Baker Hughes Co

Previous wording

Baker Hughes Company ("Baker Hughes," "the Company," "we," "us," or "our") is an energy technology company with a broad and diversified portfolio of technologies and services that span the energy and industrial value chain. We conduct business in more than 120 countries and employ approximately 54,000 employees. We operate through our two business segments: Oilfield Services & Equipment ("OFSE") and Industrial & Energy Technology ("IET"). We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments, as well as broader industrial and new energy markets.

Current wording

Baker Hughes Company ("Baker Hughes," "the Company," "we," "us," or "our") is an energy technology company with a broad and diversified portfolio of technologies and services that span the energy and industrial value chain. We conduct business in more than 120 countries and employ approximately 65,600 employees. We operate through our three business segments: Oilfield Services & Equipment ("OFSE"), Industrial & Energy Technology ("IET"), and Chart. We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments, as well as the broader industrial and new energy markets.

Previous wording

During the second quarter of 2026, continued disruptions in the Middle East contributed to tighter oil and liquefied natural gas (“LNG”) market balances and higher inflationary costs.

Current wording

During the third quarter of 2026, continued disruptions in the Middle East contributed to tighter oil and liquefied natural gas (“LNG”) market balances and higher inflationary costs.

Previous wording

Looking ahead, oil market fundamentals are likely to be supported by a supply-constrained market and the need to replenish depleted strategic inventories. As the dynamic geopolitical environment continues to create uncertainty, we expect to see a decline in upstream spending in the Middle East this year, while spending in North American and other international markets is expected to remain broadly unchanged compared to 2025, absent further downside pressure in oil prices. Additionally, ongoing supply constraints through the Strait of Hormuz and broader disruptions across the Middle East are expected to create incremental risk across the business, with potential impacts on customer spending patterns, project timing, and supply chain visibility. Over the longer term, heightened geopolitical risk may contribute to higher mid-cycle oil prices necessary to incentivize incremental global supply. As a result, we see continued upstream investment as necessary to sustain production growth and meet rising global demand. We also expect a continued increase in operating expenditure-driven investment as operators focus on optimizing recovery and extending the life of producing assets.

Current wording

Looking ahead, oil market fundamentals are likely to be supported by a supply-constrained market and the need to replenish depleted strategic inventories. As the dynamic geopolitical environment continues to create uncertainty, we expect to see a decline in upstream spending in the Middle East this year, partially offset by increased spending elsewhere, absent downside pressure on oil prices. Additionally, ongoing supply constraints through the Strait of Hormuz and broader disruptions across the Middle East are expected to create incremental risk across the business, with potential impacts on customer spending patterns, project timing, and supply chain visibility. Over the longer term, heightened geopolitical risk may contribute to higher mid-cycle oil prices necessary to incentivize incremental global supply. As a result, we see continued upstream investment as necessary to sustain production growth and meet rising global demand. We also expect a continued increase in operating expenditure-driven investment as operators focus on optimizing recovery and extending the life of producing assets.

Previous wording

On July 16, 2026, we completed our previously announced acquisition of Chart Industries, Inc. ("Chart"), for

Current wording

On July 16, 2026, we completed our previously announced acquisition of Chart Industries ("Chart"), for $210 per share. Total consideration paid for Chart was $14.8 billion, includingnet cash paid for the acquisition of $14.2 billion, which included the cash paid to Chart shareholders, amounts paid to settle Chart's outstanding third-party debt, and other acquisition-related consideration, partially offset by cash acqu ired. The consideration paid also includes the $258 million Flowserve-Chart merger break fee paid in 2025 as discussed in "Note 2. Business Acquisitions." The Chart acquisition was funded through an offering of senior notes in March 2026, along with other borrowings, as discussed in "Note 10. Debt," and cash on hand.

Previous wording

In the second quarter of 2026, the Company generated revenues of $6.7 billion, a decrease of $0.2 billion, or 2%, compared to the second quarter of 2025. IET revenue remained flat year-over-year, driven by an increase of $79 million or 11% in Gas Technology Services ("GTS"), an increase of $61 million or 13% in Industrial Products ("IP"), and an increase in Climate Technology Solutions ("CTS") of $49 million or 31%, offset by a decrease of $100 million or 6% in Gas Technology Equipment ("GTE"), and a decrease of $91 million or 33% in Industrial Solutions ("IS") reflective of the Precision Sensors & Instrumentation ("PSI") disposition. OFSE revenue decreased $0.2 billion, or 5% year-over-year led by the Surface Pressure Control ("SPC") disposition and a decline in international revenue. Net income was $0.7 billion, which remained flat compared to the second quarter of 2025, driven by reduced income tax expense, improved performance in Segment EBITDA, and the change in fair value of equity securities, offset by increases in depreciation and amortization, transaction related costs, working capital adjustments related to business dispositions, interest expense, and restructuring.

Current wording

In the third quarter of 2026, the Company generated revenues of $8.0 billion, an increase of $1.0 billion, or 14%, compared to the third quarter of 2025, of which $0.9 billion is due to the contribution of Chart. IET revenue increased $0.1 billion, or 3% year-over-year, driven by an increase in Climate Technology Solutions ("CTS") and Gas Technology Services ("GTS"), partially offset by a decrease in Gas Technology Equipment ("GTE"), and Industrial Solutions ("IS") reflective of the Precision Sensors & Instrumentation ("PSI") disposition. OFSE revenue was broadly flat year-over-year. Net income was $0.4 billion, a decrease of $0.2 billion compared to the third quarter of 2025, primarily driven by amortization of intangible assets and the impact of the inventory fair value step-up recognized through cost of good sold during the period, higher interest expense, and transaction related costs associated with the Chart acquisition, partially offset by higher segment EBITDA, including the contribution from Chart, and lower income tax expense.

Previous wording

In the second quarter of 2026, we returned $228 million to shareholders through dividends.

Current wording

In the third quarter of 2026, we returned $228 million to shareholders through dividends.

Previous wording

•OFSE outlook: We expect to see an improvement in global upstream spending through the remainder of the year across both international and North American markets, absent further downside pressure in oil prices.

Current wording

•OFSE outlook: We expect to see a modest improvement in global upstream spending through the remainder of the year, with conditions improving as we move into 2027, absent a material decline in oil prices or an increase in geopolitical tensions.

Previous wording

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition, and liquidity position as of and for the three and six months ended June 30, 2026 and 2025, and should be read in conjunction with our condensed consolidated financial statements and related notes.

Current wording

The following discussion and analysis summarize the significant factors affecting our results of operations, financial condition, and liquidity position as of and for the three and nine months ended September 30, 2026 and 2025, and should be read in conjunction with our condensed consolidated financial statements and related notes.

Previous wording

The rig counts are summarized in the table below as averages for each of the periods indicated based on our published rig counts on our website at www.bakerhughes.com.

Current wording

The rig counts are summarized in the table below as averages for each of the periods indicated based on our published rig counts on our website at www.bakerhughes.com. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this Quarterly Report on Form 10-Q.

Previous wording

Summarized orders information for our segments are shown in the following table.

Current wording

Summarized orders information for our segments is shown in the following table.

Previous wording

Remaining Performance Obligations ("RPO") relate to the aggregate amount of the transaction prices allocated to the unsatisfied (or partially unsatisfied) performance obligations. As of June 30, 2026, RPO totaled $40.1 billion, of which OFSE totaled $3.0 billion and IET totaled $37.1 billion.

Current wording

Remaining Performance Obligations ("RPO") relate to the aggregate amount of the transaction prices allocated to the unsatisfied (or partially unsatisfied) performance obligations. As of September 30, 2026, RPO totaled $46.4 billion, of which IET totaled $39.4 billion, Chart totaled $3.6 billion, and OFSE totaled $3.4 billion.

Previous wording

Selling, general and administrative costs increased $2 million to $569 million.

Current wording

Selling, general and administrative costs increased $135 million, or 23%, to $732 million, which included $113 million related to Chart.

Previous wording

Net interest expense in the second quarter of 2026 was $66 million, which includes interest income of $130 million offset by interest expense of $196 million. Net interest expense increased $12 million compared to the second quarter of 2025, primarily driven by increased interest expense as a result of the senior notes offering in March 2026.

Current wording

Net interest expense in the third quarter of 2026 was $177 million, which includes interest income of $47 million offset by interest expense of $224 million. Net interest expense increased $121 million compared to the third quarter of 2025, driven by increased interest expense related to the 2026 senior notes offering and new term loans.

Previous wording

We recorded income tax expense in the second quarter of 2026 and 2025 of $210 million and $256 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is primarily related to income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances.

Current wording

We recorded income tax expense in the third quarter of 2026 and 2025 of $97 million and $204 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is driven by income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances. Further, for the period ended September 30, 2026, these impacts were offset by the discrete recognition of additional U.S. tax attributes.

Previous wording

OFSE segment EBITDA of $605 million decreased $72 million, or 11%, in the second quarter of 2026 compared to the second quarter of 2025. The reduction of EBITDA in the second quarter of 2026, after taking into consideration the impact of the SPC disposition, was the result of inflation, change in business mix, and lower volume, partially offset by cost-out initiatives, overall productivity, and FX.

Current wording

OFSE segment EBITDA of $659 million decreased $12 million, or 2%, in the third quarter of 2026 compared to the third quarter of 2025. The reduction of EBITDA in the third quarter of 2026, after taking into consideration the impact of the SPC disposition, was driven by reduced productivity benefits, primarily reflecting the linearity of variable expenses, and change in business mix, partially offset by higher volume, price, and cost-out initiatives.

Previous wording

IET segment EBITDA of $678 million increased $93 million, or 16%, in the second quarter of 2026 compared to the second quarter of 2025. The improved performance in the second quarter of 2026 was driven by price, productivity, cost-out initiatives, and FX, partially offset by lower volume and inflation.

Current wording

IET segment EBITDA of $685 million increased $50 million, or 8%, in the third quarter of 2026 compared to the third quarter of 2025. The improved performance in the third quarter of 2026, after taking into consideration the impact of the PSI disposition, was driven by price and higher volume, partially offset by a change in business mix and inflation.

Previous wording

Other income increased $697 million, primarily related to gains of $697 million on business dispositions.

Current wording

Other income increased $611 million, primarily related to gains of $697 million on business dispositions and a net gain of $110 million on the year-over-year change in fair value of equity securities, partially offset by an increase in transaction related costs of $159 million.

Previous wording

Net interest expense incurred in the first six months of 2026 was $151 million, which includes interest income of $189 million offset by interest expense of $340 million. Net interest expense increased $46 million compared to the first six months of 2025, as a result of the recognition of previously unamortized lending fees related to the Bridge Facility terminated in the first quarter of 2026.

Current wording

Net interest expense incurred in the first nine months of 2026 was $328 million, which includes interest income of $236 million offset by interest expense of $564 million. Net interest expense increased $167 million compared to the first nine months of 2025, as a result of the recognition of previously unamortized lending fees related to the Bridge Facility terminated in the first quarter of 2026, along with the 2026 senior notes offering and new term loans.

Previous wording

In the first six months of 2026 and 2025, the provision for income taxes was $545 million and $408 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is primarily related to income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances.

Current wording

In the first nine months of 2026 and 2025, the provision for income taxes was $642 million and $612 million, respectively. The difference between the U.S. statutory tax rate of 21% and the effective tax rate in both periods is driven by income generated in jurisdictions with tax rates higher than in the U.S. and losses with no tax benefit due to valuation allowances. Further, for the period ended September 30, 2026, these impacts were offset by the discrete recognition of additional U.S. tax attributes.

Previous wording

OFSE revenue of$6,688 million decreased $428 million, or 6%, in the first six months of 2026 compared to the first six months of 2025, driven by the SPC disposition and disruptions in the Middle East. From a geographical perspective, international revenue was $4,829 million, a decrease of $438 million, or 8%, from the first six months of 2025 driven by a decrease in Middle East/Asia and Europe/CIS/Sub-Saharan Africa, partially offset by an increase in Latin America. North America revenue was $1,859 million in the first six months of 2026, a increase of $10 million, or 1%, from the first six months of 2025.

Current wording

OFSE revenue of $10,348 million decreased $404 million, or 4%, in the first nine months of 2026 compared to the first nine months of 2025, driven by the SPC disposition, along with volume decline primarily in the Middle East, partially offset by FX benefits. Froma geographical perspective, international revenue was $7,534 million, a decrease of $388 million, or 5%, from the first nine months of 2025 driven by a decrease in Middle East/Asia, partially offset by increases in Latin America and Europe/CIS/Sub-Saharan Africa. North America revenue was $2,814 million in the first nine months of 2026, a decrease of $16 million, or 1%, from the first nine months of 2025.

Previous wording

OFSE segment EBITDA of $1,170 million decreased $130 million, or 10%, inthe first six months of 2026 comp ared to the first six months of 2025. The reduction of EBITDA in the first six months of 2026, after taking into consideration the disposal of SPC was a result of inflation, lower volume, change in business mix, partially offset by cost-out initiatives, overall productivity, and FX.

Current wording

OFSE segment EBITDAof $1,829 million decreased $142 million, or 7%, inthe first nine months of 2026 comp ared to the first nine months of 2025. The reduction of EBITDA in the first nine months of 2026, after taking into consideration the SPC disposition was a result of a change in business mix, inflation, and lower volume, partially offset by cost-out initiatives, FX, and price.

Previous wording

IET revenue of $6,641 million increased $420 million, or 7%, in the first six months of 2026 compared to the first six months of 2025, with increases in GTE, GTS, IP, and CTS, partially offset by a decline in IS driven by the PSI disposition.

Current wording

IET revenue of$10,118 million increased $523 million, or 5%, in the first nine months of 2026 compared to the first nine months of 2025, driven by increases in GTS, CTS, and Industrial Products ("IP"), partially offset by a decline in IS driven by the PSI disposition.

Previous wording

IET segment EBITDA of $1,356 million increased $270 million, or 25%, in the first six months of 2026 compared to the first six months of 2025. The improved performance in the first six months of 2026 was driven by price, overall productivity, FX, higher volume, and cost-out initiatives, partially offset by inflation.

Current wording

IET segment EBITDA of$2,041 million increased $320 million, or 19%, in the first nine months of 2026 compared to the first nine months of 2025. The improved performance was driven by price, higher volume, overall productivity, FX, and cost-out initiatives, partially offset by inflation.

Previous wording

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and financial flexibility in order to fund the requirements of our business and pending acquisitions. We continue to maintain solid financial strength and sufficient liquidity. At June 30, 2026, we had cash and cash equivalents of $15.7 billion compared to $3.7 billion at December 31, 2025.

Current wording

Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and financial flexibility in order to fund the requirements of our business and pending acquisitions. We continue to maintain solid financial strength and sufficient liquidity. At September 30, 2026, we had cash and cash equivalents of $4.1 billion compared to $3.7 billion at December 31, 2025.

Previous wording

As of June 30, 2026, we held approximately $13.5 billion of cash and cash equivalents in the U.S. and approximately $2.3 billion outside the U.S., including $0.9 billion held in Europe and the United Kingdom. As of December 31, 2025, cash and cash equivalents totaled approximately $0.7 billion in the U.S. and approximately $3.0 billion outside the U.S., including $1.5 billion held in Europe and the United Kingdom. A substantial portion of the cash held outside the U.S. at June 30, 2026 has either been reinvested in active non-U.S. business operations or was being held for the Chart acquisition, which was completed on July 16, 2026. If we decide at a later date to repatriate certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

Current wording

As of September 30, 2026, we held approximately $1.6 billion of cash and cash equivalents in the U.S. and approximately $2.5 billion outside the U.S. As of December 31, 2025, cash and cash equivalents totaled approximately $0.7 billion in the U.S. and approximately $3.0 billion outside the U.S. A substantial portion of the cash held outside the U.S. at September 30, 2026 has been reinvested in active non-U.S. business operations. If we decide at a later date to repatriate certain cash to the U.S., we may incur other additional taxes that would not be significant to the total tax provision.

Previous wording

During the six months ended June 30, 2026, we disbursed cash to fund a variety of activities including certain working capital needs, capital expenditures, and the payment of dividends.

Current wording

During the nine months ended September 30, 2026, we disbursed cash to fund the Chart acquisition along with a variety of other activities including certain working capital needs, capital expenditures, and the payment of dividends.

Previous wording

On July 15, 2026, BHH LLC, as borrower, and Baker Hughes Company, as parent guarantor, entered into two separate $1.0 billion, 2-year senior, unsecured term loan agreements (the "Term Loans"). Both Term Loan agreements contain customary representations, warranties, and covenants, and bear interest at a base rate or Secured Overnight Financing Rate ("SOFR") plus applicable margin. Concurrent with the closure of the Chart acquisition, the 2025 delayed draw term loan facility was terminated. See "Note 19. Business Acquisitions, Dispositions, and Businesses Held for Sale" for additional information related to the Chart acquisition and "Note 8. Debt" for additional information on our funding activities.

Current wording

On July 15, 2026, BHH LLC, as borrower, and Baker Hughes Company, as parent guarantor, entered into two separate $1.0 billion, two-year, senior, unsecured term loan agreements (the "Term Loans"). Both Term Loan agreements contain customary representations, warranties, and covenants, and bear interest at a base rate or Secured Overnight Financing Rate ("SOFR") plus applicable margin. Concurrent with the completion of the Chart acquisition, the $2.6 billion senior unsecured delayed-draw term loan facility was terminated. See "Note 2. Business Acquisitions" for additional information related to the Chart acquisition and "Note 10. Debt" for additional information on our funding activities.

Previous wording

Cash flows provided by (used in) each type of activity were as follows for the six months ended June 30:

Current wording

Cash flows provided by (used in) each type of activity were as follows for the nine months ended September 30:

Previous wording

Cash flows provided by operating activities were $1,845 million and $1,219 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Cash flows provided by operating activities were $2,850 million and $2,148 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

For the six months ended June 30, 2026, net working capital cash generation was $350 million, mainly due to progress collections, partially offset by contract assets build up and inventory increase.

Current wording

For the nine months ended September 30, 2026, net working capital cash generation was $350 million, mainly due to progress collections, partially offset by increases in customer receivables, contract assets and inventory.

Previous wording

For the six months ended June 30, 2025, net working capital cash generation was $98 million, mainly due to accounts receivable collections and contract asset buildup, partially offset by progress collections, accounts payable, and inventory increases.

Current wording

For the nine months ended September 30, 2025, net working capital cash absorption was $34 million, mainly due to progress collections and accounts payable payments partially offset by customer receivables collections, contract assets, and inventory reduction.

Previous wording

Included in the cash flows from operating activities for the six months ended June 30, 2026 and 2025 were payments of $86 million and $67 million, respectively, made primarily for employee severance as a result of our restructuring activities.

Current wording

Included in the cash flows from operating activities for the nine months ended September 30, 2026 and 2025 were payments of $99 million and $129 million, respectively, made primarily for employee severance as a result of our restructuring activities.

Previous wording

Cash flows provided by investing activities were $874 million for the six months ended June 30, 2026 and cash flows used in investing activities were $596 million for the six months ended June 30, 2025.

Current wording

Cash flows used in investing activities were $13,402 million for the nine months ended September 30, 2026 and $1,651 million for the nine months ended September 30, 2025.

Previous wording

Our principal recurring investing activity is the funding of capital expenditures including property, plant and equipment ("PP&E") and software, to support and generate revenue from operations. Expenditures for capital assets were $636 million and $601 million for the six months ended June 30, 2026 and 2025, respectively, partially offset by cash flows from the disposal of PP&E of $110 million and $74 million for the six months ended June 30, 2026 and 2025, respectively. Proceeds from the disposal of assets were primarily related to OFSE equipment that was lost-in-hole, and PP&E no longer used in operations that was sold throughout the period.

Current wording

Our principal recurring investing activity is the funding of capital expenditures including property, plant and equipment ("PP&E") and software, to support and generate revenue from operations. Expenditures for capital assets were $907 million and $896 million for the nine months ended September 30, 2026 and 2025, respectively, partially offset by cash flows from the disposal of PP&E of $145 million and $139 million for the nine months ended September 30, 2026 and 2025, respectively. Proceeds from the disposal of assets were primarily related to OFSE equipment that was lost-in-hole, and PP&E no longer used in operations that was sold throughout the period.

Previous wording

During the first quarter of 2026, the Company generated approximately $1.2 billion from the disposition of the Precision Sensors & Instrumentation business, a business within the Industrial Solutions product line of its IET segment, to Crane Company. The Company also received $0.2 billion from the formation of a joint venture with a subsidiary of Cactus, Inc. ("Cactus") whereby the Company contributed the Surface Pressure Control business, a business within the Subsea & Surface Pressure Systems product line of its OFSE segment, in exchange for cash consideration and 35% noncontrolling interest.

Current wording

During the first quarter of 2026, the Company generated approximately $1.2 billion from the disposition of the Precision Sensors & Instrumentation business, a business within the Industrial Solutions product line of its IET segment, to Crane Company. The Company also received $0.2 billion from the formation of a joint venture with a subsidiary of Cactus, Inc. ("Cactus") whereby the Company contributed the Surface Pressure Control business, a business within the Subsea & Surface Pressure Systems product line of its OFSE segment, in exchange for cash consideration and 35% noncontrolling interest. During the third quarter of 2026, the Company received funds for the final transfer of certain legal entities related to this disposition.

Previous wording

Cash flows provided by financing activities were $9,287 million for the six months ended June 30, 2026 and cash flows used in financing activities were $945 million for the six months ended June 30, 2025.

Current wording

Cash flows provided by financing activities were $10,905 million for the nine months ended September 30, 2026 and cash flows used in financing activities were $1,224 million for the nine months ended September 30, 2025.

Previous wording

On March 11, 2026, we completed an offering of $6.5 billion of U.S. dollar-denominated notes, along with €3.0 billion of Euro-denominated notes. As a result of the completed offering, we terminated the Bridge Facility entered into on July 28, 2025.

Current wording

On March 11, 2026, we completed an offering of $6.5 billion of U.S. dollar-denominated notes, along with €3.0 billion of Euro-denominated notes. As a result of the completed offering, we terminated the Bridge Facility entered into on July 28, 2025. On July 15, 2026, we entered into two separate $1.0 billion two-year term loans. The notes offering and term loans, along with cash on hand, were used to complete Chart acquisition during the third quarter of 2026. See "Note 10. Debt" above for additional information related to the financing of the Chart acquisition.

Previous wording

We maintained a quarterly dividend during the six months ended June 30, 2026 and 2025 of $0.23 per share. We paid dividends of $456 million and $456 million to our Class A shareholders during the six months ended June 30, 2026 and 2025, respectively.

Current wording

We maintained a quarterly dividend during the nine months ended September 30, 2026 and 2025 of $0.23 per share. We paid dividends of $684 million and $683 million to our Class A shareholders during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

We did not repurchase any shares of Class A common stock during the six months ended June 30, 2026. During the six months ended June 30, 2025, we repurchased and canceled 9.8 million shares of Class A common stock for a total of $384 million.

Current wording

We did not repurchase any shares of Class A common stock during the nine months ended September 30, 2026. During the nine months ended September 30, 2025, we repurchased and canceled 9.8 million shares of Class A common stock for a total of $384 million.

Previous wording

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk by working with our customers to restructure their debts or utilizing available trade receivable facilities that enable us to manage collection risk. With regard to our primary customer in Mexico, there have not historically been any material losses due to uncollectable accounts receivable, nor are any such balances currently in dispute. As of June 30, 2026 and December 31, 2025, the Company had credit default swaps ("CDS") with original notional balances totaling $514 million and $775 million, respectively, with third-party financial institutions. The CDS relate to borrowings provided by these financial institutions to our primary customer in Mexico who utilized these borrowings to pay certain of the Company's outstanding receivables. The total notional amount remaining on the issued CDS was $86 million and $287 million as of June 30, 2026 and December 31, 2025, respectively, which will reduce each month through September 2026 as the customer repays the borrowings. As of June 30, 2026, the fair value of these derivative liabilities is not material.

Current wording

Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears dependent upon contractual terms. In a challenging economic environment, we may experience delays in the payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit markets. While historically there have not been material non-payment events, we attempt to mitigate this risk by working with our customers to restructure their debts or utilizing available trade receivable facilities that enable us to manage collection risk. With regard to our primary customer in Mexico, there have not historically been any material losses due to uncollectable accounts receivable, nor are any such balances currently in dispute.