4. IMPAIRMENT CHARGES

Pintail asset group valuation at the time of acquisition reflected certain expectations regarding customer wireline activity, pricing, operating margins and future cash flows. Subsequent to the April 1, 2025, acquisition, Pintail experienced persistent customer pricing weakness, lower wireline activity levels, and increased wireline costs. These factors represented a significant adverse change in Pintail’s operating environment that resulted in operating performance and cash flows being below acquisition-date expectations. During the third quarter of 2026, indicators existed that the carrying amount of the Pintail asset group might not be fully recoverable due to continued pricing weakness, lower customer wireline activity and cost pressure. As a result, the Company evaluated the triggering event indicators in accordance with ASC 360 - Property, Plant and Equipment, and performed a recoverability assessment of Pintail’s long-lived asset group as of August 31, 2026 (“Assessment Date”). The Company determined that the operating equipment was the primary asset class in the Pintail asset group and its remaining weighted average useful life was used in determining the period over which undiscounted cash flows were evaluated. Based on actual results and updated forecasts, the estimated undiscounted cash flows were less than the carrying amount of the asset group. Therefore, in accordance with ASC 360, the Company measured the impairment based on the amount by which the carrying amount of the asset group exceeded its estimated fair value.

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The Company estimated the fair value of the Pintail asset group as of the Assessment Date, with assistance from an independent third-party valuation specialist, using an income approach based on discounted projected cash flows. Management was responsible for the fair value estimate and the underlying forecasts and assumptions. The Company used internal forecasts which included estimates of future revenues, operating margins, capital expenditures, working capital requirements and long-term growth rates.

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The Company recorded a non-cash impairment charge for the amount by which the asset group’s carrying amount exceeded its estimated fair value as of the Assessment Date. The impairment charge was allocated to the long-lived assets within the asset group, subject to the requirement that the carrying amount of an individual asset not be reduced below its estimated fair value when determinable. In determining the impairment allocated to property, plant and equipment, the Company estimated fair value floors by applying class-level factors to the net book value of each asset class. These factors were developed primarily through a sampling analysis that compared selected assets to secondary-market prices for similar equipment, adjusted for differences in age, configuration and other asset-specific characteristics. Where sufficient direct market data was unavailable, the factors were developed using market results for related equipment or estimates based on the assets’ characteristics and expected resale marketability.

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Non-cash impairment charges, before income taxes, were allocated to the long-lived assets for the three and nine months ended September 30, 2026, as follows:

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All of the impairment charges related to assets within the Technical Services reportable segment. The Company evaluated whether the circumstances giving rise to the impairment represented a triggering event for goodwill at the Technical Services reporting-unit level and concluded that an interim goodwill impairment test was not required.

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The nonrecurring fair value measurement of the Pintail asset group was approximately $78.9 million as of August 31, 2026, based primarily on significant unobservable inputs and therefore was classified within Level 3 of the fair value hierarchy. The Company used a weighted average cost of capital of 14.5% and a residual growth rate of (2.0)% in estimating fair value. The negative 2% residual growth rate reflects management’s expectations regarding Pintail’s longer-term customer activity and pricing weakness.

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The significant assumptions used in determining fair value reflect estimates regarding Pintail’s future operating performance and market-participant assumptions. The estimated fair value of the asset group would have been lower if forecasted cash flows or the residual growth rate were lower or if the discount rate was higher. Conversely, the estimated fair value would have been higher if forecasted cash flows or the residual growth rate were higher or if the discount rate was lower. The Company’s estimates and assumptions regarding the unobservable inputs are subject to change as a result of changes in market and economic conditions and Pintail’s future operating performance.

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The full extent of the impact of Pintail’s continued pricing weakness on the business, financial condition, results of operations or cash flows as well as the pace or extent of any subsequent recovery cannot be reasonably predicted at this time. If the Pintail asset group’s future operating performance is lower than the assumptions used in the estimation of fair value, the Company may record further asset impairments.