What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-11 compared with 2025-03-11 · 265 added, 278 removed, 787 unchanged (41% of the section changed)

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We have audited the accompanying consolidated balance sheets of Mistras Group, Inc.

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income (loss), of comprehensive income (loss), of equity and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements").

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of income (loss), of comprehensive income (loss), of equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, in 2025 the Company changed the manner in which it accounts for certain costs incurred at its operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services.

Basis for Opinions

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We have served as the Company’s auditor since 2023.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors Mistras Group, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of income (loss), comprehensive income (loss), equity and cash flows of Mistras Group, Inc.

and subsidiaries (the Company) for the year ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2013 to 2023.

Short Hills, New Jersey

March 15, 2023, except for Note 19, as to which the date is March 11, 2025

Mistras Group, Inc.

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Additional paid-in capital 256,863 250,832

Accumulated Deficit ( 9,984 ) ( 28,942 )

Retained earnings (accumulated deficit) 6,853 ( 9,984 )

Accumulated other comprehensive loss ( 29,111 ) ( 42,682 )

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Selling, general and administrative expenses 139,876 135,452 147,243

Bad debt provision for troubled customers, net of recoveries — — 42

Reorganization and other costs 12,654 5,517 12,278

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Depreciation and amortization 8,638 9,407 10,104

Acquisition-related expense, net 2 9 76

Income (loss) from operations 40,572 39,826 ( 1,904 )

Other income ( 1,485 ) — —

Other expense (income), net 3,451 ( 1,485 ) —

Interest expense 14,643 17,067 16,761

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Common stock Additional

paid-in capital Accumulated Deficit Accumulated

paid-in capital Retained earnings (accumulated deficit) Accumulated

comprehensive loss Total

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Balance at December 31, 2022 29,895 $ 298 $ 243,031 $ ( 11,489 ) $ ( 33,390 ) $ 198,450 $ 299 $ 198,749

Net loss — — — 6,499 — 6,499 75 6,574

Net income (loss) — — — ( 17,453 ) — ( 17,453 ) 8 ( 17,445 )

Other comprehensive income, net of tax — — — — 5,054 5,054 4 5,058

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Balance at December 31, 2023 30,598 $ 305 $ 247,165 $ ( 28,942 ) $ ( 28,336 ) $ 190,192 $ 311 $ 190,503

Net income (loss) — — — ( 17,453 ) — ( 17,453 ) 8 ( 17,445 )

Other comprehensive loss, net of tax — — — — 5,054 5,054 4 5,058

Net income — — — 18,958 — 18,958 12 18,970

Other comprehensive income (loss), net of tax — — — — ( 14,346 ) ( 14,346 ) 4 ( 14,342 )

Share-based compensation — — 5,072 — — 5,072 — 5,072

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Balance at December 31, 2024 31,010 $ 402 $ 250,832 $ ( 9,984 ) $ ( 42,682 ) $ 198,568 $ 327 $ 198,895

Net income (loss) — — — 18,958 — 18,958 12 18,970

Other comprehensive loss, net of tax — — — — ( 14,346 ) ( 14,346 ) 4 ( 14,342 )

Net income — — — 16,837 — 16,837 84 16,921

Other comprehensive income, net of tax — — — — 13,571 13,571 130 13,701

Share-based compensation — — 7,785 — — 7,785 — 7,785

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Deferred income taxes 304 ( 4,868 ) ( 5,281 )

Share-based compensation expense 5,072 5,712 5,335

Impairment charges — 13,799 —

Share-based compensation 7,785 5,072 5,712

Goodwill impairment charges — — 13,799

Bad debt provision for troubled customers, net of recoveries 1,755 846 346

Change in allowance for credit losses 846 346 —

Foreign currency (gain) loss ( 1,805 ) 1,030 ( 208 )

Payment of finance costs — — ( 400 )

Fair value adjustments to contingent consideration — — 45

Foreign currency loss (gain) 3,451 ( 1,805 ) 1,030

Other ( 2,635 ) ( 437 ) ( 437 )

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Repayments of revolver ( 61,900 ) ( 83,501 ) ( 77,100 )

Payments of financing costs — — ( 147 )

Payment of contingent consideration for business acquisitions — — ( 405 )

Taxes paid related to net share settlement of share-based awards ( 1,657 ) ( 1,306 ) ( 1,572 )

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Description of Business

Mistras Group, Inc., together with its subsidiaries (the "Company"), is a leading “one source” multinational provider of integrated technology-enabled asset protection solutions helping to maximize the safety and operational uptime for civilization’s most critical industrial and civil assets.

Backed by an innovative, data-driven asset protection portfolio, proprietary technologies and decades-long legacy of industry leadership, the Company helps customers with asset-intensive infrastructure in the oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), other process industries and infrastructure, research and engineering and other industries towards achieving and maintaining operational excellence.

By supporting these organizations that help fuel our vehicles and power our society;

inspecting components that are trusted for commercial, defense, and space craft;

building real-time monitoring equipment to enable safe travel across bridges;

and helping to propel sustainability, the Company helps the world at large.

The Company enhances value for its customers by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities, for the benefit of its customers.

The Company’s core capabilities also include non-destructive testing (“NDT”) field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, shop laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.

Mistras Group, Inc., together with its subsidiaries (the "Company"), is a global leader in technology-enabled industrial asset integrity and laboratory testing solutions, serving critical industries including oil & gas, aerospace & defense, power & utilities, manufacturing, and civil infrastructure.

The Company provides a diversified portfolio of products and services, ranging from advanced non-destructive testing ("NDT") and pipeline inspections to real-time condition monitoring, maintenance planning, and specialized engineering, powered by a proprietary management software suite that centralizes integrity data for predictive analytics and benchmark analysis.

With a long-standing track record of innovation and deep industry expertise, the Company helps clients reduce risk, extend asset life, and optimize operational performance.

The Company enhances value for its customers by integrating asset integrity protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected software and monitoring solutions, including OneSuite®, which serves as a cloud-based ecosystem that pulls together the Company’s software and data services capabilities.

This integrated approach enables customers to make data-driven decisions that improve asset reliability, enhance safety, reduce operational risk, and optimize performance across the asset lifecycle.

The Company’s core capabilities include NDT field inspections enhanced by advanced robotics, laboratory quality control, laboratory materials services, in-house laboratory assurance testing, sensing technologies and NDT equipment, asset and mechanical integrity engineering services, and light mechanical maintenance and access services.

The Company has three operating segments.

Our segments are as follows:

• North America This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

• North America:

This segment provides asset protection solutions predominantly in North America, with the largest concentration in the United States, followed by Canada, consisting primarily of NDT, inspection, mechanical and engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

Software, digital and data services are included in this segment.

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Recent Developments

The Company provides products and services to countries throughout the Middle East, where lawfully permitted, and in accordance with United States regulations.

We continue to monitor the on-going conflicts throughout the Middle East.

These conflicts caused disruptions in the Company's European operations in 2023 with increased costs associated with higher energy costs, amongst others.

These disruptions have largely subsided in 2024.

We may also experience increased costs associated with tariffs or trade barriers (including recent U.S.

We continue to monitor the impact tariffs and trade barriers may have on our business, including recent U.S.

tariffs imposed or threatened to be imposed on China, Canada, Mexico and other countries and any retaliatory actions taken by such countries.

The Company will continue to monitor market conditions and respond accordingly.

Continued uncertainty surrounding such tariffs and trade barriers may have a material adverse effect on global economic conditions, inflation and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States.

Such uncertainty limits our ability to anticipate, plan for, or effectively mitigate the adverse impacts of such measures on our operations and supply chain costs.

Tariffs and trade barriers did not had a material effect on our business or results of operations during 2025 but could result in additional costs to us and could impact the import of materials by our customers which are inspected by us.

During 2025, the price of crude oil declined due to various macroeconomic and geopolitical factors.

The decline in crude oil prices has had an adverse impact on our field-related services that we provide to the oil and gas sector, which could continue if prices remain low.

More recently, geopolitical tensions in the Middle East, including the conflict involving the United States and Iran, have contributed to increased volatility in global oil markets.

Fluctuations in crude oil prices may influence the spending decisions of our oil and gas customers and could affect demand for our field-related services.

Principles of Consolidation

The Company follows guidance on the consolidation of variable interest entities ("VIEs") that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE.

The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most

significantly impact the VIE’s economic performance, including powers granted to the VIE’s program manager, powers contained in the VIE governing board and, to a certain extent, a company’s economic interest in the VIE.

The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the VIE’s economic performance, including powers granted to the VIE’s program manager, powers contained in the VIE governing board and, to a certain extent, a company’s economic interest in the VIE.

The Company analyzes its joint ventures and classifies them as either:

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The Company became the primary beneficiary in July 2020 of a VIE in which the Company has a 49 % interest in a limited partnership, and a 49 % stockholder in the corporate general partner of the limited partnership.

The Company consolidated the financial statements of the VIE with the financial statements of the Company.

The Company consolidated the financial statements of the VIE within the consolidated financial statements of the Company.

As of and for the year ended December 31, 2025, the VIE had immaterial assets and had approximately $ 7.1 million of revenue.

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The results of operations of companies acquired are included from the date of acquisition.

Reclassifications

Change in Accounting Principle

Certain amounts in prior periods have been reclassified to conform to the current year presentation.

Such reclassifications did not have a material effect on the Company's financial condition or results of operations as previously reported.

The impacts of the reclassifications are shown in the tables below.

Any reclassifications not shown below did not have a material effect on the Company's financial condition or results of operations as previously reported.

Change in Classification of Certain Expenses from Selling, General and Administrative Expenses to Cost of Revenue

Beginning on January 1, 2025, the Company changed the presentation of certain costs on its Consolidated Statements of Income (Loss), which include costs incurred at the Company's operational labs as well as the costs for certain personnel that indirectly support the Company’s delivery of services.

This voluntary change in classification of certain overhead and personnel costs, which were determined to be directly related to the Company’s delivery of services, resulted in a decrease in selling, general and administrative expenses and an offsetting increase in cost of revenue.

The Company believes this presentation is preferable as it will provide greater transparency regarding its cost of revenue and aligns with how the business is managed.

This change in classification has been applied retrospectively to all periods presented and affects selling, general and administrative expenses;

cost of revenue;

and gross profit on the Company's Consolidated Statements of Income (Loss).

This change in presentation had no impact to revenue, income (loss) from operations, income (loss) before provision (benefit) for income taxes, provision (benefit) for income taxes, net income (loss), earnings (loss) per common share, or other components of equity, net assets or cash flows.

In addition, selling, general and administrative expenses and other expenses information disclosed in Note 18 - Segment Disclosure were adjusted for this change.

The impacts of the update to the presentation of certain indirect costs on the Company’s Consolidated Financial Statements for the years ended December 31, 2024 and 2023 are reflected below under the "Effect of change" columns .

For the Year Ended December 31, 2024

As Previously Reported Effect of change As Adjusted

Cost of revenue $ 492,928 $ 20,936 $ 513,864

Gross profit 213,109 ( 20,936 ) 192,173

Selling, general and administrative expenses 156,388 (20,936) 135,452

For the Year Ended December 31, 2023

As Previously Reported Effect of change As Adjusted

Cost of revenue $ 477,671 $ 19,506 $ 497,177

Gross profit 203,807 ( 19,506 ) 184,301

Selling, general and administrative expenses 166,749 (19,506) 147,243

Use of Estimates

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The Company monitors and considers whether historical loss rates are consistent with expectation of supportable forward-looking estimates for its trade receivables noting any current or future economic considerations that would require adjusting the Company’s historical loss experience.

Each reporting period, the Company reassesses whether any accounts receivable no

longer share similar risk characteristics and should instead be evaluated as part of another pool or on an individual basis.

Changes to the allowance for credit losses are adjusted through credit loss expense, which is presented within Selling, general and administrative expenses in the Consolidated Statements of Income (Loss).

Each reporting period, the Company reassesses whether any accounts receivable no longer share similar risk characteristics and should instead be evaluated as part of another pool or on an individual basis.

Changes to the allowance for credit losses are adjusted through bad debt expense, which is presented within Selling, general and administrative expenses in the Consolidated Statements of Income (Loss).

Concentration of Credit Risk

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Repairs and maintenance costs are expensed as incurred.

Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recorded in Income (loss) from operations in the Consolidated Statements of Income (Loss).

Goodwill represents the excess purchase price of acquired businesses over the fair values attributed to underlying net tangible assets and identifiable intangible assets.

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The Company reviews the recoverability of its long-lived assets (or asset groups) whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable.

The assessment for potential

impairment is based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future undiscounted cash flows.

The assessment for potential impairment is based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future undiscounted cash flows.

If the total expected future undiscounted cash flows are less than the carrying amount of the assets, a loss is recognized for the difference between fair value (computed based upon the expected future discounted cash flows) and the carrying value of the assets.

The Company allocates the purchase price of acquired businesses to their identifiable tangible assets and liabilities as well as identifiable intangible assets, such as customer relationships, technology, non-compete agreements and trade names.

Certain estimates and judgments are required in the application of the fair value techniques, including estimates of the respective acquisition's future performance and related cash flows, selection of a discount rate and economic lives, and use of Level 3 measurements as defined in ASC No.

820, Fair Value Measurements and Disclosure.

Deferred taxes are recorded for any differences between the assigned values and tax bases of assets and liabilities.

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Translation gains and losses are reported as a component of other comprehensive income (loss) for the period and included in accumulated other comprehensive income (loss) within stockholders’ equity.

Foreign currency (gains) losses arising from transactions denominated in currencies other than the functional currency are included in net income, reported in selling, general and administrative expenses, and were approximately $( 1.8 ) million, $ 1.3 million, and $( 0.2 ) million for the years ended December 31, 2024, 2023 and 2022, respectively.

Foreign currency losses (gains) arising from transactions denominated in currencies other than the functional currency are included in net income (loss), and were approximately $ 3.5 million, $( 1.8 ) million, and $ 1.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.

During the current fiscal year, the Company revised its presentation of foreign currency losses (gains), which are now included within other expense (income), net.

Previously, such amounts were presented in selling, general and administrative expenses.

Prior period amounts have not been reclassified due to immateriality.

This change in presentation had no effect on previously reported net income (loss).

Self-Insurance

The Company is self-insured for certain losses relating to workers’ compensation and health benefit claims.

The Company maintains third-party excess insurance coverage for all workers' compensation and health benefit claims in excess of approximately $ 0.3 million per occurrence to reduce its exposure from such claims.

The Company maintains third-party excess insurance coverage for all workers' compensation and health benefit claims.

Self-insured losses are accrued when it is probable that an uninsured claim has been incurred but not reported and the amount of the loss can be reasonably estimated at the balance sheet date.

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Awards to certain employees eligible for retirement prior to the award becoming fully vested are amortized to expense over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award.

As share-based compensation expense is based on awards ultimately expected to

vest, the amount of expense is reduced for estimated forfeitures.

Share-based compensation expense is measured based on awards ultimately expected to vest.

The Company accounts for forfeitures as they occur.

The cost of these awards is recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Income (Loss).

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Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280) to expand the disclosures about a public entity's reportable segments and address requests from investors for additional, more detailed information about a reportable segment's expenses.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We adopted the provisions of this ASU in the fourth quarter of 2024 and applied the provisions retrospectively to each period presented in the consolidated financial statements.

Adoption of the new standard did not have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid disclosures.

The new standard is effective for fiscal years beginning after December 15, 2024.

We do not expect the impact of ASU 2023-09 to be material on our financial statements.

The Company derives the majority of its revenue by providing services on a time and material basis that are short-term in

We adopted the provisions of this ASU in the fourth quarter of 2025 and applied the provisions retrospectively to each period presented in the consolidated financial statements.

Adoption of the new standard did not have a material impact on our consolidated financial statements.

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220):

Expense Disaggregation Disclosures, to require disaggregation of certain expense captions into specified categories in disclosures within the notes of the financial statements.

The standard is effective for fiscal years beginning after December 31, 2026 and early adoption is permitted.

The guidance is required to be applied prospectively and amendments in the ASU may be applied prospectively or retrospectively.

We are currently evaluating the impact this standard will have on our disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal Use Software (ASU 2025-06).

This standard clarifies capitalization thresholds for software development costs and aligns accounting treatment more closely with the economic substance of modern software development activities.

ASU 2025-06 is effective for annual and interim periods beginning after December 15, 2027 on a retrospective, prospective or modified prospective basis.

Early adoption is permitted.

We are currently evaluating the impact this standard will have on our disclosures.

The Company derives the majority of its revenue by providing services on a time and material basis that are short-term in nature.

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

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For these arrangements, revenue is recognized on a cost-to-cost method tracked on an input basis.

The majority of our revenue recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer.

The majority of our revenue that is recognized at a point in time is related to product sales when the customer obtains control of the asset, which is generally upon shipment to the customer.

Contract costs include labor, material and overhead.

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Revenue by industry was as follows (in thousands):

Year ended December 31, 2024 North America International Products Corp/Elim Total

Year ended December 31, 2025 North America International Products & Systems Corp/Elim Total

Oil & Gas $ 360,158 $ 36,117 $ 552 $ — $ 396,827

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Total $ 584,131 $ 143,843 $ 13,970 $ ( 17,920 ) $ 724,024

Year ended December 31, 2023 North America International Products Corp/Elim Total

Year ended December 31, 2024 North America International Products & Systems Corp/Elim Total

Oil & Gas $ 376,333 $ 42,315 $ 275 $ — $ 418,923

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Total $ 593,527 $ 135,969 $ 13,661 $ ( 13,517 ) $ 729,640

Year ended December 31, 2022 North America International Products Corp/Elim Total

Year ended December 31, 2023 North America International Products & Systems Corp/Elim Total

Oil & Gas $ 379,221 $ 36,615 $ 159 $ — $ 415,995

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Revenue per key geographic location was as follows (in thousands):

Year ended December 31, 2024 North America International Products Corp/Elim Total

Year ended December 31, 2025 North America International Products & Systems Corp/Elim Total

United States $ 502,484 $ 5,278 $ 5,542 $ ( 3,944 ) $ 509,360

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Total $ 584,131 $ 143,843 $ 13,970 $ ( 17,920 ) $ 724,024

Year ended December 31, 2023 North America International Products Corp/Elim Total

Year ended December 31, 2024 North America International Products & Systems Corp/Elim Total

United States $ 502,005 $ 1,607 $ 5,868 $ ( 2,535 ) $ 506,945

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Total $ 593,527 $ 135,969 $ 13,661 $ ( 13,517 ) $ 729,640

Year ended December 31, 2022 North America International Products Corp/Elim Total

Year ended December 31, 2023 North America International Products & Systems Corp/Elim Total

United States $ 495,764 $ 934 $ 5,956 $ ( 2,372 ) $ 500,282

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costs incurred related to obtaining a contract when the amortization period of the asset that the Company otherwise would have recognized is one year or less.

Earnings per Share

Earnings (loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period.

Diluted earnings per share is computed by dividing net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method.

Diluted earnings (loss) per share is computed by dividing net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, and (2) the dilutive effect of assumed conversion of equity awards using the treasury stock method.

With respect to the number of weighted-average shares outstanding (denominator), diluted shares reflects:

(i) the exercise of options to acquire common stock to the extent that the options’ exercise prices are less than the average market price of shares of common stock during the period and (ii) the pro forma vesting of restricted stock units.

The following table sets forth the computations of basic and diluted earnings (loss) per share (in thousands except share data):

The following table sets forth the computations of basic and diluted earnings (loss) per share (in thousands):

For the year ended December 31,

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Diluted earnings (loss) per share $ 0.53 $ 0.60 $ ( 0.58 )

The following potential shares of common stock were excluded from the computation of diluted earnings per share, as the effect would have been anti-dilutive:

The following potential shares of common stock (in thousands) were excluded from the computation of diluted earnings per share, as the effect would have been anti-dilutive:

For the year ended December 31,

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Potential shares of common stock attributable to restricted stock units (RSUs) and performance stock units (PSUs) outstanding (1)

307 547 1,005

Potential shares of common stock attributable to stock options outstanding 11 — —

Total 28 307 547

(1) For the year ended December 31, 2023, 1,014,527 shares of common stock related to restricted stock and 250,000 stock options, were excluded from the calculation of diluted EPS due to the net loss for the period.

(1) For the year ended December 31, 2023, 1,014,527 shares of common stock related to restricted stock and 250,000 stock options were excluded from the calculation of diluted earnings per share due to the net loss for the period.

Accounts Receivable

Accounts receivable consist of the following (in thousands):

Trade accounts receivable $ 129,894 $ 134,495

Trade accounts receivable - billed $ 133,100 $ 108,563

Trade accounts receivable - unbilled 25,139 21,331

Allowance for credit losses ( 3,566 ) ( 2,613 )

Accounts receivable, net $ 154,673 $ 127,281

The Company had $ 21.3 million and $ 18.5 million of unbilled revenues accrued as of December 31, 2024 and December 31, 2023, respectively, which is included within the trade accounts receivable balance above.

Unbilled revenue is generally billed in the subsequent quarter to their revenue recognition.

The Company considers unbilled receivables as short-term in nature as they are normally converted to trade receivables within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate.

Trade accounts receivables - unbilled are generally billed in the subsequent quarter to their revenue recognition.

The Company considers Trade accounts receivables - unbilled as short-term in nature as they are normally converted to Trade accounts receivables - billed within 90 days, thus future changes in economic conditions will not have a significant effect on the credit loss estimate.

Inventories consist of the following (in thousands):

Raw materials $ 5,344 $ 6,099

Raw materials and consumable supplies $ 9,252 $ 8,321

Work in progress 912 1,018

Finished goods 3,838 5,146

Consumable supplies 2,977 2,605

Inventories $ 14,002 $ 14,485

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Depreciation expense was approximately $ 24.3 million, $ 25.3 million, and $ 25.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Acquisition-Related expense

In the course of its acquisition activities, the Company incurs costs in connection with due diligence, such as professional fees, and other expenses.

Additionally, the Company adjusts the fair value of acquisition-related contingent consideration liabilities on a quarterly basis.

These amounts are recorded as acquisition-related expense, net, on the Consolidated Statements of Income (Loss) and were as follows for the years ended December 31, 2024, 2023 and 2022 (in thousands):

For the year ended December 31,

2024 2023 2022

Due diligence, professional fees and other transaction costs $ 2 $ 9 $ 31

Adjustments to fair value of contingent consideration liabilities — — 45

Acquisition-related expense, net $ 2 $ 9 $ 76

The changes in the carrying amount of goodwill by segment is shown below (in thousands):

The changes in the carrying amount of goodwill by segment are shown below (in thousands):

North America International Products and Systems Total

Balance at December 31, 2023 $ 187,354 $ — $ — $ 187,354

Impairment charges — ( 13,799 ) — ( 13,799 )

Foreign currency translation ( 5,912 ) — — ( 5,912 )

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In performing the interim quantitative goodwill impairment test and consistent with prior practice, the Company determined the fair value of each of the reporting units using a combination of the income approach and the market approach by assessing each of these valuation methodologies based upon availability and relevance of comparable Company data and determining the appropriate weighting.

Under the income approach, the fair value for each of the reporting units was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

The Company used internal forecasts, updated for recent events, to estimate future cash flows using a terminal value calculation, which incorporates historical and forecasted trends, including an estimate of long-term future growth rates, based on the Company’s most recent views of the long-term outlook for each reporting unit.

The Company's internal forecasts include assumptions about future profitability, including the expected demand for the Company’s goods and services.

Due to the inherent uncertainties involved in making estimates and assumptions, actual results may differ from those assumed in the forecasts.

The Company derived the discount rates using a capital asset pricing model and analyzing published rates for industries relevant to the reporting units to estimate the cost of equity financing.

The Company used discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in the Company's internally developed forecasts and which are updated for recent events.

Increased interest rates in the current period increased the discount rate associated with the reporting units which contributed to an unfavorable decrease in the reporting units value.

Under the income approach, the fair value for each of the reporting units was determined using a discounted cash flow model.

The market approach valuation was derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.

The selection of comparable businesses was based on the markets in which the reporting units operate, considering risk profiles, size, geography, and diversity of products and services.

Based upon the results of the interim quantitative goodwill impairment test, the Company recorded an impairment charge of $ 13.8 million within the International reporting units.

The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units and is included in Goodwill impairment charges on the condensed consolidated statements of income (loss) for the year ended December 31, 2023.

Based upon the results of the interim quantitative goodwill impairment test, the Company recorded an impairment charge of $ 13.8 million within the International reporting unit for the year ended December 31, 2023.

The impairment was calculated based on the difference between the estimated fair value and the carrying value of the reporting units and is included in Goodwill impairment charges on the Consolidated Statements of Income (Loss) for the year ended December 31, 2023.

There were no impairment charges recognized for the years ended December 31, 2025 and 2024.

Any significant adverse changes in future periods to the Company’s internal forecasts or the external market conditions, if any, could reasonably be expected to negatively affect its key assumptions and may result in future goodwill impairment charges which could be material.

The Company's cumulative goodwill impairment as of December 31, 2024 was $ 114.0 million, of which $ 57.2 million related to the North America segment, $ 43.6 million related to the International segment and $ 13.2 million related to the Products and Systems segment.

Intangible Assets

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Senior credit facility $ 79,250 $ 59,650

Senior secured term loan, net of unamortized debt issuance costs of 0.3 million and $ 0.4 million

Senior secured term loan, net of unamortized debt issuance costs of $ 0.2 million and $ 0.3 million, respectively

96,711 107,545

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Senior Credit Facility

On August 1, 2022, the Company entered into a credit agreement (the “Credit Agreement”) which provides the Company with a $ 190 million, 5 -year committed revolving credit facility and a $ 125 million term loan with a balance of $ 107.5 million as of December 31, 2024.

On August 1, 2022, the Company entered into a credit agreement (the “Credit Agreement”) which provides the Company with a $ 190 million, 5 -year committed revolving credit facility with a balance of $ 79.3 million as of December 31, 2025 and a $ 125 million term loan with a balance of $ 96.7 million as of December 31, 2025.

The Credit Agreement permits the Company to borrow up to $ 100 million in non-US dollar currencies and to use up to $ 20 million of the credit limit for the issuance of letters of credit.

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The Credit Agreement has the following key terms, conditions and financial covenants:

• Borrowings bear interest at Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment and applicable SOFR margin ranging from 1.25 % to 2.75 %, based upon our Total Consolidated Debt Leverage Ratio (defined below);

• Borrowings bear interest at the Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment and applicable SOFR margin ranging from 1.25 % to 2.75 %, based upon our Total Consolidated Debt Leverage Ratio (defined below);

under the Credit Agreement, the margin was based upon the LIBOR margin.

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• The Company has the benefit of the lowest SOFR margin if its Total Consolidated Debt Leverage Ratio is equal to or less than 1.25 to 1.0, and the margin increases as the ratio increases, to the maximum margin if the ratio is greater than 3.75 to 1.0.

The Credit Agreement is secured by liens on substantially all of the assets of the Company and certain of its U.S subsidiaries and is guaranteed by those U.S subsidiaries.

The Credit Agreement is secured by liens on substantially all of the assets of the Company and certain of its U.S.

subsidiaries and is guaranteed by those U.S.

subsidiaries.

• The Company is required to maintain a Total Consolidated Debt Leverage Ratio of no more than 4.0 to 1.0 at the end of each quarter through June 30, 2023 and stepping down to a maximum permitted ratio of no more than 3.75 to 1.0 for the remainder of the term.

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The Company continuously monitors compliance with the covenants contained in the Credit Agreement.

The Company believes that it is probable that the Company will be able to comply with the financial covenants in the Credit Agreement and that sufficient credit remains available under the Credit Agreement to meet the Company's liquidity needs.

However, such matters cannot be predicted with certainty.

The Company's other debt includes bank financing provided at the local subsidiary level used to support working capital requirements and fund capital expenditures.

At December 31, 2025, there was an aggregate of approximately $ 2.0 million outstanding, payable at various times through 2030.

Monthly payments ran ge fro m $ 1 thousand to $ 15 thousand, and interest rates range from 0.4 % to 3.5 %.

Scheduled principal payments due under all borrowing agreements in each of the five years and thereafter subsequent to December 31, 2025 are as follows (in thousands):

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It also establishes a three-level hierarchy that prioritizes the inputs used to measure fair value.

The three levels of the hierarchy are defined as follows:

Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 — Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.

Level 3 — Unobservable inputs reflecting the Company’s own assumptions about inputs that market participants would use in pricing the asset or liability based on the best information available.

Financial instruments measured at fair value on a recurring basis

The fair value of contingent consideration liabilities was estimated using a discounted cash flow technique with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820.

The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future cash flows related to the acquisitions, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the applicable acquisition agreements.

The following table represents the changes in the fair value of Level 3 contingent consideration (in thousands):

Balance at the beginning of the period:

Acquisitions — —

Payments ( 937 )

Accretion of liability — —

Revaluation — —

Foreign currency translation — —

Balance at the end of the period:

Financial instruments not measured at fair value on a recurring basis

The Company has evaluated current market conditions and borrower credit quality and has determined that the carrying value of its long-term debt approximates fair value.

The fair value of the Company’s notes payable and finance lease obligations approximates their carrying amounts based on anticipated interest rates which management believes would currently be available to the Company for similar issuances of debt.

Share-Based Compensation

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Awards granted under the 2016 Plan may be in the form of stock options, restricted stock units and other forms of share-based incentives, including performance-based restricted stock units, stock appreciation rights and deferred stock rights.

At the annual shareholders meeting on May 14, 2024, the Company’s shareholders approved an amendment to the 2016 Plan, including an increase to the total number of shares that may be issued under the 2016 Plan by 1.3 million, for a total of 6.2 million shares that are authorized for issuance under the 2016 Plan, of which approximately 1,850,000 shares were available for future grants as of as of December 31, 2024.

At the annual shareholders meeting on May 14, 2024, the Company’s shareholders approved an amendment to the 2016 Plan, including an increase to the total number of shares that may be issued under the 2016 Plan by 1.3 million, for a total of 6.2 million shares that are authorized for issuance under the 2016 Plan, of which approximately 934,000 shares were available for future grants as of December 31, 2025.

Stock Options

The grant date fair values of the stock options granted in the years ended December 31, 2025 and 2023, were estimated using the Black-Scholes option valuation model, the key assumptions for which are listed in the table below.

No stock option awards were granted during the year ended December 31, 2024.

The expected volatility assumption is based on the historical volatility of our common stock measured over a period approximately equal to the expected term of the awards.

The expected term represents the period of time that options granted are expected to be outstanding.

The risk-free interest rate is based on U.S.

Treasury securities with terms equal to the expected timing of stock option exercises as of the grant date.

The dividend yield assumption reflects anticipated dividends on the Company’s common stock.

The terms of stock options granted in each respective year are described further below.

On October 11, 2023, Mr.

Stamatakis was granted an award of stock options to purchase 250,000 shares of common stock of the Company, with an exercise price of $ 5.36 , the closing price of the Company's common stock as quoted on the New York Stock Exchange on the grant date (the "Options").

The Options were granted as an inducement for Mr.

Stamatakis to accept the position of Interim President and CEO of the Company and were therefore granted outside the 2016 Plan, as permitted by the rules of the NYSE.

The Options can be exercised any time after the grant date until its expiration date, which is the earlier of 10 years from the grant date or one year following the date Mr.

These stock options were granted as an inducement for Mr.

Stamatakis to accept the position of Interim President and CEO of the Company and were therefore granted outside the 2016

Plan, as permitted by the rules of the NYSE.

These stock options can be exercised any time after the grant date until its expiration date, which is the earlier of 10 years from the grant date or one year following the date Mr.

Stamatakis is no longer serving as an officer, director or in any other capacity of the Company.

The Company recognized all share-based compensation expense related to the stock options granted in the fourth quarter of 2023 when they were granted, and no further unrecognized share-based compensation expense remains as of the end of the current period.

For the year ended 2022, the Company did no t recognize any share-based compensation expense related to stock option awards, as the one outstanding stock option award was already fully vested and expired during the year ended 2022.

No unrecognized compensation costs remained related to the stock option awards.

In addition, there were no stock options exercised during the years ended December 31, 2024, 2023 and 2022.

The following table sets forth a summary of the stock option activity, weighted-average exercise prices and options outstanding as of December 31, 2024, 2023 and 2022 as follows (in thousands, except per share amounts and years):

For the years ended December 31,

2024 2023 2022

Options Weighted

Price Common Stock Options Weighted Average Exercise Price Common

Options Weighted

Outstanding at beginning of year:

On January 6, 2025, Mr.

Stamatakis was granted a stock option for the purchase of 375,000 shares of the Company's common stock at an exercise price of $ 9.06 , the closing price of the Company's common stock on the NYSE on the grant date.

These stock options can be exercised any time on or after January 6, 2026, and prior to their expiration date, which is the earlier of 10 years from the grant date or one year following the date Mr.

Stamatakis is no longer serving as an officer, director or in any other capacity of the Company.

The Company recognized $ 2.0 million of share-based compensation expense within Reorganization and other costs on the Company's Consolidated Statements of Income (Loss) during the year ended December 31, 2025 related to these stock options that were granted in the first quarter of 2025.

No further unrecognized share-based compensation expense remains as of the end of the current period related to these stock options.

On September 8, 2025, Natalia Shuman, President and Chief Executive Officer of the Company, was awarded options to purchase 35,000 shares of the Company’s common stock.

The options have an exercise price of $ 9.71 , the closing price of the Company's common stock on the NYSE on the grant date of September 8, 2025.

The options can be exercised any time on or after September 8, 2026, and expire ten years after the grant date of September 8, 2025, in each case subject to certain exceptions as to the vesting and expiration in case of termination of employment, death or disability.

The Company recognized $ 0.1 million of share-based compensation expense related to these stock options during the year ended December 31, 2025.

$ 0.1 million of unrecognized share-based compensation expense remains as of the end of the current period related to these stock options.

The following table contains weighted average Black-Scholes option valuation model assumptions for stock options granted for the years ended December 31, 2025, 2024 and 2023:

2025 2024 2023

Expected Dividend Yield — % — % — %

Expected Volatility 60.8 % — % 62.0 %

Expected term (in years) 5.5 — 5.0

Risk-free interest rate 4.3 % — % 4.6 %

The weighted-average grant date fair value of options granted during the years ended December 31, 2025 and 2023 was $ 5.30 per share and $ 3.04 per share, respectively.

No stock option awards were granted during the year ended December 31, 2024.

The following table sets forth a summary of the stock option activity, weighted-average exercise prices, options outstanding and exercisable as of December 31, 2025, 2024 and 2023 as follows:

Number of Options (Thousands) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (Millions)

Outstanding at January 1, 2023 — $ — — $ —

Granted 250 5.36

Expired or forfeited —

Outstanding at December 31, 2023 250 $ 5.36 9.8 $ 0.5

Exercised — —

Expired or forfeited — —

Outstanding at end of year:

250 $ 5.36 250 $ 5.36 — $ —

Outstanding at December 31, 2024 250 $ 5.36 8.8 $ 0.9

Granted 435 9.14

Exercised — —

Expired or forfeited — —

Outstanding at December 31, 2025 685 $ 7.76 8.6 $ 3.3

Exercisable at December 31, 2025 625 $ 7.58 8.5 $ 3.2

Stock Issuances to Non-Employee Directors

As part of its compensation program for non-employee directors, the Company makes semi-annual issuances of fully-vested common stock to its non-employee directors.

As part of its compensation program for non-employee directors, the Company issues fully-vested common stock to its non-employee directors.

Prior to 2025, the shares of common stock were issued in semi-annual awards.

In 2025, non-employee directors received a single award during the quarter ended June 30, 2025.

A summary of the fully-vested common stock the Company issued to its non-employee directors, in connection with its non-employee director compensation, is as follows (in thousands):

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Restricted Stock Unit Awards

Restricted Stock Units generally vest ratably on each of the first four anniversary dates of issuance.

The Company recognized approximately $ 4.1 million, $ 4.9 million and $ 3.7 million of share-based compensation for the years ended December 31, 2024, 2023 and 2022, respectively, related to restricted stock unit awards.

As of December 31, 2024, there was approximately $ 7.5 million of unrecognized compensation costs, net of estimated forfeitures, related to restricted stock unit awards, which are expected to be recognized over a remaining weighted average period of 2.2 years.

Upon vesting, restricted stock units are generally net share-settled to cover the required minimum withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.

A summary of the vesting activity of restricted stock unit awards, with the respective fair value of the awards, is as follows (in thousands):

Restricted stock units ("RSUs") generally vest ratably on each of the first three or four anniversary dates of issuance.

For the years ended December 31, 2025, 2024 and 2023, the company recognized share-based compensation expense within selling, general and administrative related to RSU awards of $ 3.5 million, $ 4.1 million and $ 4.9 million, respectively.

For the year ended December 31, 2025, the Company recognized share-based compensation expense within Reorganization and other costs related to RSU awards of $ 0.6 million.

No share-based compensation expense was recognized within Reorganization and other costs related to RSU awards for the years ended 2024 and 2023.

As of December 31, 2025, there was approximately $ 5.3 million of unrecognized compensation costs, related to RSUs, which are expected to be recognized over a remaining weighted average period of 2.3 years.

Upon vesting, RSUs are generally net share-settled to cover the required minimum withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.

A summary of the vesting activity of RSU awards, with the respective fair value of the awards, is as follows (in thousands):

For the year ended December 31,

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Grand date fair value of awards issued $ 5,688 $ 4,247 $ 4,269

A summary of the Company's outstanding, non-vested restricted share units is as follows (in thousands, except per share amounts and years):

A summary of the Company's outstanding, non-vested RSUs is as follows (in thousands, except per share amounts and years):

For the year ended December 31,

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Performance Restricted Stock Units

The Company maintains Performance Restricted Stock Units ("PRSUs") that have been granted to select executives and senior officers whose ultimate payouts may vary between zero and 200 % of the target award, based on the Company’s performance over a one-year period based on specific metrics approved by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee").

For 2022, the Compensation Committee utilized the following three performance metrics for PRSUs approved in that year.

The three metrics were:

Free Cash Flow defined as net cash provided by operating activities less purchases of property, plant, equipment and intangible assets and is subject to adjustments approved by the Compensation Committee.

Adjusted EBITDA defined as net income attributable to the Company plus:

interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense and certain acquisition related costs (including transaction due diligence costs and adjustments to the fair value of contingent consideration), foreign exchange (gain) loss and, if applicable, certain special items which are noted.

Total Shareholder Return ("TSR") measures the total return to shareholders of the Company during the 1-year performance period versus the total return to the shareholders of a predefined peer group of companies that provide inspection, testing, certification or similar industrial services.

The return will be measured by the year over year percent change in share price.

The share prices used to calculate the return are the average share price during the 20 -trading day period ending on the initial measurement date (the last 20 trading days preceding the performance period), compared to the average share price during the 20 -trading day period ending on the final measurement date (the last 20 trading days of the performance period).

Any cash dividends or distributions paid in 2022 were added to calculate the return to shareholders during the year.

TSR is considered a market condition for which the fair value of PRSUs with this condition is determined using a Monte Carlo valuation model.

Key assumptions in the Monte Carlo valuation model included:

Expected Volatility.

Expected volatility of the Company’s common stock at the date of grant was estimated based on a historical average volatility rate for the approximate 1-year performance period.

Dividend Yield .

The dividend yield assumption was based on historical and anticipated dividend payouts (assumed at zero ).

Risk-Free Interest Rate .

The risk-free interest rate assumption was based on observed interest rates consistent with the approximate 1-year performance measurement period.

The Company grants Performance Restricted Stock Units ("PRSUs") to select executives and senior officers.

The ultimate payouts of these PRSUs may vary between zero and 200 % of the target award, based on the Company’s performance over a one-year period and measured based on specific metrics approved by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee").

For 2025, the Compensation Committee used the following three performance metrics for PRSUs approved in that year.

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For PRSUs awarded in 2024, the Compensation Committee utilized the same metrics as 2023 PRSUs, but with revised performance goals.

For PRSUs awarded in 2024 and 2023, the Compensation Committee utilized the same metrics as 2025 PRSUs, but with revised performance goals.

PRSUs are equity-classified and compensation costs related to PRSUs with performance conditions are initially measured using the fair value of the underlying stock at the date of grant.

Compensation costs related to the PRSUs with performance conditions are subsequently adjusted for changes in the expected outcomes of the performance conditions.

Compensation cost related to the PRSUs with a market condition is not reversed if the market condition is not achieved, provided the employee requisite service has been rendered.

Earned PRSUs generally vest ratably in four equal annual installments over the four years following completion of the performance period, for a total requisite service period of up to five years , and have no dividend equivalent rights.

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346 $ 9.93 125 $ 9.12 60 $ 9.33

For the year ended December 31, 2024, 295,000 PRSUs were granted.

There was a 201,000 net unit reduction to these awards, which represents the Company's achievement of the threshold level of the Adjusted EBITDA target and not achieving the revenue or FCF performance goals, during the year ended December 31, 2024.

For the year ended December 31, 2023, 282,000 PRSUs were granted.

There was a 305,000 net unit reduction to these awards, which reflects the Company's performance against specified goals, during the year ended December 31, 2023.

For the year ended December 31, 2022, 341,000 PRSUs were granted.

There was a 285,000 unit reduction to these awards, which reflects the Company's performance against specified goals, during the year ended December 31, 2022.

Compensation expense related to all PRSUs described above was $ 0.4 million, $ 0.7 million, and $ 1.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

At December 31, 2024, there was $ 0.6 million of total unrecognized compensation costs related to approximately 125,000 unvested performance restricted stock units.

For the years ended December 31, 2025, 2024 and 2023, the company recognized share-based compensation expense within Selling, general and administrative related to PRSU awards of $ 1.2 million, $ 0.4 million and $ 0.7 million, respectively At December 31, 2025, there was $ 2.5 million of total unrecognized compensation costs related to approximately 346,000 unvested PRSUs.

These costs are expected to be recognized over a weighted-average period of approximately 2.4 years.

Upon vesting, PRSUs are generally net share-settled to cover the required minimum withholding tax and the remaining amount is converted into an equivalent number of shares of common stock.

For the years ended December 31, 2025, 2024 and 2023, the income tax benefit recognized on all share based compensation arrangements referenced above was approxim ately $ 1.9 million, $ 1.6 million, and $ 0.8 million, respectively.

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Foreign 4,319 2,642 2,063

Reserve for uncertain tax positions 3 16 136

Total current provision (benefit) $ 10,142 $ 4,156 $ 3,207

Total current provision $ 5,208 $ 10,142 $ 4,156

Federal $ 1,121 $ ( 3,405 ) $ ( 2,219 )

1 unchanged sentence

Foreign ( 1,206 ) ( 1,606 ) ( 1,655 )

Reserve for uncertain tax positions — — —

Total deferred benefit ( 3,640 ) ( 3,566 ) ( 1,807 )

Net change in valuation allowance ( 1,228 ) ( 1,810 ) 1,320

Net deferred benefit ( 4,868 ) ( 5,376 ) ( 487 )

Net deferred provision (benefit) 349 ( 4,868 ) ( 5,376 )

Total provision (benefit) for income taxes $ 5,557 $ 5,274 $ ( 1,220 )

Cash paid for income taxes (net of refunds) was as follows (in thousands):

For the year ended December 31,

2025 2024 2023

Federal $ 3,500 $ 5,100 $ 2,500

States and local 1,539 1,077 540

Foreign 4,289 233 3,861

Total cash paid for income taxes, net of refunds $ 9,328 $ 6,410 $ 6,901

Cash paid for income taxes (net of refunds) exceeded five percent (5%) of total cash paid for income taxes (net of refunds) in the following jurisdictions (in thousands):

For the year ended December 31,

2025 2024 2023

State and local:

Texas * * 352

All other state and local jurisdictions 1,539 1,077 188

Total State and local $ 1,539 $ 1,077 $ 540

Germany 1,366 * 428

Canada 669 ( 669 ) 2,944

Netherlands 710 345 447

Brazil 1,221 * *

All other foreign jurisdictions 323 557 42

Total Foreign $ 4,289 $ 233 $ 3,861

* Jurisdiction is below the five percent (5%) threshold for the period presented.

The provision (benefit) for income taxes differs from the amount computed by applying the statutory federal tax rate to income tax as follows (in thousands):

1 unchanged sentence

2025 2024 2023

Federal tax at statutory rate $ 5,091 21.0 % $ ( 3,920 ) 21.0 % $ 1,952 21.0 %

State taxes, net of federal benefit 872 3.6 % 611 ( 3.3 ) % 622 6.7 %

Foreign tax 444 1.8 % 274 ( 1.5 ) % 218 2.3 %

Goodwill impairment — — % 2,901 ( 15.5 ) % — — %

Equity compensation ( 20 ) ( 0.1 ) % 716 ( 3.8 ) % — — %

US taxation of foreign earnings 19 0.1 % 98 ( 0.5 ) % 100 1.1 %

Permanent differences 405 1.7 % 485 ( 2.6 ) % 363 3.9 %

Research & Development Credit ( 713 ) ( 2.9 ) % ( 602 ) 3.2 % ( 1,716 ) ( 18.5 ) %

Change in valuation allowance ( 1,228 ) ( 5.1 ) % ( 1,810 ) 9.7 % 1,320 14.2 %

Impact of foreign tax rate changes — — % — % ( 246 ) ( 2.6 ) %

United States federal statutory tax rate $ 4,721 21.0 % $ 5,091 21.0 % $ ( 3,920 ) 21.0 %

State and local income taxes, net of federal income tax effect (1)

416 1.9 872 3.6 ( 747 ) 4.0

Foreign tax effects

Changes in valuation allowances 29 0.1 ( 759 ) ( 3.1 ) ( 79 ) 0.4

Other ( 144 ) ( 0.6 ) 145 0.6 195 ( 1.0 )

Changes in valuation allowances ( 303 ) ( 1.4 ) ( 179 ) ( 0.7 ) 31 ( 0.2 )

Other 200 0.9 170 0.7 ( 77 ) 0.4

United Kingdom

Impairment of goodwill — — — — 258 ( 1.4 )

Changes in valuation allowances ( 64 ) ( 0.3 ) ( 682 ) ( 2.8 ) ( 167 ) 0.9

Other ( 252 ) ( 1.1 ) 110 0.5 40 ( 0.2 )

Impairment of goodwill — — — — 966 ( 5.2 )

Other 150 0.7 42 0.2 ( 205 ) 1.1

Impairment of goodwill — — — — 1,314 ( 7.0 )

Statutory tax rate differences between United States and Germany ( 279 ) ( 1.2 ) ( 78 ) ( 0.3 ) 464 ( 2.5 )

State and local taxes 738 3.3 197 0.8 164 ( 0.9 )

Other ( 84 ) ( 0.4 ) 67 0.3 ( 64 ) 0.3

Other foreign jurisdictions 125 0.6 128 0.5 57 ( 0.3 )

Effect of cross-border tax laws ( 174 ) ( 0.8 ) 40 0.2 97 ( 0.5 )

Research and development tax credit ( 602 ) ( 2.7 ) ( 602 ) ( 2.5 ) ( 356 ) 1.9

Changes in valuation allowances ( 3 ) — 190 0.8 ( 214 ) 1.1

Nontaxable or nondeductible items

Share-based compensation 333 1.5 ( 20 ) ( 0.1 ) 731 ( 3.9 )

Other 199 0.9 227 0.9 270 ( 1.4 )

Changes in unrecognized tax benefits 361 1.6 3 — 16 ( 0.1 )

Other adjustments 190 0.7 312 1.2 6 0.1

Total provision (benefit) for income taxes $ 5,557 24.7 % $ 5,274 21.8 % $ ( 1,220 ) 6.6 %

The permanent differences identified above include normal recurring differences, such as meals, entertainment, and parking fringe benefits as well as a portion of the goodwill impairment charge.

On June 28, 2019, the Canadian province of Alberta enacted the Job Creation Tax Cut which reduced the Alberta corporate income tax rate from 12% to 11% starting in 2019 with further annual reductions to 10% in 2020, 9% in 2021, and 8% in 2022.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CARES Act is an approximately $2 trillion emergency economic stimulus package in response to the Coronavirus outbreak, which among other things contains numerous income tax provisions.

Some of these tax provisions are effective retroactively for years ending before the date of enactment.

The CARES Act provides a five-year carryback of net operating losses generated in years 2018 through 2020.

As the statutory federal income tax rate applicable to certain years within the carryback period is 35%, carryback to those years of our estimated 2020 annual federal tax loss provides a tax benefit in excess of the current federal statutory rate of 21%, resulting in an increased income tax benefit of $ 1.9 million.

The income tax effects of the CARES Act resulted in a cash refund of approximately $ 4.9 million in 2021 of taxes paid in prior years.

On December 27, 2020, the United States enacted the Consolidated Appropriations Act, 2021, (the "Appropriations Act") an additional stimulus package providing financial relief for individuals and small business.

The Appropriations Act contains a variety of tax provisions, including full expensing of business meals in 2021 and 2022, and expansion of the employee retention tax credit.

The Appropriations Act did not have a material impact on our consolidated financial position, results of operations, and cash flows .

In response to the COVID-19 pandemic, the American Rescue Plan Act was signed into law on March 11, 2021.

This act, among other things, provides economic relief provisions to individuals and funding to certain businesses and programs.

This guidance did not have a material impact on our consolidated financial position, results of operations, and cash flows.

In August 2022 the United States enacted the Inflation Reduction Act (“IRA”) of 2022 (Public Law No.

117-169), which includes a 15% book minimum tax on corporations with financial accounting profits over 1 billion US dollars (USD) and a 1% excise tax on certain stock buybacks.

The IRA also contains numerous clean energy tax incentives related to electricity production, carbon sequestration, alternative vehicles and fuels, and residential and commercial energy efficiency.

The Company does not expect this act to have a material impact.

(1) State taxes in Arizona, Alaska, California, Alabama, Pennsylvania, Vermont, Louisiana, Minnesota, Georgia, Montana, New Jersey, Tennessee, and Iowa made up the majority (greater than 50 percent) of the tax effect in this category for the year ended December 31, 2025.

State taxes in Florida, New Jersey, Alaska, and Louisiana made up the majority (greater than 50 percent) of the tax effect in this category for the year ended December 31, 2024.

State taxes in Texas, California, Alaska, Louisiana, Pennsylvania, Connecticut, and Mississippi made up the majority (greater than 50 percent) of the tax effect in this category for the year ended December 31, 2023.

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions.

These tax reform provisions include the extension and modification of certain provisions of the Tax Cuts and Jobs Act and are effective for calendar year 2025.

The changes include, but are not limited to, immediate expensing of domestic research and development expenditure, the restoration of 100% bonus depreciation, and an EBITDA-based interest expense limitation.

These provisions did not have a material impact on the Company’s financial statements for the year ended December 31, 2025.

Deferred income tax attributes resulting from differences between financial accounting amounts and income tax basis of assets and liabilities are as follows (in thousands):

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Right-of-use asset ( 8,070 ) ( 8,657 )

Other — ( 2 )

Deferred income tax liabilities ( 26,247 ) ( 26,147 )

Net deferred income taxes $ 4,113 $ 4,294

As of December 31, 2024, the Company had no federal net operating loss carry forwards (NOLs).

In addition, as of December 31, 2024, the Company had state and foreign NOLs of $ 23.8 million and $ 12.2 million, respectively.

As of December 31, 2025, the Company had a federal net operating loss carry forward ("NOLs") of $ 6.6 million.

As of December 31, 2025, the Company had state and foreign NOLs of $ 55.1 million and $ 9.1 million, respectively.

Approximately $ 43.6 million of state NOLs expire at various times from 2023 to 2043, while the remainder of the Company's state NOLs do not expire.

Approximately $ 1.4 million of the foreign NOLs expire at various times from 2023 to 2042, while the remainder of the Company's foreign NOLs do not expire.

In addition to NOLs, the company holds both foreign tax, research and development and other tax credits of $ 0.8 million.

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

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At December 31, 2025 and December 31, 2024, the Company had a valuation allowance of approximately $ 3.7 million and $ 4.0 million, respectively, primarily against certain state and foreign NOLs and other specific deferred tax assets.

The net decrease in the valuation allowance of approximately $ 2.0 million is primarily attributable to state and foreign net operating losses and changes in foreign exchange rates, offset by a reduction of expiring losses.

The net decrease in the valuation allowance of approximately $ 0.3 million is primarily attributable to state and foreign net operating losses and changes in foreign exchange rates, which were offset by a reduction in expiring losses.

Except for those deferred tax assets subject to the valuation allowance, management believes that it will realize all deferred tax assets as a result of sufficient future taxable income in each tax jurisdiction in which the Company has deferred tax assets.

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Interest and penalties related to unrecognized tax benefits are recorded in income tax expense and are not significant for the years ended December 31, 2025, 2024 and 2023.

The Company anticipates a decrease to its unrecognized tax benefits of $ 0.1 million excluding interest and penalties within the next 12 months.

The Company is subject to taxation in the United States and various states and foreign jurisdictions.

The Company is no longer subject to U.S.

federal income tax examinations for years ending before December 31, 2017 and generally is no longer subject to state, local or foreign income tax examinations by tax authorities for years ending before December 31, 2019.

Currently the Company is undergoing a federal tax audit for years ending December 31, 2018 through December 31, 2020.

As previously noted, the Tax Act made significant changes to the taxation of undistributed earnings, requiring that all previously untaxed earnings and profits of the Company's controlled foreign operations be subjected to the transition tax.

The company’s statute of limitation remains open for the years 2021 to 2025 for Germany taxation purposes.

The company’s statute of limitation remains open for Canadian entities for years 2024, 2023, and 2022.

The Tax Cuts and Jobs Act made significant changes to the taxation of undistributed earnings, requiring that all previously untaxed earnings and profits of the Company's controlled foreign operations be subjected to the transition tax.

Since these earnings have now been subjected to U.S.

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The Company’s contribution to the plan was $ 4.0 million, $ 4.1 million, and $ 3.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company's subsidiary participated with other employers in contributing to the Boilermaker-Blacksmith National Pension Trust (EIN 48-6168020) (“Boilermakers”) and Plumbers and Pipefitters National Pension Fund (EIN 52-6152779) (“Pipefitters”), multi-employer defined benefit pension plans, which cover certain U.S.

based union employees.

The plans provide pension benefits with contribution rates that are collectively bargained between participating employers and their affiliated Boilermakers and Pipefitters local unions.

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Related Party Transactions

The Company leases its headquarters under an operating lease from a stockholder and director of the Company.

On August 1, 2014, the Company extended its lease at its headquarters requiring monthly payments through October 2024.

The Company leases its headquarters under an operating lease from an entity majority-owned by a stockholder of the Company with significant influence.

On March 1, 2024, the Company extended its lease at its headquarters requiring monthly payments through October 2026.

Total rent payments made during the year ended December 31, 2025 were approximately $ 1.0 million.

See Note 16 - Leases for further detail.

The Company receives benefits consulting services from Capital Management Enterprise (“CME”).

Stamatakis, Executive Chairman of our Board of Directors, is the Chief Executive Officer of CME.

The Company does no t pay any fees to CME and any compensation CME receives related to work for the Company is received by commissions paid by the third-party benefit providers.

Manny Stamatakis, our Executive Chairman, previously owned Capital Management Enterprise (“CME”), a firm that provided employee benefits consulting services to the Company.

Mr Stamatakis sold the Company to Conner Strong and Buckelew ("CSB") in 2020.

Mr Stamatakis remains an employee of CSB and provides employee benefit consulting services to CSB as needed.

CSB provides insurance consulting and brokerage services to the Company.

The Company paid CSB $ 0.5 million during the year ended December 31, 2025.

CSB also receives normal and customary commissions from third-party benefits providers on account of coverages such third parties provide.

The Company leases certain office and operating facilities, machinery, equipment, and vehicles.

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The ROU liability for this facility is approximately $ 0.8 million as of December 31, 2025 and $ 1.8 million as of December 31, 2024.

Total rent payments for this facility were approximately $ 1.0 million and $ 1.0 million during the years ended December 31, 2024 and 2023.

An agreement was reached with the related party to reduce rental payments by 12.5 % for the lease of the Company’s headquarters, effective February 2022 as part of a voluntary reduction.

Total rent payments for this facility were approximately $ 1.0 million and $ 1.0 million during the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the total ROU assets attributable to finance leases are approximately $ 23.5 million and $ 17.9 million, respectively, which is included in Property, plant, and equipment, net on the Consolidated Balance Sheets.

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Litigation and Commercial Claims

The Company and a subsidiary of the Company, Mistras Arizona Inspection Services LLC (“Mistras Arizona”), are subject to a lawsuit filed by the State of Arizona and the Arizona Department of Environmental Quality (collectively “DEQ”).

The lawsuit, captioned State of Arizona v.

The Company and a subsidiary of the Company, Mistras Arizona Inspection Services LLC (“Mistras Arizona”), are subject to a lawsuit ("the DEQ Proceeding") filed by the State of Arizona and the Arizona Department of Environmental Quality (collectively “DEQ”).

The DEQ Proceeding, captioned State of Arizona v.

Mistras Group, Inc., Mistras Arizona Inspection Services, LLC and Naiman Phoenix, Ltd., was originally filed on February 27, 2024, in the Superior Court of the State of Arizona for Maricopa County, CV 2024-003866 (the "DEQ Complaint").

The DEQ Complaint alleges various violations of Arizona environmental laws and regulations by the Company and Mistras Arizona in connection with the operation by Mistras Arizona of its testing facility in Phoenix, Arizona.

The DEQ Complaint alleges various violations of Arizona environmental laws and regulations by Mistras Arizona in connection with the operation by Mistras Arizona of its testing facility in Phoenix, Arizona.

The DEQ Complaint seeks, through injunctive relief, the closing of a chromic acid plating line at the testing facility, implementation of a site assessment plan approved by the DEQ, and corrective and remedial action to bring the testing facility into compliance with laws and regulations.

In addition, the DEQ Complaint seeks unspecified penalties and costs.

The Superior Court held a hearing September 2024 regarding the DEQ’s request for a preliminary injunction.

On October 23, 2024, the Superior Court issued a ruling, which declined to issue the preliminary injunction requested by the DEQ, but imposed the following conditions on the Company and Mistras Arizona unless and until modified by the Superior Court or entry of a final judgement:

In addition, the DEQ is seeking unspecified penalties and costs in connection with the DEQ Proceeding.

The Superior Court held a hearing in September 2024 regarding the DEQ’s request for a preliminary injunction.

(1) the Company and Mistras Arizona are prohibited from releasing or permitting any release of chromic acid from the facility;

(2) within a reasonable time, the Company and Mistras Arizona must complete improvements to the testing facility designed to prevent future discharges of chromium or chromic acid;

(3) the Company must notify the DEQ upon completion of the improvement to enable the DEQ to conduct an inspection;

(3) the Company and Mistras Arizona must notify the DEQ upon completion of the improvement to enable the DEQ to conduct an inspection;

and (4) the Company and Mistras Arizona are prohibited from engaging in any chrome plating operations at the testing facility until they notify the DEQ that the improvements have been completed.

The DEQ may seek relief if it determines that the improvements are not sufficient to prevent discharges.

The Company intends to comply with the Superior Court's ruling.

This matter is still in the relatively early stages, including as to factual and expert discovery.

It is probable that remediation costs, fines and penalties may be imposed related to this lawsuit.

However, the Company is unable to estimate the range of loss that it may incur.

In April 2025, Mistras Arizona notified the DEQ that the improvements were completed, which the DEQ

then inspected.

Following the DEQ site visit, Mistras Arizona commenced its chrome plating operations on April 28, 2025.

Mistras Arizona has been and intends to continue complying with the Superior Court's ruling.

In the meantime, the DEQ Proceeding is ongoing.

It is probable that additional investigation and/or remediation costs, as well as fines and penalties will be imposed related to the DEQ Proceeding.

However, the Company is unable to estimate the range of loss that it may incur and whether these amounts will be material to the Company.

In addition, Mistras Arizona’s operations in Phoenix are located at a leased site within the footprint of the Motorola 52nd Street Superfund Site (the “Motorola Site”).

Mistras Arizona received a General Notice Letter from the US Environmental Protection Agency (the "EPA"), dated May 21, 2024, informing Mistras Arizona that the EPA has identified it as a potentially responsible party in relation to the Motorola Site.

Mistras Arizona has received two General Notice Letters from the US Environmental Protection Agency (the "EPA"), dated May 21, 2024 and December 1, 2025, informing Mistras Arizona that the EPA has identified it as a potentially responsible party in relation to the Motorola Site.

On April 29, 2025, the Company received a notice from the EPA requesting information regarding the improvements and other matters related to Phoenix testing facility.

Mistras Arizona provided the EPA with the requested information in July 2025.

Pension Related Contingencies

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The collective bargaining agreements for the employees of this subsidiary required contributions for these employees to two national multi-employer pension funds.

The reduction in employees resulted in one of the Company's subsidiaries incurring a complete withdrawal to one of the pension funds under the Employee Retirement Income Security Act of 1974 ("ERISA"), which was fully satisfied in 2019.

The reduction in employees resulted in one of the Company's subsidiaries incurring a complete withdrawal from one of the pension funds under the Employee Retirement Income Security Act of 1974 ("ERISA"), which was fully satisfied in 2019.

The Company has determined that the subsidiary is likely to incur partial or complete withdrawal liability to the other pension fund.

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• North America:

engineering services that are used to evaluate the safety, structural integrity and reliability of critical energy, industrial and public infrastructure and commercial aerospace components.

Software, digital and data services are included in this segment.

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The chief operating decision maker ("CODM") reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment.

For the year ended December 31, 2024, our CODM was identified as Manny Stamatakis, the Interim Chief Executive Officer, because he has final authority over performance assessment and resource allocation decisions.

Beginning January 1, 2025, our CODM was identified as Natalia Shuman, upon her appointment as our Chief Executive Officer effective January 1, 2025, as she has final authority over performance assessment and resource allocation decisions.

For the year ended December 31, 2025, our CODM was identified as Natalia Shuman, our Chief Executive Officer, as she has final authority over performance assessment and resource allocation decisions.

Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.

Segment income (loss) from operations is the primary performance measure used by the CODM to evaluate segment performance and allocate resources, including considering budget-to-actual variances and prior year-to-actual variances on a monthly basis in accordance with GAAP under ASC 280, Segment Reporting.

Segment income (loss) from operations for each of the Company's reportable segments are comprised of revenue, selling, general & administrative expenses, and "other expenses." "Other expenses" include cost of revenue, bad debt provision for troubled customers, goodwill impairment charges, reorganization and environmental costs, legal settlements and recoveries, acquisition-related expenses, depreciation and amortization and research and engineering.

Segment income (loss) from operations for each of the Company's reportable segments is comprised of revenue, selling, general & administrative expenses, and "other expenses." "Other expenses" include cost of revenue, bad debt provision for troubled customers, goodwill impairment charges, reorganization and environmental costs, legal settlements and recoveries, acquisition-related expenses, depreciation and amortization and research and engineering.

Corporate and other assets are comprised principally of cash, deposits, property, plant and equipment, domestic deferred taxes, deferred charges and other assets.

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The tables above only reconcile to income (loss) from operations as our measure of segment profitability and the remainder of the reconciliation to net income (loss) can be seen on the Consolidated Statement of Income (Loss).

For the year ended December 31, 2024, Products and Systems segment revenue was comprised of approximately $ 4.0 million of sales to the International segment, which was eliminated upon consolidation.

Products and Systems segment revenue was comprised of approximately $ 3.0 million of sales to the International segment, which was eliminated upon consolidation, for the year ended December 31, 2025 .

Intersegment revenue related to sales between other segments was immaterial for the years ended December 31, 2025, 2024 and 2023.

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Refer to Note 2 - Revenue , for revenue by industry and by geographic area for the years ended December 31, 2025, 2024, and 2023.

Subsequent Events

On December 5, 2024, the Board, in furtherance of its management succession planning, appointed Natalia Shuman, as the Company’s President and Chief Executive Officer, effective as of January 1, 2025.

In these positions, Ms.

Shuman will succeed Manuel N.

Stamatakis, who has served as the Company’s interim President and Chief Executive Officer since October 9, 2023.

Stamatakis will continue as the Executive Chairman of the Company and, in this position, will continue to lead the Board and exercise supervisory responsibility over the strategic direction of the Company, oversee, and receive reports from, the new President and Chief Executive Officer, and perform such other duties from time to time that may be assigned to him by the Board.

On December 12, 2024, the Company announced the appointment of Hani Hammad, previously the Company’s Executive Vice President and Chief Transformation Officer, to the position of Executive Vice President and Chief Operating Officer, effective January 1, 2025.

On December 31, 2024, the Compensation Committee approved the grant to Mr.

Stamatakis, of a stock option for the purchase of 375,000 shares of the Company’s common stock at an exercise price per share equal to the closing price of the common stock, as reported on the New York Stock Exchange, on January 6, 2025.

On February 6, 2025, the Company announced the passing of its founder and Chairman Emeritus, Dr.

Sotirios Vahaviolos.

On February 7, 2025, the Company terminated the employment of its Executive Vice President, and President of Services, John A.

Smith’s separation is without cause and he will be entitled to receive severance and related benefits for such a separation, subject to the execution of a release by Mr.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data