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What changed in Custom Truck One Source, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Custom Truck One Source, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+273 added−248 removedSource: 10-K (2025-03-04) vs 10-K (2024-03-07)

Top changes in Custom Truck One Source, Inc.'s 2024 10-K

273 paragraphs added · 248 removed · 197 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

65 edited+30 added−15 removed66 unchanged
Biggest changeAugers Tool used to dig holes for power, telephone, or cable poles and also used to dig holes for structure bases, pilings, and foundation supports. Insulated Tools Extension arms, temp arms, insulated ladders, etc., used to insulate and dielectrically protect workers and temporarily reposition powerlines for safe execution of tasks while working at height in live line circumstances.
Biggest changeInsulated Tools Extension arms, temp arms, insulated ladders, etc., used to insulate and dielectrically protect workers and temporarily reposition powerlines for safe execution of tasks while working at height in live line circumstances. 4 Table of Contents Other parts, tools, and accessories Crimping tools and dies, pumps/motors, underground fiber laying tools, and various other tools used in either utility, telecom, or rail applications.
CTOS community giving includes financial donations, volunteer time, and in-kind support to eligible third-party organizations who support our local communities in one of our key focus areas. • Education – supporting vocational educational programs, enabling people to develop a valuable skilled trade and launch a meaningful career. • Military / Veteran & Public Safety – supporting future, active and veteran members of the armed services, police, fire, and first responders who put their lives on the line to protect us.
CTOS community giving includes financial donations, volunteer time, and in-kind support to eligible third-party organizations who support our local communities in one of our key focus areas. • Education – supporting vocational education programs, enabling people to develop a valuable skilled trade and launch a meaningful career. • Military / Veteran & Public Safety – supporting future, active and veteran members of the armed services, police, fire, and first responders who put their lives on the line to protect us.
Every incident is investigated and, based on the findings, our safety team implements processes and procedures to prevent recurrences and remediate known hazards. We offer competitive pay and a comprehensive benefit program including medical, vision, dental, life and disability insurance to attract and retain top talent.
Every incident is investigated and based on the findings, our safety team implements processes and procedures to prevent recurrences and remediate known hazards. We aim to offer competitive pay and a comprehensive benefit program including medical, vision, dental, life and disability insurance to attract and retain top talent.
Our digital advertising efficacy is maximized by the following: • We invest in Search Engine Optimization (“SEO”) to maintain top result ranks for search terms we anticipate our customers would use; • We leverage marketing analytics to measure and adapt campaign performance; • We use social media to connect with customers and prospects across an array of core end-user segments, and to source user-generated content of our equipment excelling in use; • We leverage Search Engine Marketing (“SMO”), and regularly adjust our campaign investments to: i. target peak sales and rental seasonality by segment, ii. align with Company inventory levels, and iii. achieve target revenue goals • We advertise available inventory in select industry online marketplaces.
Our digital advertising efficacy is maximized by the following: • We invest in Search Engine Optimization to maintain top result ranks for search terms we anticipate our customers would use; • We leverage marketing analytics to measure and adapt campaign performance; • We use social media to connect with customers and prospects across an array of core end-user segments, and to source user-generated content of our equipment excelling in use; • We leverage Search Engine Marketing, and regularly adjust our campaign investments to: i. target peak sales and rental seasonality by segment, ii. align with Company inventory levels, and iii. achieve target revenue goals • We advertise available inventory in select industry online marketplaces.
Marketing We utilize targeted advertising, trade shows, focused email distributions, a comprehensive equipment catalog, and our website for marketing our products and services. Our rental catalog contains detailed technical information and diagrams for all our products, while the website offers easy access to equipment specifications and rental listings.
Marketing We utilize targeted digital advertising, trade shows, focused email distributions, a comprehensive equipment catalog, and our website for marketing our products and services. Our rental catalog contains detailed technical information and diagrams for all our products, while the website offers easy access to equipment specifications and rental listings.
We operate with a differentiated “one-stop-shop” business model, offering equipment rental, new and used equipment sales, and aftermarket parts and service out of more than 35 locations across the U.S. and Canada. Customers receive additional support throughout the country from Custom Truck’s twenty-four hour, seven-day a week (“24/7”) call center, approximately 90 mobile technicians, and over 2,600 third-party service partners.
We operate with a differentiated “one-stop-shop” business model, offering equipment rental, new and used equipment sales, and aftermarket parts and service out of more than 40 locations across the U.S. and Canada. Customers receive additional support throughout the country from Custom Truck’s twenty-four hour, seven-day a week (“24/7”) call center, approximately 90 mobile technicians, and over 2,600 third-party service partners.
Geographical Diversity – We have a large geographic footprint that enables us to provide local service throughout North America. Our more than 35 locations are strategically located to provide access to key high-growth end-markets and have sufficient geographic reach to provide a holistic solution to nationwide accounts. Our footprint is further expanded by over 2,600 third-party service partners.
Geographical Diversity – We have a large geographic footprint that enables us to provide local service throughout North America. Our more than 40 locations are strategically located to provide access to key high-growth end-markets and have sufficient geographic reach to provide a holistic solution to nationwide accounts. Our footprint is further expanded by over 2,600 third-party service partners.
Of our top 20 customers, 14 of them both rent and purchase equipment. We have very strong brand recognition among our industry-leading customers. Our ability to deliver an unmatched value proposition for our customers’ most complex and technical requirements, on a tight deadline, results in long-tenured relationships with premier customers across our different end-markets.
Of our top 20 customers, 15 of them both rent and purchase equipment. We have very strong brand recognition among our industry-leading customers. Our ability to deliver an unmatched value proposition for our customers’ most complex and technical requirements, on a tight deadline, results in long-tenured relationships with premier customers across our different end-markets.
Additionally, we launched our e-commerce platform in 2020 to begin selling proprietary Load King™ equipment parts and other targeted specialty equipment parts. Continue to Pursue Domestic Geographic Expansion – We operate more than 35 locations; however, broad sections of the United States and Canada are still outside of our primary operating area.
Additionally, we launched our e-commerce platform in 2020 to begin selling proprietary Load King™ equipment parts and other targeted specialty equipment parts. Continue to Pursue Domestic Geographic Expansion – We operate more than 40 locations; however, broad sections of the United States and Canada are still outside of our primary operating area.
The most recent Federal estimates quantify the backlog of projects required to attain a “state of good repair,” meaning public transit is repaired to an age within its average service life, at $105 billion, which is projected to grow as high as $290 billion by 2029 if not addressed.
The most recent Federal estimates quantify the backlog of projects required to attain a “state of good repair,” meaning public transit is repaired to an age within its average service life, at $105 billion, which is projected to grow to as high as $270 billion by 2029 if not addressed.
The contents of our website are not incorporated by reference in this Annual Report. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The public can obtain any documents that are filed by us at www.sec.gov .
The contents of our website are not incorporated by reference in this Annual Report. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The public can obtain any documents that are filed by us at www.sec.gov . 10 Table of Contents
Our Culture Our success is enabled by our core values that guide how we interact with each other and our customers, vendors, suppliers, and key stakeholders in our communities. • Care & Respect - We treat each other with respect and show genuine care for one another, our customers, suppliers, and communities where we live and work. • Solve Problems Like A Mechanic - We relish solving problems, our curiosity and true grit enables us to find lasting solutions that meet our customers’ needs. • Driven to Deliver - We own our work, take initiative and use our determination to make our work better and deliver on our commitments and drive results that matter. • Engage Collaboratively - We help each other, we openly share and listen to each other’s ideas and opinions – even when we disagree because we succeed when we work together. • Spark Innovation - We embrace new ways of working; we challenge the status quo and continue to explore and learn to enhance our skills and work.
Our Culture Our success is rooted in our core values that guide how we interact with our colleagues, customers, vendors, suppliers, and key stakeholders in the communities we serve. • Care & Respect - We treat each other with respect and show genuine care for one another, our customers, suppliers, and communities where we live and work. • Solve Problems Like A Mechanic - We relish solving problems, our curiosity and true grit enables us to find lasting solutions that meet our customers’ needs. • Driven to Deliver - We own our work, take initiative, and use our determination to make our work better and deliver on our commitments and drive results that matter. • Engage Collaboratively - We help each other, we openly share and listen to each other’s ideas and opinions – even when we disagree because we succeed when we work together. • Spark Innovation - We embrace new ways of working; we challenge the status quo and continue to explore and learn to enhance our skills and work.
We focus our production capabilities on the equipment that our customers need most in the end-markets with the most growth potential. Disciplined fleet maintenance and strict focus on meeting customer and end-market requirements have resulted in over 80% utilization on average of our rental fleets in the last two years.
We focus our production capabilities on the equipment that our customers need most in the end-markets with the most growth potential. Disciplined fleet maintenance and strict focus on meeting customer and end-market requirements have resulted in over 77% utilization on average of our rental fleets in the last two years.
We train our employees on our Code of Conduct and offer multiple pathways for reporting any concerns promptly, including through their leader, Human Resources, Legal or our anonymous 24/7 compliance hotline, which is managed by an experienced and objective third-party. Our Health, Safety & Well Being We are committed to a safe and healthy workplace and culture of total well-being.
We train our employees on our Code of Conduct and offer multiple pathways for reporting any concerns promptly, including through their leader, Human Resources, Legal or our anonymous 24/7 compliance hotline, which is managed by an experienced and objective third-party. 9 Table of Contents Our Health, Safety & Well Being We are committed to a safe and healthy workplace and culture of total well-being.
Aftermarket Parts and Services Our APS offerings include a broad range of parts, tools, and accessories inventory, which is a natural extension of our core equipment offering and can be rented or purchased on an individual basis or in packaged specialty kits.
Aftermarket Parts and Services Our APS offerings include a broad range of parts, tools, and accessories products, which is a natural extension of our core equipment offering and can be rented or purchased on an individual basis or in packaged specialty kits.
We are currently well positioned to capitalize on favorable trends across end-markets, including grid updates and maintenance, build-out of renewable resources, 5G roll-out, and potential significant infrastructure spend. Increase Penetration of Aftermarket Parts and Service – Each full-service location provides certified test and repair services and an expanded product offering of both insulated and non-insulated tools.
We are currently well positioned to capitalize on favorable trends across end-markets, including grid updates and maintenance, build-out of renewable resources, continued 5G expansion, and potential significant infrastructure spend. Increase Penetration of Aftermarket Parts and Service – Each full-service location provides certified test and repair services and an expanded product offering of both insulated and non-insulated tools.
Additionally, our direct-to-customer sales channels drive attractive net resale values that exceed those of our competitors who typically sell used equipment through auctions. 5 Table of Contents Growth Strategy We offer a full suite of specialty equipment services and a broad portfolio of products, which provides us with numerous channels for future growth and opportunities to deepen customer relationships.
Additionally, our direct-to-customer sales channels drive attractive net resale values that exceed those of our competitors who typically sell used equipment through auctions. Growth Strategy We offer a full suite of specialty equipment services and a broad portfolio of products, which provides us with numerous channels for future growth and opportunities to deepen customer relationships.
This allows us to maintain high utilization rates for our entire rental fleet while quickly responding to both equipment and service requests from customers. Our broad reach also represents a competitive advantage in serving customers with nationwide operations who may prefer the convenience of interacting with a limited number of equipment providers.
This allows us to maintain high utilization rates for our entire rental fleet while quickly responding to both equipment and service requests from customers. Our broad reach also represents a competitive advantage in serving customers with nationwide operations who may prefer the convenience of interacting with a limited number of 5 Table of Contents equipment providers.
We believe that the rental penetration rate will continue to trend towards the levels observed in the broader market, and we believe there will be significant growth within our specific markets. 1 Table of Contents On November 6, 2021, the United States Congress passed, and the President of the United States signed, the Infrastructure Investment and Jobs Act (the “Infrastructure Act”).
We believe that the rental penetration rate will continue to trend towards the levels observed in the broader market, and we believe there will be significant growth within our specific markets. On November 6, 2021, the United States Congress passed, and the President of the United States signed, the Infrastructure Investment and Jobs Act (the “Infrastructure Act”).
Products and Services Equipment Rental Solutions and Truck and Equipment Sales Our equipment rental fleet consists of more than 10,300 units, which management believes is among the largest specialty equipment rental fleets in North America.
Products and Services Equipment Rental Solutions and Truck and Equipment Sales Our equipment rental fleet consists of more than 10,000 units, which management believes is among the largest specialty equipment rental fleets in North America.
We believe that customers’ growing preference for equipment rental is driven by several factors including the avoidance of significant capital outlay, improved asset utilization, reduced storage and maintenance, access to a wider range of modern productive equipment, dedicated customer care, and operational efficiencies.
We believe that customers’ growing preference for equipment rental is driven by several factors including the avoidance of significant capital outlay, improved asset utilization, reduced storage and maintenance, access to a wider range of modern productive equipment, dedicated 1 Table of Contents customer care, and operational efficiencies.
Our flexibility to meet customers’ capital allocation preferences allow us to develop deeper relationships with our customers and our wide variety of equipment offered enables us to meet more of our customers’ 4 Table of Contents needs than our competitors. Additionally, our national platform and scale provides us the ability to serve both regional and national customers wherever they operate.
Our flexibility to meet customers’ capital allocation preferences allow us to develop deeper relationships with our customers and our wide variety of equipment offered enables us to meet more of our customers’ needs than our competitors. Additionally, our national platform and scale provides us the ability to serve both regional and national customers wherever they operate.
Although we have an expansive national footprint already, we have identified additional attractive geographic markets for potential expansion. Strong, Diverse Client Relationships and Industry Expertise – We serve more than 8,000 customers, with the top 15 customers representing approximately 16% of total revenue and no single customer representing greater than 3% of total revenue in 2023.
Although we have an expansive national footprint already, we have identified additional attractive geographic markets for potential expansion. Strong, Diverse Client Relationships and Industry Expertise – We serve more than 8,000 customers, with the top 15 customers representing approximately 17% of total revenue and no single customer representing greater than 3% of total revenue in 2024.
Strategic Account Managers are responsible for 6 Table of Contents establishing and managing these relationships along with direct involvement from senior leadership to create more contact and touch points between the key decision makers and Custom Truck.
Strategic Account Managers are responsible for establishing and managing these relationships along with direct involvement from senior leadership to create more contact and touch points between the key decision makers and Custom Truck.
Our drive, expertise, and responsiveness to the specialized needs of our customers set us apart. Management values a strong relationship with our employees across all our locations. As of December 31, 2023, we had approximately 2,580 employees in more than 35 locations across North America. Approximately 2% of our U.S. employees are covered by a collective bargaining agreement.
Our drive, expertise, and responsiveness to the specialized needs of our customers set us apart. Management values a strong relationship with our employees across all our locations. As of December 31, 2024, we had approximately 2,619 employees in more than 40 locations across North America. Approximately 2% of our U.S. employees are covered by a collective bargaining agreement.
In the past, we have expanded into new geographical markets through both strategic acquisitions and through internal growth. There is an opportunity for future expansion across the United States to support growth.
In the past, we have expanded into new geographical markets through both strategic acquisitions and through internal growth. There is an opportunity for future expansion across the United States 6 Table of Contents to support growth.
We have significant tenure with our top customers, with key relationships spanning more than 17 years.
We have significant tenure with our top customers, with key relationships spanning more than 18 years.
The Infrastructure Act provides $39 billion to modernize transportation and an additional $89.9 billion in guaranteed funding for public transportation along with an additional $66 billion of funding specifically earmarked for passenger rail services.
The Infrastructure Act provides $39 billion to modernize transportation and an additional approximate $90 billion in guaranteed funding for public transportation along with an additional $66 billion of funding specifically earmarked for passenger rail services.
As of December 31, 2023, our fleet is comprised of more than 10,300 units with an average unit age of approximately 3.5 years, which we believe is young by rental fleet standards and compares favorably to the long useful life of the equipment.
As of December 31, 2024, our fleet is comprised of more than 10,000 units with an average unit age of approximately 3.2 years, which we believe is young by rental fleet standards and compares favorably to the long useful life of the equipment.
The equipment is also often used for working on older infrastructure such as repairing bridges and terminals with more antiquated track and systems that are in need of upgrades with more modern systems like Positive Train Control (“PTC”) and others. The five largest public railroads operating in North America spend more than $12 billion annually in capital expenditures.
The equipment is also often used for working on older infrastructure such as repairing bridges and terminals with more antiquated track and systems that are in need of upgrades with more modern systems. The five largest public railroads operating in North America spend more than $13 billion annually in capital expenditures.
Young, Well-Maintained Rental Fleet Comprised of In-Demand Equipment – Our rental fleet consists of more than 10,300 units and is one of the youngest in the industry, with an average age of 3.5 years as of December 31, 2023.
Young, Well-Maintained Rental Fleet Comprised of In-Demand Equipment – Our rental fleet consists of more than 10,000 units and is one of the youngest in the industry, with an average age of 3.2 years as of December 31, 2024.
Freight Rail – Freight rail, one of the most cost-effective, energy-efficient modes of transport, carries a majority of intercity freight as measured by ton-miles, more than any other mode of transportation. Our North American customers are principally Class I railroads and related contractors. Data indicates that these Class I operators operate approximately 70% of total United States railroad route miles.
Freight Rail – Freight rail, one of the most cost-effective, energy-efficient modes of transport, carries a majority of intercity freight as measured by ton-miles, more than any other mode of transportation. Our North American customers are principally Class I railroads and related contractors.
The Infrastructure Act includes $7.5 billion to build a national network of electric vehicle chargers and $65 billion to upgrade power infrastructure. Telecom End-Market Telecommunications infrastructure, including telecom cells, towers, and wirelines, are the backbone of telephonic interaction and the transportation of mobile data. We provide the specialty equipment required to maintain and install telecom cells, towers, and communication lines.
Supporting these trends, the Infrastructure Act includes $7.5 billion to build a national network of electric vehicle chargers and $65 billion to upgrade power infrastructure. Telecom End-Market Telecommunications infrastructure, including telecom cells, towers, and wirelines, are the backbone of telephonic interaction and the transportation of mobile data.
Additionally, we are subject to environmental regulations governing the discharge of pollutants into the air or water, the management, storage and disposal of, or exposure to, hazardous substances and wastes, the responsibility to investigate and clean up contamination, and occupational health and safety.
Additionally, we are subject to environmental regulations governing the discharge of pollutants into the air or water, the management, storage and disposal of, or exposure to, hazardous substances and wastes, the responsibility to investigate and clean up contamination, and occupational health and safety. The Company is not aware of any material instances of non-compliance with respect to the foregoing regulations.
Capital expenditure spend in the electric utility T&D end-market were estimated to be approximately $88 billion in 2023. This spend is driven by a number of attractive dynamics, demonstrating that the U.S. is potentially in the very early stages of a multi-year electric utility T&D spending cycle.
This spend is driven by a number of attractive dynamics, demonstrating that the U.S. is potentially in the very early stages of a multi-year electric utility T&D spending cycle.
The Company is not aware of any material instances of non-compliance with respect to the foregoing regulations. 7 Table of Contents We are subject to federal, state, and local environmental laws and regulations with respect to the ownership and operation of tanks for the storage of petroleum products, such as gasoline, diesel fuel and motor and waste oils.
We are subject to federal, state, and local environmental laws and regulations with respect to the ownership and operation of tanks for the storage of petroleum products, such as gasoline, diesel fuel and motor and waste oils.
Facilities We are headquartered in Kansas City, Missouri where we house executive management, accounting, finance, information technology, human resources, marketing, and procurement professionals, as well as production, assembly, service and distribution operations. We maintain a diverse geographic footprint in the U.S. and Canada, with more than 35 locations.
Facilities We are headquartered in Kansas City, Missouri where we house executive management, accounting, finance, information technology, human resources, marketing, and procurement professionals, as well as production, assembly, service and distribution operations.
We are committed to an inclusive work environment where our employees of all backgrounds and experiences can succeed. We are always striving to enhance our employee experience and seek feedback from employees through our engagement surveys, which helps us identify areas where we can continuously enhance our work experience and sense of belonging.
We are dedicated to fostering an inclusive workplace where our employees can thrive regardless of background. We are always striving to enhance our employee experience and seek feedback from employees through engagement surveys, which helps us identify areas where we can continuously enhance our work experience.
Twenty-four states plus the District of Columbia have adopted specific greenhouse gas reduction targets to address climate change. As a result, significant spend for new transmission lines will be required to interconnect these new sources of power with the electrical grid. Increased Outsourcing by Utilities – Utilities are increasingly turning to specialized third-party contractors to fulfill construction and maintenance needs.
Twenty- three states plus the District of Columbia have adopted specific greenhouse gas reduction targets to address climate change. As a result, significant spend for new transmission lines will be required to interconnect these new sources of power with the electrical grid.
We offer employees options to enhance their financial security through our 401(k) savings program that includes a Company matching component, health savings account, and pre-tax flexible spending accounts for healthcare and dependent care.
We offer employees options to enhance their financial security through our 401(k) savings program that includes a Company matching component, health savings account, and pre-tax flexible spending accounts for healthcare and dependent care. We provide employees with the opportunity to participate in the Company’s success with equity ownership at a discounted price through our Employee Stock Purchase Plan.
The technical nature of certain parts, tools, and accessories requires periodic testing in a certified lab and expertise in specialized repairs, which we provide at our test and repair facilities. We provide nationwide coverage through eight locations that serve as hubs for the rental and sale of parts, tools, and accessories, and five of which offer technical test and repair.
The technical nature of certain parts, tools, and accessories requires periodic testing in a certified lab and expertise in specialized repairs, which we provide at our test and repair facilities.
The Infrastructure Act provided an additional $65 billion to increase access to reliable high-speed internet. 2 Table of Contents Rail End-Market Freight and commuter rail are responsible for transporting products and people across North America. Our rail mounted equipment is used for a variety of tasks including the installation of new rail and maintenance of the existing rail lines.
Rail End-Market Freight and commuter rail are responsible for transporting products and people across North America. Our rail mounted equipment is used for a variety of tasks including the installation of new rail and maintenance of the existing rail lines.
The majority of our equipment can be used across a variety of end-markets and many of our customers operate in multiple end-markets.
The majority of our equipment can be used across a variety of end-markets and many of our customers operate in multiple end-markets. Rental rates vary depending on product type, geography, demand, and other factors.
Infrastructure End-Market We also serve the general infrastructure end-market, which includes surface transportation, national highway performance, highway safety, metropolitan transit, and other key infrastructure systems, including residential and non-residential waste and water. Total infrastructure capex spend in 2023 was estimated to be just under $270 billion, and we believe the infrastructure end-market outlook remains positive.
Infrastructure End-Market We also serve the general infrastructure end-market, which includes surface transportation, national highway performance, highway safety, metropolitan transit, and other key infrastructure systems, including residential and non-residential waste and water.
We believe we own or license, or could obtain on reasonable terms, any intellectual property rights needed to conduct its business. Governmental Regulation We are subject to various governmental, including environmental, laws and regulations. Regulations affecting our operations principally relate to the licensing, permitting and inspection requirements for vehicles in our rental fleet.
Governmental Regulation We are subject to various governmental, including environmental, laws and regulations. Regulations affecting our operations principally relate to the licensing, permitting and inspection requirements for vehicles in our rental fleet.
Aging and Underinvested Electric Utility T&D Infrastructure – Electricity delivery in the U.S. depends on an aging and complex patchwork system of power generation facilities, transmission grids, local distribution lines, and substations. Most electric utility T&D lines were constructed in the 1950s and 1960s with a 50-year life expectancy and were not originally engineered to meet today’s load demands.
Aging and Underinvested Electric Utility T&D Infrastructure – Electricity delivery in the U.S. depends on an aging and complex patchwork system of power generation facilities, transmission grids, local distribution lines, and substations.
Rental rates vary depending on product type, geography, demand, and other factors. 3 Table of Contents Examples of our rental and sales equipment include: Bucket Trucks Trucks equipped with a bucket mounted on an insulated or non-insulated hydraulic lifting aerial device used to maintain and construct utility, rail, or telecommunication lines.
Examples of our rental and sales equipment include: Bucket Trucks Trucks equipped with a bucket mounted on an insulated or non-insulated hydraulic lifting aerial device used to maintain and construct utility, rail, or telecommunication lines. Digger Derricks Trucks equipped with a boom and auger used to dig holes and set utility, rail, and telephone poles.
On April 1, 2021, Nesco Holdings Inc. completed the acquisition of Custom Truck One Source, L.P. and changed its name to “Custom Truck One Source, Inc.” We are a specialty equipment provider to the electric utility transmission and distribution, telecommunications, rail, forestry, waste management and other infrastructure-related industries in North America.
(“Nesco Holdings”) changed its name to “Custom Truck One Source, Inc.” and changed The New York Stock Exchange ticker for its shares of common stock from “NSCO” to “CTOS.” We are a specialty equipment provider to the electric utility transmission and distribution, telecommunications, rail, forestry, waste management and other infrastructure-related industries in North America.
Digger Derricks Trucks equipped with a boom and auger used to dig holes and set utility, rail, and telephone poles. Cable placers Equipment used to string new and re-conduct overhead utility, rail, telecom, or cable lines including pole trailers, reel handling trailers, and other material handling trailers.
Cable placers Equipment used to string new and re-conduct overhead utility, rail, telecom, or cable lines including pole trailers, reel handling trailers, and other material handling trailers. Boom Trucks Trucks equipped with a boom mounted on an insulated or non-insulated hydraulic lifting aerial device used to maintain and construct utility, rail, or telecommunication lines.
Ongoing consolidation amongst waste haulers results in increasing market share for large, well-capitalized companies that have the resources to invest in the latest trucks and equipment.
Waste is 3 Table of Contents generally considered to be a recession-resistant industry given the non-discretionary nature of waste collection and disposal. Ongoing consolidation amongst waste haulers results in increasing market share for large, well-capitalized companies that have the resources to invest in the latest trucks and equipment.
Upfit and Repair Services Customizing existing heavy-duty trucks by adding features, and repair services, including labor and parts, for customer-owned trucks. Competitive Strengths We believe our platform is differentiated and benefits from several significant strengths that will continue to support our leading market position and future growth.
Competitive Strengths We believe our platform is differentiated and benefits from several significant strengths that will continue to support our leading market position and future growth.
Commuter Rail – Trends such as population growth, increasing urbanization, a focus on sustainability, environmental awareness, and increasing highway congestion are expected to drive continued investment in commuter rail. Furthermore, as a result of years of insufficient funding, transit systems across the U.S. are struggling to cope with aging infrastructure, creating and increasing backlog.
Furthermore, as a result of years of insufficient funding, transit systems across the U.S. are struggling to cope with aging infrastructure, creating and increasing backlog.
