Custom Truck One Source Inc
For the period ended Dec 31, 2023. Filed Mar 7, 2024.
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FY2023 · Filed Mar 7, 2024
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Item 15. Exhibit and Financial Statement Schedules
(a) Financial Statement Schedules
Condensed Financial Information for Custom Truck One Source, Inc.
for the years ended December 31, 2023, 2022 and 2021
Condensed Parent Company Balance Sheets
| (in $000s, except share data) | December 31, 2023 | December 31, 2022 |
|---|---|---|
| Assets | ||
| Investment in subsidiaries | $943,396 | $909,757 |
| Total Assets | $943,396 | $909,757 |
| Liabilities and Stockholders' Deficit | ||
| Liabilities | ||
| Derivative, warrants and other liabilities | $527 | $3,012 |
| Deferred income taxes | 30,835 | 23,471 |
| Total long-term liabilities | 31,362 | 26,483 |
| Commitments and contingencies (see Note 4) | ||
| Stockholders' Equity (Deficit) | ||
| Common stock — 0.0001 par value, 500,000,000 shares authorized, 249,903,120 and 248,311,104 shares issued and outstanding, at December 31, 2023 and 2022, respectively | 25 | 25 |
| Treasury stock, at cost — 8,891,788 and 2,241,069 shares at December 31, 2023 and December 31, 2022, respectively | (56,524) | (15,537) |
| Additional paid-in capital | 1,532,384 | 1,516,318 |
| Accumulated other comprehensive loss | (5,978) | (8,947) |
| Accumulated deficit | (557,873) | (608,585) |
| Total stockholders' equity (deficit) | 912,034 | 883,274 |
| Total Liabilities and Stockholders' Equity (Deficit) | $943,396 | $909,757 |
Condensed Parent Company Statements of Operations and Comprehensive Income (Loss)
| Year Ended December 31, | |||
|---|---|---|---|
| (in $000s) | 2023 | 2022 | 2021 |
| Operating Expenses | |||
| Selling, general, and administrative expenses | $13,309 | $12,297 | $17,313 |
| Total operating expenses | 13,309 | 12,297 | 17,313 |
| Operating Loss | (13,309) | (12,297) | (17,313) |
| Other Expense (Income) | |||
| Equity in net (income) loss of subsidiaries | (68,900) | (40,436) | 148,948 |
| Other (income) expense | (2,485) | (18,593) | 10,815 |
| Total other expense (income) | (71,385) | (59,029) | 159,763 |
| Income (Loss) Before Income Taxes | 58,076 | 46,732 | (177,076) |
| Income Tax Expense | 7,364 | 7,827 | 4,425 |
| Net Income (Loss) | $50,712 | $38,905 | $(181,501) |
| Other Comprehensive Income (Loss): | |||
| Unrealized foreign currency translation adjustment | $2,969 | $(8,947) | $— |
| Other Comprehensive Income (Loss) | 2,969 | (8,947) | — |
| Comprehensive Income (Loss) | $53,681 | $29,958 | $(181,501) |
Condensed Parent Company Statements of Cash Flows
| Year Ended December 31, | |||
|---|---|---|---|
| (in $000s) | 2023 | 2022 | 2021 |
| Operating Activities | |||
| Net cash flow from operating activities | $68,723 | $40,231 | $(148,948) |
| Investing Activities | |||
| Changes in investment in subsidiaries | (30,670) | (28,114) | (727,014) |
| Net cash flow from investing activities | (30,670) | (28,114) | (727,014) |
| Financing Activities | |||
| Proceeds from issuance of common stock | — | — | 883,000 |
| Common stock issuance costs | — | — | (6,386) |
| Share-based payments | 792 | (1,838) | (652) |
| Common stock repurchase | (38,845) | (10,279) | — |
| Net cash flow from financing activities | (38,053) | (12,117) | 875,962 |
| Net Change in Cash | — | — | — |
| Cash at Beginning of Period | — | — | — |
| Cash at End of Period | $— | $— | $— |
Notes to Condensed Parent Company Financial Statements
Note 1: Basis of Presentation
Custom Truck One Source, Inc. (the “Parent”), a Delaware corporation, serves as the parent for its two primary operating companies, Custom Truck One Source, L.P. and NESCO, LLC (the “Subsidiaries”). The Subsidiaries are engaged in the business of providing a range of services and products to customers through sales and rentals of specialty equipment, sales of parts related to the specialty equipment, and repair and maintenance services related to that equipment. On April 1, 2021, the Parent, through its wholly-owned subsidiary, NESCO Holdings II, Inc., acquired Custom Truck One Source, L.P. (the “Acquisition”). In connection with the Acquisition, the Parent issued shares of its common stock to certain investors and in exchange for the member interests of Custom Truck One Source, L.P. Additionally, NESCO Holdings II, Inc. issued new notes payable, proceeds from which were used for the Acquisition, to repay prior indebtedness and to pay transaction expenses. Refer to Note 3: Business Combinations, to the Custom Truck One Source, Inc. consolidated financial statements included in this Annual Report on Form 10-K for information about the Acquisition and related financing transactions.
