Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $44 million, a decline of 23% year-over-year, with adjusted EBITDA decreasing to $7.5 million, down $4.5 million from the previous year [11][12][36] - Adjusted EPS from continuing operations was breakeven in Q3, compared to $0.10 in Q2 and $0.03 in Q3 of the previous year [28] - Operating cash flow was $2 million in Q3, negatively impacted by growth in working capital prior to the divestiture [29] Business Line Data and Key Metrics Changes - Total rental and service revenues declined 11% sequentially and 15% year-over-year to $32 million in Q3 [23] - Revenues from product sales decreased to $12 million in Q3, down from record Q2 results [23] - Year-to-date rental revenues are up 1% over the prior year, while service revenues are down 21% [24] Market Data and Key Metrics Changes - The utility sector contributed 60% of year-to-date revenues, with nearly 55% of rental and service revenues coming from this sector [25] - A pronounced seasonal slowdown in utility sector activity in the southern region negatively impacted rental revenues [22][23] Company Strategy and Development Direction - The company is transitioning from an Oilfield Services business to a vertically integrated specialty Rental & Services business focused on critical infrastructure markets [13][14] - Plans include rebranding and aligning with the New York Stock Exchange for industry reclassification [15][18] - The company aims to achieve $5 million in cost savings by early 2026, with SG&A as a percentage of revenue expected to reach the mid-teens range [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a strong rebound in late September and October, with record rental volume achieved in October [12][33] - Full-year revenue guidance has been revised down to a range of $217 million to $223 million due to Q3 headwinds [36] - The company remains confident in the near-term and long-term outlook for utilities and critical infrastructure spending [32] Other Important Information - The company ended Q3 with total cash of $43 million and total debt of $14 million, resulting in a net cash position of $29 million [30] - There are over $15 million in net assets related to the Fluid sale, including a $5 million interest-bearing note receivable [31] Q&A Session Summary Question: Impact of project shifts - Management indicated that the shift of projects from transmission to renewable generation projects had an impact of approximately $1 million in Q3, with no definitive start date for the postponed projects [48][60] Question: Guidance for Q4 - Management expressed strong optimism for Q4, citing a swift rebound in customer activity and encouraging product sales [49][50] Question: Plant maintenance and CapEx - The maintenance at the Louisiana plant was necessary and has since been resolved, with CapEx for 2025 expected to be similar to 2024 [52][56] Question: Pipeline growth and regional expansion - Management noted strong quoting activity and a positive outlook for pipeline growth, with regional expansion efforts ongoing [57][91]

Revenue Performance - Revenue for Q3 2024 was $44.2 million, a decrease of 13.1% from $57.3 million in Q3 2023[2] - Revenues for Q3 2024 were $44.2 million, a decrease of 33.7% from $66.8 million in Q2 2024 and a decrease of 22.8% from $57.3 million in Q3 2023[24] - The Industrial Solutions segment generated revenues of $44.2 million, with operating income of $7.3 million, both lower than the previous year[3] - Industrial Solutions revenue for the three months ended September 30, 2024, was $44,207,000, a decrease of 33.8% compared to $66,791,000 for the previous quarter[39] - Total revenues for the nine months ended September 30, 2024, were $159,965,000, slightly down from $161,193,000 for the same period in 2023[39] - The company reported a total of $206,420,000 in revenues for the trailing twelve months ended September 30, 2024[41] Income and Profitability - Operating income from continuing operations was $1.2 million, down from $6.3 million in the prior year[3] - Operating income from continuing operations for Q3 2024 was $1.2 million, down from $12.5 million in Q2 2024 and $6.3 million in Q3 2023[24] - Net loss for Q3 2024 was $(174.3) million, compared to net income of $8.0 million in Q2 2024 and a net income of $7.7 million in Q3 2023[24] - Adjusted EBITDA from continuing operations was $7.5 million, representing a margin of 17.0%, down from $12.0 million and 21.0% in Q3 2023[12] - Adjusted EBITDA for the three months ended September 30, 2024, was $12,490,000, down 49.6% from $24,782,000 in the previous quarter[39] - Operating margin (GAAP) for the three months ended September 30, 2024, was 16.5%, a decline from 29.0% in the previous quarter[39] - Adjusted EBITDA margin (non-GAAP) for the three months ended September 30, 2024, was 28.3%, down from 37.1% in the previous quarter[39] Cash and Debt Position - Total cash as of September 30, 2024, was $43 million, with total debt of $14 million[7] - Cash and cash equivalents increased to $42.9 million as of September 30, 2024, up from $0.8 million at the end of 2023[27] - The company had cash, cash equivalents, and restricted cash of $43,384 thousand at the end of the period on September 30, 2024, up from $28,404 thousand at the end of the same period in 2023[29] Assets and Liabilities - Total assets decreased to $389.6 million as of September 30, 2024, down from $642.3 million at the end of 2023[27] - Total current liabilities decreased to $51.2 million as of September 30, 2024, compared to $136.3 million at the end of 2023[27] - The company reported a deferred tax asset of $17.5 million as of September 30, 2024, significantly up from $1.4 million at the end of 2023[27] Divestitures and Capital Expenditures - The company completed the sale of its Fluids Systems segment on September 13, 2024, receiving initial cash proceeds of $70 million[2] - The company incurred a loss of $(195.7) million on the sale of discontinued operations[24] - The company experienced a loss on divestitures amounting to $195,729 thousand during the nine months ended September 30, 2024[29] - The company reported capital expenditures of $29,940 thousand for the nine months ended September 30, 2024, compared to $20,134 thousand for the same period in 2023[29] Future Outlook - For the full year 2024, the company anticipates Industrial Solutions segment revenue between $217 million and $223 million[17] - The company expects a strong rebound in rental revenues in Q4 2024 following a seasonal slowdown in Q3[4] Shareholder Returns - The company has a robust return of capital program, with a $50 million authorization for share repurchases[9] Adjusted Metrics - Adjusted income from continuing operations (non-GAAP) for the nine months ended September 30, 2024, was $10,156 thousand, compared to $13,174 thousand for the same period in 2023[30] - Adjusted EBITDA from continuing operations (non-GAAP) for the nine months ended September 30, 2024, was $37,773 thousand, compared to $36,210 thousand for the same period in 2023[36] - Free cash flow (non-GAAP) for the nine months ended September 30, 2024, was $15,544 thousand, down from $46,660 thousand in the same period of 2023[37] - The adjusted EBITDA margin from continuing operations (non-GAAP) for the nine months ended September 30, 2024, was 23.6% compared to 22.5% for the same period in 2023[36] Share Count - The weighted average shares outstanding for basic shares were 86.4 million for Q3 2024, compared to 85.5 million in Q2 2024[24] - The weighted average common shares outstanding - diluted for the nine months ended September 30, 2024, was 87,490 thousand[30]

Group 1: Company Performance - Newpark Resources (NR) has returned 14.5% year-to-date, outperforming the average gain of 3.2% in the Oils-Energy group [4] - The Zacks Consensus Estimate for NR's full-year earnings has increased by 1.9% over the past 90 days, indicating improved analyst sentiment and earnings outlook [3] - Newpark Resources is currently ranked 2 (Buy) in the Zacks Rank system, suggesting strong potential for market performance [3] Group 2: Industry Context - Newpark Resources belongs to the Oil and Gas - Field Services industry, which has seen an average loss of 5.4% year-to-date, further highlighting NR's strong performance [5] - The Oils-Energy group consists of 247 companies and is currently ranked 12 in the Zacks Sector Rank, reflecting the overall strength of the sector [2] - Another outperforming stock in the Oils-Energy sector is Pedevco Corp. (PED), which has gained 11.8% year-to-date [4]

Core Viewpoint - Newpark Resources (NR) shows potential for significant upside, with a mean price target of $11 indicating a 41.2% increase from the current price of $7.79 [1] Price Targets - The average price target consists of four estimates ranging from $10 to $12, with a standard deviation of $0.82, suggesting a consensus among analysts [2] - The lowest estimate indicates a 28.4% increase, while the highest suggests a 54% upside [2] Analyst Sentiment - Analysts exhibit strong agreement on NR's ability to report better earnings than previously predicted, which supports the potential for stock price appreciation [4][9] - The Zacks Consensus Estimate for the current year has risen by 1.9% over the past month, with no negative revisions [10] Zacks Rank - NR holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for near-term upside [11]

Financial Data and Key Metrics Changes - The company reported a sequential 6% improvement in revenues and a 10% improvement in adjusted EBITDA on a consolidated basis for Q2 2024 [4][10] - Adjusted EBITDA increased 10% sequentially and 18% year-over-year, with a growth in adjusted EBITDA margin [7][10] - Free cash flow was $22 million, including over $10 million from efficiencies in fluid systems working capital management, reducing net leverage to 0.3 times adjusted EBITDA [9][15] Business Line Data and Key Metrics Changes - The Industrial Solutions segment generated $67 million in revenues, reflecting a 36% sequential and 39% year-over-year improvement, with product sales contributing $30 million [7][10] - Rental revenues increased by 12% sequentially and 9% year-over-year, while service revenues saw a decline due to project mix and delays [11][12] - The Fluid Systems segment generated $112 million in revenues, with the Eastern Hemisphere contributing $66 million, while Canadian revenues decreased 37% sequentially [13][14] Market Data and Key Metrics Changes - The company noted that its international business contributed over 70% of the fluids segment's revenues, indicating strong performance in global markets [6] - The U.S. operations contributed $33 million in revenues, reflecting a 46% year-over-year decline due to market softness and lower market share [13][14] Company Strategy and Development Direction - The company is focused on a multiyear business transformation plan, emphasizing growth in the Industrial Solutions business as a key driver for long-term value creation [4][5] - The company aims to capitalize on government programs for electrical infrastructure and the growth of AI data centers, which are expected to create sustained demand for worksite access solutions [5] - Capital allocation priorities include organic growth investments in the rental fleet and potential inorganic growth opportunities following the completion of the fluid sales process [19][20] Management Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook for demand in both business segments, particularly in Industrial Solutions, with expectations for revenues in the range of $230 million to $240 million for 2024 [16][20] - The third quarter is typically the softest for rental and service revenues due to seasonal factors, but modest year-over-year growth is anticipated [17][18] - Management acknowledged ongoing project delays related to permitting but noted a strong pipeline of projects [24] Other Important Information - SG&A expenses were $26.4 million in Q2, including costs related to the fluid sale and elevated performance-based incentive costs [14][15] - The company has $50 million remaining on its share repurchase authorization, which is expected to resume after the fluid sales process is completed [21] Q&A Session Summary Question: Discussion on record product sales - Management indicated that the record product sales were concentrated in a large customer transitioning from timber to composite mats, suggesting sustainability in this trend [22][35] Question: Status of permitting and supply chain - Management noted that delays in projects have persisted but the pipeline continues to build, with no significant impact from the political landscape observed [23][24] Question: Dynamics of service revenue decline - Management clarified that the decline in service revenue is a deliberate strategy to de-prioritize high-service projects that do not meet margin expectations [26][28] Question: Expenses related to fluid systems transaction - Management confirmed that expenses related to the fluid systems transaction will continue until the process is resolved [29] Question: Capital expenditures for rental business - Management reported that approximately $19 million of the first half CapEx was allocated to the Industrial Solutions business, with a focus on fleet expansion [30] Question: Market growth expectations for mats - Management expects the market to grow at 8% to 10% long-term, with a focus on gaining market share from traditional timber products [32] Question: Working capital in the fluids business - Working capital within the fluids business was reported at approximately $160 million at the end of Q2 [34]

Revenue Performance - Total revenues for the second quarter of 2024 decreased by 2% to $179.0 million compared to $183.3 million in the second quarter of 2023[65] - For the first half of 2024, total revenues decreased by 9% to $348.1 million, with a notable 19% decrease in North America revenues[73] - Total revenues for the Fluids Systems segment decreased by 17% to $232.4 million in the first half of 2024, compared to $279.4 million in the first half of 2023[82] - North America revenues for the Fluids Systems segment fell 38% to $97.6 million, primarily due to a decline in U.S. market share and activity[83] - The Industrial Solutions segment reported an 11% increase in total revenues to $115.8 million for the first half of 2024, up from $103.9 million in the same period of 2023[86] Operating Income - Total operating income for the second quarter of 2024 was $13.3 million, a significant increase of 126% compared to $5.9 million in the same quarter of 2023[65] - The Fluids Systems segment generated operating income of $2.3 million, up from $2.0 million in the prior year, despite incurring $1.1 million in facility exit and transaction costs[67] - Industrial Solutions segment operating income rose to $19.4 million, compared to $12.8 million in the second quarter of 2023, attributed to higher product sales revenues[69] - Operating income for the Fluids Systems segment rose to $9.2 million in the first half of 2024, compared to $5.4 million in the first half of 2023[85] - The Industrial Solutions segment generated operating income of $32.3 million for the first half of 2024, an increase from $27.3 million in the first half of 2023[87] Net Income and Cash Flow - Net income for the first half of 2024 was $15.3 million, significantly up from $7.3 million in the first half of 2023[72] - Net cash provided by operating activities was $39.5 million for the first half of 2024, compared to $36.8 million for the first half of 2023[89] Costs and Expenditures - Cost of revenues for the first half of 2024 decreased by 13% to $274.7 million, reflecting the overall decline in revenues[74] - Capital expenditures for the first half of 2024 were $20.5 million, primarily focused on expanding the Industrial Solutions segment rental fleet[89] - The company expects capital expenditures in 2024 to be approximately $30 million to $40 million, with a focus on expanding the mat rental fleet[89] Debt and Liquidity - Total debt decreased to $57.98 million as of June 30, 2024, down from $75.03 million at the end of 2023, resulting in a total debt to capitalization ratio of 12.0%[90] - The company anticipates using proceeds from the Fluids Systems sale process to repay a significant portion of existing debt, enhancing liquidity for long-term strategic initiatives[89] Tax Provision - The provision for income taxes for the first half of 2024 was $6.2 million, with an effective tax rate of 29%, compared to 37% in the prior year[80]

Financial Performance - Net income for Q2 2024 was $8.0 million, or $0.09 per diluted share, compared to $1.7 million, or $0.02 per diluted share in Q2 2023[5]. - Revenues for Q2 2024 were $179,009 thousand, a 5.3% increase from $169,107 thousand in Q1 2024, but a 2.4% decrease from $183,256 thousand in Q2 2023[20]. - Net income for Q2 2024 was $8,040 thousand, up 10.3% from $7,293 thousand in Q1 2024, and significantly higher than $1,702 thousand in Q2 2023[20]. - The company reported a total operating income of $13,299 thousand for Q2 2024, an increase from $11,859 thousand in Q1 2024 and $5,878 thousand in Q2 2023[23]. - Net income for the six months ended June 30, 2024, was $15,333,000, a 109% increase from $7,322,000 in the same period of 2023[27]. - Revenues for the six months ended June 30, 2024, totaled $348,116,000, a decrease from $383,286,000 in the same period of 2023[32]. Segment Performance - Industrial Solutions segment revenue grew by 39% on an organic basis, reaching $66.8 million, with operating income of $19.4 million[2][7]. - Fluids Systems segment revenue decreased to $112.2 million from $135.2 million in the prior year, with operating income of $2.3 million[1][8]. - The Industrial Solutions segment reported an operating income of $19,392 thousand in Q2 2024, compared to $12,936 thousand in Q1 2024 and $12,774 thousand in Q2 2023, reflecting a strong performance[23]. - Revenues for Fluids Systems in Q2 2024 were $112,218, down 16.9% from $135,181 in Q2 2023[35]. - Operating income for Industrial Solutions in Q2 2024 was $19,392, an increase of 51.8% from $12,774 in Q2 2023[36]. Cash Flow and Investments - Free cash flow for Q2 2024 was $21.9 million, significantly up from $0.6 million in Q2 2023[1][4]. - Capital investments in Q2 2024 totaled $6 million, primarily for expanding the composite matting rental fleet[10]. - Net cash provided by operating activities increased to $39,531,000 for the six months ended June 30, 2024, compared to $36,848,000 for the same period in 2023[27]. - Free Cash Flow for the six months ended June 30, 2024, was $21,105,000, down from $23,805,000 in the same period of 2023[33]. - Capital expenditures for the six months ended June 30, 2024, were $20,468,000, compared to $15,347,000 in the same period of 2023, indicating a 33% increase[27]. Debt and Leverage - Total debt stood at $58 million, with net debt of $23 million and a net leverage ratio of 0.3x as of June 30, 2024[1][10]. - Total Debt decreased from $75,033,000 in December 31, 2023 to $57,983,000 as of June 30, 2024, representing a reduction of approximately 23%[42]. - Net Debt reduced significantly from $36,439,000 to $22,896,000, a decrease of about 37%[42]. - Net Leverage improved from 0.5x to 0.3x, indicating a stronger balance sheet position[42]. Margins and Profitability - Adjusted EBITDA increased by 18% to $23.4 million, with an adjusted EBITDA margin of 13.1%, up 230 basis points year-over-year[1][7]. - Consolidated gross margin improved by 370 basis points year-over-year to 21.7%[4]. - Adjusted EBITDA for the six months ended June 30, 2024, was $44,687,000, compared to $40,783,000 for the same period in 2023, reflecting a 10% increase[32]. - Adjusted EBITDA Margin for the six months ended June 30, 2024, was 12.8%, up from 10.6% in the same period of 2023[32]. - Adjusted EBITDA for Fluids Systems in Q2 2024 was $5,176, a decrease of 41.8% compared to $8,834 in Q2 2023[35]. Shareholder Returns - The company has a share repurchase authorization of up to $50 million, with over $30 million repurchased in 2023[4].

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