HMH Holding Inc

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

HMH Holding B.V. (“HMH,” the “Company,” “we,” “us” or “our”) is a leading global provider of offshore and onshore drilling equipment and services.

The Company was operationally established with effect from October 1, 2021, through its acquisition of all shares in the MHWirth business from Akastor ASA and the Subsea Drilling Systems business from Baker Hughes Company. After these transactions, the shareholders were Baker Hughes Holdings LLC (50%), Akastor AS (25%) and Mercury HoldCo Inc. (25%). Baker Hughes Holdings LLC is a wholly owned subsidiary of Baker Hughes Company (together with Baker Hughes Holdings LLC, “Baker Hughes”), and Akastor AS and Mercury HoldCo Inc. are wholly owned subsidiaries of Akastor ASA (together with Akastor AS, Mercury HoldCo AS and Mercury HoldCo Inc., “Akastor”).

HMH Holding Inc. (“HMH Holding”) was incorporated in the State of Delaware on April 29, 2024 as a holding entity with an intent to complete its initial public offering (“IPO”) and other related transactions in order to carry on our business. On April 2, 2026, HMH Holding completed its IPO of its Class A common stock, par value $0.01 per share (“Class A common stock”) and received net proceeds of approximately $197.8 million after deducting the underwriters’ discounts and offering fees of $12.6 million.

HMH Holding also granted the IPO underwriters a 30-day option to purchase additional shares of Class A common stock on the same terms. On April 30, 2026, the underwriters partially exercised the option, resulting in additional net proceeds of $12.9 million, after deducting the underwriters’ discounts and offering fees of $0.8 million.

Subsequent to the IPO, the Company will be consolidated by HMH Holding as HMH Holding controls 100% of the voting shares of the Company.

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2025 included in the final prospectus of HMH Holding dated March 31, 2026 and filed with SEC on April 1, 2026.

The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position as of March 31, 2026 and December 31, 2025 and the consolidated results of operations and cash flows for the three months ended March 31, 2026 and 2025. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.

Subsequent to the IPO, HMH Holding’s sole material asset is its equity interest in the Company. As the sole managing member and holder of 100% of the voting interest of the Company, HMH Holding operates and controls all of the business and affairs of the Company. The reorganization transactions will be accounted for as a reorganization of entities under common control.

Certain amounts in prior periods have been reclassified to conform with current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although management believes these assumptions to be reasonable, given historical experience, actual amounts and results could differ from these estimates. Estimates are used for, but are not limited to, determining the following: allowance for credit losses and inventory valuation reserves; recoverability of long-lived assets; revenue recognition on long-term contracts; valuation of goodwill; useful lives used in depreciation and amortization; income taxes and related valuation allowances; accruals for contingencies; actuarial assumptions to determine costs and liabilities related to employee benefit plans; stock-based compensation expense; valuation of derivatives; and the fair value of assets acquired and liabilities assumed in business combinations.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Offering Costs

In connection with HMH Holding’s IPO, we and our affiliates have or will incur accounting, legal and other costs, which will be reimbursed by HMH Holding. Such costs will be deferred and recorded as a reduction to shareholders’ equity and recorded against the proceeds from the IPO. Deferred offering costs of $26.1 million and $21.3 million were recognized in Prepaids and other current assetsin our Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively.

Concentration Risk

During the three months ended March 31, 2026, two customers accounted for approximately 13.6% and 11.5% of total revenue, and three customers accounted for approximately 14.4%,12.3% and 11.9% of total revenue during the three months ended March 31, 2025, respectively. The revenue associated with these customers were included in both Equipment and System Solutions (“ESS”) and Pressure Control Systems (“PCS”) revenue.

As of March 31, 2026 and December 31, 2025, one customer accounted for approximately 15.7% and 11.2%, respectively, of current accounts receivable. The Company expects to maintain its relationship with this customer.

New Accounting Standards to be Adopted

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (the “JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The JOBS Act does not preclude an EGC from early adopting new or revised accounting standards codification. The Company has elected to use extended transition periods permissible under the JOBS Act, while also early adopting certain accounting pronouncements. The adoption dates discussed below reflect these elections.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2025. The Company is currently evaluating the impact of this standard on its disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40).” The ASU requires public entities to disaggregate, in a tabular presentation, certain income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”). Under the new guidance, internal-use software costs are capitalized when management has authorized and committed to funding the project and it is probable that the software will be completed and used for its intended function. ASU 2025-06 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-09, “Hedge Accounting Improvements” (“ASU 2025-09”). The new guidance provides targeted improvements to the hedge accounting guidance to primarily address cash flow hedging, but also impact certain fair value and net investment hedges, including (i) permitting designation of variable price components of forecasted purchases or sales of nonfinancial assets when clearly and closely related to the underlying asset, (ii) allowing groups of forecasted transactions with similar risk exposures (including those based on different interest rate indexes) to be hedged together, and (iii) introducing a model for cash flow hedges of forecasted interest payments on “choose-your-rate” debt instruments that permits a borrower to change the designated interest rate index and/or tenor without automatically discontinuing hedge accounting. ASU 2025-09 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-09 on its consolidated financial statements and related disclosures.

2. Business Combinations

On October 1, 2025, Hydril PCB Limited completed the acquisition of Deep Blue Oil & Gas Limited (“Deep Blue”), a UK‑based company specializing in managed‑pressure‑drilling (“MPD”) systems. Deep Blue holds a portfolio of patents and proprietary technology with applications in offshore drilling, including advanced MPD control and sealing systems. The Company accounted for the transaction as a business combination and allocated the total purchase price to assets acquired, liabilities and contingent consideration assumed based on their fair values at the date of acquisition.

The following table provides the allocation of the purchase price to major classes of assets and liabilities assumed in USD as of the acquisition date, translated at the exchange rate on the acquisition date. The goodwill reflected below increased by £0.6 million ($0.8 million) from December 31, 2025, which resulted from working capital measurement period adjustments.

(a). The contingent consideration consists of deferred payments by the Company to the acquiree’s prior equity holders for three years, contingent on meeting specific earnings and operational targets.

3. Inventories

Inventories, net of reserves of $99.7 million and $99.9 million as of March 31, 2026 and December 31, 2025, respectively, consisted of the following:

For the three months ended March 31, 2026 and 2025, we recorded inventory write-downs of $0.4 million and $1.9 million, respectively.

4. Goodwill

The changes in carrying value of goodwill are detailed by segment below:

(a). ESS segment includes purchase price adjustment of $0.8 million, related to working capital measurement period adjustments for Deep Blue acquisition. See Note 2—“Business Combinations” for more information.

5. Financial Instruments

The following tables set forth the Company’s financial instruments that are measured at fair value on a recurring basis by level within the fair value hierarchy:

(a). The fair value (Level 3) of the seller’s receivable against Akastor AS on proceeds from the sales or liquidation of Step Oiltools B.V. has been remeasured to zero as of March 31, 2026 and December 31, 2025.

We classify financial instruments in our Condensed Consolidated Balance Sheets based on maturity date of these instruments. As of March 31, 2026 and December 31, 2025, the fair value of our financial instruments are presented in Other current receivables and Other current liabilitiesin our Condensed Consolidated Balance Sheets.

The carrying value of cash and cash equivalents, current receivables, accounts payable and accrued expenses approximates fair value based on the short-term nature of these accounts.

Designated Hedges

The following table presents the fair value of the derivative financial instruments and a maturity analysis of the derivatives cash flows. Valuation techniques and inputs of forward contracts are based on the quoted forward exchange rate.

Non-Designated Hedges

The table below presents the notional value of the non-designated derivative financial instruments and a maturity analysis of the related derivatives cash flows. Valuation techniques and inputs of forward contracts are based on the quoted forward exchange rate.

For the three months ended March 31, 2026, we recorded a loss of $1.5 million, related to non-designated hedges in Other non-operating income (loss), net in our Condensed Consolidated Statements of Income. The Company did not have any open non-designated hedges during the three months ended March 31, 2025.

6. Other Current Liabilities

Other current liabilities consisted of the following:

7. Leases

The following table sets forth supplemental Condensed Consolidated Balance Sheets information related to leases:

For the three months ended March 31, 2026 and 2025, we recognized lease operating cost of $2.8 million and $2.7 million, respectively, in our Condensed Consolidated Statements of Income.

8. Debt

Below are the contractual terms of the Company’s interest-bearing loans and borrowings that are measured at amortized cost. The carrying values of the Company’s short-term and long-term debt consisted of the following:

Fair Values

As of March 31, 2026 and December 31, 2025, the fair value of the 7.875% Senior Secured Bonds due 2028 was $205.5 million and $204.5 million, respectively. The fair value was determined using a market approach based on observable inputs. For the remaining debt instruments, the book values of each instrument approximate its respective carrying amount, as these interest rates are variable in nature and are reflective of market rates.

9. Revenue from Contracts with Customers

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers by revenue type for both its ESS and PCS segments, as it believes this best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

The following tables presents revenue from contracts with customers:

(a). Product revenue includes related party revenue.

The following table presents timing of revenue recognition:

Contract assets consisted of the following:

Contract liabilities consisted of the following:

Revenue recognized during the three months ended March 31, 2026 and 2025 that was included in the contract liabilities balance at the beginning of such periods was $10.4 million and $19.0 million, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2026, the aggregate amount of the transaction price allocated to the unsatisfied or partially unsatisfied performance obligations was $381.9 million. As of March 31, 2026, the Company expected to recognize substantially all of the revenue from the total remaining performance obligations over the next 12 months. Contract modifications could affect both the timing to complete as well as the amount to be received as the Company fulfills the related remaining performance obligations.

10. Accrued Expenses

Accrued expenses consisted of the following:

(a). Costs of future estimated expenditures for environmental remediation liabilities are not discounted to their present value due to the timing of the future expenditures not being reliably determinable. The environmental remediation liability is related to two plants.

The following table describes the changes to the Company’s warranty liability:

For the three months ended March 31, 2026 and 2025, we recognized warranty expense of $0.4 million and $2.3 million, respectively, which was recorded in our Condensed Consolidated Statements of Income within Total cost of sales.

11. Other Liabilities

Other liabilities consisted of the following:

(a). Other long-term liabilities include $3.7 million of contingent consideration related to the Drillform acquisition, as of both March 31, 2026 and December 31, 2025.

12. Share-based Compensation

The Board of Directors of the Company (“Board”) established the founders’ phantom equity award, the 2022 long-term incentive program, the 2023 long-term incentive program, the 2024 long-term incentive program and the 2025 long-term incentive program as award programs for management and certain key personnel to entitle them to payment when certain strategic goals are met. All of the aforementioned awards were contingent on a liquidity event, which is defined as an IPO or a change of control (each as defined in the applicable award agreement) of the Company. The performance condition related to these awards was met upon the commencement of trading of our Class A common stock on The Nasdaq Global Select Market, and the Company expects to recognize related share-based compensation in the second quarter of 2026.

13. Employee Benefit Expenses

The components of net periodic cost recognized in Selling, general and administrative expenses in our Condensed Consolidated Statements of Income consisted of the following:

14. Income Taxes

Provision for Income Taxes

We estimate the annual effective tax rate for the full year to be applied to the actual year-to-date ordinary income and reflect the tax effects of discrete items as they occur.

The tax provision for the three months ended March 31, 2026 and 2025 was $5.9 million and $5.3 million, respectively. The increase in the tax provision was primarily attributable to a change in the Company’s geographic mix of revenues.

The effective tax rate for the three months ended March 31, 2026 and 2025 was 60.2% and 47.2%, respectively. Our effective tax rates for the three months ended March 31, 2026 and 2025 were impacted by valuation allowances related to losses in certain jurisdictions for which the Company cannot currently recognize a tax benefit. The effective tax rates were also impacted by certain withholding taxes, differences in tax rates in the jurisdictions in which the Company operates and the Company’s U.S. income, which is taxed at the ultimate owner level rather than at the Company level.

15. Commitments and Contingencies

We are involved in various claims and legal actions arising in the ordinary course of business. A liability is recognized in our consolidated financial statements when a loss is considered probable and amounts can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, we will disclose the nature of the claim and, if possible, an estimate of the loss or range of loss. We believe it is remote that outcomes of such known matters would have a material adverse impact on our consolidated financial position, result of operations or liquidity.

Restructuring

The Company has taken a substantial workforce decrease and reorganization in recent years, driven by the desire to increase efficiency and flexibility and rationalize its footprint, which involved establishing a new organization structure by converting the “Major Projects and Products” division under ESS to “Product and Innovation, Engineering Disciplines and Product Management.” In January 2025, the Company also announced a restructuring plan primarily focused on the reorganization of facilities in Horten and Fornebu, Norway and global workforce reductions. These initiatives impacted 135 individuals, comprising 110 employees in Norway and 25 employees in Germany.

For the three months ended March 31, 2025, we recognized restructuring and other expenses of $3.3 million, which included a charge of $1.1 million related to the impairment of right-of-use assets. There wereno restructuring and other expenses recognized in the three months ended March 31, 2026.

The following table summarizes the changes to the Company’s provision balance for restructuring and other charges:

Other

In the normal course of business with customers, vendors and others, the Company has issued various bank guarantees, such as advance payment guarantees, surety bonds, performance guarantees, bid bonds, customs and tax guarantees to guarantee the Company’s performance as it relates to contracts with customers, contract bidding, customs duties, tax appeals and obligations in various jurisdictions. As of March 31, 2026, the Company had outstanding bank guarantees of $29.1 million. As of March 31, 2026, none of these guarantees either has, or is likely to have, a material impact on the Company’s financial position, results of operations or cash flows as the Company expects to comply with the underlying performance requirements.

16. Related Party Transactions

The following tables set forth a summary of transactions and balances with significant related parties:

17. Segment Information

Operating segments are defined as components of an entity for which separate financial information is available and evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) to allocate resources and assess performance. As of March 31, 2026 and 2025, the Company hadtwo operating segments, ESS and PCS. The Company has identified its reportable segments based on the nature of the products and services, markets served and pricing and go-to-market strategies.

•ESS is a supplier of drilling solutions and complete topside drilling packages and services to both onshore and offshore oil and gas customers. Key product offerings consist of overhaul, equipment installation and commissioning, services account management, 24/7 technical support, logistics, engineering upgrades, spare parts supply and training and condition-based maintenance. The ESS segment is derived from the acquisition of MHWirth AS.

•PCS is a supplier of integrated drilling products and services. Key product offerings consist of blowout preventer systems, controls and drilling riser equipment, spare parts supply for rig operations and maintenance programs, overhaul and recertification and reactivation of rigs and technical and operational rig support. The PCS segment is derived from the acquisition of Subsea Drilling Systems.

In addition to its reportable segments, the Company has corporate operations (Headquarters) which include general corporate expenses. Headquarters includes certain corporate stewardship items discussed below necessary to reconcile the reportable segments to the Company’s total amounts.

The CODM, who is the Company’s Chief Executive Officer, uses segment operating income as the primary financial measure to evaluate segment performance. Segment operating income is defined as income before taxes (excluding certain corporate stewardship costs which are not allocable to the segments, such as legal, certain corporate finance functions and centrally managed initiatives, other non-operating items, and depreciation and amortization related to certain long-lived assets, including the headquarters office space), net other operating expenses (income), net foreign currency gain/(loss), net other non-operating income (loss), and net interest income (expense). Inter-segment pricing is determined on an arm’s length basis. The CODM uses segment operating income in the budget and forecasting process and to monitor budget versus actual results, which are used in assessing the performance of the segments and to allocate resources to the segments. Segment assets are not reported to, or used by, the CODM to allocate resources to or assess performance of the Company’s segments.

The following table presents the reconciliation of reportable segment revenues:

The following table presents the reconciliation of segment performance:

(a)As the CODM does not regularly review intersegment revenue, it is excluded from the determination of total segment operating income. The CODM uses revenue from external customers to assess performance and allocate resources.

(b) Restructuring and other expenses consist of severance costs primarily related to workforce reductions and reorganization within ESS and impairment of right-of-use assets.

(c) Unallocated corporate costs include certain corporate stewardship costs that are not allocable to the segments, consisting of centralized finance costs of $1.6 million for both the three months ended March 31, 2026 and 2025 and other corporate expenses of $1.6 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively.

18. Earnings per Share

For purposes of calculating earnings per share, Class A ordinary shares and Class B ordinary shares are identical. Therefore, the Company has calculated basic earnings per share on the basis of 200 shares. Basic earnings per ordinary share is calculated by dividing the net income attributable to the Company during the period by the weighted average number of ordinary shares outstanding during the same period. There are no adjustments required to be made to net income or the ordinary shares outstanding for purposes of computing basic and diluted earnings per share.

19. Subsequent Events

On April 2, 2026, HMH Holding completed its IPO of shares of its Class A common stock and received net proceeds of approximately $197.8 million after deducting the underwriters’ discounts and offering fees of $12.6 million.

HMH Holding also granted the IPO underwriters a 30-day option to purchase additional shares of Class A common stock on the same terms. On April 30, 2026, the underwriters partially exercised the option, resulting in additional net proceeds of $12.9 million, after deducting the underwriters’ discounts and offering fees of $0.8 million.

HMH Holding used approximately $39.5 million of the net proceeds it received from the IPO as the cash consideration to purchase an aggregate of 2,100,000 of our voting Class A ordinary shares (“B.V. Voting Class A Shares”) and 2,100,000 of our voting Class B ordinary shares (“B.V. Voting Class B Shares” and, together with B.V. Voting Class A Shares, the “B.V. Voting Shares”) from Baker Hughes and Akastor (collectively, the “Principal Stockholders”).

On April 2, 2026, HMH Holding contributed all of the remaining net proceeds from the IPO to us in exchange for a number of B.V. Voting Class A Shares and B.V. Voting Class B Shares such that the number of B.V. Voting Class A Shares and B.V. Voting Class B Shares, respectively, held by HMH Holding, taking into account the B.V. Voting Class A Shares and B.V. Voting Class B Shares acquired by HMH Holding from the Principal Stockholders, equals the number of shares of Class A common stock sold by HMH Holding in the IPO.

We used the remaining net proceeds received from the IPO to repay all of the outstanding principal and accrued and unpaid interest under a loan agreement with Baker Hughes Holdings LLC and Akastor AS, dated as of October 1, 2021 (as amended, the “Shareholder Loans”), net of amounts owed to the Company by Baker Hughes and Akastor, respectively, pursuant to that certain note with Baker Hughes and Akastor dated March 17, 2023, as amended, and remaining proceeds were used to fund our working capital.

On May 5, 2026, HMH Holding contributed all of the net proceeds it received from the underwriters’ exercise of the over-allotment option to us in exchange for an additional 685,844 B.V. Voting Class A Shares and 685,844 B.V. Voting Class B Shares. We used such additional net proceeds to purchase in equal proportion from Baker Hughes and Akastor, respectively, an aggregate number of shares of HMH Holding’s Class B common stock, par value $0.01 per share (“Class B common stock”), non-voting Class A ordinary shares of the Company (“B.V. Non-Voting Class A Shares”) and non-voting Class B ordinary shares of the Company (“B.V. Non-Voting Class B Shares” and, together with the B.V. Non-Voting Class A Shares, the “B.V. Non-Voting Shares”), respectively, equal to the number of shares of Class A common stock purchased by the underwriters pursuant to the exercise of the option.

After giving effect to these transactions, including the shares of Class A common stock issuable upon the consummation of the IPO pursuant to equity awards that vested in connection with the IPO, Baker Hughes and Akastor each owned 15,945,826 shares of HMH Holding’s Class B common stock, par value $0.01 per share (“Class B common stock”), collectively representing approximately 72% of the total voting power of HMH Holding’s capital stock, and each owned 15,945,826 B.V. Non-Voting Class A Shares and 15,945,826 B.V. Non-Voting Class B Shares, collectively representing an approximately 72% equity interest in the Company and 0% voting power of the equity in the Company. Immediately following the underwriters’ exercise of the over-allotment option, the investors in the IPO, collectively, owned all of the shares of HMH Holding’s Class A common stock, representing approximately 28% of the total voting power of the Company’s capital stock.

On April 2, 2026, we entered into a Tax Receivable Agreement (the “TRA”) with HMH Holding and the Principal Stockholders. The TRA requires HMH Holding to pay 85% of the net cash savings, if any, actually realized or deemed to be realized in certain circumstances to the Principal Stockholders in connection with U.S. federal, state, local and foreign income taxes and franchises taxes resulting from (i) acquisitions of B.V. Voting Shares from the Principal Stockholders by us in connection with the IPO, (ii) the acquisition of B.V. Non-Voting Shares from the Principal Stockholders using the net proceeds from any future offering, (iii) redemptions or exchanges of B.V. Non-Voting Shares by the Principal Stockholders and the corresponding number of shares of HMH Holding’s Class B common stock for shares of HMH Holding’s Class A common stock or cash or (iv) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA.