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What changed in NPK International Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NPK International Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+222 added−395 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-23)

Top changes in NPK International Inc.'s 2024 10-K

222 paragraphs added · 395 removed · 147 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe consider our relations with our employees to be satisfactory and through various company-culture initiatives, strive to reinforce our commitment to our Core Values of safety, integrity, respect, excellence, and accountability. The following charts present the geographic composition of our revenues and workforce.
Biggest changeWe consider our relations with our employees to be satisfactory and through various company-culture initiatives, strive to reinforce our commitment to our Core Values of safety, integrity, respect, excellence, and accountability. • Safety: Protecting each other like family while sustaining the environment in which we work. • Integrity: Acting honestly, ethically, and responsibly in all aspects of our business. • Respect: Dealing fairly and openly with employees, customers, suppliers and community. • Excellence: Delivering value through performance, innovation and service quality. • Accountability: Using good judgment and taking responsibility for our actions.
Governmental Regulations Our business exposes us to regulatory risks associated with the various industries that we serve, including governmental regulations relating to the oil and natural gas industry in general, as well as environmental, health, and safety regulations that have specific application to our business.
Governmental Regulations Our business exposes us to regulatory risks associated with the various industries that we serve, including governmental regulations relating to the utilities and oil and natural gas industries in general, as well as environmental, health, and safety regulations that have specific application to our business.
We also use the HSEMS to capture the information generated by regularly scheduled independent audits that are performed to validate the findings of our internal monitoring and auditing procedures. 7
We also use the HSEMS to capture the information generated by regularly scheduled independent audits that are performed to validate the findings of our internal monitoring and auditing procedures. 6
The competitive landscape for composite mat sales is less fragmented than rental and services, with only a few competitors providing various alternatives to our DURA-BASE® composite mat products, including Signature Systems Group and Spartan Mat. This is due to many factors, including large capital start-up costs and proprietary technology associated with these products.
The competitive landscape for composite mat sales is less fragmented than rental and services, with only a few competitors providing various alternatives to our DURA-BASE® composite mat products, including Signature Systems (Myers Industries) and Spartan Mat (Exchange Income Corporation). This is due to many factors, including large capital start-up costs and proprietary technology associated with these products.
In recent years, we have also expanded the use of alternative materials, including recycled materials in our manufacturing process, which we believe provides further protection against potential shortages of virgin raw materials.
In recent years, we have also expanded the use of alternative materials, including recycled materials in our manufacturing process, which we believe provides further protection against potential shortages of virgin raw materials. During 2024, our manufacturing operations consumed approximately 1.1 million pounds of recycled resin.
Our Industrial Solutions segment provides temporary worksite access solutions, including 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”), pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and United Kingdom.
In 2024, 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 (“E&P”), pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom.
Using proprietary technology and systems is an important aspect of our business strategy. In 2023, we launched our newest generation matting system, the DURA-BASE 800 series TM , which fully integrates into our DURABASE® format and offers a nearly 15% reduction in weight.
In 2023, we launched our newest generation matting system, the DURA-BASE 800 Series TM , which fully integrates into our DURABASE® format and offers a nearly 15% reduction in weight.
Resin is the largest material component in the manufacturing of our recyclable composite mat products. We believe that our sources of supply for materials used in our business are adequate for our needs. We are not dependent upon any one supplier, and we have encountered no significant shortages or delays in obtaining any raw materials.
We believe that our sources of supply for materials used in our business are adequate for our needs. We are not dependent upon any one supplier, and we have not encountered significant shortages or delays in obtaining any raw materials.
Our Fluids Systems segment provides drilling and completion fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific.
We previously operated a Fluids Systems business, which was historically reported as a separate operating segment, that provided drilling and completion fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in Europe, the Middle East and Africa, and North America, as well as certain countries in Asia Pacific.
Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports are available free of charge through our website. These reports are available as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the SEC.
We file or furnish annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”). Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports are available free of charge through our website.
The segment also generated 93% of its revenues domestically during 2023. Typically, we perform services either under short-term contracts or rental service agreements. As most agreements with our customers are cancellable upon short notice, our backlog is not significant.
Revenues from our largest customer were driven by product sales, which vary from year to year, as discussed above. We also generated 94% of our revenues domestically during 2024. Typically, we perform services either under short-term contracts or rental service agreements. As most agreements with our customers are cancellable upon short notice, our backlog is not significant.
We also sell our manufactured recyclable composite mats to customers around the world, with power transmission being the primary end-market.
The remaining 33% of our 2024 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.
During 2023, our manufacturing operations consumed over 750,000 pounds of recycled resin. 4 Technology — We have patents related to the design and manufacturing of our recyclable DURA-BASE® mats and several of the components, as well as other products and systems related to these mats (including the connecting pins and the EPZ Grounding System™), although certain key patents expired in 2020.
Technology We have certain patents related to the design and manufacturing of our recyclable DURA-BASE® mats and several of the components, as well as other products and systems related to these mats (including the connecting pins and the EPZ Grounding System™). Using proprietary technology and systems is an important aspect of our business strategy.
The power transmission sector contributes the majority of our Industrial Solutions segment revenues, and we expect customer activity in this sector will grow over the next several years, driven in part by the impacts of the U.S. energy transition and the increasing investment in grid reliance initiatives.
Approximately 55% of our 2024 rental and service revenues were derived from customers in the power transmission sector and we expect customer activity in this sector will grow over the next several years, driven in part by the impacts of increasing energy demand and required investments in grid reliance initiatives, due to the aging grid infrastructure.
The demand for our products and services from customers in these industries is driven, in part, by infrastructure construction and maintenance activity levels within the United States and United Kingdom, including required infrastructure investments to support energy transition efforts.
Industry Fundamentals and Customers The demand for temporary worksite access from customers in the industries we serve is driven, in part, by infrastructure construction and maintenance activity levels within the United States and United Kingdom.
Our Code of Ethics, our Corporate Governance Guidelines, our Audit Committee Charter, our Compensation Committee Charter, and our Environmental, Social and Governance Committee Charter are also posted to the governance section of our website. We make our website content available for informational purposes only.
These reports are available as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the SEC. Our Code of Ethics, our Corporate Governance Guidelines, our Audit Committee Charter, our Compensation Committee Charter, and our Environmental, Social and Governance Committee Charter are also posted to the governance section of our website.
Product sales largely reflect sales to power transmission customers and other industrial markets, and typically fluctuate based on the timing of customer projects and orders.
Product sales largely reflect sales to service companies supporting the power transmission market as well as utility companies, with product sales levels and customer mix typically fluctuating based on the timing of customer projects and orders.
We recognize our greatest assets are our people, and our long-term sustainability depends on our ability to attract, motivate, and retain the highly talented individuals that make up the Newpark team, while protecting each other like family and sustaining the environment in which we work.
We believe that the principal competitive factors in our business includes reputation, product capabilities, price, innovation through R&D, and reliability, and that our competitive position is enhanced by our proprietary products, manufacturing expertise, services, and experience. 5 Human Capital We believe our greatest assets are our people, and our long-term success depends on our ability to attract, motivate, and retain the highly talented individuals that make up the NPK team, while protecting each other like family and sustaining the environment in which we work.
Our principal executive offices are located at 9320 Lakeside Boulevard, Suite 100, The Woodlands, Texas 77381. Our telephone number is (281) 362-6800. You can find more information about us on our website located at www.newpark.com. We file or furnish annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”).
In 1991, we changed our state of incorporation to Delaware. On December 9, 2024, we changed our name to NPK International Inc. Our principal executive offices are located at 9320 Lakeside Boulevard, Suite 100, The Woodlands, Texas 77381. Our telephone number is (281) 362-6800. You can find more information about us on our website located at www.npki.com.
It should not be relied upon for investment purposes, nor is any information contained on our website incorporated by reference in this Form 10-K. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. When referring to Newpark Resources, Inc.
The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. When referring to NPK International Inc. (“NPK,” the “Company,” “we,” “our,” or “us”), the intent is to refer to NPK International Inc. and its subsidiaries as a whole.
We appreciate our people and their achievements as we recognize they are integral to fully implementing our business strategy, which directly translates to improving our long-term profitability and increasing shareholder value. As a global company, the Newpark team supporting our customers spans more than 20 countries, and more than half of our employees reside outside of the United States.
We appreciate our people and their achievements as we recognize they are integral to fully implementing our business strategy, which directly translates to improving our long-term profitability and increasing shareholder value. We make a commitment to our people through training and development, employee engagement, and community outreach, with competitive pay aligned with pay-for-performance along with various benefits programs.
Our global footprint provides natural diversity within our organization and serves as a foundation to support an inclusive approach to everything that we do. At December 31, 2023, we employed approximately 1,550 full and part-time personnel, none of which are represented by labor unions.
At December 31, 2024, we employed approximately 460 full and part-time personnel, including 410 in the United States and 50 in the United Kingdom. None of our employees are represented by labor unions.
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ITEM 1. Business General Newpark Resources, Inc. is a geographically diversified supplier providing environmentally-sensitive products, as well as rentals and services to customers across multiple industries. We currently operate our business through two reportable segments: Industrial Solutions and Fluids Systems, as described further below. In addition, we had a third reportable segment, Industrial Blending, which was exited in 2022.
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ITEM 1. Business General 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.
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Over the past few years, our primary focus within Fluids Systems has been the transformation into a more agile and simplified business focused on key markets, while monetizing assets in underperforming or sub-scale markets and reducing our invested capital, particularly in the U.S.
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On 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.
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In the fourth quarter of 2022, we exited two of our Fluids Systems business units, including our U.S.-based mineral grinding business as well as our Gulf of Mexico fluids operations. In 2023, we exited our stimulation chemicals product line, certain operations for offshore Australia, and our Latin America operations in Chile.
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All results and information in the consolidated financial statements and related notes in this Form 10-K are presented for our continuing operations and exclude Fluids Systems unless otherwise noted specifically as discontinued operations. See Note 2 for additional information. NPK International Inc., formerly known as Newpark Resources, Inc., was organized in 1932 as a Nevada corporation.
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In June 2023, we initiated a review of strategic alternatives for the long-term positioning of the Fluids Systems division, and in September 2023, we launched a formal sale process for substantially all the Fluids Systems business as part of this strategic review.
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We make our website content available for informational purposes only. It should not be relied upon for investment purposes, nor is any information contained on our website incorporated by reference in this Form 10-K.
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While the sale process is ongoing, we anticipate substantially completing the process in mid-2024, although it is not certain that any such transaction will be consummated on that timeline or at all. Newpark Resources, Inc. was organized in 1932 as a Nevada corporation. In 1991, we changed our state of incorporation to Delaware.
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The reference to a “Note” herein refers to the accompanying Notes to Consolidated Financial Statements contained in Item 8 “Financial Statements and Supplementary Data.” 3 Strategy Our long-term strategy includes key foundational elements that are intended to enhance long-term shareholder value creation: • Accelerate Organic Growth – We seek to accelerate revenue growth through the expansion of our high-return rental business, which includes a combination of geographic expansion to new growth territories, primarily within the U.S., while also expanding customer market share within currently-served markets, and/or expanding our offering into adjacent products or services that are valued by our customers and leverage our core competencies.
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(“Newpark,” the “Company,” “we,” “our,” or “us”), the intent is to refer to Newpark Resources, Inc. and its subsidiaries as a whole or on a segment basis, depending on the context in which the statements are made.
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We prioritize investment capital to support this objective, where over the past several years, we have seen the strong market adoption of our specialty rental products and differentiated service offering. • Pursue Inorganic Growth – We seek to accelerate our growth and enhance shareholder value through strategically-aligned inorganic actions, leveraging our scale to increase our value and relevance to customers. • Drive Operational Efficiency – We are focused on efficiency improvements and operating cost optimization across every aspect of our business.
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The reference to a “Note” herein refers to the accompanying Notes to Consolidated Financial Statements contained in Item 8 “Financial Statements and Supplementary Data.” Industry Fundamentals Our Industrial Solutions segment, which has been our primary source of operating income and cash generation in recent years, provides temporary worksite access products and services to various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries.
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With a simplified business model, we continue to evaluate and execute actions intended to streamline the organization and our cost structure, driving improvements in profitability. • 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.
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Our Fluids Systems segment operating results remain dependent on oil and natural gas drilling activity levels in the markets we serve and the nature of the drilling operations, which governs the revenue potential of each well. Drilling activity 3 levels depend on a variety of factors, including oil and natural gas commodity pricing, inventory levels, product demand, and regulatory restrictions.
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For 2024, 67% of our revenues were derived from rental and service activities while 33% of our revenues were derived from the sale of our manufactured worksite access products. During 2024, approximately 67% of our revenues were derived from our 20 largest customers, of which our largest customer represented 19% of our revenues.
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Oil and natural gas prices and activity are cyclical and volatile, and this market volatility has a significant impact on our Fluids Systems segment operating results. Rig count data remains the most widely accepted indicator of drilling activity.
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We do not derive a significant portion of our revenues from government contracts. 4 Raw Materials The resins, chemicals, and other materials used to manufacture our recyclable composite mats are widely available. High Density Polyethylene (“HDPE”) is the largest material component in the manufacturing of our recyclable composite mat products.
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During 2021, oil prices and the average U.S. rig count steadily improved in the wake of the COVID-19 pandemic, and during 2022, oil prices and rig counts further increased due in part to global economic recovery and geopolitical events.
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Yak Mat (United Rentals) is the largest competitor in the rental market, primarily using wood mats. We believe that our recyclable composite mats provide superior work surface and economics relative to timber-based products, providing a meaningful opportunity to expand our market share within the temporary worksite access ma rket.
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In 2023, market activity in the U.S. steadily declined, ending the year at 622 active rigs, down 20% from the end of 2022. With recent instability in oil prices, the 2024 outlook for U.S. market activity generally remains below the 2023 average level, as many of our customers maintain strong capital discipline and prioritize cash flow generation over growth.
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Outside of North America, drilling activity is generally more stable as this drilling activity is based on longer-term economic projections and multi-year drilling programs, which typically reduces the impact of short-term changes in commodity prices on overall drilling activity.
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Operations in several countries in the EMEA region experienced activity disruptions and project delays continuing through 2021, driven by government-imposed restrictions on movements of personnel, quarantines of staffing, and logistical limitations as a result of the COVID-19 pandemic.
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Drilling activity within international markets gradually recovered in 2021 and 2022, though the combination of increasing activity levels combined with the impacts of global supply chain disruptions caused significant cost inflation to many hydrocarbon-based products and chemicals used in our fluids systems.
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While we worked with customers to mitigate the inflationary impact, in some cases, we were unable to adjust our customer pricing on certain international contracts due to the long-term contracts in place negatively impacting the profitability of our international operations in 2022 and into 2023.
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In recent years, geopolitical events have caused several markets to increase drilling activity levels, to help ensure reliable energy supply in the coming years, while reducing their dependency on Russia-sourced oil and natural gas. Consequently, the outlook for several markets within the EMEA region remains strong, with growth in activity expected over the next few years.
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Strategy Our long-term strategy includes key foundational elements that are intended to enhance long-term shareholder value creation: • Simplify our business model and accelerate Industrial Solutions growth – We have prioritized investment capital in the growth of our Industrial Solutions business, which has been our primary source of operating income and cash generation in recent years, the majority of which has been derived from the utilities and other industrial end-markets.
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In addition, we divested certain underperforming business units in 2022 and 2023 within our Fluids Systems segment, and in September 2023, we launched a formal sale process for substantially all the Fluids Systems division. • Drive operational excellence through all aspects of our business – As our business transforms, we are enhancing our focus on efficiency improvements and operating cost optimization across every aspect of our global footprint.
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With our simplified business model and enhanced focus on balance sheet optimization, we seek to improve returns and consistency in cash flow generation. • Focus on value creation, balancing growth with return of capital to shareholders – We are committed to a disciplined growth strategy, balancing our investments in high-returning business activities with the return of capital through a share repurchase program.
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Segment Overview Industrial Solutions Our Industrial Solutions segment provides temporary worksite access solutions, including the rental of our recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and United Kingdom (72% of 2023 segment revenues represented rental and service).
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We also manufacture and sell our recyclable composite mats to customers around the world, with power transmission being the primary end-market (28% of 2023 segment revenues represented product sales). Raw Materials — The resins, chemicals, and other materials used to manufacture our recyclable composite mats are widely available.
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We believe that the principal competitive factors in our businesses include reputation, product capabilities, price, innovation through R&D, and reliability, and that our competitive position is enhanced by our proprietary products, manufacturing expertise, services, and experience.
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Customers — Our customers are principally utility companies, infrastructure construction companies, and oil and natural gas E&P companies operating in the markets that we serve. During 2023, approximately 67% of our segment revenues were derived from our 20 largest segment customers. No single customer accounted for more than 10% of our segment revenues.
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We do not derive a significant portion of our revenues from government contracts. 5 Fluids Systems Our Fluids Systems segment provides drilling and completion fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in North America (52% of 2023 segment revenues) and EMEA (44% of 2023 segment revenues), as well as certain countries in Asia Pacific.
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We offer customized solutions for complex subsurface conditions such as horizontal, directional, geologically deep, or drilling in deep water. These projects require high levels of monitoring and technical support of the fluids system during the drilling process.
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Over the past few years, our primary focus within Fluids Systems has been the transformation into a more agile and simplified business focused on key markets, while monetizing assets in underperforming or sub-scale markets and reducing our invested capital, particularly in the U.S. (see Note 2 for additional information).
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As of December 31, 2023, the net working capital of the Fluids Systems segment was $171 million, which reflects a $69 million reduction from December 31, 2022. Raw Materials — We believe that our sources of supply for materials and equipment used in our fluids business are adequate for our needs.
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In connection with the sale of our U.S.-based mineral grinding business in November 2022 (see Note 2), we entered into a four-year barite supply agreement for certain regions of our U.S. drilling fluids business. We also obtain barite and other materials used in the fluids business from various third-party suppliers.
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In 2022, as a result of the global supply chain disruptions, including the effect of the ongoing conflict between Russia and Ukraine, we experienced shortages and significant cost increases associated with many of our raw materials, however, none of the product shortages materially impacted our operations.
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Technology — Proprietary technology and systems are an important aspect of our business strategy, though we believe that our reputation in the industry, the range of services we offer, ongoing technical development and know-how, and responsiveness to customers, are of equal or greater competitive significance than our existing proprietary rights.
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We seek patents and licenses on new developments whenever we believe it creates a competitive advantage in the marketplace.
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We own patent rights in a family of high-performance water-based fluids systems, which we market as Evolution ® and DeepDrill ® systems, which are designed to enhance drilling performance while also providing a variety of environmental benefits relative to traditional oil-based fluids. In addition, we have developed the TerraTherm TM water-based fluids system designed specifically for clean-energy geothermal drilling.
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We also rely on a variety of unpatented proprietary technologies and know-how in many of our applications. Competition — Globally, we face competition from larger companies, including Halliburton, SLB, and Baker Hughes, which compete vigorously on fluids performance and/or price. Moreover, these companies have broad product and service offerings in addition to their fluids systems.
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Within North America, the drilling fluids market is more fragmented, with many smaller regional competitors competing with us primarily on price and local relationships.
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We believe that the principal competitive factors in our businesses include a combination of technical proficiency, reputation, price, reliability, quality, and experience, and that our competitive position is enhanced by our best-in-class customer experience and value enhancing products and services.
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Customers — Our customers are principally major integrated and independent oil and natural gas E&P companies operating in the markets that we serve. During 2023, approximately 52% of segment revenues were derived from our 20 largest segment customers, of which our largest customer represented 11% of our segment revenues. The segment also generated 40% of its revenues domestically during 2023.
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In North America, we primarily perform services either under short-term standard contracts or under “master” service agreements. Internationally, some customers issue multi-year contracts, but many are on a well-by-well or project basis. As most agreements with our customers can be terminated upon short notice, our backlog is not significant.
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We do not derive a significant portion of our revenues from government contracts. Industrial Blending Our Industrial Blending segment began operations in 2020 and supported industrial end-markets, including the production of disinfectants and industrial cleaning products.
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We completed the wind down of the Industrial Blending business in the first quarter of 2022 and the sale of the industrial blending assets in the fourth quarter of 2022 (see Note 2 for additional information). 6 Human Capital We are committed to providing a diverse and inclusive environment for all employees and for those with whom we conduct business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+22 added−75 removed65 unchanged
Biggest changeAdditionally, there are market areas around the world in which our operations are subject to seasonality such as Canada where the Spring “break-up” (an industry term used to describe the time of year when the frost comes out of the ground causing the earth to become soft and muddy and strict weight restrictions are implemented by the government to prevent potholes forming on roads) results in a significant slowdown in the oil and natural gas industry and our fluids business each year, or in the summer in the U.S., where utility companies typically reduce maintenance project activity on the transmission grid due to elevated consumer electricity demand.
Biggest changeAdditionally, there are markets in which our operations are subject to seasonality such as summer in the U.S., where utility companies typically reduce maintenance project activity on the transmission grid due to elevated consumer electricity demand. Severe weather, natural disasters, and seasonality could adversely affect our or our customers’ financial condition, results of operations and cash flows.
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.
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 12 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.
We do not obtain contracts from all of our bids and our inability to win bids at acceptable profit margins would adversely affect our business and results of operations. 13 Risks Related to Technological Developments and Intellectual Property The market for our products and services requires technological developments that generate improvements in product performance or service delivery.
We do not obtain contracts from all of our bids and our inability to win bids at acceptable profit margins would adversely affect our business and results of operations. Risks Related to Technological Developments and Intellectual Property The market for our products and services requires technological developments that generate improvements in product performance or service delivery.
Non-compliance could also result in significant fines, damages, and other criminal sanctions against us, our officers or our employees, prohibitions or additional requirements on the conduct of our business and damage our reputation. Certain violations of law could also result in suspension or debarment from government contracts. We also incur additional legal compliance costs associated with global regulations.
Non-compliance could also result in significant fines, damages, and other criminal sanctions against us, our officers or our employees, prohibitions or additional requirements on the conduct of our business and damage our reputation. Certain violations of law could also result in 13 suspension or debarment from government contracts. We also incur additional legal compliance costs associated with global regulations.
Spending by our customers for exploration, development, and production of oil and natural gas is based on a number of factors, including expectations of future hydrocarbon demand, energy prices, the risks associated with developing reserves, our customers’ ability to finance exploration and development of reserves, regulatory developments, and the future value of the reserves.
Spending by our customers for exploration, development, and production of oil and natural gas is based on a number of factors, including expectations of future hydrocarbon demand, the volatility of energy prices, the risks associated with developing reserves, our customers’ ability to finance exploration and development of reserves, regulatory developments, and the future value of the reserves.
Risks Related to Share Repurchases The amount and timing of all future purchases of shares of our common stock pursuant to our securities repurchase program, if any, are subject to the discretion of the Board of Directors and will depend upon business conditions, results of 18 operations, financial condition and other factors.
Risks Related to Share Repurchases The amount and timing of all future purchases of shares of our common stock pursuant to our securities repurchase program, if any, are subject to the discretion of the Board of Directors and will depend upon business conditions, results of operations, financial condition and other factors.
In addition, many of our contracts permit our customers to decrease the products or services without penalty, which could result in a decrease in our revenues and 11 profitability. As a result, you should not place undue reliance on the strength of our customer contracts or the terms of those contracts.
In addition, many of our contracts permit our customers to decrease the products or services without penalty, which could result in a decrease in our revenues and profitability. As a result, you should not place undue reliance on the strength of our customer contracts or the terms of those contracts.
As with any market expansion effort, new customer and product markets require additional capital investment and include inherent uncertainties regarding customer expectations, industry-specific regulatory requirements, product performance, and customer-specific risk profiles. In addition, we likely will not have the same level of operational experience with respect to the new customer and product markets as will our competitors.
As with any market expansion effort, new customer and product markets require additional capital investment and include inherent uncertainties regarding customer expectations, industry-specific regulatory requirements, product performance, customer-specific risk profiles and competitor responses. In addition, we likely will not have the same level of operational experience with respect to the new customer and product markets as will our competitors.
These investments and acquisitions are subject to a number of risks and uncertainties, including: ▪ incorrect assumptions regarding business activity levels or results from our capital investments, acquired operations, or assets; ▪ insufficient revenues to offset liabilities assumed; ▪ potential loss of significant revenue and income streams; ▪ increased or unexpected expenses; ▪ inadequate return of capital; ▪ regulatory or compliance issues; ▪ potential loss of key employees, customers, or suppliers of the acquired company; ▪ the triggering of certain covenants in our debt agreements (including accelerated repayment); ▪ unidentified issues not discovered in due diligence; ▪ failure to complete a planned acquisition transaction or to successfully integrate the operations or management of any acquired businesses or assets in a timely manner; ▪ diversion of management’s attention from existing operations or other priorities; ▪ unanticipated disruptions to our business associated with the implementation of our enterprise-wide operational and financial system; and ▪ delays in completion and cost overruns associated with large capital investments.
These investments and acquisitions are subject to a number of risks and uncertainties, including: ▪ incorrect assumptions regarding business activity levels or results from our capital investments, acquired operations, or assets; ▪ potential loss of significant revenue and income streams; ▪ increased or unexpected expenses; ▪ inadequate return of capital; ▪ regulatory or compliance issues; ▪ potential loss of key employees, customers, or suppliers of the acquired company; ▪ the triggering of certain covenants in our debt agreements (including accelerated repayment); 10 ▪ unidentified issues not discovered in due diligence; ▪ failure to complete a planned acquisition transaction or to successfully integrate the operations or management of any acquired businesses or assets in a timely manner; ▪ diversion of management’s attention from existing operations or other priorities; ▪ unanticipated disruptions to our business associated with the implementation of our enterprise-wide operational and financial system; and ▪ delays in completion and cost overruns associated with large capital investments.
Many of the factors affecting our ability to generate internal growth may be beyond our control, and we cannot be certain that our strategies will be successful or that we will be able to generate cash flow sufficient to fund our operations and to support internal growth.
Many of the factors affecting our ability to generate organic growth may be beyond our control, and we cannot be certain that our strategies will be successful or that we will be able to generate cash flow sufficient to fund our operations and to support organic growth.
These laws and regulations relate to a number of aspects of our business, including anti-bribery and anti-corruption laws, sanctions against business dealings with certain countries and third parties, the payment of taxes, employment and labor relations, immigration, fair competition, data privacy protections, securities regulation, and other regulatory requirements affecting trade and investment.
These laws and regulations relate to several aspects of our business, including anti-bribery and anti-corruption laws, sanctions against business dealings with certain countries and third parties, the payment of taxes, employment and labor relations, immigration, fair competition, data privacy protections, securities regulation, and other regulatory requirements affecting trade and investment.
Risks Related to Capital Investments and Business Acquisitions 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.
Risks Related to Capital Investments and Business Acquisitions 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 services may be impacted by periodic supply chain disruptions and, particularly during times of high demand, may cause 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.
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.
Risks Related to Our Ability to Generate Internal Growth Our ability to generate internal growth may be affected by, among other factors, our ability to: • attract new customers; • increase the number of projects performed for existing customers; • successfully bid for new projects; • hire and retain qualified personnel; • obtain necessary levels of equipment; and 9 • adapt the range of products and services we offer to address our customers’ evolving needs.
Risks Related to Our Ability to Generate Organic Growth Our ability to generate organic growth may be affected by, among other factors, our ability to: • attract new customers; • increase the number of projects performed for existing customers; • successfully qualify and bid for new projects; • hire and retain qualified personnel; • obtain necessary levels of equipment; and • adapt the range of products and services we offer to address our customers’ evolving needs.
Risks Related to Product Offering and Market Expansion As a key component of our long-term strategy to diversify our revenue streams, we seek to continue to expand our product and service offerings and enter new customer markets with our existing products.
Risks Related to Product Offering and Market Expansion As a key component of our long-term strategy to diversify our revenue streams, we seek to continue to expand our product and service offerings, including through acquisitions, and enter new customer markets with our existing products.
General Risks Risks Related to Cybersecurity Incidents or Business System Disruptions We utilize various management information systems and information technology infrastructure to manage or support a variety of 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.
General Risks Risks Related to Cybersecurity Incidents or Business System Disruptions 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.
If we are unsuccessful, we may not be able to achieve internal growth, expand our operations or grow our business. Risks Related to Economic and Market Conditions that May Impact Our Customers’ Future Spending A substantial portion of our operating income, cash flows, and financial returns is generated from construction projects, the awarding of which we do not directly control.
If we are unsuccessful, we may not be able to achieve organic growth, expand our operations or grow our business. 7 Risks Related to Economic and Market Conditions that May Impact Our Customers’ Future Spending 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.
Risks Related to Contracts that Can Be Terminated or Downsized by Our Customers Without Penalty Many of our fixed-term contracts contain provisions permitting early termination by the customer at their convenience, generally without penalty, and with limited notice requirements.
Risks Related to Contracts that Can Be Terminated or Downsized by Our Customers Without Penalty Certain of our contracts contain provisions permitting early termination by the customer at their convenience, generally without penalty, and with limited notice requirements.
Further, any changes in the current legal and regulatory environment could impact industry activity and the demands 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.
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.
Our operations are subject to hazards present in the oil and natural gas industry, such as fires, explosions, blowouts, oil spills, and leaks or spills of hazardous materials (both onshore and offshore), as well as hazards in the electrical utility industry, such as exposure to wildfires, high voltage electrocution, among other 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.
Borrowing availability under the Amended ABL Facility is calculated based on eligible U.S. accounts receivable, inventory and composite mats included in the rental fleet, net of reserves and subject to limits on certain of the assets included in the borrowing base calculation.
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.
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 or indirect domestic subsidiaries of the borrowers and certain equity interests issued by certain foreign subsidiaries of the borrowers.
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.
In some foreign countries, particularly those with developing economies, it may be customary for others to engage in business practices that are prohibited by laws such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the Italian Criminal Code in Italy, Brazil’s Clean Companies Act, India’s Prevention of Corruption Act and The Companies Act, and Mexico’s Anti-Corruption Law.
In some foreign countries, particularly those with developing economies, it may be customary for others to engage in business practices that are prohibited by laws such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, Brazil’s Clean Companies Act, and Mexico’s Anti-Corruption Law.
The continued implementation of these kinds of cost saving measures 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.
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.
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, members of the investment community are increasing their focus on Environmental, Social, and Governance (“ESG”) practices and disclosures by public companies.
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.
This, in turn, is subject to the volatile nature of the oil and natural gas industry, and to competitive, economic, financial, and other factors that are beyond our control. We primarily fund our ongoing operational needs through a $175 million asset-based revolving credit agreement (the “Amended ABL Facility”). The Amended ABL Facility terminates in May 2027.
This, in turn, is subject to competitive, economic, financial, and other factors that are beyond our control. 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.
Risks Related to Public Health Crises, Epidemics, and Pandemics The effects of public health crises, epidemics, and pandemics have resulted and may in the future result in a significant and swift reduction in U.S. and international economic activity, including adversely affecting the demand for and price of oil and natural gas, as well as the demand for our products and services.
Risks Related to Public Health Crises, Epidemics, and Pandemics The effects of future public health crises, epidemics, and pandemics may result in a significant and swift reduction in U.S. and international economic activity, including adversely affecting the demand for our products and services.
Furthermore, the growth of our Industrial Solutions segment is heavily dependent upon the production of our recyclable composite mat products, which in turn is dependent on the operations and capacity of our manufacturing facilities in Carencro, Louisiana.
Furthermore, the growth of our business is heavily dependent upon the production of our recyclable composite mat products, which in turn is dependent on the operations and capacity of our manufacturing facility in Carencro, Louisiana.
Such risks include, but are not limited to, the volatility of oil and natural gas prices that can adversely affect demand for our products and services; 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 price and availability of raw materials; the cost and continued availability of borrowed funds; and cybersecurity incidents or business system disruptions.
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.
The continued expansion of revenues in industrial markets, and particularly end-markets that are likely to benefit from ongoing energy transition efforts around the world, such as power transmission, renewable energy, and geothermal, remains a strategic priority going forward, and we anticipate that our capital investments will primarily focus on supporting this objective.
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.
When the general level of economic activity deteriorates, our customers may delay, or cancel upgrades, expansions, and/or maintenance and repairs to their systems. Many factors, including the financial condition of the industry, could adversely affect our customers and their willingness to fund capital expenditures in the future.
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.
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.
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.
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.
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. 14 There can be no assurance that security incidents will not occur.
These severe weather events or natural disasters, such as excessive rains, hurricanes, fires, or droughts, could disrupt our operations and result in damage to our properties, including the manufacturing facilities and technology center for our Industrial Solutions business located in Carencro, Louisiana, or our leased fluids industrial space in Fourchon, Louisiana.
These severe weather events or natural disasters, such as excessive rains, hurricanes, fires, or droughts, could disrupt our operations and result in damage to our properties, including our manufacturing facility and technology center located in Carencro, Louisiana.
These risks could have a material adverse effect on our business, results of operations, and financial condition. Risks Related to Activist Stockholders that May Attempt to Effect Changes at Our Company or Acquire Control Over Our Company We have been the subject of campaigns by activist stockholders and may continue to be so in the future.
Risks Related to Activist Stockholders that May Attempt to Effect Changes at Our Company or Acquire Control Over Our Company We have been the subject of campaigns by activist stockholders and may continue to be so in the future.
The construction industry historically has experienced cyclical fluctuations in financial results due to economic recessions, downturns in business cycles of our customers, material shortages, price increases by subcontractors, interest rate fluctuations and other economic factors beyond our 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.
Risks Related to Legal Compliance As a global business, we are subject to complex laws and regulations in the U.S., the U.K. and other countries in which we operate.
Risks Related to Legal Compliance As a global business, we are subject to complex laws and regulations in the United States, the United Kingdom, and other countries in which we sell our products.
Risks Related to the Price and Availability of Raw Materials Our ability to provide products and services to our customers is dependent upon our ability to obtain raw materials necessary to operate our business. Certain of the raw materials essential to our business are sourced globally and require various freight services to transport the materials to our job sites.
Risks Related to the Price and Availability of Raw Materials Our ability to provide products and services to our customers is dependent upon our ability to obtain raw materials necessary to operate our business.
In addition, we can seek to enforce our rights in trade secrets, or “know-how,” and other proprietary information and technology in the conduct of our business.
In addition, we may from time to time engage in expensive and time-consuming litigation to determine the enforceability, scope, and validity of our patent rights. In addition, we can seek to enforce our rights in trade secrets, or “know-how,” and other proprietary information and technology in the conduct of our business.
The proposals 17 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.
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.
Risks Related to Operating Hazards Present in the Oil and Natural Gas and Utilities Industries and Substantial Liability Claims, Including Catastrophic Well Incidents We are exposed to significant health, safety, and environmental risks.
Risks Related to Operating Hazards Present in Our and Our Customers ’ Industries and Substantial Liability Claims We are exposed to significant health, safety, and environmental risks.
In addition, economic, regulatory and market conditions affecting our specific end markets may adversely impact the demand for our services, resulting in the delay, reduction or cancellation of certain projects and these conditions may continue to adversely affect us in the future. Risks Related to Customer Concentration and Reliance on the U.S.
In addition, economic, regulatory, and market conditions affecting our specific end markets, including import tariffs and other laws and regulations that impact our customers’ ability to obtain materials necessary for their operations, may adversely impact the demand for our services, resulting in the delay, reduction or cancellation of certain projects and these conditions may continue to adversely affect us in the future.
Our Amended and Restated Bylaws, Which Designate the Court of Chancery of the State of Delaware as the Sole and Exclusive Forum for Certain Types of Actions and Proceedings that May Be Initiated by Our Stockholders, and the U.S.
In addition, any elimination of, or downward revision in, our repurchase program could have an adverse effect on the market price of our common stock. 15 Our Amended and Restated Bylaws, Which Designate the Court of Chancery of the State of Delaware as the Sole and Exclusive Forum for Certain Types of Actions and Proceedings that May Be Initiated by Our Stockholders, and the U.S.
As such, new market entry is subject to a number of risks and uncertainties, which could have an adverse effect on our business, financial condition, or results of operations.
As such, new market entry is subject to a number of risks and uncertainties, which could have an adverse effect on our business, financial condition, or results of operations. 9 Risks Related to Our Ability to Attract, Retain, and Develop Qualified Leaders, Key Employees, and Skilled Personnel Our business is highly dependent on our ability to attract and retain highly-skilled product specialists, technical sales personnel, and service personnel.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations and could have a material adverse effect on our business and financial condition. 15 Legal and Regulatory Risks Risks Related to Environmental Laws and Regulations 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.
Legal and Regulatory Risks Risks Related to Environmental Laws and Regulations 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.
We have experienced, and expect to continue to experience, a shortage of labor for certain functions, which has increased our labor costs and negatively impacted our profitability.
Also, a significant increase in wages paid by competing employers could result in a reduction in our skilled labor force or an increase in our operating costs. We have experienced, and expect to continue to experience, a shortage of labor for certain functions, which has increased our labor costs and negatively impacted our profitability.
In response to reduced demand for our 14 products and services, we would take (and have in the past taken) actions aimed at protecting our liquidity and reshaping the business for the new market realities, including reducing our workforce and cost structure.
If we encounter a significant and prolonged reduction in demand for our products and services, we plan to take (and have in the past taken) actions aimed at protecting our liquidity and reshaping the business for the market changes, including the sale of assets from our rental fleet, and reducing our workforce and cost structure.
As a result of any such divestitures, we may incur or experience (i) greater costs or realize fewer benefits than anticipated under the agreements, (ii) operational or commercial difficulties segregating the divested assets from our retained assets, (iii) disputes with the purchasers regarding the nature and sufficiency of the transition services we provide or the terms and conditions of our commercial agreements with the purchasers, (iv) higher vendor costs due to reduced economies of scale or operational dis-synergies, or (v) losses or increased inefficiencies from stranded or underutilized assets.
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.
A heightened focus by our customers on cost-saving measures rather than the quality of products and services could reduce the demand for our products and services Our customers are continually seeking to implement measures aimed at greater cost savings, which may include the acceptance of lesser quality products and services in order to improve short term cost efficiencies as opposed to total cost efficiencies.
Reductions in customer spending levels adversely affect the demand for our products and services, and consequently, our revenues and operating results. 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 term cost efficiencies as opposed to total cost efficiencies.
Share repurchases under our repurchase program could diminish our available liquidity, which may impact our ability to finance future growth and to pursue possible future strategic growth projects. In addition, any elimination of, or downward revision in, our repurchase program could have an adverse effect on the market price of our common stock.
Share repurchases under our repurchase program could diminish our available liquidity, which may impact our ability to finance future growth and to pursue possible future strategic growth projects.
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.
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.
Our costs can vary based on the energy costs of the producers of HDPE, demand for this material, and the capacity or operations of the plants used to make HDPE. We may not be able to increase our customer pricing to cover the cost increases that we have experienced, which could result in a reduction in future profitability.
We may not be able to increase our customer pricing to cover the cost increases that we have experienced, which could result in a reduction in future profitability.
The ongoing conflicts 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.
Bribery Act, export laws, and other similar laws applicable to our operations in international markets; ▪ our inexperience in certain international markets; ▪ political and economic instability; ▪ ongoing conflicts in Europe and the Middle East; and ▪ fluctuations in foreign currency exchange rates. 8 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.
The availability of borrowed funds on reasonable terms is dependent on the condition of credit markets and financial institutions from which these funds are obtained.
The availability of borrowed funds on reasonable terms is dependent on the condition of credit markets and financial institutions from which these funds are obtained. Adverse events in the financial markets may significantly reduce the availability of funds, which may have an adverse effect on our cost of borrowings and our ability to fund our business strategy.
International operations are subject to a number of risks and uncertainties which could negatively impact our results from operations, including: ▪ difficulties and cost associated with complying with a wide variety of complex foreign laws, treaties, and regulations; ▪ uncertainties in or unexpected changes in regulatory environments or tax laws, including with respect to climate change; ▪ legal uncertainties, timing delays, and expenses associated with tariffs, export licenses, and other trade barriers; 10 ▪ difficulties enforcing agreements and collecting receivables through foreign legal systems; ▪ risks associated with failing to comply with the U.S.
In addition, international operations are subject to a number of risks and uncertainties which could negatively impact our results from operations, including among others: ▪ difficulties and cost associated with complying with a wide variety of complex foreign laws, treaties, and regulations; ▪ risks associated with failing to comply with the U.S. Foreign Corrupt Practices Act, the U.K.
Additionally, developing non-infringing technologies could increase our costs. If a license were not available, we might not be able to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows.
If a license were not available, we might not be able to continue providing a particular service or product, which could adversely affect our financial condition, results of operations and cash flows. 11 Risks Related to Severe Weather, Natural Disasters, and Seasonality We have significant operations located in market areas that are negatively impacted by severe adverse weather events or natural disasters.
The market for qualified employees is extremely competitive. If we cannot attract and retain qualified personnel, our ability to compete effectively and grow our business will be severely limited. Also, a significant increase in wages paid by competing employers could result in a reduction in our skilled labor force or an increase in our operating costs.
Our failure to attract, retain, and develop qualified leaders and key employees could have a material adverse effect on our business. The market for qualified employees is extremely competitive. If we cannot attract and retain qualified personnel, our ability to compete effectively and grow our business will be severely limited.
This may, in turn, have a material adverse effect on our business, financial condition, results of operations, and cash flows.
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.
In the Industrial Solutions business, many 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. 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.
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.
Our Industrial Solutions business is highly dependent on the availability of high-density polyethylene (“HDPE”), which is the primary raw material used in the manufacture of our recyclable composite mats. The cost of HDPE increased significantly in 2021, but returned to more historical levels in 2022 and 2023.
Our business is highly dependent on the availability of HDPE, which is the primary raw material used in the manufacture of our recyclable composite mats. Our costs can vary based on the energy costs of the producers of HDPE, demand for this material, and the capacity or operations of the plants used to make HDPE.
We do not carry insurance against these risks, although we do 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.
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.
Removed
Business and Industry Risks Risks Related to our Exploration of Strategic Alternatives for the Long-Term Positioning of our Fluids Systems Division In June 2023, we announced that we initiated a review of strategic alternatives for the long-term positioning of the Fluids Systems division in June 2023.
Added
Business and Industry Risks Risks Related to our Recently Completed Sale of the Fluids Systems Business 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.
Removed
In September 2023, we launched a formal sale process for substantially all the Fluids Systems business as part of this strategic review. While the sale process is ongoing, we anticipate substantially completing the process in mid-2024, although it is not certain that any such transaction will be consummated on that timeline or at all.
Added
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.
Removed
We do not intend to disclose developments with respect to the progress of our evaluation of any strategic options until such time as our Board of Directors has approved a specific transaction or we otherwise deem disclosure is required or appropriate.
Added
Any of these risks could have a material adverse effect on our business, financial condition, results of operations, and cash flows. 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).
Removed
We may also incur significant costs and management’s attention may be diverted in connection with the pursuit of strategic alternatives which are not ultimately consummated.
Added
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.
Removed
There are risks inherent with the consummation of any such transaction, such as the risks that the anticipated benefits of such transaction may not be realized, that unexpected liabilities may result from such transaction and that the process of consummating or the effects of consummating such a transaction may cause interruption of or slow down the operations of our existing or continuing businesses.
Added
We also derive revenues from customers in the oil and natural gas industry.
Removed
Risks Related to Divestitures Any divestitures made as part of the Fluids Systems sale process or otherwise could impact us in several ways, including (i) impacting relationships with our customers and vendors, (ii) restricting our operations due to certain specified terms of the agreements, and (iii) diminishing our ability to retain or attract employees due to concerns over future job security or responsibilities.
Added
Risks Related to the Effective Management of Our Fleet, Including Our Ability to Properly Manufacture, Safeguard, and Maintain Our Fleet 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.
Removed
Any of these risks could have a material adverse effect on our business, financial condition, results of operations, and cash flows. In addition, any divestitures we make could reduce our future cash flows. If our remaining businesses fail to perform as expected, such divestitures could exacerbate certain of the other risks specified in this Annual Report on Form 10-K.
Added
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.
Removed
Risks Related to the Worldwide Oil and Natural Gas Industry Although we continue to diversify our operations and expand into a variety of end-markets, we derive a significant portion of our revenues from customers in the worldwide oil and natural gas industry; therefore, our risk factors include those factors that impact the demand for oil and natural gas.
Added
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.
Removed
Reductions in customer spending levels adversely affect the demand for our products and services, and consequently, our revenues and operating results. The key risk factors that we believe influence the worldwide oil and natural gas markets are discussed below.
Added
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.
Removed
Demand for oil and natural gas is subject to factors beyond our control Demand for oil and natural gas, and consequently the demand for our products and services, is highly correlated with global economic growth and in particular by the economic growth of countries such as the U.S., India, China, and developing countries in Asia and the Middle East.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Board of Directors oversees management’s enterprise risk management process, including cybersecurity risks, to help align our risk exposure with our strategic objectives. Senior leadership, including our Chief Information Officer (CIO), regularly briefs the Board of Directors on our cybersecurity and information security, and we have processes by which certain cybersecurity incidents are escalated to the Board of Directors.
Biggest changeSenior leadership, including our Chief Information Officer (CIO), regularly briefs the Board of Directors on our cybersecurity and information security, and we have processes by which certain cybersecurity incidents are escalated to the Board of Directors.
Our CIO receives reports on cybersecurity threats from experienced information security personnel and third-party consultants and resources, and regularly reviews risk management measures implemented by the Company to identify and 19 mitigate data protection and cybersecurity risks. Our processes and systems include automated tools and technical safeguards managed and monitored by our cybersecurity team.
Risk Management and Strategy Our CIO receives reports on cybersecurity threats from experienced information security personnel and third-party consultants and resources, and regularly reviews risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks. Our processes and systems include automated tools and technical safeguards 16 managed and monitored by our cybersecurity team.
Our CIO, who reports to our Senior VP & Chief Financial Officer, oversees our cybersecurity function.
Management’s Involvement in the Oversight of Cybersecurity Risk Our CIO, who reports to our Senior Vice President & Chief Financial Officer, oversees our cybersecurity function.
Added
The Board’s Oversight of Cybersecurity Risk Our Board of Directors oversees management’s enterprise risk management process, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
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We also maintain what we believe are appropriate levels of cybersecurity insurance that covers settlements, judgments and defense costs arising out of a failure of network security, a privacy breach, media liability, business income loss resulting from a cyber event and for cyber extortion coverage.
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This cybersecurity insurance coverage also provides for certain breach response services in connection with incidents involving the theft, loss or unauthorized disclosure of third-party information, and computer system security breaches.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also own a facility containing approximately 108,000 square feet of office space (approximately 21,000 square feet of which is currently being leased to third parties) on approximately 11 acres of land in Katy, Texas, which houses our division headquarters and general and administrative support personnel for both operating segments, the laboratory and technology center for the Fluids Systems segment, as well as administrative offices for third-party lessees.
Biggest changeProperties We own a facility containing approximately 108,000 square feet of office space (approximately 81,000 square feet of which is currently being leased to third parties) on approximately 11 acres of land in Katy, Texas, which houses certain administrative offices, and we own a facility containing approximately 93,000 square feet of industrial and office space on approximately 34 acres of land in Carencro, Louisiana, which houses our DURA-BASE® mats manufacturing facilities and technology center.
We also own or lease various facilities and warehouses throughout the U.S., as well as facilities in the U.K., to support our field operations.
We also lease and own office and warehouse space to support our field operations, as well as our administrative offices throughout the U.S. and U.K.
Removed
ITEM 2. Properties We lease office space to support our operating segments, as well as our corporate offices.
Removed
Fluids Systems . We own or lease various facilities and warehouses throughout the world to support our operations. Some of these warehouses include blending facilities. We also lease approximately nine acres of industrial space in Fourchon, Louisiana which houses a drilling fluids shorebase and blending facility for the deepwater Gulf of Mexico market.
Removed
During the fourth quarter of 2022, we entered a seven-year sublease of this property as we exited our Gulf of Mexico fluids operations. Industrial Solutions . We own a facility containing approximately 93,000 square feet of industrial and office space on approximately 34 acres of land in Carencro, Louisiana, which houses our manufacturing facilities and technology center for this segment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not expect that any loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, will have a material adverse impact on our consolidated financial statements. ITEM 4. Mine Safety Disclosures Not applicable. 20 PART II
Biggest changeWhile the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not expect that any loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, will have a material adverse impact on our consolidated financial statements. ITEM 4. Mine Safety Disclosures Not applicable. 17 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCopyright 1980-2024. 21 Issuer Purchases of Equity Securities The following table details our repurchases of shares of our common stock for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions) October 2023 878,923 $ 6.85 878,923 $ 18.1 November 2023 3,043 $ 7.19 — $ 18.1 December 2023 — $ — — $ 18.1 Total 881,966 878,923 During the three months ended December 31, 2023, we purchased an aggregate of 3,043 shares surrendered in lieu of taxes under vesting of restricted stock awards.
Biggest changeThis information shall be deemed furnished but not filed in this Form 10-K, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, or the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference. 19 Issuer Purchases of Equity Securities The following table details our repurchases of shares of our common stock for the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions) October 2024 — $ — — $ 50.0 November 2024 — $ — — $ 50.0 December 2024 — $ — — $ 50.0 Total — — Our Board of Directors has authorized a securities repurchase program available for repurchases of our common stock.
Our repurchase program is available to purchase outstanding shares of our common stock in the open market or as otherwise determined by management, subject to certain limitations under the Amended ABL Facility and other factors. The repurchase program has no specific term.
Our repurchase program authorizes us to purchase outstanding shares of our common stock in the open market or as otherwise determined by management, subject to certain limitations under the Amended ABL Facility (as defined in Note 6) and other factors. The repurchase program has no specific term.
During 2023, we purchased an aggregate of 576,967 shares surrendered in lieu of taxes under vesting of restricted stock awards. These shares were not acquired pursuant to our securities repurchase program described below. All of the shares purchased are held as treasury stock.
During 2024, we purchased an aggregate of 529,067 shares surrendered in lieu of taxes under vesting of restricted stock awards. These shares were not acquired pursuant to our securities repurchase program described above. All of the shares purchased are held as treasury stock. ITEM 6. [Reserved] 20
Future repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our Amended ABL Facility. As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. ITEM 6. [Reserved] 22
Repurchases are expected to be funded from operating cash flows and available cash on hand. As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of December 31, 2024, we had $50.0 million of authorization remaining under the program.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Asset-Based Loan Facility.” Stock Performance Graph The following graph reflects a comparison of the cumulative total stockholder return of our common stock from January 1, 2019 through December 31, 2023, with the New York Stock Exchange Market Value Index, a broad equity market index, and the Philadelphia Oil Service Sector Index.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Asset-Based Loan Facility.” 18 Stock Performance Graph The following graph reflects a comparison of the cumulative total stockholder return of our common stock from January 1, 2020 through December 31, 2024, with the Russell 2000 Index, a broad equity market index comprised of companies with comparable market capitalization to NPK, and the S&P SmallCap 600 Capped Industrials Index, an index comprised of industrial sector companies with comparable market capitalization to NPK.
The graph assumes the investment of $100 on January 1, 2019 in our common stock and each index and the reinvestment of all dividends, if any.
The New York Stock Exchange Market Value Index and the Philadelphia Oil Service Sector Index have been included through this transition year. The graph assumes the investment of $100 on January 1, 2020 in our common stock and each index and the reinvestment of all dividends, if any.
During 2023, we repurchased 6,522,797 shares of our common stock under our repurchase program for a total cost of $31.9 million. As of December 31, 2023, we had $18.1 million remaining under the program. In February 2024, our Board of Directors replaced the existing program with a new repurchase program for repurchases of common stock up to $50.0 million.
In February 2024, our Board of Directors replaced the prior program with a new repurchase program for repurchases of common stock up to $50.0 million.
We have not paid any dividends during the three most recent fiscal years or any subsequent interim period, and we do not intend to pay any cash dividends in the foreseeable future. In addition, our Amended ABL Facility contains covenants which limit the payment of dividends on our common stock. See Item 7.
As of February 1, 2025, we had 1,061 stockholders of record as determined by our transfer agent. We have not paid any dividends during the three most recent fiscal years or any subsequent interim period, and we do not intend to pay any cash dividends in the foreseeable future.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “NR.” As of February 1, 2024, we had 1,072 stockholders of record as determined by our transfer agent.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “NPKI”. The Company’s common stock began trading on NYSE under the ticker symbol “NPKI” prior to market open on December 19, 2024. This replaced the Company's previous ticker symbol “NR”.
Removed
This information shall be deemed furnished but not filed in this Form 10-K, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, or the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference. NOTE: Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved.
Added
In addition, our Amended ABL Facility contains covenants which limit the payment of dividends on our common stock. See Item 7.
Removed
In November 2018, our Board of Directors authorized a securities repurchase program available for repurchases of any combination of our common stock and our unsecured convertible senior notes, which matured in December 2021.
Added
The Russell 2000 Index and the S&P SmallCap 600 Capped Industrials Index replace the New York Stock Exchange Market Value Index and the Philadelphia Oil Service Sector Index, respectively, in this analysis and going forward, as these indexes are more representative of our current business following the sale of the Fluids Systems business in September 2024.
Removed
In February 2023, our Board of Directors approved certain changes to the repurchase program as well as additional capacity to increase the total authorization then available to $50.0 million. During the three months ended December 31, 2023, we repurchased 878,923 shares of our common stock under our repurchase program for a total cost of $6.0 million.
Added
Due to restrictions associated with the Fluids Systems sale process and other events, no shares of common stock were repurchased under the repurchase program during 2024. During the three months ended December 31, 2024, we purchased no shares surrendered in lieu of taxes under vesting of restricted stock awards.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeContractual Obligations A summary of our outstanding contractual and other obligations and commitments at December 31, 2023 is as follows: (In thousands) 2024 2025 2026 2027 2028 Thereafter Total Amended ABL Facility $ — $ — $ — $ 45,000 $ — $ — $ 45,000 Other debt 13,078 4,010 — — — — 17,088 Financing obligation (1) 932 157 — — — — 1,089 Finance lease liabilities (1) 3,389 3,097 2,656 1,134 261 100 10,637 Operating lease liabilities (1) 5,639 4,051 3,628 3,236 2,819 6,278 25,651 Trade accounts payable and accrued liabilities (2) 114,609 — — — — — 114,609 Other long-term liabilities (3) — 1,689 558 — — 4,613 6,860 Performance bond obligations 24,481 4,160 — — 557 — 29,198 Letter of credit commitments 8,748 — — 1,729 — 123 10,600 Total contractual obligations $ 170,876 $ 17,164 $ 6,842 $ 51,099 $ 3,637 $ 11,114 $ 260,732 (1) Financing obligations, finance lease liabilities, and operating lease liabilities represent the undiscounted future payments.
Biggest changeNone of these off-balance sheet arrangements either has, or is expected to have, a material effect on our financial statements. 27 Contractual Obligations A summary of our outstanding contractual and other obligations and commitments at December 31, 2024 is as follows: (In thousands) 2025 2026 2027 2028 2029 Thereafter Total Amended ABL Facility $ — $ — $ — $ — $ — $ — $ — Financing obligation (1) 106 — — — — — 106 Finance lease liabilities (1) 3,278 2,909 1,791 519 — — 8,497 Operating lease liabilities (1) 2,724 2,696 2,552 2,178 2,029 3,056 15,235 Trade accounts payable and accrued liabilities (2) 39,597 — — — — — 39,597 Other long-term liabilities (3) — 2,279 402 — — 2,921 5,602 Performance bond obligations 3,312 — — 435 — — 3,747 Letter of credit commitments 2,487 — — — — — 2,487 Total contractual obligations $ 51,504 $ 7,884 $ 4,745 $ 3,132 $ 2,029 $ 5,977 $ 75,271 (1) Financing obligations, finance lease liabilities, and operating lease liabilities represent the undiscounted future payments.
The Amended ABL Facility includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control. 37 Other Financing Arrangements.
The Amended ABL Facility includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control. Other Financing Arrangements.
The specific timing of settlement for certain long-term obligations cannot be reasonably estimated. 38 Critical Accounting Policies Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosures.
The specific timing of settlement for certain long-term obligations cannot be reasonably estimated. 28 Critical Accounting Policies Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosures.
Under the terms of the Amended ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) the BSBY rate (subject to a floor of zero) or (2) the base rate (subject to a floor of zero), equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) BSBY for a one-month interest period plus 1.00%, plus, in each case, an applicable margin per annum.
Under the terms of the Amended ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) the Term SOFR rate (subject to a floor of zero) or (2) the base rate (subject to a floor of zero), equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) Term SOFR for a one-month interest period plus 1.00%, plus, in each case, an applicable margin per annum.
The applicable margin ranges from 1.50% to 2.00% per annum for BSBY borrowings, and 0.50% to 1.00% per annum for base rate borrowings, based on the consolidated leverage ratio (as defined in the Amended ABL Facility) as of the last day of the most recent fiscal quarter.
The applicable margin ranges from 1.50% to 2.00% per annum for Term SOFR borrowings, and 0.50% to 1.00% per annum for base rate borrowings, based on the consolidated leverage ratio (as defined in the Amended ABL Facility) as of the last day of the most recent fiscal quarter.
(2) Excludes the current portion of operating lease liabilities. (3) Table does not allocate by year expected tax payments, asset retirement obligations, and uncertain tax positions due to the inability to make reasonably reliable estimates of the timing of future cash settlements.
(2) Excludes the current portion of operating lease liabilities. (3) Table does not allocate by year expected tax payments and uncertain tax positions due to the inability to make reasonably reliable estimates of the timing of future cash settlements.
When there are qualitative indicators of impairment, we use an impairment test which includes a comparison of the carrying value of net assets of our reporting units, including goodwill, with their estimated fair values, which we estimate using a combination of a market multiple and discounted cash flow approach (classified within Level 3 of the fair value hierarchy).
When there are qualitative indicators of impairment, we use an impairment test which includes a comparison of the carrying value of net assets of our reporting unit, including goodwill, with its estimated fair values, which we estimate using a combination of a market multiple and discounted cash flow approach (classified within Level 3 of the fair value hierarchy).
Although we believe all tax positions are reasonable and properly reported in accordance with applicable tax laws and regulations in effect during the periods involved, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals. New Accounting Pronouncements See Note 1 in Item 8.
Although we believe all tax positions are reasonable and properly reported in accordance with applicable tax laws and regulations in effect during the periods involved, the final determination of these matters could be materially different than that which is reflected in historical income tax provisions and accruals. New Accounting Pronouncements See Note 1 in Item 8.
We anticipate that the obligations and commitments listed above that are due in less than one year will be paid from the projected availability under our Amended ABL Facility and other existing financing arrangements, cash generated by operations, and available cash on-hand in our international subsidiaries, subject to covenant compliance and certain restrictions as further discussed above.
We anticipate that the obligations and commitments listed above that are due in less than one year will be paid from available cash on-hand, cash generated by operations, and the projected availability under our Amended ABL Facility, subject to covenant compliance and certain restrictions as further discussed above.
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 or indirect domestic subsidiaries of the borrowers and certain equity interests issued by certain foreign subsidiaries of the borrowers.
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.
“Financial Statements and Supplementary Data” for a discussion of new accounting pronouncements. 40
“Financial Statements and Supplementary Data” for a discussion of new accounting pronouncements. 30
Net cash used in financing activities was $81.0 million for 2023, which includes $47.4 million in net repayments on our Amended ABL Facility and other financing arrangements and $32.0 million in share purchases under our repurchase program. Net cash used in financing activities was $24.9 million for 2022, which included $17.6 million in share purchases under our repurchase program.
Net cash used in financing activities was $81.0 million for 2023, which includes $47.4 million in net repayments on our Amended ABL Facility and other financing arrangements and $32.0 million in share purchases under our repurchase program.
At December 31, 2023, we had $39.8 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $0.3 million in restricted cash. We also enter into normal short-term operating leases for office and warehouse space, as well as certain operating equipment.
At December 31, 2024, we had $6.2 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $0.5 million in restricted cash. We also enter into normal short-term operating leases for office and warehouse space, as well as certain operating equipment.
In completing the annual evaluation during the fourth quarter of 2023, we determined that the fair value of the Industrial Solutions reporting unit was significantly more than the net carrying value, and therefore, no impairment was required. Income Taxes We had total deferred tax assets of $77.3 million and $71.9 million at December 31, 2023 and 2022, respectively.
In completing the annual evaluation during the fourth quarter of 2024, we determined that the fair value was significantly more than the net carrying value, and therefore, no impairment was required. Income Taxes We had total deferred tax assets of $78.6 million and $56.0 million at December 31, 2024 and 2023, respectively.
Selling, general and administrative expenses Selling, general and administrative expenses increased $3.5 million to $101.1 million for 2023, compared to $97.6 million for 2022. This increase was primarily driven by a $1.9 million increase in severance costs and a $1.4 million increase in expenses related to strategic planning projects.
This increase was primarily driven by $1.4 million of costs related to strategic planning projects and a $1.3 million increase in severance costs. Selling, general and administrative expenses as a percentage of revenues was 24.6% for 2023 compared to 25.3% for 2022.
We expect total availability under the Amended ABL Facility to fluctuate directionally based on the level of eligible U.S. accounts receivable, inventory, and composite mats included in the rental fleet.
We expect future working capital requirements for our operations will generally fluctuate directionally with revenues, and total availability under the Amended ABL Facility to fluctuate directionally based on the level of eligible U.S. accounts receivable, inventory, and composite mats included in the rental fleet.
We evaluate the potential exposure associated with various filing positions and record a liability for uncertain tax positions as circumstances warrant.
We fully cooperate with all audits but defend existing positions vigorously. We evaluate the potential exposure associated with various filing positions and record a liability for uncertain tax positions as circumstances warrant.
Foreign currency exchange Foreign currency exchange was a $0.3 million loss for 2023 compared to a $0.4 million loss for 2022, and reflects the impact of currency translation for assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies. Interest expense, net Interest expense was $8.2 million for 2023 compared to $7.0 million for 2022.
Foreign currency exchange Foreign currency exchange was a $0.9 million gain for 2023 compared to a $1.3 million loss for 2022 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.
Foreign currency exchange Foreign currency exchange was a $0.4 million loss for 2022 compared to a $0.4 million gain for 2021 and reflects the impact of currency translation for assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies. Interest expense, net Interest expense was $7.0 million for 2022 compared to $8.8 million for 2021.
Foreign currency exchange Foreign currency exchange was a $0.9 million loss for 2024 compared to a $0.9 million gain for 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.
As of December 31, 2023, the applicable margin for borrowings under the Amended ABL Facility was 1.50% with respect to BSBY borrowings and 0.50% with respect to base rate borrowings.
As of December 31, 2024, the applicable margin for borrowings under the Amended ABL Facility was 1.50% with respect to Term SOFR borrowings and 0.50% with respect to base rate borrowings, and the applicable commitment fee on the unused portion of the Amended ABL Facility was 0.375% per annum.
Substantially all our $38.6 million of cash on hand at December 31, 2023 resides in our international subsidiaries. We primarily manage our liquidity utilizing availability under our Amended ABL Facility and other existing financing arrangements.
Following completion of the Sale Transaction in September 2024, substantially all our $17.8 million of cash on hand at December 31, 2024 resides in the U.S. We primarily manage our liquidity utilizing cash on hand and availability under our Amended ABL Facility and other existing financing arrangements.
At December 31, 2023, we had a total valuation allowance of $49.2 million, which includes a valuation allowance on $29.3 million of net operating loss carryforwards for certain U.S. federal, state and foreign jurisdictions, as well as a valuation allowance of $13.0 million for foreign tax credits and research and development credits.
At December 31, 2024, we had a total valuation allowance of $34.3 million, which includes valuation allowances of $20.3 million for U.S. capital loss carryforwards, $9.2 million for certain U.S. state and foreign net operating loss carryforwards, as well as $4.8 million for foreign tax credits.
The Amended ABL Facility has a five-year term expiring May 2027, is based on a Bloomberg Short-Term Bank Yield Index (“BSBY”) pricing grid, and includes a mechanism to incorporate a sustainability-linked pricing framework with the consent of the required lenders (as defined in the Amended ABL Facility). 36 As of December 31, 2023, our total availability under the Amended ABL Facility was $109.2 million, of which $45.0 million was drawn and $4.0 million was used for outstanding letters of credit, resulting in remaining availability of $60.2 million.
The Amended ABL Facility has a five-year term expiring May 2027, is based on a Bloomberg Short-Term Bank Yield Index (“BSBY”) pricing grid, and includes a mechanism to incorporate a sustainability-linked pricing framework with the consent of the required lenders (as defined in the Amended ABL Facility).
We expect the projected availability under our Amended ABL Facility and other existing financing arrangements, cash generated by operations, and available cash on-hand in our international subsidiaries to be adequate to fund our current operations during the next 12 months. We anticipate that our near-term working capital requirements for our operations will generally fluctuate directionally with revenues.
We expect cash on hand and cash generated by operations, as well as the projected availability under our Amended ABL Facility and other existing financing arrangements, to be adequate to fund our current operations during the next 12 months.
The substantial majority of our capital expenditures were directed to expanding our Industrial Solutions segment rental fleet. Net cash provided by investing activities was $46.2 million for 2022, which included $71.3 million in proceeds from 2022 divestitures as well as $3.2 million in proceeds from the sale of assets, partially offset by capital expenditures of $28.3 million.
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 million in 2024, the substantial majority of which were directed to expanding our mat rental fleet.
As of December 31, 2023, our consolidated balance sheet includes $47.3 million of goodwill, all of which relates to the Industrial Solutions segment. Goodwill and other indefinite-lived intangible assets are tested for impairment annually as of November 1, or more frequently, if indicators of impairment exist.
Goodwill As of December 31, 2024, our consolidated balance sheet includes $47.2 million of goodwill. Goodwill is tested for impairment annually as of November 1, or more frequently, if indicators of impairment exist.
We file income tax returns in the U.S. and several non-U.S. jurisdictions and are subject to examination in the various jurisdictions in which we file. We are no longer subject to income tax examinations for U.S. federal and substantially all state jurisdictions for years prior to 2019 and for substantially all foreign jurisdictions for years prior to 2008.
We file income tax returns in the U.S. and certain non-U.S. jurisdictions and are subject to examination in the various jurisdictions in which we file.
In October 2017, we entered into a U.S. asset-based revolving credit agreement, which was amended in March 2019 and amended and restated in May 2022 (the “Amended ABL Facility”). The Amended ABL Facility provides financing of up to $175.0 million available for borrowings (inclusive of letters of credit), which can be increased up to $250.0 million, subject to certain conditions.
In October 2017, we entered into a U.S. asset-based revolving credit agreement, which was amended in March 2019, amended and restated in May 2022, and further amended and restated in September 2024 (the “Amended ABL Facility”).
We also sell our manufactured recyclable composite mats to customers around the world, with power transmission being the primary end-market. For the Industrial Solutions segment, approximately 75% of 2023 revenues were derived from power transmission and other industrial markets.
The remaining 33% of our 2024 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.
The increase in interest expense is primarily due to an increase in benchmark borrowing rates partially offset by a decrease in average debt outstanding. Provision for income taxes The provision for income taxes was $10.7 million for 2023, reflecting an effective tax rate of 42%.
Interest expense, net Interest expense was $4.1 million for 2023 compared to $3.5 million for 2022. The increase in interest expense is primarily due to an increase in benchmark borrowing rates in 2023 partially offset by a decrease in average debt outstanding. Discontinued operations also includes an allocation of interest expense on corporate debt.
Other operating income, net for 2022 includes $3.6 million of total gains on divestitures, including $2.6 million in the Industrial Blending segment for the sale of the Conroe, Texas blending facility and $1.0 million in the Fluids Systems segment for the Excalibar sale. See Note 2 for additional details.
Other operating (income) loss, net Other operating (income) loss, net primarily includes gains associated with the sale of assets. Other operating (income) loss, net for 2022 includes a gain on divestiture of $2.6 million for the sale of the Conroe, Texas blending facility. See Note 13 for additional details.
Segment Overview Industrial Solutions – Our Industrial Solutions segment, which generated 28% of our consolidated revenues and $53.0 million of operating income for 2023, provides temporary worksite access solutions, including the rental of our manufactured recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and United Kingdom.
In 2024, 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 (“E&P”), pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom.
As of February 22, 2024, our total borrowing availability under the Amended ABL Facility was $116.8 million, of which $45.6 million was drawn and $4.0 million was used for outstanding letters of credit, resulting in remaining availability of $67.2 million.
The BSBY rates were replaced with Term SOFR (Secured Overnight Financing Rate) beginning in November 2024. 26 As of December 31, 2024, our total availability under the Amended ABL Facility was $67.8 million, with no outstanding borrowings and $2.0 million was used for outstanding letters of credit, resulting in remaining availability of $65.8 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 “Financial Statements and Supplementary Data.” Overview We are a geographically diversified supplier providing environmentally-sensitive products, as well as rentals and services to customers across multiple industries.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 “Financial Statements and Supplementary Data.” Overview 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.
The Amended ABL Facility requires compliance with the following financial covenants: (i) a minimum fixed charge coverage ratio of 1.00 to 1.00 for the most recently completed four fiscal quarters and (ii) while a leverage covenant trigger period (as defined in the Amended ABL Facility) is in effect, a maximum consolidated leverage ratio of 4.00 to 1.00 as of the last day of the most recently completed fiscal quarter.
The Amended ABL Facility also requires a minimum fixed charge coverage ratio of 1.00 to 1.00 for the most recently completed four fiscal quarters.
Operating income The Industrial Solutions segment generated operating income of $53.0 million for 2023 compared to $43.9 million for 2022, the increase being primarily attributable to incremental profitability associated with revenue growth, including the effects of improved operating cost leverage from increased manufacturing, rental, and service activity.
The improvement in gross profit margin is primarily associated with revenue growth, including the effects of improved operating cost leverage from increased manufacturing, rental, and service activity. Selling, general and administrative expenses Selling, general and administrative expenses increased $2.3 million to $51.1 million for 2023, compared to $48.8 million for 2022.
Impairments and other charges As described above, 2022 includes $29.4 million of total non-cash impairment charges related to the long-lived assets and inventory associated with the exit of our Fluids Systems Gulf of Mexico operations, as well as a $7.9 million non-cash impairment charge related to the exit of our Industrial Blending operations.
Impairments and other charges For 2022, we recognized a $7.9 million non-cash impairment charge related to the exit of our Industrial Blending operations. See Note 13 for additional details.
Our capitalization is as follows: (In thousands) December 31, 2023 December 31, 2022 Amended ABL Facility $ 45,000 $ 80,300 Other debt 30,093 33,949 Unamortized discount and debt issuance costs (60) (134) Total debt $ 75,033 $ 114,115 Stockholders’ equity 415,364 423,028 Total capitalization $ 490,397 $ 537,143 Total debt to capitalization 15.3 % 21.2 % Asset-Based Loan Facility.
Our capitalization is as follows: (In thousands) December 31, 2024 December 31, 2023 Amended ABL Facility $ — $ 45,000 Other debt 7,728 17,085 Unamortized discount and debt issuance costs (1) (56) Total debt $ 7,727 $ 62,029 Stockholders’ equity 326,495 415,364 Total capitalization $ 334,222 $ 477,393 Total debt to capitalization 2.3 % 13.0 % Asset-Based Loan Facility.
Net cash used in investing activities was $5.7 million for 2023, including $29.2 million in capital expenditures partially offset by $19.8 million in proceeds received related to our fourth quarter of 2022 divestitures (see Note 2 for additional information), as well as $3.7 million in proceeds from the sale of assets, which includes the sale of used mats from our Industrial Solutions rental fleet.
Net cash used in investing activities was $5.7 million for 2023, including $29.2 million in capital expenditures partially offset by $19.8 million in proceeds received related to our fourth quarter 2022 divestiture transactions. Net cash used in financing activities was $66.9 million for 2024 and primarily relates to net repayments on our Amended ABL Facility and other financing arrangements.
Fluids Systems – Our Fluids Systems segment, which generated 72% of our consolidated revenues and $11.9 million of operating income for 2023 (including $12.7 million in total charges for certain impairments, facility exit, severance costs, and transaction related expenses for the ongoing Fluids Systems segment sale process), provides drilling and completion fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in North America and EMEA, as well as certain countries in Asia Pacific.
We previously operated a Fluids Systems business, which was historically reported as a separate operating segment, that provided drilling and completion fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in Europe, the Middle East and Africa, and North America, as well as certain countries in Asia Pacific.
During 2023, net income adjusted for non-cash items provided cash of $57.2 million and changes in working capital provided cash of $42.8 million. The cash provided by reductions in work working capital was primarily driven by Fluids Systems segment reductions in U.S. land, along with the wind down of retained working capital associated with the fourth quarter 2022 divestiture transactions.
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.
We believe the critical accounting policies described below affect our more significant judgments and estimates used in preparing the consolidated financial statements. Impairment of Long-lived Assets As of December 31, 2023, our consolidated balance sheet includes $195.3 million of property, plant and equipment and $17.1 million of finite-lived intangible assets.
We believe the critical accounting policies described below affect our more significant judgments and estimates used in preparing the consolidated financial statements. Sale of Fluids Systems Business In September 2024, we completed the sale of the Fluids Systems business. See Note 2 for additional information.
Selling, general and administrative expenses in 2022 included $1.8 million of costs within divested business units. 28 Other operating income, net Other operating income, net for 2023 primarily reflects gains and losses associated with the sale of assets, including assets previously used in divested businesses, as well as lease income on office space from third-party lessees.
Selling, general and administrative expenses as a percentage of revenues was 21.2% for 2024 compared to 24.6% for 2023. Other operating (income) loss, net Other operating (income) loss, net primarily reflects gains and losses associated with the sale of assets. In addition, 2024 includes a $0.6 million gain related to a legal settlement.
Product sales revenues decreased slightly for 2023, with continued strong demand across sectors, including utilities. Product sales typically fluctuate based on the timing of customer projects and orders.
Product sales revenues decreased slightly for 2023, with continued strong demand across sectors, including utilities. 24 Cost of revenues Cost of revenues increased 2% to $135.1 million for 2023 (34.9% gross profit margin), compared to $133.0 million for 2022 (31.1% gross profit margin).
We expect capital expenditures in 2024 will remain fairly in line with 2023 levels, with spending heavily focused on the expansion of our mat rental fleet. We also expect to return value to our shareholders, utilizing excess cash generation to fund additional share repurchases.
We expect capital expenditures in 2025 to be $35 million to $40 million, with spending primarily focused on the expansion of our mat rental fleet to further support the utilities market penetration. We also expect to use a portion of our existing liquidity to return value to our shareholders and pursue our long-term strategic initiatives.
In addition, in April 2022, a U.K. subsidiary entered a £7.0 million term loan and a £2.0 million revolving credit facility. Both the term loan and revolving credit facility mature in April 2025 and bear interest at a rate of Sterling Overnight Index Average plus a margin of 3.25% per year.
In April 2022, a U.K. subsidiary entered a £7.0 million term loan and a £2.0 million revolving credit facility. In October 2024, all amounts outstanding under the term loan and revolving credit facility were repaid, and both were terminated. We also maintain finance leases primarily related to transportation equipment.
Removed
We currently operate our business through two reportable segments: Industrial Solutions and Fluids Systems, as described further below. In addition, we had a third reportable segment, Industrial Blending, which was exited in 2022. We have reflected these three reportable segments for all periods presented in this Annual Report on Form 10-K.
Added
On 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.
Removed
Over much of the past decade, while the Fluids Systems segment has been the primary driver of revenues, the Industrial Solutions segment has been the primary driver of operating income, cash flows, and financial returns. Consequently, our growth investments in recent years have been heavily concentrated in the Industrial Solutions segment.
Added
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. 2024 Strategic Actions As aligned with our Strategy described in Part I. Item I.
Removed
For 2023, the relative revenues, operating income, and capital expenditures for the Industrial Solutions and Fluids Systems segments for 2023 are as follows (amounts in millions): * Fluids Systems segment operating income for 2023 includes $12.7 million in total charges for certain impairments, facility exit, severance costs, and transaction related expenses for the ongoing Fluids Systems segment sale process as described further below.
Added
Business, the following strategic actions were taken in 2024. • Completed the Fluids Systems Sale Transaction – The September 2024 sale marked an important strategic milestone for our company, simplifying our business model while meaningfully improving our margin profile, return on investment and profitability potential, as we focus on growing our scale as a leading, pure-play specialty rental and services business in the global worksite access and critical infrastructure markets.
Removed
In June 2023, we announced that we initiated a review of strategic alternatives for the long-term positioning of the Fluids Systems division. We have retained Lazard to serve as our exclusive financial advisor in connection with the strategic review.
Added
The estimated total consideration of the Sale Transaction was $88.2 million, which includes $70.2 million of cash proceeds received at closing, $16.0 million of receivables, primarily reflecting an adjustment for the final working capital conveyed at closing, and a $5 million interest-bearing note receivable, partially offset by net deferred consideration liabilities. • Rebranded as NPK – In December 2024, we announced our new brand identity, aligning with our strategic focus on specialty rental solutions for the global access market, and launched a new company website (www.npki.com).
Removed
In September 2023, we launched a formal sale process for substantially all the Fluids Systems business as part of this strategic review. While the sale process is ongoing, we anticipate substantially completing the process in mid-2024, although it is not certain that any such transaction will be consummated on that timeline or at all.
Added
NPK International commenced trading on the NYSE under the ticker symbol “NPKI” beginning December 19, 2024. • Strengthened Balance Sheet – We ended 2024 with total cash of $17.8 million, total debt of $7.7 million, and available liquidity under our ABL credit facility of $65.8 million, positioning the Company to pursue our stated organic and inorganic growth strategy. • Accelerated Organic Growth – In support of our efforts to accelerate revenue growth through the expansion of our high-return rental business, approximately $37 million of our 2024 capital expenditures were directed to the expansion of our mat rental fleet, expanding the rental fleet by approximately 11%, driving a 7% year-over-year increase in rental revenues. • Drove Operational Efficiency – During 2024, we continually took actions to streamline our overhead structure, which contributed to a $5.0 million year-over-year reduction in selling, general and administrative expenses (“SG&A”) for 2024.
Removed
As part of the strategic review, we will continue to evaluate under-performing areas within our business and anticipate additional actions may be necessary to optimize our operational footprint and invested capital within the Fluids Systems segment.
Added
SG&A as a percentage of revenues was 21.2% for 2024 compared to 24.6% for 2023. We plan to maintain our focus on efficiency improvements and operating cost optimization across every aspect of our business.
Removed
If we successfully complete the process to substantially exit the Fluids Systems segment, our remaining operations will primarily reflect a specialty rental and service business, serving the utilities sector and other critical infrastructure markets.
Added
With the recent completion of the sale of the Fluids Systems business and simplified business model, we continue to evaluate and execute actions intended to streamline the organization and our cost structure, driving improvements in profitability, with the goal of driving SG&A as a percentage of revenue to a mid-teens range by early 2026. 21 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Consolidated Results of Operations Summarized results of operations for 2024 compared to 2023 are as follows: Year Ended December 31, 2024 vs 2023 (In thousands) 2024 2023 $ % Revenues $ 217,489 $ 207,648 $ 9,841 5 % Cost of revenues 140,359 135,094 5,265 4 % Selling, general and administrative expenses 46,048 51,083 (5,035) (10) % Other operating (income) loss, net (1,269) (1,469) 200 NM Operating income from continuing operations 32,351 22,940 9,411 41 % Foreign currency exchange (gain) loss 869 (889) 1,758 NM Interest expense, net 2,621 4,107 (1,486) (36) % Income from continuing operations before income taxes 28,861 19,722 9,139 46 % Provision (benefit) for income taxes from continuing operations (6,738) 5,573 (12,311) NM Income from continuing operations 35,599 14,149 21,450 NM Income (loss) from discontinued operations (185,861) 367 (186,228) NM Net income (loss) $ (150,262) $ 14,516 $ (164,778) NM The following table presents further disaggregated revenues by type: Year Ended December 31, 2024 vs 2023 (In thousands) 2024 2023 $ % Rental and service revenues $ 145,785 $ 149,954 $ (4,169) (3) % Product sales revenues 71,704 57,694 14,010 24 % Total revenues $ 217,489 $ 207,648 $ 9,841 5 % The following table presents gross profit margins by type: Year Ended December 31, Change (In thousands) 2024 2023 Rental and service - Gross profit margin 35.3 % 34.3 % 100 bps Product sales - Gross profit margin 35.8 % 36.7 % (90) bps Total gross profit margin 35.5 % 34.9 % 60 bps Revenues Revenues increased 5% to $217.5 million for 2024, compared to $207.6 million for 2023, including a 24% increase in product sales revenues, partially offset by a 3% decline in rental and service revenues.
Removed
See further information below. 2023 Priorities The following summarizes our performance against key priorities established for 2023: • Accelerate Industrial Solutions Growth – We continued to prioritize investment capital in the growth of our Industrial Solutions business, where over the past several years, we have seen the strong market adoption of our specialty rental products and differentiated service offering.
Added
Rental revenues increased $6.1 million (7%) primarily due to higher rental volume driven by our organic growth efforts, partially offset by lower pricing. Service revenues decreased $10.3 million (15%), primarily attributable to a reduced level of services required within customer rental projects.
Removed
For 2023, 90% of our capital expenditures were directed to the Industrial Solutions segment.
Added
Product sales revenues increased $14.0 million (24%) for 2024, primarily reflecting an increasing customer adoption of manufactured composite matting products relative to timber-based products that continue to be the primary solution used for temporary worksite access.
Removed
Industrial Solutions segment revenues were $207.6 million in 2023, reflecting an 8% increase from 2022, including a 12% increase in rental and services, with higher revenues seen broadly across all major industries served. • Operational Excellence – We increased our focus on efficiency improvements and operating cost optimization across every aspect of our global footprint.
Added
The majority of the 2024 and 2023 revenues were derived from customers in the power transmission sector. 22 Cost of revenues 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.
Removed
With our simplified business model and enhanced focus on balance sheet optimization, we seek to improve returns and consistency in cash flow generation.
Added
The improvement in gross profit margin is primarily attributable to the effects of an improved revenue mix. Rental and service margins increased primarily due to a higher proportion of rental revenues and a lower proportion of service revenues.
Removed
During 2023, we generated $100.0 million of operating cash flow, which was partially driven by the effects of the 2022 divestitures and ongoing efforts to restructure or reduce the level of invested capital in underperforming business activities within the Fluids Systems segment.
Added
Product sales margins 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. Selling, general and administrative expenses Selling, general and administrative expenses decreased $5.0 million to $46.0 million for 2024, compared to $51.1 million for 2023.
Removed
In addition, we have continually evaluated and executed actions intended to streamline the organization and our cost structure, driving reductions in overhead costs and improvements in profitability. 23 • Prioritize Return of Capital – We are committed to maintaining a strong balance sheet, using excess cash generation to reduce our debt and return value to our shareholders.
Added
The decrease was primarily driven by lower performance-based incentives and other personnel expense resulting from efforts to streamline the overhead structure, lower severance costs, as well as increased lease and sublease income associated with our administrative offices. In addition, 2023 included $1.4 million of costs related to strategic planning projects.
Removed
During 2023, we utilized $47 million of cash generation for debt repayments and another $32 million to repurchase 6.5 million (7%) of our outstanding shares under our repurchase program.
Added
Interest expense, net Interest expense was $2.6 million for 2024 compared to $4.1 million for 2023. The decrease in interest expense is primarily due to a decrease in average debt outstanding. The 2024 expense includes a $0.5 million non-cash write off of debt issuance costs associated with the amendment of our Amended ABL Facility.
Removed
Our Industrial Solutions segment has been our primary source of operating income and cash generation in recent years, and has also been the primary focus for growth investments.
Added
Discontinued operations also includes an allocation of interest expense on corporate debt. Such interest expense totaled $1.4 million and $2.4 million for 2024 and 2023, respectively. Provision (benefit) for income taxes from continuing operations 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.
Removed
The growth of our business in the power transmission and other industrial markets remains a strategic priority for us due to the relative stability of such markets compared to E&P, as well as the magnitude of growth opportunity in these markets, including the potential positive impact from the energy transition and future legislation and regulations related to greenhouse gas emissions and climate change.
Added
The 2024 benefit includes 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.
Removed
We expect customer activity, particularly in the power transmission sector, will remain robust in the coming years, driven in part by the impacts of the U.S. energy transition and the increasing investment in grid reliance initiatives.
Added
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 Income (loss) from discontinued operations reflects the former Fluids Systems segment, which was sold in the third quarter of 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed1 unchanged
Biggest changeInterest Rate Risk At December 31, 2023, we had total principal amounts outstanding under financing arrangements of $75.1 million, including $45.0 million of borrowings under our Amended ABL Facility, $7.8 million of borrowings under a U.K. term loan and credit facility, and $4.3 million under certain other international credit facilities, which are subject to variable interest rates as determined by the respective debt agreements.
Biggest changeInterest Rate Risk We are primarily exposed to interest rate risk through our Amended ABL Facility, which is subject to variable interest rates as determined by the debt agreement. At December 31, 2024, we had no borrowings under our Amended ABL Facility.
Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies. 41
Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies. 31
Foreign Currency Risk Our principal foreign operations are conducted in certain areas of EMEA, Canada, and Asia Pacific. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate including European euros, Canadian dollars, Kuwaiti dinar, Algerian dinar, Romanian leu, British pounds, and Australian dollars.
Foreign Currency Risk Following the Fluids Systems sale in September 2024, our principal foreign operations are currently conducted in the U.K., which contributed approximately 6% of our consolidated revenues. We have foreign currency exchange risks associated with these operations, which are conducted principally in British pounds.
Removed
The weighted average interest rates at December 31, 2023 for the Amended ABL Facility, U.K. debt, and other international credit facilities was 6.9%, 8.4%, and 8.6%, respectively. Based on the balance of variable rate debt at December 31, 2023, a 100 basis-point increase in short-term interest rates would have increased annual pre-tax interest expense by $0.6 million.

Other NPKI 10-K year-over-year comparisons