What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-12 · 134 added, 90 removed, 243 unchanged (48% of the section changed)

21 unchanged sentences

• delays in the commencement of major projects;

• seasonal and other variations, such as severe weather conditions (including conditions influenced by climate change) and the nature of our customers’ industry;

• our ability to expand into new markets (including low carbon energy transition) and attract customers in new industries may be limited due to our competition’s breadth of service offerings and intellectual property;

• our significant debt and high leverage which could have a negative impact on our financing options, liquidity position and ability to manage increases in interest rates;

• our ability to access capital and liquidity provided by the financial and capital markets;

• the timing of new customer contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results;

• seasonal and other variations, such as severe weather conditions (including conditions influenced by climate change) and the nature of our customers’ industry, affecting the timing of new contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results;

• our significant debt and high leverage which could have a negative impact on our ability to access capital markets, liquidity position and ability to manage increases in interest rates;

• risk of non-payment and/or delays in payment of receivables from our customers;

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• our ability to maintain compliance with the NYSE’s continued listing requirements and rules;

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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.

(i) turnaround or project services, (ii) callout 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.

19 unchanged sentences

• Aerospace and Defense.

Recent Refinancing Transactions .

On March 12, 2025, we entered into certain debt refinancing transactions with our existing and new lenders (collectively, the “Refinancing Transactions”).

Refer to Note 10 - Debt to the unaudited condensed consolidated financial statements for additional details.

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.

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

The following is a comparison of our results of operations for the three months ended March 31, 2025 to the three months ended March 31, 2024 (in thousands).

Three Months Ended March 31, Favorable (Unfavorable)

Results of Operations

The following is a comparison of our results of operations for the three and six months ended June 30, 2025 to the three and six months ended June 30, 2024.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

The following is a comparison of our results of operations for the three months ended June 30, 2025 to the three months ended June 30, 2024 (in thousands):

Three Months Ended June 30, Favorable (Unfavorable)

2025 2024 $ %

8 unchanged sentences

Corporate and shared support services (13,814) (11,937) (1,877) (15.7) %

Total operating loss $ (6,003) $ (6,386) $ 383 6.0 %

Total operating income $ 12,103 $ 11,159 $ 944 8.5 %

Interest expense, net $ (11,896) $ (11,909) $ 13 0.1 %

Loss on debt extinguishment (11,853) — $ (11,853) (100%)

Other expense, net (3,490) (541) (2,949) (545.1) %

Loss before income taxes $ (3,283) $ (1,291) $ (1,992) (154.3) %

Provision for income taxes (983) (1,472) 489 33.2 %

Net loss $ (4,266) $ (2,763) $ (1,503) (54.4) %

Total revenues increased by $19.4 million or 8.5% from the prior year quarter and were positively impacted by $1.1 million in favorable foreign exchange movement.

IHT revenues increased by $17.2 million or 15.2% primarily driven by higher turnaround and callout activity in the U.S.

of $13.3 million and a $3.6 million revenue increase in Canada.

This increase in activity for IHT represented services performed this quarter on large projects from existing customers in both the U.S.

MS revenues increased by $2.2 million or 1.9%, primarily driven by a $4.5 million increase in U.S.

turnaround activities, partially offset by a $2.3 million revenue decrease in Canada and other international locations such as the United Kingdom and Trinidad, all of which had customer project scope conclude in 2024 and did not repeat through this quarter.

Operating income (loss).

Overall operating income was $12.1 million in the current year quarter, a $0.9 million increase compared to the prior year quarter.

IHT operating income increased by $3.3 million or 26.7% reflecting the contributions from revenue growth for the quarter, with the U.S.

increasing by $2.7 million primarily due to lower costs and improved margins, and improved operating income from Canada of $0.6 million driven mainly by higher customer project activity.

MS operating income decreased by $0.5 million or 4.7% as compared to the prior year quarter, with higher U.S.

operating income of $2.1 million offset by lower operating income from Canada and other international regions of $1.8 million and $0.8 million, respectively, driven by lower customer project activity as compared to the prior year quarter.

Corporate operating loss increased by $1.9 million primarily due to higher nonrecurring professional fees, see details noted in the table below.

For the three months ended June 30, 2025 and 2024, operating income includes net expenses totaling $3.5 million and $0.8 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

Three Months Ended June 30,

Operating income $ 12,103 $ 11,159

Professional fees and other 2,301 516

Legal costs 799 41

Severance charges, net 375 225

Total non-core expenses 3,475 782

Operating income, excluding non-core expenses $ 15,578 $ 11,941

Excluding the impact of these identified non-core items in both periods, operating income increased by $3.7 million or 30.5%, from $11.9 million in the three months ended June 30, 2024 to $15.6 million for the three months ended June 30, 2025.

See our non-GAAP reconciliation for additional details of our non-core expenses.

Interest expense, net.

Interest expense remained consistent in the current quarter as compared to the prior year quarter.

Cash interest paid during the quarter ended June 30, 2025 and 2024 was $3.9 million and $6.5 million, respectively.

The decrease in cash interest was driven by all the interest expense on the 2025 Second Lien Term Loans being PIK, as well as the timing of interest payments on the First Lien Term Loan.

Other (expense) income, net.

Overall change in other (expense) income, net of $2.9 million, is primarily due to the impact of a loss on unfavorable foreign currency fluctuations during the current quarter.

The provision for income tax was $1.0 million on the pre-tax loss of $3.3 million in the current year quarter, compared to a $1.5 million income tax provision on a pre-tax loss of $1.3 million in the prior year quarter.

The effective tax rate, inclusive of discrete items, was a provision of 29.9% for the three months ended June 30, 2025, compared to a provision of 114.0% for the three months ended June 30, 2024.

The decrease in effective tax rate for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 is due to the mix of pretax income in non-valuation allowance jurisdictions and pretax losses in valuation allowance jurisdictions.

The impact is a larger decrease in income tax expense as compared to pretax income, resulting in a decrease of effective tax rate.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The following is a comparison of our results of operations for the six months ended June 30, 2025 to the six months ended June 30, 2024 (in thousands):

Six Months Ended June 30, Favorable (Unfavorable)

2025 2024 $ %

(unaudited) (unaudited)

Revenues by business segment:

IHT $ 236,611 $ 212,682 $ 23,929 11.3 %

MS 210,070 215,536 (5,466) (2.5) %

Total revenues $ 446,681 $ 428,218 $ 18,463 4.3 %

Operating income (loss):

IHT $ 24,473 $ 17,644 $ 6,829 38.7 %

MS 9,026 14,728 (5,702) (38.7) %

Corporate and shared support services (27,399) (27,599) 200 0.7 %

Total operating income $ 6,100 $ 4,773 $ 1,327 27.8 %

Interest expense, net $ (23,332) $ (24,007) $ 675 2.8 %

Loss on debt extinguishment (11,853) — $ (11,853) (100)%

Other (expense) income, net (3,694) 821 (4,515) (549.9) %

Loss before income taxes $ (32,779) $ (18,413) $ (14,366) (78.0) %

1 unchanged sentence

Net loss $ (33,984) $ (19,958) $ (14,026) (70.3) %

Total revenues decreased $0.9 million or 0.5% from the prior year period.

Total revenues increased by $18.5 million or 4.3% from the prior year period.

IHT segment year-to-date revenue increased by $23.9 million or 11.3% compared to the prior year period, primarily driven by an increase in U.S.

operations revenue of $7.8 million attributable to higher turnaround and capital projects activity as well as $2.0 million from our Aerospace facility, partially offset by lower year over year callout and turnaround activities in Canada and other international regions of $1.0 million.

MS segment revenue decreased by $7.7 million or 7.7% compared to the prior year period, mainly driven by lower turnaround activities and callout projects in the U.S.

and lower revenue from projects in international areas other than Canada.

revenue of $18.6 million attributable to large turnaround projects for our existing customers, and expanded support in established nested activities.

In addition, increased enhanced non-destructive evaluation and testing services demand generated $2.5 million year over year growth from our Aerospace facility, as well as greater turnaround and callout services, especially in eastern Canada, that contributed to a $3.0 million revenue increase in Canada.

MS segment revenue decreased by $5.5 million or 2.5% compared to the prior year period, with a $1.1 million U.S.

revenue increase offset by a $6.6 million revenue decrease in Canada and other international areas due to the conclusion of prior year projects related to plant shutdowns in Trinidad, the United Kingdom and Latin America that did not repeat in 2025.

Operating income (loss).

Overall operating loss was $6.0 million in the 2025 period, a $0.4 million or 6.0% improvement as compared to an operating loss of $6.4 million in the prior year period.

IHT operating income increased by $3.5 million or 67.7%, primarily driven by increased revenue and lower costs.

Overall operating income was $6.1 million in the 2025 period, a $1.3 million or 27.8% improvement over operating income of $4.8 million in the prior year period.

IHT operating income increased by $6.8 million or 38.7%, primarily driven by the increase in large turnaround projects from our existing customers for the year and the impact of our focus on field cost rationalization.

MS operating income decreased by $5.7 million or 38.7% as compared to the prior year period.

MS operating income from U.S.

and International operations, excluding Canada, decreased by $3.0 million and $2.3 million, respectively, primarily driven by lower year over year revenue due to projects from the prior year period that did not repeat in 2025.

Corporate operating loss decreased by $2.1 million compared to the prior year period, primarily due to lower personnel and professional services costs in the current period .

For the three months ended March 31, 2025 and 2024, operating income (loss) includes net expenses totaling $3.0 million and $2.6 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

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Three Months Ended March 31,

Operating loss $ (6,003) $ (6,386)

MS operating income from international operations, excluding Canada, decreased by $3.0 million, reflecting the impact of prior year project activity that did not repeat this year, and MS operating income from the U.S.

and Canada which decreased by $0.9 million and $1.8 million, respectively, driven mainly by lower mechanical services activity in certain locations that had turnaround projects in the prior year.

Corporate operating loss decreased by $0.2 million compared to the prior year period, primarily due to lower personnel and support cost partially offset by increased nonrecurring professional fees in the current period, see details noted in the table below .

For the six months ended June 30, 2025 and 2024, operating income includes net expenses totaling $6.4 million and $3.4 million, respectively, that we believe are not indicative of our core operating activities, as detailed in the table below (in thousands):

Six Months Ended June 30,

Operating income $ 6,100 $ 4,773

Professional fees and other 4,308 2,597

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Total non-core expenses 6,439 3,370

Operating loss, excluding non-core expenses $ (3,039) $ (3,798)

Excluding the impact of these identified non-core items in both periods, operating loss decreased by $0.8 million, from $3.8 million to $3.0 million.

Operating income, excluding non-core expenses $ 12,539 $ 8,143

Excluding the impact of these identified non-core items in both periods, operating income improved by $4.4 million, or 54.0% from $8.1 million in the six months ended June 30, 2024 to $12.5 million in the six months ended June 30, 2025.

See our non-GAAP reconciliation for additional details of our non-core expenses.

1 unchanged sentence

Interest expense, net decreased by $0.7 million from the prior year period.

The decrease was primarily attributable to lower interest rates on our ABL Revolving Credit Loans and other facilities.

Cash interest paid for the three months ended March 31, 2025 and 2024 was $8.9 million and $5.9 million, respectively.

The decrease was primarily attributable to lower interest rates on our Revolving Credit Loans and other facilities.

Cash interest paid for the six months ended June 30, 2025 and 2024 was $12.8 million and $12.4 million, respectively.

Loss on debt extinguishment.

On March 12, 2025, pursuant to the Refinancing Transactions, we repaid the total outstanding balances under the ME/RE Loans, Corre Delayed Draw Term Loan and Corre Incremental Term Loan and made a partial payment on the Corre Uptiered Loan, together with any applicable prepayment premiums and related accrued interest, resulting in a loss on debt extinguishment of $11.9 million.

On March 12, 2025, pursuant to the debt refinancing transactions executed with our existing and new lenders, we repaid the total outstanding balances under the ME/RE Loans, Corre Delayed Draw Term Loan and Corre Incremental Term Loan, and made a partial payment on the Corre Uptiered Loan, together with any applicable prepayment premiums and related accrued interest, resulting in a loss on debt extinguishment of $11.9 million.

The loss on debt extinguishment includes $7.4 million of unamortized debt issuance cost (noncash) written off as part of the debt payoffs.

Other income (expense), net .

The overall change in other income (expense), net of $1.6 million, was primarily driven by foreign currency transaction losses in the current year period reflecting the effects of negative fluctuations in the value of the U.S.

The overall change in other income (expense), net of $4.5 million, was primarily driven by foreign currency transaction losses in the current year period reflecting the effects of unfavorable fluctuations in the value of the U.S.

dollar relative to the foreign currencies to which we have exposure.

The provision for income tax was $1.2 million on the pre-tax loss of $32.8 million in the current year-to-date period compared to income tax expense o f $1.5 million o n the pre-tax loss of $18.4 million in the prior year-to-date period.

The effective tax rate was a provision of 0.8% for the three months ended March 31, 2025, compared to a provision of 0.4% for the three months ended March 31, 2024.

The effective tax rate was a provision of 3.7% for the six months ended June 30, 2025, compared to a provision of 8.4% for the six months ended June 30, 2024.

The effective tax rate differs from the prior year period due to changes in the valuation allowance.

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Non-GAAP Financial Measures and Reconciliations

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The following tables set forth the reconciliation of adjusted net income (loss), EBIT and EBITDA to their most comparable GAAP financial measurements on a consolidated and segmented basis:

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AND SUBSIDIARIES

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(unaudited, in thousands except per share data)

Three Months Ended March 31,

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

2025 2024 2025 2024

Adjusted Net Loss:

1 unchanged sentence

Professional fees and other 1

2,301 516 4,308 2,597

Write-off of software cost

Legal costs 799 41 1,289 123

Severance charges, net 3

Severance charges 375 225 842 650

Loss on debt extinguishment — — 11,853 —

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Provision for income taxes 983 1,472 1,205 1,545

Loss (gain) on equipment sale

Loss on equipment sale — 28 5 18

Interest expense, net 11,896 11,909 23,332 24,007

Professional fees and other 1

2,301 516 4,308 2,597

Write-off of software cost

Legal costs 799 41 1,289 123

Severance charges, net 3

Severance charges 375 225 842 650

Foreign currency loss (gain)

3,544 615 3,749 (624)

Pension credit 2

(54) (102) (105) (215)

Loss on debt extinguishment — — 11,853 —

4 unchanged sentences

Total depreciation and amortization 8,527 9,260 16,929 18,900

Non-cash share-based compensation costs (credit) (53) 665

Non-cash share-based compensation costs 366 612 313 1,277

Consolidated Adjusted EBITDA $ 24,471 $ 21,813 $ 29,781 $ 28,320

Free Cash Flow:

Cash provided by (used in) operating activities

$ (28,661) $ 1,886

Cash used in operating activities $ (3,344) $ (6,352) $ (32,005) $ (4,466)

Capital expenditures (2,910) (2,743) (4,316) (5,759)

1 unchanged sentence

____________________________________

1 For the three months ended March 31, 2025, consists of $2.0 million related to the Refinancing Transactions, For the three months ended March 31, 2024, includes $1.9 million related to debt financing, and $0.2 million related to support costs.

2 Primarily relates to accrued legal matters and legal reserves.

3 Represents customary severance costs associated with staff reductions across multiple departments.

4 Represents the tax effect of the adjustments.

1 For the six months ended June 30, 2025, includes $1.3 million related to debt financing and for the three and six months ended June 30, 2025, includes $2.3 million and $3.0 million, respectively, related to support costs.

For the three and six months ended June 30, 2024, includes $0.5 million and $2.4 million, respectively, related to debt financing and for six months ended June 30, 2024, includes $0.2 million related to support costs.

2 Represents pension credits for the U.K.

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The pension plan was frozen in 1994 and no new participants have been added since that date.

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AND SUBSIDIARIES

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(unaudited, in thousands)

Three Months Ended March 31,

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

2025 2024 2025 2024

Segment Adjusted EBIT and Adjusted EBITDA:

1 unchanged sentence

Professional fees and other 1

Severance charges, net 3

Severance charges 62 152 177 247

Adjusted EBIT 16,592 12,611 25,400 17,931

3 unchanged sentences

Professional fees and other 1

Severance charges, net 3

Legal costs 251 41 251 41

Severance charges 313 49 647 374

Adjusted EBIT 10,701 10,785 9,924 15,283

4 unchanged sentences

Provision for income taxes 983 1,472 1,205 1,545

Loss (gain) on equipment sale 5 (10)

Loss on equipment sale — 28 5 18

Interest expense, net 11,896 11,909 23,332 24,007

1 unchanged sentence

Professional fees and other 1

1,551 458 3,558 2,417

Write-off of software cost — — 45 —

Legal costs 548 — 1,038 82

Severance charges, net 3

Severance charges — 24 18 29

Pension credit 2

(54) (102) (105) (215)

Loss on debt extinguishment — — 11,853 —

1 unchanged sentence

Depreciation and amortization 1,344 1,717 2,659 3,679

Non-cash share-based compensation costs (credit) (53) 665

Non-cash share-based compensation costs 366 612 313 1,277

Adjusted EBITDA $ (10,005) $ (9,126) $ (19,813) $ (20,115)

Consolidated Adjusted EBITDA

$ 24,471 $ 21,813 $ 29,781 $ 28,320

2 Primarily relates to accrued legal matters and legal reserves.

3 Represents customary severance costs associated with staff reductions across multiple departments.

___________________

2 Represents pension credits for the U.K.

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The pension plan was frozen in 1994 and no new participants have been added since that date.

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Liquidity and Capital Resources

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• our ability to generate sufficient cash from operations, access our credit facilities or amounts available under our term loans to support our operations, or maintain our compliance with covenants under our debt arrangements;

• our ability to manage inflationary pressures in our operating costs;

• our ability to manage inflationary pressures, including the impact of tariffs, in our operating costs;

• loss of customers or other unforeseen deterioration in demand for our services;

7 unchanged sentences

See Item 1A “Risk Factors” in our Annual Report on Form 10-K for additional information.

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Recent Refinancing Transactions .

On March 12, 2025, we entered into the Refinancing Transactions with our existing and new lenders.

Refer to Note 10 - Debt to the unaudited condensed consolidated financial statements for additional details.

As of March 31, 2025, we had approximately $16.3 million of available borrowing capacity under our various credit facilities, consisting of $6.3 million available under the Revolving Credit Loans, and $10.0 million available under the Second Lien Delayed Draw Term Loans.

As of June 30, 2025, we had approximately $32.7 million of available borrowing capacity under our various credit facilities, consisting of $22.7 million available under the Revolving Credit Loans, and $10.0 million available under the Second Lien Delayed Draw Term Loans.

Our principal uses of cash are for working capital needs, capital expenditures, and operations.

As of March 31, 2025, we were in compliance with our debt covenants.

As of June 30, 2025, we were in compliance with our debt covenants.

Our ability to maintain compliance with the financial covenants contained in the 2022 ABL Credit Agreement, First Lien Term Loan Agreement and Second A&R Second Lien Term Loan Credit Agreement is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties.

As of May 8, 2025, we had consolidated cash and cash equivalents of $8.6 million, excluding $3.9 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $15.2 million of undrawn availability under our various credit facilities, resulting in total liquidity of $23.8 million.

As of August 8, 2025, we had consolidated cash and cash equivalents of $8.8 million, excluding $4.5 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $37.7 million of undrawn availability under our various credit facilities, resulting in total liquidity of $46.5 million.

The following table summarizes cash flows from Operating, Investing and Financing activities (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows provided by (used in):

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Effect of exchange rate changes on cash 324 (380) 704

Net change in cash and cash equivalents $ (18,742) $ (11,237) $ (7,505)

Net decrease in cash and cash equivalents $ (14,836) $ (12,966) $ (1,870)

Cash and cash equivalents.

Our cash and cash equivalents as of March 31, 2025 totaled $16.8 million, consisting of $12.8 million of unrestricted cash on hand, and $4.0 million of restricted cash.

International cash balances as of March 31, 2025 were $4.8 million, and approximately $1.1 million of such cash is located in countries where currency or regulatory restrictions exist.

Our cash and cash equivalents as of June 30, 2025 totaled $20.7 million, consisting of $16.6 million of unrestricted cash on hand, and $4.1 million of restricted cash.

International cash balances as of June 30, 2025 were $6.4 million, and approximately $1.1 million of such cash is located in countries where currency or regulatory restrictions exist.

As of December 31, 2024, our cash and cash equivalents were $35.5 million, including $31.5 million of unrestricted cash on hand, and $4.0 million of restricted cash.

International cash balances as of December 31, 2024 were $5.1 million, including $1.1 million of cash located in countries where currency or regulatory restrictions existed.

Our total debt and finance obligations were $353.6 million, of which $3.8 million was classified as current at March 31, 2025, compared to total debt of $325.1 million at December 31, 2024.

Our total debt and finance obligations were $370.2 million (of which $3.8 million was classified as current at June 30, 2025), compared to total debt of $325.1 million at December 31, 2024.

The increase of $45.1 million was driven by the $20.0 million increase in the Revolving Credit Loans borrowings and increases in other outstanding debt due to the recent refinancing transactions completed on March 12, 2025.

Cash flows attributable to our operating activities.

For the three months ended March 31, 2025, net cash used in operating activities was $28.7 million, a decrease of $30.5 million as compared to net cash provided by operating activities of $1.9 million in the 2024 period.

The decrease was primarily driven by the higher negative working capital impacts of $23.7 million primarily attributable to an increase in accounts receivable and lower accrued liabilities and accounts payable.

Our net cash provided by operating activities was further impacted by loss on debt extinguishment of $11.9 million, depreciation and amortization of $8.4 million, PIK interest of $3.3 million and amortization of debt issuance costs of $1.4 million.

For the three months ended March 31, 2024, net cash provided by operating activities was $1.9 million.

Our net cash provided by operating activities was driven by net loss for the period, which totaled $17.2 million, offset by positive working capital impacts of $5.7 million, depreciation and amortization of $9.6 million, PIK interest of $3.1 million, and amortization of debt issuance costs of $2.0 million.

Our largest source of operating cash inflow is cash collection from customers for work performed.

The primary use of operating cash is to pay our suppliers, employees, tax authorities, and others.

Cash flows from operating activities are primarily generated from net income or loss adjusted for certain noncash items which include depreciation and amortization, PIK interest, and amortization of debt issuance costs.

For the six months ended June 30, 2025, cash flows from operating activities also included an adjustment to net loss for noncash loss on debt extinguishment.

For the six months ended June 30, 2025, net cash used in operating activities was $32.0 million, an increase of $27.5 million as compared to $4.5 million in the 2024 period.

This was primarily driven by higher negative working capital impacts.

Changes in working capital items such as collection of receivables, and payments of operating payables are significant factors affecting operating cash flows and can be highly volatile in periods of increasing or decreasing activity levels.

Changes in working capital items used $40.0 million in cash flows during the six months ended June 30, 2025, a $26.0 million increase as compared to the $14.0 million in cash flows used by working capital in the corresponding 2024 period.

Cash flows attributable to our investing activities.

For the three months ended March 31, 2025, net cash used in investing activities consisted primarily of capital expenditures of $1.4 million.

For the three months ended March 31, 2024, net cash used in investing activities consisted primarily of capital expenditures of $3.0 million.

For the six months ended June 30, 2025, net cash used in investing activities consisted of capital expenditures of $4.3 million.

For the six months ended June 30, 2024, net cash used in investing activities consisted primarily of capital expenditures of $5.8 million.

Cash flows attributable to our financing activities.

For the three months ended March 31, 2025, net cash provided by financing activities was $11.2 million, consisting primarily of the net borrowings under the Revolving Credit Loans of $8.0

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For the six months ended June 30, 2025, net cash provided by financing activities was $21.2 million, consisting primarily of the net borrowings under the Revolving Credit Loans of $20.0

million, borrowings under the new First Lien Term Loan and 2025 Second Lien Term Loan, partially offset by the payments of the total outstanding balances under the Corre Delayed Draw Term Loan, Corre Incremental Term Loan and ME/RE Loans, and a partial pay down of the Corre Uptiered Loan.

In addition, we paid $8.1 million of debt issuance costs for the Refinancing Transactions at March 12, 2025.

For the three months ended March 31, 2024, net cash used in financing activities was $9.8 million, consisting primarily of net payments under our 2022 ABL Credit Facility of $9.9 million, payments under the ME/RE Loans of $0.7 million, payments under the Incremental Term Loan of $0.4 million, and payment of debt issuance costs of $1.4 million, partially offset by equipment financing of $2.5 million.

In addition, we paid $8.9 million of debt issuance costs for the debt refinancing transactions executed with our existing and new lenders at March 12, 2025.

For the six months ended June 30, 2024, net cash used in financing activities was $2.5 million, consisting primarily of the payments under the ME/RE Loans of $1.4 million, payments under the Corre Incremental Term Loan of $0.7 million, and payment of debt issuance costs of $2.8 million, partially offset by equipment financing of $1.8 million and net borrowings under the Revolving Credit Loans of $0.6 million.

Effect of exchange rate changes on cash and cash equivalents.

For the three months ended March 31, 2025 and 2024, the effect of foreign exchange rate changes on cash was $0.1 million and negative $0.3 million, respectively.

For the six months ended June 30, 2025 and 2024, the effect of foreign exchange rate changes on cash was $0.3 million and negative $0.4 million, respectively.

The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in U.S.

Dollar exchange rate against the Euro, the British Pound, the Canadian Dollar and the Brazil Real.

Dollar exchange rate against the Euro, the British Pound, the Canadian Dollar and the Brazilian Real.

Off-Balance Sheet Arrangements

3 unchanged sentences

A discussion of our critical accounting policies and estimates is included in our Annual Report on Form 10-K.

There were no material changes to our critical accounting policies during the three months ended March 31, 2025.

There were no material changes to our critical accounting policies during the six months ended June 30, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis