KLX Energy Services Holdings, Inc.

Previous wording

The following discussion and analysis addresses the results of our operations for the three and nine months ended September 30, 2025, as compared to our results of operations for the three and nine months ended September 30, 2024. Note that these results are presented after intercompany eliminations. In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods.

Current wording

The following discussion and analysis addresses the results of our operations for the three months ended March 31, 2026, as compared to our results of operations for the three months ended March 31, 2025. In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods.

Previous wording

We offer a variety of targeted services that are differentiated by the technical competence and experience of our field service engineers and their deployment of a broad portfolio of specialized tools and proprietary equipment. Our innovative and adaptive approach to proprietary tool design has been employed by our in-house research and development (“R&D”) organization and, in selected instances, by our technology partners to develop tools covered by 39 patents and 6 pending patent applications, which we believe differentiates us from our regional competitors and also allows us to deliver more focused service and better outcomes in our specialized services than larger national competitors that do not discretely dedicate their resources to the services we provide.

Current wording

We offer a variety of targeted services that are differentiated by the technical competence and experience of our field service engineers and their deployment of a broad portfolio of specialized tools and proprietary equipment. Our innovative and adaptive approach to proprietary tool design has been employed by our in-house research and development (“R&D”) organization and, in selected instances, by our technology partners to develop tools covered by 40 patents and 6 pending patent applications, which we believe differentiates us from our regional competitors and also allows us to deliver more focused service and better outcomes in our specialized services than larger national competitors that do not discretely dedicate their resources to the services we provide.

Previous wording

Demand for services in the oil and natural gas industry is cyclical and subject to sudden and significant volatility. So far in 2025, factors affecting oil prices have included instability and conflict in the Middle East, output increases from the largest oil-producing countries and changes in the growth rate of the U.S. and world economies. Oil and natural gas prices have been, and may remain, volatile, which impacts demand for our business. West Texas Intermediate’s (“WTI") average daily price per barrel increased by approximately 1.9%, to $65.78 per Bbl during the three months ended September 30, 2025, compared to the WTI average daily price per barrel of $64.57 per Bbl during the three months ended June 30, 2025. In early April 2025, after the introduction of tariffs by the U.S. government and an announced increase in production from the Organization of the Petroleum Exporting Countries and its allies (“OPEC+”), the price of oil dropped by approximately 15%, from $71.87 per Bbl to $61.05 per Bbl. In July and August 2025, OPEC+ announced additional production increases of about 548 and 547 thousand barrels per day, respectively, followed by smaller increases announced in September and October 2025. By the middle of October 2025, WTI price per barrel decreased to just under $60. Per the U.S. Energy Information Administration, U.S. crude oil production is expected to remain constant between 2025 and 2026. Natural gas prices in the third quarter of 2025 were about 11.0% higher than the two-year average. As of September 30, 2025, U.S. land rig count stood at 532, a decrease of 7.2% compared to December 31, 2024, when the U.S. land rig count was 573.

Current wording

Demand for services in the oil and natural gas industry is cyclical and subject to sudden and significant volatility. While oil prices declined in the first half of 2023 from their 2022 highs, oil prices rebounded in the third quarter of 2023 due to stronger than anticipated economic growth and sustained production cuts from Saudi Arabia and Russia, followed by oil price stabilization, through decreases, in the fourth quarter of 2023 due to a decrease in demand as the overall economy declined. During the first half of 2024, oil prices increased steadily, while in the second half of the year they fell back and traded within a relatively narrow band. Natural gas prices also declined since the fourth quarter of 2023, bottoming out in the first quarter of 2024 and remaining near historic lows for the remainder of the year, before increasing in early 2025 to a two-year high. Oil and natural gas prices have been, and may remain, volatile, which impacts demand for our business. West Texas Intermediate’s (“WTI") average daily price per barrel increased by approximately 22.0%, to $72.74 per Bbl during the three months ended March 31, 2026, compared to the WTI average daily price per barrel of $59.62 per Bbl during the three months ended December 31, 2025. However, these average prices conceal extremes reached within the first quarter of 2026, with early January lows near $56 per Bbl and late March highs at almost $105 per Bbl, in the run-up to the ongoing conflict with Iran. As of March 31, 2026, U.S. land rig count stood at 530, which increased slightly compared to December 31, 2025, when the U.S. land rig count was 527. So far in 2026, factors affecting oil prices have included instability and conflict in the Middle East, output increases from the largest oil-producing countries and changes in the growth rate of the U.S. and world economies.

Previous wording

Oil and natural gas prices may fluctuate with changes in demand due to, among other things, the ongoing war in Ukraine, the Israel-Hamas conflict, the conflict with Iran, international sanctions, speculation as to future actions by OPEC+, gas prices, interest rates, inflation and government efforts to reduce inflation, and possible changes in the overall health of the global economy, including a perceived economic recovery or any increased volatility in financial and credit markets, the imposition of increased, new and retaliatory tariffs or a recession. To what extent these and other external factors (such as government action with respect to climate change regulation) ultimately impact our future business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous factors, including future developments, that are not within our control and cannot be accurately predicted.

Current wording

Oil and natural gas prices may fluctuate with changes in demand due to, among other things, the ongoing war in Ukraine, the Israel-Hamas conflict, the conflict with Iran, conditions in South America, including most recently in Venezuela, international sanctions, speculation as to future actions by the Organization of the Petroleum Exporting Countries and its allies, gas prices, interest rates, inflation and government efforts to reduce inflation, and possible changes in the overall health of the global economy, including a perceived economic recovery or any increased volatility in financial and credit markets, the imposition of increased, new and retaliatory tariffs or a recession. To what extent these and other external factors (such as government action with respect to climate change regulation) ultimately impact our future business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous factors, including future developments, that are not within our control and cannot be accurately predicted.

Previous wording

For the quarter ended September 30, 2025, revenues were $166.7, a decrease of $22.2, or 11.8%, as compared with the prior year period. The overall decrease in revenues reflects a decline in activity during the quarter, leading to lower demand for our services. Lower weighted average price contributed to approximately 47% of the $22.2 decrease, and lower weighted average volume contributed to the remaining approximately 53%. On a segment basis, Rocky Mountains segment revenue decreased by $17.1 or 25.2%. Lower weighted average volume contributed to approximately all of the dollar decrease in the Rocky Mountains segment. Southwest segment revenue decreased by $12.0 or 17.5%. Lower weighted average price contributed to approximately 33% of the dollar decrease in the Southwest segment, and lower weighted average volume contributed to the remaining approximately 67%. Northeast/Mid-Con segment revenue increased by $6.9 or 13.2%. Higher weighted average price contributed to approximately all of the dollar increase in the Northeast/Mid-Con segment.

Current wording

For the quarter ended March 31, 2026, revenues were $144.7, a decrease of $9.3, or 6.0%, as compared with the prior year period. The overall decrease in revenues reflects a decline in activity during the quarter, leading to lower demand for our services. Lower weighted average price contributed to approximately 67% of the $9.3 decrease, and lower weighted average volume contributed to the remaining approximately 33%. On a segment basis, Rocky Mountains segment revenue decreased by $9.2 or 19.2%. Lower weighted average price contributed to approximately 7% of the dollar decrease, and lower weighted average volume contributed to the remaining approximately 93%. Southwest segment revenue decreased by $11.6 or 17.8%. Lower weighted average price contributed to approximately 97% of the dollar decrease, and lower weighted average volume contributed to the remaining approximately 3%. Northeast/Mid-Con segment revenue increased by $11.5 or 28.0%. Higher weighted average price contributed to approximately 80% of the dollar decrease, and higher weighted average volume contributed to the remaining approximately 20%.

Previous wording

Cost of sales. For the quarter ended September 30, 2025, cost of sales were $130.5, or 78.3% of sales, as compared to the three months ended September 30, 2024 of $142.3, or 75.3% of sales. Cost of sales as a percentage of revenues increased primarily due to lower leverage of fixed costs during the quarter. The two largest components of cost of sales are labor and repair & maintenance. As cost of sales as a percentage of revenues increased, labor costs per employee increased by 0.5% as compared with the three months ended September 30, 2024. Repair & maintenance costs as a percentage of revenues increased by 4.1% as compared to the three months ended September 30, 2024, due to the higher cost during the quarter.

Current wording

Cost of sales. For the quarter ended March 31, 2026, cost of sales were $119.1, or 82.3% of sales, as compared to the three months ended March 31, 2025 of $123.8, or 80.4% of sales. Cost of sales as a percentage of revenues increased primarily due to lower revenues during the quarter. The two largest components of cost of sales are labor and repair & maintenance. As cost of sales as a percentage of revenues increased, labor costs per employee increased by 0.6% as compared with the three months ended March 31, 2025. Repair & maintenance costs as a percentage of revenues increased by 7.3% as compared to the three months ended March 31, 2025, due to an increase in repair & maintenance costs during the quarter.

Previous wording

Selling, general and administrative expenses (“SG&A”). For the quarter ended September 30, 2025, SG&A expenses were $15.6, or 9.4% of revenues, as compared with $21.2, or 11.2% of revenues, in the prior year period. SG&A expenses decreased at a faster rate than revenues during the quarter, which caused the decrease in percentage of revenues compared to the three months ended September 30, 2024.

Current wording

Selling, general and administrative expenses (“SG&A”). For the quarter ended March 31, 2026, SG&A expenses were $15.4, or 10.6% of revenues, as compared with $21.6, or 14.0% of revenues, in the prior year period. The decreases on a dollar basis and in percentage of revenues are the result of continuous efforts to reduce costs and improve efficiency.

Previous wording

For the quarter ended September 30, 2025, operating loss was $3.0 compared to operating income of $1.1 in the prior year period, due to a reduction in activity and pricing.

Current wording

For the quarter ended March 31, 2026, operating loss was $12.1 compared to operating loss of $17.7 in the prior year period, due to lower Corporate and other operating costs.

Previous wording

The operating results across our three geographic segments broadly declined as a function of lower revenues compared to the prior year period. Rocky Mountains segment operating income was $1.8, Southwest segment operating loss was $3.4, and Northeast/Mid-Con segment operating income was $6.6 for the three months ended September 30, 2025.

Current wording

The operating results across our three geographic segments declined as a function of lower revenues compared to the prior year period. Rocky Mountains segment operating loss was $3.8, Southwest segment operating loss was $3.4, and Northeast/Mid-Con segment operating income was $3.0 for the three months ended March 31, 2026.

Previous wording

Income tax expense. For the quarter ended September 30, 2025, income tax expense was $0.2, consistent with income tax expense of $0.2 in the prior year period, and was comprised primarily of state and local taxes. The Company did not recognize a federal tax benefit on its year-to-date losses because it has a full valuation allowance recorded against its net deferred tax assets.

Current wording

Income tax expense. For the quarter ended March 31, 2026, income tax expense was $0.2, consistent with income tax expense of $0.2 in the prior year period, and was comprised primarily of state and local taxes. The Company did not recognize a federal tax benefit on its year-to-date losses because it has a valuation allowance against its deferred tax balances.

Previous wording

Net loss. For the quarter ended September 30, 2025, net loss was $14.3, as compared to net loss of $8.2 in the prior year period, decreasing primarily as a result of lower revenues as discussed above.

Current wording

Net loss. For the quarter ended March 31, 2026, net loss was $24.0, as compared to net loss of $27.9 in the prior year period, improving primarily as a result of lower operating costs as discussed above.

Previous wording

We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, debt service obligations, investments and acquisitions. Our primary sources of liquidity to date have been capital contributions from our equity and note holders, borrowings under our Prior ABL Facility (as defined below) and New ABL Facility (as defined below) and cash flows from operations. At September 30, 2025, we had $8.3 of cash and cash equivalents, and $56.9 available on the New ABL Facility August Borrowing Base Certificate, which resulted in a total liquidity position of $65.2.

Current wording

We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, debt service obligations, investments and acquisitions. Our primary sources of liquidity to date have been capital contributions from our equity and note holders, borrowings under our Prior ABL Facility and 2028 ABL Facility and cash flows from operations. At March 31, 2026, we had $5.6 of cash and cash equivalents and $42.1 of available capacity under the 2028 ABL Facility.

Previous wording

We have taken several actions to continue to improve our liquidity position, including equity issuances under our ATM Offering program, debt-for-equity exchanges that have reduced interest burden and monetized non-core and obsolete assets. Most recently, we completed a refinancing of our long-term indebtedness on March 12, 2025, as described in greater detail under “—Refinancing”, “—ABL Facilities—New ABL Facility” and “—Senior Secured Notes—2030 Senior Notes” below. As market conditions warrant and subject to our contractual restrictions, liquidity position and other factors, we may further access the public or private debt and equity markets or seek to recapitalize, refinance or otherwise restructure our capital structure.

Current wording

We have taken several actions to continue to improve our liquidity position, including equity issuances under our ATM Offering program, debt-for-equity exchanges that have reduced interest burden and monetization of non-core and obsolete assets. Recently, we completed a refinancing of our long-term indebtedness on March 12, 2025, as described in greater detail under “—Refinancing”, “—ABL Facilities—2028 ABL Facility” and “—Senior Secured Notes—2030 Senior Notes” below. As market conditions warrant and subject to our contractual restrictions, liquidity position and other factors, we may further access the public or private debt and equity markets, sell non-core assets or seek to recapitalize, refinance or otherwise restructure our capital structure.

Previous wording

Our ability to pay the principal and interest on our debt and to satisfy our other liabilities will depend on our future operating performance. Our future operating performance will be affected by prevailing economic and political conditions, the level of drilling, completion, production and intervention services activity for North American onshore oil and natural gas resources, the willingness of capital providers to lend to our industry and other financial and business factors, many of which are beyond our control. In addition, incurring additional debt in excess of our existing outstanding indebtedness would result in increased interest expense and financial leverage, and issuing Common Stock may result in dilution to our current stockholders.

Current wording

Our ability to comply with the covenants in our debt instruments and pay the principal and interest on our debt and to satisfy our other liabilities will depend on our future operating performance and our ability to refinance our debt as it becomes due. Our future operating performance and ability to refinance such indebtedness will be affected by prevailing economic and political conditions, the level of drilling, completion, production and intervention services activity for North American onshore oil and natural gas resources, the willingness of capital providers to lend to our industry and other financial and business factors, many of which are beyond our control. In addition, incurring additional debt in excess of our existing outstanding indebtedness would result in increased interest expense and financial leverage, and issuing Common Stock may result in dilution to our current stockholders.

Previous wording

We actively manage our capital spending and are focused primarily on required maintenance spending. For the past couple of years, due to increasing oil prices leading to an increase in demand for our services, our operating cash flow has been positive. Based on our current forecasts, we believe our cash on hand, availability under the New ABL Facility and our cash flows will provide us with the ability to fund our operations for at least the next twelve months.

Current wording

We actively manage our capital spending and are focused primarily on required maintenance spending. For the past couple of years, due to increasing oil prices leading to an increase in demand for our services, our operating cash flow has been positive. Based on our current forecasts, we believe our cash on hand, availability under the 2028 ABL Facility and our cash flows will provide us with the ability to fund our operations for at least the next twelve months.

Previous wording

On March 7, 2025, the Company and certain of our subsidiaries party thereto entered into a Securities Purchase Agreement with certain holders (the “Investors”) of our 11.5% senior secured notes due 2025 (the “2025 Senior Notes”), pursuant to which the Company agreed to issue and sell to the Investors (a) approximately $232.2 in aggregate principal amount of the Senior Secured Floating Rate Cash / PIK Notes due 2030 (the “2030 Senior Notes” and, together with the 2025 Senior Notes, the “Senior Secured Notes”) and (b) warrants entitling the holders thereof to purchase, in the aggregate, up to 2,373,187 shares of Common Stock, at an exercise price of $0.01 per share, subject to adjustment in exchange for (i) approximately $78.4 in aggregate cash consideration and (ii) approximately $143.6 aggregate principal amount of the 2025 Senior Notes, which were cancelled by the Company upon receipt thereof (collectively, the “Refinancing”). The Company consummated the Refinancing on March 12, 2025.

Current wording

On March 7, 2025, the Company and certain of our subsidiaries party thereto entered into a Securities Purchase Agreement with certain holders (the “Investors”) of our 2025 Senior Notes, pursuant to which the Company agreed to issue and sell to the Investors (a) approximately $232.2 in aggregate principal amount of the 2030 Senior Notes and (b) warrants entitling the Investors thereof to purchase, in the aggregate, up to 2,373,187 shares of Common Stock, at an exercise price of $0.01 per share, subject to adjustment in exchange for (i) approximately $78.4 in aggregate cash consideration and (ii) approximately $143.6 aggregate principal amount of the 2025 Senior Notes, which were cancelled by the Company upon receipt thereof (collectively, the “Refinancing”). The Company consummated the Refinancing on March 12, 2025.

Previous wording

On March 12, 2025, as part of the Refinancing, the Company and certain of its subsidiaries entered into an indenture, dated as of March 12, 2025 (the “2030 Senior Notes Indenture”), with U.S. Bank Trust Company, National Association, as the trustee and notes collateral agent, pursuant to which $232.2 of the 2030 Senior Notes were issued. The 2030 Senior Notes will mature on March 12, 2030 and bear a floating rate of interest of Term SOFR plus the Applicable Margin (as defined in the 2030 Senior Notes Indenture) based on the Secured Net Leverage Ratio (as defined in the 2030 Senior Notes Indenture) payable on the last day of the applicable interest period in cash or, at the Company’s election, additional 2030 Senior Notes paid-in-kind on one-, three- or six-month interest periods, which shall include a 100 basis point premium for any period where interest is paid-in-kind. The 2030 Senior Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by each of the Company’s current domestic subsidiaries and by certain future subsidiaries, subject to agreed guaranty and security principles and certain exclusions.

Current wording

On March 12, 2025, as part of the Refinancing, the Company and certain of its subsidiaries entered into the 2030 Senior Notes Indenture, with U.S. Bank Trust Company, National Association, as the trustee and notes collateral agent, pursuant to which $232.2 of the 2030 Senior Notes were issued. The 2030 Senior Notes will mature on March 12, 2030 and bear a floating rate of interest of Term SOFR plus the Applicable Margin (as defined in the 2030 Senior Notes Indenture) based on the Secured Net Leverage Ratio (as defined in the 2030 Senior Notes Indenture) payable on the last day of the applicable interest period in cash or, at the Company’s election, additional 2030 Senior Notes paid-in-kind on one-, three- or six-month interest periods, which shall include a 100 basis point premium for any period where interest is paid-in-kind. The 2030 Senior Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by each of the Company’s current domestic subsidiaries and by certain future subsidiaries, subject to agreed guaranty and security principles and certain exclusions.

Previous wording

The 2030 Senior Notes were initially fully and unconditionally guaranteed by each of the Company’s current subsidiaries. The 2030 Senior Notes will also be guaranteed by each of the Company’s future subsidiaries that guarantee the Company’s indebtedness or indebtedness of guarantors, including under the New ABL Facility (as defined below) and such subsidiaries that become guarantors in the future will also pledge their collateral in support of such guarantees. These guarantees are senior secured obligations of the guarantors secured by a first priority security interest on substantially all of the guarantors’ assets (other than collateral securing the New ABL Facility on a first priority basis) and a second priority security interest on the guarantors’ assets which secure the New ABL Facility on a first priority basis, subject in each case to certain excluded assets.

Current wording

The 2030 Senior Notes are fully and unconditionally guaranteed by each of the Company’s current subsidiaries. The 2030 Senior Notes will also be guaranteed by each of the Company’s future subsidiaries that guarantee the Company’s indebtedness or indebtedness of guarantors, including under the 2028 ABL Facility and such subsidiaries that become guarantors in the future will also pledge their collateral in support of such guarantees. These guarantees are senior secured obligations of the guarantors secured by a first priority security interest on substantially all of the guarantors’ assets (other than collateral securing the 2028 ABL Facility on a first priority basis) and a second priority security interest on the guarantors’ assets which secure the 2028 ABL Facility on a first priority basis, subject in each case to certain excluded assets.

Previous wording

The Company will be required to redeem the 2030 Senior Notes in an amount equal to 2.00% per annum of all 2030 Senior Notes outstanding as of the prior applicable Interest Payment Date (as defined in the 2030 Senior Notes Indenture) on the last business day of each of March, June, September and December, commencing on March 31, 2025. Additionally, upon certain changes of control, consummation of certain asset sales and other events, the Company will be required to repurchase the 2030 Senior Notes at the applicable redemption prices.

Current wording

The Company is required to redeem the 2030 Senior Notes in an amount equal to 2.00% per annum of all 2030 Senior Notes outstanding as of the prior applicable Interest Payment Date (as defined in the 2030 Senior Notes Indenture) on the last business day of each of March, June, September and December. Additionally, upon certain changes of control, consummation of certain asset sales and other events, the Company will be required to repurchase the 2030 Senior Notes at the applicable redemption prices.

Previous wording

2026, 3.50 to 1.0 for the test periods ending March 31, 2027 through December 31, 2027, 3.00 to 1.0 for the test periods ending March 31, 2028 through December 31, 2028, and 2.50 to 1.0 for each test period thereafter and (ii) restrictions on making net capital expenditures in any test period in excess of the greater of (x) $65.0 in the aggregate or (y) 7% of revenues during such test period. As of September 30, 2025, the Company was in full compliance with its debt covenants under the 2030 Senior Notes Indenture.

Current wording

The 2030 Senior Notes Indenture contains certain financial covenants that include (i) a maximum total net leverage ratio of not greater than 4.50 to 1.0 for the test periods ended March 31, 2025 through December 31, 2025, stepping down to 4.00 to 1.0 for the test periods ending March 31, 2026 through December 31, 2026, 3.50 to 1.0 for the test periods ending March 31, 2027 through December 31, 2027, 3.00 to 1.0 for the test periods ending March 31, 2028 through December 31, 2028, and 2.50 to 1.0 for each test period thereafter and (ii) restrictions on making net capital expenditures in any test period in excess of the greater of (x) $65.0 in the aggregate or (y) 7% of revenues during such test period.

Previous wording

As of September 30, 2025, the principal amount outstanding under the 2030 Senior Notes was $241.7. On a net basis, after taking into consideration unamortized debt issuance costs and original issue discount for the 2030 Senior Notes, total debt related to the 2030 Senior Notes as of September 30, 2025 was $219.2. The effective interest rate under the 2030 Senior Notes was approximately 12.67% on September 30, 2025. Accrued interest related to the 2030 Senior Notes was $0.8 as of September 30, 2025.

Current wording

As of March 31, 2026, the principal amount outstanding under the 2030 Senior Notes was $249.5. On a net basis, after taking into consideration unamortized debt issuance costs and issue discount for the 2030 Senior Notes, total debt related to the 2030 Senior Notes as of March 31, 2026 was $226.8. The effective interest rate under the 2030 Senior Notes was approximately 12.18% on March 31, 2026. Accrued interest related to the 2030 Senior Notes was $— as of March 31, 2026 and $— as of December 31, 2025.

Previous wording

The previously-issued 2025 Senior Notes were redeemed on March 30, 2025 and the related indenture was satisfied and discharged. On a net basis, after taking into consideration the debt issuance costs for the 2025 Senior Notes, total debt related to the 2025 Senior Notes as of December 31, 2024 was $235.1. The 2025 Senior Notes bore interest at an annual rate of 11.5%, payable semi-annually in arrears on May 1 and November 1. Accrued interest as of December 31, 2024 was $4.5.

Current wording

The previously-issued 2025 Senior Notes were redeemed on March 30, 2025 and the related indenture was satisfied and discharged in full.

Previous wording

On March 7, 2025, the Company entered into a Credit Agreement, dated as of March 7, 2025 (the “New ABL Facility”), with the Company, as borrower, Eclipse Business Capital LLC, as administrative agent, as collateral agent and as FILO administrative agent and the lenders party thereto. The New ABL Facility is comprised of an asset-based revolving credit facility with a $125.0 commitment (the “Revolving Facility”), a first-in-last-out asset-based credit facility with a $10.0 commitment (the “FILO Facility”), and a committed incremental loan option under the Revolving Facility with a $25.0 commitment (the “Incremental Revolving Loans”). The availability of the Incremental Revolving Loans are subject to usual and customary conditions to effectiveness, including, for example, the Company electing to utilize such Incremental Revolving Loans by a date certain and the payment of required fees. Borrowings under the Revolving Facility (including, to the extent incurred, the Incremental Revolving Loans) bear interest at a rate equal to adjusted term SOFR plus an applicable margin of 4.625%. Borrowings under the FILO Facility bear interest at a rate equal to adjusted term SOFR plus an applicable margin of 6.00%. The applicable margin under the Revolving Facility is subject to a 0.125% reduction and the applicable margin under the FILO Facility is subject to a 0.50% reduction, in each case upon the repayment in full of a $5.0 over-advance provided on the initial funding date under the Revolving Facility. The New ABL Facility is secured by, among other things, a first priority lien on accounts receivable and inventory and contains customary conditions precedent to borrowing and affirmative and negative covenants.

Current wording

The availability of the Incremental Revolving Loans are subject to usual and customary conditions to effectiveness, including, for example, the Company electing to utilize such Incremental Revolving Loans by a date certain and the payment of required fees. Borrowings under the Revolving Facility (including, to the extent incurred, the Incremental Revolving Loans) bear interest at a rate equal to adjusted term SOFR plus an applicable margin of 4.625%. Borrowings under the FILO Facility bear interest at a rate equal to adjusted term SOFR plus an applicable margin of 6.00%. The applicable margin under the Revolving Facility is subject to a 0.125% reduction and the applicable margin under the FILO Facility is subject to a 0.50% reduction, in each case upon the repayment in full of a $5.0 over-advance provided on the initial funding date under the Revolving Facility. The 2028 ABL Facility is secured by, among other things, a first priority lien on accounts receivable and inventory and contains customary conditions precedent to borrowing and affirmative and negative covenants.

Previous wording

The initial funding under the New ABL Facility occurred on March 12, 2025, and the proceeds therefrom were used to repay the Prior ABL Facility in full. After giving effect to the foregoing, we had approximately $39.9 of available borrowing capacity under the New ABL Facility. Our New ABL Facility matures in 2028.

Current wording

The initial funding under the 2028 ABL Facility occurred on March 12, 2025, and the proceeds therefrom were used to repay the Prior ABL Facility in full. After giving effect to the foregoing, we had approximately $39.9 of available borrowing capacity under the 2028 ABL Facility. Our 2028 ABL Facility matures on March 7, 2028.

Previous wording

The New ABL Facility includes a springing financial covenant which requires the Company’s consolidated fixed charge coverage ratio to be at least 1.0 to 1.0 if availability under the Revolving Facility falls below $7.0. The New ABL Facility includes financial, operating and negative covenants that limit our ability to incur indebtedness, to create liens or other encumbrances, to make certain payments and investments, including dividend payments, to engage in transactions with affiliates, to engage in sale/leaseback transactions, to guarantee indebtedness and to sell or otherwise dispose of assets and merge or consolidate with other entities. It also includes a covenant to deliver annual audited financial statements that are not qualified by a “going concern” or like qualification or exception. A failure to comply with the obligations contained in the New ABL Facility could result in an event of default, which could permit acceleration of the debt, termination of undrawn commitments and enforcement against any liens securing the debt. The New ABL Facility contains certain other covenants (including the ability to incur indebtedness for the purpose of consummating permitted acquisitions, subject to the terms of the New ABL Facility), events of default and other customary provisions. As of September 30, 2025, the Company was in full compliance with its debt covenants under the New ABL Facility.

Current wording

The 2028 ABL Facility includes financial, operating and negative covenants that limit our ability to incur indebtedness, to create liens or other encumbrances, to make certain payments and investments, including dividend payments, to engage in transactions with affiliates, to engage in sale/leaseback transactions, to guarantee indebtedness and to sell or otherwise dispose of assets and merge or consolidate with other entities. It also includes a covenant to deliver annual audited financial statements that are not qualified by a “going concern” or like qualification or exception. A failure to comply with the obligations contained in the 2028 ABL Facility could result in an event of default, which could permit acceleration of the debt, termination of undrawn commitments and enforcement against any liens securing the debt. The 2028 ABL Facility contains certain other covenants (including the ability to incur indebtedness for the purpose of consummating permitted acquisitions, subject to the terms of the 2028 ABL Facility), events of default and other customary provisions. As of March 31, 2026, the Company was in compliance with its financial covenants under the 2028 ABL Facility.

Previous wording

As of September 30, 2025, the borrowings outstanding under the New ABL Facility were $40.0. The effective interest rate under the New ABL Facility was approximately 9.02% on September 30, 2025. Accrued interest related to the New ABL Facility was $0.4 as of September 30, 2025.

Current wording

As of March 31, 2026, the borrowings outstanding under the 2028 ABL Facility were $49.0. The effective interest rate under the 2028 ABL Facility was approximately 8.41% on March 31, 2026. Accrued interest related to the 2028 ABL Facility was $0.4 as of March 31, 2026 and $0.4 as of December 31, 2025.

Previous wording

Our capital expenditures were $39.7 during the nine months ended September 30, 2025, compared to $49.8 in the nine months ended September 30, 2024. We offset $10.6 of capital spending during the nine months ended September 30, 2025 with the same amount of proceeds from asset sales and other proceeds. Based on current industry conditions and our significant investments in capital expenditures over the past several years, we expect to incur between $42.5 and $47.5 in total capital expenditures for the year ending December 31, 2025. The nature of our capital expenditures is comprised of a base level of investment required to support our current operations and amounts related to growth and Company initiatives. Capital expenditures for growth and Company initiatives are discretionary. We continually evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including expected industry activity levels and Company initiatives.

Current wording

Our capital expenditures were $8.7 during the three months ended March 31, 2026, compared to $15.0 in the three months ended March 31, 2025. We offset $3.4 of capital spending during the three months ended March 31, 2026 with the same amount of proceeds from asset sales. Based on current industry conditions and our significant investments in capital expenditures over the past several years, we expect to incur approximately $40.0 in total capital expenditures for the year ending December 31, 2026. The nature of our capital expenditures is comprised of a base level of investment required to support our current operations and amounts related to growth and Company initiatives. Capital expenditures for growth and Company initiatives are discretionary. We continually evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including expected industry activity levels and Company initiatives.

Previous wording

On June 14, 2021, the Company entered into an Equity Distribution Agreement (as amended from time to time, the “Equity Distribution Agreement”) with Piper Sandler & Co. as sales agent (the “Agent”). Pursuant to the terms of the Equity Distribution Agreement, the Company may sell from time to time through the Agent (the “ATM Offering”) the Company’s common stock, par value $0.01 per share (“Common Stock”), having an aggregate offering price of up to $50.0. On November 16, 2022, the Company entered into Amendment No. 1 to the Equity Distribution Agreement, which, among other things, allows for debt-for-equity exchanges in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”). On March 14, 2025, the Company entered into Amendment No. 2 to the Equity Distribution Agreement (the “EDA Amendment”), which, among other things, increased the aggregate offering price to up to approximately $57.75 (which amount includes all of the Common Stock previously sold pursuant to the Equity Distribution Agreement prior to the EDA Amendment) and provides for the Company's election not to deliver a placement notice. Under the terms of the Equity Distribution Agreement, the Company will pay the Agent a commission equal to 3.0% of the gross sales price of the Common Stock sold.

Current wording

On June 14, 2021, the Company entered into an Equity Distribution Agreement (as amended from time to time, the “Equity Distribution Agreement”) with Piper Sandler & Co. as sales agent (the “Agent”). Pursuant to the terms of the Equity Distribution Agreement, the Company may sell from time to time through the Agent (the “ATM Offering”) Common Stock, having an aggregate offering price of up to $50.0. On November 16, 2022, the Company entered into Amendment No. 1 to the Equity Distribution Agreement, which, among other things, allows for debt-for-equity exchanges in accordance with Section 3(a)(9) of the Securities Act. On March 14, 2025, the Company entered into Amendment No. 2 to the Equity Distribution Agreement (the “EDA Amendment”), which, among other things, increased the aggregate offering price to up to approximately $57.8 (which amount includes all of the Common Stock previously sold pursuant to the Equity Distribution Agreement prior to the EDA Amendment) and provides for the Company’s election not to deliver a placement notice. Under the terms of the Equity Distribution Agreement, the Company will pay the Agent a commission equal to 3.0% of the gross sales price of the Common Stock sold.

Previous wording

Any Common Stock offered and sold in the ATM Offering may be issued pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333-271182) filed with the SEC on April 7, 2023 and declared effective on April 19, 2023 (the “Registration Statement”), the prospectus supplement relating to the ATM Offering filed with the SEC on March 14, 2025 and any applicable additional prospectus supplements related to the ATM Offering that form a part of the Registration Statement. Sales of Common Stock under the Equity Distribution Agreement may be made in any transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.

Current wording

Any Common Stock offered and sold in the ATM Offering may be issued pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333-271182) filed with the SEC on April 7, 2023 and declared effective on April 19, 2023 (the “Registration Statement”), the prospectus supplement relating to the ATM Offering filed with the SEC on March 14, 2025 and any applicable additional prospectus supplements related to the ATM Offering that form a part of the Registration Statement. Sales of Common Stock under the Equity Distribution Agreement may be made in any transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act. The Registration Statement expired on April 19, 2026 pursuant to Rule 415(a)(5) under the Securities Act. Sales under the ATM Offering program may restart when and if the Company files a prospectus supplement under a successor registration statement.

Previous wording

During the three and nine months ended September 30, 2024, the Company did not sell any shares of Common Stock and incurred legal and administrative fees of $— and $0.2, respectively.

Current wording

During the three months ended March 31, 2026, the Company did not sell any shares of Common Stock and incurred legal and administrative fees of $0.0.

Previous wording

During the three and nine months ended September 30, 2025, the Company sold — and 167,769 shares of Common Stock, respectively, in exchange for gross proceeds of approximately $— and $0.6, respectively, and incurred legal and administrative fees of $0.1 and $0.3, respectively.

Current wording

During the three months ended March 31, 2025, the Company sold 142,769 shares of Common Stock in exchange for gross proceeds of approximately $0.5 and incurred legal and administrative fees of $0.1.

Previous wording

Our cash flows used in operating activities for the nine months ended September 30, 2025 were approximately $5.0 as compared to approximately $28.2 provided by operating activities for the nine months ended September 30, 2024. Our operating cash flows are sensitive to many variables, the most significant of which are utilization and profitability, the timing of billing and customer collections, payments to our vendors, repair and maintenance costs and personnel, any of which may affect our available cash. Additionally, should our customers experience financial distress for any reason, they could default on their payments owed to us, which would affect our cash flows and liquidity.

Current wording

Our cash flows provided by operating activities for the three months ended March 31, 2026 were approximately $0.3 as compared to approximately $37.6 used in operating activities for the three months ended March 31, 2025. Our operating cash flows are sensitive to many variables, the most significant of which are utilization and profitability, the timing of billing and customer collections, payments to our vendors, repair and maintenance costs and personnel, any of which may affect our available cash. Additionally, should our customers experience financial distress for any reason, they could default on their payments owed to us, which would affect our cash flows and liquidity.

Previous wording

At September 30, 2025, we had $8.3 of cash and cash equivalents and $0.1 of restricted cash. Cash on hand at September 30, 2025 decreased by $83.2, as a result of $5.0 of cash flows used in operating activities, $29.1 of cash flows used in investing activities and $49.1 used in financing activities. Our liquidity requirements consist of working capital needs, debt service obligations and ongoing capital expenditure requirements. Our primary requirements for working capital are directly related to the activity level of our operations.

Current wording

At March 31, 2026, we had $5.6 of cash and cash equivalents. Cash on hand at March 31, 2026 decreased by $0.1, as a result of $0.3 of cash flows provided by operating activities, $5.3 of cash flows used in investing activities and $4.9 provided by financing activities. Our liquidity requirements consist of working capital needs, debt service obligations and ongoing capital expenditure requirements. Our primary requirements for working capital are directly related to the activity level of our operations.

Previous wording

Net cash used in operating activities was $5.0 for the nine months ended September 30, 2025, as compared to net cash provided by operating activities of $28.2 for the nine months ended September 30, 2024. The negative operating cash flows were attributable to the net loss position and an increase in days receivable outstanding.

Current wording

Net cash provided by operating activities was $0.3 for the three months ended March 31, 2026, as compared to net cash used in operating activities of $37.6 for the three months ended March 31, 2025. The improvement in operating cash flows was attributable to management of working capital and an increase in days payable outstanding.

Previous wording

Net cash used in investing activities was $29.1 for the nine months ended September 30, 2025, as compared to net cash used in investing activities of $40.6 for the nine months ended September 30, 2024. The cash flows used in investing activities for the nine months ended September 30, 2025 were primarily driven by maintenance capital spending tied to the operation of our existing asset base offset by sales of property and equipment.

Current wording

Net cash used in investing activities was $5.3 for the three months ended March 31, 2026, as compared to net cash used in investing activities of $10.2 for the three months ended March 31, 2025. The cash flows used in investing activities for the three months ended March 31, 2026 were primarily driven by maintenance capital spending tied to the operation of our existing asset base offset by sales of property and equipment.

Previous wording

Net cash used in financing activities was $49.1 for the nine months ended September 30, 2025, compared to net cash used in financing activities of $17.4 for the nine months ended September 30, 2024. We refinanced both our 2025 Senior Notes and Prior ABL Facility during the nine months ended September 30, 2025, which brought additional cash outlays. We also restarted sales under our ATM Offering program, which generated gross proceeds of $0.6 during the nine months ended September 30, 2025.

Current wording

Net cash provided by financing activities was $4.9 for the three months ended March 31, 2026, compared to net cash used in financing activities of $21.1 for the three months ended March 31, 2025. In the prior year, we refinanced both our 2025 Senior Notes and Prior ABL Facility, which brought additional cash outlays.

Previous wording

We believe Adjusted EBITDA is useful because it allows us to supplement the GAAP measures in order to evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above in arriving at Adjusted EBITDA (Loss) because these amounts can vary substantially from company to company within our industry depending upon accounting methods, book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net (loss) earnings as determined in accordance with GAAP, or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted

Current wording

We believe Adjusted EBITDA is useful because it allows us to supplement the GAAP measures in order to evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above in arriving at Adjusted EBITDA (Loss) because these amounts can vary substantially from company to company within our industry depending upon accounting methods, book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net (loss) earnings as determined in accordance with GAAP, or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.