UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-02960

Newpark Resources, Inc.

(Exact name of registrant as specified in its charter)


Delaware		72-1123385
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9320 Lakeside Boulevard,	Suite 100
The Woodlands,	Texas	77381
(Address of principal executive offices)		(Zip Code)

(281) 362-6800

(Registrant’s telephone number, including area code)


Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NR	~~New York Stock Exchange~~
~~Rights to Purchase Series D Junior Participating Preferred Stock~~	~~N/A~~	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑☐

Accelerated filer

☐☑

Non-accelerated filer

☐

Smaller reporting company

☑☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of ~~October 30, 2020,~~November 1, 2021, a total of ~~90,803,610~~92,257,408 shares of common stock, $0.01 par value per share, were outstanding.

NEWPARK RESOURCES, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, ~~2020~~

2021


PART I	FINANCIAL INFORMATION	2
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3130
ITEM 4.	Controls and Procedures	3130
PART II	OTHER INFORMATION	3231
ITEM 1.	Legal Proceedings	3231
ITEM 1A.	Risk Factors	3231
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3231
ITEM 3.	Defaults Upon Senior Securities	32
ITEM 4.	Mine Safety Disclosures	32
ITEM 5.	Other Information	32
ITEM 6.	Exhibits	33
	Signatures	34

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. We also may provide oral or written forward-looking statements in other materials we release to the public. Words such as “will,” “may,” “could,” “would,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them. These forward-looking statements reflect the current views of our management as of the filing date of this Quarterly Report on Form ~~10-Q and include statements regarding the impact of the COVID-19 pandemic, as well as our future operating results related to compliance with certain financial covenants under our ABL Facility;~~10-Q; however, various risks, uncertainties, contingencies, and other factors, some of which are beyond our control, are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those expressed in, or implied by, these statements.

We assume no obligation to update, amend, or clarify publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by securities laws. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur.

For further information regarding these and other factors, risks, and uncertainties that could cause actual results to differ, we refer you to the risk factors set forth in Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the period ended June 30, 2021, and our Annual Report on Form 10-K for the year ended December ~~31, 2019, and in Part II Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March~~ 31, 2020.

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)	(In thousands, except share data)	September 30, 2020		December 31, 2019		(In thousands, except share data)	September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	24,028	$	48,672	Cash and cash equivalents	$	31,242	$	24,197
Receivables, net	Receivables, net	127,957		216,714		Receivables, net	163,309		141,045
Inventories	Inventories	159,567		196,897		Inventories	148,194		147,857
Prepaid expenses and other current assets	Prepaid expenses and other current assets	17,327		16,526		Prepaid expenses and other current assets	17,124		15,081
Total current assets	Total current assets	328,879		478,809		Total current assets	359,869		328,180

Property, plant and equipment, net	Property, plant and equipment, net	287,332		310,409		Property, plant and equipment, net	262,856		277,696
Operating lease assets	Operating lease assets	32,306		32,009		Operating lease assets	27,352		30,969
Goodwill	Goodwill	42,234		42,332		Goodwill	42,393		42,444
Other intangible assets, net	Other intangible assets, net	26,103		29,677		Other intangible assets, net	22,511		25,428
Deferred tax assets	Deferred tax assets	3,264		3,600		Deferred tax assets	3,864		1,706
Other assets	Other assets	2,927		3,243		Other assets	2,267		2,769
Total assets	Total assets	$	723,045	$	900,079	Total assets	$	721,112	$	709,192

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt	Current debt	$	10,149	$	6,335	Current debt	$	21,875	$	67,472
Accounts payable	Accounts payable	44,013		79,777		Accounts payable	73,567		49,252
Accrued liabilities	Accrued liabilities	35,923		42,750		Accrued liabilities	40,736		36,934
Total current liabilities	Total current liabilities	90,085		128,862		Total current liabilities	136,178		153,658

Long-term debt, less current portion	Long-term debt, less current portion	92,206		153,538		Long-term debt, less current portion	71,869		19,690
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	26,371		26,946		Noncurrent operating lease liabilities	22,505		25,068
Deferred tax liabilities	Deferred tax liabilities	14,513		34,247		Deferred tax liabilities	15,102		13,368
Other noncurrent liabilities	Other noncurrent liabilities	10,787		7,841		Other noncurrent liabilities	9,745		9,376
Total liabilities	Total liabilities	233,962		351,434		Total liabilities	255,399		221,160

Commitments and contingencies (Note 9)	Commitments and contingencies (Note 9)					Commitments and contingencies (Note 9)	0		0

Common stock, $0.01 par value (200,000,000 shares authorized and 107,587,786 and 106,696,719 shares issued, respectively)		1,076		1,067
Common stock, $0.01 par value (200,000,000 shares authorized and 109,233,315 and 107,587,786 shares issued, respectively)						Common stock, $0.01 par value (200,000,000 shares authorized and 109,233,315 and 107,587,786 shares issued, respectively)	1,092		1,076
Paid-in capital	Paid-in capital	625,328		620,626		Paid-in capital	632,569		627,031
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(69,847)		(67,947)		Accumulated other comprehensive loss	(59,486)		(54,172)
Retained earnings	Retained earnings	69,422		134,119		Retained earnings	28,026		50,937
Treasury stock, at cost (16,786,446 and 16,958,418 shares, respectively)		(136,896)		(139,220)
Treasury stock, at cost (16,976,680 and 16,781,150 shares, respectively)						Treasury stock, at cost (16,976,680 and 16,781,150 shares, respectively)	(136,488)		(136,840)
Total stockholders’ equity	Total stockholders’ equity	489,083		548,645		Total stockholders’ equity	465,713		488,032
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	723,045	$	900,079	Total liabilities and stockholders’ equity	$	721,112	$	709,192

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	(In thousands, except per share data)	2020		2019		2020		2019		(In thousands, except per share data)	2021		2020		2021		2020
Revenues	Revenues	$	96,424	$	202,763	$	362,920	$	630,648	Revenues	$	151,797	$	96,424	$	435,218	$	362,920
Cost of revenues	Cost of revenues	99,301		169,429		357,675		522,338		Cost of revenues	132,273		99,301		376,370		357,675
Selling, general and administrative expenses	Selling, general and administrative expenses	20,597		27,017		66,230		85,796		Selling, general and administrative expenses	23,864		20,597		67,755		66,230
Other operating (income) loss, net	Other operating (income) loss, net	(820)		29		(1,906)		(367)		Other operating (income) loss, net	1,723		(820)		(141)		(1,906)
Impairments	Impairments	3,038		0		3,038		0		Impairments	—		3,038		—		3,038
Operating income (loss)		(25,692)		6,288		(62,117)		22,881
Operating loss										Operating loss	(6,063)		(25,692)		(8,766)		(62,117)

Foreign currency exchange loss		580		828		3,343		756
Foreign currency exchange (gain) loss										Foreign currency exchange (gain) loss	25		580		(83)		3,343
Interest expense, net	Interest expense, net	2,411		3,628		8,524		10,807		Interest expense, net	2,176		2,411		6,748		8,524
Gain on extinguishment of debt		0		0		(419)		0
Income (loss) before income taxes		(28,683)		1,832		(73,565)		11,318
(Gain) loss on extinguishment of debt										(Gain) loss on extinguishment of debt	210		—		1,000		(419)
Loss before income taxes										Loss before income taxes	(8,474)		(28,683)		(16,431)		(73,565)

Provision (benefit) for income taxes	Provision (benefit) for income taxes	(4,813)		3,273		(11,303)		7,171		Provision (benefit) for income taxes	2,011		(4,813)		5,414		(11,303)
Net income (loss)		$	(23,870)	$	(1,441)	$	(62,262)	$	4,147
Net loss										Net loss	$	(10,485)	$	(23,870)	$	(21,845)	$	(62,262)

Net income (loss) per common share - basic:		$	(0.26)	$	(0.02)	$	(0.69)	$	0.05
Net income (loss) per common share - diluted:		$	(0.26)	$	(0.02)	$	(0.69)	$	0.05
Net loss per common share - basic:										Net loss per common share - basic:	$	(0.11)	$	(0.26)	$	(0.24)	$	(0.69)
Net loss per common share - diluted:										Net loss per common share - diluted:	$	(0.11)	$	(0.26)	$	(0.24)	$	(0.69)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
(In thousands) 2020 2019 2020 2019
Net income (loss) $ (23,870) $ (1,441) $ (62,262) $ 4,147
Foreign currency translation adjustments (net of tax benefit (expense) of $(330), $713, $268, $604) 3,461 (3,897) (1,900) (4,097)
Comprehensive income (loss) $ (20,409) $ (5,338) $ (64,162) $ 50


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020

Net loss	$	(10,485)	$	(23,870)	$	(21,845)	$	(62,262)

Foreign currency translation adjustments (net of tax benefit (expense) of $222, $(330), $408, $268)	(2,700)		3,461		(5,314)		(1,900)

Comprehensive loss	$	(13,185)	$	(20,409)	$	(27,159)	$	(64,162)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


(In thousands)	(In thousands)	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total		(In thousands)	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total
Balance at June 30, 2021														Balance at June 30, 2021	$	1,090	$	629,833	$	(56,786)	$	38,510	$	(136,403)	$	476,244
Net loss														Net loss	—		—		—		(10,485)		—		(10,485)
Employee stock options, restricted stock and employee stock purchase plan														Employee stock options, restricted stock and employee stock purchase plan	2		288		—		1		(85)		206
Stock-based compensation expense														Stock-based compensation expense	—		2,448		—		—		—		2,448
Foreign currency translation, net of tax														Foreign currency translation, net of tax	—		—		(2,700)		—		—		(2,700)
Balance at September 30, 2021														Balance at September 30, 2021	$	1,092	$	632,569	$	(59,486)	$	28,026	$	(136,488)	$	465,713

Balance at June 30, 2020	Balance at June 30, 2020	$	1,074	$	623,269	$	(73,308)	$	93,292	$	(136,890)	$	507,437	Balance at June 30, 2020	$	1,074	$	623,269	$	(73,308)	$	93,292	$	(136,890)	$	507,437
Net loss	Net loss	—		—		—		(23,870)		—		(23,870)		Net loss	—		—		—		(23,870)		—		(23,870)
Employee stock options, restricted stock and employee stock purchase plan	Employee stock options, restricted stock and employee stock purchase plan	2		267		—		—		(6)		263		Employee stock options, restricted stock and employee stock purchase plan	2		267		—		—		(6)		263
Stock-based compensation expense	Stock-based compensation expense	—		1,792		—		—		—		1,792		Stock-based compensation expense	—		1,792		—		—		—		1,792
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		3,461		—		—		3,461		Foreign currency translation, net of tax	—		—		3,461		—		—		3,461
Balance at September 30, 2020	Balance at September 30, 2020	$	1,076	$	625,328	$	(69,847)	$	69,422	$	(136,896)	$	489,083	Balance at September 30, 2020	$	1,076	$	625,328	$	(69,847)	$	69,422	$	(136,896)	$	489,083

Balance at June 30, 2019		$	1,067	$	618,626	$	(67,873)	$	153,395	$	(139,086)	$	566,129
Balance at December 31, 2020														Balance at December 31, 2020	$	1,076	$	627,031	$	(54,172)	$	50,937	$	(136,840)	$	488,032
Net loss	Net loss	—		—		—		(1,441)		—		(1,441)		Net loss	—		—		—		(21,845)		—		(21,845)
Employee stock options, restricted stock and employee stock purchase plan	Employee stock options, restricted stock and employee stock purchase plan	—		(2,495)		—		(651)		2,979		(167)		Employee stock options, restricted stock and employee stock purchase plan	16		(183)		—		(1,066)		352		(881)
Stock-based compensation expense	Stock-based compensation expense	—		2,501		—		—		—		2,501		Stock-based compensation expense	—		5,721		—		—		—		5,721
Treasury shares purchased at cost		—		—		—		—		(3,494)		(3,494)
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		(3,897)		—		—		(3,897)		Foreign currency translation, net of tax	—		—		(5,314)		—		—		(5,314)
Balance at September 30, 2019		$	1,067	$	618,632	$	(71,770)	$	151,303	$	(139,601)	$	559,631
Balance at September 30, 2021														Balance at September 30, 2021	$	1,092	$	632,569	$	(59,486)	$	28,026	$	(136,488)	$	465,713

Balance at December 31, 2019	Balance at December 31, 2019	$	1,067	$	620,626	$	(67,947)	$	134,119	$	(139,220)	$	548,645	Balance at December 31, 2019	$	1,067	$	620,626	$	(67,947)	$	134,119	$	(139,220)	$	548,645
Cumulative effect of accounting change	Cumulative effect of accounting change	—		—		—		(735)		—		(735)		Cumulative effect of accounting change	—		—		—		(735)		—		(735)
Net loss	Net loss	—		—		—		(62,262)		—		(62,262)		Net loss	—		—		—		(62,262)		—		(62,262)
Employee stock options, restricted stock and employee stock purchase plan	Employee stock options, restricted stock and employee stock purchase plan	9		(167)		—		(1,700)		2,324		466		Employee stock options, restricted stock and employee stock purchase plan	9		(167)		—		(1,700)		2,324		466
Stock-based compensation expense	Stock-based compensation expense	—		4,869		—		—		—		4,869		Stock-based compensation expense	—		4,869		—		—		—		4,869
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		(1,900)		—		—		(1,900)		Foreign currency translation, net of tax	—		—		(1,900)		—		—		(1,900)
Balance at September 30, 2020	Balance at September 30, 2020	$	1,076	$	625,328	$	(69,847)	$	69,422	$	(136,896)	$	489,083	Balance at September 30, 2020	$	1,076	$	625,328	$	(69,847)	$	69,422	$	(136,896)	$	489,083

Balance at December 31, 2018		$	1,064	$	617,276	$	(67,673)	$	148,802	$	(129,788)	$	569,681
Net income		—		—		—		4,147		—		4,147
Employee stock options, restricted stock and employee stock purchase plan		3		(8,019)		—		(1,646)		9,218		(444)
Stock-based compensation expense		—		9,375		—		—		—		9,375
Treasury shares purchased at cost		—		—		—		—		(19,031)		(19,031)
Foreign currency translation, net of tax		—		—		(4,097)		—		—		(4,097)
Balance at September 30, 2019		$	1,067	$	618,632	$	(71,770)	$	151,303	$	(139,601)	$	559,631

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	(In thousands)	2020		2019		(In thousands)	2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	(62,262)	$	4,147
Adjustments to reconcile net income (loss) to net cash provided by operations:
Net loss						Net loss	$	(21,845)	$	(62,262)
Adjustments to reconcile net loss to net cash provided by operations:						Adjustments to reconcile net loss to net cash provided by operations:
Impairments and other non-cash charges	Impairments and other non-cash charges	13,024		0		Impairments and other non-cash charges	—		13,024
Depreciation and amortization	Depreciation and amortization	34,186		34,891		Depreciation and amortization	32,009		34,186
Stock-based compensation expense	Stock-based compensation expense	4,869		9,375		Stock-based compensation expense	5,721		4,869
Provision for deferred income taxes	Provision for deferred income taxes	(19,023)		(787)		Provision for deferred income taxes	282		(19,023)
Credit loss expense	Credit loss expense	1,304		1,044		Credit loss expense	426		1,304
Gain on sale of assets	Gain on sale of assets	(2,916)		(5,779)		Gain on sale of assets	(6,863)		(2,916)
Gain on extinguishment of debt		(419)		0
Gain on insurance recovery						Gain on insurance recovery	(849)		—
(Gain) loss on extinguishment of debt						(Gain) loss on extinguishment of debt	1,000		(419)
Amortization of original issue discount and debt issuance costs	Amortization of original issue discount and debt issuance costs	3,962		4,589		Amortization of original issue discount and debt issuance costs	3,062		3,962
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Decrease in receivables		77,004		17,065
Decrease in inventories		26,566		11,873
(Increase) decrease in receivables						(Increase) decrease in receivables	(26,382)		77,004
(Increase) decrease in inventories						(Increase) decrease in inventories	(2,536)		26,566
Increase in other assets	Increase in other assets	(2,912)		(3,621)		Increase in other assets	(2,535)		(2,912)
Decrease in accounts payable		(34,606)		(11,806)
Increase (decrease) in accrued liabilities and other		1,516		(7,805)
Increase (decrease) in accounts payable						Increase (decrease) in accounts payable	25,292		(34,606)
Increase in accrued liabilities and other						Increase in accrued liabilities and other	6,888		1,516
Net cash provided by operating activities	Net cash provided by operating activities	40,293		53,186		Net cash provided by operating activities	13,670		40,293

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(14,609)		(35,803)		Capital expenditures	(19,103)		(14,609)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	10,497		7,116		Proceeds from sale of property, plant and equipment	11,730		10,497
Proceeds from insurance property claim						Proceeds from insurance property claim	85		—
Net cash used in investing activities	Net cash used in investing activities	(4,112)		(28,687)		Net cash used in investing activities	(7,288)		(4,112)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings on lines of credit	Borrowings on lines of credit	147,987		237,093		Borrowings on lines of credit	166,012		147,987
Payments on lines of credit	Payments on lines of credit	(180,440)		(242,263)		Payments on lines of credit	(150,132)		(180,440)
Purchases of Convertible Notes	Purchases of Convertible Notes	(29,124)		0		Purchases of Convertible Notes	(28,137)		(29,124)
Proceeds from term loan						Proceeds from term loan	8,258		—
Proceeds from financing obligation						Proceeds from financing obligation	8,004		—
Debt issuance costs	Debt issuance costs	0		(1,214)		Debt issuance costs	(295)		—
Proceeds from employee stock plans		0		1,236
Purchases of treasury stock	Purchases of treasury stock	(332)		(21,678)		Purchases of treasury stock	(1,435)		(332)
Other financing activities	Other financing activities	1,029		1,336		Other financing activities	(458)		1,029
Net cash used in financing activities		(60,880)		(25,490)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	1,817		(60,880)

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(1,810)		(1,526)		Effect of exchange rate changes on cash	(1,349)		(1,810)

Net decrease in cash, cash equivalents, and restricted cash		(26,509)		(2,517)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	6,850		(26,509)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	56,863		64,266		Cash, cash equivalents, and restricted cash at beginning of period	30,348		56,863
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	30,354	$	61,749	Cash, cash equivalents, and restricted cash at end of period	$	37,198	$	30,354

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

NEWPARK RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Significant Accounting Policies

Newpark Resources, Inc. is a geographically diversified supplier providing products, as well as rentals and services to customers across multiple industries. The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we collectively refer to as “we,” “our,” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Our fiscal year end is December 31, our third quarter represents the ~~three- month~~three-month period ended September 30, and our first nine months represents the nine-month period ended September 30. The results of operations for the third quarter and first nine months of ~~2020~~2021 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise noted, all currency amounts are stated in U.S. dollars.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of September 30, ~~2020,~~2021, our results of operations for the third quarter and first nine months of ~~2020~~2021 and ~~2019,~~2020, and our cash flows for the first nine months of ~~2020~~2021 and ~~2019.~~2020. All adjustments are of a normal recurring nature. Our balance sheet at December 31, ~~2019~~2020 is derived from the audited consolidated financial statements at that date.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

We operate our business through 2 reportable segments: Fluids Systems and Industrial Solutions. Our Fluids Systems segment primarily provides customized drilling, completion, and stimulation fluids solutions to oil and natural gas exploration and production (“E&P”) customers primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific and Latin America. Our Industrial Solutions segment includes our Site and Access Solutions business (historically reported as the Mats and Integrated Services segment), along with our Industrial Blending operations. Site and Access Solutions provides composite matting system rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and Europe. We also sell our manufactured composite mats to customers around the world, with power transmission being the primary end-market. Our Industrial Blending operations began in 2020, leveraging our chemical blending capacity and technical expertise to enter targeted industrial end-markets.

New Accounting Pronouncements

Standards Adopted in ~~2020~~

~~Credit Losses.~~ In 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance which requires financial assets measured at amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected. The new guidance requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, which will generally result in the earlier recognition of allowances for losses. Under previous guidance, reserves for uncollectible accounts receivable were determined on a specific identification basis when we believed that the required payment of specific amounts owed to us was not probable. Under the new guidance, our allowance for credit losses reflects losses that are expected over the contractual life of the asset, and takes into account historical loss experience, current and future economic conditions, and reasonable and supportable forecasts.

We adopted this new guidance as of January 1, 2020 using the modified retrospective transition method, and recorded a net reduction of $0.7 million to opening retained earnings to reflect the cumulative effect of adoption. Results for reporting periods beginning after December 31, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance. See Note 5 for additional required disclosures.

~~The cumulative effect of the changes made to our consolidated balance sheet for the adoption of the new accounting guidance for credit losses were as follows:~~

(In thousands) Balance at December 31, 2019 Impact of Adoption of New Credit Losses Guidance Balance at January 1, 2020
Receivables, net $ 216,714 $ (959) $ 215,755
Deferred tax assets 3,600 59 3,659
Deferred tax liabilities 34,247 (165) 34,082
Retained earnings 134,119 (735) 133,384

~~Standards Not Yet Adopted~~2021

Income Taxes: Simplifying the Accounting for Income Taxes. In December 2019, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued new guidance ~~which is~~ intended to simplify various aspects related to accounting for income taxes. We adopted this new guidance as of January 1, 2021. The adoption of this new guidance had no material impact on our financial statements or related disclosures.

Standards Not Yet Adopted

Debt: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued new guidance which is intended to simplify the accounting for convertible instruments. This guidance iswill be effective for us in the first quarter of ~~2021. We~~2022. As our existing convertible instrument matures in December 2021, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements or related disclosures.

Note 2 – Earnings Per Share

The following table presents the reconciliation of the numerator and denominator for calculating net ~~income (loss)~~loss per share:


		Third Quarter			First Nine Months							Third Quarter	First Nine Months
(In thousands, except per share data)	(In thousands, except per share data)		2020		2019		2020		2019		(In thousands, except per share data)		2021		2020		2021		2020
Numerator	Numerator										Numerator
Net income (loss) - basic and diluted			$	(23,870)	$	(1,441)	$	(62,262)	$	4,147
Net loss - basic and diluted											Net loss - basic and diluted		$	(10,485)	$	(23,870)	$	(21,845)	$	(62,262)

Denominator	Denominator										Denominator
Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic		90,535		89,675		90,056		89,863		Weighted average common shares outstanding - basic		91,932		90,535		91,264		90,056
Dilutive effect of stock options and restricted stock awards	Dilutive effect of stock options and restricted stock awards		0		0		0		1,676		Dilutive effect of stock options and restricted stock awards		—		—		—		—
Dilutive effect of Convertible Notes	Dilutive effect of Convertible Notes		0		0		0		0		Dilutive effect of Convertible Notes		—		—		—		—
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted		90,535		89,675		90,056		91,539		Weighted average common shares outstanding - diluted		91,932		90,535		91,264		90,056

Net income (loss) per common share
Net loss per common share											Net loss per common share
Basic	Basic		$	(0.26)	$	(0.02)	$	(0.69)	$	0.05	Basic		$	(0.11)	$	(0.26)	$	(0.24)	$	(0.69)
Diluted	Diluted		$	(0.26)	$	(0.02)	$	(0.69)	$	0.05	Diluted		$	(0.11)	$	(0.26)	$	(0.24)	$	(0.69)

We excluded the following weighted-average potential shares from the calculations of diluted net ~~income (loss)~~loss per share during the applicable periods because their inclusion would have been anti-dilutive:


		Third Quarter		First Nine Months				Third Quarter	First Nine Months
(In thousands)	(In thousands)		2020	2019	2020	2019	(In thousands)		2021	2020	2021	2020
Stock options and restricted stock awards	Stock options and restricted stock awards		5,608	4,989	5,172	1,812	Stock options and restricted stock awards		5,954	5,608	5,708	5,172

For the third quarter and first nine months of 2021 and 2020, ~~as well as the third quarter of 2019,~~ we excluded all potentially dilutive stock options and restricted stock awards in calculating diluted earnings per share as the effect was anti-dilutive due to the net loss incurred for these periods. The Convertible Notes (as defined in Note 7) only impact the calculation of diluted net income per share in periods that the average price of our common stock, as calculated in accordance with the terms of the indenture governing the Convertible Notes, exceeds the conversion price of $9.33 per share. ~~We have the option to pay cash, issue shares of common stock, or any combination thereof for the aggregate amount due upon conversion of the Convertible Notes as further described in Note 7.~~ If converted, we ~~currently intend to~~will settle the principal amount of the notes in cash and as a result, only the amounts payable in excess of the principal amount of the notes, if any, would be assumed to be settled with shares of common stock for purposes of computing diluted net income per share.

Note 3 – ~~Capital Stock and~~ Repurchase Program

Our ~~securities~~ repurchase program remains available for repurchases of any combination of our common stock and ~~our~~ Convertible Notes. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility (as defined in Note 7). As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, ~~2020,~~2021, we had ~~$51.9~~$23.8 million remaining under the program.

During the first nine months of 2021, we repurchased $28.3 million of our Convertible Notes in the open market under the repurchase program for a total cost of $28.1 million. During the first nine months of 2020, we repurchased $33.1 million of our Convertible Notes in the open market under the repurchase program for a total cost of $29.1 million. ~~There were 0 Convertible Notes repurchased under the program during 2019.~~

There were 0no shares of common stock repurchased under the repurchase program during the first nine months of ~~2020. During the first nine months of 2019, we repurchased an aggregate of 2,537,833 shares of our common stock under the program for a total cost of $19.0 million.~~

~~On May 27, 2020, our Board of Directors adopted a limited duration stockholder rights agreement which expires on May 1,~~ 2021 ~~whereby a dividend distribution of 1 right (each, a “Right”) for each outstanding share of our common stock was paid to holders of record as of the close of business on June 12,~~or 2020. Each Right entitles the registered holder to purchase from us one one-thousandth of a share of Series D Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $12.00, subject to adjustment. Subject to certain exceptions, if a person or group acquires more than 10% of our outstanding common stock, the Rights will become exercisable for common stock having a value equal to two times the purchase price.

Note 4 – Stock-Based and Other Long-Term Incentive Compensation

During the second quarter of 2021, our stockholders approved an amendment to the 2015 Employee Equity Incentive Plan (“2015 Plan”) to increase the number of shares authorized for issuance under the 2015 Plan from 12,300,000 to 14,300,000 shares, and also approved an amendment to the 2014 Non-Employee Directors’ Restricted Stock Plan (“2014 Director Plan”) to increase the number of shares authorized for issuance under the 2014 Director Plan from 1,000,000 to 1,200,000 shares.

During the second quarter of ~~2020,~~2021, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved equity-based compensation to executive officers and other key employees consisting of ~~2,474,377~~2,659,177 restricted stock units, which will ~~primarily~~ vest in equal installments over a three-year period. ~~At September 30, 2020, 1,622,532 shares remained available for award under the 2015 Employee Equity Incentive Plan (“2015 Plan”).~~ In addition, non-employee directors received a grant of ~~156,886~~210,367 restricted stock awards, which will vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant date. The weighted average grant-date fair value was ~~$2.06~~$3.28 per share for both the restricted stock units and restricted stock awards. During the third quarter of 2021, the Compensation Committee approved additional equity-based compensation to certain executive officers and other key employees consisting of 200,000 restricted stock units, which will vest in equal installments over a three-year period. The weighted average grant-date fair value was $2.09 per share for these restricted stock units. At September 30, 2021, 1,623,607 shares remained available for award under the 2015 Plan and 146,527 shares remained available for award under the 2014 Director Plan.

Also during the second quarter of ~~2020,~~2021, the Compensation Committee approved the issuance of performance-based cash awards to certain executive officers with a target ~~amount~~value of ~~$2.6~~$3.0 million. The performance-based cash awards will be settled based on the relative ranking of our total shareholder return (“TSR”) as compared to the TSR of our designated peer group over a three-year performance period. The performance period began May 2, ~~2020~~2021 and ends May 31, ~~2023,~~2024, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, ~~2023~~2024 and the cash payout for each executive ranging from 0% to 200% of target. The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte-Carlo valuation model with changes in fair value recognized in the consolidated statements of operations. During the third quarter of 2021, the Compensation Committee approved the issuance of $1.4 million of time-based cash awards to certain executive officers and other key employees, which will vest in full on September 1, 2023.

Note 5 – Receivables

Receivables consisted of the following:

(In thousands) September 30, 2020 December 31, 2019
Trade receivables:
Gross trade receivables $ 119,705 $ 207,554
Allowance for credit losses (5,753) (6,007)
Net trade receivables 113,952 201,547
Income tax receivables 4,403 7,393
Other receivables 9,602 7,774
Total receivables, net $ 127,957 $ 216,714


(In thousands)	September 30, 2021		December 31, 2020
Trade receivables:
Gross trade receivables	$	155,464	$	133,717
Allowance for credit losses	(4,859)		(5,024)
Net trade receivables	150,605		128,693
Income tax receivables	5,806		6,545
Other receivables	6,898		5,807
Total receivables, net	$	163,309	$	141,045

Other receivables included ~~$8.4~~$5.1 million and ~~$6.2~~$4.4 million for value added, goods and service taxes related to foreign jurisdictions as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

We adopted the new accounting guidance for credit losses as of January 1, 2020 (see Note 1 for additional information). To measure expected credit losses, we evaluate our receivables on a collective basis for assets that share similar risk characteristics. Our allowance for credit losses reflects losses that are expected over the contractual life of the asset, and takes into account historical loss experience, current and future economic conditions, and reasonable and supportable forecasts.2020.

Changes in our allowance for credit losses were as follows:


		First Nine Months					First Nine Months
(In thousands)	(In thousands)	2020		2019		(In thousands)	2021		2020
Balance at beginning of period	Balance at beginning of period	$	6,007	$	10,034	Balance at beginning of period	$	5,024	$	6,007
Cumulative effect of accounting change	Cumulative effect of accounting change	959		0		Cumulative effect of accounting change	—		959
Credit loss expense	Credit loss expense	1,304		1,044		Credit loss expense	426		1,304
Write-offs, net of recoveries	Write-offs, net of recoveries	(2,517)		(2,530)		Write-offs, net of recoveries	(591)		(2,517)
Balance at end of period	Balance at end of period	$	5,753	$	8,548	Balance at end of period	$	4,859	$	5,753

Note 6 – Inventories

Inventories consisted of the following:

(In thousands) September 30, 2020 December 31, 2019
Raw materials:
Fluids systems $ 106,484 $ 141,314
Mats and integrated services 3,724 5,049
Total raw materials 110,208 146,363
Blended fluids systems components 34,221 39,542
Finished goods - mats 15,138 10,992
Total inventories $ 159,567 $ 196,897


(In thousands)	September 30, 2021		December 31, 2020
Raw materials:
Fluids Systems	$	110,522	$	98,974
Industrial Solutions	4,864		6,315
Total raw materials	115,386		105,289
Blended fluids systems components	26,906		31,744
Finished goods - mats	5,902		10,824
Total inventories	$	148,194	$	147,857

Raw materials for the Fluids Systems segment consists primarily of barite, chemicals, and other additives that are consumed in the production of our fluids systems. Raw materials for the ~~Mats and Integrated Services~~Industrial Solutions segment consists primarily of resins, chemicals, and other materials used to manufacture composite mats and cleaning products, as well as materials that are consumed in providing spill containment and other services to our customers. Our blended fluids systems components consist of base ~~fluid~~fluids systems that have been either mixed internally at our blending facilities or purchased from third-party vendors. These base ~~fluid~~fluids systems require raw materials to be added, as needed to meet specified customer requirements.

Fluids Systems segment cost of revenues includes a total of $10.0 million of charges for the first nine months of 2020 for inventory write-downs, primarily attributable to the reduction in carrying values of certain inventory to their net realizable value.

Note 7 – Financing Arrangements and Fair Value of Financial Instruments

Financing arrangements consisted of the following:

September 30, 2020 December 31, 2019
(In thousands) Principal Amount Unamortized Discount and Debt Issuance Costs Total Debt Principal Amount Unamortized Discount and Debt Issuance Costs Total Debt
Convertible Notes $ 66,912 $ (5,262) $ 61,650 $ 100,000 $ (12,291) $ 87,709
ABL Facility 29,900 — 29,900 65,000 — 65,000
Other debt 10,805 — 10,805 7,164 — 7,164
Total debt 107,617 (5,262) 102,355 172,164 (12,291) 159,873
Less: Current portion (10,149) 0 (10,149) (6,335) 0 (6,335)
Long-term debt $ 97,468 $ (5,262) $ 92,206 $ 165,829 $ (12,291) $ 153,538


	September 30, 2021						December 31, 2020
(In thousands)	Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt
Convertible Notes	$	38,567	$	(464)	$	38,103	$	66,912	$	(4,221)	$	62,691
ABL Facility	24,100		—		24,100		19,100		—		19,100
Term loan	6,569		(130)		6,439		—		—		—
Financing obligation	7,953		(91)		7,862		—		—		—
Other debt	17,240		—		17,240		5,371		—		5,371
Total debt	94,429		(685)		93,744		91,383		(4,221)		87,162
Less: Current portion	(21,875)		—		(21,875)		(71,693)		4,221		(67,472)
Long-term debt	$	72,554	$	(685)	$	71,869	$	19,690	$	—	$	19,690

Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“Convertible Notes”) that mature on December 1, 2021, of which ~~$66.9~~$38.6 million principal amount was outstanding at September 30, ~~2020.~~2021. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.

~~Holders may convert the notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2021, only under the following circumstances:~~

•during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least 20 trading days (regardless of whether consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the notes in effect on each applicable trading day;

•~~during the~~ ~~five~~ ~~business day period after any~~ ~~five~~ consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the conversion rate on each such trading day; or

•~~upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.~~

~~On or after June 1, 2021 until~~Until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any ~~time, regardless of whether~~time. If any ~~of the foregoing conditions have been satisfied. As of October 30, 2020, the notes were not convertible.~~

~~The~~ notes are ~~convertible into,~~converted, we will settle the converted notes at ~~our election,~~the maturity date with a combination of cash and shares of common stock ~~or a combination of both, subject to satisfaction of specified conditions and during specified periods, as described above. If converted, we currently intend to pay cash for~~in accordance with the ~~principal amount~~terms of the ~~notes converted.~~indenture governing the Convertible Notes. The conversion rate is 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date. As of November 1, 2021, no holders have converted their notes. The Convertible Notes are classified as long-term debt in the September 30, 2021 balance sheet as we intend to settle the notes at maturity utilizing borrowings under our ABL Facility.

In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of September 30, ~~2020,~~2021, the carrying amount of the debt component was ~~$61.7~~$38.1 million, which is net of the unamortized debt discount and debt issuance costs of ~~$5.3~~$0.5 million. Including the impact of the unamortized debt discount and debt issuance costs, the effective interest rate on the notes is approximately 11.3%.

During the first nine months of ~~2020,~~2021, we repurchased ~~$33.1~~$28.3 million of our Convertible Notes in the open market for a total cost of ~~$29.1~~$28.1 million, and recognized a net ~~gain~~loss of ~~$0.4~~$1.0 million reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.

Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement, which ~~replaced our previous credit agreement. In~~was amended in October 2017 ~~we entered into an Amended~~ and ~~Restated Credit Agreement and in~~ March 2019 ~~we entered into a First Amendment to Amended and Restated Credit Agreement~~ (as amended, the “ABL Facility”). The ABL Facility provides financing of up to $200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of $275.0 million, subject to certain conditions. The ABL Facility terminates in March 2024. As of September 30, ~~2020,~~2021, our total availability under the ABL Facility was ~~$99.0~~$106.2 million, of which ~~$29.9~~$24.1 million was drawn, $39.3 million was reserved for settlement of the Convertible Notes, and $1.1 million was used for outstanding letters of credit, resulting in remaining availability of ~~$69.1~~$41.7 million.

The ABL Facility terminates in March 2024; however, the ABL Facility has a springing maturity date that will accelerate the maturity of the ABL Facility to September 1, 2021 if, prior to such date, the Convertible Notes have not been repurchased, redeemed, refinanced, exchanged or otherwise satisfied in full or we have not escrowed an amount of funds, that together with the amount that we establish as a reserve against our borrowing capacity, is sufficient for the future settlement of the Convertible Notes at their maturity. The ABL Facility requires compliance with a minimum consolidated fixed charge coverage ratio of 1.25 to 1.0 calculated based on the trailing twelve-month period ended June 30, 2021 and remaining unused availability of at least $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes.

Borrowing availability under the ABL Facility is calculated based on eligible U.S. accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation also includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio of 1.5 to 1.0 and at least $1.0 million of operating income for the ~~Mats~~Site and ~~Integrated Services segment,~~Access Solutions business, each calculated based on a trailing twelve-month period.

As of November 3, 2020, our total availability under the ABL Facility was $112.3 million, of which $29.0 million was drawn, resulting in remaining availability of $83.3 million. As of November 3, 2020, our total availability under the ABL Facility included $25.3 million from eligible rental mats. After the filing of our quarterly compliance certificate under the ABL Facility for the third quarter of 2020 in November, we will not satisfy the minimum consolidated fixed charge coverage ratio that is required to continue including eligible rental mats in the borrowing availability under the ABL Facility. While this does not represent a default, it would reduce the borrowing availability under the ABL Facility noted above as of November 3, 2020 by $25.3 million.

rate of Bank of America, N.A. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50 to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL ~~Facility calculated based on a trailing twelve-month period.~~Facility. As of September 30, ~~2020,~~2021, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was ~~1.9%~~1.65% at September 30, ~~2020. In November 2020, the applicable margins for borrowings under our ABL Facility will increase 50 basis points based on the consolidated fixed charge coverage ratio.~~2021. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of September 30, ~~2020,~~2021, the applicable commitment fee was 37.5 basis points.

The ABL Facility is a senior secured obligation, secured by first liens on substantially all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires ~~compliance with~~ a minimum consolidated fixed charge coverage ratio of 1.0 to 1.0 calculated based on a trailing twelve-month period if availability under the ABL Facility falls below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.

Other Debt.In August 2021, we completed sale-leaseback transactions related to certain vehicles and other equipment for net proceeds of approximately $7.9 million. The transactions have been accounted for as financing arrangements as they did not qualify for sale accounting. As a result, the vehicles and other equipment continue to be reflected on our balance sheet in property, plant and equipment, net. The financing arrangements have a weighted average annual interest rate of 5.4% and are payable in monthly installments with varying maturities through October 2025. We had an $8.0 million financing obligation outstanding under these arrangements at September 30, 2021.

In February 2021, a U.K. subsidiary entered a £6.0 million (approximately $8.3 million) term loan facility that matures in February 2024, the proceeds of which were used to pay down the ABL Facility. The term loan bears interest at a rate of LIBOR plus a margin of 3.4% per year, payable in quarterly installments of £375,000 plus interest beginning March 2021 and a £1.5 million payment due at maturity. We had $6.6 million outstanding under this arrangement at September 30, 2021.

Certain of our foreign subsidiaries maintain local credit arrangements consisting primarily of lines of credit or overdraft facilities which are generally renewed on an annual basis. We utilize local financing arrangements in our foreign operations in order to provide short-term local liquidity needs. We had ~~$7.9~~$12.6 million and ~~$4.8~~$3.5 million outstanding under these arrangements at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

In addition, at September 30, ~~2020,~~2021, we had ~~$57.5~~$43.1 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by ~~$6.3~~$6.0 million in restricted cash.

Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our Convertible Notes, approximated their fair values at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The estimated fair value of our Convertible Notes was ~~$59.2~~$38.6 million at September 30, ~~2020~~2021 and ~~$101.4~~$61.1 million at December 31, ~~2019,~~2020, based on quoted market prices at these respective dates.

Note 8 – Income Taxes

The provision for income taxes was $5.4 million for the first nine months of 2021, despite reporting a pretax loss for the period, primarily reflecting the impact of the geographic composition of our pretax loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses as they may not be realized. The benefit for income taxes was $11.3 million for the first nine months of 2020, ~~reflecting an effective tax benefit rate of 15%. This result primarily reflects the impact of the geographic composition of our pretax loss,~~ where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations. The provision for income taxes was $7.2 million for the first nine months of 2019, reflecting an effective tax rate of 63%. The 2019 effective tax rate was impacted by the geographic composition of our pretax income as well as non-deductible expenses relative to the amount of pretax income.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in March 2020 in the United States. The CARES Act contains several tax provisions, including additional carryback opportunities for net operating losses, temporary increases in the interest deductibility threshold, and the acceleration of refunds for any remaining alternative minimum tax (“AMT”) carryforwards. While there was no material impact from the CARES Act in our provision for income taxes for the first nine months of 2020, we are continuing to evaluate the provisions of the CARES Act. In addition, we filed an amendment to our 2018 U.S. federal income tax return in the second quarter of 2020 and received a refund of $0.7 million for AMT carryforwards in July 2020.

The CARES Act also permits most companies to defer paying their portion of certain applicable payroll taxes from the date the CARES Act was signed into law through December 31, 2020. The deferred amount will be due in two equal installments on December 31, 2021 and December 31, 2022. The deferred amount of applicable payroll taxes was $2.3 million at September 30, 2020.

Note 9 – Commitments and Contingencies

In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state, and local levels. While the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not expect that any loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, will have a material adverse impact on our consolidated financial statements.

~~Kenedy, Texas Drilling Fluids Facility Fire~~

In July 2018, a fire occurred at our Kenedy, Texas drilling fluids facility, destroying the distribution warehouse, including inventory and surrounding equipment. In addition, nearby residences and businesses were evacuated as part of the response to the fire. In order to avoid any customer service disruptions, we implemented contingency plans to supply products from alternate facilities in the area and region. Subsequently, we received petitions seeking payment for alleged bodily injuries, property damage, and punitive damages claimed to have been incurred as a result of the fire and the subsequent efforts we undertook to remediate any potential smoke damage. As of September 30, 2020, all plaintiffs' claims have been settled under our insurance program and the matter is closed. As of September 30, 2020, our claims related to the fire under our property, business interruption, and general liability insurance programs have not been finalized.

Note 10 – Supplemental Disclosures to the Statements of Cash Flows

Supplemental disclosures to the statements of cash flows are presented below:


	First Nine Months
(In thousands)	2021		2020
Cash paid for:
Income taxes (net of refunds)	$	5,765	$	4,733
Interest	$	3,414	$	4,160

First Nine Months
(In thousands) 2020 2019
Cash paid for:
Income taxes (net of refunds) $ 4,733 $ 10,095
Interest $ 4,160 $ 5,702

Cash, cash equivalents, and restricted cash in the consolidated statements of cash flows consisted of the following:

(In thousands) September 30, 2020 December 31, 2019
Cash and cash equivalents $ 24,028 $ 48,672
Restricted cash (included in prepaid expenses and other current assets) 6,326 8,191
Cash, cash equivalents, and restricted cash $ 30,354 $ 56,863


(In thousands)	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	31,242	$	24,197
Restricted cash (included in prepaid expenses and other current assets)	5,956		6,151
Cash, cash equivalents, and restricted cash	$	37,198	$	30,348

Note 11 – Segment Data

Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers):


		Third Quarter			First Nine Months							Third Quarter	First Nine Months
(In thousands)	(In thousands)		2020		2019		2020		2019		(In thousands)		2021		2020		2021		2020
Revenues	Revenues										Revenues
Fluids systems			$	67,711	$	152,547	$	275,178	$	485,744
Mats and integrated services			28,713		50,216		87,742		144,904
Fluids Systems											Fluids Systems		$	107,955	$	67,711	$	292,897	$	275,178
Industrial Solutions											Industrial Solutions		43,842		28,713		142,321		87,742
Total revenues	Total revenues		$	96,424	$	202,763	$	362,920	$	630,648	Total revenues		$	151,797	$	96,424	$	435,218	$	362,920

