Newpark Resources, Inc.

Greetings and welcome to the New Park Resources second quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Denard. Thank you, Ken. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the New Park Resources conference call and webcast to review second quarter 2021 results. Participating from the company in today's call are Paul Howes, New Park's president and chief executive officer, Greg Piontek, chief financial officer, David Patterson, president of the fluids business, and Matthew Lanigan, president of the industrial solutions business. Following my remarks, Management will provide a high-level commentary on the financial details of the second quarter results and near-term outlook before opening the call for Q&A. But before I turn the call over to management, I have a few housekeeping details to run through. There'll be a replay of today's call. It'll be available via webcast on the company's website at newpark.com. There'll also be a recorded telephonic replay available until August 18, 2021, and information on how to access the features in yesterday's release. Please note that the information reported on this call speaks only as of today, August 4th, 2021, and therefore you are advised that time-sensitive information may no longer be accurate of any time of replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of New Park's management. However, various risks uncertainties, and contingencies could cause New Park's actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K to understand certain of those risks, uncertainties, and contingencies. The comments made today may also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in the quarterly press release, which can be found on New Park's website. And now with that behind me, I'd like to turn the call over to New Park's President and CEO, Mr. Paul Howells. Paul.

Thanks, Ken, and good morning, everyone. Our second quarter results reflect another step forward in our strategy execution as we continue to reshape and position the company for sustainable and profitable growth. Consolidated revenues improved 1% sequentially to $142 million, with a 28% increase in international fluid systems and a 15% improvement in industrial solutions rental and service revenues, offsetting the previously anticipated pullback in industrial solution product sales that we discussed on our prior quarter call. Second quarter EBITDA generation was $7 million. Turning to the specifics of the segments, our industrial solutions business continues to demonstrate the value of our diversification efforts as we expand our presence in the power transmission and other industrial end markets. As anticipated, coming off the exceptionally strong first quarter product sales, segment revenues declined 15% sequentially to $45 million in the second quarter. as site access product sales pulled back to $10 million for the quarter. Partially offsetting the product sales reduction, rental and service revenues improved 15% sequentially, contributing $33 million of revenue in the second quarter, including a record $25 million contribution from the power transmission and other industrial and markets, reflecting strong performance both in the United States and in the United Kingdom. Industrial blending revenues also pulled back to $2 million in the second quarter, reflecting the anticipated impact of product transition with our primary customer. With a lower revenue, our industrial solutions operating margins declined modestly to 22% in the second quarter, generating $15 million of EBITDA. Reflecting on our first half 2021 performance, it's worth highlighting that that the power transmission and other industrial end markets contributed $75 million of our site and access solution revenues. This annualized run rate of $150 million represents a 30% improvement over the previous high of $115 million achieved in 2018, illustrating the continued momentum in our market penetration. Meanwhile, our historical upstream oil and gas end market contributed less than 20% of the first half 2021 segment revenues, reflecting the lower industry activity and our focus on the more stable industrial end markets. In the fluid systems segment, revenues improved 11% sequentially, benefiting from project startups and the early phases of recovery within certain international markets, following the COVID-related disruptions that significantly impacted the previous four quarters. Our international revenues improved 28% sequentially to $35 million in the second quarter, benefiting primarily from improvements in Europe and North Africa. In North America, revenues improved modestly to $62 million, with a 19% improvement in the U.S., largely offset by the seasonal pullback in Canada. Despite the revenue growth and positive earnings contributions from our international businesses, the fluids segment remained below EBITDA break-even in the second quarter, impacted by elevated operating expenses, including employee severance and costs associated with our ongoing inventory rationalization efforts. In addition, the quarter is impacted by an unfavorable sales mix on U.S. land, which we expect to normalize going forward. During the second quarter, I'm very pleased to highlight that we won two notable fluids contracts, including a three-year award in Thailand to provide drilling and completion fluids on land, which reflects our first entry into the Southeast Asian market. This contract is expected to provide approximately $25 million of revenue over the three-year term, with work scheduled to begin in the third quarter. In addition, as part of the latest shell oil tender in the Gulf of Mexico, we were awarded a contract to continue providing drilling fluids, reservoir drilling fluids, and related services for two deepwater drill ships, which we expect will generate approximately $30 million of revenue annually. We believe the recent contract awards are a direct result of our continued focus on providing differentiated technology and superior customer service. As global activity improves in the energy market, we feel we are well positioned to capture our fair share of the value chain while also continuing to reshape our cost structure to generate profitable growth and provide an acceptable return on capital. And with that, I will hand the call over to Greg to discuss in more detail the financials for the second quarter. Greg?