Newpark Resources, Inc.

Good morning, ladies and gentlemen, and welcome to the New Park Resources third quarter 2022 conference call. This call will have a Q&A session. All participants will be in a muted mode until it's time to go live. And with that, I will now turn the program over to your host, Ken Dennard.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the New Park Resources conference call and webcast. to review third 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 third quarter results and their term outlook before opening the call for Q&A. 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 by webcast on the company's website at newpark.com. There'll also be a recorded replay available until November 16, 2022, and that information on how to access is included in yesterday's release. Please note that the information reported on this call speaks only as of today, November 2, 2022, and therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay, listening, or transcript reading. In addition, the comments made by management during the 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 Parks 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. Comments today may also include certain non-GAAP financial measures. Additional details and reconciliations of the most comparable GAAP financial measures are included in the quarterly earnings release, which can be found on the New Parks website. And with that behind me now, I'd like to turn the call over to New Parks President and CEO, Mr. Matthew Lanigan. Matthew.

Good morning, everyone. Our third quarter demonstrated solid execution on several fronts, including meaningful improvements in operational performance and significant progress on the handful of critical priorities that we laid out on our August call. Third quarter consolidated revenues grew 13% sequentially to $220 million, benefiting from broad-based improvements across both segments. Adjusted EBITDA improved 48% sequentially to $20 million, representing our strongest quarterly EBITDA result since the second quarter of 2019. Adjusted EPS improved five cents sequentially to six cents per diluted share, reflecting our strongest quarterly EPS result since the fourth quarter of 2018. Touching on segment performance, in industrial solutions, our focus remains on the execution of our expansion strategy. As highlighted in our last call, we expected our industrial solutions business to perform well in Q3, with our geographic expansion and utility sector penetration offsetting the typical seasonal weather impacts that suppress T&D project activity in the southern US regions. I'm very pleased that our team delivered sequential growth in both revenues and operating income while continuing to generate solid cash flows. Our performance continues to validate our unique value proposition in the market as we look for ways to accelerate our industrial solutions growth strategy. As we have stated before, we will continue to prioritise capital to the expansion of our geographic footprint where we see strong growth potential and returns. In fluid systems, we are making progress to reshape the business as we focus on markets where we can generate acceptable returns. With double digit sequential growth rates in both North American land and international markets, Fluid Systems adjusted EBITDA improved to $9 million in Q3, which puts the segment on an annualized run rate approaching $40 million after consideration of the combined loss from the units pending divestiture. With respect to our other key focus areas in the quarter, I'd like to take a moment to discuss the progress made against our announced portfolio actions, including the sale of our Excalibur mineral grinding business and Conroe Industrial Blending Facility, and the optimisation of our Fluids Gulf of Mexico investments. As announced last month, we've entered into a definitive agreement with Simbar Resources to sell substantially all the assets and operations of Excalibur. Importantly, the transaction also includes an agreement with Simbar to supply Bayrite for our US Fluid operations and we look forward to a strong working relationship with the team at Simbar. Separately, we've also signed a letter of intent to sell our Conroe, Texas blending facility and related equipment to a global chemical provider and are moving diligently to execute this transaction. While both transactions remain subject to standard closing conditions, we expect them to be completed in the fourth quarter, generating approximately $80 million of cash. Over the past three months, our team has also made significant progress with the assessment of options to optimize our invested capital in the Gulf of Mexico, executing two separate agreements with key strategic market participants that result in NUPAC effectively exiting this market. We entered an agreement in the third quarter to sell substantially all assets associated with our Gulf of Mexico completion fluids operations and in October entered a separate agreement with a leading global energy service provider to sublease our deep water drilling fluids facility for seven years and to sell substantially all of our related inventory over the next few quarters. When completed, these two transactions are anticipated to generate cash of approximately $30 million from the sale of assets and release of related working capital, and importantly, eliminate the persistent operating losses that have historically weighed on our fluids division performance. Ultimately, our decision to cease operations in the Gulf of Mexico was driven by current and projected activity levels that could not demonstrate a pathway to sufficient return on our investments. While we are proud of the technology and services we've provided to our valued customers in the Gulf over the years, it was clear that winding down our operations provided the best financial outcome for our broader fluids business and our shareholders. As we work through the exit, we will be working closely with our customers to ensure a seamless transition. As highlighted in yesterday's earning release, prior to the consideration of the third quarter impairments, the Excalibur and Gulf of Mexico operations have contributed a combined $63 million of revenues and a $7 million operating loss in the first nine months of 2022. We believe that exiting these businesses will result in a meaningful improvement to our Fluid's business operating margins and returns moving forward. These transactions, along with our office space consolidation as we transition our Katy, Texas Fluids Technology Center into a company-wide and multi-tenant facility, provide line of sight to reducing our fluid system net capital employed to approximately $210 million. This represents a reduction of more than $200 million from 2019 levels and marks a significant milestone in our journey to create a more agile and capital-like fluids business. I'm pleased with the progress we've made over the last quarter in executing these critical priorities. As previously discussed, we expect the cash proceeds from these divestiture activities to be used to reduce our debt, creating capacity to accelerate investments in high-returning opportunities and return value to shareholders via share repurchases. And now, I'll hand the call over to Greg to discuss in more detail the financials for the third quarter. Greg?