Newpark Resources(NR) - 2025 Q1 - Quarterly Report

Part I Item 1. Financial Statements This section presents NPK International Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, reflecting the company's financial position after the Fluids Systems business divestiture Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, shows a slight decrease in total assets to $390.0 million from $393.7 million at year-end 2024, driven by decreases in receivables and inventories, partially offset by an increase in property, plant, and equipment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,832 | $17,756 | | Total current assets | $105,088 | $112,984 | | Property, plant and equipment, net | $194,092 | $187,483 | | Total assets | $390,010 | $393,682 | | Total current liabilities | $40,354 | $44,659 | | Total liabilities | $63,124 | $67,187 | | Total stockholders' equity | $326,886 | $326,495 | Condensed Consolidated Statements of Operations For the first quarter of 2025, the company reported a significant increase in performance compared to the same period in 2024, with revenues growing 32% to $64.8 million and operating income from continuing operations nearly doubling to $13.5 million Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $64,777 | $48,967 | | Operating income from continuing operations | $13,528 | $6,966 | | Income from continuing operations | $10,375 | $4,054 | | Net income | $10,003 | $7,293 | | Diluted EPS from continuing operations | $0.12 | $0.05 | | Diluted Net EPS | $0.11 | $0.08 | Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash from operating activities was $8.8 million, a decrease from Q1 2024, while investing activities provided $5.4 million, primarily from divestiture proceeds, and financing activities used $11.7 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,828 | $11,950 | | Net cash provided by (used in) investing activities | $5,418 | $(12,739) | | Net cash provided by (used in) financing activities | $(11,675) | $589 | | Net increase (decrease) in cash | $2,597 | $(961) | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed explanations of the financial statements, including the basis of presentation following the Fluids Systems business sale, share repurchase program details, and segment data reflecting a single reportable segment - The company's core business is providing temporary worksite access solutions, including manufacturing, selling, and renting recyclable composite matting products[20][24] - The Fluids Systems business was sold on September 13, 2024, and its results are now reported in discontinued operations, with all presented financial information pertaining to continuing operations unless specified otherwise[25] - Following the sale of the Fluids Systems segment, the company operates as a single reportable segment, with the Chief Executive Officer assessing financial performance on a consolidated basis[62] Disaggregated Revenues by Type (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Rental revenues | $28,110 | $21,232 | | Service revenues | $15,283 | $13,949 | | Product sales revenues | $21,384 | $13,786 | | Total revenues | $64,777 | $48,967 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2025 performance, highlighting a 32% revenue increase and 94% operating income surge, alongside outlining four key strategic priorities for 2025 and maintaining a strong liquidity position 2025 Priorities The company's 2025 strategy centers on four key pillars: accelerating organic growth, pursuing strategic inorganic growth, driving operational efficiency, and enhancing capital returns via share repurchases - Accelerate Organic Growth: Focus on expanding the rental business through geographic and market share expansion, with $8 million invested in rental fleet expansion in Q1 2025[69] - Drive Operational Efficiency: Aim to streamline the organization and reduce SG&A as a percentage of revenue to a mid-teens range by early 2026, with this metric improving from 23.6% in Q1 2024 to 18.1% in Q1 2025[69] - Enhance Return on Capital: Prioritize organic investment while returning excess cash to shareholders, repurchasing 1.8 million shares for $11 million in Q1 2025 and subsequently increasing the repurchase authorization to $100 million[69][39] First Quarter of 2025 Compared to First Quarter of 2024 Q1 2025 results showed significant year-over-year improvement, with revenues increasing 32% to $64.8 million, gross profit margin expanding by 300 basis points to 39.0%, and operating income growing 94% to $13.5 million Q1 2025 vs Q1 2024 Performance Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $64,777 | $48,967 | 32% | | - Rental and service revenues | $43,393 | $35,181 | 23% | | - Product sales revenues | $21,384 | $13,786 | 55% | | Operating income from continuing operations | $13,528 | $6,966 | 94% | | Total gross profit margin | 39.0% | 36.0% | +300 bps | - The increase in revenues was driven by higher rental volume and strong customer adoption of manufactured composite matting products, primarily in the power transmission sector[71] - SG&A expenses remained flat at ~$11.7 million, but as a percentage of revenue, they decreased significantly from 23.6% in Q1 2024 to 18.1% in Q1 2025, demonstrating improved operating leverage[74] Liquidity and Capital Resources The company maintains strong liquidity with $20.8 million in cash and $66.1 million available under its ABL Facility as of March 31, 2025, with management expecting sufficient funds for the next 12 months Liquidity Position as of March 31, 2025 (in thousands) | Item | Amount | | :--- | :--- | | Cash on hand | $20,834 | | Amended ABL Facility availability | $68,100 | | Outstanding letters of credit | $2,000 | | Remaining availability | $66,100 | - Capital expenditures for 2025 are projected to be between $35 million and $40 million, mainly focused on expanding the mat rental fleet to support the utilities market[85] - Net cash used in financing activities was $11.7 million, primarily reflecting $10.8 million in share repurchases[84] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk, currently minimal due to no outstanding ABL facility borrowings, and foreign currency risk from U.K. operations, which accounted for approximately 6% of Q1 2025 consolidated revenues - Interest rate risk exposure is primarily from the Amended ABL Facility, and as of March 31, 2025, there were no borrowings under this facility, mitigating this risk[101] - Foreign currency risk is associated with U.K. operations conducted in British pounds, which contributed about 6% of consolidated revenues for Q1 2025[102] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[103] - No changes occurred in the company's internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[104] Part II Item 1. Legal Proceedings The company is involved in routine litigation and claims in the ordinary course of business, with management not anticipating a material adverse impact on consolidated financial statements - The company is involved in litigation in the ordinary course of business and has indemnified the purchaser of its former Fluids Systems business for certain pre-closing contingencies[106] - Management does not expect any resulting loss from litigation, beyond amounts accrued or covered by insurance, to have a material adverse impact on its financial statements[106] Item 1A. Risk Factors There have been no material changes to the company's risk factors as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the 'Risk Factors' discussed in the Annual Report on Form 10-K for the year ended December 31, 2024, occurred during the period ended March 31, 2025[107] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 1,819,600 shares for $10.8 million, with $39.2 million remaining available as of March 31, 2025, and the Board subsequently increasing authorization to $100.0 million Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2025 | — | $ — | | February 2025 | — | $ — | | March 2025 | 1,819,600 | $5.92 | | Total | 1,819,600 | N/A | - As of March 31, 2025, the company had $39.2 million of authorization remaining under its share repurchase program[111] - On April 30, 2025, the Board of Directors increased the remaining authorization under the repurchase program to $100.0 million[112] Item 5. Other Information This section discloses the adoption of Rule 10b5-1 trading plans by board member Michael Lewis and EVP Lori Briggs on March 7, 2025, for future sales of company common stock - On March 7, 2025, board member Michael Lewis adopted a Rule 10b5-1 trading plan for the sale of up to 16,108 shares, commencing June 16, 2025[116] - On March 7, 2025, EVP Lori Briggs adopted a Rule 10b5-1 trading plan for the sale of up to 35,822 shares, commencing June 6, 2025[117] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The exhibits filed with this report include Sarbanes-Oxley Act certifications from the CEO (Matthew S. Lanigan) and CFO (Gregg S. Piontek)[119] - The filing also includes XBRL Instance Documents and other related Inline XBRL files as required[119]