Sales Performance - Signet's total sales increased by 2.0% year over year to $1.54 billion in the first quarter of Fiscal 2026[118] - Same store sales rose by 2.5%, compared to a decrease of 8.9% in the prior year quarter, driven by improved merchandise assortment and increased average unit retail (AUR)[111] - North America total sales increased by 2.1% to $1.45 billion, with same store sales up 2.3% compared to a decrease of 9.2% in the prior year[121] - International sales rose 3.8% to $80.1 million, with same store sales increasing 4.5% compared to a decrease of 3.2% in the prior year[122] - E-commerce sales in Q1 Fiscal 2026 were $338.7 million, a slight increase of 0.2% from $337.9 million in the prior year[119] Financial Metrics - Gross margin improved to 38.8% in the first quarter of Fiscal 2026, compared to 37.9% in the prior year[117] - Net income for the first quarter of Fiscal 2026 was $33.5 million, a decrease from $52.1 million in the same period last year[117] - Operating income decreased slightly to $48.1 million in the first quarter of Fiscal 2026 from $49.8 million in the prior year[117] - Adjusted operating income for Q1 was $70.3 million, with an adjusted operating margin of 4.6% compared to 3.8% in the prior year[142] - Free cash flow for the 13 weeks ended May 3, 2025, was $(211.9) million, compared to $(181.5) million in the prior year[138] - Adjusted diluted EPS for the 13 weeks ended May 3, 2025, was $1.18, compared to $1.11 for the same period in the prior year, while diluted EPS was $0.78, up from $(0.90)[145] Expenses and Charges - SG&A expenses were $526.0 million, maintaining 34.1% of sales, driven by increased store payroll and marketing expenses[124] - The company incurred restructuring charges of $19.0 million and asset impairments of $3.0 million during the 13 weeks ended May 3, 2025, primarily due to the Grow Brand Love strategy initiatives[167] - Net interest income fell to $0.8 million from $8.6 million in the prior year due to lower cash balances[130] - Income tax expense was $12.1 million with an effective tax rate of 26.5%, significantly higher than the prior year’s $6.5 million and 11.1%[131] Strategic Initiatives - The Company launched its Grow Brand Love strategy in Fiscal 2026, focusing on sustainable growth and brand loyalty[110] - The company plans to invest up to $160 million in capital expenditures for Fiscal 2026, focusing on new stores, renovations, and digital advancements, following a $153.0 million investment in Fiscal 2025[149] - The company opened 5 new stores and closed 14 during the 13 weeks ended May 3, 2025, resulting in a total of 2,633 stores[160] Cash and Debt Management - As of May 3, 2025, the company had $264.1 million in cash and cash equivalents and no outstanding borrowings on its asset-based revolving credit facility (ABL), which had an available borrowing capacity of $1.1 billion[147][165] - The company repurchased $117.4 million of common shares during the 13 weeks ended May 3, 2025, with $605.6 million remaining authorized for repurchase[154] - The company maintained a 1.1x adjusted leverage ratio as of the end of Fiscal 2025, reflecting its conservative balance sheet strategy after retiring all funded debt[153] Market Risks - The company is closely monitoring macroeconomic factors such as tariffs and inflation, which may impact future performance[115] - Signet is exposed to market risk from fluctuations in foreign currency exchange rates, interest rates, and precious metal prices, which could affect its financial position and cash flows[174] - The company manages its market risk through regular operating and financing activities and the use of derivative financial instruments[174] - Signet enters into forward foreign currency exchange contracts and swaps to manage exposure to the US dollar and currency fluctuations associated with Canadian operations[175] - The interest rates earned on cash and cash equivalents will fluctuate in line with short-term interest rates[176] Dividend Information - The quarterly common dividend was increased from $0.29 per share in Fiscal 2025 to $0.32 per share beginning in Fiscal 2026, marking the fourth consecutive year of dividend growth[154] Impairment and Fair Value - The fair value of the Diamonds Direct reporting unit exceeded its carrying value of $251.2 million by approximately 11%[171] - The carrying values of the Digital brands goodwill and the trade names for Blue Nile, James Allen, and Diamonds Direct approximate their estimated fair values of $53.6 million, $19.0 million, $15.0 million, and $112.0 million, respectively[171] - An increase in the discount rate of 0.5% could result in additional impairment charges of approximately $8 million for the impaired trade names and reporting unit[172] - The company continues to monitor events that could trigger the need for an interim impairment test, with estimates and assumptions being subject to change[173]

Financial Results - Quantum Corporation provided preliminary financial results for its fiscal fourth quarter ended March 31, 2025[5] - The press release detailing these results was issued on May 6, 2025[5] - The financial results will not be deemed filed under the Securities Exchange Act of 1934[6] Report Details - The report includes a cover page interactive data file embedded within the Inline XBRL document[7]

Financial Performance - First quarter 2025 net sales are expected to be approximately $1.35 billion, exceeding the prior guidance range of $1.30 billion to $1.33 billion[7] - Adjusted operating income for the first quarter 2025 is projected to be $32 million, surpassing the previous guidance of $10 million to $30 million[7] - Adjusted diluted earnings per share for the first quarter 2025 is anticipated to be $0.09, compared to the prior guidance range of ($0.10) to $0.10[7] - Adjusted financial measures are used to evaluate performance internally, providing additional insights for investors[14] Security Incident - The company experienced a security incident on May 24, 2025, which led to temporary shutdowns of corporate systems and the e-commerce website[2][3] - The security incident did not materially disrupt financial results for the first quarter of fiscal 2025, but may incur future expenses impacting second quarter results[5] - The company is currently assessing the full scope and impact of the security incident under the oversight of the Audit Committee[5] Business Operations - Victoria's Secret & Co. operates approximately 1,380 retail stores in nearly 70 countries, employing over 30,000 associates[8] - The company is committed to integrating artificial intelligence into its business operations while managing associated risks[10] - The company plans to announce a new date for the first quarter 2025 earnings release and earnings call webcast in due course[4]

Exhibit 99.1 Financial Highlights for the First Quarter of 2025 1 · Vehicle sales were RMB9,939.3 million (US$1,369.7 million) i in the first quarter of 2025, representing an increase of 18.6% from the first quarter of 2024 and a decrease of 43.1% from the fourth quarter of 2024. · Vehicle margin ii was 10.2% in the first quarter of 2025, compared with 9.2% in the first quarter of 2024 and 13.1% in the fourth quarter of 2024. · Total revenues were RMB12,034.7 million (US$1,658.4 million) in the first quarte ...

Financial Performance - Net sales increased by 13.4% to $576.8 million, compared to $508.8 million in the same quarter last year[2] - Adjusted net income per diluted share was $0.75, reflecting a year-over-year increase of 2.7%[7] - Adjusted net income increased to $46,073 thousand in Q1 2025, up from $45,210 thousand in Q1 2024, reflecting a growth of 1.9%[18] - The net income per diluted share increased to $0.77 in Q1 2025 from $0.75 in Q1 2024, representing a growth of 2.7%[18] Store Performance - Comparable store sales rose by 2.6%, driven by an increase in transactions[7] - The number of stores open at the end of the period rose to 584 in Q1 2025, compared to 516 in Q1 2024, indicating a year-over-year store growth of 13.2%[19] - Comparable store sales change was 2.6% in Q1 2025, slightly down from 3.0% in Q1 2024[19] - The average net sales per store rose to $1,005 in Q1 2025 from $993 in Q1 2024, reflecting a growth of 1.2%[19] Outlook and Projections - The company reaffirmed its fiscal 2025 earnings outlook, projecting net sales between $2.579 billion and $2.599 billion[6] - The projected increase in comparable store sales for fiscal 2025 is between 1.4% and 2.2%[6] Cash and Investments - Cash and cash equivalents, along with short-term investments, totaled $369.5 million, with a total cash and investment position of $414.9 million, up 21.5% year over year[7] - Cash, cash equivalents, and short-term investments increased to $369,508 thousand in Q1 2025 from $341,500 thousand in Q1 2024, marking a rise of 8.2%[19] Expenses and Margins - Gross margin remained flat at 41.1%, with lower supply chain costs offset by a decrease in merchandise margin[7] - Selling, general and administrative expenses as a percentage of sales increased by 60 basis points to 28.6%[7] Share Repurchases - The company invested $17.1 million to repurchase 159,757 shares of its common stock, with $315.5 million remaining for future repurchases[7] - Share repurchases totaled $17,107 thousand in Q1 2025, down from $25,007 thousand in Q1 2024[19] Operating Activities - Net cash provided by operating activities decreased to $28,702 thousand in Q1 2025 from $40,184 thousand in Q1 2024, representing a decline of 28.8%[17] Capital Expenditures - Capital expenditures were $26,740 thousand in Q1 2025, slightly down from $26,865 thousand in Q1 2024[19] EBITDA - Adjusted EBITDA for Q1 2025 was $72,159 thousand, compared to $69,431 thousand in Q1 2024, showing an increase of 3.9%[18]

Financial Performance - Net sales for the 13 weeks ended May 2, 2025, increased to $10,435,979, up 5.3% from $9,914,021 in the same period last year[22] - Gross profit for the same period rose to $3,231,288, representing a gross margin of 30.9%, compared to 30.2% in the prior year[22] - Net income for the quarter was $391,928, an increase of 7.9% from $363,317 in the previous year[22] - Earnings per share (EPS) for the quarter was $1.78, up from $1.65 year-over-year[22] - Consolidated net income for the 13 weeks ended May 2, 2025, was $391,928 thousand, compared to $363,317 thousand for the same period in 2024, representing an increase of 7.9%[72] - Cash flows from operating activities rose to $847.2 million in 2025, an increase of $183.3 million compared to 2024[121] Assets and Liabilities - Total current assets decreased to $7,896,303 from $8,163,925 at the end of January 2025, primarily due to a reduction in cash and cash equivalents[20] - Total liabilities decreased to $23,283,998 from $23,719,026, reflecting a reduction in current liabilities[20] - Cash and cash equivalents at the end of the period were $850,018, down from $932,576 at the beginning of the period[30] - As of May 2, 2025, the Company's total current and long-term obligations were $5.744 billion, down from $6.238 billion as of January 31, 2025[52] Tax and Legal Matters - Total reserves for uncertain tax benefits, interest expense related to income taxes, and potential income tax penalties amounted to $14.5 million as of May 2, 2025[46] - The effective income tax rate for the 13-week period ended May 2, 2025, was 23.4%, slightly higher than the 23.3% rate for the same period in 2024[48] - The Company expects to reduce its reserve for uncertain tax positions by $3.5 million in the coming twelve months[47] - The effective income tax rate for 2025 was 23.4%, slightly higher than 23.3% in 2024, primarily due to stock-based compensation[113] - The Company believes that pending legal matters will be resolved without a material adverse effect on its consolidated financial statements[68] Operational Highlights - The company reported a LIFO provision of $12.3 million for the quarter, compared to $10.3 million in the same period last year[36] - Operating lease costs for the 13-week periods ended May 2, 2025, and May 3, 2024, were $487.9 million and $459.8 million, respectively, reflecting an increase of 6.5%[51] - The weighted-average remaining lease term for the Company's operating leases was 9.3 years, with a weighted average discount rate of 4.6% as of May 2, 2025[51] - The company opened 156 new stores and remodeled 668 stores in the first quarter of 2025, with plans to open approximately 575 new stores in 2025[92] - The Company operates 20,582 stores across 48 U.S. states and Mexico as of May 2, 2025, maintaining its position as the largest discount retailer in the U.S. by store count[82] Sales and Inventory - Consumables sales reached $8,636,680 thousand, up from $8,210,850 thousand, reflecting a growth of 5.2% year-over-year[70] - The percentage of net sales from consumables remained high at 82.76%, reflecting the company's focus on this category[111] - Inventory turnover improved to 4.2 in 2025 from 3.8 in 2024, indicating better inventory management[106] - Total merchandise inventories decreased by 2% in 2025, with apparel and home products both seeing an 8% decline[122] - Inventory represented approximately 46% of total assets as of May 2, 2025, indicating a focus on inventory management[117] Expenses and Dividends - Selling, general and administrative expenses increased by 8.5% to $2.66 billion, impacting overall profitability[109] - Cash dividends paid were $129.8 million in 2025, slightly up from $129.7 million in 2024[126] - Dividends paid during the quarter remained stable at $0.59 per share, consistent with the previous year[22] - A cash dividend of $0.59 per share was paid during the first quarter of 2025, with a similar dividend declared for June 2025[76] Future Outlook and Strategy - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency[32] - The company plans to enhance its digital shopping experience and expand same-day home delivery offerings through partnerships with third-party delivery services[90] - The company has approximately $1.38 billion available under its common stock repurchase program, which has no expiration date[74] - The company has a remaining stock repurchase authorization of approximately $1.38 billion but plans no repurchases in 2025[127] - The Company is focused on mitigating the impact of tariffs on consumer behavior and financial results, with no material impact observed in the first quarter of 2025[84]

Financial Performance - Sales for Q1 Fiscal 2026 were $1.54 billion, an increase of $30.8 million or 2.0% compared to Q1 of FY25[5]. - Same store sales (SSS) rose by 2.5% compared to a decline of 8.9% in Q1 of FY25[6]. - Adjusted operating income increased to $70.3 million, up from $57.8 million in Q1 of FY25, representing an adjusted operating margin of 4.6%[8]. - Diluted earnings per share (EPS) improved to $0.78, compared to a loss of $0.90 in Q1 of FY25, while adjusted diluted EPS was $1.18, up from $1.11[9]. - Gross margin was $598.8 million, an increase of approximately $26 million from Q1 of FY25, with a gross margin rate of 38.8%[7]. - Net income for the quarter was $33.5 million, a decrease from $52.1 million year-over-year[23]. - Basic earnings per share were $0.79, compared to a loss of $0.90 in the prior year[23]. - Total operating income for the first quarter of Fiscal 2026 was $48.1 million, a decrease of 3.4% compared to $49.8 million in the first quarter of Fiscal 2025[27]. - Adjusted EBITDA for the first quarter of Fiscal 2026 was $113.8 million, an increase from $101.5 million in the prior year[47]. Guidance and Future Expectations - Fiscal 2026 total sales guidance is updated to $6.57 to $6.80 billion, with same store sales expected to range from (2.0%) to +1.5%[14]. - Adjusted diluted EPS guidance for Fiscal 2026 is raised to a range of $7.70 to $9.38, compared to the previous range of $7.31 to $9.10[14]. - The company expects capital expenditures of approximately $145 to $160 million for the fiscal year[16]. Cash and Assets - Cash and cash equivalents at the end of the quarter were $264.1 million, down from $729.3 million in Q1 of FY25 due to share repurchases and debt retirement[10]. - Total assets decreased to $5,451.9 million from $5,726.6 million year-over-year[24]. - The company reported a net cash used in operating activities of $175.3 million for the quarter[25]. - Free cash flow for the 13 weeks ended May 3, 2025, was $(211.9) million, compared to $(181.5) million for the same period in the prior year[39]. Inventory and Store Operations - Inventories increased to $2,006.5 million from $1,937.3 million, indicating a rise in stock levels[24]. - The company operated 2,633 stores as of May 3, 2025, a decrease of 9 stores from the end of Fiscal 2025[28]. - The company reported a total of 2,371 stores in the North America segment after 5 openings and 13 closures[29]. Segment Performance - North America segment sales increased by 2.3%, while international segment sales saw a 1.5% increase at constant exchange rates[26]. - North America segment adjusted operating income rose to $97.1 million, a 14.0% increase from $85.2 million in the first quarter of Fiscal 2025[41]. - The International segment reported an adjusted operating loss of $7.0 million, unchanged from the previous year[42]. Tax and Other Financial Metrics - The effective tax rate for the first quarter of Fiscal 2026 was 26.5%, up from 11.1% in the same quarter of the previous year[45].

Financial Performance - Net sales increased by 5.3% to $10.4 billion in Q1 2025 compared to $9.9 billion in Q1 2024[4] - Operating profit increased by 5.5% to $576.1 million, up from $546.1 million in Q1 2024[7] - Diluted earnings per share (EPS) rose by 7.9% to $1.78, compared to $1.65 in Q1 2024[9] - Net income for the quarter was $391,928,000, representing a 7.9% increase from $363,317,000 in the prior year[31] - Earnings per share for the quarter were $1.78, up from $1.65 in the same quarter last year[31] Sales and Revenue Growth - Same-store sales rose by 2.4%, driven by a 2.7% increase in average transaction amount, despite a 0.3% decrease in customer traffic[4] - The company expects net sales growth of approximately 3.7% to 4.7% for fiscal year 2025, an increase from the previous expectation of 3.4% to 4.4%[16] - For the quarter ended May 2, 2025, net sales increased by 5.3% to $10,435,979,000 compared to $9,914,021,000 for the same period in 2024[31] Profitability Metrics - Gross profit as a percentage of net sales improved to 31.0%, up from 30.2% in Q1 2024, an increase of 78 basis points[6] - Gross profit margin improved to 30.96% from 30.18% year-over-year, with gross profit amounting to $3,231,288,000[31] Cash Flow and Liquidity - Cash flows from operations increased by 27.6% to $847.2 million[5] - Cash and cash equivalents at the end of the period were $850,018,000, down from $932,576,000 at the beginning of the period[33] Inventory and Assets - Total merchandise inventories decreased by 7.0% to $6.6 billion as of May 2, 2025, compared to $6.9 billion as of May 3, 2024[10] - The company reported a decrease in merchandise inventories to $6,590,096,000 from $6,934,389,000 year-over-year[29] - Total assets decreased slightly to $30,987,661,000 from $31,132,733,000 at the end of January 2025[29] Expenses and Liabilities - Selling, general and administrative expenses increased to $2,655,175,000, accounting for 25.44% of net sales[31] - The company’s total liabilities were $23,283,998,000, a decrease from $24,009,320,000 in the previous year[29] Future Plans - The updated guidance for diluted EPS is approximately $5.20 to $5.80, compared to the previous expectation of $5.10 to $5.80[16] - The company plans to execute approximately 4,885 real estate projects in fiscal year 2025, including opening about 575 new stores in the U.S.[18] - The company opened 156 new stores during the quarter, resulting in a total store count of 20,582, a net decrease of 12 stores[37]

Financial Performance - Comparable store sales growth of 9.9% and total year-over-year sales growth of 8.3%, or $15.4 million, to $201.7 million[1][6] - Adjusted EBITDA of $5.4 million, an increase of $6.2 million compared to the prior year, with a flowthrough of 40%[1][10] - Net income of $0.9 million, compared to a net loss of $3.4 million in Q1 2024, with diluted earnings per share of $0.11[6][10] - Adjusted operating income for Q1 2025 was $1,036 million, compared to a loss of $5,589 million in Q1 2024[22] - Adjusted net income for Q1 2025 was $1,418 million, improving from a loss of $2,663 million in Q1 2024[22] - Adjusted diluted earnings per share (EPS) for Q1 2025 was $0.17, compared to a loss of $0.32 in Q1 2024[22] - Adjusted EBITDA for Q1 2025 was $5,406 million, a significant increase from a loss of $796 million in Q1 2024[23] Inventory and Expenses - Merchandise inventory decreased by 7.6% to $109.9 million, with a 45% reduction in aged product compared to Q1 2024[10] - SG&A expenses leveraged 270 basis points compared to Q1 2024, reflecting disciplined cost controls amid increased sales[6][10] - Adjusted SG&A expenses for Q1 2025 were $74,404 million, compared to $72,831 million in Q1 2024[22] - The company incurred $402 million in cyber incident expenses during Q1 2025[22] - Other non-recurring expenses amounted to $885 million in Q1 2025, down from $1,380 million in Q1 2024[22] - The company reported an asset impairment of $64 million in Q1 2025, while there was no such expense in Q1 2024[22] Future Outlook - The company expects full-year comparable store sales growth in the mid-single digits, and EBITDA to be in the range of $6 million to $10 million, a significant improvement from 2024[11] - Plans to open up to 5 new stores and remodel approximately 50 stores during fiscal 2025[11] - Total liquidity at the end of Q1 2025 was approximately $117.0 million, with no debt and $41.6 million in cash[10][11] Operational Focus - The company continues to focus on enhancing customer experience and operational improvements to drive future growth[4][5] Interest and Tax - Interest income for Q1 2025 was $458 million, down from $849 million in Q1 2024[22] - The company did not report any income tax benefit in Q1 2025, compared to a benefit of $2,773 million in Q1 2024[22] Gross Margin - Gross margin improved to 39.6%, up 90 basis points from 38.7% in Q1 2024, driven by higher initial markup and lower shrink[6][10]

PART I – FINANCIAL INFORMATION [Unaudited Condensed Consolidated Interim Financial Statements](index=3&type=section&id=ITEM%201.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20FINANCIAL%20STATEMENTS) The company's Q1 2025 financial performance shows increased revenues and net income, with a slight decrease in total assets and segment-specific revenue shifts [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets slightly decreased to **$1.769 billion** as of March 31, 2025, while total liabilities decreased and total equity increased to **$920.5 million** Condensed Consolidated Balance Sheet Data (in US$ thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $554,848 | $540,516 | | **Total assets** | $1,769,323 | $1,773,678 | | **Total current liabilities** | $502,569 | $503,512 | | **Total liabilities** | $848,844 | $865,446 | | **Total equity** | $920,479 | $908,232 | [Unaudited Condensed Consolidated Interim Statements of Operations](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 revenue increased to **$303.1 million**, but gross profit and operating income declined, while net income slightly rose to **$10.4 million** due to lower expenses Q1 2025 vs Q1 2024 Statement of Operations (in US$ thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | $303,102 | $296,848 | | **Gross Profit** | $37,455 | $42,942 | | **Operating Income** | $20,941 | $24,558 | | **Net Income** | $10,391 | $9,982 | | **Diluted EPS** | $0.11 | $0.10 | [Unaudited Condensed Consolidated Interim Statements of Comprehensive Income](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Total comprehensive income for Q1 2025 was **$10.4 million**, aligning with net income, with no other comprehensive income items reported - Total comprehensive income was **$10.4 million** for Q1 2025 and **$10.0 million** for Q1 2024, with no other comprehensive income items reported in either period[14](index=14&type=chunk) [Unaudited Condensed Consolidated Interim Statements of Shareholders' Equity](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Total equity increased to **$920.5 million** by March 31, 2025, primarily driven by net income and share-based compensation - Total equity grew to **$920.5 million** at March 31, 2025, up from **$908.2 million** at December 31, 2024, mainly due to net income of **$10.4 million**[16](index=16&type=chunk) [Unaudited Condensed Consolidated Interim Statements of Cash Flows](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operating activities significantly decreased to **$20.5 million** in Q1 2025, resulting in a net cash decrease of **$29.3 million** for the period Cash Flow Summary (in US$ thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $20,485 | $69,620 | | **Net cash used in investing activities** | ($31,487) | ($41,363) | | **Net cash used in financing activities** | ($18,259) | ($33,319) | | **Net (decrease) in cash** | ($29,261) | ($5,062) | | **Cash and cash equivalents, end of period** | $78,695 | $62,759 | [Notes to Unaudited Condensed Consolidated Interim Financial Statements](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20FINANCIAL%20STATEMENTS) The notes detail accounting policies, debt compliance, tax rates, segment reporting, and a subsequent warrant exchange offer, with **99%** of revenue from the MENA region - The company's Integrated Production Management (IPM) projects, where compensation is based on cash flow from production, represented **0.8%** of revenues in Q1 2025[21](index=21&type=chunk) - Total long-term debt stood at **$306.0 million** and short-term debt was **$60.4 million** as of March 31, 2025, with the company in compliance with all financial covenants[33](index=33&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The effective tax rate for Q1 2025 was **24.2%**, a decrease from **31.5%** in Q1 2024, primarily due to fewer provisions for uncertain tax positions[42](index=42&type=chunk) - The company has two reportable segments: Production Services (**62%** of Q1 2025 revenue) and Drilling and Evaluation Services (**38%** of Q1 2025 revenue)[52](index=52&type=chunk)[57](index=57&type=chunk) - Subsequent to the quarter end, the company announced an intention to offer **0.10** ordinary shares in exchange for each outstanding warrant[64](index=64&type=chunk) [Operating and Financial Review](index=22&type=section&id=ITEM%202.%20OPERATING%20AND%20FINANCIAL%20REVIEW) Q1 2025 revenue grew **2.1%** to **$303.1 million**, driven by MENA E&P trends, with segment shifts and a contracted gross margin due to elevated costs - The company operates primarily in the MENA region, which contributed **99%** of revenue in Q1 2025, with demand linked to global commodity prices and regional E&P spending[70](index=70&type=chunk)[74](index=74&type=chunk) Q1 2025 vs Q1 2024 Revenue by Segment (in US$ thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Production Services** | $188,087 | $194,503 | | **Drilling and Evaluation Services** | $115,015 | $102,345 | | **Total revenue** | $303,102 | $296,848 | - Drilling and Evaluation Services revenue grew due to increased rig assignments in Saudi Arabia and contributions from the Roya™ advanced directional drilling technology platform[94](index=94&type=chunk) - Production Services revenue declined due to a seasonal slowdown related to the holy month of Ramadan[93](index=93&type=chunk) - Cost of services as a percentage of revenue increased from **85.5%** to **87.6%** YoY, attributed to an elevated cost structure to support expected higher activity levels in H2 2025[95](index=95&type=chunk) Cash Flow Summary (in US$ thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Operating Activities** | $20,485 | $69,620 | | **Investing Activities** | ($31,487) | ($41,363) | | **Financing Activities** | ($18,259) | ($33,319) | [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks primarily from interest rate changes on variable-rate borrowings, while foreign currency and credit risks are managed and considered low - Foreign currency risk is limited as key currencies in the UAE, Saudi Arabia, Oman, Kuwait, and Qatar are pegged to the U.S. dollar[123](index=123&type=chunk) - Credit risk is concentrated with National Oil Companies (NOCs) in the MENA region, but the company has not experienced material losses from non-payment[124](index=124&type=chunk)[125](index=125&type=chunk) - The company is exposed to market risk from rising interest rates on its borrowings, with the interest rate on U.S. dollar-denominated term loans increased from **2.96%** at the end of 2021 to **7.19%** as of March 31, 2025[128](index=128&type=chunk)[129](index=129&type=chunk) [Internal Controls and Procedures](index=33&type=section&id=ITEM%204.%20INTERNAL%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting, with a remediation plan partially implemented - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period due to a material weakness in internal control over financial reporting[131](index=131&type=chunk) - The material weakness is related to the control environment, specifically: lack of an effective organizational structure, ineffective communication protocols, and insufficient technical accounting resources[133](index=133&type=chunk)[142](index=142&type=chunk) - A remediation plan has been designed, and several steps have been implemented, such as executive training, adding new independent directors, and enhancing policies, though not yet fully remediated[134](index=134&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in ordinary course legal proceedings, which management does not expect to have a material impact on its financial condition - The company is involved in ordinary course legal proceedings, but management does not expect them to have a material impact on its business, financial condition, or liquidity[136](index=136&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors.) The most significant risk is the ongoing material weakness in internal control over financial reporting, with potential for adverse financial impact and penalties - A key risk is the continuing material weakness in internal control over financial reporting, which could adversely affect the company's ability to report financial results accurately and prevent fraud[138](index=138&type=chunk) - If the material weakness is not remediated by August 28, 2025, the company faces an additional SEC civil monetary penalty of **$1.2 million**[141](index=141&type=chunk)