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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-04-02 · 85 added, 112 removed, 119 unchanged (62% of the section changed)

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Demand for our services depends upon the level of spending by these companies for exploration, production, development and field management activities, which depends, in large part, on oil and natural gas prices.

Significant fluctuations in domestic oil and natural gas exploration and development activities related to commodity prices, as we have recently experienced, have affected, and will continue to affect, demand for our services and our results of operations, and such fluctuations continue to be the single most important factor affecting our business and results of operations.

We had two crews operating throughout the fourth quarter in the United States and resumed our seasonal operations in Canada.

High crew utilization in the fourth quarter resulted in improved margins and profitability.

In the first quarter, we started the year with two crews in the US and continued to keep our crews highly utilized in Canada.

We have a strong backlog of projects through the end of the second quarter of 2025.

In the fourth quarter of 2024, we began testing new single node channels from multiple vendors, which have improved our team’s efficiency and margins.

We are still evaluating our options to upgrade to these single node channels based on the results of our field operations and market conditions.

services and our results of operations, and such fluctuations continue to be the single most important factor affecting our business and results of operations.

The Company had one large channel crew and three smaller channel crews operating in the fourth quarter in the United States and into the first quarter of 2026.

High crew utilization in the fourth quarter resulted in improved margins and profitability, and we expect an increase in utilization and revenue in the first quarter of 2026.

We resumed our Canadian operations in the fourth quarter of 2025 with two crews and moved into the first quarter of 2026 with three large channel count crews.

We anticipate our Canadian operations to have a successful first quarter.

In August 2025, Dawson Operating LLC (“Dawson Operating”), a wholly-owned subsidiary of Dawson Geophysical Company, entered into an equipment purchase agreement with GTC, Inc.

(“GTC”), a wholly-owned subsidiary of Geospace Technologies Corporation (“Geospace”), pursuant to which, among other things, Dawson Operating agreed to acquire new single point node channels from GTC for an aggregate purchase price of approximately $24.2 million (the “Equipment Purchase Agreement”) subject to the terms and conditions thereof.

The Company paid cash of approximately $4.8 million upon execution of the Equipment Purchase Agreement, agreed to pay approximately $1.2 million in cash upon final delivery, and agreed to finance approximately $18.2 million through separate promissory notes to be issued in connection with each delivery of equipment (each, a “Geospace Note” and collectively, the “Geospace Notes”).

Each Geospace Note is payable by Dawson Geophysical Company and Dawson Operating, jointly and severally, to GTC.

The Geospace Notes will each have a term of 36 months, bear a fixed interest rate of 8.75% annually and may be prepaid in whole or in part at any time without penalty.

As of December 31, 2025, we have taken delivery of $20.9 million of equipment and issued five Geospace Notes with an aggregate principal of approximately $15.5 million.

We have observed significant demand for this new equipment from our customers during 2025, and into the first half of 2026.

While our revenues are mainly affected by the level of client demand for our services, our revenues are also affected by the pricing for our services that we negotiate with our clients and the productivity and utilization level of our data acquisition crews.

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operations and Canada operations.

The revenue for both segments is generated by the same

services, which utilize the same type of equipment and personnel.

The revenue for both segments is generated by the same services, which utilize the same type of equipment and personnel.

The performance of our segments is evaluated primarily on Adjusted EBITDA.

We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation, depletion and amortization and (iv) other charges, such as severance expenses.

We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income

tax expense or benefit, (iii) depreciation and amortization and (iv) (iv) non-recurring and other charges, such as strategic transaction expenses or severance expenses.

Discussions with Controlling Stockholder

As of December 31, 2025, Wilks Brothers, LLC (“Wilks”) and its affiliates control approximately 80% of our common stock.

We have been in discussion with Wilks and certain of its affiliates with respect to one or more transactions involving assets owned by Wilks and/or certain of its affiliates, which may include, among other things, asset contributions or sales, a business combination transaction or other similar transactions.

In connection with these discussions, we incurred $528,000 in expenses in the fourth quarter of 2025, which is included in general and administrative expense in our consolidated statement of operations for the year ended December 31, 2025.

There is no guarantee that we will enter into a definitive agreement with any such parties regarding any such transaction.

The terms of any potential agreement between us and Wilks, and/or any of its affiliates, would be contingent on certain conditions, including completion of due diligence and the negotiation of definitive transaction documents.

Our Board of Directors has formed a special committee of independent directors (the “Special Committee”), which has retained independent legal and financial advisors, to evaluate, negotiate and make recommendations to the Board regarding any such transaction with Wilks and/or its affiliates, including whether to pursue or decline to pursue any proposed transaction.

Results of Operations

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Fee Revenues.

Acquisition revenues for the year ended December 31, 2024, were $40.7 million compared to $49.0 million for the same period of 2023.

The decrease in revenues for the year ended December 31, 2024, compared to the same period of 2023 was primarily a result of decreased demand for our services.

Fee revenues for the year ended December 31, 2025, were $46.3 million compared to $40.7 million for the same period of 2024.

The increase in revenues was primarily a result of increased demand for our services.

Canadian Fee Revenues.

Acquisition revenues for the year ended December 31, 2024, were $12.7 million compared to $12.4 million for the same period of 2023.

The increase in revenues for the year ended December 31, 2024, compared to the same period of 2023 was primarily a result of a slight increase in demand for our services in Canada, and utilization of single node channels in our operations.

Fee revenues for the year ended December 31, 2025, were $15.5 million compared to $12.7 million for the same period of 2024.

The increase in revenues was primarily a result of increased demand for our services in Canada.

Total Revenues.

Revenue for the year ended December 31.

2024, were $74.2 million compared to $96.8 million for the same period of 2023.

Total revenues included a decrease of $14.7 million in reimbursable revenues.

Revenues for the year ended December 31, 2025, were $75.6 million compared to $74.2 million for the same period of 2024.

Fee Operating Expenses.

Acquisition expenses for the year ended December 31, 2024, decreased to $32.8 million compared to $39.9 million for the same period of 2023.

Acquisition expenses decreased from 81% of revenues in 2023 to 80% of revenues due to cost reduction initiatives throughout the year.

The decrease in operating expenses was due to an overall decrease in crew production and utilization and to cost reduction initiatives.

Fee operating expenses for the year ended December 31, 2025, increased to $37.7 million compared to $32.8 million for the same period of 2024.

Acquisition expenses remained approximately 80% of revenues in 2024 and 2025.

The increase in operating expenses was due to an overall increase in crew production and utilization.

Canadian Fee Operating Expenses.

Acquisition expenses for the year ended December 31, 2024, decreased to $9.5 million compared to $11.6 million for the same period of 2023.

Fee operating expenses for the year ended December 31, 2025 increased to $11.1 million compared to $9.5 million for the same period of 2024.

Acquisition expenses decreased from 75% of revenues to 72% of revenues due to utilization of single node channels in our operations and higher channel count jobs in 2025.

The decrease in operating expenses was mainly due to increased operational efficiencies at the crew level.

The increase in operating expenses was mainly due to increased demand for our services.

Reimbursable Revenues and Costs .

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General and administrative expenses decreased 9% to $9.0 million for the year ended December 31, 2025, compared to $9.9 million for the same period of 2024.

The primary factors for the decrease in general and administrative expenses are related to continued cost management and streamlining procedures as well as cost savings related to changes to the executive personnel during the fourth quarter of 2023.

We anticipate general and administrative expenses to continue to decrease in 2025 due to continued focus on maintaining an efficient and cost-effective administrative structure.

Severance Expenses.

For the year ended December 31, 2024, we recorded severance expenses of $0.5 million in connection with the termination of a portion of our workforce.

In December 2023, we recorded severance expenses of $2.2 million in connection with the termination of the Company’s (i) President and Chief Executive Officer, (ii) Chief Financial Officer, Executive Vice President, Secretary and Treasurer and (iii) Chief Operating Officer and Executive Vice President.

General and administrative expenses in 2025 included $528,000 in strategic transaction costs related to a potential transaction(s) with our largest shareholder, Wilks Brothers, LLC, and/or any of its affiliates, as described above under “Discussions with Controlling Stockholder.” The primary factors for the decrease in general and administrative expenses are related to continued cost management and streamlining procedures.

General and administrative expenses did not include any severance expenses for the year ended December 31, 2025, though we did record $0.5 million of severance expenses for the same period of 2024 in connection with the termination of a portion of our workforce.

We anticipate general and administrative expenses to remain similar to 2025 during 2026, excluding additional strategic transaction costs.

Depreciation Expense.

Depreciation for the year ended December 31, 2024, was $5.7 million compared to $8.5 million for the same period of 2023.

The decrease in depreciation expense is a result of limiting capital expenditures to necessary maintenance capital requirements in recent years.

Our depreciation expense is expected to remain flat or decline slightly during 2025 primarily due to limited capital expenditures to maintain our existing asset base.

Depreciation for the years ended December 31, 2025 and 2024, was $5.7 million.

The stability of our depreciation expense is a result of limiting capital expenditures to necessary maintenance capital requirements in recent years.

Our depreciation expense is expected to increase during 2026 primarily due to the asset acquired pursuant to the Equipment Purchase Agreement during the second half of 2025 in addition to our normal maintenance capital expenditures needed to maintain our existing asset base.

Our total operating costs for the year ended December 31, 2025 were $77.2 million, representing a 2% decrease from the corresponding period of 2024.

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Income Tax (expense) benefit.

Income tax expense was $7,000 for the year ended December 31, 2024, compared to income tax benefit of $96,000 for the same period of 2023.

Income tax expense was $6,000 for the year ended December 31, 2025, compared to $7,000 for the same period of 2024.

The effective tax rates for the years ended December 31, 2025, and 2024 were approximately -0.3% and -0.2%, respectively.

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Use of Adjusted EBITDA (Non-GAAP measure)

We define Adjusted EBITDA as net income (loss) plus interest expense, interest income, income taxes, depreciation and amortization expense and severance expenses.

We define Adjusted EBITDA as net income (loss) plus interest expense, interest income, income taxes, depreciation, and amortization expense, and non-recurring and other charges, such as strategic transaction expenses or severance expenses.

Our management uses Adjusted EBITDA as a supplemental financial measure to assess:

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When assessing our operating performance, investors and others should not consider this data in isolation or as a substitute for net income (loss), cash flow from operating activities or other cash flow data calculated in accordance with GAAP.

In addition, our Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies since other companies may not calculate Adjusted EBITDA in the same manner as us.

In addition, our Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies because other companies may not calculate Adjusted EBITDA in the same manner as us.

Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes:

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Year Ended December 31,

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

Changes in working capital and other items

Non-cash adjustments to net (loss) income

Strategic transaction costs

Severance expense

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Depreciation and amortization

Interest income, net

Income tax expense (benefit)

Interest expense (income), net

Income tax expense

Strategic transaction costs

Severance expense

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Accordingly, our cash position depends (as do our revenues) on the level of demand for our services.

Historically, cash generated from our operations along with cash reserves and borrowings from commercial banks have been sufficient to fund our working capital requirements and, to some extent, our capital expenditures.

Management believes cash flow from operations, cash on hand and amounts available under our Revolving Credit Note (defined below) are sufficient to fund operating and investing cash flow requirements, as well as our obligations under the Geospace Notes.

The following table shows our sources and uses of cash (in thousands) for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Net cash (used in) provided by:

Net cash provided by (used in):

Operating activities

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Year Ended December 31, 2025 versus Year Ended December 31, 2024

Net cash used in operating activities was $1.9 million for the year ended December 31, 2024, and net cash provided by operating activities was $814,000 for the same period of 2023.

In 2023, cash provided by operating activities included receipt of $3 million from an employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”).

The decrease in cash provided by operating activities to cash used in operating activities was primarily due to changes in operating assets and liabilities.

Net cash provided by operating activities was $14.0 million for the year ended December 31, 2025, and net cash used in operating activities was $1.9 million for the same period of 2024.

The increase in cash provided by operating activities to cash used in operating activities was primarily due to an increase in revenue, improved margins and changes in operating assets and liabilities.

Net cash used in investing activities was $6.7 million for the year ended December 31, 2025, and includes cash capital expenditures of $6.8 million and acquisitions of short-term investments of $370,000, offset by $468,000 in proceeds from the disposal of assets.

Net cash used in investing activities was $0.7 million for the year ended December 31, 2024, and includes cash capital expenditures of $1.9 million, offset by $533,000 in proceeds from the disposal of assets, $332,000 proceeds from insurance claims and $265,000 proceeds from maturity of short-term investments.

Net cash used in investing activities was $4.5 million for the year ended December 31, 2023, and includes cash capital expenditures of $3.7 million and cash acquisition of short–term investments of $1.0 million associated with the acquisition of Breckenridge Geophysical, LLC (“Breckenridge”) assets, offset by $217,000 in proceeds from the disposal of assets.

Net cash used in financing activities was $3.7 million for the year ended December 31, 2025, and includes principal payments of $2.7 million on our notes and $934,000 on our finance leases.

Net cash used in financing activities was $11.6 million for the year ended December 31, 2024, and includes dividend payment of approximately $9.9 million, principal payments of $947,000 on our notes and $680,000 on our finance leases.

Net cash used in financing activities was $4.2 million for the year ended December 31, 2023, and includes principal payments of $896,000 on our notes and $253,000 on our finance leases and outflows of $3.1 million associated with the acquisition of Breckenridge assets.

We continually strive to supply our clients with technologically advanced 3-D data acquisition recording services and data processing capabilities.

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We incurred net losses of $1.9 million for the year ended December 31, 2025, and $4.1 million for the year ended December 31, 2024.

As of December 31, 2024, we had $1.4 million in cash, and a positive working capital balance of $4.6 million.

We believe that our cash flows from operations, and our current financial position are adequate to fund our continued operations for the next 12 months.

As of December 31, 2025, we had $4.9 million in cash, and a negative working capital balance of $5.0 million.

We believe that our cash flows from operations, and our current financial position are adequate to fund our continued operations and meet our obligations for the next 12 months.

Capital Resources .

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We believe that our capital resources, including our cash and cash flow from operations are sufficient to meet our operational needs.

Dominion Credit Facility.

On September 30, 2019, we entered into a Loan and Security Agreement with Dominion Bank, a Texas state bank (“Dominion Bank”).

On September 30, 2023, we entered into a Fifth Loan Modification Agreement (the “Fifth Modification Agreement”) to the Loan and Security Agreement (as amended by (i) that certain Loan Modification Agreement dated as of September 30, 2020, (ii) that certain Second Loan Modification Agreement dated as of September 30, 2021, (iii) that certain Third Loan Modification Agreement dated as of September 30, 2022, (iv) that certain Fourth Modification Agreement dated as of March 21, 2023, and (v) the Fifth Modification

Agreement, the “Loan Agreement”).

The Loan Agreement provided for a secured revolving credit facility (the “Revolving Credit Facility”) in an amount up to the lesser of (I) an amount equal to the Borrowing Base or (II) $5 million.

Our obligations under the Loan Agreement were secured by a Certificate of Deposit with Dominion Bank for $5 million (the “Deposit”) in our collateral account.

On May 2, 2024, the collateral deposit of $5 million was released and the Loan Agreement was terminated.

Dominion Letters of Credit.

As of December 31, 2024, we have no outstanding letters of credit.

Our previously issued letter of credit in the amount of $265,000 was not renewed on August 9, 2024.

Equify Credit Facility.

On October 31, 2025, Dawson Geophysical Company and Dawson Operating, as borrowers (the “Borrowers”), entered into a Revolving Credit Note (the “Revolving Credit Note”) in favor of Equify Financial, as lender (the “Lender”), a related party affiliated through common control.

Pursuant to the Revolving Credit Note, the Borrowers, jointly and severally, may, from time to time until November 20, 2028, request loans from the Lender for up to an aggregate principal amount of $5,035,032.

The loans outstanding under the Revolving Credit Note are payable by the Borrowers in thirty-six (36) monthly installments of principal in the amount of $139,862, together with all accrued and unpaid interest on the outstanding principal balance thereunder, commencing on December 20, 2025, and continuing thereafter until the maturity date.

The interest rate applicable to loans outstanding under the Revolving Credit Note is a rate per annum equal to 13%.

The maximum borrowing limit under the Revolving Credit Note is initially $5,035,032, and such amount is reduced by $139,862 on each monthly payment date.

The Borrowers may prepay up to 75% of the then outstanding principal and accrued but unpaid interest at any time without a prepayment fee.

The obligations under the Revolving Credit Note are secured by a lien on our vibrator energy source vehicles, pursuant to a Security Agreement by and between us and Lender, dated as of October 31, 2025.

All outstanding amounts owed under the Revolving Credit Note become due and payable no later than the maturity date of November 20, 2028, and are subject to acceleration upon the occurrence of events of default which we consider usual and customary for an agreement of this type, including failure to make payments under the Revolving Credit Note, non-performance of covenants and obligations or insolvency or bankruptcy.

As of December 31, 2025, there were no outstanding draws on this line of credit and the amount available to borrow was approximately $4.9 million.

Letters of Credit.

As of December 31, 2025, we have one letter of credit in the amount of $370,000 to support our insurance policies.

The letter of credit is secured by a certificate of deposit with First Financial Bank.

Other Indebtedness.

As of December 31, 2024, we have one note payable to a finance company for various insurance premiums totaling $168,000.

As of December 31, 2025, we have two notes payable to a finance company for various insurance premiums totaling $258,000.

In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases.

Our Consolidated Balance Sheet as of December 31, 2025 includes finance leases of $2.6 million.

Geospace Notes Payable.

In connection with the Purchase Agreement, we have agreed to the terms under the Geospace Notes.

We executed our first Geospace Note in August of 2025, for approximately $3.6 million.

Our second Geospace Note was executed in September 2025 for approximately $3.9 million.

Our third Geospace Note was executed in October of 2025 for approximately $3.5 million.

Our fourth Geospace Note was executed in November of 2025 for approximately $3.5 million.

Our fifth Geospace Note was executed in December of 2025 for approximately $0.9 million.

Each Note will be for a term of 36 months with a fixed interest rate of 8.75% the combined monthly principal and interest payments due on these notes totals approximately $489,000.

These notes are collateralized by both the equipment purchased and two owned properties in Midland that consist of a 61,402 square foot property used as a field office and a 6,600 square foot property used as an inventory and storage facility.

As of December 31, 2025 we have a principal balance on these five notes payable of $14.7 million.

We received the sixth and final delivery of equipment in January of 2026 and executed our sixth note in January of 2026 for approximately $2.7 million.

Contractual Obligations.

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During the year ended December 31, 2024, management tested two of its asset groups for impairment through estimating the fair value of certain assets within the asset groups using a market approach or cost approach, as applicable.

Because the fair value of these assets collectively exceeded the carrying value of the asset group, no impairment charges were recognized for the year ended December 31, 2024 or 2023.

Because the fair value of these assets collectively exceeded the carrying value of the asset group, no impairment charges were recognized for the year ended December 31, 2024.

No impairment test was required during the year ended December 31, 2025.

Income Taxes.

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The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Our methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including determining our annual effective tax rate and the valuation of deferred tax assets, which can create a variance between actual results and

estimates and could have a material impact on our provision or benefit for income taxes.

Due to recent operating losses and valuation allowances, we may recognize reduced or no tax benefits on future losses on the Consolidated Statements of Operations and Comprehensive Loss.

Our effective tax rates differ from the statutory federal rate of 21% for certain items such as state and local taxes, valuation allowances, and non-deductible expenses.

Critical Accounting Policies

Revenue Recognition.

Our services are provided under cancelable service contracts which usually have an original expected duration of one year or less.

These contracts are either turnkey or term agreements.

Under both types of agreements, we recognize revenue as the services are performed.

Revenue is generally recognized based on receiver layout and pickup compared to total number of receivers anticipated to be recorded on the survey using the total estimated revenue for the service contract.

In the case of a cancelled service contract, the client is billed and revenue is recognized for any third party charges and square miles of data recorded up to the date of cancellation.

We also receive reimbursements for certain out-of-pocket expenses under the terms of the service contracts.

The amounts billed to clients are included at their gross amount in the total estimated revenue for the service contract.

Clients are billed as permitted by the service contract.

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections.

If billing occurs prior to the revenue recognition or billing exceeds the revenue recognized, the amount is considered deferred revenue and a contract liability.

Conversely, if the revenue recognition exceeds the billing, the excess is considered an unbilled receivable and a contract asset.

As services are performed, those contract liabilities and contract assets are recognized as revenue and expense, respectively.

In some instances, third-party permitting, surveying, drilling, helicopter, equipment rental and mobilization costs that directly relate to the contract are utilized to fulfill the contract obligations.

These fulfillment costs are capitalized in other current assets and amortized based on the total square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated fulfillment costs for the service contract.

Estimates for total revenue and total fulfillment cost on any service contract are based on certain qualitative and quantitative judgments supported by underlying facts.

Management considers a variety of factors such as whether various components of the performance obligation will be performed internally or externally, cost of third party services, and facts and circumstances unique to the performance obligation in making these estimates.

Additionally, our policy includes (i) ignoring the financing component when estimating the transaction price for service contracts completed within one year, (ii) excluding sales tax collected from the customer when determining the transaction price, and (iii) expensing incremental costs to obtain a customer contract if the amortization period for those costs would otherwise be one year or less.

We lease certain vehicles, seismic recording equipment, real property and office equipment under lease agreements.

We evaluate each lease to determine its appropriate classification as an operating lease or a finance lease for financial reporting purposes.

We are the lessee in a lease contract when we obtain the right to control the asset.

The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Texas, and Plano, Texas, and Calgary, Alberta, and Wheatland County, Alberta.

The assets and liabilities under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair market value of the related assets.

Assets under finance leases are amortized using the straight-line method over the initial lease term.

Amortization of assets under finance leases is included in depreciation expense.

For operating leases, where readily determinable, we use the implicit interest rate in determining the present value of future minimum lease payments.

In the absence of an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date.

We give consideration to our outstanding debt, as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

The ROU assets are amortized to operating lease cost over the lease terms on a straight-line basis.

We do not recognize leases with an initial term of 12 months or less and we do not separate lease and non-lease components.

Several of our leases include options to renew, with renewal terms that can extend from one to 10 years or more.

The exercise of lease renewal options is primarily at our discretion.

To measure operating lease recognition, we evaluate our lease agreements to determine if they have economic incentives for renewal or options to purchase.

We deem leasehold improvements as one of the few economic incentives that would entice us to renew a lease and all of our leasehold improvements are currently fully amortized.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) .

ASU 2023-07 seeks to improve disclosures about a public entity’s reportable segments and add disclosures around a reportable segment’s expenses.

The updated guidance is effective for our annual periods beginning January 1, 2024, and interim periods within fiscal years beginning January 1, 2025.

The Company adopted this ASU 2023-07 for the fiscal year ended December 31, 2024, as required under this standard.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) .

ASU 2023-09 seeks to improve transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures.

The updated guidance is effective for the Company on January 1, 2025.

The Company does not expect the adoption of ASU 2023-09 to have a material impact on its financial statements and disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, ASU 2024-03 enhances the disclosures required for certain expense captions in the Company's annual and interim consolidated financial statements.

This ASU is effective prospectively or retrospectively for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard on its disclosures

The tax years that are open to examination for the U.S.

are for years after 2021, for Canada and Texas it is years after 2020.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis