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Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the NPK International Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Gregg Piontek, Chief Financial Officer. Please go ahead.

Thank you, operator. I'd like to welcome everyone to the NPK International Fourth Quarter 2025 Conference Call. Joining me today is Matthew Lanigan, our President and Chief Executive Officer. Before handing over to Matthew, I'd 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. 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 February 26, 2026. At the conclusion of our prepared remarks, we will open the line for questions. And with that, I'd like to turn the call over to our President and CEO, Matthew 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 million 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 million, 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 1 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 million in rental revenues, representing a 39% year-over-year growth, of which 37% was from organic growth and 2% was from our November acquisition of Grassform. To support our rental growth, we invested a net $37 million, expanding our DURA-BASE fleet by 16% in the year. With the impact of roughly 20,000 composite mats added through the Grassform 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 million 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 transition 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 the first half of 2027, and we'll 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 U.K. market. We welcome the talented Grassform team to NPK and look forward to seeing our combined U.K. 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 acquired transitional support services for the divested Fluids business while simultaneously advancing a major ERP conversion project. I'm pleased to highlight that we have now successfully rolled out the new ERP system 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 costs and 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'm 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 million fewer shares outstanding versus the prior year. Overall, our team achieved all our stated objectives with 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 '26. And with that, I'll turn the call over to Gregg for his prepared remarks.

Thanks, Matthew. I'll 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 million 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 acquisition contributed $2 million 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 million 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 2/3 of our 2025 revenues was derived from the power transmission sector, including roughly 60% of rental and services and the vast majority of product sales. It's 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 DURA-BASE 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 $1.7 million 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 $15.4 million, which includes $1.8 million of acquisition-related transaction costs and severance as highlighted in yesterday's press release, along with $400,000 associated with the Grassform business. The remaining $13.2 million 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 $1.7 million in the fourth quarter, which is net of a $1.5 million 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 million of cash in the fourth quarter, including $21 million from net income adjusted for noncash expenses, partially offset by $3 million of cash used by a net increase in working capital. Net CapEx used $12 million, which includes $11 million of net investment into the fleet expansion. Looking at the full year 2025 cash flows, we generated a total of $73 million of cash from operating activities, along with $17 million of additional proceeds from the Fluids divestiture, using $42 million for the Grassform acquisition and $43 million to fund net capital expenditures that enabled us to expand our composite mat rental fleet by approximately 16% from the end of 2024, while also using $20 million to repurchase 3 million shares. We ended the year with total debt of $17 million and total cash of $5 million for a net debt position of $12 million. Additionally, we have $139 million of availability under our bank facility, providing us with ample financial flexibility to continue executing on our strategic 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 million to $325 million and adjusted EBITDA of $88 million to $100 million. 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 million to $55 million in 2026, including approximately $35 million to $45 million targeted for rental fleet expansion. This level of investment is expected to grow our DURA-BASE 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'd 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 a double-digit organic growth combined with the effect of the Grassform 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-30s mark, likely in line with the full year 2025 results. In terms of SG&A, we expect to see a reduction in personnel expense 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 acquisition, which we expect will keep SG&A near the $13 million 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 20s in 2026. We entered the year with roughly $40 million 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 investments 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. And with that, I'd like to turn the call back over to Matthew for his concluding remarks.

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 U.K. 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 the end of 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 DURA-BASE 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 project on our first quarter call and are very encouraged by the team's progress in this area with respect to both project costing and time line. 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 in the U.K., which clearly demonstrates our approach to acquisitions with a disciplined view on growth potential, value and prudent financial leverage. Now 3 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 U.K. market. We continue to believe that like the U.S., the U.K. 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, a 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 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 provides 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. And with that, we'll open the call for questions.

[Operator Instructions] Your first question comes from Aaron Spychalla with Craig-Hallum.

First for me, can you just kind of talk about the visibility you have into the guidance, low to mid-teens growth in rental and service, kind of square that with the 30% growth in the pipeline. You kind of talked about just kind of timing and start times and things like that. But just visibility into that? And then how much is incorporated for Grassform in that as well?

