# NPK International Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [NPK International Inc.](/companies/npki.md) (CIK 71829)
- Form: 10-Q
- Filed: 2025-05-02
- Accepted by EDGAR: May 2, 2025, 11:55 ET
- Period: 2025-03-31
- Accession: 0000071829-25-000041
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/71829/000007182925000041/nr-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/71829/000007182925000041/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $64.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $39.5m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $11.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $13.5m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $3.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $10.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.11 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 86,996,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $8.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $10.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $10.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $20.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $105.1m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $390.0m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $40.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $63.1m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $5.0m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $3.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $326.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 19,859 characters.

The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2024. Our first quarter represents the three-month period ended March 31. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”

### Overview

NPK International Inc. (“NPK,” the “Company,” “we,” “our,” or “us”) is a temporary worksite access solutions company that manufactures, sells, and rents recyclable composite matting products, along with a full suite of services, including planning, logistics, and site restoration. In the first quarter of 2025, 67% of our revenues were generated from the rental of our recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, oil and natural gas exploration and production, pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom. The remaining 33% of our first quarter of 2025 revenues were generated from the sale of our manufactured recyclable composite mats to customers around the world, with power transmission being the primary end-market.

We previously operated a Fluids Systems business, which was historically reported as a separate operating segment, that provided drilling and completion fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in Europe, the Middle East and Africa, and North America, as well as certain countries in Asia Pacific. On September 13, 2024, we completed the sale of substantially all of the Company’s Fluids Systems segment (the “Sale Transaction”) to SCF Partners, a leading private equity firm serving the global energy industry (the “Purchaser”). The results of operations of Fluids Systems are reported in discontinued operations in the consolidated statements of operations. All results and information in the consolidated financial statements and related notes are presented for our continuing operations and exclude Fluids Systems unless otherwise noted specifically as discontinued operations. See Note 2 for additional information.

### 2025 Priorities

Our long-term strategy includes key foundational elements that are intended to enhance long-term shareholder value creation:

- *Accelerate Organic Growth –* We seek to accelerate revenue growth through the expansion of our rental business, which includes a combination of geographic expansion to new growth territories, primarily within the U.S., while also expanding customer market share within currently-served markets, and/or expanding our offering into adjacent products or services that are valued by our customers and leverage our core competencies. We prioritize investment capital to support this objective, where over the past several years, we have seen the strong market adoption of our specialty rental products and differentiated service offering. During the first quarter of 2025, we made net investments of $8 million in the expansion of our rental fleet, expanding the rental fleet by approximately 2%. Rental and service revenues increased $8 million, or 23%, year-over-year for the first quarter of 2025.
- *Pursue Inorganic Growth –* We seek to accelerate our growth and enhance shareholder value through strategically-aligned inorganic actions, leveraging our scale to increase our value and relevance to customers.
- *Drive Operational Efficiency –* We are focused on efficiency improvements and operating cost optimization across every aspect of our business. With a simplified business model, we continue to evaluate and execute actions intended to streamline the organization and our cost structure, driving improvements in profitability, with the goal of driving SG&A as a percentage of revenue to a mid-teens range by early 2026. SG&A as a percentage of revenues was 18.1% for the first quarter of 2025 compared to 23.6% for the first quarter of 2024.
- *Enhance Return on Capital –* We are committed to maintaining a strong balance sheet, prioritizing organic investment to expand our rental business while evaluating accretive inorganic growth opportunities to accelerate growth and returning excess cash generation via programmatic share repurchases. In February 2024, our Board of Directors replaced our prior share repurchase program with a new program for repurchases of common stock up to $50.0 million. In 2024, our share repurchase program was restricted due to the Fluids Systems sale process. During the first quarter of 2025, we utilized $11 million to repurchase 1.8 million of our outstanding shares (2%) under our repurchase program. In April 2025, we used $1.2 million to repurchase 0.2 million shares under the repurchase program. On April 30, 2025, our Board of Directors increased the remaining authorization under the repurchase program to $100.0 million.

### First Quarter of 2025 Compared to First Quarter of 2024

### Consolidated Results of Operations

Summarized results of operations for the first quarter of 2025 compared to the first quarter of 2024 are as follows:

*(In thousands)*

|  | First Quarter 2025 | 2024 | 2025 vs 2024 $% |  |
| --- | ---: | ---: | ---: | --- |
| Revenues | $64,777 | $48,967 | $15,810 | 32% |
| Cost of revenues | 39,527 | 31,325 | 8,202 | 26% |
| Selling, general and administrative expenses | 11,746 | 11,580 | 166 | 1% |
| Other operating (income) loss, net | (24) | (904) | 880 | NM |
| Operating income from continuing operations | 13,528 | 6,966 | 6,562 | 94% |
| Foreign currency exchange (gain) loss | (314) | 245 | (559) | NM |
| Interest (income) expense, net | (48) | 760 | (808) | NM |
| Income from continuing operations before income taxes | 13,890 | 5,961 | 7,929 | NM |
| Provision for income taxes from continuing operations | 3,515 | 1,907 | 1,608 | NM |
| Income from continuing operations | 10,375 | 4,054 | 6,321 | NM |
| Income (loss) from discontinued operations, net of tax | (372) | 3,239 | (3,611) | NM |
| Net income | $10,003 | $7,293 | $2,710 | NM |

The following table presents further disaggregated revenues by type:

*(In thousands)*

|  | First Quarter 2025 | 2024 | 2025 vs 2024 $% |  |
| --- | ---: | ---: | ---: | ---: |
| Rental and service revenues | $43,393 | $35,181 | $8,212 | 23% |
| Product sales revenues | 21,384 | 13,786 | 7,598 | 55% |
| **Total revenues** | $64,777 | $48,967 | $15,810 | 32% |

|  | First Quarter 2025 | 2024 | Change |  |
| --- | ---: | ---: | ---: | --- |
| **Total gross profit margin** | 39.0% | 36.0% | 300 | bps |

### Revenues

Revenues increased 32% to $64.8 million for the first quarter of 2025, compared to $49.0 million for the first quarter of 2024, including a 55% increase in product sales revenues and a 23% increase in rental and service revenues. Rental revenues increased $6.9 million (32%), primarily due to higher rental volume driven by our organic growth efforts, slightly offset by lower pricing. Service revenues increased $1.3 million (10%), primarily attributable to the increased level of customer rental projects. Product sales revenues increased $7.6 million (55%), reflecting both an increasing customer adoption of manufactured composite matting products relative to timber-based products that continue to be the primary solution used for temporary worksite access, as well as timing of customer projects. The majority of the 2025 and 2024 revenues were derived from customers in the power transmission sector.

### Cost of revenues

Cost of revenues increased 26% to $39.5 million for the first quarter of 2025 (39.0% gross profit margin), compared to $31.3 million for the first quarter of 2024 (36.0% gross profit margin), primarily driven by the 32% increase in revenues described above. The improvement in gross profit margin is primarily attributable to the effects of an improved revenue mix, including a higher proportion of rental revenues and a lower proportion of service revenues.

### Selling, general and administrative expenses

Selling, general and administrative expenses increased slightly to $11.7 million for the first quarter of 2025, compared to $11.6 million for the first quarter of 2024. Selling, general and administrative expenses as a percentage of revenues was 18.1% for the first quarter of 2025 compared to 23.6% for the first quarter of 2024.

### Other operating (income) loss, net

Other operating (income) loss, net, includes gains and losses on sales of assets. The first quarter of 2024 included a $0.6 million gain related to a legal settlement.

### Foreign currency exchange

Foreign currency exchange for the first quarter of 2025 and 2024 reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies, principally related to our U.K. operations.

### Interest (income) expense, net

Interest income, net was minimal for the first quarter of 2025 compared to $0.8 million of interest expense for the first quarter of 2024. The decrease in interest expense is primarily due to a decrease in average debt outstanding.

### Provision for income taxes from continuing operations

The provision for income taxes from continuing operations was $3.5 million for the first quarter of 2025, reflecting an effective tax rate of 25%, compared to $1.9 million for the first quarter of 2024, reflecting an effective tax rate of 32%. The decrease in effective tax rate is primarily attributable to an increase in pre-tax income from continuing operations.

### Income (loss) from discontinued operations, net of tax

Income (loss) from discontinued operations, net of tax reflects the former Fluids Systems segment, which was sold in the third quarter of 2024. See Note 2 for additional information.

### Liquidity and Capital Resources

We elected not to adjust the consolidated statements of cash flows to separately present cash flows attributable to discontinued operations. As a result, the below descriptions of net cash provided by or used in operating, investing, and financing activities represents the consolidated cash flows of the Company for such activities.

Net cash provided by operating activities was $8.8 million for the first quarter of 2025 compared to $12.0 million for the first quarter of 2024. Net income adjusted for non-cash items provided cash of $19.2 million in the first quarter of 2025, compared to $13.7 million in 2024, while changes in working capital used cash of $10.3 million in first quarter of 2025, compared to $1.7 million in 2024.

Net cash provided by investing activities was $5.4 million for the first quarter of 2025, which includes $10.7 million in additional proceeds from the sale of the Fluids Systems business partially offset by $10.0 million in capital expenditures. The substantial majority of our capital expenditures for the first quarter of 2025 and 2024 were directed to expanding our mat rental fleet. In addition, we received $1.8 million in proceeds from the sale of assets in the first quarter of 2025, which includes the sale of used mats from our mat rental fleet. Net cash used in investing activities was $12.7 million for the first quarter of 2024 primarily related to capital expenditures.

Net cash used in financing activities was $11.7 million for the first quarter of 2025, which primarily reflects $10.8 million in share purchases under our repurchase program. Net cash provided by financing activities was $0.6 million for the first quarter of 2024.

Substantially all our $20.8 million of cash on hand at March 31, 2025 resides in the U.S. We primarily manage our liquidity utilizing cash on hand and availability under our Amended ABL Facility and other existing financing arrangements.

We expect future working capital requirements for our operations will generally fluctuate directionally with revenues, and total availability under the Amended ABL Facility to fluctuate directionally based on the level of eligible U.S. accounts receivable, inventory, and composite mats included in the rental fleet. We expect capital expenditures in 2025 to be $35 million to $40 million, with spending primarily focused on the expansion of our mat rental fleet to further support the utilities market penetration. We also expect to use a portion of our existing liquidity to return value to our shareholders and pursue our long-term strategic initiatives. We expect cash on hand and cash generated by operations, as well as the projected availability under our Amended ABL Facility and other existing financing arrangements, to be adequate to fund our current operations during the next 12 months.

Our capitalization is as follows:

*(In thousands)*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Amended ABL Facility | $— | $— |
| Other debt | 8,050 | 7,728 |
| Unamortized discount and debt issuance costs | — | (1) |
| Total debt | $8,050 | $7,727 |
| Stockholders’ equity | 326,886 | 326,495 |
| Total capitalization | $334,936 | $334,222 |
| Total debt to capitalization | 2.4% | 2.3% |

***Asset-Based Loan Facility.*** In October 2017, we entered into a U.S. asset-based revolving credit agreement, which was amended in March 2019, amended and restated in May 2022, and further amended and restated in September 2024 (the “Amended ABL Facility”). The Amended ABL Facility provides financing of up to $100.0 million available for borrowings (inclusive of letters of credit), which can be increased up to $250.0 million, subject to certain conditions. The Amended ABL Facility has a five-year term expiring May 2027, was based on a Bloomberg Short-Term Bank Yield Index (“BSBY”) pricing grid, and includes a mechanism to incorporate a sustainability-linked pricing framework with the consent of the required lenders (as defined in the Amended ABL Facility). The BSBY rates were replaced with Term SOFR (Secured Overnight Financing Rate) beginning in November 2024.

As of March 31, 2025, our total availability under the Amended ABL Facility was $68.1 million, with no outstanding borrowings and $2.0 million was used for outstanding letters of credit, resulting in remaining availability of $66.1 million.

Borrowing availability under the Amended ABL Facility is calculated based on eligible U.S. accounts receivable, inventory and composite mats included in the rental fleet, net of reserves and subject to limits on certain of the assets included in the borrowing base calculation. To the extent pledged by the borrowers, the borrowing base calculation also includes the amount of eligible pledged cash. The administrative agent may establish reserves in accordance with the Amended ABL Facility, in part based on appraisals of the asset base, and other limits in its discretion, which could reduce the amounts otherwise available under the Amended ABL Facility.

Under the terms of the Amended ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) the Term SOFR rate (subject to a floor of zero) or (2) the base rate (subject to a floor of zero), equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) Term SOFR for a one-month interest period plus 1.00%, plus, in each case, an applicable margin per annum. The applicable margin ranges from 1.50% to 2.00% per annum for Term SOFR borrowings, and 0.50% to 1.00% per annum for base rate borrowings, based on the consolidated leverage ratio (as defined in the Amended ABL Facility) as of the last day of the most recent fiscal quarter. We are also required to pay a commitment fee equal to (i) 0.375% per annum at any time the average daily unused portion of the commitments is greater than 50% and (ii) 0.25% per annum at any time the average daily unused portion of the commitments is less than 50%.

As of March 31, 2025, the applicable margin for borrowings under the Amended ABL Facility was 1.50% with respect to Term SOFR borrowings and 0.50% with respect to base rate borrowings, and the applicable commitment fee on the unused portion of the Amended ABL Facility was 0.375% per annum.

The Amended ABL Facility is a senior secured obligation of the Company and certain of our U.S. subsidiaries constituting borrowers thereunder, secured by a first priority lien on substantially all of the personal property and certain real property of the borrowers, including a first priority lien on certain equity interests of direct subsidiaries of the borrowers.

The Amended ABL Facility contains customary representations, warranties and covenants that, among other things, and subject to certain specified circumstances and exceptions, restrict or limit the ability of the borrowers and certain of their subsidiaries to incur indebtedness (including guarantees), grant liens, make investments, pay dividends or distributions with respect to capital stock and make other restricted payments, make prepayments on certain indebtedness, engage in mergers or other fundamental changes, dispose of property, and change the nature of their business.

The Amended ABL Facility requires compliance with the following financial covenants: (i) a minimum fixed charge coverage ratio of 1.00 to 1.00 for the most recently completed four fiscal quarters and (ii) a maximum consolidated leverage ratio of 4.00 to 1.00 as of the last day of the most recently completed fiscal quarter.

The Amended ABL Facility includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control.

***Other Financing Arrangements.*** We maintain finance leases primarily related to transportation equipment. During the first quarter of 2025, we entered into $1.2 million of new finance lease liabilities in exchange for leased assets.

In addition, at March 31, 2025, we had $5.9 million in outstanding letters of credit, performance bonds, and other guarantees.

### Critical Accounting Estimates and Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosures. Significant estimates used in preparing our consolidated financial statements include estimated cash flows and fair values used for impairments of long-lived assets, including goodwill and other intangibles, and valuation allowances for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.

For additional discussion of our critical accounting estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024. Our critical accounting estimates and policies have not materially changed since December 31, 2024.

## Market risk

As filed, 1,032 characters.

We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. A discussion of our primary market risk exposure in financial instruments is presented below.

### Interest Rate Risk

We are primarily exposed to interest rate risk through our Amended ABL Facility, which is subject to variable interest rates as determined by the debt agreement. At March 31, 2025, we had no borrowings under our Amended ABL Facility.

### Foreign Currency Risk

Following the Fluids Systems sale in September 2024, our principal foreign operations are currently conducted in the U.K., which contributed approximately 6% of our consolidated revenues for the first quarter of 2025. We have foreign currency exchange risks associated with these operations, which are conducted principally in British pounds. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies.

## Controls and procedures

As filed, 974 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this quarterly report in accordance with Rules 13a-15 and 15d-15 under the Exchange Act. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2025, the end of the period covered by this quarterly report.

### Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 192 characters.

There have been no material changes during the period ended March 31, 2025 to our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.

Filed May 2, 2025.
Source: SEC EDGAR, the filing index for accession 0000071829-25-000041. Last ingested by Listed: Nov 3, 2026, 23:02 ET. No prices; not investment advice.