Innovex International, Inc.

Previous wording

The following discussion and analysis of the results of operations, financial condition, and liquidity position of Innovex for the three and six months ended June 30, 2026 and 2025 should be read in conjunction with (i) the accompanying unaudited Condensed Consolidated Financial Statements and the related notes included in Part I, Item 1 of this Quarterly Report and (ii) the audited Consolidated Financial Statements and related notes for the year ended December 31, 2025 included in our Annual Report.

Current wording

The following discussion and analysis of the results of operations, financial condition, and liquidity position of Innovex for the three and nine months ended September 30, 2026 and 2025 should be read in conjunction with (i) the accompanying unaudited Condensed Consolidated Financial Statements and the related notes included in Part I, Item 1 of this Quarterly Report and (ii) the audited Consolidated Financial Statements and related notes for the year ended December 31, 2025 included in our Annual Report.

Previous wording

Innovex does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. References in this section to “Innovex,” the “Company,” the “Combined Company,” “we,” “us,” and “our” are to Innovex International, Inc.(formerly known as Dril-Quip, Inc.) and its consolidated subsidiaries after giving effect to the Merger (as defined below) and related transactions, unless the context otherwise requires or as otherwise indicated. Except as otherwise indicated, references herein to “Dril-Quip” are to Dril-Quip, Inc. prior to the completion of the Merger.

Current wording

Innovex does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. References in this section to “Innovex,” the “Company,” “we,” “us,” and “our” are to Innovex International, Inc. (formerly known as Dril-Quip, Inc.) and its consolidated subsidiaries.

Previous wording

Innovex designs, manufactures, sells, and rents mission critical engineered products to the global oil and natural gas industry. Our vision has been to create a global leader in well-centric products and technologies through organic, customer-linked innovations and disciplined acquisitions to drive leading returns for our investors. Our products are used across the life cycle of the well (during the construction, completion, production, and intervention phases) and are typically utilized downhole and are consumable in nature. Our products perform a critical well function, and we believe they are chosen due to their reliability and capacity to save our customers time and lower costs during the well lifecycle. We believe that our products have a significant impact on a well’s performance and economic profile relative to the price we charge, creating a“Big Impact, Small Ticket”value proposition. Many of our products can be used in a significant portion of our customers’ wells globally, with our most advanced products providing mission critical solutions for some of the most challenging and complex wells in the world. We have a track record of developing proprietary products to address our customers’ evolving needs, and we maintain an active pipeline of potential new products across various stages of development.

Current wording

Innovex designs, manufactures, sells, and rents mission-critical engineered products for the global oil and natural gas industry. Our strategy is to build a global leader in well-centric products and technologies through customer-linked innovation, organic growth, and disciplined acquisitions that deliver strong returns for our investors.

Previous wording

We are a global company, and for the six months ended June 30, 2026, the U.S. and Canadian onshore (“NAM”) market made up approximately 55% of our revenue, while the international and offshore (“International and Offshore”) market constituted 45%. Within the NAM market, we have a strong presence in both the United States and Canada. The NAM market is core to us, and we maintain a robust sales and distribution infrastructure across the region. Our products have broad applicability in this market, particularly for horizontal or unconventional wells that have become prevalent methods of oil and natural gas development across the region. We are focused on significantly increasing our revenue from the International and Offshore markets, as these regions are typically subject to long-cycle investment horizons and exhibit relatively less cyclicality than the NAM market. The Middle East, and in particular Saudi Arabia, has been a key source of growth for Innovex. We also operate across Asia, Latin America, Europe, and the Gulf of America, among other regions. To enhance our global reach, we have complemented our locations across these markets with a network of strategic distribution, sales, and manufacturing partners.

Current wording

Innovex is focused on increasing revenue from International and Offshore markets. These regions are typically supported by long-cycle investment horizons and tend to exhibit less cyclicality than the NAM market. The Middle East, particularly Saudi Arabia, has been a key source of growth for Innovex. We also operate across Asia, Latin America, Europe, and the Gulf of America, among other regions. We maintain a network of distribution, sales, and manufacturing partners within the International and Offshore markets.

Previous wording

Our organic growth has been complemented by a disciplined and contrarian acquisition strategy. We view acquisitions as a core competency and have identified a rich opportunity set of acquisition targets that we believe are seeking to transact. We aim to execute a disciplined acquisition strategy for high-quality opportunities that meet our stringent investment criteria.

Current wording

Our organic growth is complemented by a disciplined and contrarian acquisition strategy. We view acquisitions as a core competency and have identified a rich opportunity set of potential targets that we believe are seeking to transact. We aim to pursue high-quality opportunities that meet our stringent investment criteria and align with our long-term growth strategy.

Previous wording

We have a broad customer base, ranging from International Oil Companies, National Oil Companies, and exploration and production (“E&P”) companies, as well as multinational and regional oilfield service companies. Once a new product has been commercialized or acquired, our global sales and distribution infrastructure enables us to scale and drive customer adoption quickly.

Current wording

Innovex serves a broad range of customers, including International Oil Companies, National Oil Companies, exploration and production (“E&P”) companies and multinational and regional oilfield service companies.

Previous wording

Our business has produced strong returns on invested capital. Refer to “Non-GAAP Financial Measures” within this section for Return on Capital Employed, which is how we assess the effectiveness of our capital allocation over time. For the six months ended June 30, 2026, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 1.7%, 2.5%, and 20.1% of revenue, respectively. Over the same period, capital expenditures accounted for 2.6% of revenue, and we recognized approximately $12.0 million in income from operations. For the six months ended June 30, 2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 6.0%, 10.0%, and 20.0% of revenue, respectively. Over the same period, capital expenditures accounted for 3% of revenue, and we earned approximately $44.5 million in income from operations. During the six months ended June 30, 2026, we established a legal contingency accrual due to the jury verdict in connection with the Impulse Litigation, which is a primary reason for the decrease in net income and income from operations for the six months ended June 30, 2026. We believe that our global sales and distribution network, as well as our manufacturing capacity and vendor network, position us well to drive revenue growth and margin expansion. Refer to “Non-GAAP Financial Measures” within this section for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed, as well as a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed to our most directly comparable financial measures calculated and presented in accordance with GAAP.

Current wording

Our business has produced strong returns on invested capital. Refer to “Non-GAAP Financial Measures” within this section for Return on Capital Employed, which is how we assess the effectiveness of our capital allocation over time. For the nine months ended September 30, 2026, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 4.6%, 5.9%, and 20.4% of revenue, respectively. Over the same period, capital expenditures accounted for 2.5% of revenue, and we recognized approximately $44.3 million in income from operations. For the nine months ended September 30, 2025, our net income, income from operations and Adjusted EBITDA were equivalent to approximately 10.0%, 15.0%, and 19.0% of revenue, respectively. Over the same period, capital expenditures accounted for 4% of revenue, and we earned approximately $106.8 million in income from operations. During the nine months ended September 30, 2026, we established a legal contingency accrual due to the jury verdict in connection with the Impulse Litigation, which reduced net income and income from operations for the nine months ended September 30, 2026. We believe that our global sales and distribution network, as well as our manufacturing capacity and vendor network, position us well to drive revenue growth and margin expansion. Refer to “Non-GAAP Financial Measures” within this section for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed, as well as a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, and Return on Capital Employed to our most directly comparable financial measures calculated and presented in accordance with GAAP.

Previous wording

We believe that we can create value for our stockholders across the industry cycle and view our “through-cycle playbook” as providing a plan for us to outperform in all market environments. We prioritize protecting the long-term health of the Company through investments in R&D and sustaining engineering in our existing portfolio in all market environments. We seek to maintain a conservative balance sheet to preserve operational and financial flexibility through the industry cycle.

Current wording

We believe we can create value for stockholders across the industry cycle. Our “through-cycle playbook” provides a framework for outperforming in a range of market environments. To protect the long-term health of the Company, we prioritize continued investment in R&D and sustaining engineering across our existing portfolio, regardless of market conditions. We also seek to maintain a conservative balance sheet to preserve operational and financial flexibility through the industry cycle.

Previous wording

On April 10, 2026, we acquired Drilling Innovative Solutions, LLC (“DIS”) for a total purchase consideration of $17.6 million, which includes $4 million of earnout obligations subject to the achievement of revenue targets over the next two years, resulting in DIS becoming a wholly owned subsidiary of Innovex. DIS manufactures and distributes unique patented products to the oil and gas industry, including float valves and plug cement retainers, with a proven track record of helping operators realize significant savings through innovative solutions. Through integrating DIS’ product offering and expertise into our broader platform, we expect to enhance our portfolio of “big-impact, small ticket” products, allowing us to deliver additional value to our global customer base.

Current wording

On April 10, 2026, we acquired Drilling Innovative Solutions, LLC (“DIS”) for a total purchase consideration of $17.6 million, which includes $4 million of earnout obligations subject to the achievement of defined performance metrics within two years of closing, resulting in DIS becoming a wholly owned subsidiary of Innovex. DIS manufactures and distributes unique patented products to the oil and gas industry, including float valves and plug cement retainers, with a proven track record of helping operators realize significant savings through innovative solutions. Through integrating DIS’ product offering and expertise into our broader platform, we expect to enhance our portfolio of “Big Impact, Small Ticket” products, allowing us to deliver additional value to our global customer base.

Previous wording

On June 15, 2026, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with Rieber & Søn AS, a Norwegian private limited liability company (the “Seller”), pursuant to which we agreed to acquire from the Seller all of the issued shares (other than treasury shares) of TCO Group AS, a Norwegian private limited liability company (“TCO Group”). The acquisition closed on July 1, 2026. TCO Group is engaged in the development, manufacturing, and supply of equipment, tools, and related services to the oil and gas industry. TCO Group’s product offering includes completion barrier plugs, tubing-conveyed perforating services, chemical injection systems and annulus pressure relief systems. These products are used in well completion and testing, perforation services, targeted downhole chemical delivery and automatic relief of trapped pressure between casing strings.

Current wording

On July 1, 2026, we acquired TCO Group AS, a Norwegian private limited liability company (“TCO Group”), for a total purchase consideration of $90.8 million, resulting in TCO Group becoming a wholly owned subsidiary of Innovex. TCO Group is engaged in the development, manufacturing, and supply of equipment, tools, and related services to the oil and gas industry. TCO Group’s product offering includes completion barrier plugs, tubing-conveyed perforating services, chemical injection systems and annulus pressure relief systems. These products are used in well completion and testing, perforation services, targeted downhole chemical delivery and automatic relief of trapped pressure between casing strings. Through integrating TCO Group's product offering and expertise, we expect to enhance our portfolio of "Big Impact, Small Ticket" products, allowing us to deliver additional value to our global customer base and accelerate TCO Group's technologies across new customers, applications, and geographies.

Previous wording

Our business is driven by the number of oil and natural gas wells drilled worldwide, which is closely tied to global exploration and production spending. As of June 25, 2026, Rystad Energy expects global upstream energy spending, excluding Iran, Venezuela, Cuba, Russia, and China, to decline slightly by approximately 1% in 2026 before increasing by approximately 6% in 2027 and a further approximately 2% in 2028. Approximately 33,000 wells were drilled in 2025, and that number is expected to remain relatively stable at approximately 33,000 wells annually through 2028. The pace of development activity is driven by expected well profitability and returns, which, in turn, are influenced by several factors, including current global oil and natural gas supply and demand balances, current and expected future prices for oil and natural gas and the perceived stability and sustainability of these commodity prices over time.

Current wording

Our business is driven by the number of oil and natural gas wells drilled worldwide, which is closely tied to global exploration and production spending. As of October 15, 2026, Rystad Energy expects global upstream energy spending, excluding Iran, Venezuela, Cuba, Russia, and China, to decline modestly by approximately 1% in 2026 before increasing by approximately 6% in 2027 and a further approximately 1% in 2028. Approximately 33,000 wells were drilled in 2025, and that number is expected to remain relatively stable at approximately 33,000 wells annually through 2028. The pace of development activity is driven by expected well profitability and returns, which, in turn, are influenced by several factors, including current global oil and natural gas supply and demand balances, current and expected future prices for oil and natural gas and the perceived stability and sustainability of these commodity prices over time.

Previous wording

The oil and natural gas industry has historically been characterized by volatility in commodity prices and in the level of drilling and production activity, which are driven by a variety of market forces, including geopolitical instability (including, most recently, the Iran conflict), climate-related initiatives, OPEC+ actions, among others. We expect that the growing energy demands of data centers, driven by the prevalence of Artificial Intelligence, will continue to contribute to the consumption of natural gas for power generation. The global demand for oil and natural gas has consistently increased historically, and we believe that multiple years of underinvestment in oil and natural gas development have left the industry with limited spare production capacity. Additionally, public E&P operators have adopted a more conservative approach to capital spending in response to stockholders’ desire for increased return of capital. We believe that these factors have laid a foundation to support oil and natural gas prices and will lead to a sustained spending cycle and stable activity levels by our customers in the near and medium-term.

Current wording

The oil and natural gas industry has historically been characterized by volatility in commodity prices and in the level of drilling and production activity, which are driven by a variety of market forces, including geopolitical instability (including, most recently, the conflicts within the Middle East), climate-related initiatives, tariffs, and OPEC+ actions, among others. We expect that the growing energy demands of data centers, driven by the prevalence of Artificial Intelligence, will continue to contribute to the consumption of natural gas for power generation. The global demand for oil and natural gas has consistently increased historically, and we believe that multiple years of underinvestment in oil and natural gas development have left the industry with limited spare production capacity. Additionally, public E&P operators have adopted a more conservative approach to capital spending in response to stockholders’ desire for increased return of capital. We believe that over the longer term, heightened geopolitical risk may contribute to higher mid-cycle oil prices necessary to incentivize incremental global supply. As a result, we see continued upstream investment as necessary to sustain production growth and meet rising global demand.

Previous wording

Revenues Our NAM market revenue for the three months ended June 30, 2026 was $131.4 million, an increase of $11.5 million from the three months ended June 30, 2025, primarily driven by an increase in market share and incremental business operations due to the acquisition of Citadel in May of 2025. Our International and Offshore market revenue for the three months ended June 30, 2026 was $113.5 million, an increase of $9.2 million from the three months ended June 30, 2025, primarily driven by an increase in business operations from our Latin America region and the DIS acquisition in April of 2026.

Current wording

Revenues Our NAM market revenue for the three months ended September 30, 2026 was $145.7 million, an increase of $13.7 million from the three months ended September 30, 2025, primarily driven by an increase in drilling activity in North America due to an increase in the North American onshore rig count during the comparative period. Our International and Offshore market revenue for the three months ended September 30, 2026 was $119.4 million, an increase of $11.3 million from the three months ended September 30, 2025, primarily driven by an increase in business operations from the TCO Group acquisition in July of 2026.

Previous wording

Cost of revenues, exclusive of depreciation and amortization Total cost of revenues for the three months ended June 30, 2026 was $161.2 million, an increase of $8.7 million from the three months ended June 30, 2025. The increase in cost of revenues was primarily attributable to an increase in sales activity.

Current wording

Cost of revenues, exclusive of depreciation and amortization Total cost of revenues for the three months ended September 30, 2026 was $169.2 million, an increase of $5.1 million from the three months ended September 30, 2025. The increase in cost of revenues was primarily attributable to an increase in sales activity due to the TCO Group acquisition in July 2026.

Previous wording

Gain on sale of assets, net Gain on sale of assets, net for the three months ended June 30, 2026 was $9.9 million, an increase of $9.4 million from the three months ended June 30, 2025. The change was driven by the sale of our rental tool assets and the sale of a building in Mineral Wells, TX, which resulted in a gain, offset by normal variations associated with the sale of property during the period.

Current wording

Gain on sale of assets, net Gain on sale of assets, net for the three months ended September 30, 2026 was $0.1 million, a decrease of $40.8 million from the three months ended September 30, 2025. The change was driven by the sale of our Eldridge facility assets during the three months ended September 30, 2025, which resulted in a gain, offset by normal variations associated with the sale of property and equipment during the three months ended September 30, 2026.

Previous wording

Depreciation and amortization Total depreciation and amortization expense for the three months ended June 30, 2026 was $16.2 million, an increase of $1.2 million from the three months ended June 30, 2025. The change was primarily due to additional depreciation for assets acquired related to the Citadel and DIS acquisitions.

Current wording

Depreciation and amortization Total depreciation and amortization expense for the three months ended September 30, 2026 was $16.5 million, an increase of $1.1 million from the three months ended September 30, 2025. The change was primarily due to additional depreciation for assets acquired related to the DIS and TCO Group acquisitions.

Previous wording

Acquisition and integration costs Acquisition and integration costs for the six months ended June 30, 2026 were $3.2 million, a decrease of $6.2 million from the six months ended June 30, 2025. The change was due to a reduction of acquisitions in 2026, and therefore a reduction in costs due to acquisition and integration activities as compared to 2025 and 2024.

Current wording

Acquisition and integration costs Acquisition and integration costs for the three months ended September 30, 2026 were $0.9 million, a decrease of $2.7 million from the three months ended September 30, 2025. The change was due to a reduction of acquisition and integration activities in 2026, partly due to the integration costs incurred in 2025 attributable to the merger with Dril-Quip, Inc. (the "Merger") that did not reoccur in 2026.

Previous wording

Provision for legal settlement Provision for legal settlement expense for the three months ended June 30, 2026 was $2.8 million, an increase of $2.8 million from the three months ended June 30, 2025. The change was entirely related to the Impulse Litigation, as discussed further in Note 16. Commitments and Contingencies.

Current wording

Provision for legal settlement Provision for legal settlement expense for the three months ended September 30, 2026 was $1.8 million, an increase of $1.8 million from the three months ended September 30, 2025. The change was entirely related to the Impulse Litigation, as discussed further in Note 16. Commitments and Contingencies.

Previous wording

Interest (income) expense, net Total interest (income) expense, net was $(0.7) million and $0.6 million for the three months ended June 30, 2026 and 2025, respectively. Interest (income) expense varied between the two periods due to interest received on our cash deposits.

Current wording

Interest (income) expense, net Total interest (income) expense, net was $(0.2) million and $0.7 million for the three months ended September 30, 2026 and 2025, respectively. Interest (income) expense varied between the two periods due to interest received on our cash deposits.

Previous wording

Other income, net Total other income, net for the three months ended June 30, 2026 was $1.0 million, an increase of $0.9 million from the three months ended June 30, 2025. The change was primarily due to the net change in our foreign currency exchange gains (losses).

Current wording

Other income, net Total other income, net for the three months ended September 30, 2026 was $2.3 million, an increase of $2.6 million from the three months ended September 30, 2025. The change was primarily due to the net change in our foreign currency exchange gains (losses) and other miscellaneous expenses.

Previous wording

Income tax expense Our operations are subject to U.S. federal income tax at an entity level, as well as various state income and franchise taxes. In addition, our operations located in international jurisdictions are subject to local country income taxes. Income tax expense for the three months ended June 30, 2026 was $10.4 million, an increase of $3.5 million from the three months ended June 30, 2025. The change was primarily driven by the discrete items recorded during the three months ended June 30, 2026.

Current wording

Income tax expense Our operations are subject to U.S. federal income tax at an entity level, as well as various state income and franchise taxes. In addition, our operations located in international jurisdictions are subject to local country income taxes. Income tax expense for the three months ended September 30, 2026 was $8.5 million, a decrease of $10.2 million from the three months ended September 30, 2025. The change was primarily driven by the discrete items recorded during the three months ended September 30, 2026.

Previous wording

Net income Net income for the three months ended June 30, 2026 was $25.0 million, an increase of $9.7 million from the three months ended June 30, 2025, as a result of the factors discussed above.

Current wording

Net income Net income for the three months ended September 30, 2026 was $26.3 million, a decrease of $12.9 million from the three months ended September 30, 2025, as a result of the factors discussed above.

Previous wording

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Current wording

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Previous wording

Revenues Our NAM market revenue for the six months ended June 30, 2026 was $268.1 million, an increase of $27.7 million from the six months ended June 30, 2025, primarily driven by an increase in market share and incremental business operations due to the acquisition of Citadel in May of 2025. Our International and Offshore market revenue for the six months ended June 30, 2026 was $215.8 million, a decrease of $8.4 million from the six months ended June 30, 2025, primarily driven by a decrease in business operations from our Europe, Caspian, and Africa regions.

Current wording

Revenues Our NAM market revenue for the nine months ended September 30, 2026 was $413.8 million, an increase of $41.4 million from the nine months ended September 30, 2025, primarily driven by an increase in market share and incremental business operations due to the acquisition of Citadel in May of 2025 and an increase in drilling activity in North America due to an increase in the North American onshore rig count during the comparative period. Our International and Offshore market revenue for the nine months ended September 30, 2026 was $335.2 million, an increase of $2.9 million from the nine months ended September 30, 2025, primarily driven by an increase in revenues generated through the acquisition of TCO Group in July of 2026 partially offset by a decrease in business operations from our Europe, Caspian, and Africa regions.

Previous wording

Cost of revenues, exclusive of depreciation and amortization Total cost of revenues for the six months ended June 30, 2026 was $315.8 million, a decrease of $0.7 million from the six months ended June 30, 2025. The change was primarily attributable to a decrease in salaries and wages costs.

Current wording

Cost of revenues, exclusive of depreciation and amortization Total cost of revenues for the nine months ended September 30, 2026 was $484.9 million, an increase of $4.5 million from the nine months ended September 30, 2025. The change was primarily attributable to an increase in sales activity due to the TCO Group acquisition in July 2026.

Previous wording

Selling, general and administrative expenses Selling, general and administrative expense for the six months ended June 30, 2026 was $80.8 million, an increase of $19.6 million from the six months ended June 30, 2025. The change was primarily attributable to the recovery of $13.6 million of outstanding receivables from our former agent in Saudi Arabia during the six months ended June 30, 2025, which resulted in a reduction of bad debt expense during that period.

Current wording

Selling, general and administrative expenses Selling, general and administrative expense for the nine months ended September 30, 2026 was $125.3 million, an increase of $28.5 million from the nine months ended September 30, 2025. The change was primarily attributable to an increase in bad debt expense of $13.6 million from the prior period driven by the recovery of outstanding receivables from our former agent in Saudi Arabia during the nine months ended September 30, 2025. The change was also due to an increase of $11.2 million related to benefits, commissions, IT, and professional services costs due to an increase in business activity attributable to the recent acquisitions.

Previous wording

Gain on sale of assets, net Gain on sale of assets, net for the six months ended June 30, 2026 was $11.9 million, an increase of $11.6 million from the six months ended June 30, 2025. The change was driven by the sale of our rental tool assets and the sale of a building in Mineral Wells, TX, which resulted in a gain, offset by normal variations associated with the sale of property during the period.

Current wording

Gain on sale of assets, net Gain on sale of assets, net for the nine months ended September 30, 2026 was $12.0 million, a decrease of $29.2 million from the nine months ended September 30, 2025. The change was driven by the sale of our Subsea Tree product line in June 2025 and the Eldridge facility assets in September 2025, both of which resulted in a gain.

Previous wording

Depreciation and amortization Total depreciation and amortization expense for the six months ended June 30, 2026 was $32.4 million, an increase of $2.5 million from the six months ended June 30, 2025. The change was primarily due to additional depreciation for assets acquired related to the Citadel and DIS acquisitions .

Current wording

Depreciation and amortization Total depreciation and amortization expense for the nine months ended September 30, 2026 was $49.0 million, an increase of $3.7 million from the nine months ended September 30, 2025. The change was primarily due to additional depreciation for assets acquired related to the Citadel, DIS, and TCO Group acquisitions.

Previous wording

Impairment of long-lived assets Long-lived asset impairment expense for the six months ended June 30, 2025 was $3.4 million and was primarily related to (i) real estate in Mexico acquired as part of the Merger that was held for sale at June 30, 2025 and marketed at an amount that was lower than the net book value, which ultimately resulted in an impairment expense of $2.9 million and (ii) the impairment of a lease $0.5 million. There was no impairment recognized during the three and six months ended June 30, 2026.

Current wording

Impairment of long-lived assets Long-lived asset impairment expense for the nine months ended September 30, 2025 was $3.4 million and was primarily related to (i) real estate in Mexico acquired as part of the Merger that was held for sale at March 31, 2025 and marketed at an amount that was lower than the net book value, which ultimately resulted in an impairment expense of $2.9 million and (ii) the impairment of a lease $0.5 million. There was no impairment recognized during the three and nine months ended September 30, 2026.

Previous wording

Acquisition and integration costs Acquisition and integration costs for the three months ended June 30, 2026 were $1.6 million, a decrease of $3.5 million from the three months ended June 30, 2025. The change was due to a reduction of acquisitions in 2026, and therefore a reduction in costs due to acquisition and integration activities as compared to 2025 and 2024.

Current wording

Acquisition and integration costs Acquisition and integration costs for the nine months ended September 30, 2026 were $4.1 million, a decrease of $9.0 million from the nine months ended September 30, 2025. The change was due to a reduction of acquisition and integration activities in 2026, partly due to the integration costs incurred in 2025 attributable to the Merger that did not reoccur in 2026.

Previous wording

Provision for legal settlement Provision for legal settlement expense for the six months ended June 30, 2026 was $51.6 million, an increase of $51.6 million from the six months ended June 30, 2025. The change was entirely related to the Impulse Litigation, as discussed further in Note 16. Commitments and Contingencies.

Current wording

Provision for legal settlement Provision for legal settlement expense for the nine months ended September 30, 2026 was $53.4 million, an increase of $53.4 million from the nine months ended September 30, 2025. The change was entirely related to the Impulse Litigation, as discussed further in Note 16. Commitments and Contingencies.

Previous wording

Interest (income) expense, net Total interest (income) expense, net was $(1.0) million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively. Interest (income) expense varied between the two periods due to interest received on our cash deposits.

Current wording

Interest (income) expense, net Total interest (income) expense, net was $(1.2) million and $1.9 million for the nine months ended September 30, 2026 and 2025, respectively. Interest (income) expense varied between the two periods due to interest received on our cash deposits.

Previous wording

Other income, net Total other income, net for the six months ended June 30, 2026 was $0.8 million, an increase of $0.5 million from the six months ended June 30, 2025. The change was primarily due to the net change in our foreign currency exchange gains (losses).

Current wording

Other income, net Total other income, net for the nine months ended September 30, 2026 was $3.1 million, an increase of $3.1 million from the nine months ended September 30, 2025. The change was primarily due to the net change in our foreign currency exchange gains (losses) and other miscellaneous expenses.

Previous wording

Income tax expense Our operations are subject to U.S. federal income tax at an entity level, as well as various state income and franchise taxes. In addition, our operations located in international jurisdictions are subject to local country income taxes. Income tax expense for the six months ended June 30, 2026 was $5.5 million, a decrease of $8.0 million from the six months ended June 30, 2025. The change was primarily driven by the discrete items recorded during the six months ended June 30, 2026.

Current wording

Income tax expense Our operations are subject to U.S. federal income tax at an entity level, as well as various state income and franchise taxes. In addition, our operations located in international jurisdictions are subject to local country income taxes. Income tax expense for the nine months ended September 30, 2026 was $13.9 million, a decrease of $18.3 million from the nine months ended September 30, 2025. The change was primarily driven by the discrete items recorded during the nine months ended September 30, 2026.

Previous wording

Net income Net income for the six months ended June 30, 2026 was $8.4 million, a decrease of $21.7 million from the six months ended June 30, 2025, primarily as a result of the provision for legal settlement related to the Impulse Litigation recorded for the six months ended June 30, 2026 in addition to the other factors discussed above.

Current wording

Net income Net income for the nine months ended September 30, 2026 was $34.6 million, a decrease of $34.7 million from the nine months ended September 30, 2025, primarily as a result of the provision for legal settlement related to the Impulse Litigation recorded for the nine months ended September 30, 2026 in addition to the other factors discussed above.

Previous wording

Our primary sources of liquidity are our existing cash, cash provided by operating activities, and borrowings under the Credit Agreement (as defined below). We have a share repurchase program in place and may repurchase shares from time to time based on management’s evaluation of market conditions, share price, and other factors. As of June 30, 2026, we had cash and restricted cash of $222.1 million and availability under the Credit Agreement of $156.5 million. Our total indebtedness, including finance lease obligations, was $25.1 million as of June 30, 2026.

Current wording

Our primary sources of liquidity are our existing cash, cash provided by operating activities, and borrowings under the Credit Agreement (as defined below). We have a share repurchase program in place and may repurchase shares from time to time based on management’s evaluation of market conditions, share price, and other factors. As of September 30, 2026, we had cash and restricted cash of $188.8 million and availability under the Credit Agreement of $165.2 million. Our total indebtedness, including finance lease obligations, was $24.1 million as of September 30, 2026.

Previous wording

We have certain obligations related to debt maturities, finance leases, and operating leases. As of June 30, 2026, we have $22.8 million of minimum non-cancelable lease obligations for the twelve months following June 30, 2026, comprised of $7.5 million of finance lease maturities and $15.4 million of operating lease obligations. We have an additional $68.1 million of minimum non-cancelable lease obligations for the periods after June 30, 2027, comprised of $23.9 million of finance lease maturities and $44.2 million of non-cancelable operating lease obligations. As of June 30, 2026, interest rates on our lease obligations range from 2.88% to 12.00%. In addition, all amounts borrowed, if any, under our Revolver (as defined below) become due and payable in 2030. There were no borrowings on the Credit Agreement as of June 30, 2026. For the three and six months ended June 30, 2025, the effective interest rate on the Revolver was approximately 5.63% and 6.94%, respectively. Refer to Note 10. Debt of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Current wording

We have certain obligations related to debt maturities, finance leases, and operating leases. As of September 30, 2026, we have $23.4 million of minimum non-cancelable lease obligations for the twelve months following September 30, 2026, comprised of $7.3 million of finance lease maturities and $16.1 million of operating lease obligations. We have an additional $67.5 million of minimum non-cancelable lease obligations for the periods after September 30, 2027, comprised of $22.8 million of finance lease maturities and $44.7 million of non-cancelable operating lease obligations. As of September 30, 2026, interest rates on our lease obligations range from 2.88% to 12.00%. In addition, all amounts borrowed, if any, under our Revolver (as defined below) become due and payable in 2030. There were no borrowings on the Credit Agreement as of September 30, 2026. For the nine months ended September 30, 2025, the effective interest rate on the Revolver was approximately 8.92%. Refer to Note 10. Debt of our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Previous wording

Operating Activities Net cash provided by operating activities for the six months ended June 30, 2026 was $56.9 million, a decrease of $33.4 million from the six months ended June 30, 2025. The change was primarily driven by the following:

Current wording

Operating Activities Net cash provided by operating activities for the nine months ended September 30, 2026 was $95.7 million, a decrease of $43.0 million from the nine months ended September 30, 2025. The change was primarily driven by the following:

Previous wording

a decrease in net income of $21.7 million;

Current wording

a decrease in net income of $34.7 million;

Previous wording

changes in non-cash adjustments to net income from the comparative period, including an increase in (i) provision for legal settlement related to the Impulse Litigation of $51.6 million, (ii) gains on property, equipment disposals of $11.4 million, (iii) depreciation and amortization expense of $2.5 million, and (iv) stock-based compensation expense of $0.8 million, offset by a decrease in impairment of long-lived assets of $3.4 million; and

Current wording

changes in non-cash adjustments to net income from the comparative period, including an increase in (i) provision for legal settlement related to the Impulse Litigation of $53.4 million, (ii) depreciation and amortization expense of $3.7 million, and (iii) stock-based compensation expense of $0.9 million, offset by a decrease in (i) impairment of long-lived assets of $3.4 million, (ii) gains on property and equipment disposals of $28.9 million, (iii) bargain purchase loss of $3.4 million, and (iv) deferred tax, net of $10.5 million; and