Custom Truck One Source, Inc. (NYSE:CTOS) Q4 2021 Earnings Conference Call March 10, 2022 5:00 PM ET Company Participants Brian Perman - Vice President, Investor Relations Fred Ross - Chief Executive Officer Ryan McMonagle - President and Chief Operating Officer Brad Meader - Chief Financial Officer Conference Call Participants Justin Hauke - Baird Scott Schneeberger - Oppenheimer Noelle Dilts - Stifel Stefanos Crist - CJS Securities Operator Hello and welcome to the Custom Truck One Source Fourth Quarter 2 ...

Table of Contents _______________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38186 _______________________________ CUSTOM TRUCK ONE ...

Custom Truck One Source, Inc. (NYSE:CTOS) Q3 2021 Earnings Conference Call November 9, 2021 5:00 AM ET Company Participants Brian Perman - VP, IR Fred Ross – CEO Ryan McMonagle – President and COO Bradley Meader – CFO Conference Call Participants Stefanos Crist - CJS Securities Scott Schneeberger - Oppenheimer & Co. Sean Wondrack - Deutsche Bank Operator Ladies and gentlemen, thank you for standing by, and welcome to Custom Truck One Source's Third Quarter 2021 Earnings Conference Call. During the presentat ...

Custom Truck One Source 3rd Quarter 2021 Investor Presentation November 9, 2021 1 CONFIDENTIAL DRAFT 2 2 Safe Harbor This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States ("GAAP"), including, without limitation, EBITDA, Adjusted EBITDA, and Pro Forma Adjusted EBITDA (collectively, the "non-GAAP financial measures"). These non-GAAP financial measures are not measures of financial performan ...

Table of Contents _______________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-38186 _______________________________ CUSTOM TRUCK ONE SOURCE ...

Custom Truck One Source, Inc. (NYSE:CTOS) Q2 2021 Earnings Conference Call August 12, 2021 5:00 PM ET Company Participants Brian Perman - Vice President of Investor Relations Fred Ross - Chief Executive Officer Ryan McMonagle - President & Chief Operating Officer Brad Meader - Chief Financial Officer Conference Call Participants Scott Schneeberger - Oppenheimer Stefanos Crist - CJS Securities Operator Ladies and gentlemen, thank you for standing by and welcome to Custom Truck One Source's Second Quarter 202 ...

Custom Truck One Source 2 nd Quarter 2021 Investor Presentation CONFIDENTIAL DRAFT 1 August 12, 2021 2 2 Safe Harbor This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States ("GAAP"), including, without limitation, EBITDA, Adjusted EBITDA, and Pro Forma Adjusted EBITDA (collectively, the "non-GAAP financial measures"). These non-GAAP financial measures are not measures of financial performan ...

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section covers the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements for the three months ended March 31, 2021, show a slight decrease in total revenue to **$78.3 million** from **$81.7 million** year-over-year, with a significantly wider net loss of **$27.9 million** compared to a **$15.9 million** loss in the prior-year period, primarily driven by **$10.4 million** in transaction expenses related to the Custom Truck acquisition [Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202021%20and%20December%2031%2C%202020) This section presents the company's financial position as of March 31, 2021, showing a slight decrease in total assets to **$750.2 million** and an increased total stockholders' deficit of **$68.7 million** Condensed Consolidated Balance Sheet Highlights (in $000s) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $104,346 | $103,242 | | Rental equipment, net | $323,705 | $335,812 | | Goodwill and other intangibles, net | $304,878 | $305,631 | | **Total Assets** | **$750,244** | **$768,404** | | **Total Current Liabilities** | $65,074 | $71,351 | | Long-term debt, net | $725,677 | $715,858 | | Derivative and warrants liabilities | $23,647 | $7,012 | | **Total Liabilities** | $818,911 | $799,471 | | **Total Stockholders' Deficit** | **$(68,667)** | **$(31,067)** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) This section details the company's financial performance for the three months ended March 31, 2021, reporting a total revenue of **$78.3 million** and a net loss of **$27.9 million** Condensed Consolidated Statements of Operations (in $000s, except per share data) | Account | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Total Revenue** | **$78,299** | **$81,743** | | Gross Profit | $20,219 | $21,403 | | Transaction and other expenses | $10,448 | $1,452 | | Operating (Loss) Income | $(3,054) | $6,796 | | **Net Loss** | **$(27,907)** | **$(15,969)** | | Basic and Diluted Net Loss Per Share | $(0.57) | $(0.33) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) This section outlines the company's cash flow activities for the three months ended March 31, 2021, showing a net cash use from operating activities of **$12.1 million** and a net change in cash of **$(0.2 million)** Condensed Consolidated Statements of Cash Flows (in $000s) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash flow from operating activities | $(12,086) | $(2,819) | | Net cash flow from investing activities | $3,972 | $(27,190) | | Net cash flow from financing activities | $7,893 | $33,943 | | **Net Change in Cash** | **$(221)** | **$3,934** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, including information on the Custom Truck acquisition and warrant reclassification - On April 1, 2021, after the reporting period, Nesco Holdings, Inc. acquired Custom Truck One Source, L.P. and changed its name to Custom Truck One Source, Inc. (CTOS Inc.), with the financial statements presented on a historical basis for Nesco Holdings[24](index=24&type=chunk) - The acquisition of Custom Truck One Source, L.P. closed on April 1, 2021, with a preliminary purchase price of **$1.5 billion**, and the company expensed approximately **$10.4 million** in related transaction costs during the three months ended March 31, 2021[52](index=52&type=chunk)[54](index=54&type=chunk) - In connection with the acquisition, the company issued **$920 million** of 5.50% senior secured notes due 2029 and entered into a new **$750 million** ABL facility, repaying its existing Senior Secured Notes and 2019 Credit Facility[55](index=55&type=chunk)[56](index=56&type=chunk)[59](index=59&type=chunk) - The company reclassified its Non-Public Warrants from equity to a liability based on SEC guidance for SPACs, resulting in a reclassification of **$10.3 million** from Additional paid-in capital and a recognized expense of **$7.6 million** in Q1 2021 for the fair value remeasurement[102](index=102&type=chunk)[103](index=103&type=chunk) Revenue by Segment (in $000s) | Segment | Q1 2021 Revenue | Q1 2020 Revenue | | :--- | :--- | :--- | | Equipment Rental and Sales (ERS) | $62,717 | $63,723 | | Parts, Tools, and Accessories (PTA) | $15,582 | $18,020 | | **Total** | **$78,299** | **$81,743** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **4.2%** year-over-year revenue decline to a decrease in rental revenue and parts sales, partially offset by higher sales of used rental equipment, with the significant increase in net loss primarily due to transaction costs and warrant liability re-measurement - The acquisition of Custom Truck One Source, L.P. closed on April 1, 2021, with a preliminary purchase price of **$1.5 billion**, funded through a combination of equity issuance and new debt financing[133](index=133&type=chunk) - Total revenue for Q1 2021 decreased by **4.2%** YoY to **$78.3 million**, driven by a **5.3%** decrease in rental revenue and a **14.6%** decrease in parts sales and services, while sales of rental equipment increased **15.3%**[145](index=145&type=chunk) - Net loss widened to **$27.9 million** in Q1 2021 from **$16.0 million** in Q1 2020, largely due to **$10.4 million** in transaction expenses for the acquisition and a **$7.6 million** non-cash charge related to the change in fair value of warrant liabilities[149](index=149&type=chunk) Key Performance Metrics | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA (in $000s) | $27,531 | $32,061 | (14.1)% | | Fleet utilization | 78.5% | 77.3% | +1.6% | | OEC on rent yield | 35.0% | 36.5% | (4.1)% | - Post-acquisition, the company's debt structure consists of a **$750 million** ABL facility maturing in 2026 and **$920 million** of 5.50% senior secured notes due 2029, with previous credit facilities repaid[171](index=171&type=chunk)[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk associated with its variable-rate debt under the new ABL Facility, with a **0.125%** change in interest rates impacting annual interest expense by approximately **$0.5 million** - The company is exposed to interest rate risk from its variable-rate ABL Facility, with **$415.0 million** in variable-rate debt post-acquisition[200](index=200&type=chunk) - A **0.125%** change in the applicable interest rate would change the company's annual interest expense by approximately **$0.5 million**, excluding the impact of the existing interest rate collar[200](index=200&type=chunk) - The company utilizes an interest rate collar agreement to manage a portion of its interest rate risk, which is not designated for hedge accounting[201](index=201&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[205](index=205&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[206](index=206&type=chunk) [PART II OTHER INFORMATION](index=43&type=section&id=PART%20II%20OTHER%20INFORMATION) This section includes legal proceedings, risk factors, unregistered sales of equity securities, and other miscellaneous information [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and litigation in the ordinary course of business, which management does not expect to have a material adverse impact on its financial condition or results of operations - The company is not currently involved in any pending litigation that is expected to have a material adverse effect on its financial condition, cash flows, or results of operations[208](index=208&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) The company highlights several key risks, including the difficulty and cost of integrating the Nesco and Custom Truck businesses, substantial indebtedness incurred for the acquisition, and the majority equity ownership by Platinum - **Integration Risk:** The company faces challenges in integrating Nesco and Custom Truck, which is a complex and costly process, with a risk that anticipated benefits and cost savings may not be fully realized[229](index=229&type=chunk)[230](index=230&type=chunk) - **Indebtedness Risk:** The company has significant indebtedness following the acquisition, which could adversely affect its financial position, limit access to capital, and increase the risk of default, with debt agreements imposing significant operating and financial restrictions[238](index=238&type=chunk)[239](index=239&type=chunk)[246](index=246&type=chunk) - **Majority Shareholder Risk:** Platinum owns a majority of the company's equity, giving it control over affairs, policies, and the election of directors, whose interests may conflict with those of other shareholders[237](index=237&type=chunk) - **Operational Risk:** The company faces risks related to managing its long-life rental equipment, potential supply chain disruptions for raw materials and components, and the potential for increased unionization of its workforce[211](index=211&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On April 1, 2021, the company issued **176,600,000** shares of common stock at **$5.00** per share for a total of **$883.0 million** to finance the acquisition of Custom Truck One Source, L.P., under an exemption from registration - On April 1, 2021, CTOS Inc. issued **176,600,000** shares of Common Stock at **$5.00** per share, raising **$883.0 million** in aggregate[254](index=254&type=chunk) - The proceeds were used to finance the acquisition of Custom Truck One Source, L.P., with the issuance made under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(c) of Regulation D[254](index=254&type=chunk) [Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[255](index=255&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[256](index=256&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) No other information was reported - No other information was reported[258](index=258&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Purchase and Sale Agreement for the acquisition, the new Indenture and Revolving Credit Agreement, and various officer certifications - The report includes key legal documents as exhibits, such as the Purchase and Sale Agreement, new debt agreements (Indenture and ABL Credit Agreement), and officer certifications required by the Sarbanes-Oxley Act[259](index=259&type=chunk)

Financial Data and Key Metrics Changes - Nesco's total revenue for Q1 2021 was $78.3 million, down from $81.7 million in Q1 2020, reflecting a decline of approximately 3.9% [24] - Adjusted EBITDA decreased by 14.1% to $27.5 million, with a margin contraction of 400 basis points [24] - Net loss for the quarter was $27.9 million, compared to a loss of $16 million in Q1 2020, which included $10.4 million in transaction-related expenses and a noncash charge of $7.6 million [25] - Equipment rental and sales revenue declined by 1.6% to $62.7 million, while whole goods sales increased by 7.9% to $18 million [26] Business Line Data and Key Metrics Changes - Equipment rental revenue decreased by 4.9% to $44.7 million, with OEC on rent remaining consistent with 2020 levels but yield down due to a mix shift [26] - The parts, tools, and accessories business saw a revenue decline of 13.5% to $15.6 million, driven by a decrease in the truck utilities upfitting business [27] - Gross profit decreased by 5.5% to $20.2 million, primarily due to deferred repair and maintenance costs from the COVID slowdown [28] Market Data and Key Metrics Changes - Rental demand was strong, with both legacy Custom Truck and legacy Nesco fleets achieving over 78% utilization during Q1, with further gains expected [15] - Customers are experiencing pent-up demand and are increasingly prepared to operate safely, leading to increased equipment rentals and unit sales [15][16] - Significant capital projects in transmission and distribution have been announced, indicating strong market fundamentals [17] Company Strategy and Development Direction - The merger with Nesco is seen as a transformational opportunity, creating a leading provider of specialty equipment [4][5] - The company aims to achieve $50 million in synergies by the end of 2022, with $20 million to $25 million expected on a run rate basis by the end of 2021 [19] - Capital allocation will focus on targeted investments in the fleet while maintaining a balance with debt reduction [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery phase post-COVID, driven by pent-up demand and potential infrastructure legislation [5][16] - The company is well-positioned to capitalize on robust tailwinds in core markets, with strong customer backlogs and demand for rental equipment [13][16] - Management highlighted the importance of adapting to new conditions and maintaining operational capabilities during the pandemic [22] Other Important Information - The debt refinancing concurrent with the acquisition resulted in a stronger balance sheet, reducing the weighted interest rate on debt from 7.7% to 4.4% [30] - The integration of Custom Truck and Nesco is progressing smoothly, with plans to unify systems and operations [41] Q&A Session Summary Question: Can you elaborate on the end markets and trends moving into Q2? - Management noted strong demand across all end markets, including transmission, distribution, telecom, and rail, with utilization rates improving [34][36] Question: What are the expectations for rental rates going forward? - Management indicated that rental rates have been increasing month-on-month due to strong demand, and this trend is expected to continue [42] Question: Can you provide details on CapEx goals over the next two years? - Management outlined a CapEx range of $50 million to $70 million for core rental, with potential for increased investment if demand remains strong [43][44]

