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 the 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 with Denard Lascar Investor Relations.

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 2022 results. Participating from the company in today's call are Matthew Lanigan, New Park's president and chief executive officer, and Greg Piontek, chief financial officer. 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 to Q&A. Before I turn over the call, I have the normal housekeeping items to go over. There will be a replay of today's call, and it will be available by webcast on the company's website at newpark.com. There will also be a recorded replay available until August 17, 2022, and that information is included in yesterday's news release. Please note that the information reported on this call speaks only as of today, August 3, 2022, and therefore, you're advised that time-sensitive information may no longer be accurate as in the time of replay listening or transcript reading. In addition, the comments made by management during this conference call 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 statements made by management. The listener 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 today may also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included. and 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. Matthew Lanigan. Matthew.

Good morning, everyone. Our second quarter performance demonstrated progress in both of our businesses, with strong execution and improving market fundamentals, contributing to a 10% sequential increase in revenues and continued improvement in EBITDA within our core business activities. Consolidated revenues were $194 million for the second quarter, delivering adjusted EBITDA of $13.3 million and adjusted earnings per share of one cent per share. Our industrial solution segment delivered $49 million of revenues and $15.1 million of EBITDA in the quarter. The result was especially pleasing given the unseasonably hot and dry conditions in large parts of the US, as well as customer labor and supply chain related issues that caused unplanned delays to a number of domestic and international projects. Compensating for the reduction in rental and service income, the quarter benefited from $19 million of revenue from product sales, reflecting strong orders from the utility sector, as well as the impact of previously discussed deliveries that shifted from Q1 to Q2. With Q3 orders and robust inquiries to date, we remain confident that we'll see this strength continue in the second half of the year. During the quarter, we progressed our efforts to expand our participation in the growing circular plastics economy, leveraging our historical investments in R&D capabilities and adaptable manufacturing processes. We're on track to utilize approximately 1 million pounds of recycled and altered materials in our mat production in 2022. Importantly, once scaled, the use of these materials can provide meaningful economic benefits, along with a significant reduction in lifecycle greenhouse gas emissions when compared to using traditional virgin materials. We are very encouraged with our progress and expect that through further refinement and expansion of our supply chain integration and material processing capabilities, we could see this volume expand significantly in the coming years. This initiative illustrates another clear example of how our focus on scalable innovation at New Park provides compelling economic and environmental drivers for our customers and shareholders. Turning to the fluids business, market fundamentals remain supportive for both North America land and our served international markets. Our fluid system segment delivered $145 million of revenues and $4.3 million of EBITDA in the second quarter. In North America, we delivered double-digit growth in our U.S. land operations that largely offset the seasonal impact of the spring breakup in Canada. We also saw sequential revenue growth in the Gulf of Mexico for the quarter. Although profitability was unfavourably impacted by a combination of incremental costs incurred to meet a tight deep water project timeline with unrelated customer operational issues ultimately leading the customer to delay and reduce the scope of the planned drilling project and return unused inventory. As a result, our operating loss in the Gulf of Mexico increased sequentially by roughly $1 million, overshadowing the solid progress we're making in other areas. Based on the customer's current schedule, we expect drilling to resume in Q3, improving our performance as operating expenses return to more typical levels. Outside of the Gulf of Mexico, we are making progress with our margin improvement efforts in North America as we focus on pricing recovery to offset raw material cost inflation and target customers that place value on our technology, reliability and industry-leading service quality. Internationally, revenues increased sequentially despite the impact of the strengthening US dollar as we saw the benefits of customer drilling programs commencing in the quarter that had been delayed through the pandemic. We remain very pleased with the improving outlook for our international fluids business as activity levels build from both the startup of previously delayed programs and new projects being evaluated in response to the heightened focus on energy security resulting from the ongoing conflict in Ukraine. With regards to international tenders, I'm pleased to highlight a few specific meaningful successes in the quarter. First, we were successful in our latest tender with Sonotrac in Algeria. The three-year award is valued at approximately $90 million and notably demonstrates the value of our technology portfolio as Sonotrac looks to expand the use of our high-performance water-based systems in the coming years. Not only does the award maintain meaningful revenues for the next three years in this important market, but also resets pricing to more appropriately reflect raw material cost inflation, which should provide a lift to profitability beginning in the fourth quarter. Also in Algeria, our ongoing success with IOCs continues as we secured a $27 million multi-year award with a joint venture of E&I, further reinforcing our leading market position in this country. I'm also pleased to highlight that we were successful in securing a five-year award for our CleanSeal product line in Saudi Arabia valued at over $20 million, where we see further upside potential as our innovative orca breaker system gains further acceptance across onshore and offshore fields in the kingdom. During the quarter, the Fluids team continued to navigate the inflationary pressures and supply chain challenges that persisted across all our global operations. Raw material cost inflation, the build of inventory for the delayed project in the Gulf of Mexico, and required prepayments on baywright purchases for our mineral grinding business led to a $20 million increase in our fluids inventory levels for the quarter. With the second half deep water project and ongoing efforts to monetize our excess inventories in the Gulf of Mexico, along with the sale process of our mineral grinding business, we expect inventories will come down meaningfully in the second half of the year. Switching now to our previously discussed fluids portfolio actions, we have been very active in our ongoing efforts to identify all opportunities to transform our fluids business into a more focused and capital-like business model. Specifically, relating to our previously announced divestitures, the sale of our U.S. mineral grinding business led by PPHB is progressing well and remains on track for completion before the end of the year. We've been pleased with the level of interest and believe the strong representation from several non-oilfield strategic buyers further validates our strategy of separating this non-core business unit and freeing up meaningful capital for our shareholders. In parallel, we are also continuing efforts to monetize excess real estate, including our Conroe, Texas blending facility. After winding down the Conroe blending operations at the end of Q1, we have been active in marketing the facility and related equipment. but expect the process to take some time, given the outlook for interest rates and their impact on real estate valuations. We recorded an $8 million impairment in the quarter to reduce the assets carrying amount to its recoverable value. As stated previously, we expect our divestitures to provide meaningful cash generation to reduce our debt levels and provide greater flexibility to accelerate investments in high returning opportunities, while also re-engaging in our share repurchase program, returning a portion of cash generation to our shareholders. And now, I'll have Nicole over to Greg to discuss in more detail the financials for the second quarter. Greg?