Advantage Solutions Inc.

1. Organization and Significant Accounting Policies

Advantage Solutions Inc. (the “Company”) is a provider of outsourced solutions to consumer goods companies and retailers. The Company’s Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ADV.”

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The unaudited condensed consolidated financial statements do not include all of the information required by accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated balance sheet at December 31, 2025 was derived from the audited Consolidated Balance Sheet at that date and does not include all the disclosures required by GAAP. In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair statement of the results as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been reflected in the condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025 and the related footnotes thereto. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

Reverse Stock Split

On March 26, 2026, the Company effected a 1-for-25 reverse stock split of its Class A common stock. In connection with the reverse stock split, the Company amended its certificate of incorporation to reduce the number of authorized shares of Class A common stock and preferred stock by dividing the previously authorized share amounts by the reverse stock split ratio and applying a 1.5x multiplier. No fractional shares were issued in connection with the reverse stock split, and stockholders who otherwise would have been entitled to a fractional share received cash in lieu thereof. All share and per share amounts presented in these unaudited condensed consolidated financial statements, including shares underlying stock-based compensation equity awards, have been retroactively adjusted for all periods presented to give effect to the reverse stock split. The reverse stock split did not affect the per share par value of the Company’s Class A common stock.

Retirement of Treasury Shares

During the three months ended March 31, 2026, the Company retired 566,408 treasury shares that had been previously purchased under the 2021 Share Repurchase Program.

Revenue Recognition

The Company recognizes revenue when control of promised goods or services is transferred to the client in an amount that reflects the consideration that the Company expects to be entitled to in exchange for such goods or services. Substantially all of the Company’s contracts with clients involve the transfer of a service to the client, which represents a performance obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided. In most cases, the contracts provide for a performance obligation that is comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). For these contracts, the Company allocates the ratable portion of the consideration based on the services provided in each period of service to such period.

Revenues related to the Branded Services segment are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing headquarter relationship management, execution of merchandising strategies and omni-commerce marketing services. Revenues within the Branded Services segment are further disaggregated between brokerage services, branded merchandising services and omni-commerce marketing services. Brokerage services revenues are primarily outsourced sales and services for branded consumer goods manufacturers at retailer headquarters, in-store and online. Branded merchandising services relate to merchandising in-store and online for branded consumer goods manufacturers. Omni-commerce marketing services primarily relate to digital and field marketing services.

Experiential Services segment revenues are primarily recognized in the form of fee-for-service and cost-plus fees for providing in-store, digital sampling and demonstrations, where the Company manages highly customized, large-scale sampling programs for leading brands and retailers.

Retailer Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing consulting services related to private brand development, the execution of merchandising strategies and marketing strategies within retailer locations, including retail media networks and analyzing shopper behavior. Revenues within the Retailer Services segment are further disaggregated between advisory services, retailer merchandising services and agency services to retailers. Advisory services primarily consist of consulting services related to private brand development. Retailer merchandising services primarily relate to the execution of merchandising strategies. Agency services primarily consist of providing marketing strategies within retail locations.

Disaggregated revenues were as follows:

Deferred revenues represent cash payments that are received in advance of the Company’s satisfaction of the applicable obligation and are included in Deferred revenues in the condensed consolidated balance sheets. Deferred revenues are recognized as revenues when the related services are performed for the client. Revenues recognized during the three months ended March 31, 2026 that were included in Deferred revenues as of December 31, 2025 was$14.7 million. Revenues recognized during the three months ended March 31, 2025 included in Deferred revenues as of December 31, 2024 was $10.7 million.

Accounting Standards Recently Issued but Not Yet Adopted by the Company

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date(“ASU 2025-01”). ASU 2024-03 requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted on a prospective or retrospective basis. The Company is currently evaluating the impact of ASU 2024-03 on the 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”), which modernizes the accounting for internal-use software costs to reflect incremental and iterative development methods. The amendments remove prescriptive development stages and require capitalization of software costs once management has authorized and committed to funding the project and it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted and application on a prospective, modified retrospective, or retrospective basis. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements and related disclosures.

Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.

2. Divestiture

Investments in European Joint Venture

During the three months ended March 31, 2026, the Company executed a series of agreements related to its investment in a European joint venture, which was accounted for under the equity method and in which the Company held an ownership interest as of December 31, 2025. Under the terms of these agreements, the Company sold its interest in a portion of the European joint venture business for total consideration of £20 million (approximately $28 million), comprised of £10 million (approximately $14 million) received in cash at closing and £10 million of deferred consideration to be paid 12 months after completion of the sale. The deferred consideration is reflected in Prepaid expenses and other current assets in the condensed consolidated balance sheet as of March 31, 2026. The Company retained a minority interest of 49.6% in the remaining portion of its ownership interest in the European joint venture.

The Company recognized a gain of approximately $1.0 million on the partial disposition of its equity‑method investment during the period, which is reflected in operating income.

For the three months ended March 31, 2025, the Company presented its proportionate share of earnings from the European joint venture within operating income, as reflected in Income from investment in European joint venture and other, because the results of that investment were considered integral to the Company’s operations at that time. Following completion of the restructuring of the investments in the European joint venture in 2026, the Company reassessed the nature of its retained equity‑method investment and concluded that the results of the remaining European joint venture investment are no longer integral to the Company’s core operating activities. Accordingly, for the three months ended March 31, 2026, the Company presents its proportionate share of Income from unconsolidated investments within Income from unconsolidated investments in the condensed consolidated statements of operations and comprehensive loss.

2024 Divestitures

During the three months ended March 31, 2026, the Company received the remaining installment of approximately $27.5 million related to the July 31, 2024 sale of the Jun Group business.

3. Goodwill and Intangible Assets

The carrying amount of goodwill as of March 31, 2026 and December 31, 2025 was $438.9 million. Accumulated impairment losses related to goodwill were $2.3 billion as of March 31, 2026 and December 31, 2025.

Amortization of intangible assets was$42.3 million and$42.9 million for the three months ended March 31, 2026 and 2025, respectively.

The following tables set forth information for intangible assets:

As of March 31, 2026, estimated future amortization expense of the Company’s finite-lived intangible assets are as follows:

4. Debt

Long-term debt consisted of the following:

Refinancing

On March 11, 2026, Advantage Sales & Marketing Inc., the Company’s indirect wholly owned subsidiary, completed a refinancing transaction designed to extend maturities, enhance liquidity, and simplify its capital structure. The transaction was executed through a series of interrelated financing actions, including (i) an exchange offer and consent solicitation with respect to the Company’s outstanding senior secured notes, (ii) a refinancing and amendment of the Company’s term loan facility, and (iii) amendments to the Company’s asset‑based revolving credit facility.

As part of the refinancing, holders of approximately 99% of its outstanding 6.50% senior secured notes due 2028 (the“2028 Notes”) with outstanding principal balance of $561.4 million accepted the offer to exchange their 2028 Notes for new 9.0% senior secured notes due 2030 (the “2030 Notes”) and $43.9 million in cash consideration, along with a related consent solicitation to amend the indenture governing the 2028 Notes, was completed. In connection with the exchange and consent solicitation, substantially all of the covenants, events of default, guarantees, and the collateral securing the 2028 Notes were eliminated or released, and 99% of the 2028 Notes were effectively replaced by the 2030 Notes with extended maturities and revised terms, which are further described below.

Concurrently with the notes exchange, the Company refinanced its existing term loan facility by (i) entering into a new senior secured first lien term loan facility at an extended maturity (“the 2030 Term Loan Facility”) in an aggregate principal amount of $1.035 billion and (ii) making a cash prepayment of$80.9 million onthe prior term loan balance, and amended its existing senior secured asset-based revolving credit facility (the “2030 ABL”).

The 2030 Notes

The 2030 Notes bear interest at 9.0% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2026, and mature on November 15, 2030, and include a payment-in-kind fee that was recorded as a debt discount. The debt discount is being amortized to interest expense over the term of the debt using the effective interest method.

The Company’s obligations under the 2030 Notes are guaranteed by Karman Intermediate Corp. and each of the Company’s direct and indirect wholly owned material U.S. subsidiaries and Canadian subsidiaries (the “Guarantors”), and are secured by a lien on substantially all of the Company’s and the Guarantors’ assets (subject to certain permitted exceptions). The 2030 Notes have a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility) and a second‑priority lien on the current asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility and second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens.

The 2030 Notes may be redeemed, in whole at any time or in part from time to time, at 100% of the principal amount thereof, plus accrued and unpaid interest. Holders of the 2030 Notes have the right to require the Company to repurchase their notes upon the occurrence of certain changes of control, subject to specified exceptions, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest. If the Company or any of its restricted subsidiaries sells assets, under certain circumstances the Company must offer to use the net proceeds to purchase the 2030 Notes at 100% of the principal amount thereof, plus accrued and unpaid interest. If the Company generates excess cash flow, the Company must use 75% of such excess cash flow, subject to reduction as set forth in the applicable indenture, to make an offer to repurchase the 2030 Notes together with other applicable parity lien indebtedness at 100% of the principal amount thereof, plus accrued and unpaid interest.

The 2030 Term Loan Facility

Borrowings under the Company’s 2030 Term Loan Facility amortize in equal quarterly installments in an amount equal to 2.50% per annum of the principal amount. Borrowings will bear interest at a floating rate, which can be either adjusted SOFR plus an applicable margin or, at the Company’s option, a base rate plus an applicable margin. The applicable margins for the 2030 Term Loan Facility is 6.00%, with respect to SOFR borrowings and 5.00%, with respect to base rate borrowings. The Company may voluntarily prepay loans or reduce commitments under this facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty. The Company will be required to prepay its 2030 Term Loan Facility with 100% of the net cash proceeds of certain asset sales subject to certain reinvestment rights,100% of the net cash proceeds of certain debt issuances and 75% of excess cash flow (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios).

The Company’s obligations under the 2030 Term Loan Facility are guaranteed by the Guarantors, and are secured by a lien on substantially all of the Company’s and the Guarantors’ assets (subject to certain permitted exceptions). The 2030 Term Loan Facility has a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Notes) and a second‑priority lien on the current asset collateral (second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens. The 2030 Term Loan Facility matures in April 2030, subject to potential extensions in accordance with its terms. The 2030 Term Loan Facility includes a payment-in-kind fee that was recorded as debt discount and is being amortized to interest expense over the term of the 2030 Term Loan Facility using the effective interest method.

The 2030 Asset-based Revolving Credit Facility

The Company's 2030 ABL provides for revolving loans and letters of credit in the aggregate amount of up to $500.0 million, subject to borrowing base capacity. Letters of credit are limited to the lesser of (i) $150.0 million and (ii) the aggregate unused amount of commitments then in effect under the revolving credit facility. Loans under the revolving credit facility may be denominated in either U.S. dollars or Canadian dollars. The revolving credit facility matures on January 30, 2030, subject to a customary springing maturity tied to the maturity of the 2030 Term Loan Facility and the 2030 Notes.

Borrowings under the 2030 ABL bear interest at variable rates based on the CME Group Benchmark Administration Limited Term Secured Overnight Financing Rate (“SOFR”) or a base rate, plus applicable margins, at the Company's option. The applicable margins for the 2030 ABL are 1.75%,2.00% or 2.25%, with respect to SOFR borrowings and 0.75%,1.00% or 1.25%, with respect to base rate borrowings, in each case depending on average excess availability under the revolving credit facility.

The Company’s obligations under the ABL are guaranteed by the Guarantors and are secured by liens on substantially all assets of the Company and the Guarantors, subject to certain permitted exceptions. These obligations have a first‑priority lien on current asset collateral and a second‑priority lien on fixed asset collateral, which is junior to the liens securing the 2030 Notes and the 2030 Term Loan Facility discussed below, in each case subject to permitted liens.

As of March 31, 2026, the Company had the ability to borrow up to $385.8 million under the 2030 ABL after giving effect to borrowing base limitations and outstanding letters of credit. As of December 31, 2025, the Company had the ability to borrow up to $438.0 million under the previous revolving credit facility after giving effect to borrowing base limitations and outstanding letters of credit.

Debt Covenants

The 2030 Notes, the 2030 ABL and the 2030 Term Loan Facility each contain customary affirmative and negative covenants applicable to the Guarantors, the Company and its subsidiaries. Collectively, these covenants restrict the ability of such parties to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock, or make other restricted payments; (iii) prepay, redeem, repurchase or modify the terms of certain junior or other indebtedness; (iv) issue certain preferred stock or similar equity securities; (v) make loans, advances, acquisitions or other investments; (vi) sell or otherwise dispose of or transfer assets; (vii) incur liens or other security interests on assets; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the ability of subsidiaries to pay dividends; (x) change the Company's line of business; and (xi) merge or consolidate with, or sell all or substantially all of their assets to, another entity.

Substantially all of the foregoing covenants under the 2030 Notes will be suspended, and the guarantees provided by the Guarantors released, for so long as the 2030 Notes maintain certain investment grade ratings, subject to customary exceptions.

The 2030 ABL additionally requires the Company to maintain a fixed charge coverage ratio (as defined in the related credit agreement) of not less than 1.00 to 1.00 as of the end of each fiscal quarter during any period in which excess availability is less than the greater of (a) $25 million and (b)10% of the lesser of the borrowing base and the maximum borrowing capacity. The fixed charge coverage ratio will continue to be tested at the end of each fiscal quarter until excess availability exceeds the foregoing threshold.

The agreements governing the 2030 Notes, the 2030 Term Loan Facility and the 2030 ABL contain additional affirmative and negative covenants, including related definitions, thresholds, limitations and exceptions, that vary between the facilities. The 2028 Notes, 2030 Notes, and the 2030 Term Loan Facility rank pari passu in right of payment, subject to the applicable intercreditor arrangements and collateral priorities. As of March 31, 2026, the Company was in compliance with all applicable covenants.

The Company determined that all components of the Refinancing were considered to be modifications. Fees paid to creditors in connection with the Refinancing, including payment-in-kind fees associated with the 2030 Notes and the 2030 Term Loan Facility, were recorded as adjustments to the carrying amounts of the related debt instruments and are being amortized as interest expense over the remaining terms of the modified arrangements. Third-party fees of $20.4 million associated with the 2030 Notes and the 2030 Term Loan Facility were expensed as incurred and recognized in Other expense in the condensed consolidated statements of comprehensive loss. Deferred financing costs of $13.7 million associated with the revolving credit facility were capitalized and are included in Prepaid expenses and other current assets and Other assets in the condensed consolidated balance sheets and are being amortized over the term of the revolving credit facility. The Company recognized $1.2 million of expense in Interest expense in the condensed consolidated statement of operations and comprehensive loss, related to the write-off of unamortized debt issuance costs associated with the portion of debt principal repaid in connection with the Refinancing. The remaining unamortized fees and discount associated with the modified debt instruments, including amounts associated with the Company’s prior debt arrangements that continue to be attributed to the modified instruments, are being amortized as interest expense over the remaining terms of the modified arrangements

Debt Maturities

Future minimum principal payments on long-term debt as of March 31, 2026 are as follows:

5. Fair Value of Financial Instruments

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table sets forth the Company’s financial assets and liabilities measured on a recurring basis at fair value, categorized by input level within the fair value hierarchy.

Interest Rate Collar and Cap Agreements

The Company has interest rate collar contracts with an aggregate notional value of principal of$700.0 million as of March 31, 2026, from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities. Interest rate collar contracts with notional value of principal of $300.0 million matured on April 5, 2026, and interest rate collar contracts with notional values of principal of$200 million each will mature on April 5, 2027 and 2028.

Effective April 8, 2026, the Company entered into an interest rate collar with a $100.0 million notional amount that matures on April 8, 2029, providing a 4.50% cap and a 2.89% floor based on one‑month term SOFR. No premium was paid at inception. The interest rate collar was entered into to mitigate exposure to changes in interest rates on floating‑rate debt.

As of March 31, 2026, the fair value of the Company’s outstanding interest collars of$0.2 million was included in “Other long-term liabilities” in the condensed consolidated balance sheets. As of December 31, 2025 the fair value of the Company’s outstanding interest rate caps and collars of$0.5 million was included in “Other long-term liabilities” in the condensed consolidated balance sheets. Changes in fair value of the Company's outstanding interest rate caps and collars are recognized as a component of “Interest expense, net” in the condensed consolidated statements of operations and comprehensive loss.

During the three months ended March 31, 2026 and 2025, the Company recorded a gain of$0.3 million and a loss of$1.6 million, respectively, within “Interest expense, net,” related to changes in the fair value of its derivative instruments.

Long-term Debt

The following tables set forth the carrying values and fair values of the Company’s financial liabilities measured on a recurring basis, categorized by input level within the fair value hierarchy:

6. Related Party Transactions

Unconsolidated Affiliates

During the three months ended March 31, 2026 and 2025, the Company recognized revenues of $1.1 million and $2.6 million, respectively, from its investment in unconsolidated affiliates. Accounts receivable from transactions with unconsolidated affiliates were$0.4 million as of March 31, 2026 and December 31, 2025.

7. Income Taxes

The Company had an effective tax rate of (48.0)% for thethree months ended March 31, 2026, compared to an effective tax rate of (14.6)% for the corresponding period in 2025.

The effective tax rate for the three months ended March 31, 2026 differed from the statutory rate primarily due to an increase in the valuation allowance recorded against the deferred tax asset related to interest expense limitation carryforwards.

8. Segments

The Company’s reportable segments, consisting of Branded Services, Experiential Services, and Retailer Services, have separate financial information and are evaluated regularly by the Company’s Chief Operating Decision Maker (“CODM”), a position currently held by the Company's Chief Executive Officer, in deciding how to allocate resources and in assessing performance.

The CODM utilizes segment operating income to assess the performance and allocate resources to each reportable segment. The CODM is not provided asset information by reportable segment.

The tables below summarize revenues, significant expenses and operating income (loss) by reportable segment:

(1) Reimbursable expenses are costs incurred in the delivery of services to the Company's clients that the client has agreed to reimburse, including media, sample, retailer fees and other marketing and production costs.

(2) The “other segment items” category primarily consists of costs incurred in the execution of service obligations, including supplies, technology, and other direct expenses such as travel and indirect general and administrative expenses such as professional fees. These costs align with the segment-level information regularly provided to the CODM and represent the difference between revenue and the significant expense categories above in determining segment profitability.

9. Restructuring

During the first quarter of fiscal year 2026, the Company initiated restructuring activities primarily focused on transitioning certain back office functions to a third‑party operating model. A summary of expenses incurred by segment for the three months ended March 31, 2026, consisting primarily of workforce transition‑related costs, including employee rebadging to a third-party service provider, retention‑related compensation, professional services, and other implementation and transition activities, is presented below:

The Company estimates that it will incur additional costs of approximately $4.0 million to $6.0 million related to this initiative in multiple phases prior to completion in 2027. These costs are expected to primarily relate to workforce transition activities, professional services, and other implementation‑related costs. As of March 31, 2026, an accrued restructuring liability of $2.2 million was outstanding.

10. Commitments and Contingencies

The Company is involved in various legal matters that arise in the ordinary course of its business. Some of these legal matters purport or may be determined to be class and/or representative actions under the California Labor Code and Private Attorneys General Act, or seek substantial damages, or penalties. The Company has accrued amounts in connection with certain legal matters. There can be no assurance, however, that these accruals will be sufficient to cover such matters or other legal matters or that such matters or other legal matters will not materially or adversely affect the Company’s financial position, liquidity, or results of operations.

11. Stock-Based Compensation

The Company has nonqualified stock options, restricted stock units (“RSUs”), and performance restricted stock units (“PSUs”). Stock-based compensation expense is recognized based on the fair value at the grant date over the requisite service period. The Company recognized stock-based compensation expense as follows:

Performance Restricted Stock Units

PSUs granted in fiscal years 2025 and 2024 cliff-vest after three years at a rate ranging from 0% to 200% of target subject to achievement of certain financial performance criteria over three years based on measurements of the Company’s Adjusted EBITDA margin and cash earnings, both terms as defined in the award agreement, and the recipient's continued service to the Company. Financial performance is measured at the conclusion of each fiscal year of the vesting period by the Human Capital Committee (“HCC”). The number of PSUs that ultimately vest is further modified based on the Company’s total shareholder return (“TSR”) relative to a defined peer group over the same performance period(which adjustment imposes a floor or a cap on the total number of PSUs that are eligible to vest based on the Company’s relative total shareholder return ranking). Following completion of the performance period and determination of achievement levels, the HCC approves the final number of PSUs vested and settled in shares of the Company’s Class A common stock. During the first quarter of 2026, the HCC determined the achievement percentage for the fiscal year 2025 performance period to be zero for PSUs granted in fiscal year 2025 and 2024.

PSUs granted in fiscal year 2023 vest over athree year period at a rate ranging from 0% to 150% subject to achievement of certain financial performance criteria based on the Company’s revenues and Adjusted EBITDA targets, both terms as defined in the award agreement, over the 2023 fiscal year, and the recipient’s continued service to the Company. During the first quarter of 2026, the HCC determined the achievement percentage for these PSUs for the three year performance period ending December 31, 2025 was 117.5%.

The fair value of PSU grants was equal to the closing price of the Company’s stock on the date of the applicable grant. The following table presents the number of PSUs that would potentially be issued upon achievement of performance criteria at threshold, target and maximum. The maximum potential expense below assumes the maximum and threshold achievement level for periods not yet approved by the HCC. Recognition of expense associated with performance-based stock is not permitted until achievement of the performance targets are probable of occurring.

The following table summarizes the PSU activity for thethree months ended March 31, 2026:

(1) Adjusted for final 2023 performance achievement as approved by the HCC at 117.5%.

(2) PSU award activity for each year used in the three year average achievement is presented at target until three year average achievement is approved by the HCC, at which point the awards are adjusted as outstanding awards, subject to additional performance requirements, TSR and service-based vesting conditions.

Restricted Stock Units

RSUs are subject to the recipient’s continued service to the Company. RSUs are generally scheduled to vest over three years and are subject to the provisions of the agreement under the Plan.

During thethree months ended March 31, 2026, the following activities involving RSUs occurred under the Plan:

As of March 31, 2026, the total remaining unrecognized compensation cost related to RSUs amounted to$10.7 million, which is expected to be amortized over the weighted-average remaining requisite service periods of 1.8 years.

Stock Options

During thethree months ended March 31, 2026, the following activities involving nonqualified stock options occurred under the Plan:

The fair value of the employee stock options was estimated using the following weighted average assumptions using a Black-Scholes option valuation model:

As of March 31, 2026, the Company had approximately$5.5 million of total unrecognized compensation expense related to stock options, which the Company expects to recognize over a weighted-average period of approximately 3.0 years. There wereno options exercised during thethree months ended March 31, 2026 and 2025.

12. Earnings Per Share

The Company calculates earnings per share using a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income attributable to stockholders of the Company by the weighted-average shares of common stock outstanding without the consideration for potential dilutive shares of common stock. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of performance stock units, restricted stock units, public and private placement warrants, the employee stock purchase plan and stock options. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding and the potential dilutive shares of common stock for the period determined using the treasury stock method. During periods of net loss, diluted loss per share is equal to basic loss per share because the antidilutive effect of potential common shares is disregarded.

On March 26, 2026, the Company effected a 1-for-25 reverse stock split of its Class A common stock. The weighted average common shares and net loss reflect the Reverse Stock Split for all periods presented on the condensed consolidated statements of operations.

The following is a reconciliation of basic and diluted earnings per common share:

In accordance with the treasury stock method the weighted average shares outstanding assuming dilution include the incremental effect of stock-based awards, except when such effect would be antidilutive. Stock-based awards of 0.3 million weighted-average shares were outstanding for the three months ended March 31, 2026, but were not included in the computation of diluted (loss) earnings per common share because the net loss position of the Company made them antidilutive. Stock-based awards of 0.4 million weighted-average shares were outstanding for thethree months ended March 31, 2025, but were not included in the computation of diluted loss per common share because the net loss position of the Company made them antidilutive.

13. Subsequent Events

On April 29, 2026, the Company granted approximately 951,000 RSUs,80,000 PSUs and 44,000 nonqualified stock options, with an estimated aggregate grant date fair value of approximately $31.5 million, $2.7 million and $1.0 million, respectively, to certain members of management consistent with the Company’s 2020 Incentive Plan.