ONT 10-K & 10-Q changes, risk factors and insider trading

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the financial statements and the related notes included in Item 8. “Financial Statements and Supplementary Data,” before making an investment decision. The discussion of these risks is organized by the following sections: Risks Related to Our Industry and the Broader Economy, Risks Related to Our Acquisition Strategy, Risks Related to the Nature of Our Business, Risks Related to Our Acquisition Strategy, Risks Related to Our Contracts and Revenue Streams, Technology and Privacy Related Risks, Risks Related to Our Indebtedness, Risks Related to Ownership of Our Common Stock, Risks Related to Provisions in Our Charter Documents, and General Risks. Some of the more significant risks include:

general global economic, business and other conditionsconditions, including inflationary and interest rate pressures, the cyclical nature of some of our end marketsindustry;

the highly competitive nature of our business;

rapidlyour ability to adapt to changing technologytechnology, industry standards or regulatory requirements, including emerging environmental, social and industrygovernance and regulatory standardsrequirements;

the parts of our business that depend on difficult to predict natural or manmade events and the fluctuations in our revenue and customer concentration as a result thereof;

If any of the risks described below actually occurs, our business, financial condition and results of operations could be materially and adversely affected and the trading price of our common stock could decline, causing you to lose all or part of your investment in our common stock. Some of the risks and uncertainties discussed below may have occurred in the past, and the disclosures below are not representations or warranties as to whether or not any risks or uncertainties have occurred in the past, but arereflect discussedour hereinbeliefs becauseand futureopinions occurrencesas ofto suchthe risks and uncertainties that could have a material adverse effect on our business, financial condition and results of operations.operations in the future. The risks described in these documents are not the only ones we face. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could harm our future results. We could also be affected by factors, events or uncertainties that are not known to us or that we do not currently believe present any material risk.

General global economic, business and other conditions and our vulnerability to the cyclical nature of the sectors and industries in which our clients operate,operate may adversely affect our business.

We compete in various end markets and geographic regions domestically and around the world. We provide environmental services to clients operating in a number of sectors and industries, including thebut not limited to oil & gas, utilities, local, state, provincial and federal government entities, technical services,services including engineering, industrial manufacturing, chemicals, transportation, chemicals, renewable energy generation, aerospace, telecommunications and engineering.telecommunications. These sectors and industries and the resulting demand for our services have been, and we expect will continue to be, cyclical and subject to significant fluctuations due to a variety of factors beyond our control, including economic conditions, such as inflation and supply chain difficulties, regulatory requirements, appropriation levels and changes in client capital spending, particularly during periods of economic or political uncertainty. Important factors for our business and the businesses of our clients include macroeconomic conditions, the overall strength of, and our clients’ confidence in, the economy, industrial and governmental capital spending, governmental fiscal and trading policies,policies such as tariffs, environmental and regulatory policiespolicies, the strength of the residential and commercial real estate markets, unemployment rates, consumer spending, availability of financing, interest rates, tax rates and changes in tax laws, political conditions, energy and commodity prices and programs such as renewable fuel standard programs and low-carbon fuel standard programs.

The assessment,environmental permittingconsulting, testing and response, measurement and analysis and remediation and reusetreatment industries are highly fragmented and competitive. Our primary competitors in these industries include companies that specialize in one or more services similar to those offered by us on a local or regional basis. We also compete with global, national, regional and local firms specializing in testing, environmental engineering and consulting services, remediation services and other services we provide. SomeSee Item 1. “Business—Contracts” for some of our primary competitors include,by inbusiness our Assessment, Permitting and Response segment, the environmental divisions of ERM, Ramboll, Geosyntec, Exponent, WSP and other large engineering companies and small businesses, in our Measurement and Analysis segment, the environmental divisions of SGS, TRC Companies, Eurofins, Pace Analytical and other large testing companies and small businesses, and in our Remediation and Reuse segment, the environmental divisions or remediation segments of Tetra Tech, AECOM, Xylem, Veolia, Mead & Hunt, and other large engineering companies and other small businesses.segment. It is also possible that our clients may establish in-house capabilities to perform certain services that we currently provide.

We operate in markets that are characterized by client demand that is often broad in scope butand localized in delivery. We compete with companiesfirms that are or may be better positioned to capitalize on highly localized relationships and knowledge that areis difficult for us to replicate. Our potentialPotential clients may prefer local providers, whether because of existing relationships or local legal restrictions or incentives that favor local businesses. Smaller regional companies may also have lower cost structures with fewer fixed costs. As a result, efforts to expand, whether organically or through acquisition, or support our service network may not improve our ability to penetrate new local markets or expand our footprint in existing markets. New entrants to our key markets could cause us to lose clients and otherwise harm our competitive position.

Competition in our industry is based on many factors, but we believe the principal points of competition in our markets are the quality, range, pricing, technology and availability of services. Maintaining and improving our competitive position will require successful management of these factors, including continued investment by us in research and development, sales, marketing, technology, customer service and support, personnel and our professional networks. Our future growth rate depends upon our ability to compete successfully, which is impacted by a number of factors, including our ability to identify emerging technologicaltechnology trends in our target end markets, develop and maintain a wide range of competitive and appropriately priced services and solutions, defend our market share against competitors, including new and non-traditional competitors, expand into new markets and attract, develop and retain individuals with the requisite technical expertise and understanding of clients’ needs to develop and sell new services.

If we are unable to develop successful new services or technologies or adapt to rapidly changing technology and industry standards or changes to regulatory requirements, our business could be harmed.

The market for our servicesservices, including technologies, is characterized by rapid technological change and evolving industry standards and, to a lesser extent, changing regulatory requirements. This constant evolution may reduce the effectiveness of or demand for our services or render them noncompetitive or obsolete. Our continued success and growth depend upon our ability to anticipate these challenges and to innovate by enhancing our existing services and developing and successfully implementing new services to keep pace with the ever-changing and increasingly sophisticated needs of our clients.

New service introductions that are responsive to new technologies and changing industry and regulatory standards can be complex and expensive as they require significant planning, design, development and testing. We may find it difficult or costly to update our services and to develop new services quickly enough to work effectively with new or changed technologies, to keep the pace with evolving industry standards or to meet our clients’ needs. In addition, our industry may be slow to accept new technologies that we develop because of, among other things, existing regulations or standards written specifically for older technologies and general unfamiliarity of clients with new technologies. In a deregulatory environment, our return on investment for services or technologies that were previously under development or that we developed to meet future demand that never materializes would be adversely affected. As a result, any new services that we may develop may not be successful for a number of years, if at all. If we are unable to successfully enhance or update existing services or develop new services to meet these challenges, our business, financial condition and results of operations may be adversely affected.

A significant portion of our historical growth has occurred through acquisitions, and though we arehave temporarily slowingslowed our cadence of consummating acquisitions, we anticipate continued growth through acquisitions in the future. Our growth strategy is partially dependent on acquiring and integrating the operations of companies in the environmental services industry. Since January 1, 2020, we have acquired 25 companies. We are presently evaluating, and we expect to continue to evaluate on an ongoing basis, a variety of possible acquisition transactions. We cannot predict the timing of any contemplated transactions, and there can be no assurances that we will identify suitable acquisition opportunities or, if we do identify such opportunities, that any transaction can be consummated on terms acceptable to us. We also compete for acquisitions with other potential acquirers, some of which may have greater financial or operational resources than we do. A significant change in our business or the economy, an unexpected decrease in our cash flows or any restrictions imposed by our debt may limit our ability to obtain the necessary capital for acquisitions or otherwise impede our ability to complete an acquisition. Certain proposed acquisitions or dispositions may also trigger a review by the U.S. Department of Justice, or DOJ, and the U.S. Federal Trade Commission, or FTC, under their respective regulatory authority, focusing on the effects on competition, including the size or structure of the relevant markets and the pro-competitive benefits of the transaction. Any delay, prohibition or modification required by regulatory authorities could adversely affect the terms of a proposed acquisition or could require us to modify or abandon an otherwise attractive acquisition opportunity. The terms of our Series A-2 Preferred Stock also restrict our ability to make certain acquisitions without the consent of the holder majority, including acquisitions in excess of $75.0 million. The failure to identify suitable transaction partners and to consummate transactions on acceptable terms could have a material adverse effect on our business, financial condition and results of operations.

We may not be successful in maintaining and expanding our client base or the services we provide to existing clients, which could adversely affect our business.

Our success and the planned growth and expansion of our business depends on our ability to maintain our existing client base and expand into new markets and further penetrate existing markets. Our ability to maintain our existing client base is primarily dependent on our ability to meet client needs and expectations. Our ability to expand is to a large extent contingent on our services and solutions achieving greater and broader acceptance, resulting in a larger client base, a broader array of prospective clients and expanded services provided to existing clients. However, demand for our services is uncertain, and there can be no assurance that clients will purchase our offerings, or that we will be able to maintain or continually expand our client base within existing geographies or into new geographies, whether we expand organically or through acquisition. ExpandingMaintaining and expanding our client base is also subject to external factors, many of which are beyond our control, including the overall demand for the services we offer, the actions of our competitors and the finite number of prospective clients in a given market. We cannot provide any assurances regarding our immediate or long-term growth rates in any geographic market or segment, or if we will grow at all. If we are unable to effectively maintain our existing client base and market or expand our offerings to new clients or cross-market our services to existing clients, we may be unable to grow our business or implement our business strategy. Any of the above could materially impair our ability to increase sales and revenue and have a material adverse effect on our business, financial condition and results of operations.

Our operations depend upon our relationships with our clients. Our clients are companies operating in a number of sectors and industries, including the financial, oil & gas, utilities, construction, automotive, real-estate,real estate, midstream energy, manufacturing, commodities, petrochemical, food and beverage, telecommunications and engineering industries, as well as local, state, provincial and federal government entities. As is customary in our industry, we do not always enter into formal written agreements with our clients, and to the extent we do, such agreements do not generally restrict our clients from altering the terms of the relationship. These arrangements allow clients to attempt to seek concessions, introduce unfavorable terms or limit the services and solutions that we provide to them before a project is finished or as a condition to continued or increased business. The arrangements also generally allow a client to terminate or to decide not to renew their contracts or purchase orders with little or no advanced notice to us. A loss of one or more clients, a meaningful reduction in their purchases from us or an adverse change in the terms on which we provide our services and solutions could have a material adverse effect on our business, financial condition and results of operations.

Our efforts to minimize the likelihood and impact of adverse cybersecurity incidents and to protect data and intellectual property may not be successful and our business has in the past been and could be negatively affected by cyber or security threats or other disruptions. We routinely experience various cybersecurity threats to our technology infrastructure, unauthorized attempts to gain access to our company, employee and customer-sensitive information, insider threats and other attacks. Our customers, suppliers, subcontractors, and partners experience similar security threats. In addition to cyber threats, we face threats to the security of our facilities and employees, which could materially disrupt our business if carried out. We could also be impacted by the improper conduct of our employees or others working on behalf of us who have access to export controlled or Controlled Unclassified Information (CUI), which could adversely affect our business and reputation. The threats we face vary from attacks common to most industries, such as ransomware, to more advanced and persistent threats,threats and highly organized adversaries, including nation state actors, which target us and other defense contractors and other companies. These threats can cause disruptions to our business operations. Additionally, the prevalence and increasing sophistication of artificial intelligence may increase the frequency or efficacy of cyberattacks, and the use of artificial intelligence by us or the third parties on which we depend to operate our business may create new cybersecurity vulnerabilities, including those which may not be recognized at this time. In addition to cyber threats, our cybersecurity and processing systems, as well as those of our third-party service providers, including cloud service providers, newly acquired companies that have not yet been integrated, and those of our clients which we periodically manage, may experience damage or disruption from a number of causes, including power outages, computer and telecommunication failures, internal design, manual or usage errors, workplace violence or wrongdoing, catastrophic events, natural disasters, and severe weather conditions. These systems may also be damaged, disrupted, or fail entirely because of computer viruses or other malicious codes, social-engineering schemes, unauthorized access attempts, and cyber-attacks that could include phishing-attacks, denial-of-service attacks, ransomware, malware, and hacking. If we are unable to protect sensitive information, including complying with evolving information security and data protection/privacy regulations, our customers or governmental authorities could question the adequacy of our threat mitigation and detection processes and procedures. Moreover, depending on the severity of an incident, our customers’ data, our employees’ data, our intellectual property (including trade secrets and research, development, and engineering know-how), and other third-party data (such as subcontractors, suppliers and vendors) could be compromised. As previously disclosed, on June 11, 2022, we were the target of an organized ransomware attack on our IT systems that, although not ultimately material to our results of operations for the year ended December 31, 2022, and December 31, 2023, or any individual fiscal quarter within those years, the attack led to the temporary disruption of our regular operations and lost revenues in 2022.

As of December 31, 2024, ourOur Senior Secured Credit Agreement, provided for a $400.0 million credit facility comprised of a $225.0 million term loan and a $175.0 million revolving credit facility, or the 2021 Credit Facility. In February 2024, the Company exercised its option to access the $100.0 million accordion under our Senior Secured Credit Agreement, and as a result, the Senior Secured Credit Agreement was amended to provide for an additional $50.0 million term loan, $50.0 million revolving credit facility and an incremental accordion of $150.0 million. On February 26, 2025, the Company entered into a new Senior Secured Credit Agreement providing for a $500.0 million credit facility comprised of a $200.0 million term loan and a $300.0 million revolving creditline facility,of credit, or the 2025 Credit Facility. Pursuant to the 2025 Credit Facility, the Company also has the option to borrow up to an aggregate of $200.0 million in incremental term loans or request an increase in the aggregateincreased commitments under the revolving credit facility up to an aggregate amountline of $200.0 millioncredit subject to the satisfaction of certain conditions. The revolving line of credit facility includes a $20.0 million sublimit for the issuance of letters of credit. Subject to certain exceptions, all amounts under the 2025 Credit Facility will become due on February 26, 2030. As of December 31, 2024,2025, our total indebtedness net of deferred debt issuance costs was $222.7$288.3 million, consisting of $214.4$282.2 million outstanding under the 20212025 Credit Facility, $189.2$197.5 million of which was outstanding under the term loan, $25.2$84.7 million of which was outstanding under the revolving line of credit facility and $9.3$8.1 million of which was outstanding under our aircraft loan.

See NotesNote 13 and 22 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data."

We may not be able to borrow additional financing or to refinance our 2025 Credit Facility or other indebtedness we may incur in the future, if required, on commercially reasonable terms, if at all. In addition, our ability to borrow under our 2025 Credit Facility is subject to significant conditions. See NotesNote 13 and 22 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data."

We may be able to incur significant additional indebtedness in the future. For example, we may incur additional indebtedness in connection with future acquisitions. Although our 2025 Credit Facility and our Series A-2 Preferred Stock containcontains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us from incurring obligations that do not constitute indebtedness. As of December 31, 2024,2025, the 20212025 Credit Facility provided for an aggregate unused capacity of $149.8$215.3 million (without giving effect to any outstanding letters of credit, and subject to borrowing base limitations, if any). Immediately following closing of the 2025 Credit Facility, the Company had total available capacity under the 2025 Credit Facility of $283.8 million (without giving effect to any outstanding letters of credit, and subject to borrowing base limitations). The 2025 Credit Facility also allows us to increase the aggregate borrowings thereunder by up to $200.0 million. See NotesNote 13 and 22 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data."

Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our existing or future debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. Our 2025 Credit Facility, airplane loan, and our Seriesairplane A-2 Preferred Stockloan, restrict our ability to consummate or use the proceeds from asset sales. We may not be able to consummate those asset sales to raise capital or sell assets at prices that we believe are fair. Any proceeds that we receive may not be adequate to meet any debt service obligations then due. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.

Since our inception in 2012, our mission has been to help clients and communities meet their environmental goals and needs. According to data derived from a 20242025 Environmental Industry Study prepared by Environmental Business International, Inc., or EBI, which we commissioned, the global environmental industry is estimated to begenerate approximately $1.6$1.9 trillion,trillion in revenues in 2026, with $540.0$620.0 billion concentrated in the United States.

We provide environmental services to our clients through three business segments—Assessment, Permitting and Response, Measurement and AnalysisAnalysis, and Remediation and Reuse. For more information on each of our operating segments, see Item 1. “Business” and our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

Assessment, Permitting and Response segment provides scientific advisory and consulting services to support environmental assessments, environmental emergency response and recovery, toxicology consulting and environmental audits and permits for current operations, facility upgrades, new projects, decommissioning projects and development projects. We work closely with clients to navigate the regulatory process at the local, state, provincial and federal levels, identify the potential environmental and political impacts of their decisions and develop practical mitigation approaches, as needed. In addition to environmental toxicology,toxicology and given our expertise in helping businesses plan for and respond to disruptions, our scientists and response teams have helped clients navigate their preparation for and response to emergency response situations.

Remediation and Reuse segment provides clients with engineering, design, and implementation services, primarily (i) treatment technologies which treat contaminated water or create renewable energy from waste,water, or (ii) soil remediation. Our employees, including engineers, scientists and consultants, provide these services to assist our clients in designing solutions, managing products and mitigating environmental risks and liabilities at their locations. We do not own the properties or facilities at which we implement these projects or the underlying liabilities, nor do we own material amounts of the equipment used in projects.

WeAlthough we did not consummate any acquisitions in 2025, we have been, and expect to continue to be, an acquisitive company. Acquisitions have expanded our environmental service capabilities across all three segments, our access to technology, as well as our geographic reach in the United States, Canada, Europe and Australia. See Item 1. “Business—Strategic Acquisitions.” The table below sets forth the number of acquisitions completed in each2024 ofand the last three fiscal years,2023, fiscal year revenues contributed by those acquisitions in the year of acquisition, and the percentage of total annual revenues attributable to those acquisitions:

WeDuring the year ended December 31, 2025, we made contingent consideration payments of $17.8 million for Epic, SensibleIoT, LLC (Sensible), Vandrensning, and Spirit, of which $10.0 million was paid in cash, and $7.7 million was paid in the Company's common stock. During the year ended December 31, 2024, we made earn-out payments of $1.5 million in March 2024 in connection with our acquisition of Huco Consulting, Inc. (Huco), of which, $0.4 million was paid in cash, and the remaining $1.1 million in the Company's common stock. In connection with certain of our acquisitions, we may make up to $57.6$17.6 million in aggregate earn-out payments between the years 20252026 and 2026,2027, of which up to $22.1$5.1 million may be paid only in cash, up to $13.6$2.8 million may be paid only in common stock and up to $21.9$9.7 million may be paid, at our option, in cash or common stock. See Note 8 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

As part of this evaluation, duringDuring the first quarter of 2023, we determined to sell one of our specialty lab testing businesses, the Discontinued Specialty Lab, whose service offering was non-core to our business. On December 29, 2023, we sold the assets of the Discontinued Specialty Lab for a total sales price of $4.8 million. Proceeds from the sale were paid in cash of $0.5 million, and a promissory note receivable of $4.3 million. We recorded a gain on the sale of the assets of approximately $1.8 million and recorded a current expected loss of $2.2 million against the promissory note receivable. The Discontinued Specialty Lab, which was part of our Measurement and Analysis segment, generated revenues of $8.8 million and $17.0 million in the yearsyear ended December 31, 2023 and 2022, respectively.2023. The discontinuation of this specialty service line did not represent a strategic shift that had a major effect on our operations and financial results, therefore it did not meet the requirements to be classified as discontinued operations.

Our segments and our business lines within each segment generate different levels of profitability and, accordingly, shifts in the mix of revenues between segments can impact our consolidated reported net income,income or loss, net income or loss margin, Segment Adjusted EBITDA and Segment Adjusted EBITDA margin from quarter to quarter and year to year. Inter-company revenues between business lines within segments have been eliminated. See Note 19 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

Total debt at December 31, 2024 was $222.7 milliondebt, net of deferred debt issuance costs, at December 31, 2025 was $288.3 million, which was an increase of $59.5$65.6 million compared to December 31, 2023.2024. The increase was primarily driven by thean additionalincrease $50.0of $59.5 million termoutstanding loan and additional usage ofunder our revolving credit facility, the outstanding balance under which increased to $25.2 million under the revolving credit facility asline of December 31, 2024 from no outstanding borrowings as of December 31, 2023, partially offset by repayments and amortization of the various debt noted.credit.

Interest expense, net was $15.9$19.6 million, $7.8$15.9 million and $5.2$7.8 million in the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. We expect interest expense to remain a significant cost as we continue to leverage theour 20212025 Credit Facility to support our operations,operations partiallyand fundfuture acquisitions. Our 2025 Credit Facility funded a portion of the redemption of the Series A-2 Preferred Stock,Stock in April and toJuly fund future acquisitions.2025.

In February 2025, we refinanced our 2021 Credit Facility and replaced it with a new 2025 Credit Facility. See NotesNote 13 and 22 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

Due to the field-based nature of certain of our services, weather patterns generally impact our field-based teams’ ability to operate in the winter months. As a result, our operating results could experience quarterly variability with generally lower revenues and lower earnings in the first and fourth quarters and higher overall revenues and earnings in the second and third quarters. As we continue to grow and expand into new geographies and service lines, quarterly variability in our Measurement and Analysis and Remediation and Reuse segments may deviate from historical trends.

In addition to the impact of seasonality on earnings, our environmental emergency response business exposes us to potentially significant revenue and earnings fluctuations tied to large environmental emergency response projects following an incident or natural disaster or more broad scale events such as the COVID-19 pandemic.events. Total revenue from emergency response related services was $48.0$77.0 million, $91.4$48.0 million, and $88.0$91.4 million in the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. Demand for environmental emergency response services remains difficult to predict and as a result, we may have experienced revenues and earnings in prior years that are not indicative of future results, making those periods particularly difficult comparisons for future periods. Earnings volatility is also driven by the timing of large projects, particularly in our Remediation and Reuse segment, and the impact of acquisitions. As a result of these factors, and because demand for environmental services is not driven by specific or predictable patterns in one or more fiscal quarters, our business is better assessed based on annual results.

For the year ended December 31, 2024,2025, we generated revenues of $696.4$830.5 million, an increase of $72.2$134.1 million or 11.6%19.3% from the year ended December 31, 2023.2024. The period over period increase in revenues was primarily driven by $81.6 million from revenues pertaining to acquisitions as well as strong organic growth of 8.3%12.7% or $43.4$81.8 million drivenacross byall Assessment, Permitting and Response and Measurement and Analysisthree segments, partially offset by lower non-acquisition related revenue in our Remediation and Reuse segment. These increases were partially offset by $43.3$29.0 million lower environmentalhigher emergency response revenues,revenue, whichand we$25.0 excludemillion from organicacquisitions growth, and the December 2023 sale of the Discontinued Specialty Lab, which generated $8.8 million of revenuecompleted in 2023.2024. EnvironmentalRevenue emergencyfrom environmental response revenueswas were $48.0$77.0 million and $91.4$48.0 million for the years ended December 31, 20242025 and 2023,2024, respectively. Revenues from the exited European operations were $3.8 million for the year ended December 31, 2025, compared to $3.2 million for the year ended December 31, 2024.

Cost of revenues consists of all direct costs required to provide services, including fixed and variable direct labor costs, equipmentmaterial purchasesparts and rental,components, and other outside services, field and lab supplies, vehicle costs and travel-related expenses. Variable costs of revenues generally follow the same trends as revenue, while fixed costs tend to change primarily as a result of acquisitions.

Cost of revenues for the year ended December 31, 20242025 increased from the year ended December 31, 20232024 driven primarily by an increase in revenues. Cost of revenues as a percentage of revenue dropped to 60.1%59.7% from 61.5%60.1% in 2023,2024, primarily due to operatingfavorable leveragesegment revenue mix. Revenue in our labs,Assessment, improvedPermitting marginsand inResponse segment which has our treatment technology and consulting businesses, and the benefit from acquisitions. Year-over-yearlowest cost of revenues as a percentage of revenuerevenue, droppedincreased to 37.0% of total revenues for the year ended December 31, 2025 from 30.9% in allthe threeprior year. Cost of revenues as a percentage of revenue also benefited from operating leverage in our segments.Measurement and Analysis segment, partially offset by higher sub-contract costs in our Assessment, Permitting and Response segment attributable to higher external lab spending on higher emergency response revenues.

Selling, general and administrative expense for the year ended December 31, 20242025 increased $38.8by $9.2 million or 17.4%3.5% compared to the year ended December 31, 2023.2024. This increase was primarily driven by an increase of $16.6$22.1 million relatedin tolabor acquisitions,costs, mainly driven by a $10.8 million increase in bonus expenses, as well as an increase in headcount, $6.7 million increase in bad debt expense, primarily driven by an increase in aged receivables from the City of $15.9Tustin, and $2.0 million increase in severance costs. These increases were partially offset by a decrease of $22.5 million in stock based compensation expense, primarily related to the expensing of the unamortized value of executive team stock appreciation rights (SARs), which were canceled on December 31, 2024, within the remainingprior changes due to inflationary increases and investments in IT infrastructure.year.

The increasedecrease in depreciation and amortization expense was drivenprimarily primarilydue to lower amortization of intangibles due to the absence of acquisitions in 2025, partially offset by $4.8increased milliondepreciation ofexpense additional amortization relateddue to intangibleshigher acquired through acquisition,property and $1.7 million higher depreciation related to equipment purchases.balances.

Other Income (Expense), IncomeNet

Other incomeincome, net for the year ended December 31, 20232025 of $4.4$19.1 million was driven by a $6.7$20.2 million fair value gain related to fair value adjustments on the Series A-2 Preferred Stock conversion option and a $0.3$0.8 million gain fromof other non-operating income, partially offset by a $2.6$2.0 million loss related to fair value adjustments on our interest rate swap.swaps.

Interest expense, net incurred in the year ended December 31, 2024,2025, was $15.9$19.6 million, compared to $7.8$15.9 million for the year ended December 31, 2023.2024. The increase in interest expense was primarily due to higher interest rates anda higher debt balance outstanding during the year.year, partially offset by lower interest rates. Interest expense in 2025 was also impacted by the write-off of deferred debt issuance costs of $0.9 million as a result of the refinancing of our senior secured credit facility in February 2025.

Weighted average interest rates as of December 31, 20242025 and December 31, 20232024 were 7.2%6.1% and 6.7%,7.2%, respectively, before the benefit of interest rate swaps, and 5.8%5.5% and 4.1%,5.8%, respectively, after the benefit of interest rate swaps. See “—Key Factors that Affect Our Business and Our Results—Financing Costs” and NoteNotes 7 and 13 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

Income Tax Expense (Benefit)

Income tax expense (benefit) was $8.0$12.1 million and $(1.0)$8.0 million for the years ended December 31, 20242025 and 2023,2024, respectively. The difference between our effective tax rate and the federal statutory rate of 21.0% is primarily attributable to items recorded for GAAP but permanently disallowed for U.S. federal income tax purposes, change in valuation allowance, research and development tax credits and state and foreign income tax provisions.

For a discussion of our consolidated results of operations for the year ended December 31, 20232024 compared to the year ended December 31, 2022,2023, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 20232024 filed with the SEC on FebruaryMarch 29,3, 2024,2025, or the 20232024 Annual Report.

Assessment, Permitting and Response segment revenues for the year ended December 31, 20242025 decreasedincreased compared to the year ended December 31, 20232024 due to a decline in emergency response revenues of $43.3 million, partially offset by strong organic growth of 25.0% or $32.3 million, mainly within our non-response consulting and advisory services,services of 34.6% or $57.8 million driven by remediation consulting work cross sold from an initial emergency response incident, an increase in revenues from environmental emergency responses of $29.0 million, and the$5.8 impactmillion ofadditional acquisitions,revenue whichfrom contributedacquisitions $5.1completed million.in 2024. Emergency response revenue was $48.0$77.0 million and $91.4$48.0 million for the yearyears ended December 31, 20242025 and December 31, 2023,2024, respectively.

Measurement and Analysis segment revenues for the year ended December 31, 20242025 increased compared to the year ended December 31, 20232024 as a result of strong organic growth of 15.2%5.4% or $28.2$12.0 million and the$11.6 impactmillion ofadditional acquisitions,revenue whichfrom contributedacquisitions $8.5completed million,in 2024, partially offset by thea saledecrease in revenue of the$2.3 Discontinuedmillion Specialtyrelated Labto a lab sold in Decemberthe 2023,fourth whichquarter contributedof $8.82024. millionOrganic togrowth revenueswas primarily driven by cross selling efforts and an increase in 2023.certain state regulatory requirements.

Assessment, Permitting and Response Segment Adjusted EBITDA andfor the year ended December 31, 2025 increased compared to the year ended December 31, 2024 primarily as a result of higher revenues. Segment Adjusted EBITDA margin for the year ended December 31, 20242025 decreased compared to the year ended December 31, 20232024 primarily dueas a result of a bad debt expense of $4.9 million related to athe reductionCity inof certainTustin, higherpartially marginoffset by favorable emergency response revenues that did not recur from the prior year.revenue.

RemediationMeasurement and ReuseAnalysis Segment Adjusted EBITDA for the year ended December 31, 20242025 increased compared to the year ended December 31, 20232024 dueprimarily toas a result of higher revenues.revenues Improveddriven by organic growth. Segment Adjusted EBITDA margin infor the year ended December 31, 2025 increased compared to the year ended December 31, 2024 was driven primarily byas a result of improved operating efficiencyperformance and higheroperating margin acquisitions.leverage.

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, other commitments and contractual obligations. We consider liquidity in terms of cash flows from operations and other sources, including availability under our credit2025 facility,Credit Facility, and their sufficiency to fund our operating and investing activities.

Our principal sources of liquidity have been cash generated by operating activities, borrowings under our senior secured credit facilities, other borrowing arrangements, and proceeds from the issuance of common and our Series A-2 Preferred Stock.stock. Historically, we have financed our operations and acquisitions from a combination of cash generated from operations, periodic borrowings under senior secured credit facilities, and proceeds from the issuance of common stock and ourpreferred Series A-2 Preferred Stock.stock. Our primary cash needs are for day-to-day operations, to fund working capital requirements, to fund our acquisition strategy and any related cash earn-out obligations, to pay interest and principal on our indebtedness and dividends on our Series A-2 Preferred Stock,indebtedness, and to make capital expenditures. Additionally, in connection with certain acquisitions, we agree to earn-out provisions and other purchase price adjustments that may require future payments. We may make up to $57.6$17.6 million in aggregate earn-out payments between the years 20252026 and 20262027 in connection with certain of our acquisitions of which up to $22.1$5.1 million may be paid only in cash, up to $13.6$2.8 million may be paid only in common stock and up to $21.9$9.7 million may be paid in cash or, at our option, in common stock. See Note 8 to our audited consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data." As of December 31, 2024,2025, the Companywe had $149.8$214.2 million available under itsthe 20212025 Credit Facility (withoutafter giving effect to any outstanding letters of credit, and subject to borrowing base limitations), and $12.9$11.2 million of cash on hand. In FebruaryApril and July 2025, we redeemed the Companyremaining refinanced$122.2 itsmillion Creditin Facilityaggregate (2025stated Creditvalue Facility)of bringingthe totaloutstanding availableSeries capacityA-2 Preferred Stock using cash and borrowings under theour 2025revolving Credit Facility to $283.8 million (without giving effect to any outstanding lettersline of credit, and subject to borrowing base limitations).credit.

We expect to continue to finance our liquidity requirements, including any cash earn-out payments that may be required in connection with acquisitions, through cash generated from operations and borrowings under our credit2025 facility.Credit Facility. We believe these sources will be sufficient to fund our cash needs in the short-term and long-term.

Working capital (which excludes contingent consideration payments and changes in right-of-use assets) increaseddecreased by $40.4$14.8 million in the year ended December 31, 2024,2025, primarily due to an increase in accounts receivable of $42.0 million driven by higher revenues in the fourth quarter versus the prior year, and the previously disclosed receivables from a large US government project for the City of Tustin, CA. This increase was partially offset by an increase in accounts payable and other accrued liabilities (includingof $8.3 million and accrued payroll) and benefits of $2.1$18.5 million, due to the timing of payments and growth in the company.company, partially offset by an increase in accounts receivable of $10.1 million driven by an increase in revenue.

Except as set forth below, thereThere have been no material changes to our risk factors from the risk factors disclosed in our 2025 Form 10-K.10-K, as supplemented by the Q1 2026 Form 10-Q. The risks described in ourthose 2025 Form 10-K,filings, in addition to the other information set forth in this Quarterly Report on Form 10-Q, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical audited and unaudited consolidated financial statements and related notes and other information included elsewhere in this filing and our other filings with the SEC, including our unaudited condensed consolidated financial statements and the accompanying notes as of and for the three and six months ended MarchJune 31,30, 2026 and 2025 included in Part I, Item 1. “Financial Statements” in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section entitled “Forward-Looking Statements”, and elsewhere in this filing and our other filings with the SEC, including in Item 1A. Risk Factors in the 2025 Form 10-K.10-K and the Q1 2026 Form 10-Q.

Although we did not consummate any acquisitions in the three and six months ended MarchJune 31,30, 2026, or the year ended 2025, we have been, and expect to continue to be, an acquisitive company. Acquisitions expanded our environmental service capabilities across our segments, our access to technology, as well as our geographic reach in the United States, Canada, and Australia.

As a result of our acquisitions, goodwill and other intangible assets represent a significant proportion of our total assets, and amortization of intangible assets has historically been a significant expense. Our historical financial statements also include other acquisition-related costs, including costs relating to external legal support, diligence and valuation services and other transaction and integration-related matters. In addition, in any year gains and losses from changes in the fair value of business acquisition contingencies such as earn-outs could be significant. The amount of each for the three and six months ended MarchJune 31,30, 2026 and 2025, was:

During the three months ended MarchJune 31,30, 2026, we made a contingent consideration cash payment of $8.0$2.8 million for OriginsEpic Laboratory,Environmental Inc.Pty Ltd (Epic). During the three months ended MarchJune 31,30, 2025, we made contingent consideration payments of $6.6$4.0 million in the Company's common stock, of which $4.8 million related to deferred consideration payments for the acquisition of Epic Environmental Pty Ltd (Epic), and $1.8 millioncash related to earn-out payments for SensibleIoT, LLC.Epic.

Total debt, net of deferred debt issuance costs, at MarchJune 31,30, 2026 was $321.4$349.0 million, which was an increase of $33.1$60.8 million compared to December 31, 2025. The increase was primarily driven by an increase of $35.8$66.1 million outstanding under our revolving line of credit.

Interest expense, net was $5.5 million in the three months ended March 31, 2026 and $5.1$10.9 million in the three and six months ended MarchJune 31,30, 2025.2026, respectively, and $4.8 million and $9.8 million in the three and six months ended June 30, 2025, respectively. We expect interest expense to remain a significant cost as we continue to leverage our 2025 Credit Facility to support our operationsoperations, share repurchase activity, and future acquisitions. Our 2025 Credit Facility funded a portion of the redemption of the Series A-2 Preferred Stock in April and July 2025.

In addition to the impact of seasonality on earnings, our environmental emergency response business exposes us to potentially significant revenue and earnings fluctuations tied to large environmental emergency response projects following an incident or natural disaster or more broad scale events. Total revenue from emergency response related services was $8.1$10.8 million and $13.9$48.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $18.9 million and $62.4 million for the six months ended June 30, 2026 and 2025, respectively. Demand for environmental emergency response services remains difficult to predict and as a result, we may have experienced revenues and earnings in prior years that are not indicative of future results, making those periods particularly difficult comparisons for future periods. Earnings volatility is also driven by the timing of large projects, particularly in our Consulting and Treatment segment, and the impact of acquisitions. As a result of these factors, and because demand for environmental services is not driven by specific or predictable patterns in one or more fiscal quarters, our business is better assessed based on annual results.

The Three and Six Months Ended MarchJune 31,30, 2026 Compared to the Three and Six Months Ended MarchJune 31,30, 2025

Cost of revenues for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 decreased by $6.9$28.4 million or 6.4%21.4% driven primarily by the decrease in revenues. Cost of revenues as a percentage of revenue for the three months ended MarchJune 31,30, 2026 was 60.2%,55.9%, compared to 61.0%56.6% for the three months ended MarchJune 31,30, 2025. This improvement was driven primarily by lower non-labor project costs incurred in the prior year period as parta percentage of therevenues, wind-downpartially offset by higher project labor costs as a percentage of ourrevenue, renewablesboth business.due to project mix.

Selling, general and administrative expense for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 decreased $4.9$10.7 million or 7.4%14.6% primarily due to a decrease of $3.3 million in stock-based compensation expense, $2.7$5.7 million in lower labor costs, which included a decrease inlower bonus accrual, andaccruals, a $1.0$5.9 million year-over-year change in bad debt expense dueprimarily todriven improvedby collectionsaged receivables from the City of agedTustin accountsin receivables,the prior year period, and lower stock-based compensation expense of $1.2 million, partially offset by higher IT expenses. Selling, general and administrative expense as a percentage of revenues decreasedincreased to 36.4%33.7% from 37.2%31.4% in the comparable period.period primarily as a result of lower revenue.

Depreciation and Amortization for the three and six months ended MarchJune 31,30, 2026 remained relatively consistent with the three and six months ended MarchJune 31,30, 2025 primarily due to the absence of significant changes in the underlying property and equipment and intangible asset base.

Other Income (Expense),Income, Net

Other income (expense),income, net for the three months ended MarchJune 31,30, 2026 was comprised of fair value gains of $0.7$0.5 million on our interest rate swaps and $0.4$0.1 million on our foreign currency forward contracts. Other income (expense),income, net for the three months ended MarchJune 31,30, 2025 was comprised of a fair value gain of $10.0 million related to the Series A-2 preferred stock conversion option, partially offset by losses of $0.9$0.7 million related to a fair value adjustment on our interest rate swaps and a $0.3 million charge related to a fair value adjustment on the Series A-2 Preferred Stock conversion option, partially offset by $0.4 million of other income.swaps.

Interest expense, net for the three and six months ended MarchJune 31,30, 2026 increased compared to the three and six months ended MarchJune 31,30, 2025 primarily due to higher debt balances during the quarter,current partiallyyear offset by lower interest rates.periods.

Weighted average interest rates, after giving effect to the impact of the interest rate swaps, as of MarchJune 31,30, 2026 and MarchJune 31,30, 2025 were 5.6%5.5% and 5.5%,5.4%, respectively. See “—Key Factors that Affect Our Business and Our Results—Financing Costs” and Notes 12 and 13 to our unaudited condensed consolidated financial statements included in Part I, Item 1. “Financial Statements.”

The income tax expense for the three and six months ended MarchJune 31,30, 2026 decreased compared to the three and six months ended MarchJune 31,30, 2025 primarily due to the Oneimpact Bigof Beautifulavailable Billindefinite-lived Act, which was signed into law in July 2025 and includes several significant favorable U.S.deferred tax deductionsassets foron the Company.calculation of deferred income tax.

The Three and Six Months Ended MarchJune 31,30, 2026 Compared to the Three and Six Months Ended MarchJune 31,30, 2025

Consulting and Treatment segment revenues for the three months ended MarchJune 31,30, 2026 decreased compared to the three months ended MarchJune 31,30, 2025 primarily as a result of a decrease in revenues fromlower environmental emergency responsesresponse revenues of $5.8$37.7 millionmillion, andlower recovery services revenue tied to environmental events of $11.2 million, a $1.0 million decrease in revenues from exited European operations, which were exited in the fourth quarter of 2025, and lower renewables revenues of $0.9 million, which was wound down by the end of 2025. These decreases were partially offset by organichigher growthcore consulting revenues of $2.5$3.5 million. Organic growth was primarilymillion driven by growth withinin our non-responseUnited consultingStates servicesand Australian markets. Environmental emergency response revenues were $10.8 million in the Unitedthree States,months Canadaended andJune Australia.30, 2026, compared to $48.5 million in the three months ended June 30, 2025.

Measurement and Analysis segment revenues for the three months ended MarchJune 31,30, 2026 decreased compared to the three months ended MarchJune 31,30, 2025 primarily due to thea impactdecrease in field services revenues of severe$3.5 million, partially offset by an increase in lab testing revenues of $1.0 million, which recovered from weather conditions in January and February 2026impacts in the Unitedfirst States, which limited the ability for field teams in certain regions to get on site and disrupted sample deliveries to our labs.quarter.

CorporateMeasurement and otherAnalysis costssegment revenues for the threesix months ended MarchJune 31,30, 2026 whendecreased compared to the threesix months ended MarchJune 31,30, 2025 increased primarily due to investmentsa decrease in ITfield infrastructure,services softwarerevenues andof marketing.$7.7 million, which included the impact of adverse weather conditions in the first quarter of 2026.

Our principal sources of liquidity have been cash generated by operating activities, borrowings under our senior secured credit facilities, other borrowing arrangements, and proceeds from the issuance of common stock. Historically, we have financed our operations and acquisitions from a combination of cash generated from operations, periodic borrowings under senior secured credit facilities, and proceeds from the issuance of common and preferred stock. Our primary cash needs are for day to day operations, to fund working capital requirements, to fund our acquisition strategy and any related cash earn-out obligations, to pay interest and principal on our indebtedness and to make capital expenditures. Historically, our cash needs also included the payment of dividends on our Series A-2 preferred stock.stock and, more recently, we have begun repurchasing shares of common stock pursuant to our share repurchase program. Additionally, in connection with certain acquisitions, we agree to earn-out provisions and other purchase price adjustments that may require future payments. We may make up to $9.6$7.0 million in aggregate earn-out payments between the years 2026 and 2027 in connection with certain of our acquisitions of which up to $5.1$3.8 million may be paid only in cash, up to $2.8 million may be paid only in common stock and up to $1.7$0.4 million may be paid in cash or, at our option, in common stock. See Note 7 to our unaudited condensed consolidated financial statements included in Part 1, Item 1. “Financial Statements.” As of MarchJune 31,30, 2026, we had $178.4$148.1 million available under the 2025 Credit Facility (after giving effect to any outstanding letters of credit, and subject to borrowing base limitations), and $10.0$12.7 million of cash on hand. In April and July 2025, we redeemed the remaining $122.2 million in aggregate stated value of the outstanding Series A-2 preferred stock using cash and borrowings under our revolving line of credit.

For the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $11.6$5.5 million compared to net cash provided by operating activities of $5.5$27.4 million for the threesix months ended MarchJune 31,30, 2025. The period-over-period decrease of $17.1$32.9 million was primarily due to a decrease in earnings before non-cash items of $21.4 million and a higher increase in working capital of $11.6 million (comprised of an increase in working capital in the current year period of $37.8 million compared to an increase in working capital of $16.3$26.2 million.million in the prior year period).

Working capital (which excludes contingent consideration payments and changes in right-of-use assets) increased by $16.3$37.8 million in the threesix months ended MarchJune 31,30, 2026, primarily due to higher1) paymentsa decrease in accrued payroll and benefits of $22.2 million, primarily due to the payment of accrued annual bonus in theMarch current2026 yearof period$27.7 versusmillion, representing a $16.0 million increase compared to the prior year periodbonus ofpayment $16.0due million as a result ofto outperformance in 2025,2025 and2) a $15.7$17.4 million decrease in accounts payable and other accrued liabilities due to the timing of vendor payments, and 3) a $13.5 million increase in prepaid expenses and other current assets primarily due to an increase in deferred tax assets and prepaid software costs. These drivers were partially offset by a decrease in accounts receivable of $32.5$15.0 million due to a year-to-date decrease in revenue of $57.2 million compared to the prior-year period and a decrease in days sales outstanding due to improved collections.

For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $5.5$11.1 million, primarily driven by cash paid for the purchases of property and equipment of $5.7$11.3 million.

For the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities was $3.7$7.9 million, driven by cash paid for the purchases of property and equipment of $5.1 million, and $2.8 million in proprietary software development costs.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $15.9$18.3 million. Cash provided by financing activities was driven by borrowing under our 2025 Credit Facility of $140.4$258.4 million, partially offset by repayments of borrowings of $107.1$196.8 million, repurchases of common stock of $10.0$30.0 million, and a paymentpayments for contingent consideration of $8.0$10.8 million.

For the threesix months ended MarchJune 31,30, 2025, net cash providedused byin financing activities was $16.0$21.3 million. Cash providedused byin financing activities was driven by borrowing under our 2025 Credit Facilityrepayments of $306.9borrowing of $364.5 million, partiallya offsetpartial byredemption of the Series A-2 preferred stock of $60.0 million, a payment for contingent consideration of $4.4 million, repayments of borrowingsfinance leases of $286.7$6.1 million, a portion of which related to the refinancing of our prior credit facility, dividends on the Series A-2 Preferredpreferred Stockstock of $2.8 millionmillion, and payment of financing cost of $2.2$2.0 million, partially offset by borrowing under our credit facilities of $416.0 million.

On May 6, 2025, the Board of Directors approved a stock repurchase program of up to $40.0 million. The repurchase program does not have a set expiration date. During the three and six months ended MarchJune 31,30, 20262026, the Company repurchased 376,3131,251,450 and 1,627,763 shares of its common stock for approximately $10.0$20.0 million.million and $30.0 million, respectively, inclusive of transaction fees. As of MarchJune 31,30, 2026, approximately $30.0$10.0 million of the authorized capacity under the repurchase program remainsremained available for future repurchases.