Flowco Holdings Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. The following discussion includes forward-looking statements that involve certain risks and uncertainties. For further information on items that could impact our future operating performance or financial condition, see the sections entitled “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report. We assume no obligation to update any of these forward-looking statements, except as required by law. Unless otherwise indicated or the context otherwise requires, the historical financial information in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” reflects only the historical financial results of Flowco Holdings Inc. and its consolidated subsidiaries and references to the “Company,” “we,” “our,” or “us” are to Flowco Holdings Inc. and its consolidated subsidiaries

Background and Business Overview

We are a leading provider of production optimization, artificial lift and emissions management and monetization solutions for the oil and natural gas industry. The Company’s core technologies include high pressure gas lift (“HPGL”), electric submersible pump (“ESP”), conventional gas lift, plunger lift, and vapor recovery units (“VRUs”), all supported by proprietary digital tools that enable real-time remote monitoring and control to enhance efficiency and performance.

Consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources, our operations are conducted, managed and presented within the following two reportable segments:

• Production Solutions: segment is comprised of our artificial lift operation, including digital solutions; and
• Natural Gas Technologies: segment is comprised of our vapor recovery and natural gas systems operations.

The Production Solutions operations are critical to maximizing the economic lifespan and profitability of oil and gas wells, particularly as production naturally declines over time – especially in shale formations. The Company’s artificial lift and optimization technologies are essential in maintaining production rates and enabling wells to remain economically viable, making these offerings less discretionary and more integrated into ongoing operations.

In the Natural Gas Technologies segment, the Company also holds a leading position in the rapidly growing market for methane abatement, offering innovative VRUs and related technologies that capture fugitive emissions of methane and other hydrocarbons. These solutions not only provide economic value by monetizing captured gas, but also help customers achieve decarbonization goals and comply with increasingly stringent environmental regulations. Initially driven by safety and operational benefits, demand for these solutions has accelerated due to their strong return on investment and regulatory necessity. As a result, the Company’s offerings are viewed as indispensable in both economic and environmental contexts, providing our customers with durable earnings and stable through-cycle performance in their well productions.

Overall, we have strategically positioned ourselves to provide products and services that include a full range of equipment and technology solutions that enable our customers to efficiently and cost-effectively maximize the profitability and economic lifespan of the production phase of their operations. As a result of this strategic position, we are able to generate revenues throughout the long producing lives of oil and natural gas wells. Our products and services also integrate proprietary digital technologies that allow for remote monitoring and controls, and other enhanced uses of our equipment. We have an operating presence in every major onshore oil and natural gas producing region in the United States.

As of March 31, 2026, our Production Solutions and Natural Gas Technologies segments operated a combined fleet of over 5,400 active systems, generating consistent, recurring revenues through the long production life of wells. For a more detailed overview of our business, see Part 1. Item 1. Business and Part 1. Item 2. Properties included in our Annual Report.

Recent Developments and Trends

Valiant Acquisition

On March 2, 2026, we completed the previously announced agreement to acquire all of the issued and outstanding equity interests of Riverstone Oilfield Services and Equipment, Inc., a Delaware corporation (the “Acquired Company”), from Riverway Group, a Cayman Islands exempted company with limited liability (the “Seller”) pursuant to the Stock Purchase Agreement dated as of February 1, 2026 (the “Purchase Agreement”) by and between the Company and the Seller. The Acquired Company is the parent company of its wholly owned subsidiary, Valiant Artificial Lift Solutions, LLC (“Valiant”).

Pursuant to the Purchase Agreement, we paid aggregate consideration, including Valiant’s cash on hand, of approximately $315.9 million, consisting of (i) $283.1 million of cash, of which $121.3 million was related to Valiant’s cash on hand, subject to adjustment in accordance with the Purchase Agreement, and (ii) 1,454,849 shares of Class A common stock of the Company. We funded the cash portion of the acquisition through available capacity under our Revolving Credit Facility. Upon the consummation of this acquisition, both the Acquired Company and Valiant became our wholly owned subsidiaries.

We believe this acquisition (the “Valiant Acquisition”) strategically diversifies our complementary fleet within the Production Solutions segment and allows for significant expected synergies to our already vertically integrated business models across the long life production stages of a well. For additional information on the Valiant Acquisition, see Note 3 – Business Combination and Asset Acquisition of the notes to the condensed consolidated financial statements in this Quarterly Report.

