NPKI 10-K & 10-Q changes, risk factors and insider trading

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 Risks in this section are grouped in the following categories: (1) Business and Industry Risks; (2) Indebtedness Risks; (3) Legal and Regulatory Risks; (4) Financial Risks; and (5) General Risks. Many risks affect more than one category, and the risks are not in order of significance or probability of occurrence because they have been grouped by categories.

•obtain necessary levels of rental assets and equipment; and

A substantial portion of our operating income,income and cash flows, and financial returnsflows 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 shortages,or labor shortages, price increases by subcontractors, interest rate fluctuationsfluctuations, 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.

Our customers may also seek to implement measures aimed at greater cost savings, which may include the acceptance of lesser quality products and services in order to improve short termshort-term cost efficiencies as opposed to total cost efficiencies. The utilization of these kinds of cost saving measures by our customers could reduce the demand or pricing for our products and services and have a material adverse effect on our business, financial condition, and results of operations.

As of December 31, 2024,2025, our property, plant and equipment includes $122.8$163.8 million of rental fleet assets, net of accumulated depreciation, including $112.0$138.9 million in the United States and $10.8$24.9 million in the United Kingdom. Managing our fleet is a critical element to our rental business. Rental equipmentfleet 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, despiteor excessmay inventoryincur inadditional 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.

Our United Kingdom operations generated approximately 6%7% of our 20242025 consolidated revenues,revenues and represented 6%21% of our total assets at December 31, 2024.2025. 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.

In addition, international operations are subject to a number of risks and uncertainties which could negatively impact our results from operations,uncertainties, including among others:

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,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.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’ propertyproperty, andfor anyexample relatedfrom spills of hazardous materials or plastic materials, such as pellets, from broken mats, could be extensive if a major problem occurs.

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, 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.

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,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.

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:

▪diversion of management’s attention from existing operations or other priorities; and

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 convertibleother 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 convertibleother securities could be dilutive to existing stockholders.

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, therewe compete for rental and services with larger, well-capitalized companies. These larger companies may have beengreater recentfinancial, acquisitionsmarketing ofor certainother keyresources competitorsthan thatwe providedo, temporaryand have broad product and service offerings in addition to worksite access product manufacturingproducts, and rentalsat times, attempt to compete by larger,offering well-capitalizeddiscounts companies,to potentiallycustomers heighteningto thisrent competition.multiple products and services, some of which we do not offer.

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 offeringoffer 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.

We have significant operations located in market areas that are negativelyperiodically 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,severe (including as a result of climate change), disruptions to our business and costs to repair damaged facilities could increase.

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

If we fail to comply with the various covenants and other requirements of the Amended ABLCredit 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.

We are responsiblesubject for complying with numerousto 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, investigationinvestigatory and/or cleanupremedial ofor 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.

The continued expansion of revenuesoperations in end-marketsmarkets 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.services and the costs of our operations.

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 communitycommunity, customers, administrative agencies and other stakeholders have increased their focus on Environmental, Social, and Governance (“ESG”)sustainability practices and disclosures by public companies in recent years. Concerns over climate change have resulted in,years, 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 ESGsustainability disclosures and practices. We have published and may continue to publish a Sustainability Report, which outlines our progress and ongoing efforts to advance our ESGvarious 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 ESGsustainability disclosures and practices do not meet regulatory, investor or other stakeholder expectations and standards, which continue to evolve,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.

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.

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.rate Additionally,or longstandingaccelerate internationalthe timing of our required payments of tax normsobligations. thatWhile determinewe eachcannot country’spredict jurisdictionthe impact to taxour cross-borderincome international trade are subject to potential evolution. For example, the Organization for Economic Co-operation and Development (“OECD”), a global coalitiontaxes 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 onfuture tax competitionlegislation, throughguidance, theor introductioninterpretations, of a global minimum tax. Ifif such changes to tax laws are enacted, our profitability could be negatively impacted.

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 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.

