What changed in this filing

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Item 1A. Risk Factors

2022-03-31 compared with 2021-03-18 · 52 added, 29 removed, 219 unchanged (27% of the section changed)

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disruptions in our supply chain as a result of shutdowns or other operating limitations placed on manufacturers and transporters;

increased logistics and operating costs associated with addressing the safety of our employees and customers;

increased logistics costs, increased operating costs associated with addressing the safety of our employees and customers;

the impact of the pandemic on the Company’s customers;

and potential disruptions in the global capital markets which could impact the Company’s ability to obtain funding in the future.

timing of the post-COVID-19 economic recovery remains unclear, a return to Q2 2020 operating limitations associated with the COVID-19 pandemic could materially and adversely impact our business, results of operations and/or financial condition.

A return to second quarter 2020 operating limitations associated with the COVID-19 pandemic could materially and adversely impact our business, results of operations and/or financial condition.

Risks Related to the Company’s Business and Industry

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The Company’s equipment is principally used in connection with construction and material handling activities.

Consequently, a downturn in construction or material handling activities, or the economy in general, may lead to a decrease in the demand for equipment and services or depress rental rates and the sales prices for the Company’s equipment.

The Company’s business may also be negatively impacted, either temporarily or long-term, by:

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adverse changes in federal, state and local government infrastructure spending;

our inability to pass along to customers operating cost increases related to inflation;

an increase in the cost of construction materials;

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terrorism or hostilities involving the United States;

failure to execute on strategic plans associated with commercial electric vehicle business model;

the ongoing impact of the global COVID-19 pandemic;

disruptions to global supply chains, specifically our major OEM partner supply chains

The Company’s inability to forecast trends accurately may adversely impact the Company’s business and financial condition.

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changes in interest rates and related changes in the Company’s interest expense and the Company’s debt service obligations;

changes or fluctuations in skilled technician headcount levels;

the effectiveness of integrating acquired businesses and new start-up locations;

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The Company is subject to competition, which may have a material adverse effect on the Company’s business by reducing the Company’s ability to increase or maintain revenues or profitability.

The equipment rental and retail distribution industries are highly competitive, and the equipment rental industry is highly fragmented.

The equipment dealership and rental industries are highly competitive and fragmented.

Many of the markets in which the Company operates are served by a large number of competitors, ranging from national and multi-regional equipment rental companies to small, independent businesses with a limited number of locations.

Some of the Company’s competitors have significantly greater financial, marketing and other resources than the Company does, and may be able to reduce rental rates or sales prices.

Some of the Company’s competitors have significantly greater financial, marketing and other resources than the Company does, and may be able to reduce rental rates or sales prices in the market, which could negatively impact our business.

The Company may encounter increased competition from existing competitors or new market entrants in the future, which could have a material adverse effect on the Company’s business, financial condition, and results of operations.

The Company is subject to the ability of our OEMs to deliver cost competitive equipment and parts timely.

To the extent the cost of our OEMs equipment is not competitive versus our competition’s equipment, the Company could suffer lost sales and market share over time.

This loss of market share would ultimately reduce our serviceable field population of equipment which yields revenue in our high margin product support departments.

Additionally, to the extent our OEMs replacement parts are not cost competitive versus the competition this could impact the total cost of ownership of a piece of equipment from a customer perspective and ultimate lead to lost sales for the Company.

The Company purchases a significant amount of its equipment from a limited number of manufacturers.

Termination of one or more of the Company’s relationships with any of those manufacturers could have a material adverse effect on the Company’s business, as it may be unable to obtain adequate or timely parts or rental and sales equipment.

Termination of one or more of the Company’s relationships with any of those manufacturers could have a material adverse effect on the Company’s business.

The Company purchases most of its sales and rental equipment, and aftermarket parts from leading, nationally known original equipment manufacturers.

Approximately 39% of the Company’s sales and rental equipment, and aftermarket parts are purchased from three major manufacturers (Hyster-Yale, Volvo, and JCB).

Although the Company believes that it has alternative sources of supply for the sales and rental equipment, and aftermarket parts it purchases in each of its core product categories, termination of one or more of the Company’s relationships with any of these major suppliers could have a material adverse effect on the Company’s business, financial condition or results of operations if it were unable to obtain adequate or timely parts or sales and rental equipment.

The Company’s suppliers of new equipment and aftermarket parts may appoint additional distributors, sell directly or unilaterally terminate the Company’s distribution agreements, which could have a material adverse effect on the Company’s business due to a reduction of, or inability to increase, the Company’s revenues.

Some of the Company’s suppliers of new equipment and aftermarket parts may appoint additional distributors, sell directly or unilaterally terminate the Company’s distribution agreements, which could have a material adverse effect on the Company’s business due to a reduction of, or inability to increase, the Company’s revenues.

The Company is a distributor of new equipment and parts supplied by leading, nationally known suppliers.

Under the Company’s distribution agreements with these suppliers, manufacturers generally retain the right to appoint additional dealers and sell directly to national accounts and government agencies.

Primarily, the Company has distribution agreements with the Company’s equipment suppliers, operates under its established course of dealing with the suppliers and is subject to applicable state laws regarding such relationships.

In most instances, the suppliers may appoint additional distributors, elect to sell to customers directly or unilaterally terminate distribution agreements with the Company at any time without cause.

In certain instances, under the Company’s distribution agreements with these suppliers, manufacturers may generally retain the right to appoint additional dealers and sell directly to national accounts and government agencies.

Primarily, the Company has distribution agreements with equipment suppliers which operate under its established course of dealing and are subject to applicable state laws regarding such relationships.

In most instances, the suppliers may unilaterally terminate distribution agreements with the Company at any time without cause.

Any such actions could have a material adverse effect on the Company’s business, financial condition, and results of operations due to a reduction of, or an inability to increase, the Company’s revenues.

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As the Company’s fleet of rental equipment ages, the cost of maintaining such equipment, if not replaced within a certain period of time, generally increases.

Determining the optimal age for the Company’s rental fleet equipment is based on subjective estimates

made by the Company’s management team.

Determining the optimal age for the Company’s rental fleet equipment is based on subjective estimates made by the Company’s management team.

The Company’s future operating results could be adversely affected because the Company’s maintenance and repair costs may be higher than estimated.

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The Company’s information technology systems, some of which are managed by third parties, facilitate the Company’s ability to monitor and control the Company’s operations and adjust to changing market conditions, including processing, transmitting, storing, managing and supporting a variety of business processes, activities and information.

Further, as the Company pursues its growth strategy it is also expanding and improving its information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk.

Further, as the Company pursues its growth strategy it is also expanding and improving its information technologies, resulting in a larger technological presence and

corresponding exposure to cybersecurity risk.

Any disruption in any of these systems, including the Company’s customer management system, or the failure of any of these systems to operate as expected could, depending on the magnitude of the problem, adversely affect the Company’s operating results by limiting the Company’s capacity to effectively monitor and control the Company’s operations and adjust to changing market conditions.

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If the Company is unable to fill and keep filled all of the Company’s senior management positions, or if the Company loses the services of any key member of the Company’s senior management team and is unable to find a suitable replacement in a timely manner, the Company may be challenged to effectively manage its business and execute its strategy.

The Company identified three material weaknesses in our internal controls related to ineffective information technology general controls, order to cash controls and parts inventory controls which, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact our stock price.

Internal controls related to the operation of technology systems are critical to maintaining adequate internal control over financial reporting.

As disclosed in Part II, Item 9A, during the fourth quarter of fiscal 2021, management identified a material weakness in internal control related to ineffective information technology general controls (ITGCs) in aggregate over systems that support the Company’s financial reporting processes in the areas of user access and segregation of duties conflicts.

The Company also had ineffective controls in aggregate over parts inventory, including cycle counts, receiving controls, and monitoring of adjustments to inventory.

Additionally, the Company had ineffective controls in aggregate over the order-to-cash process, including proper review and authorization of pricing and discounts, work orders, sales agreements, and rental contracts.

As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2021.

We are implementing remedial measures and, while there can be no assurance that our efforts will be successful, we plan to remediate the material weaknesses prior to the end of fiscal 2022.

These measures will result in additional technology and other expenses.

If we are unable to remediate the material weakness or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could negatively impact investor confidence in our financial statements and adversely impact our stock price.

If the Company fails to maintain an effective system of internal controls, the Company may not be able to accurately report financial results or prevent fraud.

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In addition, failure to maintain effective internal controls could result in financial statements that do not accurately reflect the Company’s financial condition or results of operations.

There can be no assurance that the Company will be able to maintain a system

of internal controls that fully complies with the requirements of the Sarbanes-Oxley Act or that the Company’s management and independent registered public accounting firm will continue to conclude that the Company’s internal controls are effective.

There can be no assurance that the Company will be able to maintain a system of internal controls that fully complies with the requirements of the Sarbanes-Oxley Act or that the Company’s management and independent registered public accounting firm will conclude that the Company’s internal controls are effective.

Labor disputes could disrupt the Company’s ability to serve its customers and/or lead to higher labor costs.

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The Company may experience integration and consolidation risks associated with future acquisitions.

An important element of the Company’s growth strategy is to selectively pursue on an opportunistic basis acquisitions of additional businesses, in particular rental companies that complement the Company’s existing business and footprint.

An important element of the Company’s growth strategy is to selectively pursue, on an opportunistic basis, acquisitions of additional businesses, in particular companies that complement the Company’s existing business and footprint.

The success of this element of the Company’s growth strategy depends, in part, on selecting strategic acquisition candidates at attractive prices and effectively integrating their businesses into the Company’s own, including with respect to financial reporting and regulatory matters.

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Any significant diversion of management’s attention or any major difficulties encountered in the locations that the Company opens in the future could have a material adverse effect on the Company’s business, financial condition or results of operations, which could decrease the Company’s profitability and make it more difficult for the Company to grow its business.

The Company may not be able to successfully, or profitably, launch to commercial electric vehicle business.

With our existing expertise in sales and service of electro-mobility, we have elected to pursue the strategic opportunity to leverage our knowledge to meet the growing demand for commercial electric vehicles and deliver world-class service to commercial electric vehicle customers within our existing territories.

Accordingly, in August 2021, the Company entered into a dealer agreement with Nikola Corporation to become the authorized dealer to sell and service Nikola medium and long-haul class 8 electric vehicle trucks in the New York, New Jersey, eastern Pennsylvania, and New England markets.

This strategic opportunity requires us to devote certain resources, including the time and attention of management.

Failure to execute on our strategic plan associated with commercial electric vehicle business model or a failure of the Company, or Nikola, to successfully capitalize on the transition of long-haul trucking to electric vehicles could cause a diversion of management’s attention and have a material adverse effect on the Company’s business, financial condition or results of operations, which could decrease the Company’s profitability and make it more difficult for the Company to grow its business.

Financial Risk and Risk Related to our Indebtedness

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In addition, the Company’s current and future credit arrangements may limit the Company’s ability to pursue any of these alternatives.

The Company may not be able to generate sufficient cash to service all of the Company’s indebtedness and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful.

The Company may not be able to generate sufficient cash flow to service all of the Company’s indebtedness and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful.

The Company’s ability to make scheduled debt payments depends on its financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond the Company’s control.

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• pay dividends (including dividends on preferred stock) and make distributions;

make investments;

• make acquisitions or investments;

• repurchase stock;

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Moreover, the Company may not be able to obtain additional capital on acceptable terms, if at all.

If it is unable to obtain sufficient additional financing in the future, the Company’s business could be adversely affected by reducing its ability to increase revenues and profitability.

If it is unable to obtain sufficient additional financing in the future, the Company’s business could be adversely affected.

In addition, the Company’s ability to refinance indebtedness will depend in part on the Company’s operating and financial performance, which, in turn, is subject to prevailing economic conditions and to financial, business, legislative, regulatory and other factors beyond the Company’s control.

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A refinancing of the Company’s indebtedness could also require it to comply with more onerous covenants and further restrict the Company’s business operations.

the Company’s inability to refinance the Company’s indebtedness or to do so upon attractive terms could materially and adversely affect the Company’s business, prospects, results of operations, financial condition and cash flows, and make it vulnerable to adverse industry and general economic conditions.

the Company’s inability to refinance the Company’s indebtedness

or to do so upon attractive terms could materially and adversely affect the Company’s business, prospects, results of operations, financial condition and cash flows, and make it vulnerable to adverse industry and general economic conditions.

Unfavorable conditions or disruptions in the capital and credit markets may adversely impact business conditions and the availability of credit.

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In the event of our bankruptcy, liquidation, dissolution or winding-up of our affairs, our assets will be available to pay obligations on the Series A Preferred Stock only after all of our indebtedness and other liabilities have been paid.

The rights of holders of the Series A Preferred Stock to participate in the distribution of our assets will rank junior to the prior claims of our current and future creditors and any future series or class of preferred stock we may issue that ranks senior to the Series A Preferred Stock.

In addition, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries.

Our existing subsidiaries are and any future subsidiaries would be separate legal entities and have no legal obligation to pay any amounts to us in respect of dividends due on the Series A Preferred Stock.

The rights of holders of the Series A Preferred Stock to participate in the distribution of our assets will rank junior to the priority claims of our current and future creditors and any future series or class of preferred stock we may issue that ranks senior to the Series A Preferred Stock.

In addition, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others) our existing subsidiaries and any future subsidiaries.

Our existing subsidiaries are and any future subsidiaries would be separate legal entities and have no legal obligation to pay any amounts with respect to dividends due on the Series A Preferred Stock.

If we are forced to liquidate our assets to pay our creditors, we may not have sufficient assets to pay amounts due on any or all of the Series A Preferred Stock then outstanding.

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As a result, we may not have sufficient funds remaining to satisfy our dividend obligations relating to our Series A Preferred Stock if we incur additional indebtedness.

In addition, our existing credit arrangements include

events of default which could result in acceleration of such indebtedness upon the occurrence of certain events, including failure to meet certain financial covenants.

In addition, our existing credit arrangements include events of default which could result in acceleration of such indebtedness upon the occurrence of certain events, including failure to meet certain financial covenants.

We may not be able to pay dividends on the Series A Preferred Stock if we have insufficient cash or available ‘surplus’ as defined under Delaware law to make such dividend payments.

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Also, payment of our dividends depends upon our financial condition and other factors as our board of directors may deem relevant from time to time.

Our businesses may not generate sufficient cash flow from operations or future borrowings may not be available to us in an amount sufficient to enable us to fund out liquidity needs and make distributions on our common stock, if any, and preferred stock, including the Series A Preferred Stock to pay our indebtedness.

Our businesses may not generate sufficient cash flow from operations or future borrowings may not be available to us in an amount sufficient to enable us to fund our liquidity needs and make dividends on the Series A Preferred Stock.

Our depositary shares representing interests in the Series A Preferred Stock have extremely limited voting rights.

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Our common stock is the only class of our securities that carries full voting rights.

Voting rights for holders of depositary shares will exist primarily with respect to the ability to elect (together with the holders of other outstanding series of our preferred stock, or depositary shares representing interests in our preferred stock, or additional series of preferred stock we may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to our Board of Directors in the event that six quarterly dividends (whether or not declared or consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to our articles of incorporation or certificate of designation (in some cases voting together with the holders of other outstanding series of our preferred stock as a single class) that materially and adversely affect the rights of the holders of depositary shares representing interests in the Series A Preferred Stock (and other series of preferred stock, as applicable) or create additional classes or series of our stock that are senior to the Series A Preferred Stock, provided that in any event adequate provision for redemption has not been made.

stock that are senior to the Series A Preferred Stock, provided that in any event adequate provision for redemption has not been made.

Other than the limited circumstances included in the certificate of designations for the Series A Preferred Stock and the agreement creating the depositary shares, holders of depositary shares will not have any voting rights.

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These liabilities can be imposed on the parties generating or disposing of such substances or the operator of the affected property, often without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous substances.

Accordingly, the Company may become liable, either contractually or by operation of law, for remediation costs even if a contaminated property is not currently owned or operated by the Company, or if the contamination was caused by third parties during or prior to the Company’s ownership or operation of the property.

Accordingly, the Company may become liable, either contractually or by operation of law, for remediation costs even if a

contaminated property is not currently owned or operated by the Company, or if the contamination was caused by third parties during or prior to the Company’s ownership or operation of the property.

Given the nature of the Company’s operations (which involve the use of petroleum products, solvents and other hazardous substances for fueling and maintaining the Company’s equipment and vehicles), there can be no assurance that prior site assessments or investigations have identified all potential instances of soil or groundwater contamination.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors