talking with customers, it's just a timing issue. I think a lot of people are thinking later this year. Many of those jobs will begin and that it will be very good demand for an extended period of time when they do begin. So everyone seems to be talking about timing later this year and we've got the equipment ready to go. But as we mentioned on the November call, and certainly we just referenced again, we are seeing a little bit of a slowdown now from a transmission utilization standpoint, and it seems to be specific to transmission, all of the other end markets are continuing to perform very well, which is what we noted and saw on the TES side of the business, certainly in the infrastructure side and the vocational side. And then even distribution, utilization is still staying in a very good level as well.
Scott Schneeberger: All right. Thanks -- thanks for that. Just kind of a follow-up on that, and then I'll have one other. But the follow-up is in your early remarks, Ryan; you mentioned early infrastructure bill rollout. I just wanted to delve in a little bit more there, anecdotally what you're seeing on that front with regard to that stimulus. Thanks.
Ryan McMonagle: Yes. I -- look, I think we're starting to see it. We're seeing it more on the infrastructure side. So for us, that shows up in dump trucks and water trucks and roll offs and some of our hydro excavators. And yes, I think we're starting to see some of those dollars flow. We would say when we talk to our customers there, and certainly when we listen to some of the other companies in the space. We're saying maybe it's maybe 15% to 20% kind of those funds are starting to show up in backlog. 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. And we're continuing to see that type of trend here even in January and into February as well on the TES side of the business.
Scott Schneeberger: Thanks. Appreciate it. Last one for me, and then I'll turn it over. Probably more for Chris. But with regard to the free cash flow outlook, $100 million it sounds good, it sounds like a strong bounce back. I think what I'm really looking to delve into here is inventory levels and just kind of the progression, the work through there, just going a layer deeper and a sense of why that guidance number and level of confidence. Thanks.
Chris Eperjesy: Yes. Scott, I think we have said a number of times throughout the year that we really were strategically making the decision to invest in inventory because we saw the demand coming. And so we feel comfortable that we're going to have an opportunity here as the year progresses to unwind some of that investment. And so certainly as we look at levered or unlevered free cash flow, there was a significant investment this year and last year, this year being 2023 and last year being 2022, that we think in terms of networking capital, we'll be able to unwind some of that in 2024. So that will be a big driver of it.
Operator: Our next question comes from the line of Nicole DeBlase with Deutsche Bank (ETR:DBKGn). Please go ahead.
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. I guess is your expectation that you could possibly exit 2024 with a more normalized lead time and amount of backlog, or do you think that backlog will remain elevated based on what you're seeing in the supply chain?
Ryan McMonagle: That's a great question. Look, we delivered almost over $200 million of additional revenue on the TES segment this year. So the fact that backlog really year-on-year just came down, what about $60 million, $65 million. We're really happy with that. So we are still seeing very good order volume. And so I think that will continue. But I wouldn't be surprised if backlog still comes down a bit. We said -- I've said historically that four to six months is where it has been historically. I don't know that I have a reason to think it will be all the way down to that by the end of the year. But we're still seeing really good order flow. We're still seeing really good demand here, even for the first two months of 2024. And I think that demand will just continue to hold.
Nicole DeBlase: Okay. Got it. Thank you. And then with respect to CapEx, how are you guys thinking about 2024 on both replacement CapEx as well as growth CapEx?
Chris Eperjesy: Yes. I think we said in our prepared remarks, Nicole, our expectation is we'll grow net OEC or we'll grow OEC by a net mid-single-digits this year. And our gross CapEx number is going to be similar to this year in that we're targeting in that $400 million range. So 5% if I picked the mid-single-digit you're looking at a net $75 million, $80 million of growth CapEx.
Operator: Our next question comes from the line of Justin Hauke with Robert W. Baird. Please go ahead.
Justin Hauke: Yes, great. Thanks for taking my questions. I guess I wanted to go back to the transmission market and the demand levels there. 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. I think one of the dynamics you guys talked about when you first came to the public markets was that rental was kind of untraded and there was an opportunity for that to be a greater usage of fleet. So I guess I would just ask for an update on that.
Ryan McMonagle: Yes, a great question. And you're right. We've said, and we'll continue to say as we see people buy, it's a good indicator of long-term demand. Transmission probably is a bit of an exception there. Transmission is primarily significantly rented. So we don't sell a lot of the transmission equipment that we consume, that we buy from our vendors that we put together. So it is a heavily rented product. So it may be a little bit different dynamic there just because of the use case of that, that equipment. So it's -- we're not seeing that dynamic. And it really does feel like it's just timing right of when the projects begin. And that seems to be consistent with all of our conversations with customers and certainly what a lot of the industry is talking about right now as well. So -- but it's a great question and it is true in other product categories. It's something we watch closely. We talk a lot about when RPO buyouts happen or when buyouts happen from the rental fleet. That's a good indicator of long-term demand. You saw those levels that were high in the fourth quarter. So we're still -- all signs are still very good kind of long-term demand. It's just a short-term indicator of when the transmission work really begins.
Justin Hauke: Okay. On that basis, I mean the utilization level, the 77.6% fourth quarter, you guys ended 3Q at 80.4%. 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. So I think that still is a high utilization rate, I guess, versus history. But what -- you gave the fleet growth. But what's your expectation for kind of utilization rates throughout the year and are they more like 75%, are they more like 80%? Just kind of trend line where you expect them to go?
Ryan McMonagle: Yes, it's a great question, and you're right. I think that is a high utilization, if you look in historical context. We did see it continue to come down at the end of the year. And so we are back to kind of that, if 75% is the average, we were just below 75% kind of at the end of the year, and that's where we are kind of currently at the beginning of Q1. And we'll expect that to kind of follow the same type of line that it typically follows, which means it should build some in the spring, level off a bit in the summer, and then continue to build into the end of Q3 and the beginning of Q4 to kind of follow that general flow. But yes, I think somewhere around that 75% is probably a good spot to think about it.
Operator: Our next question comes from the line of Tami Zakaria with JPMorgan (NYSE:JPM). Please go ahead.
Tami Zakaria: Hi. So my first question is, I just wanted to get a sense of how you're thinking about the cadence throughout the four quarters. Typically, I think you've mentioned in the past, EBITDA is called it 45% in the first half and the remaining in the second half. So should we think about the guide in terms of typical or historical seasonality or any seasonality's to think about as we model 2024?
Chris Eperjesy: Yes. Tami, this is Chris. I think the 45%, 55% generally still holds. I do think what we're going to see, certainly it holds for revenue. I think, as Ryan was just talking about kind of what we expect to see this year in ERS, which is more of a historical norm versus what we saw maybe in 2023 or certainly in 2022 is that probably -- it'd be a little bit wider range, probably first half, second half on EBITDA. So it's probably a little less than 45% and a little more than 55% on EBITDA, but 45%, 55% on revenue.
Tami Zakaria: Got it. Okay. Got it. That is very helpful. 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. Just wanted to get a sense, what exactly is this delay? Is it funding or is it availability of some other equipment? Or they're just waiting for the Fed rates to get cut? What exactly is this supply chain delay? Or what's exactly driving this delay?
Ryan McMonagle: Yes. No, it's a great question, and I would tell you. Yes, yes, and yes, right? So the conversation we're having is all three of those, Tami that some of it is regulatory approval, right, and so they're waiting on some rate increases to be passed kind of through their regulatory bodies. Some of it is supply chain, right? So we're still waiting on some superstructure, structure or transformers to be available, and then some is just a cost of funds issue, which I think they're waiting on interest rates. So it feels like it's all three, Tami. It feels like there's a lot that's ready to go. And so as each of those, break, we anticipate that it will be a great tailwind as they begin later this year and into 2025.
Operator: No further questions at this time. Brian, I'll turn the call back over to you.
Brian Perman: Great. Thanks, everyone, for your time today and your interest in Custom Truck. We look forward to speaking with you on our next quarterly earnings call. And in the meantime, please don't hesitate to reach out with any questions. Thanks again, and have a good evening.
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