ALTA EQUIPMENT GROUP INC

Previous wording

We own and operate one of the largest integrated equipment dealership platforms in North America. Through our branch network, we sell, rent, and provide parts and service support for several categories of specialized equipment, including lift trucks and other material handling equipment, heavy and compact earthmoving equipment, crushing and screening equipment, environmental processing equipment, cranes and aerial work platforms, paving and asphalt equipment, other construction equipment and allied products. We engage in five principal business activities in these equipment categories:

Current wording

We own and operate one of the largest integrated equipment dealership platforms in North America. Through our branch network, we sell, rent, and provide parts and service support for several categories of specialized equipment, including lift trucks and other material handling equipment, heavy and compact earthmoving equipment, crushing and screening equipment, environmental processing equipment, cranes and aerial work platforms, paving and asphalt equipment, other construction equipment and related products. We engage in five principal business activities in these equipment categories:

Previous wording

We have operated as an equipment dealership for 40 years and have developed a branch network that includes over 85 total locations in Michigan, Illinois, Indiana, Ohio, Pennsylvania, Massachusetts, Maine, Connecticut, New Hampshire, Vermont, Rhode Island, New York, Virginia, Nevada and Florida and the Canadian provinces of Ontario and Quebec. We offer our customers end-to-end solutions for their equipment needs by providing sales, parts, service and rental offerings. Additionally, we provide warehouse design and build services related to automated equipment installation and warehouse management system integration solutions within our Material Handling segment.

Current wording

We have operated as an equipment dealership for 41 years and have developed a branch network that includes over 85 total locations in Michigan, Illinois, Indiana, Ohio, Pennsylvania, Massachusetts, Maine, Connecticut, New Hampshire, Vermont, Rhode Island, New York, Virginia, Nevada and Florida and the Canadian provinces of Ontario and Quebec. We offer our customers end-to-end solutions for their equipment needs by providing sales, parts, service and rental offerings. Additionally, we provide warehouse design and build services related to automated equipment installation and warehouse management system integration solutions within our Material Handling segment.

Previous wording

Within our territories, we are primarily the exclusive distributor of new equipment and replacement parts on behalf of our OEM partners. We and our regional subsidiaries enjoy long-standing relationships with leading material handling and construction equipment OEMs including Hyster-Yale, Volvo, JCB, CNH, Develon, McCloskey, and Kubota, among many others, as well as master dealer rights throughout North America for environmental processing equipment with Doppstadt and Backers, among others. We are consistently recognized by OEMs as a top dealership partner and have been identified as an internationally recognized Hyster-Yale dealer and multi-year recipient of the Volvo Dealer of the Year award. More recently, given the Company’s successful history with electrified forklifts, battery charging, and power generation as well as our material handling customer base, where customers typically employ large fleets of commercial over-the-road vehicles in their day-to-day operations, we are pursuing a strategy focused on the distribution and powering of commercial electric vehicles in the over-the-road vehicle segment. While our electromobility (“e-mobility”) business, and the industry in general, is in its early stages of development, we believe that our first-mover advantage and expertise in this emerging market represents an exciting future growth opportunity.

Current wording

Within our territories, we are primarily the exclusive distributor of new equipment and replacement parts on behalf of our OEM partners. We and our regional subsidiaries enjoy long-standing relationships with leading material handling and construction equipment OEMs including Hyster-Yale, Volvo, JCB, CNH, Takeuchi, McCloskey, and Kubota, among many others, as well as master dealer rights throughout North America for environmental processing equipment with Doppstadt and Backers, among others. We are consistently recognized by OEMs as a top dealership partner and have been identified as an internationally recognized Hyster-Yale dealer and are a multi-year recipient of the Volvo Dealer of the Year award. More recently, given the Company’s successful history with electrified forklifts, battery charging, and power generation, we are pursuing a synergistic, asset-light strategy focused on the distribution and powering of commercial electric vehicles in the over-the-road vehicle segment. While our electromobility (“e-mobility”) business, and the industry in general, is in its early stages of development, we believe that our expertise in this emerging market represents a future growth opportunity.

Previous wording

Our growth strategy is multifaceted and primarily predicated on making strategic acquisitions that expand our geographic reach, broaden our capabilities and service offerings, and diversify our customer and supplier bases. We believe these acquisitions, both immediately and over the long term, will be accretive to our financial performance. Recent examples of strategic acquisitions were the Ault and Burris acquisitions that closed in late 2023.

Current wording

Our growth strategy is multifaceted and historically has been primarily predicated on making strategic acquisitions that expand our geographic reach, broaden our capabilities and service offerings, and diversify our customer and supplier bases. We believe these acquisitions, both immediately and over the long term, will be accretive to our financial performance.

Previous wording

In addition to strategic acquisitions, we intend to leverage our platform, deep roster of existing customers, and decades of equipment dealership experience to grow organically by establishing new relationships with equipment OEMs that are synergistic to our existing business. Recent examples of this facet of our growth strategy are evidenced by our new relationship with Case Power and Equipment in Western Pennsylvania, which launched in late 2023, and the ongoing development of our e-mobility offerings and partnerships in the class 3 through 8 commercial electric vehicle markets.

Current wording

In addition to strategic acquisitions, we intend to leverage our platform, deep roster of existing customers, and decades of equipment dealership experience to grow organically, and potentially geographically, by establishing new relationships with equipment OEMs that are synergistic to our existing business.

Previous wording

Our revenues are primarily derived from the sale or rental of equipment and product support (e.g., parts and service) activities, and consist of:

Current wording

Our revenues are primarily derived from the sale or rental of equipment and product support (e.g., parts and service) related activities, and consist of:

Previous wording

Service revenues. We provide maintenance and repair services for customer-owned equipment and maintain our own rental fleet. In addition to repair and maintenance on an as needed or scheduled basis, we provide ongoing preventative maintenance services and warranty repairs for our customers. We have committed substantial resources to training our technical service employees and have a full-scale service infrastructure that we believe differentiates us from our competitors. Approximately 44% of our employees are skilled service technicians.

Current wording

Service revenues. We provide maintenance and repair services for customer-owned equipment. In addition to repair and maintenance on an as needed or scheduled basis, we provide ongoing preventative maintenance services and warranty repairs for our customers. We have committed substantial resources to training our technical service employees and have a full-scale service infrastructure that we believe differentiates us from our competitors. Approximately 44% of our employees are skilled service technicians.

Previous wording

Rental revenues. We rent heavy construction, compact, aerial, material handling, and a variety of other types of equipment to our customers on a daily, weekly, and monthly basis. Our rental fleet, which is well-maintained, has an original acquisition cost (which we define as the cost originally paid to manufacturers plus any capitalized costs) of $592.2 million as of September 30, 2024. The original acquisition cost of our rental fleet excludes $6.8 million of assets associated with our guaranteed purchase obligations, which are assets that are not in our day-to-day operational control. In addition to being a core business, our rental business also creates cross-selling opportunities for us in our sales and product support activities.

Current wording

Rental revenues. We rent heavy construction, compact, aerial, material handling, and a variety of other types of equipment to our customers on a daily, weekly, and monthly basis. Our rental fleet, which is well-maintained, has an original acquisition cost (which we define as the cost originally paid to manufacturers plus any capitalized costs) of $579.0 million as of March 31, 2025. The original acquisition cost of our rental fleet excludes $5.1 million of assets associated with our guaranteed purchase obligations, which are assets that are not in our day-to-day operational control. In addition to being a core business, our rental business also creates cross-selling opportunities for us in our equipment sales and product support activities.

Previous wording

Rental equipment sales. We also sell rental equipment from our rental fleet. Rental equipment sales may occur at various stages in an equipment’s lifecycle, depending on customer demand and original purchase intentions of the equipment. Rental equipment purchased directly into the rental fleet tends to be rented for the majority of its useful life before being sold (defined earlier as rent-to-rent equipment), and rental equipment purchased as new inventory then later transferred into the rental fleet tends to be rented until a retail opportunity presents itself (defined earlier as rent-to-sell equipment). In our Material Handling segment, our rental equipment sales are primarily of rent-to-rent equipment and in our Construction Equipment segment, our rental equipment sales are primarily of rent-to-sell equipment. Selling lightly used construction equipment from our rental fleet allows us to meet customer demand for specific model years of equipment at various price points versus only offering brand new equipment to the market. Customers often have options to purchase equipment after or before rental agreements have matured. Rental equipment sales, like new and used equipment sales, generate customer-owned equipment field population within our territories that ultimately yield high-margin parts and service revenues for us.

Current wording

Rental equipment sales. We also sell rental equipment from our rental fleet. Rental equipment sales may occur at various stages in an equipment’s lifecycle, depending on customer demand and original purchase intentions of the equipment. Rental equipment purchased directly into the rental fleet tends to be rented for the majority of its useful life before being sold (which we refer as rent-to-rent equipment), and rental equipment purchased as new inventory then later transferred into the rental fleet tends to be rented until a retail opportunity presents itself (which we refer as rent-to-sell equipment). In our Material Handling segment, our rental equipment sales are primarily of rent-to-rent equipment and in our Construction Equipment segment, our rental equipment sales are primarily of rent-to-sell equipment. Selling lightly used construction equipment from our rental fleet allows us to meet customer demand for specific model years of equipment at various price points versus only offering brand new equipment to the market. Customers often have options to purchase equipment after or before rental agreements have matured. Rental equipment sales, like new and used equipment sales, generate customer-owned equipment field population within our territories that ultimately yield high-margin parts and service revenues for us.

Previous wording

New equipment sales. Cost of new equipment sold consists of the total acquisition costs of the new equipment we purchase from third parties.

Current wording

New equipment sales. Cost of new equipment sold primarily consists of the total acquisition costs of the new equipment we purchase from third parties and costs to inspect, prepare and deliver to the customer.

Previous wording

Used equipment sales. Cost of used equipment sold consists of the net book value, or cost, of used equipment we purchase from third parties or the trade-in value of used equipment that we obtain from customers in new equipment sales transactions.

Current wording

Used equipment sales. Cost of used equipment sold primarily consists of the net book value, or cost, of used equipment we purchase from third parties or the trade-in value of used equipment that we obtain from customers in new equipment sales transactions combined with our inspection, preparation and delivery costs to sell to the customer.

Previous wording

Operating expenses. These costs are comprised of three main components: personnel, operational, and occupancy costs. Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation and employee benefits, such as medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, insurance, IT, office and shop supplies, general corporate costs, depreciation on non-sales and rental related assets, and intangible amortization. Occupancy costs are comprised of all expenses related to our facility infrastructure, including rent, utilities, property taxes, and building insurance.

Current wording

Operating expenses. These costs are comprised of three main components: personnel, operational, and occupancy costs. Personnel costs are comprised of hourly and salaried wages for administrative employees, including incentive compensation, sale commissions, and employee benefits, such as medical benefits. Operational costs include marketing activities, costs associated with deploying and leasing our service vehicle fleet, insurance, information technology, office and shop supplies, general corporate costs, depreciation on non-sales and rental related assets, and intangible amortization. Occupancy costs are comprised of all expenses related to our facility infrastructure, including rent, utilities, property taxes, and building insurance.

Previous wording

Other expense, net. This section of the Condensed Consolidated Statements of Operations is mostly comprised of interest expense and other miscellaneous items that result in income or expense. Interest expense is driven by our Floor Plan Facilities, ABL Facility, Notes, and finance lease arrangements.

Current wording

Other expense, net. This section of the Consolidated Statements of Operations is mostly comprised of interest expense and other miscellaneous items that result in income or expense. Interest expense is driven by our floor plan facilities, line of credit, senior secured second lien notes, and finance lease arrangements.

Previous wording

Revenues: Consolidated revenues decreased by $17.4 million, or 3.7%, to $448.8 million for the three months ended September 30, 2024 as compared to the same period last year. Organic revenues for the three months ended September 30, 2024 decreased 8.4% compared to the same period last year. Uncertainty related to the outcome of the upcoming U.S. presidential election and a continued high interest rate environment have softened current demand for new and used equipment in our markets, however we believe the core long-term fundamentals in the markets we serve remain solid. With overall demand for new equipment depressed in nearly all of our markets, organic new and used equipment sales decreased by $45.5 million, or 17.9%, to $208.1 million for the three months ended September 30, 2024, partially offset by increased organic rental equipment sales of $5.1 million. While new equipment sales suffered on lower overall market volumes, demand for aftermarket products and services remained strong as organic parts sales increased by $1.8 million, or 2.6%, to $71.3 million for the three months ended September 30, 2024 as compared to the same period last year, and organic service revenues increased $3.4 million, or 5.6%, making for a total aftermarket revenues increase of $5.2 million organically, or 4.0%. Rental revenues for the quarter reached $50.1 million organically, or a decrease of 7.2% primarily due to reduced fleet on rent during the quarter.

