CTOS NDR Reinforces Transmission-Led Rental Momentum and the FCF/Deleveraging Path

Research evidence excerpt

CTOS NDR Reinforces Transmission-Led Rental Momentum and the FCF/Deleveraging Path

May 23, 2026

Sandhills data provide a supportive replacement-cycle read-through

for CTOS. Used heavy-duty truck, semi-trailer, and medium-duty truck

inventories were down sharply y/y in April, while Sandhills noted that

delayed fleet upgrades eventually need to be addressed. For CTOS, this

supports the view that broader vocational replacement demand can

improve over time, particularly in STEM, while tighter used supply should

also help support residual values as equipment rotates out of the SER fleet.

The caveat is that this is broad truck-market data, not CTOS-specific utility

equipment data.

Competitive dynamics remain favorable in specialty utility equipment.

Management identified Altec (private) as the primary competitor in buckets

and diggers, with Terex (TEX, NC) and Versalift (private) also relevant in

manufacturing. Management also indicated that CTOS believes it has the

largest rental fleet in the category. The broader competitive picture is more

fragmented in basic vocational trucks, where truck dealers and regional

upfitters are more active, especially after weakness in the over-the-road/

highway market pushed some dealers into adjacent vocational products.

In our view, this reinforces the view that CTOS’s strongest competitive

position is in specialized utility/transmission equipment rather than in

commoditized truck sales.

The integrated model remains strategically relevant because customers’

buy-vs.-rent preferences shift over time. Management repeatedly

emphasized that customers do not have a single equipment strategy.

Large contractors may buy, rent, use rental-purchase options, or pursue

operating leases, depending on project timing, capex availability, and