Npk International (NYSE:NPKI), a provider of composite matting systems and related infrastructure solutions, reported earnings results on August 5, 2025. The most significant news was a clear revenue and earnings beat versus analyst estimates, with GAAP revenue of $68.2 million and GAAP EPS of $0.10, driven by strong growth in the rental segment. Revenue (GAAP) reached $68.2 million, exceeding the $59.6 million GAAP consensus, while Diluted non-GAAP EPS was $0.11, beating the $0.09 GAAP expectation. Despite this, operating margin from continuing operations (GAAP) slipped to 17.0% and Free cash flow (non-GAAP) declined by 48.6% year-over-year, reflecting pressure from higher selling, general and administrative (SG&A) costs and increased capital spending. Overall, the quarter showed healthy rental-driven growth, but also flagged concerns on margin contraction and cost management.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted (Non-GAAP) | $0.11 | N/A | $0.10 | 10.0 % |
| Revenue | $68.2 million | N/A | $66.8 million | 2.1% |
| Adjusted EBITDA from Continuing Operations (Non-GAAP) | $18.8 million | $17.9 million | 5.0 % | |
| Free Cash Flow (Non-GAAP) | $11.2 million | $21.9 million | (48.8 %) | |
| Operating Margin | 17.0 % | 18.7 % | (1.7) pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Npk International’s business centers on delivering composite matting systems primarily through rentals, along with related services, to utility, construction, and infrastructure clients. These mats provide stable working platforms at job sites, replacing traditional timber solutions with reusable, recyclable composites.
Its growth strategy is anchored on expanding its rental fleet, geographic reach, and customer share in high-return markets such as power transmission and critical infrastructure. Key factors for its success include rental fleet scale, technological innovation in recyclable matting, cost efficiency, and adapting to shifting regulatory environments.
Second Quarter Highlights: Growth Drivers and Challenges
Revenue (GAAP) outpaced expectations, with the majority of gains stemming from a 34% jump in rental income, which hit a new single-quarter record for rental revenues. This growth was attributed to steady demand from utility and infrastructure projects, especially in the U.S. The rental business now makes up a larger portion of the company’s total revenue. Service revenue rose 15% year-over-year.
Adjusted EBITDA reached $18.8 million, Adjusted EBITDA was up 5% year-over-year, reflecting the strength in rental activities. However, the operating margin from continuing operations (GAAP) decreased to 17.0%, falling from 18.7% a year ago and 20.9% in the previous quarter. Management attributed this decline primarily to higher SG&A expenses, which grew to $13.7 million and included roughly $2 million in performance-based incentives and severance costs. SG&A, as a percentage of revenue, increased to 20.0%, reversing gains made earlier in the year.
Product sales revenue, representing the direct sale of composite mats, declined sharply by 28% year-over-year to $21.9 million. Management noted this decrease was due to typical project timing. Product sales volumes for the full year are expected to remain generally in line with 2024 levels. The product sales line remains less predictable and more sensitive to delays in project execution by customers.
From a cash perspective, Free cash flow (non-GAAP) dropped by nearly half year-over-year, falling to $11.2 million (non-GAAP Free Cash Flow). The company continued to invest heavily in expanding its rental fleet and reported capital expenditures of $11.7 million. Liquidity remains strong, bolstered by a new revolving credit facility established in June, providing total available liquidity of approximately $175 million. Npk International also repurchased $6 million of its shares, or 1% of shares outstanding, in line with its capital return program.
Looking Forward: Guidance and Key Watch Points
Based on strong first-half results and a robust sales pipeline for rental contracts, Management raised full-year FY2025 revenue and Adjusted EBITDA guidance. Now expects revenue of $250 million to $260 million for FY2025, an increase from the prior range, and adjusted EBITDA of $68 million to $74 million for FY2025. Planned capital expenditures remain unchanged at $35 million to $40 million for FY2025.
Management provided no quarterly guidance but highlighted continued focus on reducing SG&A as a share of revenue, aiming for a “mid-teens” percentage by early 2026. For investors, the main watch areas for the next quarters will be trends in gross and operating margin, progress on cost efficiency, and the pace of rental fleet growth. Monitoring volatility in product sales and the company’s ability to generate strong cash flow will also be key. NPKI does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
