What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-14 · 150 added, 109 removed, 469 unchanged (36% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

ASSETS (unaudited)

30 unchanged sentences

Common stock, par value $ 0.30 per share, 12,000,000 shares authorized;

4,415,201 and 4,415,147 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

4,421,876 and 4,415,147 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 459,862 458,614

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revenues $ 228,618 $ 239,492 $ 428,218 $ 441,769

2 unchanged sentences

Selling, general and administrative expenses 52,395 56,320 107,512 111,068

Operating loss ( 6,386 ) ( 7,746 )

Operating income (loss) 11,159 4,596 4,773 ( 3,150 )

Interest expense, net ( 11,909 ) ( 16,691 ) ( 24,007 ) ( 33,432 )

Other income, net 1,362 635

Loss on debt extinguishment — ( 1,582 ) — ( 1,582 )

Other (expense) income, net ( 541 ) 13 821 648

Loss before income taxes ( 1,291 ) ( 13,664 ) ( 18,413 ) ( 37,516 )

6 unchanged sentences

Basic and Diluted

4,416 4,362 4,415 4,353

See accompanying notes to unaudited condensed consolidated financial statements.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net loss $ ( 2,763 ) $ ( 15,753 ) $ ( 19,958 ) $ ( 40,464 )

26 unchanged sentences

Balance at March 31, 2024 4,415 $ 1,325 $ 459,269 $ ( 394,596 ) $ ( 39,707 ) $ 26,291

Net loss — — — ( 2,763 ) — ( 2,763 )

Net settlement of vested stock awards 7 2 ( 19 ) — — ( 17 )

Foreign currency translation adjustment, net of tax — — — — ( 291 ) ( 291 )

Defined benefit pension plans, net of tax

— — — — 43 43

Non-cash compensation — — 612 — — 612

Balance at June 30, 2024 4,422 $ 1,327 0 $ 459,862 0 $ ( 397,359 ) 0 $ ( 39,955 ) — $ 23,875

Balance at December 31, 2022 4,343 $ 1,303 $ 457,133 $ ( 301,679 ) $ ( 38,997 ) $ 117,760

4 unchanged sentences

Balance at March 31, 2023 4,357 $ 1,307 $ 457,463 $ ( 326,390 ) $ ( 38,242 ) $ 94,138

Net loss — — — ( 15,753 ) — ( 15,753 )

Net settlement of vested stock awards 11 4 ( 16 ) — — ( 12 )

Foreign currency translation adjustment, net of tax — — — — 1,254 1,254

Non-cash compensation — — 245 — — 245

Balance at June 30, 2023 4,368 $ 1,311 $ 457,692 $ ( 342,143 ) $ ( 36,988 ) $ 79,872

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization 18,900 19,085

Loss on debt extinguishment — 1,582

Amortization of debt issuance costs, debt discounts, and deferred financing costs 3,625 16,229

Paid-in-kind interest 6,318 7,117

Allowance for credit (gains) losses 40 ( 201 )

Allowance for credit losses

Foreign currency gains

12 unchanged sentences

Income taxes 1,248 ( 923 )

Net cash provided by (used in) operating activities

Net cash used in operating activities

( 4,466 ) ( 23,617 )

6 unchanged sentences

Payments under Revolving Credit Loans ( 9,909 ) ( 14,798 )

Repayment of APSC Term Loan — ( 37,092 )

Borrowings under ME/RE Loans — 27,398

Payments under ME/RE Loans ( 1,421 ) —

Payments under Corre Incremental Term Loans

Payments under Corre Incremental Term Loan

Payments for debt issuance costs ( 2,800 ) ( 5,327 )

Other 1,843 ( 495 )

Net cash used in financing activities

Net cash provided by (used in) financing activities

( 2,500 ) 483

24 unchanged sentences

IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, and field heat treating services, as well as associated engineering and condition assessment services.

These services can be offered while facilities are running (on-stream), during facility turnarounds or during new construction or expansion activities.

These services can be offered while facilities are running (onstream), during facility turnarounds or during new construction or expansion activities.

In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace industry, covering a range of components including finished machined and in-service components.

4 unchanged sentences

hot tapping and line stopping;

and on-line valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time.

and online valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes client production time.

Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns.

31 unchanged sentences

Geographic area (in thousands):

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

(unaudited) (unaudited)

3 unchanged sentences

Total $ 189,338 $ 39,280 $ 228,618 $ 195,639 $ 43,853 $ 239,492

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

(unaudited) (unaudited)

United States and Canada Other Countries Total United States and Canada Other Countries Total

IHT $ 206,507 $ 6,175 $ 212,682 $ 211,544 $ 7,025 $ 218,569

MS 148,097 67,439 215,536 154,657 68,543 223,200

Total $ 354,604 $ 73,614 $ 428,218 $ 366,201 $ 75,568 $ 441,769

Revenue by Operating segment and service type (in thousands):

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total

2 unchanged sentences

Total $ 90,113 $ 112,875 $ 17,707 $ 7,923 $ 228,618

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total

2 unchanged sentences

Total $ 94,305 $ 122,241 $ 15,928 $ 7,018 $ 239,492

Six Months Ended June 30, 2024

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total

IHT $ 171,123 $ 147 $ 30,943 $ 10,469 $ 212,682

MS — 211,736 355 3,445 215,536

Total $ 171,123 $ 211,883 $ 31,298 $ 13,914 $ 428,218

Six Months Ended June 30, 2023

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat Treating Other Total

IHT $ 175,911 $ 222 $ 29,445 $ 12,991 $ 218,569

MS — 221,860 489 851 223,200

Total $ 175,911 $ 222,082 $ 29,934 $ 13,842 $ 441,769

For additional information on our reportable operating segments and geographic information, refer to Note 14 - Segment and Geographic Disclosures .

1 unchanged sentence

As permitted by ASC 606, Revenue from Contracts with Customers , we have elected not to disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date.

As most of our contracts with customers are short-term in nature and billed on a time and

material basis, there were no material amounts of remaining performance obligations as of March 31, 2024 and December 31, 2023.

As most of our contracts with customers are short-term in nature and billed on a time and material basis, there were no material amounts of remaining performance obligations as of June 30, 2024 and December 31, 2023.

ACCOUNTS RECEIVABLE

A summary of accounts receivable as of March 31, 2024 and December 31, 2023 is as follows (in thousands):

March 31, 2024 December 31, 2023

A summary of accounts receivable as of June 30, 2024 and December 31, 2023 is as follows (in thousands):

June 30, 2024 December 31, 2023

Trade accounts receivable $ 147,954 $ 151,316

3 unchanged sentences

The following table shows a rollforward of the allowance for credit losses (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Balance at beginning of period $ 3,738 $ 5,262

4 unchanged sentences

Balance at end of period $ 4,223 $ 3,738

A summary of inventory as of March 31, 2024 and December 31, 2023 is as follows (in thousands):

March 31, 2024 December 31, 2023

A summary of inventory as of June 30, 2024 and December 31, 2023 is as follows (in thousands):

June 30, 2024 December 31, 2023

Raw materials $ 9,454 $ 9,958

3 unchanged sentences

PREPAID AND OTHER CURRENT ASSETS

A summary of prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023 is as follows (in thousands):

March 31, 2024 December 31, 2023

A summary of prepaid expenses and other current assets as of June 30, 2024 and December 31, 2023 is as follows (in thousands):

June 30, 2024 December 31, 2023

Insurance receivable $ 39,000 $ 39,000

3 unchanged sentences

The insurance receivable relates to the receivables from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 8 - Other Accrued Liabilities .

These receivables will be covered from our third-party insurance providers for litigation matters that have been settled, or are pending settlement, and where the deductibles have been satisfied.

These receivables will be collected from our third-party insurance providers for litigation matters that have been settled, or are pending settlement, and where the deductibles have been satisfied.

The prepaid expenses primarily relate to prepaid insurance and other expenses that have been paid in advance of the coverage period.

Other current assets include other accounts receivables, primarily related to insurance rebates, software implementation costs, and deferred financing charges.

Other current assets include other receivables, primarily related to insurance rebates, software implementation costs, and deferred financing charges.

PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment as of March 31, 2024 and December 31, 2023 is as follows (in thousands):

March 31, 2024 December 31, 2023

A summary of property, plant and equipment as of June 30, 2024 and December 31, 2023 is as follows (in thousands):

June 30, 2024 December 31, 2023

Land $ 4,006 $ 4,006

9 unchanged sentences

Property, plant and equipment, net $ 120,147 $ 127,057

Included in the table above are assets under finance leases of $ 8.9 million and $ 8.5 million, and related accumulated amortization of $ 3.5 million and $ 3.3 million as of March 31, 2024 and December 31, 2023, respectively.

Depreciation expense for the three months ended March 31, 2024 and 2023 was $ 5.3 million and $ 5.6 million, respectively.

Included in the table above are assets under finance leases of $ 8.7 million and $ 8.5 million, and related accumulated amortization of $ 3.8 million and $ 3.3 million as of June 30, 2024 and December 31, 2023, respectively.

Depreciation expense for the three months ended June 30, 2024 and 2023 was $ 5.2 million and $ 5.5 million, respectively.

Depreciation expense for the six months ended June 30, 2024 and 2023 was $ 10.5 million and $ 11.1 million, respectively.

INTANGIBLE ASSETS

A summary of intangible assets as of March 31, 2024 and December 31, 2023 is as follows (in thousands):

March 31, 2024

A summary of intangible assets as of June 30, 2024 and December 31, 2023 is as follows (in thousands):

June 30, 2024

Amount Accumulated

3 unchanged sentences

Technology 2,300 ( 1,918 ) 382

Licenses 683 ( 683 ) —

Intangible assets $ 187,496 $ ( 131,041 ) $ 56,455

7 unchanged sentences

Intangible assets $ 187,550 $ ( 124,857 ) $ 62,693

Amortization expense of intangible assets for the three months ended March 31, 2024 and 2023 was $ 3.1 million and $ 3.2 million, respectively.

The weighted-average amortization period for intangible assets subject to amortization was 13.8 years as of March 31, 2024 and December 31, 2023.

Amortization expense of intangible assets for the three months ended June 30, 2024 and 2023 was $ 3.1 million and $ 3.2 million, respectively.

Amortization expense of intangible assets for the six months ended June 30, 2024 and 2023 was $ 6.2 million and $ 6.4 million, respectively.

The weighted-average amortization period for intangible assets subject to amortization was 13.8 years as of June 30, 2024 and December 31, 2023.

OTHER ACCRUED LIABILITIES

A summary of other accrued liabilities as of March 31, 2024 and December 31, 2023 is as follows (in thousands):

March 31, 2024 December 31, 2023

A summary of other accrued liabilities as of June 30, 2024 and December 31, 2023 is as follows (in thousands):

June 30, 2024 December 31, 2023

Legal and professional accruals $ 49,621 $ 53,972

12 unchanged sentences

Insurance accruals primarily relate to accrued medical and workers compensation costs.

Property, sales and other non-income related taxes include accruals for items such as sales and use tax, property tax, and other related tax accruals.

Property, sales and other non-income related taxes include accruals for

items such as sales and use tax, property tax, and other related tax accruals.

Accrued interest relates to the interest accrued on our long-term debt.

Other accruals include various business expense accruals.

We recorded an income tax provision of $ 0.1 million for the three months ended March 31, 2024, compared to a provision of $ 0.9 million for the three months ended March 31, 2023.

The effective tax rate, inclusive of discrete items, was a provision of 0.4 % for the three months ended March 31, 2024, compared to a provision of 3.6 % for the three months ended March 31, 2023.

The effective tax rate differs from the statutory rate due to changes in valuation allowance in certain jurisdictions.

As of March 31, 2024 and December 31, 2023, our total long-term debt and finance lease obligations are summarized as follows (in thousands):

March 31, 2024 December 31, 2023

We recorded an income tax provision of $ 1.5 million for the three and six months ended June 30, 2024, compared to a provision of $ 2.1 million and $ 2.9 million, respectively, for the three and six months ended June 30, 2023.

The effective tax rate, inclusive of discrete items, was a provision of 114.0 % for the three months ended June 30, 2024, compared to a provision of 15.3 % for the three months ended June 30, 2023.

For the six months ended June 30, 2024, our effective tax rate, inclusive of discrete items, was a provision of 8.4 %, compared to a provision of 7.7 % for the six months ended June 30, 2023.

The increase in effective tax rate for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 is due to the mix of pretax income in non-valuation allowance jurisdictions and pretax losses in valuation allowance jurisdictions.

The impact is additional income tax expense with minimal corresponding pretax income/(loss) movement and an increase in effective tax rate.