These parent company condensed financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes thereto of Custom Truck One Source, Inc. included in this Annual Report on Form 10-K. For purposes of these condensed financial statements, the Parent’s wholly owned subsidiaries are recorded based upon its proportionate share of the subsidiaries’ net assets (similar to presenting them on the equity method).
Note 2: Debt
The Parent’s subsidiaries have debt obligations under a revolving credit facility that are guaranteed by the Parent and each of its direct and indirect, existing and future, material wholly-owned domestic subsidiaries. Obligations under the ABL will be secured by a first-priority lien on substantially all the assets of the Parent and its subsidiaries. The obligations contain customary financial and non-financial covenants, including covenants that impose restrictions on, among other things, additional indebtedness, liens, investments, advances, guarantees and mergers and acquisitions. These covenants also place restrictions on asset sales, dividends and certain transactions with affiliates. Refer to Note 9: Long-Term Debt, to the Custom Truck One Source, Inc. consolidated financial statements included in this Annual Report on Form 10-K for information about the Parent’s subsidiaries’ debt obligations.
Note 3: Income Taxes
Refer to Note 16: Income Taxes, to the Custom Truck One Source, Inc. consolidated financial statements included in this Annual Report on Form 10-K for information about subsidiaries’ income taxes.
Note 4: Commitments and Contingencies
Refer to Note 18: Commitments and Contingencies, to the Custom Truck One Source, Inc. consolidated financial statements included in this Annual Report on Form 10-K for information about commitments and contingencies.
Note 5: Changes in Stockholders’ Equity (Deficit)
The following table provides a reconciliation of the beginning and ending amounts of total stockholders’ equity (deficit) for the years ended December 31, 2023, 2022, and 2021.
| Common Stock · Treasury Stock · Additional Paid-in Capital · Accumulated Other Comprehensive Loss · Accumulated Deficit · Total Stockholders' Equity (Deficit) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Shares | ||||||||
| (in $000s, except share data) · Common · Treasury | ||||||||
| Balance, December 31, 2020 | 49,156,753 | — | $5 | $— | $429,748 | $— | $(465,989) | $(36,236) |
| Net income (loss) | — | — | — | — | — | — | (181,501) | (181,501) |
| Share-based payments | 1,501,659 | (318,086) | — | (3,020) | 19,839 | — | — | 16,819 |
| Warrants liability reclassification | — | — | — | — | (10,290) | — | — | (10,290) |
| Shares issued in business combination | 196,700,000 | — | 20 | — | 1,064,529 | — | — | 1,064,549 |
| Balance, December 31, 2021 | 247,358,412 | (318,086) | $25 | $(3,020) | $1,503,826 | $— | $(647,490) | $853,341 |
| Net income (loss) | — | — | — | — | — | — | 38,905 | 38,905 |
| Other comprehensive loss | — | — | — | — | — | (8,947) | — | (8,947) |
| Common stock repurchase | — | (1,657,635) | — | (10,483) | — | — | — | (10,483) |
| Share-based payments | 952,692 | (265,348) | — | (2,034) | 12,492 | — | — | 10,458 |
| Balance, December 31, 2022 | 248,311,104 | (2,241,069) | $25 | $(15,537) | $1,516,318 | $(8,947) | $(608,585) | $883,274 |
| Net income (loss) | — | — | — | — | — | — | 50,712 | 50,712 |
| Other comprehensive income | — | — | — | — | — | 2,969 | — | 2,969 |
| Common stock repurchase | — | (6,354,587) | — | (39,021) | — | — | — | (39,021) |
| Share-based payments | 1,592,016 | (296,132) | — | (1,966) | 16,066 | — | — | 14,100 |
| Balance, December 31, 2023 | 249,903,120 | (8,891,788) | $25 | $(56,524) | $1,532,384 | $(5,978) | $(557,873) | $912,034 |
(b) Exhibits
| Exhibit No. | Description |
| 3.1 | Third Amended and Restated Certificate of Incorporation of Custom Truck One Source, Inc. (Incorporated herein by reference to Annex A to Custom Truck One Source, Inc.’s Definitive Proxy Statement on Schedule 14A (File No. 001-38186) filed on April 28, 2023). |
| 3.2 | Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 4.1 | Indenture, dated as of April 1, 2021, by and among Nesco Holdings II, Inc., Wilmington Trust, National Association, as Trustee and Collateral Agent, and the Guarantors party thereto from time to time (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 4.2 | Form of 5.50% Senior Note due 2029 (included in Exhibit 4.1 hereto) (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 4.3* | Description of the Registrant’s Securities Registered under Section 12 of the Exchange Act |
| 10.1† | Revolving Credit Agreement, dated as of April 1, 2021, by and among Capitol Investment Merger Sub 2, LLC, NESCO Holdings II, Inc., the various lenders and issuing banks party thereto and Bank of America, N.A., as administrative agent, collateral agent and swingline lender (Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 10.2 | Amendment No. 1 to Revolving Credit Agreement and U.S. ABL Security Agreement, dated as of July 1, 2021, by and among Capitol Investment Merger Sub 2, LLC, NESCO Holdings II, Inc., the other grantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on August 8, 2023) |
| 10.3^ | Amendment No. 2 to Revolving Credit Agreement, dated as of March 27, 2023, by and among Capitol Investment Merger Sub 2, LLC, NESCO Holdings II, Inc., the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed on August 8, 2023) |
| 10.4 | Registration Rights Agreement, dated as of April 1, 2021, between Custom Truck One Source, Inc. and certain holders identified therein (Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 10.5† | Second Amended and Restated Stockholders’ Agreement, dated as of April 14, 2023, among Custom Truck One Source, Inc. and certain holders identified therein (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-38186) filed on April 14, 2023). |
| 10.6 | Corporate Advisory Services Agreement, dated as of April 1, 2021, between Custom Truck One Source, Inc. and Platinum Equity Advisors, LLC (Incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 10.7+ | Custom Truck One Source, Inc. Amended and Restated 2019 Omnibus Incentive Plan (filed as Annex A to Custom Truck One Source, Inc.’s Definitive Proxy Statement on Schedule 14A filed June 10, 2021, File No. 001-38186, and incorporated herein by reference) |
| 10.8+ | Employment Agreement, dated November 2, 2021, by and between Fred Ross and Custom Truck One Source, Inc. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on November 8, 2021) |
| 10.9+ | Amended and Restated Employment Agreement, dated December 7, 2022, by and between Fred Ross and Custom Truck One Source, Inc. (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on December 7, 2022) |
| 10.10+ | Form Indemnification Agreement (Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed on April 2, 2021) |
| 10.11+ | Employment Agreement, dated November 2, 2021, by and between Thomas “Smiley” Rich and Custom Truck One Source, Inc. (Incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K (File No. 001-38186) filed on March 16, 2022) |
| 10.12+ | Employment Agreement, dated November 2, 2021, by and between Joe Ross and Custom Truck One Source, Inc. (Incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K (File No. 001-38186) filed on March 16, 2022) |
| 10.13+ | Employment Agreement, dated August 2, 2022, by and between Christopher J. Eperjesy and Custom Truck One Source, Inc. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-38186) filed on August 4, 2022) |
| 10.14+ | Amended and Restated Employment Agreement, dated December 7, 2022, by and between Ryan McMonagle and Custom Truck One Source, Inc. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-38186) filed on December 7, 2022) |
| 10.15+ | Custom Truck One Source, Inc. 2022 Employee Stock Purchase Plan (filed as Annex A to Custom Truck One Source, Inc.’s Definitive Proxy Statement on Schedule 14A (File No. 001-38186) filed on May 2, 2022, and incorporated herein by reference) |
| 10.16+ | Form of Performance Stock Agreement (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 001-38186) filed on November 8, 2022) |
| 10.17+ | Form of Amended Performance Stock Agreement (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (File No. 001-38186) filed on November 8, 2022) |
| 10.18+ | Form of Restricted Stock Agreement (Incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K (File No. 001-38186) filed on March 16, 2022) |
| 10.19+ | Employment Agreement, by and between the Company and Raymond Todd Barrett, dated March 9, 2022 (Incorporated by reference to Exhibit 10.2 of the Company’s Report on Form 8-K (File No. 001-38186) filed on April 26, 2022) |
| 10.20+ | Employment Agreement, by and between the Company and Paul M. Jolas, dated August 2, 2023 (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 001-38186) filed on November 7, 2023) |
| 21.1* | Subsidiaries of the Company |
| 23.1* | Consent of Ernst & Young LLP |
| 24.1* | Power of attorney, pursuant to which amendments to this Form 10-K may be filed (included on the signature page contained in Part IV of the Form 10-K) |
| 31.1* | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2* | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32 ** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 97.1* | Policy for Recovery of Erroneously Awarded Compensation |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | XBRL Taxonomy Extension Schema Document. |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
- Filed herewith.
** This certificate is being furnished herewith solely to accompany the report pursuant to 18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
† The schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the SEC upon request.
^ Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.
- Management contract or compensatory plan.
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