TIC

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2025, for Acuren Corporation (trading symbol: TIC). The Company is a leading provider of critical asset integrity services, operating primarily in North America across industrial markets such as chemical, pipeline, refinery, and power generation. The reporting period reflects the "Successor" entity following the July 30, 2024, acquisition of ASP Acuren Holdings, Inc. (the "Acuren Acquisition"). The financial statements are not directly comparable to the "Predecessor" period due to the acquisition method of accounting and the remeasurement of assets and liabilities at fair value.

Key Financial Metrics

Note: Amounts in millions unless otherwise noted. Debt figures represent principal outstanding under the Term Loan.

Material Changes vs. Prior Period

• Revenue Growth: Service revenue increased 1.5% year-over-year (YoY) for the quarter and 3.0% for the six-month period, driven by new customer wins and increased callout work, partially offset by lower turnaround activity and adverse weather in the U.S. during Q1 2025.
• Margin Compression: Gross profit decreased 8.1% for the quarter and 13.7% for the six-month period. Margins declined from 26% to 23.6% (quarterly) and 25.6% to 21.5% (six-month) due to a less favorable mix of work, the absence of high-margin turnaround projects, and increased depreciation/amortization from the Acuren Acquisition.
• Expense Management: Selling, general, and administrative (SG&A) expenses decreased 9.3% for the quarter due to lower share-based compensation, though they increased 4.8% for the six-month period due to higher employee costs and amortization.
• Segment Performance: The U.S. segment saw a 0.9% revenue decline for the quarter due to softness in chemicals and refining markets. The Canada segment grew 4.4% for the quarter, supported by energy processing and midstream infrastructure growth.

Guidance, Outlook, and Risks

Subsequent Events and Outlook: On August 4, 2025, the Company completed the acquisition of NV5 Global, Inc. for approximately $1.7 billion. To finance this, the Company amended its Credit Agreement to add $875.0 million in new term loans, increasing total term loan principal to approximately $1.6 billion, and expanded its revolving credit facility to $125.0 million. The Company expects to finalize the purchase price allocation for the NV5 acquisition by the end of the third quarter of 2025.

Management Commentary: Management noted that while operating cash flow improved significantly to $26.3 million for the six months ended June 30, 2025, the Company recorded a net loss primarily due to a $11.1 million valuation allowance against interest limitation carryforwards. The Company is evaluating the impact of the "One Big Beautiful Bill Act" enacted on July 4, 2025, which includes changes to R&D expensing and bonus depreciation.

Risks and Contingencies:

• Internal Control Weaknesses: The Company disclosed that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in the control environment, period-end financial reporting, and IT general controls. These weaknesses previously led to a restatement of predecessor financial statements.
• Debt Covenants: The Company is subject to financial covenants under its Credit Facility, specifically regarding the First Lien Net Leverage Ratio. As of June 30, 2025, the Company was in compliance.
• Integration Risks: Risks associated with the integration of NV5, including potential failure to realize synergies, retention of key personnel, and exposure to government funding cycles (as NV5 derives ~63% of revenue from public sector clients).

Investor Verification Checklist

• Internal Control Remediation: Verify the progress of remediation plans for the identified material weaknesses in internal controls over financial reporting, specifically regarding IT general controls and period-end reporting processes.
• NV5 Integration: Monitor the integration of NV5 Global, Inc., including the realization of anticipated synergies and the impact of the additional $875 million in debt on future interest expenses and leverage ratios.
• Valuation Allowance: Assess the sustainability of the $11.1 million valuation allowance on deferred tax assets and the potential impact of the new "One Big Beautiful Bill Act" on future tax provisions.
• Segment Mix: Track the shift in business mix between high-margin turnaround projects and recurring run-and-maintain work, as this significantly impacts gross margins.
• Debt Servicing: Confirm continued compliance with the First Lien Net Leverage Ratio covenant, especially given the increased debt load from the NV5 acquisition.