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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-12 · 99 added, 179 removed, 200 unchanged (58% of the section changed)

19 unchanged sentences

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

• negative market conditions, including domestic and global inflationary pressures, impact of tariffs, future economic uncertainties, and impacts from epidemics and pandemics, particularly in industries in which we are heavily dependent;

• negative market conditions, including domestic and global inflationary pressures, impact of changes in global trade policies and tariffs, and future economic uncertainties, particularly in industries in which we are heavily dependent;

• 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, 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;

• seasonal and other variations, such as severe weather conditions (including conditions influenced by climate change), volatility of oil and gas prices, and the nature of our customers’ industry affecting the timing of new contracts and terminations of existing contracts which 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, our liquidity position and our ability to manage increases in interest rates;

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

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

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

• our financial forecasts being based upon estimates and assumptions that may materially differ from actual results;

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• the inherently uncertain outcome of current and future litigation;

• acts of terrorism, war or political or civil unrest in the United States or elsewhere, changes in laws and regulations, or the imposition of economic or trade sanctions affecting domestic and international commercial transactions.

• acts of terrorism, war or political or civil unrest in the United States or elsewhere, including the conflict in the Middle East and the threatened and actual closing of oil shipping routes, including the Strait of Hormuz, by Iran and affiliated groups in connection therewith, changes in laws and regulations, or the imposition of economic or trade sanctions affecting domestic and international commercial transactions.

GENERAL OVERVIEW

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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) callout services, and (iii) nested or run-and-maintain services.

(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.

19 unchanged sentences

• 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 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)

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following is a comparison of our results of operations for the three months ended March 31, 2026 to the three months ended March 31, 2025 (in thousands).

Three Months Ended March 31, Favorable (Unfavorable)

2026 2025 $ %

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Corporate and shared support services (12,800) (13,585) 785 5.8 %

Total operating income

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

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

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 %

Provision for income taxes (949) (504) (445) (88.3) %

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

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 $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 (credits) and litigation reserves

1,972 (1,975)

Severance charges, net 151 309

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 $3.6 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.

Total operating loss $ (3,371) $ (6,003) $ 2,632 43.8 %

Interest expense, net $ (8,882) $ (11,436) $ 2,554 22.3 %

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

Loss on debt extinguishment — (11,853) $ 11,853 NM

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 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)

925 (204) 1,129 553.4 %

(unaudited) (unaudited)

Revenues by business segment:

IHT $ 350,389 $ 320,286 $ 30,103 9.4 %

MS 321,268 318,690 2,578 0.8 %

Total revenues $ 671,657 $ 638,976 $ 32,681 5.1 %

Operating income (loss):

IHT $ 35,995 $ 27,504 $ 8,491 30.9 %

MS 14,879 19,188 (4,309) (22.5) %

Corporate and shared support services (43,432) (38,761) (4,671) (12.1) %

Total operating income $ 7,442 $ 7,931 $ (489) (6.2) %

Interest expense, net $ (35,187) $ (35,777) $ 590 1.6 %

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

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

Loss before income taxes $ (11,328) $ (29,496) $ 18,168 61.6 %

1 unchanged sentence

Net loss $ (11,333) $ (29,718) $ 18,385 61.9 %

Total revenues increased by $32.7 million or 5.1% from the prior year period.

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.

1 As of January 1, 2026, ECS, previously included in the MS segment, was moved to the IHT segment, refer to N ote 15 - Segment Disclosure for more information.

NM - not meaningful

Total revenues increased by $16.4 million, or 8.3%, from the prior year period and were favorably impacted by $3.2 million attributable to foreign exchange rates movements.

R evenue for the IHT segment increased by $9.8 million, or 8.6%, compared to the prior year period, primarily driven by an increase in U.S.

revenue of $6.5 million attributable to higher turnaround and capital projects activity, as well as increase in year-over-year callout and turnaround activities in Canada and other international regions of $3.3 million.

MS segment revenue increased by $6.6 million, or 7.8%, compared to the prior year period, mainly due to higher turnaround activities and callout projects in the U.S., and higher revenue from projects in Canada and international areas.

Operating income (loss).

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 $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

Overall operating loss was $3.4 million in the 2026 period, a $2.6 million, or 43.8%, improvement compared to an operating loss of $6.0 million in the prior year period.

This improvement was primarily driven by the increased revenue and cost management.

IHT reported an increase in operating income of $0.2 million, or 1.7%, as compared to prior year due to job mix.

MS operating loss decreased by $1.7 million, or 52.7%, as compared to the prior year period, primarily driven by the increased revenue in the U.S.

and a reduction in operating losses in the U.S.

Corporate operating loss decreased by $0.8 million compared to the prior year period, primarily due to lower legal and professional services costs, partially offset by higher personnel costs in the current period .

For the three months ended March 31, 2026 and 2025, operating loss includes net expenses totaling $1.7 million and $3.0 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 March 31,

Operating loss $ (3,371) $ (6,003)

Professional fees and other 1,606 2,007

Legal costs (credits) and litigation reserves

3,261 (1,852)

Legal costs (refunds) and litigation reserves (1,560) 490

Severance charges, net 1,629 467

Total non-core expenses 1,675 2,964

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 $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.

Operating loss, excluding non-core expenses $ (1,696) $ (3,039)

Excluding the impact of these identified non-core items in both periods, operating loss decreased year over year by $1.3 million, from $3.0 million to $1.7 million.

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

Interest expense, net.

Interest expense, net decreased by $0.6 million from the prior year period.

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

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

Interest expense, net decreased by $2.6 million for the three months ended March 31, 2026, compared to the same period in 2025.

The decrease was primarily attributable to the refinancing completed in March 2025, in which we replaced our existing credit facilities with new facilities at lower interest rates.

In addition, we renegotiated the terms of our ABL Revolving Credit Loans, resulting in further reductions in applicable interest rates.

The decrease was also due to lower overall debt balances compared to the prior period.

Cash interest paid for the three months ended March 31, 2026 and 2025 was $2.5 million and $8.9 million, respectively.

Loss on debt extinguishment.

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.

During the three months ended March 31, 2025, we completed refinancing transactions that resulted in the repayment of our existing loans.

As a result, we recognized a loss on debt extinguishment of $11.9 million which included the write-off of unamortized debt issuance costs.

Other income (expense), net .

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.

The overall change of $1.1 million in other income (expense), net, was primarily driven by foreign currency transaction losses in the current year period reflecting the effects of positive 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 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 provision for income tax was $0.0 million on the pre-tax loss of $11.3 million in the current year period compared to income tax expense o f $0.2 million o n the pre-tax loss of $29.5 million in the prior year period.

The effective tax rate was a provision of 0.0% for the three months ended March 31, 2026, compared to a provision of 0.8% for the three months ended March 31, 2025.

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

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adjusted EBIT;

adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) and free cash flow to supplement financial information presented on a GAAP basis.

adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) and free cash flow to supplement financial information presented on a U.S.

We define adjusted net income (loss) and adjusted net income (loss) per share to exclude the following items:

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The liquidity measure of free cash flow does not represent a precise calculation of residual cash flow available for discretionary expenditures.

Reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure are presented below.

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:

Reconciliations of each non-GAAP financial measure to its most directly comparable U.S.

GAAP financial measure are presented below.

The following tables set forth the reconciliation of adjusted net income (loss), EBIT and EBITDA to their most comparable U.S.

GAAP financial measurements on a consolidated and segmented basis:

AND SUBSIDIARIES

1 unchanged sentence

(unaudited, in thousands except per share data)

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

2025 2024 2025 2024

Three Months Ended March 31,

Adjusted Net Loss:

1 unchanged sentence

Professional fees and other 1

1,977 318 6,285 2,915

Write-off of software cost

Legal costs (credits) and litigation reserves

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

Severance charges 151 309 993 959

Legal costs and litigation reserves (refunds)

Severance charges, net 2

Loss on debt extinguishment — 11,853

13 unchanged sentences

Professional fees and other 1

1,977 318 6,285 2,915

Write-off of software cost

Legal costs (credits) and litigation reserves

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

Severance charges 151 309 993 959

Legal costs and litigation reserves (refunds)

Severance charges, net 2

Foreign currency loss (gain)

(1,136) 2,128 2,613 1,504

Pension credit 2

(55) (111) (160) (326)

Pension cost (credit) 3

Loss on debt extinguishment — 11,853

1 unchanged sentence

Depreciation and amortization 8,453 8,402

Amount included in operating expenses 3,283 3,429 9,497 10,520

Amount included in SG&A expenses 5,464 5,605 16,179 17,414

Total depreciation and amortization 8,747 9,034 25,676 27,934

Non-cash share-based compensation costs 352 467 665 1,744

Non-cash share-based compensation cost (credit) 954 (53)

Consolidated Adjusted EBITDA $ 7,711 $ 5,310

1 unchanged sentence

Cash used in operating activities

$ (9,095) $ (28,661)

Capital expenditures (2,424) (1,406)

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____________________________________

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.

1 For the three months ended March 31, 2026, consists of $1.6 million related to support costs.

For the three months ended March 31, 2025, consists of $2.0 million related to refinancing transactions.

2 For the three months ended March 31, 2026, includes $1.4 million related to customary severance costs associated with executive departures.

3 Represents pension cost (credit) for the U.K.

pension plan based on the difference between the expected return on plan assets and the amount of the discounted pension liability.

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(unaudited, in thousands)

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

2025 2024 2025 2024

Three Months Ended March 31,

Segment Adjusted EBIT and Adjusted EBITDA:

1 unchanged sentence

Professional fees and other 1

Severance charges 3 210 180 457

Severance charges, net — 115

Adjusted EBIT 11,971 10,846

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Adjusted EBITDA $ 15,287 $ 13,662

Operating income $ 5,853 $ 4,460 $ 14,879 $ 19,188

Operating loss $ (1,488) $ (3,149)

Professional fees and other 1

Legal costs — — 251 41

Severance charges 148 92 795 466

Severance charges, net 177 334

Adjusted EBIT (1,242) (2,815)

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Professional fees and other 1

1,883 318 5,441 2,735

Write-off of software cost — 45

Legal costs (credits) and litigation reserves

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

Severance charges — 7 18 36

Pension credit 2

(55) (111) (160) (326)

Legal costs and litigation reserves (refunds)

Severance charges, net 2

Pension cost (credit) 3

Loss on debt extinguishment — 11,853

1 unchanged sentence

Depreciation and amortization 1,340 1,315

Non-cash share-based compensation costs 352 467 665 1,744

Non-cash share-based compensation cost (credit) 954 (53)

Adjusted EBITDA $ (10,131) $ (9,808)

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___________________

2 Represents pension credits for the U.K.

1 For the three months ended March 31, 2026, consists of $1.6 million related to support costs.

For the three months ended March 31, 2025, consists of $2.0 million related to refinancing transactions.

2 For the three months ended March 31, 2026, includes $1.4 million related to customary severance costs associated with executive departures.

3 Represents pension cost (credit) for the U.K.

pension plan based on the difference between the expected return on plan assets and the amount of the discounted pension liability.

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

4 As of January 1, 2026, ECS, previously included in the MS segment, was moved to the IHT segment, refer to N ote 15 - Segment Disclosure for more information.

Liquidity and Capital Resources

Financing for operations consists primarily of our 2022 ABL Credit Agreement, First Lien Term Loan Agreement, Second A&R Second Lien Term Loan Credit Agreement , and cash flows from our operations.

Financing for operations consists primarily of our 2022 ABL Credit Agreement and cash flows from our operations.

