Mistras Group, Inc.

Previous wording

The following Management’s Discussion and Analysis (“MD&A”) provides a discussion of our results of operations and financial position for the three months ended March 31, 2026 and 2025. The MD&A should be read together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Item 1 in this Quarterly Report on Form 10-Q (the "Quarterly Report") and our audited consolidated financial statements and related notes included in our 2025 Annual Report. Unless otherwise specified or the context otherwise requires, “Mistras,” “the Company,” “we,” “us” and “our” refer to Mistras Group, Inc. and its consolidated subsidiaries. The MD&A includes the following sections:

Current wording

The following Management’s Discussion and Analysis (“MD&A”) provides a discussion of our results of operations and financial position for the three and six months ended June 30, 2026 and 2025. The MD&A should be read together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Item 1 in this Quarterly Report on Form 10-Q (the "Quarterly Report") and our audited consolidated financial statements and related notes included in our 2025 Annual Report. Unless otherwise specified or the context otherwise requires, “Mistras,” “the Company,” “we,” “us” and “our” refer to Mistras Group, Inc. and its consolidated subsidiaries. The MD&A includes the following sections:

Previous wording

In some cases, you can identify forward-looking statements by terminology, such as “goals,” or “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “should,” “would,” “predicts,” “appears,” “projects,” or the negative of such terms or other similar expressions. You are urged not to place undue reliance on any such forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, various risks, uncertainties or other factors known and unknown. Factors that could cause or contribute to differences in results and outcomes from those in our forward-looking statements, including increases or changes in tariffs, trade restrictions or taxes; supply chain disruptions resulting from geopolitical instabilities and disputes (including those related to the wars in the Middle East and Ukraine); other impacts from the wars in the Middle East and Ukraine and related economic volatility and uncertainty resulting therefrom, include, without limitation, those discussed in the “Business—Forward-Looking Statements,” and “Risk Factors” sections of our 2025 Annual Report as well as those discussed in this Quarterly Report and in our other filings with the SEC. In addition, there are various developments discussed below which could create risks and uncertainty about our business, results of operations or liquidity.

Current wording

In some cases, you can identify forward-looking statements by terminology, such as “goals,” or “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “should,” “would,” “predicts,” “appears,” “projects,” or the negative of such terms or other similar expressions. You are urged not to place undue reliance on any such forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, various risks, uncertainties or other factors known and unknown. Factors that could cause or contribute to differences in results and outcomes from those in our forward-looking statements, including any impacts from the imposition of tariffs or other trade restrictions, changes to the

Previous wording

The Company enhances value for its customers by integrating asset integrity protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected software and monitoring solutions, including OneSuite®, which serves as a cloud-based ecosystem that pulls together the Company’s software and data services capabilities. This integrated approach enables customers to make data-driven decisions that improve asset reliability, enhance safety, reduce operational risk, and optimize performance across the asset lifecycle.

Current wording

The Company enhances value for its clients by integrating asset protection throughout supply chains and centralizing integrity data through a suite of Industrial Internet of Things ("IoT")-connected digital software and monitoring solutions, including OneSuite™, which serves as an ecosystem platform, pulling together all of the Company’s software and data services capabilities.

Previous wording

Given the role our solutions play in enhancing the safe and efficient operation of infrastructure, we have historically provided a majority of our solutions to our customers on a regular, recurring basis. We perform these services largely at our customers’ facilities, while primarily servicing our aerospace customers at our network of state-of-the-art, in-house laboratories. These solutions typically include NDT and inspection services, and can also include a wide range of mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring. Under this business model, many customers outsource their inspection to us on a “run and maintain” basis. We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets. These markets include companies across oil and gas, aerospace and defense, industrial, power generation and transmission (including alternative and renewable energy), infrastructure, research and engineering, petrochemical, and other process industries.

Current wording

Given the role our solutions play in enhancing the safe and efficient operation of infrastructure, we have historically provided a majority of our solutions to our customers on a regular, recurring basis. We perform these services largely at our customers’ facilities, while primarily servicing our aerospace customers at our network of state-of-the-art, in-house laboratories. These solutions typically include NDT and inspection services, and can also include a wide range of mechanical services, including heat tracing, pre-inspection insulation stripping, coating applications, re-insulation, engineering assessments and long-term condition-monitoring. Under this business model, many customers outsource their inspection to us on a “run and maintain” basis. We have established long-term relationships as a critical solutions provider to many of the leading companies with asset-intensive infrastructure in our target markets. These markets include companies in oil and gas, aerospace and defense, industrials, power generation and transmission (including alternative and renewable energy), infrastructure, research and engineering, petrochemical, and other process industries.

Previous wording

We believe long-term growth can be realized in our target markets. Our level of business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets. For example, ongoing geopolitical conflicts, including the war between Russia and Ukraine, the unrest in the Middle East, including the recent conflict between the U.S. and Iran, continue to contribute to global energy market volatility, supply chain disruption, and economic uncertainty that could affect certain of our end markets, particularly oil and gas customers. Among other things, we expect the timing of our oil and gas customers inspection spend to be impacted by volatility in oil prices resulting from these factors.

Current wording

We believe long-term growth can be realized in our target markets. Our level of business and financial results are impacted by world-wide macro- and micro-economic conditions generally, as well as those within our target markets. Among other things, we expect the timing of our oil and gas customers' inspection spending to be impacted by fluctuations in oil prices and broader market conditions, including potential geopolitical disruptions and uncertainty arising from conflicts in the Middle East.

Previous wording

Our cash position and liquidity remains strong. As of March 31, 2026, our cash and cash equivalents balance was approximately $25.0 million, and we had available borrowing capacity of up to $100.7 million under the revolving credit facility under our Credit Agreement.

Current wording

Our cash position and liquidity remains strong. As of June 30, 2026, our cash and cash equivalents balance was approximately $22.0 million, and we had available borrowing capacity of up to $106.3 million under the revolving credit facility under our Credit Agreement.

Previous wording

The global trade landscape continues to be highly volatile. In 2025, the U.S. government implemented a series of trade tariffs on goods imported into the U.S. from various countries. In many cases, these tariffs resulted in reciprocal tariffs and other actions on goods being exported from the U.S. These associated tariffs are complex and continue to evolve as negotiations occur. In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”), which the U.S. government relied on to impose certain tariffs, does not authorize the administration to impose tariffs. On March 4, 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, although the Court immediately suspended the order while the CBP determines a refund process. The IEEPA tariffs remain subject to ongoing litigation between the administration and other parties. In response to the U.S. Supreme Court ruling mentioned above, the administration announced plans to implement new tariffs under alternative statutory authority. The full impact of the U.S. Supreme Court’s ruling and the administration’s response, including the timing and extent of any refunds and the impact of the new tariffs, remain uncertain. Tariffs and trade barriers have not had a material effect on our business or results of operations during 2026 to date. However, new tariffs or trade measures could result in increased costs to us or our suppliers and could impact the import of materials by our customers, including materials subject to our inspection and testing services, which could adversely affect demand for our services.

Current wording

The global trade landscape continues to be highly volatile. During 2025, the U.S. government implemented a series of trade tariffs on goods imported into the U.S. from various countries, many of which prompted reciprocal tariffs and other trade measures affecting U.S. exports. The ongoing tariff environment remains complex and continues to evolve as legal proceedings and trade negotiations progress. In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA"), which the U.S. government relied upon to impose certain tariffs, does not authorize the imposition of tariffs. Following that decision, the U.S. Court of International Trade directed the U.S. Customs and Border Protection ("CBP") to begin processing refunds of previously collected IEEPA tariffs, and during the second quarter of 2026, CBP commenced accepting and processing refund claims. In response to the U.S. Supreme Court's ruling, the U.S. administration implemented replacement tariffs under alternative statutory authorities, including Section 122 of the Trade Act of 1974, while also pursuing additional tariff actions under other existing trade authorities. Certain of these replacement tariffs have also been challenged in court, and the related litigation remains ongoing. On July 24, 2026, the U.S. administration announced the implementation of additional tariffs ranging from 10% to 12.5% on imports from numerous trading partners under Section 301 of the Trade Act of 1974. Accordingly, the ultimate scope, duration and financial impact of U.S. trade measures remain uncertain. Ongoing changes to trade policies and related uncertainty may affect global economic conditions, supply chains and costs, and may reduce trade between the U.S. and impacted countries. Tariffs and trade barriers have not had a material effect on our business or results of operations during 2026 to date. However, new tariffs or other trade measures could result in increased costs for us or our suppliers and could impact the import of materials by our customers, including materials subject to our inspection and testing services, which could adversely affect demand for our services.

Previous wording

Geopolitical tensions in the Middle East, including the conflict involving the United States and Iran, have contributed to increased volatility in global energy markets and broader macroeconomic uncertainty. The conflict in the Middle East has significantly reduced the export of oil and natural gas from the Persian Gulf, creating upward pressure on oil and natural gas prices, and has also disrupted and increased the costs of certain other supplies. Fluctuations in crude oil and natural gas prices may influence capital spending and maintenance activity by customers in the oil and gas sector, which could affect demand for certain of our services, particularly field inspection and asset integrity solutions. Additionally, continued instability in the region could contribute to supply chain disruptions, changes in foreign currency exchange rates, and delays in customer projects. While we have not experienced material impacts to date, the situation remains dynamic, and we continue to monitor developments and assess potential impacts on our operations, financial condition, and results of operations.

Current wording

Geopolitical tensions in the Middle East, including the conflict involving the U.S. and Iran, have contributed to increased volatility in global energy markets and broader macroeconomic uncertainty. The conflict has increased uncertainty surrounding global energy supplies, international shipping routes and supply chains, contributing to fluctuations in oil and natural gas prices and increased costs for certain materials and transportation. Fluctuations in crude oil and natural gas prices may influence capital spending and maintenance activity by customers in the oil and gas sector, which could affect demand for certain of our services, particularly field inspection and asset integrity solutions. Additionally, continued instability in the Middle East could contribute to supply chain disruptions, changes in foreign currency exchange rates, and delays in customer projects. While we have not experienced material impacts to date, the situation remains dynamic, and we continue to monitor developments and assess potential impacts on our operations, financial condition, and results of operations.

Previous wording

The Company prepares its consolidated financial statements in accordance with GAAP. In this MD&A under the heading "Income from Operations", the non-GAAP financial performance measure "Income from operations before special items” is used for each of our three operating segments, “Corporate and Eliminations” and the "Total Company", with tables reconciling the measure to a financial measure under GAAP. This presentation excludes from "Income from Operations" (a) reorganization and other costs, which includes items such as severance, labor relations matters and asset and lease termination costs, and (b) environmental expense, which relates to costs associated with the environmental matter at the Phoenix lab operated by Mistras Arizona, as described in Note 13 to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report. These adjustments have been excluded from the GAAP measure because these expenses and credits are not related to our or any individual segment's core business operations. Our management uses this non-GAAP measure as a measure of operating performance and liquidity to assist in comparing performance from period to period on a consistent basis, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations. We believe investors and other users of our financial statements benefit from the presentation of this non-GAAP measure in evaluating our performance. Income before special items excludes the identified adjustments, which provides additional tools to compare our core business operating performance on a consistent basis and measure underlying trends and results in our business. Income before special items is not used to determine incentive compensation for executives or employees, nor is it a replacement for the reported GAAP financial performance and/or necessarily comparable to the non-GAAP financial measures of other companies. Any measure that eliminates the foregoing items has material limitations as a performance or liquidity measure and should not be considered alternatives to net income or any other measures derived in accordance with GAAP. Because Income from operations before special items may not be calculated in the same manner by all companies, this measure may not be comparable to other similarly titled measures used by other companies.

Current wording

The Company prepares its consolidated financial statements in accordance with GAAP. In this MD&A under the heading "Income from Operations", the non-GAAP financial performance measure "Income from operations before special items” is used for each of our three operating segments, “Corporate and Eliminations” and the "Total Company", with tables reconciling the measure to a financial measure under GAAP. This presentation excludes from "Income from Operations" (a) reorganization and other costs, which includes items such as severance, labor relations matters and asset and lease termination costs and (b) environmental expense, which relates to costs associated with the environmental matter at the Phoenix lab operated by Mistras Arizona, as described in Note 13 to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report. These adjustments have been excluded from the GAAP measure because these expenses and credits are not related to our or any individual segment's core business operations. Our management uses this non-GAAP measure as a measure of operating performance to assist in comparing performance from period to period on a consistent basis, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations. We believe investors and other users of our financial statements benefit from the presentation of this non-GAAP measure in evaluating our performance. Income from operations before special items excludes the identified adjustments, which provides additional tools to compare our core business operating performance on a consistent basis and measure underlying trends and results in our business. Income from operations before special items is not used to determine incentive compensation for executives or employees, nor is it a replacement for the reported GAAP financial performance and/or necessarily comparable to the non-GAAP financial measures of other companies. Any measure that eliminates the foregoing items has material limitations as a performance measure and should not be considered an alternative to net income or any other measures derived in accordance with GAAP. Because Income from operations before special items may not be calculated in the same manner by all companies, this measure may not be comparable to other similarly titled measures used by other companies.

Previous wording

Condensed consolidated results of operations for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

Condensed consolidated results of operations for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

Revenue was $169.0 million for the three months ended March 31, 2026, an increase of $7.4 million, or 4.6%, compared with the three months ended March 31, 2025.

Current wording

Revenue was $193.1 million for the three months ended June 30, 2026, an increase of $7.7 million, or 4.2%, compared with the three months ended June 30, 2025.

Previous wording

Revenue by segment for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

Revenue by segment for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

In the three months ended March 31, 2026, total revenue increased 4.6% versus the prior year comparable period due predominantly to a low-single-digit organic increase driven by increases in the aerospace and defense, power generation and transmission, infrastructure, research, and engineering, and petrochemical end markets. North America segment revenue increased 5.0%, driven predominantly by increases in the aerospace and defense, power generation and transmission, infrastructure, research, and engineering and petrochemical end markets as a result of strong market demand. International segment revenue increased 9.3%, due predominantly to a low-double-digit favorable impact of foreign exchange rates. Products and Systems segment revenue decreased by 14.2%, due to decreased sales volume and shipments as compared to the prior year comparable period.

Current wording

In the three months ended June 30, 2026, total revenue increased 4.2% versus the prior year comparable period due predominantly to a low-single-digit organic increase driven by increases in the aerospace and defense, power generation and transmission, infrastructure, research, and engineering, and petrochemical end markets. North America segment revenue increased 5.8%, driven predominantly by the aerospace and defense, power generation and transmission, infrastructure, research, and engineering, and process industries end markets as a result of strong market demand. International segment revenue decreased 2.7%, due predominantly to a mid-single-digit organic decrease driven by lower market demand. The decrease was partially offset by a low-single-digit favorable impact of foreign exchange rates. Products and Systems segment revenue increased by 43.0%, due to increased sales volume and shipments as compared to the prior year comparable period.

Previous wording

Oil and gas customer revenue comprised approximately 51% and 60% of total revenue for the three months ended March 31, 2026 and 2025, respectively. Aerospace and defense customer revenue comprised approximately 16% and 13% of total revenue for the three months ended March 31, 2026 and 2025, respectively. The Company’s top ten customers comprised approximately 36% of total revenue for the three months ended March 31, 2026, as compared to 37% for the three months ended March 31, 2025, with no customer accounting for 10% or more of total revenue in either three-month period.

Current wording

Oil and gas customer revenue comprised approximately 49% and 55% of total revenue for the three months ended June 30, 2026 and 2025, respectively. Aerospace and defense customer revenue comprised approximately 14% and 13% of total revenue for the three months ended June 30, 2026 and 2025, respectively. The Company’s top ten customers comprised approximately 35% of total revenue for both the three months ended June 30, 2026 and 2025, with no customer accounting for 10% or more of total revenue in either three-month period.

Previous wording

Integrated Field Solutions revenue is comprised of revenue derived from on-site asset inspection, maintenance, and related technical services performed by our technicians at customer locations, as well as data-driven solutions, including software, analytics, and implementation services that provide insights and recommendations to enhance asset integrity and performance. Integrated Field Solutions revenue increased by $0.7 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to increases in our power generation and transmission, infrastructure, research, and engineering and petrochemical end markets as a result of strong market demand, partially offset by decreases in sales volume in our oil and gas end market within our North America and International segments.

Current wording

Integrated Field Solutions revenue is comprised of revenue derived from on-site asset inspection, maintenance, and related technical services performed by our technicians at customer locations, as well as data-driven solutions, including software, analytics, and implementation services that provide insights and recommendations to enhance asset integrity and performance. Integrated Field Solutions revenue increased by $5.8 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 and increased by $6.5 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to increases in sales volume in our power generation and transmission and infrastructure, research and engineering end markets as a result of strong market demand, partially offset by decreases in sales volume in our oil and gas end market within our North America and International segments.

Previous wording

In-Laboratory Services revenue is comprised of quality assurance inspections of components and materials at our in-house laboratory facilities. In-Laboratory Services revenue increased by $6.7 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to increased sales volumes in our aerospace and defense end market in our North America segment.

Current wording

In-Laboratory Services revenue is comprised of quality assurance inspections of components and materials at our in-house laboratory facilities. In-Laboratory Services revenue increased by $1.9 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, and increased by $8.6 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to increased sales volumes in our aerospace and defense end market in our North America segment.

Previous wording

Gross profit increased by $3.8 million, or 9.4%, in the three months ended March 31, 2026 versus the prior year comparable period, primarily due toan improvedand diversified business mix and operating efficiencies.

Current wording

Gross profit increased by $2.5 million, or 4.6%, in the three months ended June 30, 2026 versus the prior year comparable period primarily due toan improved and diversified business mix and operating efficiencies.

Previous wording

Gross profit by segment for the three months ended March 31, 2026 and 2025 was as follows:

Current wording

Gross profit by segment for the three and six months ended June 30, 2026 and 2025 was as follows:

Previous wording

Gross profit margin was 26.5% and 25.3% for the three months ended March 31, 2026 and 2025, respectively. Gross profit margin for the North America segment increased by 1.4% for the three months ended March 31, 2026 as compared to the prior year comparable period primarily due to an improved and diversified business mix and operating efficiencies. International segment realized a 0.4% increase in gross profit margin to 27.8% for the three months ended March 31, 2026 as compared to the prior year comparable period primarily due to a favorable sales mix in the current year period. Products and Systems segment gross margin had a decrease of 12.3% to 40.2% for the three months ended March 31, 2026 primarily due to a less favorable sales mix as compared to the prior period.

Current wording

Gross profit margin was 29.2% and 29.1% for the three-month periods ended June 30, 2026 and 2025, respectively. Gross profit margin for the North America segment increased by 0.2% for the three months ended June 30, 2026 as compared to the prior year comparable period primarily due to an improved and diversified business mix and operating efficiencies. International segment realized a 0.4% decline in gross profit margin to 31.0% for the three months ended June 30, 2026 as compared to the prior year comparable period primarily due to a less favorable sales mix in the current year period. Products and Systems segment gross margin had a decrease of 2.0% to 46.8% for the three months ended June 30, 2026 primarily due to a less favorable sales mix as compared to the prior period.

Previous wording

Operating expenses for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

Operating expenses for the three and six months ended June 30, 2026 and 2025 was as follows:

Previous wording

Operating expenses decreased $1.9 million, or 4.4%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Selling, general and administrative expenses increased $1.3 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to strategic investments in our operations to support commercial execution and promote growth in our strategic markets, while maintaining discipline in overhead costs. Reorganization and other costs decreased by $2.6 million to $0.5 million as compared to the prior year comparable period, due to lower restructuring activity, including workforce reductions and laboratory rationalization initiatives in the three months ended March 31, 2025, which did not recur at similar levels during the current year period. Environmental expense, net decreased by $0.7 million as compared to the prior year comparable period due to lower expenses related to the ongoing remediation efforts related to the Mistras Arizona claim discussed in Note 13 -Commitments and Contingencies. Research and engineering expenses decreased by $0.1 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Depreciation and amortization increased by $0.2 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Current wording

Operating expenses decreased $3.9 million, or 4.4%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Selling, general and administrative expenses increased $0.3 million during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, due to strategic investments in our operations to support commercial execution and promote growth in our strategic markets, while maintaining discipline in overhead cost. Reorganization and other costs decreased by $4.0 million to $2.0 million as compared to the prior year comparable period due to lower restructuring activity, including workforce reductions and laboratory rationalization initiatives in the six months ended June 30, 2025, which did not recur at similar levels during the current year period. Environmental expense decreased by $0.7 million as compared to the prior year comparable period due to lower expenses related to the ongoing remediation efforts related to the Mistras Arizona claim discussed in Note 13 - Commitments and Contingencies. Research and engineering expenses decreased by $0.1 million during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Depreciation and amortization increased by $0.7 million during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Previous wording

The following table shows a reconciliation of the income (loss) from operations (GAAP) to income (loss) from operations before special items (non-GAAP) for each of our three segments, Corporate and Elimination and for the Company in total:

Current wording

The following table shows a reconciliation of the income from operations to income from operations before special items for each of our three segments, Corporate and Elimination and for the Company in total:

Previous wording

For the three months ended March 31, 2026, income from operations (GAAP) increased $5.7 million or 562.6%, compared with the three months ended March 31, 2025, while income from operations before special items (non-GAAP) increased by $2.4 million, or 92.2%. The increase in income from operations was due to higher gross profit and lower reorganization and other costs. As a percentage of revenue, income from operations increased by 340 basis points to 2.8% in the three months ended March 31, 2026 compared to (0.6)% in the three months ended March 31, 2025. As a percentage of revenue, income from operations before special items increased by 140 basis points to 3.0% in the three months ended March 31, 2026 compared to 1.6% in the three months ended March 31, 2025.

Current wording

For the three months ended June 30, 2026, income from operations (GAAP) increased $4.5 million, or 53.6%, compared to the three months ended June 30, 2025, while income from operations before special items (non-GAAP) increased by $3.0 million, or 25.5%. As a percentage of revenue, income from operations before special items increased by 130 basis points to 7.7% in the three months ended June 30, 2026 compared to 6.4% in the three months ended June 30, 2025.

Previous wording

Interest expense was approximately $2.9 million and $3.3 million for the three months ended March 31, 2026 and 2025, respectively. This decrease of $0.4 million in interest expense in the current year period was a result of lower interest rates during the three months ended March 31, 2026 in comparison to the prior year comparable period.

Current wording

Interest expense was approximately $4.1 million and $4.2 million for the three months ended June 30, 2026 and 2025, respectively. This decrease of $0.1 million in interest expense was a result of lower interest rates during the three months ended June 30, 2026 in comparison to the prior year comparable period. Interest expense was approximately $7.0 million and $7.6 million for the six months ended June 30, 2026 and 2025, respectively. This decrease of $0.5 million in interest expense was a result of lower interest rates and lower average borrowings outstanding during the six months ended June 30, 2026 in comparison to the prior year comparable period.

Previous wording

Our effective income tax rate was approximately 13.8% for the three months ended March 31, 2026, compared to an effective income tax benefit of approximately 26.9% for the three months ended March 31, 2025.

Current wording

Our effective income tax rate was approximately 23.1% and 25.4% for the three months ended June 30, 2026 and 2025, respectively. Our effective income tax rate was approximately 21.1% and 71.4% for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

The effective income tax rate for the three months ended March 31, 2026, was lower than the statutory rate primarily due to the impact of favorable discrete items related to stock compensation. The effective income tax benefit for the three months ended March 31, 2025, was higher than the statutory rate primarily due to the impact of an unfavorable discrete item related to stock compensation.

Current wording

The effective income tax rate for the three months ended June 30, 2026, was higher than the statutory rate primarily due to limitations on the deductibility of certain compensation expenses. The effective income tax rate for the three months ended June 30, 2025 was higher than the statutory rate primarily due to the impact of an unfavorable discrete item related to stock compensation.

Previous wording

Income tax expense varies as a function of pre-tax income and the level of non-deductible expenses, such as certain amounts of meals and entertainment expenses, valuation allowances, and other permanent differences. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. Our effective income tax rate may fluctuate over the next few years due to many variables including the amount and future geographic distribution of our pre-tax income, changes resulting from our acquisition strategy, and increases or decreases in our permanent differences.

Current wording

Income tax expense varies as a function of pre-tax income and the level of non-deductible expenses, such as certain amounts of meals and entertainment expense, valuation allowances, and other permanent differences. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. Our effective income tax rate may fluctuate over the next few years due to many variables including the amount and future geographic distribution of our pre-tax income, changes resulting from our acquisition strategy, and increases or decreases in our permanent differences.

Previous wording

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions. These tax reform provisions include the extension and modification of certain provisions of the Tax Cuts and Jobs Act. Effective for calendar year 2025. The changes include, but are not limited to, immediate expensing of domestic research and development expenditure, the restoration of 100% bonus depreciation, and an EBITDA-based interest expense limitation. These provisions did not have a material impact on the Company’s financial statements for the three months ended March 31, 2026.

Current wording

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted, which includes a broad range of tax reform provisions. These tax reform provisions include the extension and modification of certain provisions of the Tax Cuts and Jobs Act and are effective for calendar year 2025. The changes include, but are not limited to, immediate expensing of domestic research and development expenditure, the restoration of 100% bonus depreciation, and an EBITDA-based interest expense limitation. These provisions did not have a material impact on the Company’s financial statements for the three and six months ended June 30, 2026.

Previous wording

During the three months ended March 31, 2026, cash provided by operating activities was $2.8 million, representing a year-over-year decrease of $2.8 million, or 50%. This decrease was primarily attributable to movements in working capital, as compared to the prior year comparable period.

Current wording

During the six months ended June 30, 2026, cash provided by operating activities was $17.7 million, representing a year-over-year increase of $21.3 million, or 590%. This increase was primarily attributable to an increase in net income and movements in working capital, primarily due to higher collections of accounts receivable as compared to the prior year comparable period.

Previous wording

During the three months ended March 31, 2026, cash used in investing activities was $5.6 million, representing a $0.1 million increase compared to the prior year comparable period. The increase is primarily attributable to an increase in expenditures for property, plant, and equipment of $1.4 million, partially offset by an increase in proceeds from the sale of equipment of $1.3 million.

Current wording

During the six months ended June 30, 2026, cash used in investing activities was $11.9 million, representing a $0.4 million increase compared to the prior year comparable period. The increase is primarily attributable to increased expenditures for property, plant, and equipment and intangible assets, partially offset by an increase in proceeds from sale of equipment.

Previous wording

Net cash used in financing activities was $0.3 million for the three months ended March 31, 2026, compared to net cash used in financing activities of $0.7 million for the three months ended March 31, 2025. During the three months ended March 31, 2026, net borrowings of debt were approximately $0.6 million higher than the prior year comparable period resulting in additional net debt borrowings during the current year period in comparison to the prior year comparable period. The increase in net debt borrowings is partially offset by $0.1 million more in taxes paid related to net share settlement of share-based awards during the three months ended March 31, 2026.

Current wording

Net cash used in financing activities was $11.2 million for the six months ended June 30, 2026, compared to net cash provided by financing activities of $14.9 million for the six months ended June 30, 2025. During the six months ended June 30, 2026, net payments of debt were approximately $9.5 million compared to net borrowings of debt of $16.4 million in the prior year comparable period.

Previous wording

The effect of exchange rate changes on our cash and cash equivalents was an increase of $0.1 million in the three months ended March 31, 2026, compared to an increase of $0.7 million for the three months ended March 31, 2025.

Current wording

The effect of exchange rate changes on our cash and cash equivalents was a decrease of $0.6 million in the six months ended June 30, 2026, compared to an increase of $1.8 million for the six months ended June 30, 2025.

Previous wording

As of March 31, 2026, we had cash and cash equivalents totaling $25.0 million and $100.7 million of unused commitments under our Credit Agreement with borrowings of $179.6 million and $3.4 million of letters of credit outstanding. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.

Current wording

As of June 30, 2026, we had cash and cash equivalents totaling $22.0 million and $106.3 million of unused commitments under our Credit Agreement with borrowings of $170.5 million and $3.8 million of letters of credit outstanding. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.

Previous wording

The terms of our Credit Agreement are described in Note 11 -Long-Term Debtof the Notes to the Unaudited Condensed Consolidated Financial Statements, under the heading "Senior Credit Facility".

Current wording

The terms of our Credit Agreement are described in Note 11-Long-Term Debtof the Notes to the Unaudited Condensed Consolidated Financial Statements, under the heading "Senior Credit Facility". The terms related to the subsequent amendment to the Credit Agreement are described in Note 15 -Subsequent Events.

Previous wording

There have been no significant changes in our contractual obligations and outstanding indebtedness as disclosed in the 2025 Annual Report.

Current wording

Except for the subsequent amendment to the Credit Agreement described in Note 15 -Subsequent Events, there have been no significant changes in our contractual obligations and outstanding indebtedness from those disclosed in our 2025 Annual Report.