HMH Holding Inc: Form 10-Q for the period ended Jun 30, 2026

*The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the unaudited consolidated financial statements and accompanying notes for the quarter ended June 30, 2026 included under Item 1. Financial Statements of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and accompanying notes in the Final Prospectus. This discussion contains forward-looking statements that involve risks, assumptions and uncertainties that could cause actual results to differ materially from our expectations. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those described under “*Risk Factors,” in the Final Prospectus.

In this section, references to “HMH Holding,” the “Company,” “we,” “us,” or “our” refer to HMH Holding Inc. and its subsidiaries, unless otherwise indicated or the context otherwise requires.

Company Overview

We are a leading provider of highly engineered, mission-critical equipment solutions, providing customers with a comprehensive portfolio of drilling equipment, services and systems utilized in oil and gas drilling operations, both offshore and onshore. Our global reach, technical expertise and innovative product offerings, coupled with our integrated operations from manufacturing to aftermarket services, allow us to provide customers with first class technology, engineering and project management services through the entire asset lifecycle of the equipment we provide. In addition, we are growing our portfolio of products and services to adjacent industries, such as mining. The complexity and criticality of our installed equipment drive customers to choose us for their aftermarket support, particularly in the offshore environment, which is subject to extensive regulation.

We are a global company, with locations in 15 countries and sales in over 80 countries. We sell equipment and services to three core customer categories across the markets that we serve: (i) drilling contractors; (ii) operators, including both oil and gas E&P companies and mining companies onshore and offshore; and (iii) manufacturers, consisting of shipyards and manufacturers of capital equipment. In addition to providing a range of equipment, spare parts, recurring aftermarket services and digital solutions to the onshore and offshore oil and gas drilling industry, we provide equipment and services to the onshore and subsea mining industry.

Our comprehensive portfolio of offerings, supported by integrated delivery capabilities and broad range of applications, enables us to address a full range of customer priorities. Our offerings are broadly categorized as:

Sales of Projects and Products. This includes (i) comprehensive drilling equipment packages containing a full suite of components needed for a newbuild or reactivated drilling rig and (ii) individual or grouped components of drilling and pressure control equipment that facilitate customers maintaining and upgrading their existing fleet. During the three and six months ended June 30, 2026, we derived 12.1% and 15.6% of our revenue from sales of projects and products, respectively, compared to 29.0% and 28.3% during the three and six months ended June 30, 2025, respectively.

Aftermarket Services. This includes services on installed equipment and integrated digital solutions. Our aftermarket services facilitate customers maintaining and improving the lifespan, safety and efficiency of their existing drilling rig fleets. During the three and six months ended June 30, 2026, we derived 52.1% and 47.1% of our revenue from aftermarket services, respectively, compared to 45.4% and 43.8% during the three and six months ended June 30, 2025, respectively.

Sales of Spare Parts. This includes replacement parts for installed equipment used in oil and gas drilling operations. During the three and six months ended June 30, 2026, we derived 35.8% and 37.3% of our revenue from sales of spare parts, respectively, compared to 25.6% and 27.9% during the three and six months ended June 30, 2025, respectively.

Recent Developments

On April 2, 2026, we completed our initial public offering (the “IPO”) of 10,520,000 shares of our Class A common stock, par value $0.01 (“Class A common stock”), representing approximately 24% of the equity interests in the Company, at a price to the public of $20.00 per share. The net proceeds from the IPO were approximately $197.8 million, after deducting the underwriters’ discounts. On April 30, 2026, the underwriters elected to exercise their option to purchase an additional 685,844 shares of Class A common stock. Net proceeds from this exercise were $12.9 million after deducting discounts and offering fees of $0.8 million. See Note 1—“Basis of Presentation and Summary of Significant Accounting Policies” in the notes to the Condensed Consolidated Financial Statements.

In connection with the IPO, we entered into the transactions described in our Current Report on Form 8-K filed with the SEC on April 2, 2026.

The results of operations discussed in this Quarterly Report on Form 10-Q include those of HMH B.V. prior to the completion of our IPO. As a result, the historical consolidated financial data may not give you an accurate indication of what our actual results would have been if the IPO and related corporate reorganization, as discussed in “Corporate Reorganization” in Note 1—“Basis of Presentation and Summary of Significant Accounting Policies” of the notes to the Condensed Consolidated Financial Statements, had been completed at the beginning of the periods presented or of what our future results of operations are likely to be.

Market Conditions

Oil and gas play a critical role in enabling modern society to function and providing increased standards of living to the global population. We believe that oil and gas will continue to play a leading role in the future global energy mix. While the world will take the needed efforts to diversify its energy supply into renewables and more sustainable forms of energy, including nuclear, the International

Energy Agency estimates that oil and gas will nonetheless comprise 45% of global energy supply in 2050 and that global energy consumption is expected to increase to 533 exajoules by 2050, a 20% increase from 2023 levels and a 41% increase from 2010 levels.

Our business is driven by the number of drilling rigs working globally onshore and offshore (particularly those drilling rigs on which our equipment is installed), which in turn is driven by oil and gas demand, levels of global drilling activity and spending by E&P operators associated with supplying oil and gas. As demand for contracted drilling rigs increases, our customers may seek to replace existing equipment that is in need of major refurbishment or no longer operational, upgrade the capacities of their existing drilling rigs with our highly engineered, integrated drilling solutions or retrofit a new comprehensive drilling package or entire newbuild drilling rig. We provide ongoing aftermarket services and spare part sales on drilling rigs with our installed equipment, as well as rigs with equipment from other original equipment manufacturers, allowing us to capture recurring revenues throughout the lifecycle of a drilling rig.

As drilling rigs work and age, and as increasingly complex wells generate more wear-and-tear, we benefit from the resulting additional demand for our products, aftermarket services and spare parts. Historically, we have seen aftermarket-driven demand growth as offshore drilling activity increases, and we expect that pattern to continue. Additionally, as our customers bring offshore rigs that are warm stacked or cold stacked back into service, the revenue base for our aftermarket services and spare parts increases. This is in addition to our benefitting from the revenue opportunities from equipment upgrades associated with such reactivations.

Demand related to onshore oil and gas drilling activity tends to be shorter cycle and regionally focused as each market may have specific dynamics that vary from location to location. Since the cyclical trough in activity during the last commodity price decline and COVID-19, the total number of active land rigs has increased and, in the key Middle East market, the demand for modern, high-spec land rigs capable of supporting complex drilling operations has resulted in newbuild opportunities. In the North American unconventional market, efficiency gains in drilling and completion activity have resulted in production increasing without a corresponding increase in rig counts implying each active rig is drilling more wells and more footage in a given period than previously. This increased cadence of drilling activity in challenging subsurface environments and more complex, longer lateral wells create increased wear-and-tear on equipment, resulting in additional demand for our products, aftermarket services and spare parts.

We continue to operate in a volatile geopolitical environment, including recent escalations in the conflict in the Middle East and disruptions across key energy corridors, including the Strait of Hormuz. These developments have heightened uncertainty around global energy supply and prices. These factors may drive short-term volatility in certain regional markets, particularly onshore and jack-up activities in the Middle East. However, our business mix is increasingly weighted towards long-term offshore projects outside of the Middle East, which are advancing largely as planned. Supported by improving offshore drilling activity, we have seen growth in backlog and higher utilization of our products and services, reinforcing our overall positive outlook for global oil and gas activity.

Consolidated Results of Operations

The following table sets forth certain Condensed Consolidated Statement of Income data:

(in thousands)

Revenue: The following table sets forth disaggregated revenue by segment:

(in thousands)

We generate our revenue primarily from three broadly categorized offerings: (i) product revenue, which comprises revenue from sales of projects and products and includes (a) comprehensive drilling equipment packages containing a full suite of components needed for a newbuild or reactivated drilling rig and (b) individual or grouped components of drilling and pressure control equipment that facilitate customers maintaining and upgrading their existing fleet, (ii) service revenue, which comprises aftermarket services relating to installed equipment and integrated digital solutions, and (iii) spare parts revenue, which includes replacement spare parts. We also generate our revenue from related parties via sales to Baker Hughes and Akastor through its affiliates, which primarily consists of sales of products and services consistent in nature with those of external parties.

Total revenue decreased by $32.6 million, or 16.0%, and $59.7 million, or 14.9%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. The declines were primarily due to lower product and service revenues, partially offset by higher spare parts revenue.

Product revenue decreased by $38.4 million, or 65.1%, and $60.3 million, or 53.1%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods, reflecting a lower backlog to start the quarter and partially due to a delay in equipment deliveries and installation and commissioning work in the Middle East.

Service revenue decreased by $3.3 million, or 3.5%, and $14.8 million, or 8.4%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods, primarily due to decreases in repairs and other services, partially offset by stronger digital services volume. Spare parts revenue increased by $9.0 million, or 17.3%, and $15.4 million, or 13.7%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods, due to an increase in spares demand.

Cost of Sales: Our cost of sales consists of costs related to the manufacturing and procurement of our products and projects in addition to the costs of our aftermarket services and spare parts. Cost of sales related to the manufacturing and procurement of our products and projects includes the cost of components sourced from third-party suppliers and direct and indirect costs to manufacture and supply products and projects, including labor, materials, machine time, lease expense related to our manufacturing facilities, freight and other variable manufacturing costs. Cost of services includes personnel expenses for our field service organization, lease expense related to our operations facilities, materials, vehicle expenses and freight and other variable costs. Cost of sales related to spare parts includes the cost of the spare parts inventory, personnel expenses, lease expense related to our facilities, inventory management expenses, freight and other variable costs.

Total cost of sales decreased by $42.0 million, or 27.7%, and $67.3 million, or 22.9%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. Cost of sales as a percentage of revenue decreased to 64.1% and 66.1% for the three and six months ended June 30, 2026, respectively, compared to 74.5% and 73.0% for the three and six months ended June 30, 2025, respectively. These decreases in cost of sales and cost of sales as a percentage of revenue were due to lower volume, revenue mix, continued cost optimization efforts and increased utilization.

Cost of services sold decreased by $4.9 million, or 7.7%, and $8.9 million, or 7.4%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. These decreases in cost of services sold were in line with the decrease in service revenue. Cost of services as a percentage of revenue was 66.0% and 69.4% for the three and six months ended June 30, 2026, respectively, compared to 69.0% and 68.7% for the three and six months ended June 30, 2025, respectively. These decreases in cost of sales and cost of sales as a percentage of revenue were due to lower volume, revenue mix, continued cost optimization efforts and increased utilization.

Cost of goods sold - products decreased by $36.9 million, or 69.1%, and $58.2 million, or 58.2%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. These decreases in cost of goods sold - products were in line with the decrease in product revenue. Cost of goods sold - products as a percentage of revenue decreased to 80.3% and 78.5% for the three and six months ended June 30, 2026, respectively, compared to 90.6% and 88.0% for the three and six months ended June 30, 2025, respectively. These decreases in cost of goods sold - products and cost of goods sold - products as a percentage of revenue were due to recognition of product and project revenue with higher margins driven by cost optimization efforts and the completion of contracts with unfavorable margins in 2025.

Cost of goods sold – spare parts remained relatively flat for the three and six months ended June 30, 2026, compared to the corresponding periods in 2025. Cost of goods sold – spare parts as a percentage of spare parts revenue decreased to 56.0% and 56.7% for the three and six months ended June 30, 2026, respectively, compared to 66.1% and 64.6% for the three and six months ended June 30, 2025, respectively. These decreases in cost of goods sold – spare parts as a percentage of spare parts revenue were mainly due to volume mix.

Selling, General and Administrative Expenses: Selling, general and administrative expenses consist of costs such as sales and marketing, general corporate overhead, compensation expense, IT expenses, safety and environmental expenses, insurance costs, legal expenses and other related administrative functions.

Selling, general and administrative expenses increased by $30.9 million, or 105.0%, and $29.8 million, or 45.4%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. These increases were primarily driven by pre-IPO stock-based compensation expense and employer portion of taxes on the associated award vestings of $22 million.

Excluding this IPO-related stock-based compensation expense, SG&A expenses increased by $8.9 million, or 30.3%, for the three months ended June 30, 2026, and by $7.8 million, or 11.9%, for the six months ended June 30, 2026, compared to the prior-year periods. These increases were driven primarily by investments in the Company's commercial and back office organizations, including increased sales headcount, as well as higher insurance and marketing expenses stemming from our transition to and operation as a public company.

Research and Development Expenses: Research and development expenses consist of costs that are incurred in connection with the development of new cutting-edge technologies and solutions and the innovation of existing product and service offerings. Such costs include both the utilization of our employees, facilities and resources to create and develop new ideas and products and the engagement of third parties to perform development activities under our coordination and management.

Research and development expenses remained relatively flat for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. For the six months ended June 30, 2026, research and development expenses decreased by $0.5 million, or 29.5%. This decrease was attributable mainly to the strategic deployment of development resources and the capitalization of development costs.

Restructuring and Other Expenses (Income), Net: Restructuring and other expenses consist of restructuring charges primarily related to manufacturing footprint optimization initiatives and other additional de minimis incidental operating expenses incurred by the business.

Restructuring expenses for both the three and six months ended June 30, 2026 were $5.0 million, compared to $1.1 million and $4.3 million for the three and six months ended June 30, 2025, respectively, driven by our internal restructuring program and lease exit costs.

Foreign Currency Gain (Loss), Net: Foreign currency gain (loss), net consists of net gains or losses resulting from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated. Our foreign subsidiaries, whose functional currency is the local currency, conduct a portion of their operations in U.S. dollars. As a result, these subsidiaries hold significant monetary assets denominated in U.S. dollars. These monetary assets are subject to changes in exchange rates between the U.S. dollar and the local currency.

The change in foreign currency gain (loss) decreased by $3.5 million, or 120.0%, and $9.8 million, or 140.6%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. These unfavorable variances were attributable to currency exchange rate movements of the U.S. dollar to other currencies in which we transact.

Interest Income (Expense), Net: Interest expense, net primarily consists of interest expense associated with our long-term and short-term debt.

Interest expense, net decreased by $5.2 million, or 56.7%, and $7.4 million, or 40.4%, for the three and six months ended June 30, 2026, respectively, compared to the prior-year periods. These decreases were driven by the repayment of the Shareholder Loans in April 2026 upon completion of the IPO, and the refinancing of our 9.875% senior secured bonds due in 2026 with 7.875% senior secured bonds due in 2028 in December 2025.

Income tax expense (benefit): Income tax consists primarily of U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we operate. For the three months ended June 30, 2026, we recorded a tax benefit of $4.5 million, resulting in an effective tax rate of 47.3%, compared to a tax provision of $5.2 million and an effective tax rate of 34.6% for the three months ended June 30, 2025. For the six months ended June 30, 2026, the tax provision was $1.3 million, resulting in an effective tax rate of 666.3%, compared to a tax provision of $10.4 million and an effective tax rate of 40.0% for the six months ended June 30, 2025.

These fluctuating effective rates were heavily driven by valuation allowances on losses in certain foreign jurisdictions where tax benefits cannot currently be realized, along with the ongoing impacts of localized withholding taxes, statutory jurisdictional rate differentials, and pass-through non-controlling interests related to U.S. income taxed at the owner level. For the three and six months ended June 30, 2026, our income tax included the impact of a $22.5 million stock-based compensation expense related to pre-IPO stock-based awards. For the six months ended June 30, 2026, our income tax also included $0.5 million of IPO related transaction costs. Excluding the impact of the stock-based compensation expense and IPO related costs, our adjusted effective tax rate for the three and six months ended June 30, 2026 would have been 25.0% and 39.2%, respectively.

Cash Flows

Cash flows provided by (used in) operations by type of activity were as follows:

(in thousands)

Operating Activities

Net cash provided by operating activities increased by $32.7 million in the first six months of 2026, compared to the corresponding period in 2025, mainly due to a $39.2 million increase from changes in operating assets and liabilities, a $10.3 million increase in non-cash items and a $16.8 million increase in net loss.

The favorable variance in non-cash expenses was driven by the recognition of share-based compensation expenses upon completion of the IPO, which was offset by favorable changes in deferred tax expenses, paid-in-kind interest, restructuring and other expenses, and a provision for inventory write-down.

The increase in cash resulting from the changes in assets and liabilities was primarily driven by increases in accounts payable and accrued expenses. The increase in accounts payable and accounts payable - related party was primarily due to timing of vendor payments in prior periods as 2025 had significant outflows to satisfy outstanding payable obligations. The increase in accrued expenses is driven by timing of incurred expenses in each of the relative periods.

Investing Activities

Net cash used in investing activities increased by $2.8 million in the first six months of 2026, compared to the corresponding period in 2025. The increase in net cash used in investing activities was principally the result of a $4.8 million increase in development costs, offset by a $2.8 million decrease in purchases of property, plant and equipment and $0.8 million of Deep Blue acquisition working capital remeasurement period adjustments in the first six months of 2026.

Financing Activities

Net cash provided by financing activities was $6.6 million in the first six months of 2026 compared to net cash used in financing activities of $2.0 million. The increase in cash provided by financing activities was primarily driven by the receipt of $210.7 million in net proceeds from our IPO in 2026. This increase was partially offset by a $137.1 million repayment of related-party long-term debt, a $39.5 million purchase of B.V. Voting Shares from Baker Hughes and Akastor, a $12.9 million purchase of Holding Inc. and Holding B.V. shares as part of the greenshoe exercise, a $10.4 million of deferred IPO cost paid, and $4.9 million in payments for treasury shares in 2026. In the prior year period, financing cash outflows were primarily driven by the repayment of our outstanding credit facility.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin.

We use Adjusted EBITDA and Adjusted EBITDA Margin (each, a non-GAAP measure) as one of the indicators to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and certain non-recurring items. We define Adjusted EBITDA as net income before interest expense, net, income tax expense, depreciation and amortization, IPO listing related cost and other non-recurring items. Management does not consider these non-recurring items to be indicative of our ongoing operating performance measure, and such items include, but are not limited to, restructuring and other operating expenses and foreign exchange currency (gain) loss. We track Adjusted EBITDA on an absolute dollar basis and as a percentage of revenue, which we refer to as Adjusted EBITDA Margin. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA is a supplemental measurement tool used by analysts and investors to evaluate overall operating performance, ability to pursue and service possible debt opportunities and possible future investment opportunities. In addition, we believe that Adjusted EBITDA Margin is a supplemental measurement tool used by analysts and investors to evaluate profitability of sales. Adjusted EBITDA does not represent funds available for our discretionary use and is not intended to represent or to be used as a substitute for net income, as measured in accordance with generally accepted accounting principles in the United States of America ("GAAP"). The items excluded from Adjusted EBITDA and Adjusted EBITDA Margin, but included in the calculation of reported net income, are significant components of the consolidated statements of income and must be considered in performing a comprehensive assessment of overall financial performance.

We believe that the disclosure of Adjusted EBITDA and Adjusted EBITDA Margin offers additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA Margin:

(in thousands)

(a).Calculated as a percentage of total revenue.

Free Cash Flow. We use Free Cash Flow (a non-GAAP measure) to evaluate our liquidity to provide flexibility and optionality to achieve our broader capital allocation strategy. We define Free Cash Flow as cash flow from operations minus purchases of property and equipment and development costs and excluding the impact of one time non-cash IPO related expenses. Management believes that Free Cash Flow is a meaningful indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after purchases of property and equipment that can be used for investment in our business and for acquisitions as well as to strengthen our balance sheet. Free Cash Flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by (used in) operating activities. Free Cash Flow does not reflect our ability to meet future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

The following table reconciles net cash provided by (used in) operating activities to Free Cash Flow:

(in thousands)

Liquidity and Capital Resources

We believe that our existing cash on hand, cash generated from operations and available capacity under the Revolver (as defined herein) and the Senior Secured Bonds (as defined herein) will be sufficient to meet our liquidity needs in the short term and long term. Our ability to satisfy our liquidity requirements depends on our future operating performance, which is affected by prevailing economic conditions, market conditions in the oil and natural gas industry, availability and cost of raw materials and other factors, many of which are beyond our control.

Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business. Our primary sources of liquidity are our existing cash on hand and cash generated from operations. Depending upon market conditions, we may take any of the following steps, or a combination thereof, to improve our liquidity and financial position by incurring borrowings under our Revolver, issuing additional senior secured bonds in an aggregate principal amount up to $125.0 million or entering into separate bridge financing facilities as permitted by the terms of our existing Senior Secured Bonds.

As of June 30, 2026, we had $119.7 million in cash and cash equivalents and Revolver capacity of $75 million resulting in approximately $195 million of total liquidity. As of June 30, 2026, we have $1.5 million of borrowings under the Credit Line in China due in the next 12 months, and we have no long-term debt maturity until June 2028.

7.875% Senior Secured Bonds due 2028

On or around December 17, 2025, the Company issued $200.0 million aggregate principal amount of its senior secured bonds (ISIN code NO0013700039) (the “Senior Secured Bonds due 2028”), which mature on December 17, 2028. Interest on the bonds accrues at a fixed rate of 7.875% per annum as of June 30, 2026. The Senior Secured Bonds due 2028 are secured by liens on substantially all of the Company’s assets, including the equity of its material subsidiaries, and guarantees, either directly or indirectly, from its material subsidiaries. The security of the Senior Secured Bonds due 2028 is subject to an intercreditor agreement with the facility agent under the Revolver. Subject to compliance with certain conditions, the Company is permitted to issue additional bonds under the agreement governing the Senior Secured Bonds due 2028 in an aggregate principal amount up to $125.0 million, and the Company is also permitted to enter into certain bridge financing facilities. The Senior Secured Bonds due 2028 were listed on the Euronext ABM in the second quarter of 2026.

The agreement governing the Senior Secured Bonds due 2028 includes customary representations and warranties, affirmative covenants and certain restrictive covenants that may limit the Company’s ability to, among other things, incur additional indebtedness, guarantee obligations, incur liens, make investments, loans or capital expenditures, sell or dispose of assets, enter into mergers or consolidations, enter into transactions with affiliates or make or declare dividends. The Senior Secured Bonds due 2028 also require the Company to maintain at all times a minimum liquidity of not less than $30.0 million, a gearing ratio of Consolidated Net Total Borrowings to Consolidated Total Equity (each as defined in the agreement governing the Senior Secured Bonds due 2028) not to exceed 1.00 to 1.00 and an interest cover ratio of Adjusted EBITDA to Net Interest Expenses (each as defined in the agreement governing the Senior Secured Bonds due 2028) of not less than 2.50 to 1.00. The agreement governing the Senior Secured Bonds due 2028 contains customary events of default. If an event of default exists under the Senior Secured Bonds due 2028, the lenders will be able to accelerate the maturity of the Senior Secured Bonds due 2028 and exercise other rights and remedies. If an event of default exists under the Revolver, a cross-default will be triggered under the Senior Secured Bonds due 2028, and the bondholders thereunder will be able to accelerate the maturity of the Senior Secured Bonds due 2028 and exercise other rights and remedies.

As of June 30, 2026, the Company was in compliance with all financial covenants under the Senior Secured Bonds due 2028.

Shareholder Loans

On October 1, 2021, the Company entered into a loan agreement with related parties, Baker Hughes Holdings LLC and Akastor AS (as amended, the “Shareholder Loan Agreement”), to finance its operating and financing activities. Baker Hughes Holdings LLC provided an $80.0 million term loan under the Shareholder Loan Agreement (the “Baker Hughes Shareholder Loan”), and Akastor AS provided a $20.0 million term loan under the Shareholder Loan Agreement (together with the Baker Hughes Shareholder Loan, the “Shareholder Loans”). The Shareholder Loans mature on the earliest to occur of December 18, 2028 or a liquidation event (as defined in the Shareholder Loan Agreement) such as the consummation of the IPO. In connection with the closing of the IPO in April 2026, the Company repaid the Shareholder Loans from the net proceeds received from the IPO.

Revolving Credit Facility

On December 18, 2025, the Company, DNB Bank ASA, as agent, certain financial institutions party thereto as lenders (the “Revolver Lenders”) and DNB Carnegie, a part of DNB Bank ASA, and Nordea Bank Abp, branch in Norway, as mandated lead arrangers and bookrunners, entered into a senior facility agreement (the “Revolver”) pursuant to which the Revolver Lenders provide revolving credit financing to the Company in an aggregate principal amount of up to $75.0 million. The scheduled maturity date of the Revolver is June 17, 2028.

Borrowings under the Revolver bear interest at the compounded reference rate, which is the applicable Secured Overnight Financing Rate (“SOFR”) plus the applicable credit spread adjustment, plus a margin ranging from 3.00% to 4.00% based on the Company’s most recent leverage ratio. In addition to paying interest on outstanding principal under the Revolver, the Company is required to pay a quarterly commitment fee equal to 40% of the applicable margin on the unused available commitments.

The Revolver is secured by liens on substantially all of the Company’s assets, including the equity of its material subsidiaries, and guarantees, either directly or indirectly, from its material subsidiaries. The security of the Revolver is subject to an intercreditor agreement with the trustee under the Senior Secured Bonds due 2028. The Revolver includes certain restrictive covenants that may limit the Company’s ability to, among other things, incur additional indebtedness, guarantee obligations, incur liens, make investments, loans or capital expenditures, sell or dispose of assets, enter into mergers or consolidations, enter into transactions with affiliates or make or declare dividends. The Revolver also requires the Company to maintain at all times a minimum liquidity of not less than $30.0 million, a gearing ratio of Consolidated Net Total Borrowings to Consolidated Total Equity (each as defined in the Revolver) not to exceed 1.00 to 1.00 and an interest cover ratio of Adjusted EBITDA to Net Interest Expenses (each as defined in the Revolver) of not less than 2.50 to 1.00. The Revolver contains customary representations and warranties, affirmative covenants and events of default. If an event of default exists under the Revolver, the Revolver Lenders will be able to accelerate the maturity of the Revolver and exercise other rights and remedies. If an event of default exists under the Senior Secured Bonds due 2028, a cross-default will be triggered under the Revolver, and the Revolver Lenders will be able to accelerate the maturity of the Revolver and exercise other rights and remedies. Subject to certain notice requirements and certain partial prepayment amount restrictions, the Company may voluntarily prepay outstanding loans under the Revolver in whole or in part without premium or penalty. Following a Change of Control (as defined in the Revolver), which definition varies depending on whether an initial public offering has occurred, the Company can be required to prepay the loans in whole if the parties do not reach an agreement to continue the loan. As of June 30, 2026, the Company was in compliance with all financial covenants under the Revolver.

Credit Line in China

On March 27, 2025, the Company extended its credit line agreement (the “Credit Line in China”) with Bank of China Shanghai Pudong branch (the “Credit Line in China Lender”) pursuant to which the Credit Line in China Lender provided a credit line in an aggregate principal amount of up to Chinese renminbi (RMB) 10.0 million (USD: $1.47 million based on the exchange rate as of June 30, 2026). The extension period was valid through March 26, 2026, with the Company retaining a one-year period from each respective withdrawal date to remit payment. Borrowings under the Credit Line in China bear interest at the compounded reference rate, which was the applicable China Loan Prime Rate minus margin of 0.4% as of June 30, 2026. Interest is paid quarterly in the last month of each quarter. There is no quarterly commitment fee or guarantee requirement based on the Company’s financial status. The borrowing length for each withdrawal is one year. The Credit Line in China was available to use for the Company’s daily operations and could not be used to purchase real estate, re-lend to other companies or make investments.

Critical Accounting Policies

Critical accounting policies are those accounting policies that management believes are important to the portrayal of our financial condition and results of operations. There have been no material changes from the critical accounting policies previously disclosed in the section entitled “Critical accounting policies and estimates” in the Final Prospectus.

Recent Accounting Pronouncements

See “New Accounting Standards to be Adopted” in Note 1—“Basis of Presentation and Summary of Significant Accounting Policies” in the notes to the Condensed Consolidated Financial Statements.

Commodity Price Risk

The market for our products and services is indirectly exposed to fluctuations in the prices of oil and natural gas to the extent such fluctuations impact drilling and completion activity levels and thus impact the activity levels of our customers in the E&P industry. We do not believe that we are particularly exposed to short-term fluctuations. We do not currently intend to hedge our indirect exposure to commodity price risk.

Foreign Currency Exchange Rate Risk

A portion of our revenue is derived internationally and, accordingly, our competitiveness and financial results may be impacted by foreign currency fluctuations where revenues and costs are denominated in local currencies rather than U.S. dollars. For the three and six months ended June 30, 2026, $103.4 million of our revenues, or 61%, and $201.5 million, or 59%, respectively, were denominated in foreign currencies. We hedge currency risk in relevant projects using forward contracts.

We use a sensitivity analysis model to measure the potential impact on our revenues. A 10% strengthening or weakening of foreign currency exchange rates against the U.S. dollar during the three and six months ended June 30, 2026 would have resulted in an increase or decrease in revenues of approximately $10 million and $20 million, respectively. There can be no assurance that the exchange rate change projected above will materialize as fluctuations in exchange rates are beyond our control.

Interest Rate Risk

We are primarily exposed to interest rate risk through the Revolver. As of June 30, 2026, we had no aggregate principal amount outstanding under the Revolver, which bore interest at the compounded SOFR plus an applicable margin. We do not currently intend to hedge our exposure to interest rate risk. As of June 30, 2026, the impact of a 1% increase or decrease in interest rates on the Revolver would have no impact on interest expense.

As of June 30, 2026, we had $200.0 million aggregate fixed rate principal amount outstanding under the 7.875% Senior Secured Bonds due 2028. Any changes in interest rates do not impact our future cash outflows associated with these fixed-rate interest payments or settlement of debt principal, unless a debt instrument is repurchased prior to maturity.

Credit Risk

Our customers are predominantly drilling contractors and drilling rig manufacturers, drilling rig owners and drilling rig operators in all segments, such as offshore and onshore oil and gas companies and production shipyards. Changes in economic, regulatory or other conditions may increase our overall credit risk from counterparties. We manage credit risk by analyzing the counterparties’ financial condition prior to accepting new customers and prior to adjusting existing credit limits.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2026.

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We will not be required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act until our Annual Report on Form 10-K for the fiscal year ended December 31, 2027. Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012.

There have been no material changes to the risk factors previously disclosed in the section entitled “Risk Factors” in the Final Prospectus.