Exhibit 99.2

Nesco Holdings II, Inc. (the “company,” “Nesco,” “we,” “us” or “our”) has disclosed the information reproduced or summarized below in connection with a proposed transaction:

Use of Non-GAAP Financial Information

We believe that the financial statements included in this offering memorandum have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the United States (“GAAP”), and the regulations published by the SEC, and are consistent with current practice with the exception of the presentation of certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA.

We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in our industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, our non-GAAP financial measures may not be comparable to measures used by other companies within the industry.

The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. As used in this offering memorandum, the following terms have the following meanings:

EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA, as presented in this offering memorandum, are supplemental measures of our performance that are not required by, and are not presented in accordance with, GAAP. EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA are measures commonly used by financial analysts in evaluating a company’s performance and/or ability to service and/or incur indebtedness.

We believe the presentation of EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA enhances an investor’s understanding of our financial performance because it is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. Such items are excluded pursuant to the definitions of Adjusted EBITDA in the documents governing the existing indebtedness of Nesco and Custom Truck, as applicable, and will be excluded pursuant to the definition of Consolidated EBITDA in the indenture and the New ABL Credit Agreement. In addition, under the indenture and the New ABL Credit Agreement, “Consolidated EBITDA” as defined therein forms the basis for certain ratios and baskets related to our ability to incur debt or liens, or make certain payments or investments thereunder. The definition of “Consolidated EBITDA” in such agreements may differ from Adjusted EBITDA and

Pro Forma Combined Adjusted EBITDA presented herein. Therefore, our presentation of Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA may not be representative of how “Consolidated EBITDA” is calculated under the agreements governing our indebtedness (including the indenture) or our ability to incur debt or liens or make certain payments or investments thereunder.

We believe that Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA provide investors with a useful tool for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, service debt and undertake capital expenditures. We use these financial measures for business planning purposes, for loan compliance purposes, and in measuring our performance relative to that of our competitors. Because the leverage ratios presented in this offering memorandum are based, in part, on Pro Forma Combined Adjusted EBITDA, these measures are similarly impacted by the limitations referenced above and also should not be considered in isolation or as a substitute for GAAP measures.

Our use of the terms EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA may vary from that of others in our industry and therefore are limited in their usefulness as comparative measures. These financial measures should not be considered as alternatives to net income (loss), operating income (loss) or any other performance measures derived in accordance with GAAP as measures of operating performance, operating cash flows or as measures of liquidity. Non-GAAP financial measures should not be relied upon to the exclusion of U.S. GAAP financial measures. We encourage investors to review our non-GAAP financial measures together with our U.S. GAAP results and historical consolidated financial statements, and not in isolation. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies.

Adjusted EBITDA includes an adjustment to exclude the effects of purchase accounting adjustments when calculating the cost of used equipment sold. When equipment is purchased in connection with a business combination, the equipment is revalued to its then current fair value for accounting purposes. The consideration transferred (i.e., the purchase price) in a business combination is allocated to the fair value of equipment as of the acquisition date, with depreciation recorded thereafter following our accounting policies; however, this may not be indicative of our actual cost to acquire new equipment that we add to our fleet apart from a business acquisition. Additionally, the pricing of our rental contracts and equipment sales prices for our equipment is based upon OEC, and we measure a rate of return from our rentals and sales using OEC. As indicated above, the agreements governing the existing indebtedness of Nesco and Custom Truck define, and the indenture and the New ABL Credit Agreement will define, this adjustment to EBITDA, as such, and we believe this metric is a better indication of our true cost of equipment sales due to the removal of the purchase accounting adjustments.

Our EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

Because of these limitations, EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA and the related ratios should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

For more information, see the financial statements and related notes included elsewhere in this offering memorandum. The SEC has adopted rules to regulate the use of non-GAAP financial measures, such as EBITDA, Adjusted EBITDA and Pro Forma Combined Adjusted EBITDA, that are derived on the basis of methodologies other than in accordance with GAAP. These rules require, among other things:

The rules prohibit, among other things:

The non-GAAP financial measures presented in this offering memorandum may not comply with these rules. For a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), see “Summary Historical, Unaudited Pro Forma and Other Financial Information.”

Summary

Overview

Nesco Holdings, Inc., a Delaware corporation, serves as the parent for its primary operating company, NESCO, LLC. NESCO, LLC, an Indiana limited liability company, together with its wholly owned subsidiaries, is one of the largest specialty equipment rental providers to the growing electric utility transmission and distribution (“T&D”), telecom and rail industries in North America. Nesco offers its specialized equipment to a diverse customer base for use in the maintenance, repair, upgrade and installation of critical infrastructure assets including electric lines, telecommunications networks and rail systems. Nesco maintains a diverse geographic footprint in the U.S. and Canada, operating 20 facilities and partnering with more than 50 third-party service locations.

Custom Truck One Source, L.P., a Delaware limited partnership, is a leading provider of specialty equipment, primarily serving the electric utility T&D, rail and other infrastructure-related end-markets in North America. Its equipment is used primarily for the maintenance, repair, upgrade, and installation of critical infrastructure. Custom Truck operates with a differentiated “one-stop-shop” business model, offering equipment rental, new and used equipment sales, and aftermarket parts and service out of 26 locations across the U.S. and Canada. Custom Truck and its customers also benefit from its sophisticated sourcing model and large-scale integrated production and customization capabilities, which enhance the quality and diversity of its equipment offerings, reduce both cost and lead times for equipment sales and provide greater flexibility to optimize its rental fleet.

We believe that, after giving effect to the Acquisition, we will be one of the largest national specialty equipment companies serving customers in the electric utility T&D, telecom, rail and infrastructure end- markets. For the year ended December 31, 2020, after giving effect to the Acquisition, we generated pro forma revenue of $1,356.5 million and Pro Forma Combined Adjusted EBITDA of $345.1 million, inclusive of an estimated $50 million of run-rate annual cost synergies. We expect to realize approximately $50 million in annual cost synergies within two years of completion of the Acquisition and $10 million in annual capital expenditure synergies. We also believe there are additional upside opportunities from identified revenue synergies via expanded service offerings and cross-selling opportunities. However, there can be no assurance that we will be able to achieve these synergies. For more information about our anticipated synergies, including certain factors that may affect our ability to achieve such synergies, see “Risk Factors — Risks Related to the Transaction — Integration of the Nesco and Custom Truck businesses may be difficult, costly and time-consuming, and the anticipated benefits and cost savings of the Transaction may not be realized or may be less than expected.”

Combination Rationale

We believe that the combination of Nesco and Custom Truck will create a leading, “one-stop-shop” provider of specialty rental equipment serving highly attractive and growing end-markets including electric utility T&D, telecom, rail and infrastructure. Together, we will operate on a national scale with a rental fleet nearly double Nesco’s current fleet size with approximately 8,800 units, greater than $1.3 billion in combined original equipment cost (“OEC”), and an average fleet age of 3.4 years.

As an integrated platform, we believe we will provide an enhanced value proposition to our customers through a full suite of solutions, including equipment rental, new and used equipment sales, and aftermarket parts, service, tools and accessories. The consummation of the Acquisition will create a differentiated business model that should drive a better customer experience and result in a significant increase in the breadth and depth of available rental assets and other specialty equipment offerings. With a substantially larger rental fleet, scale-enabled purchasing benefits, enhanced production and customization capabilities and a well-established equipment sales operation, we expect to be better positioned to serve our existing customers and win new business.

We believe the transaction represents a meaningful synergy opportunity. We expect to realize $50 million of annual cost savings from service and product optimization, procurement initiatives, back-office consolidation, indirect spend optimization and footprint consolidation within two years after closing the Acquisition. Additionally, we anticipate $10 million of estimated annual capital expenditure savings attributable to applying the same product optimization and procurement initiatives to purchases of our rental fleet. We believe that there is significant additional growth potential from revenue synergies resulting from an expanded service offering and cross-selling opportunities. However, there can be no assurance that we will be able to achieve these synergies. For more information about our anticipated synergies, including certain factors that may affect our ability to achieve such synergies, see “Risk Factors — Risks Related to the Transaction — Integration of the Nesco and Custom Truck businesses may be difficult, costly and time-consuming, and the anticipated benefits and cost savings of the Transaction may not be realized or may be less than expected.”

We will have favorable exposure to highly attractive end-markets including electric utility T&D, telecom, rail and infrastructure. Our core end-markets are supported by strong, multi-year tailwinds, including power grid modernization, increasing renewable energy generation, the 5G revolution build-out and growing demand for replacement of aging infrastructure in the U.S. Our increased scale and national presence will provide significant opportunities to capture additional spend from new and existing customers across geographies and end-markets. After giving effect to the Acquisition, we will serve more than 3,000 customers. For the year ended December 31, 2020, on a combined basis, our top 15 customers represented approximately 16% of revenue and no customer represented more than 3% of revenue.

We believe our enhanced financial profile will further contribute to the strong momentum the combined company has been experiencing in recent years and provide meaningfully greater flexibility to capitalize on growing end-market demand. For the year ended December 31, 2020, after giving effect to the Acquisition, we generated Pro Forma Combined Adjusted EBITDA of $345.1 million, including $50 million of estimated run-rate annual cost synergies. At closing, after giving effect to the Transaction, we expect to benefit from more than $300 million in liquidity under our New ABL Facility (based on preliminary borrowing base estimates) and a reduction in net leverage from 6.2x to 4.0x. We believe that our new capital structure and transformed earnings profile will give us the opportunity to generate substantial free cash flow, which will be used to support our organic growth initiatives and drive de-leveraging.

The combined company will be led by a strong senior leadership team supported by a deep bench of highly experienced professionals. Fred Ross, the current CEO of Custom Truck, will serve as CEO of the combined company, which will be headquartered at Custom Truck’s campus in Kansas City, MO. Ryan McMonagle, the current COO of Custom Truck, will serve as President & COO of the combined company and Bradley Meader, the current CFO of Custom Truck, will serve as CFO of the combined company.

Nesco and Custom Truck’s highly complementary mix of end-markets, offerings, and specialty equipment are illustrated below.

Note: OEC as of December 31, 2020. All other data is for the year ended December 31, 2020.

Company Overview

Nesco

Nesco is one of the largest specialty equipment rental providers to the growing electric utility T&D, telecom and rail industries in North America. Nesco offers its specialized equipment to a diverse customer base for the maintenance, repair, upgrade and installation of critical infrastructure assets including electric lines, telecommunication networks and rail systems. Nesco maintains a diverse geographic footprint in the U.S. and Canada, operating 20 leased facilities, of which 12 are for the servicing of its core equipment rental fleet and 8 are dedicated to its parts, tools and accessories (“PTA”) segment. Additionally, Nesco partners with more than 50 third-party service locations geographically disbursed throughout the U.S. and Canada.

With a young, coast-to-coast rental fleet of more than 4,500 units as of December 31, 2020, Nesco has a diverse specialty fleet offering that includes insulated and non-insulated bucket trucks, digger derricks, line equipment, cranes, pressure diggers and underground equipment, with all-terrain options such as all-wheel drive, track mounting and rail mounting. Nesco’s rental fleet has an average unit age of approximately 4.0 years at December 31, 2020 compared to an average expected useful life of 15 to 25 years. The long useful life of Nesco’s equipment assets is a key driver of attractive asset economics. In addition to renting its fleet, Nesco opportunistically sells both new and used specialty equipment, which fosters strong customer relationships, facilitates fleet management and strengthens supplier relationships.

Through its PTA segment, Nesco provides its customers a total job-site solution, offering a range of products for rent or sale to fully equip their equipment and crews for activity in the field. Nesco’s comprehensive PTA offering expands opportunities to serve its equipment rental and sales customers through the convenience of a single vendor for all of their specialty equipment and PTA needs.

For the year ended 31, December 2020, Nesco generated Revenue and Adjusted EBITDA of $302.7 million and $118.6 million, respectively.

Custom Truck

Custom Truck is a leading provider of specialty equipment, primarily serving the electric utility T&D, rail and other infrastructure-related end-markets in North America. Its equipment is used primarily for the maintenance, repair, upgrade, and installation of critical infrastructure. Custom Truck operates with a differentiated “one-stop-shop” business model, offering equipment rental, new and used equipment sales, and aftermarket parts and service out of 26 locations across the U.S. and Canada. Customers receive additional support throughout the country from Custom Truck’s 24/7 call center, approximately 70 mobile technicians and over 60 third-party locations. Custom Truck and its customers also benefit from its sophisticated sourcing model and large-scale integrated production and customization capabilities, which enhance the quality and diversity of its equipment offerings, reduce both cost and lead times for equipment sales and provide greater flexibility to optimize its rental fleet. These attributes, together with a strong reputation built over many years, position Custom Truck to capitalize on attractive secular growth trends across its end-markets.

Custom Truck owns one of the industry’s largest fleets of specialty rental equipment focused on electric utility T&D, rail, and infrastructure end-markets. As of December 31, 2020, its fleet is comprised of approximately 4,300 units with an OEC of $698 million and an average unit age of approximately 2.8 years, which is young by typical rental fleet standards and compares favorably to the long useful life of the equipment. Custom Truck’s rental fleet is managed on a national level, which allows the company to efficiently reposition equipment in response to shifts in regional demand and thereby sustain strong utilization levels.

As is customary among equipment rental companies, Custom Truck sells used equipment out of its rental fleet to end user customers. Custom Truck also offers a broad variety of new equipment for sale across its end-markets, often highly customized to meet its customers’ specific needs. Integrated production capabilities and extensive knowledge gained over a long history of selling equipment have positioned Custom Truck uniquely in the market as a trusted partner for customers seeking tailored solutions with short lead times.

Custom Truck also employs over 250 trained service technicians throughout North America, enabling it to quickly and cost-effectively provide service to its deployed rental fleet and select customer-owned equipment with in-house resources and aftermarket parts inventory. Custom Truck offers third-party financing and leasing solutions through its partners, for which it receives fees and does not take credit risk.

For the year ended December 31, 2020, Custom Truck generated Revenue and Adjusted EBITDA of $1,054 million and $176.5 million, respectively.

Combined Company Products & Services

We believe that, after giving effect to the Acquisition, we will have one of the largest and most extensive offerings of specialty equipment for rent and sale to our customers. Our primary categories of trucks, and their functions, include the following:

Equipment Rental

After giving effect to the Acquisition, we will have one of the industry’s largest fleets of specialty rental equipment focused on electric utility T&D, rail and other infrastructure-related end-markets. As of December 31, 2020, our combined fleet will be comprised of approximately 8,800 units with an OEC of approximately $1.3 billion and an average unit age of approximately 3.4 years, which is young by typical rental fleet standards and compares favorably to the long useful life of the equipment. The majority of our equipment can be used across a variety of end-markets, which coincides with the needs of many of our customers who operate in multiple end-markets. Rental rates vary depending on product type, geography, demand and other factors. The average rental duration of the combined company’s equipment is approximately 12 months as of 31 December 31, 2020.

Used Equipment Sales

As is customary among equipment rental companies, we sell used equipment out of our rental fleet to end user customers. A significant portion of these sales are made on an opportunistic basis in response to specific customer requests and at a price that yields an attractive return. These sales offer customers an opportunity to buy well-maintained equipment with long remaining useful lives and enable us to effectively manage the age and mix of our rental fleet to match current market demand. We also opportunistically engage in the sale of used equipment purchased from third parties or received via trade-ins from new equipment sales customers. In all of these cases, and unlike many of our competitors, we will sell rental and used equipment directly to customers, rather than relying on auctions, which charge incremental fees and often result in lower sales prices. We also employ Rental Purchase Options (“RPOs”) on a select basis, which provide a buyout option with an established purchase price that decreases over time as rental revenue is collected. Customers are given credit against such purchase price for a portion of the amounts paid over the life of the rental, allowing customers the flexibility of a rental with the option to purchase at any time at a known price.

New Equipment Sales

We offer a broad variety of new equipment for sale to be used across our end-markets, often highly customized to meet our customers’ specific needs. We believe that our integrated production capabilities and extensive knowledge gained over a long history of selling equipment have established us as a trusted partner for customers seeking tailored solutions with short lead times. In support of these activities, we primarily employ a direct-to-customer sales model, leveraging our dedicated salesforce of industry and product managers, who are focused on driving national and local sales. Our coordinated sales approach provides a seamless, “single point of contact” buying experience for customers. In combination with our broad product offering, this enabled us to become a leading seller of specialty equipment and vocational trucks which includes equipment from leading OEMs across our end-markets as well as Custom Truck’s own Load King brand.

Aftermarket Parts & Services

After giving effect to the Acquisition, we will benefit from the combination of Nesco and Custom Truck’s existing parts and service segments. Our combined offering will include a broad parts, tools and accessories inventory, which is a natural extension of our core equipment rental offering and can be rented or purchased on an individual basis or in packaged specialty kits.

The technical nature of certain parts, tools and accessories requires periodic testing in a certified lab and expertise in specialized repairs, which we provide at our test and repair facilities. We provide nationwide coverage through eight locations that serve as hubs for technical test and repair as well as the rental and sale of parts, tools and accessories.

Examples of our aftermarket parts and services include:

Additionally, we employ over 300 trained service technicians throughout North America, enabling us to provide service quickly and cost-effectively to our deployed rental fleet and select customer-owned equipment with in-house resources. In support of the services, we maintain an ample supply of aftermarket parts inventory for repairs to ensure our customers are served as quickly as possible. We operate a call-in center, staffed by experienced technicians on a 24-hour, 7-day a week basis to rapidly respond to customer needs.

Customers, Suppliers, and Contracts

Customers

After giving effect to the Acquisition, we will serve a large base of more than 3,000 customers across a diverse set of end-markets. Our customer base includes many of the top national and regional electric utilities, telecoms, railroads and related contractors. For the year ended December 31, 2020 on a combined basis, our top 15 customers represented approximately 16% of pro forma Revenue and no customer represented more than 3% of pro forma Revenue. We have significant tenure with our top customers, with key relationships spanning more than 15 years. Through our longstanding relationships, we have developed strong brand recognition and awareness in the industry. Our breadth of equipment and geographic reach enable us to effectively serve large, national customers on multiple long-term engagements around the country. Due to our “one-stop-shop” offering, many customers will both rent and purchase equipment from us as well as utilize us for their aftermarket parts and service needs.

Suppliers

Nesco sources specialty equipment and parts, tools and accessories from a limited number of middle market suppliers including Terex, S.D.P. Manufacturing and Versalift. Custom Truck utilizes numerous suppliers to produce equipment while also manufacturing certain products through its Load King brand. Custom Truck purchases chassis from dealers across the United States, including Freightliner, Peterbilt, Ford, Kenworth, Dodge, Mack and others. Custom Truck also sources attachments from Terex, Morooka, IMT, Skylift, Tornado Global, Versalift, Galbreath, Dakota Bodies, Sherman + Reilly and others.

We will be one of the largest customers for most of our key suppliers and one of the largest purchasers of vocational trucks and attachments in the United States after giving effect to the Acquisition. This will make us an important and highly strategic sales channel for OEMs. We believe that we have strong relationships with our primary suppliers and enjoy preferential pricing as well as production priority with the majority of our suppliers, a benefit unavailable to smaller competitors. We maintain a diverse and deep supply chain network by sourcing equipment product lines from multiple manufacturers. This helps decrease supply chain risks and gives us the flexibility to pivot to other suppliers if the need arises or if our customers’ preferences change.

Contracts

The vast majority of our new rental orders use a standard rental agreement, pre-negotiated master lease or national account agreements. The typical rental agreement contains rental rates (daily, weekly, and 28-day rates), unit specifications and other important information. Customers are billed monthly and the contracts are automatically renewed until the customer returns the equipment. As of December 31, 2020, the combined company’s average rental duration was approximately 12 months.

Customers are responsible for the costs of delivery and return to our service locations, preventative maintenance and consumables, and any loss or damage beyond normal wear and tear. Customers are required to maintain liability and property insurance covering the units during the rental term and to indemnify us from losses caused by the negligence of the customer, their employees or contractors. We also provide rental customers with the opportunity to enter into RPO contracts, when requested, which allow the customer to earn credit towards the purchase of the equipment based on the rental payments made. Sales of equipment to customers are made pursuant to a standard retail buyers order.

Summary of Synergies Initiatives

We, along with Platinum, have identified significant synergies resulting from the combination of Nesco and Custom Truck. We expect to achieve an estimated $50 million in run-rate annual cost synergies within two years of closing of the Acquisition as well as approximately $10 million of run-rate annual capital expenditure synergies.

The synergies are expected to be realized through various procurement initiatives, service/production optimization, back-office consolidation, indirect spend optimization and footprint consolidation. We expect to achieve approximately 50% of run-rate cost synergies within one year of closing and the remaining by the end of year two.

To achieve the identified synergies, we expect to incur approximately $50 million of one-time costs in the first 3 years after closing of the Acquisition. The majority of one-time costs are related to implementation support, with the balance related to severance and other integration costs.

These initiatives will be executed by a dedicated implementation team with support from Platinum operational executives and third-party resources. However, there can be no assurance that we will be able to achieve these synergies. For more information about our anticipated synergies, including certain factors that may affect our ability to achieve such synergies, see “Risk Factors — Risks Related to the Transaction — Integration of the Nesco and Custom Truck businesses may be difficult, costly and time-consuming, and the anticipated benefits and cost savings of the Transaction may not be realized or may be less than expected.”

End-Market Overview

Our core end-markets include electric utility T&D, telecom, rail and infrastructure.

General End-Market Trends

Combined annual capital expenditures in our core end-markets exceeds $350 billion and grew 7.3% annually from 2001 to 2019 compared to 4.0% annual growth in U.S. GDP over the same period. Our end-markets have demonstrated limited correlation with GDP growth and resiliency through the recent economic cycle.

The North American market has and continues to experience a secular shift from equipment ownership to rental. Rental penetration of the broader equipment fleet in North America increased from 42% in 2009 to 57% in 2019 and is expected to reach 65% by the mid-2020s.¹⁵ In comparison, other developed markets recorded higher rental penetration rates in 2017, including Europe at 65%, Japan at 80% and the U.K. at 80%, demonstrating the future potential of the North American market.¹⁶ We believe that customers’ growing preference for equipment rental is driven by several factors including the avoidance of significant capital outlay, improved asset utilization, reduced storage and maintenance, access to a wider range of modern productive equipment, dedicated customer care and operational efficiencies. As we believe that the rental penetration rate in the specialty equipment market is only an estimated 20 – 25% today, and that it will continue to trend towards the levels observed in the broader market, we think there will be significant growth within our specific markets.

Electric Utility T&D End-Market

Maintaining safe and effective transmission and distribution lines is critical to national infrastructure, as they carry the electricity that powers the nation. Transmission lines carry high voltage electricity long distances, while distribution lines carry electricity from local transformers to houses and businesses. Our specialty equipment is used in the maintenance and repair of live lines and installation of new lines. Capital expenditure spend in the electric utility T&D end-market is approximately $68 billion annually.¹⁷ This spend is driven by a number of attractive dynamics, demonstrating that the U.S. is potentially in the very early stages of a multi-year electric utility T&D spending cycle.

Aging and Underinvested Electric Utility T&D Infrastructure.    Electricity delivery in the U.S. depends on an aging and complex patchwork system of power generation facilities, transmission grids, local distribution lines and substations. Most electric utility T&D lines were constructed in the 1950s and 1960s with a 50-year life expectancy and were not originally engineered to meet today’s load demands. Today, approximately 40% to 50% of existing electric utility T&D infrastructure is at or beyond its engineered life.¹⁸ Due in part to this aging infrastructure, costly electric emergency incidents and disturbances have increased more than sevenfold since 2000.¹⁹ Multiple costly fires have also been caused by aging and undermaintained transmission and distribution lines. As an example, in February 2019, Pacific Gas & Electric, an electric utility in California, announced that it is probable that its transmission line equipment caused the catastrophic fires in Paradise, CA three months prior. Maintenance work on the line had been delayed for several years.²⁰ The company, which filed for bankruptcy protection in January 2019, recorded a $10.5 billion charge in anticipation of damage claims. California fire investigators have determined that Pacific Gas & Electric’s equipment also played a role in starting 18 blazes in 2017.²¹ The prevention of additional incidents associated with the continued operations of aging electric utility T&D infrastructure is expected to continue to drive increasing levels of maintenance and repair and replacement spend by utilities.

Changing Generation Landscape.    The ongoing transition from coal to gas and renewables continues to drive changes in the generation landscape and transmission project development. Twenty-nine states and Washington, D.C. have adopted renewable portfolio standards, which mandate that a certain percentage — most states target 10% to 45% — of electricity sold by a utility must come from renewable sources.²² The share of new renewables in the U.S. electricity generation mix will increase from 21% in 2020 to 42% in 2050.²³ As a result, significant spend for new transmission lines will be required to interconnect these new sources of power with the electrical grid.

Increased Focus on Decarbonization.    With an increased societal focus on decarbonization, major fossil fuel driven sectors are shifting towards electrification. The electrification of vehicles, heating technology and industrial processes is expected to drive a significant increase in electricity demand and require a transmission investment of up to $90 billion by 2030.²⁴

Increased Outsourcing by Utilities.    Utilities are increasingly turning to specialized third-party contractors to fulfill construction and maintenance needs. This outsourcing trend is driven by the challenge of an aging workforce and desire to shift the management and responsibilities of non-core activities to external service providers. Outsourcing is a favorable trend for us, given our rental penetration among electric utility T&D contractors who prefer to rent due to lower initial capital outlay, increased flexibility, improved asset utilization and productivity and significantly reduced storage and maintenance costs.

Our longstanding relationships, national scale and diverse fleet of specialty rental equipment makes us a key supplier to many companies in the electric utility T&D end-market. Approximately 58% of our pro forma revenue, after giving effect to the Acquisition was generated from the electric utility T&D end-market for the year ended December 31, 2020.

Telecom End-Market

Telecommunications infrastructure, including telecom cells, towers and wirelines, are the backbone of telephonic interaction and the transportation of mobile data. We provide the specialty equipment required to maintain and install telecom cells, towers and communication lines. Construction spend on telecommunications infrastructure is approximately $80 billion annually.²⁶ This spend is expected to grow significantly throughout the next decade due largely to the advent of 5G technology.

Rapid technological advancements, including advanced digital and video service offerings, continue to increase demand for greater wireline and wireless network capacity and reliability. Data traffic is at an all-time high and is expected to substantially increase in the future. United States data traffic is expected to grow at a 21% CAGR from 2017 to 2022.²⁷ In response to this demand, the Big 4 U.S. Telecom Operators are planning to increase speed and capacity through the deployment of 5G technology.

5G technology will require the installation of numerous higher bandwidth small cells to “densify” wireless networks and enhance performance. This is because small cells only deliver coverage within approximately a quarter mile of their location, compared to approximately five miles for the existing 4G and predecessor macro cells.²⁸ As a result, approximately 20 times more small cells will need to be installed in order to provide the same level of coverage as the existing macro cells.²⁹

The spend required by the Big 4 Telecom Operators to deploy 5G technology is expected to grow at a 40% CAGR from 2019 to 2023, continuing into 2030 with total 2019 to 2030 spend of approximately $240 billion.³⁰

Emerging wireless technologies are also driving significant wireline deployments. A complementary wireline investment cycle is underway to facilitate the deployment of fully converged wireless and wireline networks. Continued recurring maintenance will be required on existing wireline infrastructure and new 5G infrastructure.

Approximately 3% of our pro forma Revenue, after giving effect to the Acquisition, was generated from the telecom end-market in the year ended December 31, 2020.

Rail End-Market

Freight and commuter rail are responsible for transporting products and people across the nation. Our rail mounted equipment is used for a variety of tasks including the installation of new rail and maintenance of the existing rail lines. The hi-rail equipment is utilized in projects for both installation and repair of track, electric lines, signal crossings and signs. The equipment is also often used for working on older infrastructure such as repairing bridges and terminals with more antiquated track and systems that are in need of upgrades with more modern systems like Positive Train Control (“PTC”) and others. The six largest public railroads spend more than $10 billion annually in capital expenditures, which is expected to continue to grow as freight demands increase.³¹ In addition to freight rail, spend on active commuter rail projects is significant with a growing pipeline.

Freight Rail.    Freight rail, one of the most cost-effective, energy-efficient modes of transport, carries about 40% of intercity freight as measured by ton-miles, more than any other mode of transportation.³² Our North American customers are principally Class I railroads and related contractors. Class I railroads operate in 44 states across the U.S. and account for 94% of freight rail revenues in North America.³⁴

Commuter Rail.    Trends such as population growth, increasing urbanization, a focus on sustainability, environmental awareness and increasing highway congestion are expected to drive continued investment in commuter rail. Furthermore, as a result of years of insufficient funding, transit systems across the U.S. are struggling to cope with aging infrastructure, creating a massive and increasing backlog. The most recent federal estimate quantifies the backlog of projects required to attain a “state of good repair”, meaning public transit is repaired to an age within its average service life, at $90 billion — projected to grow to $122 billion by 2032.²⁰ In August 2018, the U.S. Senate approved a fiscal-year 2019 appropriations bill that provides $16.1 billion for public transit and intercity passenger rail. Also in 2018, the Los Angeles County Metropolitan Transportation Authority’s board adopted the Twenty-Eight by ’28 plan, which calls for completing 28 transportation projects at an estimated cost of $26 billion ahead of the 2028 Summer Olympics and Paralympics in Los Angeles.

