What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-30 · 146 added, 281 removed, 195 unchanged (69% of the section changed)

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The following discussion and analysis should be read together with our condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes to those statements included in our 2024 Annual Report on Form 10-K in order to understand factors, such as charges and credits, financing transactions and changes in tax regulations, which may impact comparability from period to period.

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore Manufactured Products, Completion and Production Services (previously referred to as Well Site Services) and Downhole Technologies segments.

In first quarter 2024, certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Historical financial data, supplemental disaggregated revenue and backlog information as of and for the three and nine months ended September 30, 2023 (presented herein) was conformed with the 2024 segment presentation.

Additionally, following the sale of its remaining U.S.

land-based drilling rigs and the exit of the flowback and well testing service offering in the third quarter of 2024, our Well Site Services segment name was changed to the Completion and Production Services segment.

Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and gas industry, particularly our customers’ willingness to invest capital in the exploration for and development of crude oil and natural gas reserves.

Our customers’ capital spending programs are generally based on their cash flows and their outlook for near-term and long-term commodity prices, making demand for our products and services sensitive to expectations regarding future crude oil and natural gas prices, as well as economic growth, commodity demand and estimates of resource production and regulatory pressures related to Environmental, Social and Governance (“ESG”) considerations.

Recent Developments

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2024 82.92 $ 84.68 $ 80.01 $ 74.66 $ 80.52

2023 81.01 77.99 86.65 $ 84.01 $ 82.47

WTI Crude (per bbl)

2024 77.50 $ 81.81 $ 76.43 $ 70.73 $ 76.61

2023 75.91 73.54 82.25 $ 78.53 $ 77.56

Henry Hub Natural Gas (per MMBtu)

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________________

Energy Information Administration (spot prices).

On February 16, 2024, we amended the ABL Facility (as defined below) to extend its maturity date from February 10, 2025 to February 16, 2028.

Certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into our Downhole Technologies segment in the first quarter of 2024 to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Historical segment financial data, backlog and other information were conformed with the 2024 segment presentation.

Additionally, following the sale of its remaining U.S.

land-based drilling rigs and the exit of the flowback and well testing service offering in the third quarter of 2024, the Company’s Well Site Services segment name was changed to the Completion and Production Services segment.

In 2023, we began implementing initiatives, which are continuing into 2024, to reduce future costs.

Management actions to-date in 2024 included:

The spot price of WTI crude oil declined approximately 20% in April 2025 in response to the imposition of broad-based trade tariffs by the United States on imported goods and the announcement by OPEC+ of plans to increase crude oil production.

These actions have raised uncertainties regarding the broad future effect of reciprocal trade tariff increases on the global economy as well as the future demand for and supply of crude oil.

The ultimate magnitude and duration of the trade conflict and increased crude oil production by OPEC+, and the related impacts on crude oil prices and the global economy, remain uncertain.

While it is difficult for management to assess or predict with precision the broad future effect of these events on the global economy, the energy industry or the Company, management expects that it could adversely affect demand for our products and services, particularly in the United States, over the balance of 2025 and possibly beyond.

In 2024, we implemented initiatives to reduce future costs, which are continuing into 2025.

Management actions in 2024 included:

the consolidation, relocation and exit of certain underperforming locations;

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reductions in our U.S.

work force as well as the realignment of operations discussed above.

We have also incurred legal and other related costs to enforce certain patents related to our proprietary technologies.

As a result of these actions, our reported pre-tax results for the nine months ended September 30, 2024 included $23.4 million in non-cash goodwill, intangible and operating lease asset impairment charges as well as $11.8 million of facility consolidation and exit, patent defense and other charges.

During the nine months ended September 30, 2024, our Offshore Manufactured Products segment sold a manufacturing and service facility that was classified as held for sale for net proceeds of $10.3 million, we purchased $11.5 million principal amount of our 2026 Notes (as defined below) for $10.8 million, and we purchased $5.5 million of our common stock.

On October 24, 2024, our Board of Directors terminated our existing common stock repurchase program and replaced it with a new $50.0 million common stock repurchase authorization which expires in October 2026.

On October 25, 2024, Brent crude oil, WTI crude oil and natural gas spot prices closed at $75.62 per barrel, $72.02 per barrel and $1.93 per MMBtu, respectively – below the third quarter 2024 averages.

Additionally, the U.S.

drilling rig count reported on October 25, 2024 was 585 rigs – comparable to the third quarter 2024 average.

work force as well as the realignment of operations within two of our reportable segments.

We also incurred legal and other related costs to enforce certain patents related to our proprietary technologies.

As a result of these actions, our reported pre-tax results for the three months ended March 31, 2024 included $10.0 million in non-cash goodwill impairment charges as well as $2.5 million of facility consolidation and exit, patent defense and other charges.

During the first quarter of 2025, we continued the exit of facilities closed in 2024 and further reduced headcount, incurring $0.9 million of associated pre-tax charges.

During the first three months of 2025, we sold equipment and inventory (related to a service offering exited in 2024) that was classified as held for sale assets, generating net proceeds of $7.5 million and we purchased $5.3 million of our common stock.

Current and expected future pricing for WTI crude oil and natural gas and inflationary cost increases, along with expectations regarding the regulatory environment in the regions in which we operate, are factors that will continue to influence our customers’ willingness to invest capital in their businesses.

Expectations for the longer-term price for Brent crude oil will continue to influence our customers’ spending related to global offshore drilling and development and, thus, a significant portion of the activity of our Offshore Manufactured Products segment.

Expectations for the longer-term price for Brent crude oil will continue to influence our customers’ spending related to global offshore and international drilling and development and, thus, a significant portion of the activity of our Offshore Manufactured Products segment.

Crude oil and natural gas prices and levels of demand for crude oil and natural gas are likely to remain highly volatile due to numerous factors, including:

geopolitical conflicts in Europe and the Middle East, along with associated international tensions;

the perceived risk of a global economic recession;

the moderate perceived risk of a global economic recession;

the levels of domestic or international crude oil and natural gas production;

changes in governmental rules and regulations;

the willingness of operators to invest capital in the

exploration for and development of resources;

the willingness of operators to invest capital in the exploration for and development of resources;

use of alternative fuels;

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crude oil and natural gas prices, given the short-term, call-out nature of our U.S.

Customer spending in the natural gas shale plays has moderated over the last ten years due to technological advancements that have led to significant amounts of natural gas being produced from prolific basins in the Northeastern United States and from associated gas produced from the drilling and completion of unconventional oil wells in the United States.

