NPK International Inc.

Previous wording

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, 2025. Our second quarter represents the three-month period ended June 30 and our first half represents the six-month period ended June 30. 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.”

Current wording

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, 2025. Our third quarter represents the three-month period ended September 30 and our first nine months represents the nine-month period ended September 30. 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.”

Previous wording

NPK International Inc. (“NPK,” the “Company,” “we,” “our,” or “us”) is a 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 half of 2026, 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 half of 2026 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.

Current wording

NPK International Inc. (“NPK,” the “Company,” “we,” “our,” or “us”) is a 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. For the first nine months of 2026, 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 nine months of 2026 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.

Previous wording

•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. As part of this effort, we have placed a particular emphasis on penetrating larger-scale, longer-term (six months or longer) projects, which we believe will help drive improvements in revenue stability and operational efficiency. Due in part to the success of our efforts, rental and service revenues increased $16 million, or 18%, year-over-year for the first half of 2026, including a 22% increase in rental revenues. We prioritize investment capital to support our organic growth 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 half of 2026, we made net investments of $24.3 million in the expansion of our composite rental fleet, expanding our owned composite mat rental fleet by 7%. Further, with our revenue growth and the favorable macro-environment, in March 2026, our Board of Directors approved management’s plan to expand our composite mat production capacity by approximately 50% over current levels. We expect to invest $40 million to $45 million through the second quarter of 2027 to complete this expansion, of which $4.1 million was invested in the second quarter of 2026, with production expected to start up by mid-2027.

Current wording

To support our organic growth objective, we prioritize investments to expand our rental mat fleet, where over the past several years, we have seen the strong market adoption. During the first nine months of 2026, we made net investments of $27.0 million in the expansion of our rental fleet, expanding the rental fleet by approximately 10%. Further, with our revenue growth and the favorable macro-environment, in March 2026, our Board of Directors approved management’s plan to expand our composite mat production capacity by approximately 50% over current levels. We expect to invest $40 million to $45 million through the second quarter of 2027 to complete this expansion, of which $10.5 million was invested in the first nine months of 2026, with production expected to start up by mid-2027.

Previous wording

•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, and we continually evaluate inorganic opportunities that align with our objectives. 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 with a fleet of over 20,000 composite mats. Our U.K. operations generated $19.2 million of revenues during the first half of 2026, a $10.2 million increase over the first half of 2025, with the substantial majority of the increase driven by the Grassform acquisition.

Current wording

•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, and we continually evaluate inorganic opportunities that align with our objectives. 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 with a fleet of over 20,000 composite mats. Our U.K. operations generated $28.5 million of revenues during the first nine months of 2026, a $16.1 million increase over the first nine months of 2025, with the substantial majority of the increase driven by the Grassform acquisition.

Previous wording

•Drive Operational Efficiency – We are focused on efficiency improvements and operating cost optimization across every aspect of our business. Throughout 2025, we continued to evaluate and execute actions intended to streamline the organization and our cost structure, driving improvements in profitability. SG&A as a percentage of revenues was 17.5% for the first half of 2026 compared to 19.1% for the first half of 2025.

Current wording

•Drive Operational Efficiency – We are focused on efficiency improvements and operating cost optimization across every aspect of our business. Throughout 2025 and 2026, we continued to evaluate and execute actions intended to streamline the organization and our cost structure, driving improvements in profitability. SG&A as a percentage of revenues was 18.1% for the first nine months of 2026 compared to 19.2% for the first nine months of 2025. SG&A for the first nine months of 2026 includes approximately $1.2 million in severance and related costs associated with the third quarter 2026 executive leadership transition, a $0.9 million charge reflecting the acceleration of compensation expense for awards for retirement eligible executive officers and other employees, as well as $0.8 million in strategic planning, diligence, and acquisition-related costs.

Previous wording

•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. During the first half of 2026, we utilized $2.7 million to repurchase 0.2 million shares under our share repurchase program.

Current wording

•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. During the first nine months of 2026, we utilized $16.1 million to repurchase 1.2 million shares under our share repurchase program.

Previous wording

Summarized results of operations for the second quarter of 2026 compared to the second quarter of 2025 are as follows:

Current wording

Summarized results of operations for the third quarter of 2026 compared to the third quarter of 2025 are as follows:

Previous wording

Revenues increased 20% to $81.6 million for the second quarter of 2026, compared to $68.2 million for the second quarter of 2025, including a 16% increase in rental and service revenues and a 28% increase in product sales revenues. Rental revenues increased $5.6 million (18%), primarily due to higher pricing along with the contribution from the Grassform acquisition. Service revenues increased $1.7 million (12%), primarily attributable to the contribution from the Grassform acquisition. Product sales revenues increased $6.1 million (28%), reflecting continued strength in customer adoption of manufactured composite matting products relative to timber-based products that represent the primary solution used for worksite access in the market. During the second quarter of 2026, approximately 75% of our product sales revenues were derived from utility companies.