Approximately 5% of our pro forma Revenue, after giving effect to the Acquisition, was generated from the rail end-market in the year ended December 31, 2020.

Infrastructure End-Market

We also serve the general infrastructure end-market, which includes surface transportation, national highway performance, highway safety, metropolitan transit, and other key infrastructure systems, including residential and non-residential waste and water. According to FMI Research, total infrastructure capex spend annually exceeds $200 billion and the infrastructure end market outlook remains positive. We anticipate the recent change in administration and growing bipartisan support will result in additional federal funds being allocated to infrastructure investment.

We consider the waste end market as part of the general infrastructure industry. Long-term, secular growth in this market is driven by growing waste volumes generated by increasing waste generation per capita. Population and income growth drive municipal solid waste generation. Municipal solid waste revenue grew at a compounded annual growth rate of 3.5% from 2003 to 2018. Waste is generally considered to be a recession-resistant industry given the non-discretionary nature of waste collection and disposal. Ongoing consolidation amongst waste haulers results in increasing market share for large, well-capitalized companies that have the resources to invest in the latest trucks and equipment.

Approximately 21% of our pro forma Revenue, after giving effect to the Acquisition, was generated from the infrastructure end-market in the year ended December 31, 2020.

Competitive Strengths

We believe our platform is differentiated and benefits from several significant strengths that will continue to support our leading market position and future growth. We believe that the following factors have been instrumental in our success and will position us for continued growth:

Market Leader with a Differentiated “One-Stop-Shop” Platform.    Our combined platform will offer our customers a true “one-stop-shop” solution for their needs across the specialty equipment market, including rentals, new and used sales, production and customization, aftermarket parts and services, financing and asset disposal, building upon the successful business model that has been a key source of differentiation for Custom Truck historically. Our flexibility to meet customers’ capital allocation preferences will allow us to develop deeper relationships with our customers and our wide variety of equipment offered enables us to meet more of our customers’ needs than our competitors. Additionally, our national platform and scale provides us the ability to serve both regional and national customers wherever they operate.

Integrated Business Model with Large-Scale Production and Customization Capabilities.    We are able to provide our customers with highly tailored solutions on an expedited basis, enabled by our extensive internal production and customization operations. These capabilities allow us to deepen our relationships with customers by offering them the ability to customize equipment to meet their specific job demands. Our large-scale production further offers benefits to customers by reducing lead times for equipment and provides the ability to change and adapt mid-production should the customer need to modify its order. Maintaining inventory and shorter lead times helps us to support our own rental operation and more quickly react to changing customer demands and preferences. We are also able to quickly adapt our processes and procedures to enter into new markets and product offerings, such as dump trucks, roll-offs and vacuum trucks which are products that have been added over the past several years. As one of the largest consumers of vocational chassis and attachments in the United States, we have a structural cost advantage on purchasing. Our production capabilities further lower costs, while providing flexibility to pursue the highest growth portions of the market.

Attractive Long-term End-Market Dynamics.    We are a leader across a diverse set of end-markets, including electric utility T&D, telecom, rail and infrastructure, among others, many of which have attractive long-term growth dynamics. This position was established by leveraging both Custom Truck and Nesco’s expansive fleets, national sales and service network, longstanding customer relationships and operational expertise. The favorable end-market dynamics may lead to increased spend on specialty equipment by our existing customers. These end-markets are in the early years of a secular upcycle that is expected to persist for years to come. We are well positioned to benefit from this projected growth and maintain the flexibility to pivot our production and focus to any end market that is experiencing greater demand due to our deep knowledge and expertise in the production of different types of equipment.

Young, Well-Maintained Rental Fleet Comprised of In-Demand Equipment.    After giving effect to the Acquisition, our rental fleet will consist of approximately 8,800 units and will be one of the youngest in the industry, with an average age of 3.4 years as of December 31, 2020. We maintain the majority of our fleet using our own trained technicians and locations to ensure consistent repairs, best-in-class service and maintenance, and delivery of fully functioning, ready-to-work equipment to our customers. We are highly responsive, adding high-quality equipment to our fleet on an ongoing basis to meet customer demands in a changing market landscape. We focus our production capabilities on the equipment that our customers need most in the end-markets with the most growth potential. Disciplined fleet maintenance and strict focus on meeting customer and end-market requirements have resulted in over 80% utilization on average of both Custom Truck’s and Nesco’s rental fleets since the beginning of 2017.

Geographical Diversity.    We have a large geographic footprint that enables us to provide local service throughout North America. Custom Truck’s 26 locations and Nesco’s 20 locations are strategically located to provide access to key high-growth end markets and have sufficient geographic reach to provide a holistic solution to nationwide accounts. Our footprint is further expanded by over 100 third-party service locations. We maintain a 24/7 call center, as well as a large team of mobile technicians, ensuring that our customers can quickly access experienced technicians regardless of geography. Because our rental fleet is managed nationally, equipment can be deployed strategically across locations in periods of high regional demand. This allows us to maintain high utilization rates for our entire rental fleet while quickly responding to both equipment and service requests from customers. Our broad reach also represents a competitive advantage in serving customers with nationwide operations who may prefer the convenience of interacting with a limited number of equipment providers. Although we have an expansive national footprint already, we have identified additional attractive geographic markets for potential expansion.

Strong, Diverse Client Relationships and Industry Expertise.    After giving effect to the Acquisition, we will serve more than 3,000 customers, with the top 15 customers representing approximately 16% of Revenue and no single customer representing greater than 3% of Revenue, in each case during the year ended December 31, 2020. Of Custom Truck’s top 20 customers, 14 of them both rent and purchase equipment. Both Nesco and Custom Truck have very strong brand recognition among their industry-leading customers. Our ability to deliver an unmatched value proposition for our customers’ most complex and technical requirements on a tight deadline results in long-tenured relationships with premier customers across our different end-markets. We have significant tenure with our top customers, with key relationships spanning more than 15 years. Our strong knowledge of the equipment and product requirements in our customers’ end-markets allows us to work closely with our customers to determine their specialty equipment needs while our ability to offer the optionality to either rent or purchase equipment helps meet customers’ capital allocation preferences and increases customer penetration.

Attractive Unit Economics Driving High Returns.    Our integrated, “one-stop shop” business model results in both lower costs and higher equipment resale values, driving exceptional unit economics. We believe that our ability to purchase equipment components separately and assemble in-house results in a cost advantage over buying fully completed units. Additionally, our direct-to-customer sales channels drive attractive net resale values that exceed those of our competitors who typically sell used equipment through auctions.

Growth Strategy

We offer a full suite of specialty equipment services and a broad portfolio of products, which provides us with numerous channels for future growth and opportunities to deepen customer relationships. We intend to maintain our leading position and expand our market share by continuing to pursue the following strategies:

Capitalize on Favorable Trends Across a Large Addressable Market.    Because of the highly fragmented industry in which we operate, we have significant runway to increase our share of the market. We estimate the addressable market to be approximately $30 billion: $15.6 billion in new sales, $9 billion in aftermarket parts and service, and $5 billion in rental and used sales. The new sales addressable market has grown from an estimated $14.4 billion in 2016 to $15.6 billion in 2019³⁶. Our differentiated cost position, North American branch network, broad product offering and flexible distribution model position us to achieve strong growth in the future. Additionally, several end markets we serve, including electric utility T&D, telecom, infrastructure, rail and waste disposal, are expanding and spending on capital expenditures is increasing accordingly. Our production and customization capabilities will only serve to bolster our ability to meet the growing demand and changing landscapes in these end markets as we can nimbly adapt as necessary to capitalize on opportunities as they present themselves.

Invest in Rental Fleet to Meet Growing Demand.    We see continued opportunity to invest in our rental fleet to serve customer demand. We will look to drive utilization improvements via enhanced selling efforts and investments in in-demand equipment as well as drive rental penetration via continued customer education. Custom Truck’s rental fleet has grown from the original Custom Truck & Equipment (Custom Truck’s predecessor entity) rental fleet of $275 million in OEC as of December 31, 2014 to $690 million in OEC today. Nesco has similarly grown from a rental fleet of $406 million as of December 31, 2014 to $633 million in OEC today. We believe that by investing in new products and adding to our rental fleet, we can continue to satisfy the growing specialty equipment needs of our customers across end-markets. While Nesco had limited ability to invest in its fleet from 2017 – 2019 due to capital structure constraints, after giving effect to the Acquisition, we will have the resources and capital structure necessary to capture incremental demand. Lastly, a large percentage of our rental fleet is currently focused on serving the electric utility T&D and telecom industries, but we believe there is significant opportunity to continue to grow our fleet of specialty equipment tailored to serve the growing rail and infrastructure end-markets as well.

Grow Equipment Sales Across both Current and New Customers, End Markets, and Product Offerings.    Custom Truck has proven its ability to grow new equipment sales, which have increased from $216 million in 2016 to $603 million in 2020. While this has not been a significant portion of Nesco’s business model to date, we will be able to leverage our national and local sales approach to achieve growth within Nesco’s existing customer base and across existing and newly entered product categories. We have identified several new product categories that we plan to expand into, where our experience and expertise in production, customization and purchasing are expected to provide favorable returns. We will look to drive volume growth via continued equipment innovations and strategic selling initiatives. We are currently well positioned to capitalize on favorable trends across end markets, including grid updates and maintenance, build-out of renewable resources, 5G roll-out, and potential significant infrastructure spend.

Increase Penetration of Aftermarket Parts & Service.    Since its launch in 2015, Nesco’s PTA business has demonstrated significant growth, indicating the strong appeal of the product offering to Nesco’s customer base. PTA revenue as a percentage of equipment rental revenue increased from 17% in 2018, when only two locations were opened with a limited product offering at each of those locations, to 22% in 2020 (excluding Truck Utilities) after Nesco opened four full service locations and a warehouse facility and added certified test and repair services to all of its full service locations. We believe PTA revenue as a percentage of equipment rental revenue demonstrates the level of cross-sell of the PTA segment into our existing customer base and we believe there is ample opportunity to increase this percentage over time, especially with the addition of Custom Truck’s existing customer base. Nesco increased the number of PTA full-service locations and warehouses from two in 2018 to eight by the end of 2020. Each full-service location provides certified test and repair services and an expanded product offering of both insulated and non-insulated tools.

Today, Custom Truck leverages its 250 service technicians, including 70 dedicated to field service, to support its existing rental fleet and select customer-owned equipment. We see an opportunity to grow the size of the internal service organization and external service provider network to increase our ability to service customer-owned equipment as well as to extend service to Nesco’s existing fleet. Additionally, Custom Truck launched its e-commerce platform in 2020 to begin to sell proprietary Load King equipment parts and other targeted specialty equipment parts.

Continue to Pursue Domestic Geographic Expansion.    After giving effect to the Acquisition, we will operate 46 locations; however, broad sections of the United States and Canada are still outside of our primary operating area. In the past, we have expanded into new geographical markets through both strategic acquisitions and through internal growth. There is an opportunity for future expansion across the United States to support growth. Custom Truck has successfully opened five locations in geographic areas where there were no attractive acquisition targets, exemplifying the ability to expand our reach without the use of acquisitions.

In addition to organic geographic expansion, we may opportunistically pursue acquisitions to expand our product and service offering and accelerate growth.

The Transactions

The Acquisition

On December 3, 2020, Nesco Holdings, Inc., Nesco Holdings II, Inc., certain affiliates of The Blackstone Group and other direct and indirect equity holders of Custom Truck One Source, L.P., Blackstone Capital Partners VI-NQ L.P., and PE One Source Holdings, LLC entered into a Purchase and Sale Agreement, pursuant to which Nesco Holdings II, Inc. has agreed to acquire 100% of the limited partnership interests of Custom Truck and 100% of the limited liability company interests of Custom Truck’s general partner.

Upon consummation of the Acquisition, Sellers will receive a base purchase price of $1,475,000,000, subject to customary working capital adjustments, indebtedness and transaction expenses of Custom Truck as of Closing, as well as an adjustment on the basis of the target original equipment cost of the rental fleet inventory owned by Custom Truck as of the Closing Date, if any.

We expect that the purchase price for the Acquisition will be financed through:

For a detailed discussion of the expected sources and uses of funds for the Transaction, see “Use of Proceeds,” “Capitalization,” “Certain Relationships and Related Transactions,” “Description of Other Indebtedness” and “Description of Notes.”

The closing of the Acquisition is subject to customary closing conditions, including, among others, (a) the absence of laws or orders restraining, enjoining or otherwise prohibiting the consummation of the Acquisition, (b) the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), (c) the completion of pre-closing reorganization transactions involving Custom Truck and certain of its affiliates, (d) the execution of joinders to the Purchase Agreement by each Seller who did not initially execute the Purchase Agreement, (e) the receipt of required consents or waivers, or the refinancing, of certain Floorplan Financing Agreements of Custom Truck and its subsidiaries, (f) the completion of the financing transactions related to the Acquisition, (g) the shares to be issued to certain Sellers who have entered into Rollover Agreements with Nesco being approved for listing on the New York Stock Exchange, subject only to official notice of issuance thereof, (h) the accuracy of the parties’ representations and warranties in the Purchase Agreement (subject to certain de minimis, materiality and material adverse effect qualifications), (i) the compliance in all material respects by the

parties under the Purchase Agreement with the applicable covenants and agreements therein, and (j) the absence of any material adverse effect on Nesco and its subsidiaries or Custom Truck and its subsidiaries, in each case, taken as a whole.

The Acquisition Agreement contains certain termination rights for Nesco and Custom Truck, including the right to terminate if the Acquisition has not been consummated by June 30, 2021.

The Purchase Agreement includes representations and warranties and covenants of a customary nature for a transaction similar to the Acquisition. In addition, certain Sellers will be bound by two-year employee and business relation non-solicit obligations and three-year non-competition obligations. Sellers have agreed to indemnify Nesco and Buyer for losses arising out of the breach of Sellers’ pre-closing covenants in the Purchase Agreement and certain indemnified tax matters, with recourse limited to a $10 million and $8.5 million escrow account, respectively.

New ABL Credit Agreement

On or prior to the closing of the Acquisition, we expect to enter into the New ABL Credit Agreement. The New ABL Credit Agreement provides for the New ABL Facility providing for up to $750.0 million in borrowings, subject to a borrowing base, $400.0 of which is available to be drawn upon closing of the Acquisition.

Equity Investment

On December 3, 2020, Nesco entered into the Investment Agreement with Platinum in respect of the Subscription, relating to the issuance and sale to Platinum of (i) Common Stock, for an aggregate purchase price in the range of $700 million to $763 million, with the specific amount to be calculated in accordance with the Investment Agreement based upon the total equity funding required to fund the consideration to be paid pursuant to the terms of the Purchase Agreement, and (ii) additional shares of common stock for an aggregate purchase price of not more than $100 million, if necessary, in connection with the Supplemental Equity Financing. The shares of common stock issued and sold to Platinum will have a purchase price of $5.00 per share. Nesco has also entered into subscription agreements in respect of the Supplemental Equity Financing. Both the Subscription and the Supplemental Equity Financing are subject to customary closing conditions.

Sources and Uses

The following table summarizes the estimated sources and uses of funds in connection with the Transaction, assuming the Transaction occurred on December 31, 2020. The actual amounts set forth in the table and in the accompanying footnotes are subject to adjustment and may differ at the time of the consummation of the Transaction depending on several factors, including changes in our working capital and capital expenditures and differences from our estimation of fees and expenses. You should read the following together with “The Transaction” and “Unaudited Pro Forma Combined Financial Information.”

Corporate Information

Nesco’s principal executive offices are located at 6714 Pointe Inverness Way, Suite 220, Fort Wayne, Indiana 46804, its telephone number is (260) 824-6340, and website is www.nescorentals.com. Information on, or accessible through, the website is not part of this offering memorandum, nor is such content incorporated by reference herein.

Platinum

Founded in 1995 by Tom Gores, Platinum is a global investment firm with approximately $23 billion of assets under management and a portfolio of approximately 40 operating companies representing over $25 billion in revenue that serve customers around the world. The firm is currently investing from Platinum Equity Capital Partners V, a $10 billion global buyout fund, and Platinum Equity Small Cap Fund, a $1.5 billion buyout fund focused on investment opportunities in the lower middle market. Platinum specializes in mergers, acquisitions and operations — a trademarked strategy it calls M&A&O^® — acquiring and operating companies in a broad range of business markets, including manufacturing, distribution, transportation and logistics, equipment rental, metals services, media and entertainment, technology, telecommunications and other industries. Over the past 26 years, Platinum has completed more than 300 acquisitions.

Summary Historical, unaudited pro forma and other Financial Information

Nesco’s consolidated balance sheet data as of December 31, 2020, December 31, 2019 and December 31, 2018 and statement of operations and cash flow data for each of the three years in the period ended December 31, 2020 is derived from Nesco’s audited consolidated financial statements, included elsewhere in this offering memorandum.

Custom Truck’s consolidated balance sheet data as of December 31, 2020, December 31, 2019 and December 31, 2018 and statement of operations and cash flow data for each of the three years in the period ended December 31, 2020 is derived from Custom Truck’s audited consolidated financial statements, included elsewhere in this offering memorandum.

The following tables also present summary unaudited pro forma condensed combined financial information about the financial condition and results of operations of the combined company after giving effect to the Acquisition and related transactions as described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The summary unaudited pro forma condensed combined balance sheet data as of December 31, 2020 give effect to the Acquisition and related transactions as if they occurred on December 31, 2020. The summary unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2020 give effect to the Transaction as if it occurred on January 1, 2020, the first day of Nesco’s 2020 fiscal year.

The summary pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information of the combined company appearing elsewhere in this offering memorandum and the accompanying notes to the pro forma financial information. Additionally, the unaudited pro forma condensed combined financial information contains estimated adjustments, based upon available information and certain assumptions that we believe are reasonable under the circumstances. The assumptions underlying the pro forma adjustments are described in greater detail in the section entitled “Notes to Unaudited Pro Forma Condensed Combined Financial Information.” In addition, the pro forma financial information was based on, and should be read in conjunction with, the historical consolidated financial statements and related notes of Nesco and Custom Truck for the applicable periods, which have been included in this offering memorandum. See the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” for additional information. The pro forma financial information below and elsewhere in this offering memorandum are not indicative of the future performance of the combined company.

The information presented below is only a summary and should be read in conjunction with each of Nesco’s and Custom Truck’s consolidated financial statements and related notes, “Nesco’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Custom Truck’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Non-GAAP Financial Measures,” “Risk Factors,” “The Transaction,” “Use of Proceeds,” “Capitalization,” “Unaudited Pro Forma Condensed Combined Financial Information” and “Cautionary Note Regarding Forward-Looking Statements” contained elsewhere herein. The historical results included below and elsewhere in this offering memorandum are not indicative of the future performance of Nesco or Custom Truck. All amounts are in US dollars.

Nesco

The information presented below is that of Nesco Holdings, Inc., the indirect parent of the Issuer. The only assets of Nesco Holdings, Inc. are equity interests in Capitol Intermediate Holdings, LLC.

Nesco and Custom Truck define Adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization, equity-based compensation, and other items that Nesco and Custom Truck do not view as indicative of ongoing performance. Custom Truck’s Adjusted EBITDA also reflects operating results as though all rental contracts with customers were accounted for as operating leases rather than sales-type leases, as Custom Truck believes this better reflects the cash flows of these contracts, and excludes additional expense determined to be non-recurring or non-core as permitted for under Custom Truck’s credit agreements. Additionally, Nesco’s and Custom Truck’s Adjusted EBITDA includes an adjustment to exclude the effects of purchase accounting adjustments when calculating the cost of used equipment sold. When equipment is purchased in connection with a business combination, the equipment is revalued to its then current fair value for accounting purposes. The consideration transferred (i.e., the purchase price) in a business combination is allocated to the fair value of equipment as of the acquisition date, with depreciation recorded thereafter following applicable accounting policies; however, this may not be indicative of the actual cost to acquire new equipment that is added to the rental fleets apart from a business acquisition. Additionally, the pricing of rental contracts and equipment sales prices for equipment is based upon original equipment cost (or, “OEC”), and Nesco and Custom Truck measure a rate of return from rentals and sales using OEC. As indicated above, the agreements governing each of Nesco’s and Custom Truck’s indebtedness define this adjustment to EBITDA, as such, and it is believed this metric is a better indication of each company’s true cost of equipment sales due to the removal of the purchase accounting adjustments.

The tables below present a reconciliation of Adjusted EBITDA to net income, Nesco’s most directly comparable financial measure calculated and presented in accordance with GAAP. All adjustments included in the table below are permitted under the credit agreements of Nesco and, accordingly, have been provided to the lenders as part of Nesco’s quarterly reporting requirements.

Nesco:    Represents the non-cash impact of purchase accounting, net of accumulated depreciation, on the cost of equipment sold. The equipment acquired received a purchase step-up in basis, which is a non-cash adjustment to the equipment cost pursuant to our credit agreement.

Custom Truck (for purposes of the Pro Forma year ended December 31, 2020 period only):    Reclassified from historical Custom Truck “Legacy entity/purchase accounting” adjustment. In accordance with the Custom Truck Credit Agreement, Custom Truck has historically adjusted for the impact of purchase accounting on sales of rental equipment obtained in conjunction with the 2015 acquisitions through which Custom Truck was formed. This adjustment also includes certain charges incurred by Custom Truck related to conditions or events that existed prior to the 2015 acquisitions, including, but not limited to, settlement of liabilities relating to the pre-acquisition period and subsequent write-downs or impairments of receivables and inventory obtained through the 2015 acquisitions.

Nesco: Represents transaction costs related to Nesco’s acquisition of Truck Utilities (which includes post-acquisition integration expenses incurred during the year ended December 31, 2020 and transaction expenses related to the pending acquisition of Custom Truck; 2019: Represents transaction expenses related to merger activities associated with the transaction with Capitol that was consummated on July 31, 2019. These expenses are comprised of professional consultancy, legal, tax and accounting fees. Also included are costs of startup activities (which include training, travel, and process setup costs) associated with the rollout of new PTA locations that occurred throughout the prior year into the current period. Finally, the expenses associated with the closure of operations in Mexico, which closure activities commenced in the third quarter of 2019, are included for the twelve month period periods ended December 31, 2020 and 2019. Pursuant to Nesco’s credit agreement, the cost of undertakings to affect such cost savings, operating expense reductions and other synergies, as well as any expenses incurred in connection with acquisitions, are amounts to be included in the calculation of Adjusted EBITDA.

Custom Truck (for purposes of the Pro Forma year ended December 31, 2020 period only):    Reclassified from historical Custom Truck “New site/product development.” This adjustment reflects the costs incurred to launch new branch locations or products. New product development has not been a core business activity for Custom Truck, as its primary business activities generally include renting, selling, assembling, upfitting, and servicing new and used heavy-duty trucks and cranes, as well as the sale of related parts. Reclassified from historical Custom Truck “Consulting and transaction fees.” This adjustment includes consulting fees and other costs related to the implementation of a new ERP system, business combinations, and the contemplated sale of Custom Truck in 2020.

Custom Truck (for purposes of the Pro Forma year ended December 31, 2020 period only):    In accordance with the Custom Truck Credit Agreement, Custom Truck has historically adjusted for the impact of sales-type lease accounting for certain leases containing rental purchase options (“RPOs”), as the application of sales-type lease accounting was not deemed to be representative of the ongoing cash flows of the underlying rental contracts.

Nesco:    Represents the undepreciated cost of replaced vehicle chassis and components from heavy maintenance, repair and overhaul activities associated with our fleet, which is an adjustment pursuant to our credit agreement.

Nesco:    Represents non-cash stock compensation expense associated with the issuance of stock options and restricted stock units.

Custom Truck (for purposes of the Pro Forma year ended December 31, 2020 period only):    Adjustment represents the non-cash equity-based compensation expense related to Custom Truck’s Class B interests.

Nesco.    Represents charges incurred in 2018 for the early termination of fleet equipment leases.

Custom Truck (for purposes of the Pro Forma year ended December 31, 2020 period only):    Reclassified from historical Custom Truck “Tax-related matters.” This adjustment represents the favorable and unfavorable impacts of specific audits related to Custom Truck’s withholding of state-specific sales, motor vehicle, and rental-related taxes. These items are deemed to be non-recurring in nature due to the fact that these taxes would ordinarily be passed-through to our customers, and, where applicable, Custom Truck has adjusted its withholding percentages to comply with the relevant audit findings. Reclassified from historical Custom Truck “Other adjustments.” Represents miscellaneous non-recurring gains or losses, as permitted under our credit agreement. Adjustments running through this item include, but are not limited to severance, cleaning and other charges related to COVID-19; costs specific to certain non-routine transactions, such as debt refinancings; miscellaneous gains on the sale of non-rental property and equipment; gains and losses on the extinguishment of debt; sponsor management fees; and other individually immaterial charges as reported under the Custom Truck Credit Agreement.

Nesco. Represents the charge to earnings for Nesco’s interest rate collar (which is an undesignated hedge).

Custom Truck

Custom Truck defines Adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization, equity-based compensation, and other items that Custom Truck does not view as indicative of ongoing performance. Custom Truck’s Adjusted EBITDA also reflects operating results as though all rental contracts with customers were accounted for as operating leases rather than sales-type leases, as Custom Truck believes this better reflects the cash flows of these contracts, and excludes additional expense determined to be non-recurring or non-core as permitted for under Custom Truck’s credit agreements. Additionally, Custom Truck’s Adjusted EBITDA includes an adjustment to exclude the effects of purchase accounting adjustments when calculating the cost of used equipment sold. When equipment is purchased in connection with a business combination, the equipment is revalued to its then current fair value for accounting purposes. The consideration transferred (i.e., the purchase price) in a business combination is allocated to the fair value of equipment as of the acquisition date, with depreciation recorded thereafter following applicable accounting policies; however, this may not be indicative of the actual cost to acquire new equipment that is added to the rental fleets apart from a business acquisition. Additionally, the pricing of rental contracts and equipment sales prices for equipment is based upon original equipment cost (or, “OEC”), and

Custom Truck measures a rate of return from rentals and sales using OEC. As indicated above, the agreements governing Custom Truck’s indebtedness define this adjustment to EBITDA, as such, and it is believed this metric is a better indication of its true cost of equipment sales due to the removal of the purchase accounting adjustments.

The tables below present a reconciliation of Adjusted EBITDA to net income, Custom Truck’s most directly comparable financial measure calculated and presented in accordance with GAAP. All adjustments included in the table below are permitted under the credit agreements of Custom Truck and, accordingly, have been provided to the lenders as part of its quarterly reporting requirements.

Unaudited Pro Forma Condensed Combined Financial Information

On December 3, 2020, the parties thereto entered into the Purchase Agreement, dated December 3, 2020, pursuant to which Nesco has agreed to acquire 100% of the partnership interests of Custom Truck. Upon consummation of the Acquisition, Sellers will receive a base purchase price of $1.475 billion, subject to customary adjustments in respect of the cash, indebtedness and transaction expenses of Custom Truck as of the Closing, as well as an adjustment on the basis of the original equipment cost of the rental fleet inventory owned by Custom Truck as of the Closing Date. In connection with the Acquisition, Nesco and certain Sellers entered into Rollover Agreements, pursuant to which such Sellers agreed to contribute a portion of their equity interests in Custom Truck in exchange for 20,000,000 shares of Nesco’s common stock. The contributions of equity interests in exchange for shares of common stock contemplated by the Rollover Agreements will be consummated immediately prior to the Closing Date.

On December 3, 2020, Nesco also entered into the Investment Agreement with Platinum. Pursuant to the terms of the Investment Agreement, Nesco will issue and sell shares of its common stock to Platinum for an aggregate purchase price in the range of $700 million to $763 million based upon the total equity funding required to fund the consideration to be paid pursuant to the terms of the Purchase Agreement. Nesco has also agreed to use its reasonable best efforts to sell shares of its common stock in a private placement, a registered public offering, and/or a rights offering to its stockholders, in each case for the aggregate amount of up to $200 million. If necessary as a backstop to the Supplemental Equity Financing, Nesco will issue and sell additional shares of common stock to Platinum for an aggregate purchase price of not more than $100 million. For the purpose of the unaudited pro forma condensed combined financial information, the total Subscription from Platinum is estimated to be $742 million and the Supplemental Equity Financing is estimated to be $140 million, both at a price of $5.00 per share. The proceeds from the Subscription and the Supplemental Equity Financing will be used to pay a portion of the purchase price in the Acquisition and other fees and expenses. To the extent the proceeds of the Subscription, the Supplemental Equity Financing and the Debt Financing exceed the amount required to pay the purchase price, fees and expenses related to the Transaction and indebtedness required to be discharged in connection therewith, the amount of any Debt Financing will be correspondingly reduced.

In connection with entering into the Purchase Agreement, Nesco and Platinum entered into the Debt Commitment Letter pursuant to which the Commitment Parties have agreed to provide a portion of the financing necessary to fund the consideration to be paid pursuant to the terms of the Purchase Agreement. The Debt Financing is anticipated to consist of the following: (i) an asset-based revolving credit facility in an aggregate principal amount of up to $750 million, $400 million of which shall be available on the closing date to finance the purchase price or, when determined, for working capital adjustments payable under the Purchase Agreement (the “New ABL Facility”); and (ii) an issuance of senior secured notes (the “notes”) yielding $1.0 billion in gross cash proceeds and/or to the extent that the issuance of the notes yields less than $1.0 billion in gross cash proceeds or such cash proceeds are otherwise unavailable to consummate the Acquisition, loans under a senior secured bridge facility yielding up to $1.0 billion in gross cash proceeds (less the gross cash proceeds received from the notes and available for use, if any). For purposes of the unaudited pro forma condensed combined financial information, the amount estimated to be incurred under the notes at close of the Transaction is $920 million.

The unaudited pro forma condensed combined financial information presented herein gives effect to the following transactions:

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Nesco and Custom Truck described below. In preparing the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020, certain reclassifications were made to conform the historical reported financial information of Custom Truck to the reporting presentation of Nesco.

The unaudited pro forma condensed combined balance sheet as of December 31, 2020 and unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 is based on, derived from, and should be read in conjunction with, Nesco’s historical audited consolidated financial statements included elsewhere in this offering memorandum. The aforementioned unaudited pro forma financial information is also based on and derived from Custom Truck’s historical audited consolidated financial statements for the year ended December 31, 2020 and should be read in conjunction with Custom Truck’s historical audited consolidated financial statements included elsewhere in this offering memorandum.

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 assumes that the Transaction occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet as of December 31, 2020 assumes that the Transaction occurred on December 31, 2020. The historical financial statements of Nesco and Custom Truck have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma events that are transaction accounting adjustments which are necessary to account for the Acquisition and related to the financing of the Acquisition, in accordance with U.S. GAAP.

The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and does not purport to represent or be indicative of the combined financial position or results of operations that would have been realized had the transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations of the combined company. In addition, the unaudited pro forma condensed combined financial information does not reflect the costs of any integration activities or benefits that may result from the realization of future cost savings from operating efficiencies, or any other synergies that may result from the Transaction.

Nesco Holdings, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2020

See accompanying notes to unaudited pro forma condensed combined financial information.

Nesco Holdings, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2020

See accompanying notes to unaudited pro forma condensed combined financial information.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1. Basis of Pro Forma Presentation

The accompanying unaudited pro forma condensed combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X, “Pro Forma Financial Information,” as amended by the SEC’s Final Rule Release No. 33-10786, “Amendments to Financial Disclosures About Acquired and Disposed Businesses,” as adopted by the SEC on May 21, 2020 (“Article 11”). The amended Article 11 was effective on January 1, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 combine the historical consolidated statements of operations of Nesco and Custom Truck, giving effect to the transactions as if they had been completed on January 1, 2020. The unaudited pro forma condensed combined balance sheet as of December 31, 2020 combines the historical consolidated balance sheets of Nesco and Custom Truck, giving effect to the transactions as if they had been completed on December 31, 2020.

Nesco’s and Custom Truck’s historical financial statements were prepared in accordance with U.S. GAAP, presented in U.S. dollars, and there were no material intercompany transactions and balances between Nesco and Custom Truck as of and for the year ended December 31, 2020. As discussed in Note 3, certain reclassifications were made to align Nesco’s and Custom Truck’s financial statement presentation. Nesco has not identified all adjustments necessary to conform Custom Truck’s accounting policies to Nesco’s accounting policies. Upon completion of the transactions, or as more information becomes available, Nesco will complete a more detailed review of Custom Truck’s accounting policies. As a result of that review, further differences could be identified between the accounting policies of the two companies.

The accompanying unaudited pro forma condensed combined financial statements and related notes were prepared using the acquisition method of accounting under the provisions of ASC 805, with Nesco as the accounting acquirer of Custom Truck. In identifying Nesco as the accounting acquirer, management considered the structure of the transaction and other actions contemplated by the Purchase Agreement, including the composition of purchase consideration that will be issued to the selling equity holders of Custom Truck (consisting of cash from Nesco and Nesco common stock). Nesco also considered the relative outstanding share ownership and the composition of the combined company board of directors following completion of the Acquisition. ASC 805 requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. For purposes of the unaudited pro forma condensed combined balance sheet, the estimated purchase consideration has been allocated to the assets acquired and liabilities assumed of Custom Truck based upon management’s preliminary estimate of their fair values as of December 31, 2020. Nesco has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair value of the Custom Truck’s assets to be acquired or liabilities assumed, other than a preliminary estimate for inventory, rental equipment and certain intangible assets. Accordingly, apart from these assets, Custom Truck’s assets and liabilities are presented at their respective carrying amounts and should be treated as preliminary values. Any differences between the fair value of the consideration transferred and the fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Accordingly, the purchase price allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair values.

All amounts presented within these notes to the unaudited pro forma condensed combined financial information are in thousands, except share and per share data.

2. The Acquisition

On December 3, 2020, the parties entered into the Purchase and Sale Agreement, pursuant to which Nesco’s wholly owned subsidiary, Nesco Holdings II, Inc., has agreed to acquire 100% of the partnership interests of Custom Truck. The estimated cash consideration presented herein may be adjusted for customary adjustments in respect of the cash, indebtedness, net working capital, and transaction expenses of Custom Truck as of the closing of the Acquisition, as well as an adjustment on the basis of the original equipment cost of the rental fleet inventory owned by Custom Truck as of the Closing Date. These adjustments, if any, will affect the preliminary estimated total acquisition consideration presented herein.

Estimated total acquisition consideration

The following table presents a reconciliation from the “base purchase price,” as defined in the Purchase Agreement, which is based on a $5.00 per share value of Nesco’s common stock, to the estimated value of the equity consideration to be issued, which is based upon the $8.49 per share closing Nesco common stock price as of March 11, 2021:

Preliminary purchase price allocation

The estimated total acquisition consideration as shown above is allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. As mentioned in Note 1, Nesco has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair value of the Custom Truck’s assets to be acquired or liabilities assumed, other than a preliminary estimate for inventory, rental equipment and certain intangible assets. Such fair values are based on currently available information and certain assumptions that Nesco believes are reasonable. The estimates and underlying assumptions will be revised as additional information becomes available and those changes could be significant. Accordingly, certain assets acquired and liabilities assumed are presented at their respective carrying amounts as of December 31, 2020, and should be treated as preliminary values. The final determination of these estimated fair values, the assets’ useful lives and the amortization methods are subject to completion of an ongoing assessment and will be available as soon as practicable but no later than one year after the consummation of the Acquisition.

The following table summarizes the preliminary purchase price allocation, as if the Acquisition had been completed on December 31, 2020:

3. Accounting Policies and Reclassifications

During the preparation of this unaudited pro forma condensed combined financial information, Nesco performed a preliminary assessment of Custom Truck’s financial information to identify differences in accounting policies as compared to those of Nesco and differences in financial statement presentation as compared to the presentation of Nesco. At the time of preparing this unaudited pro forma condensed combined financial information, Nesco has not identified all adjustments necessary to conform Custom Truck’s accounting policies to Nesco’s accounting policies. Following the Acquisition, the combined company will finalize the review of accounting policies, which could be materially different from the amounts set forth in the unaudited pro forma condensed combined financial information presented herein.

Refer to the table below for a summary of adjustments made to present Custom Truck’s balance sheet as of December 31, 2020 to conform with that of Nesco:

Refer to the table below for a summary of adjustments made to present Custom Truck’s statement of operations for the year ended December 31, 2020 to conform with that of Nesco:

4. Transaction Accounting Adjustments - Financing

The following summarizes the pro forma adjustments related to the Financing. Proceeds from the Financing will be used to (1) repay borrowings outstanding under the 2019 Credit Facility, (2) repay the Existing Secured Notes, (3) purchase the partnership interests of Custom Truck in connection with the Acquisition, and (4) repay certain borrowings of Custom Truck’s outstanding debt upon consummation of the Acquisition. The Transaction Accounting Adjustments related to the Acquisition, including repayment of Custom Truck’s existing borrowings, are presented in Note 5, Transaction Accounting Adjustments - Acquisition.

Nesco has assumed the repayment of the 2019 Credit Facility and the Existing Secured Notes will be accounted for as a debt extinguishment. This presentation is preliminary and subject to change as additional information becomes available to finalize the accounting treatment.

A 2.0% interest rate was used in calculating the pro forma adjustments under the New ABL Facility, which was derived from an assumed LIBOR rate as of March 11, 2021 of 0.2% plus a margin of 1.8%. An 8.0% interest rate was used in calculating the pro forma adjustments under the notes. The following table presents a sensitivity analysis with a 12.5 basis point change on variable interest expense for the year ended December 31, 2020.