Customer spending in the natural gas shale plays has declined in recent years due to technological advancements and consolidation of oil and gas producers that have led to significant amounts of natural gas being produced from prolific basins in the Northeastern United States and from associated gas produced from the drilling and completion of unconventional oil wells in the United States.

However, the extended outlook for natural gas in the United States is positive with increased exports of LNG, as well as increased power needs for the technology sector, namely data centers.

Our Offshore Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities globally, as well as certain products and services to the offshore drilling and completion markets.

This segment also produces a variety of products for use in industrial, military and other applications outside the traditional energy industry.

Additionally, we are investing in research and product development (and have been awarded select contracts and are bidding on additional projects) to facilitate the development of alternative energy sources, including offshore wind and deepsea mineral gathering opportunities.

This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers’ longer-term commodity demand forecasts and outlook for crude oil and natural gas prices.

Approximately 89% of Offshore Manufactured Products segment sales in the first nine months of 2024 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”).

Approximately 90% of Offshore Manufactured Products segment sales in the first three months of 2025 were driven by our customers’ capital spending for products and services used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as “project-driven products and services”).

Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans.

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Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to change based on short-term fluctuations in the price of crude oil and natural gas.

Backlog reported by our Offshore Manufactured Products segment increased to $313 million as of September 30, 2024 from $300 million as of June 30, 2024.

Bookings totaled $112 million in the third quarter of 2024, yielding a quarterly book-to-bill ratio of 1.1x (1.0x year-to-date).

This segment also produces a variety of products for use in industrial, military and other applications outside the traditional energy industry.

Backlog reported by our Offshore Manufactured Products segment increased to $357 million as of March 31, 2025 from $311 million as of December 31, 2024.

Bookings totaled $136 million in the first quarter of 2025, yielding a book-to-bill ratio of 1.5x in the first quarter of 2025.

This compares to total bookings of $66 million and a book-to-bill ratio of 0.8x in the first quarter of 2024.

The following table sets forth backlog as of the dates indicated (in millions).

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2023 316 328 341 327

2022 255 232 248 300

Our Completion and Production Services segment provides completion and production services in the United States (including the Gulf of Mexico) and internationally.

Our Completion and Production Services segment provides completion and production services in the United States (including the Gulf of America) and internationally.

Prior to the sale of its drilling rigs in August of 2024, the segment also provided land drilling services in the United States.

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This expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing.

Additional offerings include frac plug, toe valve and other elastomer products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications.

Additional offerings include frac plugs, toe valves and other elastomer products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications.

Demand drivers for the Downhole Technologies segment include continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well productivity.

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drilling rig count, as measured by Baker Hughes Company, as of and for the periods indicated.

As of October 25, 2024

As of April 25, 2025

Average for the

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

United States Rig Count:

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Offshore 16 17 21

585 586 649 604 707

energy industry is primarily focused on crude oil and liquids-rich exploration and development activities in U.S.

shale plays utilizing horizontal drilling and completion techniques.

As of September 30, 2024, oil-directed drilling accounted for 82% of the total U.S.

As of March 31, 2025, oil-directed drilling accounted for 82% of the total U.S.

rig count – with the balance largely natural gas related.

We use a variety of domestically produced and imported raw materials and component products, including steel, in the manufacture of our products.

The United States has imposed tariffs on a variety of imported products, including steel and aluminum.

In the first quarter of 2025, the United States imposed new or additional tariffs on a variety of imported raw materials and products, including steel and aluminum.

In response to the U.S.

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In addition, in response to Russia’s invasion of Ukraine, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have enacted sanctions against Russia and Russian interests.

On April 2, 2025, the U.S.

government announced additional tariffs on goods imported into the United States, including steel and other metal products.

The effect of these sanctions and tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continue to evolve, and we continue to monitor these matters.

If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase and we are unable to pass corresponding cost increases on to our customers, our financial position, cash flows and results of operations could be adversely affected.

While we cannot predict with certainty the impact of any new or increased tariffs, or the impact of any retaliatory tariffs, if we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase and we are unable to pass corresponding cost increases on to our customers, our financial position, cash flows and results of operations could be adversely affected.

Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause our customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position, cash flows and results of operations.

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customer consolidations;

public health crises;

natural disasters;

labor market constraints;

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management’s implementation of strategic decisions;

and changes in tax laws in the United States and international markets.

public health crises;

natural disasters;

and changes in tax laws in the United States and in the international markets in which we operate.

We continue to monitor the global economy, the prices of and demand for crude oil and natural gas, and the resultant impact on the capital spending plans and operations of our customers in order to plan and manage our business.

Human Capital

For more information on our health and safety, diversity and other workforce policies, please see “Part I, Item 1.

For more information on our health and safety policy and other workforce policies, please see “Part I, Item 1.

Business – Human Capital” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Selected Financial Data

This selected financial data should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included in “Part I, Item 1.

Financial Statements” of this Quarterly Report on Form 10-Q and “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes included in “Part II, Item 8.

Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2023 in order to understand factors, such as charges and credits, which may impact comparability of the selected financial data.

In the first quarter of 2024, certain short-cycle manufacturing operations historically reported within the Offshore Manufactured Products segment (legacy frac plug and elastomer products) were integrated into the Downhole Technologies segment to better align with the underlying activity demand drivers and the current segment management structure, as well as provide for additional operational synergies.

Historical financial data and supplemental disaggregated revenue information as of and for the three and nine months ended September 30, 2023 (presented herein) were conformed with the 2024 segment presentation.

Additionally, following the sale of its remaining U.S.

This selected financial data should be read in conjunction with our Consolidated Financial Statements and related notes included in “Part II, Item 8.

Financial Statements and Supplementary Data” of this Annual Report on Form 10-K and “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in order to understand factors, such as charges, credits and financing transactions, which may impact comparability of the selected financial data.

Unaudited Consolidated Results of Operations

The following summarizes our consolidated results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):

The following summarizes our consolidated results of operations for the three months ended March 31, 2025 and 2024 (in thousands, except per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Variance 2024 2023 Variance

2025 2024 Variance

Products $ 100,551 $ 94,329 $ 6,222

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— 10,000 (10,000)

Impairments of intangible assets

10,787 — 10,787 10,787 — 10,787

Impairments of operating lease assets

2,579 — 2,579 2,579 — 2,579

Other operating (income) expense, net

Other operating income, net

(2,933) (203) (2,730)

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Interest expense, net (1,578) (2,101) 523

Other income, net

731 186 545 1,311 672 639

Other income (expense), net

Income (loss) before income taxes 4,199 (13,350) 17,549

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$ 0.05 $ (0.21)

(0.23) 0.07 (0.42) 0.11

Weighted average number of common shares outstanding:

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Offshore Manufactured Products, Completion and Production Services and Downhole Technologies.

Supplemental financial information by operating segment for the three and nine months ended September 30, 2024 and 2023 is summarized below (in thousands):

Supplemental financial information by operating segment for the three months ended March 31, 2025 and 2024 is summarized below (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Variance 2024 2023 Variance

2025 2024 Variance

Offshore Manufactured Products

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(2,124) (12,079) 9,955

Corporate (8,431) (10,781) 2,350 (28,349) (31,623) 3,274

(10,016) (9,282) (734)

$ 5,639 $ (11,177) $ 16,816

(1) During the three and nine months ended September 30, 2024, the Offshore Manufactured Products segment recognized facility consolidation and other charges of $0.4 million and $3.4 million, respectively, associated primarily with the consolidation and relocation of a manufacturing and service location.

During the three and nine months ended September 30, 2023, the segment recognized facility consolidation charges of $1.6 million associated primarily with the consolidation and relocation of certain manufacturing and service locations.

(2) During the three and nine months ended September 30, 2024, the Completion and Production Services segment recognized charges of $17.2 million and $21.1 million, respectively, associated primarily with the exit of its flowback and well testing service offering, the consolidation and exit of certain underperforming service locations, and the defense of certain patents.

(3) During the both three and nine months ended September 30, 2024, the Downhole Technologies segment recognized charges of $0.6 million associated primarily with the exit of an underperforming location.

Additionally during the nine months ended September 30, 2024, the segment recognized a $10.0 million non-cash impairment charge related to goodwill reassigned to the business in connection with the segment realignment discussed above.

For further discussion of charges and credits recognized during the three and nine months ended September 30, 2024 and 2023, see Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

We reported a net loss for the three months ended September 30, 2024 of $14.3 million, or $0.23 per share.

The reported third quarter net loss included charges of $18.2 million ($17.0 million after tax, or $0.27 per share) associated with the restructuring of certain of its U.S.

land-based operations, facility consolidations and closures, patent defense and personnel reductions.

These results compare to net income for the three months ended September 30, 2023 of $4.2 million, or $0.07 per share, which included facility consolidation and other charges of $1.6 million ($1.3 million after-tax, or $0.02 per share).

Our third quarter 2024 results of operations reflect the impact of operators continued investments in offshore and international project activity and associated backlog conversion, partially offset by a decline in land-based investments by our U.S.

customers, competitive market conditions and management’s decision to exit certain underperforming locations and service offerings in the United States.

Management expects to continue to implement measures to reduce costs in areas experiencing lower activity levels.

Consolidated total revenues in the third quarter of 2024 decreased $19.9 million, or 10%, from the third quarter of 2023.

Consolidated product revenues in the third quarter of 2024 decreased $1.8 million, or 2%, from the third quarter of 2023, driven primarily by lower U.S.

short-cycle completion product sales volumes.

Consolidated service revenues in the third quarter of 2024 decreased $18.1 million, or 20%, from the third quarter of 2023.

This decrease was concentrated in the United States – driven by lower land-based customer investments (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming locations during the first half of 2024, partially offset by higher offshore and international service activity.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended September 30, 2024 and 2023 (in thousands):

Offshore Manufactured Products

Completion and Production Services

Downhole Technologies Total

Three Months Ended September 30 2024 2023 2024 2023 2024 2023 2024 2023

Project-driven:

Products $ 58,164 $ 58,169 $ — $ — $ — $ — $ 58,164 $ 58,169

Services 32,754 30,391 — — — — 32,754 30,391

Total project-driven 90,918 88,560 — — — — 90,918 88,560

Military and other products 11,316 7,510 — — — — 11,316 7,510

Short-cycle products and services

_______________

$ 102,234 $ 96,070 $ 40,099 $ 59,831 $ 32,015 $ 38,388 $ 174,348 $ 194,289

By destination:

Offshore and international $ 94,189 $ 87,857 $ 10,639 $ 10,729 $ 9,028 $ 6,164 $ 113,856 $ 104,750

land 8,045 8,213 29,460 49,102 22,987 32,224 60,492 89,539

$ 102,234 $ 96,070 $ 40,099 $ 59,831 $ 32,015 $ 38,388 $ 174,348 $ 194,289

Cost of Revenues (exclusive of Depreciation and Amortization Expense).

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) in the third quarter of 2024 decreased $13.8 million, or 9%, compared to the level reported in the third quarter of 2023.

Consolidated product costs in the third quarter of 2024 decreased $1.0 million, or 1%, from the third quarter of 2023 driven primarily by the decline in U.S.

land-based products sales volumes.

Consolidated service costs in the third quarter of 2024 decreased $12.8 million, or 18%, from the third quarter of 2023, with the impact of lower U.S.

land-based activity levels and implemented cost control measures partially offset by facility exit and severance costs incurred in third quarter of 2024.

Selling, General and Administrative Expense.

Selling, general and administrative expense was $22.8 million in the third quarter of 2024, which included $1.3 million of costs associated with enforcing certain of our patents.

Excluding these patent defense costs, selling, general and administrative costs decreased $2.8 million, or 12%, from the third quarter of 2023, due primarily to lower short- and long-term incentive expenses.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $1.8 million, or 12%, in the third quarter of 2024 compared to the prior-year quarter.

Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

Impairments of Intangible Assets.

In the third quarter of 2024, as a result of our decision to exit an underperforming service offering, our Completion and Production Services segment recognized non-cash impairment charges of $10.8 million to reduce the carrying amount of its long-lived intangible assets to estimated fair value.

See Note 2, “Asset Impairments and Other Charges and Credits,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Impairments of Operating Lease Assets.

In the third quarter of 2024, management made strategic decisions to exit five leased service locations within our Completion and Production Services segment and one within our Downhole Technologies segment.

As a result of these decisions, our Completion and Production Services and Downhole Technologies segments recognized non-cash impairment charges totaling $2.6 million to reduce the carrying amount of the related operating lease assets.

Operating Income.

Our consolidated operating loss was $11.0 million in the third quarter of 2024, which included $13.4 million in non-cash intangible and operating lease asset impairment charges and charges totaling $4.8 million associated with facility consolidations and exits, patent defense and other management actions.

This compares to third quarter 2023 consolidated operating income of $6.2 million, which included facility consolidation and other charges of $1.6 million.

Excluding these charges, operating results declined $0.7 million year-over-year, driven by the substantial decline in activity levels in the United States.

Interest Expense, Net.

Net interest expense totaled $1.8 million in the third quarter of 2024, which compares to $1.9 million in the same period of 2023.

Interest expense as a percentage of total debt outstanding was approximately 7% in the third quarter of 2024, compared to 7% in the third quarter of 2023.

Income tax provision for the three months ended September 30, 2024 and 2023 was calculated using a discrete approach.

This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate.

For the three months ended September 30, 2024, our income tax provision was $2.2 million on a pre-tax loss of $12.1 million, which included unfavorable changes in valuation allowances recorded against deferred tax assets and certain non-deductible expenses.

This compares to an income tax provision of $0.2 million on a pre-tax income of $4.4 million for the three months ended September 30, 2023, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.

Other Comprehensive Income (Loss).

Reported comprehensive loss is the sum of reported net income (loss) and other comprehensive income (loss).

Other comprehensive income was $9.6 million in the third quarter of 2024 compared to comprehensive loss of $5.7 million in the third quarter of 2023 due to fluctuations in currency exchange rates compared to the U.S.

dollar which are used to translate certain of the international operations of our operating segments.

For the three months ended September 30, 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the third quarter of 2024, the exchange rate for the British pound and the Brazilian real strengthened compared to the U.S.

In the third quarter of 2023, the exchange rates for the British pound and the Brazilian real weakened compared to the U.S.

Segment Operating Results

Offshore Manufactured Products

Our Offshore Manufactured Products segment revenues increased $6.2 million, or 6%, in the third quarter of 2024 compared to the third quarter of 2023 due to increased demand for military products and international and offshore project-driven products and services.

Operating Income.

Our Offshore Manufactured Products segment reported operating income of $19.3 million in the third quarter of 2024, which included $0.4 million in facility consolidation and other charges.

This compares to operating income in the third quarter of 2023 of $15.6 million, which included $1.6 million in facility consolidation and other charges.

Excluding these charges, operating income increased $2.4 million year-over-year.

Backlog in our Offshore Manufactured Products segment totaled $313 million as of September 30, 2024, with third quarter 2024 bookings of $112 million and a quarterly book-to-bill ratio of 1.1x.

Completion and Production Services

Our Completion and Production Services segment revenues decreased $19.7 million, or 33%, in the third quarter of 2024 compared to the prior-year period, driven primarily by lower U.S.

land-based customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first half of 2024.

Operating Income (Loss).

Our Completion and Production Services segment reported an operating loss of $18.3 million in the third quarter of 2024, which included charges totaling $17.2 million associated with the exit of a service offering, facility consolidations and exits, the defense of patents and other management actions.

This compares to operating income of $3.3 million in the third quarter of 2023.

Excluding the 2024 charges discussed above, the Completion and Production Services segment’s operating income declined $4.3 million from the prior-year period, with the impact of the decrease in U.S.

land-based revenues partially offset by implemented cost control measures.

The segment’s U.S.

land-based service offerings and facilities exited during the third quarter of 2024 collectively generated revenues of $9.3 million and operating losses of $17.1 million in the current quarter, which included intangible and operating lease asset impairment, facility closure and other charges totaling $15.1 million as well as depreciation and amortization expense of $1.3 million.

Downhole Technologies

Our Downhole Technologies segment revenues decreased $6.4 million, or 17%, in the third quarter of 2024 from the prior-year period, driven primarily by lower U.S.

customer activity levels and competitive market conditions.

Operating Loss.

Our Downhole Technologies segment reported an operating loss of $3.7 million in the third quarter of 2024, which included charges totaling $1.2 million associated with the exit of a facility, personnel reductions and a customer bankruptcy.

This compares to an operating loss of $1.9 million in the third quarter of 2023.

Excluding the 2024 charges discussed above, the Downhole Technologies segment’s operating loss increased $0.6 million year-over-year due primarily to the reported decrease in revenues and lower manufacturing volumes.

Operating Loss.

Corporate expenses decreased $2.4 million, or 22%, in the third quarter of 2024 from the prior-year period due primarily to lower short- and long-term incentive expenses.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

We reported a net loss for the nine months ended September 30, 2024 of $26.4 million, or $0.42 per share.

The reported first nine months net loss included net charges and credits of $34.6 million ($31.6 million after tax, or $0.51 per share) associated with the restructuring of certain of its U.S.

land-based operations, facility consolidations and closures, patent defense, personnel reductions and debt extinguishment.

These results compare to net income for the nine months ended September 30, 2023 of $6.9 million, or $0.11 per share, which included facility consolidation and other charges of $1.6 million ($1.3 million after-tax, or $0.02 per share).

Our results of operations for the first nine months of 2024 reflect the impact of operators continued investment in offshore and international project activity and associated backlog conversion, partially offset by a decline in land-based investments by our U.S.

customers, competitive market conditions and management’s decision to exit certain underperforming locations and service offerings in the United States.

Management expects to continue to implement measures to reduce costs in areas experiencing lower activity levels.

Consolidated total revenues in the first nine months of 2024 decreased $46.0 million, or 8%, from the first nine months of 2023.

Consolidated product revenues in the first nine months of 2024 increased $8.6 million, or 3%, from the first nine months of 2023, with the impact of higher customer demand for project-driven production facility products and military products partially offset by a decline in U.S.

(1) During the three months ended March 31, 2024, we recognized facility consolidation charges of $1.5 million within the Offshore Manufactured Products segment, associated primarily with the segment’s consolidation and relocation of certain manufacturing and service locations.

(2) During the three months ended March 31, 2024, we recognized charges of $1.0 million within the Completion and Production Services segment, associated primarily with the consolidation and exit of certain underperforming service locations.

During the first quarter of 2025, the segment incurred charges of $0.9 million associated with the exit of facilities closed in 2024 and, to a lesser extent, additional headcount reductions.

(3) During the three months ended March 31, 2024, we recognized a $10.0 million non-cash impairment charge within the Downhole Technologies segment related to goodwill reassigned to the business in connection with the realignment of operations between segments.

