Nine Energy Service Inc

Previous wording

•Adjusted EBITDA: We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest, taxes, and depreciation and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) fees and expenses relating to our Units (as defined and described below) offering and other refinancing activities, (iv) loss or gain on revaluation of contingent liabilities, (v) loss or gain on extinguishment of debt, (vi) loss or gain on the sale of subsidiaries, (vii) restructuring charges, (viii) stock-based compensation and cash award expense, (ix) loss or gain on sale of property and equipment, and (x) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. For additional information, see “Non-GAAP Financial Measures” below.

Current wording

•Adjusted EBITDA: We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest, taxes, and depreciation and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) loss or gain on extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation and cash award expense, (viii) loss or gain on sale of property and equipment, and (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. For additional information, see “Non-GAAP Financial Measures” below.

Previous wording

•Adjusted Return on Invested Capital (“Adjusted ROIC”): We define Adjusted ROIC as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss) as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) fees and expenses relating to our Units offering and other refinancing activities, (iv) interest expense (income), (v) restructuring charges, (vi) loss (gain) on the sale of subsidiaries, (vii) loss (gain) on extinguishment of debt, and (viii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining Adjusted ROIC. Previously, in our filings with the Securities and Exchange Commission (the “SEC”), press releases, and other investor materials issued prior to December 31, 2023, we referred to (a) Adjusted ROIC as ROIC and (b) adjusted after-tax net operating profit (loss) as after-tax net operating profit (loss). We have made no changes to the manner in which these measures are calculated and have only revised the titles of these measures to more clearly identify them as non-GAAP measures. For additional information, see “Non-GAAP Financial Measures” below.

Current wording

•Adjusted Return on Invested Capital (“Adjusted ROIC”): We define Adjusted ROIC as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss) as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss (gain) on the sale of subsidiaries, (vi) loss (gain) on extinguishment of debt, and (vii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining Adjusted ROIC. For additional information, see “Non-GAAP Financial Measures” below.

Previous wording

Our business depends, to a significant extent, on the level of unconventional resource development activity and corresponding capital spending of oil and natural gas companies. These activity and spending levels are strongly influenced by current and expected oil and natural gas prices. In recent years, commodity prices have been extremely volatile and unpredictable, and this has continued in 2024 thus far. Natural gas prices have continued to be extremely depressed, with average natural gas prices of $2.11 for the first nine months of 2024, which is 17% lower than average prices in 2023, which had already declined by over 60% as compared to 2022. This sustained lower natural gas price environment has resulted in, and is expected to continue to result in, decreased activity and lower rig counts, especially in natural gas-levered basins like the Haynesville, where the rig count as of the end of the third quarter of 2024 has declined by approximately 54% since the end of 2022. It has also led to, and is expected to continue to lead to, pricing pressure from customers, impacting both revenue and margins. Towards the end of the third quarter of 2024, West Texas Intermediate oil prices began to decline, reaching as low as $66.73 on September 10, 2024, a decline of approximately 24% as compared to the highest price thus far in 2024 of $87.69 on April 5, 2024, due to OPEC and other oil exporting nations potentially bringing production back. The ongoing conflict in the

Current wording

Our business depends, to a significant extent, on the level of unconventional resource development activity and corresponding capital spending of oil and natural gas companies. These activity and spending levels are strongly influenced by current and expected oil and natural gas prices. In recent years, commodity prices have been extremely volatile and unpredictable. During 2024, natural gas prices were extremely depressed, averaging approximately $2.19 for the year. Through the first quarter of 2025, natural gas prices have recovered, averaging approximately $4.14 for the quarter. However, despite a more supportive natural gas price during the first quarter of 2025, we have yet to see increased activity levels in the natural gas-levered basins like the Haynesville and Northeast. For example, during the fourth quarter of 2024, the average rig count in the Haynesville was 32 rigs and in the first quarter of 2025, the average rig count was 30 rigs. Nonetheless, we remain positive on the long-term outlook of natural gas, even as prices have trended downward thus far in the second quarter of 2025. As for oil prices, towards the end of 2024, we began to see West Texas Intermediate (“WTI”) oil prices decline, and this trend has continued into the first quarter of 2025. Thus far in the second quarter, WTI prices continued to decline following the announcements of U.S. imposed tariffs and OPEC communicating they would be increasing production. Our customers are reviewing their capital plans real-time, and the impacts of oil price reductions on U.S. land activity are still unknown. In May, we began to see some activity declines, as well as receive pricing pressure, specifically in the Permian Basin in response to lower oil prices. Because of this, we anticipate second quarter revenue and profitability to be down compared to the first quarter of 2025. Where commodity prices land will have major impacts on activity levels for the second half of the year.

Previous wording

Due to the spot-market nature of our business, our revenue and profitability generally moves very similarly to rig, frac, and stage counts in U.S. rig count. Since the end of 2023, the U.S. rig count has declined by around 35 rigs, or approximately 6%. This is following a rig count decline of over 150 rigs from the end of 2022 to the end of 2023, creating an already depressed oil and gas market. For the full year 2024, most public operators with acreage in oil-levered basins, like the Permian, appear to be keeping activity and capital expenditure levels relatively flat year-over-year. However, we anticipate both private and public operators with acreage in gas-levered basins, like the Haynesville and in the Northeast, will maintain low activity levels until natural gas prices start to improve. In the third quarter of 2024, despite a declining rig count as compared to the second quarter of 2024, we outperformed market drivers, and our revenue and profitability for the third quarter of 2024 was improved as compared to the second quarter of 2024 due in large part to market share gains achieved by our cementing division, which we believe has been able to differentiate itself in the market with its advanced cementing slurries and excellent wellsite execution. Due to typical budget exhaustion, weather, and holiday slow-downs, as well as an expected decrease in international tool sales, we anticipate fourth quarter revenue and profitability to be lower as compared to the third quarter of 2024.

Current wording

Due to the spot-market nature of our business, our revenue and profitability generally move very similarly to U.S. rig, frac, and stage counts. According to Baker Hughes, the average U.S. rig count was stable in the first quarter of 2025, averaging

Previous wording

Significant factors that are likely to affect commodity prices moving forward include geopolitical and economic developments in the U.S. and globally, including conflicts, instability, acts of war or terrorism in oil producing countries or regions, particularly the Middle East, Russia, South America and Africa; actions of the members of OPEC and other oil exporting nations that relate to or impact oil production or supply; weather conditions; the effect of energy, monetary, and trade policies of the U.S.; the pace of economic growth in the U.S. and throughout the world, including the potential for macro weakness; changes to energy regulations and policies, including those of the U.S. Environmental Protection Agency and other governmental bodies; and overall North American oil and natural gas supply and demand fundamentals, including the pace at which export capacity grows. Furthermore, although as noted above, our customers’ activity and spending levels, and thus demand for our services and products, are strongly influenced by current and expected oil and natural gas prices, even with price improvements in oil and natural gas, operator activity may not materially increase, as operators remain focused on operating within their capital plans and uncertainty remains around supply and demand fundamentals.

Current wording

Significant factors that are likely to affect commodity prices moving forward include geopolitical and economic developments in the U.S. and globally, including conflicts, the pace of economic growth in the U.S. and throughout the world, including the potential for macro weakness; tariffs imposed by the U.S. and other countries or retaliatory trade measures; instability, acts of war or terrorism in oil producing countries or regions, particularly the Middle East, Russia, South America and Africa; actions of the members of OPEC and other oil exporting nations that relate to or impact oil production or supply; weather conditions; the effect of energy, monetary, and trade policies of the U.S.; changes to energy regulations and policies, including those of the U.S. Environmental Protection Agency and other governmental bodies; and overall North American oil and natural gas supply and demand fundamentals, including the pace at which export capacity grows. Furthermore, although as noted above, our customers’ activity and spending levels, and thus demand for our services and products, are strongly influenced by current and expected oil and natural gas prices, even with price improvements in oil and natural gas, operator activity may not materially increase, as operators remain focused on operating within their capital plans and uncertainty remains around supply and demand fundamentals.

Previous wording

Adjusted gross profit increased approximately $1.8 million to $24.7 million for the third quarter of 2024 due to the factors described above under “Revenues” and “Cost of Revenues.”

Current wording

Adjusted gross profit increased approximately $1.9 million to $28.0 million for the first quarter of 2025 due to the factors described above under “Revenues” and “Cost of Revenues.”

Previous wording

General and administrative expenses decreased $0.7 million to $12.4 million for the third quarter of 2024. The decrease was primarily related to a $0.4 million decrease in marketing expenses and a $0.3 million decrease in professional fees between periods.

Current wording

General and administrative expenses increased $1.0 million to $13.3 million for the first quarter of 2025. The increase was primarily related to a $0.8 million increase in employee-related costs and a $0.4 million increase in professional fees between periods. The overall increase was partially offset by a $0.2 million decrease in other general and administrative costs between periods.

Previous wording

Depreciation expense decreased $1.1 million to $6.2 million for the third quarter of 2024. The decrease in comparison to the third quarter of 2023 was primarily due to a decrease in capital expenditures across certain lines of service over the last twelve months.

Current wording

Depreciation expense decreased $0.9 million to $5.8 million for the first quarter of 2025. The decrease in comparison to the first quarter of 2024 was primarily due to a decrease in capital expenditures across certain lines of service over the last twelve months.

Previous wording

Loss on sale of property and equipment increased $0.5 million in comparison to the third quarter of 2023. The increase is primarily related to losses on equipment sales in the third quarter of 2024 that did not occur in the third quarter of 2023.

Current wording

Loss on sale of property and equipment increased $0.5 million in comparison to the first quarter of 2024. The increase is primarily related to certain asset disposals in the first quarter of 2025 that did not occur in the first quarter of 2024.

Previous wording

Non-operating expenses increased $0.3 million to $12.5 million for the third quarter of 2024. The increase in comparison to the third quarter of 2023 was attributed to a decrease in interest income earned on cash in the third quarter of 2024, as our average cash for the period decreased in comparison to the third quarter of 2023.

Current wording

Non-operating expenses increased $0.3 million to $12.6 million for the first quarter of 2025. The increase in comparison to the first quarter of 2024 was attributed to a decrease in interest income earned on cash in the first quarter of 2025, as our average cash for the period decreased in comparison to the first quarter of 2024.

Previous wording

We recorded an income tax provision of $0.1 million for the third quarter of 2024 compared to an income tax provision of $0.2 million for the third quarter of 2023. The difference between the periods was primarily attributed to our income tax position in state and foreign tax jurisdictions.

Current wording

We recorded an income tax provision of $0.1 million for the first quarter of 2025 compared to an income tax provision of $0.2 million for the first quarter of 2024. The difference between the periods was primarily attributed to our income tax position in state and foreign tax jurisdictions.

Previous wording

Net loss decreased $3.1 million, or 24%, to $10.1 million for the third quarter of 2024, and Adjusted EBITDA increased $2.7 million, or 23%, to $14.3 million for the third quarter of 2024. The changes were primarily due to the fluctuations in revenues and expenses discussed above. See “Non-GAAP Financial Measures” below for further information regarding Adjusted EBITDA.

Current wording

Net loss decreased $1.0 million, or 12%, to $7.1 million for the first quarter of 2025, and Adjusted EBITDA increased $1.5 million, or 10%, to $16.5 million for the first quarter of 2025. The changes were primarily due to the fluctuations in revenues and expenses discussed above. See “Non-GAAP Financial Measures” below for further information regarding Adjusted EBITDA.

Previous wording

Adjusted EBITDA is a non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders, and rating agencies. We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest, taxes, depreciation, and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) fees and expenses relating to our Units offering and other refinancing activities, (iv) loss or gain on revaluation of contingent liabilities, (v) loss or gain on extinguishment of debt, (vi) loss or gain on the sale of subsidiaries, (vii) restructuring charges, (viii) stock-based compensation and cash award expense, (ix) loss or gain on sale of property and equipment, and (x) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business.

Current wording

Adjusted EBITDA is a non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders, and rating agencies. We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest, taxes, depreciation, and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) loss or gain on extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation and cash award expense, (viii) loss or gain on sale of property and equipment, and (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business.

Previous wording

The following table presents a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss) for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table presents a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss) for the three months ended March 31, 2025 and 2024:

Previous wording

(1)Amounts relate to the revaluation of a contingent liability associated with a 2018 acquisition. The impact is included in our Condensed Consolidated Statements of Income and Comprehensive Income (Loss). For additional information on contingent liabilities, see Note 10 – Commitments and Contingencies included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Current wording

(1)Amounts relate to the revaluation of a contingent liability associated with a 2018 acquisition. The impact is included in our Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). For additional information on contingent liabilities, see Note 10 – Commitments and Contingencies included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Previous wording

Adjusted ROIC is a non-GAAP financial measure. We define Adjusted ROIC as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss), which is a non-GAAP financial measure, as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) fees and expenses relating to our Units offering and other refinancing activities, (iv) interest expense (income), (v) restructuring charges, (vi) loss (gain) on the sale of subsidiaries, (vii) loss (gain) on extinguishment of debt, and (viii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining Adjusted ROIC. Previously, in our SEC filings, press releases, and other investor materials issued prior to December 31, 2023, we referred to (a) Adjusted ROIC as ROIC and (b) adjusted after-tax net operating profit (loss) as after-tax net operating profit (loss). We have made no changes to the manner in which these measures are calculated and have only revised the titles of these measures to more clearly identify them as non-GAAP measures.

Current wording

Adjusted ROIC is a non-GAAP financial measure. We define Adjusted ROIC as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss), which is a non-GAAP financial measure, as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss (gain) on the sale of subsidiaries, (vi) loss (gain) on extinguishment of debt, and (vii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining Adjusted ROIC.

Previous wording

The following table provides our calculation of Adjusted ROIC for the three and nine months ended September 30, 2024 and 2023. The following table also presents ROIC (defined as net income (loss), divided by average total capital) and a reconciliation of the non-GAAP financial measure of adjusted after-tax net operating profit (loss) to the most directly comparable GAAP measure of net income (loss), in each case for the three and nine months ended September 30, 2024 and 2023.

Current wording

The following table provides our calculation of Adjusted ROIC for the three months ended March 31, 2025 and 2024. The following table also presents ROIC (defined as net income (loss), divided by average total capital) and a reconciliation of the non-GAAP financial measure of adjusted after-tax net operating profit (loss) to the most directly comparable GAAP measure of net income (loss), in each case for the three months ended March 31, 2025 and 2024.

Previous wording

The following table presents a reconciliation of adjusted gross profit (loss) to GAAP gross profit (loss) for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table presents a reconciliation of adjusted gross profit (loss) to GAAP gross profit (loss) for the three months ended March 31, 2025 and 2024:

Previous wording

Historically, we have met our liquidity needs principally from cash on hand, cash flows from operations and, if needed, external borrowings and issuances of debt and equity securities. Our principal uses of cash are to fund capital expenditures, service our outstanding debt, and fund our working capital requirements. Due to our high level of variable costs and the asset-light make-up of our business, we have historically been able to quickly implement cost-cutting measures and will continue to adapt as the market dictates. For example, earlier this year, we implemented certain cost reduction and supply chain initiatives. These ongoing initiatives have helped reduce some of our largest material costs, and starting at the end of the second quarter of 2024, we began to see positive impacts on our profitability as a result of such efforts. We have also used cash to make open market repurchases of our debt and may, from time to time, continue to make such repurchases when it is opportunistic to do so to manage our debt maturity profile.

Current wording

Historically, we have met our liquidity needs principally from cash on hand, cash flows from operations and, if needed, external borrowings and issuances of debt and equity securities. Our principal uses of cash are to fund capital expenditures, service our outstanding debt (including semi-annual interest payments ($19.5 million based on amounts outstanding as of March 31, 2025) to the holders of the 2028 Notes (as defined and described below), which began on August 1, 2023), and fund our working capital requirements. Due to our high level of variable costs and the asset-light make-up of our business, we have historically been able to quickly implement cost-cutting measures and will continue to adapt as the market dictates. For example, in 2024, we implemented certain cost reduction and supply chain initiatives. These ongoing initiatives have helped reduce some of our largest material costs, and starting at the end of the second quarter of 2024, we began to see positive impacts, that have continued into 2025, on our profitability as a result of such efforts. We have also used cash to make open market repurchases of our debt and may, from time to time, continue to make such repurchases when it is opportunistic to do so to manage our debt maturity profile.

Previous wording

For 2024, our planned capital expenditure budget, excluding possible acquisitions, is expected to be between $10.0 million and $15.0 million. The nature of our capital expenditures is comprised of a base level of investment required to support our current operations and amounts related to growth and company initiatives. Capital expenditures for growth and company initiatives are discretionary. We continually evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including expected industry activity levels and company initiatives. For example, our planned capital expenditure budget, excluding possible acquisitions, for 2024 was initially expected to be between $15.0 million and $25.0 million and was subsequently reduced to be between $10.0 million and $15.0 million in conjunction with market declines and to preserve liquidity until the market returns to more normalized levels. Although we do not budget for acquisitions, pursuing growth through acquisitions may continue to be a part of our business strategy. Our ability to make significant additional acquisitions for cash will require us to obtain additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.

Current wording

For 2025, our planned capital expenditure budget, excluding possible acquisitions, is expected to be between $15 million and $25 million. The nature of our capital expenditures is comprised of a base level of investment required to support our current operations and amounts related to growth and company initiatives. Capital expenditures for growth and company initiatives are discretionary. We continually evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including expected industry activity levels and company initiatives. Although we do not budget for acquisitions, pursuing growth through acquisitions may continue to be a part of our business strategy. Our ability to make significant additional acquisitions for cash will require us to obtain additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.

Previous wording

At September 30, 2024, we had $15.7 million of cash and cash equivalents and $27.6 million of availability under the ABL Credit Facility (as defined and described below), which resulted in a total liquidity position of $43.3 million. Our liquidity position will continue to be impacted by the semi-annual interest payments ($19.5 million based on amounts outstanding as of September 30, 2024) to the holders of the 2028 Notes, which began on August 1, 2023. We believe that, based on our current forecasts, our cash on hand, together with cash flows from operations and borrowings under the ABL Credit Facility, should be sufficient to fund our capital requirements for at least the next twelve months from the issuance date of our condensed consolidated financial statements. However, we can make no assurance regarding our ability to achieve our forecasts, which are materially dependent on our financial performance and the ever-changing market.

Current wording

We believe that, based on our current forecasts, our cash on hand, together with cash flows from operations and borrowings under the 2025 ABL Credit Facility, should be sufficient to fund our capital requirements for at least the next twelve months from the issuance date of our condensed consolidated financial statements. However, we can make no assurance regarding our ability to achieve our forecasts, which are materially dependent on our financial performance and the ever-changing market.

Previous wording

Under the Equity Distribution Agreement, we will set the parameters for the sale of the shares thereunder, including the number of shares to be sold, the time period during which sales are requested to be made and any price below which sales may not be made. During the three months ended September 30, 2024, 1,181,090 shares were sold under the Equity Distribution Agreement, which generated net proceeds to us of $1.4 million after deducting commissions of $0.1 million. During the nine months ended September 30, 2024, 5,380,164 shares were sold under the Equity Distribution Agreement, which generated net proceeds to us of $8.2 million after deducting commissions of $0.3 million.

Current wording

Under the Equity Distribution Agreement, we will set the parameters for the sale of the shares thereunder, including the number of shares to be sold, the time period during which sales are requested to be made and any price below which sales may not be made. During both the three months ended March 31, 2025 and March 31, 2024, no shares were sold under the Equity Distribution Agreement.

Previous wording

On January 30, 2023, we completed our public offering of 300,000 units with an aggregate stated amount of $300.0 million (the “Units”). Each Unit consisted of $1,000 principal amount of our 13.000% Senior Secured Notes due 2028 (collectively, the “2028 Notes”) and five shares of our common stock. We received proceeds of $279.8 million from the Units offering, after deducting underwriting discounts and commission, which, together with borrowings under the ABL Credit Facility, was used to fund the redemption of our 8.750% Senior Notes due 2023 (the “2023 Notes”). On February 1, 2023, we redeemed all of the 2023 Notes at a redemption price of 100.0% of outstanding principal amount thereof ($307.3 million), plus accrued and unpaid interest ($6.7 million).

Current wording

On January 30, 2023, we completed our public offering of 300,000 units with an aggregate stated amount of $300.0 million (the “Units”). Each Unit consisted of $1,000 principal amount of our 13.000% Senior Secured Notes due 2028 (collectively, the “2028 Notes”) and five shares of our common stock. Each Unit separated into its constituent securities (the 2028 Notes and the shares of our common stock) automatically on October 27, 2023.

Previous wording

On January 30, 2023, we, and certain of our subsidiaries entered into an indenture, dated as of January 30, 2023 (the “2028 Notes Indenture”), with U.S. Bank Trust Company, National Association, as the trustee and as notes collateral agent, pursuant to which the 2028 Notes were issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an annual rate of 13.000% payable in cash semi-annually in arrears on each of February 1 and August 1, commencing August 1, 2023. The 2028 Notes are our senior secured obligations and are guaranteed on a senior secured basis by each of our current domestic subsidiaries and will be so guaranteed by certain future subsidiaries, in each case, subject to agreed guaranty and security principles and certain exclusions.

Current wording

On January 30, 2023, we, and certain of our subsidiaries entered into an indenture, dated as of January 30, 2023 (the “2028 Notes Indenture”), with U.S. Bank Trust Company, National Association, as the trustee and as notes collateral agent, pursuant to which the 2028 Notes were issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an annual rate of 13.000% payable in cash semi-annually in arrears on each of February 1 and August 1, commencing August 1, 2023.

Previous wording

On each May 15 and November 14, commencing November 14, 2023 (each, an “Excess Cash Flow Offer Date”), we are required to make an offer (an “Excess Cash Flow Offer”) to all holders of the 2028 Notes and, if required by the terms of any Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes Indenture), to any holders of any Pari Passu Notes Lien Indebtedness to purchase, prepay or redeem, together on a pro-rata basis, the maximum principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (plus all accrued interest (including additional interest, if any) on the 2028 Notes and any such Pari Passu Notes Lien Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed using an amount of cash equal to the Excess Cash Flow Amount (as defined in the 2028 Notes Indenture and which is 75.0% of Excess Cash Flow (as defined in the 2028 Notes Indenture), as determined immediately prior to the Excess Cash Flow Offer Date), if any, subject to certain exceptions set forth in the 2028 Notes Indenture. The offer price in any such offer will be equal to 100% of the principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of purchase, prepayment or redemption, subject to the rights of holders of the 2028 Notes or any such Pari Passu Notes Lien Indebtedness on the relevant record date to receive interest due on an interest payment date that is on or prior to the date of purchase, prepayment or redemption, and will be payable in cash. For the

Current wording

On each May 15 and November 14, commencing November 14, 2023 (each, an “Excess Cash Flow Offer Date”), we are required to make an offer (an “Excess Cash Flow Offer”) to all holders of the 2028 Notes and, if required by the terms of any Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes Indenture), to any holders of any Pari Passu Notes Lien Indebtedness to purchase, prepay or redeem, together on a pro-rata basis, the maximum principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (plus all accrued interest (including additional interest, if any) on the 2028 Notes and any such Pari Passu Notes Lien Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed using an amount of cash equal to the Excess Cash Flow Amount (as defined in the 2028 Notes Indenture and which is 75.0% of Excess Cash Flow (as defined in the 2028 Notes Indenture), as determined immediately prior to the Excess Cash Flow Offer Date), if any, subject to certain exceptions set forth in the 2028 Notes Indenture. The offer price in any such offer will be equal to 100% of the principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of purchase, prepayment or redemption, subject to the rights of holders of the 2028 Notes or any such Pari Passu Notes Lien Indebtedness on the relevant record date to receive interest due on an interest payment date that is on or prior to the date of purchase, prepayment or redemption, and will be payable in cash. For the Excess Cash Flow Offer Date of May 15, 2025, the Excess Cash Flow Amount will be $0, and as such, no Excess Cash Flow Offer will be made.

Previous wording

On October 25, 2018, we entered into a credit agreement dated as of October 25, 2018 (the “2018 ABL Credit Agreement”) that permitted aggregate borrowings of up to $200.0 million, subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for letters of credit (the “ABL Credit Facility”).

Current wording

On October 25, 2018, we entered into a credit agreement (the “2018 ABL Credit Agreement”) that permitted aggregate borrowings of up to $200.0 million, subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for letters of credit (the “2018 ABL Credit Facility”). On January 17, 2023, we entered into the First Amendment to Credit Agreement (the “First ABL Facility Amendment”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, which became effective on January 30, 2023. Pursuant to the First ABL Facility Amendment, the maturity date of the 2018 ABL Credit Facility was extended from October 25, 2023 to January 29,

Previous wording

On January 17, 2023, we entered into the First Amendment to Credit Agreement (the “First ABL Facility Amendment”) with JP Morgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, which became effective on January 30, 2023. Pursuant to the First ABL Facility Amendment, the maturity date of the ABL Credit Facility was extended from October 25, 2023 to January 29, 2027. In addition, the First ABL Facility Amendment, among other changes, revised the terms of the ABL Credit Facility as follows: (a) decreased the size of the ABL Credit Facility from $200.0 million to $150.0 million, subject to the borrowing base, (b) changed the interest rate benchmark from London Interbank Offered Rate to Term Secured Overnight Financing Rate with a 10 basis point spread adjustment and increased pricing from the existing range of 1.75% to 2.25% to a range of 2.00% to 2.50%, in each case depending on our leverage ratio, (c) decreased the Canadian tranche sub-limit from $25.0 million to $5.0 million, and (d) decreased the letter of credit sub-limit from $50.0 million to $10.0 million. Certain other changes to the terms of the ABL Credit Facility as a result of the First ABL Facility Amendment are summarized in Note 8 – Debt Obligations included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Current wording

In addition, the First ABL Facility Amendment, among other changes, revised the terms of the 2018 ABL Credit Facility as follows: (a) decreased the size of the 2018 ABL Credit Facility from $200.0 million to $150.0 million, subject to the borrowing base, (b) changed the interest rate benchmark from London Interbank Offered Rate to Term Secured Overnight Financing Rate with a 10 basis point spread adjustment and increased pricing from the existing range of 1.75% to 2.25% to a range of 2.00% to 2.50%, in each case depending on our leverage ratio, (c) decreased the Canadian tranche sub-limit from $25.0 million to $5.0 million, and (d) decreased the letter of credit sub-limit from $50.0 million to $10.0 million. Certain other changes to the terms of the 2018 ABL Credit Facility as a result of the First ABL Facility Amendment are summarized in Note 8 – Debt Obligations included in Item 1 of Part I of this Quarterly Report on Form 10-Q. On June 7, 2024, we entered into the Second Amendment to Credit Agreement (together with the First ABL Facility Amendment, the “2018 ABL Facility Amendments”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, to change the interest rate benchmark for borrowings denominated in Canadian dollars from Canadian Dollar Offered Rate (CDOR) to a rate based on the Canadian Overnight Repo Rate Average (CORRA), effective as of June 14, 2024.

Previous wording

The 2018 ABL Credit Agreement, as amended by the ABL Facility Amendments (the “ABL Credit Agreement”), contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions) and transactions with affiliates. We were in compliance with all covenants contained in the ABL Credit Agreement as of September 30, 2024.

Current wording

The 2018 ABL Credit Agreement, as amended by the 2018 ABL Facility Amendments (the “Amended 2018 ABL Credit Agreement”), contained various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions) and transactions with affiliates. We were in compliance with all covenants contained in the Amended 2018 ABL Credit Agreement as of March 31, 2025.

Previous wording

At September 30, 2024, we had $50.0 million of borrowings under the ABL Credit Facility, and our availability under the ABL Credit Facility was approximately $27.6 million, net of outstanding letters of credit of $2.2 million. On October 10, 2024, the Company repaid $3.0 million of outstanding borrowings on the ABL Credit Facility.

Current wording

At March 31, 2025, we had $47.0 million of borrowings under the 2018 ABL Credit Facility, and our availability under the 2018 ABL Credit Facility was approximately $36.5 million, net of outstanding letters of credit of $2.4 million.

Previous wording

For additional information on the ABL Credit Facility and the ABL Facility Amendments, see Note 8 – Debt Obligations included in Item 1 of Part I of this Quarter Report on Form 10-Q.

Current wording

For additional information on the 2018 ABL Credit Facility and the 2025 ABL Credit Facility, see Note 8 – Debt Obligations included in Item 1 of Part I of this Quarter Report on Form 10-Q.

Previous wording

Cash flows provided by (used in) operations by type of activity were as follows for the nine months ended September 30, 2024 and 2023:

Current wording

Cash flows provided by (used in) operations by type of activity were as follows for the three months ended March 31, 2025 and 2024:

Previous wording

Net cash used in operating activities was $1.8 million in the first nine months of 2024 compared to $21.2 million in net cash provided in the first nine months of 2023. The change was primarily attributed to a $12.0 million decrease in cash provided by operations driven mainly by an increased net loss in comparison to the first nine months of 2023. The change was also partially attributed to a $11.0 million decrease in cash provided by working capital, driven mainly by a $11.6 million decrease in cash provided by accounts receivable collections in comparison to the first nine months of 2023.

Current wording

Net cash used in operating activities was $5.3 million in the first three months of 2025 compared to $8.8 million in net cash used in the first three months of 2024. The decrease in cash flow used in operating activities was primarily attributed to a $1.9 million increase in cash provided by working capital in comparison to the first three months of 2024, as well as a $1.7 million increase in cash provided by operations driven mainly by a decreased net loss in comparison to the first three months of 2024.

Previous wording

Net cash used in investing activities was $11.2 million during the first nine months of 2024 compared to $14.7 million in net cash used in the first nine months of 2023. The decrease was attributed to a $4.5 million decrease in cash purchases of property and equipment, partially offset by a $1.0 million decrease in proceeds from the sale of property and equipment (including insurance), each in comparison to the first nine months of 2023.

Current wording

Net cash used in investing activities was $4.0 million during the first three months of 2025 compared to $5.5 million in net cash used in the first three months of 2024. The decrease in cash flow used in investing activities was attributed to a $1.5 million decrease in cash purchases of property and equipment in comparison to the first three months of 2024.

Previous wording

Net cash used in financing activities was $2.1 million during the first nine months of 2024 compared to $11.6 million in net cash used in the first nine months of 2023. The decrease was primarily attributed to the $307.3 million redemption of the 2023 Notes as well as $6.3 million in debt issuance costs associated with the Units offering in the first nine months of 2023, neither of which reoccurred in the first nine months of 2024. The decrease in net cash used was also partially due to $8.2 million in proceeds received from the issuance of common stock under our ATM program in the first nine months of 2024 that did not occur in the first nine months of 2023. Additionally, the decrease was partly attributed to a $5.0 million reduction in payments on the ABL Credit Facility between periods. The overall decrease in net cash used was largely offset by $279.8 million in proceeds received from the Units offering in the first nine months of 2023, that did not reoccur in the first nine months of 2024. The decrease was also offset by a $37.0 million reduction in proceeds from the ABL Credit Facility between periods, as well as a $0.6 million increase in payments on short term debt between periods.

Current wording

Net cash used in financing activities was $1.6 million during the first three months of 2025 compared to $6.2 million in net cash used in the first three months of 2024. The decrease in cash flow used in financing activities was primarily attributed to $4.0 million in proceeds received from the 2018 ABL Credit Facility in the first quarter of 2025 that did not occur in the first quarter of 2024 as well as a $1.0 million reduction in payments on the 2018 ABL Credit Facility between periods. The decrease was partially offset by a $0.3 million increase in payments of short-term debt in comparison to the first quarter of 2024.