The average age of the transmission system in the United States is well over 40 years, with 25% to 35% being greater than 50 or more years old. Due in part to this aging infrastructure, costly electric emergency incidents and disturbances have increased since 2000. Multiple costly fires have also been caused by aging and under-maintained transmission and distribution lines.
Due in part to this aging infrastructure, costly electric emergency incidents and disturbances have increased since 2000. Multiple costly fires have also been caused by aging and under-maintained transmission and distribution lines.
We have an engaged Culture Champion Network, which is comprised of a cross-section of employees from a diverse range of backgrounds who collaborate to strengthen and celebrate our culture. Our Employee Resource Groups (“ERG”s) create a community for our employees who share similar interests. These employee-led groups encourage meaningful connections, support our employee wellbeing, and enable personal and professional growth.
To strengthen and celebrate our culture, we rely on our active Culture Champion Network, which is comprised of a cross-section of employees from a diverse range of backgrounds who collaborate to promote and enhance our work environment. 8 Table of Contents Our Employee Resource Groups (“ERG’s”) provide a community for our employees with shared interests, encouraging meaningful connections, promoting wellbeing, and fostering personal and professional growth.
From 2010 to 2022, annual spending by the major U.S. wireline, wireless and cable broadband providers has increased from approximately $68 billion to over $102 billion, a CAGR of approximately 15%.
From 2010 to 2023, annual spending by the major U.S. wireline, wireless and cable broadband providers has increased from approximately $68 billion to approximately $95 billion, a CAGR of approximately 2.4%. The Infrastructure Act provided an additional $65 billion to increase access to reliable high-speed internet.
We consider the waste end-market as part of the general infrastructure industry. Long-term, secular growth in this market is driven by growing waste volumes generated by increasing waste generation per capita. Population and income growth drive municipal solid waste generation.
Long-term, secular growth in this market is driven by growing waste volumes generated by increasing waste generation per capita. Population and income growth drive municipal solid waste generation. Municipal solid waste revenue in the U.S. is projected to grow at a CAGR of 4.7% from 2024 to 2030.
Intellectual Property We do not own or license any patents, patent applications, or registered copyrights. We own a number of trademarks and domain names important to the business. Our material trademarks are registered or pending applications for registrations in the U.S. Patent and Trademark Office and various non-U.S. jurisdictions.
We maintain a diverse geographic footprint in the U.S. and Canada, with more than 40 locations. 7 Table of Contents Intellectual Property We do not own or license any patents, patent applications, or registered copyrights. We own a number of trademarks and domain names important to the business.
We use “Custom Truck One Source” as unregistered trademarks and “Load King” as a registered trademark. Additionally, pursuant to an agreement with Terex, we have a revocable, royalty-free, limited license to use certain Terex trademarks to promote the sale and servicing of Terex products, subject to certain conditions of use.
Additionally, pursuant to an agreement with Terex, we have a revocable, royalty-free, limited license to use certain Terex trademarks to promote the sale and servicing of Terex products, subject to certain conditions of use. We believe we own or license, or could obtain on reasonable terms, any intellectual property rights needed to conduct its business.
Examples of our aftermarket parts and services include: Equipment Parts Aftermarket replacement parts for various types of trucks and equipment sold and rented by Custom Truck. Stringing Blocks Stringing dollies and accessories used to string powerline, telephone line (including fiber), or cable, above ground or underground in the new construction, rebuild, or maintenance of the lines.
Stringing Blocks Stringing dollies and accessories used to string powerline, telephone line (including fiber), or cable, above ground or underground in the new construction, rebuild, or maintenance of the lines. Augers Tool used to dig holes for power, telephone, or cable poles and also used to dig holes for structure bases, pilings, and foundation supports.
We provide employees with the opportunity to participate in the Company’s success with equity ownership at a discounted price through our Employee Stock Purchase Plan. 9 Table of Contents We provide employees and their family members with 24/7 access to doctors and counselors with telemedicine and virtual counseling with no cost to our employees.
We provide employees and their family members with 24/7 access to doctors and counselors with telemedicine and virtual counseling with no cost to our employees.
We partner with various organizations to support a range of military recruitment efforts, including Hiring Our Heroes, the U.S. Chamber of Commerce and Military Transition Assistant Programs to recruit veteran candidates to join our team and have a rewarding career following their military service.
We collaborate with organizations such as Hiring Our Heroes, the U.S. Chamber of Commerce, and Military Transition Assistance Programs to recruit veterans seeking rewarding careers after their military service. Our Veterans Employee Resource Group (ERG) plays a pivotal role in outreach efforts, actively participating in career fairs and veteran community events to connect with potential candidates.
From 2008 to 2022, compound annual growth rates for capital expenditures relating to transmission, distribution and solar were approximately 7%, 6% and 50%, respectively. Our specialty equipment is used for these projects, including the maintenance and repair of live lines and installation of new lines.
Our specialty equipment is used for these projects, including the maintenance and repair of live lines and installation of new lines. Capital expenditure spend in the electric utility T&D end-market were estimated to be approximately $95 billion in 2024.
Rapid technological advancements, including advanced digital and video service offerings, continue to increase demand for greater wireline and wireless network capacity and reliability. Data traffic is at an all-time high and is expected to increase in the future. North America data traffic is expected to grow at a 17% compound annual growth rate (“CAGR”) from 2022 to 2029.
Data traffic is at an all-time high and is expected to increase in the future. North America data traffic is expected to grow at a CAGR of 16% from 2024 to 2030.
Other parts, tools, and accessories (“PTA”) Crimping tools and dies, pumps/motors, underground fiber laying tools, and various other tools used in either utility, telecom, or rail applications. Test and Repair Services Testing and inspections of various tools and safety equipment and personal protective equipment (“PPE”) to comply with regulatory and safety requirements.
Test and Repair Services Testing and inspections of various tools and safety equipment and personal protective equipment (“PPE”) to comply with regulatory and safety requirements. Upfit and Repair Services Customizing existing heavy-duty trucks by adding features, and repair services, including labor and parts, for customer-owned trucks.
Boom Trucks Trucks equipped with a boom mounted on an insulated or non-insulated hydraulic lifting aerial device used to maintain and construct utility, rail, or telecommunication lines. Rail Trucks Trucks equipped with specialty equipment to drive on rail tracks.
Rail Trucks Trucks equipped with specialty equipment to drive on rail tracks.
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Construction spend on telecommunications infrastructure has exceeded approximately $80 billion annually in recent years. This spend is expected to continue to grow due largely to the advent of 5G technology, which requires existing cell sites add equipment to support new frequencies. 5G technology will require the installation of numerous higher bandwidth small cells to “densify” wireless networks and enhance performance.
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Immediately following the acquisition by Nesco Holdings II, Inc. of Custom Truck One Source, L.P. (“Custom Truck LP”) on April 1, 2021 (the “Acquisition”), Nesco Holdings, Inc.
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This is because small cells only deliver coverage within approximately a quarter mile of their location, compared to approximately five miles for the existing 4G and predecessor macro cells. As a result, approximately 20 times more small cells will need to be installed in order to provide the same level of coverage as the existing macro cells.
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Recent data released by the Federal government indicates that, as of November 2024, less than 50% of the funds from the Infrastructure Act have been allocated. Third-party industry research supports this and suggests that spending from the Infrastructure Act should continue for at least the next two to three years.
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Municipal solid waste revenue is projected to grow at a compounded annual growth rate of 4.2% globally from 2024 to 2030. Waste is generally considered to be a recession-resistant industry given the non-discretionary nature of waste collection and disposal.
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From 2015 to 2023, the compound annual growth rate (“CAGR”) for capital expenditures relating to transmission, distribution and solar in North America was approximately 5%, 9% and 31%, respectively. From 2023 through 2028, capital expenditures in these categories are forecasted to grow at CAGRs of approximately 9%, 6%, and 18%, respectively.
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Based on available industry sources, we estimate the addressable market to be approximately $65 billion: $20.4 billion in new sales, $23.2 billion in aftermarket parts and service, and $21.4 billion in rental and used sales. The new sales addressable market has grown from an estimated $15.6 billion in 2019 to $20.4 billion in 2023.
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Most electric utility T&D lines were constructed in the 1950s and 1960s with a 50- to 80- year life expectancy and were not originally engineered to meet today’s load demands. The average age of the transmission system in the United States is well over 40 years, with more than 25% being greater than 60 or more years old.
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They make CTOS a better, more inclusive place to work while also positively impacting our communities where we live and work. • In 2023, we launched a women’s ERG called “Women Empowered” to propel personal and professional growth. With Women Empowered, we strive to create the best female talent and top contributors of the future.
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AI-Driven Data Center Growth - AI-driven data centers are transforming digital infrastructure but are also driving significant increases in power demand due to their reliance on energy-intensive hardware. As these centers process vast amounts of data for machine learning and deep learning, they require substantial electricity further amplified by the growing integration of “edge” computing.
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Our Women Empowered ERG fosters meaningful connections with its 345 members and 201 allies. • We engage with our Veterans ERG as a strategic business partner to support and foster an inclusive culture and positive work experience for our military and veteran employees.
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Electricity demand from data centers is expected to grow from 25 megawatts of power in 2024 to more than 80 megawatts of power in 2030, a CAGR of more than 21%.
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Our military and veteran employees represent approximately 7% of our U.S. workforce and bring valuable attributes and skills to our organization.
Added
Electrification Trends - Electrification in the U.S. transportation, commercial and residential real estate, and industrial sectors coupled with the shift to renewal electricity generation detailed above have been identified among the key factors towards reducing reliance on fossil fuels in the U.S. The U.S. energy consumption in 2050 could be more than 80% higher than it was in 2018.
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This ERG has over 240 members and allies and provides support to current and past service members within our organization and in the communities where we operate. 8 Table of Contents Our Talent Attraction We engage in multiple initiatives focused on identifying, hiring and retaining a varied range of talent.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the price of fuel increases, the demand for our products may decline and transportation and freight costs may increase, which would adversely affect our financial condition and results of operations. Regulatory, technological advancement, or other changes in our core end-markets may affect our customers’ spending on the products and services we provide.
Biggest changePolitical events in petroleum-producing regions as well as hurricanes and other weather-related events may cause the price of fuel to increase. If the price of fuel increases, the demand for our products may decline and transportation and freight costs may increase, which would adversely affect our financial condition and results of operations.
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 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.
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.
In addition, we have 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.
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.
In addition, because our systems may contain sensitive data and information about individuals and businesses, our failure to maintain the security, integrity or confidentiality of the data we hold, whether the result of our insider malfeasance or errors or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenues, increased costs for compliance and systems remediation, increased costs of liability for litigation (including class actions) and regulatory proceedings as well as fines and penalties, result in the misuse of our systems and networks, manipulation and destruction of data, misappropriation of assets or production stoppages and supply shortages, and other potential material adverse effects on our results of operations.
In addition, because our systems may contain sensitive data and information about individuals and businesses, our failure to maintain the security, integrity 17 Table of Contents or confidentiality of the data we hold, whether the result of our insider malfeasance or errors or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenues, increased costs for compliance and systems remediation, increased costs of liability for litigation (including class actions) and regulatory proceedings as well as fines and penalties, result in the misuse of our systems and networks, manipulation and destruction of data, misappropriation of assets or production stoppages and supply shortages, and other potential material adverse effects on our results of operations.
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 finalized, may require us to incur significant costs to assess and disclose on a range of climate-related data and risks.
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.
As a small portion of our workforce is unionized, we are subject to risk of work stoppages and other labor relations matters. As of December 31, 2023, approximately 2% of the U.S. hourly workers of the Company were represented by a labor union and were covered by a collective bargaining agreement.
As a small portion of our workforce is unionized, we are subject to risk of work stoppages and other labor relations matters. As of December 31, 2024, approximately 2% of the U.S. hourly workers of the Company were represented by a labor union and were covered by a collective bargaining agreement.
Holding other variables constant, each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense on the ABL Facility and floor plan financing arrangements by approximately $1.5 million per year.
Holding other variables constant, each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense on the ABL Facility and floor plan financing arrangements by approximately $1.7 million per year.
Additionally, many of our business partners and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us. Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions.
Additionally, many of our business partners and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us. 19 Table of Contents Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions.
Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness. 15 Table of Contents The Indenture and the ABL Credit Agreement impose significant operating and financial restrictions on our company and our subsidiaries, which may prevent us from capitalizing on business opportunities.
Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness. The Indenture and the ABL Credit Agreement impose significant operating and financial restrictions on our company and our subsidiaries, which may prevent us from capitalizing on business opportunities.
Our ability to pay interest and principal in the future on our indebtedness and to fund our capital expenditures and acquisitions will depend upon our future operating performance and the availability of refinancing options, which will be affected by prevailing economic conditions and, the availability of capital, as well as financial, business and other factors, some of which are beyond our control.
Our ability to pay interest and principal in the future on our indebtedness and to fund our capital expenditures and acquisitions will depend upon our future operating performance and the 15 Table of Contents availability of refinancing options, which will be affected by prevailing economic conditions and, the availability of capital, as well as financial, business and other factors, some of which are beyond our control.
To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business. This and other stakeholder expectations will likely lead to increased costs as well as 19 Table of Contents scrutiny that could heighten all of the risks identified in this risk factor.
To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business. This and other stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor.
There are limitations on our ability to incur the full $750.0 million of commitments under the ABL Facility. Availability will be limited to the lesser of a borrowing base and $750.0 million.
There are limitations on our ability to incur the full $950.0 million of commitments under the ABL Facility. Availability will be limited to the lesser of a borrowing base and $950.0 million.
Our rental equipment has a long economic life, and managing this equipment is a critical element of our business. We must successfully maintain and repair our equipment in a cost-effective manner to maximize the economic life of our products and the level 10 Table of Contents of proceeds from the sale of such products.
Our rental equipment has a long economic life, and managing this equipment is a critical element of our business. We must successfully maintain and repair our equipment in a cost-effective manner to maximize the economic life of our products and the level of proceeds from the sale of such products.
If any actual or perceived security or disruptive attacks, breaches or incidents are not detected or deflected by our current security measures, 17 Table of Contents we could also be required to expend additional capital and other resources, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.
If any actual or perceived security or disruptive attacks, breaches or incidents are not detected or deflected by our current security measures, we could also be required to expend additional capital and other resources, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.
If we fail to maintain compliance with these covenants in the future, we cannot assure you that we will be able to obtain waivers from the lenders and/or amend the covenants. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
If we fail to maintain compliance with these covenants in the future, we cannot assure you that we will be able to obtain waivers from the lenders and/or amend the covenants. 16 Table of Contents Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
In the past year, we have 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 our company and/or our products; such initiatives or achievements of such commitments may be costly and may not have the desired effect.
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 our company and/or our products; such initiatives or achievements of such commitments may be costly and may not have the desired effect.
Uncertainty relating to macroeconomic conditions may reduce demand for our products and services, resulting in non-performance of contracts by our lessees, limit our ability to obtain additional capital to finance new investments, or have other unforeseen negative effects.
Uncertainty relating to macroeconomic conditions may reduce demand for our products and services, resulting in non-performance of contracts by our lessees or delays in customer purchase decisions, limit our ability to obtain additional capital to finance new investments, or have other unforeseen negative effects.
Integrating acquired businesses is a complex, costly and time-consuming process, and we cannot assure you that 13 Table of Contents we will be able to successfully integrate them or, if the integration is successfully accomplished, that the integration will not be more costly or take longer than presently contemplated.
Integrating acquired businesses is a complex, costly and time-consuming process, and we cannot assure you that we will be able to successfully integrate them or, if the integration is successfully accomplished, that the integration will not be more costly or take longer than presently contemplated.
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, 2023, the average age of our rental equipment fleet was less than four years. The costs of maintenance may materially increase in the future.
If our operating costs increase as our rental equipment fleet ages and we are unable to pass 12 Table of Contents along such costs, our results of operations will be negatively impacted. As of December 31, 2024, the average age of our rental equipment fleet was less than four years. The costs of maintenance may materially increase in the future.
Any significant decline in the selling prices for used equipment could have a material adverse effect on our business, financial condition and results of operations. 12 Table of Contents Our business is highly dependent on the timely and sufficient delivery of finished goods, such as commercial vehicles, from our suppliers.
Any significant decline in the selling prices for used equipment could have a material adverse effect on our business, financial condition and results of operations. Our business is highly dependent on the timely and sufficient delivery of finished goods, such as commercial vehicles, from our suppliers. We depend on the timely and sufficient delivery of finished goods from our suppliers.
These restrictions will limit our ability, among other things, to: • incur additional indebtedness; • pay dividends or certain other distributions on our capital stock or repurchase our capital stock; • make certain investments or other restricted payments; • cause subsidiaries to pay dividends or make other payments to us; • engage in transactions with stockholders or affiliates; • sell certain assets or merge with or into other companies, reorganize our companies, or suspend or dispose of a substantial portion of our business; • prepay or modify the terms of our other indebtedness; • guarantee indebtedness; and • create liens.
These restrictions limit our ability, among other things, to: • incur additional indebtedness; • pay dividends or certain other distributions on our capital stock or repurchase our capital stock, which restriction becomes inapplicable if we satisfy certain financial conditions; • make certain investments or other restricted payments; • cause subsidiaries to pay dividends or make other payments to us; • engage in transactions with stockholders or affiliates; • sell certain assets or merge with or into other companies, reorganize our companies, or suspend or dispose of a substantial portion of our business; • prepay or modify the terms of our other indebtedness; • guarantee indebtedness; and • create liens.
Competition for skilled technicians in our industry, especially during periods of low unemployment or periods of high demand, could increase our labor costs and hinder our ability to meet customer demand, which could have a material adverse effect on our business, financial condition and results of operations. 11 Table of Contents A number of key personnel are critical to the success of our business.
Competition for skilled technicians in our industry, especially during periods of low unemployment or periods of high demand, could increase our labor costs and hinder our ability to meet customer demand, which could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2023, we have variable rate debt, consisting of $1,214.7 million outstanding under the ABL Facility and floor plan financing arrangements.
As of December 31, 2024, we have variable rate debt, consisting of $1,384.2 million outstanding under the ABL Facility and floor plan financing arrangements.
We have several significant production and manufacturing locations. If operations at any of these production and manufacturing locations were disrupted as a result of public health concerns, equipment failures, natural disasters, work stoppages, power outages or other reasons, our business, financial condition and results of operations could be adversely affected.
If operations at any of these production and manufacturing locations were disrupted as a result of public health concerns, equipment failures, natural disasters, work stoppages, power outages or other reasons, our business, financial condition and results of operations could be adversely affected. Interruptions in production could increase costs and delay delivery of units in production.
Our reported sales order backlog may not be converted to revenue in any particular period and actual revenue from such orders may not equal our backlog. Therefore, our sales order backlog may not be indicative of the level of our future revenues.
Our reported sales order backlog may not be converted to revenue in any particular period and actual revenue from such orders may not equal our backlog.
As of December 31, 2023, our total indebtedness was $1,517.8 million, consisting of $920.0 million in aggregate principal amount of the 2029 Secured Notes, $552.4 million of borrowings under our Asset Based Lending (“ABL”) Facility and other debt obligations of $45.4 million (excluding approximately $662.3 million of indebtedness under our floorplan financing agreements).
As of December 31, 2024, our total indebtedness was $1,547.7 million, consisting of $920.0 million in aggregate principal amount of the 2029 Secured Notes, $582.9 million of borrowings under our Asset Based Lending (“ABL”) Facility and other debt obligations of $44.8 million (excluding approximately $801.3 million of indebtedness under our floor plan financing agreements).
Our success is dependent on our ability to attract and retain highly skilled personnel. Competition within our industry and the business world for high-performing management talent is substantial. We have senior executives and other management-level employees with extensive industry experience. We rely on this knowledge and experience in our strategic planning and in our day-to-day business operations.
A number of key personnel, including our management and skilled technicians, are critical to the success of our business. Our success is dependent on our ability to attract and retain highly skilled personnel. Competition within our industry and the business world for high-performing management talent is substantial. We have senior executives and other management-level employees with extensive industry experience.
Competition for experienced managers and skilled technicians in our industry can be intense. If we fail to retain and recruit the necessary personnel, our business and our ability to retain customers and provide acceptable levels of customer service could suffer. A material disruption to our operation and manufacturing locations could adversely affect our ability to generate revenue.
If we fail to retain and recruit the necessary personnel, our business and our ability to retain customers and provide acceptable levels of customer service could suffer. A material disruption to our operation and manufacturing locations could adversely affect our ability to generate revenue. We have several significant production and manufacturing locations.
A small portion of our workforce is unionized, and more of our workforce could become unionized in the future, which could negatively impact the stability of our production, materially reduce our profitability and increase the risk of work stoppages.
Therefore, our sales order backlog may not be indicative of the level of our future revenues. 11 Table of Contents A small portion of our workforce is unionized, and more of our workforce could become unionized in the future, which could negatively impact the stability of our production, materially reduce our profitability and increase the risk of work stoppages.
However, we may not maintain interest rate swaps with respect to any of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk. 16 Table of Contents Risks Related to Information Technology, Cybersecurity and Data Privacy Disruptions or security compromises affecting our information technology systems or those of our critical service providers could adversely affect our operating results by subjecting us to liability, and limiting our ability to effectively monitor and control our operations, adjust to changing market conditions, or implement strategic initiatives.
Risks Related to Information Technology, Cybersecurity and Data Privacy Disruptions or security compromises affecting our information technology systems or those of our critical service providers could adversely affect our operating results by subjecting us to liability, and limiting our ability to effectively monitor and control our operations, adjust to changing market conditions, or implement strategic initiatives.
Interruptions in production could increase costs and delay delivery of units in production. Production capacity limits could cause us to reduce or delay sales efforts until production capacity is available.
Production capacity limits could cause us to reduce or delay sales efforts until production capacity is available.
In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility.
In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to any of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.
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.
Regulatory, technological advancement, or other changes in our core end-markets may affect our customers’ spending on the products and services we provide. 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.
Additionally, due to our legacy as a combination of several family-operated businesses, a number of our key employees have deep institutional knowledge and family relationships within our organization. An inability to retain these individuals or ensure smooth transitions with timely and effective transfers of knowledge could have a negative impact on our business.
An inability to retain these individuals or ensure smooth transitions with timely and effective transfers of knowledge could have a negative impact on our business.
Our ability to realize the anticipated benefits of acquisitions we make will depend, to a large extent, on our ability to integrate the businesses acquired.
Our ability to realize the anticipated benefits of acquisitions we make will depend, to a large extent, on our ability to integrate the businesses acquired, including timely integration of operations and systems, organizations, standards, controls, procedures, policies and technologies, as well as the harmonization of differences in business cultures.
Platinum may also pursue acquisition opportunities that may be complementary to our business and, as a result, these acquisition opportunities may not be available to us. 14 Table of Contents Risks Related to the Company’s Indebtedness We have, and may incur, significant indebtedness and may be unable to service our debt.
Platinum may also pursue acquisition opportunities that may be complementary to our business and, as a result, these acquisition opportunities may not be available to us. 14 Table of Contents The price of our common stock has been, and may continue to be, volatile. The market price of our common stock price historically has fluctuated over a wide range.
Increases in the costs of shipping and transportation, purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or our inability to market products. The unprecedented nature of the supply chain disruptions continues to make it difficult to predict our future business and financial performance.
These tariffs and potential tariffs have resulted, and may further result, in increased prices for certain imported goods and raw materials. Increases in the costs of shipping and transportation, purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or our inability to market products.
We are subject to a series of risks related to climate change. There are inherent climate-related risks wherever business is conducted.
We are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations. 18 Table of Contents We are subject to a series of risks related to climate change. There are inherent climate-related risks wherever business is conducted.
Any reduction, elimination, or delay of spending by our customers on the products and services we provide could adversely affect our revenues, results of operations, and cash flows. Integration of acquired businesses may be difficult, costly and time-consuming, and the anticipated benefits and cost savings of acquired businesses may not be realized or may be less than expected.
Any reduction, elimination, or delay of spending by our customers on the products and services we provide could adversely affect our revenues, results of operations, and cash flows. Our strategic initiatives including acquisitions and divestitures may not be successful and may divert our management’s attention away from operations and could create general customer uncertainty.
In addition, limitations on the availability of capital, higher costs of capital or financing expenditures or the desire to preserve liquidity, may cause our current or prospective customers to make reductions in future capital budgets and spending. If petroleum prices increase, then our results of operations could be adversely affected. Petroleum prices have fluctuated significantly in recent years.
We cannot guarantee that future 13 Table of Contents 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.
Prices and availability of petroleum products are subject to political, economic and market factors that are outside of our control. Political events in petroleum-producing regions as well as hurricanes and other weather-related events may cause the price of fuel to increase.
If petroleum prices increase, then our results of operations could be adversely affected. Petroleum prices have fluctuated significantly in recent years. Prices and availability of petroleum products are subject to political, economic and market factors that are outside of our control.
For example, we may be unable to eliminate duplicative costs in a timely fashion or at all. Additionally, achieving these benefits may require certain related one-time costs, charges and expenses, which may be material.
Additionally, achieving these benefits may require certain related one-time costs, charges and expenses, which may be material. Additionally, any acquisition or disposition (including separation of operations, products and personnel) may place a significant burden on our management and other internal resources.
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We may not be able to attract and retain skilled technicians, which could have a material adverse effect on our ability to meet customer demand.
Added
The U.S. government previously announced, and in some cases implemented, an approach to trade policy that includes renegotiating or potentially terminating certain trade agreements, as well as implementing or increasing tariffs on foreign goods and raw materials such as steel and aluminum.
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We depend on the timely and sufficient delivery of finished goods from our suppliers.
Added
We rely on this knowledge and experience in our strategic planning and in our day-to-day business operations. Additionally, due to our legacy as a combination of several family-operated businesses, a number of our key employees have deep institutional knowledge and family relationships within our organization.
Removed
If we cannot successfully integrate and manage acquired businesses within a reasonable time following their acquisition, we may not be able to realize the potential and anticipated benefits of them, which could have a material adverse effect on our business, financial condition and results of operations.
Added
Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may also have a material adverse effect on our results of operations.
Removed
Our ability to realize expected synergies and benefits from acquisitions is subject to a number of risks and uncertainties, many of which are outside of our control.
Added
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.
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These risks and uncertainties could adversely impact our business, financial condition and operating results, and include, among other things: • our ability to complete the timely integration of operations and systems, organizations, standards, controls, procedures, policies and technologies, as well as the harmonization of differences in business cultures; • our ability to minimize the diversion of management attention from ongoing business concerns during the integration process; • our ability to retain the service of key management and other key personnel; • our ability to preserve customer, supplier and other important relationships and resolve potential conflicts that may arise; • the risk that acquired businesses may have liabilities that we failed to discover or fully appreciate in the course of performing due diligence; • difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination; and • difficulties in managing the expanded operations of a larger and more complex combined company.
