TEAM INC 10-Q

ITEM 1. FINANCIAL STATEMENTS TEAM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) March 31, 2026 December 31, 2025 ASSETS (unaudited) Current assets: Cash and cash equivalents $ 12,839 $ 18,145 Accounts receivable, net of allowance of $ 4,395 and $ 4,585 respectively 182,007 177,884 Inventory 41,876 41,384 Income tax receivable 969 1,042 Prepaid expenses and other current assets 28,285 27,950 Total current assets 265,976 266,405 Property, plant and equipment, net 108,512 110,628 Intangible assets, net 34,770 37,849 Operating lease right-of-use assets 48,443 49,849 Defined benefit pension asset 5,163 5,144 Other assets, net 14,378 14,044 Deferred tax asset 2,167 1,534 Total assets $ 479,409 $ 485,453 LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) Current liabilities: Current portion of long-term debt and finance lease obligations $ 3,884 $ 3,858 Current portion of operating lease obligations 16,749 16,476 Accounts payable 34,703 42,010 Other accrued liabilities 61,953 56,724 Income tax payable 1,301 987 Total current liabilities 118,590 120,055 Long-term debt and finance lease obligations 302,616 293,343 Operating lease obligations 34,166 35,910 Deferred tax liabilities 4,832 4,984 Other long-term liabilities 3,792 3,691 Total liabilities 463,996 457,983 Commitments and contingencies Redeemable preferred stock, par value $ 100.00 per share, 75,000 shares issued and outstanding at March 31, 2026 and December 31, 2025 54,832 51,951 Shareholders’ equity (deficit): Preferred stock, 500,000 shares authorized, 75,000 shares (included in redeemable preferred stock) issued and outstanding at March 31, 2026 and December 31, 2025 — — Common stock, par value $ 0.30 per share, 12,000,000 shares authorized; 4,571,382 and 4,532,240 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 1,371 1,360 Additional paid-in capital 473,730 475,829 Accumulated deficit ( 476,210 ) ( 464,877 ) Accumulated other comprehensive loss ( 38,310 ) ( 36,793 ) Total shareholders’ equity (deficit) ( 39,419 ) ( 24,481 ) Total liabilities, redeemable preferred stock and shareholders’ equity (deficit) $ 479,409 $ 485,453 See accompanying notes to unaudited condensed consolidated financial statements. 2 TEAM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) Three Months Ended March 31, 2026 2025 Revenues $ 215,056 $ 198,655 Operating expenses 161,912 148,287 Depreciation and amortization 2,989 3,102 Gross margin 50,155 47,266 Selling, general and administrative expenses 48,062 47,969 Depreciation and amortization 5,464 5,300 Operating loss ( 3,371 ) ( 6,003 ) Interest expense, net ( 8,882 ) ( 11,436 ) Loss on debt extinguishment — ( 11,853 ) Other income (expense), net 925 ( 204 ) Loss before income taxes ( 11,328 ) ( 29,496 ) Provision for income taxes ( 5 ) ( 222 ) Net loss ( 11,333 ) ( 29,718 ) Dividend and accretion to redemption value on redeemable preferred stock ( 2,874 ) — Net loss attributable to common shareholders $ ( 14,207 ) $ ( 29,718 ) Loss per common share: Basic and diluted $ ( 3.12 ) $ ( 6.61 ) Weighted-average number of shares outstanding: Basic and diluted 4,559 4,493 See accompanying notes to unaudited condensed consolidated financial statements. 3 TEAM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (Unaudited) Three Months Ended March 31, 2026 2025 Net loss $ ( 11,333 ) $ ( 29,718 ) Other comprehensive income (loss) before tax: Foreign currency translation adjustment ( 1,606 ) 2,015 Defined benefit pension plans: Amortization of prior service cost 8 8 Amortization of net actuarial loss 110 87 Other comprehensive income (loss) before tax ( 1,488 ) 2,110 Tax provision attributable to other comprehensive income (loss) ( 29 ) ( 44 ) Other comprehensive income (loss), net of tax ( 1,517 ) 2,066 Total comprehensive loss $ ( 12,850 ) $ ( 27,652 ) See accompanying notes to unaudited condensed consolidated financial statements. 4 TEAM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (in thousands) (Unaudited) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Shareholders’Equity (Deficit) Shares Amount Balance at December 31, 2025 4,532 $ 1,360 $ 475,829 $ ( 464,877 ) $ ( 36,793 ) $ ( 24,481 ) Net loss — — — ( 11,333 ) — ( 11,333 ) Dividend and accretion to redemption value on redeemable preferred stock — — ( 2,874 ) — — ( 2,874 ) Net settlement of vested stock awards 39 11 ( 179 ) — — ( 168 ) Foreign currency translation adjustment, net of tax — — — — ( 1,635 ) ( 1,635 ) Defined benefit pension plans, net of tax — — — — 118 118 Non-cash compensation — — 954 — — 954 Balance at March 31, 2026 4,571 $ 1,371 $ 473,730 $ ( 476,210 ) $ ( 38,310 ) $ ( 39,419 ) Balance at December 31, 2024 4,493 $ 1,348 $ 460,186 $ ( 415,667 ) $ ( 44,129 ) $ 1,738 Net loss — — — ( 29,718 ) — ( 29,718 ) Foreign currency translation adjustment, net of tax — — — — 1,971 1,971 Defined benefit pension plans, net of tax — — — — 95 95 Non-cash compensation — — ( 53 ) — — ( 53 ) Balance at March 31, 2025 4,493 $ 1,348 $ 460,133 $ ( 445,385 ) $ ( 42,063 ) $ ( 25,967 ) See accompanying notes to unaudited condensed consolidated financial statements. 5 TEAM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net loss $ ( 11,333 ) $ ( 29,718 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 8,453 8,402 Loss on debt extinguishment — 11,853 Amortization of debt issuance costs, debt discounts, and deferred financing costs 1,152 1,389 Paid-in-kind (“PIK”) interest 2,121 3,261 Allowance for credit losses ( 70 ) 182 Foreign currency loss (gain) ( 917 ) 205 Deferred income taxes ( 796 ) ( 491 ) Non-cash compensation cost (credit) 954 ( 53 ) Other, net ( 74 ) 37 Changes in operating assets and liabilities: Accounts receivable ( 4,612 ) ( 5,758 ) Inventory ( 530 ) ( 1,367 ) Prepaid expenses and other assets ( 1,665 ) 127 Accounts payable ( 7,675 ) ( 8,877 ) Other accrued liabilities 5,520 ( 7,980 ) Income taxes 377 127 Net cash used in operating activities ( 9,095 ) ( 28,661 ) Cash flows from investing activities: Capital expenditures ( 2,424 ) ( 1,406 ) Proceeds from disposal of assets 14 — Net cash used in investing activities ( 2,410 ) ( 1,406 ) Cash flows from financing activities: Borrowings under Revolving Credit Loans 74,000 13,000 Payments under Revolving Credit Loans ( 66,800 ) ( 5,018 ) Payments under Corre Delayed Draw Term Loan — ( 35,700 ) Payments under Corre Uptiered Loan — ( 55,894 ) Borrowings under First Lien Term Loan — 175,000 Payments under First Lien Term Loan ( 438 ) — Payments under ME/RE Loans — ( 23,427 ) Payments under Corre Incremental Term Loan — ( 48,015 ) Payments for debt issuance costs — ( 8,053 ) Other ( 525 ) ( 705 ) Net cash provided by financing activities 6,237 11,188 Effect of exchange rate changes on cash ( 38 ) 137 Net decrease in cash and cash equivalents ( 5,306 ) ( 18,742 ) Cash and cash equivalents at beginning of period 18,145 35,545 Cash and cash equivalents at end of period $ 12,839 $ 16,803 See accompanying notes to unaudited condensed consolidated financial statements. 6 TEAM, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business. Unless otherwise indicated, the terms “Team,” “the Company,” “we,” “our” and “us” are used in this report to refer to either Team, Inc., to one or more of our consolidated subsidiaries, or to all of them taken as a whole. Our stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TISI”. We are a global, leading provider of specialty industrial services offering customers access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability, and operational efficiency for our customers’ most critical assets. We conduct operations in two segments: Inspection and Heat-Treating (“IHT”) and Mechanical Services (“MS”). Through the capabilities and resources in these two segments, we believe that we are uniquely qualified to provide integrated solutions involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the customer’s election. In addition, we are capable of escalating with the customer’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide these services in three distinct customer demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services. IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, and field heat-treating services, as well as associated engineering and condition assessment services. These services can be offered while facilities are running (onstream), during facility turnarounds or during new construction or expansion activities. In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace and other industries covering a range of components including finished machined and in-service components. IHT also provides advanced digital imaging including remote digital video imaging. MS provides solutions designed to serve customers’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and online valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes customer production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize customer downtime and are primarily delivered while assets are off-line, often through the use of cross-certified technicians whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions. We market our services to companies in a diverse array of heavy industries which include: • Energy (refining, power, renewables, nuclear, offshore oil and gas, and liquefied natural gas); • Manufacturing and Process (chemical, petrochemical, pulp and paper industries, automotive, and mining); • Midstream (valves, terminals and storage, and pipeline); • Infrastructure (construction and building, roads, dams, amusement parks, bridges, ports, and railways); and • Aerospace and Defense. Basis of presentation. These condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain disclosures have been condensed or omitted from the interim financial statements included in this report. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC (“our Annual Report on Form 10-K”). 7 Consolidation. The condensed consolidated financial statements include the accounts of our subsidiaries where we have control over operating and financial policies. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications. Certain amounts in prior periods have been reclassified to conform to the current year presentation, including the separate presentation of depreciation and amortization expense on the condensed consolidated statements of operations. Such reclassifications did not have any effect on our financial condition or results of operations as previously reported. Significant Accounting Policies. Our significant accounting policies are disclosed in Note 1 - Summary of Significant Accounting Policies and Practices in our Annual Report on Form 10-K. On an ongoing basis, we evaluate the estimates and assumptions, including among other things, those related to long-lived assets. Since the date of our Annual Report on Form 10-K, there have been no material changes to our significant accounting policies. Newly Adopted Accounting Standards. In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers . Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods in those years. T he Company has elected to apply the practical expedient in its assessment of an allowance for credit losses as of March 31, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements. 2. REVENUE Disaggregation of revenue. Essentially all of our revenues are associated with contracts with customers. A disaggregation of our revenue from customer contracts by geographic region, by reportable operating segment and by service type is presented below: Revenue by geographic area (in thousands): Three Months Ended March 31, 2026 (unaudited) United States Canada Other Countries Total Revenue 1 : IHT $ 110,342 $ 9,267 $ 3,782 $ 123,391 MS 55,981 7,290 28,394 91,665 Total $ 166,323 $ 16,557 $ 32,176 $ 215,056 Three Months Ended March 31, 2025 (unaudited) United States Canada Other Countries Total Revenue 1 : IHT $ 103,803 $ 7,112 $ 2,706 $ 113,621 MS 53,571 5,095 26,368 85,034 Total $ 157,374 $ 12,207 $ 29,074 $ 198,655 1 As of January 1, 2026, Emission Control Services (ECS), previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosures for more information. Revenue by operating segment and service type (in thousands): 8 Three Months Ended March 31, 2026 (unaudited) Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat-Treating Other Total Revenue 1 : IHT $ 104,076 $ 8 $ 16,653 $ 2,654 $ 123,391 MS — 90,427 19 1,219 91,665 Total $ 104,076 $ 90,435 $ 16,672 $ 3,873 $ 215,056 Three Months Ended March 31, 2025 (unaudited) Non-Destructive Evaluation and Testing Services Repair and Maintenance Services Heat-Treating Other Total Revenue 1 : IHT $ 94,644 $ 1 $ 16,374 $ 2,602 $ 113,621 MS — 83,881 189 964 85,034 Total $ 94,644 $ 83,882 $ 16,563 $ 3,566 $ 198,655 1 As of January 1, 2026, ECS, previously included in the MS segment, was moved to the IHT segment, refer to Note 15 - Segment Disclosures for more information. For additional information on our reportable operating segments, refer to Note 15 - Segment Disclosures . Remaining performance obligations. As permitted by ASC 606, Revenue from Contracts with Customers , we have elected not to disclose information about remaining performance obligations where (i) the performance obligation is part of a contract that has an original expected duration of one year or less or (ii) when we recognize revenue from the satisfaction of the performance obligation in accordance with the right-to-invoice practical expedient, which permits us to recognize revenue in the amount to which we have a right to invoice the customer if that amount corresponds directly with the value to the customer of our performance completed to date. As most of our contracts with customers are short-term in nature and billed on a time and material basis, there were no material amounts of remaining performance obligations as of March 31, 2026 and December 31, 2025. 3. ACCOUNTS RECEIVABLE A summary of accounts receivable as of March 31, 2026 and December 31, 2025 is as follows (in thousands): March 31, 2026 December 31, 2025 (unaudited) Trade accounts receivable $ 132,979 $ 143,923 Unbilled revenues 53,423 38,546 Allowance for credit losses ( 4,395 ) ( 4,585 ) Total $ 182,007 $ 177,884 The following table shows a rollforward of the allowance for credit losses (in thousands): March 31, 2026 (unaudited) Balance at beginning of period $ 4,585 Provision for expected credit losses ( 33 ) Recoveries collected ( 35 ) Write-offs ( 174 ) Foreign exchange effects 52 Balance at end of period $ 4,395 9 4. INVENTORY A summary of inventory as of March 31, 2026 and December 31, 2025 is as follows (in thousands): March 31, 2026 December 31, 2025 (unaudited) Raw materials $ 10,040 $ 9,781 Work in progress 3,990 3,600 Finished goods 27,846 28,003 Total $ 41,876 $ 41,384 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS A summary of prepaid expenses and other current assets as of March 31, 2026 and December 31, 2025 is as follows (in thousands): March 31, 2026 December 31, 2025 (unaudited) Insurance receivables $ 10,000 $ 10,000 Prepaid expenses 15,603 14,039 Other current assets 2,682 3,911 Prepaid expenses and other current assets $ 28,285 $ 27,950 The insurance receivable represents amounts from our third-party insurance providers for a legal claim that is recorded in other accrued liabilities, refer to Note 8 - Other Accrued Liabilities . Insurance receivables will be collected from our third-party insurance providers for litigation matters that have been settled, or are pending settlement, and where the deductibles have been satisfied. The prepaid expenses primarily relate to prepaid insurance and other expenses that have been paid in advance of the coverage period. 6. PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment as of March 31, 2026 and December 31, 2025 is as follows (in thousands): March 31, 2026 December 31, 2025 (unaudited) Land $ 4,006 $ 4,006 Buildings and leasehold improvements 61,690 61,868 Machinery and equipment 307,452 304,618 Furniture and fixtures 11,007 11,063 Capitalized ERP system development costs 45,903 45,903 Computers and computer software 19,934 19,945 Automobiles 3,103 3,163 Construction in progress 1,389 2,729 Total 454,484 453,295 Accumulated depreciation and amortization ( 345,972 ) ( 342,667 ) Property, plant and equipment, net $ 108,512 $ 110,628 Included in the table above are assets under finance leases of $ 13.3 million and $ 13.0 million as of March 31, 2026 and December 31, 2025, respectively, and related accumulated amortization of $ 5.3 million and $ 4.8 million as of March 31, 2026 and December 31, 2025, respectively. Depreciation expense for the three months ended March 31, 2026 and 2025 was $ 4.5 million and $ 4.7 million, respectively. 10 7. INTANGIBLE ASSETS A summary of intangible assets as of March 31, 2026 and December 31, 2025 is as follows (in thousands): March 31, 2026 (unaudited) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 162,670 $ ( 128,112 ) $ 34,558 Trade names 19,165 ( 18,953 ) 212 Technology 2,300 ( 2,300 ) — Licenses 683 ( 683 ) — Intangible assets $ 184,818 $ ( 150,048 ) $ 34,770 December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 162,678 $ ( 125,109 ) $ 37,569 Trade names 19,172 ( 18,930 ) 242 Technology 2,300 ( 2,262 ) 38 Licenses 683 ( 683 ) — Intangible assets $ 184,833 $ ( 146,984 ) $ 37,849 Amortization expense of intangible assets was $ 3.1 million for the three months ended March 31, 2026 and 2025. The weighted-average amortization period for intangible assets subject to amortization was 14.0 years as of March 31, 2026 and December 31, 2025. 8. OTHER ACCRUED LIABILITIES A summary of other accrued liabilities as of March 31, 2026 and December 31, 2025 is as follows (in thousands): March 31, 2026 December 31, 2025 (unaudited) Payroll and other compensation expenses $ 33,275 $ 28,647 Legal and professional accruals 12,829 13,502 Insurance accruals 3,576 3,782 Property, sales and other non-income related taxes 3,738 5,626 Accrued interest 4,333 1,633 Volume discounts 1,962 1,938 Other accruals 2,240 1,596 Total $ 61,953 $ 56,724 Payroll and other compensation expenses include all payroll related accruals including, among others, accrued vacation, severance, and bonuses. Legal and professional accruals include accruals for legal and professional fees as well as accrued legal claims, refer to Note 14 - Commitments and Contingencies for legal claims information. Certain legal claims are covered by our third-party insurance providers and the related insurance receivable for these claims is recorded in prepaid expenses and other current assets, refer to Note 5 - Prepaid and Other Current Assets. Insurance accruals primarily relate to workers compensation costs. Property, sales and other non-income related taxes include accruals for items such as sales and use tax, property tax and other related tax accruals. Accrued interest relates to the interest accrued on our long-term debt. Other accruals include various business expense accruals. 9. INCOME TAXES 11 We recorded an income tax provision of $ 0.0 million for the three months ended March 31, 2026, compared to a provision of $ 0.2 million for the three months ended March 31, 2025. The effective tax rate, inclusive of discrete items, 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 decrease in effective tax rate for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is due to the mix of pretax income in non-valuation allowance jurisdictions and pretax losses in valuation allowance jurisdictions, along with changes in permanent differences. 10. DEBT As of March 31, 2026 and December 31, 2025, our total long-term debt and finance lease obligations are summarized as follows (in thousands): March 31, 2026 December 31, 2025 (unaudited) 2022 ABL Credit Facility $ 65,986 $ 58,786 First Lien Term Loan 1 166,142 166,241 2025 Second Lien Term Loan 1 64,393 62,063 Equipment Financing Loans 1,362 1,436 Total 297,883 288,526 Finance lease obligations 8,617 8,675 Total long-term debt and finance lease obligations 306,500 297,201 Current portion of long-term debt and finance lease obligations ( 3,884 ) ( 3,858 ) Total long-term debt and finance lease obligations, less current portion $ 302,616 $ 293,343 1 Comprised of principal amount outstanding, less unamortized debt issuance costs. See below for additional information. 2022 ABL Credit Agreement On February 11, 2022, we entered into a credit agreement, with the lender parties thereto, and Eclipse Business Capital, LLC, a Delaware limited liability company, as agent (“Eclipse”) (such agreement, as amended by Amendment No.1 dated as of May 6, 2022, Amendment No.2 dated as of November 1, 2022, Amendment No.3 dated as of June 16, 2023, Amendment No.4 dated as of March 6, 2024, Amendment No.5 dated as of September 30, 2024, Amendment No.6 dated as of March 12, 2025 and Amendment No.7 dated as of September 11, 2025, the “2022 ABL Credit Agreement”). Available funding commitments to us under the 2022 ABL Credit Agreement, subject to certain conditions, include a revolving credit line in an amount of up to $ 150.0 million to be provided by certain affiliates of Eclipse, with a $ 35.0 million sublimit for swingline borrowings, and a $ 26.0 million sublimit for issuances of letters of credit (the “Revolving Credit Loans”). The terms of the Revolving Credit Loans are described in the table below (dollar amounts are presented in thousands): 12 Maturity date 10/2/2028 Interest rate SOFR + applicable margin (or base rate + applicable margin) Actual interest rate: 3/31/2026 7.28 % 3/31/2025 8.69 % Interest payments monthly Cash paid for interest YTD 3/31/2026 $ 973 YTD 3/31/2025 $ 1,761 Principal balance 3/31/2026 $ 65,986 12/31/2025 $ 58,786 Unamortized balance of deferred financing cost 3/31/2026 $ 902 12/31/2025 $ 991 Available amount at 3/31/2026 $ 30,495 The 2022 ABL Credit Agreement contains customary conditions to borrowings and covenants, as described in the 2022 ABL Credit Agreement. As of March 31, 2026, we were in compliance with the covenants. As of March 31, 2026, $ 9.5 million in letters of credit were issued under the 2022 ABL Credit Agreement. Such amounts remain undrawn and are off-balance sheet. First Lien Term Loan Agreement On March 12, 2025, we entered into a First Lien Term Loan Credit Agreement (such agreement, as amended by Amendment No.1 dated as of September 11, 2025, the “First Lien Term Loan Agreement”) with the lenders party thereto and HPS Investment Partners, LLC. Available funding commitments include a $ 225.0 million senior secured first lien term loan (the “First Lien Term Loan”) consisting of a $ 175.0 million initial term loan tranche (the “Initial First Lien Term Loans”) and a $ 50.0 million delayed draw term loan tranche (the “First Lien Delayed Draw Term Loans”), which is available to be drawn from March 12, 2025 to June 30, 2027, subject to satisfying certain conditions. The terms of the Initial First Lien Term Loans are described in the table below (dollar amounts are presented in thousands): 13 Maturity date 3/12/2030 Stated interest rate SOFR+applicable margin (or base rate+applicable margin) Principal payments $ 438 quarterly Effective interest rate 3/31/2026 11.21 % 3/31/2025 12.64 % Actual interest rate 3/31/2026 9.42 % 3/31/2025 10.83 % Interest payments variable 1 Cash paid for interest YTD 3/31/2026 $ 1,494 YTD 3/31/2025 $ — Balances at 3/31/2026 Principal balance $ 173,250 Unamortized balance of debt discount and issuance cost 1 $( 7,108 ) Net carrying balance $ 166,142 Balances at 12/31/2025 Principal balance $ 173,688 Unamortized balance of debt discount and issuance cost 2 $( 7,447 ) Net carrying balance $ 166,241 1 Interest payment dates may be monthly or quarterly based on the Company’s election (subject to availability), adjusted to the nearest business day. The First Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative and negative covenants as described in the First Lien Term Loan Agreement. As of March 31, 2026, we were in compliance with the covenants. A&R Term Loan Credit Agreement / Second A&R Second Lien Term Loan Credit Agreement On March 12, 2025, we entered into a Second Amended and Restated Second Lien Term Loan Credit Agreement with the lenders party thereto and Cantor Fitzgerald Securities, as Agent (as amended by Amendment No.1 dated as of September 11, 2025, the “Second A&R Second Lien Term Loan Agreement”), which amended and restated the existing Amended and Restated Term Loan Credit Agreement, dated June 16, 2023. Available funding commitments to the Company under the Second A&R Second Lien Term Loan Agreement, subject to certain conditions, included a $ 107.4 million second lien term loan (the “Second Lien Term Loans”), initially provided by Corre Partners Management, LLC and certain of its affiliates (“Corre and affiliates”), consisting of a $ 97.4 million term loan tranche (the “2025 Second Lien Term Loans”) and a $ 10.0 million delayed draw term loan tranche (the “Second Lien Delayed Draw Term Loans”) which was available to be drawn from March 12, 2025, until April 15, 2026, subject to satisfying certain conditions. The amount currently outstanding under the Second A&R Second Lien Term Loan Agreement is a $ 65.8 million second lien term loan, including certain interest payments paid in kind. As of April 15, 2026, the availability period for the Second Lien Delayed Draw Term Loans expired. No amounts were drawn under the Second Lien Delayed Draw Term Loans prior to the expiration date. The terms of the 2025 Second Lien Term Loans are described in the table below (dollar amounts are presented in thousands): 14 Maturity date 6/10/2030 Principal payments quarterly 1 Effective interest rate 3/31/2026 16.32 % 3/31/2025 16.01 % Actual interest rate 3/31/2026 13.50 % 3/31/2025 13.50 % Interest payments quarterly 2 Cash paid for interest YTD 3/31/2026 $ — YTD 3/31/2025 $ — PIK interest added to principal balance YTD 3/31/2026 $ 2,120 YTD 3/31/2025 $ — Balances at 3/31/2026 Principal balance $ 65,817 Unamortized balance of debt issuance cost $( 1,424 ) Net carrying balance $ 64,393 Balances at 12/31/2025 Principal balance $ 63,696 Unamortized balance of debt issuance cost $( 1,633 ) Net carrying balance $ 62,063 1 Principal payments represent a percentage (ranges between 0 % and 0.25 % based on the First Lien Net Leverage Ratio) of the outstanding principal balance. As of March 31, 2026 we are not making quarterly principal payments. 2 Interest payments are based on the First Lien Net Leverage Ratio and may be paid in cash or PIK. As of March 31, 2026, all interest is PIK. The Second A&R Second Lien Term Loan Agreement contains certain conditions to borrowings, events of default and affirmative and negative covenants and a financial covenant as described in the agreement. As of March 31, 2026, we were in compliance with the covenants. Equipment Financing Loans Equipment financing loans consist of secured borrowings used to acquire machinery and equipment (including office equipment). Under some of the arrangements, the lender pays the equipment vendor directly on behalf of the Company; as a result, no cash proceeds are received by the Company. The loans are secured by the financed equipment and are repaid over fixed terms through scheduled installments. The related assets are recorded in property, plant, and equipment, net of accumulated depreciation. As of March 31, 2026 and December 31, 2025, the outstanding balance of equipment financing loans was $ 1.4 million. Fair Value of Debt The fair value of our debt obligations is representative of the carrying value based upon the respective interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt obligations. 1970 Group Substitute Insurance Reimbursement Facility As of March 31, 2026, the Company maintains $ 19.1 million of letters of credit outstanding under its Substitute Insurance Collateral Facility Program Agreement (the “Collateral Facility Agreement”) with 1970 Group Originator, Inc. The collateral facility agreement remains off-balance sheet unless drawn upon. Deferred facility fees are amortized to interest expense; the unamortized balances as of March 31, 2026 and December 31, 2025, were $ 1.0 million and $ 1.5 million, respectively. For additional details, refer to Note 11 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. 15 11. EMPLOYEE BENEFIT PLANS We have a defined benefit pension plan covering certain United Kingdom employees (the “U.K. Plan”). The pension plan was frozen in 1994 and no new participants have been added since that date. Net periodic pension cost (credit) includes the following components (in thousands): Three Months Ended March 31, 2026 2025 (unaudited) (unaudited) Interest cost $ 713 $ 672 Expected return on plan assets ( 826 ) ( 818 ) Amortization of prior service cost 8 8 Unrecognized net actuarial loss 110 87 Net periodic pension cost (credit) $ 5 $ ( 51 ) Net pension cost (credit) is included in “Other income (expense), net” on our condensed consolidated statements of operations. The expected long-term rate of return on invested assets is determined based on the weighted average of expected returns on asset investment categories for the U.K. Plan as follows: 5.7 % overall, 8.2 % for equities and 5.6 % for debt securities. 12. SHAREHOLDERS’ EQUITY (DEFICIT) Shareholders’ Equity (Deficit) As of March 31, 2026 there were 4,571,382 shares of our common stock outstanding and 12,000,000 shares authorized at $ 0.30 par value per share. As of March 31, 2026 there were 75,000 shares of preferred stock outstanding, designated as Series B Preferred Stock, and we had 500,000 authorized shares at $ 100.00 par value per share of preferred stock (see Note 13 - Redeemable Preferred Stock for more detail). Warrants As of March 31, 2026, the Company had the following warrants issued and outstanding: Holder Issuance date Number of warrants/ shares issuable Exercise price Expiration date APSC Holdco II, LP 12/18/2020, 11/9/2021, 12/8/2021 500,000 $ 15.00 12/8/2028 Corre and affiliates 12/8/2021 500,000 $ 15.00 12/8/2028 Stellex Holder: Tranche A 9/11/2025 982,371 $ 23.00 9/11/2035 Tranche B 9/11/2025 470,889 $ 50.00 9/11/2035 Total warrants 2,453,260 16 Accumulated Other Comprehensive Income (loss) A summary of changes in accumulated other comprehensive loss included within shareholders’ equity (deficit) is as follows (in thousands): Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 (unaudited) (unaudited) Foreign Currency Translation Adjustments Defined Benefit Pension Plans Tax Provision Total Foreign Currency Translation Adjustments Defined Benefit Pension Plans Tax Provision Total Balance, beginning of period $ ( 25,452 ) $ ( 11,148 ) $ ( 193 ) $ ( 36,793 ) $ ( 33,249 ) $ ( 10,951 ) $ 71 $ ( 44,129 ) Other comprehensive income (loss) ( 1,606 ) 118 ( 29 ) ( 1,517 ) 2,015 95 ( 44 ) 2,066 Balance, end of period $ ( 27,058 ) $ ( 11,030 ) $ ( 222 ) $ ( 38,310 ) $ ( 31,234 ) $ ( 10,856 ) $ 27 $ ( 42,063 ) 13. REDEEMABLE PREFERRED STOCK On September 11, 2025, the Company issued 75,000 shares of Series B Preferred Stock and 1,453,260 warrants to InspectionTech Holdings LP (the “Stellex Holder”) pursuant to a securities purchase agreement (the “Purchase Agreement”). The Series B Preferred Stock is classified as temporary equity in the mezzanine section of the consolidated balance sheets, as it is potentially redeemable for cash at the holder’s option beginning December 31, 2030, and under certain other events outside the Company’s control. The Company continues to have the option to access (the “Series B Delayed Draw”) up to $ 30.0 million in additional proceeds through the issuance of up to 30,000 shares of Series B Preferred Stock and 581,304 related warrants prior to September 11, 2027, subject to the terms and conditions of the Purchase Agreement. No Series B Delayed Draws were made during the quarter. During the three-months ended March 31, 2026, the Company accrued a 10.5 % paid-in-kind (PIK) dividend on the outstanding Series B Preferred Stock. The dividend was non-cash and was settled by increasing the carrying value of the preferred stock. The accrued PIK dividend totaled $ 2.0 million for the period, equivalent to $ 27 per share of redeemable preferred stock. The following table presents the change in carrying value of the redeemable preferred stock during the period ended March 31, 2026 (in thousands): Balance at December 31, 2025 $ 51,951 Additions 7 Accrued paid-in-kind dividend 2,036 Accrued paid-in-kind commitment fees 75 Accretion to redemption value 763 Balance at March 31, 2026 $ 54,832 For further information regarding the terms, classification, fair value allocation, and accretion accounting for the Series B Preferred Stock and warrants, refer to Note 16 - Redeemable Preferred Stock in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. 14. COMMITMENTS AND CONTINGENCIES As of March 31, 2026, the Company continues to assess potential loss contingencies, including legal proceedings and government compliance matters, in consultation with legal counsel. Liabilities are accrued when it is probable that a material loss has been incurred and the amount can be reasonably estimated; otherwise, the nature and possible range of loss are disclosed if reasonably possible. During the quarter ended March 31, 2026, the Company remained involved in the Kelli Most litigation, a wrongful death case that was previously subject to a $ 222 million judgment, which was subsequently vacated and dismissed in Texas. The plaintiff has since refiled the case in federal court in Kansas. Based on an updated assessment of the case under Kansas jurisdiction, the Company has accrued a $ 10.0 million liability as of March 31, 2026, which is fully offset by a receivable from 17 the Company’s insurance providers. All insurance retentions and deductibles have been met, and the Company expects that any further claims will be fully funded by its insurance policies. In total, the Company has accrued approximately $ 11.0 million for this and other matters as of March 31, 2026. Management, after consultation with legal counsel, believes that the resolution of these matters, as well as other routine legal proceedings, will not have a material adverse effect on the Company’s condensed consolidated financial statements. 