PART I [Business](index=5&type=section&id=Item%201.%20Business) Nesco provides specialized equipment rentals for North American utility, telecom, and rail industries, with a key growth strategy centered on the pending $1.475 billion acquisition of Custom Truck One Source - Nesco is one of the largest specialty equipment rental providers for the electric utility T&D, telecom, and rail industries in North America, with a fleet of **over 4,500 units** as of December 31, 2020[14](index=14&type=chunk)[15](index=15&type=chunk) - The company operates through two primary segments: **Equipment Rental and Sales (ERS)** and **Parts, Tools, and Accessories (PTA)**, offering a comprehensive solution to its customers[31](index=31&type=chunk)[32](index=32&type=chunk) - On December 3, 2020, Nesco entered into an agreement to acquire Custom Truck One Source, L.P. for a base purchase price of **$1.475 billion**, which is expected to be financed through a new credit facility, equity financing, and senior secured notes[20](index=20&type=chunk)[22](index=22&type=chunk) - Key growth strategies include investing in the fleet to meet unmet demand (over **6,000 rental opportunities turned away** from 2017-2019), increasing PTA penetration, and pursuing strategic acquisitions like Custom Truck[57](index=57&type=chunk)[59](index=59&type=chunk)[64](index=64&type=chunk) Revenue by End-Market (FY 2020 vs. FY 2019) | End-Market | FY 2020 Revenue % | FY 2019 Revenue % | | :--- | :--- | :--- | | Electric Utility T&D | 75.8% | 76.4% | | Telecom | 13.6% | 12.9% | | Rail | 7.3% | 5.2% | | Other | 3.2% | 5.5% | [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, end-market cyclicality, competition, operational challenges, substantial indebtedness, and the pending acquisition of Custom Truck - The **COVID-19 pandemic** has negatively impacted the business through project delays and could lead to extended economic disruption, materially affecting financial results[92](index=92&type=chunk)[93](index=93&type=chunk) - Demand for products and services is **cyclical and vulnerable to downturns** in the electric utility T&D, telecommunications, and rail industries, as well as the broader economy[94](index=94&type=chunk)[95](index=95&type=chunk) - The pending acquisition of Custom Truck is subject to significant risks, including **failure to complete the transaction**, difficulties in integrating the two businesses, loss of key personnel, and failure to realize anticipated synergies and benefits[193](index=193&type=chunk)[196](index=196&type=chunk)[208](index=208&type=chunk) - The company requires a significant amount of cash to service its indebtedness and an inability to generate sufficient cash flow could lead to a **default under its debt agreements**, which contain significant operating and financial restrictions[149](index=149&type=chunk)[153](index=153&type=chunk) - As of December 31, 2020, affiliates of ECP owned **more than 50% of the common stock**, giving them control over company affairs, which may create interests that differ from other shareholders[185](index=185&type=chunk) [Unresolved Staff Comments](index=47&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[220](index=220&type=chunk) [Properties](index=47&type=section&id=Item%202.%20Properties) The company operates from its headquarters in Indiana and 28 leased facilities across the U.S. and Canada, totaling approximately 300,000 square feet - The company's headquarters is in Fort Wayne, Indiana[221](index=221&type=chunk) - Nesco operates **28 leased facilities** in the U.S. and Canada, totaling approximately 300,000 square feet, with leases expiring through 2030[80](index=80&type=chunk)[223](index=223&type=chunk) [Legal Proceedings](index=49&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various routine lawsuits and claims which are not expected to have a material adverse impact on its financial condition - In the normal course of business, the company is involved in various legal proceedings, which are **not expected to have a material adverse impact** on its financial results[224](index=224&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[225](index=225&type=chunk) PART II [Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=49&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Nesco's common stock and warrants trade on the NYSE, and the company has never paid cash dividends, intending to retain earnings for business operations - Common stock and warrants trade on the NYSE under symbols **"NSCO"** and **"NSCO WS"**[227](index=227&type=chunk) - The company has **never declared or paid cash dividends** and does not anticipate paying any in the foreseeable future, with earnings intended for reinvestment[231](index=231&type=chunk) [Selected Financial Data](index=50&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not required for the reporting period - Not required[233](index=233&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Financial performance in 2020 was impacted by COVID-19, with total revenue increasing 14.7% to $302.7 million while Adjusted EBITDA fell 7.0% to $118.6 million due to a lower-margin revenue mix [Operating Results](index=56&type=section&id=Operating%20Results) Total revenue for 2020 increased 14.7% to $302.7 million, driven by equipment and parts sales, while gross profit declined and net loss narrowed to $21.3 million - The increase in total revenue was primarily due to a significant rise in sales of new equipment (+$14.8M) and parts sales and services (+$18.6M), which was partially offset by a decrease in rental revenue (-$2.5M) due to COVID-19 related project delays[252](index=252&type=chunk) - The **ERS segment revenue increased by 9.1%** to $236.6 million in 2020, driven by higher sales of new and used equipment[276](index=276&type=chunk) - The **PTA segment revenue increased by 40.1%** to $66.2 million in 2020, primarily due to the acquisition of Truck Utilities in late 2019[281](index=281&type=chunk) Consolidated Operating Results (in thousands) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $302,739 | $264,035 | 14.7% | | Rental Revenue | $195,490 | $197,996 | (1.3)% | | Gross Profit | $76,443 | $86,548 | (11.7)% | | Operating Income | $17,248 | $36,018 | (52.1)% | | Net Loss | $(21,277) | $(27,052) | 21.3% | [Financial Performance and Non-GAAP Measures](index=57&type=section&id=Financial%20Performance%20and%20Non-GAAP%20Measures) Adjusted EBITDA decreased 7.0% to $118.6 million in 2020, and fleet utilization dropped to 74.6% due to a higher mix of sales and pandemic-related project delays - The decrease in Adjusted EBITDA was primarily due to a lower gross profit from a **higher proportion of equipment and parts sales** in the revenue mix (35.4% in 2020 vs 25.0% in 2019) and increased SG&A expenses[263](index=263&type=chunk) - **Fleet utilization decreased significantly** due to COVID-19 project delays combined with a larger fleet resulting from investments and acquisitions in the second half of 2019[271](index=271&type=chunk) Key Financial Performance Metrics | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $118.6M | $127.5M | (7.0)% | | Fleet Utilization | 74.6% | 84.7% | (11.9)% | | OEC on Rent Yield | 36.0% | 36.9% | (2.4)% | [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) As of year-end 2020, the company had $97.0 million in liquidity, with operating cash flow increasing to $42.8 million due to improved working capital management - As of December 31, 2020, the company had **$3.4 million in cash** and **$93.6 million in availability** under its revolving credit facility[285](index=285&type=chunk) - The company's primary debt instruments are a **$385.0 million asset-based revolving credit facility** (2019 Credit Facility) and **$475.0 million in Senior Secured Notes** due 2024[287](index=287&type=chunk)[289](index=289&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Operating Activities | $42,829 | $18,792 | | Investing Activities | $(29,314) | $(129,679) | | Financing Activities | $(16,405) | $115,049 | [Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations on its variable-rate debt, which it partially hedges, and unhedged foreign exchange rate risk - The company's primary market risk is **interest rate exposure** from its variable-rate 2019 Credit Facility; a 12.5 basis point change would alter annual interest expense by about $0.5 million on a fully drawn facility[338](index=338&type=chunk) - Nesco utilizes an **interest rate collar** to hedge against interest rate fluctuations on $170.0 million of its variable-rate debt[339](index=339&type=chunk)[484](index=484&type=chunk) - The company has **foreign exchange rate risk** from revenues denominated in Canadian dollars and Mexican pesos, which are not currently hedged[342](index=342&type=chunk) [Financial Statements and Supplementary Data](index=77&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal year ended December 31, 2020, and accompanying notes - The financial statements were audited by Deloitte & Touche LLP, which issued an **unqualified opinion**[345](index=345&type=chunk)[349](index=349&type=chunk) - Subsequent to year-end, on December 3, 2020, the company entered into a definitive agreement to acquire Custom Truck One Source for **$1.475 billion**, a transformative event for the company[555](index=555&type=chunk) - The company recorded a significant **income tax benefit of $30.1 million** in 2020, primarily due to a reduction in the valuation allowance on its deferred tax assets following changes in tax regulations (CARES Act) and a reassessment of future taxable income[538](index=538&type=chunk)[542](index=542&type=chunk) Key Financial Statement Balances (as of Dec 31, 2020, in thousands) | Account | Amount | | :--- | :--- | | Total Assets | $768,404 | | Total Liabilities | $799,471 | | Total Stockholders' Deficit | $(31,067) | | Total Revenue (FY 2020) | $302,739 | | Net Loss (FY 2020) | $(21,277) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=121&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[561](index=561&type=chunk) [Controls and Procedures](index=121&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2020[563](index=563&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2020, based on the COSO framework[566](index=566&type=chunk) [Other Information](index=121&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[568](index=568&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=122&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's leadership, board structure, and governance policies, noting that nine of its ten directors are independent - The executive team is led by **Lee Jacobson, Chief Executive Officer**, and **Robert Blackadar, President**[571](index=571&type=chunk) - The Board of Directors has standing **Audit, Nominating, and Compensation committees**, composed of independent directors[597](index=597&type=chunk) - The Board has determined that **nine of its ten directors are independent** under NYSE listing standards[665](index=665&type=chunk) [Executive Compensation](index=133&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation in 2020 included base salary, cash bonuses, and equity awards, with new CFO Joshua Boone receiving total compensation of $2.2 million - Executive compensation is designed to align with business objectives and stockholder value creation, consisting of **base salary, annual cash incentives, and long-term equity awards**[616](index=616&type=chunk)[617](index=617&type=chunk) - Non-employee directors receive an annual cash fee of **$50,000**, with committee chairs receiving an additional **$10,000**, supplemented by equity awards[645](index=645&type=chunk) 2020 Summary Compensation for Named Executive Officers | Name | Position | Total Compensation ($) | | :--- | :--- | :--- | | Lee Jacobson | CEO | 586,621 | | Joshua Boone | CFO | 2,172,219 | | Robert Blackadar | President | 520,884 | | Bruce Heinemann | former CFO | 732,235 | [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=140&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) As of March 1, 2021, ECP ControlCo, LLC was the largest beneficial owner with 54.6% of common stock, while directors and officers as a group owned 26.4% - As of March 1, 2021, **ECP ControlCo, LLC was the beneficial owner of 54.6%** of the company's common stock[653](index=653&type=chunk) - All current directors and executive officers as a group beneficially owned approximately **26.4% of the outstanding common stock**[653](index=653&type=chunk) - As of December 31, 2020, there were **2,452,992 securities available for future issuance** under equity compensation plans approved by security holders[657](index=657&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=143&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company generated $9.2 million in revenue from transactions with an affiliate of major shareholder ECP, with all such transactions reviewed by the Audit Committee - Nesco generated **$9.2 million in revenue in 2020** from transactions with a subsidiary of PLH Group, Inc., an affiliate of ECP[659](index=659&type=chunk) - The Audit Committee has a written policy to review and approve **related party transactions exceeding $120,000**[663](index=663&type=chunk) - The Board has determined that **nine of the ten directors are independent**[665](index=665&type=chunk) [Principal Accountant Fees and Services](index=145&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Total fees paid to the independent auditor, Deloitte & Touche LLP, were $981,000 in 2020 and $837,000 in 2019, with all services pre-approved by the Audit Committee - The Audit Committee is required to **pre-approve all auditing and permissible non-audit services** performed by the independent auditor[670](index=670&type=chunk) Fees Paid to Deloitte & Touche LLP (in thousands) | Fee Type | 2020 | 2019 | | :--- | :--- | :--- | | Audit Fees | $672 | $642 | | Audit-Related Fees | $309 | $0 | | Tax Fees | $0 | $195 | | **Total Fees** | **$981** | **$837** | PART IV [Financial Statement Schedule and Exhibits](index=146&type=section&id=Item%2015.%20Financial%20Statement%20Schedule%20and%20Exhibits) This section includes the condensed parent company financial information and lists all exhibits filed with the Form 10-K - This section contains the **condensed parent-company-only financial statements** for Nesco Holdings, Inc[674](index=674&type=chunk) - A comprehensive list of exhibits is provided, including the **Agreement and Plan of Merger**, Certificate of Incorporation, debt indentures, and executive employment agreements[697](index=697&type=chunk)[699](index=699&type=chunk) [Form 10-K Summary](index=155&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[701](index=701&type=chunk)