What changed in this filing

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Item 1. Financial Statements

2026-08-10 compared with 2026-05-13 · 170 added, 89 removed, 521 unchanged (33% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

ASSETS (unaudited)

28 unchanged sentences

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

Redeemable preferred stock, par value $ 100.00 per share, 75,000 shares issued and outstanding at June 30, 2026 and December 31, 2025

57,838 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

Preferred stock, 500,000 shares authorized, 75,000 shares (included in redeemable preferred stock) issued and outstanding at June 30, 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

4,571,382 and 4,532,240 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital 471,036 475,829

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Revenues $ 228,678 $ 248,026 $ 443,734 $ 446,681

1 unchanged sentence

Depreciation and amortization

2,994 3,112 5,983 6,214

Gross margin 54,396 68,089 104,551 115,355

2 unchanged sentences

Depreciation and amortization

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

5,472 5,415 10,936 10,715

Operating income (loss) 2,173 12,103 ( 1,198 ) 6,100

Interest expense, net ( 9,280 ) ( 11,896 ) ( 18,162 ) ( 23,332 )

2 unchanged sentences

Loss before income taxes ( 6,914 ) ( 3,283 ) ( 18,242 ) ( 32,779 )

Provision for income taxes ( 5 ) ( 222 )

Benefit (provision) for income taxes 102 ( 983 ) 97 ( 1,205 )

Net loss $ ( 6,812 ) $ ( 4,266 ) $ ( 18,145 ) $ ( 33,984 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE LOSS

COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Net loss $ ( 6,812 ) $ ( 4,266 ) $ ( 18,145 ) $ ( 33,984 )

4 unchanged sentences

Amortization of net actuarial loss

109 94 219 181

Other comprehensive income (loss) before tax ( 703 ) 7,114 ( 2,191 ) 9,224

2 unchanged sentences

Other comprehensive income (loss), net of tax ( 776 ) 7,006 ( 2,293 ) 9,072

Total comprehensive loss $ ( 12,850 ) $ ( 27,652 )

Total comprehensive income (loss) $ ( 7,588 ) $ 2,740 $ ( 20,438 ) $ ( 24,912 )

See accompanying notes to unaudited condensed consolidated financial statements.

15 unchanged sentences

Balance at March 31, 2026 4,571 $ 1,371 $ 473,730 $ ( 476,210 ) $ ( 38,310 ) $ ( 39,419 )

Net loss — — — ( 6,812 ) — ( 6,812 )

Dividend and accretion to redemption value on redeemable preferred stock — — ( 3,006 ) — — ( 3,006 )

Foreign currency translation adjustment, net of tax — — — — — ( 893 ) ( 893 )

Defined benefit pension plans, net of tax — — — — — 117 117

Non-cash compensation — — — 312 — — 312

Balance at June 30, 2026 4,571 $ 1,371 $ 471,036 $ ( 483,022 ) $ ( 39,086 ) $ ( 49,701 )

Balance at December 31, 2024 4,493 $ 1,348 $ 460,186 $ ( 415,667 ) $ ( 44,129 ) $ 1,738

4 unchanged sentences

Balance at March 31, 2025 4,493 $ 1,348 $ 460,133 $ ( 445,385 ) $ ( 42,063 ) $ ( 25,967 )

Net loss — — — ( 4,266 ) — ( 4,266 )

Net settlement of vested stock awards 6 2 ( 65 ) — — ( 63 )

Foreign currency translation adjustment, net of tax — — — — 6,904 6,904

Defined benefit pension plans, net of tax — — — — 102 102

Non-cash compensation — — 366 — — 366

Balance at June 30, 2025 4,499 1,350 460,434 ( 449,651 ) ( 35,057 ) ( 22,924 )

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

7 unchanged sentences

Foreign currency loss (gain)

( 1,290 ) 3,749

Deferred income taxes ( 1,616 ) ( 851 )

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

Non-cash compensation cost 1,266 313

Other, net 150 7

25 unchanged sentences

Effect of exchange rate changes on cash ( 95 ) 324

Net decrease in cash and cash equivalents ( 5,306 ) ( 18,742 )

Net increase (decrease) in cash and cash equivalents 7,839 ( 14,836 )

Cash and cash equivalents at beginning of period 18,145 35,545

19 unchanged sentences

(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.

IHT provides conventional and advanced non-destructive testing services primarily for the process, pipeline and power sectors, pipeline integrity management services, emissions control and compliance 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.

3 unchanged sentences

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;

35 unchanged sentences

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.

T he Company has elected to apply the practical expedient in its assessment of an allowance for credit losses beginning January 1, 2026.

The adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Not Yet Adopted.

In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505):

Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock (“ASU 2026-01”) .

The guidance in ASU 2026-01 clarifies how issuers initially measure paid-in-kind (“PIK”) dividends on equity-classified preferred stock by requiring issuers to use the PIK dividend rate stated in the preferred stock agreement.

ASU 2026-01 will be effective for the Company’s annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual periods, with early adoption permitted.

Entities may apply the amendments on either a prospective basis or a modified retrospective basis for equity-classified preferred stock instruments that are outstanding as of the initial application date.

The Company is currently evaluating the impact that adoption of ASU 2026-01 may have on its consolidated financial statements.

Disaggregation of revenue.

2 unchanged sentences

Revenue by geographic area (in thousands):

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

United States Canada Other Countries Total

2 unchanged sentences

Total $ 171,959 $ 19,987 $ 36,732 $ 228,678

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

United States Canada Other Countries Total

2 unchanged sentences

Total $ 184,286 $ 25,424 $ 38,316 $ 248,026

Six Months Ended June 30, 2026

United States Canada Other Countries Total

IHT $ 225,102 $ 21,780 $ 7,792 $ 254,674

MS 113,180 14,764 61,116 189,060

Total $ 338,282 $ 36,544 $ 68,908 $ 443,734

Six Months Ended June 30, 2025

United States Canada Other Countries Total

IHT $ 223,616 $ 22,224 $ 6,003 $ 251,843

MS 118,044 15,407 61,387 194,838

Total $ 341,660 $ 37,631 $ 67,390 $ 446,681

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):

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services

3 unchanged sentences

Total $ 114,253 $ 96,462 $ 14,347 $ 3,616 $ 228,678

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services

3 unchanged sentences

Total $ 112,958 $ 109,277 $ 22,071 $ 3,720 $ 248,026

Six Months Ended June 30, 2026

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services

Heat-Treating Other Total

IHT $ 218,329 $ 19 $ 30,514 $ 5,812 $ 254,674

MS — 186,878 505 1,677 189,060

Total $ 218,329 $ 186,897 $ 31,019 $ 7,489 $ 443,734

Six Months Ended June 30, 2025

Non-Destructive Evaluation and Testing Services Repair and Maintenance Services

Heat-Treating Other Total

IHT $ 207,602 $ 49 $ 38,296 $ 5,896 $ 251,843

MS — 193,110 338 1,390 194,838

Total $ 207,602 $ 193,159 $ 38,634 $ 7,286 $ 446,681

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.

1 unchanged sentence

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.

of our performance completed to date.

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

A summary of accounts receivable as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

June 30, 2026 December 31, 2025

Trade accounts receivable $ 149,396 $ 143,923

3 unchanged sentences

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

March 31, 2026

June 30, 2026

Balance at beginning of period $ 4,585

4 unchanged sentences

Balance at end of period $ 4,697

A summary of inventory as of March 31, 2026 and December 31, 2025 is as follows (in thousands):

March 31, 2026 December 31, 2025

A summary of inventory as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

June 30, 2026 December 31, 2025

Raw materials $ 10,596 $ 9,781

3 unchanged sentences

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

A summary of prepaid expenses and other current assets as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

June 30, 2026 December 31, 2025

Insurance receivables $ 10,000 $ 10,000

6 unchanged sentences

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

A summary of property, plant and equipment as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

June 30, 2026 December 31, 2025

Land $ 3,466 $ 4,006

9 unchanged sentences

Property, plant and equipment, net $ 106,495 $ 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.

Included in the table above are assets under finance leases of $ 14.1 million and $ 13.0 million as of June 30, 2026 and December 31, 2025, respectively, and related accumulated amortization of $ 6.0 million and $ 4.8 million as of June 30, 2026 and December 31, 2025, respectively.

Depreciation expense for the three months ended June 30, 2026 and 2025 was $ 4.5 million and $ 4.7 million, respectively.

Depreciation expense for the six months ended June 30, 2026 and 2025 was $ 9.0 million and $ 9.5 million, respectively.

INTANGIBLE ASSETS

A summary of intangible assets as of March 31, 2026 and December 31, 2025 is as follows (in thousands):

March 31, 2026

A summary of intangible assets as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

June 30, 2026

Amount Accumulated

13 unchanged sentences

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.

Amortization expense of intangible assets was $ 3.0 million and $ 3.1 million, respectively, for the three months ended June 30, 2026 and 2025.

Amortization expense of intangible assets for the six months ended June 30, 2026 and 2025 was $ 6.1 million and $ 6.2 million, respectively.

The weighted-average amortization period for intangible assets subject to amortization was 14.0 years as of June 30, 2026 and December 31, 2025.

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

A summary of other accrued liabilities as of June 30, 2026 and December 31, 2025 is as follows (in thousands):

June 30, 2026 December 31, 2025

Payroll and other compensation expenses $ 37,607 $ 28,647

Legal and professional accruals 12,506 13,502

Insurance accruals 3,576 3,782

Property, sales and other non-income related taxes 4,118 5,626

Accrued interest 4,056 1,633

Insurance accruals 3,659 3,782

Volume discounts

3 unchanged sentences

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.

Insurance accruals primarily relate to workers compensation costs.

Other accruals include various business expense accruals.

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.

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

We recorded an income tax benefit of $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2026, compared to a provision of $ 1.0 million and $ 1.2 million for the three and six months ended June 30, 2025.

The effective tax rate, inclusive of discrete items, was 1.5 % for the three months ended June 30, 2026, compared to 29.9 % for the three months ended June 30, 2025.

For the six months ended June 30, 2026, our effective tax rate, inclusive of discrete items, was 0.5 %, compared to 3.7 % for the six months ended June 30, 2025.

The decrease in effective tax rate for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 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.

As of June 30, 2026 and December 31, 2025, our total long-term debt and finance lease obligations are summarized as follows (in thousands):

June 30, 2026 December 31, 2025

2022 ABL Credit Facility $ 83,486 $ 58,786

13 unchanged sentences

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”).

Available funding commitments under the 2022 ABL Credit Agreement, subject to certain conditions, include a revolving credit line 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):

16 unchanged sentences

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.

As of June 30, 2026, we were in compliance with the covenants.

As of June 30, 2026, $ 9.4 million in letters of credit were issued under the 2022 ABL Credit Agreement.

Such amounts remain undrawn and are off-balance sheet.

26 unchanged sentences

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 June 30, 2026, we were in compliance with the covenants.

2025 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 “2025 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 2025 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 2025 Second Lien Term Loan Agreement is a $ 68.0 million second lien term loan, including certain paid-in-kind interest.

As of April 15, 2026, the availability period for the Second Lien Delayed Draw Term Loans expired.

25 unchanged sentences

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.

As of June 30, 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.

For the six months ended June 30, 2026, all interest was PIK.

The 2025 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 June 30, 2026, we were in compliance with the covenants.

Equipment Financing Loans

4 unchanged sentences

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.

As of June 30, 2026 and December 31, 2025, the outstanding balances of equipment financing loans were $ 1.3 million and $ 1.4 million, respectively.

Fair Value of Debt

1 unchanged sentence

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.

As of June 30, 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.

the unamortized balances as of June 30, 2026 and December 31, 2025, were $ 0.5 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.

3 unchanged sentences

Net periodic pension cost (credit) includes the following components (in thousands):

Three Months Ended March 31,

(unaudited) (unaudited)

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

2026 2025 2026 2025

(unaudited) (unaudited) (unaudited) (unaudited)

Interest cost $ 710 $ 714 $ 1,423 $ 1,386

2 unchanged sentences

Unrecognized net actuarial loss

109 94 219 181

Net periodic pension cost (credit) $ 4 $ ( 54 ) $ 9 $ ( 105 )

5 unchanged sentences

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).

As of March 31, 2026, the Company had the following warrants issued and outstanding:

As of June 30, 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 June 30, 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).

As of June 30, 2026, the Company had the following warrants issued and outstanding:

Holder Issuance date Number of warrants/ shares issuable Exercise price Expiration date

6 unchanged sentences

Total warrants 2,453,260

Accumulated Other Comprehensive Income (loss)

Accumulated Other Comprehensive 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

Six Months Ended

June 30, 2026 Six Months Ended

June 30, 2025

(unaudited) (unaudited)

12 unchanged sentences

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.

During the six months ended June 30, 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 $ 4.2 million for the period, equivalent to $ 55 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):

The following table presents the change in carrying value of the redeemable preferred stock during the period ended June 30, 2026 (in thousands):

Balance at December 31, 2025 $ 51,951

2 unchanged sentences

Accretion to redemption value 1,578

Balance at March 31, 2026 $ 54,832

Balance at June 30, 2026 $ 57,838

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.

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.

As of June 30, 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.

During the quarter ended June 30, 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

Based on an updated assessment of the case under Kansas jurisdiction, the Company has accrued a $ 10.0 million liability as of June 30, 2026, which is fully offset by a receivable from

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.

In total, the Company has accrued approximately $ 11.0 million for this and other matters as of June 30, 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.

5 unchanged sentences

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.

As of January 1, 2026, 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.

1 unchanged sentence

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.

The impact of this change for the three months ended June 30, 2025 was to decrease previously reported revenue and adjusted EBITDA for the MS segment with a similar increase to the IHT segment by approximately $ 7.8 million and $ 2.2 million, respectively.

The impact of the change for the six months ended June 30, 2025 was to decrease previously reported revenue and adjusted EBITDA for the MS segment with a similar increase to the IHT segment by approximately $ 15.2 million and $ 4.2 million, respectively.

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

Three Months Ended

March 31, 2026

June 30, 2026

(unaudited) (unaudited) (unaudited)

7 unchanged sentences

Three Months Ended

March 31, 2025

June 30, 2025

(unaudited) (unaudited) (unaudited)

6 unchanged sentences

$ 21,675 $ 12,801 $ 34,476

Six Months Ended

June 30, 2026

(unaudited) (unaudited) (unaudited)

Revenues $ 254,674 $ 189,060 $ 443,734

Adjusted operating expenses 1

192,232 140,769 333,001

Adjusted selling, general and administrative expenses 2

30,035 39,616 69,651

Adjusted EBITDA

$ 32,407 $ 8,675 $ 41,082

Six Months Ended

June 30, 2025

(unaudited) (unaudited) (unaudited)

Revenues $ 251,843 $ 194,838 $ 446,681

Adjusted operating expenses 1

185,696 139,311 325,007

Adjusted selling, general and administrative expenses 2

30,810 41,270 72,080

Adjusted EBITDA

$ 35,337 $ 14,257 $ 49,594

_____________

1 Represent operating expenses including direct depreciation and amortization but excluding severance cost.

2 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2026 2025 2026 2025

(unaudited) (unaudited) (unaudited) (unaudited)

IHT $ 17,120 $ 21,675 $ 32,407 $ 35,337

7 unchanged sentences

Corporate and shared support cost ( 13,468 ) ( 13,814 ) ( 26,268 ) ( 27,399 )

Consolidated operating loss ( 3,371 ) ( 6,003 )

Consolidated operating income (loss) 2,173 12,103 ( 1,198 ) 6,100

Interest expense ( 9,280 ) ( 11,896 ) ( 18,162 ) ( 23,332 )

3 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2026 2025 2026 2025

(unaudited) (unaudited) (unaudited) (unaudited)

Capital expenditures 1 :

IHT $ 1,397 $ 1,671 $ 2,829 $ 3,129

MS 1,859 1,277 2,912 1,944

Corporate and shared support services 77 304 291 318

4 unchanged sentences

Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2026 2025 2026 2025

(unaudited) (unaudited) (unaudited) (unaudited)

Depreciation and amortization:

6 unchanged sentences

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 Company’s debt obligations, 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

Holder acquired $ 10.0 million of the Company’s outstanding loan under the Second A&R Second Lien Term Loan Agreement.

On the same date, the Stellex Holder acquired $ 10.0 million of the Company’s outstanding loan under the 2025 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.

In September 2025, $ 15.0 million of the Company’s outstanding loan under the 2025 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.

1 unchanged sentence

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.

As of August 10, 2026, the filing date of this Quarterly Report on Form 10-Q, management evaluated the existence of events occurring subsequent to the quarter ended June 30, 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.

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 1. Financial Statements