What Custom Truck One Source, Inc. told the SEC could break it.

Custom Truck One Source manufactures and assembles specialty equipment from purchased raw materials (notably steel and aluminum), component parts and finished goods, so increases in the costs of those inputs (and of shipping/transportation) can cause manufacturing interruptions, delays and inefficiencies, and its profit margins would decrease if input prices rise and it is unable to pass those increases on to customers — making its margins sensitive to commodity and component cost inflation.

“In addition, our profit margins would decrease if prices of purchased raw materials, component parts or finished goods increase and we are unable to pass on those increases to our customers.”

Custom Truck operates a capital-intensive equipment rental/sales model funded with significant debt, including its 2029 Secured Notes whose indenture contains restrictive covenants limiting its (and certain subsidiaries') ability to incur additional debt or issue preferred stock, pay dividends, redeem stock or make other distributions; these covenants and its leverage constrain financial flexibility, and rising interest rates, tighter credit or covenant pressure could increase its borrowing costs and limit its ability to fund fleet investment.

“The Indenture contains covenants that limit the Issuer's (and certain of its subsidiaries') ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock, or make other distributions;”

Custom Truck's manufacturing is concentrated in its Kansas City, Missouri 'mega-center,' which performs the majority of its production and manufacturing; a prolonged work stoppage at one or several principal manufacturing facilities — whether from union or non-union labor matters (about 2% of its U.S. workforce is unionized) — or a disruption at this central production hub could materially and adversely affect its ability to build and deliver equipment.

“Kansas City, Missouri is also home to our mega-center which performs the majority of our production and manufacturing.”

Custom Truck is exposed to U.S. trade policy: the government has announced or implemented renegotiation/termination of trade agreements and tariffs on foreign goods and raw materials such as steel and aluminum, which have resulted and may further result in increased prices for imported goods and raw materials it uses; combined with supply-chain disruptions (from suppliers or customers) and reshoring trends, these tariff and trade dynamics could raise costs, interrupt manufacturing and pressure margins.

“The U.S. government previously announced, and in some cases implemented, an approach to trade policy that includes renegotiating or potentially terminating certain trade agreements, as well as implementing or increasing tariffs on foreign goods and raw materials such as steel and aluminum. These tariffs and potential tariffs have resulted, and may further result, in increased prices for certain imported goods and raw materials.”