5. Transaction Accounting Adjustments — Acquisition

The following summarizes the Transaction Accounting Adjustments to give effect as if the Acquisition had been completed on December 31, 2020 for the purposes of the pro forma condensed combined balance sheet:

The fair value estimates for identifiable intangible assets are preliminary and are based upon assumptions that market participants would use in pricing an asset. The fair value of the customer relationships intangible asset was valued using a multi-period excess earnings method, a form of the income approach, which incorporates the estimated

future cash flows to be generated from Custom Truck’s existing customer base. The Custom Truck trade name was valued using the relief from royalty method, which considers both the market approach and the income approach. The calculated value is preliminary and subject to change, and could vary materially from the final purchase allocation.

The following summarizes the Transaction Accounting Adjustments to give effect as if the Acquisition had been completed on January 1, 2020 for the purposes of the pro forma condensed combined statements of operations:

Amortization expense related to customer relationships has been calculated on a preliminary basis using a straight-line method over the midpoint of a nine to twelve year estimated useful life. Trade names are an indefinite life intangible asset and are not amortized. Amortization expense relating to software and product designs have been calculated on a preliminary basis using a straight-line method over a weighted average useful life of seven years.

6. Pro Forma Earnings (Loss) Per Share

Pro forma earnings (loss) per common share for the year ended December 31, 2020, has been calculated based on the estimated weighted average number of common shares outstanding on a pro forma basis, as described below. The pro forma weighted average number of common shares outstanding has been calculated as if the shares issued in the transactions had been issued and outstanding on January 1, 2020.

The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding for the year ended December 31, 2020:

Nesco’s historical consolidated statement of operations for the year ended December 31, 2020 was in a net loss position, thus Nesco’s stock options, stock awards and outstanding warrants were excluded from the computation of diluted earnings (loss) per share because their effect would have been anti-dilutive. There is no adjustment for the dilutive impact of stock options, stock awards and outstanding warrants in the pro forma condensed combined financial statements due to the combined results being in a net loss position.

Custom Truck’s Management’s Discussion and Analysis of
Financial Condition and Results of Operations⁴⁶

Throughout this section, unless otherwise noted, references to “we,” “us,” “our” and “Custom Truck” refer to Custom Truck One Source, L.P. and its consolidated subsidiaries. The following discussion contains forward-looking statements and analysis should be read in conjunction with the financial statements and related notes of Custom Truck included elsewhere in this offering memorandum. Actual results could differ materially from such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact our future operating performance or financial condition, see the section herein entitled “Cautionary Note Regarding Forward-Looking Statements” and the section entitled “Risk Factors.”

Overview

Custom Truck is a leading provider of specialty equipment, primarily serving the electric utility T&D, rail and other infrastructure-related end-markets in North America. Its equipment is used for the maintenance, repair, upgrade, and installation of critical infrastructure. Custom Truck operates with a differentiated “one-stop-shop” business model, offering equipment rental, new and used equipment sales, and aftermarket parts and service out of 26 locations across the U.S. and Canada. Custom Truck and its customers also benefit from its sophisticated sourcing model and large-scale integrated production and customization capabilities, which enhance the quality and diversity of its equipment offerings and reduce both cost and lead times for equipment sales and provide greater flexibility to optimize its rental fleet. These attributes, together with a strong reputation built over many years, position Custom Truck to capitalize on attractive secular growth trends across its end-markets.

COVID-19 Impact and Response

Custom Truck was negatively impacted by the COVID-19 pandemic during the year ended December 31, 2020. We experienced declines in revenue across all revenue streams except used sales, particularly during the second and third quarters. Our operations were also impacted, necessitating temporary closures of several facilities. Customer demand started to recover in the third quarter and, as of December 2020, key metrics of the business, such as OEC on rent and fleet utilization, had recovered to pre-COVID-19 levels. While recent performance has been strong, we remain cautious due to the uncertainty caused by the continuing impact of COVID-19.

Custom Truck serves critical infrastructure sectors that have been identified by CISA as vital to the U.S. Accordingly, we have continued to meet the needs of our customers during the pandemic. Custom Truck has designed and continues to adhere to safety protocols to maintain the health and safety of our employees and their families, as well as our customers, vendors and communities. These protocols, along with guidance from state and local authorities, have allowed Custom Truck to continue its operations with minimal disruptions.

Starting in March, we saw a decline in demand from customers as planned projects were delayed in response to the shelter-in-place restrictions implemented across the country. This led to a decline in OEC on rent and a reduction in demand for new equipment sales. This trend began to reverse starting in the third quarter. Electric T&D customers continue to have large backlogs of projects that must be undertaken to maintain an aged grid, to reduce fire hazards, to ensure the uninterrupted supply of electricity and to meet growing electricity demands tied to increased household usages and vehicle electrification. We have experienced relative stability in the rail and telecom sectors. Telecom end-customers have announced intentions to continue to invest in 5G infrastructure and additional network enhancements designed to address deficiencies that became apparent with increased traffic during pandemic stay-at-home orders.

The unprecedented nature of the COVID-19 pandemic continues to make it difficult to predict our future business and financial performance. However, our customers continue to reiterate record or near-record backlogs and capital investment plans. We are not aware of any significant project cancellations by our customers during the pandemic at this time. Customer projects that were impacted were merely delayed and many have now been rescheduled. Following the project delays from March to August, we are now experiencing an increase in demand as our customers work to fulfill backlogs and have become more adept at working safely within the pandemic environment.

At the onset of the pandemic, our focus was on delivering upon the needs of our customers, protecting the health and safety of our employees, managing costs and cash flows, and preparing for a future recovery. We reduced our capital spending and undertook cost reduction efforts, including limited headcount reductions. While working capital improvement initiatives were already identified as a key priority by Custom Truck, additional focus was paid to managing receivables and payables. While rental revenue did decline, we did not defer repair and maintenance activities which resulted in higher costs and lower margins.

Financial Overview

Custom Truck uses a variety of financial and other information in monitoring the financial condition and operating performance of its business. Some of this information is financial information that is prepared in accordance with GAAP, while other information may be financial in nature and may not be prepared in accordance with GAAP. Historical information is periodically compared to budgets, as well as against industry-wide information. Custom Truck uses this information for planning and monitoring its business.

Custom Truck evaluates its overall business performance based primarily on a combination of two financial metrics: Revenue and Adjusted EBITDA. These are key measures used by Custom Truck’s management and board of directors to understand and evaluate Custom Truck’s operational performance, to establish budget and to develop short and long-term operational goals. Management also utilizes certain non-financial metrics in evaluating performance of our rental fleet, including OEC on rent, fleet utilization, and OEC on rent yield.

Measures Related to our Fleet

OEC on Rent — OEC on rent is the OEC of units on rent to third party customers at a given point in time. Average OEC on rent is calculated as the simple average of OEC on rent during the stated period of time. OEC represents the original equipment cost exclusive of the effect of purchase accounting adjustments applied to rental equipment acquired in business combinations and any rental equipment held for sale. Evaluation of our rate of return from rental is based on OEC. OEC is a widely used industry metric to compare fleet investment independent of depreciation.

Fleet Utilization — Fleet Utilization is defined as the total numbers of days the rental equipment was rented during a specified period of time divided by the total number of days available during the same period and weighted based on OEC. Utilization is a measure of fleet efficiency expressed as a percentage of time the fleet is on rent and is considered to be an important indicator of the revenue generating capacity of the fleet.

OEC on Rent Yield — OEC on rent yield (“ORY”) is a measure of return realized by our on rental fleet during a 12-month period. ORY is calculated as rental revenue (excluding freight recovery and ancillary fees) during the stated period divided by the average OEC on rent for the same period. For period less than 12 months, the ORY is adjusted to an annualized basis.

Adjusted EBITDA

Custom Truck views Adjusted EBITDA, which is a non-GAAP financial measure, as an important indicator of performance. Custom Truck defines Adjusted EBITDA as net income before non-Floorplan Financing Agreements interest expense, income taxes, depreciation and amortization. Adjusted EBITDA also reflects adjustments related to equity-based compensation, costs related to acquisitions and divestitures, new location development costs, and other items specifically identified in our credit agreements. Adjusted EBITDA has been a primary metric in determining payouts under the annual incentive plans. For more information on Adjusted EBITDA as well as a reconciliation to the most directly comparable GAAP measure, please see “Non-GAAP Financial Measures.”

Components & Factors Affecting Custom Truck’s Operating Results

Revenue.    As a full-service equipment provider, Custom Truck generates revenue through renting, selling, assembling, upfitting, and servicing new and used heavy-duty trucks and cranes, as well as the sale of related parts. Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers. New and used sales revenue reflects the value of vocational trucks and other equipment sold to customers. Parts and service revenue is derived from maintenance and repair services, light upfit services, and parts sold directly to customers.

Cost of Revenues.    Cost of revenues reflects production and inventory costs associated with new and used units sold, repairs and maintenance costs of rental equipment, depreciation on rental assets, parts costs, labor and other overheads related to parts and services business, and freight associated with the shipping and receiving of equipment and parts.

Selling, General and Administrative.    Selling, general and administrative expenses include sales compensation, fleet licensing fees and corporate expenses, including salaries, insurance, advertising costs, professional services, and information technology costs.

Depreciation and Amortization.    Depreciation and amortization expenses include depreciation on property and equipment, and amortization of intangible assets such as customer list, trade names, etc.

Other Income, net.    Other income or expense reflects the fees earned on customer arranged financing, financing income associated with sales-type lease activity, gains or losses resulting from insurance settlements, foreign currency gains and losses related to our Canadian operations, and other miscellaneous gains or losses from non-operating activities.

Interest Expense.    Interest expense consists of contractual interest expense on outstanding debt obligations, Floorplan Financing Agreements, amortization of deferred financing costs and other related financing expenses.

Operating Results — Years Ended December 31, 2020, 2019 and 2018

Consolidated Operating Results — Years Ended December 31, 2020, 2019 and 2018