Babcock & Wilcox Enterprises, Inc.

MARCH 31, 2026

NOTE 1 –BASIS OF PRESENTATION

These interim Condensed Consolidated Financial Statements of Babcock & Wilcox Enterprises, Inc. ("B&W," "management," "we," "us," "our" or the "Company") have been prepared in accordance with GAAP and SEC instructions for interim financial information and should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2025. The Notes to the Condensed Consolidated Financial Statements are presented on the basis of continuing operations, unless otherwise stated.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these Condensed Consolidated Financial Statements contain all estimates and adjustments, consisting of normal recurring adjustments, required to fairly present the financial position, results of operations and cash flows for the periods presented. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full-year ending December 31, 2026. Certain prior period amounts were reclassified to conform to the presentation in the current period.

There have been no material changes to our significant accounting policies included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Liquidity

As disclosed in the Company's 2025 Annual Report on Form 10-K, management concluded that actions completed during 2025 alleviated the substantial doubt about the Company's ability to continue as a going concern that existed as of March 31, 2025. Management has evaluated conditions and events through the date of this filing and has concluded that substantial doubt does not exist as of March 31, 2026.

Operations

Our operations are assessed based onone reportable segment as described in Note 5. For financial information about our segment see Note 5 to the Condensed Consolidated Financial Statements.

NOTE 2 –LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per share of our common stock, net of non-controlling interest and dividends on Preferred Stock:

In accordance with GAAP, dilution is assessed on the basis of continuing operations. We incurred a net loss from continuing operations in the three months ended March 31, 2026 and 2025, therefore basic and diluted shares are the same for those periods.

We excluded 10.5 million and 1.1 million shares related to stock options and warrants from the diluted share calculation for the three months ended March 31, 2026 and 2025, respectively, because their effect would have been anti-dilutive.

NOTE 3 –DIVESTITURES

Vølund

In April 2025, Babcock & Wilcox A/S ("BWAS"), a subsidiary of the Company, sold substantially all of its assets, including intellectual property, specific project contracts as well as related agreements with suppliers and certain tangible assets, to Kanadevia Inova Denmark A/S (the "Buyer"). The sale was comprised of a simultaneous transfer of assets from BWAS to a newly incorporated BWAS subsidiary (the "NewCo") pursuant to a business transfer agreement ("BTA"), and sale of NewCo by BWAS to the Buyer pursuant to a share purchase agreement (together with the BTA, the "Purchase Agreements").

The Purchase Agreements provided for a base purchase price equal to $15.0 million plus $0.1 million (400,000 Danish krone), subject to certain offsets and adjustments, including additional payments to BWAS if the Buyer enters into a certain prospective project agreement within five years. In addition, BWAS and the Buyer entered into an agreement under which the Buyer loaned BWAS $5.0 million which will be considered repaid when BWAS transfers to NewCo certain retained intellectual property usage rights. The Purchase Agreements also included representations and warranties regarding BWAS and the transferred business and assets, as well as certain indemnities with respect thereto. The proceeds were used to reduce outstanding debt and support working capital needs. We recorded a net loss of $36.8 million in the second quarter of 2025, which included a write off of CTA of $52.6 million.

Diamond Power

In June 2025, we through our wholly owned subsidiaries, The Babcock & Wilcox Company, Babcock & Wilcox International Sales and Service Corporation and Babcock & Wilcox Canada Corp. (collectively, the "Sellers") entered into an agreement (the "Purchase Agreement") to sell to certain legal entities affiliated with Andritz AG the equity interests of Diamond Power and related legal entities together with assets related to the Diamond Power business. We closed the sale in July 2025.

The Purchase Agreement provided for a base purchase price equal to $177 million, subject to certain offsets and adjustments. The Purchase Agreement also included representations and warranties regarding the sale, as well as certain indemnities with respect thereto. The Purchase Agreement also included an undertaking for the Sellers and their affiliates not to compete with the Diamond Power business or to solicit customers or employees with respect to the Diamond Power business for a period offour years. Additionally, we entered into an agreement to provide transition services to the Diamond Power business for a period of 12 months, or until earlier agreed upon with respect to certain services. The proceeds are being used to support working capital needs and reduce outstanding debt. We recorded a gain of $53.2 million on the sale for the year ended December 31, 2025. During the three months ended March 31, 2026, we recorded an additional gain of $3.5 million as part of the settlement of certain outstanding items in accordance with the agreement, which is reported in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations.

