Mistras Group, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Mistras Group, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Mistras Group, Inc. 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, 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 The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements 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 audits 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 48 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition As described in Note 2 to the consolidated financial statements, the Company derives the majority of its revenue by providing services on a time and material basis that are short-term in nature. Revenue is recognized over time as work progresses for the Company's service deliverables, which includes providing testing, inspection and mechanical services to customers. Revenue is recognized over time, based on time and material incurred to date which best portrays the transfer of control to the customer. For the year ended December 31, 2025, the Company’s revenue was $724.0 million, a majority of which relates to revenue recognized for providing services on a time and material basis. The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company's revenue recognition. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over revenue recognized over time. These procedures also included, among others (i) evaluating revenue transactions by testing the issuance and settlement of invoices and credit memos, tracing transactions not settled to a detailed listing of accounts receivable, and testing the completeness and accuracy of data provided by management; (ii) testing the unbilled revenue accrual at the end of the period, on a test basis, by obtaining the unbilled revenue analysis and supporting documentation, such as invoices, purchase orders/contracts, and timesheets; and (iii) confirming, on a sample basis, outstanding customer invoice balances as of December 31, 2025 and obtaining and inspecting source documents, including invoices, delivery documents, and subsequent cash receipts, where applicable for confirmations not returned. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania March 11, 2026 We have served as the Company’s auditor since 2023. 49 Table of Contents Mistras Group, Inc. and Subsidiaries Consolidated Balance Sheets ( in thousands, except share and per share data ) December 31, 2025 2024 ASSETS Current Assets Cash and cash equivalents $ 28,008 $ 18,317 Accounts receivable, net 154,673 127,281 Inventories 14,002 14,485 Prepaid expenses and other current assets 19,509 12,387 Total current assets 216,192 172,470 Property, plant and equipment, net 93,164 80,892 Intangible assets, net 38,407 39,708 Goodwill 184,829 181,442 Deferred income taxes 5,377 6,267 Other assets 40,812 42,259 Total Assets $ 578,781 $ 523,038 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 14,943 $ 11,128 Accrued expenses and other current liabilities 88,026 85,233 Current portion of long-term debt 12,849 11,591 Current portion of finance lease obligations 7,025 5,317 Income taxes payable 1,465 1,656 Total current liabilities 124,308 114,925 Long-term debt, net of current portion 165,143 158,056 Obligations under finance leases, net of current portion 17,340 15,162 Deferred income taxes 1,264 1,973 Other long-term liabilities 35,081 34,027 Total Liabilities $ 343,136 $ 324,143 Commitments and contingencies (Note 17) Equity Preferred stock, 10,000,000 shares authorized — — Common stock, $ 0.01 par value, 200,000,000 shares authorized, 31,567,434 and 31,010,375 shares issued 499 402 Additional paid-in capital 256,863 250,832 Retained earnings (accumulated deficit) 6,853 ( 9,984 ) Accumulated other comprehensive loss ( 29,111 ) ( 42,682 ) Total Mistras Group, Inc. stockholders’ equity 235,104 198,568 Non-controlling interests 541 327 Total Equity 235,645 198,895 Total Liabilities and Equity $ 578,781 $ 523,038 The accompanying notes are an integral part of these consolidated financial statements. 50 Table of Contents Mistras Group, Inc. and Subsidiaries Consolidated Statements of Income (Loss) ( in thousands, except per share data ) For the year ended December 31, 2025 2024 2023 Revenue $ 724,024 $ 729,640 $ 705,473 Cost of revenue 497,143 513,864 497,177 Depreciation 22,370 23,603 23,995 Gross profit 204,511 192,173 184,301 Selling, general and administrative expenses 139,876 135,452 147,243 Reorganization and other costs 12,654 5,517 12,278 Environmental expense 1,743 1,660 — Goodwill impairment charges — — 13,799 Legal settlement and litigation charges (benefit), net — ( 808 ) 1,058 Research and engineering 1,028 1,119 1,723 Depreciation and amortization 8,638 9,407 10,104 Income (loss) from operations 40,572 39,826 ( 1,904 ) Other expense (income), net 3,451 ( 1,485 ) — Interest expense 14,643 17,067 16,761 Income (loss) before provision (benefit) for income taxes 22,478 24,244 ( 18,665 ) Provision (benefit) for income taxes 5,557 5,274 ( 1,220 ) Net income (loss) 16,921 18,970 ( 17,445 ) Less: net income attributable to noncontrolling interests, net of taxes 84 12 8 Net income (loss) attributable to Mistras Group, Inc. $ 16,837 $ 18,958 $ ( 17,453 ) Earnings (loss) per common share Basic $ 0.54 $ 0.61 $ ( 0.58 ) Diluted $ 0.53 $ 0.60 $ ( 0.58 ) Weighted average common shares outstanding: Basic 31,408 30,926 30,330 Diluted 32,058 31,608 30,330 The accompanying notes are an integral part of these consolidated financial statements. 51 Table of Contents Mistras Group, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) (in thousands) For the year ended December 31, 2025 2024 2023 Net income (loss) $ 16,921 $ 18,970 $ ( 17,445 ) Other comprehensive income (loss): Foreign currency translation adjustments 13,701 ( 14,342 ) 5,058 Comprehensive income (loss) 30,622 4,628 ( 12,387 ) Less: net income attributable to noncontrolling interests, net of taxes 84 12 8 Less: Foreign currency translation adjustments attributable to noncontrolling interests 130 4 4 Comprehensive income (loss) attributable to Mistras Group, Inc. $ 30,408 $ 4,612 $ ( 12,399 ) The accompanying notes are an integral part of these consolidated financial statements. 52 Table of Contents Mistras Group, Inc. and Subsidiaries Consolidated Statements of Equity (in thousands) Common stock Additional paid-in capital Retained earnings (accumulated deficit) Accumulated other comprehensive loss Total Mistras Group, Inc. stockholders’ equity Non-controlling interests Shares Amount Total Equity Balance at December 31, 2022 29,895 $ 298 $ 243,031 $ ( 11,489 ) $ ( 33,390 ) $ 198,450 $ 299 $ 198,749 Net income (loss) — — — ( 17,453 ) — ( 17,453 ) 8 ( 17,445 ) Other comprehensive income, net of tax — — — — 5,054 5,054 4 5,058 Share-based compensation — — 5,712 — — 5,712 — 5,712 Net settlement of restricted stock units 703 7 ( 1,578 ) — — ( 1,571 ) — ( 1,571 ) Balance at December 31, 2023 30,598 $ 305 $ 247,165 $ ( 28,942 ) $ ( 28,336 ) $ 190,192 $ 311 $ 190,503 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 Net settlement of restricted stock units 412 97 ( 1,405 ) — — ( 1,308 ) — ( 1,308 ) Balance at December 31, 2024 31,010 $ 402 $ 250,832 $ ( 9,984 ) $ ( 42,682 ) $ 198,568 $ 327 $ 198,895 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 Net settlement of restricted stock units 557 97 ( 1,754 ) — — ( 1,657 ) — ( 1,657 ) Balance at December 31, 2025 31,567 $ 499 $ 256,863 $ 6,853 $ ( 29,111 ) $ 235,104 $ 541 $ 235,645 The accompanying notes are an integral part of these consolidated financial statements. 53 Table of Contents Mistras Group, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) For the year ended December 31, 2025 2024 2023 Cash flows from operating activities Net income (loss) $ 16,921 $ 18,970 $ ( 17,445 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization 31,008 33,010 34,099 Deferred income taxes 304 ( 4,868 ) ( 5,281 ) 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 Foreign currency loss (gain) 3,451 ( 1,805 ) 1,030 Other ( 2,635 ) ( 437 ) ( 437 ) Changes in operating assets and liabilities, net of effect of acquisitions and dispositions Accounts receivable ( 24,949 ) 1,286 ( 8,026 ) Inventories 772 100 ( 1,867 ) Prepaid expenses and other assets ( 6,797 ) 1,228 ( 1,852 ) Accounts payable 3,283 ( 5,148 ) 4,177 Accrued expenses and other liabilities 2,409 1,220 4,010 Income taxes payable ( 326 ) 655 ( 580 ) Payment of contingent consideration in excess of initial estimate — — ( 937 ) Net cash provided by operating activities 32,981 50,129 26,748 Cash flows from investing activities Purchase of property, plant and equipment ( 24,674 ) ( 17,902 ) ( 20,854 ) Purchase of intangible assets ( 4,518 ) ( 5,084 ) ( 2,795 ) Proceeds from sale of equipment 4,070 1,620 1,516 Net cash used in investing activities ( 25,122 ) ( 21,366 ) ( 22,133 ) Cash flows from financing activities Repayment of finance lease obligations ( 6,625 ) ( 5,495 ) ( 5,047 ) Proceeds from borrowings of long-term debt — — 611 Repayment of long-term debt ( 11,913 ) ( 9,096 ) ( 7,598 ) Proceeds from revolver 81,500 72,000 83,000 Repayments of revolver ( 61,900 ) ( 83,501 ) ( 77,100 ) Taxes paid related to net share settlement of share-based awards ( 1,657 ) ( 1,306 ) ( 1,572 ) Net cash used in financing activities ( 595 ) ( 27,398 ) ( 7,706 ) Effect of exchange rate changes on cash and cash equivalents 2,427 ( 694 ) 249 Net change in cash and cash equivalents 9,691 671 ( 2,842 ) Cash and cash equivalents: Beginning of period 18,317 17,646 20,488 End of period $ 28,008 $ 18,317 $ 17,646 Supplemental disclosure of cash paid Interest, net $ 13,359 $ 15,572 $ 17,078 Income taxes, net $ 9,328 $ 6,410 $ 6,901 Noncash investing and financing Equipment acquired through finance lease obligations $ 10,154 $ 9,899 $ 7,125 The accompanying notes are an integral part of these consolidated financial statements. 54 Table of Contents Mistras Group, Inc. and Subsidiaries Notes to Consolidated Financial Statements (tabular dollars in thousands, except per share data) 1. Summary of Significant Accounting Policies and Practices Description of Business 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. Software, digital and data services are included in this segment. • International: This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment. • Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States. Recent Developments 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. 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. 55 Table of Contents 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 Company analyzes its joint ventures and classifies them as either: • a VIE that must be consolidated because the Company is the primary beneficiary, or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or • a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest. As part of the above analysis, if it is determined that the Company has the power to direct the activities that most significantly impact the joint venture’s economic performance, the Company considers whether or not it has the obligation to absorb losses or rights to receive benefits of the VIE that could potentially be significant to the VIE. 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 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. The Company is the primary sub-contractor of the VIE. The accompanying audited consolidated financial statements include the accounts of Mistras Group, Inc. as well as its wholly-owned subsidiaries, majority-owned subsidiaries and consolidated VIE. For subsidiaries in which the Company’s ownership interest is less than 100%, the non-controlling interests are reported in stockholders’ equity in the accompanying Consolidated Balance Sheets. The non-controlling interests in net results, net of tax, is classified separately in the accompanying Consolidated Statements of Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations of companies acquired are included from the date of acquisition. Change in Accounting Principle Certain amounts in prior periods have been reclassified to conform to the current year presentation. 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 . 56 Table of Contents 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 The preparation of financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") requires that the Company make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements. The Company bases its estimates and assumptions on historical experience, known or expected trends and various other assumptions that it believes to be reasonable. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates, which may cause the Company’s future results to be significantly affected. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts Receivable and Allowance for Credit Losses The Company maintains an allowance for credit losses on its accounts receivable balances, which represents its best estimate of current expected credit losses over the contractual life of the accounts receivable. When evaluating the adequacy of its allowance for credit losses each reporting period, the Company analyzes accounts receivable balances with similar risk characteristics on a collective basis, considering factors such as the aging of receivable balances, payment terms (primarily with 30 day terms), geographic location, historical loss experience, current information and future expectations (generally considered one year which is consistent with expected collectability of the Company's trade receivables). 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 bad debt expense, which is presented within Selling, general and administrative expenses in the Consolidated Statements of Income (Loss). Concentration of Credit Risk For each of the years ended December 31, 2025 and 2024, no customer represented 10% or more of the Company's revenue. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. At times, cash deposits may exceed the limits insured by the Federal Deposit Insurance Corporation. The Company believes it is not exposed to any significant credit risk or risk of nonperformance of financial institutions. Inventories 57 Table of Contents Inventories are stated at the lower of cost or net realizable value, as determined by using the first-in, first-out method, or market. Work in process and finished goods inventory include material, direct labor, variable costs and overhead. Purchased and Internal-Use Software The Company capitalizes certain costs that are incurred to purchase or to create and implement internal-use software, which includes software coding, installation and testing. Capitalized costs are amortized on a straight-line basis over three years , the estimated useful life of the software. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation of property, plant and equipment is computed utilizing the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is computed utilizing the straight-line method over the shorter of the remaining lease term or estimated useful life. 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 Goodwill represents the excess purchase price of acquired businesses over the fair values attributed to underlying net tangible assets and identifiable intangible assets. The Company tests goodwill for impairment at a “reporting unit” level (which for the Company is represented by (i) its North America segment, (ii) its Products and Systems segment, (iii) the European component of its International segment and (iv) the Brazilian component of its International segment). The Company's annual impairment test is conducted on the first day of the Company's fourth quarter, which is October 1. Goodwill is also tested for impairment whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing a quantitative impairment test is not necessary. If the Company concludes otherwise, the Company is required to perform a quantitative impairment test. If the fair value of a reporting unit is less than its carrying value, this is an indicator that the goodwill assigned to that reporting unit may be impaired. An impairment will be recorded in the amount that the fair value is less than the carrying value. The Company considers the income and market approaches to estimate the fair value of its reporting units, which requires significant judgment and assumptions related to revenue growth rates, gross margins, EBIT margins, and market multiples. See Note 7 - Goodwill for additional information related to the Company's goodwill impairment test during 2025. Impairment of Long-lived Assets 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. 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. Acquisitions 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 820, Fair Value Measurements and Disclosure. Deferred taxes are recorded for any differences between the assigned values and tax bases of assets and liabilities. 58 Table of Contents Research and Engineering Research and product development costs are expensed as incurred. Advertising, Promotions and Marketing The costs for advertising, promotion and marketing programs are expensed as incurred and are included in selling, general and administrative expenses. Advertising expense was approximately $ 0.4 million, $ 1.0 million and $ 1.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other financial current assets and liabilities approximate fair value based on the short-term nature of the items. Foreign Currency Translation The financial position and results of operations of the Company’s foreign subsidiaries are measured using their functional currencies, which are their local currencies. Assets and liabilities of foreign subsidiaries are translated into the U.S. Dollar at the exchange rates in effect at the balance sheet date. Income and expenses are translated at the average exchange rate during the period. 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 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. 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. Share-based Compensation The value of services received from employees and directors in exchange for an award of an equity instrument is measured based on the grant-date fair value of the award. Such value is recognized as a non-cash expense on a straight-line basis over the minimum period the individual provides services, which is typically the vesting period of the award with the exception of awards with graded vesting that contain an internal performance measure where each tranche is recognized on a straight-line basis over its vesting period subject to the probability of meeting the performance requirements and adjusted for the number of shares expected to be earned. 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. 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). Income Taxes Income taxes are accounted for under the asset and liability method. We recognize deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. Any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment. Our net deferred tax assets primarily consist of net operating loss carry forwards, or NOLs. A valuation allowance is provided if it is more likely than not that some or all of a deferred income tax asset will not be realized. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current and prior years. 59 Table of Contents We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Recent Accounting Pronouncements 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 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. 2. Revenue 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. Performance Obligations The Company provides highly integrated and bundled inspection services to its customers. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company's best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is a relative selling price based on price lists. Contract modifications are not routine in the performance of the Company's contracts. Generally, when contracts are modified, the modification is to account for changes in scope to the goods and services that are provided. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as a separate contract. The Company's performance obligations are satisfied over time as work progresses or at a point in time. The majority of the Company's revenue is recognized over time as work progresses for the Company's service deliverables, which includes providing testing, inspection and mechanical services to our customers. Revenue is recognized over time, based on time and material incurred to date which best portrays the transfer of control to the customer. The Company also utilizes an available practical expedient that provides for revenue to be recognized in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. Fixed fee arrangements are determined based on expected labor, material, and overhead to be consumed on fulfillment of such services. For these arrangements, revenue is recognized on a cost-to-cost method tracked on an input basis. 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. The Company expects any significant remaining performance obligations to be satisfied within one year . 60 Table of Contents Contract Estimates The majority of the Company's revenues are short-term in nature. The Company enters into master service agreements ("MSAs") with customers that specify an overall framework and contract terms. The actual contracting to provide services or furnish products are triggered by a work order, purchase order, or some similar document issued pursuant to an MSA which sets forth the scope of services and/or identifies the products to be provided. From time-to-time, the Company may enter into longer-term contracts, which can range from several months to several years. Revenue on certain contracts is recognized as work is performed based on total costs incurred to date in relation to the total estimated costs for the performance of the contract at completion. This includes contract estimates of costs to be incurred for the performance of the contract. Cost estimation is based upon the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Factors that are considered in estimating the work to be completed include the availability of materials, the effect of any delays in the Company's project performance and the recoverability of any claims. Whenever revisions of estimates, contract costs and/or contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. Revenue by Category The following series of tables present the Company's disaggregated revenue: Revenue by industry was as follows (in thousands): Year ended December 31, 2025 North America International Products & Systems Corp/Elim Total Oil & Gas $ 360,158 $ 36,117 $ 552 $ — $ 396,827 Aerospace & Defense 67,071 26,316 428 — 93,815 Industrials 50,284 28,017 2,387 — 80,688 Power Generation and Transmission 33,572 8,805 1,847 — 44,224 Other Process Industries 22,183 17,828 54 — 40,065 Infrastructure, Research & Engineering 18,943 14,124 4,463 — 37,530 Petrochemical 13,013 132 — — 13,145 Other 18,907 12,504 4,239 ( 17,920 ) 17,730 Total $ 584,131 $ 143,843 $ 13,970 $ ( 17,920 ) $ 724,024 Year ended December 31, 2024 North America International Products & Systems Corp/Elim Total Oil & Gas $ 376,333 $ 42,315 $ 275 $ — $ 418,923 Aerospace & Defense 63,111 23,785 120 — 87,016 Industrials 44,310 25,498 1,857 — 71,665 Power Generation and Transmission 27,035 7,629 1,854 — 36,518 Other Process Industries 32,353 17,190 302 — 49,845 Infrastructure, Research & Engineering 19,155 10,606 3,400 — 33,161 Petrochemical 14,437 1,134 — — 15,571 Other 16,793 7,812 5,853 ( 13,517 ) 16,941 Total $ 593,527 $ 135,969 $ 13,661 $ ( 13,517 ) $ 729,640 61 Table of Contents Year ended December 31, 2023 North America International Products & Systems Corp/Elim Total Oil & Gas $ 379,221 $ 36,615 $ 159 $ — $ 415,995 Aerospace & Defense 56,000 20,711 286 — 76,997 Industrials 42,518 26,292 1,773 — 70,583 Power Generation and Transmission 23,598 6,609 3,767 — 33,974 Other Process Industries 33,035 14,456 112 — 47,603 Infrastructure, Research & Engineering 16,620 9,320 3,168 — 29,108 Petrochemical 13,216 1,216 — — 14,432 Other 15,122 9,195 3,721 ( 11,257 ) 16,781 Total $ 579,330 $ 124,414 $ 12,986 $ ( 11,257 ) $ 705,473 Revenue per key geographic location was as follows (in thousands): 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 Other Americas 74,570 2,979 407 ( 7,052 ) 70,904 Europe 3,888 133,607 2,656 ( 6,403 ) 133,748 Asia-Pacific 3,189 1,979 5,365 ( 521 ) 10,012 Total $ 584,131 $ 143,843 $ 13,970 $ ( 17,920 ) $ 724,024 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 Other Americas 85,139 9,144 1,777 ( 6,047 ) 90,013 Europe 2,590 120,052 2,655 ( 4,118 ) 121,179 Asia-Pacific 3,793 5,166 3,361 ( 817 ) 11,503 Total $ 593,527 $ 135,969 $ 13,661 $ ( 13,517 ) $ 729,640 Year ended December 31, 2023 North America International Products & Systems Corp/Elim Total United States $ 495,764 $ 934 $ 5,956 $ ( 2,372 ) $ 500,282 Other Americas 77,880 12,906 850 ( 4,697 ) 86,939 Europe 3,655 105,934 1,927 ( 3,381 ) 108,135 Asia-Pacific 2,031 4,640 4,253 ( 807 ) 10,117 Total $ 579,330 $ 124,414 $ 12,986 $ ( 11,257 ) $ 705,473 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, generally at periodic intervals (e.g., weekly, bi-weekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are aggregated on an individual contract basis and reported on the Consolidated Balance Sheets at the end of each reporting period within accounts receivable, net or accrued expenses and other current liabilities. Revenue recognized for 2025 and 2024, that was included in the contract liability balance at the beginning of the year, was $ 7.8 million and $ 6.7 million, respectively. Changes in the contract asset and liability balances during the years ended December 31, 2025 and 2024, were not impacted by any other factors. The Company applies the practical expedient to expense incremental 62 Table of Contents 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. 3. 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 (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): For the year ended December 31, 2025 2024 2023 Basic earnings (loss) per share: Numerator: Net income (loss) attributable to Mistras Group, Inc. $ 16,837 $ 18,958 $ ( 17,453 ) Denominator: Weighted average common shares outstanding 31,408 30,926 30,330 Basic earnings (loss) per share $ 0.54 $ 0.61 $ ( 0.58 ) Diluted earnings (loss) per share: Numerator: Net income (loss) attributable to Mistras Group, Inc. $ 16,837 $ 18,958 $ ( 17,453 ) Denominator: Weighted average common shares outstanding 31,408 30,926 30,330 Dilutive effect of stock options outstanding 133 106 — Dilutive effect of restricted stock units outstanding 517 576 — 32,058 31,608 30,330 Diluted earnings (loss) per share $ 0.53 $ 0.60 $ ( 0.58 ) 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, 2025 2024 2023 Potential shares of common stock attributable to restricted stock units (RSUs) and performance stock units (PSUs) outstanding (1) 17 307 547 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 earnings per share due to the net loss for the period. 63 Table of Contents 4. Accounts Receivable Accounts receivable consist of the following (in thousands): December 31, 2025 2024 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 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. 5. Inventories Inventories consist of the following (in thousands): December 31, 2025 2024 Raw materials and consumable supplies $ 9,252 $ 8,321 Work in progress 912 1,018 Finished goods 3,838 5,146 Inventories $ 14,002 $ 14,485 6. Property, Plant and Equipment Property, plant and equipment consist of the following: December 31, Useful Life 2025 2024 (Years) (in thousands) Land $ 2,470 $ 2,429 Building and improvements 30 - 40 22,383 27,973 Office furniture and equipment 5 - 8 16,887 16,768 Machinery and equipment 5 - 7 308,457 274,907 350,197 322,077 Accumulated depreciation and amortization ( 257,033 ) ( 241,185 ) Property, plant and equipment, net $ 93,164 $ 80,892 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. 64 Table of Contents 7. Goodwill 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 Foreign currency translation ( 5,912 ) — — ( 5,912 ) Balance at December 31, 2024 $ 181,442 $ — $ — $ 181,442 Foreign currency translation 3,387 — 3,387 Balance at December 31, 2025 $ 184,829 $ — $ — $ 184,829 The Company reviews goodwill for impairment on a reporting unit basis on October 1 of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. During the third quarter of 2023, a triggering event was identified within the Company's reporting units within the International segment due to decreased gross margin in the current period as a result of inflationary pressures and rising energy costs impacting the International reporting units' operations. As a result, the Company performed an interim quantitative goodwill impairment test. 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 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 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. 65 Table of Contents 8. Intangible Assets The gross carrying amount and accumulated amortization of intangible assets were as follows (in thousands): December 31, 2025 2024 Useful Life (Years) Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships 5 - 18 $ 109,262 $ ( 96,428 ) $ 12,834 $ 107,704 $ ( 92,220 ) $ 15,484 Software/Technology 3 - 15 63,158 ( 37,822 ) 25,336 57,414 ( 33,930 ) 23,484 Covenants not to compete 2 - 5 12,387 ( 12,387 ) — 12,391 ( 12,371 ) 20 Other 2 - 12 10,211 ( 9,974 ) 237 10,218 ( 9,498 ) 720 Total $ 195,018 $ ( 156,611 ) $ 38,407 $ 187,727 $ ( 148,019 ) $ 39,708 Amortization expense for the years ended December 31, 2025, 2024 and 2023 was approximately $ 6.7 million, $ 7.6 million, and $ 8.5 million, respectively, including amortization of software/technology for these periods of $ 3.6 million, $ 2.9 million, and $ 2.9 million, respectively. Amortization expense in each of the five years and thereafter subsequent to December 31, 2025 related to the Company’s intangible assets is expected to be as follows (in thousands): Expected Amortization Expense 2026 $ 7,079 2027 7,027 2028 6,646 2029 5,624 2030 5,073 Thereafter 6,958 Total $ 38,407 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2025 2024 Accrued salaries, wages and related employee benefits $ 30,391 $ 27,990 Accrued workers' compensation and health benefits 2,471 4,898 Deferred revenue 9,099 8,096 Right-of-use liability - Operating 10,882 11,375 Pension accrual 2,081 2,458 Other accrued expenses 33,102 30,416 Total accrued expenses and other current liabilities $ 88,026 $ 85,233 66 Table of Contents 10. Long-Term Debt Long-term debt consisted of the following (in thousands): December 31, 2025 2024 Senior credit facility $ 79,250 $ 59,650 Senior secured term loan, net of unamortized debt issuance costs of $ 0.2 million and $ 0.3 million, respectively 96,711 107,545 Other 2,031 2,452 Total debt 177,992 169,647 Less: Current portion ( 12,849 ) ( 11,591 ) Long-term debt, net of current portion $ 165,143 $ 158,056 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 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. Both the revolving line of credit and the term loan under the Credit Agreement have a maturity date of July 30, 2027. The Credit Agreement has the following key terms, conditions and financial covenants: • 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. ◦ Total Consolidated Debt Leverage Ratio means the ratio of (a) Total Consolidated Debt to (b) EBITDA (as defined in the Credit Agreement) for the trailing four consecutive fiscal quarters. ◦ Total Consolidated Debt means all indebtedness (including subordinated debt) of the Company on a consolidated basis. • 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 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. • The Company is required to maintain a Fixed Charge Coverage Ratio of 1.25 to 1.0 for the duration of the Credit Agreement, as defined in the Credit Agreement. • The Credit Agreement limits the Company’s ability to, among other things, create liens, make investments, incur more indebtedness, merge or consolidate, make dispositions of property, pay dividends, make distributions to stockholders or repurchase our stock, enter into a new line of business, enter into transactions with affiliates and enter into burdensome agreements. • The Credit Agreement does not limit the Company’s ability to acquire other businesses or companies except that the acquired business or company must be in the Company's line of business, the Company must be in compliance with the financial covenants on a pro forma basis after taking into account the acquisition, and the Company must provide written notice at least five business days prior to the date of an acquisition of $ 10 million or more. • Quarterly payments on the term loan of $ 1.56 million through June 30, 2024, then increasing to $ 2.34 million through June 30, 2025, and to $ 3.12 million for each quarterly payment thereafter through maturity. 67 Table of Contents As of December 31, 2025, the Company had borrowings of $ 176.0 million and a total of $ 3.4 million of letters of credit outstanding under the Credit Agreement. The Company has capitalized costs associated with debt modifications of $ 0.5 million as of December 31, 2025, which is included in Other assets on the Consolidated Balance Sheet and will be amortized into interest expense over the remaining term of the Credit Agreement through July 30, 2027. As of December 31, 2025, the Company was in compliance with the terms of the Credit Agreement. The Company continuously monitors compliance with the covenants contained in the Credit Agreement. Other Debt 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. 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): 2026 $ 12,538 2027 164,030 2028 487 2029 465 2030 411 Thereafter 61 Total $ 177,992 11. Fair Value Measurements The Company performs fair value measurements in accordance with the guidance provided by ASC 820, Fair Value Measurements and Disclosures . ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three-level hierarchy that prioritizes the inputs used to measure fair value. 12. Share-Based Compensation The Company grants share-based incentive awards to its eligible employees and non-employee directors under its 2016 Long-Term Incentive Plan (the "2016 Plan"). 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 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 (the "NYSE") on the grant date (the "Options"). 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 68 Table of Contents 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. 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: 69 Table of Contents 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 Exercised — Expired or forfeited — Outstanding at December 31, 2023 250 $ 5.36 9.8 $ 0.5 Granted — — Exercised — — Expired or forfeited — — 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 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): For the year ended December 31, 2025 2024 2023 Awards issued 72 60 133 Grant date fair value of awards issued $ 571 $ 549 $ 750 Restricted Stock Unit Awards 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, 2025 2024 2023 Awards issued 597 467 683 Grand date fair value of awards issued $ 5,688 $ 4,247 $ 4,269 70 Table of Contents 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, 2025 2024 2023 Units Weighted Average Grant-Date Fair Value Units Weighted Average Grant-Date Fair Value Units Weighted Average Grant-Date Fair Value Outstanding at beginning of period: 1,231 $ 8.41 1,184 $ 8.07 1,415 $ 6.66 Granted 395 $ 9.36 733 $ 8.52 606 $ 8.30 Released ( 597 ) $ 9.53 ( 467 ) $ 9.09 ( 683 ) $ 6.25 Forfeited ( 235 ) $ 8.54 ( 219 ) $ 8.35 ( 154 ) $ 8.00 Outstanding at end of period: 794 $ 8.71 1,231 $ 8.41 1,184 $ 8.07 Performance Restricted Stock Units 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. 1. 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. 2. 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. 3. Revenue 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. 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. A summary of the Company's PRSU activity is presented as follows (in thousands, except per share amounts and years): For the year ended December 31, 2025 2024 2023 Units Weighted Average Grant-Date Fair Value Units Weighted Average Grant-Date Fair Value Units Weighted Average Grant-Date Fair Value Outstanding at beginning of period: 125 $ 9.12 60 $ 9.33 371 $ 9.96 Granted 507 $ 10.08 295 $ 8.76 282 $ 8.50 Performance condition adjustments, net ( 203 ) $ 8.76 ( 201 ) $ 8.76 ( 305 ) $ 8.34 Released ( 28 ) $ 12.37 ( 29 ) $ 9.87 ( 204 ) $ 6.59 Forfeited ( 55 ) $ 8.78 — $ 8.02 ( 84 ) $ 6.95 Outstanding at end of period: 346 $ 9.93 125 $ 9.12 60 $ 9.33 71 Table of Contents 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. 13. Income Taxes Income (loss) before provision (benefit) for income taxes is as follows (in thousands): For the year ended December 31, 2025 2024 2023 Income (loss) before provision (benefit) for income taxes from: U.S. operations $ 8,210 $ 16,010 $ ( 6,900 ) Foreign operations 14,268 8,234 ( 11,765 ) Income (loss) before provision (benefit) for income taxes $ 22,478 $ 24,244 $ ( 18,665 ) The provision (benefit) for income taxes consists of the following (in thousands): For the year ended December 31, 2025 2024 2023 Current Federal $ 900 $ 6,167 $ 1,388 States and local ( 11 ) 1,333 705 Foreign 4,319 2,642 2,063 Total current provision $ 5,208 $ 10,142 $ 4,156 Deferred Federal $ 1,121 $ ( 3,405 ) $ ( 2,219 ) States and local 434 143 ( 1,502 ) Foreign ( 1,206 ) ( 1,606 ) ( 1,655 ) 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 72 Table of Contents 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 Foreign: 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): 73 Table of Contents For the years ended December 31, 2025 2024 2023 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 Brazil Changes in valuation allowances 29 0.1 ( 759 ) ( 3.1 ) ( 79 ) 0.4 Other ( 144 ) ( 0.6 ) 145 0.6 195 ( 1.0 ) Canada 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 ) France Impairment of goodwill — — — — 966 ( 5.2 ) Other 150 0.7 42 0.2 ( 205 ) 1.1 Germany 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 ) Tax credits 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 % (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. 74 Table of Contents Deferred income tax attributes resulting from differences between financial accounting amounts and income tax basis of assets and liabilities are as follows (in thousands): December 31, 2025 2024 Deferred income tax assets Allowance for doubtful accounts $ 493 $ 470 Inventory 1,269 1,218 Intangible assets 954 808 Accrued expenses 4,014 4,090 Net operating loss carryforward 3,774 4,369 Finance lease obligations 485 189 Stock Options 181 183 Deferred stock based compensation 785 911 Interest carryforward 8,302 6,328 Right-of-use liability 8,072 8,696 R&D Expense 3,283 6,671 Credits 788 100 Other 1,645 442 Deferred income tax assets 34,045 34,475 Valuation allowance ( 3,685 ) ( 4,034 ) Net deferred income tax assets $ 30,360 $ 30,441 Deferred income tax liabilities Property and equipment $ ( 5,558 ) $ ( 5,404 ) Goodwill ( 10,702 ) ( 10,134 ) Intangible assets ( 1,917 ) ( 1,952 ) Right-of-use asset ( 8,070 ) ( 8,657 ) Deferred income tax liabilities ( 26,247 ) ( 26,147 ) Net deferred income taxes $ 4,113 $ 4,294 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. Valuation allowances are provided when management believes the Company's deferred tax assets are not recoverable based on future reversals of existing taxable temporary differences, taxable income in prior carryback year(s) if carryback is permitted under the tax law, and an assessment of estimated future taxable income, exclusive of reversing temporary differences and carryforwards, that incorporates on going, prudent and feasible tax planning strategies. 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 $ 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. 75 Table of Contents The following table summarizes the changes in the Company’s gross unrecognized tax benefits, excluding interest and penalties (in thousands): For the year ended December 31, 2025 2024 Balance at beginning of period $ 251 $ 258 Additions for tax positions related to the current fiscal period — — Additions for tax positions related to prior years 361 — Reductions related to the expiration of statutes of limitations ( 14 ) ( 7 ) Other 4 — Balance at end of period $ 602 $ 251 The Company has recorded the unrecognized tax benefits in other long-term liabilities in the consolidated balance sheets. As of December 31, 2025 and December 31, 2024, there were approximately $ 0.6 million and $ 0.3 million of unrecognized tax benefits, respectively, including penalties and interest. If the Company recognized these unrecognized tax benefits, approximately $ 0.6 million and $ 0.3 million would favorably affect the effective tax rate for both December 31, 2025 and December 31, 2024, respectively. 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 is subject to taxation in the United States and various states and foreign jurisdictions. Currently the Company is undergoing a federal tax audit for years ending December 31, 2018 through December 31, 2020. 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. federal tax, they would only be potentially subject to limited other taxes, including foreign withholding and certain state taxes. As of December 31, 2025, the Company has no t recognized a deferred tax liability for foreign withholdings and state taxes on its undistributed international earnings or losses of its foreign subsidiaries since it intends to indefinitely reinvest the earnings outside the United States. The Company has estimated $ 68.4 million of unremitted international earnings which provides an unrecorded deferred tax liability related to undistributed international earnings of approximately $ 1.7 million. 14. Employee Benefit Plans The Company provides a 401(k) savings plan for eligible U.S. based employees. Employee contributions are discretionary up to the IRS limits each year and catch up contributions are allowed for employees 50 years of age or older. Under the 401(k) plan, employees become eligible to participate on the first day of the month after three months of continuous service. Under this plan, the Company matches 50 % of the employee’s contributions up to 6 % of the employee’s annual compensation, as defined by the plan. There is a five-year vesting schedule for the Company match. 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. Both the Boilermakers and Pipefitters plans are approximately 80 percent funded as of the latest Form 5500 filed, respectively. The Company did no t make any contributions to the Boilermakers plan during the years ended December 31, 2025 and 2024, while making de minimis contributions to the Pipefitters plan during the same periods. See Note 17 - Commitments and Contingencies, Pension Related Contingencies, for additional detail. The Company has other benefit plans covering certain employees throughout the Company. Amounts charged to expense under these plans were not significant in any year. 76 Table of Contents 15. Related Party Transactions 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. 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. 16. Leases The Company leases certain office and operating facilities, machinery, equipment, and vehicles. Concurrent with the adoption of ASC 842, the Company recognized a right-of-use ("ROU") asset and lease liability based on the present value of the future lease payments over the lease term for each lease agreement. The Company elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less and will continue to recognize lease expense for these leases on a straight-line basis over the lease term. The Company has leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance. For all asset classes, the Company decided to utilize the practical expedient to include both fixed lease components and fixed non-lease components in calculating the ROU asset and lease liability. The Company identified variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum charge. Many of the Company's leases include one or more options to renew. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining future lease payments. As the Company is unable to determine the discount rate implicit in its lease agreements, the Company uses its incremental borrowing rate on the commencement date to calculate the present value of future payments. The Company’s Consolidated Balance Sheets include the following related to operating leases as of December 31, 2025 and 2024 (in thousands): Leases Classification 2025 2024 Assets: ROU assets Other assets $ 38,937 $ 40,401 Liabilities: ROU liability - current Accrued expenses and other current liabilities $ 10,882 $ 11,375 ROU liability - long-term Other long-term liabilities 29,378 30,279 Total ROU liabilities $ 40,260 $ 41,654 Included within the balance of operating leases is a lease for the Company’s headquarters which is with a related party. 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, 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. 77 Table of Contents The components of lease costs for the year ended December 31, 2025 and 2024 are as follows (in thousands): Classification 2025 2024 Finance lease expense: Amortization of ROU assets Depreciation and amortization $ 6,298 $ 5,491 Interest on lease liabilities Interest expense 3,832 1,062 Operating lease expense Cost of revenue; Selling, general & administrative expenses 14,050 14,213 Short-term lease expense Cost of revenue; Selling, general & administrative expenses 44 56 Variable lease expense Cost of revenue; Selling, general & administrative expenses 1,986 1,683 Total $ 26,210 $ 22,505 Additional information related to leases as of December 31, 2025 and 2024 is as follows: 2025 2024 Cash paid for amounts included in the measurement of lease liabilities for finance and operating leases (in thousands): Finance - financing cash flows $ 6,625 $ 5,495 Finance - operating cash flows 3,832 1,062 Operating - operating cash flows 14,048 14,243 ROU assets obtained in the exchange for lease liabilities: Finance leases $ 10,154 $ 9,899 Operating leases 10,014 16,254 Weighted-average remaining lease term (in years): Finance leases 4.4 5.0 Operating leases 4.8 4.7 Weighted-average discount rate: Finance leases 6.0 % 6.5 % Operating leases 6.0 % 6.1 % Maturities of lease liabilities as of December 31, 2025 is as follows (in thousands): Finance Operating 2026 $ 8,278 $ 12,922 2027 7,308 10,532 2028 5,389 8,398 2029 3,705 5,095 2030 1,559 3,471 Thereafter 1,098 5,944 Total 27,337 46,362 Less: Present value discount ( 2,972 ) ( 6,102 ) Lease liability $ 24,365 $ 40,260 17. Commitments and Contingencies Legal Proceedings and Government Investigations 78 Table of Contents The Company is periodically involved in lawsuits, investigations and claims. While uncertainties exist with respect to the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company, based on currently available information, does not believe that any currently pending or threatened legal proceeding to which the Company is a party, or is likely to become a party, including those proceedings identified in this Note 17, will have a material adverse effect on its business, results of operations, cash flows or financial condition. The costs incurred by the Company to defend lawsuits, investigations and claims and amounts the Company pays to other parties because of these matters may be covered by insurance in some circumstances. Litigation and Commercial Claims 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 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 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. 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 judgment: (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 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. 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 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 Certain of Company’s subsidiaries had significant reductions in their unionized workers in 2018. 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 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. The balance of the estimated total amount of this potential liability as of December 31, 2025 is approximately $ 2.1 million, which was incurred in 2018 and 2019. 79 Table of Contents 18. Segment Disclosure The Company’s three operating segments, which are also the Company's reportable segments, are: • 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. • International: This segment offers services, products and systems similar to those of the other segments to select markets within Europe, the Middle East, Africa, Asia and South America, but not to customers in China and South Korea, which are served by the Products and Systems segment. • Products and Systems: This segment designs, manufactures, sells, installs and services the Company’s asset protection products and systems, including equipment and instrumentation, predominantly in the United States. Costs incurred for general corporate services, including finance, legal, and certain other costs that are provided to the segments are reported within Corporate and eliminations. Sales to the International segment from the Products and Systems segment and subsequent sales by the International segment of the same items are recorded and reflected in the operating performance of both segments. Additionally, engineering charges and royalty fees charged to the North America and International segments by the Products and Systems segment are reflected in the operating performance of each segment. 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, 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 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. Corporate loss from operations consists of administrative charges related to corporate personnel and other charges that cannot be readily identified for allocation to a particular segment. These items of our operating profit are managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM, as well as the measure of segment performance used for incentive compensation purposes. The accounting policies of the reportable segments are the same as those described in Note 1 - Summary of Significant Accounting Policies and Practices . 80 Table of Contents Selected consolidated financial information by segment for the periods shown was as follows. Income (loss) from operations by operating segment includes intercompany transactions, which are eliminated in Corporate and eliminations . For the year ended December 31, 2025 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 584,131 $ 143,843 $ 13,970 $ 741,944 $ ( 17,920 ) $ 724,024 Selling, general & administrative expenses 81,291 29,620 3,411 114,322 25,554 139,876 Other Expenses 440,052 103,870 7,908 551,830 ( 8,254 ) 543,576 Income (loss) from operations $ 62,788 $ 10,353 $ 2,651 $ 75,792 $ ( 35,220 ) $ 40,572 For the year ended December 31, 2024 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 593,527 $ 135,969 $ 13,661 $ 743,157 $ ( 13,517 ) $ 729,640 Selling, general & administrative expenses 75,567 29,126 3,677 108,370 27,082 135,452 Other Expenses 455,674 100,568 7,474 563,716 ( 9,354 ) 554,362 Income (loss) from operations $ 62,286 $ 6,275 $ 2,510 $ 71,071 $ ( 31,245 ) $ 39,826 For the year ended December 31, 2023 Segment North America International Products and Systems Total Reportable Segments Corporate and eliminations Total Revenue $ 579,330 $ 124,414 $ 12,986 $ 716,730 $ ( 11,257 ) $ 705,473 Selling, general & administrative expenses 80,503 28,577 4,049 113,129 34,114 147,243 Other Expenses 443,657 108,066 8,670 560,393 ( 259 ) 560,134 Income (loss) from operations $ 55,170 $ ( 12,229 ) $ 267 $ 43,208 $ ( 45,112 ) $ ( 1,904 ) 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). 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. December 31, 2025 2024 Intangible assets, net North America $ 28,245 $ 30,869 International 1,110 1,377 Products and Systems 733 946 Corporate and eliminations 8,319 6,516 $ 38,407 $ 39,708 81 Table of Contents December 31, 2025 2024 Total assets North America $ 426,146 $ 390,052 International 150,741 97,546 Products and Systems 12,072 11,280 Corporate and eliminations ( 10,178 ) 24,160 $ 578,781 $ 523,038 December 31, 2025 2024 Long-lived assets North America $ 278,419 $ 268,608 International 27,900 24,822 Products and Systems 850 1,049 Corporate and eliminations 9,231 7,563 $ 316,400 $ 302,042 Refer to Note 2 - Revenue , for revenue by industry and by geographic area for the years ended December 31, 2025, 2024, and 2023. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.