Author Archives: Custom Truck One Source

a hand using a vertical mouse, one of the EHS trends of 2021
3 EHS Trends Defining How Americans Will Work In 2021

Punctuated equilibrium is the theory that the human race tends to experience a significant amount of evolutionary change in short, stressful bursts of time. The impact of COVID- 19 once again demonstrates this. Environment, health, and safety trends must adapt to this unique set of circumstances.

The fourth industrial revolution (or Industry 4.0) was already underway when the pandemic appeared as a catalyst to hasten its progress. To the revolution that was being built on 21st century technologies, such as artificial intelligence, virtual reality, and the internet of things (IoT), COVID-19 added a unique atmosphere, unlike any industrial transformation in the past. It required creating a safety infrastructure to help fight an infectious virus.

2021 is going to be a very unusual year for this reason. Here are 3 ways that many market experts predict new trends will play out:

Staying Remote

The percentage of workers who permanently work from home (WFH) will likely double in 2021. In fact, by 2025, 36.2 million Americans are expected to be working remotely, which is an 87% increase from pre-pandemic levels.

This is one area where Covid-19 has pushed the country to experiment with a work model trend that is largely proving successful. Productivity, for example, increased markedly during 2020, according to an Enterprise Technology Research (ETR) survey. Statistics gathered from over 180 countries show that remote workers also tend to earn higher wages than traditional office goers. Additionally, recruiting from a wider pool of applicants not restricted by geographical boundaries helps helps to hire the perfect candidate.

Employers will save money on extensive renovation, too. Many commercial office spaces would fail CDC guidelines for safe social distancing without remodeling their current set-up, if all employees were to work onsite. And there is the risk of cross-infection among staff members. This could potentially result in class action suits if employees perceive the safety measures taken by employers to be insufficient.

Last but not least, the environment will benefit from the WFH culture of 2021. By removing the need to commute, we will drastically reduce pollution from vehicular emissions and save billions of kilowatt-hours of energy each year. According to TelCoa, we could reduce carbon footprint by nearly 10% if 32 million Americans telecommuted just one day a week.

Focus on Ergonomics

Working from home, full-time or part time, invariably leads to the topic of ergonomics. This EHS trend will become more relevant than ever in 2021. The aim of ergonomics is to increase efficiency and productivity while managing health issues related to repetitive/continuous working posture.

According to OSHA, musculoskeletal disorders (MSDs) are the leading cause of pain and disability in American workplaces, accounting for 33% of all workers’ compensation costs. Direct costs exceed $20 billion annually. Total expenses (including lost productivity) amount to over $50 billion a year for American employers.

Now, imagine how high these numbers could potentially be if increased by poor ergonomic work conditions. Some employees may be doing their jobs off kitchen tables, on sofas, or even beds.

The popularity of ergonomic home offices will be at an all-time high. Many companies will be reimbursing their staff for equipment (such as monitor arms, vertical mice, standing desks, etc.). Such items reduce possibilities of computer vision syndrome, carpal tunnel, musculoskeletal disorders, etc. and keep them healthy and productive, no matter what their living conditions are.

Hybrid Offices

A hybrid model allows non-essential employees to work remotely while companies alter physical office spaces to reduce chances of contamination among onsite workers.

A substantial number of staff members will be working remotely. This means the existing open plan offices will probably remain, with fewer occupants operating from safely distanced workstations. Open plan offices are easier to clean and sanitize as well. They have fewer doors, door handles, and cubicle openings that are necessary to touch.

Other modification trends we can expect to see in 2021 hybrid offices include:

  • Modified HVAC and climate control systems to ventilate offices and restrict spread of Covid-19 and other pathogens
  • Touch-free technology such as motion lights, motion sensors, automatic doors, and smartphone-controlled elevators and AV systems
  • Floor stickers, emblems, and decals to remind occupants to maintain social distance in high traffic areas
  • Staggered lunch breaks, smaller in-person meetings, and reduced in-person interactions
  • Wearing necessary PPE at all times
workers clean up confetti in times square
How New York’s Sanitation Department Cleans Up After the Times Square Ball Drop

Located just south of Central Park in Manhattan, Times Square is one of the most iconic locales in the world. On New Year’s Eve, this symbolic center of New York City takes to the world stage in a 114-year-old tradition televised all over the world: the famous Times Square Ball Drop.

At precisely 11: 59 pm, the Waterford crystal paneled ball, weighing 11,875 lbs and backlit by pyrotechnic effects, begins its 1-minute descent from the roof of One Times Square to mark the end of one year and the beginning of the next.

Along with the ball, confetti also comes down like colorful rain on Times Square at the stroke of midnight. Vast amounts of it. A confetti master, working with a team of over 100 volunteers (called the confetti dispersal engineers) shower the gathered crowd with colorful bits of paper from the rooftop of eight Times Square buildings.

Each piece of this custom confetti is larger than the average sort you’d find at a party supply store. This creates a magical, densely packed atmosphere. But, like any party thrown on such a grand scale, the end of the event leaves a lot of debris. This raises the question: who cleans up after News Year’s Eve at Times Square? And how?

Here’s a breakdown of the amazing clean-up drive, undertaken by the New York Department of Sanitation (DSNY), that is no less of a feat than the event itself:

Area Covered

The sanitation department covers five blocks running east to west (5th Avenue – 9th Avenue) and 26 blocks running north to south (59th Street to 34th Street). The area of approximately 0.87 square miles is divided up into seven sections for clean-up purposes.

Pre-Party Prep

Several hours before the event, the DSNY mobilizes into action. They work alongside police officers, armed counterterrorism units, and bomb-sniffing dogs to clear the area of potential security threats.

  • Following incidents of truck-driving attacks in Germany and France, large 20-ton sanitation trucks, loaded with 15 tons of sand, are now deployed around Times Square.
  • Newspaper machines and trash cans are removed as a preemptive measure against any concealed threats (such as explosives) where the crowds will gather. Manholes are also sealed shut.

Post-Party Clean Up

Manhattan’s cold December weather typically clears out the crowd quickly after the ball drops.

As the revelers begin to disperse, another group converges on the site. The DSNY crew return Times Square to its pristine condition within seven hours.

The cleaning unit consists of garbage trucks, pickup trucks, rack trucks, street sweepers, utility vehicles, leaf blowers, brooms and shovels, operated by a team of about 200 trash collectors from the sanitation department.

The job at hand is to remove approximately 100,000 lbs of confetti. This plus an assortment of banners, balloons, whistles, noisemakers, top hats, costumes, and other party trash make up about 65 tons of debris. This debris now covers the streets.

But how are such large quantities of flying confetti shored up and removed so efficiently? The procedure is this: push every last piece of colorful debris from the building line and onto the curb.

Leaf blowers and Haulster utility vehicles with squeegee attachments pile the trash from the curb into the street. The cleaning crew picks up larger objects. Street sweepers and mechanical brooms make continuous passes over the same area until every last piece of confetti has been collected.

By 7 am, the streets look completely clean. But this was only the first leg of the clean-up project. The sanitation department later has to tackle a second wave of confetti by January 2. This is confetti that blows off rooftops and settles on the streets after the initial clean up.

It’s a fascinating enterprise. The speed of the operation astonishes visitors from all over the world, celebrating New Year’s at Times Square. But having done this year after year, the DSNY now has the massive clean-up drive down to an art.

By 7am on January 1, when morning traffic hits Times Square, the streets look no different from any other day.

 

* 2020 was the first year since its inception in 1907 that no public celebrations took place at Times Square. 

 

FEDERAL ENERGY REGULATORY COMMISSION- sign at entrance to headquarters building where NERC compliance is monitored
FERC and NERC Compliance

Under the Federal Energy Regulatory Commission or FERC, there is a small but very important clause. Any organization involved with bulk power systems must comply with this clause. This clause is referred to as NERC. It consists of four pillars of compliance success. At times it can be quite difficult to maintain compliance, but not impossible. In this article, we will elaborate entirely upon FERC and NERC compliance. You’ll know the all-too-common mistakes to avoid.

Read on to learn more about these energy sector regulations.

What Is FERC?

As mentioned earlier, the FERC is the Federal Energy Regulatory Commissions. It has a lengthy history. It first appeared in the 1920s with the purpose of controlling hydropower dams.

About 10 tens years later, President Franklin D. Roosevelt changed legislation affecting monopolies in the utility sector. Then the Federal Power Act passed, requiring the Federal Power Commission to set reasonable and just wholesale prices on electricity.

Nowadays, this agency regulates the natural gas industry and oil pipelines in addition to hydroelectric projects and electricity wholesale rates. With 1200 employees and a budget of $170 million, the FERC oversees a quarter-trillion dollar industry. This places it in charge of price regulation for over 70% of the electricity in the U.S.

The five-member board of governors is pre-selected by the president. It contains five commissioners, all of which serve in five-year schedules. The president determines the chairman of the board, which means they are usually from the same political party. They serve as a tie-breaker vote in a deadlock.

Until recent times, the FERC operated quite under the radar, even though it played an important role in building the stage for deregulation. In the 1980s, the agency started to deregulate markets. Then when the Energy Policy Act was passed, the FERC was given authority to impress wholesale competition with oversight obligations.

In this new market, utility companies had to open transmission to electrical wholesalers. Some believe that the FERC has gone far from its initial standards of reasonable and just pricing, and that it has done so to allow competition to take the front lead.

What Is NERC and FERC Compliance?

Any enterprise that is associated with the interconnection, generation, or transmission of electricity in the power system of some parts of Mexico, Canada, and the United States is subject to standards of NERC.

NERC expresses that all bulk power system operators must comply with reliability standards. As a prerequisite of operation in the sector, organizations have to register with an RE.

Compliance with NERC is pre-conditioned via the FERC and the Federal Power Act. Thus, NERC measures the activities of compliance by registering and certifying organizations. They also monitor how companies cultivate power in North America.

Noncompliance leads to violations. The violations are subject to penalties that vary based on duration and severity. High-level and specialized reliability functions demand special certifications.

When the organization is violating the standards, REs will examine applicable penalties and also monitor for future compliance.

Four Pillars Of Success

Four guiding pillars define NERC reliability regulations. NERC has these well-defined, and in their words, they are:

Reliability

Addressing identifiable events and risks, thus improving the reliability of the power system.

Assurance

Assuring the industry, government, and public in the reliable performance of the system.

Learning

Promoting continuous improvement of operations. This includes adapting to learned lessons from the power system.

Risk-Based Approach

Focusing on resources, attention, and decision issues most important to reliability. Regulating reliability through critically-assessed risk activities.

These principles support the strategic goals of NERC in the areas of:

  1. Compliance & Standards – to develop reasonable, clear, and sound obligatory reliability standards in an efficient and timely manner
  2. The risk to reliability – to be an authentic and potent authority that is objective, fair, and independent without conflict of interest
  3. Coordination and collaboration – to promote a compliance culture with obligatory reliability standards for the entire industry

That’s how NERC defines its own success. Therefore, one can understand the mandatory and highly-regulated standard.

How to Maintain NERC Compliance

The NERC & 8 Regional Entities through the Compliance Monitoring and Enforcement Program release an implementation plan on an annual basis. This plan comes with advice for the successful monitoring of compliance and enforcement. The implementation plan outlines the elements of risk to help understand the prioritized compliance efforts.

The risk elements currently presented are:

  1. Human performance
  2. Event recovery & response
  3. Protection system failures
  4. Monitoring & situational awareness
  5. Extreme physical events
  6. Critical infrastructure protection
  7. Management & maintenance of BPS assets
  8. System analysis and planning

For registered enterprises, NERC has audits every six years. For those who are certified, audits happen once every three years. The Regional Entities provide worksheets that outline the information required for audits called Reliability Standard Audit Worksheets. Third-party entities can supply services that support NERC compliance activities, such as self-certification.

They can assist in the identification of procedure gaps, mock audits, and policy creation, as well as compliance testing and management guidance. They can also provide mitigation planning, personal training, and maintenance reviews.

The certification consists of organization registration, certification, compliance investigation, and complaint resolve.

NERC Compliance Issues

Much of North America’s infrastructure is interconnected, international, and complex. Because of this, NERC works across and with governmental agencies, mitigating boundaries to foster standards, cooperation, activity monitoring, and penalty levying.

NERC knows that not all incidents can be mitigated, even with the best practices and standards in place. However, by having their set of standards that are consistently enforced, NERC can reduce the incidents tremendously.

NERC standards consider the quick response benefits crucial. Also recovery is an important part of the infrastructure. When an incident does happen, it’s quickly mitigated and addressed.

NERC Resolved

Now that you have a full understanding of NERC and FERC compliance, you are well on your way to ensure your enterprise is free of penalization. It can be difficult to ensure compliance, but it’s certainly possible.

 

Custom Truck Nesco Announcement Slider Image
Nesco Holdings to Acquire Custom Truck One Source and Create Leading Specialty Rental Equipment Company in Partnership with Platinum Equity

Transformative transaction resulting in greater scale and enhanced depth and breadth of products and services to better serve highly attractive infrastructure-related end-market customers

Platinum Equity, the premier financial sponsor in the specialty rental equipment industry, has committed to invest over $850 million in Nesco and will hold a majority interest in the combined company

Nesco lead investors, Energy Capital Partners and Capitol Investment, and existing CTOS lead investor, Blackstone, to remain ongoing shareholders in partnership with Platinum Equity

Combination significantly reduces leverage, includes material synergies and substantially enhances both corporate and public market liquidity

 

Fort Wayne, Indiana – December 3, 2020 – Nesco Holdings, Inc. (NYSE: NSCO, “Nesco” or the “Company”) today announced it has entered into a definitive agreement to acquire Custom Truck One Source (“CTOS”) for a purchase price of $1.475 billion. Nesco and CTOS are leading providers of specialized truck and heavy equipment solutions including rental, sales and aftermarket parts and service.

The combination will create a leading, one-stop-shop provider of specialty rental equipment serving highly attractive and growing infrastructure end-markets, including transmission and distribution (“T&D”), the 5G revolution build-out and critical rail and other national infrastructure initiatives. With complementary business lines, customer bases and capabilities, the combination is expected to yield significant benefits from increased scale, breadth of product and service offerings and expanded geographic coverage. Following closing, the combined company will have a more attractive financial profile with significantly reduced leverage and enhanced liquidity providing flexibility to address anticipated demand in the large and growing addressable market in which it operates.

In connection with the transaction, an affiliate of Platinum Equity, LLC (“Platinum”) has committed to invest over $850 million into Nesco in exchange for newly issued common stock at a price of $5.00 per share. In addition, existing CTOS shareholders, including certain funds managed by The Blackstone Group, Inc. (“Blackstone”), in its capacity as the current majority owner of CTOS, and certain members of the CTOS management team, are expected to invest approximately $100 million into Nesco in exchange for newly issued common stock also at the same price as Platinum. Energy Capital Partners (“ECP”) and Capitol Investment (“Capitol”), who together currently own ~70% of Nesco’s outstanding common stock, will retain their entire ownership positions in Nesco and have entered into voting agreements in support of the transaction. Subject to closing mechanics and an additional equity investment of up to $200 million, upon closing, Platinum is expected to own approximately 57% of Nesco’s common stock, with existing CTOS shareholders owning approximately 7%, ECP owning approximately 10% and Capitol owning approximately 3%. The additional equity investment of up to $200 million is targeted to be raised between signing and closing with a Platinum backstop for $100 million.

There will be approximately 259 million shares outstanding at closing assuming the full $200 million of additional equity is raised.  The transaction is anticipated to also be financed with a new $750 million ABL, of which approximately $400 million will be drawn at closing, and $900 million of high yield notes.  Pro forma net debt at closing is projected to be approximately $1.3 billion.

“Since Capitol’s investment in Nesco last year, our number one strategic priority has been to find a way to bring these two companies together, given the significant value inherent in the combination. With enhanced scale, a broader set of capabilities and vastly improved financial flexibility, we believe the new company will be distinctively well-positioned to take advantage of the anticipated growth in critical U.S. infrastructure efforts in energy, telecom and rail over the near term and beyond,” said Mark Ein, Chairman & CEO of Capitol and Vice Chairman of Nesco. “We are very pleased to partner with Platinum given its deep knowledge and strong track record in the equipment rental industry, as well as the existing CTOS shareholders led by Blackstone. Together with Platinum and our other co-investors and the combined company’s Board and management team, we look forward to capturing the meaningful upside opportunities that lie ahead.”

Platinum Equity was previously the majority owner of Nesco from 2011 to 2014, and has been a long-time, successful investor in a wide range of specialty rental businesses.

“This is a powerful team of investors coming together to create value,” said Tom Gores, Chairman and CEO of Platinum Equity. “We will deploy our industry knowledge and global operating expertise to maximize the potential of this investment.”

“We know these companies and the industry extremely well and we have a well-defined playbook for creating value in this space,” said Louis Samson, Partner at Platinum Equity. “We also have a deep bench of operations professionals specialized in merger integration and business transformation who will help bring Nesco and CTOS together, building on the best attributes of each. We expect the combination will create a compelling industrial growth company with strong fundamentals and multiple ways to drive EBITDA organically or through additional M&A.”

“We are excited to bring together our complementary companies to provide a full range of solutions to our customers,” said Fred Ross, Chief Executive Officer of CTOS. “I want to thank our dedicated employees for all that they do each day. Looking ahead, as a combined company, we will be very well positioned to capitalize on a broad range of growth opportunities and better serve our customers’ specialty rental equipment needs on a national basis. We look forward to working together with the Nesco team to realize substantial synergies that will create meaningful value for all our stakeholders.”

John-Paul (JP) Munfa, Managing Director at Blackstone, added, “We at Blackstone are proud to have played a role in the establishment of CTOS, in partnership with Fred Ross and other CTOS shareholders, and have seen the company more than double in size during our ownership. We believe the additional scale and public market access provided by the transaction are the next logical step in the company’s evolution, and we are pleased to invest in a transaction carrying significant commercial benefits for the company’s customers, in partnership with Platinum, Capitol, ECP and Nesco’s existing shareholders.”

“This combination will create new opportunities for our company, our employees and the customers we serve,” said Lee Jacobson, Chief Executive Officer of Nesco. “Nesco and CTOS are a perfect fit and together will be well positioned to pursue numerous opportunities in the rapidly growing specialty rental segment. We couldn’t have reached this milestone without the hard work of our team, and we look forward to working together with CTOS to ensure a seamless transition.”

Strategic Combination Creates a Compelling Industrial Growth Company

  • Enhanced value proposition to customers through “one-stop-shop” national platform. The combined company will offer customers a full suite of solutions across the specialty rental equipment value chain, including equipment rental, new sales, used sales, aftermarket parts and service and retail parts, tools and accessories. Together, the combined company will operate on a national scale with over 1,800 employees, 46 company-operated locations and a rental fleet that will be nearly double in size with almost 9,000 units and more than $1.3 billion in combined original equipment cost (“OEC”).
  • Favorable exposure to highly attractive end-markets with strong fundamentals. The combined company’s core end-markets will include T&D, telecom, rail and infrastructure, all of which benefit from strong secular growth and macro mega trends, as well as limited downside cyclicality. The combined company’s increased scale and national presence will provide significant opportunities to further penetrate new and existing customers across geographies and end-markets.
  • Integrated platform with scale and differentiated offerings. The combination will create a unique business model that should drive a better customer experience and a significant increase in the number and breadth of rental assets available. With a substantially increased rental fleet, scale-enabled purchasing benefits, maximum production and customization flexibility and a well-established new and used sales business, the new company will be better positioned to serve customers and win business.
  • Significant anticipated cost synergies with additional revenue upside opportunities. Nesco and CTOS expect to achieve approximately $50 million in run-rate annual cost synergies within two years of closing. Cost savings are expected to be realized through back office consolidation, procurement and SG&A efficiencies and service and production optimization. The combined company also expects additional upside opportunities from identified revenue synergies via expanded service offerings and cross-selling opportunities and fleet synergies.
  • Compelling financial profile with strong momentum and ample flexibility. The combined company expects to deliver pro forma 2020 adjusted EBITDA of approximately $337 million including run-rate cost synergies and pro forma 2021 adjusted EBITDA of $380 million to $400 million including run-rate cost synergies, as well as meaningful free cash flow as core end-market activity continues to grow. At closing, the combined company expects to benefit from more than $300 million in liquidity and a reduction in net leverage from 6.3x to 3.9x, based on last twelve months ended September 30, 2020 adjusted EBITDA including run-rate cost synergies.

Leadership and Headquarters

At closing, the Nesco Board of Directors will be reconstituted such that Blackstone, ECP and Capitol each retain one board seat and Platinum holds majority voting power of the Board. Together, the parties will work to drive value for all shareholders.

Mr. Ross is expected to serve as CEO of the combined business. The combined company will be headquartered at the CTOS campus in Kansas City with significant operations maintained in Indiana. Additional details, including plans for integrating the respective brands, will be addressed post close by a transition team comprising representatives from each of the companies.

Approvals

The transaction has been unanimously approved by the Nesco Board of Directors and is expected to close in the first quarter of 2021, subject to shareholder approval and other customary conditions. ECP and Capitol have entered into voting agreements in support of the transaction.

Advisors

J.P. Morgan Securities LLC is serving as financial advisor to Nesco and Latham & Watkins LLP is serving as legal counsel. Citi is serving as financial advisor to CTOS and Kirkland & Ellis LLP is serving as legal counsel.

Debt financing commitments have been obtained by Bank of America, who will be leading the financing.

Hughes Hubbard & Reed LLP is serving as legal counsel to Platinum.

Conference Call and Webcast

Representatives of Nesco, CTOS, Capitol and Platinum will host a conference call today, December 3, 2020, at 8:30 a.m. ET to discuss the transaction. The conference call can be accessed by dialing +1 877-524-8416 (U.S. and Canada only) or +1 412-902-1028.

A live webcast of the conference call will be available on the investor relations section of Nesco’s website at https://investors.nescospecialty.com/events-and-presentations/default.aspx#upcoming-events.

ABOUT NESCO

Nesco is one of the largest providers of specialty equipment, parts, tools, accessories and services to the electric utility transmission and distribution, telecommunications and rail markets 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, telecommunications networks and rail systems. Nesco’s coast-to-coast rental fleet of more than 4,000 units includes aerial devices, boom trucks, cranes, digger derricks, pressure drills, stringing gear, hi-rail equipment, repair parts, tools and accessories. For more information, please visit investors.nescospecialty.com.

ABOUT CUSTOM TRUCK ONE SOURCE

CTOS is a leading provider of specialized truck and heavy equipment solutions to the utility, telecommunications, rail and infrastructure markets in North America. CTOS solutions include rentals, sales, aftermarket parts and service, equipment production, manufacturing, financing solutions, and asset disposal. With vast equipment breadth, CTOS’ team of experts service its customers across an integrated network of 26 locations across North America. For more information, please visit www.customtruck.com.

Additional Information About the Acquisition and Where to Find It

This communication is being made in respect of the proposed acquisition of CTOS by Nesco. A special meeting of the stockholders of Nesco will be announced as promptly as practicable to seek stockholder approval in connection with the proposed acquisition. Nesco expects to file with the Securities and Exchange Commission (“SEC”) a proxy statement and other relevant documents in connection with the proposed acquisition. The definitive proxy statement will be sent or given to the stockholders of Nesco and will contain important information about the proposed transaction and related matters. INVESTORS AND STOCKHOLDERS OF NESCO ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NESCO, CTOS AND THE ACQUISITION. Investors may obtain a free copy of these materials (when they are available) and other documents filed by Nesco with the SEC at the SEC’s website at www.sec.gov, at Nesco’s website at www.nescospecialty.com or by sending a written request to Nesco Holdings, Inc., 6714 Pointe Inverness Way, Suite 220, Fort Wayne, Indiana 46804, Attention: Chief Financial Officer and Secretary.

Participants in the Solicitation

Nesco and its directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from its stockholders in connection with the acquisition.  Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of Nesco’s stockholders in connection with the acquisition will be set forth in Nesco’s definitive proxy statement for its special stockholder meeting. Additional information regarding these individuals and any direct or indirect interests they may have in the acquisition will be set forth in the definitive proxy statement when it is filed with the SEC in connection with the acquisition. You can find information about Nesco’s directors and executive officers in Nesco’s filings with the SEC, including Nesco’s definitive proxy statement for its 2020 Annual Meeting of Stockholders, which was filed with the SEC on May 1, 2020.

Forward-Looking Statements

Certain statements contained in this communication may be considered forward-looking statements within the meaning of U.S. securities laws, including section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the proposed transaction and the ability to consummate the proposed transaction. When used in this communication, the words “potential,” “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Nesco’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: the ability to consummate the acquisition of CTOS and to integrate the acquisition into the Nesco business; failure to obtain necessary stockholder and regulatory approvals or to satisfy any of the other conditions related to the acquisition of CTOS; the ability to realize expected synergies and the timing for any such realization; projected financial results for Nesco and CTOS, including on a combined basis; potential litigation associated with the acquisition of CTOS; the potential impact of the announcement of the acquisition of CTOS on Nesco’s or CTOS’s relationships, including with suppliers, customers, employees and regulators; the impact of the COVID-19 pandemic on Nesco’s or CTOS’s business operations, as well as the overall economy; Nesco’s ability to execute on its plans to develop and market new products and the timing of these development programs; Nesco’s estimates of the size of the markets for its solutions; the rate and degree of market acceptance of Nesco’s solutions; the success of other competing technologies that may become available; Nesco’s ability to identify and integrate acquisitions, including the acquisition of truck utilities; the performance and security of Nesco’s services; potential litigation involving Nesco; and general economic and market conditions impacting demand for Nesco’s services. For a more complete description of these and other possible risks and uncertainties, please refer to Nesco’s annual report on form 10-K filed with the securities and exchange commission on March 13, 2020 and quarterly report on form 10-Q filed with the securities and exchange commission on May 7, 2020, as well as to Nesco’s subsequent filings with the SEC. Should one or more of these material risks occur, or should the underlying assumptions change or prove incorrect, Nesco’s actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statement. The forward-looking statements contained herein speak only as of the date hereof, and Nesco undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NESCO INVESTOR CONTACT

Josh Boone, CFO

(800) 252-0043

investors@nescospecialty.com

 

PLATINUM INVESTOR CONTACT

Dan Whelan

Principal, Platinum Equity

dwhelan@platinumequity.com

 

MEDIA CONTACT

Joele Frank, Wilkinson Brimmer Katcher

Jim Golden / Tim Lynch

212-355-4449

Conceptual compass with needle pointing the word lease.
Leases: Fast and Flexible Financing

So, you’ve already made the big decision to purchase some heavy equipment, like a dump truck or roll-off, for your fleet. However, the transaction doesn’t end there. You still have an important decision left to make: should you buy or lease?

There are advantages to both options, but many people choose to lease their equipment. This could be for a number of reasons. For example: to save on up-front capital, lower their monthly payments, or remain more open to quickly upgrade to newer technologies as they become available. Once you’ve decided leasing is right for you, there are still a few different options available in order to best tailor your financing to your exact business and circumstance.

Custom Truck Capital (CTC) provides the flexible leasing and financing solutions businesses need to make acquiring equipment easy and affordable. Our team of finance professionals continuously work to deliver competitive finance structures to meet a variety of equipment needs and budgetary requirements. Here is a breakdown of some available options to consider.

Types of Leases

LEASE TYPE FEATURES/BENEFITS END OF TERM OPTIONS
True Lease (Fair Market Value)

Best for customers that want use of equipment without ownership

 

  • Possible tax benefits
  • Flexible lease end options

 

  • Purchase equipment for the then “Fair Market Value”
  • Continue to lease the equipment with a new lease at a reduced rate
  • Return the equipment

 

TRAC Lease

Designed for vehicles in commercial use, offering customers the option to purchase the vehicles at a pre-determined price at lease end

 

  • Reduces uncertainty of a monthly payment, at an attractive price
  • CTC retains ownership of equipment, while customers benefit from use
  • Purchase the equipment for the predetermined “Residual Value” or return the equipment

 

Full Payout Lease

Best option for customers who want to own the equipment, but also want the convenience of making affordable monthly payments.

 

  • Predictable and manageable monthly payments
  • 100% Financing
  • Flexibility to add equipment during term

 

 

  • Title automatically transfers to customer at end of term.
Fixed Price Purchase Option (FPPO)

Option offering customers a fixed monthly payment, plus flexibility to purchase the equipment at end of the term for a guaranteed, predetermined amount.

 

  • Fixed, low monthly payments hedge against inflation and ease cash flow
  • 100% Financing
  • Return equipment or purchase equipment for a fixed price

 

 

In special circumstances that don’t easily fit within our standard lease products offered, CTC will work to customize finance structures like Skip, Step-up and Seasonal Payments to meet more complex equipment needs and terms based on very unique cash flow needs.

For more information contact CTC at 833-CTC-FIN1

 

worker cleaning the bottom of a rental track unit
Rental Units – Ready for the Next Job

Unit rental is a very common practice in most industries. Rentals are a great option when a job requires a piece of equipment not normally needed, or a different size/configuration of equipment that’s not available in the company’s fleet.

When a company rents a piece of equipment, they expect it will be in good working condition, clean, and safe. The following gives an inside glimpse into how our offices ensure that every piece of rental equipment remains safe and reliable for our customers.

Return of Rental Inspection

When a customer returns a rental unit, it goes through a full inspection. Technicians perform a “bumper to bumper” evaluation. They check everything from tires all the way up to buckets and cranes. This ensures the full piece of equipment is functioning properly. We also check the unit for leaks, broken windshields, dents, and anything else that would prevent the unit from properly functioning for the next renter.

mechanic working on rental bucket truck

Shop Repair

When needed, we send rental units into one of the repair shops to address any issues found upon return. This can be anything from a chassis-related repairs to hydraulic maintenance for a boom. Technicians will replace parts, if needed, ensuring the unit is going out to the next renter in optimum condition.

hood of bucket truck opened for repairs to be done

Cleaning

Renters often use our units in harsh conditions and terrains. Therefore, it’s important rental units go back out into the fleet, fully cleaned and free of debris.

As always, our units are supported by Custom Truck One Source’s 24/7 Call-In Center and our 26 locations coast to coast.

 

A red wind vane against a blue cloudy sky helps predict weather patterns
Weather Patterns to Prepare for in the 1st Quarter of 2021

No matter what plans people have in store next year, the weather patterns will likely play a central role in how they decide to spend their time. When informed, people can adjust their plans accordingly and approach the new year with a sense of confidence. Weather predictions are particularly important for those with jobs that outdoor conditions heavily influence. This includes farmers, pilots, truck drivers, meteorologists, and more.

Regardless of a person’s lifestyle or career, there’s no question that weather patterns play a significant role in their lives. Here are the top 1st quarter 2021 weather predictions to keep an eye out for next year.

Weather Predictions in the Southern U.S.

Currently, the southern United States is suffering from numerous areas of drought. These conditions will likely worsen during the first quarter of the new year. In addition, the South is projected to experience warmer conditions than usual as a direct effect of global climate change.

These weather patterns are partly due to the presence of La Niña, an ocean-atmosphere phenomenon that takes place across the east-central Equatorial Pacific. La Niña causes strong winds to blow warm water across the surface of the ocean. This leads to warmer and drier conditions throughout the South.

Weather Predictions in the Northern U.S.

1st quarter 2021 weather predictions look very different in the North than they do in the South. Conditions in the North early next year are mainly characterized by wet weather. The weather may also become aggressive at times, with heavy storms projected to take place towards the beginning of 2021. Furthermore, the northern United States can expect to prepare themselves for cooler temperatures than usual, particularly during the frigid winter months.

La Niña hasn’t only affected weather conditions in the South. You can also expect this phenomenon to have a significant impact on weather predictions in the North. When warm winds spread across the surface of the Pacific, it often leads to colder and wetter conditions throughout the Northern U.S. This effect is a direct opposite of the effect on the South.

Preparing for 1st Quarter 2021 Weather Patterns

The weather has the power to influence numerous aspects of everyday life, particularly in the vocational trucking industry. Not only can these events be demanding on their own, but they often become even more stressful when one doesn’t know how to properly prepare for them. Fortunately, by paying attention to 1st quarter 2021 weather predictions and planning accordingly, you can make the most of the expected weather patterns no matter what the new year has in store for you.

 

Two maintenance engineers inspect relay protection system with laptop computer. Bay control unit. Medium voltage switchgear
SCADA – How Is It Shaping the Construction Industry?

SCADA or Supervisory Control and Data Acquisition is a software and hardware system which is now increasingly used in the construction industry. It allows the users to control their industrial operations both locally as well as in remote locations.

The advantage is its ability to monitor and gather data in real-time and process it for industrial usage. It can also record industrial information into log files for future reference. Its design allows for integration with construction equipment and machinery involving valves, motors, pumps, and sensors.

Better Communication With SCADA

SCADA is helping in compartmentalizing information for industrial usage. It uses better data processing, leading to smarter decisions. Better communication results in fewer glitches, decreasing the time spent on the project, and reducing costs in the long run.

How Does It Work?

SCADA makes use of PLCs as well as remote terminal units. These are microcomputers which will interact with the machines on the construction site or with machinery in other sectors.

It makes use of sensors in the devices, and the information is redirected from them to the SCADA computers. There it is processed and made ready for data analysis by the operators on the field, helping them decide the next course of action. It will also immediately notify experts about any error in the system and will try to pinpoint the cause of the glitch.

Benefits of Installing SCADA

Any issue in the construction industry can quickly escalate into a problem costing the company millions. The promptness of SCADA makes it possible to avoid loss of product, preventing the loss of precious revenue from the construction industry.

Any industrial organization can use SCADA but it is revolutionizing the construction industry in a big way by reducing downtime on projects. Problems that took days to solve can be handled in a few hours. This is thanks to the enhanced problem-solving matrix of the system.

Many organizations have embraced it due to its ability to work with large and complex installations in the industry. Apart from construction, other industries like waste, recycling, energy, food and beverage, transportation, and many more are using it.

Integration of SCADA With Other Systems

Modern SCADA Systems can transmit data from the plant floor to anywhere in the world, enabling people to make data-driven decisions. SCADA designer applications are also making use of RAD (rapid application development), even without extensive knowledge of software development.

Many organizations are also using their unique industrial automation software platform along with SCADA for better results.

With the use of SCADA, the construction industry has indeed become safer and more efficient. Glitches are minimal and accurate information has resulted in avoiding serious errors of judgment. Multinational construction companies are investing in such system updates in a big way.

 

Overhead view of family-owned business Custom Truck One Source headquarters in Kansas City
Six Reasons a Family-Owned Business Can Also Be Good for Employees

Fred Ross, CEO of Custom Truck One Source, recently had the following article published in the Kansas City Business Journal. The full article is included below. You can also read it directly on the KCBJ Website (login required).

According to SCORE, of the 28.8 million small businesses in the U.S., 19% are family-owned. Over time, these businesses benefit from different generations running operations together. I know firsthand the benefits of working with family: I started my company alongside nine of my siblings, and we currently have many nieces, nephews and cousins working with us as well.

Family-owned businesses are essential and distinct organizations in the world economy. They operate in every country, and they may be the oldest form of business organization and structure. Family businesses are unusual entities due to their concern for the long-term health of the company over generations, strong commitment to quality in relation to their family name, and humanity in the workplace, where the care and concern for employees are like that of an extended family.

While the benefits to the family may be obvious, there are many benefits for potential employees of family businesses to consider. Here are six of them:

1. Family businesses frequently can provide the opportunity for a real relationship with management. Because of the family atmosphere already in place, the C-suite is invested in the culture of the company and in the well-being of the employees.

2. Family-owned companies are willing to sacrifice for the good of the company. When bad things happen, like the Great Recession, everyone pulls together, tightens their belts and puts money back into the business that you wouldn’t see otherwise. There has to be buy-in from the top down for this to work.

3. When family is your business, failure is not an option. When push comes to shove, employees have to get paid, even when the family doesn’t. The family commits to greater sacrifice for the good of the business and its employees.

4. Employees can have greater trust in management because of the family culture (managers often consider all employees to be family). It is an “all for one and one for all” mentality.

5. Family-owned businesses typically have a set of shared traditions and values rooted in their history. Everyone wants to work with companies that they can trust. I would argue that family-owned businesses beat the competition in that regard because their brands are directly associated with their family legacies and reputations.

6. In a family-run business, employees are more able to enjoy a greater variety of roles.  For example, it’s not uncommon to play to the strengths of an employee or family member and tailor a position to not only embrace their capabilities, but also to strategically place them so their strengths can greater benefit the business as a whole.

During this time of furloughs, layoffs and record unemployment, it is certainly worth looking into the background of the company you might choose to work with. Give special consideration to family-run businesses. They are good for the family and employees alike.

 

close up of The CARES Act, which could suspend FET requirments, on a desk
The CARES Act – How FET Suspension Could Impact the Equipment Industry

With the CARES Act expected to provide an estimated $591 billion in tax relief in the next ten years, every industry is wondering how they can benefit from this.  The suspension of the 7.5 air transportation federal excise tax (FET) for commercial operations from March to December 2020, such as charter flights, has led to a discussion on whether this should be extended to other areas, such as trucks and trailers.

Several stakeholders, including the American Truck Dealers (ATD) and more than 116 interested organizations, are pushing Congress to suspend the 12% federal excise tax (FET). The U.S. instituted the FET in 1917 as a means to fund World War I. Since then, it has grown from 3% to 12%. Most people feel that abolishing this tax would help the economy recover.

How the Federal Excise Tax Suspension Could Affect the Equipment Industry

According to a survey conducted by CCJ, many carrier organizations canceled their truck (23%) and trailer (17%) orders citing the current unfavorable business environment. Moreover, 60% of those who withdrew their orders say that they have no intention of buying again this calendar year. However, in their recent study, the American Truck Association reiterated that more than half of these carriers would most likely add new trucks/trailers to their fleets if the FET were to be suspended.

The elimination of the federal excise tax (FET) would boost the equipment industry. It would incentivize carriers to invest in new, cleaner, and safer emission trucks. The increased demand for new trucks will mean that the manufacturers have to produce more, thereby creating more jobs.

Additionally, when the number of trucks and trailers increases, the delivery of critical medical supplies will be more efficient. The trucking industry employs around 7.8 million Americans. This means a further delay in FET suspension could result in a significant percentage of these individuals losing their jobs.

A tax holiday on the FET would be an excellent way to assist and restore the equipment manufacturing industry. It could also help to jump-start the economy. Getting rid of the FET will allow more customers to upgrade their machinery. Additionally, it would aid in achieving the overall goal of reducing harmful emissions and improving highway safety.

While the CARES Act may be offering manufacturers loans and grants, this might not be enough. If the government is serious about economic recovery, FET elimination could be a great way to boost the economy. It could even increase trucking equipment sales by up to 10%.