NPK International Inc.
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 27, 2026
NPKI$8.64+0.2%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-28.
0000071829-25-000012
ITEM 1A. Risk FactorsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-27.
0000071829-26-000009
ITEM 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 121 previous paragraphs and 122 current paragraphs.
84 unchanged; 30 reworded; 8 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
During 2025, approximately 74% of our revenues were derived from our 20 largest customers, of which our three largest customers represented 19%, 15%, and 10%, respectively, of our revenues. Typically, we perform services either under short-term contracts or rental service agreements, and most agreements with our customers are cancellable upon short notice. The loss of one or more of our significant customers could have an adverse effect on our results of operations and financial condition.
Current report
As part of our growth strategy, we seek to diversify our customers with a particular emphasis on penetrating larger-scale, longer-term (six months or longer) projects. We may not be effective in executing this or any other aspect of our growth strategy.
Current report
▪changes in global trade policies, including the termination of trade agreements, the imposition of tariffs on certain imports into the United States, and other regulations affecting trade between the United States and countries in which we conduct business; and
Current report
Risks Related to Manufacturing Capacity Expansion Projects
Current report
As part of our growth strategy, we intend to make investments to expand our composite mat production capacity. Such manufacturing capacity expansion projects may be delayed, interrupted, or otherwise limited due to unexpected cost increases, availability of labor and materials, unforeseen hazards, and other risks associated with construction projects. The costs of these activities could have a negative impact on our results of operations and financial condition.
Current report
In addition, the expected benefits of such future manufacturing operations are subject to a number of risks and uncertainties which could negatively impact our results from operations, including among other items, incorrect assumptions regarding future business activity levels, future per unit manufacturing cost assumptions, including expectations of the cost and availability of raw materials, as well as the diversion of management’s attention from existing operations or other priorities.
Current report
In June 2025, we entered into a U.S. senior secured revolving credit agreement (the “Credit Facility”) with a group of lenders that provides financing of up to $150 million available for borrowings (inclusive of letters of credit), which can be increased up to $250 million, subject to certain conditions. The Credit Facility and the loans made under the Credit Facility are secured by a first priority lien on substantially all of the personal property of the Company and its significant U.S. subsidiaries as guarantors (subject to customary exceptions and exclusions). The Credit Facility will mature in June 2030.
Removed paragraphs (7)
Previous report
Risks Related to our Recently Completed Sale of the Fluids Systems Business
Previous report
On September 13, 2024, we completed the sale of the equity interests in one of our subsidiaries which held substantially all of the Company’s previously operated Fluids Systems business. We are subject to a number of risks associated with the sale of the Fluids Systems business, including risks associated with (i) our requirement to provide certain transition services in connection with the Sale Transaction and any issues, delays or complications in completing such services, including the incurrence of unanticipated costs to complete such services, (ii) the diversion of management’s attention away from the operations of our retained business; and (iii) any required payments of indemnification obligations under the Sale Transaction agreement for retained liabilities.
Previous report
As a result of the Sale Transaction, we may incur or experience various adverse effects, including but not limited to (i) greater costs or realize fewer benefits than anticipated under the Sale Transaction agreement, (ii) operational or commercial difficulties segregating the divested assets from our retained assets, (iii) disputes with the Purchaser regarding the nature and sufficiency of the transition services we provide, (iv) higher vendor costs due to reduced economies of scale or other similar dis-synergies, (v) modified, terminated or scaled back relationships with our existing customers or difficulty in attracting prospective customers, (vi) loss or difficulty in retaining employees due to concerns over future job security or responsibilities, or (vii) losses or increased inefficiencies from stranded or underutilized assets. Any of these risks could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Previous report
For 2024, through the closing date of the Sale Transaction in September 2024, the Fluids Systems business generated approximately 68% of total combined company revenue (72% and 76% for 2023 and 2022, respectively). Accordingly, our future financial results will differ materially from our previous results since our future financial results are dependent solely on our remaining business. Any downturn in our business could have a material adverse effect on our future financial condition, results of operations, and cash flows. There can be no guarantee that the sale of the Fluids Systems business will result in stronger long-term financial and operational results for our remaining business.
Previous report
▪ongoing conflicts in Europe and the Middle East; and
Previous report
▪unanticipated disruptions to our business associated with the implementation of our enterprise-wide operational and financial system; and
Previous report
We primarily fund our ongoing operational needs through a $100 million asset-based revolving credit agreement (the “Amended ABL Facility”). The Amended ABL Facility terminates in May 2027. Borrowing availability under the Amended ABL Facility is calculated based on the level of 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, and accordingly, the total availability under the Amended ABL Facility may fluctuate. 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.
Reworded paragraphs (30)
Previous wording
The following summarizes the most significant risks to our business. In addition to these risks, we are subject to a variety of risks that affect many other companies generally, as well as other risks and uncertainties that are not known to us as of the date of this Annual Report. Our success will depend, in part, on our ability to anticipate and effectively manage these and other risks. Any of these risk factors, either individually or in combination, could have a material adverse effect on our results of operations or financial condition, or prevent us from meeting our profitability or growth objectives. If you hold our securities or are considering an investment in our securities, you should carefully consider the following risks, together with the other information contained in this Annual Report.
Current wording
The following summarizes the most significant risks to our business. In addition to these risks, we are subject to a variety of risks that affect many other companies generally, as well as other risks and uncertainties that are not known to us as of the date of this Annual Report. Our success will depend, in part, on our ability to anticipate and effectively manage these and other risks. Any of these risk factors, either individually or in combination, could have a material adverse effect on our results of operations or financial condition, or prevent us from meeting our profitability or growth objectives. If you hold our securities or are considering an investment in our securities, you should carefully consider the following risks, together with the other information contained in this Annual Report. The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past
Current wording
•obtain necessary levels of rental assets and equipment; and
Previous wording
A substantial portion of our operating income, cash flows, and financial returns are generated from infrastructure construction and maintenance projects, the awarding of which we do not directly control. Infrastructure construction and maintenance historically has experienced cyclical fluctuations and unpredictable changes in project timing due to economic recessions, downturns in business cycles of our customers, material shortages, labor shortages, price increases by subcontractors, interest rate fluctuations and other economic factors beyond our control. When the general level of economic activity deteriorates, our customers may reduce investments in infrastructure construction and maintenance, or delay or cancel planned projects. Many factors, including the financial condition of the industry, could adversely affect our customers and their willingness to fund capital expenditures in the future.
Current wording
A substantial portion of our operating income and cash flows are generated from infrastructure construction and maintenance projects, the awarding of which we do not directly control. Infrastructure construction and maintenance historically has experienced cyclical fluctuations and unpredictable changes in project timing due to economic recessions, downturns in business cycles of our customers, rejection of proposed utility rate increases, project permitting challenges, material or labor shortages, price increases by subcontractors, interest rate fluctuations, the imposition of new or additional tariffs, government shutdowns, and other economic factors beyond our control. When the general level of economic activity deteriorates, our customers may reduce investments in infrastructure construction and maintenance, or delay or cancel planned projects. Many factors, including the financial condition of the industry, could adversely affect our customers and their willingness to fund capital expenditures in the future.
Previous wording
As of December 31, 2024, our property, plant and equipment includes $122.8 million of rental fleet assets, net of accumulated depreciation, including $112.0 million in the United States and $10.8 million in the United Kingdom. Managing our fleet is a critical element to our rental business. Rental equipment asset management requires anticipating customer needs as well as changes in legislation, regulations, and local permitting in the various markets in which we or our customers operate. Our composite matting systems have long economic lives, and we must cost-effectively safeguard and maintain our fleet to maximize the economic life of the products. In addition, as the needs of our customers change, we may incur costs to relocate our assets to better meet shifts in demand. If the distribution of our assets is not aligned with regional demand, we may be unable to take advantage of rental opportunities in certain regions, despite excess inventory in other regions. If we are not able to successfully manage our mat rental fleet, our business, results of operations and financial condition may be materially adversely affected.