Macroeconomic Conditions and Outlook

We monitor macroeconomic conditions and industry-specific drivers and key risk factors affecting our business segments as we formulate our strategic plans and make decisions related to allocating capital and human resources. Our business segments provide products and services to support oil and natural gas production. As a result, we are substantially dependent upon global oil production levels, as well as operating expenditures and new investment activity levels in the oil and natural gas sector. Demand for our products and services is impacted by overall global demand for oil and natural gas, ongoing depletion rates of existing oil and natural gas wells, and our customers’ willingness to invest in the development of new oil and natural gas resources. Our customers determine their operating and capital budgets based on current and expected future crude oil and natural gas prices and expectation of industry cost levels, among other factors. Crude oil and natural gas prices are impacted by supply and demand, which are influenced by geopolitical, macroeconomic and local events, and have historically been subject to substantial volatility and cyclicality.

We acknowledge the evolving and complex nature of the global tariff environment. Additionally, we also understand that current uncertainties about the tariffs and their effects on trading relationships may affect cost for and availability of raw materials or contribute to inflation in the markets in which we operate and increase economic pressures on our customers. We do not believe that the impacts on the current tariff environment will materially affect our business operations and results of operations. However, we continue to actively monitor the economic effects of the uncertainties created from these tariffs, as well as opportunities to mitigate their related impacts, costs and other effects in our business operations.

Over the mid to long-term, we expect demand for oil and natural gas exploration and production as well as new energy platforms to continue to require more advanced technology from the energy services industry. While the ongoing uncertainties persist for reasons mentioned above, we remain cautiously optimistic that our integrated scope of products and service offerings, our differentiated technologies and a strong market presence will enable us to achieve a sustained long-term growth.

Critical Accounting Estimates

Refer to our “Critical Accounting Estimates” included in Part II, Item 7 – Management’s Discussions and Analysis included in our Annual Report for a discussion of our critical accounting estimates.

Consolidated Results of Operations

The following discussions relating to significant line items from our condensed consolidated statements of operations are based on available information and represent our analysis of significant changes or events that impact the comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items.

We currently have two operating segments: (i) Production Solutions and (ii) Natural Gas Technologies. Our corporate headquarters and certain functional departments do not earn revenues but incur costs which do not constitute business activities. Therefore, these corporate headquarters and certain functional departments do not qualify as an operating segment and have been included within corporate and other, which is also not considered a reportable segment. Corporate and other includes (i) corporate and overhead costs, and (ii) capitalized costs related to IPO and debt issuance. Corporate does not include any immaterial and aggregated operating segments. The performance of our operating segments is primarily evaluated based on revenue and segment profit or loss with respect to such segments, in addition to other measures.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Revenue – rentals. Rental revenue was $121.9 million for the three months ended March 31, 2026, an increase of $24.6 million, or 25%, from $97.3 million for the three months ended March 31, 2025. This increase in rental revenue was driven primarily by three factors as follows:

• Surface equipment fleet size experienced an increase of 188 average active systems per month from 1,480 during the three months ended March 31, 2025, to 1,668 average active surface equipment systems per month during the three months ended March 31, 2026. Additionally, average rental rate also had a $1,511 increase in average monthly price from $12,397 per unit during the three months ended March 31, 2025 to $13,908 per unit during the three months ended March 31, 2026. These increases approximate 13% and 12% for fleet size and average rental rate per unit, respectively, and contribute to a total increase in surface equipment rental revenue of $14.6 million, or approximately 26%.
• Vapor recovery fleet size experienced an increase of 69 average active systems per month from 2,952 during the three months ended March 31, 2025 to 3,021 average active vapor recovery units per month during three months ended March 31, 2026. Additionally, average rental rate had a $353 increase in average monthly price from $4,718 per unit during the three months ended March 31, 2025 to $5,071 per unit during the three months ended March 31, 2026. These increases approximate 2% and 7% for fleet size and average rental rate per unit, respectively, and contribute to a total increase in vapor recovery rental revenue of $4.2 million, or approximately 10%.
• Downhole component fleets are new additions to our fleet footprint resulting from the Valiant Acquisition on March 2, 2026, as discussed above. Due to the timing of this acquisition, our rental revenues include one month of operations of these downhole component fleets. During the three months ended March 31, 2026, the downhole component fleets consist of 802 average active systems.

Revenue – sales. Sales revenue was $87.7 million for the three months ended March 31, 2026, a decrease of $7.4 million, or 8%, from $95.1 million for the three months ended March 31, 2025. This decrease in sales revenue was primarily due to a completion of a project for a customer during the three months ended March 31, 2025 and a shift in purchasing patterns from our operators from historically purchasing our VRUs to recently seeking out the rental options within the Natural Gas Technologies segment of approximately $11.5 million, partially offset by increased downhole component sales of approximately $4.3 million primarily due to additional sales from the Valiant Acquisition during the three months ended March 31, 2026 that was absent in the three months ended March 31, 2025.

In addition to sales to our external customers, we sell our natural gas systems through intercompany transactions for further use in the Production Solutions segment. Approximately $11.2 million of intercompany natural gas system sales to the Production Solutions segment were recognized in the three months ended March 31, 2026, an increase of approximately $2.1 million in intercompany revenues from approximately $9.1 million in the three months ended March 31, 2025 due to continued growth in our Production Solutions segment. All intercompany revenues have been eliminated in consolidation.

Cost of rentals. Rental cost was $32.6 million in the three months ended March 31, 2026, an increase of $5.7 million, or approximately 21%, from $26.9 million for the three months ended March 31, 2025. The increase was primarily due to higher costs of approximately $5.0 million associated with surface equipment rental fleet rental units. The 20% increase of total cost of rentals contributed to the increase in total rental revenues of 25% discussed above.

Cost of sales. Sales cost was $62.4 million for the three months ended March 31, 2026, a decrease of $3.2 million, or approximately 5%, from $65.6 million for the three months ended March 31, 2025. This decrease was primarily attributable to the reduced sales volume from our natural gas systems sales within the Natural Gas Technologies segment resulting from a completion of a project for a customer in 2025 and a shift in purchasing patterns by our customers, partially offset by increased downhole component sales resulting primarily from the Valiant Acquisitions during the three months ended March 31, 2026.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended March 31, 2026 were $36.5 million, an increase of $5.9 million, or approximately 19%, from $30.5 million for the three months ended March 31, 2025. This increase was primarily attributable to (i) $7.4 million increase in corporate selling, general and administrative expenses related to the added personnel, marketing and sales expenses as we continue to grow as a publicly traded company and from the Valiant Acquisition, (ii) an additional $1.7 million of Valiant’s selling, general and administrative expenses that were absent in the three months ended March 31, 2025, partially offset by (iii) a net decrease of approximately $2.7 million from the operating subsidiaries primarily due to a one-time expense associated with the crystallization of legacy profits interest during three months ended March 31, 2025 in anticipation of the IPO.

Depreciation and amortization. Depreciation and amortization was $41.5 million for the three months ended March 31, 2026 an increase of $7.4 million or approximately 22%, from $34.1 million for the three months ended March 31, 2025. The increase was primarily attributable additional depreciation and amortization expense related to to the organic growth of our rental fleet, the assets acquired in the Archrock acquisition and the assets acquired from the Valiant Acquisition. The depreciation and amortization expenses associated with the assets acquired from these acquisitions are not reflected in the depreciation and amortization expenses for the three months ended March 31, 2025, as these acquisitions occurred subsequently.

Interest expense. Interest expense was $4.3 million in the three months ended March 31, 2026 compared to $5.4 million in the three months ended March 31, 2025. This decrease in interest expense of $1.0 million, or approximately 19%, was primarily due to decreased average borrowings outstanding in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily attributable to our ability to maintain and, from time-to-time, reduce, using cash flows provided by operations, an overall average daily borrowings outstanding throughout the remainder of 2025 after the IPO and into the three months ended March 31, 2026, partially offset with increased borrowings outstanding in March 2026 to fund the Valiant Acquisition.

Income tax provision. Income tax provision was $4.0 million for the three months ended March 31, 2026, an increase of $1.4 million, or approximately 52%, compared to $2.6 million for the three months ended March 31, 2025. This increase in income tax provision is primarily attributable to the impact on the tax rate due to the Company’s increased ownership in Flowco LLC in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Liquidity and Capital Resources

IPO and Subsequent Transactions

On January 15, 2025, we consummated our IPO and received $461.8 million net proceeds from the sale of 20,470,000 shares of our Class A common stock. The net proceeds from our IPO were used to purchase 20,470,000 newly issued LLC Interests directly from Flowco LLC at a price per unit equal to the IPO price per share of Class A common stock.

In connection with the IPO described above, Flowco LLC used the net proceeds received from us to: (i) redeem approximately $20.9 million of Flowco LLC interests from certain non-affiliate holders and (ii) with respect to the remainder, repay indebtedness under our Credit Agreement in the amount of $440.0 million.

Sources of Liquidity and Indebtedness

As of March 31, 2026, we had $17.3 million of cash and cash equivalents. We believe existing cash and cash equivalents and cash flows from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. We have historically generated cash and fund our operations primarily from cash flows from operating activities as well as availability under our Credit Agreement. Borrowings under our Credit Agreement have a maturity date of August 20, 2029, in which all principal owed is payable upon maturity. Our interest rate is Term Secured Overnight Finance Rate (“SOFR”) for one month plus 0.1% (“Adjusted REVSOFR30”) plus a contractual applicable margin based on the Company’s calculated leverage ratio, which combined approximates 5.51% per annum at the effective date with interest due monthly. If such rate is below contractual minimums, the interest rate will be calculated based on Adjusted Term SOFR Rate, Adjusted REVSOFR30 Rate or the Adjusted Daily Simple SOFR Rate. Depending upon market conditions and other factors, we may also have the ability to issue additional equity and/or debt, as needed.

As of May 1, 2026, we had $332.9 million outstanding borrowings and $387.5 million available borrowing capacity under our Credit Agreement.

Additional Liquidity Requirements

As a holding company, we have no material assets other than our ownership of LLC Interests in Flowco LLC. As such, we have no independent means of generating revenue. The Flowco LLC Agreement provides for the payment of certain distributions to the Continuing Equity Owners and to us in amounts sufficient to cover the income taxes imposed on the Company with respect to the allocation of taxable income from Flowco LLC as well as to cover our obligations under the TRA and other administrative expenses.

Regarding the ability of Flowco LLC to make distributions to us, the terms of their financing arrangements (including the Credit Facility) contain covenants that may restrict Flowco LLC or its subsidiaries from paying such distributions, subject to certain exceptions. Further, Flowco LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Flowco LLC (with certain exceptions), as applicable, exceed the fair value of its assets.

In addition, under the TRA, we are required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize (or in certain circumstances are deemed to realize), as a result of (i) Basis Adjustments; (ii) Section 704(c) Allocations; and (iii) certain tax benefits (such as interest deductions) arising from payments made under the TRA. We expect the amount of the cash payments that we will be required to make under the TRA will be significant. The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of redemptions or exchanges by the Continuing Equity Owners, the amount of gain recognized by the Continuing Equity Owners, the amount and timing of the taxable income we generate in the future, and the federal tax rates then applicable. Any payments made by us to the Continuing Equity Owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us.

Additionally, when we declare any cash dividends, we intend to cause Flowco LLC to make distributions to us in amounts sufficient to fund such cash dividends declared by us to our stockholders. Deterioration in the financial condition, earnings, or cash flow of Flowco LLC for any reason could limit or impair their ability to pay such distributions.

If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To the extent we are unable to make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore accelerate payments due under the TRA. In addition, if Flowco LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.

See Part I – Item 1A. Risk Factors-Risks Related to our Organizational Structure in our Annual Report.

Dividends

Our Board of Directors may elect to declare cash dividends on our Class A common stock, subject to our compliance with applicable law, and depending on, among other things, economic conditions, our financial condition, results of operations, projections, liquidity, earnings, legal requirements, and restrictions in the agreements governing our indebtedness.

On January 30, 2026, our Board of Directors declared and paid a cash dividend of $0.08 per share payable to holders of Class A common stock of record as of the close of business on February 13, 2026 (the “Common Stock Dividend”). In conjunction with the Common Stock Dividend, Flowco LLC declared a distribution on its units of $0.08 per unit to all unitholders of record of Flowco LLC as of the close of business on February 13, 2026. The declaration and payment of future dividends will be at the discretion of our Board of Directors and will depend on future business conditions, financial conditions, results of operations and other factors.

Common Share Repurchase Program

On June 11, 2025, our Board of Directors authorized a $50 million share repurchase program (the “Repurchase Program”) to reacquire shares via open market purchase, privately negotiated transactions, or by other means in accordance with the regulations of the Securities and Exchange Commission. The Repurchase Program does not obligate us to repurchase any particular amount of shares and may be modified, suspended, or discontinued at any time. The timing of purchases and the number of shares repurchased under the Repurchase Program will depend on a variety of factors including price, trading volume, market conditions and corporate and regulatory requirements.

During the three months ended March 31, 2026, we repurchased and subsequently retired 780,000 shares of our Class A common stock at an average price of $21.18 per share, excluding commissions.

As of March 31, 2026, the remaining total available authorization under the Repurchase Program was approximately $18.2 million.

Cash Flow Analysis

The following table presents our summary cash flows for the periods presented (in thousands):

Operating Cash Flows– Net cash provided by operating activities was $78.7 million in the three months ended March 31, 2026 compared to $42.5 million in the three months ended March 31, 2025, an increase of approximately $36.2 million. Operating cash flows increased primarily due to timing of payments to vendors, suppliers and other third parties.

Investing Cash Flows – Net cash used in investing activities was $188.3 million and $27.7 million for the three months ended March 31, 2026 and 2025, respectively. The approximately $160.6 million increase in net cash used was primarily attributable to the cash paid for the Valiant acquisition during the three months ended March 31, 2026.

Financing Cash Flows – Cash from financing activities had a favorable swing of $141.2 million from a net cash used of $18.8 million in the three months ended March 31, 2025 to net cash provided by financing activities of $122.4 million in the three months ended March 31, 2026. This $141.2 million change was primarily attributable to (i) $615.0 million cash proceeds from, net of repayments to, our long-term debt, (ii) the absence of $20.9 million purchase of LLC Interests from the Continuing Equity Owners immediately following the IPO, partially offset by (i) the absence of $461.8 million IPO proceeds in January 2025, (ii) $16.5 million of repurchase of Class A common stock in March 2026 and (iii) $14.8 million distributions to the members of Flowco LLC in the three months ended March 31, 2026.

Critical Accounting Policies and Estimates

In preparing our financial statements in conformity with U.S. GAAP, we must make decisions that impact the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgments based on our understanding and analysis of the relevant circumstances, historical experience, and business valuations. Actual amounts could differ from those estimated at the time the Consolidated Financial Statements are prepared.

Our significant accounting policies are described in Note 2 – Summary of Significant Accounting Policies to our accompanying financial statements included elsewhere in this Quarterly Report on Form 10-Q. Some of those significant accounting policies require us to make difficult, subjective, or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria: (i) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made and (ii) different estimates reasonably could have been used, or changes in the estimate that are reasonably likely to occur from period to period may have a material impact on the presentation of our financial condition, changes in financial condition, or results of operations. There have been no material changes to the Company’s critical accounting estimates since our Annual Report, except as described below.

Fair Value Estimates in Business Combination Accounting

Business combination accounting requires that assets acquired and liabilities assumed be recorded at their estimated fair value in connection with the initial recognition of the transaction. Estimating fair value of assets acquired and liabilities assumed in connection with business combination accounting requires management to make estimates, assumptions and judgments, and in some cases management may also utilize third-party specialists to assist and advise on those estimates.

In order to estimate the fair value of assets acquired and liabilities assumed, we utilized widely accepted valuation techniques, including discounted cash flow and cost methods. The discounted cash flow method utilizes assumptions that include, but are not limited to, estimated future cash flows, discount rates applied to estimated future cash flows, estimated rates of return and estimated customer attrition rates. Cost methods estimate the fair value of assets based on the estimated construction, and in some cases, replacement cost of the assets, and requires the use of various inputs and assumptions. While we believe that we have made reasonable assumptions to estimate the fair value, these assumptions are inherently uncertain. An estimate of the sensitivity to changes in our assumptions is not practicable given the numerous assumptions, and their interdependence, that can materially affect our estimates.

The purchase price allocation recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 – Summary of Significant Accounting Policies to our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies, and our consolidated financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if as an emerging growth company we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our systems of internal controls over financial reporting pursuant to Section 404, (ii) provide all the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Act, (iii) comply with the requirement of the PCAOB regarding the communication of critical audit matters in the auditor’s report on the financial statements, and (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation. These exemptions will apply until we no longer meet the requirements of being an emerging growth company. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.

Recent Accounting Pronouncements

For a discussion of new accounting pronouncements recently adopted and not yet adopted, refer to Note 2 – Summary of Significant Accounting Policies to our accompanying condensed consolidated financial statements in this Quarterly Report.

We are exposed to market risk from changes in interest rates and inflation. These market risks arise in the normal course of business. During the three months ended March 31, 2026, there have been no material changes to the information included under Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of March 31, 2026.

Based on the evaluation of our disclosure controls and procedures, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of March 31, 2026 due to the material weaknesses in our internal control over financial reporting described below.

Notwithstanding the material weaknesses discussed below, we believe our condensed consolidated financial statements fairly present, in all material respects, our financial condition, results of operations, and cash flows for the periods presented, in accordance with GAAP.

Previously Reported Material Weaknesses

As disclosed in Item 9A – Controls and Procedures, of our Annual Report, we previously identified material weaknesses in our internal control over financial reporting, which continue to exist as of March 31, 2026. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

We identified the following material weaknesses in our internal control over financial reporting:

• We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of resources with an appropriate level of accounting knowledge, experience and training to appropriately analyze, record and disclose accounting matters timely and accurately and establish effective processes and controls. Additionally, the lack of a sufficient number of professionals resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in the finance and accounting functions.

This material weakness contributed to the following additional material weaknesses:

• We did not design and maintain effective controls related to the period-end financial reporting process, including designing and maintaining formal accounting policies, procedures and controls to achieve,

complete, accurate and timely financial accounting, reporting and disclosures. Additionally, we did not design and maintain effective controls over the preparation and review of account reconciliations and journal entries, including maintaining appropriate segregation of duties for all significant accounts.

• We did not design and maintain processes and controls to analyze and account for non-routine, unusual or complex transactions. Specifically, we did not design and maintain controls over the review of transactions utilizing a specialist.
• We did not design and maintain effective IT general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain:
• (i) program change management controls to ensure that program and data changes are identified, tested, authorized and implemented appropriately;
• (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel;
• (iii) computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored; and
• (iv) program development controls to ensure that new software development is tested, authorized and implemented appropriately.

The material weaknesses resulted in a revision to a disclosure in the consolidated financial statements as of and for the year ended December 31, 2023, and immaterial adjustments to the consolidated financial statements as of and for the years ended December 31, 2023 and 2022, and as of and for the nine-month period ended September 30, 2024. The material weaknesses also resulted in adjustments recorded prior to the issuance of the consolidated financial statements as of and for the year ending December 31, 2024 and an adjustment to a disclosure recorded prior to the issuance of the condensed consolidated financial statements as of and for the nine-month period ended September 30, 2024. The material weaknesses also resulted in a revision to the previously issued consolidated financial statement for the interim periods prior to September 30, 2025, the annual period ended December 31, 2024 and the previously filed prospectus for the nine months ended September 30, 2024. These material weaknesses could result in misstatements of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.

Remediation Plans

We have taken, and will continue to take, steps to address the material weaknesses, including:

• We have hired, and will continue to hire, additional accounting, internal audit, and information technology personnel to establish effective processes and controls, including establishing appropriate segregation of duties;
• We have developed, and continue to refine, formal accounting policies, procedures and controls related to the period-end financial reporting process including designing and maintaining controls over account reconciliations, journal entries, and financial reporting and disclosures;
• We have designed and maintained processes and controls to analyze and account for non-routine, unusual or complex transactions, including review of transactions utilizing a specialist; and
• We have implemented, and plan to continue to enhance, information technology governance processes, including our program change management, computer operations, program development, and user access controls, enhancing role-based access, and more robust information technology policies and procedures.

We are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that control deficiencies contributing to the material weaknesses are remediated. We have made progress towards remediation and will continue to implement our remediation plan for the material weaknesses in internal control over financial reporting described above. We will not consider the material weaknesses remediated until the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the period covered in this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

In addition to the other information set forth in this Quarterly Report (including the risk factor set forth below), you should carefully consider the factors discussed under Part I, Item 1A. Risk Factors in our Annual Report. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this Quarterly Report. Except as set forth below, there have been no material changes in the risks affecting the Company since the filing of our Annual Report.

We are no longer a “controlled company” within the meaning of the rules of the NYSE.

Following the consummation of the offering of our Class A common stock by certain affiliates of GEC in March 2026, we are no longer a “controlled company” within the meaning of the rules of the NYSE. However, even though we are no longer a “controlled company,” during a one-year transition period we will continue to qualify for, and may rely on, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies, including:

• the requirement that our Board be composed of a majority of independent directors;
• the requirement that our Compensation Committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
• the requirement that our Nominating and Corporate Governance Committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

As a “controlled company”, we currently rely only on the above exemptions. However, before the one-year transition period has expired, our Board will be composed of a majority of independent directors and each of our Compensation Committee and the Nominating and Governance Committee will be composed entirely of independent directors in accordance with the corporate governance rules of the NYSE.

The independence standards are intended to ensure that directors who meet those standards are free of any conflicting interest that could influence their actions as directors. Accordingly, stockholders may not have the same protections afforded to stockholders of other companies that are subject to all of the corporate governance requirements of the NYSE.