HMH Holding Q3 profit falls to $5M as revenue drops
HMH had $434.0 million allocated to remaining performance obligations at September 30, 2026, with substantially all expected to be recognized over the next 12 months.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
HMH Holding Inc. reported third-quarter revenue of $171.1 million, down 21.2% from $217.2 million a year earlier. Net income attributable to HMH was $5.0 million, compared with $16.2 million. The company attributed lower revenue primarily to declines in product sales and contract service agreements, partly offset by higher repairs, field service and digital technology.
For the nine months ended September 30, 2026, revenue was $513.2 million versus $619.1 million, while net income attributable to HMH was $13.4 million versus $31.2 million. Operating cash flow was $19.0 million, compared with $28.9 million. Spare-parts revenue rose 8.4% to $184.9 million. As of September 30, 2026, $434.0 million of transaction price was allocated to remaining performance obligations, with substantially all expected to be recognized over the next 12 months. Total debt, net, was $197.5 million at September 30, 2026, compared with $340.1 million at December 31, 2025.
1 point · 0 major0 major · 3 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month spare-parts revenue increased 8.4% to $184.9 million.
Negative
- Moderate pointThird-quarter revenue declined 21.2% to $171.1 million.
- Moderate pointNine-month net income attributable to HMH was $13.4 million, versus $31.2 million.
- Moderate pointNine-month operating cash flow was $19.0 million, compared with $28.9 million.
Filing Explained
As of September 30, 31,891,652 Class A shares could be issued through exchange; the filing reports no completed exchange.
This unaudited HMH Holding Form 10-Q updates interim financial statements and liquidity, and says the Principal Stockholders may exchange 31,891,652 Class B shares, together with associated HMH B.V. non-voting interests, for the same number of Class A shares or cash at HMH’s election, subject to limits. The exchange right is disclosed as available, not completed; Class B shares carry voting rights only, while Class A shares carry voting and economic rights, so an exchange would change the class and stated rights of the HMH shares held. HMH reports 12,201,501 Class A shares outstanding as of
Separately, the 2026 plan reserves a maximum of 2.2 million Class A shares, with about 1.4 million available for future awards as of
Key Figures
Revenue: $171.1 million
Revenue: $513.2 million
Net income attributable to HMH: $5.0 million
+5 more
8 metrics
Revenue
$171.1 million
Three months ended September 30, 2026; $217.2 million in 2025
Revenue
$513.2 million
Nine months ended September 30, 2026; $619.1 million in 2025
Net income attributable to HMH
$5.0 million
Three months ended September 30, 2026; $16.2 million in 2025
Net income attributable to HMH
$13.4 million
Nine months ended September 30, 2026; $31.2 million in 2025
Net cash provided by operating activities
$19.0 million
Nine months ended September 30, 2026; $28.9 million in 2025
Spare-parts revenue
$184.9 million
Nine months ended September 30, 2026; $170.5 million in 2025; increased 8.4%
Transaction price allocated to remaining performance obligations
$434.0 million
As of September 30, 2026; substantially all expected to be recognized over the next 12 months
Total debt, net
$197.472 million
As of September 30, 2026; $340.083 million as of December 31, 2025
Key Terms
remaining performance obligations, non-controlling interest, Tax Receivable Agreement, cash flow hedges
4 terms
remaining performance obligations financial
"transaction price allocated to the unsatisfied or partially unsatisfied performance obligations"
Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.
non-controlling interest financial
"presented as non-controlling interest in the Company's consolidated financial statements"
Non-controlling interest represents the portion of ownership in a company held by investors who do not have a controlling stake, meaning they do not have enough voting power to make major decisions. It is similar to owning a minority share of a business partner’s company—while they benefit from profits, they cannot control how the company is run. This matters to investors because it shows how much of the company's value is owned by outside shareholders and affects overall financial reporting.
Tax Receivable Agreement financial
"entered into a Tax Receivable Agreement with HMH B.V. and the Principal Stockholders"
A contract in which a company agrees to pay a specified party (often former owners after a spinoff or IPO) a share of future tax savings the company realizes. Think of it like agreeing to share a future tax refund with someone who helped create the conditions for that refund. For investors it matters because those payments reduce the cash the company can use for dividends, buybacks, or reinvestment, and therefore affect valuation and returns.
cash flow hedges financial
"designated as cash flow hedges"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
Why did HMH product revenue decline in the third quarter of 2026?
HMH product revenue decreased $37.4 million, or 69.1%, from the third quarter of 2025. The company attributed the decline to lower equipment backlog volume and delays in the Middle East.
How much remaining performance obligation revenue did HMH report?
As of September 30, 2026, HMH had $434.0 million of transaction price allocated to unsatisfied or partially unsatisfied performance obligations. The company expected to recognize substantially all of that revenue over the next 12 months.
How much of HMH's third-quarter revenue came from a major customer?
One customer accounted for approximately 11.4% of HMH's total revenue in the three months ended September 30, 2026. One customer accounted for approximately 22.9% in the corresponding 2025 period.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM | ||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from __________ to __________
Commission File Number: | ||
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | ||||
(Registrant’s telephone number, including area code) | |||||
Not Applicable | |||||
(Former name, former address and former fiscal year, if changed from last report) | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
☒ | Smaller reporting company | |||||||||||||
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 31, 2026, the registrant had 12,201,501 shares of Class A common stock, par value $0.01 per share, and 31,891,652 shares of Class B common stock, par value $0.01 per share, outstanding.
HMH Holding Inc.
Form 10-Q
Table of Contents
| Page Number | ||||||||
Cautionary Statement Regarding Forward-Looking Statements | 2 | |||||||
| PART I — FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements (Unaudited) | |||||||
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2026 and 2025 | 4 | |||||||
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2026 and 2025 | 5 | |||||||
Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 | 6 | |||||||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 | 7 | |||||||
Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2026 and 2025 | 8 | |||||||
Notes to Condensed Consolidated Financial Statements | 9 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 36 | ||||||
Item 4. | Controls and Procedures | 36 | ||||||
| PART II — OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 37 | ||||||
Item 1A. | Risk Factors | 37 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 | ||||||
Item 3. | Defaults Upon Senior Securities | 37 | ||||||
Item 4. | Mine Safety Disclosures | 37 | ||||||
Item 5. | Other Information | 37 | ||||||
Item 6. | Exhibits | 38 | ||||||
Signatures | 39 | |||||||
1
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “may,” “could,” “should,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements generally relate to expectations, beliefs, future events, future expected business or our future financial or operating performance and prospects and include statements regarding our business strategy, our industry, our expected capital expenditures and the impact of such expenditures on our performance.
These forward-looking statements are based on our current expectations and assumptions, based on currently available information, as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in our filings with the Securities and Exchange Commission (the “SEC”), including those described under the heading “Risk Factors” included in our final prospectus dated March 31, 2026 and filed with the SEC pursuant to Rule 424(b) under the Securities Act on April 1, 2026 (the “Final Prospectus”), those described under the heading “Risk Factors” included in our Form S-1 filed with the SEC on September 28, 2026 (the “Form S-1”) and subsequent Quarterly Reports on Form 10-Q. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:
•uncertainty regarding economic conditions in the United States and elsewhere, which, in turn, will likely affect demand for oil and natural gas and therefore the demand for our products and services;
•worldwide demand for, and production of, oil and natural gas and the resultant market prices of oil and natural gas;
•global or national health concerns, including health epidemics or pandemics such as the COVID-19 pandemic, related economic repercussions and the resulting severe disruption in the oil and natural gas industry and negative impact on demand for oil and natural gas, which may negatively impact our business;
•a further decline or future decline in spending by our customers in the oil and natural gas industry;
•actions by the Organization of the Petroleum Exporting Countries (“OPEC”), its members and other state-controlled oil companies relating to oil price and production controls;
•the level of production in non-OPEC countries;
•domestic and international political, military, regulatory and economic conditions, including global inflationary pressures, Russia’s ongoing invasion of Ukraine and sanctions related thereto, the ongoing conflicts in the Middle East, including Israel and Iran, and political, economic and social instability in Venezuela, each of which may negatively impact our operating results;
•changes in general economic and geopolitical conditions;
•competition among oilfield service and equipment providers;
•changes in the long-term supply of, demand for and inventory levels of oil and natural gas;
•cost and availability of storage and transportation of oil, gas and related products;
•actions taken by our customers, competitors and third-party operators;
•the discovery rate, size and location of new oil and natural gas reserves, including in offshore areas;
•delay and regulatory uncertainty stemming from local or environmental non-governmental opposition to offshore and onshore energy development projects;
•laws and regulations related to environmental matters, including those addressing alternative energy sources and the risks of global climate change;
•the ability of oil and natural gas producers to generate funds for their capital-intensive businesses, including via their ability to raise equity capital and debt financing;
•our ability to successfully implement our business plan;
•large or multiple customer defaults, including defaults resulting from actual or potential insolvencies;
•contractions in the credit market and the price and availability of debt and equity financing (including changes in interest rates);
•our ability to complete growth strategies on time and on budget;
2
•our ability to integrate and realize the benefits expected from recent and potential future acquisitions, including any related synergies;
•introduction of new drilling or completion techniques or equipment, products or services using new technologies subject to patent or other intellectual property protections and our ability to obtain and, as applicable, enforce such intellectual property protections;
•technological advances, including technology related to the exploitation of shale oil, which can result in over-supply of oil and natural gas or a change in demand for oil and natural gas;
•our ability to develop, deploy and incorporate performance of AI and machine learning functionalities within our product portfolio;
•operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control;
•unionization of our workforce;
•the imposition of laws or regulations that result in reduced exploration and production (“E&P”) activities or that increase our operating costs or operating requirements, including laws and regulations addressing climate change;
•the effects of asserted and unasserted claims and the extent of available insurance coverage;
•social unrest, acts of terrorism, war and other armed conflict;
•loss or corruption of our information or a cyberattack on our computer systems;
•the price and availability of alternative fuels and energy sources;
•federal, state and local regulation of oilfield service activities, as well as E&P activities, including public pressure on governmental bodies and regulatory agencies to regulate our industry;
•the effects of existing and future laws and governmental regulations (or the interpretation thereof) on us and our customers;
•the effects of inflation;
•supply chain disruptions;
•the effects of future litigation;
•expectations regarding future energy prices;
•disruptions in global trade, including as a result of tariffs, trade restrictions, retaliatory trade measures or the effect of such actions on trading relationships between the United States and other countries;
•worldwide financial instability or recessions; and
•other factors described in the Final Prospectus and the Form S-1.
You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and the Investors section of our website at www.hmhw.com. We may use these channels to distribute material information about us; therefore, we encourage investors, the media, business partners and others interested in us to review the information posted on our website. The information on our website is not part of, and is not incorporated into, this Quarterly Report on Form 10-Q.
3
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Service revenue | $ | $ | $ | $ | |||||||||||||||||||
| Product revenue | |||||||||||||||||||||||
| Spare parts revenue | |||||||||||||||||||||||
| Related party revenue | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of services sold | |||||||||||||||||||||||
| Cost of goods sold – products | |||||||||||||||||||||||
| Cost of goods sold – spare parts | |||||||||||||||||||||||
| Total cost of sales | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Research and development expenses | |||||||||||||||||||||||
| Restructuring and other expenses | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income (loss) | |||||||||||||||||||||||
| Foreign currency gain (loss), net | ( | ( | |||||||||||||||||||||
| Other non-operating income (loss), net | ( | ( | |||||||||||||||||||||
| Interest income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Net income (loss) attributable to non-controlling interests | ( | ( | |||||||||||||||||||||
| Net income attributable to HMH Holding Inc. | $ | $ | $ | $ | |||||||||||||||||||
Net income per share of common stock (actual)(a): | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares of common stock for HMH and HMH B.V. outstanding (a): | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
(a).Basic and diluted shares used for computing earnings per share for periods prior to our initial public offering (“IPO”) have been retrospectively adjusted to give effect to the organizational transactions. The calculation of basic and diluted weighted average shares used for calculating earnings per share for the three and nine months ended September 30, 2025 does not include the 11.2
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
| Foreign currency translation adjustments | |||||||||||||||||||||||
| Derivatives designated as cash flow hedges | |||||||||||||||||||||||
| Effect of changes in fair value of cash flow hedges | ( | ( | |||||||||||||||||||||
| Tax benefit (expense) on effect of changes in cash flow hedges | ( | ( | |||||||||||||||||||||
| Net change in fair value of cash flow hedges, after taxes | ( | ( | |||||||||||||||||||||
| Benefit plans | |||||||||||||||||||||||
| Effect of changes in benefit plans | ( | ( | ( | ||||||||||||||||||||
| Tax benefit (expense) on effect of changes in benefit plans | ( | ||||||||||||||||||||||
| Net effect of changes in benefit plans, after taxes | ( | ( | ( | ||||||||||||||||||||
| Total other comprehensive income (loss) | |||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Less: Comprehensive income (loss) attributable to non-controlling interests | ( | ( | |||||||||||||||||||||
| Comprehensive income attributable to HMH Holding Inc. | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| September 30, 2026 | December 31, 2025 | ||||||||||
(in thousands, except par value) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Current accounts receivable, net of allowance of $ | |||||||||||
| Related party accounts receivable | |||||||||||
| Related party notes receivable—current | |||||||||||
| Contract assets | |||||||||||
| Inventories, net | |||||||||||
| Other current receivables | |||||||||||
| Prepaids and other current assets | |||||||||||
| Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
| Goodwill | |||||||||||
Customer relationships, net of accumulated amortization of $ | |||||||||||
Other intangible assets, net of accumulated amortization of $ | |||||||||||
| Related party note receivable | |||||||||||
| Right-of-use assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accounts payable—related party | |||||||||||
| Current portion of long-term debt, net | |||||||||||
| Contract liabilities | |||||||||||
| Accrued expenses | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Long-term debt, net—related party | |||||||||||
| Non-current operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Equity | |||||||||||
| Members’ equity | — | ||||||||||
Class A common stock (par value $ | — | ||||||||||
Class B common stock (par value $ | — | ||||||||||
| Additional paid-in capital | — | ||||||||||
| Retained earnings | — | ||||||||||
| Accumulated other comprehensive income (loss) | — | ||||||||||
Class A common stock held in treasury ( | ( | — | |||||||||
| HMH Holding Inc. equity | |||||||||||
| Non-controlling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
(in thousands) | |||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation expense | |||||||||||
| Amortization of borrowing costs | |||||||||||
| Restructuring and other expenses | |||||||||||
| Deferred tax expense | ( | ( | |||||||||
| Payment-in-kind interest | |||||||||||
| Provision for bad debt expense | |||||||||||
| Provision for inventory write-down | |||||||||||
| Changes in operating assets and liabilities | |||||||||||
| Accounts receivable and related party accounts receivable | ( | ||||||||||
| Contract assets | ( | ||||||||||
| Inventories, net | ( | ||||||||||
| Other current receivables | ( | ||||||||||
| Prepaid and other current assets | ( | ||||||||||
| Accounts payable and accounts payable—related party | ( | ||||||||||
| Accrued expenses | ( | ( | |||||||||
| Contract liabilities | ( | ||||||||||
| Other current and long-term liabilities | ( | ( | |||||||||
| Other, net | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Purchase of property, plant and equipment | ( | ( | |||||||||
| Development costs | ( | ( | |||||||||
| Acquisitions of business, net of cash | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Issuance of common stock in initial public offering (IPO), net of underwriting discount | |||||||||||
| Purchase of HMH B.V. voting shares from Principal Stockholders | ( | ||||||||||
| Redemption under exchange agreement with Principal Stockholders | ( | ||||||||||
| IPO issuance costs | ( | ||||||||||
| Repayment of long-term debt, net—related party | ( | ||||||||||
| Proceeds from issuance of revolving credit facilities | |||||||||||
| Repayment of revolving credit facilities | ( | ( | |||||||||
| Purchase of treasury shares | ( | ||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of foreign exchange rate on cash and cash equivalents | ( | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents beginning of period | |||||||||||
| Cash and cash equivalents end of period | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Cash paid for income taxes, net | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Supplemental non-cash financing activities: | |||||||||||
| Deferred IPO cost netted with IPO proceeds | $ | $ | |||||||||
| Settlement of long-term debt, net —related party and related party notes receivable | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
| Class A common stock | Amount | Class B common stock | Amount | Additional paid-in capital | Accumulated other comprehensive income (loss) | Common stock held in treasury | Retained earnings (loss) | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HMH Holding Inc. (Successor) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of July 1, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reallocation of NCI | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of September 30, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income prior to the Corporate Reorganization Transactions | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income prior to the Corporate Reorganization Transactions | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in initial public offering, net of offering costs | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption under exchange agreement with Principal Stockholders | — | — | ( | ( | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of HMH B.V. voting shares from Principal Stockholders | — | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Effect of the Corporate Reorganization Transactions | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| IPO related costs | — | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| TRA liability and related deferred tax impact from the Corporate Reorganization Transactions | — | — | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) subsequent to the Corporate Reorganization Transactions | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reallocation of NCI | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of September 30, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HMH Holding B.V. (Predecessor) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of July 1, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
HMH Holding Inc. (“HMH,” the “Company,” “we,” “us” or “our”) is a leading global provider of offshore and onshore drilling equipment and services.
We were incorporated in the State of Delaware on April 29, 2024 as a holding entity with an intent to complete our initial public offering (“IPO”) and other related transactions in order to carry on business of HMH Holding B.V. ("HMH B.V."). HMH B.V. was operationally established with effect from October 1, 2021, through its acquisition of all shares in the MHWirth business from Akastor ASA and the Subsea Drilling Systems business from Baker Hughes Company. After these transactions, the shareholders of HMH B.V. were Baker Hughes Holdings LLC (50 %), Akastor AS (25 %) and Mercury HoldCo Inc. (25 %). Baker Hughes Holdings LLC is a wholly owned subsidiary of Baker Hughes Company (together with Baker Hughes Holdings LLC, “Baker Hughes”), and Akastor AS and Mercury HoldCo Inc. are wholly owned subsidiaries of Akastor ASA (together with Akastor AS, Mercury HoldCo AS and Mercury HoldCo Inc., “Akastor”).
Initial Public Offering
On April 2, 2026, we completed our IPO of our Class A common stock, par value $0.01 per share (“Class A common stock”), and received net proceeds of approximately $197.8 million after deducting the underwriters’ discounts and offering fees of $12.6 million. We also granted the IPO underwriters a 30-day over-allotment option to purchase additional shares of Class A common stock on the same terms. On April 30, 2026, the underwriters partially exercised the option, resulting in additional net proceeds of $12.9 million, after deducting the underwriters’ discounts and offering fees of $0.8 million.
Corporate Reorganization
We used approximately $39.5 million of the net proceeds from the IPO as the cash consideration to purchase an aggregate of 2,100,000 voting Class A ordinary shares of HMH B.V., par value $0.01 per share (“B.V. Voting Class A Shares”), and 2,100,000 voting Class B ordinary shares of HMH B.V., par value $0.01 per share (“B.V. Voting Class B Shares” and, together with B.V. Voting Class A Shares, the “B.V. Voting Shares”), from Baker Hughes and Akastor (collectively referred to as the “Principal Stockholders”).
On April 2, 2026, we contributed all of the remaining net proceeds from the IPO to HMH B.V. in exchange for a number of B.V. Voting Class A Shares and B.V. Voting Class B Shares such that the number of B.V. Voting Class A Shares and B.V. Voting Class B Shares, respectively, held by the Company, taking into account the B.V. Voting Class A Shares and B.V. Voting Class B Shares acquired by the Company from the Principal Stockholders, equals the number of shares of Class A common stock sold by us in the IPO.
On May 5, 2026, we contributed all of the net proceeds from the underwriters’ exercise of the over-allotment option to HMH B.V. in exchange for an additional 685,844 B.V. Voting Class A Shares and 685,844 B.V. Voting Class B Shares. HMH B.V. used such additional net proceeds to purchase in equal proportion from Baker Hughes and Akastor, respectively, an aggregate number of shares of the Company’s Class B common stock, par value $0.01 per share (“Class B common stock”), non-voting Class A ordinary shares of HMH B.V. (“B.V. Non-Voting Class A Shares”) and non-voting Class B ordinary shares of HMH B.V. (“B.V. Non-Voting Class B Shares” and, together with the B.V. Non-Voting Class A Shares, the “B.V. Non-Voting Shares”), respectively, equal to the number of shares of the Company’s Class A common stock purchased by the underwriters pursuant to the exercise of the option.
After giving effect to these transactions, including the shares of the Company’s Class A common stock issuable upon the consummation of the IPO pursuant to equity awards granted to employees that vested in connection with the IPO, Baker Hughes and Akastor each owned 15,945,826 73 % of the total voting power of our capital stock, and each owned 15,945,826 15,945,826 73 % equity interest in HMH B.V. and 0 % voting power of the equity in HMH B.V. Immediately following the underwriters’ exercise of the over-allotment option, the investors in the IPO, collectively, owned all of the shares of the Company’s Class A common stock, representing approximately 27 % of the total voting power of our capital stock.
Basis of Presentation
The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These statements, therefore, should be read in conjunction with the consolidated financial statements and related notes of HMH B.V. for the year ended December 31, 2025 included in the final prospectus of HMH Holding dated March 31, 2026 and filed with the SEC on April 1, 2026.
The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of our consolidated financial position as of September 30, 2026 and December 31, 2025 and the consolidated results of operations and cash flows for the three and nine months ended September 30, 2026 and 2025. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year.
Immediately following the closing of the IPO, we are the successor to HMH B.V. for financial reporting purposes. Subsequent to the IPO, the Company’s sole material asset is its equity interest in HMH B.V. As the sole managing member and holder of 100 % of the voting interest of HMH
9
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
B.V., we operate and control all of its business and affairs and therefore consolidate its results for financial reporting purposes. The reorganization transactions are accounted for as a reorganization of entities under common control. Accordingly, the condensed consolidated financial statements have been retrospectively presented to reflect the assets and liabilities received in the Corporate Reorganization at HMH B.V.'s historical carrying amounts, as if the common control transaction had occurred on January 1, 2025, the earliest period presented.
Certain amounts in prior periods have been reclassified to conform with current period presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although management believes these assumptions to be reasonable, given historical experience, actual amounts and results could differ from these estimates. Estimates are used for, but are not limited to, determining the following: allowance for credit losses and inventory valuation reserves; recoverability of long-lived assets; revenue recognition on long-term contracts; valuation of goodwill; useful lives used in depreciation and amortization; income taxes and related valuation allowances; accruals for contingencies; actuarial assumptions to determine costs and liabilities related to employee benefit plans; stock-based compensation expense; valuation of derivatives; and the fair value of assets acquired and liabilities assumed in business combinations.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.
Offering Costs
Share-based Compensation
We account for share-based compensation awards granted to employees, directors, and non-employees in accordance with ASC 718, Compensation—Stock Compensation based on the estimated grant date fair value and recognize the expense over the requisite service period, net of actual forfeitures. The fair value of restricted stock awards and restricted stock units (“RSUs”) is determined based on the closing price of our Class A common stock on the date of grant and the fair value of performance share units (“PSUs”) is measured using a Monte Carlo simulation model.
Concentration Risk
During the three months ended September 30, 2026, one customer accounted for approximately 11.4 % of total revenue compared to one customer accounting for approximately 22.9 % during the three months ended September 30, 2025. During the nine months ended September 30, 2026, two customers accounted for approximately 11.9 % and 10.7 % of total revenue compared to one customer accounting for 17.3 % during the nine months ended September 30, 2025. The revenue associated with these customers was included in both Equipment and System Solutions (“ESS”) and Pressure Control Systems (“PCS”) revenue.
As of September 30, 2026, two customers accounted for approximately 19.3 % and 10.0 % of current accounts receivable. As of December 31, 2025, one customer accounted for approximately 11.2 % of current accounts receivable. The Company expects to maintain its relationship with these customers.
New Accounting Standards to be Adopted
As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (the “JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The JOBS Act does not preclude an EGC from early adopting new or revised accounting standards codification. The Company has elected to use extended transition periods permissible under the JOBS Act, while also early adopting certain accounting pronouncements. The adoption dates discussed below reflect these elections.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively for all annual periods beginning after December 15, 2025. The Company is currently evaluating the impact of this standard on its disclosures.
10
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In November 2024, the FASB issued ASU No. 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40).” The ASU requires public entities to disaggregate, in a tabular presentation, certain income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”). Under the new guidance, internal-use software costs are capitalized when management has authorized and committed to funding the project and it is probable that the software will be completed and used for its intended function. ASU 2025-06 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements and related disclosures.
In November 2025, the FASB issued ASU 2025-09, “Hedge Accounting Improvements” (“ASU 2025-09”). The new guidance provides targeted improvements to the hedge accounting guidance to primarily address cash flow hedging, but also impacts certain fair value and net investment hedges, including (i) permitting designation of variable price components of forecasted purchases or sales of nonfinancial assets when clearly and closely related to the underlying asset, (ii) allowing groups of forecasted transactions with similar risk exposures (including those based on different interest rate indexes) to be hedged together, and (iii) introducing a model for cash flow hedges of forecasted interest payments on “choose-your-rate” debt instruments that permits a borrower to change the designated interest rate index and/or tenor without automatically discontinuing hedge accounting. ASU 2025-09 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-09 on its consolidated financial statements and related disclosures.
2. Business Combinations
The Company accounted for the Deepwater Riser Services, LLC (“DWR”) acquisition and the Deep Blue Oil & Gas Limited (“Deep Blue”) acquisition as business combinations and allocated the total purchase price to assets acquired, liabilities and contingent consideration assumed based on their fair values at the date of acquisition.
Deepwater Riser Services, LLC
On September 21, 2026, we completed the acquisition of DWR, a Louisiana based company specializing in riser inspection, recertification, refurbishment and storage business in the U.S. Gulf of America for a purchase consideration of $14.5 million, inclusive of working capital of $1.4 million.
The following table provides the allocation of the purchase price to major classes of assets and liabilities (in thousands):
| Assets | ||||||||
| Current accounts receivable | $ | |||||||
| Inventories | ||||||||
| Contract assets | ||||||||
| Prepaids and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment | ||||||||
| Right-of-use assets | ||||||||
| Customer relationships | ||||||||
| Other assets | ||||||||
| Total assets | $ | |||||||
| Liabilities and equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | |||||||
| Contract liabilities | ||||||||
| Accrued expenses | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Total liabilities | $ | |||||||
| Equity consideration | $ | |||||||
| Goodwill | $ | |||||||
Goodwill generated from this business combination is primarily attributable to expected synergies from the transaction and incremental revenue. The
11
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
goodwill is expected to be deductible for U.S. income tax purposes.
Deep Blue Oil & Gas Limited
On October 1, 2025, we completed the acquisition of Deep Blue, a UK‑based company specializing in managed‑pressure‑drilling (“MPD”) systems. Deep Blue holds a portfolio of patents and proprietary technology with applications in offshore drilling, including advanced MPD control and sealing systems.
The following table provides the allocation of the purchase price to major classes of assets and liabilities assumed in USD as of the acquisition date, translated at the exchange rate on the acquisition date. The goodwill reflected below increased by £0.6 million ($0.8 million) from December 31, 2025, which resulted from working capital measurement period adjustments.
| British pounds | Exchange rate at acquisition date | USD | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
Cash consideration paid, including £ | £ | 1.3446 | $ | |||||||||||||||||
| Contingent consideration (a) | 1.3446 | |||||||||||||||||||
| Total consideration | ||||||||||||||||||||
| Identified intangible assets acquired | 1.3446 | |||||||||||||||||||
| Goodwill acquired | £ | $ | ||||||||||||||||||
(a).The contingent consideration consists of deferred payments by the Company to the acquiree’s prior equity holders for three years, contingent on meeting specific earnings and operational targets.
3. Inventories
Inventories, net of reserves of $97.0 million and $99.9 million as of September 30, 2026 and December 31, 2025, respectively, consisted of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Stock of raw materials | $ | $ | |||||||||
| Work in progress | |||||||||||
| Finished goods | |||||||||||
| Inventories, net | $ | $ | |||||||||
Inventory write-downs for the three and nine months ended September 30, 2026 were $2.2 million and $2.6 million, respectively, compared to $3.6 million and $6.6 million for the three and nine months ended September 30, 2025, respectively.
4. Goodwill
The changes in carrying value of goodwill are detailed by segment below:
| ESS | PCS | Total | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Balance as of January 1, 2026 | $ | $ | $ | ||||||||||||||
Acquisition (a) | |||||||||||||||||
Purchase accounting adjustments (a) | |||||||||||||||||
| Currency translation differences | |||||||||||||||||
Balance as of September 30, 2026 | $ | $ | $ | ||||||||||||||
12
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5. Financial Instruments
The following tables set forth the Company’s financial instruments that are measured at fair value on a recurring basis by level within the fair value hierarchy:
| Level 1 | Level 2 | Level 3(a) | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
As of September 30, 2026 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Derivative financial instruments—not designated as hedging instruments | $ | $ | $ | $ | |||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative financial instruments—not designated as hedging instruments | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
As of December 31, 2025 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Derivative financial instruments—designated as cash flow hedging instruments | $ | $ | $ | $ | |||||||||||||||||||
| Derivative financial instruments—not designated as hedging instruments | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative financial instruments—designated as cash flow hedging instruments | $ | $ | $ | $ | |||||||||||||||||||
| Derivative financial instruments—not designated as hedging instruments | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
We classify financial instruments in our Condensed Consolidated Balance Sheets based on the maturity date of these instruments. As of December 31, 2025, the fair value of our financial instruments is presented in Other current receivables and Other current liabilities in our Condensed Consolidated Balance Sheets.
The carrying value of cash and cash equivalents, current receivables, accounts payable and accrued expenses approximates fair value based on the short-term nature of these accounts.
Designated Hedges
The following table presents the notional amounts and maturity profile of derivative instruments designated as cash flow hedges as of December 31, 2025. All designated hedging contracts expired during the nine months ended September 30, 2026, and no designated hedging instruments were outstanding as of September 30, 2026. Valuation techniques and inputs for forward contracts are based on quoted forward exchange rates.
13
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Total | 6 months and less | 6-12 months | 1-2 years | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Foreign exchange forward contracts to hedge highly probable forecasted sales: | ||||||||||||||||||||||||||
| Notional amounts USD | $ | $ | $ | $ | ||||||||||||||||||||||
| Average forward rate (USD/NOK) | ||||||||||||||||||||||||||
| Notional amounts EUR | € | € | € | € | ||||||||||||||||||||||
| Average forward rate (EUR/NOK) | ||||||||||||||||||||||||||
| Notional amounts GBP | £ | £ | £ | £ | ||||||||||||||||||||||
| Average forward rate (GBP/NOK) | ||||||||||||||||||||||||||
| Foreign exchange forward contracts to hedge highly probable forecasted purchases: | ||||||||||||||||||||||||||
| Notional amounts EUR | € | € | € | € | ||||||||||||||||||||||
| Average forward rate (EUR/NOK) | ||||||||||||||||||||||||||
| Notional amounts GBP | £ | £ | £ | £ | ||||||||||||||||||||||
| Average forward rate (GBP/NOK) | ||||||||||||||||||||||||||
Non-Designated Hedges
The table below presents the notional value of the non-designated derivative financial instruments and a maturity analysis of the related derivatives’ cash flows. Valuation techniques and inputs for forward contracts are based on the quoted forward exchange rate.
| Total | 6 months and less | 6-12 months | 1-2 years | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
As of September 30, 2026 | ||||||||||||||||||||||||||
| Foreign exchange forward contracts: | ||||||||||||||||||||||||||
| Notional amounts NOK | NOK | NOK | NOK | NOK | ||||||||||||||||||||||
| Average forward rate (NOK/USD) | ||||||||||||||||||||||||||
| Notional amounts GBP | £ | £ | £ | £ | ||||||||||||||||||||||
| Average forward rate (GBP/USD) | ||||||||||||||||||||||||||
| Notional amounts EUR | € | € | € | € | ||||||||||||||||||||||
| Average forward rate (EUR/USD) | ||||||||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Foreign exchange forward contracts: | ||||||||||||||||||||||||||
| Notional amounts NOK | NOK | NOK | NOK | NOK | ||||||||||||||||||||||
| Average forward rate (NOK/USD) | ||||||||||||||||||||||||||
| Notional amounts GBP | £ | £ | £ | £ | ||||||||||||||||||||||
| Average forward rate (GBP/USD) | ||||||||||||||||||||||||||
| Notional amounts EUR | € | € | € | € | ||||||||||||||||||||||
| Average forward rate (EUR/USD) | ||||||||||||||||||||||||||
14
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6. Other Current Liabilities
Other current liabilities consisted of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Income tax payable | $ | $ | |||||||||
| Operating lease liability | |||||||||||
| Public duties and taxes | |||||||||||
| External derivative financial liabilities | |||||||||||
| Withheld taxes and other deductions | |||||||||||
| Other | |||||||||||
| Other current liabilities | $ | $ | |||||||||
7. Leases
The following table sets forth supplemental Condensed Consolidated Balance Sheets information related to leases:
| Classification | September 30, 2026 | December 31, 2025 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Assets: | |||||||||||||||||
| Operating lease assets | Right-of-use assets | $ | $ | ||||||||||||||
| Total lease assets | $ | $ | |||||||||||||||
| Liabilities: | |||||||||||||||||
| Current: | |||||||||||||||||
| Operating | Other current liabilities | $ | $ | ||||||||||||||
| Noncurrent: | |||||||||||||||||
| Operating | Non-current operating lease liabilities | ||||||||||||||||
| Total lease liabilities | $ | $ | |||||||||||||||
8. Debt
Below are the contractual terms of the Company’s interest-bearing loans and borrowings that are measured at amortized cost. The carrying values of the Company’s short-term and long-term debt consisted of the following:
| Debt outstanding | |||||||||||||||||
| September 30, 2026 | December 31, 2025 | Maturity | |||||||||||||||
(in thousands) | |||||||||||||||||
| $ | $ | Dec 2028 | |||||||||||||||
| Shareholder Loans | Dec 2028 | ||||||||||||||||
| Revolving Credit Facility | Jun 2028 | ||||||||||||||||
| Credit Line in China (a) | |||||||||||||||||
| Total debt, net | |||||||||||||||||
| Current debt, net | |||||||||||||||||
| Non-current debt, net | |||||||||||||||||
| Total debt, net | $ | $ | |||||||||||||||
15
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Fair Values
As of September 30, 2026 and December 31, 2025, the fair value of the 7.875 204.0 million and $204.5 million, respectively. The fair value was determined using a market approach based on observable inputs. For the remaining debt instruments, the book values of each instrument approximate its respective fair value, as these interest rates are variable in nature and are reflective of market rates.
9. Revenue from Contracts with Customers
Disaggregated Revenue
The Company disaggregates revenue from contracts with customers by revenue type for both its ESS and PCS segments, as it believes this best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.
The following tables present revenue from contracts with customers:
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| ESS | PCS | Total | ESS | PCS | Total | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| Project and other manufacturing contracts revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Sale of products | |||||||||||||||||||||||||||||||||||
Product revenue(a) | |||||||||||||||||||||||||||||||||||
| Service revenue | |||||||||||||||||||||||||||||||||||
| Spare parts revenue | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| Project and other manufacturing contracts revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Sale of products | |||||||||||||||||||||||||||||||||||
Product revenue(a) | |||||||||||||||||||||||||||||||||||
| Service revenue | |||||||||||||||||||||||||||||||||||
| Spare parts revenue | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(a).Product revenue includes related party revenue.
The following table presents the timing of revenue recognition:
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| ESS | PCS | Total | ESS | PCS | Total | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| Transferred overtime | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Transferred at point in time | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| Transferred overtime | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Transferred at point in time | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Contract assets consisted of the following:
| September 30, 2026 | |||||
| (in thousands) | |||||
| Balance as of January 1, 2026 | $ | ||||
| Additions | |||||
| Transfers to accounts receivable | ( | ||||
Balance as of September 30, 2026 | $ | ||||
16
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Contract liabilities consisted of the following:
| September 30, 2026 | |||||
| (in thousands) | |||||
| Balance as of January 1, 2026 | $ | ||||
| Additions | |||||
| Revenue recognized | ( | ||||
Balance as of September 30, 2026 | $ | ||||
Revenue recognized during the nine months ended September 30, 2026 and 2025 that was included in the contract liabilities balance at the beginning of such periods was $35.0 million and $46.4 million, respectively.
Transaction Price Allocated to the Remaining Performance Obligations
10. Accrued Expenses
Accrued expenses consisted of the following:
| September 30, 2026 | December 31, 2025 | |||||||||||||
| (in thousands) | ||||||||||||||
| Accrued vendor costs | $ | $ | ||||||||||||
| Accrued payroll and employee related liabilities | ||||||||||||||
| Provisions—restructuring | ||||||||||||||
| Provisions—warranty | ||||||||||||||
Provisions—environmental(a) | ||||||||||||||
| Provisions for loss contingencies | ||||||||||||||
| Accrued interest | ||||||||||||||
| Accrued sales and other taxes | ||||||||||||||
| Other | ||||||||||||||
| Accrued expenses | $ | $ | ||||||||||||
The following table describes the changes to the Company’s warranty liability:
| September 30, 2026 | |||||||||||
| (in thousands) | |||||||||||
| Balance as of January 1, 2026 | $ | ||||||||||
| Accrued expense | |||||||||||
| Payments | ( | ||||||||||
| Provision reversed during the period | ( | ||||||||||
| Currency translation differences | |||||||||||
Balance as of September 30, 2026 | $ | ||||||||||
17
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
11. Other Liabilities
Other liabilities consisted of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Deferred tax liabilities | $ | $ | |||||||||
| Pension and other post—retirement liabilities | |||||||||||
| Contingent considerations—related party | |||||||||||
| Tax receivable agreement liability | |||||||||||
| Provisions long-term | |||||||||||
Other long-term liabilities (a) | |||||||||||
| Total | $ | $ | |||||||||
(a).Other long-term liabilities include $3.7
12. Equity
Prior to the IPO, the capital structure of HMH B.V. consisted of two different classes of ordinary shares, 100 Class A ordinary shares and 100 Class B ordinary shares at €1.00
Amendment and Restatement of Certificate of Incorporation
In connection with the reorganization, the certificate of incorporation of HMH was amended and restated, among other things, to provide for the authorization of (i) 1,000,000,000 shares of Class A common stock, (ii) 500,000,000 shares of Class B common stock and (iii) 10,000,000 shares of preferred stock.
The holders of Class A common stock have both voting and economic rights, including rights to dividends and liquidation proceeds. In contrast, holders of Class B common stock have voting rights only and are not entitled to dividends or liquidation distributions.
Reorganization and Initial Public Offering
The following is a summary of the securities reclassified in connection with the reorganization transactions and IPO:
•HMH B.V. underwent a 346,774.96 for 1 stock split, after which Baker Hughes owned 17,338,748 B.V. Voting Class A Shares and 17,338,748 B.V. Voting Class B Shares and Akastor owned 17,338,748 B.V. Voting Class A Shares and 17,338,748 B.V. Voting Class B Shares.
•HMH B.V. recapitalized to convert (i) 32,577,496 B.V. Voting Class A Shares to B.V. Non-Voting Class A Shares and (ii) 32,577,496 B.V. Voting Class B Shares to B.V. Non-Voting Class B Shares.
•HMH and the Principal Stockholders entered into an exchange agreement under which the Principal Stockholders may, subject to certain limitations, exchange their HMH B.V. non‑voting Class A and Class B ordinary shares, together with an equivalent number of shares of Class B common stock in HMH, for shares of Class A common stock on a one ‑for‑one basis or, at the Company's election, for cash.
•On April 2, 2026, HMH completed the IPO of 10,520,000 shares of Class A common stock, and received net proceeds of approximately $197.8 million after deducting the underwriters’ discounts and offering fees of $12.6 million. HMH also granted the IPO underwriters a 30-day over-allotment option to purchase additional shares of Class A common stock on the same terms. On April 30, 2026, the underwriters partially exercised the option for 685,844 shares of Class A common stock, resulting in additional net proceeds of $12.9 million, after deducting the underwriters’ discounts and offering fees of $0.8 million.
•HMH used approximately $39.5 million of the net proceeds from the IPO as the cash consideration to purchase an aggregate of 2,100,000 B.V. Voting Class A Shares and 2,100,000 B.V. Voting Class B Shares from the Principal Stockholders, and the Principal Stockholders received 32,577,496 shares of Class B common stock in HMH in exchange for relinquishing voting rights on 32,577,496 of their B.V. Voting Class A Shares and 32,577,496 of their B.V. Voting Class B Shares.
•HMH contributed the remaining net proceeds from the IPO to HMH B.V. in exchange for B.V. Voting Shares, consisting of 8,420,000 B.V. Voting Class A Shares and 8,420,000 B.V. Voting Class B Shares, such that, after the exchange, HMH held, after taking into account the B.V. Voting Shares acquired from the Principal Stockholders, one B.V. Voting Class A Share and one B.V. Voting Class B Share, respectively, for each share of our Class A common stock outstanding following the IPO and reorganization.
18
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
•On May 5, 2026, HMH contributed all of the net proceeds from the underwriters’ exercise of the over-allotment option of $12.9 million to HMH B.V. in exchange for an additional 685,844 B.V. Voting Class A Shares and 685,844 B.V. Voting Class B Shares. HMH B.V. used such additional net proceeds to purchase in equal proportion from the Principal Stockholders an aggregate number of shares of the Company's Class B common stock, B.V. Non-Voting Class A Shares and B.V. Non-Voting Class B Shares equal to the number of shares of the Company’s Class A common stock purchased by the underwriters pursuant to the exercise of the over-allotment option.
After giving effect to these transactions, including 836,781 shares of the Company’s Class A common stock issuable upon the consummation of the IPO pursuant to equity awards granted to employees that vested in connection with the IPO, Baker Hughes and Akastor each owned 15,945,826 73 % of the total voting power of the Company’s capital stock, and each owned 15,945,826 15,945,826 73 % equity interest in HMH B.V. and 0 % voting power of the equity in HMH B.V.
Non-controlling Interest
Following the reorganization and the IPO, HMH consolidates the full results of HMH B.V. and its subsidiaries. The portion of the net assets and results of HMH B.V. attributable to the economic interests retained by the Principal Stockholders through their B.V. non‑voting shares is presented as non-controlling interest in the Company's consolidated financial statements. Upon the reorganization, the Company recognized a non-controlling interest of approximately $642.1 million, with a corresponding adjustment to the Condensed Consolidated Statements of Changes in Equity. The non-controlling interest is subsequently adjusted for the Principal Stockholders’ proportionate share of net income and other comprehensive income of HMH B.V. and is reduced as Principal Stockholders exercise their exchange rights, at which point the corresponding economic interest is reclassified from non-controlling interest to equity attributable to HMH Holding Inc.
The following table summarizes the change in ownership of HMH B.V.:
| Ownership | Ownership Percentage | ||||||||||||||||||||||||||||||||||
| HMH Holding Inc. | Non-controlling Interests | Total | HMH Holding Inc. | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||
| Balance as of April 2, 2026 | % | % | % | ||||||||||||||||||||||||||||||||
| Purchase of HMH B.V. Shares | ( | % | ( | % | % | ||||||||||||||||||||||||||||||
| Partial Exercise of Underwriters Purchase Option | ( | % | ( | % | % | ||||||||||||||||||||||||||||||
| Issuance under the Equity Based Compensation Plan | % | ( | % | % | |||||||||||||||||||||||||||||||
Balance as of September 30, 2026 (a) | % | % | % | ||||||||||||||||||||||||||||||||
(a).Includes the impact of incremental vesting of equity-based awards during the third quarter of 2026.
As of September 30, 2026, the 63,783,304 total B.V. Non-Voting Class A Shares and B.V. Non-Voting Class B Shares together with 31,891,652 shares of the Company’s Class B common stock could be exchanged for 31,891,652 shares of the Company’s Class A common stock.
Treasury Stock
Repurchases of the Company's Class A common stock are included in treasury stock at the cost of shares repurchased.
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss) consisted of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
| Hedging reserve adjustments | $ | $ | |||||||||
| Pension remeasurement reserve adjustments | |||||||||||
| Currency translation reserve adjustments | |||||||||||
| Total | $ | $ | |||||||||
19
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
13. Share-based Compensation
Pre-IPO Plans
Prior to the IPO, the Board of Directors of the Company (the “Board”) established the founders’ phantom equity award, the 2022 long-term incentive program, the 2023 long-term incentive program, the 2024 long-term incentive program and the 2025 long-term incentive program (collectively, the “Pre-IPO Plans”) as award programs for management and certain key personnel to entitle them to compensation when certain strategic goals are met. The 2026 Plan (as defined herein) replaced the Pre-IPO Plans, and no additional awards will be granted under those historical plans. In connection with the closing of the IPO, all outstanding equity awards previously granted under the Pre-IPO Plans were replaced with substantially similar awards under the 2026 Plan (the “Replacement Awards”).
2026 Long-term Incentive Plan
On March 31, 2026, the Board approved the HMH Holding Inc. 2026 Long-Term Incentive Plan (the “2026 Plan”), which became effective upon the closing of the IPO. The 2026 Plan authorizes the grant of incentive stock options, RSUs, and other equity-based awards to eligible employees, non-employee directors, and consultants. As of September 30, 2026, the Company has reserved a maximum of 2.2 million shares of Class A common stock for issuance under the 2026 Plan, of which approximately 1.4 million shares are available for issuance of future awards. This share reserve includes an evergreen provision allowing for an annual increase of up to 5 % of outstanding shares, effective on the first day of each fiscal year at the discretion of the Board. The Company has reserved an additional 1,500,714 shares of Class A common stock for issuance under the 2026 Plan to be used exclusively to satisfy the obligations under the Replacement Awards.
Share-based compensation cost
The following table summarizes total share-based compensation expense by financial statement line item:
| Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | ||||||||||
| (in thousands) | |||||||||||
Selling, general, and administrative expenses | $ | $ | |||||||||
Cost of sales | |||||||||||
Total share-based compensation cost (a) | $ | $ | |||||||||
(a).For the nine months ended September 30, 2026, total share-based compensation cost included $22.5 million related to pre-IPO share based awards recognized upon consummation of the IPO.
As of September 30, 2026, there was approximately $16.3 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under both the Pre-IPO Plans and the 2026 Plan. This cost is expected to be recognized over a weighted-average period of 2.30 years.
Restricted stock:
RSUs generally vest over a three-year period, with fair value determined by the closing market price of the Company’s Class A common stock on the date of grant. The following table presents a summary of RSU activity for the nine months ended September 30, 2026:
| Restricted Stock Units | Weighted Average Price on the Date of Grant | ||||||||||
(in thousands, except per share amounts) | |||||||||||
| Balance as of January 1, 2026 | $ | ||||||||||
| Converted at IPO | |||||||||||
| Post-IPO grant | |||||||||||
Vested (a) (b) | ( | ||||||||||
Balance as of September 30, 2026 | |||||||||||
(a).Includes 0.9 million shares vested upon consummation of the IPO.
(b).During the three and nine months ended September 30, 2026, the total grant date fair value of restricted stock unit awards that vested was $2.6 million and $16.1 million, respectively.
Performance share units:
PSUs generally cliff vest three years from the date of grant, with their grant-date fair value measured utilizing a Monte Carlo simulation model. For the 2026 PSU grant, the number of shares of Class A common stock issuable is determined by comparing the Company’s Total Shareholder Return Compound Annual Growth Rate (TSR CAGR) against the TSR CAGR of the peer group over a three-year performance period ending December 31,
20
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
2028. Initial payouts range from 0 % to 200 % of target. The following table presents a summary of PSU activity for the nine months ended September 30, 2026:
| Performance Share Units | Weighted Average Price on the Date of Grant | ||||||||||
(in thousands, except per share amounts) | |||||||||||
| Balance as of January 1, 2026 | $ | ||||||||||
| Converted at IPO | |||||||||||
| Post-IPO Grant | |||||||||||
Vested (a) (b) | ( | ||||||||||
Balance as of September 30, 2026 | |||||||||||
(a).Includes 0.2 million shares vested upon consummation of the IPO.
(b).During the three and nine months ended September 30, 2026, the total grant date fair value of performance share units that vested was $2.3 million and $4.5 million, respectively.
The Company estimated the grant date fair value of PSU awards using the following weighted average assumptions:
| September 30, 2026 | |||||
| Risk free interest rate | % | ||||
| Stock price volatility | % | ||||
| Contracted expected term in years | |||||
| Expected dividend yield | |||||
| Grant date price of HMH common stock | $ | ||||
14. Employee Benefit Expenses
The components of net periodic cost recognized in Selling, general and administrative expenses in our Condensed Consolidated Statements of Income consisted of the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Amortization of net actuarial loss | |||||||||||||||||||||||
| Net periodic cost | $ | $ | $ | $ | |||||||||||||||||||
15. Income Taxes
Provision for Income Taxes
We recorded a tax provision of $7.2 million and $8.5 million for the three and nine months ended September 30, 2026, respectively, compared to tax provisions of $4.3 million and $14.8 million for the corresponding prior year periods, respectively. The increase in our tax provisions for the three months ended September 30, 2026 was primarily attributable to shifts in the Company’s geographic mix of income, which unfavorably altered our estimated annual effective tax rate. The decreases in our tax provisions for the nine months ended September 30, 2026 were primarily attributable to stock compensation expenses recorded in 2026 upon completion of the IPO and shifts in the Company’s geographic mix of income, which unfavorably altered our estimated annual effective tax rate. Consequently, our effective tax rate shifted to 41.0 % and 48.1 % for the three and nine months ended September 30, 2026, respectively, compared to 21.5 % and 31.9 % for the same periods in 2025, respectively.
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 nine months ended September 30, 2026, our income tax included the impact of a $22.5 million stock-based compensation expense related to pre-IPO stock-based awards and certain related transaction costs.
Tax Receivable Agreement
On April 2, 2026, the Company entered into a Tax Receivable Agreement (the “TRA”) with HMH B.V. and the Principal Stockholders. The TRA requires the Company to pay 85% of the net cash savings, if any, actually realized or deemed to be realized in certain circumstances to the Principal Stockholders in connection with U.S. federal, state, local and foreign income taxes and franchise taxes resulting from (i) acquisitions of B.V. Voting
21
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Shares from the Principal Stockholders by the Company in connection with the IPO, (ii) the acquisition of B.V. Non-Voting Shares from the Principal Stockholders using the net proceeds from any future offering, (iii) redemptions or exchanges of B.V. Non-Voting Shares by the Principal Stockholders and the corresponding number of shares of the Company’s Class B common stock for shares of the Company’s Class A common stock or cash or (iv) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA.
16. Commitments and Contingencies
We are involved in various claims and legal actions arising in the ordinary course of business. A liability is recognized in our consolidated financial statements when a loss is considered probable and amounts can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, we will disclose the nature of the claim and, if possible, an estimate of the loss or range of loss. We believe it is remote that outcomes of such known matters would have a material adverse impact on our consolidated financial position, results of operations or liquidity.
Restructuring
The Company has taken a substantial workforce decrease and reorganization in recent years, driven by the desire to increase efficiency and flexibility and rationalize its footprint. In January 2025, the Company initiated a restructuring plan primarily focused on global workforce reductions and the reorganization of facilities in Horten and Fornebu, Norway. In 2026, the Company expanded the scope of this restructuring plan to include the reorganization of its operations in Mexico and the Mobile facility in the U.S. These initiatives impacted 210 individuals, comprising 110 employees in Norway, 60 employees in Mexico, 25 employees in Germany and 15 employees in the U.S.
We recognized restructuring and other expenses of $2.2 million and $7.2 million for the three and nine months ended September 30, 2026, respectively, compared to $0.1 million and $4.4 million for the three and nine months ended September 30, 2025. Restructuring and other expenses for the three and nine months ended September 30, 2026 included $0.2 none and $1.8 million in ROU asset impairment charges, respectively.
The following table summarizes the changes to the Company’s provision balance for restructuring and other charges:
| September 30, 2026 | ||||||||
| (in thousands) | ||||||||
| Balance at the beginning of the period | $ | |||||||
| Additions for costs expensed | ||||||||
| Reductions for payments | ( | |||||||
| Foreign currency translation | ||||||||
| Balance at the end of the period | $ | |||||||
Other
22
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
17. Related Party Transactions
The following tables set forth a summary of transactions and balances with significant related parties:
| Baker Hughes Holdings LLC | Akastor AS | Other Baker Hughes companies | Other Akastor companies | Tanajib Holding Company | Total | |||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||||||||||||||||||||||
| As of September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Related party accounts receivable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Related party notes receivable—current | ||||||||||||||||||||||||||||||||||||||||||||
| Related party notes receivable | ||||||||||||||||||||||||||||||||||||||||||||
| Accounts payable—related party | ||||||||||||||||||||||||||||||||||||||||||||
| Tax receivable agreement liability | ||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | ||||||||||||||||||||||||||||||||||||||||||||
| Baker Hughes Holdings LLC | Akastor AS | Other Baker Hughes companies | Other Akastor companies | Tanajib Holding Company | Total | |||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Related party accounts receivable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Related party notes receivable—current | ||||||||||||||||||||||||||||||||||||||
| Related party notes receivable | ||||||||||||||||||||||||||||||||||||||
| Accounts payable—related party | ||||||||||||||||||||||||||||||||||||||
| Long-term debt, net—related party | ||||||||||||||||||||||||||||||||||||||
| Other liabilities | ||||||||||||||||||||||||||||||||||||||
18. Segment Information
Operating segments are defined as components of an entity for which separate financial information is available and evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) to allocate resources and assess performance. As of September 30, 2026 and 2025, the Company had two segments
•ESS is a supplier of drilling solutions and complete topside drilling packages and services to both onshore and offshore oil and gas customers. Key product offerings consist of overhaul, equipment installation and commissioning, services account management, 24/7 technical support, logistics, engineering upgrades, spare parts supply and training and condition-based maintenance. The ESS segment is derived from the acquisition of MHWirth AS.
•PCS is a supplier of integrated drilling products and services. Key product offerings consist of blowout preventer systems, controls and drilling riser equipment, spare parts supply for rig operations and maintenance programs, overhaul and recertification and reactivation of rigs and technical and operational rig support. The PCS segment is derived from the acquisition of Subsea Drilling Systems.
23
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In addition to its reportable segments, the Company has corporate operations (Headquarters) which include general corporate expenses. Headquarters includes certain corporate stewardship items discussed below necessary to reconcile the reportable segments to the Company’s total amounts.
The CODM, who is the Company’s Chief Executive Officer, uses segment operating income as the primary financial measure to evaluate segment performance. Segment operating income is defined as income before taxes (excluding certain corporate stewardship costs which are not allocable to the segments, such as legal, certain corporate finance functions and centrally managed initiatives, other non-operating items, and depreciation and amortization related to certain long-lived assets, including the headquarters office space), net other operating expenses (income), net foreign currency gain (loss), net other non-operating income (loss), and net interest income (expense). Inter-segment pricing is determined on an arm’s length basis. The CODM uses segment operating income in the budget and forecasting process and to monitor budget versus actual results, which are used in assessing the performance of the segments and to allocate resources to the segments. Segment assets are not reported to, or used by, the CODM to allocate resources to or assess performance of the Company’s segments.
The following table presents the reconciliation of reportable segment revenues:
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| ESS | PCS | Total | ESS | PCS | Total | |||||||||||||||||||||||||||||||||
Three Months Ended September 30, | (in thousands) | |||||||||||||||||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||||||||||||||||||||
| Total segment revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Elimination of intersegment revenue | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total consolidated revenue | $ | $ | ||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||||||||||||||||||||
| Total segment revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Elimination of intersegment revenue | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total consolidated revenue | $ | $ | ||||||||||||||||||||||||||||||||||||
The following table presents the reconciliation of segment performance:
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| ESS | PCS | Total | ESS | PCS | Total | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
Revenues from external customers(a) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cost of sales | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Research and development expenses | ( | ( | ( | ||||||||||||||||||||||||||||||||
Restructuring and other expenses(b) | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Unallocated corporate costs(c) | ( | ( | |||||||||||||||||||||||||||||||||
| Foreign currency gain (loss) | ( | ||||||||||||||||||||||||||||||||||
| Other non-operating income (loss) | ( | ||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||||||||||||||
| Income before income taxes | $ | $ | |||||||||||||||||||||||||||||||||
24
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| ESS | PCS | Total | ESS | PCS | Total | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
Revenues from external customers(a) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Cost of sales | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Research and development expenses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Restructuring and other expenses(b) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Total segment operating income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Unallocated corporate costs(c) | ( | ( | |||||||||||||||||||||||||||||||||
| Foreign currency gain (loss) | ( | ||||||||||||||||||||||||||||||||||
| Other non-operating income (loss) | ( | ||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||||||||||||||
| Income before income taxes | $ | $ | |||||||||||||||||||||||||||||||||
(a)As the CODM does not regularly review intersegment revenue, it is excluded from the determination of total segment operating income. The CODM uses revenue from external customers to assess performance and allocate resources.
(b)Restructuring and other expenses consist of severance costs primarily related to workforce reductions and impairment of right-of-use assets.
(c)Unallocated corporate costs include certain centralized corporate stewardship costs that are not allocable to the segments and are included in Selling, general and administrative expenses in our Condensed Consolidated Statements of Income.
19. Earnings per Share
Basic earnings per share is calculated by dividing the net income (loss) attributable to the Company during the period by the weighted average number of shares of Class A common stock outstanding during the same period. For the periods following the IPO, shares of Class B common stock are excluded from the computation of basic and diluted earnings per share, as these shares represent nonparticipating securities with no rights to dividends or earnings.
For periods prior to the IPO, we treated the Corporate Reorganization as a merger of entities under common control and retrospectively reflected earnings per share as though these transactions occurred at the earliest period presented. We allocated historical net income (loss) between Class A common stockholders and non-controlling interests based on their respective share ownership, with Class A and Class B share equivalents calculated from the HMH B.V. shares held by the Principal Stockholders.
The calculation of basic and diluted weighted average shares used for calculating earnings (loss) per share for the three and nine months ended September 30, 2025 does not include the 11.2
The following table reconciles the figures used to calculate basic and diluted net income per share for common stock:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Numerator (in thousands) | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Less: Net income (loss) attributable to non-controlling interests | ( | ( | |||||||||||||||||||||
| Net income attributable to HMH Holding Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Denominator (actual shares) | |||||||||||||||||||||||
| Weighted-average shares of common stock for HMH and HMH B.V. outstanding—basic | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
| Weighted-average shares of common stock outstanding—diluted | |||||||||||||||||||||||
| Net income per share of common stock (actual) | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
We apply the treasury stock method to certain equity-based compensation awards and the "if-converted" method to determine the dilutive impact of the associated exchange rights on weighted-average common shares outstanding.
25
PART I - FINANCIAL INFORMATION (CONT’D.)
HMH HOLDING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table details the actual potential common shares excluded from the diluted share calculation because their effect would be anti-dilutive:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Restricted common stock | |||||||||||||||||||||||
| Performance share units | |||||||||||||||||||||||
As of September 30, 2026, the 63,783,304 total B.V. Non-Voting Class A Shares and B.V. Non-Voting Class B Shares together with 31,891,652 shares of the Company’s Class B common stock could be exchanged for 31,891,652 shares of the Company’s Class A common stock.
26
PART I - FINANCIAL INFORMATION (CONT’D.)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 September 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 and the Form S-1.
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 nine months ended September 30, 2026, we derived 9.8% and 13.7% of our revenue from sales of projects and products, respectively, compared to 24.9% and 27.1% during the three and nine months ended September 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 nine months ended September 30, 2026, we derived 56.8% and 50.3% of our revenue from aftermarket services, respectively, compared to 48.3% and 45.3% during the three and nine months ended September 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 nine months ended September 30, 2026, we derived 33.4% and 36.0% of our revenue from sales of spare parts, respectively, compared to 26.8% and 27.5% during the three and nine months ended September 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
27
PART I - FINANCIAL INFORMATION (CONT’D.)
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.
28
PART I - FINANCIAL INFORMATION (CONT’D.)
Consolidated Results of Operations
The following table sets forth certain Condensed Consolidated Statement of Income data:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Service revenue | $ | 97,128 | $ | 104,838 | $ | 258,209 | $ | 280,678 | |||||||||||||||
| Product revenue | 16,705 | 53,954 | 69,198 | 167,424 | |||||||||||||||||||
| Spare parts revenue | 57,202 | 58,186 | 184,884 | 170,511 | |||||||||||||||||||
| Related party revenue | 45 | 193 | 932 | 445 | |||||||||||||||||||
| Total revenue | 171,080 | 217,171 | 513,223 | 619,058 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of services sold | 63,733 | 71,737 | 175,557 | 192,486 | |||||||||||||||||||
| Cost of goods sold – products | 19,905 | 52,441 | 61,799 | 152,560 | |||||||||||||||||||
| Cost of goods sold – spare parts | 29,288 | 33,227 | 101,727 | 105,787 | |||||||||||||||||||
| Total cost of sales | 112,926 | 157,405 | 339,083 | 450,833 | |||||||||||||||||||
| Selling, general and administrative expenses | 33,928 | 31,361 | 129,393 | 97,040 | |||||||||||||||||||
| Research and development expenses | 222 | 98 | 1,407 | 1,778 | |||||||||||||||||||
| Restructuring and other expenses | 2,174 | 104 | 7,178 | 4,447 | |||||||||||||||||||
| Total operating expenses | 149,250 | 188,968 | 477,061 | 554,098 | |||||||||||||||||||
| Operating income | 21,830 | 28,203 | 36,162 | 64,960 | |||||||||||||||||||
| Foreign currency gain (loss), net | (113) | 74 | (2,932) | 7,015 | |||||||||||||||||||
| Other non-operating income (loss), net | (441) | 229 | (854) | 876 | |||||||||||||||||||
| Interest income (expense), net | (3,759) | (8,334) | (14,657) | (26,619) | |||||||||||||||||||
| Income before income taxes | 17,517 | 20,172 | 17,719 | 46,232 | |||||||||||||||||||
| Income tax expense | (7,176) | (4,343) | (8,522) | (14,757) | |||||||||||||||||||
| Net income | $ | 10,341 | $ | 15,829 | $ | 9,197 | $ | 31,475 | |||||||||||||||
Revenue: The following table sets forth disaggregated revenue by segment:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Service revenue - ESS | $ | 62,948 | $ | 40,035 | $ | 160,916 | $ | 138,155 | |||||||||||||||
| Product revenue - ESS | 5,744 | 33,038 | 35,811 | 111,237 | |||||||||||||||||||
| Spare parts revenue - ESS | 27,994 | 30,249 | 98,309 | 87,018 | |||||||||||||||||||
| Total revenue - ESS | $ | 96,686 | $ | 103,322 | $ | 295,036 | $ | 336,410 | |||||||||||||||
| Service revenue - PCS | $ | 34,180 | $ | 64,803 | $ | 97,293 | $ | 142,523 | |||||||||||||||
| Product revenue - PCS | 11,006 | 21,109 | 34,319 | 56,632 | |||||||||||||||||||
| Spare parts revenue - PCS | 29,208 | 27,937 | 86,575 | 83,493 | |||||||||||||||||||
| Total revenue - PCS | $ | 74,394 | $ | 113,849 | $ | 218,187 | $ | 282,648 | |||||||||||||||
| Total revenue | $ | 171,080 | $ | 217,171 | $ | 513,223 | $ | 619,058 | |||||||||||||||
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 $46.1 million, or 21.2%, and $105.8 million, or 17.1%, for the three and nine months ended September 30, 2026, respectively, compared to the prior-year periods. The declines were primarily due to lower product and contract service agreements partially offset with higher repairs, field service and digital technology.
Product revenue decreased by $37.4 million, or 69.1%, and $97.7 million, or 58.2%, for the three and nine months ended September 30, 2026, respectively. The decrease in product revenue, compared to the prior-year periods, reflects our lower equipment backlog volume and delays in the
29
PART I - FINANCIAL INFORMATION (CONT’D.)
Middle East due to the ongoing conflict.
Service revenue decreased by $7.7 million, or 7.4%, and $22.5 million, or 8.0%, for the three and nine months ended September 30, 2026, respectively. The decrease in Service revenue, compared to the prior-year periods, reflects reduction in contract service agreements partially offset by stronger digital technology and repair volume. Spare parts revenue decreased by $1.0 million, or 1.7%, and increased by $14.4 million, or 8.4%, for the three and nine months ended September 30, 2026, respectively, compared to the prior-year periods reflecting the pace of order intake and regional mix.
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 $44.5 million, or 28.3%, and $111.8 million, or 24.8%, for the three and nine months ended September 30, 2026, respectively, compared to the prior-year periods. Cost of sales as a percentage of revenue decreased to 66.0% and 66.1% for the three and nine months ended September 30, 2026, respectively, compared to 72.5% and 72.8% for three and nine months ended September 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 $8.0 million, or 11.2%, and $16.9 million, or 8.8%, for the three and nine months ended September 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 65.6% and 68.0% for the three and nine months ended September 30, 2026, respectively, compared to 68.4% and 68.6% for the three and nine months ended September 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, increased utilization and lower variable compensation impacting all three product lines.
Cost of goods sold - products decreased by $32.5 million, or 62.0%, and $90.8 million, or 59.5%, for the three and nine months ended September 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 increased to 118.8% for the three months ended September 30, 2026 and decreased to 88.1% for the nine months ended September 30, 2026, compared to 96.8% and 90.9% for the three and nine months ended September 30, 2025, respectively. These changes in cost of goods sold - products and cost of goods sold - products as a percentage of revenue were due to changes in revenue mix recognized and lower utilization relative to prior year.
Cost of goods sold – spare parts decreased by $3.9 million, or 11.9%, and $4.1 million or 3.8%, for the three and nine months ended September 30, 2026, compared to the corresponding periods in 2025. Cost of goods sold – spare parts as a percentage of spare parts revenue decreased to 51.2% and 55.0% for the three and nine months ended September 30, 2026, respectively, compared to 57.1% and 62.0% for the three and nine months ended September 30, 2025, respectively. These decreases in cost of goods sold – spare parts as a percentage of spare parts revenue were mainly due to part mix and higher utilization relative to prior year.
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 $2.6 million, or 8.2%, and $32.4 million, or 33.3%, for the three and nine months ended September 30, 2026, respectively, compared to the prior-year periods. These increases for the nine months ended September 30, 2026 were primarily driven by pre-IPO stock-based compensation expense and employer portion of taxes on the associated award vesting of $22.5 million.
Excluding this IPO-related stock-based compensation expense, SG&A expenses increased by $9.9 million, or 10.2%, for the nine months ended September 30, 2026, compared to the prior-year period. These increases were driven primarily by investments in the Company's commercial and back office organizations stemming from our transition to and operation as a public company as well as transaction costs associated with the IPO and our recent strategic acquisition initiatives.
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 September 30, 2026, compared to the three months ended September 30, 2025. For the nine months ended September 30, 2026, research and development expenses decreased by $0.4 million, or 20.9%. This decrease was attributable mainly to the strategic deployment of development resources and the capitalization of development costs.
Restructuring and Other Expenses: 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.
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PART I - FINANCIAL INFORMATION (CONT’D.)
Restructuring expenses for the three and nine months ended September 30, 2026 were $2.2 million and $7.2 million, respectively, compared to $0.1 million and $4.4 million for the three and nine months ended September 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 $0.2 million, or 252.7%, and $9.9 million, or 141.8%, for the three and nine months ended September 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 $4.6 million, or 54.9%, and $12.0 million, or 44.9%, for the three and nine months ended September 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: 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 September 30, 2026, we recorded a tax expense of $7.2 million, resulting in an effective tax rate of 41.0%, compared to a tax expense of $4.3 million and an effective tax rate of 21.5% for the three months ended September 30, 2025. For the nine months ended September 30, 2026, the tax expense was $8.5 million, resulting in an effective tax rate of 48.1%, compared to a tax expense of $14.8 million and an effective tax rate of 31.9% for the nine months ended September 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 nine months ended September 30, 2026, our income tax included the impact of a $22.5 million stock-based compensation expense related to pre-IPO stock-based awards and certain IPO related transaction costs. Excluding the impact of the stock-based compensation expense and IPO related costs, our adjusted effective tax rate for the nine months ended September 30, 2026 would have been 42.1%.
Cash Flows
Cash flows provided by (used in) operations by type of activity were as follows:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 18,967 | $ | 28,948 | |||||||
| Net cash used in investing activities | (28,656) | (10,985) | |||||||||
| Net cash provided by (used in) financing activities | 3,288 | (14,298) | |||||||||
| Effect of exchange rate changes on cash activities | (111) | 4,031 | |||||||||
| (Decrease) increase in cash and cash equivalents | $ | (6,512) | $ | 7,696 | |||||||
Operating Activities
Net cash provided by operating activities decreased by $10.0 million in the first nine months of 2026, compared to the corresponding period in 2025, mainly due to a $22.3 million decrease in net income, a $2.5 million decrease in non-cash items and a $14.9 million increase from changes in operating assets and liabilities.
The variance in non-cash expenses was driven by the recognition of share-based compensation expenses upon completion of the IPO, which was offset by unfavorable changes in provision for bad debt expense, paid-in-kind interest, deferred tax expenses, a provision for inventory write-down, and restructuring and other expenses.
The change in operating assets and liabilities was primarily driven by increases in accounts payable, accrued expenses and contract liabilities, partially offset by decreases in accounts receivable, contract assets and inventories. The increase in accounts payable and accounts payable – related party was primarily due to the timing of vendor payments, as 2025 included significant outflows to satisfy outstanding payables. The increase in accrued expenses was primarily due to the timing of expenses incurred in the respective periods. The increase in contract liabilities was primarily due to the timing of customer billings relative to the satisfaction of performance obligations. The decrease in accounts receivable was primarily due to the timing of customer billings and collections. The decrease in contract assets was primarily due to the timing of revenue recognition relative to our contractual right to bill customers and the decrease in inventories was primarily due to the timing of inventory purchases in anticipation of expected future demand.
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PART I - FINANCIAL INFORMATION (CONT’D.)
Investing Activities
Net cash used in investing activities was $28.7 million for the nine months ended September 30, 2026, representing an increase of $17.7 million compared to the prior-year period. The increase was principally due to a $14.5 million increase in net cash paid for the DWR business combination in September 2026, a $5.2 million increase in development costs, and $0.8 million of working capital adjustments during the measurement period for the Deep Blue acquisition in the first nine months of 2026. These increases were partially offset by a $2.8 million decrease in purchases of property, plant, and equipment.
Financing Activities
Net cash provided by financing activities was $3.3 million in the first nine months of 2026 compared to net cash used in financing activities of $14.3 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 HMH Inc. and HMH B.V. shares as part of the greenshoe exercise, a $10.8 million of deferred IPO cost paid, and $7.1 million in payments for treasury shares in 2026. Cash flows used in financing activities for the prior period were primarily driven by $14.3 million in net repayments under our outstanding credit facilities.
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, share-based compensation, IPO listing related cost and, when applicable, other items. Management does not consider these items to be indicative of our ongoing operating performance measure, and such items include, but are not limited to, restructuring 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:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Net income | $ | 10,341 | $ | 15,829 | $ | 9,197 | $ | 31,475 | |||||||||||||||
Add: Interest expense, net | 3,759 | 8,334 | 14,657 | 26,619 | |||||||||||||||||||
| Income tax expense | 7,176 | 4,343 | 8,522 | 14,757 | |||||||||||||||||||
| Depreciation and amortization | 10,640 | 10,884 | 32,359 | 31,877 | |||||||||||||||||||
| Share-based compensation | 2,343 | — | 25,118 | — | |||||||||||||||||||
| Restructuring and other expenses | 2,174 | 104 | 7,178 | 4,447 | |||||||||||||||||||
| Foreign currency (gain) loss, net | 113 | (74) | 2,932 | (7,015) | |||||||||||||||||||
| IPO listing and acquisition related costs | 1,640 | — | 2,160 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | 38,186 | $ | 39,420 | $ | 102,123 | $ | 102,160 | |||||||||||||||
| Net income as a % of revenue | 6.0 | % | 7.3 | % | 1.8 | % | 5.1 | % | |||||||||||||||
| Adjusted EBITDA Margin (a) | 22.3 | % | 18.2 | % | 19.9 | % | 16.5 | % | |||||||||||||||
(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
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PART I - FINANCIAL INFORMATION (CONT’D.)
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 operating activities to Free Cash Flow:
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 18,967 | $ | 28,948 | |||||||
Add: Purchases of property and equipment | (3,813) | (6,586) | |||||||||
| Development costs | (9,574) | (4,399) | |||||||||
| Non-cash IPO related settlement | $ | 9,541 | $ | — | |||||||
| Free Cash Flow | $ | 15,121 | $ | 17,963 | |||||||
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 September 30, 2026, we had $90.1 million in cash and cash equivalents and Revolver capacity of $75 million resulting in approximately $165.1 million of total liquidity. As of September 30, 2026, we have $0.7 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 is fixed and is accrued at a rate of 7.875% per annum. 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 September 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
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PART I - FINANCIAL INFORMATION (CONT’D.)
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 September 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: $1.49 million based on the exchange rate as of September 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 September 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.
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PART I - FINANCIAL INFORMATION (CONT’D.)
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.
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PART I - FINANCIAL INFORMATION (CONT’D.)
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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 nine months ended September 30, 2026, $104.2 million of our revenues, or 60.9%, and $305.7 million, or 59.6%, 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 nine months ended September 30, 2026 would have resulted in an increase or decrease in revenues of approximately $10 million and $30 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 September 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 September 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 September 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.
Item 4. Controls and Procedures
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 September 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 September 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.
36
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to this Item may be found in Note 16—“Commitments and Contingencies” in the notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in the section entitled “Risk Factors” in the Final Prospectus and the Form S-1.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 31, 2026, our registration statement on Form S-1, as amended (File No. 333-281497), was declared effective in connection with our IPO. On April 2, 2026, we completed our IPO of 10,520,000 shares of our Class A common stock at a price to the public of $20.00 per share. These sales of our Class A common stock resulted in net proceeds of $197.8 million, after deducting the underwriters’ discounts and offering fees of $12.6 million.
We used $39.5 million of the net proceeds we received from the IPO as the cash consideration to purchase an aggregate of 2,100,000 B.V. Voting Class A Shares and 2,100,000 B.V. Voting Class B Shares from Baker Hughes and Akastor, the Principal Stockholders. We contributed all of the remaining net proceeds from the IPO to HMH B.V. in exchange for a number of B.V. Voting Class A Shares and B.V. Voting Class B Shares such that the number of B.V. Voting Class A Shares and B.V. Voting Class B Shares, respectively, held by us equals the number of shares of our Class A common stock sold in the IPO. HMH B.V. used an aggregate of $137.1 million of the net proceeds received by it, comprised of $110.0 million to be paid to Baker Hughes and $27.1 million to be paid to Akastor, to repay all of the outstanding principal and accrued and unpaid interest under the Shareholder Loan Agreement, and the remaining net proceeds of $21.2 million received by HMH B.V. were used to fund HMH B.V.’s working capital.
We also granted the IPO underwriters a 30-day over-allotment option to purchase up to 1,578,000 additional shares of Class A common stock on the same terms. On April 30, 2026, the underwriters partially exercised the option and, on May 5, 2026, purchased an additional 685,844 shares of the Company’s Class A common stock. The sales of our Class A common stock sold in connection with the exercise of the underwriters’ over-allotment option resulted in net proceeds of approximately $12.9 million, after deducting the underwriters’ discounts and offering fees of $0.8 million.
We contributed all of the net proceeds from the underwriters’ exercise of the over-allotment option to HMH B.V. in exchange for an additional 685,844 B.V. Voting Class A Shares and 685,844 B.V. Voting Class B Shares. HMH B.V. used such additional net proceeds to purchase in equal proportion from Baker Hughes and Akastor, respectively, an aggregate number of shares of the Class B common stock, par value $0.01 per share, non-voting Class A ordinary shares of HMH B.V. and non-voting Class B ordinary shares of HMH B.V. respectively, equal to the number of shares of Class A common stock purchased by the underwriters pursuant to the exercise of the option.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted terminated
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PART II - OTHER INFORMATION (CONT’D.)
Item 6. Exhibits
Exhibit number | Description | |||||||
3.1 | Amended and Restated Certificate of Incorporation of HMH Holding Inc., dated April 2, 2026 (incorporated herein by reference to Exhibit 3.1 to HMH Holding Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2026). | |||||||
3.2 | Amended and Restated Bylaws of HMH Holding Inc., dated April 2, 2026 (incorporated herein by reference to Exhibit 3.2 to HMH Holding Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2026). | |||||||
31.1* | Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
31.2* | Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
32.1** | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
32.2** | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101(INS)* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101(SCH)* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101(CAL)* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101(DEF)* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101(LAB)* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101(PRE)* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). | |||||||
* Filed herewith.
** Furnished herewith.
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HMH Holding Inc. | ||||||||
| By: | /s/ Thomas W. McGee | |||||||
Date: November 4, 2026 | Thomas W. McGee | |||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Duly Authorized Officer) | ||||||||
39