Current wording

Revenues increased 11% to $76.3 million for the third quarter of 2026, compared to $68.8 million for the third quarter of 2025, including a 12% increase in rental and service revenues and a 9% increase in product sales revenues. Rental revenues increased $2.2 million (8%), including the contribution from the Grassform acquisition ($3 million). Within the base business (excluding acquisition impact), rental volume declined ($3 million) due to the impact of exceptionally dry weather in Texas, which negatively impacted matting demand. This was partially offset by higher pricing ($2 million). Service revenues increased $3.0 million (21%), primarily attributable to the timing of rental project demobilization activities as well as the contribution from the Grassform acquisition ($1 million). Product sales revenues increased $2.2 million (9%), reflecting continued strength in customer adoption of manufactured composite matting products relative to timber-based products that represent the primary solution used for worksite access in the market.

Previous wording

Cost of revenues increased 19% to $51.4 million for the second quarter of 2026 (37.0% gross profit margin), compared to $43.1 million for the second quarter of 2025 (36.9% gross profit margin), primarily driven by the 20% increase in revenues described above. Gross profit margin was substantially in line with the prior year, and reflects the effect of improved rental pricing and manufacturing cost leverage for product sales, substantially offset by lower rental fleet utilization attributable to the timing of large-scale projects, and $0.2 million of expenses associated with our manufacturing expansion effort.

Current wording

Cost of revenues increased 12% to $52.4 million for the third quarter of 2026 (31.3% gross profit margin), compared to $46.9 million for the third quarter of 2025 (31.9% gross profit margin), primarily driven by the 11% increase in revenues described above. Gross profit for rental and service activities remained in line with prior year, reflecting the higher revenues largely offset by increased costs associated with the expanding rental fleet and the impact of the Grassform acquisition. Gross profit for product sales increased $2 million, reflecting higher sales volume along with manufacturing cost leverage.

Previous wording

Foreign currency exchange for the second quarter of 2026 and 2025 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.

Current wording

Foreign currency exchange for the third quarter of 2026 and 2025 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.

Previous wording

The provision for income taxes from continuing operations was $3.9 million for the second quarter of 2026, reflecting an effective tax rate of 25%, compared to income taxes of $3.5 million for the second quarter of 2025, reflecting an effective tax rate of 28%.

Current wording

The provision for income taxes from continuing operations was $2.3 million for the third quarter of 2026, reflecting an effective tax rate of 26%, compared to income taxes of $3.0 million for the third quarter of 2025, reflecting an effective tax rate of 33%.

Previous wording

Income (loss) from discontinued operations, net of tax

Current wording

Loss from discontinued operations, net of tax

Previous wording

Summarized results of operations for the first half of 2026 compared to the first half of 2025 are as follows:

Current wording

Summarized results of operations for the first nine months of 2026 compared to the first nine months of 2025 are as follows:

Previous wording

Revenues increased 18% to $156.7 million for the first half of 2026, compared to $133.0 million for the first half of 2025, including an 18% increase in both rental and service revenues and product sales revenues. Rental revenues increased $13.1 million (22%) primarily due to higher rental volume driven by our organic growth efforts along with the contribution from the Grassform acquisition, as well as modestly higher pricing. Service revenues increased $2.7 million (9%), primarily attributable to the contribution from the Grassform acquisition. Product sales revenues increased $7.8 million (18%), reflecting continued strength in customer adoption of manufactured composite matting products relative to timber-based products that represent the primary solution used for worksite access in the market. During the first half of 2026, approximately 75% of our product sales revenues were derived from utility companies.

Current wording

Revenues increased 15% to $232.9 million for the first nine months of 2026, compared to $201.8 million for the first nine months of 2025, including a 16% increase in rental and service revenues and a 15% increase in product sales revenues. Rental revenues increased $15.3 million (17%), including the contribution from the Grassform acquisition ($11 million). Within the base business (excluding acquisition impact), higher pricing ($6 million) was partially offset by lower rental volume ($2 million) following the completion of multiple large-scale projects completed in the second quarter of 2026, along with the impact of exceptionally dry weather in Texas, which negatively impacted matting demand during the third quarter of 2026. Service revenues increased $5.8 million (13%), primarily attributable to the contribution from the Grassform acquisition. Product sales revenues increased $10.0 million (15%), reflecting continued strength in customer adoption of manufactured composite matting products relative to timber-based products that represent the primary solution used for worksite access in the market. We sold approximately 32,000 mats during the first nine months of 2026, compared to approximately 30,000 mats during the first nine months of 2025, along with higher sales of ancillary products. During the first nine months of 2026, the majority of our product sales revenues were derived from utility companies.

Previous wording

Selling, general and administrative expenses increased to $27.4 million for the first half of 2026, which includes $1.3 million attributable to the Grassform acquisition, compared to $25.4 million for the first half of 2025. Selling, general and administrative expenses as a percentage of revenues was 17.5% for the first half of 2026 compared to 19.1% for the first half of 2025. The first half of 2026 includes a $0.9 million charge reflecting the acceleration of stock-based compensation expense for retirement eligible executive officers and other employees. The first half of 2025 included a $1.2 million charge related to performance-based awards measured on the Company’s TSR as compared to the TSR of a designated peer group, as well as $0.4 million of severance costs.

Current wording

Selling, general and administrative expenses increased to $42.1 million for the first nine months of 2026, which includes $2.0 million attributable to the Grassform acquisition, compared to $38.7 million for the first nine months of 2025. Selling, general and administrative expenses as a percentage of revenues was 18.1% for the first nine months of 2026 compared to 19.2% for the first nine months of 2025. SG&A for the first nine months of 2026 includes approximately $1.2 million in severance and related costs associated with the executive leadership transition, a $0.9 million charge reflecting the acceleration of compensation expense for awards for retirement eligible executive officers and other employees, as well as $0.8 million in strategic planning, diligence, and acquisition-related costs. The first nine months of 2025 included $1.5 million in elevated costs related to performance-based incentives, $0.5 million in costs associated with strategic planning projects and our ERP implementation, and $0.4 million of severance costs.

Previous wording

Foreign currency exchange for the first half of 2026 and 2025 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.

Current wording

Foreign currency exchange for the first nine months of 2026 and 2025 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.

Previous wording

The provision for income taxes from continuing operations was $7.5 million for the first half of 2026, reflecting an effective tax rate of 25%, compared to income taxes of $7.0 million for the first half of 2025, reflecting an effective tax rate of 27%.

Current wording

The provision for income taxes from continuing operations was $9.8 million for the first nine months of 2026, reflecting an effective tax rate of 25%, compared to income taxes of $10.0 million for the first nine months of 2025, reflecting an effective tax rate of 28%.

Previous wording

Income (loss) from discontinued operations, net of tax reflects net costs related to the former Fluids Systems segment, which was sold in the third quarter of 2024. In the first half of 2026, we recognized a $0.5 million pre-tax gain on sale related to the resolution of certain contractual indemnifications related to the Sale Transaction, which was partially offset by costs associated with the transaction as well as the closure of certain foreign subsidiaries that are no longer operational.

Current wording

Loss from discontinued operations, net of tax reflects net costs related to the former Fluids Systems segment, which was sold in the third quarter of 2024. In the first nine months of 2026, we recognized a $0.5 million pre-tax gain on sale related to the resolution of certain contractual indemnifications related to the Sale Transaction, which was offset by costs associated with the transaction as well as the closure of certain foreign subsidiaries that are no longer operational.

Previous wording

Net cash provided by operating activities was $43.0 million for the first half of 2026 compared to $30.3 million for the first half of 2025. Net income adjusted for non-cash items provided cash of $47.9 million in the first half of 2026, compared to $38.2 million in 2025, while changes in working capital used cash of $4.9 million in the first half of 2026, compared to $7.9 million of cash used in 2025.

Current wording

Net cash provided by operating activities was $50.1 million for the first nine months of 2026 compared to $55.0 million for the first nine months of 2025. Net income adjusted for non-cash items provided cash of $66.4 million in the first nine months of 2026, compared to $54.3 million in 2025, while changes in working capital used cash of $16.2 million in the first nine months of 2026, compared to $0.7 million of cash provided in 2025. The 2026 increase in working capital is primarily attributable to the increase in receivables and inventories associated with the growth of the business, along with specific timing of customer transactions or the deployment of inventory into our rental fleet.

Previous wording

Net cash used in investing activities was $26.7 million for the first half of 2026, which includes $33.2 million in capital expenditures partially offset by $5.5 million in additional proceeds from the sale of the Fluids Systems business. The substantial majority of our capital expenditures for the first half of 2026 and 2025 were directed to expanding our mat rental fleet, and 2026 includes $4.1 million spent on the expansion of our Carencro, Louisiana manufacturing operations. Net cash used in investing activities was $0.8 million for the first half of 2025, which includes $21.7 million in capital expenditures partially offset by $14.5 million in additional proceeds from the sale of the Fluids Systems business and $3.3 million in proceeds from the sale of assets.

Current wording

Net cash used in investing activities was $38.8 million for the first nine months of 2026, which includes $45.5 million in capital expenditures partially offset by $5.5 million in additional proceeds from the sale of the Fluids Systems business, $1.8 million in proceeds from sales of assets, and $0.6 million cash paid for other investing activities. Net cash used in investing activities was $13.0 million for the first nine months of 2025, which includes $34.4 million in capital expenditures partially offset by $14.5 million in additional proceeds from the sale of the Fluids Systems business, $3.8 million in proceeds from the sale of assets, and $3.1 million in proceeds from other investing activities. The substantial majority of our capital expenditures for the first nine months of 2026 and 2025 were directed to expanding our mat rental fleet, along with $10.5 million spent on the expansion of our Carencro, Louisiana manufacturing operations in 2026.

Previous wording

Net cash used in financing activities was $13.1 million for the first half of 2026, which primarily reflects net repayments on our Credit Facility and other existing financing arrangements as well as $2.7 million in share purchases under our repurchase program. Net cash used in financing activities was $21.8 million for the first half of 2025.

Current wording

Net cash used in financing activities was $12.2 million for the first nine months of 2026, which primarily reflects $19.3 million in purchases of treasury stock, which were primarily funded through $10.6 million of net borrowings on our Credit Facility. Net cash used in financing activities was $24.6 million for the first nine months of 2025, primarily reflecting $22.7 million in purchases of treasury stock.

Previous wording

We expect future working capital requirements for our operations will generally fluctuate directionally with revenues, and we expect net capital expenditures in 2026 to be $65 million to $80 million, which includes $35 million to $45 million in the expansion of our rental fleet and $20 million to $25 million for the manufacturing expansion project. Our planned capital expenditures for 2026 were reduced in the second quarter of 2026, primarily reflecting changes in the timing of manufacturing expansion expenditures which will not impact our anticipated mid-year 2027 completion date. We also expect to use a portion of our existing liquidity to pursue inorganic growth opportunities and return value to our shareholders through share repurchases. We expect cash on hand and cash generated by operations, as well as the projected availability under our Credit Facility and other existing financing arrangements, to be adequate to fund our current operations during the next 12 months.

Current wording

We expect future working capital requirements for our operations will generally fluctuate directionally with revenues, and we expect net capital expenditures in 2026 to be $70 million to $75 million, which includes $40 million to $45 million invested to expand our rental fleet and approximately $20 million for the manufacturing expansion. We also expect to use a portion of our existing liquidity to pursue inorganic growth opportunities and return value to our shareholders through share repurchases. We expect cash on hand and cash generated by operations, as well as the projected availability under our Credit Facility and other existing financing arrangements, to be adequate to fund our current operations during the next 12 months.

Previous wording

As of June 30, 2026, we had no outstanding borrowings and $1.9 million in outstanding letters of credit, resulting in $148.1 million of remaining availability under the Credit Facility.

Current wording

As of September 30, 2026, we had $15.9 million outstanding borrowings and $1.9 million in outstanding letters of credit, resulting in $132.2 million of remaining availability under the Credit Facility.

Previous wording

As of June 30, 2026, the applicable margin for loans under the Credit Facility was 1.75% for Term SOFR loans and 0.75% for alternate base rate loans, and the applicable commitment fee was 0.25% per annum.

Current wording

As of September 30, 2026, the applicable margin for loans under the Credit Facility was 1.75% for Term SOFR loans and 0.75% for alternate base rate loans, and the applicable commitment fee was 0.25% per annum. As of September 30, 2026, the weighted average interest rate for the Credit Facility was 6.5%.

Previous wording

Other Financing Arrangements. We maintain finance leases primarily related to transportation equipment. During the first half of 2026, we entered into $1.5 million of new finance lease liabilities in exchange for leased assets.

Current wording

Other Financing Arrangements. We maintain finance leases primarily related to transportation equipment. During the first nine months of 2026, we entered into $2.9 million of new finance lease liabilities in exchange for leased assets.