ASH

In October 2025, we completed a sale of the net assets comprising our ASH business to Andritz AG for $29.0 million, subject to customary fees and adjustments. In conjunction with the transaction, we and Andritz AG, through certain wholly-owned subsidiaries, have signed sales representative agreements under which we will continue to market ASH and Diamond Power products and services to customers in the utility power sectors. We recorded a gain of $21.5 million on the sale in the fourth quarter of 2025.

Solar

In December 2025, the B&W Solar business was disposed of through abandonment, as we ceased all business operations and either transferred or wrote off its remaining assets. No impairment charges were recognized as part of the abandonment.

BWRS

In June 2024, we, through our B&W PGG Luxembourg Finance Sárl subsidiary, sold all issued and outstanding share capital of our Denmark-based renewable parts and services subsidiary, BWRS, to Hitachi Zosen Inova AG. We received net cash proceeds of $83.5 million and recorded a gain on the sale of the business of $44.9 million during the year ended December 31, 2024. During the three months ended March 31, 2025, we recorded a gain of $1.0 million and during the three months ended March 31, 2026, we incurred a loss of $0.9 million as part of settlement negotiations with the buyer, each of which are reported in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations.

NOTE 4 –DISCONTINUED OPERATIONS

During 2024 and 2025, we engaged in a strategy and developed a formalized plan to divest certain non-core businesses to reduce our debt, improve our balance sheet and increase liquidity. As of December 31, 2025, we have divested our BWRS, SPIG, GMAB, Vølund, Diamond Power, ASH and Solar businesses as part of this plan. The Company has completed this strategic initiative and no additional divestitures are planned at this time.

Results of operations of the divested subsidiaries are reported as discontinued operations for all periods presented and the notes to the financial statement have been adjusted on a retrospective basis. Our divestitures are described further in Note 3 to the Condensed Consolidated Financial Statements.

The following table summarizes the operating results of the disposal groups included in discontinued operations in the Condensed Consolidated Statements of Operations:

The depreciation, amortization, capital expenditures and significant operating and investing noncash items of the discontinued operations are as follows:

NOTE 5 –SEGMENT REPORTING

Our operations are assessed asone reportable segment, B&W, as revised in the fourth quarter of 2025 due to a strategic shift in our business, including the divestiture of certain non-core assets as described in Note 3. This segment presentation has been applied retrospectively to all periods presented.

The Company's CODM is the chief executive officer and chairman of the Board of Directors. The CODM assesses performance on a consolidated basis, using the segment's Loss from continuing operations as its profitability metric. The CODM considers budget-to-actual and forecast-to-actual variances on a quarterly basis when making decisions about our operating and capital resources. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as Total assets.

An analysis of our operations by revenue type is as follows:

The following table presents Revenues, significant expenses and Loss from continuing operations for our consolidated segment:

(1) Excludes depreciation and amortization.

(2) Depreciation and amortization is included in Cost of operations and Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

(3) Other expense, net includes Research and development costs, Impairment of long-lived assets, (Gain) loss on asset disposals, net, Loss on debt extinguishment and Foreign exchange as presented in the Condensed Consolidated Statements of Operations.

NOTE 6 –REVENUE RECOGNITION AND CONTRACTS

Revenue Recognition

We generate the vast majority of our revenues from the supply of, and aftermarket services for, steam-generating, environmental and auxiliary equipment.

A performance obligation is a contractual promise to transfer a distinct product or service to the customer. A contract's transaction price is allocated to each distinct performance obligation and is recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied.

Revenue from products and services transferred to customers over time, which primarily relates to customized, engineered solutions and construction services, accounted for more than 90% of revenue for the three months ended March 31, 2026 and 2025. Revenue from products and services transferred to customers at a point in time, which includes certain aftermarket parts and services, accounted for less than 10% of revenue for the three months ended March 31, 2026 and 2025.

Refer to Note 5 to the Condensed Consolidated Financial Statements for further disaggregation of revenue.

Base Electron Agreement

Effective February 26, 2026, we entered into a written definitive agreement with Base Electron, an IPP backed by Applied Digital, to complete the design and installation offour 300-megawatt natural gas-fired power plants. The total consideration in exchange for completion of this project is $2.4 billion, of which $2.0 billion is for variable charges and the remaining is a fixed fee. The variable charges are based on reimbursable costs incurred plus mark-up. The plant is targeted to begin commercial operation in 2029.

Revenue for this project is recognized over time as we satisfy our performance obligation. For the three months ended March 31, 2026, we have recognized $31.0 million of revenue related to this contract.

Contract Balances

The following represents the components of Accounts receivable – trade, net, Contracts in progress and Advance billings on contracts included in the Condensed Consolidated Balance Sheets. Also included are accrued contract losses, which are presented in Other accrued liabilities in the Condensed Consolidated Balance Sheets:

For the three months ended March 31, 2026 and 2025, we recognized 75% and 88% of the revenue related to amounts that were included in Advance billings on contracts as of December 31, 2025 and 2024, respectively.

Backlog

At March 31, 2026 we had $2.7 billion of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 21%,22% and 57% of the remaining performance obligations as revenue in 2026, 2027 and thereafter, respectively.

NOTE 7 –INVENTORIES, NET

Inventories are stated at the lower of cost or net realizable value. Certain raw material inventory is sold to our customers directly and without further processing. The components of Inventories, net included in the Condensed Consolidated Balance Sheets are as follows:

NOTE 8 –PROPERTY, PLANT AND EQUIPMENT AND FINANCE LEASES

The following table indicates the carrying value of land and each of the major classes of depreciable assets in the Condensed Consolidated Balance Sheets:

NOTE 9 – GOODWILL

Goodwill represents the excess of the consideration transferred over the fair value of net assets, including identifiable intangible assets, at the acquisition date. Goodwill is assessed for impairment annually on October 1 or more frequently if events or changes in circumstances indicate a potential impairment exists.

There wereno indicators of goodwill impairment identified for the quarter ended March 31, 2026.

The following summarizes the changes in the net carrying amount of Goodwill in the Condensed Consolidated Balance Sheets:

NOTE 10 –INTANGIBLE ASSETS, NET

Intangible assets are as follows:

The following summarizes the changes in the carrying amount of intangible assets, net:

Amortization of intangible assets is included in Cost of operations and SG&A in the Condensed Consolidated Statements of Operations.

Estimated future intangible asset amortization expense as of March 31, 2026 is as follows:

NOTE 11 –ACCRUED WARRANTY EXPENSE

We may offer assurance-type warranties on products and services sold to customers. Changes in the carrying amount of accrued warranty expense are as follows:

(1)2025 balance includes $1.3 million of liabilities transferred out of held for sale as of December 31, 2025.

We record estimated expense included in Cost of operations in the Condensed Consolidated Statements of Operations to satisfy contractual warranty requirements when we recognize the associated revenues on the related contracts, or in the case of a loss contract, the full amount of the estimated warranty costs is recognized when the contract becomes a loss contract. In addition, we record specific adjustments when we expect the actual warranty costs to significantly differ from the initial estimates. Factors that impact our estimate of warranty costs include prior history of warranty claims and our estimate of future costs of materials and labor. Such changes could have a material effect on our consolidated financial position, results of operations and cash flows.

NOTE 12 –PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Components of net periodic benefit (credit) cost included in net loss are as follows:

(1)Service cost related to a small group of active participants is presented within Cost of operations in the Condensed Consolidated Statements of Operations.

There were no MTM adjustments for the pension and other postretirement benefit plans during the three months ended March 31, 2026 and 2025.

We made contributions to the pension and other postretirement benefit plans totaling $6.5 million and $3.7 million during the three months ended March 31, 2026 and 2025, respectively.

NOTE 13 –DEBT AND CREDIT FACILITIES

Senior Notes Due 2026

The components of our Senior Notes due 2026 are as follows:

(1) The 6.50% Senior Notes mature in December 2026 and is included in Current senior notes in the Condensed Consolidated Balance Sheets at March 31, 2026 and December 31, 2025. As of March 31, 2026 the 6.50% Senior Notes bear an effective interest rate of 7.9%.

During the three months ended March 31, 2026, we repurchased $15.0 million of our 6.50% Senior Notes.

Senior Notes Due 2030

The components of our Senior Notes due 2030 are as follows:

(1)The 8.75% Senior Notes mature in June 2030 and is included in Senior Notes due 2030 in the Condensed Consolidated Balance Sheets at March 31, 2026 and December 31, 2025. As of March 31, 2026 the 8.75% Senior Notes bear an effective interest rate of 5.3%.

In May 2025, we completed privately negotiated exchange transactions (the "Exchanges") in which we issued $100.7 million aggregate principal amount of newly-issued 8.75% Senior Secured Second Lien Notes due 2030 as consideration for $84.0 million aggregate principal amount of our 8.125% Senior Notes and $47.8 million aggregate principal amount of our 6.50% Senior Notes. As a result of the Company's financial situation as a going concern entity at the time of refinancing, and the fact the creditors had granted concessions, the Exchanges were accounted for as a troubled debt restructuring. Therefore, the Company recognized the difference between the face value of the original Senior Notes due 2026 and the face value of the 8.75% Senior Notes as debt premium, which is amortized using the effective interest method over the 5-year term through May 2030.

Credit Agreement with Axos

We entered into the Credit Agreement in January 2024, with certain of our subsidiaries as guarantors, the lenders party thereto from time to time and Axos, as administrative agent, swingline lender and letter of credit issuer.

The Credit Agreement provides for an up to $150.0 million asset-based Credit Facility, including a $100.0 million letter of credit sublimit. Our obligations under the Credit Agreement are guaranteed by certain of our domestic and foreign subsidiaries. B. Riley originally provided a guaranty of payment with regard to our obligations under the Credit Agreement; however, this guaranty is no longer in place due to the Tenth Amendment as further described below. We used and expect to use the proceeds and letter of credit availability under the Credit Agreement to (i) provide for working capital needs, (ii) provide cash collateral to secure letters of credit to be issued under the Credit Agreement and (iii) provide for general corporate purposes.

The Credit Agreement has a maturity date of January 18, 2028 as amended by the Tenth Amendment. The interest rates applicable under the Credit Agreement are: (i) with respect to SOFR Loans, (a) SOFR plus 5.25% if the outstanding principal amount of loans is equal to or less than $100.0 million or (b) SOFR plus 4.00% if the outstanding principal amount of loans is greater than $100.0 million; (ii) with respect to Base Rate Loans, the greater of (a) the Federal Funds Rate plus 2.00% plus the Applicable Margin, (b) the prime rate as designated by Axos plus the Applicable Margin and (c) Daily Simple SOFR plus 1.00% plus the Applicable Margin; and (iii) with respect to the default rate under the Credit Agreement, the then-existing interest rate plus 2.00%.

In connection with the Credit Agreement, we are required to pay (i) a commitment fee equal to 0.50% per annum multiplied by the positive difference by which the Aggregate Revolving Commitments exceed the Total Revolvings Outstanding (as defined in the Credit Agreement), subject to adjustment, (ii) a facility fee equal to the Applicable Margin for SOFR Loans multiplied by the positive difference by which the actual daily amount of L/C Obligations the Administrative Agent is then holding Specified Cash Collateral exceeds the actual daily Outstanding Amount of Revolving Loans, and (iii) a collateral monitoring fee of $1,000 per month. We are permitted to prepay all or any portion of the loans under the Credit Agreement prior to maturity, subject to the payment of an early termination fee. The Credit Agreement requires mandatory prepayments under certain circumstances, including in the event of an overadvance.

The obligations under the Credit Agreement are secured by substantially all assets of B&W and each of the guarantors, in each case subject to intercreditor arrangements. The Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The Credit Agreement requires us to comply with certain financial maintenance covenants, including a quarterly fixed charge coverage test, a quarterly total net leverage ratio test, a cash repatriation covenant, a minimum liquidity covenant, an annual cap on maintenance capital expenditures and a limit on unrestricted cash.

The Credit Agreement also contains customary events of default (subject, in certain instances, to specified grace periods) including, but not limited to, the failure to make payments of interest or premium, if any, on, or principal under the Credit Agreement, the failure to comply with certain covenants and agreements specified in the Credit Agreement, defaults in respect of certain other indebtedness, and certain events of insolvency. If any event of default occurs, Axos may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Credit Agreement may become due and payable immediately. At March 31, 2026, after giving consideration to the Amendments to the Credit Agreement, we are in compliance with all financial and other covenants contained in the Credit Agreement.

The key terms of the Credit Agreement described above reflect the various amendments completed since the original Credit Agreement was entered into and reflect changes in the Company's capital structure, borrowing base, collateral requirements and financial covenant levels. These amendments addressed, among other items, (i) authorization of specified asset dispositions, (ii) adjustments to borrowing base components, including increases in inventory valuation percentages and changes to PBGC reserve requirements, (iii) temporary and permanent modifications to minimum liquidity thresholds, (iv) deferral or modification of certain covenant ratios, (v) add‑backs related to discontinued operations and capital expenditures for covenant calculations and (vi) updates to maturity provisions tied to the refinancing or repayment of other outstanding debt instruments.

On February 25, 2026, the Company with certain subsidiaries of the Company as guarantors, B. Riley, and the lenders party to the Credit Agreement with Axos, as administrative agent, entered into the Tenth Amendment to the Credit Agreement. Pursuant to the Tenth Amendment, Axos and the Lenders party to the Credit Agreement consented to amend certain provisions of the Credit Agreement to, among other things, (i) increase the amounts available to be borrowed based on inventory and receivables in the borrowing base under the Credit Agreement; (ii) extend the maturity date of the Credit Agreement to January 18, 2028; (iii) suspend the PBGC Reserve (provided that the PBGC Reserve shall be re-imposed in the amount of $3.0 million on January 1, 2027 unless the Company has provided evidence to Axos that the $3.0 million installment due to the PBGC on or prior to September 15, 2026 has been paid); (iv) modify the covenants relating to deposit account control agreements and institutions to allow for certain holdings in foreign currencies; and (v) release B. Riley as a specified guarantor thereunder.

At March 31, 2026, we had a total of $37.9 million outstanding on the Credit Agreement, all of which is drawn on the letter of credit portion of the agreement. At March 31, 2026, cash collateralizing the letters of credit totaling $37.9 million is classified as Current and Long-term restricted cash included in the Condensed Consolidated Balance Sheets.

A summary of usage of letters of credit under domestic facilities is as follows:

Other Letters of credit, bank guarantees and surety bonds

Certain of our subsidiaries, that are primarily outside of the United States, have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity.

We have posted surety bonds to support contractual obligations to customers relating to certain contracts. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion. These bonds generally indemnify customers should we fail to perform our obligations under our applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds the underwriters issue in support of some of our contracting activity.

The following table provides a summary of outstanding letters of credit issued outside of the domestic facilities and outstanding surety bonds:

Our ability to obtain and maintain sufficient capacity under our current debt facilities is essential to allow us to support the issuance of letters of credit, bank guarantees and surety bonds. Without sufficient capacity, our ability to support contract security requirements in the future will be diminished.

Other Loans Payable

As of March 31, 2026 and December 31, 2025, we had loans payable of approximately $8.4 million, net of debt issuance costs of $0.5 million, related to sale-leaseback financing transactions.

As of March 31, 2026 and December 31, 2025, we had loans payable of $5.0 million owed to the State of West Virginia relating to our BrightLoop™project. The loan will be forgiven in full when certain employment and capital expenditure milestones are met during the course of project.

Interest expense in the Condensed Consolidated Financial Statements consisted of the following components:

NOTE 14 –CAPITAL STOCK

Preferred Stock

During the three months ended March 31, 2026, our Board of Directors approved dividends totaling $3.7 million to holders of the Preferred Stock. There wereno cumulative undeclared dividends of the Preferred Stock at March 31, 2026, and all declared dividends have been paid as of March 31, 2026.

Common Stock

In April 2024, we entered into the Sales Agreement with the Agents, in connection with an at-the-market offering. For the three months ended March 31, 2025,3.3 million shares were sold pursuant to the Sales Agreement, for net proceeds of $5.2 million.

In November 2025, we entered into the 2025 Sales Agreement with the 2025 Agents, in connection with the offer and sale from time to time by us of shares of our common stock, having an aggregate offering price of up to $200.0 million through the 2025 Agents. For the three months ended March 31, 2026,3.9 million shares have been sold pursuant to the 2025 Sales Agreement for net proceeds of $34.1 million.

Applied Digital/Base Electron Agreements

In November 2025, we entered into a limited notice to proceed ("LNTP") with Applied Digital for a project to design and install four 300-megawatt natural gas-fired power plants consisting of boilers and associated steam turbines to deliver power for an AI factory. Effective February 26, 2026, we entered into a definitive written agreement in relation to the project with Base Electron, an IPP backed by Applied Digital. The total consideration in exchange for completion of this project is $2.4 billion, of which $2.0 billion is for variable charges and the remaining is a fixed fee. The variable charges are based on reimbursable costs incurred plus mark-up. The plant is targeted to begin operation in 2029.

In connection with the entry into the LNTP, we issued to Applied Digital, in a private placement, (i)0.5 million shares of common stock, par value $0.01 per share for a purchase price of $2.0 million and (ii) a warrant (the "Initial Warrant") exercisable to purchase 2.6 million shares of our common stock at an exercise price of $4.11, subject to registration rights.

The LNTP also granted to Applied Digital an additional warrant (the "Additional Warrant") to purchase up to 7.86 million shares of our common stock, on the same terms as the Initial Warrant. As a result of the signing of the agreement with Base Electron, the Additional Warrant to purchase up to 7.86 million shares of our common stock is fully vested on the same terms as the Initial Warrant.

Effective March 18, 2026, we entered into a Partial Assignment and Assumption Agreement with Applied Digital and Base Electron under which Applied Digital assigned 5.23 million shares of stock under the Initial Warrant and Additional Warrant (collectively the "Warrants") to Base Electron.

The Warrants are classified as liability-based awards which require calculation of fair value for each reporting period until settled or expired. As of March 31, 2026 and December 31, 2025, we calculated the fair value of the Initial Warrant at$35.5 million and $8.3 million, respectively, and as of March 31, 2026, we calculated the fair value of the Additional Warrant at $107.3 million, each of which are recorded in Customer warrants on the Condensed Consolidated Balance Sheets. The increase in the fair value of the Warrants during the quarter was primarily driven by an increase in the Company’s stock price. As a result, we recorded expense of $70.2 million for the three months ended March 31, 2026 in Change in fair value of customer warrants in the Condensed Consolidated Statements of Operations.

Since the Warrants were issued as part of the Base Electron project, a corresponding asset was calculated as of the grant date of each warrant and is amortized over the life of the agreement with Base Electron. As of March 31, 2026 and December 31, 2025, the asset balances were $71.5 million and$8.3 million, respectively, and recorded in Customer contract asset current and noncurrent in the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2026, amortization expense of$1.1 million was recognized as a reduction to Revenues in the Condensed Consolidated Statements of Operations.

We used the following assumptions to determine the fair value of the Warrants granted as of March 31, 2026 and December 31, 2025:

The fair value of the Warrants is categorized within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including expected volatility. In making these assumptions, we based risk-free rates on the corresponding U.S. Treasury spot rates for the remaining duration of the grant, which we convert to a continuously compounded rate. We based estimated volatility on the historical returns of our stock price and selected guideline companies over the remaining term of the grant.

NOTE 15 –SUPPLEMENTAL CASH FLOW INFORMATION

The following table provides a reconciliation of Cash and cash equivalents and Current and Long-term restricted cash reported within the Condensed Consolidated Balance Sheets and in the Condensed Consolidated Statements of Cash Flows:

(1) Balance drawn on Axos Credit Agreement to serve as collateral on our letters of credit. This is reflected in Current and Long-term restricted cash in the Condensed Consolidated Balance Sheets.

NOTE 16 –STOCK-BASED COMPENSATION

Stock options

There wereno stock options awarded during the three months ended March 31, 2026. As of March 31, 2026, nominal shares were outstanding and exercisable, each with a weighted average exercise price of $41.70 and a weighted average remaining contractual term of 1.7 years. As of December 31, 2025, nominal outstanding and exercisable shares had a weighted average exercise price of $63.57 and $63.55, respectively, and a weighted average remaining contractual term of 1.7 years.

Restricted stock units (RSUs)

Non-vested restricted stock units activity for the year ended March 31, 2026 is as follows:

As of March 31, 2026, total compensation expense not yet recognized related to non-vested restricted stock units was $2.3 million and the weighted-average period in which the expense is expected to be recognized is 2.1 years. For the three months ended March 31, 2026 and 2025, compensation expense related to the RSUs was $6.8 million and $0.8 million, respectively.

Restricted stock units with market conditions

In July 2022, we granted market-based RSUs to certain members of management that vest if our closing stock price on the NYSE is equal to or higher than the stock price goal of $12.00 per share. The grant date fair value per market-based RSU was $6.70 and determined using a Monte Carlo simulation approach. On March 5, 2026, our stock price closed at $13.29 per share which triggered the vesting of 0.5 million shares. There wasno compensation expense recognized for the three months ended March 31, 2026 and 2025, respectively.

Stock Appreciation Rights (SARs)

The Company has outstanding cash-settled SARs held by two employees. The SARs may be exercised during specified periods when the Company's stock price exceeds the applicable share price goal. The liability method is used to recognize the accrued compensation expense with cumulatively adjusted revaluations to the then current fair value at each reporting date through final settlement. As of March 31, 2026 and December 31, 2025, we calculated the fair value of the SARs at $6.5 million and nominal, respectively. The SARs are recorded in Accrued employee benefits and Other accrued liabilities in the Condensed Consolidated Balance Sheets.

The change in fair value of the SARs liability for the three months ended March 31, 2026 was $6.4 million and is recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The increase in the fair value of the SARs during the quarter was primarily driven by an increase in the Company's stock price.

We used the following assumptions to determine the fair value of the SARs granted as of March 31, 2026 and December 31, 2025:

The fair value of the SARs is categorized within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including expected volatility. In making these assumptions, we based estimated volatility on the historical returns of our stock price and selected guideline companies. We based risk-free rates on the corresponding U.S. Treasury spot rates for the expected duration at the date of grant, which we convert to a continuously compounded rate. We relied upon a suboptimal exercise factor, representing the ratio of the base price to the stock price at the time of exercise, to account for potential early exercise prior to the expiration of the contractual term. With consideration to the executive level of the SARs holders, a suboptimal exercise multiple of 2.0 x was selected. Subject to vesting conditions, should the stock price achieve a value of 2.0 x above the base price, we assume the holders will exercise prior to the expiration of the contractual term of the SARs. The expected term for the SARs is an output of the valuation model in estimating the time period that the SARs are expected to remain unexercised. The valuation model assumes the holders will exercise their SARs prior to the expiration of the contractual term of the SARs.

As of March 31, 2026 and December 31, 2025, the SARs are fully vested and their total intrinsic value iszero.

NOTE 17 –INCOME TAXES

For the three months ended March 31, 2026, Income tax expense from continuing operations was $4.2 million, resulting in an effective tax rate of (5.5)%. For the three months ended March 31, 2025, Income tax expense from continuing operations was $1.9 million, resulting in an effective tax rate of (14.0)%.

The effective tax rate for the three months ended March 31, 2026 is impacted by the mix of profitable foreign operations and losses in the U.S., certain foreign entities having a tax rate higher than the U.S. statutory rate, valuation allowances against certain net deferred tax assets and unfavorable discrete items.

We are subject to federal income tax in the United States and numerous countries that have statutory tax rates different than the U.S. federal statutory rate of 21%. We provide for income taxes based on the tax laws and rates in the jurisdictions where we conduct operations. These jurisdictions may have regimes of taxation that vary in both nominal rates and the basis on which these rates are applied. Our consolidated effective income tax rate can vary from period to period due to these foreign income tax rate variations, changes in the jurisdictional mix of our income, and valuation allowances.

NOTE 18 –ACCUMULATED OTHER COMPREHENSIVE LOSS

Gains and losses deferred in AOCI are generally reclassified and recognized in the Condensed Consolidated Statements of Operations once they are realized. The changes in the components of AOCI, net of tax, for the three months ended March 31, 2026 and 2025 were as follows:

The amounts reclassified out of AOCI by component and the affected Condensed Consolidated Statements of Operations line items are as follows (in thousands):

NOTE 19 –FAIR VALUE MEASUREMENTS

The accounting guidance established by ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (known as "Level 1") and the lowest priority to unobservable inputs (known as "Level 3"). Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2.

The following tables summarize financial assets carried at fair value, all of which were valued from readily available prices (Level 1).

Securities

Investments in securities are presented as $6.1 million in Other current assets and $0.7 million in Other assets as of March 31, 2026 in the Condensed Consolidated Balance Sheets with contractual maturities ranging from 0 to 2 years.

Senior Notes due 2026

See Note 13 to the Condensed Consolidated Financial Statements for a discussion of our Senior Notes due 2026. The fair value of the Senior Notes due 2026 is based on readily available quoted market prices (known as "Level 1") as of March 31, 2026 and December 31, 2025:

Senior Notes due 2030

The fair value of the Senior Notes due 2030 is based on present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms (known as "Level 2") as of March 31, 2026 and December 31, 2025:

Other Financial Instruments

We used the following methods and assumptions in estimating fair value amounts for other financial instruments:

•Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts reported in the accompanying Condensed Consolidated Balance Sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair value due to their highly liquid nature and are classified as Level 1.

•Revolving Debt. We base the fair value of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair value on Level 2 inputs such as the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of Revolving Debt was calculated at $36.4 million, which is $1.4 million less than its carrying amount at March 31, 2026.

•Applied Digital Warrants. These liability-based awards are categorized within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. For further information, see Note 14 to the Condensed Consolidated Financial Statements.

•Stock Appreciation Rights. These instruments are categorized within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. For further information, see Note 16 to the Condensed Consolidated Financial Statements.

NOTE 20 –RELATED PARTY TRANSACTIONS

Transactions with B. Riley

Based on Schedule 13D filings with the SEC, B. Riley beneficially owns approxim ately 20%of our outstanding common stock as of March 31, 2026. B. Riley currently has the right to nominate one member of our Board of Directors pursuant to the investor rights agreement we entered into with B. Riley in April 2019. The investor rights agreement also provides pre-emptive rights to B. Riley with respect to certain future issuances of our equity securities.

As described in Note 13 to the Condensed Consolidated Financial Statements, in connection with our entry into the Credit Agreement in January 2024, we entered into a guaranty agreement and related fee and reimbursement agreement with B. Riley, pursuant to which B. Riley guaranteed our obligations under the Credit Agreement in exchange for an annual fee of approximately $3.0 million. In June 2025, the B. Riley Guaranty, as well as the associated B. Riley Guaranty fees, were suspended until January 1, 2027 and in February 2026, the guaranty and fee agreement were cancelled. See Note 13 to the Condensed Consolidated Financial Statements for further information.

As described in Note 14 to the Condensed Consolidated Financial Statements, in April 2024 and November 2025, we entered into sales agreements with B. Riley, among others, in connection with the offer and sale from time to time of shares of our common stock. B. Riley is entitled to compensation equal to 3.0% of the gross proceeds from each sale of the shares sold through it as the designated Agent.

In the first quarter of 2026, we entered into an agreement with B. Riley to provide financial advisory services to the Company. Under this agreement, B. Riley will be paid a cash fee equal to 3.0% of the total financing value of any qualified debt transaction that is consummated. As of March 31, 2026, we have an accrual balance of $5.0 million related to this agreement and these costs will be amortized over the life of the Credit Agreement.

NOTE 21 –NEW ACCOUNTING PRONOUNCEMENTS AND STANDARDS

The Company did not adopt any new accounting pronouncements during the three months ended March 31, 2026.

New accounting standards to be adopted

We consider the applicability and impact of all issued ASUs. Certain recently issued ASUs were assessed and determined to not be applicable. New accounting standards not yet adopted that could affect the Condensed Consolidated Financial Statements in the future are summarized as follows:

In October 2023, FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative("ASU 2023-06"). The new guidance is intended to align GAAP and SEC requirements while facilitating the application of GAAP for all entities. The effective date of ASU 2023-06 depends on (1) whether an entity is already subject to the SEC's current disclosure requirements and (2) whether and, if so, when the SEC removed related requirements from its regulations. For entities that are already subject to the SEC's current disclosure requirements, the effective date for each amendment will be the date on which the SEC's removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the related requirements from its regulations by June 30, 2027, the amendments made by ASU 2023-06 will be removed from the Codification and will not become effective for any entity. The impact of this standard on the Company's Condensed Consolidated Financial Statements is contingent upon future transactions.

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses("ASU 2024-03"). The new guidance is intended to improve financial reporting by requiring all public business entities to disclose additional information about specific expense categories. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. Early adoption is permitted. Further, in January 2025, FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2025-01 is clarifying the effective dates outlined in ASU 2024-03 which is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. We are currently evaluating the impact of this standard on the Condensed Consolidated Financial Statements.

In December 2025, FASB issued ASU 2025-10, Government Grants: Accounting for Government Grants Received by Business Entities("ASU 2025-10"). The new guidance is intended to help business entities in determining how to recognize, measure and present these grants. ASU 2025-10 is effective for annual periods beginning after December 15, 2028. Early adoption is permitted. We are currently evaluating the impact of this standard on the Condensed Consolidated Financial Statements.

NOTE 22 –SUBSEQUENT EVENTS

Buybacks of Senior Notes

We repurchased $1.9 million of our 6.50% Senior Notes from April 1, 2026 through April 30, 2026.

Sales of Common Stock

We sold 0.5 million shares of our common stock pursuant to the 2025 Sales Agreement, described in Note 14 to the Condensed Consolidated Financial Statements, from April 1, 2026 through April 30, 2026 for net proceeds of $7.8 million.