For further discussion of charges recognized during the three months ended March 31, 2025 and 2024, including the realignment of operations between segments during the first quarter of 2024, see Note 2, “Asset Impairments and Other Charges,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

We reported net income for the three months ended March 31, 2025 of $3.2 million, or $0.05 per share.

These results compare to a net loss for the three months ended March 31, 2024 of $13.4 million, or $0.21 per share, which included a non-cash goodwill impairment charge of $10.0 million ($9.5 million after-tax, or $0.15 per share) and facility consolidation and other charges of $2.5 million ($2.0 million after-tax, or $0.03 per share).

Our results of operations for the first three months of 2025 reflect the impact of management’s decision to exit certain underperforming locations and service offerings in the United States in 2024.

The impact was partially offset by growth in offshore and international projects and associated backlog conversion.

Consolidated total revenues in the first three months of 2025 decreased $7.3 million, or 4%, from the first three months of 2024 due primarily to our Completion and Production Services segment’s exit of underperforming service offerings and locations during 2024.

These exited operations generated $16.8 million of revenues in the first three months of 2024.

Excluding the impact of operations exited during 2024, consolidated revenues increased $9.5 million, or 6%, year-over-year.

Consolidated product revenues in the first three months of 2025 increased $6.2 million, or 7%, from the first three months of 2024, with the impact of higher customer demand for connector and military products, partially offset by a reduced U.S.

customer demand for completion and perforating products.

Consolidated service revenues in the first nine months of 2024 decreased $54.6 million, or 20%, from the first nine months of 2023.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the nine months ended September 30, 2024 and 2023 (in thousands):

Consolidated service revenues in the first three months of 2025 decreased $13.5 million, or 19%, from the first three months of 2024.

This decrease was concentrated in the United States – driven by our exit of certain underperforming service offerings in 2024 (which generated $16.8 million of revenues in the first three months of 2024).

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, 2025 and 2024 (in thousands):

Offshore Manufactured Products

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Downhole Technologies Total

Nine Months Ended September 30 2024 2023 2024 2023 2024 2023 2024 2023

Three Months Ended March 31 2025 2024 2025 2024 2025 2024 2025 2024

Project-driven:

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Military and other products 9,048 8,487 — — — — 9,048 8,487

Short-cycle products and services

Products — — — — 32,379 32,705 32,379 32,705

Services — — 34,519 47,292 444 408 34,963 47,700

Total short-cycle

— — 34,519 47,292 32,823 33,113 67,342 80,405

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Cost of Revenues (exclusive of Depreciation and Amortization Expense).

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $32.6 million, or 7%, in the first nine months of 2024 compared to the first nine months of 2023.

Consolidated product costs in the first nine months of 2024 increased $5.3 million, or 2%, compared to the first nine months of 2023 due primarily to the reported product revenue increase.

Consolidated service costs in the first nine months of 2024 decreased $37.9 million, or 18%, compared to the first nine months of 2023, with the impact of lower U.S.

activity levels and implemented cost control measures partially offset by facility exit and severance costs incurred in 2024.

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $9.3 million, or 7%, in the first three months of 2025 compared to the first three months of 2024.

Consolidated product costs in the first three months of 2025 increased $5.2 million, or 7%, compared to the first three months of 2024 due primarily to the reported increase in product revenue as well as an unfavorable shift in product sales mix.

Consolidated service costs in the first three months of 2025 decreased $14.5 million, or 25%, compared to the first three months of 2024, reflective primarily of the strategic management actions implemented in 2024 to improve reported results.

Selling, General and Administrative Expense.

Selling, general and administrative expense was $71.6 million in the first nine months of 2024, which included $2.7 million of costs associated with enforcing certain of our patents.

Excluding these patent defense costs, selling, general and administrative costs decreased $2.8 million, or 4%, from the level reported in the first nine months of 2023, due primarily to lower short- and long-term incentive expenses.

Selling, general and administrative expense totaled $22.5 million in the first three months of 2025, consistent with the level reported in the first three months of 2024, which included $0.4 million of costs associated with enforcing certain of our patents.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $3.7 million, or 8%, in the first nine months of 2024 compared to the prior-year period.

Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements presents depreciation and amortization expense by segment.

Depreciation and amortization expense decreased $2.2 million, or 15%, in the first three months of 2025 compared to the prior-year period.

Note 10, “Segments and Related Information,” to our Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q presents depreciation and amortization expense by segment.

Impairment of Goodwill.

During the first quarter of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with segment realignment discussed above.

Impairments of Intangible Assets.

In the first nine months of 2024, as a result of our decision to exit an underperforming service offering, our Completion and Production Services business recognized non-cash impairment charges of $10.8 million to reduce the carrying amount of its long-lived intangible assets to estimated fair value.

Impairments of Operating Lease Assets.

In the first nine months of 2024, management made strategic decisions to exit five leased service locations within our Completion and Production Services segment and one within our Downhole Technologies segment.

In the first quarter of 2024, our Downhole Technologies operations recognized a non-cash impairment charge of $10.0 million related to goodwill transferred to the business in connection with the realignment of operations between segments.

See Note 2, “Asset Impairments and Other Charges and Credits,” to our Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Operating Income (Loss).

Our consolidated operating loss was $20.2 million in the first nine months of 2024, which included $23.4 million in non-cash goodwill, intangible and operating lease asset impairment charges and other charges totaling $11.8 million associated with facility consolidations and exits, patent defense and other management actions.

This compares to consolidated operating income of $15.3 million in the first nine months of 2023, which included facility consolidation and other charges of $1.6 million.

Excluding these charges, operating results declined $2.0 million year-over-year, driven by the substantial decline in activity levels in the United States.

Our consolidated operating income was $5.6 million in the first three months of 2025, which included $0.9 million in facility exit charges.

This compares to consolidated operating loss of $11.2 million in the first three months of 2024, which included a $10.0 million non-cash goodwill impairment charge and $2.5 million in facility consolidation and other charges.

Excluding these charges, operating results improved by $5.2 million year-over-year, driven by growth in offshore and international activity.

Interest Expense, Net.

Net interest expense totaled $6.0 million in the first nine months of 2024, which compares to $6.4 million in the first nine months of 2023.

Interest expense as a percentage of total debt outstanding was approximately 7% in the first nine months of 2024, compared to 7% in the first nine months of 2023.

Income tax provision for the first nine months of 2024 and 2023 was calculated using a discrete approach.

Net interest expense totaled $1.6 million in the first three months of 2025, which compares to $2.1 million in the first three months of 2024.

Interest expense as a percentage of total debt outstanding was approximately 7% in the first three months of 2025 and the first three months of 2024.

Income tax expense for the first three months of 2025 and 2024 was calculated using a discrete approach.

This methodology was used because changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate.

For the first nine months of 2024, our income tax provision was $1.6 million on a pre-tax loss of $24.8 million, which included a $10.0 million goodwill impairment charge, other non-deductible expenses and unfavorable changes in valuation allowances recorded against deferred tax assets.

This compares to an income tax provision of $2.7 million on pre-tax income of $9.6 million for the first nine months of 2023, which included certain non-deductible expenses, discrete tax items and a reduction in valuation allowances recorded against deferred tax assets.

Other Comprehensive Income.

Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income.

Other comprehensive income was $3.4 million in the first nine months of 2024 compared to comprehensive income of $1.7 million in the first nine months of 2023 due to fluctuations in foreign currency exchange rates compared to the U.S.

For the first three months of 2025, our income tax provision was $1.0 million, which included the impact of certain discrete tax items and other non-deductible expenses on pre-tax income of $4.2 million.

This compares to an income tax provision of $24 thousand, which included the impact of a $10.0 million goodwill impairment charge and other non-deductible expenses, on a pre-tax loss of $13.4 million for the first three months of 2024.

Other Comprehensive Income (Loss).

Reported comprehensive income (loss) is the sum of reported net income (loss) and other comprehensive income (loss).

Other comprehensive income was $5.5 million in the first three months of 2025 compared to comprehensive loss of $3.0 million in the first three months of 2024 due to fluctuations in foreign currency exchange rates compared to the U.S.

dollar for certain of the international operations of our operating segments.

For the first nine months of 2024 and 2023, currency translation adjustments recognized as a component of other comprehensive income were primarily attributable to the United Kingdom and Brazil.

During the first nine months of 2024, the exchange rates for the British pound strengthened compared to the U.S.

dollar while the Brazilian real weakened compared to the U.S.

This compares to the first nine months of 2023, when the exchange rates for the British pound and the Brazilian real strengthened compared to the U.S.

For the first three months of 2025 and 2024, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil.

During the first three months of 2025, the exchange rates for both the British pound and the Brazilian real strengthened compared to the U.S.

This compares to the first three months of 2024, when the exchange rates for both the British pound and the Brazilian real weakened compared to the U.S.

Segment Operating Results

Offshore Manufactured Products

Our Offshore Manufactured Products segment revenues increased $35.4 million, or 14%, in the first nine months of 2024 compared to the first nine months of 2023 due primarily to increased demand for international and offshore-project driven products and services.

Our Offshore Manufactured Products segment revenues increased $5.7 million, or 7%, in the first three months of 2025 compared to the first three months of 2024 due primarily to increased demand for the segment’s international and offshore project-driven connector and valve products.

Operating Income.

Our Offshore Manufactured Products segment reported operating income of $44.3 million in the first nine months of 2024, which included $3.4 million in facility consolidation and other charges.

This compares to operating income of $32.1 million in the first nine months of 2023, which included $1.6 million in facility consolidation and other charges.

Excluding these charges, operating income increased $13.9 million year-over-year.

Backlog in our Offshore Manufactured Products segment totaled $313 million as of September 30, 2024 compared to $327 million as of December 31, 2023.

Bookings during the first nine months of 2024 totaled $279 million, yielding a year-to-date book-to-bill ratio of 1.0x.

Our Offshore Manufactured Products segment reported operating income of $14.3 million in the first three months of 2025.

This compares to operating income of $10.6 million in the first three months of 2024, which included $1.5 million in facility consolidation and other charges.

Excluding these charges, the Offshore Manufactured Products segment’s operating income increased $2.2 million year-over-year due to the reported revenue growth and a favorable shift in revenue mix.

Backlog in our Offshore Manufactured Products segment totaled $357 million as of March 31, 2025 compared to $311 million as of December 31, 2024.

Bookings during the first three months of 2025 were $136 million, yielding a book-to-bill ratio of 1.5x.

Completion and Production Services

Our Completion and Production Services segment revenues decreased $57.6 million, or 30%, in the first nine months of 2024 compared to the first nine months of 2023, driven primarily by lower U.S.

customer activity levels (particularly in natural gas basins), competitive market conditions and our exit of certain underperforming service locations during the first half of 2024.

Our Completion and Production Services segment revenues decreased $12.8 million, or 27%, in the first three months of 2025 compared to the first three months of 2024, driven primarily by the exit of underperforming service offerings and facilities during 2024.

These exited operations generated $16.8 million of revenues in the first three months of 2024.

Excluding the impact of operations exited during 2024, revenues increased $4.0 million, or 13%, year-over-year – driven primarily by increased customer activity in the Gulf of America.

Operating Income (Loss).

Our Completion and Production Services segment reported an operating loss of $19.2 million in the first nine months of 2024, which included charges totaling $21.1 million associated with the exit of a service offering, facility consolidations and exits, the defense of patents and other management actions.

This compares to operating income of $15.0 million in the first nine months of 2023.

Excluding the 2024 charges discussed above, the Completion and Production Services segment’s operating income declined $13.1 million from the prior-year period, with the impact of a decrease in U.S.

land-based revenues partially offset by implemented cost control measures.

The segment’s U.S.

land-based service offerings and facilities exited during the first nine months of 2024 collectively generated revenues of $35.8 million and operating losses of $24.0 million in 2024, which included intangible and operating lease asset impairment, facility closure and other charges totaling $17.4 million as well as depreciation and amortization expense of $4.2 million.

Our Completion and Production Services segment reported operating income of $3.5 million in the first three months of 2025, which included $0.9 million in facility exit charges.

This compares to an operating loss of $0.4 million in the first three months of 2024, which included charges totaling $1.0 million associated with the exit of three facilities and the defense of patents.

Excluding these charges, the Completion and Production Services segment’s operating results improved $3.8 million from the prior-year period, due primarily to the reported revenue growth within our current base operations and the cost reduction measures implemented in 2024.

Downhole Technologies

Our Downhole Technologies segment revenues decreased $23.8 million, or 19%, in the first nine months of 2024 from the first nine months of 2023 due primarily to lower U.S.

customer demand for perforating and completion products during the first quarter of 2024.

Our Downhole Technologies segment revenues decreased $0.3 million, or 1%, in the first three months of 2025 from the first three months of 2024.

Operating Loss.

