ALTA EQUIPMENT GROUP INC.

Previous 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 43% 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 $517.1 million as of June 30, 2026. The original acquisition cost of our rental fleet excludes $2.1 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.

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 $507.3 million as of September 30, 2026. The original acquisition cost of our rental fleet excludes $1.6 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

The consolidated gross profit margin for the six months ended June 30, 2026 was 26.4%, an increase of 20 basis points from 26.2% in the same period of 2025. The improvement was primarily driven by stronger margins within new and used equipment sales and service operations. New and used equipment sales gross margins increased 70 basis points to 15.2%, reflecting the benefits of an improved sales mix, easing tariff-related pressures, and a more favorable pricing environment compared to the prior year. Service revenues gross margins increased 90 basis points to 60.8%, as higher effective labor rates and operational initiatives helped to offset weather-related challenges existing earlier in the year. Parts gross margins declined modestly by 30 basis points but remained within expected ranges. Rental equipment sales margins declined 580 basis points year over year reflecting a higher mix of lower-margin asset dispositions as the Company continued to optimize fleet levels and exit underperforming rental product categories. Rental revenues gross margins decreased 20 basis points, remaining consistent with the prior year and generally aligned to expectations.

Current wording

Consolidated gross profit margin for the nine months ended September 30, 2026 was 26.9%, an increase of 10 basis points from 26.8% in the same period of 2025. New and used equipment sales gross margins increased 70 basis points to 15.3%, reflecting generally stable equipment margin performance across the Company's operating segments. Service revenues gross margins increased 150 basis points to 61.1% reflecting ongoing service productivity initiatives, including workforce optimization, improved technician productivity and efforts to reduce non-billable labor. Parts gross margins declined modestly by 140 basis points, reflecting a combination of pricing and procurement pressures, parts availability and fulfillment challenges, and aligning our parts reserve to operational and market realities in prior year. Rental revenues gross margins increased 60 basis points, remaining relatively consistent with the prior year and generally aligned to expectations. Rental equipment sales margins declined 450 basis points year over year reflecting the mix, age, and carrying value of rental fleet assets sold during the period, including targeted dispositions of aging and underutilized equipment as part of the Company's ongoing fleet optimization efforts.

Previous wording

Operating expenses: Consolidated operating expenses increased by $2.3 million to $112.2 million for the three months ended June 30, 2026 and increased by $3.1 million to $227.2 million for the six months ended June 30, 2026, compared to the same periods in 2025. The increases were primarily attributable to higher healthcare costs resulting from unfavorable claims experience and the impact of inflationary cost pressures. These increases were partially offset by the benefits of workforce optimization initiatives, disciplined expense management, and other cost-saving actions implemented across the Company's operating segments.

Current wording

Operating expenses: Consolidated operating expenses decreased by $2.9 million to $110.1 million for the three months ended September 30, 2026 and increased by $0.2 million to $337.3 million for the nine months ended September 30, 2026, compared to the same periods in 2025. Operating expenses benefited from workforce optimization initiatives, disciplined management of discretionary spending, and other cost-saving actions implemented across the Company's operating segments. These benefits were offset by higher healthcare costs resulting from unfavorable claims experience under the Company's self-insured healthcare plan and other inflationary cost pressures.

Previous wording

Other expense, net: Consolidated other expense, net for the three months ended June 30, 2026 was $19.9 million compared to $17.2 million for the same period in 2025. The increase was primarily attributed to a loss on divestiture recognized during the current year compared to a gain on divestiture recognized in the prior year. These unfavorable variances were partially offset by lower floor plan and other interest expense resulting from reduced inventory and rental fleet levels and lower benchmark interest rates.

Current wording

Other expense, net: Consolidated other expense, net for the three months ended September 30, 2026 was $18.0 million compared to $22.0 million for the same period in 2025. The decrease was primarily attributed to lower floor plan and other interest expense resulting from reduced inventory and rental fleet levels and lower benchmark interest rates.

Previous wording

Consolidated other expense, net for the six months ended June 30, 2026 reduced by $0.7 million to $37.5 million compared to $38.2 million for the same period in 2025. The improvement was primarily driven by $5.2 million in reduced interest expense resulting from reduced inventory levels, inventory optimization initiatives, and a lower benchmark interest rate environment, partially offset by the loss on divestiture recognized during the current year compared to a gain on divestiture recognized in the prior year.

Current wording

Consolidated other expense, net for the nine months ended September 30, 2026 decreased by $4.7 million to $55.5 million compared to $60.2 million for the same period in 2025. The improvement was primarily driven by $7.7 million of lower interest expense, reflecting reduced average inventory levels and rental fleet balances and lower benchmark interest rates. These benefits were partially offset by unfavorable year-over-year divestiture-related activity, including a loss recognized in the current year period compared to a gain on divestiture recognized in the prior year.

Previous wording

Income tax (benefit) expense: The Company recorded an income tax benefit of $0.4 million and expense of $1.3 million for the three months ended June 30, 2026 and 2025, respectively, and an income tax benefit of $4.2 million and expense of $2.0 million for the six months ended June 30, 2026 and 2025, respectively. During the three and six months ended June 30, 2026, the income tax benefit was primarily attributable to the net loss for the period and provision to return reconciliation in the second quarter of 2026. The income tax expense in 2025 was primarily a result of adjustments of the Company's valuation allowance against a portion of the deferred tax asset relating to U.S. disallowed interest expense carryforwards partially offset by the benefit attributable to the net loss for the period.

Current wording

Income tax expense (benefit): The Company recorded an income tax expense of $0.7 million and $24.4 million for the three months ended September 30, 2026 and 2025, respectively, and an income tax benefit of $3.5 million and expense of $26.4 million for the nine months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 2026, the income tax expense was primarily attributable to adjustments of the Company's valuation allowance partially offset by the net loss for the period. For the nine months ended September 30, 2026, the income tax benefit was primarily attributable to the net loss for the period and a favorable provision to return reconciliation in the second quarter of 2026. During the three and nine months ended September 30, 2025, the income tax expense was primarily attributable to deferred tax expense resulting from a full valuation allowance on the Company's U.S. deferred tax assets (“DTAs”) primarily driven from the enactment of the One Big Beautiful Bill Act whereby the calculation of adjusted taxable income for U.S. interest expense limitation changed from EBIT to EBITDA, allowing more interest to be deductible in a given year impacting our assessment of the realizability of our DTAs.

Previous wording

For the six months ended June 30, 2026, Material Handling segment revenues decreased by $12.6 million, or 4.0%, to $306.0 million as compared to the same period last year. The decline in revenues reflects continued softness in new equipment deliveries, partially offset by stable product support revenues and higher rental equipment sales. Organic sales of new and used equipment decreased $6.5 million, or 4.2%, primarily due to lower new equipment deliveries related to lower customer booking activity observed in the second half of 2025. Despite the decline in equipment sales, backlog levels remained healthy and bookings momentum improved as the period progressed, supporting expectations for stronger invoicing activity in the second half of 2026. Organic product support performance remained stable, with parts sales down $0.7 million and service revenues up $1.7 million compared to the prior year. Despite challenging weather conditions and technician availability constraints in the first quarter, service revenues were buoyed by improved pricing discipline and strong operational execution in several regions. Rental revenues decreased $2.0 million, or 5.7%, on an organic basis, reflecting a lower average fleet-on-rent and ongoing fleet optimization initiatives. In contrast, rental equipment sales increased $1.6 million, or 20.5%, primarily due to higher disposal activity associated with the targeted reduction of underutilized fleet assets. These actions were consistent with the Company's strategic fleet optimization efforts to develop a more productive and better-utilized rental fleet.

Current wording

For the nine months ended September 30, 2026, Material Handling segment revenues decreased by $28.9 million, or 5.9%, to $457.6 million compared to the same period last year. The decline in revenues primarily reflects a lower volume of new equipment deliveries partially offset by stable product support revenues and higher rental equipment sales. Organic sales of new and used equipment decreased $19.9 million, or 8.4%, primarily due to lower new equipment deliveries associated with lower customer booking activity during the second half of 2025. Despite lower equipment sales, year-over-year bookings improved and backlog levels remained healthy, reflecting continued customer demand despite experiencing longer overall sales and delivery cycles. Elongated customer decision cycles extended the time required to convert sales opportunities into firm orders while the timing of equipment deliveries contributed to the continued elevated backlog awaiting conversion to revenues. Organic product support performance remained stable with parts sales down $1.7 million and service revenues up $2.4 million compared to the prior year. Parts sales were impacted by parts availability constraints while service revenues benefited from improved activity and operational execution in certain regions despite technician staffing constraints. Rental revenues decreased $3.1 million, or 5.8%, on an organic basis reflecting a reduced rental fleet size and early 2026 demand softness. In contrast, rental equipment sales increased $2.5 million, or 19.5%, primarily due to higher disposal activity associated with the targeted reduction of underutilized fleet assets. These actions were consistent with the Company's strategic fleet optimization efforts to develop a more productive and better-utilized rental fleet.

Previous wording

Operating expenses: Material Handling operating expenses decreased by $1.3 million to $45.1 million for the three months ended June 30, 2026 and decreased by $0.9 million to $94.5 million for the six months ended June 30, 2026 as compared to the same periods last year. These favorable results were driven by several cost saving initiatives implemented by the Company during the year; however, unfavorable claims experience under the Company's self-insured healthcare plan partially offset those savings during the second quarter.

Current wording

Operating expenses: Material Handling operating expenses decreased by $1.6 million to $46.8 million for the three months ended September 30, 2026 and decreased by $2.5 million to $141.3 million for the nine months ended September 30, 2026 compared to the same periods last year. The decreases primarily reflect lower bad debt and depreciation expense as well as disciplined management of discretionary customer-related and promotional spending. These savings were partially offset by higher healthcare costs resulting from unfavorable claims experience under the Company's self-insured healthcare plan.

Previous wording

Other expense, net: Other expense, net increased by $0.6 million to $6.7 million for the three months ended June 30, 2026 and decreased by $0.1 million to $12.2 million for the six months ended June 30, 2026, compared to the same period in 2025. The year-to-date decline was primarily attributable to lower floor plan interest associated with reduced inventory levels, which was offset by a loss from the working capital adjustment of a prior year divestiture.

Current wording

Other expense, net: Other expense, net remained consistent at $5.7 million for the three months ended September 30, 2026 and decreased by $0.1 million to $17.9 million for the nine months ended September 30, 2026 compared to the same period in 2025. Lower floor plan interest associated with reduced average inventory levels was largely offset by a loss related to a working capital adjustment associated with a prior year divestiture.

Previous wording

Construction Equipment segment revenues decreased by $4.2 million, or 0.8%, to $542.3 million for the six months ended June 30, 2026 as compared to the same period last year. The overall decline in revenues reflects harsh winter weather conditions experienced during the first quarter of 2026 when compared to the same period in 2025, which reduced service productivity and delayed customer equipment deliveries in certain markets, partially offset by strategic inventory and fleet optimization initiatives that resulted in higher rental equipment sales volumes. New and used equipment sales decreased $3.9 million from the prior year, driven primarily by lower new equipment sales volumes in the first quarter, partially offset by improved market conditions and customer deliveries in certain regions in the second quarter. Rental equipment sales increased for the six months ended June 30, 2026 by $8.0 million primarily due to the targeted disposals and fleet optimization efforts to address underutilized assets and align the rent-to-sell fleet with sustainable customer demand. Product support revenues were lower overall, with parts sales essentially flat year over year and service revenues down versus the prior year. The overall decrease in product support of 3.2% was primarily attributable to weather-related impacts experienced during the first quarter as well as tactically-driven lower technician headcount (in an effort to drive overall technician productivity and profitability) and reduced service throughput in certain regions. Rental revenues decreased $1.5 million organically for the six months ended June 30, 2026 reflecting a smaller average rental fleet as the Company continues to optimize fleet size, improve asset utilization, and enhance returns on invested capital.

Current wording

Construction Equipment segment revenues increased by $8.0 million, or 1.0%, to $796.1 million for the nine months ended September 30, 2026 as compared to the same period last year. Revenue growth reflects softer demand during the first quarter of 2026, due in part to harsh winter weather conditions, followed by improved sales activity in certain regions during the second and third quarters. New and used equipment sales increased $5.3 million compared to the prior year driven primarily by improved market demand and customer deliveries across certain regions in the second and third quarter. Rental equipment sales increased $10.6 million for the nine months ended September 30, 2026 primarily reflecting sales initiatives targeted toward the disposal of underutilized fleet assets as part of the Company's ongoing optimization efforts ultimately to align the rent-to-sell fleet with sustainable customer demand. Product support revenues decreased 2.1% as lower service revenues more than offset higher parts revenues. The decrease primarily reflects weather-related impacts experienced during the first quarter, targeted technician headcount reductions implemented as part of ongoing productivity and profitability initiatives, and softer service demand in certain markets. Rental revenues decreased $1.2 million on an organic basis for the nine months ended September 30, 2026 reflecting a smaller average rental fleet as the Company continued to optimize fleet size and asset utilization to enhance returns on invested capital.

Previous wording

Construction Equipment gross profit decreased by 20 basis points to 21.7% in the three months ended June 30, 2026 from 21.9% in the same period in 2025. New and used equipment sales margins increased by 110 basis points to 12.8% for the three months ended June 30, 2026 compared to 11.7% in the prior year. The improvement primarily reflects a more favorable sales mix as well as an improved pricing environment compared to prior year when elevated industry inventory levels and competitive discounting pressures negatively impacted new equipment margins. Parts sales margins for the three months ended June 30, 2026 increased 80 basis points when compared to the same period last year, in line with expectations. Year-over-year service gross margins decreased 120 basis points due to an unfavorable labor mix as a higher proportion of technician hours were absorbed by non-billable internal and expense work, including training and new equipment preparation activities associated with inventory deliveries, rather than customer billable activity. Rental revenues gross margin for the three months ended June 30, 2026 increased 20 basis points from prior year, remaining aligned with expectations. Gross margins on rental equipment sales for the three months ended June 30, 2026 declined by 510 basis points, primarily reflecting the impact of fleet optimization efforts and the resulting mix of assets sold, as the Company continued to dispose of underutilized rental equipment and align fleet size with demand and utilization objectives.

Current wording

Construction Equipment gross profit margin decreased 80 basis points to 23.2% in the three months ended September 30, 2026 from 24.0% in the same period in 2025. New and used equipment sales margins increased by 30 basis points to 12.2% for the three months ended September 30, 2026 compared to 11.9% in the prior year period reflecting normal fluctuations in product and geographic sales mix while remaining generally in line with expectations. Parts sales margins for the three months ended September 30, 2026 decreased 370 basis points when compared to the same period last year reflecting a combination of pricing and procurement pressures in certain regions along with aligning our parts reserve to operational and market realities in prior year. Year-over-year service gross margins increased 280 basis points reflecting targeted technician headcount reductions and other service productivity initiatives, including reductions in non-billable labor and improved utilization of service capacity. Rental revenues gross margin for the three months ended September 30, 2026 increased 170 basis points from prior year primarily reflecting lower repair and maintenance costs as a percentage of rental revenues. Gross margins on rental equipment sales for the three months ended September 30, 2026 declined by 150 basis points reflecting the mix and relative age of rental fleet assets sold during the quarter, including targeted dispositions of underutilized equipment.

Previous wording

Construction Equipment gross profit decreased by 60 basis points to 21.7% in the six months ended June 30, 2026 compared to 22.3% in the same period of 2025. New and used equipment sales margins increased to 12.3%, up 70 basis points year over year. The improvement primarily reflects a more favorable sales mix as well as a more favorable pricing environment compared to prior year when elevated industry inventory levels and competitive discounting pressures negatively impacted margins. Parts sales margins decreased 30 basis points for the six months ended June 30, 2026, but remain within expected ranges. Service gross margins decreased by 120 basis points year over year, primarily reflecting an unfavorable labor mix as a greater proportion of technician hours were absorbed by non-billable internal and expense work, together with throughput disruptions associated with winter operating conditions during the first quarter. Rental revenues gross margin for the six months ended June 30, 2026 increased 70 basis points compared to the prior year, primarily reflecting lower sublet costs, freight, and repair and maintenance expenses as a percentage of rental revenues. Conversely, gross margins on rental equipment sales decreased 710 basis points from the prior year, largely reflecting the impact of fleet optimization efforts and the resulting mix of assets sold, as the Company continued to dispose of underutilized rental equipment and align fleet size with demand and utilization objectives.

Current wording

Construction Equipment gross profit margin decreased by 70 basis points to 22.1% in the nine months ended September 30, 2026 compared to 22.8% in the same period of 2025. New and used equipment sales margins increased 60 basis points to 12.3% reflecting generally stable margin performance across the segment and remaining in line with expectations. Parts sales margins decreased 140 basis points compared to the prior-year period reflecting pricing and procurement pressures in certain regions as well as the impact of reserves on aged parts. Service gross margins increased by 20 basis points year over year, generally in line with expectations and reflective of ongoing service productivity initiatives. Rental revenues gross margin for the nine months ended September 30, 2026 increased 110 basis points compared to the prior year, a reflection of lower sublet costs, freight, and repair and maintenance expenses as a percentage of rental revenues. Conversely, gross margins on rental equipment sales decreased 540 basis points from the prior year largely reflecting the impact of fleet optimization efforts and the resulting mix of assets sold as the Company disposes of underutilized rental equipment and align fleet size with demand and utilization objectives.

Previous wording

Operating expenses: Construction Equipment operating expenses increased by $0.5 million to $57.1 million for the three months ended June 30, 2026 and decreased by $0.5 million to $114.7 million for the six months ended June 30, 2026, as compared to the same periods in 2025. Higher healthcare claims impacting the second quarter largely offset favorable cost reductions elsewhere, including savings from workforce optimization initiatives, disciplined management of marketing and promotional spending, and lower bad debt expense attributable to improved customer payment activity.

Current wording

Operating expenses: Construction Equipment operating expenses were $54.1 million for both the three months ended September 30, 2026 and 2025. For the nine months ended September 30, 2026, operating expenses decreased by $0.5 million to $168.8 million compared to the same period in 2025. The year-to-date decrease primarily reflects savings from workforce optimization initiatives, including reductions in management and administrative headcount as well as lower marketing and promotional spending and vehicle lease costs of a reduced technician base. These savings were partially offset by higher healthcare claims and fuel costs.

Previous wording

Other expense, net: Construction Equipment other expense, net increased by $3.1 million to $10.5 million for the three months ended June 30, 2026 and increased by $2.2 million to $22.0 million for the six months ended June 30, 2026, as compared to the same periods in 2025. The increase was primarily attributable to the gain on divesture in second quarter of 2025 partially offset by lower interest expense in current year, driven primarily by the inventory and rental optimization initiatives.

Current wording

Other expense, net: Construction Equipment other expense, net decreased by $2.2 million to $10.8 million for the three months ended September 30, 2026 and remained flat for the nine months ended September 30, 2026, as compared to the same periods in 2025. The quarterly decrease was primarily attributable to lower interest expense resulting from lower average inventory and rental fleet balances. For the nine-month period, the benefit from lower interest expense was largely offset by the absence of a $4.3 million gain on divestiture recognized in the prior-year period.

Previous wording

Master Distribution segment revenues for the six months ended June 30, 2026 were $39.9 million, an increase of $1.6 million from the prior year. Combined new and used equipment sales increased $1.4 million year over year. While equipment sales during the first quarter continued to be impacted by tariff-related challenges and delayed customer purchasing activity, performance improved during the second quarter as market demand strengthened, tariff pressures largely subsided, and previously delayed machine deliveries were completed and invoiced. Parts sales increased modestly by $0.2 million year over year, reflecting our stable customer relationships which were challenged by tariff-related pricing pressures and supply chain disruptions over the past twelve months. Service revenues decreased slightly while rental revenues increased modestly year over year, with both categories performing generally in line with expectations.

Current wording

Master Distribution segment revenues for the nine months ended September 30, 2026 were $52.7 million, a decrease of $0.6 million from the prior year. Combined new and used equipment sales decreased $0.4 million year over year. While equipment sales during the first quarter were impacted by tariff-related challenges and delayed customer purchasing activity, performance improved during the second quarter as market demand strengthened and previously delayed machine deliveries were completed and invoiced, partially offset by lower equipment sales during the third quarter resulting from more cautious dealer inventory purchasing and product availability and delivery timing. Parts sales increased modestly by $0.2 million year over year as sales of specialized and equipment-specific parts and components offset lower volumes in wear-part categories, which were impacted by tariff-related pricing and competitive pressures. Service revenues decreased slightly while rental revenues remained consistent year over year, with both categories performing generally in line with expectations.

Previous wording

For the three months ended June 30, 2026, gross profit margin increased 580 basis points from the prior year. Gross profit margins on new and used equipment sales were 26.9%, a 760 basis point increase from the prior year quarter, primarily reflecting the normalization of machine margins as tariff-related pressures subsided, supported by improved OEM pricing dynamics, a stronger U.S. dollar relative to the Euro, and the benefit of a portion of IEEPA tariff refunds recognized during the quarter. Parts gross profit margin was 24.1% for the three months ended June 30, 2026, a 260 basis point decrease compared to the same period last year, primarily reflecting the negative impact of inventory reserve adjustments. Excluding these adjustments, underlying parts margins for the segment continued to show improvement and were generally consistent with expectations.

Current wording

For the three months ended September 30, 2026, gross profit margin increased 19.7% from the prior year. Gross profit margins on new and used equipment sales were 44.1%, a 27.4% increase from the prior year, primarily reflecting the benefit of IEEPA tariff refunds recognized during the quarter, which compares favorably against the adverse impact of the tariffs incurred in the prior year. Parts gross profit margin was 44.0% for the three months ended September 30, 2026, a 16.0% decrease compared to the same period last year, primarily reflecting the impact of inventory reserve adjustments. Excluding these adjustments, underlying parts margins for the segment were generally consistent with expectations.

Previous wording

For the six months ended June 30, 2026, gross profit was $9.8 million, an increase of $1.1 million compared to the prior year. Gross profit margin increased 190 basis points to 24.6%, primarily reflecting improved margins in new and used equipment sales. The improvement reflects the benefit of reduced tariff-related pressures during the second quarter, improved OEM pricing dynamics, a more favorable foreign exchange environment, and the benefit of the initial tranche of tariff refund payments, resulting in gross profit margins on new and used equipment sales increasing to 23.7%, up 150 basis points from the prior year. Parts gross profit margin was 33.9% for the six months ended June 30, 2026, up 60 basis points compared to the same period last year and in line with expectations. A more stable tariff environment and renegotiated pricing with OEMs are expected to provide additional support for gross margins in future periods.

Current wording

For the nine months ended September 30, 2026, gross profit was $15.3 million, an increase of $3.1 million compared to the prior year. Gross profit margin increased 610 basis points to 29.0%, primarily reflecting improved margins in new and used equipment sales. Gross profit margin on new and used equipment sales increased 770 basis points to 28.4%, primarily reflecting improved equipment margins during the second quarter and the benefit of IEEPA tariff refunds recognized during the third quarter associated with tariffs that had adversely impacted equipment margins in the prior year. Parts gross profit margin was 37.0% for the nine months ended September 30, 2026, down 480 basis points compared to the same period last year, but remained in line with expectations for the segment. The year-over-year decline in parts gross profit margin reflects, in part, differences in the tariff environment between the comparative periods. A more stable tariff environment is expected to reduce some of the volatility in parts gross profit margins experienced over the last several quarters.

Previous wording

Operating expenses: Master Distribution segment operating expenses totaled $3.7 million and $7.2 million for the three and six months ended June 30, 2026, a decrease of $0.1 million and flat to prior year, respectively. The quarter-to-date decrease was primarily attributable to the cost stabilizing initiatives partially offset by negative variances in higher healthcare claims in the second quarter.

Current wording

Operating expenses: Master Distribution segment operating expenses totaled $3.7 million and $10.9 million for the three and nine months ended September 30, 2026, respectively, decreasing $0.2 million, in each case, compared to the same periods last year. The decreases were primarily attributable to the cost stabilization initiatives partially offset by higher healthcare claims.

Previous wording

Other expense, net: Master Distribution other expense, net was $1.9 million for the three months ended June 30, 2026, a $0.2 million increase compared to the same period last year. Other expense, net was $3.7 million for the six months ended June 30, 2026, an increase of $0.4 million compared to the same period last year. The year-to-date increase was primarily attributable to higher interest expense driven by higher relative average inventory balances partially offset by lower benchmark interest rates.

Current wording

Other expense, net: Master Distribution other expense, net was $1.5 million for the three months ended September 30, 2026, a decrease of $0.1 million compared to the same period last year, and $5.2 million for the nine months ended September 30, 2026, an increase of $0.3 million compared to the same period last year. The year-to-date increase was primarily attributable to higher interest expense driven by higher relative average inventory balances partially offset by lower benchmark interest rates.

Previous wording

The six months ended June 30, 2026 and 2025 Cash Flows

Current wording

The nine months ended September 30, 2026 and 2025 Cash Flows

Previous wording

Cash Flow from Operating Activities. Cash flows provided by operating activities include net loss adjusted for non-cash items and the effects of changes in working capital. For the six months ended June 30, 2026, operating activities resulted in net cash provided by operations of $26.1 million. Our reported net loss of $27.0 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory and bad debt reserves, loss on divestitures, deferred income taxes, and stock-based compensation, provided net cash inflows of $28.8 million. Cash flow changes from working capital included $61.9 million of inventory purchased ($69.1 million of inventory was transferred into our rental fleet primarily for replenishment purposes), a $6.0 million in net inflow from accounts payable, accrued expenses, leases, and other operating liabilities offset by $29.6 million outflow from accounts receivable. Cash flows from operating activities were favorably impacted by $50.6 million due to proceeds from the sale of rent-to-sell equipment, $36.3 million in net inflows related to manufacturer floor plans partially offset by a $4.1 million net outflow related to prepaid expenses and other assets.

Current wording

Cash Flow from Operating Activities. Cash flows provided by operating activities include net loss adjusted for non-cash items and the effects of changes in working capital. For the nine months ended September 30, 2026, operating activities resulted in net cash provided by operations of $58.8 million. Our reported net loss of $38.5 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory and bad debt reserves, loss on divestitures, deferred income taxes, and stock-based compensation, provided net cash inflows of $49.4 million. Cash flow changes from working capital included $91.8 million of inventory purchased ($97.9 million of inventory was transferred into our rental fleet primarily for replenishment purposes), a $19.6 million in net inflow from accounts payable, accrued expenses, leases, and other operating liabilities offset by $13.4 million outflow from accounts receivable. Cash flows from operating activities were favorably impacted by $72.1 million due to proceeds from the sale of rent-to-sell equipment and $30.8 million in net inflows related to manufacturer floor plans partially offset by a $7.9 million net outflow related to prepaid expenses and other assets.

Previous wording

For the six months ended June 30, 2025, operating activities resulted in net cash used in operations of $3.4 million. Our reported net loss of $27.0 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory and bad debt reserves, gain on divestiture, deferred income taxes, and stock-based compensation, provided net cash inflows of $32.5 million. Changes in working capital included $21.1 million of inventory purchased ($66.7 million of inventory was transferred into our rental fleet primarily for replenishment purposes) and a $6.8 million increase in accounts receivable. Cash flows from operating activities were favorably impacted by $44.8 million due to proceeds from the sale of rent-to-sell equipment offset by $41.0 million in net outflows related to manufacturer floor plans, and an $11.8 million net change in prepaid expenses and other assets and accounts payable, accrued expenses, leases, and other operating liabilities.

Current wording

For the nine months ended September 30, 2025, operating activities resulted in net cash used in operations of $0.9 million. Our reported net loss of $68.6 million, when adjusted for non-cash income and expense items, primarily depreciation and amortization, the gain on sale of property and rental equipment, inventory and bad debt reserves, gain on divestitures, deferred income taxes, and stock-based compensation, provided net cash inflows of $51.3 million. Changes in working capital included $60.7 million of inventory purchased ($81.8 million of inventory was transferred into our rental fleet primarily for replenishment purposes) and an $18.3 million increase in accounts receivable. Cash flows from operating activities were favorably impacted by $64.3 million due to proceeds from the sale of rent-to-sell equipment and $4.9 million in net impact in accounts payable, accrued expenses, leases, and other operating liabilities offset by $28.3 million in net outflows related to manufacturer floor plans and a $14.1 million net change in prepaid expenses and other assets.

Previous wording

Cash Flow from Investing Activities. For the six months ended June 30, 2026, our cash used in investing activities was $4.0 million. This was mainly due to $16.0 million in purchases of rental equipment and non-rental property and equipment and other investing activities partially offset by $8.7 million proceeds from the sale of rent-to-rent equipment, $1.8 million proceeds from the sale of non-rental property and equipment, and $1.5 million proceeds from the divestiture as discussed in Note 15.

Current wording

Cash Flow from Investing Activities. For the nine months ended September 30, 2026, our cash used in investing activities was $6.0 million. This was mainly due to $22.3 million in purchases of rental equipment and non-rental property and equipment and other investing activities partially offset by $12.1 million proceeds from the sale of rent-to-rent equipment, $1.9 million proceeds from the sale of non-rental property and equipment, and $2.3 million proceeds from the divestitures as discussed in Note 15.

Previous wording

For the six months ended June 30, 2025, our cash used in investing activities was $8.4 million. This was mainly due to $31.6 million purchases of rental equipment and non-rental property and equipment, the acquisition of Les Chariots Elevateurs Du Quebec Inc., and other investing activities partially offset by $18.0 million proceeds from the divestiture of our aerial fleet rental business in Illinois, $4.9 million proceeds from the sale of rent-to-rent equipment, and $0.3 million proceeds from the sale of non-rental property and equipment.

Current wording

For the nine months ended September 30, 2025, our cash used in investing activities was $19.3 million. This was mainly due to $47.6 million purchases of rental equipment and non-rental property and equipment, the acquisition of Les Chariots Elevateurs Du Quebec Inc., and other investing activities partially offset by $21.1 million proceeds from the divestiture of our aerial fleet rental business in Illinois and our Dock and Door business, $6.8 million proceeds from the sale of rent-to-rent equipment, and $0.4 million proceeds from the sale of non-rental property and equipment.

Previous wording

Cash Flow from Financing Activities. For the six months ended June 30, 2026, cash used in financing activities was $19.6 million. This cash outflow was due to the $6.8 million of net payments on our line of credit, long-term borrowings, and finance lease obligations, net payments of $9.6 million related to non-manufacturer floor plans, payments of $1.5 million for preferred stock dividends, and $1.7 million related to other financing activities.

Current wording

Cash Flow from Financing Activities. For the nine months ended September 30, 2026, cash used in financing activities was $49.5 million. This cash outflow was due to the $28.2 million of net payments on our line of credit, long-term borrowings, and finance lease obligations, net payments of $17.7 million related to non-manufacturer floor plans, payments of $2.2 million for preferred stock dividends, and $1.4 million related to other financing activities.

Previous wording

For the six months ended June 30, 2025, cash provided by financing activities was $11.4 million. This cash inflow was mainly due to the $29.6 million of net proceeds from our line of credit, long-term borrowings, and finance lease obligations. These cash inflows were partially offset by payments of $5.4 million for preferred and common stock dividends, net payments of $5.9 million related to non-manufacturer floor plans, $6.5 million for common stock repurchases, and $0.4 million related to other financing activities.

Current wording

For the nine months ended September 30, 2025, cash provided by financing activities was $20.7 million. This cash inflow was mainly due to the $42.6 million of net proceeds from our line of credit, long-term borrowings, and finance lease obligations. These cash inflows were partially offset by payments of $6.1 million for preferred and common stock dividends, net payments of $8.2 million related to non-manufacturer floor plans, $6.5 million for common stock repurchases, and $1.1 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 also reported $20.9 million in cash as of June 30, 2026. 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 $21.8 million in cash as of September 30, 2026. 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

Our principal uses of cash have been to fund operating activities and working capital, including but not limited to new and used equipment inventories, purchases of rental fleet equipment and personal property, payments due under line of credit and floor plans, acquisitions, debt service requirements, stock repurchases, and preferred stock and common stock dividends. In the future, we may pursue additional strategic acquisitions and seek to open new start-up locations. We anticipate that the uses described above encompass the principal demands on our cash and availability under our line of credit and floor plans in the future.

Current wording

Our principal uses of cash have been to fund operating activities and working capital, including but not limited to new and used equipment inventories, purchases of rental fleet equipment and personal property, payments due under line of credit and floor plans, acquisitions, debt service requirements, stock repurchases, and preferred stock and common stock dividends. In the future, we may pursue additional strategic acquisitions and seek to open new start-up locations, and we may borrow under existing or new debt arrangements in connection with those transactions. We anticipate that the uses described above encompass the principal demands on our cash and availability under our line of credit and floor plans in the future.

Previous wording

The amount of our future capital expenditures will depend on a number of factors including general economic conditions, the state of our industry and the markets we serve, and our growth prospects. Our gross rental fleet capital expenditures for the six months ended June 30, 2026 was $78.1 million, including $69.1 million of transfers from new and used inventory to rent-to-sell rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of $59.3 million for the six months ended June 30, 2026 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, the state of our industry and the markets we serve, and our growth prospects. Our gross rental fleet capital expenditures for the nine months ended September 30, 2026 was $111.2 million, including $97.9 million of transfers from new and used inventory to rent-to-sell rental fleet. This gross rental fleet capital expenditure was offset by sales proceeds of rental equipment of $84.2 million for the nine months ended September 30, 2026 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 June 30, 2026, we had $373.8 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 September 30, 2026, we had $413.5 million of available borrowings under the ABL Facility and Floor Plan Facilities.