Current wording
As of December 31, 2025, our property, plant and equipment includes $163.8 million of rental fleet assets, net of accumulated depreciation, including $138.9 million in the United States and $24.9 million in the United Kingdom. Managing our fleet is a critical element to our rental business. Rental fleet asset management requires anticipating customer needs as well as changes in legislation, regulations, and local permitting in the various markets in which we or our customers operate. Our composite matting systems have long economic lives, and we must cost-effectively safeguard and maintain our fleet to maximize the economic life of the products. In addition, as the needs of our customers change, we may incur costs to relocate our assets to better meet shifts in demand. If the distribution of our assets is not aligned with regional demand, we may be unable to take advantage of rental opportunities in certain regions, or may incur additional costs to relocate assets from other regions. If we are not able to successfully manage our mat rental fleet, our business, results of operations and financial condition may be materially adversely affected.
Previous wording
Our United Kingdom operations generated approximately 6% of our 2024 consolidated revenues, and represented 6% of our total assets at December 31, 2024. A decline or slowed growth in this region could result in reduced demand for our products and services, which may adversely affect our business, results of operations, and financial condition.
Current wording
Our United Kingdom operations generated approximately 7% of our 2025 consolidated revenues and represented 21% of our total assets at December 31, 2025. In November 2025, we completed the acquisition of Grassform Plant Hire Limited (“Grassform”), a U.K. market leader in ground protection and temporary roadway solutions and services, for estimated net consideration of £34.9 ($46.0) million. A decline or slowed growth in this region could result in reduced demand for our products and services, which may adversely affect our business, results of operations, and financial condition.
Previous wording
In addition, international operations are subject to a number of risks and uncertainties which could negatively impact our results from operations, including among others:
Current wording
In addition, international operations are subject to a number of risks and uncertainties, including among others:
Previous wording
These risks and uncertainties may also have the effect of heightening many of the other risks specified in our risk factors or disclosed in our public filings, any of which could materially and adversely affect our business and results of operations. Such risks include, but are not limited to, our customers’ activity levels, spending for our products and services, and their ability to pay amounts owed us that could be impacted by the ability of our customers to access equity or credit markets; the cost and continued availability of borrowed funds; and cybersecurity incidents or business system disruptions.
Current wording
These risks and uncertainties could materially and adversely affect our business and results of operations.
Previous wording
We are exposed to significant health, safety, and environmental risks. Our operations, and those of our customers, are subject to hazards present in the electrical utility industry, such as exposure to wildfires, high voltage electrocution, among other risks, as well as hazards in the oil and natural gas industry, such as fires, explosions, blowouts, oil spills, and leaks or spills of hazardous materials. These incidents as well as accidents or problems in normal operations can cause personal injury or death and damage to property or the environment. From time to time, customers seek recovery for damage to their equipment or property that occurred during the course of our service obligations. Damage to our customers’ property and any related spills of hazardous materials could be extensive if a major problem occurs.
Current wording
We are exposed to significant health, safety, and environmental risks. Our operations, and those of our customers, are subject to hazards present in the electrical utility industry, such as exposure to wildfires and high voltage electrocution, among other risks, as well as hazards in the oil and natural gas industry, such as fires, explosions, blowouts, oil spills, and leaks or spills of hazardous materials. These incidents as well as accidents or problems in normal operations can cause personal injury or death and damage to property or the environment and may result in investigations, litigation, and other legal, regulatory, and reputational risks. From time to time, customers seek recovery for damage to their equipment or property that occurred during the course of our service obligations. Damage to our customers’ property, for example from spills of hazardous materials or plastic materials, such as pellets, from broken mats, could be extensive if a major problem occurs.
Previous wording
Our ability to provide products and services to our customers is dependent upon our ability to obtain raw materials necessary to operate our business. These raw materials may be impacted by periodic supply chain disruptions and, particularly during times of high demand, there may be delays in the arrival of or otherwise constrain our supply of raw materials. These constraints could have a material adverse effect on our business and consolidated results of operations. In addition, price increases, whether as a result of inflation, geopolitical issues, or otherwise, imposed by our vendors for raw materials used in our business and the inability to pass these increases through to our customers could have a material adverse effect on our business and results of operations.
Current wording
Our ability to provide products and services to our customers is dependent upon our ability to obtain raw materials necessary to operate our business. These raw materials may be impacted by periodic supply chain disruptions and, particularly during times of high demand, there may be delays in the supply of raw materials. These constraints could have a material adverse effect on our business and consolidated results of operations. In addition, price increases, whether as a result of inflation, geopolitical issues, changes in global trade policies, including the termination of trade agreements and the imposition of tariffs, or otherwise, imposed by our vendors for raw materials used in our business and the inability to pass these increases through to our customers could have a material adverse effect on our business and results of operations.
Previous wording
Increases in the cost of wages, materials, equipment and other operational components has the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers for our products and services. In addition, inflation has also resulted in higher interest rates, which could cause an increase in the cost of debt borrowing in the future, as well as supply chain shortages, an increase in the costs of labor, currency fluctuations and other similar effects.
Current wording
Increases in the cost of wages, materials, equipment and other operational components has the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers for our products and services. In addition, inflation has also resulted in higher interest rates in recent years, which could cause an increase in the cost of debt borrowing in the future, as well as supply chain shortages, an increase in the costs of labor, currency fluctuations and other similar effects.
Previous wording
Our ability to successfully execute our business strategy will depend, among other things, on our ability to make capital investments and complete acquisitions which provide us with financial benefits and operational synergies. These investments and acquisitions are subject to a number of risks and uncertainties, including:
Current wording
Our ability to successfully execute our business strategy will depend, among other things, on our ability to make capital investments and complete acquisitions which provide us with financial benefits and operational synergies. In November 2025, we completed the acquisition of Grassform. In addition, our capital expenditures in 2026 are expected to range between $45 million to $55 million, exclusive of any manufacturing expansion or future acquisitions. These investments and acquisitions are subject to a number of risks and uncertainties, including:
Previous wording
▪diversion of management’s attention from existing operations or other priorities;
Current wording
▪diversion of management’s attention from existing operations or other priorities; and
Previous wording
Any of the factors above could have an adverse effect on our business, financial condition, or results of operations. Additionally, the anticipated benefits of a capital investment or acquisition may not be realized fully or at all, or may take longer to realize than expected. We may incur substantial indebtedness to make capital investments or finance future acquisitions, and we also may issue equity, debt or convertible securities in connection with any such acquisitions. The use of cash for acquisitions may adversely affect our cash available for capital investments and other uses, the incurrence of additional debt may limit our financial flexibility, and the issuance of additional equity or convertible securities could be dilutive to existing stockholders.
Current wording
Any of the factors above could have an adverse effect on our business, financial condition, or results of operations. Additionally, the anticipated benefits of a capital investment or acquisition may not be realized fully or at all, or may take longer to realize than expected. We may incur substantial indebtedness to make capital investments or finance future acquisitions, and we also may issue equity, debt or other securities in connection with any such acquisitions. The use of cash for acquisitions may adversely affect our cash available for capital investments and other uses, the incurrence of additional debt may limit our financial flexibility, and the issuance of additional equity or other securities could be dilutive to existing stockholders.
Previous wording
We face competition and compete vigorously on product performance and/or price. Many of our competitors provide various forms of worksite access products and services. More recently, several competitors have begun marketing composite products to compete with our DURA-BASE® matting system. In addition, there have been recent acquisitions of certain key competitors that provide temporary worksite access product manufacturing and rentals by larger, well-capitalized companies, potentially heightening this competition.
Current wording
We face competition and compete vigorously on product performance and/or price. Many of our competitors provide various forms of worksite access products and services. More recently, several competitors have begun marketing composite products to compete with our DURA-BASE® matting system. In addition, we compete for rental and services with larger, well-capitalized companies. These larger companies may have greater financial, marketing or other resources than we do, and have broad product and service offerings in addition to worksite access products, and at times, attempt to compete by offering discounts to customers to rent multiple products and services, some of which we do not offer.
Previous wording
While we believe the design and manufacturing quality of our products provide a differentiated value to our customers, many of our competitors seek to compete on pricing. In addition, certain patents related to our DURA-BASE® matting system have expired, and competitors may begin offering mats that include features described in those patents. We have filed additional patent applications on improvements to the structure of, features of, and uses of the DURA-BASE® matting system, but there is no assurance that our competitors will not be able to offer products that are similar to these improvements, features, or uses of the DURA-BASE® matting system.
Current wording
While we believe the design and manufacturing quality of our products provide a differentiated value to our customers, many of our competitors seek to compete on pricing. In addition, certain patents related to our DURA-BASE® matting system have expired, and competitors offer mats that include features described in those patents. We have filed additional patent applications on improvements to the structure of, features of, and uses of the DURA-BASE® matting system, but there is no assurance that our competitors will not be able to offer products that are similar to these improvements, features, or uses of the DURA-BASE® matting system.
Previous wording
We have significant operations located in market areas that are negatively impacted by severe adverse weather events or natural disasters. A potential result of climate change is more frequent or more severe weather events or natural disasters. To the extent such weather events or natural disasters become more frequent or severe, disruptions to our business and costs to repair damaged facilities could increase.
Current wording
We have significant operations located in market areas that are periodically impacted by severe adverse weather events or natural disasters. To the extent such weather events or natural disasters become more frequent or severe (including as a result of climate change), disruptions to our business and costs to repair damaged facilities could increase.
Previous wording
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 certain financial covenants, 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.
Current wording
The Credit Facility contains various customary representations, warranties and covenants that, among other things and subject to certain specified circumstances and exceptions, restrict or limit the ability of the Company and its subsidiaries to incur indebtedness (including guarantees), grant liens, make investments, pay dividends or distributions with respect to capital stock or make other restricted payments, make prepayments on other indebtedness, engage in mergers or other fundamental changes, dispose of property, or change the nature of their business.
Previous wording
If we fail to comply with the various covenants and other requirements of the Amended ABL Facility, we would be in default thereunder, which would permit the holders of the indebtedness to accelerate the maturity thereof and proceed against their collateral. The acceleration of any of our indebtedness and the election to exercise any remedies could have a material adverse effect on our business and financial condition and we may not be able to make all of the required payments or borrow sufficient funds to refinance such indebtedness.
Current wording
If we fail to comply with the various covenants and other requirements of the Credit Facility, we would be in default thereunder, which would permit the holders of the indebtedness to accelerate the maturity thereof and proceed against their collateral. The acceleration of any of our indebtedness and the election to exercise any remedies could have a material adverse effect on our business and financial condition and we may not be able to make all of the required payments or borrow sufficient funds to refinance such indebtedness.
Previous wording
We are responsible for complying with numerous federal, state, local, and foreign laws, regulations and policies that govern environmental protection, zoning and other matters applicable to our current and past business activities, including the activities of our former subsidiaries. Failure to remain compliant with these laws, regulations and policies may result in, among other things, fines, penalties, costs, investigation and/or cleanup of contaminated sites and site closure obligations, costs of remedying noncompliance, termination or suspension of certain operations, or other expenditures. We could be exposed to strict, joint and several liability for cleanup costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. Private parties may also pursue legal actions against us based on alleged non-compliance with or liability under certain of these laws, rules and regulations.
Current wording
We are subject to federal, state, local, and foreign laws, regulations and policies that govern environmental protection, zoning and other matters applicable to our current and past business activities, including the activities of our former subsidiaries. Failure to remain compliant with these evolving laws, regulations and policies or to maintain compliance with permits obtained under such legal and regulatory schemes may result in, among other things, sanctions, fines, penalties, criminal prosecution, imposition of costs, investigatory and/or remedial or corrective actions relating to contaminated sites and site closure obligations, costs of remedying noncompliance, termination or suspension of certain operations, or other expenditures. We could be exposed to strict, joint and several liability for remediation or cleanup costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. Private parties may also pursue legal actions against us based on spills of hazardous materials or plastic materials, such as pellets, from broken mats, or alleged non-compliance with or liability under certain of these laws, rules and regulations.
Previous wording
The continued expansion of revenues in end-markets that are likely to benefit from increasing demand from electricity, such as power transmission and renewable energy, remains a strategic priority going forward, and we anticipate that our capital investments will primarily focus on supporting this objective. However, any changes in the current legal and regulatory environment could impact industry activity and the demand for our products and services, the scope of products and services that we provide, or our cost structure required to provide our products and services, or the costs incurred by our customers. It is unclear whether initiatives from federal, state, and local legislative bodies and administrative agencies, when implemented, will have a material adverse effect on the demand for our products and services.
Current wording
The continued expansion of operations in markets that are likely to benefit from increasing demand from electricity, such as power transmission and renewable energy, remains a strategic priority going forward, and we anticipate that our capital investments will primarily focus on supporting this objective. However, any changes in the current legal and regulatory environment could impact industry activity and the demand for our products and services, the scope of products and services that we provide, or our cost structure required to provide our products and services, or the costs incurred by our customers. It is unclear whether initiatives from federal, state, and local legislative bodies and administrative agencies, when implemented, will have a material adverse effect on the demand for our products and services and the costs of our operations.
Previous wording
There have also been efforts in recent years to influence the investment community, including investment advisors and certain sovereign wealth, pension and endowment funds, promoting divestment of fossil fuel equities and pressuring lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. Such environmental activism and initiatives aimed at limiting climate change and reducing air pollution could interfere with our business activities, operations, and ability to access capital. Furthermore, some members of the investment community have increased their focus on Environmental, Social, and Governance (“ESG”) practices and disclosures by public companies in recent years. Concerns over climate change have resulted in, and are expected to continue to result in, the adoption of regulatory requirements for climate-related disclosures, which could increase our compliance burden and costs. As a result, we may continue to face increasing pressure regarding our ESG disclosures and practices. We have published and may continue to publish a Sustainability Report, which outlines our progress and ongoing efforts to advance our ESG initiatives. Our disclosures on these matters rely on management’s expectations as of the date the statements are first made, as well as standards for measuring progress that are still in development and may change or fail to be realized. These expectations and standards may continue to evolve. If our ESG disclosures and practices do not meet regulatory, investor or other stakeholder expectations and standards, which continue to evolve, it could have a material adverse effect on our business or demand for our services.
Current wording
There have also been efforts in recent years to influence the investment community, including investment advisors and certain sovereign wealth, pension and endowment funds, promoting divestment of fossil fuel equities and pressuring lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. Such environmental activism and initiatives aimed at limiting climate change and reducing air pollution could interfere with our business activities, operations, and ability to access capital. Furthermore, some members of the investment community, customers, administrative agencies and other stakeholders have increased their focus on sustainability practices and disclosures by public companies in recent years, and we may face increasing pressure regarding our sustainability disclosures and practices. We have published and may continue to publish a Sustainability Report, which outlines our various initiatives. Our disclosures on these matters rely on management’s expectations as of the date the statements are first made, as well as standards for measuring progress that are still in development and may change or fail to be realized. These expectations and standards may continue to evolve. We may be unable to satisfy all of our stakeholders, who hold varied perspectives on these topics. If our sustainability disclosures and practices do not meet regulatory, investor or other stakeholder expectations and standards, which continue to evolve and may conflict, we could become the target of litigation, investigations or other proceedings, and it could have a material adverse effect on our business or demand for our services.
Previous wording
In addition, our ability to continue to obtain insurance coverage on commercially reasonable terms is dependent upon a variety of factors impacting the insurance industry in general, which are outside our control. Any of the issues noted above, including insurance cost increases, uninsured or underinsured claims, or the inability of an insurance carrier to meet their financial obligations could have a material adverse effect on our business.
Current wording
In addition, our ability to continue to obtain insurance coverage on commercially reasonable terms is dependent upon a variety of factors impacting the insurance industry in general, including a recent rise in exceptionally high jury awards for auto-related claims, which are outside our control. Any of the issues noted above, including insurance cost increases, uninsured or underinsured claims, or the inability of an insurance carrier to meet their financial obligations could have a material adverse effect on our business.
Previous wording
Our future effective tax rates could be adversely affected by changes in tax laws, both domestically and internationally, or the interpretation or application thereof. From time to time, U.S. and foreign tax authorities, including state and local governments, consider legislation that could increase our effective tax rate. Additionally, longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international trade are subject to potential evolution. For example, the Organization for Economic Co-operation and Development (“OECD”), a global coalition of member countries, proposed a two-pillar plan to reform international taxation. The proposals aim to ensure a fairer distribution of profits among countries and to impose a floor on tax competition through the introduction of a global minimum tax. If such changes to tax laws are enacted, our profitability could be negatively impacted.
Current wording
Our future effective tax rates could be adversely affected by changes in tax laws, both domestically and internationally, or the interpretation or application thereof. From time to time, U.S. and foreign tax authorities, including state and local governments, consider legislation that could increase our effective tax rate or accelerate the timing of our required payments of tax obligations. While we cannot predict the impact to our income taxes of future tax legislation, guidance, or interpretations, if such changes are enacted, our profitability could be negatively impacted.
Previous wording
We utilize various management information systems and information technology infrastructure to manage or support a variety of our business operations, as well as the operations of our recently-divested Fluids Systems business, and to maintain various records, which may include confidential business or proprietary information as well as information regarding our customers, business partners, employees or other third parties. We also utilize third-party vendors and their systems and technology to support our business activities, including secure processing of confidential, sensitive, proprietary and other types of information. Failures of or interference with access to these systems, such as communication disruptions, could have an adverse effect on our ability to conduct operations or directly impact financial reporting.
Current wording
We utilize various management information systems and information technology infrastructure to manage or support our business operations and to maintain various records, which may include confidential business or proprietary information as well as information regarding our customers, business partners, employees or other third parties. We also utilize third-party vendors and their systems and technology to support our business activities, including the secure processing of confidential, sensitive, proprietary and other types of information. Failures of or interference with access to these systems, such as communication disruptions, could have an adverse effect on our ability to conduct operations or directly impact financial reporting.
Previous wording
In addition, our information systems and information technology infrastructure are subject to security threats and sophisticated cyber-based attacks, including, but not limited to, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering, or physical breaches, that can cause deliberate or unintentional damage, destruction or misuse, manipulation, denial of access to or disclosure of confidential or important information or intellectual property. A failure of or breach in our information systems and information technology infrastructure, or those of our third-party vendors, could expose us and our employees, customers, and suppliers to risks of misuse of information or systems, transaction errors, the compromise of confidential information, manipulation and destruction of data, the loss of sales and customers and operations disruptions.
Current wording
In addition, our information systems and information technology infrastructure are subject to security threats and increasingly sophisticated cybersecurity incidents, including, but not limited to, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering or physical breaches, including cyber-based attacks that may leverage artificial intelligence technologies to increase speed, scale, or effectiveness. These cybersecurity incidents can cause deliberate or unintentional damage, destruction, misuse, manipulation, alteration, corruption, loss, denial of access to or disclosure of confidential or important data or systems, which could expose us and our employees, customers, and suppliers to risks, such as transaction errors, compromise or loss of confidential information, loss of sales and customers, operational disruptions and other adverse business impacts. A cybersecurity incident affecting third-party vendors, service providers, or other third parties on whom we rely could adversely affect our information systems or the confidentiality, integrity, or availability of our data, even if our own systems are not directly compromised.
Previous wording
There can be no assurance that security incidents will not occur. In addition, there can be no assurance that the policies and procedures we or our third-party vendors have in place, including system monitoring and data back-up processes, to prevent or mitigate the effects of these potential disruptions or incidents will be sufficient to prevent, detect and limit the impact of disruptions or incidents. Even when an incident has been detected, it is not always immediately apparent what the full nature and scope of any potential harm may be, or how best to remediate it. We invest in security technology, perform penetration tests from time to time, and design our business processes to attempt to mitigate the risk of such incidents. Our processes require continuous monitoring as technologies change and efforts to overcome security measures evolve. We obtain cybersecurity insurance, though costs related to a cyber-based attack may exceed the amount of insurance coverage or be excluded under the terms of our cybersecurity insurance policy. In addition, as cyber-based attacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts or on terms we view as appropriate for our operations.
Current wording
There can be no assurance that cybersecurity incidents will not occur. In addition, there can be no assurance that the policies and procedures we or our third-party vendors have in place, including system monitoring and data back-up processes, to prevent or mitigate the effects of these potential disruptions or cybersecurity incidents will be sufficient to prevent, detect and limit the impact of disruptions or incidents. Even when a cybersecurity incident has been detected, it may not be immediately apparent what the full nature, scope and potential impact may be, or how best to mitigate its effects or remediate it. We invest in security technology, perform penetration and vulnerability tests from time to time, and design our business processes to attempt to mitigate the risk of such incidents. Our processes require continuous monitoring as technologies change and efforts to overcome security measures evolve. We maintain cybersecurity insurance; however, losses related to a cyberattack or other cybersecurity incident may exceed the scope or limits of such coverage or may not be covered under the terms of our cybersecurity insurance policy. In addition, as cyberattacks and other cybersecurity incidents increase in frequency and magnitude, including as threat actors increasingly leverage artificial intelligence technologies, we may be unable to obtain cybersecurity insurance in amounts or on terms we view as appropriate for our operations.
Previous wording
On October 29, 2024, we experienced a ransomware cybersecurity incident, and we expect such cybersecurity threats and incidents involving our systems and third-party systems to continue. While none of the cybersecurity events have been material to date, a successful breach or attack could have a material negative impact on our operations or business reputation, harm our reputation and relationships with our customers, business partners, employees or other third parties, and subject us to consequences such as litigation and direct costs associated with incident response. These risks could have a material adverse effect on our business, results of operations, and financial condition.
Current wording
We have experienced a ransomware incident in the past, and we expect cybersecurity threats and attacks involving our systems, data and the third-party systems upon which we rely to continue. While no cybersecurity incidents have materially impacted our business to date, a successful breach or attack could have a material negative impact on our operations, business reputation, financial conditions and relationships with our customers, business partners, employees or other third parties, and could subject us to consequences such as regulatory inquiries and enforcement actions, litigation, contractual liability and direct and indirect costs associated with incident response, remediation, notification obligations, loss of revenue and reputational harm. These risks could have a material adverse effect on our business, results of operations, and financial condition.
Previous wording
Risks Related to Complications with the Design or Implementation of Our Updated Enterprise Resource Planning System
Current wording
Risks Related to Complications with the Design or Implementation of Our Updated Enterprise Resource Planning (“ERP”) System
Previous wording
We rely extensively on information systems and technology to manage our business and summarize operating results. We are in the process of a multi-year phased upgrade to our digital capabilities, including replacing our enterprise resource planning ("ERP") system to enhance operating efficiencies and transitioning to a cloud-based platform. The ERP system implementation update and cloud-based platform transition will require the training of personnel, migration of data, and the execution of certain new processes and procedures. We may be unable to successfully implement the updated ERP system or the new cloud-based platform without experiencing delays, increased costs and other difficulties. If we do not effectively manage the implementation or the resources necessary to build and sustain the upgraded technology infrastructure, or if we fail to achieve the expected benefits from this enhancement or it does not operate as designed, our business and operations could be adversely affected. Additionally, if we do not effectively implement the updated ERP system as planned or the updated ERP system does not operate as intended, the effectiveness of our internal control over financial reporting and disclosure controls and procedures could be adversely affected or our ability to assess those controls adequately could be delayed.
Current wording
We rely extensively on information systems and technology to manage our business and summarize operating results. We are in the process of a multi-year phased upgrade to our digital capabilities and have recently transitioned the majority of our operational and financial processes to a cloud-based ERP platform. The ongoing ERP system implementation and transition requires the training of personnel and the development and execution of certain new processes and procedures. We may be unable to successfully implement the new cloud-based ERP platform without experiencing delays, increased costs and other difficulties with certain processes. If we do not effectively manage the implementation or the resources necessary to build and sustain the upgraded technology infrastructure, or if we fail to achieve the expected benefits from this enhancement or it does not operate as designed, our business and operations could be adversely affected. Additionally, if we do not effectively implement the updated ERP system as planned or the updated ERP system does not operate as intended, the effectiveness of our internal control over financial reporting and disclosure controls and procedures could be adversely affected or our ability to assess those controls adequately could be delayed.
Previous wording
We have been the subject of campaigns by activist stockholders and may continue to be so in the future. Such activist stockholders may engage in proxy solicitations, advance stockholder proposals, or otherwise attempt to affect changes or acquire control over our company. Campaigns by stockholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming and could divert the attention of our Board of Directors and senior management from the management of our operations and the pursuit of our business strategies. As a result, stockholder campaigns could adversely affect our results of operations and financial condition.
Current wording
We have been the subject of campaigns by activist stockholders in the past and may continue to be so in the future. Such activist stockholders may engage in proxy solicitations, advance stockholder proposals, or otherwise attempt to affect changes or acquire control over our company. Campaigns by stockholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming and could divert the attention of our Board of Directors and senior management from the management of our operations and the pursuit of our business strategies. As a result, stockholder campaigns could adversely affect our results of operations and financial condition.