Added
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.
Removed
We may encounter additional integration-related costs, fail to realize all of the benefits anticipated or be subject to other factors that adversely affect preliminary estimates of synergies.
Added
In the normal course of business, we engage in discussions relating to strategic initiatives including acquisitions and divestitures. Such transactions are accompanied by a number of risks.
Removed
In addition, even if the operations of acquired businesses are integrated successfully, the full benefits of them may not be realized, including the synergies, cost savings or sales or growth opportunities that we expect. The occurrence of any of these events, individually or in combination, could have a material adverse effect on our financial condition and results of operations.
Added
The diversion of management’s attention, and any difficulties encountered in such a process, could harm our business, financial condition, and operating results. Moreover, our customers may, in response to the announcement or consummation of a transaction, delay or defer purchasing decisions, and our revenues could materially decline or any anticipated increases in revenue could be lower than expected.
Removed
Measures of anticipated synergies we report from time to time are based upon assumptions about our ability to implement integration measures in a timely fashion and within certain cost parameters.
Added
During fiscal 2024, the price of our common stock ranged from a low of $3.03 per share to a high of $7.00 per share.
Removed
Our ability to achieve the planned synergies is dependent upon a significant number of factors, many of which are beyond our control, such as our ability to integrate businesses that we acquire (including the integration of Nesco and Custom Truck LP (each term as defined below)), operating difficulties, increased operating costs, delays in implementing initiatives and general economic, competitive or industry conditions.
Added
Our stock price may be impacted by any number of events and factors, including, but not limited to, quarterly variations in operating and financial results, litigation, changes in financial estimates and recommendations by securities analysts, the operating and stock performance of other companies that investors may deem comparable to us, news reports relating to us, trends in our industry or general economic conditions, illiquidity in the public market for our shares due to the concentration of ownership, as well as other risks noted in this Risk Factors section.
Removed
We are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations. We have identified a material weakness in our internal control over financial reporting which, if not remediated, could result in material misstatements in our financial statements.
Added
Because securities litigation is sometimes brought against a company following periods of volatility in the market price of its securities, we may become the target of litigation should substantial price fluctuations occur, especially if our annual projected financial guidance is not met or we lower our annual projected financial guidance for any reason.
Removed
During the fourth quarter ended December 31, 2021, we identified a material weakness in internal control over financial reporting that related to control deficiencies in information technology general controls (“ITGCs”) for both user access and program change-management for systems supporting all of the Company’s internal control processes and controls, controls over the completeness and accuracy of information used in business process controls and management review controls.
Added
Such litigation, regardless of its merit, could result in substantial costs and divert management’s attention and resources, which could harm our business, operating results, and financial condition as well as the market price of our common stock. Risks Related to the Company’s Indebtedness We have, and may incur, significant indebtedness and may be unable to service our debt.
Removed
Our business process controls (automated and manual) and management review controls were also deemed ineffective because they are adversely impacted by ineffective ITGCs.
Added
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.
Removed
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual consolidated financial statements will not be prevented or detected on a timely basis.
Removed
We have developed and are implementing a plan to remediate the material weakness and in fiscal year 2023, management concluded that the material weakness related to ITGCs was remediated. The material weakness related to business process level controls will not be remediated until all necessary internal controls have been implemented, tested and determined to be operating effectively.
Removed
In addition, we may need to take additional measures to address the material weakness or modify the planned remediation steps, and we cannot be certain that the measures we have taken, and expect to take, to improve our internal controls will be sufficient to address the issues identified, to ensure that our internal controls are effective or to ensure that the identified material weakness will not result in a material misstatement of our annual consolidated financial statements.
Removed
Moreover, we cannot assure you that we will not identify additional material weaknesses in our internal control over financial reporting in the future.
Removed
If we are unable to remediate the material weakness, our ability to record, process and report financial information accurately, and to prepare financial statements with the time periods specified by the rules and forms of the Securities and Exchange Commission, could be adversely affected.
Removed
This failure could 18 Table of Contents negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties and generally materially and adversely impact our business and financial condition.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeCommerce Ave, Suite 200 Kansas City, MO United States Leased 2770 5th Ave S Fargo, ND United States Leased 6 Sutton Cir and Unit 2 Sutton Cir Condominium Hooksett, NH United States Leased 1400 Union Lndg Rd and 1850 Union Lndg Rd Cinnaminson, NJ United States Leased 6708 Townline Rd Syracuse, NY United States Leased 3522 Middlebranch Rd NE Canton, OH United States Leased 3205 Davinion Rd El Reno, OK United States Leased 300 Johnson St and 370 Johnson St Wilkes Barre, PA United States Leased 1400 E Hwy 67 Alvarado, TX United States Leased 2801 N Earl Rudder FWY, Bryan TX United States Leased 7200 Jack Newell Blvd S and 7525 Pebble Dr Bldg 24 Fort Worth, TX United States Leased 18725 Mckay Blvd Humble, TX United States Leased 12519 W I-20 Odessa, TX United States Leased 9775 E Lynchburg Salem Tpke Forest, VA United States Leased 26109 & 26119 United Rd NE and 26129 Calvary Kingston, WA United States Leased 5734 Minder Rd Ste A-1 Poulsbo, WA United States Leased 11139 W Becher St West Allis, WI United States Leased 5065 140th Ave NW, Williston, ND United States Leased 2900 Rissler Rd Sedalia, MO United States Owned 4334 Snapfinger Woods Dr Atlanta, GA United States Owned 21209 & 21115 Durand Ave; 4601 Haag Dr, Union Grove, WI United States Leased 1700 Leider Dr Union Grove, WI United States Owned 12660 E Lycshburg Salem Turnpike Lynchburgh, VA United States Owned 702 East Rose St Elk Point, SD United States Owned We believe that all of our properties are in good operating condition and are suitable to adequately meet our current needs.
Biggest changeCommerce Ave, Suite 200 Kansas City, MO United States Leased 6 Sutton Cir and Unit 2 Sutton Cir Condominium Hooksett, NH United States Leased 1400 Union Lndg Rd and 1850 Union Lndg Rd Cinnaminson, NJ United States Leased 6708 Townline Rd Syracuse, NY United States Leased 3522 Middlebranch Rd NE Canton, OH United States Leased 3205 Davinion Rd El Reno, OK United States Leased 300 Johnson St and 370 Johnson St Wilkes Barre, PA United States Leased 1400 E Hwy 67 Alvarado, TX United States Leased 7200 Jack Newell Blvd S and 2422 Gravel Rd Fort Worth, TX United States Leased 18725 Mckay Blvd Humble, TX United States Leased 12519 W I-20 Odessa, TX United States Leased 9775 E Lynchburg Salem Tpke Forest, VA United States Leased 26109 & 26119 United Rd NE and 26129 Calvary Kingston, WA United States Leased 5734 Minder Rd Ste A-1 Poulsbo, WA United States Leased 11139 W Becher St West Allis, WI United States Leased 5065 140th Ave NW, Williston, ND United States Leased 2900 Rissler Rd and 5105 Pelham Dr Sedalia, MO United States Leased 4334 Snapfinger Woods Dr Atlanta, GA United States Leased 21209 & 21115 Durand Ave; 4601 Haag Dr, Union Grove, WI United States Leased 1700 Leider Dr Union Grove, WI United States Leased 12660 E Lynchburg Salem Turnpike Lynchburg, VA United States Leased 701, 702 and 704 East Rose St and 306 N Pearl St Elk Point, SD United States Leased 738 W Boeing Dr Casas Grande, AZ United States Leased 2040 and 2060 Industrial Park Rd Alexandria, LA United States Leased 7473 Reese Rd Sacramento, CA United States Leased 2794 S Commerce Way Ogden, UT United States Leased 118 Wyandanch Ave Wyandanch, NY United States Leased 4840 90 Ave SE Calgary, Alberta Canada Leased We believe that all of our properties are in good operating condition and are suitable to adequately meet our current needs.
We maintain a diverse geographic footprint in the U.S. and Canada, with more than 35 equipment rental and service locations. These facilities are typically service centers for the maintenance and support of our equipment and, depending on the location, may include separate areas for displaying and storage of equipment and parts.
We maintain a diverse geographic footprint in the U.S. and Canada, with more than 39 equipment rental and service locations. These facilities are typically service centers for the maintenance and support of our equipment and, depending on the location, may include separate areas for displaying and storage of equipment and parts.
Our one-stop shop approach focuses on providing the products and services offered by each of our segments at each of our locations. 21 Table of Contents Location Type 7701 Independence Avenue, Kansas City, MO United States Owned 7413 Sr 930 E Fort Wayne/New Haven, IN United States Leased 11102 261 St,, Acheson, AB Canada Leased 9230 51 St SE Calgary, AB Canada Leased 127 Earl Thompson PL, Ayr, ON Canada Leased 29 Perini RD, Elliot Lake, ON Canada Leased 4045 Hwy 5 and 2665 South Rockwood Cabot, AR United States Leased 655 E 20Th St Yuma, AZ United States Leased 4500 State Rd and 1032 Black Gold Rd Bakersfield, CA United States Leased 14670 Randall Ave Fontana, CA United States Leased 5455 E 52nd Ave Commerce City, CO United States Leased 4729 Capital Cir Nw and 4755DI Capital Cir Nw Tallahassee, FL United States Leased 9879 Us Hwy 301 N; 7906 Baseline Ct and 8949 Maislin Rd Tampa, FL United States Leased 3112 E State Rd 124 Bluffton, IN United States Leased 5323 Kansas Ave Kansas City, KS United States Leased 10740 Nall Ave Overland Park, KS United States Leased 9230 Cedar Knoll Dr Grass Lake, MI United States Leased 2370 English St Maplewood; 2450 Maplewood Ave; 2384 English St Maplewood, MN United States Leased 2109 Manchester Trafficway and 6501 E.
Our one-stop shop approach focuses on providing the products and services offered by each of our segments at each of our locations. 21 Table of Contents Location Type 7701 Independence Avenue, Kansas City, MO United States Owned 11102 261 St Acheson, AB Canada Leased 9230 51 St SE Calgary, AB Canada Leased 127 Earl Thompson PL, Ayr, ON Canada Leased 4045 Hwy 5 and 2665 South Rockwood Cabot, AR United States Leased 655 E 20Th St Yuma, AZ United States Leased 4500 State Rd and 1032 Black Gold Rd Bakersfield, CA United States Leased 14670 Randall Ave Fontana, CA United States Leased 5455 E 52nd Ave Commerce City, CO United States Leased 4729 Capital Cir Nw and 4755DI Capital Cir Nw Tallahassee, FL United States Leased 9879 Us Hwy 301 N; 7906 Baseline Ct and 8949 Maislin Rd Tampa, FL United States Leased 3112 E State Rd 124 Bluffton, IN United States Leased 10740 Nall Ave Overland Park, KS United States Leased 9230 Cedar Knoll Dr Grass Lake, MI United States Leased 2370 and 2384 English St Maplewood, MN United States Leased 2109 Manchester Trafficway and 6501 E.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed2 unchanged
Biggest changeThe following table contains information regarding our purchases of our common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in $000s) October 1, 2023 to October 31, 2023 963,210 $ 5.64 963,210 $ 47,813 November 1, 2023 to November 30, 2023 1,172,997 $ 5.22 1,172,997 $ 41,692 December 1, 2023 to December 31, 2023 1,124,938 $ 6.83 1,071,885 $ 34,339 Total 3,261,145 $ 5.90 3,208,092
Biggest changeThe following table contains information regarding our purchases of our common stock during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in $000s) October 1, 2024 to October 31, 2024 — $ — — 1,892 November 1, 2024 to November 30, 2024 — $ — — 1,892 December 1, 2024 to December 31, 2024 135,434 $ 4.81 — 1,892 Total 135,434 $ 4.81 — On January 30, 2025, the Company purchased 8,143,635 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), from affiliates of Energy Capital Partners, at a purchase price of $4.00 per share, which represents an approximately 23% discount from the price of $5.19 per share of Common Stock at the close of trading on January 29, 2025, for an aggregate purchase price of $32.6 million.
Equity Compensation Plans For information regarding equity compensation plans, see Item 11, Executive Compensation, of this Annual Report on Form 10-K and Note 14: Share-Based Compensation, to the consolidated financial statements included in this Annual Report on Form 10-K.
Equity Compensation Plans For information regarding equity compensation plans, see Item 11, Executive Compensation, of this Annual Report on Form 10-K and Note 13: Share-Based Compensation, to the consolidated financial statements included in this Annual Report on Form 10-K.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Custom Truck One Source, Inc.’s common stock and warrants trade on the New York Stock Exchange under the symbol “CTOS” and “CTOS.WS,” respectively.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Custom Truck One Source, Inc.’s common stock and warrants trade on the New York Stock Exchange under the symbol “CTOS” and “CTOS.WS,” respectively. As of February 26, 2025 , there were approximately 60 holders of record of our common stock.
The shares purchased under our equity compensation plans were withheld to satisfy tax withholding obligations upon the vesting of restricted stock unit awards or exercise of stock options.
We purchased and held in treasury 135,434 shares for tax withholding purposes related to our equity compensation plans during the fourth quarter of 2024. The shares purchased under our equity compensation plans were withheld to satisfy tax withholding obligations upon the vesting of restricted stock unit awards or exercise of stock options.
As of March 1, 2024 , there were approximately 67 holders of record of our common stock and 14 holders of record of warrants. Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities There were no sales of unregistered securities by the Company during the year ended December 31, 2023.
Recent Sales of Unregistered Securities; Use of Proceeds From Registered Securities There were no sales of unregistered securities by the Company during the year ended December 31, 2024.
Issuer Purchases of Equity Securities On August 2, 2022, our Board of Directors authorized a stock repurchase program for up to $30.0 million of the Company’s common stock.
Issuer Purchases of Equity Securities On August 2, 2022, our Board of Directors authorized a stock repurchase program for up to $30.0 million of the Company’s common stock, which authorization was further increased by $25 million of shares on September 14, 2023, and again increased by $25 million on March 11, 2024, upon exhaustion of prior authorization.
Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs. We purchased and held in treasury 53,053 shares for tax withholding purposes related to our equity compensation plans during the fourth quarter of 2023.
The authorization does not have an expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate needs.
Removed
The Company exhausted this program during 2023 and on September 14, 2023, the Board of Directors approved a stock repurchase program that authorizes additional repurchases of up to $25 million of shares of the Company’s common stock. The authorization does not have an expiration date.
Added
The transaction was approved by the Company’s Board of Directors and Audit Committee of the Board of Directors and the purchased shares are held in treasury.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

77 edited+33 added−17 removed68 unchanged
Biggest changeThe Company continues to monitor the impact on its supply chain, including, but not limited to, the commercial vehicle manufacturers that provide the chassis used in the Company’s production and manufacturing processes, which could potentially limit the ability of these manufacturers to meet demand in future periods. 27 Table of Contents Results of Operations Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 Consolidated Results of Operations Year Ended December 31, (in $000s) 2023 % of revenue 2022 % of revenue $ Change % change Rental revenue $ 478,910 25.7% $ 464,039 29.5% $ 14,871 3.2% Equipment sales 1,253,453 67.2% 982,341 62.4% 271,112 27.6% Parts sales and services 132,737 7.1% 126,706 8.1% 6,031 4.8% Total revenue 1,865,100 100.0% 1,573,086 100.0% 292,014 18.6% Cost of revenue, excluding rental equipment depreciation 1,240,176 66.5% 1,017,635 64.7% 222,541 21.9% Depreciation of rental equipment 170,664 9.2% 171,703 10.9% (1,039) (0.6)% Gross profit 454,260 24.4% 383,748 24.4% 70,512 18.4% Total operating expenses 283,312 280,440 2,872 Operating income 170,948 103,308 67,640 Total other expense 112,872 56,576 56,296 Income before income taxes 58,076 46,732 11,344 Income tax expense 7,364 7,827 (463) Net income $ 50,712 $ 38,905 $ 11,807 Total Revenue - The increase in revenue for the year ended December 31, 2023, was primarily due to strong customer demand for new equipment and used rental equipment.
Biggest changeSee further discussion of this transaction in Note 7: Rental Equipment and Property and Equipment and Note 9: Leases as Lessee in the Notes to the Consolidated Financial Statements under Part II, Item 8, Consolidated Results of Operations Year Ended December 31, (in $000s) 2024 % of revenue 2023 % of revenue $ Change % change Rental revenue $ 442,953 24.6% $ 478,910 25.7% $ (35,957) (7.5)% Equipment sales 1,223,036 67.9% 1,253,453 67.2% (30,417) (2.4)% Parts sales and services 136,291 7.6% 132,737 7.1% 3,554 2.7% Total revenue 1,802,280 100.0% 1,865,100 100.0% (62,820) (3.4)% Cost of revenue, excluding rental equipment depreciation 1,228,557 68.2% 1,240,176 66.5% (11,619) (0.9)% Depreciation of rental equipment 183,453 10.2% 170,664 9.2% 12,789 7.5% Gross profit 390,270 21.7% 454,260 24.4% (63,990) (14.1)% Gain on sale leaseback transaction (23,497) — (23,497) Total other operating expenses 287,404 283,312 4,092 Total operating expenses 263,907 283,312 (19,405) Operating income 126,363 170,948 (44,585) Total other expense 155,550 112,872 42,678 Income (loss) before income taxes (29,187) 58,076 (87,263) Income tax expense (532) 7,364 (7,896) Net income (loss) $ (28,655) $ 50,712 $ (79,367) Total Revenue - The decrease in revenue for the year ended December 31, 2024, was primarily due to lower rental revenue and lower volume of used equipment sales.
The Indenture 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 to 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 Indenture 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.
For the year ended December 31, 2023, the impact of state income taxes and a tax benefit from the reduction to the valuation allowance, resulted in an overall effective tax rate in the period of 12.7%, $7.4 million of tax expense being recognized.
For the year ended December 31, 2023, the impact of state income taxes and a tax benefit from the reduction to the valuation allowance resulted in an overall effective tax rate in the period of 12.7%, $7.4 million of tax expense recognized.
Unlimited dividends, under 2029 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.
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.
Income Tax Expense — We have net operating loss carryforward and disallowed interest deduction carryforward assets, which are generally available to be used to offset taxable income generated in future years.
Income Tax Expense (Benefit) — We have net operating loss carryforward and disallowed interest deduction carryforward assets, which are generally available to be used to offset taxable income generated in future years.
We also provide truck and equipment maintenance and repair services, which are executed throughout our nationwide branch network and fleet of mobile technicians supported by our 24/7 call center based in Kansas City, Missouri. Overview of Markets We continue to focus on four primary end-markets: Electric Utility Transmission and Distribution, or T&D, Telecom, Rail, Forestry, Waste Management, and Infrastructure.
We also provide truck and equipment maintenance and repair services, which are executed throughout our nationwide branch network and fleet of mobile technicians supported by our 24/7 call center based in Kansas City, Missouri. Overview of Markets We continue to focus on six primary end-markets: Electric Utility Transmission and Distribution, or T&D, Telecom, Rail, Forestry, Waste Management, and Infrastructure.
Telecom, specifically the roll-out of 5G, has seen some positive trends over the last few years. Our existing T&D related contactor 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.
Telecom, specifically the continued expansion of 5G, has seen some positive trends over the last few years. Our existing T&D related contactor 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.
While we remain in a financial reporting loss position based on a cumulative pre-tax loss for the three-year period ended December 31, 2023, 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.
While we remain in a financial reporting loss position based on a cumulative pre-tax loss for the three-year period ended December 31, 2024, 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.
We enter into purchase agreements with manufacturers and suppliers of chassis, parts and components and attachments, for our rental fleet and inventory. The purchase agreements are cancellable within a specified notification period to the supplier. Such amounts are not estimable as of December 31, 2023. Operating Lease Payments.
We enter into purchase agreements with manufacturers and suppliers of chassis, parts and components and attachments, for our rental fleet and inventory. The purchase agreements are cancellable within a specified notification period to the supplier. Such amounts are not estimable as of December 31, 2024. Operating Lease Payments.
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 Buyer and its restricted subsidiaries are permitted to make.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Custom Truck One Source, Inc., a Delaware corporation, and its wholly owned subsidiaries (“we,” “our,” “us,” or “the Company”) are engaged in the business of providing a range of products and services to customers through rentals and sales of specialty equipment, 24 Table of Contents rentals and sales of aftermarket parts and services related to the specialty equipment, and repair, maintenance and customization services related to that equipment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Custom Truck One Source, Inc., a Delaware corporation, and its wholly owned subsidiaries (“we,” “our,” “us,” or “the Company”) are engaged in the business of providing a range of products and services to customers through rentals and sales of specialty equipment, rentals and sales of aftermarket parts and services related to the specialty equipment, and repair, maintenance and customization services related to that equipment.
Liquidity and Capital Resources For the Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 Our principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities as described below.
Liquidity and Capital Resources For the Year Ended December 31, 2024, Compared to the Year Ended December 31, 2023 Our principal sources of liquidity include cash generated by operating activities and borrowings under revolving credit facilities as described below.
See Note 10: Leases as Lessee in the Notes to the Consolidated Financial Statements under Part II, Item 8, for a summary of the estimated future repayment terms for the operating lease amounts. Floor Plan Financing.
See Note 9: Leases as Lessee in the Notes to the Consolidated Financial Statements under Part II, Item 8, for a summary of the estimated future repayment terms for the operating lease amounts. Floor Plan Financing.
Parts and service revenue is derived from maintenance and repair services, light upfit services, and parts, tools and accessories sold directly to customers. Rental revenue excludes active rental contracts which qualify to be accounted for as sales-type leases.
Parts and service revenue is derived from maintenance and repair services, and parts, tools and accessories sold directly to customers. Rental revenue excludes active rental contracts which qualify to be accounted for as sales-type leases.
See Note 7: 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. Notes Payable and Loan Principal and Interest Payments.
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. Notes Payable and Loan Principal and Interest Payments.
We depreciate our rental equipment over its estimated useful rentable life of one to seven years with an estimated residual value of 0% to 35% of the cost, using the straight-line method. Useful life is estimated based upon the expected period the 34 Table of Contents equipment will be in the fleet as a rentable unit.
We depreciate our rental equipment over its estimated useful rentable life of one to seven years with an estimated residual value of 0% to 35% of the cost, using the straight-line method. Useful life is estimated based upon the expected period the equipment will be in the fleet as a rentable unit.
Year Ended December 31, 2022, Compared to the Year Ended December 31, 2021 For a comparison of our liquidity and capital resources for the year ended December 31, 2022, compared to the year ended December 31, 2021, see “ Part II, Item 7.
Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 For a comparison of our liquidity and capital resources for the year ended December 31, 2023, compared to the year ended December 31, 2022, see “ Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2022 , filed with the Securities and exchange Commission on March 14, 2023, which is incorporated herein by reference. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2023 , filed with the Securities and Exchange Commission on March 7, 2024, which is incorporated herein by reference. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S.
At December 31, 2023, a 100 basis point increase to our credit loss estimate would increase our allowance for doubtful accounts by approximately $0.9 million.
At December 31, 2024, a 100 basis point increase to our credit loss estimate would increase our allowance for doubtful accounts by approximately $0.9 million.
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 December 31, 2023, this equipment (the “rental fleet”) is comprised of more than 10,300 units.
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 December 31, 2024, this equipment (the “rental fleet”) is comprised of more than 10,000 units.
For the Year Ended December 31, 2022, Compared to the Year Ended December 31, 2021 For a comparison of our results of operations for the year ended December 31, 2022, compared to the year ended December 31, 2021, see “ Part II, Item 7.
For the Year Ended December 31, 2023, Compared to the Year Ended December 31, 2022 For a comparison of our results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, see “ Part II, Item 7.
We have floor plan payables of $662.3 million at December 31, 2023 that represent financing arrangement 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.
We have floor plan payables of $801.3 million at December 31, 2024 that represent financing arrangement 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.
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. 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.
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. 31 Table of Contents 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.
The verifiable evidence, such as future reversals of existing temporary differences and the ability to carryback, are considered before estimated future taxable income (exclusive of temporary differences and tax planning strategies) is considered because future taxable income estimates are more subjective.
The verifiable evidence, such as future reversals of existing temporary differences and the ability to carryback, are considered before 36 Table of Contents estimated future taxable income (exclusive of temporary differences and tax planning strategies) is considered because future taxable income estimates are more subjective.
There were no acquisitions made during the year ended December 31, 2023. Goodwill is attributable to the synergies and economies of scale expected from the combination of the businesses. In addition to long-lived fixed assets, we also acquire other assets and assume liabilities.
Goodwill is attributable to the synergies and economies of scale expected from the combination of the businesses. There were no material acquisitions made during the years ended December 31, 2024 and 2023. In addition to long-lived fixed assets, we also acquire other assets and assume liabilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2022 , filed with the Securities and Exchange Commission on March 14, 2023, which is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2023 , filed with the Securities and Exchange Commission on March 7, 2024, which is incorporated herein by reference.
As of December 31, 2023, 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 distribution by the Issuer and its restricted subsidiaries by the Indenture.
As of December 31, 2024, 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.
Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers. The Company records changes in estimated collectability directly against rental revenue. Equipment sales revenue reflects the value of vocational trucks and other equipment sold to customers.
Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers. The Company records changes in estimated collectability directly against rental revenue. Equipment sales revenue reflects the value of vocational trucks and other equipment sold to customers as well as upfit services.
To the extent that the useful lives of our rental equipment were to increase or decrease by one year, we estimate that our annual depreciation expense would increase or decrease by approximately $149.6 million, respectively.
To the extent that the useful lives of our rental equipment were to increase or decrease by one year, we estimate that our annual depreciation expense would increase or decrease by approximately $36.1 million, respectively.
Cost of Equipment Sales - The increase in cost of equipment sales for the year ended December 31, 2023, compared to the year ended December 31, 2022, was due to an increase in equipment sales.
Cost of Equipment Sales - The increase in cost of equipment sales for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due to an increase in equipment sales volume.
We have short-term and long-term cash requirements of $8.0 million and $1,509.8 million, respectively, for the payment of principal related to notes payable and loans as of December 31, 2023. The total amount does not equal the carrying amount due to unamortized deferred charges.
We have short-term and long-term cash requirements of $7.8 million and $1,539.8 million, respectively, for the payment of principal related to notes payable and loans as of December 31, 2024. The total amount does not equal the carrying amount due to unamortized deferred charges.
Loan Covenants and Compliance The ABL Facility contains customary negative covenants for transactions of this type, including covenants that, among other things, limit Buyer’s 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 Buyer’s restricted subsidiaries to pay dividends to Buyer; create liens; transfer or sell assets; consolidate, merge, sell, or otherwise dispose of all or substantially all of Buyer’s assets; enter into certain transactions with Buyer’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.
Loan Covenants and Compliance 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) 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 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.
As of December 31, 2023, the Company’s distribution conditions were satisfied and, as a result, the Company determined there were no restrictions on distribution by the Buyer and its restricted subsidiaries by the ABL Credit Agreement.
As of December 31, 2024, 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 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, is defined as Net Debt over Adjusted EBITDA.
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, is defined as Net Debt over Adjusted EBITDA for the previous twelve-month period.
We are able to generate cash flow through our earnings. Our highly variable cost structure adjusts with the utilization of our equipment, thereby reducing our costs to match our revenue. We principally evaluate operational performance based on the following metrics: ending OEC, average OEC on rent, fleet utilization, and OEC on rent yield.
Our highly variable cost structure adjusts with the utilization of our equipment, thereby reducing our costs to match our revenue. We principally evaluate operational performance based on the following metrics: ending OEC, average OEC on rent, fleet utilization, and OEC on rent yield.
We have short-term and long-term minimum cash requirements for operating lease payments of $8.8 million and $41.6 million, respectively. The total amounts do not equal the carrying amount due to imputed interest.
We have short-term and long-term minimum cash requirements for operating lease payments of $14.4 million and $158.4 million, respectively. The total amounts do not equal the carrying amount due to imputed interest.
Cash Flows from Financing Activities Net cash provided by financing activities was $202.9 million for the year ended December 31, 2023, as compared to $153.9 million in 2022.
Cash Flows from Financing Activities Net cash provided by financing activities was $58.3 million for the year ended December 31, 2024, as compared to $202.9 million in 2023.
See Note 9: Long-Term De bt in the Notes to the Consolidated Financial Statements under Part II, Item 8 for more information. The Company presents Adjusted EBITDA calculated in accordance with “Consolidated EBITDA” as that term is used in the ABL Credit Agreement and 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. The Company presents Adjusted EBITDA calculated in accordance with “Consolidated EBITDA” as that term is used in the ABL Credit Agreement and the Indenture.
(3) Represents the impact of sales-type lease accounting for certain leases containing RPOs, as the application of sales-type lease accounting is not deemed to be representative of the ongoing cash flows of the underlying rental contracts. The adjustments are made pursuant to our ABL Credit Agreement.
These adjustments are presented as adjustments to net income (loss) pursuant to our ABL Credit Agreement and Indenture (3) Represents the impact of sales-type lease accounting for certain leases containing RPOs, as the application of sales-type lease accounting is not deemed to be representative of the ongoing cash flows of the underlying rental contracts.
We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service 30 Table of Contents and capital requirements, including investments in our rental fleet, over the next 12 months. As of December 31, 2023, we had $10.3 million in cash and cash equivalents compared to $14.4 million as of December 31, 2022.
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, we had $3.8 million in cash and cash equivalents compared to $10.3 million as of December 31, 2023.
Our expected material contractual cash requirements over the next twelve months primarily consist of minimum operating lease obligations of $8.8 million, debt principal and interest payments of $8.0 million and $101.8 million, respectively, and the repayment of floor plan borrowings.
Our expected material contractual cash requirements over the next twelve months primarily consist of minimum operating lease obligations of $14.4 million, debt principal and interest payments of $7.8 million and $99.5 million, respectively, and the repayment of floor plan borrowings.
Similarly, to the extent the estimated salvage values of our rental equipment were to increase or decrease by one percentage point, we estimate that our annual depreciation expense would change by approximately $3.4 million.
Similarly, to the extent the estimated salvage values of our rental equipment were to increase or decrease by one 34 Table of Contents percentage point, we estimate that our annual depreciation expense would change by approximately $1.9 million.
At December 31, 2023, our deferred tax asset valuation allowance was $67.6 million. 36 Table of Contents Recent Accounting Pronouncements See Note 2: Summary of Significant Accounting Policies , to our Annual Report on Form 10-K for a discussion of recently issued and adopted accounting pronouncements.
At December 31, 2024, our deferred tax asset valuation allowance was $72.4 million. Recent Accounting Pronouncements See Note 2: Summary of Significant Accounting Policies , to our Annual Report on Form 10-K for a discussion of recently issued and adopted accounting pronouncements.
Cash Flows from Investing Activities Net cash used in investing activities was $176.6 million for the year ended December 31, 2023, as compared to cash used in investing activities of $218.9 million in 2022.
Cash Flows from Investing Activities Net cash used in investing activities was $187.5 million for the year ended December 31, 2024, as compared to cash used in investing activities of $176.6 million in 2023.
Amortization and non-rental depreciation — Amortization expense relates to intangible assets such as customer lists, trade names, etc. Non-rental depreciation expense reflects the depreciation of property and equipment that is not part of the rental fleet. Transaction expenses and other — Transaction expenses and other include expenses directly related to the acquisition of businesses.
Amortization and non-rental depreciation — Amortization expense relates to intangible assets such as customer lists, trade names, etc. Non-rental depreciation expense reflects the depreciation of property and equipment that is not part of the rental fleet.
Also included in financing and other expense (income) are the unrealized remeasurement gains and losses related to our interest rate collar and redeemable warrants. Interest expense — Interest expense consists of contractual interest expense on outstanding debt obligations, floorplan financing facilities, amortization of deferred financing costs and other related financing expenses.
Also included in financing and other expense (income) are the unrealized remeasurement gains and losses related to our interest rate collar and redeemable warrants. 25 Table of Contents 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 to derivative financial instruments.
Changes in these assumptions would have an impact to the amount of intangible assets recorded and the resulting amortization expense. Goodwill and the Evaluation of Goodwill Impairment Goodwill represents the excess of cost over the fair value of identifiable net assets of businesses acquired.
Changes in these assumptions would have an impact to the amount of intangible assets recorded and the resulting amortization expense. Goodwill and the Evaluation of Goodwill Impairment Goodwill represents the excess of cost over the fair value of identifiable net assets of businesses acquired, and goodwill is assigned to each of our reporting units, which are ERS, TES and APS.
Any change in depreciation expense as a result of a hypothetical change in either useful lives or salvage values would generally result in a proportional increase or decrease in the gross profit we would recognize upon the ultimate sale of the asset. Business Combinations We have made acquisitions in the past and may continue to make acquisitions in the future.
Any change in depreciation expense as a result of a hypothetical change in either useful lives or salvage values would generally result in a proportional increase or decrease in the gross profit we would recognize upon the ultimate sale of the asset.
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.
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.
Activities in our ERS segment consist of the rental and sale from the rental fleet of the foregoing products. 26 Table of Contents Truck and Equipment Sales (“TES”) Segment — We offer a broad variety of new equipment for sale to be used across our end-markets, which can be modified to meet our customers’ specific needs.
Truck and Equipment Sales (“TES”) Segment — We offer a broad variety of new equipment for sale to be used across our end-markets, which can be modified to meet our customers’ specific needs.
As of December 31, 2023, we had $552.4 million of outstanding borrowings under our ABL Facility compared to $437.7 million of outstanding borrowings as of December 31, 2022.
As of December 31, 2024, we had 30 Table of Contents $582.9 million of outstanding borrowings under our ABL Facility compared to $552.4 million of outstanding borrowings as of December 31, 2023.
In the majority of these cases, we will sell used equipment directly to customers, rather than relying on auctions. Activities in our TES segment consist of the production and sale of new and used specialty equipment and vocational trucks, which includes equipment from leading original equipment manufacturers (“OEMs”) across our end-markets, as well as our Load King TM brand.
Activities in our TES segment consist of the production and sale of new and used specialty equipment and vocational trucks, which 26 Table of Contents includes equipment from leading original equipment manufacturers (“OEMs”) across our end-markets, as well as our Load King TM brand.
Neither Adjusted EBITDA or 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 or 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 or Net leverage Ratio should be considered as a substitute for a measure of our financial performance or liquidity prepared in accordance with GAAP.
Cash Flows from Operating Activities Net cash used in operating activities was $30.9 million for the year ended December 31, 2023, as compared to $46.0 million provided by operating activities in the same period of 2022. The use of cash in the current period is the result of our increased levels of inventory purchases and production.
Cash Flows from Operating Activities Net cash from operating activities was $122.0 million for the year ended December 31, 2024, as compared to $30.9 million used for operating activities in the same period of 2023. The change year over year is driven by lower levels of inventory production throughout 2024 compared to 2023.
Year Ended December 31, (in $000s) 2023 2022 Change % Change Ending OEC (as of period end) $ 1,455,708 $ 1,455,820 $ (112) — Average OEC on rent $ 1,183,253 $ 1,187,950 $ (4,697) (0.4) % Fleet utilization 80.4 % 83.9 % (3.5) % (4.2) % OEC on rent yield 40.4 % 39.1 % 1.3 % 3.3 % Sales order backlog (as of period end) $ 688,559 $ 754,142 $ (65,583) (8.7) % Operating Results by Segment The following segment information compares results by segment for years ended December 31, 2023 and December 31, 2022.
Year Ended December 31, (in $000s) 2024 2023 Change % Change Ending OEC (as of period end) $ 1,515,461 $ 1,455,708 $ 59,753 4.1 % Average OEC on rent $ 1,101,417 $ 1,183,253 $ (81,836) (6.9) % Fleet utilization 74.3 % 80.4 % (6.1) % (7.6) % OEC on rent yield 39.0 % 40.4 % (1.4) % (3.5) % Sales order backlog (as of period end) $ 368,779 $ 688,559 $ (319,780) (46.4) % Operating Results by Segment The following segment information compares results by segment for years ended December 31, 2024 and December 31, 2023.
Cost of Revenue, Excluding Rental Equipment Depreciation - Consistent with the increase in revenue versus the prior year, the increase in cost of revenue, excluding rental equipment depreciation, was driven primarily by the increase in new and rental equipment sales volume.
Cost of Revenue, Excluding Rental Equipment Depreciation - The decrease in cost of revenue, excluding rental equipment depreciation was driven primarily by the decrease in equipment sales volume during the year ended December 31, 2024.
See Note 9: Long-Term Debt in the Notes to the Consolidated Financial Statements under Part II, Item 8 for more information. 33 Table of Contents Sources and Uses of Cash The following table summarizes our sources and uses of cash: Year Ended December 31, (in $000s) 2023 2022 Net cash flow from operating activities $ (30,883) $ 45,968 Net cash flow from investing activities (176,598) (218,936) Net cash flow from financing activities 202,876 153,896 Effect of exchange rate changes on cash and cash equivalents 554 (2,470) Net change in cash and cash equivalents $ (4,051) $ (21,542) As of December 31, 2023, we had cash and cash equivalents of $10.3 million, a decrease of $4.1 million from December 31, 2022.
Sources and Uses of Cash The following table summarizes our sources and uses of cash: Year Ended December 31, (in $000s) 2024 2023 Net cash flow from operating activities $ 121,985 $ (30,883) Net cash flow from investing activities (187,485) (176,598) Net cash flow from financing activities 58,283 202,876 Effect of exchange rate changes on cash and cash equivalents 713 554 Net change in cash and cash equivalents $ (6,504) $ (4,051) 33 Table of Contents As of December 31, 2024, we had cash and cash equivalents of $3.8 million, a decrease of $6.5 million from December 31, 2023.
(5) Represents the charge to earnings for our interest rate collar and the change in fair value of the liability for warrants. 32 Table of Contents The following table presents the calculation of Net Debt and Net Leverage Ratio: (in $000s) December 31, 2023 December 31, 2022 Current maturities of long-term debt $ 8,257 $ 6,940 Current portion of finance lease obligations — 1,796 Long-term debt, net 1,487,136 1,354,766 Finance leases — 3,206 Deferred financing fees 22,406 27,686 Less: cash and cash equivalents (10,309) (14,360) Net Debt $ 1,507,490 $ 1,380,034 Divided by: Adjusted EBITDA 426,930 392,978 Net Leverage Ratio 3.53 3.51 Future Contractual Obligations Our estimated future obligations as of December 31, 2023 include both short-term (over the next 12 months) and long-term obligations.
On July 31, 2024, all of the Company’s stock purchase warrants expired and unexercised. 32 Table of Contents The following table presents the calculation of Net Debt and Net Leverage Ratio: (in $000s) December 31, 2024 December 31, 2023 Current maturities of long-term debt $ 7,842 $ 8,257 Long-term debt, net 1,519,882 1,487,136 Deferred financing fees 19,926 22,406 Less: cash and cash equivalents (3,805) (10,309) Net Debt $ 1,543,845 $ 1,507,490 Divided by: Adjusted EBITDA 339,657 426,930 Net Leverage Ratio 4.55 3.53 Future Contractual Obligations Our estimated future obligations as of December 31, 2024 include both short-term (over the next 12 months) and long-term obligations.
When performing a Step 0 test, if we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then perform a quantitative goodwill impairment analysis (“Step 1 test”) by comparing the carrying amount to an estimate of the fair value of the reporting unit.
If we conclude that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or we elect not to use the qualitative impairment test, a quantitative impairment test is performed.
Total Other Expense - The increase in other expense for the year ended December 31, 2023, was primarily due to an increase in interest expense from variable rate debt and floor plan financing liabilities, as well as a decrease in mark-to-market income from the private warrants liability (accounted for as a derivative financial instrument) to $2.5 million in 2023, from $20.3 million in 2022.
Total Other Expense - The increase in other expense for the year ended December 31, 2024, was primarily due to the increase in interest expense from variable rate debt and floor plan financing liabilities.
Cost of Revenue - The increase in total cost of revenue for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily driven by the increase in cost of equipment sales, resulting from an increase in demand for rental equipment purchases by our customers.
Cost of Revenue - The decrease in total cost of revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, was largely due to the decrease in rental equipment sales volume.
Neither Adjusted EBITDA or Net leverage Ratio should be considered as a substitute for a measure of our financial performance or liquidity prepared in accordance with GAAP. 31 Table of Contents The following table provides the calculation of Adjusted EBITDA pursuant to the ABL Credit Agreement and the Indenture for the years ended December 31, 2023 and 2022: Year Ended December 31, (in $000s) 2023 2022 $ Change % Change Net income $ 50,712 $ 38,905 $ 11,807 30.3 % Interest expense 94,694 76,265 18,429 24.2 % Income tax expense 7,364 7,827 (463) (5.9) % Depreciation and amortization 218,993 223,483 (4,490) (2.0) % EBITDA 371,763 346,480 25,283 7.3 % Adjustments: Non-cash purchase accounting impact (1) 19,742 23,069 (3,327) (14.4) % Transaction and integration costs (2) 14,143 26,218 (12,075) (46.1) % Sales-type lease adjustment (3) 10,458 5,204 5,254 101.0 % Share-based payments (4) 13,309 12,297 1,012 8.2 % Change in fair value of derivative and warrants (5) (2,485) (20,290) 17,805 (87.8) % Adjusted EBITDA $ 426,930 $ 392,978 $ 33,952 8.6 % (1) Represents the non-cash impact of purchase accounting, net of accumulated depreciation, on the cost of equipment and inventory sold.
The following table provides the calculation of Adjusted EBITDA pursuant to the ABL Credit Agreement and the Indenture for the years ended December 31, 2024 and 2023: Year Ended December 31, (in $000s) 2024 2023 Net income (loss) $ (28,655) $ 50,712 Interest expense 105,895 94,694 Income tax expense (benefit) (532) 7,364 Depreciation and amortization 235,807 218,993 EBITDA 312,515 371,763 Adjustments: Non-cash purchase accounting impact (1) 16,833 19,742 Transaction and other costs (2) 17,915 14,143 Sales-type lease adjustment (3) 4,559 10,458 Gain on sale leaseback transaction (4) (23,497) — Share-based payments (5) 11,859 13,309 Change in fair value of derivative and warrants (6) (527) (2,485) Adjusted EBITDA $ 339,657 $ 426,930 (1) Represents the non-cash impact of purchase accounting, net of accumulated depreciation, on the cost of equipment and inventory sold.
Aftermarket Parts and Services (APS) Segment Year Ended December 31, (in $000s) 2023 2022 Rental revenue $ 15,771 $ 14,931 Parts and services revenue 132,737 126,706 Total revenue 148,508 141,637 Cost of revenue: Cost of revenue 105,791 105,185 Depreciation of rental equipment 3,465 3,741 Total cost of revenue 109,256 108,926 Gross profit $ 39,252 $ 32,711 Total Revenue - Total revenue increased for the year ended December 31, 2023, compared to the year ended December 31, 2022, driven by growth in demand for parts, tools and accessories sales, augmented by increased tools and accessories rentals in the Parts, Tools and Accessories (“PTA”) division.
Aftermarket Parts and Services (APS) Segment Year Ended December 31, (in $000s) 2024 2023 Rental revenue $ 12,786 $ 15,771 Parts and services revenue 136,291 132,737 Total revenue 149,077 148,508 Cost of revenue: Cost of revenue 111,560 105,791 Depreciation of rental equipment 3,945 3,465 Total cost of revenue 115,505 109,256 Gross profit $ 33,572 $ 39,252 Total Revenue - Total revenue increased for the year ended December 31, 2024, compared to the year ended December 31, 2023, due to the increase in parts and services revenue partially offset by a decrease in rentals of tools and accessories tied to the decline in rental revenue in the ERS segment.
The decrease in cash used in investing activities is due to the cash paid for acquisition, net of cash acquired, in 2022 of $49.8 million as well as an increase in proceeds from sales and disposals of rental equipment of $23.7 million, partially offset by an increase in purchases for rental and non-rental equipment and cloud computing arrangements of $31.2 million.
The increase in cash used in investing activities is due to an increase in purchases for rental equipment of $34.1 million, cash paid for acquisitions of businesses (net of cash acquired) of $6.0 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.
The equipment and inventory acquired received a purchase accounting step-up in basis, which is a non-cash adjustment to the equipment cost pursuant to our ABL Credit Agreement. (2) Represents transaction and process improvement costs related to acquisitions of businesses, including post-acquisition integration costs, which are recognized within operating expenses in our Consolidated Statements of Operations and Comprehensive Income (Loss).
The equipment and inventory acquired received a purchase accounting step-up in basis, which is a non-cash adjustment to the equipment cost pursuant to our ABL Credit Agreement and Indenture.
Gross Profit - The increase in gross profit for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily volume driven, as well as the Company’s success in cutting costs to improve gross profit.
Gross Profit - The increase in gross profit for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due to higher volume of equipment sales.
Equipment Rental Solutions (ERS) Segment Year Ended December 31, (in $000s) 2023 2022 Rental revenue $ 463,139 $ 449,108 Equipment sales 263,028 212,146 Total revenue 726,167 661,254 Cost of revenue: Cost of rental revenue 118,236 106,598 Cost of equipment sales 198,510 158,167 Depreciation of rental equipment 167,199 167,962 Total cost of revenue 483,945 432,727 Gross profit $ 242,222 $ 228,527 Total Revenue - The increase in total revenue for the ERS segment for the year ended December 31, 2023, compared to the year ended December 31, 2022, was driven by an increase in rental revenues and equipment sales revenue.
Equipment Rental Solutions (ERS) Segment Year Ended December 31, (in $000s) 2024 2023 Rental revenue $ 430,167 $ 463,139 Equipment sales 167,638 263,028 Total revenue 597,805 726,167 Cost of revenue: Cost of rental revenue 116,790 118,236 Cost of equipment sales 123,229 198,510 Depreciation of rental equipment 179,508 167,199 Total cost of revenue 419,527 483,945 Gross profit $ 178,278 $ 242,222 Total Revenue - The decrease in total revenue for the ERS segment for the year ended December 31, 2024, compared to the year ended December 31, 2023, was driven by a decrease in equipment sales due to fewer rental asset sales of used equipment, as well as a decrease in rental revenue as a result of a reduction in fleet utilization of 6.1%.
Net Income - The change in net income for the year ended December 31, 2023, was primarily the result of gross profit expansion, partially offset by higher interest expense on variable-rate debt and variable-rate floor plan liabilities. 28 Table of Contents Operating Metrics We believe that our operating model, together with our highly variable cost structure, enables us to sustain high margins, strong cash flow generation and stable financial performance throughout various economic cycles.
Operating Metrics We believe that our operating model, together with our highly variable cost structure, enables us to sustain high margins, strong cash flow generation and stable financial performance throughout various economic cycles. We are able to generate cash flow through our earnings.
Gross Profit - The increase in gross profit for the year ended December 31, 2023, compared to the year ended December 31, 2022, was due to the increase in rental revenues and equipment sales for the period, partially offset by increased cost of revenue driven by factors discussed above. 29 Table of Contents Truck and Equipment Sales (TES) Segment Year Ended December 31, (in $000s) 2023 2022 Equipment sales $ 990,425 $ 770,195 Cost of equipment sales 817,639 647,685 Gross profit $ 172,786 $ 122,510 Equipment Sales - Equipment sales increased for the year ended December 31, 2023, compared to the year ended December 31, 2022, due to the continued supply chain improvements related to the segment's inventory suppliers, which allowed for greater order fulfillments and sustained strong customer demand.
Gross Profit - The decrease in gross profit for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due to the decrease in rental revenues and rental equipment sales. 29 Table of Contents Truck and Equipment Sales (TES) Segment Year Ended December 31, (in $000s) 2024 2023 Equipment sales $ 1,055,398 $ 990,425 Cost of equipment sales 876,978 817,639 Gross profit $ 178,420 $ 172,786 Equipment Sales - Equipment sales increased for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Total Operating Expenses - Operating expenses increased for the year ended December 31, 2023, primarily as a result of an increase in general and administrative expenses due to higher commissions, increased headcount and wages, elevated marketing-related activities, and additional expense associated with various information technology projects.
Total Other Operating Expenses - Other Operating expenses increased for the year ended December 31, 2024, primarily as a result of an increase in transaction expenses and other due to new site openings and launch of new line of businesses.
The Company may perform qualitative and quantitative impairment analyses on October 1 annually to evaluate whether it is more likely than not that the fair value of its reporting units is less than their respective carrying amounts as of the annual assessment date.
Qualitative Impairment Test – The qualitative impairment test assesses company-specific, industry, market and general economic factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
The increase in cash provided by financing activities is primarily due to an increase in borrowings under revolving credit facilities of $68.0 million, partially offset by an increase in cash paid for the repurchase of common stock of $28.6 million.
The decrease in cash provided by 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 cash paid for the repurchase of common stock of $9.9 million.
Year Ended December 31, (in $000s) 2023 2022 Equipment sales $ (58,064) $ (41,525) Cost of equipment sales 55,716 37,582 Gross profit (2,348) (3,943) Interest income (16,065) (12,130) Rental invoiced 28,871 21,277 Sales-type lease adjustment $ 10,458 $ 5,204 (4) Represents non-cash share-based compensation expense associated with the issuance of stock options and restricted stock units.
Year Ended December 31, (in $000s) 2024 2023 Equipment sales $ (9,849) $ (58,064) Cost of equipment sales 9,425 55,716 Gross profit (424) (2,348) Interest income (11,285) (16,065) Rental invoiced 16,268 28,871 Sales-type lease adjustment $ 4,559 $ 10,458 (4) During Q4 2024, the Company closed on a sale leaseback transaction with an unrelated third party.
Cost of Revenue - The increase in cost of revenue for the year ended December 31, 2023, compared to the year ended December 31, 2022, was commensurate with the increase in volume of parts sales and rental activity, partially offset by the Company’s focus on managing costs to improve gross profit in this segment.
Gross Profit - The decrease in gross profit for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily driven by the decrease in tools and accessories rentals with an increase in costs of materials driving gross profit down.
We allocate the cost of the acquired enterprise to the assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. Rental equipment generally represents the largest component and was 37% of total assets acquired during the two years ended December 31, 2022, followed by goodwill at 30% and other intangible assets at 20%.
Business Combinations We have made acquisitions of businesses in the past and may continue to make acquisitions in the future. We allocate the cost of the acquired enterprise to the assets acquired and liabilities assumed based on their respective fair values at the date of acquisition.
For the year ended December 31, 2022, the impact of discrete items, including derivative mark-to-market adjustments, transaction and integration expenses, our foreign operations and changes in the valuation allowance, resulted in an overall effective tax rate in the period of 16.7%, $7.8 million of tax expense recognized.
For the year ended December 31, 2024, the changes in the effective tax rates were primarily due to pre-tax book loss and the effects of permanent 28 Table of Contents adjustments in the current period, resulting in an overall effective tax rate in the period of 1.8%, $0.5 million of tax expense being recognized.
Gross Profit - The increase in gross profit for the year ended December 31, 2023, compared to the year ended December 31, 2022, is reflective of the positive demand and pricing environment for our products.
Cost of Revenue - The increase in cost of revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, as a result of higher costs of materials.
Removed
Acquisition of Custom Truck LP On December 3, 2020, Nesco Holdings Inc. (“Nesco” or “Nesco Holdings”) and Nesco Holdings II, Inc., a subsidiary of Nesco Holdings (the “Buyer” or “Issuer”), entered into a purchase and sale agreement with certain affiliates of The Blackstone Group and other direct and indirect equity holders of Custom Truck One Source, L.P.
Added
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.
Removed
(“Custom Truck LP”), Blackstone Capital Partners VI-NQ L.P., and PE One Source Holdings, LLC, an affiliate of Platinum Equity, LLC, pursuant to which Buyer agreed to acquire 100% of the partnership interests of Custom Truck LP.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeHolding other variables constant, each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense under the ABL Facility and floor plan financing arrangements by approximately $1.5 million on an annual basis.
Biggest changeHolding other variables constant, each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense under the ABL Facility and floor plan financing arrangements by approximately $1.7 million on an annual basis. We do not currently hedge our interest rate exposure.
Interest rate changes generally impact the amount of our interest payments and, therefore, our future net income and cash flows, assuming other factors are held constant. As of December 31, 2023, we had $1,214.7 million aggregate principal amount of variable rate debt, consisting of the balance outstanding under the ABL Facility and floor plan financing arrangements.
Interest rate changes generally impact the amount of our interest payments and, therefore, our future net income and cash flows, assuming other factors are held constant. As of December 31, 2024, we had $1,384.2 million aggregate principal amount of variable rate debt, consisting of the balance outstanding under the ABL Facility and floor plan financing arrangements.
Foreign currency exchange rate risk During the year ended December 31, 2023, we generated $48.6 million of revenue in Canadian dollars. Each 100 basis point increase or decrease in the average Canadian dollar to U.S. dollar exchange rate for the year would have correspondingly changed our revenues by approximately $0.5 million.
Foreign currency exchange rate risk During the year ended December 31, 2024, we generated $47.1 million of revenue in Canadian dollars. Each 100 basis point increase or decrease in the average Canadian dollar to U.S. dollar exchange rate for the year would have correspondingly changed our revenues by approximately $0.62 million.

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