v3.26.3
Segments
 9 Months Ended
Sep. 30, 2026
Segment Reporting [Abstract]  
Segments
Note 14: Segments
Our operations are primarily organized and managed by operating segment. Beginning January 1, 2026, we revised our reportable segments to combine our legacy ERS segment (excluding certain used sales) with the rental-related aftermarket activities portion of our legacy APS segment to form SER and to combine our legacy TES segment (plus certain used sales previously accounted for by ERS) with the sales-related aftermarket activities portion of our legacy APS segment to form STEM. Prior period amounts have been recast to reflect the change to two reportable segments.
Under this new segment reporting, operating segment performance and resource allocations are based on Adjusted EBITDA. Segment Adjusted EBITDA is defined as segment operating income or loss before depreciation and amortization, further excluding the effects of purchase accounting adjustments and the impact of sales-type lease accounting for certain leases containing rental purchase options (or “RPOs”).
Adjusted EBITDA aids the Chief Operating Decision Maker (“CODM”) in managing the inventory levels and rental fleet, entering into significant revenue contracts, expanding into new markets or launching new products, making capital expenditures, designing and implementing key marketing strategies, making personnel changes, and approving operating budgets. Additionally, the new segment structure better represents the financial profile and economics of our rental and sales and manufacturing businesses. Significant expense categories that are regularly reviewed by the operating segments’ CODM are disclosed below. The CODM for both segments is the Company’s Chief Executive Officer. Transactions between our segments consist of new equipment produced by STEM that is sold to SER for inclusion in its fleet of rental equipment. Additionally, SER sells certain used equipment to STEM. Beginning January 1, 2026, transactions between segments are accounted for as if completed on an arm’s length basis using a cost-plus methodology. However, intersegment sales and purchases are eliminated in consolidation and do not affect consolidated results. The Company’s segment results are presented in the tables below:
Three Months Ended September 30,
20262025
(in $000s)SERSTEMSERSTEM
Revenue from external customers
Rental$152,696$—$127,142$—
Equipment sales39,446270,15134,565286,018
Parts sales and services19,89113,04021,18213,151
Total revenue from external customers212,033283,191182,889299,169
Intersegment sales8,121158,9673,864108,975
Rental AR provision(1)
668—2,426—
Sales-type lease adjustment(2)
2,528—667—
Total Segment Revenue223,350 442,158 189,846 408,144 
Segment Expenses:
Cost of rental revenue, excluding depreciation(3)
32,507—30,133—
Cost of equipment sales, net of purchase accounting, sales-type leases and depreciation(4)
29,892232,76123,519240,732
Cost of parts and services, excluding depreciation(5)
17,39510,89418,0139,390
Cost of intersegment sales7,432133,7793,864108,975
Rental AR provision(1)
668—2,426—
Total cost of segment revenue87,894377,43477,955359,097
Selling, general and administrative expense13,60017,26912,42617,598
Floor plan interest expense—10,819—13,785
Total Segment Expenses101,494405,52290,381390,480
Segment Adjusted EBITDA$121,856$36,636$99,465$17,664
Nine Months Ended September 30,
20262025
(in $000s)SERSTEMSERSTEM
Revenue from external customers
Rental$434,971$—$364,217$—
Equipment sales128,882856,908104,081846,477
Parts sales and services60,76238,76964,50036,498
Total revenue from external customers624,615895,677532,798882,975
Intersegment sales19,024347,57031,190301,363
Rental AR provision(1)
5,234—6,629—
Sales-type lease adjustment(2)
313—3,103—
Total Segment Revenue649,186 1,243,247 573,720 1,184,338 
Segment Expenses:
Cost of rental revenue, excluding depreciation(3)
97,797—90,265—
Cost of equipment sales, net of purchase accounting, sales-type leases and depreciation(4)
89,248727,22167,404711,723
Cost of parts and services, excluding depreciation(5)
53,27729,53956,98325,468
Cost of intersegment sales17,270292,56031,190301,363
Rental AR provision(1)
5,234—6,629—
