SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2025

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation: The accompanying consolidated financial statements reflect the Company’s

accounts and subsidiaries in which the Company has a controlling financial interest. In the event that the Company

is a primary beneficiary of a variable interest entity, the assets, liabilities and results of operations of the variable

interest entity are included in the Company’s consolidated financial statements. Assets and liabilities of the

Company’s foreign subsidiary are translated from its functional currency into U.S. dollars using exchange rates at

the balance sheet date. Revenues and expenses are translated at the exchange rate effective at the time of the

transaction. Foreign currency translation gains and losses are included as a component of accumulated other

comprehensive income (“AOCI”). All intercompany transactions have been eliminated upon consolidation.

Use of estimates: Management used estimates and assumptions in preparing these financial statements in

accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Those estimates and assumptions

affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities, and the

reported revenues and expenses. As future events and their effects cannot be determined with precision, actual

results could differ from the estimates that were used.

Cash and cash equivalents: Cash and cash equivalents consist of interest bearing and non-interest bearing

demand deposit accounts and instruments with an original maturity of less than ninety days that are held with

financial institutions which are carried at cost. There was no restricted cash at December 31, 2025 and 2024.

Concentrations: Financial instruments that potentially subject the Company to concentrations of credit risk

consist primarily of cash deposits. The Company maintains cash on deposit at financial institutions in excess of

federally insured limits. The Company seeks to mitigate such risks by using multiple counterparties and monitoring

the risk profiles of these counterparties. The Company has not experienced any losses in such accounts and believes

it is not exposed to significant credit risk.

The Company has borrowings under an asset-based lending facility with one financial institution. Management

does not believe this concentration presents significant counterparty risk because the Company would be able to

obtain similar credit facilities with other financial institutions.

Sales of equipment, parts, supplies and services to two third-party OWN Program participants comprised 20%

of the Company’s total revenue for the year ended December 31, 2025. Sales of equipment, parts, supplies and

services to separate third-party OWN Program participants comprised 21% and 16% of the Company’s total revenue

in each of the years ended December 31, 2024 and 2023, respectively. These revenues were reported in the

Company’s equipment rental operations and equipment sales segments (see Note 24).

Accounts receivable: Pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC”) Topic 842, Leases, (“Topic 842”) and Accounting Standards Update (“ASU”) 2016-03,

Financial Instruments—Credit Losses (“Topic 326”) for rental and non-rental receivables, respectively, the

Company maintains an allowance for doubtful accounts that reflects the management’s estimate of expected credit

losses, in accordance with Topic 326 with respect to non-lease receivables, and an allowance for doubtful accounts

as a general loss reserve, pursuant to ASC Topic 450, Contingencies ("Topic 450") with respect to lease receivables,

which are not subject to the collectibility constraint. Management considers historical losses adjusted to take into

account current market conditions and its customers’ financial condition, the receivables in dispute, the current

receivables aging and current payment patterns, and existing industry and national economic trends when

establishing and adjusting its allowance for doubtful accounts. Topic 326 does not apply to receivables arising from

operating leases and, as disclosed in Note 18, the majority of the Company’s equipment rental revenue is accounted

for as lease revenue under Topic 842. The Company reviews its allowance for doubtful accounts on a monthly basis.

If it is determined that all efforts to collect on a balance have been exhausted and it is concluded that the potential

for recovering the account balance is remote, then the Company will write-off the account balance.

Inventories: Inventories consist of equipment spare parts, equipment assets that have been financed or paid for

in cash that are held solely with the intent to be sold, equipment attachments, building materials, supplies, tools and

telematics devices and related components. Title to new equipment held for sale at dealership locations transfers to

the Company at shipping point from the manufacturer. Cost is determined, depending on the type of inventory, using

either a specific identification or average cost method. At December 31, 2025 and 2024, approximately 33% and

45%, respectively, of inventory cost was determined by a specific identification method, and 67% and 55%,

respectively, of inventory cost was determined by average cost.

Rental equipment, net: Rental equipment is comprised of various classes of construction equipment, delivery

vehicles, trailers, and installed telematics tracker devices, all of which are stated at cost, net of related discounts. The

Company takes title and ownership of equipment for its rental fleet upon financing or remitting payment for the

equipment. Equipment under manufacturer purchase agreements that have not been paid for in cash or financed are

not the Company’s assets and, therefore, are not included in rental equipment on the accompanying consolidated

balance sheets because the OEM can retrieve those assets at any time. Rental equipment must go through an

extensive delivered, received, and accepted process upon receipt at the Company location. Costs incurred to prepare

equipment for its intended use and costs incurred to transport the asset from one location to another prior to its first

rental are added to the cost of the equipment. Rental equipment is purchased with the intention to rent the equipment

as a long-term productive asset. Upon the equipment’s first rental, the equipment is considered to be placed in

service and the Company begins to depreciate the asset over its estimated useful life to its estimated residual value.

Generally, when rental equipment is placed into service, the Company estimates the period that it may hold the

asset in its rental fleet for the purpose of generating rental revenues, ranging from 5 to 10 years until its sale or

disposal to another party. The Company also estimates the residual value of the applicable rental equipment at the

expected time of sale or disposal, ranging from zero to 35 percent of the asset’s original equipment cost. The

residual value for rental equipment is affected by factors which include equipment age and amount of usage.

Depreciation expense is calculated using the straight-line method and is recorded over the estimated holding period.

Depreciation rates are reviewed at least annually based on management’s ongoing assessment of present and

estimated future market conditions, their effect on residual values at the time of disposal and the estimated holding

periods. Market conditions for used equipment sales can also be affected by external factors such as the economy,

natural disasters, fuel prices, supply of similar used equipment, the market price for similar new equipment and

incentives offered by manufacturers of new equipment. These key factors are considered when estimating future

residual value and assessing depreciation rates. As a result of this ongoing assessment, the Company makes periodic

adjustments, applied prospectively, to depreciation rates of rental equipment in response to changed market

conditions and other factors.

Property and other fixed assets, net: Property includes land, buildings and improvements, and leasehold

improvements which are stated at cost. Buildings and improvements begin to be depreciated when placed in service

over their estimated useful lives. Leasehold improvements are depreciated over the useful life of the improvement or

the lease term, whichever is shorter. Land and construction in progress assets are not being depreciated. When

construction in progress is completed, these assets are placed into service and begin to be depreciated. Other

capitalized assets include furniture, fixtures, office equipment, and electronics. These assets are stated at cost and

begin to be depreciated when placed in service over their estimated useful lives.

Depreciation expense is calculated using the straight-line method over the assets’ estimated useful lives, ranging

from three to forty years.

Capitalized software: The Company is developing internal use telematics software and related products that it

utilizes in the management of the rental fleet. Software development costs related to preliminary project activities

and post-implementation and maintenance activities are expensed as incurred. Direct costs related to application

development activities that are probable to result in additional functionality are capitalized. Upon completion of

enhancements and updates, the total capitalized cost which includes payroll and related costs for employees directly

associated with the project will begin to be amortized over an estimated useful life of five years.

Business Combinations: In recent years, the Company has completed multiple acquisitions, including a business

that designs, manufactures, and sells custom electronic components, including telematics tracker devices and cloud-

based access control keypads, as well as building materials and hardware retail stores, industrial supplies businesses,

and certain dealership sites. The Company may continue to make acquisitions in the future. Inventories, primarily

finished goods, and other working capital, long-lived assets, goodwill and other intangible assets generally represent

the largest components of these acquisitions. The assets acquired, including working capital, and liabilities assumed

are recorded based on their respective estimated fair values at the date of acquisition. The fair value of inventories

acquired in a business combination are measured at estimated selling price less costs of disposal and a reasonable

profit margin for the selling effort. Equipment and other long-lived assets acquired are valued utilizing either a cost

or market approach, or a combination of these methods, depending on the asset being valued and the availability of

market data. The intangible assets other than goodwill that the Company has acquired are developed technology,

trade names and associated trademarks, customer relationships, non-compete agreements, and dealership rights. The

estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth

rates, operating margins, terminal values, useful lives and other prospective financial information.  Developed

technology, trade names and associated trademarks, customer relationships, non-compete agreements, and

dealership rights are valued based on an excess earnings or income approach utilizing projected cash flows and may

be amortized over their respective useful lives if they are determined to be finite-lived intangible assets. Determining

the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant

estimates and assumptions. The Company may also acquire other assets and assume liabilities, or working capital, in

connection with the business combination. These other assets and liabilities typically include, but are not limited to

accounts receivable, accounts payable and other working capital items. Because of their short-term nature, the fair

values of these other assets and liabilities generally approximate their book values at the acquisition date.

Goodwill is calculated as the excess of the cost of the acquired business over the net of the fair value of the

assets acquired and the liabilities assumed.

Finite-lived intangible and long-lived assets: Intangible assets with finite lives are amortized over the estimated

economic lives of the assets, which range from two to twenty years. These assets are primarily amortized using the

straight-line method.

Long-lived assets, including intangible assets with finite lives, are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount of such asset group may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of

the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets that management

expects to hold and use is based on the estimated fair value of the asset.

Investments: In accordance with FASB ASC Topic 321, Investments – Equity Securities (“Topic 321”),

investments in equity securities in which the Company does not have significant influence nor control of an investee

are accounted for as financial assets and carried at fair value, except for equity securities that do not have readily

determinable fair values which are carried at cost under the measurement alternative discussed below. Topic 321

also states that if an entity identifies observable price changes in orderly transactions for the identical or a similar

investment of the same issuer, it should measure the equity security at fair value as of the date that the observable

transaction occurred (hereinafter referred to as the measurement alternative). In addition, Topic 321 provides that an

entity should consider observable transactions that require it to either apply or discontinue the equity method of

accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately

before applying or upon discontinuing the equity method.

Equity securities carried at fair value are included in other current assets on the consolidated balance sheets.

Equity securities carried at cost under the measurement alternative are included in investments in non-consolidated

affiliates on the consolidated balance sheets. Unrealized gains and losses from equity securities are included in other

income, net in the consolidated statements of net income.

In accordance with FASB ASC Topic 323, Investments – Equity Method and Joint Ventures (“Topic 323”) the

Company uses the equity method of accounting for investments in equity securities in which it obtains significant

influence, but not control, of an investee. Equity method investments are recorded initially at cost, and subsequently

adjusted to recognize the Company’s share of the earnings, losses and/or changes of the investee value after the date

of acquisition.

The Company performs a qualitative impairment assessment of its investments if the investee has recognized a

series of operating losses or has recognized an impairment loss in its financial statements to determine whether there

is an other-than-temporary impairment. No impairment was identified in any of the three years in the period ended

December 31, 2025.

The Company has investments in debt securities, which are classified as available-for-sale. These investments

are recorded at fair value and included in other current assets on the consolidated balance sheets. Unrealized gains

and losses on available-for-sale debt securities are included in other comprehensive income, net of tax, in the

consolidated statements of comprehensive income.

Derivative instruments: During the normal course of operations, the Company is exposed to market risks

including the effects of changes in interest rates. The Company managed this risk through the use of derivative

instruments which it designated as cash flow hedges. The Company does not use derivative instruments for trading

or other speculative purposes. The Company accounted for all derivatives in accordance with U.S. generally

accepted accounting principles, which requires that such instruments be measured at fair value and recorded on the

consolidated balance sheet as either an asset or a liability. Changes in the fair value of derivative instruments

designated as cash flow hedges are recorded in AOCI and reclassified into earnings when the hedged transaction

affects earnings. During November 2025, in connection with a refinancing of its asset based lending facility, the

Company terminated its derivative instruments. 

For purposes of balance sheet presentation, the Company elected to net the fair value of derivative instrument

assets and liabilities entered into with the same counterparty and for whom it has the right of offset in the event of

default.

Advertising expense: The Company expenses advertising costs during the period in which they are incurred.

Advertising expenses are included in selling, general and administrative expenses in the accompanying consolidated

statements of net income and totaled $8 million, $6 million, and $7 million for the years ended December 31, 2025,

2024 and 2023, respectively.

Employee savings plan: The Company offers eligible employees participation in a 401(k) plan in which the

Company matches employee contributions up to a specified amount. For the years ended December 31, 2025, 2024

and 2023, the Company contributed $7 million, $5 million, and $4 million, respectively, to the 401(k) plan.

Lease arrangements with OWN Program participants: The Company leases equipment owned by participants in

the OWN Program. The Company accounts for these arrangements as a lease under Topic 842 whereby the

Company is the lessee.

Utilizing the T3 platform, the Company offers the equipment to its customers for rent and a portion of the rental

revenue generated for each individual piece of equipment is shared with the participant in the OWN Program as a

variable lease payment. Such variable lease payments are not included in the classification or measurement of these

lease arrangements. The portion of the rental revenues that are paid or payable to participants in the OWN Program

as lease payments are based on separately negotiated terms that are commensurate and customary for the right to use

the equipment, subject to a maximum lease payment in certain OWN Program agreements. The variable lease

expense incurred is recognized and presented as OWN Program payouts within the cost of revenues in the

consolidated statements of net income. There are no fixed lease payments paid or payable related to these lease

agreements.

Equipment leased from participants in the OWN Program generally have terms ranging from five to seven

years, and certain arrangements provide, upon mutual agreement of the participant and the Company, the ability to

renew or extend the lease term. At the lease commencement date, the Company does not consider the renewals to be

reasonably certain of being exercised.

Lease arrangements with other parties: The Company leases properties, vehicles, certain equipment used in its

operations from parties not participating in the OWN Program, and aircraft under various operating and finance

leases. The Company accounts for leases under Topic 842, which applies to an arrangement that conveys the right to

control the use of an identified asset for a period of time in exchange for consideration. The Company determines if

an arrangement is, or contains, a lease at the lease inception date by evaluating whether the arrangement conveys the

right to control the use of an identified asset and whether the Company obtains substantially all of the economic

benefits from and has the ability to direct the use of the identified asset. Leases with an initial term of twelve months

or less are not recorded on the consolidated balance sheets.

In lease arrangements whereby the Company is a lessee, the Company recognizes a lease liability and a right of

use (“ROU”) asset representing its right to use the underlying asset over the lease term. The initial measurement of

the lease liability is calculated on the basis of the present value of the remaining minimum lease payments and the

ROU asset is measured on the basis of this liability, adjusted by prepaid and accrued rent, tenant improvement

allowances, lease incentives, and initial direct costs. The subsequent measurement of a lease is dependent on

whether the lease is classified as an operating lease or a finance lease.

The Company classifies all lease arrangements as an operating lease or a finance lease at the lease

commencement date based on the terms of the arrangements. The Company’s lease classification evaluation,

including for rental equipment leased from participants in the OWN Program, considers, among other things,

determining whether or not the term of the lease arrangement represents a major part of the remaining economic life

of the underlying asset based on the period the underlying asset is expected to be usable by one or more users. The

determination of the economic life of the asset, including for rental equipment leased from participants in the OWN

Program, is subjective. The Company determines the economic life of the asset using a market approach which

utilizes external and internal data of similar assets in the marketplace.

When the Company is the lessee, the operating lease cost is recognized on a straight-line basis over the lease

term, with the cost presented as a component of cost of revenues or selling, general and administrative expenses in

the consolidated statements of net income. Finance lease cost is comprised of a separate interest component and

amortization component and is presented as a component of depreciation and amortization and interest expense, net,

in the consolidated statements of net income.

When the Company is the lessee, certain lease arrangements may require other payments such as costs related to

service components, real estate and property taxes, common area maintenance, aircraft operating costs and

insurance. These costs are generally variable in nature and are based on the actual costs incurred and required by the

lease. All variable costs associated with the lease are expensed in the period incurred and presented and disclosed as

variable lease costs included in selling, general and administrative expenses in the consolidated statements of net

income.

The Company has certain equipment lease agreements that contain residual value guarantees. For equipment

used under arrangements classified as operating leases, it is assumed at the lease commencement date that the

equipment will be returned to the lessor at the end of the lease term in the condition required and, therefore, any

residual value guarantees are excluded from the lease liability recorded. For equipment obtained under arrangements

classified as financing leases, the Company assumes it will exercise end of lease term purchase options and,

therefore, the cost of any residual value guarantees or purchase options are included as minimum lease payments for

purposes of determining the lease liability at the commencement date. The Company’s finance and operating lease

agreements do not contain any material restrictive financial covenants.

Topic 842 requires that a lessee use the rate implicit in the lease when measuring the lease liability and ROU

asset, unless that rate is not readily determinable. In that case, the Company is permitted to use its incremental

borrowing rate (“IBR”), which is defined as the rate of interest that the Company would have to pay to borrow on a

collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The IBR is calculated by utilizing the daily treasury yield curve rates, as published by the U.S. Department of the

Treasury, adjusted by a risk-based spread. The Company updates the rate quarterly and utilizes the treasury rate

yields as of the first business day of each quarter for all new leases entered into during that quarter.

As the lessee, the Company’s finance and operating leases have remaining terms ranging from one to fifteen

years, with some of those leases including options that grant the Company the ability to renew or extend the lease

term. When determining the operating lease term, the Company does not include renewal options unless the

renewals are deemed to be reasonably certain of being exercised at the operating lease commencement date.

Sale leaseback arrangements: The Company assesses sale leaseback arrangements to determine whether a sale

has occurred under ASU 2014-09: Revenue from Contracts with Customers (“Topic 606”) and whether the

classification of the lease precludes sale accounting under Topic 842. These assessments involve a determination of

whether control of the underlying asset has been transferred to the buyer. If control of the underlying asset has been

transferred to the buyer, the arrangements are accounted for as a sale and leaseback transaction. If control of the

underlying asset has not been transferred to the buyer, the arrangements are accounted for as a financing obligation.

For each sale leaseback arrangement entered into with a third party, the measurements associated with the gain

or loss recognized on the sale and the lease-related right-of-use assets and liabilities have been adjusted for any off-

market terms. These off-market adjustments are based on the difference between the sales price of the property or

rental equipment and its fair value. When the sales price is greater than the underlying property or rental equipment's

fair value, the Company recognizes the difference as a reduction to the sales price and as a financing obligation that

is separate from the operating lease liability. The determination of the fair value of the assets related to sale

leaseback arrangements is subjective and requires estimates, including the use of multiple valuation techniques. The

Company measures the fair value of the assets on the basis of one or more of (1) the market approach, (2) the

income approach, or (3) the cost approach.

Build-to-suit lease arrangements: The Company evaluates build-to-suit lease arrangements, where the

Company is engaged by the owner to perform construction and development services prior to lease commencement,

to determine whether or not the Company controls the underlying asset during the construction period. If the

Company controls the underlying asset during the construction period, the transaction is assessed as a sale leaseback

arrangement.

At December 31, 2025, the Company was a party to certain property lease agreements under which lease

commencement had not yet occurred. The lease commencement date will be determined, and the lease obligation

recognized, once the underlying property and construction is completed and available for its intended use as a full-

service branch location, which is expected to occur in the next twenty-four months. For each build-to-suit

arrangement, it was determined that the Company did not control the underlying constructed asset prior to the

commencement date of the lease.

Revenue recognition: The Company is in the business of renting equipment that is owned by the Company or

rented from vendors, contractors, and other third parties and then re-rented to third party customers as part of their

normal business activities. Such arrangements are accounted for as operating leases with the Company as a lessor

and governed by the standard rental contract.

As a lessor of rental equipment to customers, the Company recognizes revenue from equipment rentals in the

period earned on a straight-line basis over the expected contract term, regardless of timing of billing to customers. A

rental contract term can be daily, weekly, or monthly (28 days), and is billed when the maximum monthly rental

charge is achieved, or at the completion of the rental contract, whichever is sooner. Because the term of the contract

can extend across financial reporting periods, unbilled rental revenue of $45 million, $28 million, and $32 million

was included in equipment rental and related services in the accompanying consolidated statements of net income

for the years ended December 31, 2025, 2024 and 2023, respectively. As a lessor of rental equipment, the Company

recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to

pay which is based on the rental contract period and the cumulative amount of revenue recognized to date under that

contract.

For leasing revenue associated with its lease of construction equipment to its customers, the Company, as a

lessor, accounts for the lease component separately from the non-lease components using an allocation of the rental

transaction consideration between the lease component and the non-lease components based on relative stand-alone

selling prices. In developing relative stand-alone selling prices, the Company considers observable stand-alone

selling prices associated with leasing activities and all of the performance obligations relating to non-lease sales and

services associated with a lease of construction equipment to its customers.

The Company evaluates its rights to control of the rental equipment in determining whether the Company acts

as the principal or agent in a rental arrangement whereby the Company is the lessor of the rental equipment to its

customers. When the Company owns the equipment, the Company will act as the principal resulting in the rental

revenue generated being recognized on a gross basis in equipment rental and related services revenue. When the

Company accepts another owner’s equipment into the OWN Program (see Note 18), the Company will evaluate

whether it has control of the equipment that it re-rents to third party customers. When the Company has control of

the equipment, the participant in the OWN Program does not have the ability to redeploy or retrieve the equipment

while under rent. In this instance, the Company will act as the principal resulting in the rental revenue generated

from the customer being presented on a gross basis in equipment rental and related services revenue and the rental

payments owed to the equipment owner being presented as OWN Program payouts in cost of revenues. When the

Company does not have control of the equipment, the equipment owner, at their discretion, has the ability to

redeploy, replace, or retrieve, the equipment under rent, and can arrange for substitute equipment to be delivered and

rented to the Company's customer. In this instance, the Company will act as the agent resulting in the rental revenue

generated from the customer and the rental payments owed to the equipment owner being presented on a net basis in

equipment rental and related services revenue. The Company no longer enters into new lease arrangements with

terms that provide the owner of the equipment with rights to control the equipment during the lease term.

The Company is in the business of selling new and used equipment, parts and supplies, building materials and

hardware supplies, and offers a full suite of services and proprietary digital tools that customers use to manage their

equipment and jobsites more efficiently. Under Topic 606, the Company recognizes revenue when it satisfies a

performance obligation by transferring control over a product or service to a customer. The amount of revenue

recognized reflects the consideration the Company expects to be entitled to in exchange for such products or

services. The contracts generally do not include variable consideration or multiple performance obligations.

Customers are billed after delivery has occurred, and payment terms vary depending on customer profile and

location, type of service and product line. Given the Company’s contracts are typically less than a year in duration,

there are no significant financing components. The profit on new and used equipment sales is included within

operating activities on the consolidated statements of cash flows because this portion of the sales proceeds represent

the retail process associated with such sales to customers and OWN Program participants.

See Note 18 for additional details relating to the Company’s recognition of revenue.

Insurance: The Company is self-insured through a wholly owned Missouri captive insurance subsidiary for

workers’ compensation, automobile, property, and general liability claims below certain deductibles and stop loss

limits. The Company estimates the required liability utilizing actuarial methods based upon various assumptions,

which include, but are not limited to, the Company’s historical loss experience, projected loss development factors,

actual payroll, and other data. The required liability is also subject to adjustment in the future based upon the

changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate

cost per incident. The Company had an accrued liability of $39 million and $26 million for outstanding claims as of

December 31, 2025 and 2024, respectively, included in accrued liabilities on the accompanying consolidated

balance sheets.

The Company is also self-insured for employee medical benefits below certain deductibles and certain stop-loss

limits. The Company expensed $48 million, $32 million, and $25 million during the years ended December 31,

2025, 2024 and 2023 respectively, for costs relating to the employee medical benefit plan. The Company had $4

million and $3 million in accrued liabilities on the consolidated balance sheets for employee medical claims incurred

but not reported as of December 31, 2025 and 2024, respectively.

Sales Tax: The Company collects significant amounts of sales taxes concurrent with its revenue-producing

transactions with customers and remits those taxes to the various governmental agencies as prescribed by the taxing

jurisdictions in which it operates. Such taxes are presented on a net basis in the consolidated statements of net

income.

Manufacturer reimbursements: The Company receives reimbursements from equipment manufacturers for

certain costs incurred to sell, or rent, the OEMs equipment to a customer. When there is an arrangement in place

with the manufacturer that specifies and identifies costs incurred to sell or market the OEM equipment, the

reimbursement is recorded as a contra expense within cost of revenues or selling, general and administrative

expenses in the consolidated statements of net income. Consideration received from a manufacturer in excess of the

specific, identifiable costs to sell or lease the OEM equipment, as well as reimbursements received where there is no

arrangement in place with the manufacturer, are recorded as a reduction to the cost of the equipment asset or ROU

lease asset. Reimbursements due are included in accounts receivable and reimbursements received in advance of the

marketing effort are included in accrued liabilities on the consolidated balance sheets.

For the years ended December 31, 2025, 2024 and 2023, the Company recognized $126 million, $79 million

and $60 million, respectively, as a contra expense for reimbursements from equipment manufacturers for specific,

identifiable costs incurred to sell or market OEM equipment and $0.3 million was recognized as a reduction to the

cost of the equipment asset or ROU lease asset for the year ended December 31, 2025.

Income taxes: The Company accounts for income taxes under the asset and liability method, which requires the

recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been

included in the financial statements. Under this method, the Company determined deferred tax assets and liabilities

on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted

tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on

deferred tax assets and liabilities is recognized in income or expense in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that these assets are more-likely-than-not to be realized. In

making such a determination, the Company considers all available positive and negative evidence, including future

reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and

results of recent operations. If the Company determines that it will not be able to realize the deferred tax assets in the

future, an adjustment to the deferred tax asset valuation allowance will be recorded. The Company records uncertain

tax positions in accordance with FASB ASC Topic 740, Income Taxes (“Topic 740”) on the basis of a two-step

process in which (1) the Company determines whether it is more-likely-than-not that the tax positions will be

sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-

than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50

percent likely to be realized upon ultimate settlement with the related tax authority. Any interest or penalties

incurred related to income tax filings are reported within interest expense, net, in the consolidated statements of net

income.

Fair Value Measurements: Fair value measurements are categorized in one of the following three levels based

on the lowest level input that is significant to the fair value measurement in its entirety:

•Level 1 – Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical

assets or liabilities.

•Level 2 – Observable inputs, other than quoted market prices, in active markets for identical assets or

liabilities.

(a)Quoted prices for similar assets or liabilities in inactive markets;

(b)Quoted prices for identical or similar assets or liabilities in inactive markets;

(c)Inputs other than quoted prices that are observable for the asset or liability;

(d)Inputs that are derived principally from, or corroborated by, observable market data by correlation or

other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for

substantially the full term of the asset or liability.

•Level 3 – Inputs to the valuation methodology are unobservable (i.e., supported by little or no market

activity) and significant to the fair value measure.

Additional disclosures about fair value measurements are presented in Note 21.

Recently Adopted Accounting Pronouncements

Improvements to Income Tax Disclosure: In December 2023, the FASB issued ASU 2023-09, which requires

entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations

before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or

benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to

disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The

Company adopted this guidance on January 1, 2025, and was applied on a prospective basis to all periods presented.

The adoption of this guidance resulted in expanded disclosures and are included in Note 19 - Income Taxes.

Accounting for Convertible Instruments: In August 2020, the FASB issued ASU 2020-06, which simplifies the

accounting for convertible instruments primarily by eliminating the cash conversion and beneficial conversion

models in previous guidance. The Company adopted this guidance on January 1, 2024, using the modified

retrospective approach. The adoption of ASU 2020-06 resulted in the elimination of the beneficial conversion

feature of $2 million related to the Company’s Series A-2 convertible preferred stock, increasing convertible

preferred stock by $2 million with a corresponding decrease to additional paid-in capital. 

Accounting Pronouncements Not Yet Adopted:

Disaggregation of Income Statement Expenses: In November 2024, the FASB issued ASU 2024-03, which is

intended to improve the disclosures about a public entity's expenses and address requests from investors for more

detailed information about the types of expenses in commonly presented expense captions. The guidance is effective

for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after

December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued or

made available for issuance. ASU 2024-03 should be applied on a prospective basis, but retrospective application is

permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its

consolidated financial statements and related disclosures.

Measurement of Credit Losses for Accounts Receivable and Contract Assets: In July 2025, the FASB issued

ASU 2025-05, which provides optional guidance relating to the estimation of expected credit losses on current

accounts receivable and current contract assets. This guidance permits entities to apply a practical expedient when

estimating credit losses that assumes that current conditions as of the balance sheet date do not change for the

remaining life of the asset. ASU 2025-05 is effective for annual reporting periods beginning after December 15,

2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should

be applied prospectively. The Company is currently assessing the impact this guidance will have on our financial

statements.

Improvements to the Accounting for Internal-Use Software: In September 2025, the FASB issued ASU

2025-06, which amends the guidance in ASC 350-40, Intangibles - Goodwill and Other - Internal-Use Software. The

amendments modernize the recognition and disclosure framework for internal-use software costs, removing the

previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective

for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently

evaluating the potential impact of ASU 2025-06 on its consolidated financial statements and related disclosures.

Interim Reporting - Narrow Scope Improvements: In December 2025, the FASB issued ASU 2025-11, which

clarifies interim disclosure requirements and the applicability of ASC 270, Interim Reporting. The objective of the

amendment is to provide further clarity about the current interim disclosure requirements. ASU 2025-11 is effective

for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early

adoption permitted. The Company is currently evaluating the potential impact of ASU 2025-11 on its consolidated

financial statements and related disclosures.

Codification Improvements: In December 2025, the FASB issued ASU 2025-12, which updates U.S. GAAP for

a broad range of topics arising from technical corrections, unintended application of the codification, clarifications,

and other minor improvements. The guidance is effective for fiscal years beginning after December 15, 2026, and

interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is

currently evaluating the potential impact, if any, on the consolidated financial statements.