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.

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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 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 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.

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.

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.

See Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and 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 March 31, 2026, we had approximately $40.5 million of available borrowing capacity under our various credit facilities, consisting of $30.5 million available under the 2022 ABL Credit Agreement and $10.0 million available under the Second A&R Second Lien term Loan Agreement (the availability period for the Second Lien Delayed Draw Term Loan expired on April 15, 2026 with no amounts drawn prior to the expiration date).

In connection with the issuance of the Series B Preferred Stock and related warrants, we have access to up to $30.0 million in additional liquidity through September 2027 through a delayed draw mechanism, subject to certain conditions under the Purchase Agreement.

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

As of March 31, 2026, we were in compliance with our debt covenants.

Our ability to maintain compliance with the financial covenants contained in our Credit Agreements is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties, as described elsewhere herein.

As of May 11, 2026, we had consolidated cash and cash equivalents of $11.2 million, excluding $4.2 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $24.8 million of undrawn availability under our various credit facilities, resulting in total liquidity of $36.0 million.

We also have $30.0 million of Series B Delayed Draw availability as described above.

Refer to Note 10 - Debt for additional information about our debt instruments.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows provided by (used in):

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Effect of exchange rate changes on cash (38) 137 (175)

Net decrease in cash and cash equivalents $ (20,733) $ (16,340) $ (4,393)

Net change in cash and cash equivalents $ (5,306) $ (18,742) $ 13,436

Cash and cash equivalents.

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 $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.

Our cash and cash equivalents as of March 31, 2026 totaled $12.8 million, consisting of $8.7 million of unrestricted cash on hand, and $4.1 million of restricted cash.

International cash balances as of March 31, 2026 were $6.5 million, and approximately $1.2 million of such cash is located in countries where currency or regulatory restrictions exist.

As of December 31, 2025, our cash and cash equivalents were $18.1 million, consisting of $14.1 million of unrestricted cash on hand and $4.0 million of restricted cash.

International cash balances as of December 31, 2025 were $4.4 million, and approximately $1.2 million of such cash is restricted.

Our total debt and finance obligations were $306.5 million, of which $3.9 million was classified as current at March 31, 2026, compared to total debt of $297.2 million at December 31, 2025.

Cash flows attributable to our operating activities.

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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.

For the three months ended March 31, 2026, net cash used in operating activities was $9.1 million, an improvement of $19.6 million as compared to net cash used in operating activities of $28.7 million in the 2025 period.

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 represent significant uses of cash, particularly during periods of increasing revenue and activity levels.

During the three months ended March 31, 2026, changes in working capital items used $8.6 million in cash flows, a $15.1 million decrease compared to the $23.7 million in cash flows used by working capital in the corresponding 2025 period.

Cash flows attributable to our investing activities.

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.

For the three months ended March 31, 2026, net cash used in investing activities consisted primarily of capital expenditures of $2.4 million as compared to $1.4 million for the three months ended March 31, 2025.

Cash flows attributable to our financing activities.

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.

For the three months ended March 31, 2026, net cash provided by financing activities was $6.2 million, consisting primarily of the net borrowings under the Revolving Credit Loans of $7.2 million, partially offset by the principal payments under the First Lien Term Loan and equipment financing loans.

For the three months ended March 31, 2025, net cash used in financing activities was $11.2 million, consisting primarily of borrowings under the First Lien Term Loan of $175.0 million, net borrowings under the Revolving Credit Loans of $8.0 million, and borrowings under the 2025 Second Lien Term Loan.

These inflows were 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.

Effect of exchange rate changes on cash and cash equivalents.

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.

For the three months ended March 31, 2026 and 2025, the effect of foreign exchange rate changes on cash was $0.0 million and $0.1 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.

Off-Balance Sheet Arrangements

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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 nine months ended September 30, 2025.

There were no material changes to our critical accounting policies during the three months ended March 31, 2026.

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