Q - Nine Energy Service,

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. 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.

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 per million British thermal units (“MMBtu”) for the year. Through the first half of 2025, natural gas prices have improved averaging approximately $3.66 per MMBtu. However, despite a more supportive natural gas price during the first half of 2025, we have yet to see any meaningful activity increases 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 31 rigs and at the end of the second quarter of 2025, the average rig count was 36 rigs. Nonetheless, we remain positive on the long-term outlook of natural gas, even as prices trended downward in the second quarter of 2025.

Previous 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

Current wording

As for oil prices, towards the end of 2024, we began to see West Texas Intermediate (“WTI”) oil prices decline, which was exacerbated by the announcement of new tariffs by the Trump Administration in April 2025 and OPEC communicating they would be increasing production in May and July 2025. During the first quarter of 2025, the average WTI price was $71.78 per barrel as compared to $64.57 per barrel in the second quarter of 2025, a decline of approximately 10%. Notably, in the second quarter of 2025, WTI price fell below $60 per barrel for the first time in four years. Because of the decline in oil prices, as well as increased costs and market uncertainty, our customers began to decrease activity. According to Baker Hughes, during the second quarter of 2025, 45 rigs, most of which were in the Permian Basin, came out of the U.S. market, a decline of approximately 8% from the first quarter of 2025. 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, and starting in the second quarter of 2025, we began to experience activity declines as well as receive pricing pressure across all of our service lines, especially in the oil-levered basins, which negatively impacted both revenue and earnings during the second quarter of 2025.

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, 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.

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. We expect that U.S. activity levels will be impacted by commodity prices and many of the same factors expected to impact commodity prices, including the production of OPEC and other oil exporting nations and governmental policies, such as tariffs. We cannot predict the scope or extent of such impacts. 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

Revenues increased $8.3 million, or 6%, to $150.5 million for the first quarter of 2025. The increase in comparison to the first quarter of 2024 was primarily related to cementing revenue (including pump downs), which increased $8.9 million, or 18%, as total cement job count increased 32%. In addition, wireline revenue increased $1.7 million, or 6%, in comparison to the first quarter of 2024 as total completed wireline stages increased 19%. The overall increase was partially offset with a $1.4 million, or 4%, decrease in completion tools revenue based on pricing pressure coupled with changes in product mix between the two periods. The overall increase was also partially offset by a $0.9 million decrease, or 3%, in coiled tubing revenue as total days worked decreased 4%, each in comparison to the first quarter of 2024.

Current wording

Revenues increased $14.9 million, or 11%, to $147.3 million for the second quarter of 2025. The increase in comparison to the second quarter of 2024 was primarily related to cementing revenue (including pump downs), which increased $6.4 million, or 14%, as total cement job count increased 15%, each in comparison to the second quarter of 2024. In addition, wireline revenue increased $5.0 million, or 18%, as total completed wireline stages increased 35%, each in comparison to the second quarter of 2024, and tools revenue increased $4.6 million, or 14%, as completion tools stages increased 27%, each in comparison to the second quarter of 2024. The overall increase was partially offset by pricing pressure in coiled tubing, which decreased its revenue by $1.1 million, or 4%, in comparison to the second quarter of 2024. Lower pricing across cementing, wireline, and tools also partially offset overall revenue increases between periods.

Previous wording

Cost of revenues increased $6.5 million, or 6%, to $122.5 million for the first quarter of 2025. The increase in comparison to the first quarter of 2024 was related to a $5.0 million increase in materials installed and consumed while performing services, a $1.0 million increase in vehicle costs, and a $0.5 million increase in insurance, taxes, employee and other costs, each in comparison to the first quarter of 2024.

Current wording

Cost of revenues increased $9.4 million, or 8%, to $121.4 million for the second quarter of 2025. The increase in comparison to the second quarter of 2024 was primarily related to a $6.6 million increase in materials installed and consumed while performing services, a $2.1 million increase in employee-related costs, and a $0.6 million increase in vehicle costs, each in comparison to the second quarter of 2024.

Previous 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.”

Current wording

Adjusted gross profit increased approximately $5.5 million to $25.8 million for the second quarter of 2025 due to the factors described above under “Revenues” and “Cost of Revenues.”

Previous 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.

Current wording

Depreciation expense decreased $0.8 million to $5.8 million for the second quarter of 2025. The decrease in comparison to the second quarter of 2024 was primarily due to a decrease in capital expenditures across certain lines of service over the last twelve months.

Previous wording

We recorded $2.8 million in amortization of intangibles (comprised of technology and customer relationships) in both the first quarter of 2025 and the first quarter of 2024.

Current wording

We recorded $2.8 million in amortization of intangibles expense (comprised of technology and customer relationships) in both the second quarter of 2025 and the second quarter of 2024.

Previous 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.

Current wording

We recorded an income tax benefit of $0.5 million for the second quarter of 2025 compared to an income tax provision of $0.1 million for the second quarter of 2024. The difference between the periods was primarily attributed to a $0.5 million discrete income tax benefit in the second quarter of 2025 that did not occur in the second quarter of 2024.

Previous 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.

Current wording

Net loss decreased $3.7 million, or 26%, to $10.4 million for the second quarter of 2025, and Adjusted EBITDA increased $4.4 million, or 45%, to $14.1 million for the second 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

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:

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 and six months ended June 30, 2025 and 2024:

Previous 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.

Current wording

The following table provides our calculation of Adjusted ROIC for the three and six months ended June 30, 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 and six months ended June 30, 2025 and 2024.

Previous 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:

Current wording

The following table presents a reconciliation of adjusted gross profit (loss) to GAAP gross profit (loss) for the three and six months ended June 30, 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 (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.

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 June 30, 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 earnings 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

At March 31, 2025, we had $17.3 million of cash and cash equivalents and $36.5 million of availability under the 2018 ABL Credit Facility (as defined and described below), which resulted in a total liquidity position of $53.8 million. On May 1, 2025, we repaid all borrowings outstanding under the 2018 ABL Credit Facility and replaced the 2018 ABL Credit Facility with the 2025 ABL Credit Facility (as defined and described below) under which we borrowed $48.9 million on such date. As of May 1, 2025, after such borrowings, we had $51.3 million of availability under the 2025 ABL Credit Facility.

Current wording

At June 30, 2025, we had $14.2 million of cash and cash equivalents and $51.3 million of availability under the 2025 ABL Credit Facility (as defined and described below), which resulted in a total liquidity position of $65.5 million.

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 both the three months ended March 31, 2025 and March 31, 2024, no shares were sold under the Equity Distribution Agreement.

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 the three and six months ended June 30, 2025, no shares were sold under the Equity Distribution Agreement. During the three months ended June 30, 2024, 4,199,074 shares were sold under the Equity Distribution Agreement, which generated net proceeds to us of $6.8 million after deducting commissions of $0.2 million. No shares were sold under the Equity Distribution Agreement during the first three months of 2024.

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 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.

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 was $0, and as such, no Excess Cash Flow Offer was made.

Previous 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.

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, 2027. 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 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.

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.

Previous wording

On May 1, 2025, we entered into a Loan and Security Agreement (the “2025 ABL Credit Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto. The 2025 ABL Credit Agreement provides for an asset-based revolving credit facility (the “2025 ABL Credit Facility”) with lender commitments of $125.0 million (the “Maximum Revolving Facility Amount”) and a sub-limit of $5.0 million for letters of credit, which will mature on the earlier of (i) May 1, 2028 and (ii) the date that is 91 days prior to the maturity date of the 2028 Notes. The outstanding balance of the borrowings under the 2025 ABL Credit Facility may not exceed in the aggregate at any time the lesser of (a) the Maximum Revolving Facility Amount reduced by certain customary reserves and (b) the borrowing base, which is calculated on the basis of eligible accounts and inventory. The Maximum Revolving Facility Amount could increase from time to time pursuant to an uncommitted accordion by an aggregate amount for all such increases not to exceed $50.0 million. Borrowings under the 2025 ABL Credit Facility bear interest at a per annum rate equal to the term-specific Secured Overnight Financing Rate (SOFR) for an interest period of one month, subject to a 1.50% floor, plus an applicable margin of 4.00% to 4.50%, depending on our fixed charge coverage ratio.

Current wording

On May 1, 2025, we entered into a Loan and Security Agreement (the “2025 ABL Credit Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto. The 2025 ABL Credit Agreement provides for an asset-based revolving credit facility (the “2025 ABL Credit Facility”) with lender commitments of $125.0 million (the “Maximum Revolving Facility Amount”) and a sub-limit of $5.0 million for letters of credit, which will mature on the earlier of (i) May 1, 2028 and (ii) the date that is 91 days prior to the maturity date of the 2028 Notes. The outstanding balance of the borrowings under the 2025 ABL Credit Facility may not exceed in the aggregate at any time the lesser of (a) the Maximum Revolving Facility Amount reduced by certain customary reserves and (b) the borrowing base, which is calculated on the basis of eligible accounts and inventory. The Maximum Revolving Facility Amount could increase from time to time pursuant to an uncommitted accordion by an aggregate amount for all such increases not to exceed $50.0 million. Borrowings under the 2025 ABL Credit Facility bear interest at a per annum rate equal to the term-specific Secured Overnight Financing Rate (SOFR) for an interest period of one month, subject to a 1.50% floor, plus an applicable margin of 4.00% to 4.50%, depending on our fixed charge coverage ratio. We were in compliance with all covenants contained in the 2025 ABL Credit Agreement as of June 30, 2025.

Previous wording

On May 1, 2025, we borrowed approximately $48.9 million under the 2025 ABL Credit Facility and used such proceeds to repay all borrowings outstanding under the 2018 ABL Credit Facility and pay fees and expenses associated with the entry into the 2025 ABL Credit Agreement.

Current wording

On May 1, 2025, we borrowed approximately $48.9 million under the 2025 ABL Credit Facility and used such proceeds to repay all borrowings outstanding under the terminated and replaced 2018 ABL Credit Facility and pay fees and expenses associated with the entry into the 2025 ABL Credit Agreement.

Previous 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.

Current wording

At June 30, 2025, we had $49.4 million of borrowings under the 2025 ABL Credit Facility, and our availability under the 2025 ABL Credit Facility was approximately $51.3 million. In July 2025, we borrowed an additional $13.4 million under the 2025 ABL Credit Facility.

Previous 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.

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 Quarterly Report on Form 10-Q.

Previous 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:

Current wording

Cash flows provided by (used in) operations by type of activity were as follows for the six months ended June 30, 2025 and 2024:

Previous 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.

Current wording

Net cash provided by operating activities was $4.8 million in the first six months of 2025 compared to $4.1 million in the first six months of 2024. The increase in cash flow provided by operating activities was primarily attributed to a $6.9 million increase in cash provided by operations, driven mainly by a decreased net loss in comparison to the first six months of 2024. The increase was partially offset by a $6.2 million decrease in cash provided by working capital in comparison to the first six months of 2024, driven mainly by a decrease in cash provided by accounts receivable collections between periods.

Previous 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.

Current wording

Net cash used in investing activities was $9.7 million during the first six months of 2025 compared to $8.1 million in the first six months of 2024. The increase in cash flow used in investing activities was primarily attributed to a $1.7 million increase in cash purchases of property and equipment in comparison to the first six months of 2024.

Previous 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.

Current wording

Net cash used in financing activities was $5.5 million during the first six months of 2025 compared to $0.7 million in the first six months of 2024. The $4.8 million increase in cash flow used in financing activities was primarily attributed to a $46.0 million increase in payments on revolving credit facilities during the first six months of 2025 in comparison to the first six months of 2024, coupled with $6.8 million in proceeds received from the issuance of common stock under our ATM program in the first six months of 2024, that did not reoccur in the first six months of 2025, as well as $4.5 million in debt issuance costs associated with the 2025 ABL Credit Facility in the first six months of 2025, that did not occur in the first six months of 2024 and a $0.5 million increase in payments of short-term debt between periods. The increase was partially offset by $52.9 million in proceeds received from revolving credit facilities in the first six months of 2025 that did not occur in the first six months of 2024.