NPK International (NPKI) Earnings Transcript

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Date

Feb. 26, 2026 at 9:30 a.m. ET

Call participants

• President and Chief Executive Officer — Matthew S. Lanigan
• Chief Financial Officer — Gregg S. Piontek

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Takeaways

• Total revenue -- $277 million for fiscal 2025, up 27% year over year, with a 31% increase in the fiscal fourth quarter.
• Adjusted EBITDA -- $22 million in the fiscal fourth quarter, up 41% sequentially and 27% year over year; full-year adjusted EBITDA grew 38% year over year.
• Gross margin -- 37.7% in the fiscal fourth quarter, up from 31.9% in the prior quarter and slightly below 39.2% in the same quarter last year, primarily due to cross-rental costs.
• Rental revenues -- $124 million for fiscal 2025, increasing 39% year over year; 18% sequential and 35% year-over-year growth in the fiscal fourth quarter.
• Product sales -- $25 million recognized in the fiscal fourth quarter, up 4% sequentially and 62% year over year; full-year product sales advanced 30% year over year.
• Adjusted EPS -- $0.13 per diluted share in the fiscal fourth quarter, versus $0.07 in the prior quarter and $0.08 in the prior year's fourth quarter; full-year adjusted EPS improved 83% year over year.
• Share repurchases -- 4% of outstanding shares repurchased in 2025 at an average price of $6.70 per share, reducing the share count by approximately 2 million for the year.
• After-tax return on net assets -- 11% for fiscal 2025, a significant improvement over the prior period.
• SG&A expenses -- $15.4 million in the fiscal fourth quarter, including $1.8 million in acquisition and severance costs and $0.4 million from Grassform Plant Hire; the remainder represents recurring expenses.
• Net CapEx -- $12 million in the fiscal fourth quarter, primarily for rental fleet growth; $43 million for the full year.
• Rental fleet -- Approximately 215,000 composite mats at year-end, reflecting a 16% expansion (including 20,000 mats added through the Grassform Plant Hire acquisition).
• Operating cash flow -- $73 million generated for the full year, plus $17 million from the Fluids divestiture and $42 million used for the Grassform Plant Hire acquisition.
• Net debt -- $12 million at year-end, with $17 million in total debt and $5 million in total cash; $139 million available under the credit facility.
• 2026 guidance -- Projected revenue of $305 million-$325 million and adjusted EBITDA of $88 million-$100 million; midpoints reflect 14% revenue and 25% adjusted EBITDA growth.
• CapEx outlook -- $45 million-$55 million planned for 2026, with $35 million-$45 million dedicated to fleet expansion, excluding manufacturing expansion projects.
• Effective tax rate -- 26% for the fiscal fourth quarter (excluding a $1.5 million benefit) and 28% for the full year; expectation for mid to upper twenties in 2026.
• Deferred tax assets -- $40 million in NOLs and tax credits carried into 2026, expected to significantly limit near-term cash tax payments.
• Sector exposure -- Over two-thirds of 2025 revenue, including 60% of rental and service revenue, driven by the power transmission sector; more than 80% of 2025 product sales revenue derived from utility companies.
• Pipeline growth -- Entering 2026, quoted volumes are about 30% higher than the previous year, with roughly two-thirds tied to existing customers and one-third to new geographies.
• ERP system implementation -- Enterprise resource planning system successfully implemented across legacy operations in early 2026, aiming for further SG&A efficiencies.

Summary

NPK International (NYSE:NPKI) delivered fiscal fourth quarter and full-year results that exceeded internal expectations, driven by sustained rental fleet utilization and strong product sales. Management emphasized the successful execution of 2025 priorities, including organic rental growth, the acquisition of Grassform Plant Hire, and the rollout of a new ERP system, each contributing to improved operating leverage. Strategic guidance for fiscal 2026 focuses on further rental-driven growth, continued investment in fleet and manufacturing capacity, and disciplined capital allocation balancing acquisitions and shareholder returns.

• Management stated, "At this point, we still anticipate Q3 and some activities to be the major seasonality impact on the business. We get some offset from activities in the UK, but with the bulk of the density of our work being here in the U.S, you should expect to see that. You will see a dampening, I expect, with the UK, but largely following the same trend as historical," indicating the expected persistence of third-quarter revenue seasonality despite international activities.
• Gregg S. Piontek said, "The one thing to highlight there in terms of that broad range is your biggest wildcard is the product sales side, and it goes back to my commentary about the project-centric nature of it," citing the project-centric nature and customer CapEx timing as primary drivers of forecast range width.
• The company communicated, "what we are seeing is early stages of some improvement in pricing in the market now," though overall 2026 revenue guidance is primarily volume-driven.
• After integrating the Grassform Plant Hire acquisition, management signaled continued pursuit of inorganic growth opportunities, while stressing that share repurchases remain "programmatic, opportunistic," and secondary to fleet and capacity investments.
• The organization enters 2026 with a "robust commercial pipeline" and intends to expand the DuraBase composite mat rental fleet by a "low to mid-teens percentage."

Industry glossary

• Composite mat: A large, engineered panel used to provide stable, temporary access roads or work surfaces, typically replacing timber mats in energy and construction infrastructure projects.
• DuraBase: Proprietary composite mat product line from NPK International targeting heavy-duty worksite access applications.
• Cross-rent: The short-term rental of equipment from third-party owners to meet temporary project demand or supplement the company's own fleet.
• Net CapEx: Capital expenditures net of asset sales or reimbursements, representing the actual cash outflow toward long-term asset growth.
• NOLs: Net operating loss carryforwards, tax attributes that allow a company to offset future taxable income, lowering cash tax outlays.

Full Conference Call Transcript

Matthew S. Lanigan, our President and Chief Executive Officer. Before handing over to Matthew, I would like to highlight that today's discussion contains forward-looking statements regarding future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. Our comments on today's call may also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website at npki.com.

There will be a replay of today's call, and it will be available by webcast within the Investor Relations section of our website at npki.com. Please note that the information disclosed on today's call is current as of 02/26/2026. At the conclusion of our prepared remarks, we will open the line for questions. I will now turn the call over to our President and CEO, Matthew S. Lanigan.

Matthew S. Lanigan: Thanks, Gregg, and welcome to everyone joining us on today's call. We are very pleased with our strong fourth quarter performance, which reflects a record finish to 2025 and continues to highlight the merits of our long-term growth strategy. Total revenues for the fourth quarter increased 9% sequentially and 31% year over year, benefiting from sustained strength in rental fleet utilization, including the impacts of multiple large-scale utility projects discussed last quarter. Product sales demand also remained robust, contributing $25,000,000 to fourth quarter revenue. The elevated utilization and our strong execution delivered a solid improvement in profitability, resulting in a fourth quarter adjusted EBITDA of $22,000,000, representing a 41% sequential and 27% year over year improvement.

Our strong Q4 results are a direct reflection of our commitment to our key strategic priorities. As I reflect on our 2025 performance, I wanted to take a moment to highlight our achievements against each of the initiatives we laid out one year ago. Entering 2025, our highest priority was to accelerate organic rental growth, which we believe represents the stickiest and highest long-term driver of returns. For the full year 2025, we delivered $124,000,000 in rent revenues, representing 39% year over year growth, of which 37% was from organic growth and 2% was from our November acquisition of Grassform Plant Hire.

To support our rental growth, we invested a net $37,000,000, expanding our DuraBase-based fleet by 16% in the year, with the impact of roughly 20,000 composite mats added through the Grassform Plant Hire acquisition. We ended the year with approximately 215,000 composite mats in our rental fleet. In addition to the strong rental growth, product sales grew by 30% year over year, reflecting continued robust demand for our industry-leading composite matting solutions. In total, we delivered $277,000,000 of revenue for the year, up 27% year over year, while also expanding our gross margin by nearly 100 basis points to 36.4% and expanding adjusted EBITDA margin by more than 200 basis points to 27.3%.

As highlighted last quarter, a key component of our organic growth strategy is our continued focus on manufacturing capacity expansion, which accelerated in the second half of the year. Our total production volumes for 2025 increased by more than 15% year over year as we transitioned to 24/7 production and implemented manufacturing process modifications to enhance throughput. With the full-year benefit of these changes in 2026, we believe we have sufficient production capacity to meet our near-term growth needs. Looking longer term, our team is wrapping up the evaluation of manufacturing expansion options that aim to bring additional capacity online in 2027, and we will provide more details on this in our first quarter earnings call.

Our second priority coming into 2025 was a focused pursuit of strategic inorganic growth. Throughout the year, we actively evaluated several opportunities, assessing each for strategic and cultural alignment as well as their ability to meet our required economic returns. We were very pleased to complete the acquisition of Grassform Plant Hire in November, which strengthens our capabilities and enhances our scale, positioning us as a top-tier worksite access provider in the UK market. We welcome the talented Grassform Plant Hire team to NPK International Inc. and look forward to seeing our combined UK team deliver for our customers in this growing market.

Our third priority for 2025 was the pursuit of operational efficiency. Over the past year, we completed our required transitional support services for the divested Fluids business while simultaneously advancing a major ERP conversion project. I am pleased to highlight that we have now successfully rolled out the new ERP to all our legacy operations. As with any ERP system conversion, this was a major undertaking impacting nearly every process and employee in the company. We appreciate all the hard work from our dedicated team and are very pleased with the results to date as the organization adapts to the new system and begins to realize and expand the enabled efficiencies it creates.

The ERP system is yet another significant milestone in our efforts to streamline our overhead cost SG&A profile.

Our fourth and final priority for 2025 was to enhance our return on invested capital. As a result of the operating leverage that our growth in profitability drives through our asset base combined with our focused balance sheet management, I am very pleased to highlight that we delivered an after-tax return on net assets of 11% in 2025, a substantial year over year improvement. We also executed meaningfully on our return of capital program, repurchasing 4% of our outstanding shares in 2025 at an average price of $6.70 per share, and exited the year with 2,000,000 fewer shares outstanding versus the prior year.

Overall, our team achieved all our stated objectives, the strong execution culminating in 38% year over year improvement in adjusted EBITDA and an 83% year over year improvement in adjusted EPS. We are extremely proud of our success during 2025 and look forward to carrying this momentum into 2026. I will now turn the call over to Gregg for his prepared remarks.

Gregg S. Piontek: Thanks, Matthew. I will begin with a more detailed discussion of our fourth quarter and full year 2025 results, then provide an update on our outlook and capital allocation priorities for 2026. As Matthew touched on, with the benefit of several large-scale projects that mobilized late in the third quarter, combined with continued strength in demand across both rental and sales, fourth quarter revenues came in above our expectations. Total rental and service revenues were $50,000,000 in the fourth quarter, achieving another all-time quarterly high, with rental revenues improving 18% sequentially and 35% year over year, while associated service revenues were flat sequentially and declined 7% year over year.

The recently completed Grassform Plant Hire acquisition contributed $2,000,000 of rental and service revenues in the fourth quarter. Product sales activity also remained robust, benefiting from strong year-end demand from utility companies, generating $25,000,000 of revenues in the fourth quarter, improving 4% sequentially and 62% from the fourth quarter of last year.

For the full year 2025, rental and service revenues increased 26% year over year, while revenues from product sales increased 30%, both primarily driven by significant demand growth in the power transmission sector. More than two-thirds of our 2025 revenues were derived from the power transmission sector, including roughly 60% of rental and services and the vast majority of product sales. It is also worth noting that more than 80% of our 2025 product sales revenues were derived from utility companies as they continue to recognize the value of the DuraBase product within their owned mat fleets.

Turning to gross profit, the fourth quarter rebounded nicely with gross margin improving to 37.7%, a meaningful improvement from 31.9% in the third quarter, but modestly lower than the exceptionally strong 39.2% gross margin generated in the fourth quarter last year. The sequential gross margin improvement reflects the operating leverage benefits from the higher revenues and manufacturing volume, in addition to the roughly $1,700,000 of costs related to fleet transportation and other charges incurred during Q3. The modest year over year decline primarily reflects the continuing impact of the elevated cross-rental costs discussed in previous quarters.

Fourth quarter SG&A expenses totaled $15,400,000, which includes $1,800,000 of acquisition-related transaction costs and severance, as highlighted in yesterday's press release, along with $400,000 associated with the Grassform Plant Hire business. The remaining $13,200,000 of SG&A expense was relatively in line with expectations and the prior quarter, as the fourth quarter was again impacted by elevated costs associated with performance-based incentives primarily tied to 2025 performance targets. Income tax expense was $1,700,000 in the fourth quarter, which is net of a $1,500,000 benefit associated with the release of valuation allowances on various state net operating loss carryforwards attributable to increased profitability forecasted for the business.

Excluding this benefit, our fourth quarter effective tax rate was 26%, and full year 2025 adjusted effective tax rate was 28%. Adjusted EPS from continuing operations was $0.13 per diluted share in the fourth quarter, meaningfully improving from $0.07 per share in the third quarter and $0.08 per share in the fourth quarter of last year.

Turning to cash flows, operating activities generated $18,000,000 of cash in the fourth quarter, including $21,000,000 from net income adjusted for noncash expenses, partially offset by $3,000,000 of cash used by a net increase in working capital. Net CapEx used $12,000,000, including $11,000,000 of net investment into the fleet expansion. Looking at the full year 2025 cash flows, we generated a total of $73,000,000 of cash from operating activities, along with $17,000,000 of additional proceeds from the Fluids divestiture, using $42,000,000 for the Grassform Plant Hire acquisition and $43,000,000 to fund net capital expenditures that enabled us to expand our composite mat rental fleet by approximately 16% from 2024, while also using $20,000,000 to repurchase 3,000,000 shares.

We ended the year with total debt of $17,000,000 and total cash of $5,000,000 for a net debt position of $12,000,000. Additionally, we have $139,000,000 of availability under our bank facility, providing us with ample financial flexibility to continue executing on our growth objectives.

Now turning to our business outlook, as disclosed in yesterday's press release, our customers remain highly constructive on the near-term and longer-term outlook for utilities and critical infrastructure spending. For the full year 2026, we anticipate total revenues of $305,000,000 to $325,000,000 and adjusted EBITDA of $88,000,000 to $100,000,000. The midpoint of our range reflects 14% revenue growth and 25% adjusted EBITDA growth over 2025. Breaking our revenue expectation down, we anticipate the substantial majority of our revenue growth in 2026 to be driven by rentals and associated services. As for product sales, we remain very encouraged by the robust activity, which has provided a strong and relatively stable revenue stream over the past several quarters.

As we look to 2026, while the outlook for demand remains robust, in light of the project-centric nature and other factors that influence customer CapEx timing, our planning assumption is for product sales to remain relatively flat in 2026.

In support of our anticipated rental growth, we expect to invest net CapEx of $45,000,000 to $55,000,000 in 2026, including approximately $35,000,000 to $45,000,000 targeted for rental fleet expansion. This level of investment is expected to grow our DuraBase rental fleet by a low to mid-teens percentage, supporting our organic growth and also displacing a portion of cross-rent assets currently deployed on projects. I would also like to note that this CapEx range excludes investments in our planned manufacturing expansion, for which we plan to provide further details in our Q1 call, as Matthew mentioned earlier.

As for the near-term outlook, we expect to deliver roughly 20% year over year growth in rental and service revenues in Q1, which includes the benefit of double-digit organic growth combined with the effect of the Grassform Plant Hire acquisition. On the product sales side, we expect Q1 revenues will be fairly in line with prior Q1 levels. Q1 gross margin is expected to remain above the mid-thirties mark, likely in line with the full year 2025 results. In terms of SG&A, we expect to see a reduction in personnel expenses in Q1, primarily reflecting the reset of annual performance-based incentives for 2026, along with the impact of our SG&A streamlining efforts.

These reductions will be somewhat offset by the SG&A costs associated with the Grassform Plant Hire acquisition, which we expect will keep SG&A near the $13,000,000 quarterly level in the near term as we close in on our mid-teens percentage-of-revenue SG&A target. In terms of taxes, we expect our effective tax rate to remain in the mid to upper twenties in 2026. We entered the year with roughly $40,000,000 of NOLs and other tax credit carryforwards, which, when combined with the accelerated deductions for capital investments, are expected to significantly limit our cash tax obligations for the next several years.

As it relates to our capital allocation strategy, we continue to prioritize investment in the growth of our rental fleet, our planned manufacturing expansion, as well as strategic acquisitions, while also remaining committed to returning a portion of free cash flow generation to shareholders through a programmatic and opportunistic share repurchase program. I will now turn the call back over to Matthew for his concluding remarks.

Matthew S. Lanigan: Thanks, Gregg. With a very successful 2025 in the rearview mirror and our strategy substantially unchanged, our focus now shifts to fine-tuning the key priorities we need to execute to achieve our growth targets in 2026 and beyond. Our primary focus continues to be the scale-up of our rental platform, which generates the highest long-term returns for our business. Our strategy includes a combination of geographic expansion and market share growth within our currently served U.S. and UK markets. We remain confident that the strong momentum in these markets will support our continued fleet and operational expansion. Our view is supported by our robust commercial pipeline entering 2026, with quoted volumes approximately 30% higher than 2024.

The majority of our quoting increase is comprised of targeted growth territories and strategic customers as we seek to expand our geographic reach and diversify our customer base within these regions. While award timings and project start times are tricky to lock down within a given quarter, we feel encouraged with what we are seeing in 2026 activity levels.

To support our growth, we remain committed to expanding our DuraBase composite mat rental fleet, which we expect to grow by a low to mid-teens percentage in 2026. As I touched on earlier, we will provide further details on our manufacturing capacity expansion projects on our first quarter call and are very encouraged by the team's progress in this area with respect to both project costing and timeline. Our second focus area remains on driving organizational efficiencies across the business.

The completion of the rollout of our new ERP system in early 2026 concludes the key structural steps of our multiyear streamlining of our overhead structure, and our focus now shifts to leveraging the new system to drive further improvements in our business processes as we approach our mid-teens SG&A as a percentage of revenue target. And our final priority is the allocation of capital beyond our organic requirements. With a strong balance sheet and a disciplined approach, we remain committed to our share repurchase program while also continuing to evaluate core strategic inorganic opportunities that increase our market coverage, value, and relevance to customers in key critical infrastructure markets.

We are very pleased with the Q4 acquisition of Grassform Plant Hire in the UK, which clearly demonstrates our approach to acquisitions with a disciplined view on growth potential, value, and prudent financial leverage. Now three months post the acquisition, the integration is proceeding smoothly as our teams work through the internal and commercial processes to leverage our combined capabilities and strengthen our position and execution within the UK market. We continue to believe that, like the U.S., the UK is in the early stages of a multiyear period of increasing investment in critical infrastructure, and our growing scale and capabilities in that market will support our long-term growth.

With robust market outlooks in our served geographies, clear strategic focus, and a pristine balance sheet, we are optimistic that 2026 will be another strong year of growth for our company. Our guidance for the year reflects our commitment to investing in and growing our rental and service businesses, and continuing to lead the market conversion to longer-life fully recyclable composite matting solutions, which we believe provide superior economic returns to incumbent timber-based products. In closing, I want to thank our shareholders for their ongoing support, our employees for their dedication to the business, including their commitment to safety and compliance, and our customers for their ongoing partnership. We will now open for questions.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. We ask that you limit your questions to one question and one follow-up. Your first question comes from Aaron Michael Spychalla with Craig-Hallum.

Aaron Michael Spychalla: Good morning, Matthew and Gregg. Thanks for taking the questions.

Matthew S. Lanigan: No worries, Aaron.

Aaron Michael Spychalla: First for me, can you talk about the visibility you have into the guidance, low to mid-teens growth in rental and service, and square that with the 30% growth in the pipeline you talked about? Just timing and start times and things like that, and then how much is incorporated for Grassform Plant Hire in that as well?

Matthew S. Lanigan: I will start, Aaron. When you look at the pipeline growth of 30%, if I break that down, about two-thirds of that is really focused on our share-of-wallet expansion with existing customers, and just above a third of that is in new territories that we have been focusing on. So you are naturally going to see a difference in conversion rate as you are breaking into territories. You would expect those conversion rates to be a little lower as you prove yourself out, and that is why you are getting that discount from the 30% down.

Obviously, as the year plays out, we will continue to update that and shape it, but that is where we see this breaking out at this point in time, and that is what is driving it. I think as it pertains to your question in the UK, I think there are similar growth rates on the R&S side of what we are anticipating in that market as well.

Gregg S. Piontek: If you look at what we had published when we announced the acquisition, they had high-teens revenue on a TTM basis, and that really goes into the baseline and gets back to that double-digit growth expectation on the combined business as well. The other thing that I was going to add is just highlighting that we had talked last quarter about the successes we have had, particularly with one of the large utilities here in 2025. And to Matthew's point, as we move into 2026, replicating that success with others and diversifying that customer base is a key focus of ours.

Aaron Michael Spychalla: Understood. Thanks for the color there. And then on the EBITDA guidance, it implies a good step-up in margins as we think about 2026. Can you talk about some of the drivers behind that, some puts and takes with some of the cross-rent, and just how you are thinking about that as new capacity comes on more into 2027?

Gregg S. Piontek: We do not see cross-rent being a major change year over year. We expect that we will continue to have a fairly healthy level of cross-rent in the mix. Ultimately, you have some flexibility on your investments because if you do not have the growth rate, then you are just displacing cross-rents and you are getting the EBITDA contribution. As you take a step back and look at the EBITDA growth year over year, it is really just what that top line carries in terms of that margin on the R&S side. And then you also have that pullback on the SG&A line. We know we have been carrying the elevated incentives in 2025.

You have a reset here in 2026, so you have probably roughly a $3,000,000 drop year on year just from that item in the SG&A.

Aaron Michael Spychalla: Alright. Thanks for taking the questions. I will turn it over.

Matthew S. Lanigan: Thanks, Aaron.

Operator: Your next question is from Liam Burke with B. Riley Securities.

Liam Burke: Liam. Good morning. Your CapEx is predominantly growth CapEx. Is there anything that changes the return dynamics on the mat, or could we expect the same type of ROI, incremental ROIC, we saw this year on the rental fleet?

Matthew S. Lanigan: I think it is fair to assume it will be the same as last year, Liam.

Gregg S. Piontek: And based on the guide that we provided, you see the profile of our CapEx in 2026 looks a lot like 2025.

Liam Burke: It does look like a rewind, and that is a good thing. Gregg, with the buyback, there is more of a balance here in looking at return with the investment in the rental fleet. Is there any change in your view of buybacks?

Gregg S. Piontek: I do not think there is really any change in it. From our perspective, it is always looking at your longer-term capital needs. We have talked about being thoughtful to what inorganic opportunities are out there. We have the other project in play here that Matthew touched on in terms of the manufacturing expansion. So you are looking at your capital needs, but then beyond that, it is always, okay, any excess that you have beyond what your foreseeable needs are, then that is where the buybacks come into play. So really no change in philosophy there. And I think 2025 really illustrated how we view it. I made the comment programmatic, opportunistic.

It is a programmatic approach that you take, but it is structured in such a way where you are particularly moving when there appears to be a dislocation in markets.

Liam Burke: Great. Thank you, Matthew. Thank you, Gregg.

Matthew S. Lanigan: Thanks, Liam.

Operator: Your next question comes from Min Cho with Texas Capital Securities.

Min Cho: Great. Good morning. Thank you for taking my questions. First question, just given the growing demand, does your 2026 guidance contemplate any price increases, or is it all just growth from increased fleet and utilization?

Matthew S. Lanigan: I think what we are seeing is early stages of some improvement in pricing in the market now. I think that would be expected when you look at the need for capacity expansion. So there is an element of that in there, which is encouraging to see.

Gregg S. Piontek: I would say overall in the guidance, it is really more about volume growth. The pricing is a relatively minor contributor to our expectation.

Min Cho: Okay. Then, also, how should we think about seasonality and quarterly phasing of revenue and EBITDA in 2026, especially given utility project timing and the Grassform Plant Hire integration?

Matthew S. Lanigan: At this point, we still anticipate Q3 and some activities to be the major seasonality impact on the business. We get some offset from activities in the UK, but with the bulk of the density of our work being here in the U.S., you should expect to see that. You will see a dampening, I expect, with the UK, but largely following the same trend as historical.

Gregg S. Piontek: I go back to our historical perspective that we have always maintained that it is easier to call the business on a year than it is on a quarter, due to the fact that you have always got strong quarters and softer quarters within, and it is really project timing. It is really tough to call those project timings. As we start here in Q1, the way the year is starting out feels a lot like the pattern that we saw twelve months ago, where it started out on the soft side coming out of the holidays naturally and then picking up steam.

Min Cho: Excellent. Great. Thank you.

Gregg S. Piontek: Thanks, Min.

Operator: Your next question comes from Sameer Joshi with H.C. Wainwright.

Sameer Joshi: Good morning, Matthew, Gregg. Thanks for taking my questions. This UK acquisition, I think I heard you mention it contributed around $2,000,000 for the quarter, and I am supposing it is in the month of December. Should we annualize that from the high teens that you had said and be over $20,000,000 for next year, for 2026, I mean?

Gregg S. Piontek: I will say from our perspective, we do not get that fine with it, quite honestly. As we look at the business, we roll that in. Like I said, that baseline, what that business was on a TTM basis, goes into our base that we expect double-digit growth off of, and so it just rolls into that with the overall UK business.

Sameer Joshi: Understood. So in that light, it seems that the revenue guide on the broader range, the lower end of that range, seems pretty conservative relative to the acquisition and just organic growth from your pipeline that you are already seeing?

Gregg S. Piontek: It is a fair point. The one thing to highlight there in terms of that broad range is your biggest wildcard is the product sales side, and it goes back to my commentary about the project-centric nature of it. So that is where the revenue guide is a little bit wider for this next year.

Sameer Joshi: Understood. And then I think Matt mentioned the strategic objectives, priorities for this year, and included capacity expansion as number one, and then allocation of capital in terms of share repurchase or others as the third. Should we expect that focus will be on the manufacturing plant rather than any other initiatives?

Matthew S. Lanigan: I think Gregg sums it up in his previous answer. There is a hierarchy that we need. We have to go through what capital we need to spend to support the growth of the business. That will be fleet expansion. That will be capacity expansion. Any inorganic that we see that are accretive, beyond that if we have the surplus cash, that is when we will look to the buybacks, Sameer. So I think the way Gregg laid it out is exactly how we think about it on an ongoing basis.

Sameer Joshi: Great. Thanks a lot, and good luck.

Gregg S. Piontek: Thank you.

Operator: Your next question comes from Gerard J. Sweeney with ROTH Capital Markets.

Gerard J. Sweeney: Looking at, obviously, there is a lot of demand, but you also have capacity constraints on the mat side. Are you looking to maybe deemphasize product sales in favor of driving more rentals?

Matthew S. Lanigan: We do not need to, Gerry, I think is the answer I give you there. You said product capacity constrained. I do not think we are capacity constrained at this point. Our planning basis for 2026 says we have everything we need to achieve our plan, so we feel pretty good about that. Strategically, at the margin, you would prefer a mat to go into your rental fleet than to be sold. That said, we have never really had to make that decision, and we do not see that happening. I think our timing on a capacity expansion will work nicely into that.

Gerard J. Sweeney: Got it. And then—

Matthew S. Lanigan: I think—

Gregg S. Piontek: I was going to say that our focus has always been really driving that rental side, and the product sales side is going to happen based on the market's adoption. What I will say here is when we look at 2025, what was encouraging was north of 80% of our sales were going to utility companies directly, and that is where you are seeing that continued adoption by the end user. We see that as a good thing for the overall business.

Gerard J. Sweeney: Got it. And then I know you have been looking to push longer rental terms. Where does that stand? Is there still an opportunity for that? Obviously, you get less turnover, maybe lower margins but less turnover, but better longer-term utilization. Just wondering if there is some upside there as well.

Matthew S. Lanigan: Good news on that front, Gerry. We still have room to evolve there, but certainly, as we close the year out, all of the metrics measuring our progress were moving in the right direction. So I think that is a part of the strategy that is working well.

Gerard J. Sweeney: Got it. Alright. Thanks, guys.

Matthew S. Lanigan: Thanks, Gerry.

Operator: Final question comes from William Joseph Dezellem with Titan Capital.

William Joseph Dezellem: Thank you. Would you please discuss the options that you were considering for your manufacturing expansion?

Matthew S. Lanigan: Yeah, Bill. I am probably not going to get into a ton of detail around the specifics of the options, but we touched on it in the previous call. You have a balance of location and technology, and as you go through the various permutations and combinations that presents you, that is where we wanted to be thoughtful. More to come on that in Q1. I think that will be a more appropriate time to jump into a lot of detail on that.

William Joseph Dezellem: I will try to be patient. I would like to explore the guidance relative to the quote level. You mentioned that your quotes include a disproportionate amount of territory expansion quotes. What has been your historic win rate as you try to enter new markets versus existing markets? And then, presumably, the industry at large is more aware and interested in conversion to composite mats than they maybe would have been historically, and presumably, you all are more of a known quantity than you would have been historically. That having been said, does that improve the probability that your quote conversion rate will increase versus that historic sub-50% that you just referenced?

Matthew S. Lanigan: Specifics are going to vary market to market, but it is fair to say your conversion rate on a new client is going to be well under half of an existing client. Once you get into that sort of repeat business with your existing clients, it gets quite strong, but it takes a while to build that up. We have signaled consistently in our earnings calls that we expect this to be a proof-based scale growth in these markets, and everything is very consistent with what we are seeing there. I will just say it was not that those proportions—maybe I was not clear.

Two-thirds of what we are seeing is really growth in share of wallet with more existing or targeted strategic customers, and a third is coming from those developing territories, Bill.

William Joseph Dezellem: I had that backwards. Thank you. And so relative to your historic win rate, does that improve the probability that your quote conversion rate will increase versus that historic sub-50% you referenced?

Matthew S. Lanigan: I might put it another way. I do not know that I can give an accurate comment on that. Obviously, the more well known you are, the more confident your customers are in your ability to provide what they need, so that should be reflected in your win rates. What we are seeing as we mature some of our historical new territories is those growth rates are conforming more to our longer-term relationship-type profile. It is a truism that the longer you are in the market, the more you prove yourself, the more you deliver exactly what the customer needs. That will reflect in conversions.

The actual ratio that will play through this year, Bill—we did our best to impute that into our guide.

William Joseph Dezellem: Alright. Thank you. And congratulations on a good quarter.

Matthew S. Lanigan: Thanks, Bill.

Operator: There are no further questions at this time. I will now turn the call back over to Gregg for any closing remarks.

Gregg S. Piontek: Thank you. Thanks for joining us on the call today, and if you have any questions or requests, please reach out to us using our email at investors@npki.com. We look forward to hosting you again on our next quarterly call.

Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for participating. You may now disconnect.

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