Custom Truck One Source, Inc.

Previous wording

Transaction expenses and other — Transaction expenses and other include costs related to acquisitions of businesses; costs associated with closed operations; costs associated with restructuring and business optimization activities (inclusive of systems establishment costs); employee retention and/or severance costs; costs related to start-up/preopenings and openings of locations; reconfiguration or consolidation of facilities and equipment conversion costs.

Current wording

Transaction expenses and other — Transaction expenses and other include costs related to acquisitions of businesses; costs associated with closed operations; costs associated with restructuring and business optimization activities (inclusive of systems establishment costs); employee retention and/or severance costs; costs related to start-up/pre-openings and openings of locations; reconfiguration or consolidation of facilities and equipment conversion costs.

Previous wording

Equipment Rental Solutions (“ERS”) 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 June 30, 2025, this equipment (the “rental fleet”) is comprised of approximately 10,300 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. 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 ERS segment consist of the rental and sale from the rental fleet of the foregoing products.

Current wording

Equipment Rental Solutions (“ERS”) 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 September 30, 2025, 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. 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 ERS segment consist of the rental and sale from the rental fleet of the foregoing products.

Previous wording

Total Revenue - The increase in total revenue for the three and six months ended June 30, 2025, compared to the same periods in 2024 is a result of strong new equipment sales during second quarter of 2025 as well as higher rental revenue driven by higher average OEC on rent.

Current wording

Total Revenue - The increase in total revenue for the three and nine months ended September 30, 2025, compared to the same periods in 2024 is a result of strong new equipment sales as well as higher rental revenue driven by higher average OEC on rent.

Previous wording

Cost of Revenue, Excluding Rental Equipment Depreciation - The increase in cost of revenue, excluding rental equipment depreciation for the three and six months ended June 30, 2025, compared to the same periods in 2024, was driven primarily by the increase in equipment sales volume during the quarter.

Current wording

Cost of Revenue, Excluding Rental Equipment Depreciation - The increase in cost of revenue, excluding rental equipment depreciation for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was driven primarily by the increase in equipment sales volume.

Previous wording

Depreciation of Rental Equipment - Depreciation of our rental equipment increased in the three and six months ended June 30, 2025, compared to the same periods in 2024, as a result of higher rental equipment levels.

Current wording

Depreciation of Rental Equipment - Depreciation of our rental equipment increased in the three and nine months ended September 30, 2025, compared to the same periods in 2024, as a result of higher rental equipment levels.

Previous wording

Operating Expenses - Operating expenses increased in the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily as a result of an increase in general and administrative expenses due to increased compensation.

Current wording

Operating Expenses - Operating expenses was flat for the three months ended September 30, 2025 compared to the same period in 2024, and increased for the nine months ended September 30, 2025, compared to the same period in 2024, primarily as a result of an increase in general and administrative expenses due to increased compensation.

Previous wording

Total Other Expense - Other expense remained flat for the three months ended June 30, 2025, compared to the same period in 2024, and increased for the six months ended June 30, 2025, compared to the same period in 2024 primarily due to a decrease in interest income from financing receivables.

Current wording

Total Other Expense - Other expense decreased for the three months ended September 30, 2025, compared to the same period in 2024, due to less interest expense on floorplan financing as a result of lower inventory levels. Other expense remained flat for the nine months ended September 30, 2025, compared to the same period in 2024.

Previous wording

Income Tax Expense (Benefit) - Income tax expense for the three and six months ended June 30, 2025 was $17.5 million and $9.8 million, respectively. Income tax expense for the three months ended June 30, 2025 reflects an adjustment to our estimated annual effective tax rate resulting from changes in expected taxable income in different tax jurisdictions. Despite this change, we expect annual cash taxes to be paid to remain at a level consistent with previous years.

Current wording

Income Tax Expense (Benefit) - Income tax for the three months ended September 30, 2025 was a benefit of approximately $1.0 million and for the nine months ended September 30, 2025 was expense of approximately $8.8 million. The fluctuation in income tax is primarily due to taxable income in states that do not follow federal deductibility rules, resulting in an overall effective tax rate for the three and nine months ended September 30, 2025 of 14.7% and (20.4)%, respectively. We expect annual cash taxes to be paid to remain at a level consistent with previous years.

Previous wording

Net Income (loss) - Net loss increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily due to higher income tax expense.

Current wording

Net Income (loss) - Net loss decreased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to higher operating income as a result of strong new equipment sales as well as higher rental revenue driven by higher average OEC on rent.

Previous wording

Total Revenue - The increase in total revenue for the ERS segment for the three and six months ended June 30, 2025, compared to the same periods in 2024, was due to an increase in rental revenue and rental equipment sales. Rental revenue increased as a result of higher fleet utilization of 5.9% and 4.9% for the three and six months ended June 30, 2025, respectively; driven by higher average OEC on rent. Rental equipment sales increased due to steady performance and demand in the utility market for transmission and distribution jobs.

Current wording

Total Revenue - The increase in total revenue for the ERS segment for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was due to an increase in rental revenue as well as rental equipment sales for the nine months ended. Rental revenue increased as a result of higher fleet utilization of 6.1% and 5.3% for the three and nine months ended September 30, 2025, respectively, driven by higher average OEC on rent. Rental equipment sales increased for the nine months ended due to steady performance and demand in the utility market for transmission and distribution jobs.

Previous wording

Cost of Revenue - The increase in total cost of revenue for the three and six months ended June 30, 2025, compared to the same periods in 2024, was largely due to the increase in rental equipment sales volume.

Current wording

Cost of Rental Revenue - The increase in cost of rental revenue for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was largely due to an increase in rental activity.

Previous wording

Depreciation - Depreciation of our rental equipment increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, as a result of higher rental equipment levels.

Current wording

Depreciation - Depreciation of our rental equipment increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, as a result of higher rental equipment levels.

Previous wording

Gross Profit - The increase in gross profit for the three and six months ended June 30, 2025, compared to the same periods in 2024, was due to the increase in rental revenues and equipment sales for the period.

Current wording

Gross Profit - The increase in gross profit for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was due to the higher mix of rental revenue for the period.

Previous wording

Equipment Sales - Equipment sales increased for the three and six months ended June 30, 2025, compared to the same periods in 2024. The increase in new equipment sales is driven by robust demand for vocational vehicles across our end markets, particularly intra-quarter demand from local and regional customers.

Current wording

Equipment Sales - Equipment sales increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024. The increase in new equipment sales is driven by robust demand for vocational vehicles across our end markets, particularly intra-quarter demand from local and regional customers.

Previous wording

Cost of Equipment Sales - Cost of equipment sales increased for the three and six months ended June 30, 2025, compared to the same periods in 2024, due to the increase in equipment sales volume.

Current wording

Cost of Equipment Sales - Cost of equipment sales increased for the three and nine months ended September 30, 2025, compared to the same periods in 2024, due to the increase in equipment sales volume.

Previous wording

Gross Profit - Gross profit increased for the three months ended June 30, 2025 compared to the same period in 2024 due to the mix of equipment sold. The decrease in gross profit for the six months ended June 30, 2025, compared to the same period in 2024, was due to the pricing pressures on truck sales as well as the mix of equipment sold.

Current wording

Gross Profit - Gross profit remained flat for the three months ended September 30, 2025 compared to the same period in 2024. The decrease in gross profit for the nine months ended September 30, 2025, compared to the same period in 2024, was due to the pricing pressures on truck sales as well as the mix of equipment sold.

Previous wording

Cost of Revenue - Cost of revenue was flat for the three and six months ended June 30, 2025, compared to the same periods in 2024.

Current wording

Cost of Revenue - Cost of revenue was flat for the three and nine months ended September 30, 2025, compared to the same periods in 2024.

Previous wording

Gross Profit - The increase in gross profit for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily driven by the increase in rental revenue which has lower costs associated with it.

Current wording

Gross Profit - The increase in gross profit for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily driven by the increase in rental revenue which has lower costs associated with it.

Previous wording

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 June 30, 2025, we had $5.3 million in cash and cash equivalents compared to $3.8 million as of December 31, 2024. As of June 30, 2025 and December 31, 2024, we had $670.5 million and $582.9 million of outstanding borrowings under our ABL Facility, respectively. Availability under the ABL Facility was $275.7 million as of June 30, 2025, and based on our borrowing base, we have an additional $231.1 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.

Current wording

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 September 30, 2025, we had $13.1 million in cash and cash equivalents compared to $3.8 million as of December 31, 2024. As of September 30, 2025 and December 31, 2024, we had $708.5 million and $582.9 million of outstanding borrowings under our ABL Facility, respectively. Availability under the ABL Facility was $237.6 million as of September 30, 2025, and based on our borrowing base, we have an additional $232.0 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.

Previous wording

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, 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.

Current wording

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 floorplan 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.

Previous wording

(2) Represents transaction and other costs related to acquisitions of businesses; costs associated with closed operations; costs associated with restructuring and business optimization activities (inclusive of systems establishment costs); employee retention and/or severance costs; costs related to start-up/preopenings and openings of locations; reconfiguration or consolidation of facilities or equipment conversion costs. These adjustments are presented as adjustments to net income (loss) pursuant to our ABL Credit Agreement and Indenture.

Current wording

(2) Represents transaction and other costs related to acquisitions of businesses; costs associated with closed operations; costs associated with restructuring and business optimization activities (inclusive of systems establishment costs); employee retention and/or severance costs; costs related to start-up/pre-openings and openings of locations; reconfiguration or consolidation of facilities or equipment conversion costs. These adjustments are presented as adjustments to net income (loss) pursuant to our ABL Credit Agreement and Indenture.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $5.3 million, an increase of $1.5 million from December 31, 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.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $13.1 million, an increase of $9.3 million from December 31, 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.

Previous wording

Net cash from operating activities was $181.4 million for the six months ended June 30, 2025, as compared to $23.4 million in the same period of 2024. The change year over year is driven by lower levels of inventory production in 2025 compared to 2024.

Current wording

Net cash from operating activities was $262.8 million for the nine months ended September 30, 2025, as compared to $39.9 million in the same period of 2024. The change year over year is driven by lower levels of inventory production in 2025 compared to 2024.

Previous wording

Net cash used in investing activities was $139.8 million for the six months ended June 30, 2025, as compared to $98.7 million in the same period of 2024. The increase in cash used in investing activities was primarily due to an increase in purchases of rental equipment of $60.1 million.

Current wording

Net cash used in investing activities was $233.8 million for the nine months ended September 30, 2025, as compared to $164.9 million in the same period of 2024. The increase in cash used in investing activities was primarily due to an increase in purchases of rental equipment of $70.4 million.

Previous wording

Net cash used for financing activities was $39.9 million for the six months ended June 30, 2025, as compared to net cash from financing activities of $73.0 million in the same period of 2024. The increase in cash used for financing activities was primarily due to an increase in repayments on floorplan liabilities and long term debt of $64.1 million and lower proceeds from floorplan liabilities and long term debt of $40.0 million.

Current wording

Net cash used in financing activities was $19.7 million for the nine months ended September 30, 2025, as compared to net cash from financing activities of $122.8 million in the same period of 2024. The increase in cash used in financing activities was primarily due to an increase in repayments on floorplan liabilities and long term debt of $105.2 million and lower proceeds from floorplan liabilities and long term debt of $34.8 million.