Newpark Resources, Inc.

Good morning. My name is Savannah and I will be your conference operator today. At this time, I would like to welcome everyone to the New Parks Resources fourth quarter and full year 2023 earnings conference call. Today's call is recorded and will be available for replay beginning at 1230 p.m. Eastern. The recording can be accessed by dialing 800-925-9394 domestic or 402-220-5386 international. All lines are currently muted, and after the prepared remarks, there will be a live question and answer session. If you would like to ask a question during the Q&A segment, please press star 1 on your phone. If your question has been answered, you may remove yourself from the queue at any time by pressing star 2. We do ask that you please pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Greg Piontek, Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to the New Park Resources fourth quarter 2023 conference call. Joining me today is Matthew Lanigan, our President and Chief Executive Officer. Before handing over to Matthew, I'd like to highlight that today's discussion contains forward-looking statements regarding future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties. including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. Our comments on today's call may also include certain non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website. There will be a replay of today's call, and it will be available by webcast within the investor relations section of our website at newpark.com. Please note that the information disclosed on today's call is current as of February 22nd, 2024. At the conclusion of our prepared remarks, we will open the line for questions. And with that, I would like to turn the call over to our President and CEO, Matthew Lanigan.

Thank you, Greg, and welcome to everyone joining us on today's call. I'm pleased to share that the New Park team continued to execute at a high level in the fourth quarter, maintaining our focus on operational excellence while also advancing our multi-year business transformation strategy. We entered 2023 with very clear priorities. First, a focus on operational efficiencies to drive improvements in returns and consistent free cash flow generation. Second, prioritising investment in the growth of our industrial solutions business while evaluating strategic alternatives for our food business. And finally, maintaining a strong balance sheet and returning excess cash generation to our shareholders. I'm pleased to say that in 2023, we delivered on all three. Our industrial solutions business delivered 12% year-on-year growth in rental and service revenues, which included solid improvements across all major industry sectors, resulting in a 21% increase in segment operating income and a 13% increase in adjusted EBITDA. We continue to strengthen our position within the key utilities transmission market, which is forecasted to grow robustly over the next three years, with an average of more than $30 billion per year projected to be spent annually on transmission line projects, according to recent EEI survey of asset owners. For the full year 2023, within our fluids business, our divestitures and restructuring actions, along with disciplined balance sheet management and the strong performance of our international businesses, contribute to a 15% year-over-year improvement in adjusted EBITDA and a $69 million reduction in the segment's net working capital, resulting in the segment's strongest return on net assets since 2018. Notably, our eastern hemisphere delivered 28% year-over-year growth to a record $257 million of revenues in 2023, while our Canada operations also delivered 12% year-over-year revenue growth. As a result, NUPAC delivered $74 million of free cash flow in 2023. We increased our rental fleet by 11% and continued to prioritise capital to the expansion of our rental and service footprint to serve the multi-billion dollar infrastructure markets. We also launched a process to divest our fluids business and have been working diligently to move that forward. And finally, we reduced our net debt by $54 million and returned $32 million to shareholders through the repurchase of 6.5 million shares. Across the board for full year 2023, we executed against our stated priorities and set the business up for a solid 2024. Turning now to specifics of the fourth quarter, we generated adjusted net income of $4 million, or $0.04 per diluted share, on revenues of $168 million. Within industrial solutions, while rental revenues remained in line with Q3 levels, late quarter customer project timing shifts due to non-matting related supply chain and local permitting issues impacted expected Q4 direct sales deliveries. Combined with reduced service activities, this led to a 19% sequential decline in segment revenues. The segment delivered $17 million of fourth quarter adjusted EBITDA, reflecting a 36% adjusted EBITDA margin, again highlighting the business's flexibility to maintain strong margins and returns despite mixed shifts in revenue sources across quarters. As mentioned in my full year comments, despite quarterly fluctuations, we remain encouraged with the longer-term outlook in our serve markets and our ability to continue to penetrate them. Consistent with our Q3 commentary, the Fluid Systems business revenues declined 14% sequentially, primarily reflecting the anticipated pullback in the EMEA and US regions. On the lower revenues, the segment delivered $5 million of adjusted EBITDA and a 4% adjusted EBITDA margin. Importantly, our Fluids team's disciplined focus on working capital management led to a $25 million fourth quarter reduction in the segment's net working capital, which ended the year at $171 million. With the meaningful reduction in Fluids working capital, we generated $28 million of free cash flow in the fourth quarter, which provided for a $13 million reduction of debt and a $6 million return of capital to shareholders through continued repurchases of our equity in the open market. We also invested $9 million of capex, primarily reflecting late quarter additions to our rental fleet to support our expanding rental project pipeline. We finished the year with net debt of $36 million and a 0.5 times net leverage ratio. And with that, I'll turn the call over to Greg for his prepared remarks.