TIC Solutions, Inc.

The comparability of our operating results for the three months ended March 31, 2025 (Successor) and March 31, 2024 (Predecessor) was impacted by the Acuren Acquisition. In the discussion of our results of operations for these periods, we may quantitatively disclose the impacts of the Acuren Acquisition to the extent they remain ascertainable.

Comparison of the three months ended March 31, 2025 (Successor) to the three months ended March 31, 2024 (Predecessor)

The following table summarizes our results of operations for the periods indicated:

Revenues

Service revenue was $234.2 million for the three months ended March 31, 2025 (Successor), an increase of $11.2 million, or 5.0%, compared to$223.1 million during the three months ended March 31, 2024 (Predecessor). This increase in service revenue was driven primarilyby increases in transaction volumes with recurring customers and new sales in target markets partially offset by adverse weather events in the U.S.

Cost of revenue

Cost of revenue was $190.5 million for the three months ended March 31, 2025 (Successor), an increase of $23.3 million, or 14.0%, compared to$167.2 million during the three months ended March 31, 2024 (Predecessor). This increase was primarily driven by direct costs related to servicing the increased revenue base, as well as an increase in depreciation related to the Acuren Acquisition.

Gross profit

The following table presents gross profit and gross profit margin, defined as gross profit as a percentage of service revenues, for the three months ended March 31, 2025 (Successor) and March 31, 2024 (Predecessor):

Acuren’s gross profit was $43.7 million for the three months ended March 31, 2025 (Successor), a decrease of $12.2 million, or 21.8%, compared to$55.8 million during the three months ended March 31, 2024 (Predecessor). The gross profit decrease is a result of adverse weather events during the first quarter of 2025 in the U.S as well as timing of turnarounds and projects and one-time higher margin projects in the first quarter of 2024 in Canada.

Selling, general and administrative expenses

The following table presents selling, general and administrative expenses (“SG&A expenses”) and SG&A as a percentage of service revenues for the three months ended March 31, 2025 (Successor) compared to the three months ended March 31, 2024 (Predecessor):

Acuren’s SG&A expenses were $52.5 million for the three months ended March 31, 2025 (Successor), an increase of $10.6 million, or 25.3%, compared to $41.9 million during the three months ended March 31, 2024 (Predecessor). The increase in SG&A expenses was driven primarily by increases in employee-related costs, as well as an increase in amortization expense on intangible assets related to the Acuren Acquisition.

Depreciation and Amortization Expense

Total depreciation expense for property, plant and equipment and amortization expense for intangibles were recognized as follows:

Interest expense, net

Interest expense, net was approximately flat at $16.0 million for the three months ended March 31, 2025 (Successor) and the three months ended March 31, 2024 (Predecessor) as a result of lower effective interest rates offset by higher outstanding indebtedness. Amortization of deferred issuance costs included within interest expense, net for the three months ended March 31, 2025 (Successor) and for the three months ended March 31, 2024 (Predecessor) was $0.8 million and $1.0 million, respectively.

Provision for income taxes

Acuren recorded a provision for income taxes of $1.5 million and a benefit of $0.7 million for the three months ended March 31, 2025 (Successor) and 2024 (Predecessor), respectively. The tax expense for the three months ended March 31, 2025 (Successor) was primarily driven by the valuation allowance against our deferred tax assets. See “Note 13. Income Taxes” for further discussion.

The Organization for Economic Co-operation and Development has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which we operate have adopted the legislation, and other countries are in the process of introducing legislation to implement Pillar 2. We are continuing to evaluate and monitor the impact of Pillar 2. To date, Pillar 2 has not had a material impact on the effective tax rate or the condensed consolidated financial statements.

Operating Segment Results

Comparison of the three months ended March 31, 2025 (Successor) to the three months ended March 31, 2024 (Predecessor)

United States

United States service revenues was $147.7 million for the three months ended March 31, 2025 (Successor), an increase of $4.4 million, or 3.1%, compared to $143.3 million during the three months ended March 31, 2024 (Predecessor). The increase was driven by increases in transaction volumes with recurring customers and new sales in target markets partly offset by adverse weather events in the early part of the first quarter of 2025.

Segment gross profit was $28.1 million for the three months ended March 31, 2025 (Successor), a decrease of $8.9 million, or 24%, compared to $37.0 million during the three months ended March 31, 2024 (Predecessor). The decrease primarily resulted from adverse weather events as well as higher margin projects in the first quarter of 2024.

Canada

Canada service revenue was $87.0 million for the three months ended March 31, 2025 (Successor), an increase of $6.8 million, or 8.5%, compared to $80.2 million during the three months ended March 31, 2024 (Predecessor). The growth in service revenue was driven primarily by growth in volumes with existing recurring customers.

Segment gross profit was $15.6 million for the three months ended March 31, 2025 (Successor), a decrease of $3.3 million, or 17.4%, compared to $18.9 million during the three months ended March 31, 2024 (Predecessor). The decrease was primarily driven by timing of turnarounds and projects as well as one-time higher margin projects in the first quarter of 2024.

Liquidity and Capital Resources

Overview

Overall, we believe that available cash and cash equivalents, cash flows generated from future operations, access to capital markets, and availability under the Revolving Credit Facility are sufficient to fund our operations, service our indebtedness, and maintain compliance with our debt covenants. Our uses of available cash, borrowing capacity, cash flows from operations and financing arrangements are used to invest in capital expenditures to support our growth, repay debt maturities as they become due, and complete integration activities. Our principal liquidity requirements are for working capital and general corporate purposes, including capital expenditures and debt service, as well as to execute and integrate strategic acquisitions. In addition, we will use available cash, borrowing capacity, and cash flows from operations to fund our operating leases, finance leases, debt repayments and various other obligations as they arise.

Credit Facilities

We havea $775.0 million seven-year senior secured Term Loan under the Term Loan Facility and a $75.0 million five-year senior secured revolving credit facility, of which up to $20.0 million can be used for the issuance of letters of credit. As of March 31, 2025 (Successor), we had $771.1 million of indebtedness outstanding under the Term Loan and no amounts outstanding under the Revolving Credit Facility. For discussion of the First Amendment to our Credit Agreement, see “Note 11. Debt”.

For discussion of the covenants contained in the Credit Agreement governing our Revolving Credit Facility, see “Note 11. Debt” of the Notes to our unaudited condensed Consolidated Financial Statements. As of March 31, 2025 (Successor), we were in compliance with these covenants.

ASP Acuren entered into a credit agreement on December 20, 2019, as amended (the “2019 Credit Agreement”) that provided for a term loan and a revolving credit facility of $715.0 million and $75.0 million, respectively. In connection with the Acuren Acquisition on July 30, 2024, the 2019 Credit Agreement was repaid in full.

Cash Flows

The following table summarizes net cash flows with respect to Acuren’s operating, investing, and financing activities for the periods indicated:

Cash flows attributable to our operating activities

Net cash provided by operating activities for the three months ended March 31, 2025 (Successor) was $32.8 million, an increase of $11.9 million compared to cash provided by operating activities of $20.9 million in the three months ended March 31, 2024 (Predecessor). The change in cash used in operating activities was primarily driven by positive changes in operating assets and liabilities partially offset by an increase in net loss.

Cash flows attributable to our investing activities

For the three months ended March 31, 2025 (Successor), net cash used in investing activities was $12.2 million, a decrease of $22.1 million compared to net cash used in investing activities of $34.4 million for the three months ended March 31, 2024 (Predecessor) as a result of less cash used in acquisitions.

Cash flows attributable to our financing activities

For the three months ended March 31, 2025 (Successor), net cash used in financing activities was $5.6 million, consisting primarily of payments on the term loan, as well as principal payments on finance leases and payments on debt issuance costs.

For the three months ended March 31, 2024 (Predecessor), net cash provided by financing activities was $15.7 million, consisting primarily of borrowings under the 2019 Credit Agreement, partially offset by principal payments on finance leases and payments of debt issuance costs.

Effect of exchange rate changes on cash and cash equivalents

For the three months ended March 31, 2025 (Successor) and three months ended March 31, 2024 (Predecessor), the effect of foreign exchange rate changes on cash was $1.6 million and $0.5 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in the U.S. Dollar exchange rate against the Canadian Dollar.

Off-Balance Sheet Arrangements

During the three months ended March 31, 2025 (Successor) or the three months ended March 31, 2024 (Predecessor), we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Recently Issued Accounting Pronouncements

See “Note 1. Description of Business and Basis of Presentation” of the Notes to our unaudited condensed Consolidated Financial Statements for disclosures regarding recently issued accounting pronouncements and the critical accounting policies related to our business.

Critical Accounting Estimates

There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the 2024 Annual Report.