Total cost of segment revenue262,8261,049,320252,4711,038,554
Selling, general and administrative expense41,80854,89142,90050,114
Floor plan interest expense—32,477—40,846
Total Segment Expenses304,6341,136,688295,3711,129,514
Segment Adjusted EBITDA$344,552$106,559$278,349$54,824
Adjusted EBITDA is the operating result whereby our segments are evaluated for performance and resource allocation. The following table presents a reconciliation of segment adjusted EBITDA to consolidated income (loss) before income taxes:
Three Months Ended September 30,
in 000s20262025
SERSTEMTotalSERSTEMTotal
Segment Adjusted EBITDA$121,856 $36,636 $158,492 99,465 17,664 $117,129 
Reconciling Items:
Intersegment margin(25,877)— 
Corporate and non-allocated selling, general and administrative expenses(6)
(21,673)(21,166)
Depreciation and amortization(69,068)(67,048)
Interest expense, net (non-floor plan)(26,247)(26,462)
Non-cash purchase accounting impact(4)
(1,747)(3,406)
Transaction and integration costs(8,471)(3,246)
Sales-type lease adjustment(2)(4)
(733)(465)
Share-based payments(3,269)(2,080)
Consolidated income (loss) before income taxes$1,407 $(6,744)
Nine Months Ended September 30,
in 000s20262025
SERSTEMTotalSERSTEMTotal
Segment Adjusted EBITDA$344,552 $106,559 $451,111 278,349 54,824 $333,173 
Reconciling Items:
Intersegment margin(56,764)— 
Corporate and non-allocated selling, general and administrative expenses(6)
(68,665)(70,356)
Depreciation and amortization(206,312)(195,985)
Interest expense, net (non-floor plan)(77,816)(78,518)
Non-cash purchase accounting impact(4)
(7,715)(11,502)
Transaction and integration costs(18,361)(12,209)
Sales-type lease adjustment(2)(4)
(1,021)(1,482)
Share-based payments(7,879)(6,259)
Consolidated income (loss) before income taxes$6,578 $(43,138)

(1) Specifically identifiable lease revenue receivables not deemed probable of collection are recorded as a reduction of rental revenue. This is classified as a segment expense for Segment Adjusted EBITDA reviewed by the CODM.
(2) Impact of sales-type lease accounting for certain leases containing RPOs: this impact is excluded from the measure of Adjusted EBITDA utilized by our CODM to allocate resources and to assess the performance of our segments as we believe continuing to reflect the transactions as an operating lease better reflects the economics of the transactions given our large portfolio of rental contracts.
(3) Cost of rental revenue, excluding depreciation: reflects repairs and maintenance costs of rental equipment, parts costs, labor and other overheads related to maintaining the rental fleet, and freight associated with the shipping of rental equipment.
(4) Cost of equipment sales, net of purchase accounting, sales-type leases and depreciation: reflects production and inventory costs associated with new units sold, labor and other overheads related to production, and freight associated with the shipping and receiving of equipment. Cost of equipment sales also includes the net book value of rental units sold. These costs are net of (i) the impact of purchase accounting step-up in basis on equipment and inventory acquired ("non-cash purchase accounting impact") and (ii) the impact of sales-type lease accounting for certain leases containing RPOs, further excluding depreciation.
(5) Cost of parts and services sales, excluding depreciation: reflects inventory costs associated with parts costs and freight associated with the shipping and receiving of parts, further excluding depreciation.
(6) Certain costs are not allocated to the segments as they represent Corporate-level activities. These costs primarily include people-related costs, enterprise technology, insurance coverage, and professional services required to support the Company’s national scale, public-company requirements, and centralized corporate functions.
Total assets by operating segment are not disclosed herein because assets by operating segment data are not reviewed by the CODM to assess performance and allocate resources.
The following table presents total assets by country:
(in $000s) September 30, 2026December 31, 2025
Assets:
United States$3,489,762 $3,344,032 
Canada106,583 97,422 
       Total Assets$3,596,345 $3,441,454