TISI Team Inc - 10-K

ITEM 1A.    RISK FACTORS

Our business, financial condition, results of operations, cash flows and/or stock price could be materially adversely affected by any of the risks and uncertainties described below, individually or in combination. Such risk factors and uncertainties could also affect whether any forward-looking statements in this Annual Report on Form 10-K ultimately prove to be accurate.

Risks Related to Financing Our Business

We are subject to risks associated with indebtedness under our credit 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 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:

• limit our ability to obtain additional financing in the future for working capital, capital expenditures, to fund growth or for general corporate purposes;

• make it more difficult for us to satisfy the terms of our debt obligations;

• make it more difficult for us to manage increases in interest rates;

• limit our ability to refinance our existing debt on terms acceptable to us, or at all;

• require us to dedicate a substantial portion of our cash flow from operations to make interest and principal 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

• create a competitive disadvantage by reducing our flexibility in responding to increased competition from competitors who hold a lower level on indebtedness.

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 and obligations relating to the Series B Preferred Stock, we may be required to refinance our 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 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. If we are unable to generate sufficient cash flows from our operations, we may be unable to pay interest and principal obligations when they become due. Failure to comply with these obligations or failure to comply with the 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 10, 2026, Corre and certain of its affiliates beneficially owned approximately 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, as described 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.

Risks Related to Our Operations

If we are not able to implement commercially competitive services in a timely manner in response to changes in the market, customer requirements, competitive pressures and technology trends, our business and results of operations could be materially and adversely affected . Competition can place downward pressure on our prices and profitability. Our share of the market for our services is characterized by continual technological developments to provide better and more cost-effective services. If we are not able to implement commercially competitive services and products in a timely manner in response to changes in the market, customer requirements, competitive pressures, inflationary pressures and technology trends, our business and results of operations could be materially and adversely affected. Likewise, if our proprietary technologies, equipment, facilities, or work processes become obsolete, we may no longer be competitive, and our business and results of operations could be materially and adversely affected.

No assurances can be made that we will be successful in hiring or retaining members of a skilled technical workforce. We have a skilled technical workforce and an industry recognized technician training program for each of our service lines that prepares new employees as well as further trains our existing employees. The competition for these individuals is intense. The failure to retain these individuals, or failure to attract new employees, could adversely affect our ability to perform our obligations on our customers’ projects or maintenance and consequently could negatively impact our ability to meet the demand for our products and services.

Unsatisfactory quality of service execution, including safety performance, can affect customer relationships, eliminate or reduce revenue streams from our largest customers, result in higher operating costs and negatively impact our ability to hire and retain a skilled technical workforce. The services we provide could incur quality of execution issues that may be caused by our workforce personnel and/or components we manufacture or purchase from other manufacturers or suppliers. If the quality of our services does not meet our customers’ expectations or satisfaction, then our sales and operating earnings, and, ultimately, our reputation, could be negatively impacted. Additionally, our workers are subject to the normal hazards associated with providing services at industrial facilities. Even with proper safety precautions, these hazards can lead to personal injury, loss of life, destruction of property, plant and equipment, lower employee morale and environmental damage. While we are intensely focused on maintaining a strong safety environment and minimizing the risk of accidents, there can be no assurance that these efforts will be effective. Poor safety performance may limit or eliminate potential revenue streams, including from many of our largest customers, and may materially increase our operating costs, including increasing our required insurance deductibles, self-insured retention and insurance premium costs.

Our business depends upon the maintenance of our proprietary technologies and information. We depend on our proprietary technologies and information, many of which are no longer subject to patent protection. We regularly enter into confidentiality agreements with our key employees, customers, potential customers and other third parties and limit access to and distribution of our trade secrets and other proprietary information. However, these measures may not be adequate to prevent misappropriation of our technologies or to ensure that our competitors will not independently develop technologies that are substantially equivalent or superior to our technologies. In addition, because we operate worldwide, the laws of other countries in which we operate may not protect our proprietary rights to the same extent as the laws of the United States. We are also subject to the risk of adverse claims and litigation alleging infringement of intellectual property rights.

No assurances can be made that we will be successful in maintaining or renewing our contracts with our customers. A significant portion of our contracts and agreements with customers may be terminated by either party on short notice. Although we actively pursue the renewal of our contracts, we cannot assure that we will be able to renew these contracts or that the terms of the renewed contracts will be as favorable as the existing contracts. If we are unable to renew or replace these contracts, or if we renew on less favorable terms, we may suffer a material reduction in revenue and earnings.

The loss or unavailability of any of our executive officers or other key personnel could have a material adverse effect on our business. We depend greatly on the efforts of our executive officers and other key employees to manage and exercise leadership over our operations. The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business operations.

Additional impairments of our intangible and other long-lived assets, and changes in the estimated useful lives of intangible assets could have a material adverse impact on our results of operations and financial condition. Our long-lived assets, including our finite-lived intangible assets, are tested for impairment when circumstances indicate that the carrying amount may not be recoverable. A decrease in our market capitalization or profitability or unfavorable changes in market, economic and industry conditions would increase the risk of impairment.

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 perio d. We continually seek to reduce 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. However, to implement any 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 also decide to reduce, suspend or terminate our cost-saving and business improvement initiatives at any time before achieving the estimated benefits or after a limited period of time. The elimination of current employees can also result in increased future costs in hiring, training and mobilizing new employees or rehires in the event of a future increase in demand for our services, resulting in a slower recovery of results from operations. Our initiatives may negatively affect our ability to retain and attract qualified personnel, who may experience uncertainty about their future roles with us.

Economic, political and other risks associated with international operations could adversely affect our business . A portion of our operations are conducted and located outside the U.S., and accordingly, our business is subject to risks associated with doing business internationally, including changes in foreign currency exchange rates, instability in political or economic conditions, difficulty in repatriating cash proceeds, differing employee relations, differing regulatory environments, trade protection measures, and difficulty in administering and enforcing corporate policies which may be different than the normal business practices of local cultures. Further, the presence of our offices and operations throughout the world creates greater financial and operational risks due to the nature of our operations being conducted at various locations. Our international business operations may include projects in countries where corruption is prevalent. Although we have implemented and continue to enforce policies and procedures designed to ensure compliance with the U.S. Foreign Corrupt Practices Act and the United Kingdom Bribery Act, as well as internal controls, policies and procedures, and employee training and compliance programs to deter prohibited practices more generally, there can be no assurance that all of our employees, contractors or agents, including those representing us in countries where practices which violate such anti-corruption laws may be customary, will not take actions in violation of, or circumventing, our policies and procedures. Any violation of foreign or U.S. laws by our employees, contractors or agents, even if such violation is prohibited by our policies and procedures, could have a material adverse effect on our results of operations, financial position or cash flows.

Business acquisitions and divestitures entail risk for investors. From time to time, we seek growth through strategic acquisitions while also evaluating our portfolio for potential divestitures in specialty maintenance and specialty industrial services, including inspection, engineering assessment and mechanical services to complement, diversify or rationalize our existing business. We may also acquire other businesses that enhance our services or geographic scope and/or divest certain businesses or service offerings to rationalize our operations and take advantage of strategic opportunities. We may not be able to expand our market presence through acquisitions, and acquisitions may present unforeseen integration difficulties or costs. No assurances can be made that we will realize the cost savings, synergies or revenue enhancements that we may anticipate from any acquisition or divestiture, or that we will realize such benefits within the time frame that we expect. If we are not able to address the challenges associated with acquisitions and successfully integrate acquired businesses, or if our integrated product and service offerings fail to achieve market acceptance, or if we are not able to successfully separate divested operations, our business could be adversely affected. The transactions may also affect our share price or future financial results depending on the structure of such considerations. To the extent we issue stock or other rights to purchase stock, including options or other rights, existing shareholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of additional debt of the acquired businesses, or we may incur additional debt to finance such acquisitions.

Our business may be adversely impacted by work stoppages, staffing shortages and other labor matters. Although we believe that our relations with our employees are good and we have had no strikes or work stoppages, no assurances can be made that we will not experience these and other types of conflicts with labor unions, works councils, other groups representing employees, or our employees in general, or that any future negotiations with our labor unions will not result in significant increases in the cost of labor.

We extend credit to customers for purchases of our services which subjects us to potential credit risk that could, if realized, adversely affect our financial condition, results of operations and cash flows . If we are unable to collect amounts

owed to us, or retain amounts paid to us, our cash flows would be reduced and we could experience losses. We would also recognize losses with respect to any receivables that are impaired as a result of our customers’ financial difficulties or bankruptcies. The risk of loss may increase for capital projects where we provide services over a longer period of time. Credit losses could materially and adversely affect our financial condition, results of operations and cash flows.

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.

Increased 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 increased 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 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 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.

While we may create and publish voluntary disclosures regarding ESG matters from time to time, we could be criticized for the accuracy, adequacy or completeness of the disclosure related to our ESG-related practices and initiatives, commitments and goals, and progress toward those goals. Certain statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and lack of an established, single approach to identifying, measuring and reporting on many ESG issues. If our ESG-related data, processes or reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG-related goals on a timely basis, or at all, our reputation could be adversely affected.

In addition, organizations that provide rating information to investors on ESG matters may assign unfavorable ratings to Team or our industries, which may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on our stock price and our costs of capital. To the extent ESG matters negatively impact our reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations. Such ESG matters may also impact our customers, which may result in reduced demand for certain of our products and services.

Risks Related to Market Conditions

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, 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.

Extended periods of low prices for crude oil can have a material adverse impact on our results of operations, financial condition, and liquidity. While we continue our efforts to expand our market presence in the areas of aerospace and defense, renewable energy, construction, chemical processing, manufacturing, power generation, and public infrastructure, among other industries, economic downturns within the oil and gas industry including falling crude oil prices, have resulted in, and could in the future, result in reduced demand for our services.

The price of our outstanding securities may be volatile. It is possible that in some future quarter (or quarters) our revenues, operating results or other measures of financial performance will not meet the expectations of investors, which could cause the price of our outstanding securities to decline or be volatile. Historically, our quarterly and annual sales and operating results have fluctuated. We expect fluctuations to continue in the future. In addition to general economic and political conditions, and in addition to the other factors identified under this Item 1A “Risk Factors”, the following factors may affect our sales and operating results: the timing of significant customer orders, the timing of planned maintenance projects at customer facilities, changes in competitive pricing, wide variations in profitability by product line, variations in operating expenses, rapid increases in raw material and labor costs, the timing of announcements or introductions of new products or services by us, our competitors or our respective customers, the acceptance of those services, our ability to adequately meet staffing requirements with qualified personnel, relative variations in manufacturing efficiencies and costs, and the relative strength or weakness of international markets. Since our quarterly and annual revenues and operating results vary, we believe that period-to-period comparisons are not necessarily meaningful and should not be relied upon as indicators of our future performance. Additionally, the market for our common stock has been and may continue to be thinly traded, and the price of our common stock may be subject to wide fluctuations as a result.

Our revenues are heavily dependent on certain industries. Sales of our services are dependent on customers in certain industries, particularly the refining and petrochemical industries. As we have experienced in the past, and as we expect to occur in the future, downturns characterized by diminished demand for services in these industries as well as potential changes due to consolidation or changes in customer businesses or governmental regulations, could have a material impact on our results of operations, financial position or cash flows. Certain industries and customers have employees represented by unions and could be subject to temporary work stoppages which could impact our activity level.

We sell our services in highly competitive markets, which can limit our ability to increase prices and maintain or increase the market share of our services. Our competition generally stems from other outside service contractors, many of whom offer similar services. Future economic uncertainty could generally reduce demand for industrial services and thus create a more competitive bidding environment for new and existing work. No assurances can be made that we will continue to maintain our pricing model or increase our market share or profitability.

Our ongoing investments in new customer markets involve significant risks, could disrupt our current operations and may not produce the long-term benefits that we expect. Our ability to compete successfully in new customer markets depends on our ability to continue to deliver innovative, relevant and useful services to our customers in a timely manner. As a result, we have invested, and expect to continue to invest, resources in developing products and services to market to new customers. Such investments may not prioritize short-term financial results and may involve significant risks and uncertainties, including encountering new, well-established competitors. We may fail to generate sufficient revenue, operating margin or other value to justify our investments in such new customer markets, thereby harming our ability to generate revenue.

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.

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. 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.

On March 14, 2025, we received notice from the NYSE that we had regained compliance with the NYSE listing standards. There is no assurance that we will remain in compliance with Section 802.01B or other NYSE continued listing standards in the future. If we are unable to list our common stock on an alternate exchange, a delisting of our common stock from the NYSE could negatively impact us by, among other things, reducing the liquidity and market price of our common stock; reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; limiting our ability to issue additional securities or obtain additional financing in the future; decreasing the amount of news and analyst coverage of us; and causing us reputational harm with investors, our employees, and parties conducting business with us.

Risks Related to Information Systems

Our business and operations could suffer in the event of computer system failures, cyber-attacks or deficiencies in our cyber-security or those of third-party providers . In the ordinary course of our business, we continue to increase dependencies on digital technologies to conduct our business. Sensitive data is also transmitted on our networks and systems, including our intellectual property and proprietary information that is confidential to the business, to our customers and our business partners. We have also outsourced significant elements of our information technology infrastructure and, as a result, third parties may or could have access to our confidential information. The secure maintenance of this information is critical to our business and reputation. Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, ransomware, cyber fraud, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, encrypted, lost or stolen. Any such access, inappropriate disclosure of confidential or proprietary information or other loss of information, including our data being breached at third-party providers, could result in legal claims or proceedings, liability or financial loss under laws that protect the privacy of personal information, disruption of our operations with increases in costs and decline in revenues, damage to intellectual property or our product development programs and damage to our reputation, which could adversely affect our business.

Furthermore, we and our third-party providers rely on electronic communications and information systems to conduct our operations. We and our third-party providers have been, and may continue to be, targeted by parties using fraudulent e-mails and other communications in attempts to misappropriate bank account information, passwords, or other personal information or to introduce viruses or other malware to our information systems.

Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs and/or decreases in revenues. The proper functioning of our information systems is critical to the successful operation of our business. Although our information systems are protected through physical and software safeguards, our information systems are still vulnerable to natural disasters, power losses, telecommunication failures and other problems. If critical information systems fail or are otherwise unavailable, our business operations could be adversely affected.

Risks Related to Regulations

Unanticipated fluctuations in our effective tax rate and our tax obligations, changes in legislation or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial results. We are subject to taxes in the U.S. and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision, which includes assessing the restrictions on tax credits, offset gains or repatriation of cash proceeds, tax assets and accruals for other taxes. There are many transactions and calculations where the ultimate tax determination is uncertain. Our future effective income tax rates could be subject to volatility or adversely affected by our profit levels, changes in our business, reorganization of our business and operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the elections we make or changes in the valuation allowance for deferred tax assets, as well as other factors.

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 via 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 future effective tax rates could also be adversely affected by changes in tax laws, both domestically and internationally, or the interpretation of application thereof. From time to time, the U.S. Congress and foreign, state and local governments consider legislation that could increase our effective tax rate. We cannot determine whether, or in what form, other future tax legislation will ultimately be enacted or what impact any such legislation could have on our profitability.

We are also currently subject to audit in various jurisdictions, and these jurisdictions may assess additional income or other tax liabilities against us. Developments in an audit, litigation, or relevant laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited . Our ability to use our net operating losses and other tax attributes would be substantially limited if we experience an “ownership change,” as such term is defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). A company generally experiences an ownership change if the percentage of the value of its stock owned by certain “5-percent shareholders,” as such term is defined in Section 382 of the Code, increases by more than 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Our ability to use net operating losses to reduce future taxable income and liabilities may also be subject to annual limitations as a result of prior ownership changes and ownership changes that may occur in the future. Notwithstanding the foregoing, it is possible that we will not generate taxable income in time to use such net operating losses before their expiration, or at all.

Our operations and properties are subject to extensive environmental, health and safety regulations. We are subject to a variety of U.S. federal, state, local and international laws and regulations relating to the environment and worker health and safety, among other things. These laws and regulations are complex, change frequently, are becoming increasingly stringent, and can impose substantial sanctions for violations or require operational changes that may limit our services. We must conform our operations to comply with applicable regulatory requirements and adapt to changes in such requirements in all locations in which we operate. These requirements can be expected to increase the overall costs of providing our services over time. Some of our services involve handling or monitoring highly regulated materials, including volatile organic compounds or hazardous wastes. Environmental laws and regulations generally impose limitations and standards for the characterization, handling, disposal, discharge or emission of regulated materials and require us to obtain permits and comply with various other requirements. The improper characterization, handling, or disposal of regulated materials or any other failure by us to comply with increasingly complex and strictly-enforced federal, state, local, and international environmental, health and safety laws and regulations or associated permits could subject us to the assessment of administrative, civil and/or criminal penalties, the imposition of investigatory or remedial obligations or capital expenditure requirements, or the issuance of injunctions that could restrict or prevent our ability to operate our business and complete contracted services. A defect in our services or faulty workmanship could result in an environmental liability if, as a result of the defect or faulty workmanship, a contaminant is released into the environment. In addition, the modification or interpretation of existing environmental, health and safety laws or regulations, the more vigorous enforcement of existing laws or regulations, or the adoption of new laws or regulations may also negatively impact industries in which our customers operate, which in turn could have a negative impact on us.

Our business is subject to risks arising from climate change, including climate change legislation or regulations restricting emissions of greenhouse gases, changes in consumer preferences and technology and physical impacts of climate change, all of which could have a negative impact on our business and results of operations. There has been an increased focus on climate change in response to findings that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the environment. As a result, there have been a variety of regulatory developments, proposals or requirements and legislative initiatives that have been introduced in the U.S. and other parts of the world that are focused on restricting the emission of greenhouse gases and enhancing greenhouse gas emissions disclosure requirements, including increased fuel efficiency standards, carbon taxes or cap and trade systems, restrictive permitting and incentives for renewable energy. The adoption of new or more stringent legislation or regulatory programs limiting greenhouse gas emissions from customers, particularly those in refining and petrochemical industries, for whom we provide inspection, repair and

maintenance services, or reducing the demand for those customers’ products, could in turn affect demand for our products and services. Similarly, changing consumer preferences for goods or services relating to alternative sources of energy or emissions reductions and technological advances in fuel economy and energy generation devices or other technological advances could materially affect our customers, which in turn could negatively impact demand for our services and adversely affect our results of operations, financial condition, and liquidity. Additionally, some of our customers are modifying their plants and facilities and may adopt new technology in efforts to align their operations and products with the energy transition, but there is no assurance that such modified facilities or technological advancements will require the same level of services and products that we currently provide. In addition, our manufacturing centers use electricity generated by burning fossil fuels, which releases carbon dioxide. Increased energy or compliance costs and expenses as a result of any increased legal or regulatory requirements to limit and/or track greenhouse gas emissions may cause disruptions in, or an increase in the costs associated with, the manufacturing and distribution of our products.

Scientists have concluded that increasing greenhouse gas concentrations in the atmosphere may produce physical effects of climate change, such as increased severity and frequency of storms, droughts, floods and other climate events. Such climate events have the potential to adversely affect our operations or those of our customers or suppliers, including by damaging our manufacturing facilities, disrupting our supply chain and causing our suppliers to incur significant costs in responding to such impacts, which in turn could have a negative effect on us, including by adversely impacting our results of operations, financial condition and cash flows. Such events, if increasing in their severity and frequency, may also adversely affect our ability to insure against the risks associated with such events, thus leading to greater financial risk for us in the conduct of our operations against the backdrop of such events.

We are subject to privacy and data security/protection laws in the jurisdictions in which we operate and may be exposed to substantial costs and liabilities associated with such laws and regulations. The regulatory environment surrounding information security and privacy is increasingly demanding, with frequent imposition of new and changing requirements. Compliance with changes in privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes, which could have a material adverse effect on our financial condition and results of operations. In addition, the payment of potentially significant fines or penalties in the event of a breach or other privacy and information security laws, as well as the negative publicity associated with such a breach, could damage our reputation and adversely impact demand for our services and customer relationships.

Risks Related to Legal Liability

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 and provide for warranties for materials and workmanship. We have a $1.0 million retention for indemnity 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 involved and are likely to continue to be involved in legal proceedings or governmental or regulatory inquiries, which will increase our costs and, if adversely determined, could have a material effect on our results of operations, financial position or cash flows. We are currently a defendant in legal proceedings arising from the operation of our business and it is reasonable to expect that we will be named in future actions. Most of the legal proceedings against us arise out of the normal course of performing services at customer facilities, and include claims for workers’ compensation, personal injury and property damage. Legal proceedings can be expensive to defend and can divert the attention of management and other personnel for significant periods of time, regardless of the ultimate outcome. An unsuccessful defense of a liability claim could have an adverse effect on our business, results of operations, financial position or cash flows.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to the accompanying consolidated financial statements and notes to help provide an understanding of our financial condition, changes in financial condition, and results of operations. The following should be read in conjunction with Item 1 “Business,” Item 1A “Risk Factors,” Item 2 “Properties,” and Item 8 “Consolidated Financial Statements and Supplementary Data,” included in this Annual Report on Form 10-K.

Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future developments and/or otherwise are not statements of historical fact. See Item 1 at the beginning of this Annual Report.

Overview of Business

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

Significant Factors Impacting Results and Recent Developments

Our revenues, gross margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Cautionary Note Regarding Forward-Looking Statements above and Part 1, Item 1A. “Risk Factors” included in this report, and have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain factors are described below.

Financing Transactions

March 12, 2025 - Debt Refinancing Transactions

On March 12, 2025, the Company completed a series of refinancing transactions, including entering into the First Lien Term Loan Agreement with HPS Investment Partners, LLC as agent, which provided for a $225.0 million senior secured first lien term loan consisting of a $175.0 million initial term loan tranche and a $50.0 million delayed draw term loan tranche, both maturing on March 12, 2030, with proceeds of the initial term loan tranche used to repay certain then-existing term loans and with future draws subject to certain leverage and liquidity conditions available to repay term loans outstanding under the Second A&R Second Lien Term Loan Agreement. Concurrently, the Company entered into the Second A&R Second Lien Term Loan Agreement with Cantor Fitzgerald Securities as agent, which provided for a $107.4 million second lien term loan consisting of a $97.4 million term loan tranche and a $10.0 million delayed draw term loan tranche, both maturing on June 10, 2030, with proceeds of the term loan tranche used to repay certain then-existing term loans under the Existing A&R Term Loan Agreement, and with future draws subject to certain liquidity conditions available for general corporate and working capital purposes. In connection with these transactions, the Company also executed ABL Amendment No.6 to the 2022 ABL Credit Agreement, which permitted entry into the new term loan agreements, aligned terms across the facilities, and reflected the payoff of previously outstanding term loan tranches under the 2022 ABL Credit Agreement. Each of these agreements includes customary borrowing conditions, financial covenants, and default provisions, including increased interest rates upon certain events of default. Additional information regarding the refinancing transactions is provided in Note 11 - Debt.

September 11, 2025 - Preferred Stock Financing Transaction

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On September 11, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with the Stellex Holder, an affiliate of Stellex Capital Management LLC, resulting in the issuance of (i) 75,000 shares of Series B Preferred Stock and (ii) warrants to purchase an aggregate of 1,453,260 shares of common stock for total consideration of $75.0 million (such issuance, along with the use of proceeds therefrom and the other transactions contemplated thereby, the “Series B Transactions”). The warrants issued as part of the Series B Transactions consisted of warrants to purchase 982,371 shares of the Company’s common stock at an initial exercise price of $23.00 per share (“Tranche A Warrants”) and warrants to purchase 470,889 shares of the Company’s common stock at an initial exercise price of $50.00 per share (“Tranche B Warrants”). The proceeds of the Series B Transactions were used to repay a portion of the outstanding loans under the Company’s 2022 ABL Credit Agreement and Second A&R Second Lien Term Loan Agreement, as well as to cover transaction expenses.

Through September 11, 2027, subject to certain conditions, the Purchase Agreement also provides the Company with the option to draw upon (a “Series B Delayed Draw”) up to $30.0 million as a delayed draw, and concurrently issue up to an additional 30,000 shares of Series B Preferred Stock and 581,304 additional warrants. Each draw must be at least $5.0 million and is subject to satisfying certain conditions, including pro forma compliance with a First Lien Net Leverage Ratio (as defined in the First Lien Term Loan Agreement) of 6.50 to 1.00. For each $5.0 million draw, the Company will issue 5,000 shares of Series B Preferred Stock and grant an additional 65,491 Tranche A warrants and an additional 31,393 Tranche B warrants. Any additional Tranche A warrants will have an initial exercise price equal to the lesser of $30.00 or 110% of the 30-day volume weighted average price of the Company’s common stock, subject to adjustment. Any additional Tranche B warrants will have an initial exercise price of $50.00 per share, subject to adjustment. The Stellex Holder is not required to participate in more than one draw per calendar quarter. Pursuant to the Purchase Agreement, the proceeds from the Series B Delayed Draw may be used only for the following purposes: (i) to finance permitted acquisitions and certain growth initiatives (including the costs of expansion into new markets), (ii) to repay loans outstanding under the Company’s First Lien Term Loan Agreement, and (iii) for up to 20% of such net proceeds, to finance the Company’s transformation plan as mutually agreed between the Company and Stellex. Any undrawn amounts under this option are subject to a 1.0% annual commitment fee. The warrants issued in connection with these transactions (the “Stellex Warrants”) are exercisable for 10 years and include customary anti-dilution and participation rights.

Further details regarding the terms, accounting treatment, and features of the Series B Preferred Stock and warrants are provided in Note 14 - Shareholders’ Equity and Note 16 - Redeemable Preferred Stock .

In connection with the Series B Transactions, the Company entered into amendments to its First Lien Term Loan Agreement, Second A&R Second Lien Term Loan Agreement, and 2022 ABL Credit Agreement. These amendments provided the Company with increased flexibility to complete the equity issuance and related transactions, including reductions to interest rate margins, and increased flexibility regarding leverage ratio thresholds, covenants, and mandatory prepayment requirements. Additional information regarding the related debt amendments is provided in Note 11 - Debt.

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Results of Operations

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

The following table sets forth the components of revenue and operating income (loss) from our operations for the twelve months ended December 31, 2025 and 2024 (in thousands):

Twelve Months Ended December 31,

Favorable (Unfavorable)

Revenues by business segment:

IHT

Total revenues

Operating income (loss):

IHT

Corporate and shared support services

Total operating income

Interest expense, net

Loss on debt extinguishment

Other income (expense), net

Loss before income taxes

Provision for income taxes

Net loss

NM - not meaningful

Revenues. Total revenues increased by $44.2 million or 5.2% compared to the prior year. This increase includes a $2.3 million positive impact from favorable foreign exchange rate movements during 2025. IHT revenues increased by $32.2 million or 7.5%, primarily attributable to a $24.3 million increase in U.S. operations driven by higher call-out and turnaround activity with new and existing customers, reflecting increased demand for non-destructive testing services. Aerospace-related revenue increased by $4.2 million, attributable to growth with existing customers at our Cincinnati facility. Revenue in Canada increased by $2.5 million driven by growth in non-destructive examination and heat-treating activity from turnaround projects with new and existing customers. MS revenues increased by $12.1 million or 2.8%, over prior year, driven by a $14.6 million increase in U.S. operations due to growth from turnaround activities in the oil and refining sectors, and a $7.4 million increase in Canada mainly from project work. These increases were partially offset by a $9.9 million decline in revenue from our international operations, primarily in Latin America and the United Kingdom, attributable to lower project activity in call-out and leak repair services.

Operating income (loss) . Overall operating income increased by $3.9 million to $14.1 million in 2025, compared to $10.1 million in the prior year. IHT’s operating income increased by $6.8 million or 18.5%, 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 totaled $26.4 million, a decrease of $0.9 million year over year. This decline was mainly attributable to a $5.4 million decrease in international regions, primarily due to lower project activity levels. The decrease was partially offset by a $3.9 million improvement in U.S. operating income, due to better margins, and a $0.6 million increase in Canada. Corporate operating loss increased by $2.0 million year over year, primarily due to higher professional costs related to debt and equity refinancing activities in the current year.

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The operating income for the current year includes net expenses totaling $11.8 million which we do not believe are connected to our core operating activities, while the same period in the prior year included $5.6 million of such items.

The detail of operating income excluding non-core expenses is below (in thousands):

Twelve Months Ended December 31,

Favorable

(Unfavorable)

Operating income

Professional fees and other

Legal costs and litigation reserves

Severance charges, net

Total non-core expenses

Total operating income, excluding non-core expenses

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

Interest expense, net . Interest expense for 2025 was $44.7 million, a decrease of $3.1 million compared to the prior year, primarily due to overall lower interest rates on our debt driven mainly by the refinancing completed on March 12, 2025, and amendments to certain debt instruments on September 11, 2025, that lowered the applicable interest rates, and lower overall outstanding debt.

Cash interest paid for the years ended December 31, 2025 and 2024 amounted to $30.3 million and $24.9 million, respectively.

Loss on debt extinguishment . On March 12, 2025, as part of debt refinancing with existing and new lenders, we repaid the outstanding balances of the ME/RE Loans, Corre Delayed Draw Term Loan, and Corre Incremental Term Loan, and made a partial payment on the Corre Uptiered Loan, including applicable prepayment premiums and accrued interest. These transactions resulted in a loss on debt extinguishment of $11.9 million, which includes $7.4 million of non-cash unamortized debt issuance cost written off with the payoffs. Additionally, a $1.3 million write-off of unamortized debt issuance costs was recognized in connection with the partial prepayment of the 2025 Second Lien Term Loans on September 11, 2025.

Other income (expense), net . Other income (expense), net, changed by $5.6 million, shifting from net income of $2.7 million in the prior year to a net expense of $2.9 million in 2025. This was primarily driven by the foreign currency transaction losses in the current year, reflecting unfavorable fluctuations in the value of the U.S. dollar relative to the foreign currencies to which we are exposed.

Taxes. The provision for income tax was $2.6 million on the pre-tax loss of $46.6 million in the current year compared to a provision for income tax of $3.3 million on pre-tax loss of $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 5.5% and 9.4% for years ended December 31, 2025 and 2024, respectively.

Non-GAAP Financial Measures and Reconciliations

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-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

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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.

We believe these non-GAAP financial measures are useful to both management and investors in their analysis of our financial position and results of operations. In particular, adjusted net income (loss), adjusted net income (loss) per share, consolidated adjusted EBIT, and consolidated adjusted EBITDA are meaningful measures of performance which are commonly used by industry analysts, investors, lenders, and rating agencies to analyze operating performance in our industry, perform analytical comparisons, benchmark performance between periods, and measure our performance against externally communicated targets. Our segment adjusted EBITDA is also used as a basis for the Chief Operating Decision Maker (Chief Executive Officer) to evaluate the performance of our reportable segments. Free cash flow is used by our management and investors to analyze our ability to service and repay debt and return value directly to stakeholders.

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 adjusted net income (loss), EBIT and EBITDA to their most comparable U.S. GAAP financial measurements on a consolidated and segmented basis:

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TEAM, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(unaudited, in thousands except per share data)

Twelve Months Ended

December 31,

Adjusted Net Loss:

Net loss

Professional fees and other 1

Legal costs and litigation reserves

Severance charges, net

Loss on debt extinguishment

Write-off of software cost

Tax impact of adjustments and other net tax items

Adjusted Net Loss

Dividend and accretion to redemption value on redeemable preferred stock

Adjusted Net Loss attributable to common shareholders

Adjusted Net Loss attributable to common shareholders per common share:

Basic and Diluted

Consolidated Adjusted EBIT and Adjusted EBITDA:

Net loss

Provision for income taxes

Interest expense, net

Foreign currency loss (gain)

Gain on sale of assets

Professional fees and other 1

Legal costs and litigation reserves

Severance charges, net

Loss on debt extinguishment

Write-off of software cost

Pension credit 2

Consolidated Adjusted EBIT

Depreciation and amortization:

Amount included in operating expenses

Amount included in SG&A expenses

Total depreciation and amortization

Non-cash share-based compensation costs

Consolidated Adjusted EBITDA

Free Cash Flow:

Cash provided by (used in) operating activities

Capital expenditures

Free Cash Flow

1    The twelve months ended December 31, 2025 include $1.7 million related to debt financing and $6.5 million related to support costs. The twelve months ended December 31, 2024 include $3.8 million related to debt financing and $0.3 million for lease extinguishment charges, support and other costs.

2    Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the amount of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date.

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TEAM, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)

(unaudited, in thousands)

Twelve Months Ended

December 31,

IHT

Operating income

Professional fees and other 1

Severance charges, net

Adjusted EBIT

Depreciation and amortization

Adjusted EBITDA

Operating income

Professional fees and other 1

Legal costs

Severance charges, net

Adjusted EBIT

Depreciation and amortization

Adjusted EBITDA

Corporate and shared support services

Net loss

Provision for income taxes

Gain on sale of assets

Interest expense, net

Foreign currency loss (gain)

Professional fees and other 1

Legal costs and litigation reserves

Severance charges, net

Loss on debt extinguishment

Write-off of software cost

Pension credit 2

Adjusted EBIT

Depreciation and amortization

Non-cash share-based compensation costs

Adjusted EBITDA

Consolidated Adjusted EBITDA

1    The twelve months ended December 31, 2025 include $1.7 million related to debt financing and $6.5 million related to support costs. The twelve months ended December 31, 2024 include $3.8 million related to debt financing and $0.3 million for lease extinguishment charges, support and other costs.

2    Represents pension credits for the U.K. pension plan based on the difference between the expected return on plan assets and the amount of the discounted pension liability. The pension plan was frozen in 1994 and no new participants have been added since that date.

Liquidity and Capital Resources

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

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. 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

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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. 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 financial performance expectations. See Note 11 - Debt of the consolidated financial statements for a further discussion of our liquidity.

We closely monitor the amounts and timing of our sources and uses of funds. Our ability to maintain a sufficient level of liquidity to fund our operations and meet our financial obligations will be dependent upon our future performance, which is subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control.

Our ability to generate operating cash flow, sell assets, access capital markets or take any other action to improve our liquidity and manage our debt is subject to the risks 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.

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.

As of December 31, 2025, we had approximately $63.4 million of available borrowing capacity under our various credit facilities, consisting of $53.4 million available under the 2022 ABL Credit Agreement and $10.0 million available under the Second A&R Second Lien Term Loan Agreement. 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, 2025 we were in compliance with our debt covenants. Our ability to maintain compliance with the financial covenants contained in our credit agreements is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties, as described elsewhere herein.

As of March 10, 2026, we had consolidated cash and cash equivalents of $17.7 million, excluding $4.4 million of restricted cash used mainly as collateral for outstanding letters of credit and commercial card programs, and approximately $49.1 million of undrawn availability under our various credit facilities, resulting in total liquidity of $66.8 million. We also have $30.0 million of Series B Delayed Draw availability as described above.

Refer to Note 11 - Debt for additional information about our debt instruments.

Cash Flows

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

Twelve Months Ended December 31,

Cash flows provided by (used in):

Favorable

(Unfavorable)

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes on cash

Net change in cash and cash equivalents

Cash and cash equivalents . Our cash and cash equivalents as of December 31, 2025 totaled $18.1 million, consisting of $14.1 million of unrestricted cash on hand and $4.0 million of restricted cash. International cash balances as of December 31, 2025 were $4.4 million, and approximately $1.2 million of such cash is restricted.

Our cash and cash equivalents as of December 31, 2024 totaled $35.5 million, including $31.5 million of unrestricted cash on hand, and $4.0 million of restricted cash. International cash balances as of December 31, 2024 were $5.1 million, including $1.1 million of restricted cash.

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Our total debt and finance obligations were $297.2 million (of which $3.9 million was classified as current at December 31, 2025), compared to total debt of $325.1 million at December 31, 2024. The $27.9 million decrease was primarily due to the partial paydown on the 2022 ABL Credit Agreement and Second A&R Second Lien Term Loan Agreement following the Series B Transactions on September 11, 2025, partially offset by new borrowings from the refinancing completed on March 12, 2025.

Cash flows attributable to our operating activities. Our largest source of operating cash inflow is cash collection from customers for work performed. The primary use of operating cash is to pay our suppliers, employees, tax authorities, and others.

Cash flows from operating activities are primarily generated from net income or loss adjusted for certain non-cash items which include depreciation and amortization, PIK interest, and amortization of debt issuance costs. For the twelve months ended December 31, 2025, cash flows from operating activities also included an adjustment to net loss for the non-cash loss on debt extinguishment.

For the year ended December 31, 2025, net cash used in operating activities was $11.3 million, representing a decrease of $34.1 million compared to $22.8 million of cash provided by operating activities in the 2024 period. This change was primarily driven by the impact of working capital. Changes in working capital items - such as the growth of receivables and payment of operating payables - are significant factors affecting operating cash flows and can represent significant uses of cash, particularly during periods of increasing revenue and activity levels. During the twelve months ended December 31, 2025, changes in working capital items used $31.3 million in cash flows, a $36.0 million increase compared to the $4.7 million in cash flows provided by working capital in the corresponding 2024 period.

Cash flows attributable to our investing activities . For the year ended December 31, 2025, net cash used in investing activities was $9.1 million, consisting of $9.3 million of capital expenditures partially offset by net proceeds from asset disposals of $0.2 million.

For the year ended December 31, 2024, net cash used in investing activities was $9.3 million, consisting of $9.5 million of capital expenditures partially offset by net proceeds from asset disposals of $0.2 million.

Cash flows attributable to our financing activities. For the year ended December 31, 2025, net cash provided by financing activities totaled $2.8 million. This amount primarily reflects cash inflows from the $175.0 million borrowing under the new First Lien Term Loan and $75.0 million in proceeds from the issuance of Series B Preferred Stock. These inflows were partially offset by cash outflows, including a partial repayment of the 2025 Second Lien Term Loan of $41.8 million, net payments of $19.1 million under the Revolving Credit Loans, and the full repayment of outstanding balances under the Corre Delayed Draw Term Loan, Corre Incremental Term Loan and ME/RE Loans, and the partial paydown of the Corre Uptiered Loan. Additionally, during the period, we incurred $11.3 million in debt issuance costs related to refinancing transactions completed both with existing and new lenders as of March 12, 2025. We also paid $7.8 million in costs associated with the issuance of Series B Preferred Stock and warrants.

For the year ended December 31, 2024, net cash used in financing activities was $12.7 million, consisting primarily of $8.5 million of debt issuance costs, $2.8 million of principal payments under the ME/RE Loans and $1.4 million of principal payments under the Corre Incremental Term Loan, partially offset by the net borrowings on our 2022 ABL Credit Agreement of $0.5 million.

Effect of exchange rate changes on cash . For the year ended December 31, 2025, the effect of foreign exchange rate changes on cash was a positive impact of $0.2 million.

For the year ended December 31, 2024, the effect of foreign exchange rate changes on cash was a negative impact of $0.6 million.

Off-Balance Sheet Arrangements

From time-to-time, we enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations. See Note 11 - Debt for additional details on our off-balance sheet arrangements.

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Critical Accounting Policies

The process of preparing financial statements in accordance with U.S. GAAP requires us to make estimates and judgments. It is possible that materially different amounts could be recorded if these estimates and judgments change or if actual results differ from these estimates and judgments. We believe that the following critical accounting policies comprise the more significant estimates and assumptions used in the preparation of our consolidated financial statements.

Income taxes. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted rates in effect for the year in which the differences are expected to reverse. The effect of the change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be unable to realize our deferred tax assets, we would make an adjustment to the deferred tax asset valuation allowance.

We establish reserves for uncertain tax positions when it is not more likely than not that the position will be sustained upon challenge. When facts and circumstances change, we adjust these reserves through our provision for income taxes. To the extent interest and penalties may be assessed by taxing authorities on any related underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense.

New Accounting Principles

For information about newly adopted accounting principles as well as information about new accounting principles pending adoption, see Note 1 - Summary of Significant Accounting Policies and Practices to the consolidated financial statements.