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

We purchase raw materials, component parts and finished goods to be used in the manufacturing, sale and rental of our products. In addition, we may incorporate vehicle chassis provided directly by our customers in our production process. Although the vast majority of our raw materials and component parts are sourced domestically, certain of our suppliers are based in other countries, and certain of our domestic suppliers may source subcomponents from suppliers based in other countries. Uncertainty remains regarding supply chain disruptions, inflationary pressure, tariffs and international trade restrictions, public health crises, and geopolitical risks that have led to issues, broadly, in the supply chain. Changes in our relationships with suppliers, shortages in availability of materials, production delays, regulatory restrictions, public health crises, armed conflicts or political instability or other supply chain disruptions, whether due to our suppliers or customers, could have a material adverse effect on our ability to timely manufacture and market products.

The cost of new equipment from manufacturers that we purchase for use in our rental fleet or for sale may increase as a result of factors beyond our control, such as inflation, higher interest rates, tariffs and increased labor and raw material costs, including increases in the cost of steel, which is a primary material used in most of the equipment we use or sell. Such increases could materially impact our financial condition and results of operations in future periods if we are not able to pass such cost increases through to our customers in the form of higher prices. In addition, ourin recent years we have maintained high levels of inventory has increased recently as part of our measures to manage supply chain challenges. Due to changing demands of our customers, the types of equipment we rent or sell to our customers may become obsolete, resulting in a negative impact on our results of operations and financial condition due to, with respect to our rental fleet, increased capital expenditures required to replace the obsolete equipment, and our potential inability to sell the obsolete equipment in the used equipment market. Our efforts to realign our inventory with market demand may not be successful. In addition, we may incur losses upon dispositions of our rental fleet due to residual value risk or upon any write-off and write-down of our sales inventory.

If the average age of our fleet of rental equipment were to increase, the cost of maintaining our equipment, if not replaced within a certain period of time, will likely increase. If our operating costs increase as our rental equipment fleet ages and we are unable to pass along such costs, our results of operations will be negatively impacted. As of December 31, 2024,2025, the average age of our rental equipment fleet was less than fourthree years. The costs of maintenance may materially increase in the future. Any significant increase in such costs could have a material adverse effect on our business, financial condition and results of operations.

Our ERS segment has experienced some near-term pressure in demand in the utility market due to a lack of customer access to financing in a tight credit environment, and our customers’ decision to delay purchase decisions being influenced by their expectation of lower interest rate to come and the previous uncertainty surrounding the 2024 presidential election. We cannot guarantee that future political and public policy uncertainties, limitations on the availability of capital, higher or changing costs of capital, or the desire to preserve liquidity, will not cause our current or prospective customers to make reductions in future capital budgets and spending.

Many of our customers operate in regulated industries (for example, electric utility T&D, telecom, rail, and general infrastructure) and are subject to laws and regulations that can change frequently and without notice. Throughout 2024, our ERS segment experienced near-term pressure on demand in the utility market, partially caused by regulatory compliance issues that affected the timing of customers’ job starts. The adoption of new laws or regulations, or changes to the enforcement or interpretation of existing laws or regulations, could cause our customers to reduce or delay spending on the products and services we provide.

We face evolving cybersecurity risks that threaten the confidentiality, integrity, and availability of our IT systems and Confidential Information, and we and our service providers have experienced and expect to continue to experience cyberattacks and security incidents. Despite various security controls and measures, we and third parties remain vulnerable to cyberattacks and security incidents resulting from malware (e.g., ransomware), computer viruses, software and hardware vulnerabilities, malfeasance by external or internal actors (including state-sponsored organizations, opportunistic hackers and hacktivists, and insider data misappropriation), and/or incidents attributable to human error (e.g., due to social engineering or phishing), as well as malicious code embedded in open-source software, or misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our third parties’) IT systems, products or services. The White House, the SEC and other regulators have accordingly increased their focus on companies’ cybersecurity vulnerabilities and risks. We have also observed a global increase, in both frequency and impact, in cybersecurity threats and more sophisticated cyber-attacks and threat actors. Such attacks and threats are unpredictable as to their timing, nature and scope. As a result, we may be unable to anticipate or prevent future attacks, particularly as the methodologies utilized by attackers change frequently or are not recognized until launched, and we may be unable to identify, investigate or remediate incidents due to the increased use by threat actors of tools and techniques—including artificial intelligence— that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will beare fully implemented, complied with or effective in protecting our IT systems and Confidential Information.Information at all times. Cybersecurity risks due to work-from-home arrangements at the Company and third parties have increased due to the challenges associated with managing remote computing assets and the security vulnerabilities in many non-corporate and home networks. Given the complexity of our software and tools that we deploy in our IT systems, we regularly identify and track security vulnerabilities but cannot guarantee that patches will be applied comprehensively or before vulnerabilities can be exploited by a threat actor.

Our operations are subject to certain federal, state and local laws and regulations relating to, among other things, climate change, the generation, storage, handling, emission, transportation, disposal and discharge of hazardous and non-hazardous substances and materials into the environment, the manufacturing of motor vehicles and other equipment and employee health and safety. We may require permits or other approvals under certain laws, which may delay our ability to execute portions of our business strategy. Additionally, compliance with such laws and regulations can be costly, and our costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to our operations. We currently make, and in the future may be required to make additional capital expenditures to comply with environmental and other regulations, such as:

•Reclamation andReclamation, remediation and other environmental protection; and

Reporting expectations are also increasing, with a variety of customers, capital providers, and regulators seeking increased information on climate related risks. For example, the SEC has proposed a rule that, if adopted, may require us to incur significant costs to assess and disclose on a range of climate-related data and risks. Increased scrutiny from various parties may also result in increased compliance costs and increased legal risks may also impact our suppliers or customers, which may indirectly impact our business, financial condition, or results of operations.

During 2023, we published our inaugural ESG report, and we may in the future engage in additional voluntary ESG initiatives (such as voluntary disclosures, certifications, or goals, among others) or commitments to improve the ESG profile of ourthe companyCompany and/or our products; such initiatives or achievements of such commitments may be costly and may not have the desired effect. For example, expectations around company’sthe Company’s management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. In addition, we have committed and may continue to commit to certain initiatives or goals and we may not ultimately be able to achieve such commitments or goals due to factors that are within or outside of our control. Moreover, actions or statements that we have taken and may take in the future based on expectations, assumptions, methodologies, or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous, insufficient, unaligned with stakeholder expectations, or be subject to misinterpretation. Certain such expectations, assumptions and methodologies are necessarily uncertain due to the long timelines involved and the varying approaches to identifying, assessing, addressing, and reporting on ESG matters. Our disclosures on these matters, a failure to satisfy evolving stakeholder expectations for ESG practices and reporting, or a failure to meet our commitments or targets on our established timeline may potentially harm our reputation and negatively impact relationships with certain investors and other stakeholders. Even if this is not the case, our current actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our ESG initiatives and disclosures, even if such initiatives are currently voluntary.

We are a specialty equipment provider to the electric utility transmission and distribution, telecommunications, rail and other infrastructure-related industries in North America. Our core business relates to our new equipment inventory and rental fleet of specialty equipment that is utilized by service providers in infrastructure development and improvement work. We offer our specialized equipment to a diverse customer base, including utilities and contractors, for the maintenance, repair, upgrade, and installation of critical infrastructure assets, including distribution and transmission electric lines, telecommunications networks and rail systems, as well as for lighting and signage. We rent, produce, sell and service a broad range of new and used equipment, including bucket trucks, digger derricks, dump trucks, cranes, service trucks, and heavy-haul trailers. WeThrough manageDecember 31, 2025, we managed the business in three reporting segments: Equipment Rental Solutions (“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts and Services (“APS”).

Depreciation of rental equipment — Depreciation of rental equipment is comprised of depreciation expense on the rental fleet. We allocate the cost of rental equipment generally over the rentable life of the equipment. The depreciation allocation is based upon estimated lives ranging from fiveone to seven years. The cost of equipment is depreciated to an estimated residual value using the straight-line method.

Financing and other (income) expense — Financing and other expense (income) reflects the financing expense (income) associated with lease agreements qualifying to be accounted for as a sales-type lease, foreign currency gains and losses related to our Canadian operations, as well as other miscellaneous gains or losses from non-operating activities. Also included in financing and other expense (income) are the unrealized remeasurement gains and losses related to ourderivative interestfinancial rate collar and redeemable warrants.instruments.

Interest expense — Interest expense consists of contractual interest expense on outstanding debt obligations, floor plan financing facilities, amortization of deferred financing costs and other related tofinancing derivative financial instruments.expenses.

WeThrough operateDecember in31, 2025, we reported our results under three reportable operating segments: Equipment Rental Solutions, Truck and Equipment Sales and Aftermarket Parts and Services.

We continue to focus on six primary end-markets: Electric Utility Transmission and Distribution, or T&D, Telecom, Rail, Forestry, Waste Management, and Infrastructure. In the T&D end-market, we continue to observe demand for new generation assets resulting in the development of new transmission lines as well as repair projects to address advanced-age transmission and distribution grids to replace existing lines and poles. These factors resulted in continued demand from our customers of the Company’s products and services. Telecom, specifically the continued expansion of 5G, has seen some positive trends over the last few years. Our existing T&D related contactorcontractor customers will continue to deliver the roll-out, and our existing equipment portfolio aligns well with the needs of this market. Rail investment, both in the freight and commuter markets, remains robust. The existing rail infrastructure is aged and in need of maintenance. Infrastructure also provides potential growth opportunities as seen by the major road and bridge maintenance work experienced across the United States.

DepreciationTotal of Rental EquipmentRevenue - DepreciationThe expenseincrease ofin our rental equipmentrevenue for the year ended December 31, 20242025, increased asis a result of higher rental revenue driven by higher average OEC on rent as well as strong new and used equipment levels.sales.

TotalDepreciation Otherof OperatingRental ExpensesEquipment - OtherDepreciation Operatingexpense expensesof increasedour rental equipment for the year ended December 31, 2024,2025, primarilyincreased as a result of anhigher increaserental inequipment transaction expenses and other due to new site openings and launch of new line of businesses.levels.

Income Tax Expense (Benefit) - Our overall effective tax rate is affected by a number of factors, such as the relative amounts of income we earn in differing tax jurisdictions, tax law changes, certain non-deductible expenses (non-taxable income), such as compensation disallowance and mark-to-market adjustments on derivative financial instruments, and changes in the valuation allowance we establish against deferred tax assets. The rate is also affected by discrete items that may occur in any given year, such as legislative enactments and changes in our corporate structure that may occur.structure. These discrete items may not be consistent from year to year. For the year ended December 31, 2024,2025, the changes in the effective tax rates were primarily due to pre-taxtaxable bookincome lossin states that do not follow federal deductibility rules and theforeign effectssourced of permanent adjustments in the current period,income, resulting in an overall effective tax rate in the period of 1.8%,(10.4)%, $0.5with $2.9 million of tax expense being recognized. For the year ended December 31, 2023,2024, pre-tax book loss and the impacteffects of statepermanent incomeadjustments taxes and a tax benefit fromin the reduction to the valuation allowanceperiod resulted in an overall effective tax rate in the period of 12.7%,1.8%, $7.4with a $0.5 million of tax expensebenefit recognized.

Cost ofTotal Revenue - The decreaseincrease in total costrevenue offor revenuethe ERS segment for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was largely due to thean decreaseincrease in rental revenue as well as rental equipment sales. Rental revenue increased as a result of higher fleet utilization of 5.1%, driven by an increase in average OEC on rent by 14.1%. Rental equipment sales volume.increased due to higher year-end buyout activity of rental contracts with purchase options.

GrossCost Profitof Rental Revenue - The decreaseincrease in grosscost profitof rental revenue for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was largely due to the decreaseincrease in rental revenues and rental equipment sales.activity.

Cost of Equipment Sales - The increase in cost of equipment sales for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was due to an increase in new equipment salessales, volume.driven by robust demand for vocational vehicles across our end markets, particularly demand from local and regional customers.

GrossCost Profitof Equipment Sales - The increase in grosscost profitof equipment sales for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was due to higheran volumeincrease ofin equipment sales.sales volume.

Total Revenue - TotalThe decrease in total revenue increased for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, duewas todriven theby increasea decrease in parts and services revenue partiallyprimarily offsetdue byto asofter decreasedemand inacross rentals ofparts, tools and accessoriesaccessories, tiedand tolower theservice decline in rental revenue in the ERS segment.activity.

Cost of Revenue - The increasedecrease in cost of revenue for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, aswas adriven resultby ofthe higherdecline costsin ofparts materials.purchased.

Gross Profit - The decreaseincrease in gross profit for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily driven by the decrease in tools and accessories rentals with an increase in rental revenue which has lower costs ofassociated materialswith driving gross profit down.it.

Our principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities as described below. We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service and capital requirements, including investments in our rental fleet, over the next 12 months and beyond. As of December 31, 2024,2025, we had $3.8$6.3 million in cash and cash equivalents compared to $10.3$3.8 million as of December 31, 2023.2024. As of December 31, 2024,2025, we had $582.9$698.0 million of outstanding borrowings under our ABL Facility compared to $552.4$582.9 million of outstanding borrowings as of December 31, 2023.2024. DuringAvailability August 2024,under the ABL Facility was amended to, among other things, provide an additional $200.0 million of borrowing capacity and extend the maturity date to August 9, 2029. Availability under the senior secured credit facility was $364.0$248.1 million as of December 31, 2024,2025, and based on our borrowing base, we have an additional $158.3$200.8 million of suppressed availability that we can potentially utilize by upsizing our existing facility. For further information on the ABL Facility amendment,Facility, see Note 8: Long-Term Debt in the Notes to the Unaudited Condensed Consolidated Financial Statements.

The Company presents Net Leverage Ratio, which is equivalent to Consolidated Total Net Leverage Ratio in our ABL Credit Agreement and Consolidated Total Debt Ratio in the Indenture,Indenture. Net Leverage Ratio is defined as Net Debt over Adjusted EBITDA for the previous twelve-month period. Net debt is defined as total debt (calculated as current and long-term debt, excluding deferred financing fees, plus current and long-term finance lease obligations) minus cash and cash equivalents.

Floor Plan Financing. We have floor plan payables of $801.3$657.4 million at December 31, 20242025 that represent financing arrangementarrangements to facilitate our purchase of chassis, parts, components and attachments inventory. All floor plan payables are collateralized by the inventory financed. These payables become due and payable upon the sale, transfer, or reclassification of each unit to inventory. See Note 6: Floor Plan Financing in the Notes to the Consolidated Financial Statements under Part II, Item 8, for obligations related to trade and non-trade floor plan financings.

As of December 31, 2024,2025, we had cash and cash equivalents of $3.8$6.3 million, aan decreaseincrease of $6.5$2.5 million from December 31, 2023.2024. Generally, we manage our cash flow by using any excess cash, after considering our working capital and capital expenditure needs, including paying down the outstanding balance under our ABL Facility, and availability under our credit facilities.

Net cash from operating activities was $122.0$310.1 million for the year ended December 31, 2024,2025, as compared to $30.9$122.0 million usedin for2024. The increase in net cash from operating activities in the same period of 2023. The change year over year is driven by lower levels of inventory production throughout 20242025 compared to 2023.2024.

Cash Flows fromfor Investing Activities

Net cash used in investing activities was $187.5$282.5 million for the year ended December 31, 2024,2025, as compared to cash used in investing activities of $176.6$187.5 million in 2023.2024. The increase in cash used in investing activities is due to an increase in purchases forof rental equipment of $34.1$58.7 million, cash paid for acquisitions of businesses (net of cash acquired) of $6.0 million,million and a decrease in proceeds from sales and disposals of rental equipment of $25.0 million partially offset by proceeds from the sale leaseback transaction (net of expenses) of $52.5 million, partially offset by a decrease in purchases of non-rental property and cloud computing arrangements of $8.7 million.

Cash Flows (for) from Financing Activities

Net cash providedused byin financing activities was $58.3$25.3 million for the year ended December 31, 2024,2025, as compared to $202.9net cash from financing activities of $58.3 million in 2023.2024. The decreaseincrease in cash providedused byin financing activities is primarily due to a decrease in proceeds of $152.1 million, net of repayments, from floor plan financing and long term debt arrangements, and an increase in cashrepayments paidon forfloorplan theliabilities repurchaseand long-term debt of common$45.8 stockmillion and lower proceeds from floorplan liabilities and long-term debt of $9.9$34.1 million.

Quantitative Impairment Test – The quantitative impairment test involves a comparison of the estimated fair value of a reporting unit to its carrying amount with the fair value of a reporting being unit being estimated by using a discounted cash flow model (the “income approach”) that calculates fair value as the present value of expected cash flows of the reporting unit. Additionally, a market analysis is performed that encompasses an analysis of comparable publicly-traded companies (the “market approach”).

While we no longer remain in a financial reporting loss position based on a cumulative pre-tax loss for the three-year period ended December 31, 2024,2025, the determination of the valuation allowance is based on our evaluation of the periods over which future taxable items are expected to be utilized to offset tax loss and deduction carryforward items in those future periods. That is, future forecasts of our taxable income are not considered in the evaluation of realizability of our deferred tax assets. Therefore, changes in our deferred tax asset valuation allowances will primarily be affected by changes in the estimates of the time periods over which those future taxable items will occur. At December 31, 2024,2025, our deferred tax asset valuation allowance was $72.4$85.4 million.

Specialty Equipment Rentals (“SER”) Segment — We own a broad range of new and used specialty equipment, including truck-mounted aerial lifts, cranes, service trucks, dump trucks, trailers, digger derricks and other machinery and equipment. As of MarchJune 31,30, 2026, this equipment (the “rental fleet”) is comprised of more than 10,350 units. The majority of our rental fleet can be used across a variety of end-markets, which coincides with the needs of many of our customers who operate in multiple end-markets. As is customary for equipment rental companies, we sell used equipment out of our rental fleet to end user customers and to our STEM segment. These sales are often made in response to specific customer requests. These sales offer customers an opportunity to buy well-maintained equipment with long remaining useful lives and enable us to effectively manage the age and mix of our rental fleet to match current market demand. We also employ rental purchase options (“RPOs”) on a select basis, which provide a buyout option with an established purchase price that decreases over time as rental revenue is collected. Customers are given credit against such purchase price for a portion of the amounts paid over the life of the rental, allowing customers the flexibility of a rental with the option to purchase at any time at a known price. Activities in our SER segment consist of the rental and sale from the rental fleet of the foregoing specialty equipment, rentals of aftermarket parts and services related to the specialty equipment, and repair, maintenance and customization services related to that equipment.

Three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025

Cost of Revenue, Excluding Rental Equipment Depreciation - The increase in cost of revenue, excluding rental equipment depreciation for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was driven primarily by the increase in equipment sales volume.

Depreciation of Rental Equipment - Depreciation of our rental equipment increased in the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, as a result of higher rental equipment levels.

Operating Expenses - Operating expenses decreasedincreased for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, primarily as a result of loweran stockincrease compensationin expensegeneral and ITadministrative softwareexpenses amortization.due to increased compensation.

Total Other Expense - Other expense decreased for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, due to less interest expense on floorplanfloor plan financing as a result of lower inventory levels.

Income Tax Expense (Benefit) - Income tax expensebenefit was $1.4 million and $1.1 million for the three and six months ended MarchJune 31,30, 20262026, wasrespectively, $0.3compared million,to resulting in an effectiveincome tax rateexpense of (7.8)%.$17.5 Incomemillion taxand benefit$9.8 million for the threesame monthsperiods endedin March 31, 2025 was $7.7 million, at an effective tax rate of 30.2%.2025. The changes in effective tax rate waswere primarily attributable to changes in the valuation allowance recorded against deferred tax assets.assets, and the inclusion of an adjustment to our estimated effective tax rate in the three months ended June 30, 2025, resulting from changes in expected taxable income in different tax jurisdictions.

Net Income (lossLoss) - Net lossincome decreasedincreased for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, primarily due to higher operating income as a result of strong new equipment sales and higher rental revenue driven by higher average OEC on rentrent. The increase is also due to an income tax benefit in the three and six months ended June 30, 2026, compared to expense for the same periods in 2025, as welldiscussed as strong new equipment sales.above.

Total Revenue - The increase in total revenue for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was due to an increase in rental revenue as well as rental equipment sales. Rental revenue increased as a result of higherincreases in fleet utilization of 3.7%4.0% and 4.2%, respectively, for the three and six months ended MarchJune 31,30, 2026, driven by higherincreases in average OEC on rent of 11.8%.13.1% and 13.6%, respectively. Rental equipment sales increased due to an increase in buyout activity of rental contracts with purchase options. The decrease in parts sales and services was driven by fewer tool kits sold. Intersegment sales decreased as fewer units were identified as rental asset disposals given the increased external demand for rental units.units and buyout activity of rental contracts with purchase options.

Cost of Rental Revenue, Excluding Depreciation - The increase in cost of rental revenue for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was largely due to an increase in rental activity.

Cost of Equipment Sales, net of Purchase Accounting, Sales-Type Leases and Depreciation - The increase in cost of equipment sales for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was due to an increase in rental equipment sales volume.

Cost of Parts and Services, Excluding Depreciation - The decrease in cost of parts and services for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was in line with the decline in parts and services revenue as fewer tool kits were sold.

Selling, General and Administrative Expenses - Selling, general and administrative expenses were flatdecreased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025.2025, primarily due to the reclassification of expenses associated with two facilities that transitioned from rental operations to manufacturing operations and are now reported within STEM.

Sales TypeSales-Type Lease Adjustments - Represents the impact of sales-type lease accounting for certain leases containing rental purchase options (or “RPOs”), as we believe continuing to reflect the transactions as an operating lease better reflects the economics of the transactions given our large portfolio of rental contracts.

Segment Adjusted EBITDA - The increase in segment adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was due to higher operating income.

Total Revenue - The increase in total revenue for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was due to higher equipment sales driven by demand in serviceutility and forestry vehicles. Parts sales and services also increased driven primarily by higher service activity and increased demand for replacement parts. Intersegment sales were consistentdecreased for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025.2025, Althoughdue unitto salesfewer units sold to SER were higher infor the priorrental year, the current year revenue reflects the impact of intercompany markup, which increased the per-unit value and offset the decline in volume.fleet.

Cost of Equipment Sales, net of Purchase AccountingAccounting, Sales-Type Leases and Depreciation - The increase in cost of equipment sales for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was driven by the increase in equipment sales volume.

Cost of Parts and Services, Excluding Depreciation - The increase in cost of parts and services for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, corresponded with the increase in parts sales and services revenue reflecting higher volume of work performed and the related increase in materials and labor required to support that activity.

Cost of Intersegment Sales - Cost of intersegment sales declined for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025 due to fewer units sold to SER. While intersegment revenue increased slightly because of the markup applied in 2026, the lower unit volume directly reduced the associated cost of sales.

Selling, General and Administrative Expenses - Selling, general, and administrative expenses increased for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, primarily due to the reclassification of expenses associated with two facilities that transitioned from rental operations to manufacturing operations and are now reported within STEM, as well as higher sales commission.

FloorplanFloor plan Interest Expense - The decrease in floorplanfloor plan interest expense for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was due to the lower inventory levels.

Segment Adjusted EBITDA - The increase in segment adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, was due to increased gross profit and lower interest expense on variable-rate floor plan liabilities from lower inventory levels.

See Note 14 -: Segments for additional information.

Our principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities as described below. We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service and capital requirements, including investments in our rental fleet, over the next 12 months and beyond. As of MarchJune 31,30, 2026, we had $9.6$10.3 million in cash and cash equivalents compared to $6.3 million as of December 31, 2025. As of MarchJune 31,30, 2026 and December 31, 2025, we had $688.0$714.9 million and $698.0 million of outstanding borrowings under our ABL Facility, respectively. Availability under the ABL Facility was $256.9$229.4 million as of MarchJune 31,30, 2026, and based on our borrowing base, we have an additional $191.6$242.0 million of suppressed availability that we can potentially utilize by upsizing our existing facility. For further information on the ABL Facility, see Note 7: Long-Term Debt in the Notes to the Unaudited Condensed Consolidated Financial Statements. Our non-trade floor plan facility with PNC Equipment Finance, LLC, under which $397.0 million was outstanding as of June 30, 2026, matures on August 25, 2026; we expect to complete its renewal on or prior to that date on terms substantially consistent with the existing agreement.

The ABL Facility contains customary negative covenants for transactions of this type, including covenants that, among other things, limit Nesco Holdings II, Inc., our wholly owned subsidiary (the “Borrower” with respect to the ABL Facility, or the “Issuer” with respect to the Indenture, defined below) and its restricted subsidiaries’ ability to: incur additional indebtedness; pay dividends, redeem stock, or make other distributions; repurchase, prepay or redeem subordinated indebtedness; make investments; create restrictions on the ability of the Borrower’s restricted subsidiaries to pay dividends; create liens; transfer or sell assets; consolidate, merge, sell, or otherwise dispose of all or substantially all of the Borrower’s assets; enter into certain transactions with the Borrower’s affiliates; and designate subsidiaries as unrestricted subsidiaries, in each case subject to certain exceptions, as well as a restrictive covenant applicable to each Specified Floor Plan Company (as defined in the ABL Credit Agreement) limiting its ability to own certain assets and engage in certain lines of business. The covenants governing the payment of dividends and making other distributions are based upon a combination of fixed amounts, percentages of Adjusted EBITDA or upon multiple pro forma measures depending on the purpose of any such dividend payments or distributions the Borrower and its restricted subsidiaries are permitted to make. Unlimited dividends under the ABL Facility may be permitted so long as, on a pro forma basis, “distribution conditions” (as defined in the ABL Credit Agreement governing the ABL Facility) are satisfied. As of MarchJune 31,30, 2026, the Company’s distribution conditions were satisfied and, as a result, the Company determined there were no restrictions on distributions by the Borrower and its restricted subsidiaries by the ABL Credit Agreement.

The 5.50% senior secured second lien notes due 2029 (the “2029 Secured Notes”) were issued pursuant to the indenture governing our 2029 Secured Notes (the “Indenture”) which contains covenants that limit the Issuer’s (and certain of its subsidiaries’) ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock, or make other distributions; (iii) make other restricted payments or investments; (iv) create liens on assets; (v) transfer or sell assets; (vi) create restrictions on payment of dividends or other amounts by the Issuer’s restricted subsidiaries; (vii) engage in mergers or consolidations; (viii) engage in certain transactions with affiliates; or (ix) designate the Issuer’s subsidiaries as unrestricted subsidiaries. The covenants governing the payment of dividends and making other distributions are based upon a combination of fixed amounts, percentages of Adjusted EBITDA or upon multiple pro forma measures depending on the purpose of any such dividend payments or distributions the Issuer and its restricted subsidiaries are permitted to make. Unlimited dividends, under the Indenture, may be made so long as after giving effect to making the dividends, the Consolidated Total Debt Ratio would be no greater than 5.00 to 1.00 on a pro forma basis. As of MarchJune 31,30, 2026, the Company’s Consolidated Total Debt Ratio was not greater than 5.00 to 1.00 and, as a result, the Company determined there were no restrictions on distributions by the Issuer and its restricted subsidiaries by the Indenture. For further information on the ABL Facility and Indenture, see Note 8: Long-Term Debt in the Notes to the Consolidated Financial Statements under Part II, Item 8 in the Company’s annual report on Form 10-K for the year ended December 31, 2025, filed on March 10, 2026.

The Company presents Adjusted EBITDA calculated in accordance with “Consolidated EBITDA” as that term is used in the ABL Credit Agreement and the Indenture. Adjusted EBITDA is defined as net income, as adjusted for provision for income taxes, interest expense, net (excluding interest on floorplanfloor plan financing), depreciation of rental equipment and non-rental depreciation and amortization, and further adjusted for the impact of the fair value mark-up of acquired rental fleet (the “non-cash purchase accounting impact”), business acquisition and merger-related costs, including integration, the impact of accounting for certain of our rental contracts with customers that are accounted for under GAAP as a sales-type lease and stock compensation expense.

Our creditors utilize Adjusted EBITDA and Net Leverage Ratio to assess our compliance with the restrictive covenants in the ABL Credit Agreement and the Indenture. Neither Adjusted EBITDA ornor Net Leverage Ratio is calculated in accordance with GAAP and may not conform to the calculation of Adjusted EBITDA or Net Leverage Ratio used by other companies. Neither Adjusted EBITDA ornor Net leverageLeverage Ratio should be considered as a substitute for a measure of our financial performance or liquidity prepared in accordance with GAAP.

(1) The following tables present the calculation of LTM Adjusted EBITDA for the periods ended June 30, 2026 and March 31, 2026 and December 31, 2025:

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $9.6$10.3 million, an increase of $3.3$4.0 million from MarchDecember 31, 2025. Generally, we manage our cash flow by using any excess cash, after considering our working capital and capital expenditure needs, including paying down the outstanding balance under our ABL Facility, and availability under our credit facilities.

Net cash from operating activities was $23.8$68.2 million for the threesix months ended MarchJune 31,30, 2026, as compared to $55.6$181.4 million in the same period of 2025. The decrease in net cash from operating activities is driven by a higher levelsincrease ofin inventory on hand asfor ofthe Marchsix 31,months 2026ended June 30, 2026, when compared to the same period in 2025.

Net cash used in investing activities was $59.2$106.2 million for the threesix months ended MarchJune 31,30, 2026, as compared to $71.3$139.8 million in the same period of 2025. The decrease in cash used in investing activities was primarily due to a decrease in purchases of rental equipment of $15.0$33.7 million and an increase in proceeds from sales and disposals of rental equipment of $13.0 million, partially offset by an increase in purchases of non-rental property and cloud computing assetsarrangements of $6.2$13.2 million.

Net cash from financing activities was $38.6$41.3 million for the threesix months ended MarchJune 31,30, 2026, as compared to $17.2cash used for financing activities of $39.9 million in the same period of 2025. The increase in net cash from financing activities was primarily due to a decrease in repurchases of stock of $32.6 million andmillion, a decrease in repayments on floorplanfloor plan liabilities and long termlong-term debt of $16.1$32.6 million,million partiallyand offset by lowerhigher proceeds from floorplanfloor plan liabilities and long termlong-term debt of $27.3$16.4 million.