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

We are subject to risks associated with indebtedness under our credit facilities,facilities and the Series B Preferred Stock, including the risk of failure to maintain compliance with financial and other covenants, the risk of being unable to make interest and principal payments when due and the risk of rising interest rates.rates under our credit facilities. Additionally, our significant debt and high leverage could have a negative impact on our financing options and liquidity position. We have a significant amount of debt as discussed below, and our overall leverage and the terms of our financing arrangements could:

•require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt,payments, thereby limiting the availability of our cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements; and

Our ability to meet expenses and debt service obligations and obligations relating to the Series B Preferred Stock will depend on our future performance, which will be affected by financial, business, economic and other factors. If we do not generate enough cash to pay our debt service obligations,obligations and obligations relating to the Series B Preferred Stock, we may be required to refinance all or part of our debt,capital structure, sell assets, borrow more money or raise additional equity capital.

Disclosure of our debt instruments appears under Note 11 – Debt of the consolidated financial statements, and disclosure of our Series B Preferred Stock appears under Note 16 – Redeemable Preferred Stock of the consolidated financial statements.

Our ability to maintain compliance with the financial covenants pursuant to the debt instruments we are party to and the Series B Certificate of Designation is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties. Additionally, these risks and uncertainties may, among other factors, impact our ability to generate cash flows from operations, access the capital markets on acceptable terms or at all, and affect our future need or ability to borrow under our credit agreements. In addition to our current sources of funding our business, the effects of such events may impact our liquidity or our need to revise our allocation or sources of capital, implement further cost reduction measures and/or change our business strategy.

We rely primarily on cash flows from our operations to make required interest and principal payments on our debt.payments. If we are unable to generate sufficient cash flows from our operations, we may be unable to pay interest and principal obligations on our debt when they become due. Failure to comply with these obligations or failure to comply with the financial covenants discussed above could result in an event of default, which would permit our lenders under our credit facilities to accelerate the repayment of the debt. If our lenders accelerate the repayment of debt, there is no assurance that we could refinance such debt on terms favorable to us or at all.

Our largest shareholder (Corre and certain of its affiliates) owns a meaningful percentage of our outstanding equity securities, which could limit the ability of other shareholders to influence corporate matters. As of March 17,10, 2025,2026, Corre and certain of its affiliates beneficially owned approximately 41.2%41.5% of the total voting power held by shareholders of our outstanding common stock (including common stock issued pursuant to the common stock subscription agreement with certain Corre holders and shares issuable upon exercise, subject to beneficial ownership limitation, of certain Warrants,warrants, as defineddescribed below, held by our largest shareholder in each case). As a result, this shareholder may be able to exert influence over our management, business plans and policies, as well as matters submitted to our stockholders for approval, such as the selection of directors and amendments of our organizational documents. This concentrated ownership could limit the ability of the remaining shareholders to influence corporate matters, and the interests of the large shareholder may not coincide with our interests or the interests of the remaining shareholders.

U.S. GAAP requires that we evaluate the useful lives of our intangible assets subject to amortization each reporting period. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. To the extent the revised useful life of an intangible asset is less than originally estimated, our future amortization expense will increase, which could have a material impact on our results of operations and financial condition.

Improvements in operating results from expected savings in operating costs from workforce reductions and other cost saving and business improvement initiatives may not be realized, may take longer to be realized, or could be realized only for a limited period. SinceWe Januarycontinually 2021,seek weto have implemented a new strategic organizational structure and reducedreduce our operating costs through a more efficient organizational structure, headcount reductions and other steps to better position ourselves to deliver improved margins and cash flow from operations and to continue service diversification and enhance customer value. These organizational changes resulted in restructuring charges and other cost-saving opportunities.operations. However, to implement this or any other future cost savings or business improvement initiatives, we expect to incur additional expenses, which could adversely impact our financial results prior to the realization of the expected benefits associated with the initiatives. Due to numerous factors or future developments, we may not achieve cost reductions or other business improvements consistent with our expectations or the benefits may be delayed. These factors or future developments could include (i) the incurrence of higher than expected costs or delays in reassigning and retraining remaining employees or outsourcing or eliminating duties and functions of eliminated employees, (ii) unanticipated delays in discharging employees in eliminated positions as a result of regulatory or legal limitations on employee terminations in certain jurisdictions, (iii) actual savings differing from anticipated cost savings, (iv) anticipated benefits from business improvement initiatives not materializing and (v) disruptions to normal operations or other unintended adverse impacts resulting from the initiatives, including negatively impacting our ability to grow our business.

We may experience inflationary pressures in our operating costs and cost overruns on our projects. A small portion of our customers are serviced under fixed price contracts or contracts including a combination of fixed and variable elements, where we bear a portion of the risk for cost overruns. Under such contracts, prices are established in part on cost and scheduling estimates, which are based on a number of assumptions, including assumptions about future economic conditions, prices and availability of subcontractors, materials and other exigencies of our services. Our profitability for these contracts depends heavily on our ability to make accurate estimates. Inaccurate estimates, or changes in other circumstances, such as unanticipated technical problems, difficulties obtaining permits or approvals, changes in local laws or labor conditions, changes in trade policies, weather delays, cost of raw materials, trade disputes and tariffs, currency fluctuations, inflation pressures or our suppliers’ or subcontractors’ inability to perform could result in substantial losses, as such changes adversely affect the revenues and profitability recognized on each project. Current and future inflationary volatility driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies as well as geopolitical conflicts such as the ongoing military conflict between Russia and Ukraine and in the Middle East, and other geopolitical issues impacting global trade could further impact our ability to make accurate estimates, which could have an adverse impact on our business, cash flows and profitability.

IncreasingIncreased scrutiny and changing expectations from investors, customers and other market participants with respect to sustainability or environmental, social and governance (“ESG”) matters may impose additional costs on us or expose us to reputational or other risks. Companies across all industries and around the globe are facing increasingincreased scrutiny relating to their ESG policies, initiatives and activities by investors, lenders, regulators, customers and other market participants. While we have policies and initiatives in place related to our ESG practices, the recent increased focus on ESG matters may impact our access to capital, as investors and lenders may reconsider their capital investment allocation as a result of their assessment of our ESG practices. Our ESG initiatives, intentions and expectations are subject to change and there can be no assurance that our ESG policies and procedures will continue. Further, regulatory requirements related to ESG continue to evolve and may increase our costs of compliance. If we do not adapt to or comply with investor or other stakeholder expectations and standards on ESG matters as they continue to evolve or if we are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a regulatory or legal requirement to do so, we may be exposed to the risk of investigation, inquiry, or legal challenges or suffer reputational damage. At the same time, recent “anti-ESG” political developments could subject the Company to increased risk of criticism or litigation risks from certain “anti-ESG” parties including various government agencies. Such sentiment may focus on the Company’s environmental or social initiatives, which such anti-ESG parties may assert are unlawful, political or polarizing in nature.

Demand for our services is sensitive to oil and gas prices, global oil supply and other factors which impact our customer’s current and future spending levels. Global oil and gas supply and demand are impacted by several factors including global economic conditions, geopolitical events, widespread public health crises, epidemics and pandemics, and domestic and global inflationary pressures which may reduce the availability of liquidity and credit and, in many cases, reduce demand for our customers’ products. Disruptions or volatility in these markets could also adversely affect our customers’ decisions to fund ongoing maintenance and new capital projects, resulting in contract cancellations or suspensions, capital project delays, repurposing of infrastructure, and infrastructure closures. These factors may also adversely affect our ability to collect payment for work we have previously performed. Such disruptions, should they occur, could materially impact our results of operations, financial position, credit capacity or cash flows.

We may not be able to maintain compliance with the NYSE’s continued listing requirements and rules, and the NYSE may delist our common stock, which could negatively affect the Company, the price of our common stock and our shareholders’ ability to sell our common stock. The NYSE has several listing requirements set forth in the NYSE Listed Company Manual. Section 802.01B of the NYSE Listed Company Manual requires that either our average global market capitalization (inclusive of common and preferred equity) or our total shareholders’ equity exceed $50.0 million.

On March 14, 2024, the Company received a written notice (the “Written Notice”) from the NYSE that the Company was not in compliance with the continued listing standards set forth in Rule 802.01B of the NYSE Listed Company Manual because its average global market capitalization over a consecutive 30 trading-day period was less than $50.0 million and, at the same time, its last reported shareholders’ equity was less than $50.0 million. As required by the NYSE, the Company timely notified the NYSE of its intent to cure the deficiency and restore its compliance with the NYSE continued listing standards. On April 29, 2024, in accordance with applicable NYSE procedures, the Company submitted a plan (the “Plan”) advising the NYSE of the definitive actions the Company has taken, and is taking, that would bring it into compliance with the minimum global market capitalization listing standard within 12 months of receipt of the Written Notice. The NYSE accepted the Plan, and the Company’s common stock continued to be listed and traded on the NYSE during the 12-month period beginning March 14, 2024, subject to the Company’s compliance with other NYSE continued listing standards and continued periodic review by the NYSE of the Company’s progress with respect to the Plan. The Written Notice had no immediate impact on the listing of the Company’s common stock, which continued to trade on the NYSE during the applicable cure period and did not result in a default under the Company’s material debt or other agreements.

The Organization for Economic Co-operation and Development (the “OECD”), an international association comprised of 38 countries, including the United States, has issued proposals that change long-standing tax principles including onvia a global minimum tax initiative. On December 12, 2022, the European Union member states agreed to implement the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two global corporate minimum tax rate of 15% on companies with revenues over a specific threshold, which was scheduled to go into effect in 2024. To date, various jurisdictions have enacted, or are in the process of enacting, legislation on these rules, and the OECD continues to release additional guidance. While it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, now or in the future, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement the minimum tax directive. The OECD also issued guidance in January 2026 that exempts U.S.-based multinational entities from the minimum tax initiative, but non-U.S. jurisdictions must adopt legislation to implement this. Further, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive. We will continue to monitor the implementation of these rules by the countries in which we operate.

Our insurance coverage will not fully indemnify us against certain claims or losses. Further, our insurance has limits and exclusions and not all losses or claims are insured. We perform services in hazardous environments on or around high-pressure, high temperature systems and our employees are exposed to a number of hazards, including exposure to hazardous materials, explosion hazards and fire hazards. Incidents that occur at these large industrial facilities or systems, regardless of fault, may be catastrophic and adversely impact our employees and third parties by causing serious personal injury, loss of life, damage to property or the environment, and interruption of operations. We maintain limited insurance coverage against these and other risks associated with our business. Our contracts typically require us to name a customer as an additional insured under our insurance policies and indemnify our customers for injury, damage or loss arising out of our presence at our customers’ location, regardless of fault, or the performance of our services and provide for warranties for materials and workmanship. We maintainhave a $6.0$1.0 million retention for indemnity coverage.coverage, subject to an aggregate annual deductible of $5.0 million that must be satisfied under our liability insurance policies. This insurance may not protect us against liability for certain events, including events involving pollution, product or professional liability, losses resulting from business interruption or acts of terrorism or damages from our breach of contract. We cannot assure you that our insurance will be adequate in risk coverage or policy limits to cover all losses or liabilities that we may incur. Moreover, in the future, due to evolving market conditions, our higher risk profile due to the nature of our operations and claims history, and expected impact on pricing, we cannot assure that we will be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate. Any future damages caused by our products or services that are not covered by insurance or are in excess of policy limits could have a material adverse effect on our results of operations, financial position or cash flows.

We are a global, leading provider of specialty industrial services offering customers access to a full suite of conventional, specialized, and proprietary mechanical, heat-treating, and inspection services. We deploy conventional to highly specialized inspection, condition assessment, maintenance and repair services that result in greater safety, reliability and operational efficiency for our customers’ most critical assets. We conduct operations in two segments: Inspection and Heat TreatingHeat-Treating (“IHT”) and Mechanical Services (“MS”). Through the capabilities and resources in these two segments, we believe that we are uniquely qualified to provide integrated solutions involving: inspection to assess condition; engineering assessment to determine fitness for purpose in the context of industry standards and regulatory codes; and mechanical services to repair, rerate or replace based upon the customer’s election. In addition, we are capable of escalating with the customer’s needs, as dictated by the severity of the damage found and the related operating conditions, from standard services to some of the most advanced services and integrated asset integrity and reliability management solutions available in the industry. We also believe that we are unique in our ability to provide these services in three distinct customer demand profiles: (i) turnaround or project services, (ii) call-out services, and (iii) nested or run-and-maintain services.

Operating income (loss). Overall operating income improvedincreased by $23.4$3.9 million to $10.1$14.1 million in 2024 as2025, compared to a loss of $13.3$10.1 million in the prior year. IHT’s operating income increased by $12.8$6.8 million or 52.8%, primarily driven by lower costs and higher gross margins in U.S. operations, partially offset by a decrease in operating income from Canada18.5%, driven mainly by a $5.8 million improvement in the U.S. due to stronger gross margins and a continued focus on cost containment. Operating income in both Canada and other international regions increased by $0.5 million each, mainly due to the factors described above. MS operating income decreasedtotaled by$26.4 $0.5million, a decrease of $0.9 million year over yearyear. This decline was mainly attributable to $27.3a $5.4 million fordecrease 2024,in mainlyinternational regions, primarily due to decreasedlower revenueproject levelsactivity inlevels. CanadaThe anddecrease other international locations,was partially offset by a $5.3$3.9 million improvement in U.S. operating income, due to better margins, and a $0.6 million increase in operating income from U.S. operations driven by higher margins.Canada. Corporate operating loss decreasedincreased by $11.1$2.0 million year over year, mainlyprimarily due to lower personnel andhigher professional costs related to debt and equity refinancing activities in the current year as compared to the prior year and lower overall costs due to our ongoing cost reduction program. The impact of our cost reduction efforts has been partially offset by continued cost inflation in several areas across all segments, such as raw materials, transportation, and labor.year.

Excluding the impact of these identified non-core expenses in both periods, operating income in 2025 increased year over year by $12.7$10.2 million from $3.0$15.7 million to $15.7$25.9 million. See our non-GAAP reconciliation for additional details of our non-core expenses.

Other income (expense), net. Other income (expense), netnet, changed by $3.8$5.6 million, shifting from annet expenseincome of $1.1$2.7 million in the prior year to incomea net expense of $2.7$2.9 million in 2024.2025. This was primarily driven by the foreign currency transaction gainslosses in the current year periodyear, reflecting the effects of positiveunfavorable fluctuations in the value of the U.S. dollar relative to the foreign currencies to which we haveare exposure.exposed.

Taxes. The provision for income tax was $3.3$2.6 million on the pre-tax loss of $35.0$46.6 million in the current year compared to thea provision for income tax of $4.6$3.3 million on pre-tax loss of $71.1$35.0 million in the prior year. The provision for income tax was primarily driven by jurisdictions outside the United States. The effective tax rate was a provision of 9.4%5.5% and 6.4%9.4% for years ended December 31, 20242025 and 2023,2024, respectively.

We use supplemental non-GAAP financial measures which are derived from the consolidated financial information including adjusted net income (loss); adjusted net income (loss) per share; earnings before interest and taxes (“EBIT”); adjusted EBIT; adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”) and free cash flow to supplement financial information presented on a U.S. GAAP basis.

We define adjusted net income (loss) and adjusted net income (loss) per share to exclude the following items: non-routine legal costs and settlements, non-routine professional fees, (gain) loss on debt extinguishment, certain severance charges, non-routine write offwrite-off of assets and certain other items that we believe are not indicative of core operating activities. Consolidated adjusted EBIT, as defined by us, excludes the costs excluded from adjusted net income (loss) as well as income tax expense (benefit), interest charges, foreign currency (gain) loss, pension credit, and items of other (income) expense. Consolidated adjusted EBITDA further excludes depreciation, amortization, and non-cash share-based compensation costs from consolidated adjusted EBIT. Segment adjusted EBIT is equal to segment operating income (loss) excluding costs associated with non-routine legal costs and settlements, non-routine professional fees, certain severance charges, and certain other items as determined by management. Segment adjusted EBITDA further excludes depreciation, amortization, and non-cash share-based compensation costs from segment adjusted EBIT. Free Cash Flow is defined as net cash provided by (used in) operating activities minus capital expenditures paid in cash.

Non-GAAP measures have important limitations as analytical tools because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures and should be read only in conjunction with financial information presented on a U.S. GAAP basis. Further, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies who may calculate non-GAAP financial measures differently, limiting the usefulness of those measures for comparative purposes. The liquidity measure of free cash flow does not represent a precise calculation of residual cash flow available for discretionary expenditures. Reconciliations of each non-GAAP financial measure to its most directly comparable U.S. GAAP financial measure are presented below.

The following tables set forth the reconciliation of Adjustedadjusted Netnet Incomeincome (Lossloss), EBIT and EBITDA to their most comparable U.S. GAAP financial measurements on a consolidated and segmented basis:

We have evaluated our liquidity within one year after the date of issuance of the accompanying audited consolidated financial statements to assess the Company’s ability to fund its operations. In the preparation of this liquidity assessment, we applied judgment to estimate the projected cash flows of the Company, including the following: (i) projected cash outflows, (ii) projected cash inflows, and (iii) projected availability under the Company’s existing debt arrangements. The cash flow projections were based on known or planned cash requirements for operating and financing costs and include management’s best estimate regarding future customer activity levels, pricing for its services and for its supplies and other factors. Actual results could vary significantly from those projections. Based upon such liquidity assessment, we believe that the Company’s current working capital, forecasted cash flows from operations, current and expected availability under our existing debt arrangements and capital expenditure financing is sufficient to fund our operations, service our indebtedness, and maintain compliance with our debt covenants for the next twelve months, and based on current expectations, the long-term.long term. We based this assessment on assumptions that may prove to be inaccurate, and we could exhaust our available capital resources sooner than we expect in the event that we fail to meet our current projections.financial performance expectations. See Note 11 - Debt of the consolidated financial statements for a further discussion of our liquidity.

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

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

ABL Amendment No.5 significantly improved availability under our Revolving Credit Loans and asAs of December 31, 2024,2025, we had approximately $45.9$63.4 million of available borrowing capacity under our various credit facilities, consisting of $35.9$53.4 million available under the 2022 ABL Credit FacilityAgreement and $10.0 million available under the Second A&R Second Lien Term Loan CreditAgreement. In connection with the Series B Transactions, we have access to up to $30.0 million in additional liquidity through September 2027 through a delayed draw mechanism, subject to certain conditions under the Purchase Agreement. Our principal uses of cash and liquidity are for working capital needs, capital expenditures and operations.

As of December 31, 20242025 we arewere in compliance with our debt covenants. Our ability to maintain compliance with the financial covenants contained in our credit agreements is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties.uncertainties, as described elsewhere herein.

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. In addition, IHT provides comprehensive non-destructive testing services and metallurgical and chemical processing services to the aerospace and other industries covering a range of components including finished machined and in-service components. IHT also provides advanced digital imaging including remote digital video imaging.

MS provides solutions designed to serve customers’ unique needs during both the operational (onstream) and off-line states of their assets. Our onstream services include our range of standard to custom-engineered leak repair and composite solutions; emissions control and compliance; hot tapping and line stopping; and online valve insertion solutions, which are delivered while assets are in an operational condition, which maximizes customer production time. Asset shutdowns can be planned, such as a turnaround maintenance event, or unplanned, such as those due to component failure or equipment breakdowns. Our specialty maintenance, turnaround and outage services are designed to minimize customer downtime and are primarily delivered while assets are off-line, often through the use of cross-certified technicians whose multi-craft capabilities deliver the production needed to achieve tight time schedules. These critical services include on-site field machining; bolted-joint integrity; vapor barrier plug testing; and valve management solutions.

The following is a comparison of our results of operations for the three and six months ended MarchJune 31,30, 2026 to the three and six months ended MarchJune 31,30, 2025 (in thousands).2025.

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

Revenues. Total revenues increaseddecreased by $16.4$2.9 million, or 8.3%, from the prior year period and were favorably impacted by $3.2 million attributable to foreign exchange rates movements. Revenue for the IHT segment increased by $9.8 million, or 8.6%,0.7%, compared to the prior year period, primarilyand were favorably impacted by $4.2 million attributable to foreign exchange rate movements. IHT segment revenue increased by $2.8 million, or 1.1%, in comparison to the prior year period, driven primarily by ana $1.4 million increase in U.S. revenue of $6.5 million attributable to higher turnaround and capital projects activity,activities experienced in the first quarter, as well as a $1.8 million increase inresulting from year-over-year growth in callout and turnaround activities in Canada andacross other international regionsregions, ofpartially $3.3offset million.by a $0.4 million decrease in Canada. MS segment revenue increaseddecreased by $6.6$5.8 million, or 7.8%,3.0%, comparedrelative to the prior year period, mainlyattributable dueprimarily to higherlower turnaround and project activities and callout projects inthroughout the U.S.,segment’s andoperating higher revenue from projects in Canada and international areas.regions.

Operating income (loss). Overall operating loss wastotaled $3.4$1.2 million in the 2026 period, representing a $2.6decline of $7.3 million, or 43.8%, improvement119.6%, compared to an operating lossincome of $6.0$6.1 million in the prior year period.period, This improvement wasdriven primarily driven by thea increasedreduction revenuein and cost management.revenue. IHT segment reported ana increasedecrease in operating income of $0.2$4.4 million, or 1.7%,15.5%, asin comparedcomparison to the prior year dueperiod, todriven jobby mix.unfavorable project mix impacting margins and higher benefit costs. MS segment operating lossincome decreased by $1.7$4.0 million, or 52.7%, as82.9%, compared to the prior year period, driven primarily driven by the increasedreduced revenue inacross the U.S.segment’s operating regions, as well as unfavorable project mix impacting margins and ahigher reductionbenefit in operating losses in the U.S. and Canada.costs. Corporate operating loss decreasedimproved by $0.8$1.1 million compared to the prior year period, attributable primarily due to lowerreduced legal and professional services costs, partially offset by higher personnel costs, including severance charges, and non-cash share-based compensation costs in the current period.

For the threesix months ended MarchJune 31,30, 2026 and 2025, operating income (loss) includes net expenses totaling $1.7$3.5 million and $3.0$6.4 million, respectively, that we do not believe are indicative of our core operating activities, as detailed in the table below (in thousands):

Excluding the impact of these identified non-core items in both periods, operating lossincome decreased year over year by $1.3$10.2 million, from $3.0$12.5 million to $1.7$2.3 million. See our non-GAAP reconciliation for additional details of our non-core expenses.

Interest expense, net. Interest expense, net decreased by $2.6$5.2 million for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025. The decrease was primarily attributable to the refinancing completed in March 2025, in which we replaced our existing credit facilities with new facilities at lower interest rates.rates, Inas addition,well weas renegotiatedlower interest expense on the termsSecond Lien Term Loan following a partial paydown in September 2025 using a potion of ourthe proceeds from the issuance of preferred stock and the related reduction in interest rates on the ABL Revolving Credit Loans,Facility resultingand inFirst furtherLien reductionsTerm in applicable interest rates. The decrease wasLoan, also dueeffective toSeptember lower overall debt balances compared to the prior period.2025.

Cash interest paid for the threesix months ended MarchJune 31,30, 2026 and 2025 was $2.5$8.0 million and $8.9$12.8 million, respectively.

Loss on debt extinguishment. During the three months endedIn March 31, 2025, we completed refinancing transactions that resulted in the repayment of our existing loans. As a result, we recognized a loss on debt extinguishment of $11.9 million which included the write-off of unamortized debt issuance costs.

Other income (expense), net. The overall change of $1.1$4.8 million in other income (expense), net, was primarily drivenattributable byto foreign currency transaction lossesgains inof the$5.0 current year periodmillion, reflecting the effectsfavorable impact of positive fluctuations in the value of the U.S. dollar relativestrengthening toagainst the foreign currencies toof whichour weinternational have exposure.operations.

Taxes. The provisionbenefit for income tax was $0.0$0.1 million on the pre-tax loss of $11.3$18.2 million in the current year period compared to income tax expenseprovision of $0.2$1.2 million on the pre-tax loss of $29.5$32.8 million in the prior year period. The effective tax rate was a provision of 0.0%0.5% for the threesix months ended MarchJune 31,30, 2026, compared to a provision of 0.8%3.7% for the threesix months ended MarchJune 31,30, 2025. The effective tax rate differs from the prior year period due to changes in the valuation allowance.

2 For the three and six months ended MarchJune 31,30, 2026, includesseverance $1.4charges included $0.6 million and $2.1 million related to customary severance costs associated with executive departures.

2 For the three and six months ended MarchJune 31,30, 2026, includesseverance $1.4charges included $0.6 million and $2.1 million related to customary severance costs associated with executive departures.

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

As of MarchJune 31,30, 2026, we had approximately $40.5$28.9 million of available borrowing capacity under our various credit facilities, consisting of $30.5 million available under the 2022 ABL Credit Agreement and $10.0 million available under the Second A&R Second Lien term Loan Agreement (the availability period for the Second Lien Delayed Draw Term Loan expired on April 15, 2026 with no amounts drawn prior to the expiration date).Agreement. In connection with the issuance of the Series B Preferred Stock and related warrants, we have access to up to $30.0 million in additional liquidity through September 2027 through a delayed draw mechanism, subject to certain conditions under the Purchase Agreement. Our principal uses of cash and liquidity are for working capital needs, capital expenditures and operations.

As of MarchJune 31,30, 2026, we were in compliance with our debt covenants. Our ability to maintain compliance with the financial covenants contained in our Creditcredit Agreementsagreements is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties, as described elsewhere herein.

As of MayAugust 11,6, 2026, we had consolidated cash and cash equivalents of $11.2$6.4 million, excluding $4.2$4.0 million of restricted cash used mainly as collateral for letters of credit and commercial card programs, and approximately $24.8$48.0 million of undrawn availability under our various credit facilities, resulting in total liquidity of $36.0$54.4 million. We also have $30.0 million of Series B Delayed Draw availability as described above.

Cash and cash equivalents. Our cash and cash equivalents as of MarchJune 31,30, 2026 totaled $12.8$26.0 million, consisting of $8.7$22.3 million of unrestricted cash on hand,cash, and $4.1$3.7 million of restricted cash. International cash balances as of MarchJune 31,30, 2026 were $6.5$4.6 million, and approximately $1.2$0.7 million of such cash is located in countries where currency or regulatory restrictions exist.restricted.

As of December 31, 2025, our cash and cash equivalents were $18.1 million, consisting of $14.1 million of unrestricted cash on hand and $4.0 million of restricted cash. International cash balances as of December 31, 2025 were $4.4 million, and approximately $1.2 million of such cash iswas restricted.

Our total debt and finance obligations were $306.5$326.3 million, of which $3.9$4.1 million was classified as current at MarchJune 31,30, 2026, compared to total debt of $297.2 million at December 31, 2025.

Cash flows attributable to our investing activities. For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities consisted primarily of capital expenditures of $2.4$6.4 million as compared to $1.4$4.3 million for the threesix months ended MarchJune 31,30, 2025.

Cash flows attributable to our financing activities. For the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $6.2$22.7 million, consisting primarily of the net borrowings under the Revolving Credit Loans of $7.2$24.7 million, partially offset by the principal payments under the First Lien Term Loan and equipment financing loans.

For the threesix months ended MarchJune 31,30, 2025, net cash used in financing activities was $11.2$21.2 million, consisting primarily of borrowings under the First Lien Term Loan of $175.0 million,million and the net borrowings under the Revolving Credit Loans of $8.0$20.0 million, and borrowings under the 2025 Second Lien Term Loan.million. These inflows were partially offset by the payments of the total outstanding balances under the Corre Delayed Draw Term Loan, Corre Incremental Term Loan and ME/RE Loans, and a partial pay downpaydown of the Corre Uptiered Loan. In addition, we paid $8.1$8.9 million of debt issuance costs for the debt refinancing transactions executed with our existing and new lenders at March 12, 2025.

Effect of exchange rate changes on cash and cash equivalents. For the threesix months ended MarchJune 31,30, 2026 and 2025, the effect of foreign exchange rate changes on cash was $0.0$0.1 million and $0.1$0.3 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in U.S. Dollar exchange rate against the Euro, the British Pound, the Canadian Dollar and the Brazil Real.

A discussion of our critical accounting policies and estimates is included in our Annual Report on Form 10-K. There were no material changes to our critical accounting policies during the threesix months ended MarchJune 31,30, 2026.