Yes, I'll start, Aaron. When you look at the pipeline growth, 30%, I think if I break that down, about 2/3 of that, I'd say, is really focused on our share of wallet expansion with existing customers and just maybe just above 1/3 of that in new territories that we've been focusing on. So what you're naturally going to see there is a difference in conversion rates as you're breaking into territories, you'd expect those conversion rates to be a little lower as you prove yourself out. And that's why that you're kind of getting that discount from the 30% down. Obviously, as the year plays out, we'll continue to update that and shape it. But really, that's kind of where we see this breaking out at this point in time, and that's what's driving it.

Go ahead.

I was going to say I think as it pertains to your question in the U.K., I think the similar growth rates on the R&S side of what we're anticipating in that market as well.

Yes. I mean if you look at what we had published when we announced the acquisition, they had a high teens revenue on a TTM basis. And that really just kind of goes into the baseline and gets back to that double-digit growth expectation on the combined business as well. And the other thing I was going to add is just highlighting that we had talked last quarter about the successes we've 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.

Understood. And then on the EBITDA guidance, implies a good step-up in margins as we think about '26. Can you talk about some of the drivers behind that, some maybe puts and takes with some of the cross rent and just how you're thinking about that as new capacity comes on more into 2027?

Yes. I think cross rent, we don't see being a major change year-over-year. We expect that we'll continue to have a fairly healthy level of cross rents in the mix. Ultimately, you have some flexibility on your investments because if you don't have the growth rate, well, then you're just displacing cross rents and you're getting the EBITDA contribution. I mean if you take a step back and look at the EBITDA growth year-over-year, it's really just what that top line carries in terms of that incremental margin on the R&S side. And then you also have that pullback of -- on the SG&A line. We know we've been carrying the elevated incentives in 2025. You have a reset here in Q1 of '26. So you have probably roughly $3 million drop year-on-year just from that item in the SG&A.

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

Your CapEx is predominantly growth CapEx. Is there anything that changes the return dynamics on the mats? Or are we -- could we expect the same type of ROI -- incremental ROIC that we saw this year on the rental fleet?

I think it's fair to assume it will be the same as last year, Liam.

Yes. And based on the guide that we provided, you see the profile of our CapEx in '26 looks a lot like 2025.

Yes, it does look like a rewind, and that's a good thing. Gregg, with the buyback, there's more of a balance here and looking at return. With the investment in the rental fleet, is there any change in your view of buybacks?

I don't think there's really any change in it. I think from our perspective, it's always looking at your longer-term capital needs. We've talked about you're thoughtful to what inorganic opportunities are out there. We have the other projects in play here that Matthew touched on in terms of the manufacturing expansion. So you're looking at your capital needs. But then beyond that, it's always, okay, any excess that you have beyond what your foreseeable needs are, then that's where the buybacks come into play. So really no change in philosophy there. And then I think 2025 really illustrated kind of how we view it. I made the comment, programmatic, opportunistic. It's a programmatic approach that you take, but it's structured in such a way where you're particularly moving when there appears to be a dislocation in markets, so.

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

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?

Yes. I mean I think what we're 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 obviously encouraging to see.

Yes. I would say, overall in the guide, it's really more so about volume growth. The pricing is a relatively minor contributor to our expectation in '26.

Okay. And then also, how should we think about seasonality and quarterly phasing of revenue and EBITDA in '26, especially given just kind of utility project timing and the Grassform integration?

Yes. Look, I think at this point, we still anticipate Q3 and summer activities to be the major seasonality impact on the business. I think we get some offset from activities in the U.K., but obviously, with the bulk of the density of our work being here in the U.S., you should expect to see that. So you will see a dampening, I expect with the U.K., but largely following the same trends as historical.

Yes. And I kind of go back to our historical perspective that we've always maintained. It's easier to call the business on a year than it is on a quarter. Just due to the fact that you've always got strong quarters, softer quarters within, and it's really project timings, and it's really tough to call those project timings. But as we start here, Q1, I would say the way the year is starting out feels a lot like the pattern that we saw in 12 months ago, where it started out on the soft side coming out of the holidays naturally and then picking up steam, so.

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

This U.K. acquisition, I think I heard you mention it contributed around $2 million for the quarter, and I'm supposing it is in the month of December. Should we annualize that from the high teens that you had said and be over $20 million for next year for 2026, I mean?

Yes. I mean I will say from our perspective, it's -- I mean, it's -- we don't 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, that goes into our base that we expect double-digit growth off of. And so it just rolls into that with the overall U.K. business.

Understood. So in that light, it seems that the revenue guidance broad range -- the lower end of that range seems pretty conservative relative to the acquisition and just organic growth from your pipeline that you're already seeing?

Yes, it's a fair point. And I think the one thing that to highlight there in terms of that broad range is your biggest wildcard is the product sales side. And it kind of goes back to my commentary there about the project-centric nature of it. So that's where the guide -- the revenue guide is a little bit wider for this next year.

Understood. And then I think, Matthew 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 the focus will be on that manufacturing plant rather than any other initiatives?

Yes. I think Gregg summed it up in his previous answer. There's a hierarchy that we need. We've got 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 opportunities that we see that are accretive. Beyond that, if we have the surplus cash, that's when we'll 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.

Your next question comes from Gerry Sweeney with ROTH Capital Markets.

Looking at -- obviously, there's a lot of demand, but you also capacity constraints on the mat side. Are you looking to maybe deemphasize product sales in favor of driving more rentals?

We don't need to, Gerry. I think, is the answer I'd give you there. You said capacity constrained. I don't think we're capacity constrained at this point. Our planning basis for '26 says we have everything we need to achieve our plan. So we feel pretty good about that. I think strategically, at the margin, you would prefer a mat to go into your rental fleet than to be sold. That said, we've never really had to make that decision, and we don't see that happening. I think our timing on our capacity expansion will work nicely into that.

Got you. And then -- sorry, go ahead, Gregg.

I was going to say, our focus has always been really driving that rental side and the product sales side, it's going to happen based on the market's adoption. Now 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's where you're just seeing that continued adoption by the end user. We see that as a good thing for the overall business.

Got you. And then I know historic -- or not historically, you've been looking to push longer rental terms. Where does that stand? And is there still an opportunity for that? Obviously, you get less turnover, maybe lower margins but less turnover, but just better longer-term utilization. Just wondering if there's some upside there as well.

Yes. I think good news on that front, Gerry, we've still got room to evolve there. But certainly, as we closed the year out, all of the metrics measuring our progress there, we're moving in the right direction. So I think that's a part of the strategy that's working well.

Your final question comes from Bill Dezellem with Tieton Capital.

Would you please discuss the options that you were considering for your manufacturing expansion?

Yes, Bill, I'm probably not going to get into a ton of detail around the specifics of the options. But I think we touched on it in the previous call. You've got a balance of location and technology. And I think as you go through the various permutations and combinations that, that presents you, that's where we wanted to be thoughtful on that. So 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.

All right. I'll try to be patient. And would you -- I'd like to explore the guidance relative to the quote level. So you'd mentioned that your quotes include a disproportionate amount of territory expansion quotes. What's been your historic win rate as you try to enter new markets versus existing markets? And then with -- actually, I'll just pause there.

Yes. I mean, specifics are going to vary market to market. But I think it's fair to say your conversion rate on a new client is going to be well under half of an existing client. And so 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've signaled that consistently in our earnings calls that we expect this to be a proof-based scale growth in these markets, and I think everything is very consistent with what we're seeing there. I will just say it wasn't -- the proportions maybe I wasn't clear, 2/3 of what we're seeing is really in our growth in share of wallet with more existing or targeted strategic customers and 1/3 is really coming from those developing territories, Bill.

I had that backwards. And so relative to your historic win rate, 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. So that having been said, does that improve the probability that your quote rate -- pardon me, your quote conversion rate will increase versus that historic sub-50% that you just referenced?

Look, I think I'd maybe put it another way. I don't know that I can give an accurate comment on that. Obviously, the more well known you are, the more confidence your customers have 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. So it's a truism that the longer you're 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's going to play through this year, Bill, we kind of -- we did our best to impute that into our guide.

Congratulations on a good quarter.

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

All right. Thank you. Thanks for joining us on the call today. And should you have any questions or requests, please reach out to us using our e-mail of [email protected], and we look forward to hosting you again on our next quarterly call.