NPK International Inc. (NPKI)

ITEM 2.    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 unaudited condensed consolidated financial statements and notes thereto included in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2025. Our second quarter represents the three-month period ended June 30 and our first half represents the six-month period ended June 30. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”

Overview

NPK International Inc. (“NPK,” the “Company,” “we,” “our,” or “us”) is a worksite access solutions company that manufactures, sells, and rents recyclable composite matting products, along with a full suite of services, including planning, logistics, and site restoration. In the first half of 2026, 67% of our revenues were generated from the rental of our recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, oil and natural gas exploration and production, pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom. The remaining 33% of our first half of 2026 revenues were generated from the sale of our manufactured recyclable composite mats to customers around the world, with power transmission being the primary end-market.

2026 Priorities

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 rental business, which includes a combination of geographic expansion to new growth territories, primarily within the U.S., while also expanding customer market share within currently-served markets. As part of this effort, we have placed a particular emphasis on penetrating larger-scale, longer-term (six months or longer) projects, which we believe will help drive improvements in revenue stability and operational efficiency. Due in part to the success of our efforts, rental and service revenues increased $16 million, or 18%, year-over-year for the first half of 2026, including a 22% increase in rental revenues. We prioritize investment capital to support our organic growth objective, where over the past several years, we have seen the strong market adoption of our specialty rental products and differentiated service offering. During the first half of 2026, we made net investments of $24.3 million in the expansion of our composite rental fleet, expanding our owned composite mat rental fleet by 7%. Further, with our revenue growth and the favorable macro-environment, in March 2026, our Board of Directors approved management’s plan to expand our composite mat production capacity by approximately 50% over current levels. We expect to invest $40 million to $45 million through the second quarter of 2027 to complete this expansion, of which $4.1 million was invested in the second quarter of 2026, with production expected to start up by mid-2027.

•Pursue Inorganic Growth – We seek to accelerate our growth and enhance shareholder value through strategically-aligned inorganic actions, leveraging our scale to increase our value and relevance to customers, and we continually evaluate inorganic opportunities that align with our objectives. In November 2025, we completed the acquisition of Grassform Plant Hire Limited (“Grassform”), a U.K. market leader in ground protection and temporary roadway solutions and services with a fleet of over 20,000 composite mats. Our U.K. operations generated $19.2 million of revenues during the first half of 2026, a $10.2 million increase over the first half of 2025, with the substantial majority of the increase driven by the Grassform acquisition.

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

•Enhance Return on Capital – We are committed to maintaining a strong balance sheet, prioritizing organic investment to expand our rental business while evaluating accretive inorganic growth opportunities to accelerate growth and returning excess cash generation via programmatic share repurchases. During the first half of 2026, we utilized $2.7 million to repurchase 0.2 million shares under our share repurchase program.

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Second Quarter of 2026 Compared to Second Quarter of 2025

Consolidated Results of Operations

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

The following table presents further disaggregated revenues by type:

Revenues

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

Cost of revenues

Cost of revenues increased 19% to $51.4 million for the second quarter of 2026 (37.0% gross profit margin), compared to $43.1 million for the second quarter of 2025 (36.9% gross profit margin), primarily driven by the 20% increase in revenues described above. Gross profit margin was substantially in line with the prior year, and reflects the effect of improved rental

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pricing and manufacturing cost leverage for product sales, substantially offset by lower rental fleet utilization attributable to the timing of large-scale projects, and $0.2 million of expenses associated with our manufacturing expansion effort.

Selling, general and administrative expenses

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

Other operating (income) loss, net

Other operating (income) loss, net primarily includes gains and losses on sales of non-rental assets.

Foreign currency exchange

Foreign currency exchange for the second quarter of 2026 and 2025 reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies, principally related to our U.K. operations.

Interest (income) expense, net

Interest expense, net was minimal for both the second quarter of 2026 and 2025, reflecting limited outstanding debt.

Provision for income taxes from continuing operations

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

Income (loss) from discontinued operations, net of tax

Loss from discontinued operations, net of tax reflects ongoing wind down costs of the former Fluids Systems segment, which was sold in the third quarter of 2024, including costs related to the transaction and the closure of certain foreign subsidiaries that are no longer operational.

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First Half of 2026 Compared to First Half of 2025

Consolidated Results of Operations

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

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ITEM 7. 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. In 2025, 66% of our revenues were generated from the rental of our recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, oil and natural gas exploration and production, pipeline, renewable energy, petrochemical, construction and other industries within the United States and United Kingdom. The remaining 34% of our 2025 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.

We previously operated a Fluids Systems business, which was historically reported as a separate operating segment. In September 2024, we completed the sale of substantially all of the Company’s Fluids Systems segment (the “Sale Transaction”) to SCF Partners, a leading private equity firm serving the global energy industry (the “Purchaser”). The results of operations of Fluids Systems are reported in discontinued operations in the consolidated statements of operations. All results and information in the consolidated financial statements and related notes are presented for our continuing operations and exclude Fluids Systems unless otherwise noted specifically as discontinued operations. See Note 2 for additional information.

2025 Strategic Actions

As aligned with our Strategy described in Part I. Item I. Business, the following reflect our strategic priorities intended to enhance long-term shareholder value as well as our actions and achievements in 2025.

•Accelerated Organic Growth – We seek to accelerate revenue growth through the expansion of our rental business, which includes a combination of geographic expansion to new growth territories, primarily within the U.S., while also expanding customer market share within currently-served markets. As part of this effort, we have placed a particular emphasis on penetrating larger-scale, longer-term (six months or longer) projects, which we believe will help drive improvements in revenue stability and operational efficiency. Due in part to the success of our efforts, rental and service revenues increased $38 million, or 26%, year-over-year for 2025, including a 39% increase in rental revenues. The elevated growth in rental revenues has been primarily attributable to our success on larger-scale, longer-term projects with a key utilities customer, and consequently, the revenue contribution from this customer grew substantially to 19% of our total revenues in 2025. We prioritize investment capital to support our organic growth objective, where over the past several years, we have seen the strong market adoption of our specialty rental products and differentiated service offering. During 2025, we made net investments of $37 million in the expansion of our composite rental fleet, expanding the fleet by approximately 16% (excludes Grassform, as discussed below). Further, with our revenue growth and the favorable macro-environment, we have also accelerated our manufacturing capacity expansion planning efforts. As a result, 2025 cost of revenues includes $0.9 million of expense associated with these efforts. In 2026, we intend to make investments to expand our composite mat production capacity, with additional capacity expected to come online in the first half of 2027.

•Pursued 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. We continually evaluated inorganic opportunities that align with our objectives throughout 2025, and our 2025 selling, general and administrative expenses expense (“SG&A”) includes $1.1 million of costs in support of this effort. In November 2025, we completed the acquisition of Grassform Plant Hire Limited (“Grassform”), a U.K. market leader in ground protection and temporary roadway solutions and services with a fleet of over 20,000 composite mats. We anticipate that the acquisition will meaningfully increase the scale and capabilities of our U.K. operations.

•Drove Operational Efficiency – We are focused on efficiency improvements and operating cost optimization across every aspect of our business. Throughout 2025, we continued to evaluate and execute actions intended to streamline the organization and our cost structure, driving improvements in profitability, with the goal of driving SG&A as a percentage of revenue to a mid-teens range by early 2026. During 2025, we incurred $1.2 million of severance expense associated with our streamlining efforts. Additionally, during the second half of 2025, we began the rollout of our new cloud-based enterprise resource planning (“ERP”) system, which is expected to be substantially completed in the first quarter of 2026. SG&A includes $0.5 million of expenses associated with the ERP rollout in 2025. In addition, we have capitalized $5.1 million of implementation costs for our cloud-based ERP system during 2025 that are included in prepaid expenses and other current assets, as well as other assets, on the balance sheet. We also

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incurred $1.1 million in acquisition-related transaction costs primarily attributable to the Grassform acquisition. SG&A as a percentage of revenues was 19.5% for 2025 compared to 21.2% for 2024.

•Enhanced Return on Invested Capital – We are committed to maintaining a strong balance sheet, prioritizing organic investment to expand our rental business while evaluating accretive inorganic growth opportunities to accelerate growth and returning excess cash generation via programmatic share repurchases. During 2025, we utilized $20.4 million to repurchase 3.0 million shares (4% of our outstanding shares) under our share repurchase program.

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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Consolidated Results of Operations

Summarized results of operations for 2025 compared to 2024 are as follows:

The following table presents further disaggregated revenues by type:

The following table presents gross profit margins by type:

Revenues

Revenues increased 27% to $277.0 million for 2025, compared to $217.5 million for 2024, including a 26% increase in rental and service revenues and a 30% increase in product sales revenues. Rental revenues increased $34.7 million (39%), primarily due to higher rental volume driven by our organic growth efforts, partially offset by lower pricing resulting primarily from a higher mix of larger-scale, longer-term rental projects. Service revenues increased $3.3 million (6%), primarily attributable to the increased level of customer rental projects, though at a lower rate than rental revenues, due to the lower relative service requirements on the higher mix of larger-scale, longer-term rental projects. Product sales revenues increased $21.6 million (30%), reflecting continued strength in customer adoption of manufactured composite matting products relative to timber-based products that continue to be the primary solution used for temporary worksite access in the market. More than 80% of the 2025 product sales revenues were derived from utility companies.

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Cost of revenues

Cost of revenues increased 26% to $176.3 million for 2025 (36.4% gross profit margin), compared to $140.4 million for 2024 (35.5% gross profit margin), primarily driven by the 27% increase in revenues described above. The 140 basis point improvement in rental and service gross profit margin is also attributable to the effects of an improved revenue mix, including a higher proportion of rental revenues and a lower proportion of service revenues. Cost of revenues in 2025 includes approximately $11 million of cross-rental costs required to meet customer demand, and was negatively impacted by approximately $1.6 million of elevated transportation costs required to meet customer project timelines, as well as $0.9 million of costs incurred with our manufacturing capacity planning efforts as described above. Product sales gross profit margin declined 10 basis points, primarily reflecting lower pricing on large volume sales to utility customers, partially offset by improved manufacturing cost leverage, as 2024 included an approximately $1 million impact of an unscheduled downtime event on one of the production lines at our manufacturing facility.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $54.0 million for 2025, compared to $46.0 million for 2024. Selling, general and administrative expenses as a percentage of revenues was 19.5% for 2025 compared to 21.2% for 2024. The increase in expense was primarily driven by higher performance-based incentives, including $1.5 million in elevated charges related to performance-based awards measured on the Company’s TSR as compared to the TSR of a designated peer group, while 2024 included a $0.8 million charge, as well as $1.1 million in acquisition-related transaction costs primarily attributable to the Grassform acquisition, and $0.5 million of ERP implementation costs as described above. In addition, selling, general and administrative expenses included $1.2 million of severance costs in 2025 compared to $0.7 million in 2024.

Other operating (income) loss, net

Other operating (income) loss, net primarily inc

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