15. SEGMENT DISCLOSURES We conduct operations in two segments: IHT and MS. Management’s determination of our reporting segments was made on the basis of our strategic priorities within each segment and the differences in the services we offer. The reportable segments results are reviewed regularly by the chief operating decision maker (“CODM”), who is our Chief Executive Officer, in deciding how to allocate resources and assess performance. Our CODM evaluates the segments’ operating performance based on adjusted EBITDA defined as net income (loss) before income taxes, interest expense, depreciation and amortization, and other non-recurring and non-operational items. Our CODM uses adjusted EBITDA as a measure to make resource allocation decisions for each segment for the budgeting process and reviews budget-to-actual variances to assess performance and allocate capital. During the current period, service type Emission Control Services, previously included within the MS segment, was moved to the IHT segment. This change by the Company to the composition of its reportable segments was completed to better align with how the CODM evaluates segment performance. Prior period segment information was recast to conform to the current period presentation. The recasting of the prior period segment information did not have any impact on the Company’s previously reported consolidated revenue or consolidated adjusted EBITDA. The impact of this change was to decrease previously reported revenue and adjusted EBITDA for the MS segment with a similar increase to the IHT segment by approximately $ 7.4 million and $ 2.0 million, respectively, for the three months ended March 31, 2025. Segment data for our two operating segments are as follows (in thousands): Three Months Ended March 31, 2026 IHT MS Total (unaudited) (unaudited) (unaudited) Revenues $ 123,391 $ 91,665 $ 215,056 Adjusted operating expenses 1 93,011 68,798 161,809 Adjusted selling, general and administrative expenses 2 15,093 20,312 35,405 Adjusted EBITDA $ 15,287 $ 2,555 $ 17,842 Three Months Ended March 31, 2025 IHT MS Total (unaudited) (unaudited) (unaudited) Revenues $ 113,621 $ 85,034 $ 198,655 Adjusted operating expenses 1 85,054 63,193 148,247 Adjusted selling, general and administrative expenses 2 14,905 20,385 35,290 Adjusted EBITDA $ 13,662 $ 1,456 $ 15,118 _____________ 1 Represent operating expenses including direct depreciation and amortization but excluding severance cost. 2 Represent segment selling, general and administrative expenses excluding noncash share-based compensation, professional, legal and other non-recurring costs. 18 Reconciliation of segment adjusted EBITDA to consolidated loss before income taxes: Three Months Ended March 31, 2026 2025 (unaudited) (unaudited) IHT $ 15,287 $ 13,662 MS 2,555 1,456 Segment adjusted EBITDA 17,842 15,118 Segment depreciation and amortization ( 7,113 ) ( 7,087 ) Segment professional fees, severance and other ( 1,300 ) ( 449 ) Corporate and shared support cost ( 12,800 ) ( 13,585 ) Consolidated operating loss ( 3,371 ) ( 6,003 ) Interest expense ( 8,882 ) ( 11,436 ) Loss on debt extinguishment — ( 11,853 ) Other income/(expense) 925 ( 204 ) Loss before income taxes $ ( 11,328 ) $ ( 29,496 ) Three Months Ended March 31, 2026 2025 (unaudited) (unaudited) Capital expenditures 1 : IHT $ 1,432 $ 1,458 MS 1,053 667 Corporate and shared support services 214 14 Total capital expenditures $ 2,699 $ 2,139 ____________ 1 Excludes finance leases. Totals may vary from amounts presented in the consolidated statements of cash flows due to the timing of cash payments. Three Months Ended March 31, 2026 2025 (unaudited) (unaudited) Depreciation and amortization: IHT $ 3,316 $ 2,816 MS 3,797 4,271 Corporate and shared support services 1,340 1,315 Total depreciation and amortization $ 8,453 $ 8,402 Separate measures of our assets by operating segment are not produced or utilized by our CODM to evaluate segment performance. 16. RELATED PARTY TRANSACTIONS In connection with the Company’s debt transactions, the Company engaged in transactions with Corre and affiliates to provide and/or repay funding as described in Note 10 - Debt. In connection with the issuance of Series B Preferred Stock on September 11, 2025, the Company entered into a Purchase Agreement with the Stellex Holder, see Note 13 - Redeemable Preferred Stock for further details. On the same date, the Stellex 19 Holder acquired $ 10.0 million of the Company’s outstanding loan under the Second A&R Second Lien Term Loan Agreement. The terms of the loan remain unchanged following the acquisition. In September 2025, $ 15.0 million of the Company’s outstanding loan under the Second A&R Second Lien Term Loan Agreement was acquired by JFL Credit Opportunities Fund II, L.P. and affiliates, in which one of the Company’s independent directors is an equity partner. The terms of the loan remain unchanged. 17. SUBSEQUENT EVENTS As of May 13, 2026, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended March 31, 2026 and determined that there were no events or transactions that would have a material impact on the Company’s results of operations or financial position. 20 Table of Contents