NPK International Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the third quarter of 2026 was $76.3 million, an 11% increase compared to $68.8 million in the prior year period.
• Rental and service revenue increased 12% to $49.6 million, while product sales increased 9% to $26.7 million.
• Operating income from continuing operations was $9.2 million, compared to $9.1 million in the prior year period.
• Operating margin from continuing operations was 12.0%, a 120 basis point decrease from 13.2% in the prior year period.
• Income from continuing operations was $6.3 million ($0.07 per diluted share), unchanged from $6.3 million ($0.07 per diluted share) in the prior year period.
• Adjusted EBITDA from continuing operations was $20.0 million, a 30% increase from $15.4 million in the prior year period.
• Adjusted EBITDA margin was 26.2%, a 390 basis point increase from 22.3% in the prior year period.
• Gross margin was 31.3% in the third quarter of 2026, compared to 31.9% in the prior year period.
• Selling, general and administrative (SG&A) expenses were $14.7 million (19.3% of revenues), compared to $13.3 million (19.3% of revenues) in the prior year period.
• SG&A expenses included $1.2 million in severance and related costs for executive leadership transition and $0.7 million in strategic planning and diligence costs.
• Net cash provided by operating activities was $7.1 million, a decrease of $17.6 million from $24.7 million in the prior year period.
• Free cash flow was $(4.4) million, a decrease of $16.9 million from $12.5 million in the prior year period.
• Total debt was $26.3 million and cash was $4.2 million as of September 30, 2026.
• Available liquidity under the senior secured revolving credit facility was $132.2 million.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance is $300 million to $305 million.
• Full-year 2026 Adjusted EBITDA guidance is $90 million to $93 million.
• Full-year 2026 capital expenditures guidance is $70 million to $75 million, including $40 million to $45 million for rental fleet expansion and approximately $20 million for manufacturing expansion.
• Management expects strong rental and service trends to finish the year.
• Growth expectations for 2027 remain unchanged.
• Manufacturing facility expansion in Carencro, Louisiana is on track to begin operations by mid-2027.
• Management anticipates double-digit rental growth in the coming years.

Business Segments and Product Lines:

• Business activity remains robust in core power transmission markets.
• Quoting activity remained robust with year-over-year growth of approximately 20% throughout 2026.
• Rental demand in the third quarter was impacted by exceptionally dry weather in Texas, causing several scheduled large-scale utility projects to commence without matting.
• Revenue decline in the Texas region was partially offset by growth in other targeted expansion markets.
• Manufacturing capacity expansion in Carencro, Louisiana is expected to increase capacity by approximately 50% from current levels.
• The Company expects to invest $40 million to $45 million in the manufacturing expansion by mid-2027, with $10.5 million invested through September 30, 2026.
• Capital investments of $11.4 million were used in the third quarter, primarily funding the growth of the mat rental fleet and the manufacturing expansion project.

Market and Competitive Landscape:

• Underlying demand trends in core power transmission markets remain robust.
• Rental project activity significantly strengthened throughout October.
• Management believes strategic investments position the company to capitalize on attractive growth opportunities.
• The Company continues to evaluate organic growth opportunities and strategic acquisitions to expand presence in new and underpenetrated markets.

Risks and Challenges:

• Exceptionally dry weather in Texas negatively impacted matting demand during the third and early fourth quarter.
• Delayed deployments on several large projects occurred during the third quarter.
• Forward-looking statements involve risks including economic and market conditions, customer concentration, fleet management, manufacturing capacity expansion, operating hazards, contract termination risks, raw material prices, inflation, and severe weather.

Management Commentary and Tone:

• Matthew Lanigan, President and CEO, stated the company generated 11% revenue and 30% Adjusted EBITDA growth despite delayed deployments.
• Management noted that while weather impacted Texas demand, fundamental demand trends in core markets remain strong.
• Management expressed confidence in the strength and long-term durability of growth trends driving the business.
• Management highlighted a strong liquidity position providing flexibility to balance growth investments with capital returns.

Other Key Points:

• The Company repurchased $13.4 million of common equity in the third quarter of 2026, consisting of 1.0 million outstanding shares.
• $76 million remains under the current share repurchase authorization.
• The Company executed a programmatic return of capital program prioritizing investments with superior return profiles.
• The Company is a worksite access solutions provider manufacturing, selling, and renting recyclable composite matting products and services for critical infrastructure markets.