What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-12 · 118 added, 116 removed, 261 unchanged (47% of the section changed)

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Such risks, uncertainties and other important factors include, among others, risks related to:

• 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 and our Certificate of Designation of Series B Preferred Stock, as filed with the Delaware Secretary of State on September 11, 2025 (the “Series B Certificate of Designation”);

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

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• our incurrence of liabilities and suffering of negative financial or reputational impacts relating to occupational health and safety matters;

• our ability to continue as a going concern;

• changes in laws or regulations in the local jurisdictions that we conduct our business;

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• Aerospace and Defense.

Recent Financing Transaction.

On September 11, 2025, the Company entered into a securities purchase agreement with InspectionTech Holdings LP, an affiliate of Stellex Capital Management LLC, resulting in the issuance of 75,000 shares of Series B Preferred Stock and warrants to purchase an aggregate of 1,453,260 shares of common stock for total consideration of $75.0 million.

Refer to Note 1 - Description of business and basis for presentation to the unaudited condensed consolidated financial statements for additional details.

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)

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

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

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

Three Months Ended September 30, Favorable (Unfavorable)

2025 2024 $ %

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Total operating income

$ 1,342 $ 3,158 $ (1,816) (57.5) %

Interest expense, net $ (11,855) $ (11,770) $ (85) (0.7) %

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

Loss on debt extinguishment (1,283) — (1,283) (100)%

Other income (expense), net 1,298 (2,010) 3,308 164.6 %

Loss before income taxes $ (10,498) $ (10,622) $ 124 1.2 %

1 unchanged sentence

Net loss $ (11,447) $ (11,126) $ (321) (2.9) %

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.

Total revenues increased by $14.2 million or 6.7% compared to the same period in the prior year.

Revenues were favorably impacted by $0.9 million attributable to foreign exchange rates movements.

IHT revenues increased by $6.2 million or 5.7% primarily driven by $5.0 million of revenue growth from higher callout and nested activity in the U.S.

with new customers and addition to existing customer sites.

Additionally, IHT revenues in Canada and other international regions increased by $1.2 million, driven by higher non-destructive examination and heat-treating activity primarily in Canada.

MS reported an $8.0 million or 7.8% increase in revenues, largely attributable to a $7.9 million increase in U.S.

turnaround activities, and a $3.4 million increase in project work in Canada.

These gains were partially offset by a $3.3 million decrease in revenues from other international locations, including the United Kingdom, due to lower demand for leak repair services and valve product services during the 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,

Overall operating income was $1.3 million in the current year quarter, a $1.8 million decrease compared to operating income of $3.2 million in the prior year quarter.

IHT operating income increased by $1.7 million or 16.9% reflecting the contributions from revenue growth for the quarter, with operating income from the U.S.

increasing by $1.0 million, and improved operating income from Canada of $0.4 million driven mainly by higher customer project activity.

MS operating income increased by $1.4 million or 31.2% as compared to the prior year quarter, with an increase in U.S.

operating income of $1.9 million and Canada of $1.0 million.

This improvement was partially offset by lower operating income from other international regions of $1.5 million, driven by lower customer project activity as compared to the prior year quarter.

Corporate operating loss increased by $4.9 million, primarily due to higher non-recurring professional fees and legal costs, see details noted in the table below.

Operating income includes net expenses totaling $4.1 million for the three months ended September 30, 2025 and net credits totaling $1.3 million for the three months ended September 30, 2024, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

Three Months Ended September 30,

Operating income

$ 1,342 $ 3,158

Professional fees and other 1,977 318

Legal costs 799 41

Legal costs (credits) and litigation reserves

1,972 (1,975)

Severance charges, net 151 309

Total non-core expenses 3,475 782

Total non-core expenses (credits)

4,100 (1,348)

Operating income, excluding non-core expenses $ 5,442 $ 1,810

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.

Excluding the impact of these identified non-core items in both periods, operating income increased by $3.6 million or 200.7%, from $1.8 million in the three months ended September 30, 2024 to $5.4 million for the three months ended September 30, 2025.

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

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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.

Cash interest paid during the quarter ended September 30, 2025 and 2024 was $9.8 million and $7.1 million, respectively, with the increase in cash interest driven by the timing of interest payments on the First Lien Term Loan.

Loss on debt extinguishment.

The loss on debt extinguishment reflects the write-off of unamortized debt issuance costs associated with the prepayment of the 2025 Second Lien Term Loans on September 11, 2025.

Other income (expense), net.

Overall change in other income (expense), net of $3.3 million is primarily attributable to gain on favorable foreign currency fluctuations during the current quarter.

The provision for income tax was $0.9 million on the pre-tax loss of $10.5 million in the current year quarter, compared to a $0.5 million income tax provision on a pre-tax loss of $10.6 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)

The effective tax rate, inclusive of discrete items, was a provision of 9.1% for the three months ended September 30, 2025, compared to a provision of 4.7% for the three months ended September 30, 2024.

The increase in effective tax rate for the three months ended September 30, 2025 compared to the three months ended September 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 increase in income tax expense as compared to pretax income, resulting in a higher effective tax rate.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

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

Nine Months Ended September 30, Favorable (Unfavorable)

2025 2024 $ %

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Loss on debt extinguishment (13,136) — (13,136) (100)%

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

Other income (expense), net (2,396) (1,189) (1,207) (101.5) %

Loss before income taxes $ (43,277) $ (29,035) $ (14,242) (49.1) %

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Total revenues increased by $32.7 million or 5.1% 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.

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.

IHT year-to-date revenue increased by $30.1 million or 9.4% compared to the prior year period, primarily driven by an increase in U.S.

revenue of $23.0 million mainly due to large turnaround projects for our existing customers at new sites, and expanded support in established nested activities for existing customers.

In addition, increased demand for enhanced non-destructive evaluation and testing services generated $3.1 million in year over year growth from our laboratory testing and inspection facility in Cincinnati.

Greater turnaround and callout services, especially in eastern Canada also contributed a $3.4 million revenue increase.

MS revenue increased by $2.6 million or 0.8% compared to the prior year period, with a $9.1 million U.S.

revenue increase due to increased turnaround and call out activity and a $2.9 million revenue increase in Canada, offset by a revenue decrease in other international areas of $9.4 million due to the conclusion of prior year projects in Trinidad, the United Kingdom and Latin America that did not repeat in 2025.

Operating income (loss).

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.

Overall operating income was $7.4 million in the 2025 period, a $0.5 million or 6.2% decrease over operating income of $7.9 million in the prior year period.

IHT operating income increased by $8.5 million or 30.9%, primarily driven by the increased revenue described above.

MS operating income decreased by $4.3 million or 22.5% as compared to the prior year period.

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,

MS operating income from international operations, excluding Canada, decreased by $4.5 million, reflecting the impact of prior year project activity that did not repeat this year, partially offset by a $1.0 million increase in operating income from the U.S.

revenue driven mainly by higher margin projects.

Corporate operating loss increased by $4.7 million compared to the prior year period, primarily due to increased non-recurring professional fees and legal reserves in the current period, offset by lower personnel and support cost, see details noted in the table below .

For the nine months ended September 30, 2025 and 2024, operating income includes net expenses totaling $10.5 million and $2.0 million, respectively, that we believe are not indicative of our core operating activities, as detailed in the table below (in thousands):

Nine Months Ended September 30,

Operating income $ 7,442 $ 7,931

Professional fees and other 6,285 2,915

Legal costs 1,289 123

Legal costs (credits) and litigation reserves

3,261 (1,852)

Severance charges, net 993 959

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Operating income, excluding non-core expenses $ 17,981 $ 9,953

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.

Excluding the impact of these identified non-core items in both periods, operating income improved by $8.0 million, or 80.7% from $10.0 million in the nine months ended September 30, 2024 to $18.0 million in the nine months ended September 30, 2025.

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

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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.

Cash interest paid for the nine months ended September 30, 2025 and 2024 was $22.6 million and $19.5 million, respectively.

Loss on debt extinguishment.

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.

On March 12, 2025, as part of debt refinancing with existing and new lenders, we repaid the outstanding balances of the ME/RE Loans, Corre Delayed Draw Term Loan, and Corre Incremental Term Loan, and made a partial payment on the Corre Uptiered Loan, including applicable prepayment premiums and accrued interest.

These transactions resulted in a loss on debt extinguishment of $11.9 million, which includes $7.4 million of noncash unamortized debt issuance cost written off with the payoffs.

Additionally, a $1.3 million write-off of unamortized debt issuance costs was recognized in connection with the prepayment of the 2025 Second Lien Term Loans on September 11, 2025.

Other income (expense), net .

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.

The overall change in other income (expense), net of $1.2 million, was primarily driven by the 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 $2.2 million on the pre-tax loss of $43.3 million in the current year-to-date period compared to income tax expense o f $2.0 million o n the pre-tax loss of $29.0 million in the prior year-to-date period.

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 was a provision of 5.0% for the nine months ended September 30, 2025, compared to a provision of 7.1% for the nine months ended September 30, 2024.

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

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(unaudited, in thousands except per share data)

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

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

2025 2024 2025 2024

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Write-off of software cost

Legal costs 799 41 1,289 123

Legal costs (credits) and litigation reserves

1,972 (1,975) 3,261 (1,852)

Severance charges 151 309 993 959

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Adjusted Net Loss $ (6,062) $ (12,538) $ (21,812) $ (29,264)

Dividend and accretion to redemption value on redeemable preferred stock (610) — (610) —

Adjusted Net Loss attributable to common shareholders

$ (6,672) $ (12,538) $ (22,422) $ (29,264)

Adjusted Net Loss per common share:

4 unchanged sentences

Provision for income taxes 949 504 2,154 2,049

Loss on equipment sale — 28 5 18

Loss (gain) on equipment sale (107) (7) (102) 11

Interest expense, net 11,855 11,770 35,187 35,777

2 unchanged sentences

Write-off of software cost

Legal costs 799 41 1,289 123

Legal costs (credits) and litigation reserves

1,972 (1,975) 3,261 (1,852)

Severance charges 151 309 993 959

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____________________________________

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.

1 For the three and nine months ended September 30, 2025, includes $0.4 million and $1.7 million, respectively related to debt financing, and $1.6 million and $4.6 million, respectively, related to support costs.

For the three and nine months ended September 30, 2024, includes $0.3 million and $2.7 million, respectively, related to debt financing, and for the nine months ended September 30, 2024, includes $0.2 million related to support costs.

2 Represents pension credits for the U.K.

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(unaudited, in thousands)

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

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

2025 2024 2025 2024

16 unchanged sentences

Provision for income taxes 949 504 2,154 2,049

Loss on equipment sale — 28 5 18

Loss (gain) on equipment sale (107) (7) (102) 11

Interest expense, net 11,855 11,770 35,187 35,777

3 unchanged sentences

Write-off of software cost — — 45 —

Legal costs 548 — 1,038 82

Legal costs (credits) and litigation reserves

1,972 (1,975) 3,010 (1,893)

Severance charges — 7 18 36

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___________________

2 Represents pension credits for the U.K.

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We have evaluated our liquidity within one year after the date of issuance of the accompanying condensed consolidated financial statements to assess the Company’s ability to fund its operations.

Based upon such liquidity assessment, we believe that the Company’s current working capital, forecasted cash flows from operations, expected availability under our existing debt arrangements and capital expenditure financing is sufficient to fund our operations, service our indebtedness, and maintain compliance with our debt covenants for the next twelve months, and based on current expectations, the long-term.

In preparation of this liquidity assessment, we applied judgment to estimate the projected cash flows of the Company, including the following:

(i) projected cash outflows, (ii) projected cash inflows, and (iii) projected availability under the Company’s existing debt arrangements.

The cash flow projections were based on known or planned cash requirements for operating and financing costs and include management’s best estimate regarding future customer activity levels, pricing for its services and for its supplies and other factors.

Actual results could vary significantly from those projections.

We based this assessment on assumptions that may prove to be inaccurate, and we could exhaust our available capital resources sooner than we expect in the event that we fail to meet our current projections.

Based upon such liquidity assessment, we believe that the Company’s current working capital, forecasted cash flows from operations, current and expected availability under our existing debt arrangements and capital expenditure financing is sufficient to fund our operations, service our indebtedness, and maintain compliance with our debt covenants for the next twelve months, and based on current expectations, the long-term.

See Note 10 - Debt in this Quarterly Report on Form 10-Q and Note 11 - Debt in our Annual Report on Form 10-K for additional details concerning our debt obligations.

We closely monitor the amounts and timing of our sources and uses of funds.

Our ability to maintain a sufficient level of liquidity to fund our operations and meet our financial obligations will be dependent upon our future performance, which is subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control.

For example, the threat of recession and related economic repercussions could have a significant adverse effect on our financial position and business condition, as well as that of our customers and suppliers.

Additionally, these events may, among other factors, impact our ability to generate cash flows from operations, access the capital markets on acceptable terms or at all, service our indebtedness, maintain compliance with the financial covenants contained in our various credit agreements and affect our future need or ability to borrow under our credit agreements.

Our ability to access the capital markets will depend on financial, economic and market conditions, many of which are outside of our control, and we may be unable to raise financing when needed, or on terms favorable to us, or at all.

In addition, we may seek to engage in one or more of the following, such as refinancing and/or extending the maturities of all or part of our existing indebtedness, amend existing debt to gain additional flexibility, entering into a strategic partnership with one or more parties, or the sale or divestiture of assets, but there can be no assurance that we would be able to enter into such a transaction or transactions on a timely basis or on terms favorable to us, or at all.

Our failure to raise capital through our operations, refinancing or strategic alternatives as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

In addition to impacting our current sources of funding, the effects of such events may also impact our liquidity or require us to revise our allocation or sources of capital, reduce capital expenditures, implement further cost reduction measures and/or change our business strategy.

Political economic repercussions could also have a broad range of effects on our liquidity sources and will depend on future developments that cannot be predicted at this time.

Our ability to maintain a sufficient level of liquidity to fund our operations and meet our financial obligations is dependent upon our future performance, which is subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control.

Our ability to generate operating cash flow, sell assets, access capital markets or take any other action to improve our liquidity and manage our debt is subject to the risks described or referenced herein and other risks and uncertainties that exist in our industry, some of which we may not be able to anticipate at this time or control.

Such risks include the following:

• 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;

• seasonal fluctuations, such as severe weather and other variations in our customers’ industries, that may impede or delay the timing of customer orders and the delivery of our services;

• rapid increases in raw materials, including impacts and uncertainty from trade disputes and tariffs, and labor costs that may hinder our ability to meet our forecasted operating expenses;

• persisting or increasing levels of inflation domestically and internationally as well as increased costs due to tariffs and the impact of such inflation on our ability to meet our current forecast;

• changes in regulations governing our operations and unplanned costs to comply with such regulatory changes;

• counterparty credit risk related to our ability to collect our receivables;

• 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;

• unexpected or prolonged fluctuations in interest rates and their impact on our forecasted costs of raising additional capital.

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

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 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 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.

See Item 1A “Risk Factors” in our Annual Report on Form 10-K and risk factors included within Cautionary Note Regarding Forward-Looking Statements above, for additional information.

As of September 30, 2025, we had approximately $46.5 million of available borrowing capacity under our various credit facilities, consisting of $36.5 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, capital expenditures, and operations.

As of September 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 depends upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties.

As of November 10, 2025, we had consolidated cash and cash equivalents of $8.1 million, excluding $4.2 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $65.1 million of undrawn availability under our various credit facilities, resulting in total liquidity of $73.2 million.

In connection with the Series B Transactions, we have access to up to $30.0 million in additional liquidity through September 2027, subject to certain conditions under the Purchase Agreement.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows provided by (used in):

7 unchanged sentences

Cash and cash equivalents.

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.

Our cash and cash equivalents as of September 30, 2025 totaled $14.8 million, consisting of $10.6 million of unrestricted cash on hand, and $4.2 million of restricted cash.

International cash balances as of September 30, 2025 were $6.1 million, and approximately $1.2 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 $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.

Our total debt and finance obligations were $302.8 million (of which $4.0 million was classified as current at September 30, 2025), compared to total debt of $325.1 million at December 31, 2024.

The $22.3 million decrease was primarily due to the paydown on the 2022 ABL Credit Agreement and Second A&R Second Lien Term Loan following the Series B Transactions on September 11, 2025, partially offset by new borrowings from the refinancing completed on March 12, 2025.

Cash flows attributable to our operating activities.

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

For the nine months ended September 30, 2025, cash flows from operating activities also included an adjustment to net loss for the non-cash loss on debt extinguishment.

For the nine months ended September 30, 2025, net cash used in operating activities was $28.1 million, an increase of $29.2 million as compared to $1.1 million of cash provided by operating activities in the 2024 period.

This was primarily driven by working capital impacts.

Changes in working capital items such as the growth of receivables, and payment of operating payables are significant factors affecting operating cash flows and can be significant uses of cash, particularly in periods of increasing revenue and activity levels.

Changes in working capital items used $38.4 million in cash flows during the nine months ended September 30, 2025, a $23.9 million increase as compared to the $14.5 million in cash flows used by working capital in the corresponding 2024 period.

Cash flows attributable to our investing activities.

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.

For the nine months ended September 30, 2025, net cash used in investing activities consisted primarily of capital expenditures for equipment of $7.2 million.

For the nine months ended September 30, 2024, net cash used in investing activities consisted primarily of capital expenditures for equipment of $7.5 million.

Cash flows attributable to our financing activities.

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 $8.9 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.

For the nine months ended September 30, 2025, net cash provided by financing activities totaled $14.2 million.

This amount primarily reflects cash inflows from the $175 million borrowing under the new First Lien Term Loan and $75 million in proceeds from the issuance of Series B Preferred Stock.

These inflows were partially offset by cash outflows, including a partial repayment of the 2025 Second Lien Term Loan, net payments of $10.0 million under the Revolving Credit Loans, and the full repayment of outstanding balances under the Corre Delayed Draw Term Loan, Corre Incremental Term Loan and ME/RE Loans, and the Corre Uptiered Loan.

Additionally, during the period, we incurred $11.4 million in debt issuance costs related to refinancing transactions completed both with existing and new lenders as of March 12, 2025.

We also paid $7.0 million in costs associated with the issuance of Series B Preferred Stock and warrants.

These financing activities reflect our ongoing efforts to optimize our capital structure and manage liquidity.

For the nine months ended September 30, 2024, net cash used in financing activities was $9.9 million, consisting primarily of the payments under the ME/RE Loans of $2.1 million, payments under the Corre Incremental Term Loan of $1.1 million, and payment of debt issuance costs of $7.4 million, partially offset by equipment financing of $1.2 million and net borrowings under the Revolving Credit Loans of $0.5 million.

Effect of exchange rate changes on cash and cash equivalents.

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.

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

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

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

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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 six months ended June 30, 2025.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-Q

Item 2. Management’s Discussion and Analysis