• Fourth Quarter Revenue: Increased 24% year over year to $58 million.
• Rental Revenue: Increased 28% year over year, reaching a new single quarter record.
• Gross Margin: Increased by nearly 500 basis points to 39.2%.
• Adjusted EBITDA: Improved to $17.1 million, a 35% increase versus the prior year.
• Full Year Revenue: Increased 5% year over year.
• Product Sales: Increased 24% year over year to a record $72 million.
• Service Revenues: Declined 15% year over year.
• SG&A Expenses: $10.7 million in the fourth quarter, 18.6% of revenues.
• Income Tax Expense: $2.9 million in the fourth quarter, effective tax rate of 26%.
• Adjusted EPS: $0.08 per diluted share in the fourth quarter.
• Operating Cash Flow: Used $4 million in the fourth quarter.
• Net CapEx: $12 million in the fourth quarter, including $10 million for matting fleet expansion.
• Total Cash: Ended the year with $18 million.
• Total Debt: $8 million, resulting in a net cash position of $10 million.
• 2025 Revenue Outlook: Anticipated total revenues in the $230 to $250 million range.
• 2025 Adjusted EBITDA Outlook: Expected in the $60 to $70 million range.

• Warning! GuruFocus has detected 3 Warning Sign with NPKI.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fourth quarter revenue increased by 24% year over year, reaching $58 million, driven by broad-based growth across all revenue streams.
• Rental revenues set a new single-quarter record with a 28% year-over-year increase, supported by demand in utilities, transmission, and critical infrastructures.
• Gross margin improved by nearly 500 basis points to 39.2%, the strongest level in two years.
• Adjusted EBITDA increased by 35% year over year in the fourth quarter, doubling sequentially.
• Product sales grew by 24% year over year, illustrating the success of the strategy to displace traditional timber matting with the Dura-based composite solution.

Negative Points

• Service revenues declined by 15% year over year, impacted by moving away from service-intensive projects that did not meet return thresholds.
• The company faced FX losses of $700,000 in the fourth quarter, primarily due to US dollar to British pound currency fluctuations.
• Income tax expense was $2.9 million in the fourth quarter, with an effective tax rate of 26%.
• Operating cash flow used $4 million in the fourth quarter, including $20 million of cash used to fund revenue-driven growth in receivables.
• The company absorbed certain fixed infrastructure costs historically carried by fluids, impacting SG&A expenses.

Q & A Highlights

Q: Can you discuss the wider range in revenue guidance for 2025 and the expected split between products and rentals? A: Gregg S. Piontek, CFO: The wider range reflects uncertainties in customer spending and project timing, which are beyond our control. However, there is no expected change in the mix between products and rentals. The midpoint of the range aligns with our past discussions, indicating a consistent outlook.

Q: How are you approaching margin improvements, particularly in SG&A, and balancing growth with margins? A: Gregg S. Piontek, CFO: We anticipate SG&A costs will initially rise due to IT infrastructure expenses but will decrease as we progress through 2025. By early 2026, we aim for SG&A to be in the mid-teens percentage of revenue. Incremental margins are expected to remain consistent with historical levels, driven by the rental business's strong flow-through.

Q: What are your expectations for free cash flow in 2025, considering the events of Q4 2024? A: Gregg S. Piontek, CFO: We expect the majority of fluid-related receivables to be resolved early in the year. Working capital will primarily fluctuate with receivables, and cash taxes will be limited due to tax shields. CapEx is projected at $35 to $40 million, similar to 2024, supporting fleet growth.

Q: Can you elaborate on customer concentration, particularly in the utility sector? A: Matthew S. Lanigan, CEO: While utilities contribute significantly to our revenue, we do not have a strong concentration with any single customer. Our rental business benefits from diverse, repeating relationships, and direct sales can vary by quarter.

Q: How do you plan to manage cash flow with CapEx and potential share buybacks? A: Gregg S. Piontek, CFO: We are in a strong liquidity position, allowing us to invest in organic growth, pursue share buybacks, and evaluate inorganic opportunities. We are also considering replacing our credit facility to enhance liquidity, providing flexibility for strategic growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.