NPK International Inc.NPKI
NPK International Inc. Debt Disclosure
Financing Arrangements
Financing arrangements consisted of the following:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (In thousands) | Principal Amount | Unamortized Discount and Debt Issuance Costs | Total Debt | Principal Amount | Unamortized Discount and Debt Issuance Costs | Total Debt | |||||||||||||||||||||||||||||
| Credit Facility | $ | 5,300 | $ | — | $ | 5,300 | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Finance leases | 11,562 | — | 11,562 | 7,622 | — | 7,622 | |||||||||||||||||||||||||||||
| Other debt | — | — | — | 106 | (1) | 105 | |||||||||||||||||||||||||||||
| Total debt | 16,862 | — | 16,862 | 7,728 | (1) | 7,727 | |||||||||||||||||||||||||||||
| Less: current portion | (5,170) | — | (5,170) | (2,900) | — | (2,900) | |||||||||||||||||||||||||||||
| Long-term debt | $ | 11,692 | $ | — | $ | 11,692 | $ | 4,828 | $ | (1) | $ | 4,827 | |||||||||||||||||||||||
Credit Facility. In June 2025, we entered into a U.S. senior secured revolving credit agreement (the “Credit Facility”) with a group of lenders that provides financing of up to $150 million available for borrowings (inclusive of letters of credit), which can be increased up to $250 million, subject to certain conditions. The Credit Facility and the loans made under the Credit Facility are secured by a first priority lien on substantially all of the personal property of the Company and its significant U.S. subsidiaries as guarantors (subject to customary exceptions and exclusions). The Credit Facility will mature in June 2030. In connection with the Credit Facility, we terminated our U.S. asset-based revolving credit agreement and recognized a charge of $0.2 million in interest expense for the write-off of debt issuance costs in connection with the termination in the second quarter of 2025.
As of December 31, 2025, we had $5.3 million in outstanding borrowings and $5.5 million in outstanding letters of credit, resulting in $139.2 million of remaining availability under the Credit Facility.
Under the terms of the Credit Facility, we may elect to borrow at a variable interest rate based on either the Term SOFR rate or an alternate base rate plus, in each case, a per annum applicable margin. The applicable margin will range from 1.75% to 2.25% for Term SOFR loans and 0.75% to 1.25% for alternate base rate loans, based on the consolidated leverage ratio (as defined in the Credit Facility) as of the last day of the most recent fiscal quarter. We are also required to pay a commitment fee on the unused portion of the Credit Facility ranging from 0.25% to 0.35% per annum based on the consolidated leverage ratio.
As of December 31, 2025, the applicable margin for loans under the Credit Facility was 1.75% for Term SOFR loans and 0.75% for alternate base rate loans, and the applicable commitment fee was 0.25% per annum. As of December 31, 2025, the weighted average interest rate for the Credit Facility was 7.5%.
The Credit Facility requires compliance with a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio, each as defined in the Credit Facility. In addition, at our option, we may choose to increase the maximum consolidated leverage ratio for a certain period following a significant acquisition, subject to certain limitations, as defined in the Credit Facility. As of December 31, 2025, we were in compliance with required ratios.
The Credit Facility contains various customary representations, warranties and covenants that, among other things and subject to certain specified circumstances and exceptions, restrict or limit the ability of the Company and its subsidiaries to incur indebtedness (including guarantees), grant liens, make investments, pay dividends or distributions with respect to capital stock or make other restricted payments, make prepayments on other indebtedness, engage in mergers or other fundamental changes, dispose of property, or change the nature of their business.
The Credit Facility includes various events of default (subject to certain materiality thresholds and/or grace periods), including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control.
Other Financing Arrangements. We maintain finance leases primarily related to transportation equipment. During 2025, we entered into $4.7 million of new finance lease liabilities in exchange for leased assets.
In addition, at December 31, 2025, we had $10.3 million in outstanding letters of credit (inclusive of the amount outstanding under the Credit Facility as described above), performance bonds, and other guarantees.
Interest expense, net was minimal for 2025. We incurred net interest expense of $2.6 million and $4.1 million for 2024 and 2023, respectively. There was no capitalized interest for the years ended December 31, 2025, 2024 or 2023. As of December 31, 2025, we had undiscounted future payments for financing arrangements of approximately $6.0 million in 2026, $4.1 million in 2027, $1.9 million in 2028, $0.8 million in 2029, and $5.4 million in 2030.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.