TIC Solutions, Inc.: Form 10-Q for the period ended Sep 30, 2025

ASP Acuren is our accounting predecessor. The following is a discussion of the results of operations of: (i) TIC Solutions, Inc. (formerly Acuren Corporation) (Successor) for the three months ended September 30, 2025, compared to the results of operations of ASP Acuren (Predecessor) for the period from July 1, 2024 through July 29, 2024, and of TIC Solutions, Inc. (Successor) for the period from July 30, 2024 through September 30, 2024, and (ii) TIC Solutions, Inc. (Successor) for the nine months ended September 30, 2025, compared to the results of operations of ASP Acuren (Predecessor) for the period from January 1, 2024 through July 29, 2024 and of TIC Solutions, Inc. (Successor) for the period from July 30, 2024 through September 30, 2024. This discussion should be read in conjunction with the information contained in the unaudited TIC Solutions, Inc. condensed consolidated financial statements and the notes related thereto included elsewhere in this Quarterly Report. The tables below are presented in thousands except for percentages as well as share and per share amounts.

In this section, “we,” us,” “our” and “Company” refer to TIC Solutions, Inc. (Successor) for the three and nine months ended September 30, 2025 and the Successor period from July 30, 2024 through September 30, 2024, and ASP Acuren Holdings, Inc. (Predecessor) for the Predecessor period from January 1, 2024 through July 29, 2024.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report contains “forward-looking statements”. These forward-looking statements are based on beliefs and assumptions as of the date such statements are made and are subject to risks and uncertainties. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including “expect,” “anticipate,” “project,” “will,” “should,” “believe,” “intend,” “plan,” “estimate,” “potential,” “target,” “would,” and similar expressions, although not all forward-looking statements contain these identifying terms. These forward-looking statements are based on our current expectations and assumptions and on information currently available to management and include, among others, statements concerning our expectations regarding, as of the date such statements are made: (i) economic, industry and market conditions, including as a result of inflation, and trade and geopolitical conflicts, (ii) the sufficiency of our current sources of liquidity to fund our future liquidity requirements, our expectations regarding the types of future liquidity requirements and our expectations regarding the availability of future sources of liquidity, (iii) the cost of compliance with laws and regulations, (iv) the impact of legal claims and related contingencies, (v) estimates and liabilities regarding accounting and tax matters, and (vi) the Company’s acquisitions, including the NV5 Acquisition and the goodwill, synergies and benefits of such acquisition.

These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including, among others, (i) economic conditions affecting the industries we serve, including the construction industry and the energy sector, as well as general economic conditions; (ii) adverse developments in the credit markets that could adversely affect funding of construction projects; (iii) the ability and willingness of customers to invest in infrastructure projects; (iv) a decline in demand for our services or for the products and services of our customers; (v) the fact that our revenues are derived primarily from contracts with durations of less than six months and the risk that customers will not renew or enter into new contracts; (vi) our ability to successfully acquire other businesses, successfully integrate acquired businesses into our operations and manage the risks and potential liabilities associated with those acquisitions; (vii) our ability to compete successfully in the industries and markets we serve; (viii) our ability to properly manage and accurately estimate costs associated with specific customer projects, in particular for arrangements with fixed price terms; (ix) increases in the cost, or reductions in the supply, of the materials we use in our business and for which we bear the risk of such increases; (x) the inherently dangerous nature of the services we provide and the risks of potential liability; (xi) the seasonality of our business and the impact of weather conditions; (xii) our ability to remediate any material weaknesses; (xiii) the impact of health, safety and environmental laws and regulations, and the costs associated with compliance with such laws and regulations; (xiv) our substantial level of indebtedness and the effect of restrictions on our operations set forth in the documents that govern such indebtedness; (xv) a prolonged government shutdown, and (xvi) our compliance with certain financial maintenance covenants in the documents governing our indebtedness and the effect on our liquidity of any failure to comply with such covenants.

Please see “Risk Factors” located in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, our registration statement on Form S-4 filed with the SEC on June 25, 2025, and declared effective on June 27, 2025, our Form 10-Q for the quarter ended June 30, 2025, filed with the SEC on August 14, 2025, and Part II, Item 1A of this Quarterly Report for a further discussion of these and other risks and uncertainties which could affect our future results. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. We undertake no obligation to revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events, except to the extent we are legally required to disclose certain matters in our SEC filings or otherwise.

Overview

We are a leading provider of tech-enabled Testing, Inspection, Certification and Compliance (TICC), engineering and consulting, and geospatial services. We provide mission-critical services that are essential to the safety, reliability, and efficiency of industrial assets, buildings and public infrastructure. Our services are often non-discretionary and are driven by regulatory requirements, customer risk management policies, and the need to extend the useful life of critical assets.

We operate primarily in North America and serve both public and private-sector clients. Our public-sector clients include federal, state, and municipal agencies, public utilities, transportation authorities, and environmental regulators. Our private-sector clients span industrial, infrastructure, construction, and commercial real estate end markets. Within industrial markets, our services address energy processing and refining, pipeline and midstream infrastructure, chemicals and industrial processing, manufacturing and industrial services, power generation and utilities, and companies in aerospace, automotive, renewable energy, pulp and paper, and mining. We provide mission-critical services that are essential to the safety, reliability and efficiency of industrial assets, buildings, and public infrastructure. Our services are often non-discretionary and are driven by regulatory requirements, customer risk management policies, and the need to extend the useful life of critical assets.

On August 4, 2025 (the “NV5 Closing Date”), we completed our acquisition of NV5, an engineering and consulting services company (the “NV5 Acquisition”), and on October 10, 2025, we changed our name from Acuren Corporation to TIC Solutions, Inc.

Recent Developments

Merger with NV5

On August 4, 2025, we completed the previously announced NV5 Acquisition. NV5 is a global provider of infrastructure engineering, building systems, environmental consulting and geospatial analytics to public and private sector clients in the infrastructure, utility services, construction, real estate, environmental and geospatial markets. Pursuant to the terms of merger agreement, the aggregate purchase price was approximately $1.7 billion, including the full repayment of NV5’s outstanding debt. The Company paid total consideration consisting of $870.9 million in cash and the issuance of approximately 73.2 million shares of common stock.

Tax Legislation

On July 4, 2025, the “One Big Beautiful Bill Act” was enacted into law. The legislation includes changes to federal tax law, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation and more favorable rules for determining the limitation on business interest expense, among other changes. The legislation is reflected in the annual effective rate and the cash tax position of the Company.

Credit Facility Updates

On January 31, 2025, we entered into the First Amendment to the Credit Agreement, pursuant to which, the interest rate margins for the Term Loan decreased from 2.50% to 1.75% for the base rate and from 3.50% to 2.75% for SOFR. All other material terms of the Credit Agreement, including the aggregate principal amount, repayment terms and interest rate applicable on the Revolving Credit Facility remained the same. See “Liquidity and Capital Resources — Financing” for more information.

On August 4, 2025, in connection with the NV5 Acquisition, we entered into the Second Amendment to the Credit Agreement (the “Second Amendment”). The Second Amendment amended the Credit Agreement to: (i) include new 2025 Term Loans in an aggregate principal amount of $875.0 million (the “2025 Term Loans, and together with the 2024 Term Loans (as defined below), the “Term Loans”), and (ii) increased the aggregate amount of the senior secured revolving credit facility from $75.0 million to $125.0 million. Principal payments on the Term Loans commenced on September 30, 2025, and are made in quarterly installments on the last day of each fiscal quarter in an amount equal to $4.1 million, subject to adjustments in accordance with the Credit Agreement.

As of September 30, 2025 (Successor), we had $1.6 billion of principal outstanding under the Term Loans. The interest rate applicable to the Term Loans is, at the Company’s option, either: (1) a base rate plus an applicable margin equal to 1.75% or (2) SOFR plus an applicable margin equal to 2.75%. The Term Loans will mature on July 30, 2031.

With respect to the Second Amendment, “Interest expense, net” included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2025, includes interest expense, amortization of debt issuance costs and unused commitment fees on the Revolving Credit Facility incurred since the NV5 Closing Date.

Private Placement

On October 5, 2025, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the investor named therein (the “Investor”), for the private placement (the “Private Placement”), of (i) 17,708,333 shares of our common stock, par value $0.0001 per share, at $12.00 per share and (ii) a pre-funded warrant (the “Pre-Funded Warrant”) to purchase 3,125,000 shares of common stock, at $12.00 per share. The aggregate gross proceeds of the Private Placement were approximately $250.0 million, before deducting placement agent fees and other expenses.

The Pre-Funded Warrant has an exercise price of $0.0001 per share of common stock, is immediately exercisable and will remain exercisable until exercised in full. The Pre-Funded Warrant is exercisable in cash or by means of a cashless exercise. The Investor may not exercise the Pre-Funded Warrant if the Investor, together with its affiliates, would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise; provided, however, that a holder may increase or decrease such percentage by giving 61 days’ notice to us, but not to any percentage in excess of 19.99%.

The Private Placement closed on October 7, 2025. We intend to use the net proceeds from the Private Placement for general corporate purposes.

Also on October 7, 2025, in connection with the Purchase Agreement, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investor. Pursuant to the Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the SEC as soon as reasonably practicable following the date of the Registration Rights Agreement (but in no event later than the date that is fifteen (15) days after the closing of the Private Placement) for purposes of registering the resale of the shares of common stock issued pursuant to the Purchase Agreement and shares of common stock issuable upon exercise of the Pre-Funded Warrant. The registration statement became effective on October 29, 2025.

Certain Factors and Trends Affecting Results of Operations

Summary of Acquisitions

In addition to the NV5 Acquisition and Acuren Acquisition, the Company completed other immaterial acquisitions during the periods presented that also affect the comparability of its results of operations.

Economic, Industry and Market Factors

We may experience increased costs associated with the recent developments around tariffs between the United States, Canada, and other international jurisdictions and will continue to monitor market conditions and respond accordingly. We also have observed some impact from inflationary pressures during 2024 and into 2025. Although we look to mitigate the impact of these pressures with a combination of cost management and price initiatives, there can be no guarantee that these initiatives will be successful. There has been no direct effect on our business from the Russian-Ukrainian or the Middle Eastern conflicts, although these conflicts may have an impact on certain end markets, results of operations or liquidity or in other ways which we cannot yet determine.

On October 1, 2025, following the lapse of a continuing resolution, the U.S. government began shutdown procedures. The duration of the shutdown is unknown at this time. Currently, efforts are underway in Congress to reach an agreement and restore government functions. This shutdown may cause a reduction or delay on our existing contracts, as well as lead to potential delays in other government contracting processes and payments. Once the federal government resumes operations, Congress plans to revisit the fiscal year 2026 appropriations legislation, intending to complete the process by the end of the calendar year. Our business and results of operations may be impacted by disruptions to the U.S. government operations, and these impacts may include delays in contract awards and new program starts. A prolonged shutdown could delay new awards and funding on existing projects involving the U.S. government agencies and prime contractor customers. These delays may temporarily affect the timing of our revenue recognition or reduce near-term liquidity. Management is monitoring the situation and will evaluate potential mitigation measures, if necessary.

The Organization for Economic Co-operation and Development (“OECD”) 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. The U.S. and other countries continue to discuss how Pillar 2 will apply to U.S. companies. We are continuing to evaluate and monitor the impact of Pillar 2 and the evolving legislative landscape. To date, Pillar 2 has not had a material impact on our effective tax rate or condensed consolidated financial statements.

Description of Key Financial Statement Line Items

Revenue

Revenue is recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration we expect to receive in exchange for those goods or services. Our performance obligations are satisfied as work progresses or at a point in time. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. For our cost-reimbursable contracts, revenue is recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it depicts the transfer of control to the customer. Contract costs include labor, sub-consultant services, and other direct costs. Revenue from services transferred to customers at a point in time is recognized when control of the promised deliverable transfers to the customer, which is generally upon completion, delivery, or customer acceptance of reports or analyses.

Cost of revenue

Cost of revenue consists primarily of direct labor, sub-consultant services, and other direct costs. Other direct costs include materials and indirect costs, such as supplies, tools, facility costs, and depreciation of equipment related to our services as well as travel, per diem, and lodging costs. Labor costs are recognized as labor hours are incurred in delivering services.

Selling, general and administrative expenses

Selling, general and administrative expenses consist primarily of certain indirect costs of providing our services, employee compensation, information systems and technology costs, share-based compensation, depreciation, amortization of intangibles, and facility related expenses.

Results of Operations

The comparability of our operating results for the three and nine months ended September 30, 2025 (Successor) and September 30, 2024 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.

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

Comparison of the three months ended September 30, 2025 (Successor) to the three months ended September 30, 2024

Revenues

Revenues were $473.9 million for the three months ended September 30, 2025 (Successor), an increase of $170.9 million, or 56%, compared to $101.5 million during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and $201.5 million during the period ended July 30, 2024 to September 30, 2024 (Successor). The increase in revenues was primarily driven by incremental revenues of $180.7 million resulting from the NV5 Acquisition. Excluding the NV5 Acquisition, revenues decreased by $9.8 million due to lower project and construction activity, which was partially offset by increased run-and-maintain and call-out work. The decrease primarily reflected the timing of customer outages, turnarounds and LNG construction projects, as well as continued headwinds in the chemicals end market from lower turnaround activity and structural oversupply.

Cost of revenues

Cost of revenues were $321.2 million for the three months ended September 30, 2025 (Successor), an increase of $92.9 million, or 41%, compared to $76.0 million during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and $152.3 million during the period ended July 30, 2024 to September 30, 2024 (Successor). The increase was primarily driven by incremental cost of revenues of $94.9 million resulting from the NV5 Acquisition. Excluding the NV5 Acquisition, cost of revenues decreased $2.0 million which was primarily driven by lower revenues.

Gross profit

The following table presents gross profit and gross profit margin, defined as gross profit as a percentage of revenue, for the three months ended September 30, 2025 (Successor) and September 30, 2024:

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Gross profit was $152.7 million for the three months ended September 30, 2025 (Successor), an increase of $78.0 million, or 104%, compared to $25.5 million during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and $49.2 million during the period ended July 30, 2024 to September 30, 2024 (Successor). Gross profit margin was 32.2% for the three months ended September 30, 2025 (Successor) compared to 25.1% during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and 24.4% during the period ended July 30, 2024 to September 30, 2024 (Successor). The increase in gross profit and gross profit margin was primarily driven by the NV5 Acquisition. The NV5 Acquisition contributed $85.8 million of gross profit and 47.0% gross profit margin. NV5’s engineering and geospatial services have higher gross profit than the TIC Solutions legacy services. Excluding the NV5 Acquisition, gross profit decreased $7.8 million and gross profit margin decreased 177 basis points compared to the prior-year period. The decrease was primarily due to a lower proportion of higher-margin turnaround, outage and LNG project activity relative to the prior-year period.

Selling, general and administrative expenses

The following table presents selling, general and administrative expenses (“SG&A expenses”) and SG&A expenses as a percentage of revenue for the three months ended September 30, 2025 (Successor) and September 30, 2024 (Predecessor):

SG&A expenses were $140.5 million for the three months ended September 30, 2025 (Successor), an increase of $18.0 million, or 15%, compared to $18.6 million during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and $103.8 million during the period ended July 30, 2024 to September 30, 2024 (Successor). The increase in SG&A expense was primarily driven by incremental expenses of $76.4 million resulting from the NV5 Acquisition. Excluding the NV5 Acquisition, SG&A expenses decreased $58.4 million. The decrease was primarily driven by a $56.1 million decrease in stock-based compensation expense.

Transaction costs

Transaction costs were $18.8 million for the three months ended September 30, 2025 (Successor), a decrease of $11.0 million, or 37%, compared to $5.2 million during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and $24.6 million during the period ended July 30, 2024 to September 30, 2024 (Successor). The decrease was primarily driven by lower transaction expenses associated with acquisitions.

Depreciation and amortization expense

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

This increase in depreciation and amortization expense of $23.7 million, or 86%, was primarily driven by incremental amortization expense of $17.2 million and depreciation expense of $4.1 million resulting from the NV5 Acquisition.

Interest expense, net

Interest expense, net was $26.5 million for the three months ended September 30, 2025 (Successor), an increase of $7.4 million, or 38%, compared to $5.8 million during the period ended July 1, 2024 to July 29, 2024 (Predecessor) and $13.3 million during the period ended July 30, 2024 to September 30, 2024 (Successor). The increase in interest expense was primarily driven by an increase in our indebtedness as a result of the NV5 Acquisition.

Income taxes

The Company recorded an income tax benefit of $16.6 million for the three months ended September 30, 2025 (Successor) and $4.0 million during the period from July 1, 2024 to July 29, 2024 (Predecessor) and $2.1 million during the period from July 30, 2024 to September 30, 2024 (Successor). The income tax benefit for the three months ended September 30, 2025 (Successor) was primarily driven by the reversal of the valuation allowance of $11.1 million recorded against our interest limitation carryforwards in the second quarter. The income tax benefit during the period from July 1, 2024 to July 29, 2024 (Predecessor) was driven by the net loss recognized in the Predecessor period. See “Note 13. Income Taxes” for further discussion.

Comparison of the nine months ended September 30, 2025 (Successor) to the nine months ended September 30, 2024

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

Revenues

Revenues were $1.0 billion for the nine months ended September 30, 2025 (Successor), an increase of $186.7 million, or 22%, compared to $633.9 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $201.5 million during the period from July 30, 2024 through September 30, 2024 (Successor). The increase in revenues was primarily driven by incremental revenues of $180.7 million resulting from the NV5 Acquisition. Excluding the impact of the NV5 Acquisition, revenues increased $6.0 million reflecting higher run-and-maintain volumes and customer penetration, partially offset by lower project activity due to the timing of customer outages and LNG construction projects, continued softness in the Gulf Coast region, primarily in chemicals end markets, and adverse weather conditions in the U.S. during the first quarter of 2025.

Cost of revenues

Cost of revenues were $751.5 million for the nine months ended September 30, 2025 (Successor), an increase of $127.4 million, or 20%, compared to $471.9 million during period from January 1, 2024 through July 29, 2024 (Predecessor) and $152.3 million during the period from July 30, 2024 through September 30, 2024 (Successor). The increase was primarily driven by incremental cost of revenues of $94.9 million resulting from the NV5 Acquisition. Excluding the NV5 Acquisition, cost of revenues increased $32.5 million which was primarily driven by increases in depreciation expense of $16.2 million resulting from the step-up in property and equipment from the Acuren Acquisition and an increase in revenues.

Gross profit

The following table presents gross profit and gross profit margin for the nine months ended September 30, 2025 (Successor) and September 30, 2024:

Gross profit was $270.5 million for the nine months ended September 30, 2025 (Successor), a increase of $59.3 million, or 28.1%, compared to $162.0 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $49.2 million during the period from July 30, 2024 through September 30, 2024 (Successor). The increase in gross profit and gross profit margin was primarily driven by the NV5 Acquisition. The NV5 Acquisition contributed $85.8 million of gross profit and 47.0% gross profit margin. NV5’s engineering and geospatial services have higher gross profit than the TIC Solutions legacy services. Excluding the NV5 Acquisition, gross profit decreased $26.5 million and gross profit margin decreased 331 basis points. The decreases were primarily driven by certain one-time, higher margin project work that did not recur in 2025, lower turnaround and project volumes compared to the third quarter of 2024, adverse weather events in the first quarter of 2025 and increases in depreciation expense of $16.2 million resulting from the step-up in property and equipment from the Acuren Acquisition.

Selling, general and administrative expenses

The following table presents SG&A expenses and SG&A expenses as a percentage of revenue for the nine months ended September 30, 2025 (Successor) and September 30, 2024:

SG&A expenses were $248.2 million for the nine months ended September 30, 2025 (Successor), an increase of $23.0 million, or 10%, compared to $121.4 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $103.8 million during the period from July 30, 2024 through September 30, 2024 (Successor). The increase in SG&A expense was primarily driven by incremental expenses of $76.4 million resulting from the NV5 Acquisition. Excluding the NV5 Acquisition, SG&A expenses decreased $53.4 million. The decrease was primarily driven by a $71.4 million decrease in stock-based compensation expense, partially offset by increases of $26.9 million in depreciation and amortization expense resulting from the NV5 Acquisition and the step-up in property and equipment and intangible assets from the Acuren Acquisition.

Transaction costs

Transaction costs were $19.9 million for the nine months ended September 30, 2025 (Successor), a decrease of $9.8 million, or 33%, compared to $5.2 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $24.6 million during the period from July 30, 2024 through September 30, 2024 (Successor). The decrease was primarily driven by lower transaction expenses associated with acquisitions.

Depreciation and amortization expense

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

This increase in depreciation and amortization expense of $43.0 million, or 65%, was primarily driven by incremental depreciation and amortization expense resulting from the NV5 Acquisition and the step-up in property and equipment and intangible assets from the Acuren Acquisition.

Interest expense, net

Interest expense, net was $58.0 million for the nine months ended September 30, 2025 (Successor), an increase of $5.3 million, or 10%, compared to $39.4 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $13.3 million during the period from July 30, 2024 through September 30, 2024 (Successor). The increase in interest expense was primarily driven by an increase in our indebtedness as a result of the NV5 Acquisition.

Income taxes

The Company recorded an income tax benefit of $11.2 million for the nine months ended September 30, 2025 (Successor), income tax expense of $3.2 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and an income tax benefit of $2.1 million during the period from July 30, 2024 through September 30, 2024 (Successor). The income tax benefit for the nine months ended September 30, 2025 (Successor) was primarily driven by the reversal of the valuation allowance of $11.1 million recorded against our interest limitation carryforwards in the second quarter. Income tax expense during the period from January 1, 2024 through July 29, 2024 (Predecessor) was driven by stock compensation expense recorded during the Predecessor period that was not deductible for tax purposes. See “Note 13. Income Taxes” for further discussion.

Operating Segment Results

The following tables set forth summarized financial information about our reportable segments for the Successor and Predecessor periods indicated.

Comparison of the three months ended September 30, 2025 (Successor) to the three months ended September 30, 2024

Revenue

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Cost of revenue

Gross profit

Inspection and Mitigation

Inspection and Mitigation revenues were $293.2 million for the three months ended September 30, 2025 (Successor), a decrease of $10.8 million, or 4%, compared to $102.2 million during the period from July 1, 2024 to July 29, 2024 (Predecessor) and $201.8 million during the period from July 30, 2024 through September 30, 2024 (Successor). The decrease primarily reflected the timing of customer outages, turnarounds and LNG construction projects, as well as continued headwinds in the chemicals end market from lower turnaround activity and structural oversupply. Increased run-and-maintain and call-out volumes partially offset lower project and construction activity.

Segment gross profit was $66.9 million for the three months ended September 30, 2025 (Successor), a decrease of $7.8 million, or 10.4%, compared to $25.5 million during the period from July 1, 2024 to July 29, 2024 (Predecessor) and $49.2 million during the period from July 30, 2024 through September 30, 2024 (Successor). The decreases were primarily driven by certain one-time, higher margin project work that did not recur in 2025, lower turnaround and project activity compared to the third quarter of 2024, and increases in depreciation expense primarily resulting from the step-up in property and equipment from the Acuren Acquisition.

Consulting Engineering

Consulting Engineering revenue was $119.6 million for the three months ended September 30, 2025 (Successor) due to the NV5 Acquisition and was primarily attributable to growth in data center and infrastructure conformity assessment work as well as real estate due diligence projects. Segment gross profit was $57.8 million for the three months ended September 30, 2025 (Successor).

Geospatial

Geospatial revenue was $61.1 million for the three months ended September 30, 2025 (Successor) due to the NV5 Acquisition. During the period, the Geospatial segment experienced normal course growth in government work primarily related to projects with federal agencies. Segment gross profit was $28.0 million for the three months ended September 30, 2025 (Successor).

Comparison of the nine months ended September 30, 2025 (Successor) to the nine months ended September 30, 2024

Revenue

Cost of revenue

Gross profit

Inspection and Mitigation

Inspection and Mitigation revenue was $841.3 million for the nine months ended September 30, 2025 (Successor), an increase of $4.2 million, or 1%, compared to $635.3 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $201.8 million during the period from July 30, 2024 through September 30, 2024 (Successor). Revenue was generally consistent with the prior-year period, reflecting higher run-and-maintain volumes and customer penetration, partially offset by lower project activity due to the timing of customer outages and LNG construction projects, continued softness in the Gulf Coast region, primarily in chemicals end markets, and adverse weather conditions in the U.S. during the first quarter of 2025.

Segment gross profit was $184.7 million for the nine months ended September 30, 2025 (Successor), a decrease of $26.5 million, or 13%, compared to $162.0 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and $49.2 million during the period from July 30, 2024 through September 30, 2024 (Successor). The decrease was primarily driven by certain one-time, higher margin project work that did not recur in 2025, lower turnaround and project volumes compared to the third quarter of 2024, adverse weather events in the first quarter of 2025, and increases in depreciation expense of $16.2 million resulting from the step-up in property and equipment from the Acuren Acquisition, partially offset by an increase in revenues.

Consulting Engineering

Consulting Engineering revenue was $119.6 million for the nine months ended September 30, 2025 (Successor) due to the NV5 Acquisition and was primarily attributable to growth in data center and infrastructure conformity assessment work as well as real estate due diligence projects. Segment gross profit was $57.8 million for the nine months ended September 30, 2025 (Successor).

Geospatial

Geospatial revenue was $61.1 million for the nine months ended September 30, 2025 (Successor). During the period, the Geospatial segment experienced normal course growth in government work primarily related to projects with federal agencies. Segment gross profit was $28.0 million for the nine months ended September 30, 2025 (Successor).

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 over the next 12 months. 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.

Financing

Successor Period

We have a $775.0 million senior secured 2024 Term Loan and an $875.0 million senior secured 2025 Term Loan under the Term Loan Facility, as well as a $125.0 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 September 30, 2025 (Successor), we had $1.6 billion of indebtedness outstanding under the Term Loans and no amounts outstanding under the Revolving Credit Facility. For discussion of the First Amendment to our Credit Agreement, and the Second Amendment, see “Note 11. Long-Term Debt” of the notes to our unaudited condensed consolidated financial statements.

For discussion of the covenants contained in the Credit Agreement governing our Revolving Credit Facility, see “Note 11. Long-Term Debt” of the notes to our unaudited condensed consolidated financial statements. As of September 30, 2025 (Successor), we were in compliance with these covenants.

Predecessor Period

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 our operating, investing and financing activities for the periods indicated:

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Operating activities

Net cash provided by operating activities for the nine months ended September 30, 2025 (Successor) was $45.3 million, an increase of $43.0 million compared to cash provided by operating activities of $20.4 million during the period from January 1, 2024 through July 29, 2024 (Predecessor) and cash used by operating activities of $18.1 million during the period from July 30, 2024 through September 30, 2024 (Successor). The increase was a result of increases in our net income adjusted for noncash items primarily driven by increased revenues partially offset by changes in our working capital. The changes in our working capital that contributed to increased cash flows from operations were primarily a result of decreases in accounts receivable of $31.8 million, partially offset by increases in contract assets of $21.7 million due to timing of project billing cycles.

Investing activities

For the nine months ended September 30, 2025 (Successor), net cash used in investing activities was $856.4 million, a decrease of $1.0 billion compared to net cash used in investing activities of $58.0 million during the period ended January 1, 2024 to July 29, 2024 (Predecessor) and $1.8 billion during the period ended July 30, 2024 to September 30, 2024 (Successor). The decrease in cash used in investing activities was primarily a result of decreased cash paid for acquisitions of $1.0 billion.

Financing activities

For the nine months ended September 30, 2025 (Successor), net cash provided by financing activities was $833.9 million, a decrease of $592.6 million compared to net cash provided by financing activities of $7.8 million during the period ended January 1, 2024 to July 29, 2024 (Predecessor) and $1.4 billion during the period ended July 30, 2024 to September 30, 2024 (Successor). The decrease in cash provided by financing activities was primarily a result of a decrease in cash proceeds from the issuance of common shares and exercise of warrants of $666.6 million, partially offset by an increase in proceeds from long-term borrowings of $70.0 million.

Effect of exchange rate changes

For the nine months ended September 30, 2025 (Successor), during the period from January 1, 2024 through July 29, 2024 (Predecessor) and July 30, 2024 through September 30, 2024 (Successor), the effect of foreign exchange rate changes on cash was $2.5 million, $7.9 million and $5.5 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 nine months ended September 30, 2025 (Successor) or during the period ended January 1, 2024 to July 29, 2024 (Predecessor) and July 30, 2024 to September 30, 2024 (Successor), 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. Basis of Presentation and Significant Accounting Policies” 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, except for the changes discussed in Note 1. Basis of Presentation and Significant Accounting Policies of the Notes to the Consolidated Financial Statements.

There have been no significant changes to our quantitative and qualitative disclosures about market risk as discussed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2024 Annual Report.

Evaluation of Disclosure Controls and Procedures

Management has assessed the effectiveness of our disclosure controls and procedures as defined under Rules 13a-15(c) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These controls and procedures provide reasonable assurance that the information we are required to disclose is collected and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), and processed timely to support appropriate disclosure decisions. These controls are also designed to ensure that such information is accurately recorded, processed, summarized and reported within the timeframes required by SEC rules and forms.

Based on this assessment, our CEO and CFO concluded that, as of September 30, 2025, our disclosure controls and procedures were not effective at a reasonable assurance level due to the material weaknesses previously disclosed in our 2024 Annual Report.

Material Weaknesses in Internal Control Over Financial Reporting

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 annual or interim financial statements will not be prevented or detected on a timely basis.

As indicated above, we identified material weaknesses in our internal control over financial reporting and concluded that we had not designed and maintained an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of resources with (i) an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. This material weakness contributed to the following two 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; further, we did not design and maintain controls over the preparation and review of account reconciliations and journal entries, including maintaining appropriate segregation of duties.

These material weaknesses resulted in the misstatement of our provision (benefit) for income taxes and deferred tax liabilities and related financial statement disclosures which resulted in the restatement of our financial statements for the predecessor period from January 1, 2024 to July 29, 2024. These material weaknesses also resulted in immaterial audit adjustments to our current and previously issued consolidated financial statements in the following financial statement line items: Accounts receivable; Accounts payable; Accrued expenses and other current liabilities; Deferred income tax liabilities; Lease obligations; Revenue; Cost of revenue; Selling, general and administrative expenses; and Interest expense. Additionally, these material weaknesses could result in a misstatement of substantially all of the Company’s accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

• We did not design and maintain effective information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain:
• User access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel;
• Program change management controls to ensure that information technology program and data changes are identified, tested, authorized and implemented appropriately;
• Computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored; and
• Program development controls to ensure that new software development is tested, authorized and implemented appropriately.

These IT deficiencies did not result in a material misstatement to the financial statements, however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

Management’s Plans to Remediate the Material Weaknesses

Management is in the process of implementing its remediation plans for the material weaknesses that have been identified. The Company is implementing enhancements to its internal controls to remediate the identified material weaknesses in its internal control over financial reporting. We are committed to maintaining a strong control environment and will continue to monitor the effectiveness of these efforts, adjusting as necessary.

Specifically, the Company has:

• Engaged a third-party advisor to support the design and implementation of a robust compliance program in accordance with the Sarbanes-Oxley Act (“SOX”);
• Hired a new Corporate Controller and VP of Finance, both with experience in building and enhancing control environments, to strengthen the finance organization;
• Delivered targeted training across the organization on SOX requirements, internal controls over financial reporting, segregation of duties and other critical control environment topics;
• Completed a financial statement risk assessment and documented business processes and internal controls deemed critical to financial reporting;
• Developed and begun implementing enhanced policies and procedures for journal entries, account reconciliations, and other core accounting processes;
• Began assessing the design and operating effectiveness of internal controls over financial reporting;
• Initiated remediation of segregation of duties conflicts and improvements to user access protocols; and
• Implemented monitoring controls over key information systems and applications relevant to financial reporting.

In addition, the Company plans to continue hiring qualified accounting, finance and IT personnel with the necessary skills and expertise to support ongoing remediation and sustain a strong control environment.

While these remediation efforts are expected to significantly improve our internal control over financial reporting, they require time to be fully implemented and validated. Additional controls may also be required over time as the organization evolves. The Company will not be able to conclude that the material weaknesses have been remediated until the new and enhanced controls have been in place for a sufficient period of time and have been tested for both design and operating effectiveness. Until such time, the previously identified material weaknesses may continue to exist.

Changes in Internal Control Over Financial Reporting

Other than the changes described above, there have not been any changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of the filing of this report, we continue to implement the changes and remediation plans described above.

Our operations and financial results are subject to various risks and uncertainties. Other than as disclosed below, there have been no material changes in our risk factors from those previously disclosed in Part 1, Item 1A, “Risk Factors” in our 2024 Annual Report on Form 10-K other than those disclosed in Part II, Item 1A, “Risk Factors” in our Form 10-Q for the quarter ended June 30, 2025, as it relates to the NV5 Acquisition.

A delay in the completion of the budget process of the U.S. and state governments could delay procurement of our services and have a material adverse effect on our future revenue.

We provide services to the U.S. government as well as entities funded directly and indirectly by the U.S. government. The U.S. government’s inability to agree on a long-term budget and deficit reduction plan has resulted, and may again in the future result, in a continuing resolution or shutdown. In addition, federal government employees recently have been subject to termination in connection with cost reduction efforts. If a prolonged government continuing resolution, shutdown or significant reduction in force of federal government employees continues, government agencies may delay or forgo the procurement of services, which could have a material adverse effect on our business and future revenue.

In addition, the state of California has historically been and is a key geographic region for a portion of our business. The timing and accessibility of budgetary funding, changes in state funding allocations to local agencies and municipalities, or other delays in purchasing for, or commencement of, projects may have a negative impact on our gross revenues and net income.