Our Downhole Technologies segment reported an operating loss of $16.9 million in the first nine months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the first quarter of 2024 segment realignment and $1.2 million in charges related to the exit of a facility, personnel reductions and a customer bankruptcy.

This compares to an operating loss of $0.1 million reported in the first nine months of 2023.

Excluding the 2024 charges discussed above, the Downhole Technologies segment’s operating loss increased $5.6 million from the prior-year period, due primarily to the reported decrease in revenue and lower manufacturing volumes.

Our Downhole Technologies segment reported an operating loss of $2.1 million in the first three months of 2025.

This compares to an operating loss of $12.1 million reported in the first three months of 2024, which included the $10.0 million non-cash goodwill impairment charge related to the segment realignment in the first quarter of 2024.

Excluding the 2024 goodwill impairment charge, the Downhole Technologies segment’s operating loss was comparable with the prior year.

Operating Loss.

Corporate expenses in the first nine months of 2024 decreased $3.3 million, or 10%, from the first nine months of 2023, due primarily to lower short- and long-term incentive expenses.

Corporate expenses in the first three months of 2025 increased $0.7 million, or 8%, from the first three months of 2024, due primarily to higher performance-based incentive compensation costs.

Liquidity, Capital Resources and Other Matters

Our primary liquidity needs are to fund operating and capital expenditures, new product development and general working capital needs.

In addition, capital has been used to fund strategic business acquisitions, repay debt and fund share repurchases.

Our primary sources of funds are cash flow from operations, proceeds from borrowings under our credit facilities and, less frequently, capital markets transactions.

Our primary liquidity needs are to fund operating and capital expenditures, new product development, general working capital needs and debt repayment.

In addition, capital has been used to fund share repurchases and fund strategic business acquisitions.

Our primary sources of funds are cash flow from operations and proceeds from borrowings under our ABL Facility and, less frequently, capital markets transactions.

Operating Activities

Cash flows from operations totaled $27.7 million during the first nine months of 2024, compared to $52.4 million generated by operations during the first nine months of 2023.

During the first nine months of 2024, $13.2 million was used to fund net working capital increases, primarily due to an activity-driven increase in inventories, the payment of accrued 2023 short- and long-term cash incentives in the first quarter of 2024 and a decrease in accounts payable, partially offset by the favorable impact of a decrease in accounts receivable.

During the first nine months of 2023, $3.2 million was used to fund net working capital increases, with an activity-driven increase in inventories and the payment of accrued 2022 short-and long-term cash incentives in the first quarter of 2023 substantially offset by the favorable impact of a decrease in accounts receivable and an increase in deferred revenues.

Cash flows from operations totaled $9.3 million during the first three months of 2025, compared to $11.4 million used in operations during the first three months of 2024.

During the first three months of 2025, $5.6 million was used to fund net working capital increases, primarily due to a decrease in accounts payable and payment of accrued short- and long-term cash incentive compensation, partially offset by the favorable impact of a decrease in accounts receivable.

During 2024, $21.8 million was used to fund net working capital increases, primarily due to the payment of accrued 2023 short- and long-term cash incentives and a decrease in accounts payable.

Investing Activities

Net cash used in investing activities during the first nine months of 2024 totaled $8.3 million, compared to $19.1 million used in investing activities during the first nine months of 2023.

Capital expenditures totaled $23.3 million and $23.4 million during the first nine months of 2024 and 2023, respectively.

These investments were offset by proceeds from the sale of property and equipment of $15.4 million and $4.4 million during the first nine months of 2024 and 2023, respectively.

Within our Offshore Manufactured Products segment, we completed the consolidation of certain facilities in Houston, Texas during 2023 and have strategically relocated our Asian manufacturing and service operations from Singapore to Batam, Indonesia.

With these consolidations, a facility classified as held for sale within prepaid expenses and other current assets as of December 31, 2023 was sold during the second quarter of 2024 for net proceeds of $10.3 million.

Including investments associated with the construction of a new facility in Batam, we expect to invest approximately $30 million in capital expenditures during 2024.

Investing activities were net cash neutral during the first three months of 2025, compared to $7.8 million used in investing activities during the first three months of 2024.

Capital expenditures totaled $9.2 million and $10.1 million during the first three months of 2025 and 2024, respectively.

These investments were offset by proceeds from the sale of property, equipment and assets held for sale of $9.2 million and $2.3 million during the first three months of 2025 and 2024, respectively.

Including investments associated with the continuing construction of a new facility in Batam, we expect to invest approximately $25 million in capital expenditures during 2025.

We plan to fund our capital expenditures with available cash, internally generated funds and, if necessary, borrowings under our ABL Facility discussed below.

Financing Activities

During the first nine months of 2024, net cash of $20.2 million was used in financing activities, which included the purchase of $11.5 million principal amount of our outstanding 2026 Notes for $10.8 million in cash and the repurchase of $5.1 million of the Company’s common stock.

This compares to $22.7 million of cash used in financing activities during the first nine months of 2023, which included the repayment of the $17.3 million principal amount outstanding under our 2023 Notes and the repurchase of $3.0 million of our common stock.

As of September 30, 2024, we had cash and cash equivalents totaling $46.0 million, which compared to $47.1 million as of December 31, 2023.

As of September 30, 2024, we had no borrowings outstanding under our ABL Facility, $123.5 million principal amount of our 2026 Notes (as defined below) outstanding and other debt of $3.0 million.

Our reported interest expense included amortization of deferred financing costs of $1.2 million during the first nine months of 2024.

For the first nine months of 2024, our contractual cash interest expense was $5.5 million, or approximately 6% of the average principal balance of debt outstanding.

We believe that cash on-hand, cash flow from operations and borrowing capacity available under our ABL Facility will be sufficient to meet our liquidity needs in the coming twelve months.

If our plans or assumptions change, or are inaccurate, we may need to raise additional capital.

Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend upon our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing.

Capital availability will be affected by prevailing conditions in our industry, the global economy, the global banking and financial markets, stakeholder scrutiny of ESG matters and other factors, many of which are beyond our control.

For companies like ours that support the energy industry, disruptions affecting the availability of capital have in the

past and may in the future negatively impact the value of our common stock and may reduce our ability to access capital in the bank and capital markets or result in such capital being available on less favorable terms, which could negatively affect our liquidity.

During the first three months of 2025, net cash of $8.0 million was used in financing activities, which included the repurchase of $5.3 million of our common stock.

This compares to $3.7 million of cash used in financing activities during the first three months of 2024.

As of March 31, 2025, we had cash and cash equivalents totaling $66.8 million, which compared to $65.4 million as of December 31, 2024.

As of March 31, 2025, we had no borrowings outstanding under our ABL Facility, $123.5 million principal amount of our 2026 Notes outstanding and other debt of $2.6 million.

Our reported interest expense included amortization of deferred financing costs of $0.3 million during the first three months of 2025.

For the first three months of 2025, our contractual cash interest expense was $1.8 million, or approximately 6% of the average principal balance of debt outstanding.

We believe that cash on-hand, cash flow from operations and borrowing capacity available under our ABL Facility will be sufficient to meet our full liquidity needs in the coming twelve months.

Our 2026 Notes mature on April 1, 2026, and we anticipate that cash on hand, cash flow from operations generated during 2025 and borrowings under our ABL Facility will be sufficient to permit us to fully retire the 2026 Notes.

Under the terms of the ABL Facility, if we have not reduced the principal amount of the 2026 Notes to less than $17.5 million on or prior to December 31, 2025, any amounts outstanding under our ABL Facility will become due and payable and we will no longer have borrowing capacity under our ABL Facility.

Accordingly, we have been engaged in discussions with the lenders under our ABL Facility to eliminate such springing maturity provision in order to facilitate the efficient retirement of the 2026 Notes subsequent to the springing maturity date.

If our plans or assumptions change, or are inaccurate, we may need to raise additional capital from other sources.

Our ability to obtain capital to repay debt, for general liquidity needs and for additional projects to implement our growth strategy over the longer term will depend upon our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing.

Capital availability will be affected by prevailing conditions in our industry, the global economy, the global banking and financial markets and other factors, many of which are beyond our control.

For companies like ours that support the energy industry, disruptions affecting the availability of capital have in the past and may in the future negatively impact the value of

our common stock and may reduce our ability to access capital in the bank and capital markets or result in such capital being available on less favorable terms, which could negatively affect our liquidity.

On March 6, 2024, the SEC finalized rules relating to the disclosure of a range of climate-related information (the “Rules”).

The Rules were temporarily stayed by the SEC on April 4, 2024 pending judicial review.

While subject to ongoing litigation, these new disclosure requirements are currently effective for us beginning with the year ending December 31, 2026, phased in over a five-year period.

The ultimate impact on our business is uncertain but we and our customers may incur increased compliance costs related to the assessment and disclosure of climate-related risks.

We may also face increased litigation risks related to disclosures made pursuant to the rule if finalized as proposed.

In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders in restricting access to capital or seeking more stringent conditions with respect to their investments in us, our customers and other companies like ours that support the energy industry.

The Rules were temporarily stayed by the SEC on April 4, 2024 pending judicial review, and on March 27, 2025, the SEC announced it would end its defense of the Rules.

Although the SEC’s rules are unlikely to become effective, certain states have enacted or are considering the adoption of similar rules.

Thus, the ultimate impact on our business is uncertain, and we and our customers may incur increased compliance costs related to the assessment and disclosure of climate-related risks.

For more information on our risks related to climate change, see the risk factors in “Part I, Item 1A.

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Stock Repurchase Program.

On February 16, 2023, our Board of Directors authorized $25.0 million for repurchases of our common stock, par value $0.01 per share, through February 2025.

In October 2024, our Board of Directors authorized $50.0 million for repurchases of our common stock, par value $0.01 per share, through October 2026.

Subject to applicable securities laws, such purchases will be at such times and in such amounts as we deem appropriate.

During the nine months ended September 30, 2024, $5.5 million in repurchases of common stock were made under the program.

The amount remaining under our share repurchase authorization as of September 30, 2024 was $12.6 million.

During the three months ended March 31, 2025, $5.3 million in repurchases of common stock were made under these programs.

The amount remaining under our new share repurchase authorization as of March 31, 2025 was $36.0 million.

Revolving Credit Facility.

Our senior secured credit facility provides for a $125.0 million asset-based revolving credit facility (as amended, the “ABL Facility”) under which credit availability is subject to a borrowing base calculation.

On February 16, 2024, we amended the ABL Facility to extend the maturity date to February 16, 2028.

The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto (as amended, the “ABL Agreement”).

The ABL Agreement matures on February 16, 2028 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million.

Pursuant to this provision, our ABL Facility will mature, resulting in amounts thereunder becoming due and payable and borrowing availability terminating, if we have not reduced the outstanding principal amount of the 2026 Notes to less than $17.5 million on or prior to December 31, 2025.

See Note 4, “Long-term Debt,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the ABL Agreement.

As of September 30, 2024, we had $15.1 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of September 30, 2024 was $76.4 million, calculated based on the then-current borrowing base less outstanding letters of credit.

We issued $135.0 million aggregate principal amount of 4.75% convertible senior notes due 2026 (the “2026 Notes”) pursuant to an indenture, dated as of March 19, 2021 (the “2026 Indenture”), between us and Computershare Trust Company, National Association, as successor trustee.

As of September 30, 2024, we have purchased a cumulative $11.5 million principal amount of the 2026 Notes for $10.8 million in cash, with $123.5 million principal amount outstanding.

As of March 31, 2025, we had $16.2 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of March 31, 2025 was $62.1 million, calculated based on the then-current borrowing base less outstanding letters of credit.

We issued $135.0 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of March 19, 2021 (the “2026 Indenture”), between us and Computershare Trust Company, National Association, as successor trustee.

As of March 31, 2025, we have purchased a cumulative $11.5 million principal amount of the 2026 Notes for $10.8 million in cash, with $123.5 million principal amount outstanding.

The outstanding 2026 Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted.

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See Note 4, “Long-term Debt,” to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding the 2026 Notes.

As of September 30, 2024, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

On February 15, 2023, our 2023 Notes matured and the outstanding $17.3 million in principal amount was repaid in full.

Our total debt represented 15% and 16% of our combined total debt and stockholders’ equity as of September 30, 2024 and December 31, 2023, respectively.

As of March 31, 2025, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

Our total debt represented 15% and 16% of our combined total debt and stockholders’ equity as of March 31, 2025 and December 31, 2024, respectively.

Contingencies and Other Obligations.

2 unchanged sentences

Off-Balance Sheet Arrangements.

As of September 30, 2024, we had no off-balance sheet arrangements.

As of March 31, 2025, we had no off-balance sheet arrangements.

Critical Accounting Policies

8 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis