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Item 8. Financial Statements and Supplementary Data

2025-03-19 compared with 2024-03-07 · 424 added, 439 removed, 1016 unchanged (46% of the section changed)

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Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2024 and 2023

Consolidated Statements of S h a r e h o l d e r s ’ Equity for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of accounting for income taxes

As discussed in Note 1 and Note 10 to the consolidated financial statements, the Company recognized $4.5 million of deferred tax liabilities, net as of December 31, 2023.

The Company’s provision for income taxes from continuing operations was $4.6 million for the year ended December 31, 2023.

The Company conducts business globally and consequently is subject to U.S.

federal, state, and foreign income taxes in the jurisdictions in which it operates.

The Company exercises judgment in the application of complex tax regulations in multiple jurisdictions.

Sufficiency of audit evidence over revenue

As discussed in Note 2 to the consolidated financial statements, and as presented in the consolidated statement of operations, the Company reported revenue of $852,272 thousand for the year ended December 31, 2024.

As discussed in Note 1, the Company recognizes revenue as (or when) the performance obligations are satisfied by transferring control over a service or product to the customer.

Most of the Company’s performance obligations qualify for recognition over time, and they are generally able to elect the right-to-invoice practical expedient, which permits them to recognize revenue in the amount to which they have a right to invoice the customer.

We identified the evaluation of sufficiency of audit evidence over revenue as a critical audit matter.

Subjective auditor judgment was required to determine the nature and extent of procedures to perform over revenue related to the transfer of control to the customer and the Company’s right to invoice the customer.

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We identified the evaluation of accounting for income taxes as a critical audit matter.

Evaluating the Company’s application of current tax regulations and the impact of those regulations on the U.S.

federal tax provision required complex auditor judgment and the use of tax professionals with specialized skills.

The following are the primary procedures we performed to address this critical audit matter.

We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the Company’s analyses over the application of current tax regulations and the Company’s interpretation of tax regulations.

We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the revenue process.

We performed a software-assisted data analysis to test relationships among certain revenue transactions.

For a sample of transactions, we compared the amounts recognized as revenue for consistency with relevant underlying documentation, including contracts and other third-party evidence.

We evaluated the sufficiency of the audit evidence obtained over revenue by assessing the results of the procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Company’s auditor since 2002.

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Other assets, net 13,427 7,847

Non-current deferred tax asset 1,225 375

Deferred tax asset 1,582 1,225

Total assets $ 528,365 $ 565,744

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Commitments and contingencies

Shareholders' Equity:

Preferred stock, 500,000 shares authorized, no ne issued

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

4,415,147 and 4,342,909 shares issued

4,493,338 and 4,415,147 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 460,186 458,614

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Accumulated other comprehensive loss ( 44,129 ) ( 36,932 )

Total shareholders' equity 45,596 117,760

Total liabilities and shareholders' equity $ 565,744 $ 616,645

Total equity 1,738 45,596

Total liabilities and equity $ 528,365 $ 565,744

See accompanying notes to consolidated financial statements.

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Selling, general and administrative expenses 213,014 224,430

Restructuring and other related charges, net

Operating loss ( 13,276 ) ( 39,802 )

Operating income (loss) 10,136 ( 13,276 )

Interest expense, net ( 47,808 ) ( 55,181 )

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Provision for income taxes (see Note 10) ( 3,276 ) ( 4,578 )

Net loss from continuing operations $ ( 75,722 ) $ ( 150,087 )

Discontinued operations:

Net income from discontinued operations, net of income tax — 220,166

Net income (loss) $ ( 75,722 ) $ 70,079

Basic net income (loss) per common share:

Loss from continuing operations ( 17.32 ) ( 35.85 )

Income from discontinued operations — 52.58

Total $ ( 17.32 ) $ 16.73

Net loss $ ( 38,266 ) $ ( 75,722 )

Loss per common share:

Basic and diluted ( 8.64 ) ( 17.32 )

Weighted-average number of shares outstanding:

Basic 4,371 4,187

Basic and diluted 4,429 4,371

See accompanying notes to consolidated financial statements.

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Twelve Months Ended

Net income (loss) $ ( 75,722 ) $ 70,079

Net loss $ ( 38,266 ) $ ( 75,722 )

Other comprehensive income (loss) before tax:

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Other comprehensive income (loss), net of tax ( 7,197 ) 2,065

Total comprehensive income (loss) $ ( 73,657 ) $ 57,814

Total comprehensive loss $ ( 45,463 ) $ ( 73,657 )

See accompanying notes to consolidated financial statements.

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Comprehensive

income (loss)

Shareholders’

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

— — — 70,079 — 70,079

Net loss — — — ( 75,722 ) — ( 75,722 )

Foreign currency translation adjustment, net of tax — — — — 3,028 3,028

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Net settlement of vested stock awards 72 12 ( 109 ) — — ( 97 )

Accounting pronouncement adjustment — — ( 5,650 ) 3,826 — ( 1,824 )

Balance as of December 31, 2023 4,415 1,315 458,614 ( 377,401 ) ( 36,932 ) 45,596

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Cash flows from operating activities:

Net income (loss) $ ( 75,722 ) $ 70,079

Net loss $ ( 38,266 ) $ ( 75,722 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 36,295 37,872

Write-off of deferred loan costs — 2,748

Gain on sale of Quest Integrity — ( 203,351 )

Loss on debt extinguishment — 1,585

Write-off of software cost — 629

Amortization of debt issuance costs and debt discounts 18,725 35,509

Paid-in-kind interest 14,526 18,227

Amortization of debt issuance costs, debt discounts, and deferred financing costs 6,226 18,725

Paid-in-kind (PIK) interest 14,441 14,526

Allowance for credit losses 845 267

Foreign currency loss 734 1,698

Foreign currency loss (gain) ( 2,231 ) 734

Deferred income taxes ( 1,184 ) 906

Gain on asset disposal ( 231 ) ( 4,721 )

Non-cash compensation cost 1,590 247

Loss (gain) on asset disposal 7 ( 231 )

Non-cash compensation costs 2,273 1,590

Other, net ( 345 ) ( 4,413 )

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Inventory ( 40 ) ( 2,058 )

Prepaid expenses and other current assets ( 7,527 ) ( 3,201 )

Prepaid expenses and other assets ( 946 ) ( 7,527 )

Accounts payable 6,582 2,818

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Income taxes 1,889 ( 1,145 )

Net cash used in operating activities ( 10,986 ) ( 57,935 )

Net cash provided by (used in) operating activities 22,767 ( 10,986 )

Cash flows from investing activities:

Capital expenditures ( 9,465 ) ( 10,430 )

Net proceeds from sale of discontinued operations — 260,841

Proceeds from disposal of assets 167 414

Net cash (used in) provided by investing activities ( 10,016 ) 243,356

Net cash used in investing activities ( 9,298 ) ( 10,016 )

Cash flows from financing activities:

Borrowings under 2020 ABL Facility, gross — 10,300

Payments under 2020 ABL Facility, gross — ( 72,300 )

Borrowings under 2022 ABL Credit Facility, gross 39,792 108,638

Payments under 2022 ABL Credit Facility, gross ( 26,293 ) ( 43,722 )

Borrowings under Corre Delayed Draw Term Loan, gross — 35,000

Borrowings under Corre Incremental Term Loan 47,500 —

Payments under Corre Incremental Term Loan

Repayments of Convertible Debt ( 41,161 ) —

Borrowings under Revolving Credit Loans 31,500 39,792

Payments under Revolving Credit Loans ( 32,010 ) ( 26,293 )

Borrowings under Incremental Term Loan

Payments under Incremental Term Loan

( 1,425 ) ( 319 )

Repayment of Convertible Debt — ( 41,161 )

Borrowings under ME/RE Loans — 27,398

Payments under ME/RE Loans ( 2,842 ) ( 1,575 )

Payments under APSC Term Loan, gross ( 37,092 ) ( 224,946 )

Repayment of APSC Term Loan — ( 37,092 )

Payments for debt issuance costs ( 8,462 ) ( 9,102 )

Issuance of common stock, net of issuance costs — 9,639

Taxes paid related to net share settlement of share-based awards — 16

Other 492 ( 1,047 )

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Effect of exchange rate changes on cash ( 604 ) 253

Net decrease in cash and cash equivalents

( 22,648 ) ( 7,240 )

Net increase (decrease) in cash and cash equivalents 118 ( 22,648 )

Cash and cash equivalents at beginning of period 35,427 58,075

Cash and cash equivalents at end of period $ 35,545 $ 35,427

1 Consolidated statement of cash flows for the year ended December 31, 2022 includes cash flows from discontinued operations.

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Supplemental disclosure of cash flow information:

Cash paid (refunded) during the year for:

Cash paid during the year for:

Interest $ 24,851 $ 19,503

Income taxes $ 3,921 $ ( 553 )

$ 2,410 $ 3,921

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Description of Business .

Unless otherwise indicated, the terms “we”, “our” and “us” are used in this report to refer to either Team, Inc., to one or more of our consolidated subsidiaries, or to all of them taken as a whole.

We are a global, leading provider of specialty industrial services offering clients access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services.

We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability, and operational efficiency for our clients’ most critical assets.

Unless otherwise indicated, the terms “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to either Team, Inc., to one or more of our consolidated subsidiaries, or to all of them taken as a whole.

We are a global, leading provider of specialty industrial services offering customers access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services.

We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our customers’ most critical assets.

We conduct operations in two segments:

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engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes;

and mechanical services to repair, rerate or replace based upon the client’s election.

In addition, we are capable of escalating with the client’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry.

We also believe that we are unique in our ability to provide these services in three distinct client demand profiles:

and mechanical services to repair, rerate or replace based upon the customer’s election.

In addition, we are capable of escalating with the customer’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry.

We also believe that we are unique in our ability to provide these services in three distinct customer demand profiles:

(i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.

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.

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.

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 and other industries covering a range of components including finished machined and in-service components.

IHT also provides advanced digital imaging including remote digital video imaging.

MS provides solutions designed to serve clients’ unique needs during both the operational (onstream) and off-line states of their assets.

MS provides solutions designed to serve customers’ unique needs during both the operational (onstream) and off-line states of their assets.

Our onstream services include our range of standard to custom-engineered leak repair and composite solutions;

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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 customer 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.

Our specialty maintenance, turnaround and outage services are designed to minimize client downtime and are primarily delivered while assets are off-line and often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules.

Our specialty maintenance, turnaround and outage services are designed to minimize customer downtime and are primarily delivered while assets are off-line, often through the use of cross-certified technicians, whose multi-craft capabilities deliver the production needed to achieve tight time schedules.

These critical services include on-site field machining;

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• Midstream (valves, terminals and storage, and pipeline);

• Public Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways);

• Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways);

• Aerospace and Defense.

Discontinued Operations.

On November 1, 2022, we completed the sale of all of the issued and outstanding equity interests of our wholly-owned subsidiary, TQ Acquisition Inc., a Texas corporation (“TQ Acquisition”), to Baker Hughes Holdings LLC (“Baker Hughes”) for an aggregate purchase price of approximately $ 279.0 million, after certain post-closing adjustments (the “Quest Integrity Transaction”), pursuant to that certain Equity Purchase Agreement by and among us and Baker Hughes, dated as of August 14, 2022 (the “Sale Agreement”).

TQ Acquisition and its subsidiaries constituted Quest Integrity, which provided integrity and reliability management solutions for the process, pipeline and power sectors.

The criteria for reporting Quest Integrity as a discontinued operation were met during the third quarter of 2022 pursuant to the Sale Agreement and, as such, the prior year amounts related to Quest Integrity are presented as discontinued operations.

Unless otherwise specified, the financial information and discussion in this Form 10-K are based on our continuing operations (IHT and MS segments) and exclude any results of our discontinued operations (Quest Integrity).

Refer to Note 2 - Discontinued Operations for additional details.

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Basis for presentation.

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A related party transaction is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the Company or any of its subsidiaries is a participant, and (2) any Related Party (as defined herein) has or will have a direct or indirect material interest.

A related party is any person who is, or, at any time since the beginning of the Company’s last fiscal year, was (1) an executive officer, director or nominee for election as a director of the Company or any of its subsidiaries, (2) a person with greater than five percent (5%) beneficial interest in the Company, (3) an immediate family member of any of the individuals or entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest.

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entities identified in (1) or (2) of this paragraph, and (4) any firm, corporation or other entity in which any of the foregoing individuals or entities is employed or is a general partner or principal or in a similar position or in which such person or entity has a five percent (5%) or greater beneficial interest.

Immediate family members include a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone residing in such person’s home, other than a tenant or employee.

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Uncertainties with respect to such estimates and judgments are inherent in the preparation of financial statements.

Estimates and judgments are used in, among other things, (1) valuation of acquisition related tangible and intangible assets and assessments of all long-lived assets for possible impairment, (2) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical and general liability, (3) establishing an allowance for uncollectible accounts receivable, (4) estimating the useful lives of our assets, (5) assessing future tax exposure and the realization of tax assets, (6) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans, (7) assessments of fair value and (8) managing our foreign currency risk in foreign operations.

Estimates and judgments are used in, among other things, (1) assessments of all long-lived assets for possible impairment, (2) estimating various factors used to accrue liabilities for workers’ compensation, auto, medical and general liability, (3) establishing an allowance for uncollectible accounts receivable, (4) estimating the useful lives of our assets, (5) assessing future tax exposure and the realization of tax assets, (6) selecting assumptions used in the measurement of costs and liabilities associated with defined benefit pension plans, (7) assessments of fair value, and (8) estimating achievement of the milestones for compensation cost recognition on our performance-based stock units.

Our most significant accounting policies are described below.

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Certain contracts may contain a combination of fixed and variable elements.

We act as a principal and have performance obligations to provide the service itself or oversee the services provided by any subcontractors.

We may act as a principal and have performance obligations to provide the service itself or oversee the services provided by any subcontractors.

Revenue is measured based on consideration specified in a customer contract and excludes amounts collected on behalf of third parties, such as taxes assessed by governmental authorities.

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For our time and materials contracts, we are generally able to elect 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.

For our fixed price

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contracts, as they are short term in nature, we recognize revenue as jobs are completed or costs are incurred.

For our fixed price contracts, as they are short term in nature, we recognize revenue as jobs are completed or costs are incurred.

For contracts where control is transferred at a point in time, revenue is recognized at the time control of the asset is transferred to the customer, which is typically upon delivery and acceptance by the customer.

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We did not have a material amount of contract assets or contract liabilities as of December 31, 2024 and 2023.

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We recognize the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization period of the asset that otherwise would have been recognized is one year or less.

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For additional information regarding our pension assets, see Note 15 - Employee Benefit Plan .

The fair value of our 2022 ABL Credit Facility, ME/RE Loans, and Term Loans under the A&R Term Loan Credit Agreement are representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt.

The Notes were fully paid off on August 1, 2023, however, the fair value of the Notes as of December 31, 2022 was $ 37.5 million (inclusive of the fair value of the conversion option) and are a “Level 2” measurement, determined based on the observed trading price of these instruments.

The fair value of our debt obligations approximates their carrying value due to the respective interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt obligations .

For additional information regarding our debt obligations, see Note 11 - Debt .

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Except for certain inventories that are valued based on standard cost, we use the first-in, first-out method to value our inventory.

Inventory includes material, labor, and certain fixed overhead costs.

Inventory amounts includes material, labor, and certain fixed overhead costs.

Inventory is stated at the lower of cost and net realizable value.

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The cost of inventories consumed or products sold are included in operating expenses.

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Property, plant and equipment.

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Automobiles 2 - 5 years

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Intangible assets.

Intangible assets with finite lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets (“ASC 360”).

Cloud-based software arrangements.

The costs incurred to implement cloud computing arrangements hosted by third party vendors are capitalized when incurred during the application development phase and recognized as Prepaid expenses and other current assets for the current portion or Other assets for the long-term portion.

Implementation costs are subsequently amortized on a straight-line basis over the expected term of the related cloud service, beginning on the date the related software or module is ready for its intended use.

The amortization of cloud-based software implementation costs is recorded as a component of Selling, general, and administrative expenses, the same line item as the expense for the associated hosting arrangement.

The carrying value of cloud computing implementation costs are tested for impairment when an event or circumstance indicates that the asset might be impaired.

Cloud computing arrangement implementation costs are classified within operating activities in the consolidated statements of cash flows.

Impairment of long-lived assets.

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an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition;

and current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset.

and current or forecasted operating or cash flow losses demonstrate continuing losses associated with the use of the asset.

If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset.

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When facts and circumstances change, we adjust these reserves through our provision for income taxes.

To the extent interest and penalties may be assessed by taxing authorities on any related underpayment of income tax, such amounts have been accrued

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and are classified as a component of income tax expense (benefit) in our consolidated statements of operations.

To the extent interest and penalties may be assessed by taxing authorities on any related underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense (benefit) in our consolidated statements of operations.

As of December 31, 2024, our gross unrecognized tax benefits, excluding penalties and interest related to uncertain tax positions, were $ 1.3 million.

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Workers’ compensation, auto, medical and general liability accruals.

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This applies to financial assets measured at amortized cost, including trade and unbilled accounts receivable, and requires immediate recognition of lifetime expected credit losses.

Significant factors that affect the expected collectability of our receivables include macroeconomic trends and forecasts in the oil and gas, refining, power, and petrochemical markets and changes in our results of operations and forecasts.

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

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We estimate future expected credit losses based on forecasted changes in gross domestic product and oil demand for each region.

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We consider one year from the financial statement reporting date as representing a reasonable forecast period as this period aligns with the expected collectability of our trade receivables.

Financial distress experienced by our customers could have an adverse impact on us in the event our customers are unable to remit payment for the products or services we provide or otherwise fulfill their obligations to us.

Financial distress experienced by our customers could have an adverse impact on us in the event our customers are unable to remit payment for the products or services we provide

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or otherwise fulfill their obligations to us.

In determining the current expected credit losses, we review macroeconomic conditions, market specific conditions, and internal forecasts to identify potential changes in our assessment.

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As of December 31, 2024 and 2023, we had the following warrants:

• Equity-classified warrants issued in connection with our APSC Term Loan (“APSC Warrants”), and

• Equity-classified warrants issued in connection with the APSC Term Loan (fully paid off in 2023) (“APSC Warrants”), and

• Equity-classified warrants issued in connection with our Subordinated Term Loan Credit Agreement (“Corre Warrants”).

The warrants were accounted for as a component of additional paid-in capital and a debt warrant discount (See Note 11 - Debt ).

The warrant discount is amortized over the term of the debt.

As of December 31, 2023 and 2022, unamortized balance of warrant discount amounted to $ 0.2 million and $ 3.3 million, respectively.

The discount is amortized over the term of the related debt.

As of December 31, 2024 and 2023, the unamortized balance of the remaining Corre Warrant discount amounted to $ 0.1 million and $ 0.2 million, respectively.

Earnings (loss) per share.

Basic earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the weighted-average number of shares of common stock outstanding during the year.

Diluted earnings (loss) per share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations or net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) for 2022, the dilutive effect of the assumed conversion of our Notes under the treasury stock method.

The Notes were fully paid off on August 1, 2023.

For the years ended December 31, 2023, and 2022, all outstanding share-based compensation awards were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the loss from continuing operations in those periods.

Also, for 2022, the effect of our Notes was excluded from the calculation of diluted earnings (loss) per share since the conversion price exceeded the average price of our common stock during the applicable periods.

For information on our Notes and our share-based compensation awards, refer to Note 11 - Debt and Note 13 - Share-Based Compensation , respectively.

The Company computes earnings (loss) per share in accordance with ASC 260-10-45, Earnings per Share , which requires presentation of both basic and diluted earnings per share on the face of the statement of operations.

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

Diluted earnings (loss) per share is computed by dividing net income (loss) by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of share-based compensation using the treasury stock method and (3) the dilutive effect of the assumed exercise of outstanding warrants under the treasury stock method.

For the years ended December 31, 2024, and 2023, all outstanding share-based compensation awards and shares issuable upon the exercise of outstanding warrants were excluded from the calculation of diluted loss per share because their inclusion would be antidilutive due to the loss in those periods.

For information on outstanding warrants and our share-based compensation awards, refer to Note 11 - Debt and Note 13 - Share-Based Compensation , respectively.

Non-cash investing and financing activities.

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These rates are reviewed annually and adjusted to reflect current conditions and are determined based on reference to yields.

The expected return on plan assets is derived from detailed periodic studies, which

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include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix.

The expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix.

While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return.

Mortality and retirement rates are based on actual and anticipated plan experience.

In accordance with GAAP, actual results that differ from the assumptions are accumulated and are subject to amortization over future periods and, therefore, generally affect recognized expense in future periods.

In accordance

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with GAAP, actual results that differ from the assumptions are accumulated and are subject to amortization over future periods and, therefore, generally affect recognized expense in future periods.

While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the pension obligation and future expense.

Share-based compensation.

We account for share-based compensation to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”).

Under ASC 718, we measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and, for those awards subject only to service condition, recognizes the costs on a straight-line basis over the period the employee is required to provide service in exchange for the award, which generally is the vesting period.

For awards with performance and service conditions, we begin recording share-based compensation when achieving the performance criteria is probable.

The fair value of restricted stock units and performance of stock units is determined based on the number of shares granted and the quoted price of our common stock.

We estimate a forfeiture rate to calculate the share-based compensation expense related to our awards.

Estimated forfeitures are determined based on historical data and we continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and other factors.

Quarterly changes in the estimated forfeiture rate can have a significant impact on our share-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the forfeiture estimate is changed.

Our performance stock units vest based on certain performance criteria.

Achievement of the milestones must be probable before we begin recording share-based compensation expense.

When the performance-based vesting criteria is considered probable, we begin to recognize compensation expense at that time.

In the period that achievement of the performance-based criteria is deemed probable, US GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date.

As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods.

For any share-based awards where performance-based vesting criteria is no longer considered probable, previously recognized compensation cost would be reversed.

Reclassifications .

Certain amounts in prior periods have been reclassified to conform to the current year presentation, including the separate presentation and reporting of discontinued operations.

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

Such reclassifications did not have any effect on our financial condition or results of operations as previously reported.

Newly Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”).

The guidance in ASU 2020-04 and ASU 2021-01, Reference Rate Reform (Topic 848) :

Scope , which was issued in January 2021, provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria that reference the London Interbank Offered Rate, (“LIBOR”), or another rate that is expected to be discontinued.

The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022.

On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) Deferral of the Sunset Date of Topic 848 which defers the sunset date of ASC 848, Reference Rate Reform , from December 31, 2022, to December 31, 2024.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) :

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

ASU 2023-07 requires enhanced disclosures regarding significant segment expenses and other segment items.

The guidance requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

ASU 2023-07 is effective for all fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024, and is applied retrospectively to all periods presented.

We adopted ASU 2023-07 during the year ended December 31, 2024.

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This guidance requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold.

ASU 2023-09 is effective to all annual periods beginning after December 31, 2024, and is applied prospectively, while retrospective application is permitted.

ASU 2023-09 is effective for all annual periods beginning after December 31, 2024, and is applied prospectively, while retrospective application is permitted.

We are currently evaluating the effect this guidance will have on our tax disclosures.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) :

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

ASU 2023-07 requires enhanced disclosures regarding significant segment expenses and other segment items.

The guidance requires public entities to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually.

ASU 2023-07 is effective to all fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024, and is applied retrospectively to all periods presented.

We are evaluating the effect this guidance will have on our segment disclosures .

DISCONTINUED OPERATIONS

On November 1, 2022, we completed the Quest Integrity Transaction with Baker Hughes for an aggregate purchase price of approximately $ 279.0 million, after certain post-closing adjustments, in accordance with the Sale Agreement.

We used approximately $ 238.0 million of the net proceeds from the sale of Quest Integrity to pay down $ 225.0 million of our term loan debt, and to pay certain fees associated with that repayment and related accrued interest, with the remainder reserved for general corporate purposes, thereby reducing our future debt service obligations and leverage, and improving our liquidity.

Quest Integrity previously represented a reportable segment.

Following the completion of the Quest Integrity Transaction, we now operate in two segments, IHT and MS.

Our consolidated balance sheets and consolidated statements of operations report discontinued operations separate from continuing operations.

Our consolidated statements of comprehensive income (loss), statements of shareholders’ equity and statements of cash flows combine continuing and discontinued operations.

A summary of financial information related to our discontinued operations is presented in the tables below.

The table below represents major line items constituting net income (loss) from discontinued operations to the after-tax income from discontinued operations (in thousands):

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expenses in the notes of the financials, to provide enhanced transparency into the expense captions presented on the face of the income statement.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact that ASU 2024-03 will have on its related disclosures, including the adoption date and transition method.

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Twelve Months Ended

Major classes of line items constituting net income (loss) from discontinued operations

Operating expenses

Selling, general and administrative expenses

Interest expense, net

Other expense, net

Income before income taxes

Gain on sale of Quest transaction 203,351

Income before income taxes 222,997

Provision for income taxes

Net income from discontinued operations

We completed the sale of Quest Integrity on November 1, 2022.

As a result, there were no assets or liabilities in discontinued operations as of December 31, 2023 or 2022.

The following table presents the depreciation and amortization and capital expenditures of Quest Integrity (in thousands):

Twelve Months Ended

Cash flows provided by operating activities of discontinued operations:

Depreciation and amortization

Cash flows provided by investing activities of discontinued operations:

Capital expenditures $ 4,146

Disaggregation of revenue.

Essentially all of our revenues are associated with contracts with customers.

A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below (in thousands):

A disaggregation of our revenue from contracts with customers by geographic region, by reportable operating segment and by service type is presented below:

Geographic area (in thousands):

Twelve Months Ended December 31, 2024

United States and Canada Other Countries Total

United States Canada Other Countries Total

IHT $ 374,657 $ 39,699 $ 12,366 $ 426,722

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Total $ 637,662 $ 66,940 $ 147,670 $ 852,272

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Twelve Months Ended December 31, 2023

United States and Canada Other Countries Total

United States Canada Other Countries Total

IHT $ 364,550 $ 49,965 $ 15,044 $ 429,559

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Total $ 623,763 $ 84,870 $ 153,982 $ 862,615

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

Twelve Months Ended December 31, 2024

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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 December 31, 2024 and 2023.

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ACCOUNTS RECEIVABLE

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Accounts receivable, net $ 172,645 $ 181,185

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

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Inventory $ 37,874 38,853

PREPAID AND OTHER CURRENT ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

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Other current assets 3,826 8,594

Prepaid and other current assets

Prepaid expenses and other current assets

$ 58,643 $ 65,992

The insurance receivables relate to receivables from our third-party insurance providers for legal claims that are recorded in other accrued liabilities, refer to Note 9 - Other Accrued Liabilities .

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

The insurance receivable relates to receivables from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 9 - Other Accrued Liabilities .

Insurance 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.

As of December 31, 2023 and 2022, other current assets include deferred financing fees of $ 1.8 million each in connection with that certain Substitute Insurance Reimbursement Facility Agreement (as amended);

other accounts receivable of $ 4.4 million and $ 2.4 million, respectively, primarily related to insurance rebates;

and software implementation cost (net of amortization) of $ 1.7 million and $ 2.1 million, respectively.

As of December 31, 2022, the other current assets also included deferred financing costs of $ 3.1 million due to all long-term debt then being classified as current.

As of December 31, 2024 and 2023, other current assets include deferred financing fees of $ 1.6 million and $ 1.8 million, respectively, in connection with that certain Substitute Insurance Reimbursement Facility Agreement (as amended), other accounts receivable of $ 1.2 million and $ 4.4 million, respectively, primarily related to 2023 insurance rebates, and the current portion of software implementation cost of $ 0.9 million and $ 1.7 million, respectively.

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Included in the table above are assets under finance leases of $ 7.7 million and $ 8.5 million and related accumulated amortization of $ 3.2 million and $ 3.3 million as of December 31, 2024 and 2023, respectively.

Depreciation expense for the years ended December 31, 2023 and 2022 was $ 21.8 million, and $ 22.9 million respectively.

Assets sold and disposed of during the twelve months ended December 31, 2023 and 2022 had a carrying value of $ 0.2 million and $ 2.5 million, respectively, resulting in a gain on sale of $ 0.2 million and $ 4.2 million, respectively.

The assets sold for the twelve months ended December 31, 2023 consisted of $ 0.1 million in machinery and equipment and $ 0.1 million primarily in leasehold improvements.

The assets sold for the twelve months ended December 31, 2022 primarily consisted of $ 1.3 million in land, $ 0.9 million in buildings and $ 0.3 million in machinery and equipment.

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Depreciation expense for the years ended December 31, 2024 and 2023 was $ 20.5 million and $ 21.8 million respectively, of which $ 13.7 million and $ 14.5 million, respectively, was included in “Operating expenses” and $ 6.8 million and $ 7.3 million, respectively, was included in “Selling, general and administrative expenses” on our Consolidated Statements of Operations.

INTANGIBLE ASSETS

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Customer relationships $ 164,305 $ ( 102,630 ) $ 61,675

Non-compete agreements 4,281 ( 4,281 ) —

Trade names 20,262 ( 19,742 ) 520

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Licenses 683 ( 683 ) —

Other 12,983 ( 12,983 ) —

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

Amortization expense on intangible assets for the years ended December 31, 2023 and 2022 was $ 12.7 million, and $ 12.9 million, respectively.

Amortization expense on intangible assets for the years ended December 31, 2024 and 2023 was $ 12.4 million and $ 12.7 million, respectively, and is included in “Selling, general and administrative expenses” on our Consolidated Statements of

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Amortization expense for intangible assets is forecasted to be approximately $ 12.4 million, $ 12.0 million, $ 11.3 million, $ 6.4 million, and $ 5.4 million in 2025, 2026, 2027, 2028 and 2029, respectively.

The weighted-average amortization period for intangible assets subject to amortization was 13.8 years and 13.7 years as of December 31, 2023 and 2022, respectively.

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

The weighted-average amortization period as of December 31, 2024 is 13.9 years for customer relationships, 13.8 years for trade name and 10.0 years for technology.

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

Long term software implementation costs $ 9,232 $ 5,446

Long term deposit 1,552 1,185

Escrow fund 1,350 266

Deferred financing charges 693 267

Non-current income tax receivable 119 119

Other non-current assets 481 564

Other assets $ 13,427 $ 7,847

As of December 31, 2024, the Company had $ 19.0 million of gross capitalized cloud-based software implementation costs and $ 8.9 million of related accumulated amortization, for a net balance of $ 10.1 million, consisting of $ 0.9 million recorded within Prepaid expenses and other current assets, and $ 9.2 million recorded within Other assets (included in the table above) on the Company’s consolidated balance sheets.

As of December 31, 2023, the Company had $ 13.7 million of gross capitalized cloud-based software implementation costs and $ 6.6 million of related accumulated amortization, for a net balance of $ 7.1 million, consisting of $ 1.7 million recorded within Prepaid expenses and other current assets, and $ 5.4 million recorded within Other assets (included in the table above) on the Company’s consolidated balance sheets.

For the years ended December 31, 2024 and 2023, the Company amortized $ 2.3 million and $ 2.9 million, respectively, of cloud-based software implementation costs.

OTHER ACCRUED LIABILITIES

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

Payroll and other compensation expenses $ 39,943 $ 48,507

Legal and professional accruals $ 44,285 $ 53,972

Insurance accruals

Payroll and other compensation expenses 41,692 39,943

Property, sales and other non-income related taxes 6,379 7,248

Accrued interest 5,516 4,487

Insurance accruals 3,480 7,170

Volume discounts 1,902 2,479

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Under the Coronavirus Aid, Relief and Economic Security Act we qualified to defer the employer portion of social security taxes incurred through the end of calendar year 2020.

As of December 31, 2022, we had $ 6.5 million outstanding under this program, included in Payroll and other compensation expenses in the above table and paid in January 2023.

We also deferred certain payroll related expenses and tax payments under other foreign government programs.

We had $ 1.6 million and $ 2.1 million as of December 31, 2023 and 2022, respectively, related to these foreign deferrals.

Legal and professional accruals include accruals for legal and professional fees as well as accrued legal claims, refer to Note 16 - Commitments and Contingencies for legal claims information.

Certain legal claims are covered by our third-party insurance providers and the related insurance receivables for these claims are recorded in prepaid expenses and other current assets, refer to Note 6 - Prepaid and Other Current Asset s.

Certain legal claims are covered by our third-party insurance providers and the related insurance receivable for these claims is recorded in prepaid expenses and other current assets, refer to Note 5 - Prepaid and Other Current Asset s.

Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses.

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

Property, sales and other non-income related taxes includes 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 accruals.

Insurance accruals primarily relate to workers compensation costs and 2023 accrued medical.

Other accruals include various business expense accruals.

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For the year ended December 31, 2023, our income tax provision resulted in an effective tax rate of 6.4 %.

Our income tax provision for the year ended December 31, 2023 was $ 4.6 million, our income tax provision for December 31, 2022 was $ 3.3 million and includes federal, state and foreign taxes.

The components of our tax provision and benefit on continuing operations were as follows (in thousands):

Our income tax provision for the year ended December 31, 2024 and 2023 was $ 3.3 million and $ 4.6 million, respectively, and includes federal, state and foreign taxes.

The components of our tax provision and benefit were as follows (in thousands):

Current Deferred Total

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Tax provision $ 3,303 $ 1,275 $ 4,578

The components of pre-tax income (loss) from continuing operations for the years ended December 31, 2023 and 2022 were as follows (in thousands):

The components of loss before income taxes for the years ended December 31, 2024 and 2023 were as follows (in thousands):

Twelve Months Ended

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Foreign 7,487 14,933

Pre-tax loss from continuing operations

Loss before income taxes

$ ( 34,990 ) $ ( 71,144 )

The income tax provision in 2023 and 2022 attributable to the loss from continuing operations, respectively, differed from the amounts computed by applying the U.S.

federal income tax rate 21 % in 2023 and 2022, to pre-tax loss from continuing operations as a result of the following (in thousands):

The income tax provision in 2024 and 2023, respectively, differed from the amounts computed by applying the U.S.

federal income tax rate of 21 % in 2024 and 2023, as a result of the following (in thousands):

Twelve Months Ended

Pre-tax loss from continuing operations $ ( 71,144 ) $ ( 146,781 )

Computed income taxes at statutory rate ( 14,940 ) ( 30,824 )

Loss before income taxes

$ ( 34,990 ) $ ( 71,144 )

Computed income tax benefit at statutory rate

( 7,348 ) ( 14,940 )

State income taxes, net of federal benefit 320 ( 200 )

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Other 233 976

Total expense for income tax on continuing operations

Total expense for income tax

$ 3,276 $ 4,578

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Goodwill and intangible costs 8,078 9,110

Debt transactions

Debt related cost

Net operating loss carry forwards 46,348 45,351

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$ ( 3,383 ) $ ( 4,517 )

We successfully negotiated amendments to existing debt instruments and entered into new agreements with lenders.

These actions removed the substantial doubt about the Company's ability to continue as a going concern that previously existed and disclosed in prior periods.

As of December 31, 2024, a valuation allowance of $ 102.2 million was recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized, primarily attributable to the domestic operations.

However, on the basis of the Company's ability to continue as a going concern, we evaluated all available evidence, both positive and negative and determined that sufficient future taxable income will be generated to allow for the realization of the existing deferred tax assets in certain foreign jurisdictions in which the we operate.

As a result, we were able to release $ 2.9 million of valuation allowance in the current year, primarily attributable to our UK and Australia subsidiaries.

These benefits were offset by an increase in valuation allowance of $ 23.1 million on the expected realizability of our deferred tax assets for federal and state tax net operating loss carryforwards.

A significant factor of negative evidence evaluated for the domestic jurisdiction was the cumulative pre-tax loss incurred over the three-year period ended December 31, 2024.

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As of December 31, 2024, we had foreign net operating loss carryforwards totaling $ 18.8 million.

Of this amount, $ 0.2 million will expire in various dates through 2033 and $ 16.5 million has an unlimited carryforward period.

Of this amount, $ 0.2 million will expire on various dates through 2033 and $ 18.6 million has an unlimited carryforward period.

As of December 31, 2024, none of our undistributed earnings of foreign operations were considered to be permanently reinvested overseas.

As of December 31, 2024, the deferred tax liability related to undistributed earnings of foreign subsidiaries was $ 2.8 million.

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As of December 31, 2023, $ 2.3 million of unrecognized tax benefits would affect our effective tax rate.

We estimate the uncertain tax benefits that may be recognized within the next twelve months will not be material.

Our policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense.

We file income tax returns in the U.S.

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Certain Dutch entities were also under audit.

We did not anticipate any material adjustments related to these examinations.

We do not anticipate any material adjustments related to these examinations.

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Periodic examinations of our tax filings occur by the taxing authorities for the jurisdictions in which we conduct business.

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We do not expect any material adjustments to result from positions taken on our income tax returns.

The following table summarizes reconciliation of gross unrecognized tax benefits, excluding penalties and interest, for the year ended December 31, 2023 and 2022 (in thousands):

As of December 31, 2024, $ 2.2 million of unrecognized tax benefits would affect our effective tax rate.

We estimate the uncertain tax benefits that may be recognized within the next twelve months will not be material.

Our policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense.

The following table summarizes a reconciliation of gross unrecognized tax benefits, excluding penalties and interest, for the year ended December 31, 2024 and 2023 (in thousands):

Twelve Months Ended

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Additions based on tax positions related to prior years — 399

Disposition of uncertain tax positions of discontinued operations — ( 426 )

Reductions based on tax positions related to prior years

Reductions resulting from a lapse of the applicable statute of limitations ( 116 ) ( 44 )

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As of December 31, 2024 and 2023, the total amount of accrued interest and penalties related to unrecognized tax benefits was $ 0.9 million and $ 0.8 million, respectively.

There was approximately $ 0.2 million and $ 0.0 million , respectively, of interest and penalties related to unrecognized tax benefits that was recorded in income tax expense for the period ended December 31, 2023 and 2022 .

There was approximately $ 0.1 million and $ 0.2 million of interest or penalties related to unrecognized tax benefits that were recorded in income tax expense for the years ended December 31, 2024, and 2023, respectively.

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ME/RE Loans 1

APSC Term Loan 1

Uptiered Loan / Subordinated Term Loan 1

22,119 24,061

Uptiered Loan 1

143,955 129,436

Incremental Term Loan 1

39,824 38,758

Equipment Financing Loan

Total 319,968 305,670

Convertible Debt 1

Finance lease obligations 2

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_________________

1 Comprised of principal amount outstanding, less unamortized discount and issuance costs.

1 Comprised of principal amount outstanding, less unamortized debt issuance costs.

See below for additional information.

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The following table summarizes scheduled maturities of our debt for the years succeeding December 31, 2024 (in thousands):

Total $ 317,378

1 The total excludes unamortized debt issuance cost of $ 8.4 million.

On March 12, 2025, we entered into certain debt refinancing transactions with our existing and new lenders, which resulted in:

• full payoff of the outstanding balance under Delayed Draw Term Loan,

• full payoff of the outstanding balance under the ME/RE Loans,

• full payoff of the outstanding balance under the Incremental Term Loan, and

• partial payoff of the outstanding balance under the Uptiered Loan.

Refer to Note 19 - Subsequent Events for additional details about the transactions.

2022 ABL Credit Facility

On February 11, 2022, we entered into a credit agreement, with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent, (the “ABL Agent”) (such agreement, as amended by Amendment No.

1 dated as of May 6, 2022, Amendment No.

2 dated as of November 1, 2022, Amendment No.3 dated June 16, 2023, and Amendment No.4 dated March 6, 2024, and as further amended from time to time, the “2022 ABL Credit Agreement”).

Available funding commitments to us under the 2022 ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $ 130.0 million to be provided by certain affiliates of the ABL Agent (the “Revolving Credit Loans”), with a $ 35.0 million sublimit for swingline borrowings, a $ 26.0 million sublimit for issuances of letters of credit, and an incremental delayed draw term loan of up to $ 35.0 million (the “Delayed Draw Term Loan”) provided by Corre Partners Management, LLC and certain of its affiliates (collectively, the “2022 ABL Credit Facility”).

The proceeds from the 2022 ABL Credit Facility were used to, among other things, pay off and terminate the 2020 ABL Facility (asset-based credit agreement with Citibank, N.A.

for available borrowings up to $ 150.0 million entered on December 18, 2020).

On February 11, 2022, we entered into a credit agreement, with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent (the “ABL Agent”) (such agreement, as amended by Amendment No.1 dated as of May 6, 2022, Amendment No.2 dated as of November 1, 2022, Amendment No.3 dated as of June 16, 2023 (“ABL Amendment No.

3”), Amendment No.4 dated as of March 6, 2024 and Amendment No.5 dated as of September 30, 2024 (“ABL Amendment No.5”), the “2022 ABL Credit Agreement”).

We have fully drawn on the delayed draw term loan of $ 35.0 million (the “Delayed Draw Term Loan”) provided by Corre Partners Management, LLC (“Corre”) and certain of its affiliates, and on the ME/RE Loans (collectively, the Revolving Credit Loans, the Delayed Draw Term Loan and the ME/RE Loans, and the“2022 ABL Credit Facility”).

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Our obligations under the 2022 ABL Credit Agreement are guaranteed by certain of our direct and indirect subsidiaries referenced below as the “ABL Guarantors” and, together with the Company, the “ABL Loan Parties.” Our obligations under the 2022 ABL Credit Facility are secured on a first priority basis by, among other things, accounts receivable, deposit accounts, securities accounts and inventory of the ABL Loan Parties (collectively, the “ABL Priority Collateral”) and are secured on a lower priority basis by substantially all of the other assets of the ABL Loan Parties, subject to the terms of the Intercreditor Agreement (as defined below).

Availability under the revolving credit line is based on a percentage of the value of qualifying accounts receivable and inventory, reduced by certain reserves.

On September 30, 2024, the Company entered into ABL Amendment No.5 to the 2022 ABL Credit Agreement to, among other things:

(i) extend the scheduled maturity date from August 11, 2025 to September 30, 2027;

(ii) amend the applicable margin for Delayed Draw Term Loans from a flat rate of 10.00 % for SOFR Loans (as defined in the 2022 ABL Credit Agreement) and 9.00 % for Base Rate Loans (as defined in the 2022 ABL Credit Agreement) to a rate based on EBITDA ranging from 8.50 % to 10.00 % for SOFR Loans and 7.50 % to 9.00 % for Base Rate Loans;

(iii) amend the applicable margin for Revolving Credit Loans from a rate based on EBITDA ranging from 4.15 % to 4.65 % for SOFR Loans and 3.15 % to 3.65 % for Base Rate Loans to a rate based on both EBITDA and Average Historical Excess Availability (as defined in the 2022 ABL Credit Agreement) ranging from 3.50 % to 4.25 % for SOFR Loans and 2.50 % to 3.25 % for Base Rate Loans;

(iv) amend the applicable margin for ME/RE Loans from a flat rate of 5.75 % for SOFR Loans to a flat rate of 5.00 % for SOFR Loans;

(v) amend the definitions of “Borrowing Base” and “Consolidated Fixed Charge Coverage Ratio” as well as related definitions to expand availability under the Revolving Credit Facility (as defined in the 2022 ABL Credit Agreement);

(vi) add a springing financial covenant requiring Excess Availability (as defined in the 2022 ABL Credit Agreement) to be above $ 7,500,000 only if the Consolidated Fixed Charge Coverage Ratio falls below 0.85 x for twelve-month periods ending on or prior to December 31, 2024 and 1.00 x for twelve-month periods ending after December 31, 2024;

(vii) amend the applicable prepayment premium for Delayed Draw Term Loans and ME/RE Loans from a rate ranging from 0 % to 1 % to a rate ranging from 0 % to 2 % based on the date of prepayment.

ABL Amendment No.5 was accounted for in accordance with ASC 470-60, Troubled Debt Restructuring , and no gain or loss was recognized.

Amendment fees of $ 0.9 million related to the Revolving Credit Loans are deferred and amortized to interest expense over the term of the 2022 ABL Credit Agreement.

The terms of the 2022 ABL Credit Facility are described in the table below (dollar amounts are presented in thousands):

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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) LIBOR+ 10 % (Base+ 9 %)

Amended interest rate SOFR + applicable margin (base + applicable margin) SOFR + 10 % (Base + 9 %)

Scheduled maturity date 1

9/30/2027 9/30/2027

Stated interest rate

SOFR + applicable margin (base + applicable margin) SOFR + applicable margin (base + applicable margin)

Actual interest rate:

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12/31/2023 $ 6,984 $ 5,317

Unamortized balance of deferred financing cost

Balances at 12/31/2024

Principal balance

$ 77,905 $ 35,000

Unamortized balance of debt issuance cost

Net carrying balance

$ 77,905 $ 34,766

Balances at 12/31/2023

Principal balance

$ 78,415 $ 35,000

Unamortized balance of debt issuance cost

Net carrying balance

$ 78,415 $ 35,000

Unamortized balance of deferred financing cost

12/31/2024 $ 693 NA 2

12/31/2023 $ 267 NA 2

Available amount at 12/31/2024 $ 35,886 $ —

The “applicable margin” in the table above is defined as a rate of 3.15 %, 3.40 % or 3.65 % for Base Rate Loans with a 2.00 % base rate floor and a rate of 4.15 %, 4.40 % or 4.65 % for Adjusted Term SOFR Loans with a 1.00 % SOFR floor, in each case depending on the amount of EBITDA (as defined in ABL Amendment No.

3 to the 2022 ABL Credit Agreement) as of the most recent measurement period as reported in a monthly compliance certificate.

Base rate is used when SOFR (or LIBOR previously) is not available.

1 Amended maturity date is the earlier of (i) the Scheduled Maturity Date and (ii) the Springing Maturity Date (91 days prior to Scheduled Maturity Date of the A&R Term Loan Credit Agreement (defined below), or October 1, 2026).

2 Not applicable

Base rate is used when SOFR is not available.

The fee for undrawn revolving amounts is 0.50 %.

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Mandatory prepayments are also required in certain circumstances, including with respect to the Delayed Draw Term Loan, if the ratio of aggregate value of the collateral under the 2022 ABL Credit Facility to the sum of the Delayed Draw Term Loan plus revolving facility usage outstanding is less than 130 %.

In addition, mandatory prepayments are required for the Delayed Draw Term Loan, equal to 100 % of all net cash proceeds attributable to certain European collateral realized in connection with the assets disposition.

Amounts repaid under the Revolving Credit Loans may be re-borrowed, subject to compliance with the borrowing base and the other conditions set forth in the 2022 ABL Credit Agreement.

Amounts repaid under the Delayed Draw Term Loan cannot be re-borrowed.

Certain permanent repayments of the 2022 ABL Credit Facility loans are subject to the payment of a premium of 1.00 % from June 16, 2023 until August 11, 2024, and 0.50 % after August 11, 2024 until August 11, 2025.

Certain permanent repayments of the 2022 ABL Credit Facility loans are subject to the payment of a premium ranging from 0 % to 2 % depending on the date of prepayment as specified in the 2022 ABL Credit Agreement.

The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, including covenants that restrict our ability to sell assets, make changes to the nature of our business, engage in mergers or acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay dividends, issue equity instruments, make distributions or redeem or repurchase capital stock or make other investments, engage in transactions with affiliates and make payments in respect of certain debt.

The 2022 ABL Credit Agreement following the execution of Amendment No.

3 also requires that we will not exceed $ 15.0 million in unfinanced capital expenditures in any CapEx Test Period (as defined therein);

provided we shall be permitted to make up to $ 25.0 million in unfinanced capital expenditures in any CapEx Test Period (as defined therein) if we maintain a total leverage ratio of less than or equal to 2.00 to 1.00 on a pro forma basis immediately after giving effect to each such unfinanced capital expenditure in excess of the capital expenditure limit.

The 2022 ABL Credit Agreement following the execution of Amendment No.3 also requires that we will not exceed $ 15.0 million in unfinanced capital expenditures in any CapEx Test Period (as defined therein);

provided we shall be permitted to make up to $ 25.0 million in unfinanced capital expenditures in any CapEx Test Period (as

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defined therein) if we maintain a total leverage ratio of less than or equal to 2.00 to 1.00 on a pro forma basis immediately after giving effect to each such unfinanced capital expenditure in excess of the capital expenditure limit.

In addition, the 2022 ABL Credit Agreement includes customary events of default, the occurrence of which may require that we pay an additional 2.0 % interest on the outstanding loans under the 2022 ABL Credit Facility and that the debt becomes payable immediately.

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These costs were fully amortized as of June 16, 2023 due to the Maturity Reserve Trigger Date provision that was previously applicable.

We incurred an additional $ 0.4 million of financing cost related to the existing ABL Credit Facility in connection with the ABL Amendment No.

These costs were capitalized and amortized on a straight-line basis over the amended term of the 2022 ABL Credit Facility.

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We incurred additional financing cost of $ 0.4 million related to the ABL Amendment No.3 and $ 0.9 million related to the ABL Amendment No.5.

These costs were capitalized and are amortized on a straight-line basis over the amended term of the 2022 ABL Credit Facility.

As of December 31, 2024, we had $ 77.9 million outstanding under the Revolving Credit Loans and $ 35.0 million outstanding under the Delayed Draw Term Loans.

There were $ 9.5 million in outstanding letters of credit secured by these instruments, which are off-balance sheet.

The ABL Amendment No.

3, in addition to making certain other changes to the 2022 ABL Credit Facility, provided us with $ 27.4 million of new term loans (the “ME/RE Loans”).

Our obligations in respect of the ME/RE Loans are guaranteed by certain direct and indirect material subsidiaries of the Company (the “ABL Guarantors” and, together with the Company, the “ABL Loan Parties”).

The ABL Amendment No.3, in addition to making certain other changes to the 2022 ABL Credit Facility, provided us with $ 27.4 million of term loans (the “ME/RE Loans”).

Our obligations in respect of the ME/RE Loans are guaranteed by the ABL Guarantors.

The ME/RE Loans under the 2022 ABL Credit Agreement are secured on a first priority basis by, among other things, certain real estate and machinery and equipment (the “Specified ME/RE Collateral”) and are secured on a lower priority basis by substantially all of the other assets of the ABL Loan Parties.

The ME/RE Loans were drawn in full on June 16, 2023 and were used to pay off the amounts owed under the existing APSC Term Loan, discussed below.

The ME/RE Loans were drawn in full on June 16, 2023 and were used to pay off the remaining amounts owed under the existing APSC Term Loan, discussed below.

On September 30, 2024, the Company entered into ABL Amendment No.5.

ABL Amendment No.5 amended the 2022 ABL Credit Agreement to, among other things, provide for the following changes to the ME/RE Loans:

(i) extended the scheduled maturity date from August 11, 2025 to September 30, 2027;

(ii) amended the applicable margin for ME/RE Loans from a flat rate of 5.75 % for SOFR Loans (as defined in the 2022

ABL Credit Agreement) to a flat rate of 5.00 % for SOFR Loans;

(iii) amend the applicable prepayment premium for ME/RE Loans from a rate ranging from 0 % to 1 % to a rate ranging from 0 % to 2 % based on the date of prepayment.

The terms of ME/RE Loans are described in the table below (dollar amounts are presented in thousands):

Original maturity date 8/11/2025

Original stated interest rate SOFR + 5.75 % + 0.11 % credit spread adjustment

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Scheduled maturity date 1

Stated interest rate

SOFR + 5.00 % + 0.11 % credit spread adjustment

Principal payments $ 237 monthly

Effective interest rate 2

12/31/2022 N/A

Actual interest rate

12/31/2024 12.97 %

12/31/2022 N/A

12/31/2023 17.40 %

Actual cash interest rate

12/31/2024 9.67 %

12/31/2023 11.21 %

Interest payments monthly

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12/31/2024 $ 2,737

12/31/2022 N/A

12/31/2023 $ 1,384

Balances at 12/31/2024

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Net carrying balance $ 22,119

Balances at 12/31/2023

Principal balance $ 25,823

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

Net carrying balance $ 24,061

Available amount at 12/31/2024 $ —

_________________

2 The effective interest rate as of December 31, 2024, consisted of a 9.67 % variable interest rate paid in cash and an additional 3.30 % due to non-cash amortization of the related debt issuance costs.

The effective interest rate as of December 31, 2023, consisted of a 11.21 % variable interest rate paid in cash and an additional 6.19 % due to amortization of the related debt issuance costs.

We may make voluntary prepayments of the ME/RE Loans from time to time.

Mandatory prepayments are required in certain instances when sales of assets are completed that are related to the Specified ME/RE Collateral, and with annual excess cash flow (as defined in the 2022 ABL Credit Agreement), subject to certain prepayment premiums (subject to certain exceptions), plus accrued and unpaid interest.

Mandatory prepayments are required in certain instances when sales of assets are completed that are related to the Specified ME/RE Collateral (as defined in the 2022 ABL Credit Agreement), subject to certain prepayment premiums (subject to certain exceptions), plus accrued and unpaid interest.

The remaining unpaid principal balance of the ME/RE loans at maturity will be $ 18.2 million.

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APSC Term Loan

On June 16, 2023, we used the proceeds from the ME/RE Loans and borrowings under the 2022 ABL Credit Facility to repay the total outstanding APSC Term Loan (defined below) balance of $ 35.5 million plus the applicable prepayment premium, resulting in a loss on debt extinguishment of $ 1.6 million.

In the previous years, we entered into that certain Term Loan Credit Agreement, dated December 18, 2020, (as amended, the “APSC Term Loan Credit Agreement”) with Atlantic Park Strategic Capital Fund, L.P., as agent (“APSC”), pursuant to which we borrowed $ 250.0 million (the “APSC Term Loan”).

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

On June 16, 2023, we used the proceeds from the ME/RE Loans and borrowings under the 2022 ABL Credit Facility to repay the total outstanding APSC Term Loan (as defined below) balance of $ 35.5 million plus the applicable prepayment premium, resulting in a loss on debt extinguishment of $ 1.6 million and the termination of this facility.

In the previous years, we entered into that certain Term Loan Credit Agreement, dated December 18, 2020, (as amended, the “APSC Term Loan Credit Agreement”) with APSC as agent, pursuant to which we borrowed $ 250.0 million (the “APSC Term Loan”).

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Original maturity date 12/18/2026

Original stated interest rate variable

Effective interest rate 1

06/16/2023 (date of extinguishment)

12/31/2022 37.99 %

Actual interest rate:

06/16/2023 (date of extinguishment)

12/31/2022 11.73 %

Interest payments Quarterly

Cash paid for interest

YTD 12/31/2023

YTD 12/31/2022

PIK interest added to principal

YTD 12/31/2023

YTD 12/31/2022

Balances at 12/31/2022

Principal balance $ 35,510

Unamortized balance of debt issuance cost $( 3,948 )

Net carrying balance $ 31,562

1 The effective interest rate as of June 16, 2023, consisted of a 12.63 % variable interest rate paid in cash and an additional 25.98 % due to the acceleration of amortization of the related debt issuance costs.

The effective interest rate as of December 31, 2022, consisted of a 11.73 % variable interest rate paid in cash and an additional 26.26 % due to the acceleration of amortization of the related debt issuance costs.

Amended and Restated Term Loan Credit Agreement - Uptiered Loan / Subordinated Term Loan and Incremental Term Loan

On November 9, 2021, we entered into a credit agreement (as amended by Amendment No.

1 dated as of November 30, 2021, Amendment No.

2 dated as of December 6, 2021, Amendment No.

3 dated as of December 7, 2021, Amendment No.

4 dated as of December 8, 2021, Amendment No.

5 dated as of February 11, 2022, Amendment No.

6 dated as of May 6, 2022, Amendment No.

7 dated as of June 28, 2022, Amendment No.

8 dated as of October 4, 2022, Amendment No.

9 dated as of November 1, 2022, Amendment No.

10 dated as of November 4, 2022, Amendment No.

11 dated as of November 21, 2022 and Amendment No.

12 dated as of March 29, 2023, the “Subordinated Term Loan Credit Agreement”) with Cantor Fitzgerald Securities, as agent, and the lenders party thereto providing for an unsecured approximately $ 123.1 million delayed draw subordinated term loan facility.

Amended and Restated Term Loan Credit Agreement - Uptiered Loan and Incremental Term Loan

On November 9, 2021, we entered into a credit agreement (as amended by Amendment No.1 dated as of November 30, 2021, Amendment No.2 dated as of December 6, 2021, Amendment No.3 dated as of December 7, 2021, Amendment No.4 dated as of December 8, 2021, Amendment No.5 dated as of February 11, 2022, Amendment No.6 dated as of May 6, 2022, Amendment No.7 dated as of June 28, 2022, Amendment No.8 dated as of October 4, 2022, Amendment No.9 dated as of November 1, 2022, Amendment No.10 dated as of November 4, 2022, Amendment No.11 dated as of November 21, 2022 and Amendment No.12 dated as of March 29, 2023, the “Subordinated Term Loan Credit Agreement”) with Cantor Fitzgerald Securities, as agent, and the lenders party thereto providing for an unsecured approximately $ 123.1 million delayed draw subordinated term loan facility.

Pursuant to the Subordinated Term Loan Credit Agreement, we borrowed $ 22.5 million on November 9, 2021, and an additional $ 27.5 million on December 8, 2021.

On October 4, 2022, an additional approximately $ 57.0 million was added to the outstanding principal amount under the Subordinated Term Loan Credit Agreement in exchange for an equivalent amount of the Company’s senior unsecured 5.00 % Convertible Senior Notes due 2023 (the “Notes”) held by Corre.

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”).

2 dated September 30, 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”).

Additional funding commitments under the A&R Term Loan Credit Agreement, subject to certain conditions, included a $ 57.5 million senior secured first lien term loan (the “Incremental Term Loan”) provided by Corre and certain of its affiliates, consisting of a $ 37.5 million term loan tranche and a $ 20.0 million delayed draw tranche.

Amounts outstanding under the existing subordinated term loan credit agreement (the “Uptiered Loan”) have become senior secured obligations of the Company and the A&R Term Loan Guarantors (as defined below) and are secured on a pari passu basis with the Incremental Term Loan, on the terms described below.

On July 31, 2023, $ 42.5 million, made up of $ 37.5 million of the term loan tranche and $ 5.0 million of the delayed draw tranche, of the $ 57.5 million Incremental Term Loan under the A&R Term Loan Credit Agreement was drawn down and the proceeds thereof were used to repay the Notes that matured on August 1, 2023.

Amounts outstanding under the existing subordinated term loan credit agreement (the “Uptiered Loan”) became senior secured obligations of the Company and the A&R Term Loan Guarantors (as defined below) and are secured on a pari passu basis with the Incremental Term Loan, on the terms described below.

We borrowed an additional $ 5.0 million on October 6, 2023.

The remaining availability of the delayed draw tranche of $ 10.0 million will be used, subject to certain maximum liquidity conditions, for working capital purposes.

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On September 30, 2024 we entered into Amendment No.2 (“ Term Loan Amendment No.2”) to the A&R Term Loan Credit Agreement.

Term Loan Amendment No.2 amended the A&R Term Loan Credit Agreement to, among other things, make conforming changes to the A&R Term Loan Credit Agreement, consistent with the changes being made to the 2022 ABL Credit Agreement by ABL Amendment No.5.

The Company’s obligations under the A&R Term Loan Credit Agreement are guaranteed by certain direct and indirect material subsidiaries of the Company (the “A&R Term Loan Guarantors” and, together with the Company, the “A&R Term Loan Parties”).

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

Uptiered Loan / Subordinated Term Loan

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Uptiered Loan

Incremental Term Loan

Maturity date 12/31/2027 (12/31/2026 if outstanding balance is greater than $ 50 million)

Stated interest rate 12 % PIK through 12/31/2023, then cash and PIK split as described below

Stated interest rate

12/31/2024 9.5 % PIK and 4.0 % cash 3

12 % paid in cash

12/31/2023 12 % PIK

12 % paid in cash

Principal payments at maturity $ 356 quarterly

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12/31/2024 $ 2,775 $ 5,684

12/31/2022 $ — N/A

12/31/2023 $ — $ 898

PIK interest added to principal

12/31/2024 $ 14,366 $ —

12/31/2022 $ 7,359 N/A

12/31/2023 $ 14,644 $ 8

Balances at 12/31/2024

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Principal balance 4

$ 115,443 N/A

Unamortized balance of debt issuance cost $( 7,538 ) N/A

Net carrying balance $ 107,905 N/A

$ 130,087 $ 48,052

Unamortized balance of debt issuance cost $( 651 ) $( 9,294 )

Net carrying balance $ 129,436 $ 38,758

Available amount at 12/31/2024 $ — $ 10,000

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1 The effective interest rate on the Uptiered Loan/Subordinated Term Loan as of December 31, 2023, consisted of a 12.00 % stated interest rate paid in PIK and an additional 0.86 % due to the amortization of the related debt issuance costs.