Current wording

The three months ended March 31, 2025 and 2024

Previous wording

The above table contains a non-GAAP financial measure. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the condensed consolidated statements of operations, balance sheets or statements of cash flows of the company. The non-GAAP financial measure used by the Company is organic revenues and growth rates associated with organic revenues. We define organic revenue growth as revenue growth excluding the impact of acquisitions that do not appear fully in both periods in the current and prior years. We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenues to prior periods as well as to industry peers.

Current wording

We define organic revenue growth as revenue growth excluding the impact of acquisitions that do not appear fully in both periods in the current and prior years. We believe organic revenue growth is a meaningful metric to investors as it provides a more consistent comparison of our revenues to prior periods as well as to industry peers.

Previous wording

Pursuant to the requirements of Regulation G, we have provided a reconciliation of organic revenues to the most directly comparable GAAP financial measure in the table above and in subsequent tables, where applicable, in management's discussion and analysis of our individual business segments. This measure is supplemental to, and should be used in conjunction with, the most comparable GAAP measure. Management uses this non-GAAP financial measure to monitor and evaluate financial results and trends.

Current wording

Pursuant to the requirements of Regulation G, we have provided a reconciliation of Adjusted EBITDA and organic revenues to the most directly comparable U.S. GAAP financial measure in the tables above and organic revenues in the subsequent table in management's discussion and analysis of our Material Handling segment. This measure is supplemental to, and should be used in conjunction with, the most comparable U.S. GAAP measures. Management uses these non-GAAP financial measures to monitor and evaluate financial results and trends.

Previous wording

The consolidated gross profit margin for the nine months ended September 30, 2024 was 27.4%, a 20 basis point decrease from 27.6% for the same period in 2023. New and used equipment sales margins decreased 150 basis points to 15.9%, a reflection of a comparably softened pricing environment. On sales of our rental equipment, gross margin was similarly compressed on a softened pricing environment, posting a 180 basis point decrease when comparing the year-over-year periods. Parts gross margins remained consistent year to date when compared to the same time last year, improving 20 basis points, and service gross margins improved by 150 basis points. The improvement in year-to-date service gross margins was largely attributable to improved customer margins for shop and preventative maintenance work, as well as improved margins in our warranty and fleet accounts with our OEMs. We realized a 190 basis point decrease in rental revenues gross margin for the nine months ended September 30, 2024, largely a result of an increase in depreciation expense associated with a replenished fleet.

Current wording

The consolidated gross profit margin for the three months ended March 31, 2025 was 27.2%, a 10 basis point decrease from 27.3% for the same period in 2024. New and used equipment sales margins decreased 60 basis points to 15.2%, a reflection of a competitive but stabilizing, pricing environment and overall sales mix influences. For sales of our rental equipment, gross margin was also compressed on a softened pricing environment for used equipment when compared to the same period last year, posting a 590 basis point decrease when comparing the year-over-year periods. Parts gross margins improved 20 basis points year to date when compared to the same time last year primarily due to mix but aligned to expectations overall. Service gross margins improved by 230 basis points. The improvement in year-to-date service gross margins was largely attributable to improved rate realization on customer service work, improved efficiency measures, and improved margins on OEM warranty and fleet work. We realized a 100 basis point decrease in rental revenues gross margin for the three months ended March 31, 2025, primarily due to a greater proportion of rental revenues coming from the Construction Equipment segment.

Previous wording

Other expense, net: Consolidated other expense, net for the three months ended September 30, 2024 was $22.9 million compared to $13.8 million for the same period in 2023. The increase is primarily due to an increased amount of interest expense, namely a result of the refinance of our Senior Secured Second Lien Notes during the second quarter of 2024.

Current wording

Other expense, net: Consolidated other expense, net for the three months ended March 31, 2025 was $21.0 million compared to $15.2 million for the same period in 2024. The increase is primarily due to the refinance of debt in the second quarter of 2024, resulting in an increased amount of interest expense from the higher interest rate affixed to the refinanced debt.

Previous wording

Income tax provision (benefit): The Company recorded income tax expense of $11.6 million and a benefit of $7.3 million for the three months ended September 30, 2024 and 2023, respectively and income tax expense of $4.7 million and benefit of $6.9 million for the nine months ended September 30, 2024 and 2023, respectively. The income tax expense for the three and nine months ended September 30, 2024 was primarily a result of a valuation allowance recorded against a portion of the deferred tax asset relating to the U.S. disallowed interest expense carryforwards created by the provisions of the TCJA and the benefit in 2023 was due to the release of the valuation allowance on certain U.S. federal and state deferred tax assets during the third quarter.

Current wording

Income tax provision (benefit): The Company recorded income tax expense of $0.7 million and benefit of $4.2 million for the three months ended March 31, 2025 and 2024, respectively. The income tax expense for the three months ended March 31, 2025 was primarily a result of a change in valuation allowance recorded against a portion of the deferred tax asset relating to the U.S. disallowed interest expense carryforwards partially offset by the benefit attributable to the net loss for the period and the benefit in 2024 was due to net tax losses during the quarter.

Previous wording

Material Handling gross profit for the nine months ended September 30, 2024 decreased 90 basis points to 33.3% compared to the same period in 2023. New and used equipment gross margins compressed slightly due to sales mix variances, with reduced sales coming from Peaklogix, our higher margin warehousing solutions platform, and increased pressure on used equipment pricing. Parts gross margins have remained relatively consistent year over year and in line with expectations. The 210 basis point service margin increase for the nine months ended September 30, 2024 compared to the prior year same period can be attributed to margin improvements in major service categories, customer and OEM warranty and fleet work, on better pricing and technician productivity measures. Rental revenues gross margins have declined 490 basis points primarily due to replenishing and increasing the size of our rental fleet and the associated increase in depreciation expense. Rental equipment sales margins decreased on low volume of sales and pricing pressures from greater availability of equipment in the marketplace relative to the prior year.

Current wording

Material Handling gross profit for the three months ended March 31, 2025 increased 210 basis points to 34.6% compared to the same period in 2024. Despite lower volumes, new and used equipment gross margins increased slightly due to sales mix variances but align within the range of historical expectations. Parts gross margins have remained relatively consistent year over year and in line with expectations. The 270 basis point service margin increase for the three months ended March 31, 2025 compared to the prior year period can be attributed to margin improvements in major service categories, customer and OEM warranty and fleet work, on better pricing, and technician productivity measures. Rental revenues gross margins have increased 200 basis points primarily due to fewer subrental costs and improved repair and maintenance costs. Rental equipment sales margins decreased on low volume of sales driven by the strategic disposal of primarily underutilized equipment nearing the end of its useful life.

Previous wording

Operating expenses: Material Handling operating expenses decreased by $7.2 million to $49.6 million for the three months ended September 30, 2024 as compared to the same period last year, primarily due to a year-to-date cumulative change in the allocation of intercompany expenses for shared service functions from Other income to General and administrative expenses during the third quarter of 2023.

Current wording

Operating expenses: Material Handling operating expenses decreased by $2.1 million to $49.0 million for the three months ended March 31, 2025 as compared to the same period last year, mainly due to cost saving initiatives implemented during the second half of 2024 which primarily impacted personnel expenses, resulting in a reduction in average headcount of nearly 6.0% compared to the same quarter in the prior year.

Previous wording

Material Handling other expense, net increased by $4.3 million to $17.2 million for the nine months ended September 30, 2024 as compared to the same period last year. The increase is mainly related to increased interest expense due to higher effective interest rates, inventory, and rental fleet levels.

Current wording

Other expense, net: Material Handling other expense, net increased by $1.2 million to $6.2 million for the three months ended March 31, 2025 as compared to the same period last year. The increase is mainly related to increased interest expense due to higher nominal levels of debt and the increase in our effective interest rate after our debt refinancing in 2024.

Previous wording

Construction Equipment gross profit increased by 20 basis points to 23.4% in the nine months ended September 30, 2024 from 23.2% in the same period in 2023. New and used equipment sales margins decreased 160 basis points to 12.6%, primarily related to greater equipment supply in the market resulting in tighter sales margins this year when compared to the same period last year, and pricing pressures on used equipment. Parts sales margins for the nine months ended September 30, 2024 increased 120 basis points when compared to the same time last year. The 2023 acquisition of Ault has improved the parts sales margins during the nine months ended September 30, 2024 as parts for specialized aggregate and mining equipment command a premium compared to traditional construction equipment parts. Service gross margins increased by 100 basis points year over year mainly from improved rate realization. Rental revenues gross margin for the nine months ended September 30, 2024 were relatively flat from a year ago, consistent with expectations. Gross margins on rental equipment sales for the nine months ended September 30, 2024 were reduced from a year ago amid the aforementioned pricing pressures on used equipment.

Current wording

Construction Equipment gross profit decreased by 90 basis points to 22.7% in the three months ended March 31, 2025 from 23.6% in the same period in 2024. New and used equipment sales margins decreased 140 basis points to 11.4%. Although new equipment volumes were higher compared to the prior year, competitive pricing and the higher cost of new equipment led to lower margin realization. Conversely, despite a challenged used equipment market year-over-year and lower sales volumes, used equipment margins improved year over year on retail sales within the dealership. Parts sales margins for the three months ended March 31, 2025 increased 90 basis points when compared to the same time last year on pricing realization on over the counter sales and as freight cost recovery showed improvement. Service gross margins increased by 290 basis points year over year mainly from improved rate realization and efficiency measures along with improved warranty recovery. Rental revenues gross margin for the three months ended March 31, 2025 decreased 400 basis points from a year ago, a result of the lowered amount of fleet on rent and the relative impact of repair and maintenance charges contained within cost of revenues, as our technicians prepare our fleet for the seasonal increase in demand for rental equipment in our northern regions in the upcoming quarters. Gross margins on rental equipment sales for the three months ended March 31, 2025 were reduced from a year ago amid higher relative costs of equipment in our rental fleet and reduced market prices on used equipment year over year.

Previous wording

Construction Equipment other expense, net increased by $11.7 million to $33.4 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The variance was driven by the same aforementioned factors driving increased interest costs for the three months ended September 30, 2024.

Current wording

Other expense, net: Construction Equipment other expense, net increased by $3.0 million to $12.4 million for the three months ended March 31, 2025 as compared to the same period in 2024. The variance was driven by increased interest expense primarily due to the increase in our effective interest rate after our debt refinancing in 2024.

Previous wording

For the nine months ended September 30, 2024, gross profit margin on new and used equipment sales were 25.5%, flat from prior year and in line with expectations. Parts gross profit margin was 52.1% for the nine months ended September 30, 2024, up 20 basis points compared to the same period last year, in line with expectations.

Current wording

For the three months ended March 31, 2025, gross profit margin decreased 3.8% from prior year primarily due to high-margin rental revenues and rental equipment sales in 2024 which were non-recurring. Gross profit margins on new and used equipment sales were 25.7%, up slightly from prior year and in line with expectations. Parts gross profit margin was 41.7% for the three months ended March 31, 2025, up 170 basis points compared to the same period last year but consistent with expectations overall.

Previous wording

Other expense, net: Master Distribution other expense, net was $1.6 million for the three months ended September 30, 2024, an increase over prior year partially attributed to higher interest costs on larger inventory balances, but primarily related to exchange rate fluctuations.

Current wording

Other expense, net: Master Distribution other expense, net was $1.6 million for the three months ended March 31, 2025, an increase over prior year primarily attributed to higher interest costs on larger inventory balances and a greater effective interest rate given the debt refinance in 2024.

Previous wording

The nine months ended September 30, 2024 and 2023 Cash Flows

Current wording

The three months ended March 31, 2025 and 2024 Cash Flows

Previous wording

Cash Flow from Operating Activities. Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. For the nine months ended September 30, 2024, operating activities resulted in net cash provided by operations of $22.1 million. Our reported net loss of $51.5 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of rental equipment, inventory obsolescence and bad debt reserves, loss on debt extinguishment, deferred income taxes, and stock-based compensation, provided net cash inflows of $56.2 million. Changes in working capital included $152.2 million of inventory purchased (of which $105.6 million was transferred into our rental fleet for replenishment), and a $26.5 million decrease in accounts receivable. Cash flows from operating activities were favorably impacted by $92.5 million due to proceeds from the sale of rent-to-sell equipment, $8.4 million in net inflows related to manufacturer floor plans, and by a $4.3 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities and unfavorably impacted by a $13.6 million decrease in accounts payable, accrued expenses, customer deposits, and other current liabilities.

Current wording

Cash Flow from Operating Activities. Cash flows from operating activities include net loss adjusted for non-cash items and the effects of changes in working capital. For the three months ended March 31, 2025, operating activities resulted in net cash used in operations of $17.5 million. Our reported net loss of $20.9 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of rental equipment, inventory obsolescence and bad debt reserves, deferred income taxes, and stock-based compensation, provided net cash inflows of $9.3 million. Changes in working capital included $41.6 million of inventory purchased ($28.4 million of inventory was transferred into our rental fleet primarily for replenishment purposes) and a $9.1 million increase in accounts receivable. Cash flows from operating activities were favorably impacted by $18.6 million due to proceeds from the sale of rent-to-sell equipment and a $15.4 million increase in accounts payable, accrued expenses, customer deposits, and other current liabilities, partially offset by $6.0 million in net outflows related to manufacturer floor plans, and by a $4.1 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.

Previous wording

For the nine months ended September 30, 2023, operating activities resulted in net cash used in operations of $23.1 million. Our reported net income of $10.8 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, inventory obsolescence and bad debt reserves, and stock-based compensation, provided net cash inflows of $91.5 million. Changes in working capital included $247.4 million of inventory purchased (of which $143.0 million has been transferred into our rental fleet for replenishment and growth purposes), and a $32.7 million increase in accounts receivable. Cash flows from operating activities were favorably impacted by $87.0 million due to proceeds from the sale of rent-to-sell equipment, $97.9 million in net inflows related to manufacturer floor plans and unfavorably impacted by a $6.9 million decrease in accounts payable, accrued expenses, customer deposits, and other current liabilities and by a $12.5 million net change in prepaid expenses and other assets and leases, deferred revenue, and other liabilities.

Current wording

For the three months ended March 31, 2024, operating activities resulted in net cash used in operations of $13.5 million. Our reported net loss of $11.9 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of rental equipment, inventory obsolescence and bad debt reserves, and stock-based compensation, provided net cash inflows of $17.8 million. Changes in working capital included $66.3 million of inventory purchased ($38.8 million of inventory was transferred into our rental fleet for replenishment and growth purposes), and an $8.0 million decrease in accounts receivable. Cash flows from operating activities were favorably impacted by $26.0 million due to proceeds from the sale of rent-to-sell equipment, $0.4 million in net inflows related to manufacturer floor plans, and a $5.0 million net change in prepaid expenses and other assets and unfavorably impacted by a $4.4 million decrease in accounts payable, accrued expenses, customer deposits, and other current liabilities and leases, deferred revenue, net of current portion and other liabilities.

Previous wording

For the nine months ended September 30, 2023, our cash used in investing activities was $56.9 million. This was mainly due to $61.4 million purchases of rental equipment, non-rental property and equipment, and other investing activities as well as acquisition activity partially offset by $3.7 million proceeds from the sale of rent-to-rent equipment and $0.8 million proceeds from the sale of non-rental property and equipment.

Current wording

Cash Flow from Investing Activities. For the three months ended March 31, 2025, our cash used in investing activities was $14.3 million. This was mainly due to $16.8 million purchases of rental equipment and non-rental property and equipment, the acquisition of CEQ as discussed in Note 15, Business Combinations, and other investing activities, partially offset by $2.3 million proceeds from the sale of rent-to-rent equipment and $0.2 million proceeds from the sale of non-rental property and equipment.

Previous wording

Cash Flow from Investing Activities. For the nine months ended September 30, 2024, our cash used in investing activities was $48.0 million. This was mainly due to $59.2 million purchases of rental equipment, non-rental property and equipment, and other investing activities partially offset by $8.9 million proceeds from the sale of rent-to-rent equipment and $2.3 million proceeds from the sale of non-rental property and equipment.

Current wording

For the three months ended March 31, 2024, our cash used in investing activities was $16.5 million. This was mainly due to $18.2 million purchases of rental equipment and non-rental property and equipment, and other investing activities partially offset by $1.6 million proceeds from the sale of rent-to-rent equipment and $0.1 million proceeds from the sale of non-rental property and equipment.

Previous wording

Cash Flow from Financing Activities. For the nine months ended September 30, 2024, cash provided by financing activities was $9.7 million. This cash inflow was mainly due to the $353.5 million of net proceeds from our line of credit, long-term borrowings, and finance lease obligations, which funded the $319.4 extinguishment of our Senior Secured Second Lien Notes due April 2026 and the increase in net working capital previously noted. These cash inflows also were partially offset by payments of $8.1 million for preferred and common stock dividends, net payments of $9.3 million related to non-manufacturer floor plans, $2.0 million for common stock repurchases, and $3.1 million related to other financing activities.

Current wording

Cash Flow from Financing Activities. For the three months ended March 31, 2025, cash provided by financing activities was $29.5 million. This cash inflow was mainly due to the $34.5 million of net proceeds from our line of credit, long-term borrowings, and finance lease obligations, which funded the increase in net working capital previously noted. These cash inflows were partially offset by payments of $2.7 million for preferred and common stock dividends, net payments of $1.5 million related to non-manufacturer floor plans, and $0.8 million related to other financing activities.

Previous wording

For the nine months ended September 30, 2023, cash provided by financing activities was $78.2 million. The favorable impact was mainly due to $81.5 million of net proceeds under our line of credit, long-term debt, and finance lease obligations, which funded the increase in net working capital and rental fleet as previously noted and net proceeds of $9.8 million related to non-manufacturer floor plans. This was partially offset by payments of $7.9 million for preferred and common stock dividends and $5.2 million related to other financing activities.

Current wording

For the three months ended March 31, 2024, cash provided by financing activities was $4.6 million. This cash inflow was mainly due to $10.9 million of net borrowings under our line of credit which funded the increase in net working capital previously noted. Additionally, there were net borrowings of $1.9 million related to non-manufacturer floor plans. These cash inflows were partially offset by payments of $2.7 million for preferred and common stock dividends and $5.5 million related to other financing activities.

Previous wording

Our principal sources of liquidity have been from cash provided by our service, parts and rental related operations and the sales of new, used, and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under our line of credit and floor plans. The Company reported $14.6 million in cash as of September 30, 2024. For more information on our available borrowings under the revolving line of credit, senior secured second lien notes, and floor plans, please refer to Note 8, Floor Plans and Note 9, Long-term Debt. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested as we do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs.

Current wording

Our principal sources of liquidity have been from cash provided by our service, parts and rental related operations and the sales of new, used, and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under our line of credit and floor plans. The Company also reported $11.1 million in cash as of March 31, 2025. For more information on our available borrowings under the revolving line of credit, senior secured second lien notes, and floor plans, please refer to Note 8, Floor Plans and Note 9, Long-term Debt. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested as we do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs.

Previous wording

The amount of our future capital expenditures will depend on a number of factors including general economic conditions and growth prospects. Our gross rental fleet capital expenditures for the nine months ended September 30, 2024 was $151.2 million, including $105.6 million of transfers from new and used inventory to rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of $101.4 million for the nine months ended September 30, 2024 as our business model is to sell lightly used inventory to customers from our rental fleet to increase field population in our geographies. In response to changing economic conditions, we have the flexibility to modify our capital expenditures, especially as it relates to rental fleet.

Current wording

The amount of our future capital expenditures will depend on a number of factors including general economic conditions and our growth prospects. Our gross rental fleet capital expenditures for the three months ended March 31, 2025 was $40.4 million, including $28.4 million of transfers from new and used inventory to rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds from rental equipment of $20.9 million for the three months ended March 31, 2025 as our business model is to sell lightly used inventory to customers from our rental fleet to increase field population in our geographies. In response to changing economic conditions, we have the flexibility to modify our capital expenditures, especially as it relates to rental fleet.

Previous wording

To service our debt, we will require a significant amount of cash. Our ability to pay interest and principal on our indebtedness, will depend upon our future operating performance and the availability of borrowings under the line of credit and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flows from operations, available cash, and available borrowings under the line of credit will be adequate to meet our future liquidity needs for the foreseeable future. As of September 30, 2024, we had $360.8 million of available borrowings under the ABL Facility and Floor Plan Facilities.

Current wording

To service our debt, we will require a significant amount of cash. Our ability to pay interest and principal on our indebtedness, will depend upon our future operating performance and the availability of borrowings under the line of credit and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flows from operations, available cash, and available borrowings under the line of credit will be adequate to meet our future liquidity needs for the foreseeable future. As of March 31, 2025, we had $401.6 million of available borrowings under the ABL Facility and Floor Plan Facilities.

Previous wording

In the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures. Our management reviews these estimates and assumptions on an ongoing basis. While we believe the estimates and judgments we use in preparing our consolidated financial statements are reasonable and appropriate, they are subject to future events and uncertainties regarding their outcome; therefore, actual results may materially differ from these estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts first become known. See Note 2 to our condensed consolidated financial statements for a summary of our significant accounting policies.

Current wording

In the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures. Our management reviews these estimates and assumptions on an ongoing basis. While we believe the estimates and judgments we use in preparing our consolidated financial statements are reasonable and appropriate, they are subject to future events and uncertainties regarding their outcome; therefore, actual results may materially differ from these estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts first become known. See Note 2 to the consolidated financial statements contained in the Company’s 2024 Annual Report on Form 10-K for a summary of our significant accounting policies.