Newpark Resources, Inc.

Please stand by, we're about to begin. Good morning, my name is Jamie and I will be your conference operator today. At this time, I would like to welcome everyone to the New Park Resources Third Quarter 2024 Earnings Conference Call. Today's call is being recorded and will be available for replay beginning at 1230 p.m. Eastern Standard Time. The recording can be accessed by dialing 877-710-5302 for domestic or 402-220-1605 for 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, Chief Finance Officer for New Park Resources. Please go ahead.

Thank you, operator. I'd like to welcome everyone to the New Park Resources third quarter 2024 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 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 November 8th, 2024. At the conclusion of our prepared remarks, we will open the line for questions. And with that, I'd like to turn the call over to our president and CEO, Matthew Lanigan.

Thanks Greg and welcome to everyone joining us on today's call. I'll begin with an overview of our third quarter performance followed by an outlook for our fourth quarter and an update on our strategic priorities entering 2025. The third quarter came in below our expectations as two notable factors combined to impact our results after a very strong second quarter. While third quarter generally tends to be a seasonally slower period of the year for our business, This year was more pronounced as a few key customers shifted their priorities during the quarter from scheduled transmission projects to renewable generation related projects. This, combined with unusually dry weather conditions in the southern region, limited the need for matting on individual projects. As a result, lower rental project activity, which was particularly acute across the southern markets, together with a softer oil and gas customer activity negatively impacted rental revenues in the quarter. The quarter was also impacted by an unplanned maintenance event at our Louisiana manufacturing facility that resulted in one of our production lines being offline for approximately six weeks during the period. This timeline included approximately two weeks of delays due to logistical challenges for our third party technicians caused by Hurricane Francine. The facility has been operating at normal production levels since the start of the fourth quarter. In total, the seasonal pullback in rental revenues and six weeks of facility maintenance impacted third quarter adjusted EBITDA by nearly $5 million. The impact of the facility maintenance included both unabsorbed fixed costs and incremental maintenance expenditures during the six-week shutdown period. As a result, our total third quarter revenue came in at $44 million, a decline of 23% versus the year-ago period, as rental, service, and product sales revenues all declined. including the effects of the pronounced seasonal softness and facility maintenance, our adjusted EBITDA decreased to $7.5 million, a decline of $4.5 million versus the year-ago period. While our third quarter was below expectations, it's worth highlighting that we experienced a sharp rebound in late September and October, reflecting a strong resumption of activity, combined with a modest lift from emergency response customers supporting hurricane recovery efforts, primarily in Florida, Georgia, and North Carolina. We achieved a record level of rental volume in October, positioning us for a strong finish to 2024. Now let's turn to our outlook for 2025. In the weeks since completing the fluid sale, we have worked diligently on aligning the final pieces of our transformation from an oilfield services business to a vertically integrated specialty rental and services business servicing critical infrastructure markets. By narrowing our strategic focus exclusively to site access solutions, we're migrating towards a simpler, higher margin, more profitable business profile, one that we believe will benefit both our customers and shareholders alike. To that end, immediately following the sale, we've worked with the New York Stock Exchange to provide the necessary documentation to request the appropriate industry reclassification of the company. Based on the indicated timeline, we are hopeful to have that process concluded during the fourth quarter. At the same time, we have moved through the preparations to rebrand the company, a process that we anticipate will align with the timing of our industry reclassification. We're also taking steps to optimize our overhead structure, removing duplication and costs that are no longer required post-defluency vestiture. A key piece of our optimization effort is the retirement of our heavy cost legacy IT system. And while we were very pleased with the team's progress in moving through the planning and design phases, we recognize that these projects take time and will likely be substantially completed with benefits being realized in early 2026. And finally, we're also pursuing options to enhance the value of our Katie office facility. Over the past few years, we have been working to transform this facility to a multi-tenant model, which has reduced our net facility costs and also helps provide optionality through a potential sale of the asset, recognising that proceeds from the sale can be better deployed to fund our growth plan. We are firmly committed to reviewing all aspects of our structure and associated costs to ensure we are aligning the future business for growth and operational efficiency. As we continue to navigate the final stages of separation and solidify our go-forward operating structure, we anticipate achieving a $5 million cost saving by early 2026, with SG&A as a percentage of revenue reaching a mid-teens range. with further improvement possible as we grow and leverage our streamlined cost structure. In summary, with the sale of fluids behind us, our entire organization is now solely focused on the significant market opportunity we see in site access solutions. We are building a leaner, more efficient standalone platform, one well equipped for both organic and inorganic growth. The secular megatrends underpinning demand for our solutions remain significant, from multi-billion dollar investment programs focused on improving the nation's aging electricity infrastructure to the exponential growth in advanced computing data centers to the combined onshoring of entire industry segments. It's an exciting time for our business and our industry, one we intend to capitalize on. And with that, I'll turn the call over to Greg for his prepared remarks.