The effective interest rate on the Uptiered Loan/Subordinated Term Loan as of December 31, 2022 consisted of a 12.00 % stated interest rate paid in PIK and an additional 17.23 % due to the acceleration of the amortization of the related debt issuance costs.

2 The effective interest rate on the Incremental Term Loan as of December 31, 2023, 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.

3 The principal balance of the Uptiered Loan / Subordinated Term 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 includes PIK interest recorded of $ 22.2 million and $ 7.4 million as of December 31, 2023 and December 31, 2022 respectively, and PIK fees of $ 0.9 million.

The Uptiered Loan under the A&R Term Loan Credit Agreement bears interest at an annual rate of 12.00 %, PIK from June 16, 2023 through December 31, 2023, and thereafter a split between cash and PIK, with the cash portion ranging from 2.50 % per annum to 12.00 % per annum, and the PIK portion ranging from 9.50 % per annum to 0.00 % per annum, depending on the Company’s Net Leverage Ratio (as defined in the A&R Term Loan Credit Agreement).

In addition, if certain minimum liquidity thresholds set forth in the A&R Term Loan Credit Agreement are not met for an applicable interest payment date, all interest in respect of the Uptiered Loan payable on such interest payment date will be PIK, irrespective of the Net Leverage Ratio at such time.

1 The effective interest rate on the Uptiered Loan as of December 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 December 31, 2023 consisted of a 12.00 % stated interest rate paid in PIK and an additional 0.86 % due to the acceleration of the amortization of the related debt issuance costs.

2 The effective interest rate on the Incremental Term Loan as of December 31, 2024 and 2023, 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.

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

4 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 includes PIK interest of $ 36.6 million and $ 22.2 million as of December 31, 2024 and December 31, 2023 respectively, and PIK fees of $ 0.9 million incurred as of December 31, 2022.

The Uptiered Loan under the A&R Term Loan Credit Agreement bears an original interest at an annual rate of 12.00 %, a split between cash and PIK, with the cash portion ranging from 2.50 % per annum to 12.00 % per annum, and the PIK portion ranging from 9.50 % per annum to 0.00 % per annum, depending on the Company’s Net Leverage Ratio (as defined in the A&R Term Loan Credit Agreement).

In addition, if certain conditions related to repayments in respect of the Incremental Term Loan are not met, certain additional quarterly fees (not to exceed 4 such fees) plus a 150 basis point increase to the applicable interest rate will be payable to the lenders under the A&R Term Loan Credit Agreement in cash or common stock of the Company, at the Company’s option.

The rate increase became effective at January 31, 2024, and as of December 31, 2024, the interest rate was 13.5 % consisting of 4 % cash interest and 9.5 % PIK interest.

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Direct and incremental costs associated with the issuance of the Incremental Term Loan in connection with the A&R Term Loan Credit Agreement were approximately $ 10.1 million and were deferred and presented as a direct deduction from the carrying amount of the related debt and are amortized over the term of the Incremental Term Loan.

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and (iii) to only exercise such Warrant in a “cashless” or “net-issue” exercise.

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Convertible Debt

On July 31, 2023, $ 42.5 million of the $ 57.5 million under the Incremental Term Loan was drawn down and the proceeds thereof were used to repay in full the remaining principal and accrued interest of the outstanding Notes on their maturity date of August 1, 2023.

Previously, on July 31, 2017, we had issued $ 230.0 million principal amount of Notes in a private offering to qualified institutional buyers (as defined in the Securities Act of 1933) pursuant to Rule 144A under the Securities Act (the “Offering”).

Net proceeds received from the Offering were approximately $ 222.3 million after deducting discounts, commissions and expenses and were used to repay outstanding borrowings under a previous credit facility.

In December 2020, we retired $ 136.9 million par value of our Notes, and on October 4, 2022, we had entered into an exchange agreement (the “Exchange Agreement”) with certain holders to exchange approximately $ 57.0 million of aggregate principal amount, plus accrued and unpaid PIK Interest, of the Notes for an equivalent increased principal amount of term loan under the Subordinated Term Loan Credit Agreement.

Following the closing of the Exchange Agreement and Amendment No.8 to the Subordinated Term Loan Credit Agreement, we had approximately $ 41.2 million in aggregate principal amount of Notes outstanding.

The Notes bore interest at a rate of 5.0 % per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2018.

The Notes were originally scheduled to mature on August 1, 2023.

Effective interest rate as of December 31, 2022 was 7.84 %.

Amortization of discount and debt issuance cost for the years ended December 31, 2023 and 2022 amounted to $ 0.5 million and $ 2.4 million, respectively.

As of December 31, 2022, the outstanding net carrying balance of the Notes was $ 40.7 million consisting of the principal balance of $ 41.2 million and unamortized discount and debt issuance cost of $ 0.5 million.

Cash interest paid for the years ended December 31, 2023 and 2022 amounted to $ 2.1 million and $ 2.1 million, respectively.

PIK interest of $ 4.2 million was added to principal during 2022.

There was no PIK interest in 2023.

Fair Value of Debt

The fair value of our 2022 ABL Credit Facility, Uptiered Loan, Incremental Term Loan and ME/RE Loans are representative of the carrying value based upon the respective interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt.

The fair value of the Notes as of December 31, 2022 was $ 37.5 million, (inclusive of the fair value of the conversion option) and a “Level 2” measurement, determined based on the observed trading price of these instruments.

The Notes were fully paid off on August 1, 2023.

Equipment Financing Loan

On March 6, 2024, we entered into agreements to sell various equipment to an equipment finance lender for $ 2.9 million and lease the equipment for monthly payments of $ 181 thousand over eighteen months .

The lease agreement provides for a bargain purchase option at the end of the lease term which we intend to exercise.

The Company determined that the transaction did not meet the criteria for sale-leaseback in accordance with ASC 842, Leases and accounted for this arrangement as an equipment financing.

The assets subject to the transaction remain on our balance sheet and continue to depreciate in accordance with our depreciation policy.

1970 Group Substitute Insurance Reimbursement Facility

On September 29, 2022, we entered into the Substitute Insurance Reimbursement Facility Agreement with 1970 Group Inc.

(“1970 Group’) (as amended by that certain first amendment thereto dated August 29, 2023, the “Substitute Insurance Reimbursement Facility Agreement”).

Under this agreement, the 1970 Group extended us credit in the form of a substitute reimbursement facility (the “Substitute Reimbursement Facility”) to initially provide up to approximately $ 21.4 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance carriers for workers’ compensation, commercial automotive and/or general liability policies (the “Insurance Policies”).

Such letters of credit arranged by the 1970 Group permitted the return of certain existing letters of credit for our account that were outstanding for the purpose of supporting the Insurance Policies and that are required to be collateralized, thereby providing us increased liquidity.

Under the Substitute Insurance Reimbursement Facility Agreement, we are required to reimburse the 1970 Group for any draws made under the letters of credit within five business days of notice of any such draw.

The Substitute Insurance Reimbursement Facility Agreement terminates upon the earlier of (i) the expiration or termination of our Insurance Policies or (ii) September 29, 2024 (as amended).

The Substitute Insurance Reimbursement Facility Agreement contains certain affirmative covenants regarding our insurance contracts, and certain events of default.

Our obligations under the Substitute Insurance Reimbursement Facility Agreement are not guaranteed by any of our subsidiaries, are unsecured and are subordinated to our debt obligations.

On September 16, 2024, we entered into an amended and restated substitute insurance reimbursement facility agreement with 1970 Group Inc.

(“1970 Group”) (such agreement, the “Substitute Insurance Reimbursement Facility Agreement”).

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 $ 19.0 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance policies.

As of December 31, 2024, we have $ 19.0 million of letters of credit outstanding under the Substitute Reimbursement Facility.

Such letters of credit arranged by the 1970 Group permitted the return of certain existing letters of credit for our account that were outstanding for the purpose of supporting the Insurance Policies and that were required to be collateralized, thereby providing us increased liquidity.

Under the Substitute Insurance Reimbursement Facility Agreement, we are required to

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reimburse the 1970 Group for any draws made under the letters of credit within three business days of notice of any such draw.

The Substitute Insurance Reimbursement Facility Agreement is effective through the term of the issued letters of credit;

it renews annually upon payment of the extension fee, provided there has not been an event of default.

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.

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Fees in the amount of $ 2.3 million and $ 2.9 million, respectively, were paid by us during the years ended December 31, 2024 and 2023 and were deferred and amortized over the term of the arrangement.

As of December 31, 2023 and 2022, the unamortized balance of $ 1.8 million was included in other current assets.

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As of December 31, 2024 and 2023, the unamortized balance of $ 1.6 million and $ 1.8 million was included in other current assets.

As of December 31, 2024, we had $ 31.5 million of unrestricted cash and cash equivalents and $ 4.0 million of restricted cash, including $ 2.8 million of restricted cash held as collateral for letters of credit and commercial card programs.

International cash balances as of December 31, 2023 were $ 12.0 million, and approximately $ 0.6 million of such cash is located in countries where currency or regulatory restrictions exist.

International cash balances included in total cash as of December 31, 2024 were $ 5.1 million, and approximately $ 1.1 million of such cash is restricted.

As of December 31, 2024, we had approximately $ 45.9 million of availability under our various credit facilities, consisting of $ 35.9 million available under the Revolving Credit Loans and $ 10.0 million available under the Incremental Delayed Draw Term Loan under the A&R Term Loan Credit Agreement.

We had $ 35.7 million in letters of credit and $ 2.5 million in surety bonds outstanding and an additional $ 2.1 million in miscellaneous cash deposits securing leases or other required obligations.

Our cash and cash equivalents as of December 31, 2022 totaled $ 58.1 million, of which $ 7.0 million was restricted, including $ 4.6 million of restricted cash held as collateral for letters of credit and commercial card programs.

Additionally, $ 16.3 million of the $ 58.1 million of cash and cash equivalents was in foreign accounts, primarily in Europe, Canada and Australia including $ 1.4 million of cash located in countries where currency or regulatory restrictions exist.

We had $ 30.6 million in letters of credit and $ 1.5 million in surety bonds outstanding.

Our cash and cash equivalents as of December 31, 2023 totaled $ 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.

Additionally, $ 12.0 million of the $ 30.4 million of cash and cash equivalents was in foreign accounts, primarily in Canada, the U.K.

and Europe including $ 0.6 million of cash located in countries where currency or regulatory restrictions existed.

We determine if an arrangement is a lease at inception.

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Finance leases are included in “property, plant and equipment, net”, “current portion of long-term debt and finance lease obligations” and “long-term debt and finance lease obligations” on our consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

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We have operating and finance leases primarily for equipment, real estate, and vehicles.

Some of our leases include options to extend the leases for up to 10 years, and some may include options to terminate the leases within 1 year.

Some of our leases include options to extend the leases for up to 10 years, and some may include options to terminate the leases within 14 months.

The components of lease expense are as follows (in thousands):

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Total lease cost $ 31,391 $ 31,447

Lease cost - discontinued operations $ — $ 841

Lease cost - continuing operations $ 31,447 $ 30,807

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Total rent expense resulting from operating leases, including short-term leases, for the years ended December 31, 2023 and 2022 were $ 36.4 million and $ 37.3 million, respectively.

Total rent expense resulting from operating leases, including short-term leases, for the years ended December 31, 2024 and 2023 was $ 36.9 million and $ 36.4 million, respectively.

SHARE-BASED COMPENSATION

We have adopted stock incentive plans and other arrangements pursuant to which our Board of Directors may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees.

As of December 31, 2023, there were approximately 707,595 restricted stock units, performance awards and stock options outstanding to officers, directors, and key employees.

The exercise price, terms and other conditions applicable to each form of share-based compensation under our plans are generally determined by the Compensation Committee of our Board at the time of grant and may vary.

In May 2021, our shareholders approved the amendment and restatement to the 2018 Team, Inc.

Equity Incentive Plan (the “2018 Plan”).

The 2018 Plan authorized issuance of share-based awards representing 420,000 shares, after giving effect of the reverse stock split discussed below.

As of December 31, 2023, the 2018 Plan had 86,772 shares available for issuance, not including 445,136 performance awards granted in 2023, which can be settled in shares, cash or a combination thereof when vested.

In June 2018, the Company adopted the 2018 Team, Inc, Equity Incentive Plan (as amended and restated in May 2021 and May 2024, the “2018 Plan”) pursuant to which our Board of Directors may grant stock options, restricted stock, stock units, stock appreciation rights, common stock or performance awards to officers, directors and key employees.

As of December 31, 2024, the 2018 Plan had 462,348 shares available for issuance.

These shares exclude 445,136 performance award shares granted in 2023 which become issuable if 100 % of performance target is achieved, and can be settled in shares, cash or a combination thereof when vested.

These performance awards are discussed in further detail below.

Shares issued in connection with our share-based compensation are issued out of authorized but unissued common stock.

On December 21, 2022, we completed a reverse stock split of our outstanding common stock at a ratio of one-for-ten (the “Reverse Stock Split”) that effected a proportionate reduction in shares available for issuance under the 2018 Plan.

We have made proportionate adjustments to the number of stock units outstanding and issuable upon exercise or vesting of our outstanding awards as well as the applicable exercise prices and weighted average fair value.

No fractional shares were issued in connection with the Reverse Stock Split.

Compensation expense related to share-based compensation totaled $ 1.6 million, consisting of $ 1.4 million of stock units related expense and $ 0.2 million of performance units related expense, and $ 0.2 million, consisting of $ 1.5 million of stock units related expense and $ 1.3 million of credit related to performance units, for the years ended December 31, 2023 and 2022, respectively.

Compensation expense related to share-based compensation totaled $ 2.3 million and $ 1.6 million for the years ended December 31, 2024 and 2023, respectively.

Share-based compensation expense reflects an estimate of expected forfeitures.

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There was no income tax benefit recognized for the years ended December 31, 2024 or 2023.

Stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash.

Restricted Stock Units (RSUs)

Restricted stock units are settled with common stock upon vesting unless it is not legally feasible to issue shares, in which case the value of the award is settled in cash.

We determine the fair value of each stock unit based on the market price on the date of grant.

Stock units generally vest in annual installments over three or four years and the expense associated with the units is recognized over the same vesting period.

Compensation expense related to stock units totaled $ 1.4 million and $ 1.5 million for the years ended December 31, 2023 and 2022, respectively.

Transactions involving our stock units grants for the twelve months ended December 31, 2023 are summarized below:

Stock units generally vest in annual installments over three or four years and the expense associated with the units is recognized ratably over the same vesting period.

Compensation expense related to RSUs totaled $ 1.0 million and $ 1.4 million for the years ended December 31, 2024 and 2023, respectively.

Transactions involving our restricted stock unit grants for the twelve months ended December 31, 2024 are summarized below:

Twelve Months Ended

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Changes during the year:

Granted 253 $ 8.22

Vested and settled ( 117 ) $ 8.52

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The intrinsic value of stock units vested during the years ended December 31, 2024 and 2023 was $ 2.0 million and $ 0.6 million, respectively.

We have a performance stock unit award program whereby we grant Long-Term Performance Stock Unit (“LTPSU”) awards to our executive officers.

Under this program, we communicate “target awards” to the executive officers during the first year of a performance period.

LTPSU awards vest with the achievement of the performance goals and completion of the required service period.

Settlement occurs with common stock as soon as practicable following the vesting date.

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We granted 445,136 LTPSUs during 2023 to certain executives with a milestone factor related to our adjusted EBITDA.

This milestone factor is considered a non-market condition under GAAP.

For performance units not subject to market conditions, we determine the fair value of each performance unit based on the market price of our common stock on the date of grant.

Performance Stock Units (PSUs)

We granted 445,136 long-term performance stock units during 2023 to certain executives with a non-market condition milestone factor related to our adjusted EBITDA.

For these awards, we recognize compensation expense over the vesting term on a straight-line basis based upon the performance target that is probable of being met, subject to adjustment for changes in the expected or actual performance outcome.

For performance awards, we recorded an expense of $ 0.2 million and income of $ 1.3 million for the years ended December 31, 2023 and 2022, respectively.

For performance awards, we recorded an expense of $ 1.3 million and $ 0.2 million for the years ended December 31, 2024 and 2023, respectively.

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Transactions involving our performance awards during the twelve months ended December 31, 2024 are summarized below:

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December 31, 2024

Performance Units Not Subject to Market Conditions

Fair Value at Date of Grant

(in thousands)

Performance stock units, beginning of period 2 $ 116.90

Performance stock units, beginning of year 445 $ 8.22

Changes during the period:

Granted 445 $ 8.22

Cancelled and forfeited — —

Performance stock units, end of period 445 $ 8.22

Performance stock units, end of year 445 $ 8.22

__________________________

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There were no performance stock units vested during the years ended December 31, 2024 and 2023.

We determine the fair value of each stock option at the grant date using a Black-Scholes model and recognize the resulting expense of our stock option awards over the period during which an employee is required to provide services in exchange for the awards, usually the vesting period.

There was no compensation expense related to stock options for the years ended December 31, 2023 and 2022.

Our options typically vest in equal annual installments over a four-year service period.

Expense related to an option grant is recognized on a straight-line basis over the specified vesting period for those options.

Stock options generally have a ten-year term.

No stock options were granted during the years ended December 31, 2023 and 2022.

There were a small number of options remaining as of December 31, 2023 that had a weighted-average remaining contractual life of 0.4 years, and an exercise price of $ 504.70 .

There were no stock option awards exercised during the years ended December 31, 2023 and 2022 .

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Shareholders’ Equity and Preferred Stock

On December 21, 2022, we completed a reverse stock split of our outstanding common stock at a ratio of one-for-ten.

The Reverse Stock Split effected a proportionate reduction in our authorized shares of common stock from 120,000,000 shares to 12,000,000 shares and reduced the number of shares of common stock outstanding from approximately 43,429,089 shares to approximately 4,342,909 shares.

We have made proportionate adjustments to the number of common shares issuable upon exercise or conversion of our outstanding warrants and equity awards, as well as the applicable exercise prices and weighted average fair value of the equity awards.

No fractional shares were issued in connection with the Reverse Stock Split.

As of December 31, 2024 there were 4,493,338 shares of our common stock outstanding and 12,000,000 shares authorized with a par value of $ 0.30 per share.

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In connection with the APSC Term Loan Credit Agreement and the Subordinated Term Loan Credit Agreement, we entered into Warrant Agreements and Waivers related to our common stock.

A discussion of these transactions can be found in Note 11 - Debt.

The APSC Term Loan Credit Agreement was fully paid off in June of 2023.

For additional details, see Note 11 - Debt.

Accumulated Other Comprehensive Income (loss)

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Foreign currency translation adjustments $ ( 7,396 ) $ 73 $ ( 7,323 ) $ 3,006 $ 22 $ 3,028

Defined benefit pension plans ( 567 ) ( 396 ) ( 963 ) ( 6,601 ) 925 ( 5,676 )

Defined benefit pension plan 90 36 126 ( 567 ) ( 396 ) ( 963 )

Total $ ( 7,306 ) $ 109 $ ( 7,197 ) $ 2,439 $ ( 374 ) $ 2,065

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Defined benefit plans.

In connection with our acquisition of Furmanite, we assumed liabilities associated with the defined benefit pension plans of two foreign subsidiaries, one plan covering certain United Kingdom employees (the “U.K.

Plan”) and the other covering certain Norwegian employees (the “Norwegian Plan”).

In connection with the sale of our Norwegian operations in 2018, all assets and liabilities associated with the Norwegian Plan were transferred to the buyer.

In connection with our acquisition of Furmanite, we assumed liabilities associated with the defined benefit pension plan covering certain United Kingdom employees (the “U.K.

Benefits for the U.K.

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End of year 55,982 63,650

Excess projected obligation under fair value of plan assets at end of year

$ 4,323 $ 398

Excess of fair value of plan assets over projected obligation at end of year $ 4,768 $ 4,323

Amounts recognized in accumulated other comprehensive loss:

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The trustees of the U.K.

Plan have established a long-term investment strategy comprising global investment weightings targeted at 27.5 % (range of 25 % to 30 %) for equity securities/diversified growth funds and 72.5 % (range of 70 % to 75 %) for debt securities.

Plan have established a long-term investment strategy comprising global investment weightings targeted at 10.0 % for equity securities/diversified growth funds and 90.0 % for debt securities.

Diversified growth funds are actively managed absolute return funds that hold a combination of debt and equity securities.

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78.9 % 80.5 % 90.0 % 72.5 %

Other 4.7 % 3.3 % — % — %

11.4 % 4.7 % — % — %

Total 100 % 100 % 100 % 100 %

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Purchases/ sales/ settlements ( 6,300 ) ( 4,971 )

Transfer in/out of level 3 — —

Transfer out of level 3

Changes due to foreign exchange 25 431

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The valuation is generally based on fair value as reported by the asset manager and adjusted for cash flows, if necessary.

In making such an assessment, a variety of factors are reviewed by us, including, but are not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager.

In making such an assessment, a variety of factors are reviewed by us, including, but not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager.

The use of different techniques or assumptions to estimate fair value could result in a different fair value measurement at the reporting date.

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We accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on our best estimate of the expected liability.

We may increase or decrease our legal accruals in the future, on a matter-by-matter basis, to account for developments in such matter.

We may increase or decrease our legal accruals in the future, on a matter-by-matter basis, to account for developments in such matters.

Because such matters are inherently unpredictable and unfavorable developments or outcomes can occur, assessing contingencies is highly subjective and requires judgments about future events.

Notwithstanding the uncertainty as to the outcome and while our insurance coverage might not be available or adequate to cover these claims, based upon the information currently available, we do not believe that any uninsured losses that might arise from these lawsuits and proceedings will have a materially adverse effect on our consolidated financial statements.

California Wage and Hour Litigation - We were a defendant in a consolidated class and collective action, Michael Thai v.

Team Industrial Services, Inc., et al, pending in the U.S.

District Court for the Central District of California, originally filed by two separate plaintiffs as separate cases in the Superior Court for the County of Los Angeles, California in June 2019 and August 2020, respectively.

We settled the consolidated class and collective action in 2022 that resulted in us recording a pre-tax charge of $ 3.0 million in the third quarter of fiscal year 2022, and we paid the settlement in January 2023.

Notice of Potential Environmental Violation - On April 20, 2021, Team Industrial Services, Inc.

received Notices of Potential Violation from the U.S.

Environmental Protection Agency alleging noncompliance with various waste determination, reporting, training, and planning obligations under the Resource Conservation and Recovery Act at seven of our facilities located in Texas and Louisiana.

The allegations largely related to spent film developing solutions generated through our mobile radiographic inspection services and related to the characterization and quantities of those wastes and related notices, reporting, training, and planning.

On February 9, 2022, TEAM and the EPA agreed to settle all the claims related to this matter and the formal settlement agreement was finalized in April 2022 with our agreement to pay penalties totaling $ 0.2 million.

As of December 31, 2023, we had $ 0.1 million of penalties outstanding.

Kelli Most Litigation - On November 13, 2018, Kelli Most filed a lawsuit against Team Industrial Services, Inc., individually and as a personal representative of the estate of Jesse Henson, in the 268th District Court of Fort Bend County, Texas (the “Most litigation”).

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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 court on April 22, 2022.

A notice of appeal was filed on April 25, 2022, and this case is currently pending in the Court of Appeals for the First District of Texas, in Houston.

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

We have taken into consideration the events that have occurred after the reporting period and before the financial statements were issued.

We currently estimate a range of possible outcomes between $ 13.0 million and approximately $ 51.0 million, and we have accrued a liability as of December 31, 2023 which is the amount we believe is the most likely estimate for a probable loss on this matter.

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

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

We appealed the trial court’s judgment to the Texas First Court of Appeals.

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 filed a motion with the Texas First Court of Appeals for rehearing and a motion for en banc reconsideration, which was denied by the Court of Appeals on October 3, 2024.

The plaintiff had 45 days to seek review with the Texas Supreme Court but failed to do so.

On March 5, 2025, the plaintiff re-filed a lawsuit against the Company in the U.S.

District Court, Kansas District in Kansas City.

We currently have accrued a liability of $ 39.0 million as of December 31, 2024 in other accrued liabilities, and have recorded a related receivable from our third-party insurance providers in other current assets in the same amount.

Such amounts are treated as non-cash operating activities.

The Most litigation is covered by our general liability and excess insurance policies which are occurrence based and subject to an aggregate $ 3.0 million self-insured retention and deductible.

All retentions and deductibles have been met, accordingly, we believe pending the final settlement, all further claims will be fully funded by our insurance policies.

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continue to evaluate the possible outcomes of this case in light of future developments and their potential impact on factors relevant to our assessment of any possible loss.

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.

All retentions and deductibles have been met, and accordingly, we believe pending the final settlement, all further claims will be fully funded by our insurance policies.

We will continue to evaluate the possible outcomes of this case in light of future developments and their potential impact on factors relevant to our assessment of any possible loss.

Notice of repayment of pandemic related government subsidies - In response to the widespread COVID-19 health 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 December 31, 2023.

We believe there are grounds for appeal and intend to challenge the decisions passed by the administrative authority to repay the funds through appropriate legal means.

Accordingly, for all matters discussed above, we have accrued in the aggregate approximately $ 45.1 million as of December 31, 2023, of which approximately $ 6.1 million is not covered by our various insurance policies.

Accordingly, based on the assessments completed by the government appointed administrative authority, we previously had accrued $ 5.5 million as of December 31, 2023, to be repaid over an extended period related to this noncompliance.

However, during the quarter ended December 31, 2024, we successfully appealed $ 3.8 million of the assessment, which resulted in the reduction of the accrued liability from $ 5.5 million to $ 1.7 million as of December 31, 2024.

Accordingly, for all matters discussed within this Note 16 - Commitments and Contingencies , we have accrued in the aggregate approximately $ 40.7 million as of December 31, 2024, of which approximately $ 1.7 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”).

We believe that based on our 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 consolidated financial statements.

We believe that based on our current knowledge and after consultation

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

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SEGMENT AND GEOGRAPHIC DISCLOSURES

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

Operating segments are defined as “components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.” We conduct operations in two segments:

We conduct operations in two segments:

Management’s determination of our reporting segments was made on the basis of our strategic priorities within each segment and the differences in the services we offer.

The reportable segments results are reviewed regularly by the chief operating decision maker (“CODM”), who is our Chief Executive Officer, in deciding how to allocate resources and assess performance.

Our CODM evaluates the segments’ operating performance based on adjusted EBITDA defined as net income (loss) before income taxes, interest expense, depreciation and amortization, and other non-recurring and non-operational items.

Our CODM uses adjusted EBITDA as a measure to make resource allocation decisions for each segment for the budgeting process and reviews budget-to-actual variances to access performance and allocate capital.

Segment data for our two operating segments are as follows (in thousands):

Twelve Months Ended

IHT $ 429,559 $ 422,562

MS 433,056 417,646

Total Revenues $ 862,615 $ 840,208

December 31, 2024

Revenues $ 426,722 $ 425,550 $ 852,272

Adjusted operating expenses 1

316,831 298,473 615,304

Adjusted selling, general and administrative expenses 2

60,388 80,960 141,348

Adjusted EBITDA

$ 49,503 $ 46,117 $ 95,620

Twelve Months Ended

Operating income (loss):

December 31, 2023

Revenues $ 429,559 $ 433,056 $ 862,615

Adjusted operating expenses 1

331,481 305,062 636,543

Adjusted selling, general and administrative expenses 2

60,023 80,541 140,564

Adjusted EBITDA

$ 38,055 $ 47,453 $ 85,508

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1 Represent operating expenses excluding indirect depreciation and amortization, and severance cost.

2 Represent segment selling, general and administrative expenses excluding depreciation and amortization, noncash share based compensation, professional, legal and other non-recurring costs.

Reconciliation of segment adjusted EBITDA to consolidated loss before income taxes:

Twelve Months Ended

IHT $ 49,503 $ 38,055

MS 46,117 47,453

Corporate and shared support services ( 65,255 ) ( 77,825 )

Total Operating income (loss) $ ( 13,276 ) $ ( 39,802 )

Segment adjusted EBITDA

95,620 85,508

Segment depreciation and amortization

( 29,839 ) ( 31,157 )

Segment professional fees, severance and other

( 1,482 ) ( 2,372 )

Corporate and shared support cost ( 54,163 ) ( 65,255 )

Consolidated operating income/(loss)

10,136 ( 13,276 )

Interest expense ( 47,808 ) ( 55,181 )

Loss on debt extinguishment

Other income/(expense) 2,682 ( 1,102 )

Loss before income taxes $ ( 34,990 ) $ ( 71,144 )

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Twelve Months Ended

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IHT $ 3,675 $ 5,373

MS 5,052 5,013

Corporate and shared support services 132 9

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$ 7,498 $ 10,434

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1 Excludes finance leases.

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Total depreciation and amortization

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

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$ 36,295 $ 37,872

1 Breakdown of depreciation and amortization included in the Consolidated Statements of Operations described below:

Twelve Months Ended

Depreciation and amortization:

Amount included in operating expenses $ 13,730 $ 14,555

Amount included in SG&A expenses 22,565 23,317

Total depreciation and amortization $ 36,295 $ 37,872

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

A geographic breakdown of our revenues for the years ended December 31, 2024 and 2023 and our total long-lived assets as of December 31, 2024 and 2023 are as follows (in thousands):

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Canada 66,940 5,221

Europe 73,295 13,080

Other foreign countries 147,670 15,292

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Canada 84,870 4,755

Europe 61,713 14,591

Other foreign countries 153,982 15,066

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2 Excludes financial instruments and deferred tax assets.

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RELATED PARTY TRANSACTIONS

Alvarez & Marsal provided certain consulting services to us in connection with our former Interim Chief Financial Officer position and other corporate support costs.

Effective June 12, 2022 the Interim Chief Financial Officer position ended, as we named a permanent Chief Financial Officer.

We paid $ 8.1 million in consulting fees to Alvarez & Marsal for the year ended December 31, 2022.

In connection with our debt transactions, we engaged in transactions with Corre and APSC to provide funding as described in Note 11 - Debt .

In connection with our debt transactions, we engaged in transactions with Corre and APSC to provide and/or repay funding as described in Note 11 - Debt .

SUBSEQUENT EVENTS

As of March 7, 2024, the filing date of this Annual Report on Form 10-K, we evaluated the existence of events occurring subsequent to the end of fiscal year 2023 and determined that there were no events or transactions that would have a material impact on our results of operations or financial position, except for the execution of Amendment No.1 to the A&R Term Loan Credit Agreement (“Amendment No.1”), and Amendment No.4 to the 2022 ABL Credit Agreement (“Amendment No.4”), each dated March 6, 2024.

Amendment No.1 and Amendment No.4 modified certain terms and covenants defined in the respective debt agreements.

As of March 19, 2025, the filing date of this Annual Report on Form 10-K, we evaluated the existence of events occurring subsequent to the end of fiscal year 2024 and determined that there were no events or transactions that would have a material impact on our results of operations or financial position except as described below:

Refinancing Transactions

On March 12, 2025, we entered into the following refinancing transactions (collectively, the “Refinancing Transactions”):

First Lien Term Loan Agreement

On March 12, 2025, we, as borrower, along with the guarantors party thereto, the lenders party thereto and HPS Investment Partners, LLC, as Agent, entered into a First Lien Term Loan Credit Agreement (the “First Lien Term Loan Agreement”).

Available funding commitments to us include a $ 225.0 million senior secured first lien term loan (the “First Lien Term Loan”) consisting of a $ 175.0 million initial term loan tranche (the “Initial First Lien Term Loans”) and a $ 50.0 million delayed draw term loan tranche (the “First Lien Delayed Draw Term Loans”), which is available to be drawn upon subject to satisfying certain conditions, including pro forma compliance with a First Lien Net Leverage Ratio (as defined in the First Lien Term Loan Agreement) of 3.75 to 1.00 and Liquidity (as defined in the First Lien Term Loan Agreement) of not less than $ 40.0 million.

All outstanding amounts in respect of the First Lien Term Loan under the First Lien Term Loan Agreement mature and become due and payable on March 12, 2030.

The proceeds of the Initial First Lien Term Loans under the First Lien Term Loan Agreement were used to redeem and repay certain term loans outstanding under the 2022 ABL Credit Agreement and the A&R Term Loan Agreement.

The proceeds of the First Lien Delayed Draw Term Loans will be used to solely repay the obligations under the Second A&R Second Lien Term Loan Agreement (as defined below).

The First Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative, negative and financial covenants, that require that the Company not exceed a maximum First Lien Net Leverage Ratio (as defined in the First Lien Term Loan Agreement), tested as of the end of each fiscal quarter, of 5.50 to 1.00 Further, the First Lien Term Loan Agreement includes certain events of default, the occurrence of which may require that we pay an additional 2.0 % interest on the outstanding loans and other obligations under the First Lien Term Loan Agreement.

Second A&R Second Lien Term Loan Credit Agreement

On March 12, 2025, we as borrower, along with the guarantors party thereto, the lenders party thereto and Cantor Fitzgerald Securities, as Agent, entered into a Second Amended and Restated Second Lien Term Loan Credit Agreement (the “Second A&R Second Lien Term Loan Agreement”), which amended and restated the A&R Term Loan Credit Agreement.

Available funding commitments to us under the Second A&R Second Lien Term Loan Agreement, subject to certain conditions, include a $ 107.4 million second lien term loan, provided by Corre and certain of its affiliates, consisting of a $ 97.4 million term loan tranche (the “2025 Second Lien Term Loans”) and a $ 10.0 million delayed draw term loan tranche (the “Second Lien Delayed Draw Term Loans”).

All outstanding amounts in respect of the Second A&R Second Lien Term Loan Agreement mature and become due and payable on June 10, 2030.

The proceeds of the 2025 Second Lien Term Loans were used on March 12, 2025, along with a portion of the proceeds of the First Lien Term Loan, to pay off the Existing Loans (as defined in the Second A&R Second Lien Term Loan Agreement) (including certain interest paid in kind and accrued fees and expenses thereon) outstanding under the A&R Term Loan Agreement.

The proceeds of the Second Lien Delayed Draw Term Loans shall be used by the Company for general working capital and liquidity purposes.

The Second A&R Second Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative, negative and financial covenants, that require that the Company not exceed a maximum First Lien Net Leverage Ratio (as defined in the Second A&R Second Lien Term Loan Agreement), tested as of the end of each fiscal quarter, of 6.00 to 1.00.

Further, the Second A&R Second Lien Term Loan Agreement includes certain events of default, the occurrence of which may require that we pay an additional 2.0 % interest on the outstanding loans and other obligations under the Second A&R Second Lien Term Loan Agreement.

2022 ABL Credit Facility

On March 12, 2025, we along with the guarantors party thereto, the lenders party thereto and the ABL Agent, entered into Amendment No.6 (“ABL Amendment No.6”) to the 2022 ABL Credit Agreement.

ABL Amendment No.6 amended the 2022 ABL Credit Agreement to, among other things, (i) permit the entry of the Company into the First Lien Term Loan Agreement, the borrowing of the First Lien Term Loans thereunder, (ii) to make conforming changes to the 2022 ABL Credit Agreement,

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consistent with the terms of the First Lien Term Loan Agreement and the changes being made to the Second A&R Second Lien Term Loan Agreement, and (iii) to reflect the payoff of the term loan tranches previously outstanding under the 2022 ABL Credit Agreement prior to March 12, 2025.

Compliance with NYSE listing standards

On March 14, 2025, the Company received notice from the NYSE that the Company had regained compliance with the NYSE continued listing standards.

Specifically, the Company resolved its prior non-compliance with the quantitative listing standards described in Section 802.01B of the NYSE Listed Company Manual.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data