Acuren Corp(TIC) - 2025 Q1 - Quarterly Report

Part I - Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, statements of operations, stockholders' equity, and cash flows, reporting a net loss of $25.8 million on revenues of $234.2 million Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $2.18 billion, slightly down from $2.21 billion at year-end 2024, with total liabilities stable at approximately $1.05 billion Condensed Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $155,739 | $139,134 | | Total current assets | $376,667 | $394,236 | | Goodwill | $848,977 | $845,939 | | Intangible assets, net | $733,057 | $740,657 | | Total assets | $2,180,280 | $2,207,739 | | Liabilities & Equity | | | | Total current liabilities | $107,928 | $106,331 | | Debt, net of current portion | $744,706 | $747,048 | | Total liabilities | $1,051,233 | $1,056,567 | | Total stockholders' equity | $1,129,047 | $1,151,172 | Condensed Consolidated Statements of Operations For Q1 2025, service revenue increased to $234.2 million, but a 13.9% rise in cost of revenue and 25.3% increase in SG&A expenses led to a net loss of $25.8 million Condensed Consolidated Statement of Operations Summary (in thousands) | Account | Q1 2025 (Successor) | Q1 2024 (Predecessor) | | :--- | :--- | :--- | | Service revenue | $234,215 | $223,062 | | Cost of revenue | $190,546 | $167,214 | | Gross profit | $43,669 | $55,848 | | Selling, general and administrative expenses | $52,458 | $41,854 | | Income (loss) from operations | ($9,440) | $13,994 | | Net loss | ($25,793) | ($1,271) | | Diluted loss per share | ($0.21) | ($0.25) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased from $1.15 billion at year-end 2024 to $1.13 billion at March 31, 2025, primarily due to the $25.8 million net loss for the quarter - Total stockholders' equity decreased by $22.1 million during Q1 2025, from $1,151.2 million to $1,129.0 million[15] - The primary driver of the equity decrease was the net loss of $25.8 million recorded for the quarter[15] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $32.8 million in Q1 2025, leading to a $16.6 million increase in the company's cash balance to $155.7 million Condensed Consolidated Statement of Cash Flows Summary (in thousands) | Activity | Q1 2025 (Successor) | Q1 2024 (Predecessor) | | :--- | :--- | :--- | | Net cash provided by operating activities | $32,792 | $20,922 | | Net cash used in investing activities | ($12,213) | ($34,361) | | Net cash provided by (used in) financing activities | ($5,605) | $15,701 | | Net change in cash and cash equivalents | $16,605 | $2,811 | | Cash and cash equivalents, end of period | $155,739 | $89,872 | Notes to the Condensed Consolidated Financial Statements This section details the financial statements, covering the Acuren Acquisition's impact on reporting periods, debt structure, segment performance, and the announced $1.7 billion merger agreement with NV5 Global, Inc - The financial statements distinguish between "Predecessor" (before July 30, 2024) and "Successor" (after July 30, 2024) periods due to the Acuren Acquisition, which created a new basis of accounting, making the periods not directly comparable[22][23] - As of March 31, 2025, the company had $771.1 million of principal outstanding under its Term Loan, which was repriced in January 2025 to reduce interest rate margins[59][60] - The company reports two segments: United States and Canada, generating $147.7 million and $87.0 million in revenue respectively for Q1 2025[79] - On May 14, 2025, the company entered into a definitive merger agreement to acquire NV5 Global, Inc. for approximately $1.7 billion in cash and stock, expected to close in the second half of 2025[86][87] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, noting a 5.0% revenue growth to $234.2 million but a 21.8% decrease in gross profit to $43.7 million due to adverse weather and project timing, while also highlighting the announced merger with NV5 Results of Operations Service revenue increased 5.0% year-over-year to $234.2 million, but a 14.0% rise in cost of revenue and 25.3% increase in SG&A expenses led to a 21.8% decrease in gross profit and an operating loss of $9.4 million Key Operational Metrics Comparison | Metric | Q1 2025 (Successor) | Q1 2024 (Predecessor) | Change (%) | | :--- | :--- | :--- | :--- | | Service Revenue | $234.2M | $223.1M | +5.0% | | Gross Profit | $43.7M | $55.8M | -21.8% | | Gross Profit Margin | 19% | 25% | -600 bps | | SG&A Expenses | $52.5M | $41.9M | +25.3% | - The increase in SG&A expenses was primarily driven by higher employee-related costs and increased amortization expense on intangible assets related to the Acuren Acquisition[112] - The decrease in gross profit was attributed to adverse weather events in the U.S., timing of projects in Canada, and comparison to one-time higher margin projects in Q1 2024[111] Operating Segment Results The United States segment revenue grew 3.1% to $147.7 million, but its gross profit fell 24% to $28.1 million, while the Canada segment revenue grew 8.5% to $87.0 million, with its gross profit decreasing 17.4% to $15.6 million Segment Performance (Q1 2025 vs Q1 2024) | Segment | Service Revenue | % Change | Gross Profit | % Change | | :--- | :--- | :--- | :--- | :--- | | United States | $147.7M | +3.1% | $28.1M | -24.0% | | Canada | $87.0M | +8.5% | $15.6M | -17.4% | Liquidity and Capital Resources The company's liquidity is supported by $155.7 million cash on hand, increased operating cash flow of $32.8 million, and an undrawn $75.0 million revolving credit facility, with $771.1 million outstanding on its term loan - Net cash provided by operating activities increased by $11.9 million year-over-year to $32.8 million in Q1 2025[128] - The company has a $775.0 million term loan facility with $771.1 million outstanding and an undrawn $75.0 million revolving credit facility as of March 31, 2025[124] - Management believes current liquidity sources are sufficient to fund operations, service debt, and maintain compliance with covenants[123] Quantitative and Qualitative Disclosures About Market Risk There have been no significant changes to the company's quantitative and qualitative disclosures about market risk since its 2024 Annual Report on Form 10-K - There have been no significant changes to the company's market risk disclosures since its 2024 Annual Report[136] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses in internal control over financial reporting, and a remediation plan is being developed - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025[138] - The ineffectiveness is due to material weaknesses in internal control, including a lack of sufficient, experienced accounting resources and inadequate IT general controls (e.g., user access, change management)[140][145] - Management is in the process of developing a remediation plan for the identified material weaknesses[143] Part II - Other Information Legal Proceedings The company is involved in various claims arising in the normal course of business, but does not anticipate any material adverse effect on its financial condition or operations - Ongoing legal matters arising from the normal course of business are not expected to have a material adverse effect on the company[78][147] Risk Factors There have been no material changes to the company's risk factors from those previously disclosed in its 2024 Annual Report on Form 10-K - No material changes in risk factors have occurred since the filing of the 2024 Annual Report on Form 10-K[148] Other Items (Items 2, 3, 4, 5, 6) This section confirms no unregistered sales of equity securities, no defaults on senior securities, no mine safety disclosures, and no officer or director 10b5-1 trading plan adoptions or terminations during the quarter - The company reported no unregistered sales of equity securities or defaults on senior securities during the period[149] - No officers or directors adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[150]