In addition, our information systems and information technology infrastructure are subject to security threats and increasingly sophisticated cyber-basedcybersecurity attacks,incidents, including, but not limited to, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering,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 ordestruction, misuse, manipulation, alteration, corruption, loss, denial of access to or disclosure of confidential or important informationdata or intellectualsystems, property. A failure of or breach in our information systems and information technology infrastructure, or those of our third-party vendors,which could expose us and our employees, customers, and suppliers to risksrisks, ofsuch misuse of information or systems,as transaction errors, thecompromise compromiseor loss of confidential information, manipulation and destruction of data, the loss of sales and customerscustomers, operational disruptions and operationsother disruptions.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.

There can be no assurance that securitycybersecurity 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 ana cybersecurity incident has been detected, it ismay not alwaysbe immediately apparent what the full naturenature, scope and scope of any potential harmimpact 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 obtainmaintain cybersecurity insurance,insurance; thoughhowever, costslosses related to a cyber-basedcyberattack attackor other cybersecurity incident may exceed the amountscope or limits of insurancesuch coverage or may not be excludedcovered under the terms of our cybersecurity insurance policy. In addition, as cyber-basedcyberattacks attacksand 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.

OnWe October 29, 2024, wehave experienced a ransomware cybersecurityincident incident,in the past, and we expect such cybersecurity threats and incidentsattacks involving our systemssystems, data and the third-party systems upon which we rely to continue. While none of theno cybersecurity eventsincidents have beenmaterially materialimpacted our business to date, a successful breach or attack could have a material negative impact on our operations oroperations, business reputation, harmfinancial our reputationconditions and relationships with our customers, business partners, employees or other third parties, and could subject us to consequences such as litigationregulatory inquiries and enforcement actions, litigation, contractual liability and direct and indirect costs associated with incident response.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.

Risks Related to Complications with the Design or Implementation of Our Updated Enterprise Resource Planning (“ERP”) System

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,capabilities includingand replacinghave recently transitioned the majority of our enterprise resource planning ("ERP") system to enhance operating efficienciesoperational and transitioningfinancial processes to a cloud-based ERP platform. The ongoing ERP system implementation update and cloud-based platform transition will requirerequires the training of personnel, migration of data,personnel and the development and execution of certain new processes and procedures. We may be unable to successfully implement the updated ERP system or the new cloud-based ERP platform without experiencing delays, increased costs and other difficulties.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.

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.

NPK International Inc. 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 2024,2025, 67%66% 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 (“E&P”),production, pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom. The remaining 33%34% of our 20242025 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.end market.

We previously operated a Fluids Systems business, which was historically reported as a separate operating segment,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. OnIn September 13, 2024, we completed the sale of the equity interests in 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.

As aligned with our Strategy described in Part I. Item I. Business, the following reflect our strategic priorities intended to enhance long-term shareholder value as well as our actions wereand takenachievements in 2024.2025.

Cost of revenues increased 4% to $140.4 million for 2024 (35.5% gross profit margin), compared to $135.1 million for 2023 (34.9% gross profit margin), primarily driven by the 5% increase in revenues described above. The improvement in gross profit margin is primarily attributable to the effects of an improved revenue mix. Rental and service marginsgross profit margin increased 100 basis points primarily due to a higher proportion of rental revenues and a lower proportion of service revenues. Product sales marginsgross profit margin decreased partially due to an approximately $1 million impact of an unscheduled downtime event on one of the production lines at our manufacturing facility in the third quarter 2024.

Other operating (income) loss, net primarily reflectsincludes gains and losses associatedon with the salesales of non-rental assets. In addition, 2024 includesincluded a $0.6 million gain related to a legal settlement.

Foreign currency exchange was a $0.9 million loss for 2024 compared to a $0.9 million gain forand 2023 and reflects the impact of currency translation for assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies, principally related to our U.K. operations.

Interest expenseexpense, net was $2.6 million for 2024 compared to $4.1 million for 2023. The decrease in interest expense iswas primarily due to a decrease in average debt outstanding. The 2024 expense includesincluded a $0.5 million non-cash write off of debt issuance costs associated with the amendment of our Amended ABL Facility. Discontinued operations also includesincluded an allocation of interest expense on corporate debt. Such interest expense totaled $1.4 million and $2.4 million for 2024 and 2023, respectively.

The benefit for income taxes from continuing operations was $6.7 million for 2024 compared to a provision for income taxes of $5.6 million for 2023. The 2024 benefit includesincluded a $15.9 million benefit primarily related to the release of valuation allowances on U.S. federal and state net operating losses and tax credit carryforwards that are now expected to be realized following the sale of the Fluids Systems business. Excluding this valuation allowance benefit, the effective tax rate increased to 31.7% for 2024 compared to 28.3% for 2023, primarily attributable to higher state income taxes and the effect of unbenefited losses in the U.K.

Income (loss) from discontinued operations reflects the former Fluids Systems segment, which was sold in the third quarter of 2024. The loss from discontinued operations for 2024 includesincluded the loss on sale of the segment of $195.7 million. Discontinued operations also includeincluded $8.9 million and $12.7 million in charges for 2024 and 2023, respectively, primarily related to the Sale Transaction, impairments, and other items. See Note 2 for additional information.

We elected not to adjust the consolidated statements of cash flows for the years ended December 31, 2025, 2024, 2023, and 20222023 to excludeseparately 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 for such activities. See Note 2 for depreciation, capital expenditures and significant operating and investing non-cash items related to discontinued operations.

Net cash provided by operating activities was $73.0 million for 2025 compared to $38.2 million for 2024 compared to $100.0 million for 2023.2024. Net income adjusted for non-cash items provided cash of $75.4 million in 2025, compared to $54.5 million in 2024,2024. compared to $57.2 million in 2023, while changesChanges in working capital used cash of $2.4 million in 2025, compared to $16.3 million in 2024, compared to $42.8 million of cash provided in 2023. The cash provided by changes in working capital in 2023 benefited from the wind down of working capital associated with certain fourth quarter 2022 divestiture transactions.2024.

Net cash used in investing activities was $65.3 million for 2025, which includes $46.7 million in capital expenditures and $42.4 million associated with the Grassform acquisition (see Note 2 for additional information), partially offset by $16.6 million in additional proceeds from the sale of the Fluids Systems business. Net cash provided by investing activities was $8.3 million for 2024, which includes $48.5 million in initial net proceeds from the sale of the Fluids Systems business, partially offset by capital expenditures of $43.5 millionmillion. in 2024, theThe substantial majority of whichour capital expenditures for 2025 and 2024 were directed to expanding our mat rental fleet. NetIn cashaddition, usedwe inreceived investing activities was $5.7$4.0 million forand 2023, including $29.2 million in capital expenditures partially offset by $19.8$5.0 million in proceeds receivedfrom relatedthe tosale of assets in 2025 and 2024, respectively, primarily reflecting the sale of used mats from our fourthmat quarterrental 2022 divestiture transactions.fleet.

FollowingSubstantially completion ofall the Sale Transaction in September 2024, substantially all our $17.8$5.1 million of cash on hand at December 31, 20242025 resides in the U.S.U.K., primarily related to the November 2025 Grassform acquisition. We primarily manage our liquidity utilizing cash on hand and availability under our Amended ABLCredit 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. Wewe expect capital expenditures in 20252026 to be $35$45 million to $40$55 million, exclusive of any manufacturing expansion or acquisition, with spending primarily focused on the expansion of our mat rental fleet to further support the utilitiesour market penetration.penetration efforts. We also intend to make investments to expand our composite mat production capacity and 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 ABLCredit Facility and other existing financing arrangements, to be adequate to fund our current operations during the next 12 months.

As of December 31, 2024,2025, ourwe totalhad availability$5.3 undermillion the Amended ABL Facility was $67.8 million, with noin outstanding borrowings and $2.0$5.5 million was used forin outstanding letters of credit, resulting in $139.2 million of remaining availability ofunder $65.8the million.Credit Facility.

Under the terms of the Amended ABLCredit Facility, we may elect to borrow at a variable interest rate based on either, (1)either the Term SOFR rate (subject to a floor of zero) or (2)an thealternate 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, ana per annum applicable margin per annum.margin. The applicable margin rangeswill range from 1.50%1.75% to 2.00% per annum2.25% for Term SOFR borrowings,loans and 0.50%0.75% to 1.00% per annum1.25% for alternate base rate borrowings,loans, based on the consolidated leverage ratio (as defined in the Amended ABLCredit 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 timeon the average daily unused portion of the commitmentsCredit isFacility greaterranging than 50% and (ii)from 0.25% to 0.35% per annum atbased any timeon the averageconsolidated dailyleverage unused portion of the commitments is less than 50%.ratio.

As of December 31, 2024,2025, the applicable margin for borrowingsloans under the Amended ABLCredit Facility was 1.50%1.75% with respect tofor Term SOFR borrowingsloans and 0.50%0.75% withfor respect toalternate base rate borrowings,loans, and the applicable commitment fee onwas 0.25% per annum. As of December 31, 2025, the unusedweighted portionaverage ofinterest rate for the Amended ABLCredit Facility was 0.375% per annum.7.5%.

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

The Amended ABLCredit Facility includes customaryvarious events of default (subject to certain materiality thresholds and/or grace periods), 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 guarantees or security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control.

There have been no material changes during the period ended MarchJune 31,30, 2026 to our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.

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 firstsecond quarter represents the three-month period ended MarchJune 31.30 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.”

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 quarterhalf of 2026, 69%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 31%33% of our first quarterhalf 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.

•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 $9$16 million, or 20%,18%, year-over-year for the first quarterhalf of 2026, including a 27%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 quarterhalf of 2026, we made net investments of $14.6$24.3 million in the expansion of our composite rental fleet, expanding our owned composite mat rental fleet by 4% in the quarter.7%. Further, with our revenue growth and the favorable macro-environment, we have also accelerated our manufacturing capacity expansion planning efforts. Inin 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 overthrough the nextsecond fivequarter quartersof 2027 to complete this expansion, withof which $4.1 million was invested in the additionalsecond capacityquarter of 2026, with production expected to comestart onlineup by mid-2027.

•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 $9.2$19.2 million of revenues during the first quarterhalf of 2026, a $5.1$10.2 million increase over the first quarterhalf of 2025, with the substantial majority of the increase driven by the Grassform acquisition.

•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 17.6%17.5% for the first quarterhalf of 2026 compared to 18.1%19.1% for the first quarterhalf of 2025.

•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 quarterhalf of 2026, we utilized $2.7 million to repurchase 0.2 million shares under our share repurchase program.

FirstSecond Quarter of 2026 Compared to FirstSecond Quarter of 2025

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

Revenues increased 16%20% to $75.1$81.6 million for the firstsecond quarter of 2026, compared to $64.8$68.2 million for the firstsecond quarter of 2025, including a 20%16% increase in rental and service revenues and ana 8%28% increase in product sales revenues. Rental revenues increased $7.5$5.6 million (27%18%), primarily due to higher rental volume driven by our organic growth effortspricing along with the contribution from the Grassform acquisition, as well as modestly higher pricing.acquisition. Service revenues increased $1.0$1.7 million (7%12%), primarily attributable to the increasedcontribution level of customer rental projects, though at a lower rate than rental revenues, due primarily tofrom the higherGrassform mix of larger-scale, longer term rental projects.acquisition. Product sales revenues increased $1.7$6.1 million (8%28%), reflecting continued strength in customer adoption of manufactured composite matting products relative to timber-based products that represent the primary solution used for temporary worksite access in the market. During the firstsecond quarter of 2026, nearlyapproximately 80%75% of our product sales revenues were derived from utility companies.

Cost of revenues increased 21%19% to $47.9$51.4 million for the firstsecond quarter of 2026 (36.2%37.0% gross profit margin), compared to $39.5$43.1 million for the firstsecond quarter of 2025 (39.0%36.9% gross profit margin), primarily driven by the 16%20% increase in revenues described above. The decline in grossGross profit margin iswas primarilysubstantially attributablein toline with the impactprior year, and reflects the effect of approximately $3.5 million of cross-rental costs required to meet customerimproved rental demand,pricing modestlyand 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, partially offset by improved rental pricing and manufacturing cost leverage for product sales.effort.

Selling, general and administrative expenses increased to $13.2$14.2 million for the firstsecond quarter of 2026, which includes $0.7$0.6 million attributable to the Grassform acquisition, compared to $11.7$13.7 million for the firstsecond quarter of 2025. Selling, general and administrative expenses as a percentage of revenues was 17.6%17.4% for the firstsecond quarter of 2026 compared to 18.1%20.0% for the firstsecond quarter of 2025. In May 2026, the Compensation Committee modified the retirement eligibility terms applicable to our outstanding long-term incentive awards, including unvested grants from 2024 and 2025, and SG&A for the second quarter of 2026 includes a $0.9 million charge reflecting the acceleration of compensation expense for such awards for retirement eligible executive officers and other employees. The second quarter of 2025 included a $1.2 million charge related to performance-based awards measured on the Company’s total shareholder return (“TSR”) as compared to the TSR of a designated peer group, as well as $0.3 million of severance costs.

Foreign currency exchange for the firstsecond 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.

Interest expense, net was minimal for both the firstsecond quarter of 2026 and 2025.2025, reflecting limited outstanding debt.

The provision for income taxes from continuing operations was $3.6$3.9 million for the firstsecond quarter of 2026, reflecting an effective tax rate of 26%,25%, compared to income taxes of $3.5 million for the firstsecond quarter of 2025, reflecting an effective tax rate of 25%.28%.

Income (loss)Loss from discontinued operations, net of tax reflects ongoing wind down costs of the former Fluids Systems segment, which was sold in the third quarter of 2024.2024, Inincluding the first quarter of 2026, we recognized a $0.5 million pre-tax gain on salecosts 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 related toand the closure of certain foreign subsidiaries that are no longer operational.

Net cash provided by operating activities was $21.1$43.0 million for the first quarterhalf of 2026 compared to $8.8$30.3 million for the first quarterhalf of 2025. Net income adjusted for non-cash items provided cash of $22.5$47.9 million in the first quarterhalf of 2026, compared to $19.2$38.2 million in 2025, while changes in working capital used cash of $1.4$4.9 million in the first quarterhalf of 2026, compared to $10.3$7.9 million of cash used in 2025.

Net cash used in investing activities was $10.7$26.7 million for the first quarterhalf of 2026, which includes $16.7$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 quarterhalf of 2026 and 2025 were directed to expanding our mat rental fleet.fleet, and 2026 includes $4.1 million spent on the expansion of our Carencro, Louisiana manufacturing operations. Net cash providedused byin investing activities was $5.4$0.8 million for the first quarterhalf of 2025, which includes $10.7$21.7 million in capital expenditures partially offset by $14.5 million in additional proceeds from the sale of the Fluids Systems business partiallyand offset by $10.0$3.3 million in capitalproceeds expenditures.from the sale of assets.

Net cash used in financing activities was $8.9$13.1 million for the first quarterhalf 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 $11.7$21.8 million for the first quarterhalf of 2025.

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 $75$65 million to $90$80 million, which includes $35 million to $45 million in the expansion of our rental fleet and $30$20 million to $35$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.

As of MarchJune 31,30, 2026, we had no outstanding borrowings and $1.9 million in outstanding letters of credit, resulting in $148.1 million of remaining availability ofunder $148.1the million.Credit Facility.

As of MarchJune 31,30, 2026, the applicable margin for borrowingsloans 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.

The Credit Facility requires compliance with a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio, each as defined in the Credit Facility. In addition, at our option, we may choose to increase the maximum consolidated leverage ratio for a certain period following a significant acquisition, subject to certain limitations, as defined in the Credit Facility. As of MarchJune 31,30, 2026, we were in compliance with required ratios.

Other Financing Arrangements. We maintain finance leases primarily related to transportation equipment. During the first quarterhalf of 2026, we entered into $0.5$1.5 million of new finance lease liabilities in exchange for leased assets.

In addition, at MarchJune 31,30, 2026, we had $6.7$3.7 million in outstanding letters of credit (inclusive of the amount outstanding under the Credit Facility as described above), performance bonds, and other guarantees.