As of June 30, 2024 and December 31, 2023, our total long-term debt and finance lease obligations are summarized as follows (in thousands):

June 30, 2024 December 31, 2023

2022 ABL Credit Facility $ 114,006 $ 113,415

18 unchanged sentences

Revolving Credit Loans Delayed Draw Term Loan

Original maturity date 2/11/2025 2/11/2025

Amended maturity date 8/11/2025 8/11/2025

Original stated interest rate LIBOR + applicable margin (base + applicable margin 1 )

LIBOR + 10 % (Base + 9 %)

Amended interest rate SOFR + applicable margin (base + applicable margin 1 )

Maturity date 8/11/2025 8/11/2025

Stated interest rate SOFR + applicable margin (base + applicable margin 1 )

SOFR + 10 % (Base + 9 %)

11 unchanged sentences

1 Applicable margin ranges based on EBITDA as defined in the 2022 ABL Credit Agreement

The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement, and further amended by Amendment No.

4, dated March 6, 2024.

As of March 31, 2024, we are in compliance with the covenants.

As of March 31, 2024, $ 8.4 million in letters of credit were issued under the 2022 ABL Credit Agreement.

The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement.

As of June 30, 2024, we are in compliance with the covenants.

As of June 30, 2024, $ 9.5 million in letters of credit were issued under the 2022 ABL Credit Agreement.

Such amounts remain undrawn and are off-balance sheet.

8 unchanged sentences

Effective interest rate 1

3/31/2023 N/A

6/30/2024 17.38 %

6/30/2023 16.54 %

Actual interest rate 1

6/30/2024 11.19 %

3/31/2023 N/A

6/30/2023 11.02 %

Interest payments monthly

1 unchanged sentence

YTD 6/30/2024 $ 1,436

YTD 3/31/2023 N/A

YTD 6/30/2023 $ —

Balances at 6/30/2024

2 unchanged sentences

Net carrying balance $ 23,157

Available amount at 3/31/2024 $ —

1 The effective interest rate as of March 31, 2024, consisted of a 11.19 % variable interest rate paid in cash and an additional 6.19 % due to amortization of the related debt issuance costs.

Balances at 12/31/2023

Principal balance $ 25,823

Unamortized balance of debt issuance cost $( 1,762 )

Net carrying balance $ 24,061

1 The effective interest rate as of June 30, 2024, consisted of an 11.19 % variable interest rate paid in cash and an additional 6.19 % due to non-cash amortization of the related debt issuance costs.

The effective interest rate as of June 30, 2023, consisted of an 11.02 % variable interest rate paid in cash and an additional 5.52 % due to non-cash amortization of the related debt issuance costs.

The ME/RE Loans are governed by the 2022 ABL Credit Agreement and are subject to the same restrictive covenants as described under the 2022 ABL Credit Facility.

1 unchanged sentence

On June 16, 2023, we entered into an amendment and restatement of that certain subordinated term loan credit agreement dated as of November 9, 2021 (such agreement, as amended and restated, and as further amended by Amendment No.1 dated March 6, 2024, the “A&R Term Loan Credit Agreement”) among the Company, as borrower, the guarantors party thereto, the lenders from time-to-time party thereto and Cantor Fitzgerald Securities, as agent (the “A&R Term Loan Agent”).

The A&R Term Loan Credit Agreement included a term loan credit agreement entered into on November 9, 2021, as amended through March 29, 2023 (the “Uptiered Loan”), and an additional funding commitment, subject to certain conditions, consisting of a $ 57.5 million senior secured first lien term loan (the “Incremental Term Loan”) provided by Corre and certain of its affiliates, comprised of a $ 37.5 million term loan tranche and a $ 20.0 million delayed draw tranche.

The A&R Term Loan Credit Agreement included a term loan credit agreement entered into on November 9, 2021, as amended through March 29, 2023 (the “Uptiered Loan”), and an additional funding commitment, subject to certain conditions, consisting of a $ 57.5 million senior secured first lien term loan (the “Incremental Term Loan”) provided by Corre and certain of its affiliates and comprised of a $ 37.5 million term loan tranche and a $ 20.0 million delayed draw tranche.

The A&R Term Loan Credit Agreement contains certain customary conditions to borrowings, events of default and affirmative, negative, and financial covenants (as described in the A&R Term Loan Credit Agreement and further amended by Amendment No.

4 dated March 6, 2024).

As of March 31, 2024, we are in compliance with the A&R Term Loan Credit Agreement covenants.

As of June 30, 2024, we are in compliance with the A&R Term Loan Credit Agreement covenants.

The terms of Uptiered Loan and Incremental Term Loan are described in the table below (dollar amounts are presented in thousands):

3 unchanged sentences

Stated interest rate

3/31/2024 13.5 % cash and PIK split 2

6/30/2024 9.5 % PIK and 4.0 % cash 2

12 % paid in cash

6/30/2023 12 % PIK

12 % paid in cash

Principal payments at maturity $ 356 quarterly

21 unchanged sentences

1 The principal balance of the Uptiered Loan is made up of $ 22.5 million drawn on November 9, 2021, $ 27.5 million drawn on December 8, 2021, and $ 57.0 million added as part of the exchange agreement on October 4, 2022.

In addition, the principal balance also includes PIK interest recorded to date of $ 25.3 million and $ 22.2 million as of March 31, 2024 and December 31, 2023, respectively, and PIK fees of $ 0.9 million incurred as of December 31, 2022.

In addition, the principal balance also includes paid-in-kind (“PIK”) interest recorded to date of $ 28.6 million and $ 22.2 million as of June 30, 2024 and December 31, 2023, respectively, and PIK fees of $ 0.9 million incurred as of December 31, 2022.

2 Cash and PIK split is based on the Net Leverage Ratio as defined in the A&R Term Loan Credit Agreement.

Cash interest rate increased by 1.5 % on January 31, 2024.

3 The effective interest rate on the Uptiered Loan as of March 31, 2024 consisted of a 13.50 % stated interest rate paid in PIK and cash and an additional 1.06 % due to the amortization of the related debt issuance costs.

The effective interest rate on the Uptiered Loan as of March 31, 2023 consisted of a 12.00 % stated interest rate paid in PIK and an additional 18.32 % due to the acceleration of the amortization of the related debt issuance costs.

4 The effective interest rate on the Incremental Term Loan as of March 31, 2024 consisted of a 12.00 % stated interest rate paid in cash and an additional 10.96 % due to the amortization of the related debt issuance costs.

As of March 31, 2024 and December 31, 2023, APSC Holdco II, L.P.

3 The effective interest rate on the Uptiered Loan as of June 30, 2024 consisted of a 13.50 % stated interest rate paid in PIK and cash and an additional 1.06 % due to the non-cash amortization of the related debt issuance costs.

The effective interest rate on the Uptiered Loan as of June 30, 2023 consisted of a 12.00 % stated interest rate paid in PIK and an additional 0.86 % due to the non-cash amortization of the related debt issuance costs.

4 The effective interest rate on the Incremental Term Loan as of June 30, 2024 consisted of a 12.00 % stated interest rate paid in cash and an additional 10.96 % due to the non-cash amortization of the related debt issuance costs.

As of June 30, 2024 and December 31, 2023, APSC Holdco II, L.P.

held 500,000 warrants and certain affiliates of Corre collectively held 500,000 warrants, in each case providing for the purchase of one share of the Company’s common stock per warrant at an exercise price of $ 15.00 .

13 unchanged sentences

Under the Substitute Insurance Reimbursement Facility Agreement, the 1970 Group extended credit to us in the form of a substitute reimbursement facility (the “Substitute Reimbursement Facility”) to provide up to approximately $ 22.9 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance policies.

As of March 31, 2024, we have $ 22.9 million of letters of credit outstanding under the Substitute Reimbursement Facility.

As of June 30, 2024, we have $ 22.9 million of letters of credit outstanding under the Substitute Reimbursement Facility.

According to the provisions of ASC 470, Debt , the arrangement is a “Substitute Insurance Reimbursement Facility” limited to the amounts drawn under the letters of credit.

1 unchanged sentence

The fees paid by us periodically under this arrangement are deferred and amortized to interest expense over the term of the arrangement.

As of March 31, 2024, the unamortized balance of $ 0.7 million of deferred fees was included in other current assets.

As of March 31, 2024, we had $ 19.2 million of unrestricted cash and cash equivalents and $ 5.0 million of restricted cash, including $ 3.4 million of restricted cash held as collateral for letters of credit and commercial card programs.

International cash balances as of March 31, 2024 were $ 8.2 million, and approximately $ 0.7 million of such cash is located in countries where currency or regulatory restrictions exist.

As of March 31, 2024, we had approximately $ 16.7 million of available borrowing capacity under our various credit agreements, consisting of $ 6.7 million available under the Revolving Credit Loans and $ 10.0 million available under the Incremental Term Loan under the A&R Term Loan Credit Agreement.

As of March 31, 2024, we had $ 33.9 million in letters of credit and $ 2.4 million in surety bonds outstanding and $ 0.6 million in miscellaneous cash deposits securing other required obligations.

As of June 30, 2024, all fees were fully amortized.

As of June 30, 2024, we had $ 17.9 million of unrestricted cash and cash equivalents and $ 4.6 million of restricted cash, including $ 3.2 million of restricted cash held as collateral for letters of credit and commercial card programs.

International cash balances as of June 30, 2024 were $ 6.1 million, and approximately $ 0.5 million of such cash is located in countries where currency or regulatory restrictions exist.

As of June 30, 2024, we had approximately $ 22.2 million of available borrowing capacity under our various credit agreements, consisting of $ 12.2 million available under the Revolving Credit Loans and $ 10.0 million available under the Incremental Term Loan under the A&R Term Loan Credit Agreement.

As of June 30, 2024, we had $ 34.7 million in letters of credit and $ 2.5 million in surety bonds outstanding and $ 0.7 million in miscellaneous cash deposits securing other required obligations.

As of December 31, 2023, our cash and cash equivalents consisted of $ 30.4 million of unrestricted cash and cash equivalents and $ 5.0 million of restricted cash, including $ 3.4 million of restricted cash held as collateral for letters of credit and commercial card programs.

3 unchanged sentences

Net periodic pension credit includes the following components (in thousands):

Three Months Ended March 31,

(unaudited) (unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Interest cost $ 651 $ 689 $ 1,303 $ 1,376

2 unchanged sentences

Unrecognized net actuarial loss

79 71 158 142

Net periodic pension credit $ ( 102 ) $ ( 160 ) $ ( 215 ) $ ( 319 )

Net pension credit is included in “Other income, net” on our condensed consolidated statement of operations.

Net pension credit is included in “Other (expense) income, net” on our condensed consolidated statement of operations.

The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K.

2 unchanged sentences

SHAREHOLDERS’ EQUITY

Shareholder’s Equity and Preferred Stock

As of March 31, 2024 there were 4,415,201 shares of our common stock outstanding and 12,000,000 shares authorized at $ 0.30 par value per share.

As of March 31, 2024 we had 500,000 authorized shares of preferred stock, none of which had been issued.

Shareholders’ Equity and Preferred Stock

As of June 30, 2024 there were 4,421,876 shares of our common stock outstanding and 12,000,000 shares authorized at $ 0.30 par value per share.

As of June 30, 2024 we had 500,000 authorized shares of preferred stock, none of which had been issued.

Accumulated Other Comprehensive Income (loss)

A summary of changes in accumulated other comprehensive loss included within shareholders’ equity is as follows (in thousands):

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

(unaudited) (unaudited)

8 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, which will only be resolved when one or more future events occur or fail to occur.

Certain conditions may exist as of the date the financial statements are issued which may result in a loss to the Company and which will only be resolved when one or more future events occur or fail to occur.

Team’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment.

12 unchanged sentences

On January 25, 2022, the trial court signed a final judgment in favor of the plaintiff and against Team Industrial Services, Inc.

Post-judgment motions challenging the judgment were filed on February 24, 2022 and were denied by the trial court on

April 22, 2022.

We believe the jury verdict is not supported by the facts of the case or applicable law, is the result of significant trial error, and that there are strong grounds for appeal.

Post-judgment motions challenging the judgment were filed on February 24, 2022 and were denied by the trial court on April 22, 2022.

We appealed the trial court’s judgment to the Texas First Court of Appeals by timely filing a notice of appeal on April 25, 2022, and filed our initial appellate brief on December 23, 2022.

We believe that the likelihood that the amount of the judgment will be affirmed is not probable.

We currently estimate a range of possible outcomes between $ 13.0 million and approximately $ 51.0 million, and we have accrued a liability of $ 39.0 million as of March 31, 2024 which is the amount we believe is the most likely estimate for a probable loss on this matter.

On May 16, 2024, the Texas First Court of Appeals issued a decision which vacated the trial court’s judgment and dismissed the case, holding that the trial court erred in refusing to dismiss the case on forum non conveniens grounds.

The plaintiff has filed a motion with the Texas First Court of Appeals for rehearing and a motion for en banc reconsideration and may seek review in the Texas Supreme Court.

After any further appellate review is exhausted, the plaintiff will be permitted to re-file the lawsuit in Kansas.

We currently have accrued a liability of $ 39.0 million as of June 30, 2024.

We have also recorded a related receivable from our third-party insurance providers in other current assets with a corresponding liability of the same amount in other accrued liabilities.

4 unchanged sentences

Notice of repayment of pandemic related government subsidies - In response to widespread health crises, epidemics and pandemics, certain of our entities based in foreign jurisdictions received governmental funding assistance to compensate for a portion of employee wages between March 2020 and March 2022.

Following ongoing compliance reviews of these funding assistance programs, we received notices stating noncompliance with the requirements of these funding assistance programs.

Accordingly, based on the assessments completed by the government appointed administrative authority, we have accrued $ 5.5 million, to be repaid over an extended period, as of March 31, 2024.

Accordingly, for all matters discussed within this Note 13 - Commitments and Contingencies , we have accrued in the aggregate approximately $ 44.6 million as of March 31, 2024, of which approximately $ 5.6 million is not covered by our various insurance policies.

Following ongoing compliance reviews of these funding assistance programs, we received notices stating noncompliance with the requirements of one of these funding assistance programs.

Accordingly, based on the assessments completed by the government appointed administrative authority, as of June 30, 2024, we have accrued $ 5.5 million to be repaid over an extended period related to this noncompliance.

Accordingly, for all matters discussed within this Note 13 - Commitments and Contingencies , we have accrued in the aggregate approximately $ 44.5 million as of June 30, 2024, of which approximately $ 5.5 million is not covered by our various insurance policies.

In addition to legal matters discussed above, we are subject to various lawsuits, claims and proceedings encountered in the normal conduct of business (“Other Proceedings”).

Management believes that based on its current knowledge and after consultation with legal counsel that the Other Proceedings, individually or in the aggregate, will not have a material effect on our condensed consolidated financial statements.

SEGMENT AND GEOGRAPHIC DISCLOSURES

Management believes that based on its current knowledge and after

consultation with legal counsel that the Other Proceedings, individually or in the aggregate, will not have a material effect on our condensed consolidated financial statements.

SEGMENT DISCLOSURES

ASC 280, Segment Reporting , requires us to disclose certain information about our operating segments.

2 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

IHT $ 113,234 $ 116,740 $ 212,682 $ 218,569

3 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Operating income (loss):

2 unchanged sentences

Corporate and shared support services ( 11,937 ) ( 14,672 ) ( 27,599 ) ( 30,334 )

Total operating loss

$ ( 6,386 ) $ ( 7,746 )

Total operating income (loss) $ 11,159 $ 4,596 $ 4,773 $ ( 3,150 )

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Capital expenditures 1 :

IHT $ 2,259 $ 1,595 $ 2,795 $ 3,022

MS 620 674 1,645 1,275

Corporate and shared support services 51 — 51 —

4 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Depreciation and amortization:

4 unchanged sentences

$ 9,260 $ 9,539 $ 18,900 $ 19,085

Separate measures of our assets by operating segment are not produced or utilized by management to evaluate segment performance.

A geographic breakdown of our revenues for the three months ended March 31, 2024 and 2023 is as follows (in thousands):

Three Months Ended

(unaudited) (unaudited)

Total Revenues 1

United States $ 152,877 $ 152,494

Canada 12,389 18,068

Europe 15,440 16,331

Other foreign countries 18,894 15,384

Total $ 199,600 $ 202,277

______________

1 Revenues attributable to individual countries/geographic areas are based on the country of domicile of the legal entity that performs the work.

RELATED PARTY TRANSACTIONS

1 unchanged sentence

SUBSEQUENT EVENTS

As of May 14, 2024, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended March 31, 2024 and determined that there were no events or transactions that would have a material impact on the Company’s results of operations or financial position.

As of August 8, 2024, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended June 30, 2024 and determined that there were no events or transactions that would have a material impact on the Company’s results of operations or financial position .

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 1. Financial Statements