ALTG 10-K & 10-Q changes, risk factors and insider trading

an increase in costs generally, including the cost of inputs for our OEMsOEM's or customers' operations, as a result of tariffs, inflation or other factors;

a prolonged shutdown of the U.S., statestate, or local government;

our failure to execute on strategic plans generally, including those associated with commercial electric vehicle business modelgenerally;

The Company purchases most of our sales and rental equipment, and aftermarket parts from leading, internationally known OEMs. During the year ended December 31, 2024,2025, approximately 58%49% of the Company’s equipment and aftermarket parts sales were purchased from five major manufacturers (Volvo, Hyster-Yale, Kubota, CNH, and JCBTakeuchi). Although the Company believes we have alternative sources of supply for equipment sales and aftermarket parts we purchase in each of our core product categories, termination of one or more of the Company’s relationships with any of these major suppliers could have an adverse effect on the Company’s business, financial condition and results of operations if we were unable to obtain an adequate replacement supplier.

The Company is a distributor of new equipment and parts supplied by leading, nationally recognized suppliers. In certain instances, under the Company’s distribution agreements with these suppliers, manufacturers may generally retain the right to appoint additional dealers and sell directly to national accounts and government agencies. Additionally, mostmany of our distribution agreements grant our suppliers the right to unilaterally terminate distribution agreements with the Company at any time without cause. Any such actions could have an adverse effect on the Company’s business, financial condition and results of operations.

The cost of new equipment from manufacturers that the Company sells or purchases for use in our rental fleet may increase as a result of increased raw material costs, including increases in the cost of steel which is a primary material used in most of this equipment, or due to increased regulatory requirements, such as those related to taxes, tariffstariffs, or emissions. These increases could materially impact the Company’s financial condition and results of operations in future periods if the Company is not able to pass such cost increases through to the Company’s customers. Similarly, any increase in the cost of parts the Company purchases for resale could materially impact the Company’s financial condition and results of operations in future periods if the Company is not able to pass such cost increases through to the Company’s customers.

As the Company’s fleet of rental equipment ages, the cost of maintaining such equipment generally increases,increases if not replaced within a certain period of time. Determining the optimal age for the Company’s rental fleet equipment is based on subjective estimates made by the Company’s management team. The Company’s future operating results could be adversely affected because the Company’s maintenance and repair costs on our rental fleet may be higher than anticipated.

Increases in healthcare, pensionpension, and other costs under the Company’s benefit plans could adversely affect our financial condition and results of operations.

inability to maintain andor increase competitive presence;

Disruptions in the global capital and credit markets as a result of an economic downturn, economic uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect the Company’s customers’ ability to access capital and could adversely affect the Company’s access to liquidity needed to fund business operations in the future. Additionally, unfavorable financial market conditions may depress demand for the Company’s products and services and/or make it difficult for the Company’s customers to obtain financing and credit on reasonable terms. Unfavorable financial market conditions also may cause more of the Company’s customers to be unable to meet their payment obligations to the Company, increasing delinquencies and credit losses. If the Company is unable to manage credit risk or customer risk adequately, the Company’s credit losses could increase above historical levels and the Company’s operating results would be adversely affected. The Company’s suppliers may also be adversely impacted by unfavorable capital and credit markets, causing disruption or delay of product availability or their competitiveness in the market overall. Additionally, many of our key OEM suppliers provide floor plan financing to the Company through related party captive finance companies (e.g. Volvo Financial Services). To the extent our OEM captive finance partners are impacted by unfavorable capital and/or credit market conditions, the Company’s liquidity position, ability to borrow, or ability to borrow at favorable rates could be adversely impacted. These events could negatively impact the Company’s business, financial condition, results of operationsoperations, and cash flows.

The Company has operations throughout the U.S. and Canada and purchases capital goods from Europe which exposes us to multiple international, federal, statestate, and local regulations. Changes in applicable law, regulations or requirements, or the Company’s material failure to comply with any of them, can increase the Company’s costs and have other negative impacts on the Company’s business.

The Company’s 8077 branch locations in the U.S. are located in 15 different states, which exposes us to different federal, state, and local regulations and taxation. The Company also has seveneight locations throughout Canada and acquires inventory from Europe which exposes us to foreign regulations and taxation as well. These laws and requirements address multiple aspects of the Company’s operations, such as worker safety, consumer rights, privacy, employee benefits, taxation, securities law compliance and more, and can often have different requirements in different jurisdictions. Changes in these requirements, or any material failure by the Company to comply with them, could increase the Company’s costs, affect our reputation, limit our business, consume management’s time and attention or otherwise generally impact our operations and financial results in adverse ways.

The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this annual report. This discussion contains “forward-looking statements” reflecting Alta’s current expectations, estimates, and assumptions concerning events and financial trends that may affect our future operating results and financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, economic and competitive conditions, regulatory changeschanges, and other uncertainties, as well as those factors discussed below and elsewhere in this annual report, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed may not occur. Alta assumes no obligation to update any of these forward-looking statements.

Equipment Inventory Availability, Rental Fleet InvestmentInvestment, and Product Support Trends

New equipment sales. We sell new heavy construction, material handlinghandling, and environmental processing equipment and are a leading regional distributor for nationally recognized equipment manufacturers. Our new equipment sales operation is a primary source of new customers for our rental, partsparts, and service business. The majority of our new equipment sales are predicated on exclusive distribution agreements we have with best-in-class OEMs. The sale of new equipment to customers, while profitable from a gross margin perspective, acts as a means of generating equipment field population and activity for our higher-margin aftermarket revenue streams, specifically service and parts. We also sell tangential products and services related to our material handling equipment offerings which include, but are not limited to, automated equipment installation and warehouse management systems integration.

Used equipment sales. We sell used equipment which is typically equipment that has been taken in on trade from a customer that is purchasing new equipment, equipment coming off a third-party lease arrangement where we purchase the equipment from the finance companycompany, or used equipment that is sourced for our customers in the open market by our used equipment specialists. Used equipment sales in our territories, like new equipment sales, generate parts and service business for the Company.

Service revenues. We provide maintenance and repair services for customer-owned equipment and maintain our own rental fleet.equipment. In addition to repair and maintenance on an as needed or scheduled basis, we provide ongoing preventative maintenance services and warranty repairs for our customers. We have committed substantial resources to training our technical service employees and have a full-scale service infrastructure that we believe differentiates us from our competitors. Approximately 44%43% of our employees are skilled service technicians.

Rental revenues. We rent heavy construction, compact, aerial, material handling, and a variety of other types of equipment to our customers on a daily, weeklyweekly, and monthly basis. Our rental fleet, which is well-maintained, has an original acquisition cost (which we define as the cost originally paid to manufacturers plus any capitalized costs) of $565.5$529.8 million as of December 31, 2024.2025. The original acquisition cost of our rental fleet excludes $5.7$3.1 million of assets associated with our guaranteed purchase obligations, which are assets that are not in our day-to-day operational control. In addition to being a core business, our rental business also creates cross-selling opportunities for us in our equipment sales and product support activities.

New equipment sales. Cost of new equipment sold primarily consists of the total acquisition costs of the new equipment we purchase from third parties.parties and costs to inspect, prepare, and deliver to the customer.

Used equipment sales. Cost of used equipment sold primarily consists of the net book value, or cost, of used equipment we purchase from third parties or the trade-in value of used equipment that we obtain from customers in new equipment sales transactions.transactions combined with our inspection, preparation, and delivery costs to sell to the customer.

Rental depreciation. Depreciation of rental equipment represents the depreciation costs attributable to rental equipment. Estimated useful lives vary based upon the type and usage of equipment. See Note 2, Summary of Significant Accounting Policies, for information on our rental equipment depreciation methods.

Operating expenses. These costs are comprised of three main components: personnel, operational, and occupancy costs. Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation, sale commissions, and employee benefits, such as medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, insurance, IT, office and shop supplies, general corporate costs, depreciation on non-sales and rental relatedrental-related assets, and intangible amortization. Occupancy costs are comprised of all expenses related to our facility infrastructure, including rent, utilities, property taxes, and building insurance.

The above tables contain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different thanin the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of operations, balance sheets or statements of cash flows of the company. We disclose non-GAAP financial measures, including Adjusted EBITDA and organic revenues and growth rates associated with organic revenues because we believe they are useful performance measures that assist in an effective evaluation of our operating performance. We believe such measures are useful for investors and others in understanding and evaluating our operating results in the same manner as our management. However, such measures are not financial measures calculated in accordance with U.S. GAAP and should not be considered as a substitute for, or in isolation from, net income,income (loss), revenues, or any other operating performance measures calculated in accordance with U.S. GAAP.

We define Adjusted EBITDA as net income (loss) before interest expense (not including floor plan interest paid on new equipment), income taxes, depreciation and amortization, adjustments for certain one-timeone-time, non-recurring or non-recurringnon-cash items, otherand items not necessarily indicative of our underlying operating performance and other items.performance. We exclude these items from net income (loss) in arriving at Adjusted EBITDA because these amounts are either non-cash, non-recurring or can vary substantially within the industry depending upon accounting methods and book values of assets, capital structuresstructures, and the method by which the assets were acquired.

We define organic revenue growth as revenue growth excluding the impact of acquisitions or divestitures that do not appear fully in both periods in the current and prior years. We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenues toacross priorreported periods as well as to industry peers.

Pursuant to the requirements of Regulation G, we have provided a reconciliation of Adjusted EBITDA and organic revenues to the most directly comparable U.S. GAAP financial measure in the tables above and organic revenues in the subsequent tables in management's discussion and analysis of our individualMaterial businessHandling and Construction Equipment segments. ThisThese measuremeasures isare supplemental to, and should be used in conjunction with, the most comparable U.S. GAAP measures. Management uses these non-GAAP financial measures to monitor and evaluate financial results and trends.

Other expense, net: Consolidated other expense, net for the year ended December 31, 20242025 was $84.9$82.0 million compared to $51.9$84.9 million for the year ended December 31, 2023.2024. The increasedecrease is primarily dueattributed to anthe increaseimpact of one-time events, specifically the gain on divestitures in 2025 and debt extinguishment losses in 2024 related to refinancing activities, all of which were partially offset by changes in interest expense,expense namelyyear aover result of the refinance of our Senior Secured Second Lien Notes during the second quarter of 2024.year.

Operating expenses: Operating expenses decreased by $1.8$3.9 million to $194.1$190.2 million for the year ended December 31, 20242025 as compared to the prior year, primarily due to a change in the intercompany allocation of costs and cost savings initiatives implemented duringin the second half of 2024 and early 2025. These initiatives included workforce optimization measures that resulted in reduced personnel-related costs, including expenses associated with the Company’s self-insured health plan. Further contributing to the year-over-year reduction was a decline in fuel costs, which primarilyprovided impactedmeaningful personnelbenefit relatedgiven expenses.the scale of our field-based technician workforce.

Other (expense) income,expense, net: Other expenses increased by $6.0$0.7 million to $23.6$24.3 million for the year ended December 31, 20242025 as compared to the same period last year. The increase isyear mainly relatedreflecting to the aforementioned cumulative change in intercompany expense allocation for shared service functions and increasedhigher interest expense dueresulting tofrom increased debt levels and a higher effective interest rates,rate inventory,following our 2024 debt refinancing, partially offset by a gain on divestiture from the sale of the Dock and rentalDoor fleetdivision levelsof realizedour business in 2024the whenNew comparedYork toand 2023.Boston regions.

Other (expense) income,expense, net: Construction Equipment other expense, net increaseddecreased by $17.6$1.5 million to $46.1$44.6 million for the year ended December 31, 20242025 as compared to the same period in 2023.2024. The variance was mainlydriven by the gain on the divestiture of substantially all our aerial fleet rental business in the greater Chicago area and was partially offset by increased interest expense due to increasedhigher floornominal plan interest expense related to a combinationlevels of higherdebt and the increase in our effective interest ratesrate onassociated higher levels of new inventory that were no longer withinwith the subsidized period of our OEMs, higher effective interest rates on operating debt borrowingsrefinancing andin increased debt from financed acquisitions within the segment (Ault and Burris purchased Q4 2023).2024.

For the year ended December 31, 2024,2025, gross profit margin on new and used equipment sales were 25.2%,20.5%, relatively flatdown from the prior year and inreflective lineof withhigher expectations.input costs generally related to the weakening of the U.S. dollar against the Euro and the influence of tariffs on imported goods. Parts sales gross profit margin waswere 43.8%41.9% for the year ended December 31, 2024,2025, down 520190 basis points compared to the same period last year, relatedfollowing broad-based increases in steel and aluminum tariffs partially offset by parts pricing actions and negotiations with major OEMs. These pricing actions, together with alternative sourcing initiatives, are expected to thesupport aforementionedmargin large component parts salesstabilization in 2023future and pricing pressures from aftermarket competitors of high-volume wear parts.periods.

Operating expenses: Master Distribution segment operating expenses were $16.5$11.8 million for the year ended December 31, 2024,2025, updown $0.6$4.7 million from 2023.2024. The increasedecrease fromprimarily reflects non-recurring costs incurred in the prior year is primarily related tofor non-cash adjustments for contingent consideration earn-outsexpense associated with the earnout component of the acquisition of Ecoverse in November 2022.Ecoverse. Removing the impact of earn-out related expenses, segment-level operating expenses were slightlyrelatively downflat againstdespite 2023.higher revenues in the current year.

Other expense, net: Master Distribution other expense was $4.8$6.5 million for the year ended December 31, 2024,2025, an increase of $1.4$1.7 million over the prior year primarily attributed to higher interest costs on larger inventory balances.balances and a higher effective interest rate given the debt refinance in 2024.

Cash Flow from Operating Activities. Cash flows from operating activities include net loss adjusted for non-cash items and the effects of changes in working capital. For the year ended December 31, 2023,2025, operating activities resulted in net cash provided by operations of $58.4$33.0 million. Our reported net incomeloss of $8.9$80.3 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory obsolescence and bad debt reserves, gain on divestitures, deferred income taxes, and stock-based compensation, provided net cash inflows of $111.8$57.3 million. Changes in working capital included $286.3$48.9 million of inventory purchased ($100.0 million of which $180.2 millioninventory was transferred into our rental fleet for replenishment and growth purposes), and aan $16.6$11.2 million increasedecrease in accounts receivable. Cash flows from operating activities were favorably impacted by $123.5$98.2 million due to proceeds from the sale of rent-to-sell equipment,equipment $122.5and unfavorably impacted by $55.4 million in net inflowsoutflows related to manufacturer floor plans and byplans, a $7.3$18.4 million increasedecrease in accounts payable, accrued expenses, customer deposits,leases, and other currentoperating liabilitiesliabilities, partiallyand offsetan by a $3.8$11.0 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.assets.

Cash Flow from Investing Activities. For the year ended December 31, 2024,2025, our cash used in investing activities was $56.2$22.7 million. This was mainly due to $73.4$55.0 million purchases of rent-to-rentrental equipment,equipment and non-rental property and equipment,equipment and intangibles, the acquisition of CEQ as discussed in Note 15, Business Combinations and Divestitures, and other investing activities partially offset by $17.2$20.9 million proceeds from the two divestitures discussed in Note 15, and $11.4 million proceeds from the sale of rent-to-rent equipment and non-rental property and equipment.

For the year ended December 31, 2023,2024, our cash used in investing activities was $117.4$56.2 million. This was mainly due to $123.3$73.4 million purchases of rent-to-rent equipment, non-rental property and equipment, Burris and Ault acquisition activity, and other investing activities partially offset by $5.4$17.2 million proceeds from the sale of rent-to-rent equipment and $0.5 million proceeds from the sale of non-rental property and equipment.

Cash Flow from Financing Activities. For the year ended December 31, 2024, cash used in financing activities was $17.9 million. This cash outflow was mainly due to the extinguishment of the Senior Secured Second Lien Notes due 2026 of $319.4 million combined with principal payments on long-term debt and finance lease obligations of $639.9 million and net payments related to non-manufacturer floor plans for the year of $12.8 million more than offsetting the $974.2 million of proceeds from long-term borrowings including the new $500.0 million Senior Secured Second Lien Notes due 2029. Additionally, there were cash outflows of $10.8 million for preferred and common stock dividends, $5.8 million for repurchases of common stock, and $1.5 million related to other financing activities.

Our principal sources of liquidity have been from cash provided by our service, parts and rentalrental-related operations and the sales of new, used, and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under our line of credit and floor plans. The Company also reported $13.4$18.6 million in cash as of December 31, 2024.2025. For more information on our available borrowings under the revolving line of credit, senior secured second lien notes, and floor plans, please refer to Note 8, Floor Plans and Note 9, Long-term Debt. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested as we do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs.

We face a number of uncertainties and risks that are difficult to predict and many of which are outside of our control. For a detailed discussion of the risks that affect our business, please refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.10-K. There have been no material changes from the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.10-K.

We own and operate one of the largest integrated equipment dealership platforms in North America. Through our branch network, we sell, rent, and provide parts and service support for several categories of specialized equipment, including lift trucks and other material handling equipment, heavy and compact earthmoving equipment, crushing and screening equipment, environmental processing equipment, cranes and aerial work platforms, pavingconcrete and asphalt paving equipment, other construction equipment, and allied products. We engage in five principal business activities in these equipment categories:

We have operated as an equipment dealership for 42 years and have developed a branch network that includes over 80 total locations in Michigan, Illinois, Indiana, Ohio, Pennsylvania, Massachusetts, Maine, Connecticut, New Hampshire, Vermont, Rhode Island, New York, Virginia, Nevada, and FloridaFlorida, and the Canadian provinces of Ontario, Quebec, and New Brunswick (serving the Maritimes). We offer our customers end-to-end solutions for their equipment needs by providing sales, parts, service, and rental offerings. Additionally, we provide design and build services related to automated equipment installation and warehouse management system integration solutions within our Material Handling segment.

Rental revenues. We rent heavy construction, compact, aerial, material handling, and a variety of other types of equipment to our customers on a daily, weekly, and monthly basis. Our rental fleet, which is well-maintained, has an original acquisition cost (which we define as the cost originally paid to manufacturers plus any capitalized costs) of $522.1$517.1 million as of MarchJune 31,30, 2026. The original acquisition cost of our rental fleet excludes $2.5$2.1 million of assets associated with our guaranteed purchase obligations, which are assets that are not in our day-to-day operational control. In addition to being a core business, our rental business also creates cross-selling opportunities for us in our equipment sales and product support activities.

New equipment sales. Cost of new equipment sold primarily consists of the total acquisition costs of the new equipment we purchase from third partiesOEMs and costs to inspect, prepare, and deliver to the customer.

Used equipment sales. Cost of used equipment sold primarily consists of the net book value, or cost, of used equipment we purchase from third parties or the trade-in value of used equipment that we obtain from customers in new equipment sales transactions combined with our inspection, preparation, and delivery costs to sell to the customer.

Rental depreciation. Depreciation of rental equipment represents the depreciation costs attributable to rental equipment. Estimated useful lives vary based upon the type and usage of equipment. See Note 2, Summary of Significant Accounting Policies, of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025 for information on our rental equipment depreciation methods.

The three and six months ended MarchJune 31,30, 2026 and 2025

We define Adjusted EBITDA as net income (loss) before interest expense (not including floor plan interest paid on new equipment), income taxes, depreciation and amortization, adjusted for certain one-time, non-recurring or non-cash items, and items not necessarily indicative of our underlying operating performance. We exclude these items from net income (loss) in arriving at Adjusted EBITDA because these amounts are either non-cash, non-recurringnon-recurring, or can vary substantially within the industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired.

Operating expenses: Consolidated operating expenses increased by $0.8$2.3 million to $115.0$112.2 million for the three months ended MarchJune 31,30, 2026 and increased by $3.1 million to $227.2 million for the six months ended June 30, 2026, compared to the same periodperiods lastin year,2025. drivenThe increases were primarily byattributable to higher healthcare costs resulting from unfavorable claims experience and the impact of inflationary cost pressures and higher health benefit costs associated with unfavorable claims experience.pressures. These increases were partially offset by lowerthe benefits of workforce optimization initiatives, disciplined expense management, and other cost-saving actions implemented across the Company's operating expenses in the Construction Equipment segment resulting from workforce and expense management initiatives.segments.

Other expense, net: Consolidated other expense, net for the three months ended MarchJune 31,30, 2026 reducedwas by $3.4 million to $17.6$19.9 million compared to $21.0$17.2 million for the same period in 2025. The varianceincrease was primarily attributableattributed to a loss on divestiture recognized during the current year compared to a gain on divestiture recognized in the prior year. These unfavorable variances were partially offset by lower floor plan and other interest expense resulting from lowerreduced borrowing ratesinventory and inventoryrental optimizationfleet initiativeslevels asand welllower asbenchmark ainterest gain on divestiture in our Material Handling segment.rates.

Income tax (benefit) expense: The Company recorded an income tax benefit of $3.8$0.4 million and expense of $0.7$1.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and an income tax benefit of $4.2 million and expense of $2.0 million for the six months ended June 30, 2026 and 2025, respectively. During the three and six months ended MarchJune 31,30, 2026, the income tax benefit was primarily attributable to the net loss for the period.period and provision to return reconciliation in the second quarter of 2026. The income tax expense in 2025 was primarily a result of adjustments of the Company's valuation allowance against a portion of the deferred tax asset relating to U.S. disallowed interest expense carryforwards partially offset by the benefit attributable to the net loss for the period.

Revenues: For the threesix months ended MarchJune 31,30, 2026, Material Handling segment revenues decreased by $7.4$12.6 million, or 4.7%,4.0%, to $150.5$306.0 million as compared to the same period last year. The decline in revenues reflects continued softness in new equipment deliveriesdeliveries, partially offset by stable serviceproduct support revenues and higher rental equipment sales. Organic sales of new and used equipment decreased $2.6$6.5 million, or 3.5%,4.2%, reflectiveprimarily due to lower new equipment deliveries related to lower customer booking activity observed in the second half of slow2025. JanuaryDespite activities.the Whiledecline in equipment sales, backlog levels remained healthy and bookings momentum developedimproved lateras the period progressed, supporting expectations for stronger invoicing activity in the quartersecond inhalf certainof markets,2026. improvementsOrganic were not able to offset early quarter softness. Productproduct support revenuesperformance declinedremained modestly on an organic basis,stable, with parts sales down $1.1$0.7 million and service revenues downup $0.2$1.7 million compared to the prior year. Product support performance remained stable despiteDespite challenging weather conditions and technician availability constraints,constraints supportedin the first quarter, service revenues were buoyed by improved effectivepricing labor ratesdiscipline and continuedstrong pricingoperational discipline.execution in several regions. Rental revenues decreased $1.2$2.0 million, or 6.9%,5.7%, on an organic basis, reflecting a lower average volumefleet-on-rent ofand ongoing fleet onoptimization rent.initiatives. In contrast, rental equipment sales increased $0.4$1.6 million, or 11.4%,20.5%, primarily due to higher disposal activity associated with the targeted disposalreduction of underutilized assetsfleet and increased customer demand for cost effective used equipment alternatives.assets. These actions were consistent with intentionalthe enterprise-wideCompany's strategic fleet optimization efforts.efforts to develop a more productive and better-utilized rental fleet.

Material Handling gross profit for the three months ended MarchJune 31,30, 2026 increased 50180 basis points to 35.1%34.5% compared to 34.6% in the same period in 2025. The improvement in gross margin reflects favorable mix and margin performance in service and equipment sales, partially offset by lower parts and rental revenue margins. Gross margins on newNew and used equipment sales gross margins increased 1030 basis points,points for the three months ended June 30, 2026 as compared to the same period in 2025, remaining largely consistent year over year. Parts gross margins decreaseddeclined 1080 basis points,points generallyprimarily consistentreflecting withproduct expectations.mix and competitive market conditions during the quarter. Service margins increased 50440 basis points,points drivenfor the three months ended June 30, 2026 compared to the prior year period, supported by higher effective labor ratesrate andincreases, improved technician efficiency.utilization, and strong service execution. Rental revenues gross margins have decreased 28020 basis pointspoints, primarilystaying dueconsistent towith theprior influenceyear ofmargin fixed depreciation costs on a lower revenue base.experience. Rental equipment sales margins increaseddeclined 990to basis34.5% points,from reflecting41.9%, favorabledue timingto anda higher mix of lower-margin asset dispositions; however, margins on rent-to-rent equipment sales can vary meaningfully depending onas the ageCompany continued to optimize fleet levels and compositionexit ofunderperforming assetsrental sold,product as many of these assets are disposed of after being fully depreciated.categories.

Operating expenses: Material Handling operating expenses increased modestlydecreased by $0.4$1.3 million to $49.4$45.1 million for the three months ended MarchJune 31,30, 2026 and decreased by $0.9 million to $94.5 million for the six months ended June 30, 2026 as compared to the same periods last year. TheThese increasefavorable reflectsresults inflationarywere driven by several cost pressuressaving andinitiatives higherimplemented by the Company during the year; however, unfavorable claims experience under the Company's self-insured healthcare costs,plan partially offset bythose costsavings managementduring initiatives.the second quarter.

Other expense, net: ForOther expense, net increased by $0.6 million to $6.7 million for the three months ended MarchJune 31,30, 2026,2026 other expense, netand decreased by $0.7$0.1 million to $5.5$12.2 million,million for the six months ended June 30, 2026, compared to the same period in 2025. The improvementyear-to-date decline was primarily attributable to a $0.2 million gain on the divestiture of the Company's battery shop business in New England and lower floor plan interest expense.associated with reduced inventory levels, which was offset by a loss from the working capital adjustment of a prior year divestiture.

Revenues: Construction Equipment segment revenues decreased by $1.5$4.2 million, or 0.6%,0.8%, to $244.3$542.3 million for the threesix months ended MarchJune 31,30, 2026 as compared to the same period last year. The overall decline in revenues reflects a combination of seasonality andharsh winter weather disruptionconditions earlyexperienced during the first quarter of 2026 when compared to the same period in the2025, quarter,which reduced service productivity and delayed customer equipment deliveries in certain markets, partially offset by strategic inventory actionsand resultingfleet optimization initiatives that resulted in higher rental equipment sales volumes. New and used equipment sales decreased $5.5$3.9 million from the prior yearyear, driven primarily by moderately softerlower new equipment demand across all regions and typical seasonal softness following a record sales quartervolumes in the fourthfirst quarterquarter, ofpartially 2025.offset by improved market conditions and customer deliveries in certain regions in the second quarter. Rental equipment sales increased for the threesix months ended MarchJune 31,30, 2026 by $8.9$8.0 million primarily due to the targeted disposals and portfoliofleet optimization efforts to address underutilized assets and align the rent-to-sell fleet with sustainable customer demand. Product support revenues were modestly lower overalloverall, with parts sales essentially flat year over year and service revenues down versus the prior year. The overall decrease in product support of 3.0%3.2% was primarily the result of constrained billable capacity dueattributable to weather-impactedweather-related seasonalimpacts factors.experienced during the first quarter as well as tactically-driven lower technician headcount (in an effort to drive overall technician productivity and profitability) and reduced service throughput in certain regions. Rental revenues decreased $1.4$1.5 million organically for the threesix months ended MarchJune 31,30, 2026 reflecting a smaller average rental fleet andas lowerthe utilizationCompany in select markets comparedcontinues to the prior year. The year-over-year decline in rental revenues is consistent with the Company’s strategic repositioning of its rent-to-selloptimize fleet tosize, alignimprove withasset currentutilization, marketand demand.enhance returns on invested capital.

Construction Equipment gross profit decreased by 11060 basis points to 21.6%21.7% in the threesix months ended MarchJune 31,30, 2026 compared to 22.7%22.3% in the same period of 2025. New and used equipment sales margins increased to 11.7%,12.3%, up 3070 basis points year over yearyear. andThe 150improvement basisprimarily pointsreflects a more favorable sales mix as well as a more favorable pricing environment compared to theprior fourthyear quarterwhen ofelevated 2025,industry reflectinginventory favorable product mixlevels and signalingcompetitive andiscounting improvingpressures marginnegatively environment.impacted margins. Parts sales margins weredecreased reduced30 basis points for the threesix months ended MarchJune 31,30, 2026, decreasing 140 basis points when compared to the same time last year but remain within expected ranges. Service gross margins decreased by 120 basis points year over yearyear, primarily reflecting increasedan unfavorable labor mix as a greater proportion of technician hours were absorbed by non-billable activityinternal and expense work, together with throughput disruptiondisruptions associated with winter operating conditions.conditions during the first quarter. Rental revenues gross margin for the threesix months ended MarchJune 31,30, 2026 increased 10070 basis points compared to the prior yearyear, primarily reflecting lower sublet costs, freight, and repair and maintenance expenses as a percentage of rental revenues. Conversely, gross margins on rental equipment sales decreased 870710 basis points from the prior year, largely reflecting athe higherimpact of fleet optimization efforts and the resulting mix of lower-marginassets assetsold, dispositions consistent withas the Company’sCompany targeted effortscontinued to optimize rent-to-sell fleet levels and dispose of underutilized equipment.rental equipment and align fleet size with demand and utilization objectives.

Other expense, net: Construction Equipment other expense, net decreasedincreased $0.9by $3.1 million to $11.5$10.5 million for the three months ended MarchJune 31,30, 2026 and increased by $2.2 million to $22.0 million for the six months ended June 30, 2026, as compared to the same periodperiods in 2025. The improvementincrease was primarily attributable to the gain on divesture in second quarter of 2025 partially offset by lower interest expense,expense in current year, driven primarily by athe combination of lower ratesinventory and the Company's enterprise-wide inventoryrental optimization initiative.initiatives.

For the threesix months ended MarchJune 31,30, 2026, gross profit was $3.9$9.8 million, aan decreaseincrease of $0.6$1.1 million compared to the prior year. Gross profit margin decreasedincreased 310190 basis points to 22.8%,24.6%, primarily reflecting marginimproved compressionmargins in new and used equipment sales. GrossThe improvement reflects the benefit of reduced tariff-related pressures during the second quarter, improved OEM pricing dynamics, a more favorable foreign exchange environment, and the benefit of the initial tranche of tariff refund payments, resulting in gross profit margins on new and used equipment sales wereincreasing 19.1%,to down23.7%, up 150 basis points from the prior year reflecting higher relative product costs driven by the impact of tariff costs embedded in inventory sold during the quarter.year. Parts gross profit margin was 44.4%33.9% for the threesix months ended MarchJune 31,30, 2026, up 27060 basis points compared to the same period last year butand consistentin line with expectationsexpectations. andA historicalmore averages overall. Easingstable tariff regulationsenvironment and renegotiated pricing with OEMs are expected to provide furtheradditional support of the segment'sfor gross margins in future periods.

Operating expenses: Master Distribution segment operating expenses totaled $3.5$3.7 million and $7.2 million for the three and six months ended MarchJune 31,30, 2026, ana increasedecrease of $0.1 million,million orand 2.9%, comparedflat to the prior year.year, respectively. The increasequarter-to-date decrease was primarily attributable to normalthe cost inflationstabilizing andinitiatives remainspartially alignedoffset withby expectations.negative variances in higher healthcare claims in the second quarter.

Other expense, net: Master Distribution other expense, net was $1.8$1.9 million for the three months ended MarchJune 31,30, 2026, a $0.2 million increase compared to the same period last year. Other expense, net was $3.7 million for the six months ended June 30, 2026, an increase of $0.2$0.4 million compared to the priorsame period last year. The year-to-date increase was primarily attributable to higher interest expense driven by higher relative average inventory balances partially offset by lower benchmark interest rates.

The threesix months ended MarchJune 31,30, 2026 and 2025 Cash Flows

Cash Flow from Operating Activities. Cash flows provided by operating activities include net loss adjusted for non-cash items and the effects of changes in working capital. For the threesix months ended MarchJune 31,30, 2026, operating activities resulted in net cash provided by operations of $20.8$26.1 million. Our reported net loss of $19.5$27.0 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory and bad debt reserves, gainloss on divestiture,divestitures, deferred income taxes, and stock-based compensation, provided net cash inflows of $4.3$28.8 million. Cash flow changes from working capital included $38.8$61.9 million of inventory purchased ($30.0$69.1 million of inventory was transferred into our rental fleet primarily for replenishment purposes), a $6.0 million in net inflow from accounts payable, accrued expenses, leases, and aother $6.5operating liabilities offset by $29.6 million outflow from accounts receivable. Cash flows from operating activities were favorably impacted by $26.8$50.6 million due to proceeds from the sale of rent-to-sell equipment, $21.5$36.3 million in net inflows related to manufacturer floor plans and $13.7 million in net inflow from accounts payable, accrued expenses, leases, and other operating liabilities partially offset by a $0.2$4.1 million net outflow related to prepaid expenses and other assets.

For the threesix months ended MarchJune 31,30, 2025, operating activities resulted in net cash used in operations of $17.5$3.4 million. Our reported net loss of $20.9$27.0 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory and bad debt reserves, gain on divestiture, deferred income taxes, and stock-based compensation, provided net cash inflows of $9.3$32.5 million. CashChanges flow changes fromin working capital included $41.6$21.1 million of inventory purchased ($28.4$66.7 million of inventory was transferred into our rental fleet primarily for replenishment purposes) and a $9.1$6.8 million outflowincrease fromin accounts receivable. Cash flows from operating activities were favorably impacted by $18.6$44.8 million due to proceeds from the sale of rent-to-sell equipment and a $14.4 million inflow from accounts payable, accrued expenses, leases, and other operating liabilities, partially offset by $6.0$41.0 million in net outflows related to manufacturer floor plans, and byan $3.1$11.8 million net outflowschange pertaining toin prepaid expenses and other assets.assets and accounts payable, accrued expenses, leases, and other operating liabilities.

Cash Flow from Investing Activities. For the threesix months ended MarchJune 31,30, 2026, our cash used in investing activities was $3.5$4.0 million. This was mainly due to $10.0$16.0 million in purchases of rental equipment and non-rental property and equipment and other investing activities partially offset by $8.7 million proceeds from the sale of rent-to-rent equipment, $1.8 million proceeds from the sale of non-rental property and equipment, and $1.5 million proceeds from the divestiture as discussed in Note 15, $3.4 million proceeds from the sale of rent-to-rent equipment, and $1.6 million proceeds from the sale of non-rental property and equipment.15.

For the threesix months ended MarchJune 31,30, 2025, our cash used in investing activities was $14.3$8.4 million. This was mainly due to $16.8$31.6 million purchases of rental equipment and non-rental property and equipment, the acquisition of Les Chariots Elevateurs Du Quebec Inc., and other investing activities,activities partially offset by $2.3$18.0 million proceeds from the divestiture of our aerial fleet rental business in Illinois, $4.9 million proceeds from the sale of rent-to-rent equipmentequipment, and $0.2$0.3 million proceeds from the sale of non-rental property and equipment.

Cash Flow from Financing Activities. For the threesix months ended MarchJune 31,30, 2026, cash used in financing activities was $11.9$19.6 million. This cash outflow was due to the $9.1$6.8 million of net payments on our line of credit, long-term borrowings, and finance lease obligations, net payments of $1.1$9.6 million related to non-manufacturer floor plans, payments of $0.8$1.5 million for preferred stock dividends, and $0.9$1.7 million related to other financing activities.

For the threesix months ended MarchJune 31,30, 2025, cash provided by financing activities was $29.5$11.4 million. This cash inflow was mainly due to the $34.5$29.6 million of net proceeds from our line of credit, long-term borrowings, and finance lease obligations, which funded the increase in net working capital previously noted.obligations. These cash inflows were partially offset by payments of $2.7$5.4 million for preferred and common stock dividends, net payments of $1.5$5.9 million related to non-manufacturer floor plans, $6.5 million for common stock repurchases, and $0.8$0.4 million related to other financing activities.

Our principal sources of liquidity have been from cash provided by our service, parts and rental-related operations and the sales of new, used, and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under our line of credit and floor plans. The Company also reported $23.9$20.9 million in cash as of MarchJune 31,30, 2026. For more information on our available borrowings under the revolving line of credit, senior secured second lien notes, and floor plans, please refer to Note 8, Floor Plans and Note 9, Long-termLong-Term Debt. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested as we do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs.

The amount of our future capital expenditures will depend on a number of factors including general economic conditions, the state of our industry and the markets we serve, and our growth prospects. Our gross rental fleet capital expenditures for the threesix months ended MarchJune 31,30, 2026 was $36.3$78.1 million, including $30.0$69.1 million of transfers from new and used inventory to rent-to-sell rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of $30.2$59.3 million for the threesix months ended MarchJune 31,30, 2026 as our business model is to sell lightly used inventory to customers from our rental fleet to increase field population in our geographies. In response to changing economic conditions, we have the flexibility to modify our capital expenditures, especially as it relates to rental fleet.

To service our debt, we will require a significant amount of cash. Our ability to pay interest and principal on our indebtedness, will depend upon our future operating performance and the availability of borrowings under the line of credit and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business, and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flows from operations, available cash, and available borrowings under the line of credit will be adequate to meet our future liquidity needs for the foreseeable future. As of MarchJune 31,30, 2026, we had $400.2$373.8 million of available borrowings under the ABL Facility and Floor Plan Facilities.

In the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures. Our management reviews these estimates and assumptions on an ongoing basis. While we believe the estimates and judgments we use in preparing our consolidated financial statements are reasonable and appropriate, they are subject to future events and uncertainties regarding their outcome; therefore, actual results may materially differ from these estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts first become known. See Note 2 to the consolidated financial statements contained in the Company’s 2025 Annual Report on Form 10-K for a summary of our significant accounting policies.