Newpark Resources, Inc.

Greetings and welcome to the New Park Resources first quarter 2023 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. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Ken Dennard. 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 first quarter 2023 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 first quarter results and near-term outlook before opening the call for Q&A. Before I turn over the call, I have a few housekeeping items to run through. There'll be a replay of today's call be available by webcast on the company's website at newpark.com. There'll also be a telephonically recorded replay available until May 17, 2023, and that information on how to access is included in the Please note that information reported on this call speaks only as of today, May 3, 2023, and therefore, you're advised that time-sensitive information may no longer be accurate as of the time of any 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 management. However, various risks, uncertainties and contingencies could cause the company's actual results, performance or achievements to differ materially from those expressed in the 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 also today may include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP measures are included in the quarterly earnings release, which can be found on the New Park 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 first quarter 2023 continued the momentum from the fourth quarter. marked by solid performance both financially and against our stated key initiatives. Our financial performance was highlighted by the strongest Q1 revenue level for our industrial solutions business in our history, with $56 million in revenue generating $20 million in EBITDA, validating the strength of our offering and the robustness of market demand. The utilities and industrial end markets contributed nearly 80% of our industrial segment revenues, and we are pleased with our progress to solidify New Park as a leader in the development of sustainable technologies and services supporting the energy transition. With influence, Q1 was highlighted by the strongest revenue quarter in our history in the EMEA region and continued solid performance in our Canadian business, along with ongoing progress in our efforts to improve the returns on invested capital. As expected, we saw strong cash flow generation from both businesses, which contributed to a reduction of debt and the return of capital to shareholders by the repurchase of a further 4% of our outstanding shares in the quarter. Consolidated revenues were $200 million in the first quarter, including $144 million from fluid systems following the Q4 divestitures, while the industrial business contributed $56 million. Adjusted EBITDA was $21 million for the quarter, and adjusted EPS improved 28% sequentially, to $0.09 per diluted share. Greg will cover more specifics of the financial results in a few moments. However, before I hand the call over to him, I wanted to provide an update on our progress against the key priorities I laid out in our February call. We are pleased with the progress we've made in recent months, taking meaningful steps forward to reposition our company to organise around the strong growth opportunity and performance of our industrial solutions business while continuing to monetize investments and reduce the cost and complexity within our fluids business. As discussed in February, our first priority for 2023 is to drive operating cost optimization and efficiency improvements across every aspect of our global operational footprint. Having spent most of 2022 reshaping our fluid systems division to be a more agile and capital light business, Our efforts in recent months have been primarily focused on overhead cost reductions that were made possible by the divestitures. We have implemented several changes in recent weeks intended to reduce management layers and simplify our business support activities, particularly within our fluid systems and corporate office organisations. On that note, I'd like to extend my sincere thanks to Chip Earle, who served as our General Counsel and Chief Compliance Officer for the last five years, and recently left New Park as a part of these cost reduction efforts. Chip was instrumental in building the strong governance and succession processes that enabled the decision for him to leave the company. We wish Chip every success going forward. In addition, we have recently shut down our US stimulation chemicals business which was unable to demonstrate a path to profitability and we're also in the process of winding down operations in Chile as well as closing down several non-operational and sub-scale entities throughout the EMEA region. While cost optimisation efforts are ongoing, our company-wide actions to date translate to roughly $6 million in annual recurring cost savings, with the benefits being realised over the next few quarters. Looking ahead, we will continue to streamline our overheads both at a corporate and divisional level as we work to further simplify our business and move decision-making closer to our key end markets, while also continuing to take decisive actions to monetise investments in underperforming businesses and evaluate our value-enhancing strategic portfolio options. We believe strongly that simplifying our support cost structure to reflect the increasingly agile environments in which New Park operates is critical to ensuring that our businesses can continue to deliver world-class products and services and generate acceptable returns. Our second priority is to focus investment capital on the growth of our specialty rental and services business. To this point, I'm pleased to highlight that in the first quarter, we invested nearly $7 million in industrial solutions, primarily to expand our rental fleet in support of our growth in the utility sector. We also began production of our new Durabase 800 series mat, which fully integrates with our existing Durabase mat format and offers a nearly 15% reduction in weight. therefore driving further efficiency in transportation costs and associated carbon emissions without impacting product performance. As we roll this new product into our rental fleet in the coming months, we're excited to showcase New Park once again as the industry innovator for heavy-duty composite matting, having the lightest weight product on the market. Our focus on growing the industrial solution segment is showing tangible results, with Q1 trailing 12-month revenues now at $213 million dollars which reflects an 11% improvement from the full year 2022 revenues. Trailing 12-month adjusted EBITDA for industrial solutions increased to $74 million, a 12% improvement from our full year 2022 results. With a strong start to the year, we are confident that industrial solutions can deliver a mid to upper teens top line growth rate in 2023 while maintaining solid operating margins. Funding our continued expansion into the utilities and critical infrastructure markets remains our highest capital and resource priority. And finally, our third priority is a commitment to maintaining a strong balance sheet and using excess cash generation to reduce our debt and return value to our shareholders. During the first quarter, we generated $23 million of free cash flow, while the wind down of retained assets from last year's Gulf of Mexico to vestiges generated a further $7 million of cash. Our usage of the cash was balanced with $15 million in debt reduction and $15 million in share repurchases. I'd like to highlight that in addition to the 4.4 million shares purchased in Q4 and the 3.4 million shares that were repurchased in the first quarter, we have also repurchased 1.2 million additional shares in April. Including the Q2 activity, we have now repurchased 10% of our outstanding shares over the past six months. while our net leverage stands below one term of adjusted EBITDA. We believe that the combination of funding our industrial solutions growth plans while balancing our debt reduction and returning value to shareholders via our share repurchase program represents a meaningful opportunity for long-term shareholder value creation. And now, I'd like to hand the call over to Greg to provide more color on the specifics of the financials for the quarter. Greg?