Executive Summary

Q4 delivered a clean inflection: revenue rose 24% YoY to $57.5M, Adjusted EBITDA increased 35% YoY to $17.1M, and gross margin reached 39.2% (+~500 bps YoY), driven by record rental revenue and favorable mix .
Operating leverage improved meaningfully: operating income was $11.6M (20.2% margin), up 710 bps YoY, with SG&A at 18.6% of revenue vs 22.1% a year ago as efficiency initiatives took hold .
2025 outlook introduced: at the midpoint, management targets +10% revenue growth and +18% Adjusted EBITDA growth; capex planned at $35–$40M with ~80% to expand the rental fleet, signaling continued focus on high-return rental growth and utilization leverage .
Balance sheet/liquidity provide optionality: year-end cash $18M, debt $8M (net cash position), and $66M ABL availability; management reiterated a $50M buyback authorization and a bias to fund organic fleet growth first .
Consensus estimates from S&P Global were not retrievable at this time (SPGI request limit exceeded). Results-vs-estimates comparisons are therefore unavailable; we will update when access resumes.

What Went Well and What Went Wrong

What Went Well
- Record rental and services revenue of $42M; management highlighted broad-based demand in utilities transmission and critical infrastructure projects, underpinning the Q4 acceleration .
- Mix and cost discipline lifted profitability: gross margin rose to 39.2% (~+500 bps YoY) and Adjusted EBITDA margin to 29.7% (+240 bps YoY), with operating leverage from higher volume and a stronger sales mix .
- Strategic repositioning executed: divested Fluids, rebranded as NPK International, expanded the sales force, and sharpened the commercial focus on higher-value opportunities; management sees this as a platform for sustained ROIC gains and growth .
What Went Wrong
- Working capital drag in Q4: operating cash flow used $4.1M (receivables build on strong activity), and Free Cash Flow was -$15.9M given $13.6M capex; this was largely tied to the quarter’s demand surge and fleet expansion .
- FX was a modest headwind in Q4 (≈$0.7M loss), and absorbed fixed IT/ERP costs post-Fluids divestiture will create a near-term SG&A headwind in early 2025 before trending toward mid-teens by early 2026 .
- FY revenue mix headwind from de-emphasizing lower-return service work: service revenues declined ~15% as the company walked from projects below its return thresholds (a deliberate choice, but a revenue drag) .

Financial Results

Overall performance vs prior periods (oldest → newest):

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$46.455	$66.791	$44.207	$57.524
Operating Income ($USD Millions)	$6.077	$12.507	$1.234	$11.644
Operating Margin (%)	13.1%	18.7%	2.8%	20.2%
Adjusted EBITDA ($USD Millions)	$12.702	$17.869	$7.501	$17.085
Adjusted EBITDA Margin (%)	27.3%	26.8%	17.0%	29.7%
Gross Margin (%)	34.2%	—	—	39.2%
Diluted EPS – Continuing Ops ($)	$0.06	—	$0.17	$0.09
Income from Continuing Ops ($USD Millions)	$5.168	$8.628	$14.869	$8.048

Segment revenue mix (oldest → newest):

Segment Revenue ($USD Millions)	Q4 2023	Q3 2024	Q4 2024
Rental and Service Revenues	$35.580	$32.408	$41.800
Product Sales Revenues	$10.875	$11.799	$15.724
Total Revenues	$46.455	$44.207	$57.524

KPIs and cash/returns (Q4 2024 unless noted):

KPI	Q4 2024
SG&A as % of Revenues	18.6%
Total Cash	$17.756M
Total Debt	$8.0M
ABL Availability	$66M
Operating Cash Flow (Q4)	-$4.127M
Capital Expenditures (Q4)	$13.591M
Free Cash Flow (Q4)	-$15.909M

Actual vs. Consensus (Q4 2024):

S&P Global consensus could not be retrieved due to request limits; comparisons vs estimates are unavailable at this time. We will update promptly once access is restored.

Non-GAAP adjustments (Q4 2024):

Adjusted EPS diluted $0.08 vs GAAP EPS from continuing ops $0.09; adjustments primarily reflect unusual tax items (valuation allowance releases) and severance .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenues ($M)	FY 2025	—	$230–$250	Introduced
Adjusted EBITDA ($M)	FY 2025	—	$60–$70	Introduced
Capital Expenditures ($M)	FY 2025	—	$35–$40 (≈80% to rental fleet)	Introduced
Near-term Outlook	Q1 2025	—	“Shaping up fairly similar to Q4”	Qualitative introduction
SG&A as % of Revenue	Through early 2026	Mid-teens target reiterated	Mid-teens by early 2026	Maintained trajectory
Share Repurchase Authorization	Ongoing	$50M	$50M (unchanged)	Maintained

Management emphasizes midpoint growth of ~10% revenue and ~18% Adjusted EBITDA for FY25 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Utilities/critical infrastructure demand	Large direct sales order in Q2 drove concentration; utilities expansion cited as growth driver	Broad-based demand; rental revenue reached a record; continued constructive outlook into 2025	Improving momentum
Pricing and project mix	Focus shifted to longer-duration projects with competitive pricing but better utilization	Mix favorability drove higher margins; pricing pockets competitive but rational; utilization leverage emphasized	Rational pricing; utilization-led margin
SG&A efficiency/IT	Target mid-teens SG&A by early 2026; ERP/absorbed costs as near-term headwind	Q4 SG&A 18.6% of revenue; near-term tick-up in Q1 from IT/ERP, then declining	Progressing to target
Product performance (composite mats)	Adoption displacing timber matting; DuraBase value proposition reinforced	Record product sales in FY; ongoing adoption; NPK estimates composite mat share ~20% in U.S.	Structural adoption tailwind
Capital allocation/liquidity	Liquidity ample; ABL undrawn; capex to support fleet growth	FY25 capex $35–$40M; evaluating revolver alternatives for greater liquidity; $50M buyback authorization reiterated	Balanced growth and returns
Industry reclassification	Engaged with S&P; awaiting 10-K to finalize	Expect reclassification completion before Q1’25 call	Pending, near-term

Management Commentary

“We delivered an outstanding fourth quarter performance… rental revenue reached a new single-quarter record. Gross margin increased by nearly 500 bps to a two-year high… Adjusted EBITDA margin increased by 240 bps to 29.7%” — Matthew Lanigan, CEO .
“At the midpoint of our 2025 financial guidance, we anticipate revenue and Adjusted EBITDA growth of 10% and 18%, respectively… net capital expenditures of between $35 million to $40 million, approximately 80%… toward the continued expansion of our rental fleet.” — Matthew Lanigan, CEO .
“Fourth quarter revenues… rebounded sharply… Rental and services revenues improved 29% sequentially… Product sales… improved 33% sequentially and 45% YoY… Q4 SG&A was 18.6% of revenues… FX losses provided a modest headwind…” — Gregg Piontek, CFO .
“We estimate composite matting share of the U.S. market to be almost 20%… we will continue to prioritize investment to support the scale up of our specialty rental and service offerings.” — Matthew Lanigan, CEO .

Q&A Highlights

Guidance range/wide band: Wider revenue range reflects project timing uncertainties outside NPK’s control; mix expectations unchanged; incremental margins framed mid-30s to low-40s on the guided revenue range .
EBITDA margin drivers: SG&A headwind early 2025 from absorbed IT/ERP costs; path to mid-teens SG&A by early 2026; rental growth continues to deliver strong flow-through .
Free cash flow/working capital: Fluids-related receivables (upper teens $M) work through early in 2025; cash taxes limited by NOLs; FCF sensitivity centers on EBITDA and capex ($35–$40M in 2025) .
Liquidity/capital returns: Liquidity strong (net cash; $66M ABL); pursuing a replacement revolver to increase capacity; programmatic buybacks remain in the toolkit alongside organic and inorganic investments .
Pricing and customer concentration: Longer-duration projects carry more competitive pricing but better asset utilization; no outsized recurring customer concentration in rentals; direct sales may show episodic concentration (e.g., large Q2 order) .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 2024 and FY 2025; the request was blocked due to SPGI daily request limits, so consensus data is unavailable at this time. We will update the results-vs-estimates comparison once access is restored.

Key Takeaways for Investors

Mix-led margin expansion is real and repeatable: record rental revenue and gross margin at 39.2% underscore the operating leverage inherent in the rental-led strategy; maintaining this mix is a key driver for 2025 .
2025 setup looks constructive: midpoint guide of +10% revenue and +18% Adjusted EBITDA with steady capex signals confidence in demand and utilization; near-term Q1 expected to look similar to Q4 .
Watch SG&A/ERP execution: early 2025 headwind should abate as ERP and absorbed costs roll off; trajectory toward mid-teens SG&A by early 2026 supports sustained margin expansion .
Capital allocation remains balanced: ample liquidity, net cash position, and potential revolver upgrade enable continued fleet growth, opportunistic buybacks, and selective M&A .
Structural adoption tailwind: growing acceptance of composite matting (NPK est. ~20% U.S. share) and utilities/critical infrastructure exposure provide durable secular growth underpinnings .
Working capital can swing quarterly FCF: strong demand builds receivables; monitor OCF and capex pacing across 2025 for FCF inflection .

Additional data and disclosures

Full-year 2024 (for context):

Revenue $217.5M (+5% YoY), operating income $32.4M (14.9% margin), Adjusted EBITDA $54.9M (25.2% margin); Adjusted EPS $0.23 .
Year-end cash $17.756M, total assets $393.7M; current and long-term debt total ≈$7.7–$8.0M; equity $326.5M .

All figures reflect continuing operations unless noted. Non-GAAP reconciliations are provided in the company’s 8-K exhibit .

NPK International Inc. (NPKI)·Q4 2024 Earnings Summary