Operating income (loss)	Operating income (loss)										Operating income (loss)
Fluids systems			$	(18,957)	$	5,893	$	(46,284)	$	21,951
Mats and integrated services			(139)		10,049		3,928		32,863
Fluids Systems											Fluids Systems		$	(6,646)	$	(18,957)	$	(19,944)	$	(46,284)
Industrial Solutions											Industrial Solutions		8,103		(139)		31,376		3,928
Corporate office	Corporate office		(6,596)		(9,654)		(19,761)		(31,933)		Corporate office		(7,520)		(6,596)		(20,198)		(19,761)
Total operating income (loss)			$	(25,692)	$	6,288	$	(62,117)	$	22,881
Total operating loss											Total operating loss		$	(6,063)	$	(25,692)	$	(8,766)	$	(62,117)

The following table presents further disaggregated revenues for the Fluids Systems segment:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(In thousands)	(In thousands)	2020		2019		2020		2019		(In thousands)	2021		2020		2021		2020
United States	United States	$	40,314	$	98,140	$	156,644	$	318,353	United States	$	56,783	$	40,314	$	161,237	$	156,644
Canada	Canada	1,961		8,029		18,287		26,283		Canada	13,781		1,961		31,400		18,287
Total North America	Total North America	42,275		106,169		174,931		344,636		Total North America	70,564		42,275		192,637		174,931

EMEA	EMEA	23,207		41,126		91,380		123,346		EMEA	32,380		23,207		90,801		91,380
Other	Other	2,229		5,252		8,867		17,762		Other	5,011		2,229		9,459		8,867
Total International	Total International	25,436		46,378		100,247		141,108		Total International	37,391		25,436		100,260		100,247

Total Fluids Systems revenues	Total Fluids Systems revenues	$	67,711	$	152,547	$	275,178	$	485,744	Total Fluids Systems revenues	$	107,955	$	67,711	$	292,897	$	275,178

The following table presents further disaggregated revenues for the ~~Mats~~Industrial Solutions segment:


	Third Quarter				First Nine Months
(In thousands)	2021		2020		2021		2020
Product sales revenues	$	14,240	$	5,917	$	44,459	$	15,243
Rental revenues	15,343		9,327		51,655		31,999
Service revenues	12,393		13,469		37,919		40,500
Industrial blending revenues (1)	1,866		—		8,288		—
Total Industrial Solutions revenues	$	43,842	$	28,713	$	142,321	$	87,742

(1) Industrial blending operations began in the second quarter of 2020. Results for the industrial blending component are presented in Industrial Solutions beginning in the fourth quarter of 2020. Results prior to the fourth quarter of 2020 were reported in Fluids Systems and ~~Integrated Services segment:~~not adjusted as they were not material.

Third Quarter First Nine Months
(In thousands) 2020 2019 2020 2019
Service revenues $ 13,469 $ 18,930 $ 40,500 $ 59,989
Rental revenues 9,327 16,700 31,999 55,955
Product sales revenues 5,917 14,586 15,243 28,960
Total Mats and Integrated Services revenues $ 28,713 $ 50,216 $ 87,742 $ 144,904

~~During~~In March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic, which led to a rapid decline in customer activity in the ~~oil and natural gas exploration and production (“~~E~~&P”)~~&P industry. As of September 30, 2020, the U.S. active rig count was 261, reflecting a 67% decline from the first quarter 2020 average level. The average U.S. active rig count was 477 for the first nine months of 2020 reflecting a 52% decline from the first nine months of 2019. In addition, international activity levels have also been negatively impacted by the COVID-19 pandemic and decline in oil prices. In response to these market changes, we initiated workforce reductions and other cost reduction programs late in the first quarter of 2020 and continued these actions throughout 2020.

As part of the cost reduction programs, we ~~have~~ reduced our global employee base by approximately 620 (28%) in the first nine months of 2020. As a result of these workforce reductions, our operating results for the third quarter of 2020 ~~include~~included $0.4 million of total severance costs ($0.2 million in Fluids Systems and $0.2 million in the ~~Corporate~~corporate office), with $0.1 million in cost of revenues and $0.3 million in selling, general and administrative expenses. Our operating results for the first nine

months of 2020 ~~include~~included $3.9 million of total severance costs ($3.3 million in Fluids Systems and $0.6 million in the ~~Corporate~~

corporate office), with $2.6 million in cost of revenues and $1.3 million in selling, general and administrative expenses. These costs ~~have been~~were substantially paid as of September 30, 2020.

~~For the third quarter of 2020, we~~We recognized $4.7 million of total charges ~~primarily~~ for the impairment of certain fixed assets and other non-cash charges in the third quarter of 2020, with $4.5 million in the Fluids Systems segment and $0.2 million in the ~~Corporate Office. For the first nine months of 2020, we~~corporate office. We recognized $18.0 million of total charges ~~primarily~~ for inventory write-downs, severance costs, fixed asset impairments, and facility exit costs in the first nine months of 2020, with $17.4 million in the Fluids Systems segment and $0.6 million in the ~~Corporate~~corporate office.

In August 2021, Hurricane Ida negatively impacted our Gulf of Mexico operations, including damage to certain inventory, equipment and warehouse facilities, at our Fourchon, Louisiana Fluids Systems operating base. While this event is covered by our property and business interruption insurance programs, these programs contain self-insured retentions, which remain our financial obligations. During the third quarter of 2021, our Fluids Systems segment incurred hurricane-related costs of $2.6 million, substantially all of which is our self-insured retention under our property insurance policy representing preliminary estimates for property damage and initial costs incurred for property-related repairs, cleanup and other costs. This $2.6 million charge is recognized in other operating (income) loss, net, for the third quarter of 2021. Additional costs for property-related repairs, cleanup and other costs that may be incurred beyond the initial estimates are expected to be substantially recoverable under our property insurance policy. As of September 30, 2021, the claims related to the hurricane under our property and business interruption insurance programs have not been finalized.

Fluids Systems operating results for the third quarter and first nine months of 2021 also includes $1.7 million of charges related to facility exit and other costs included in cost of revenues, as well as a $0.8 million gain included in other operating (income) loss, net, related to the final insurance settlement associated with the July 2018 fire at our Kenedy, Texas drilling fluids facility. Industrial Solutions operating results for the first nine months of 2021 includes a $1.0 million gain in other operating (income) loss, net, related to a legal settlement.

See below for details of charges in the Fluids Systems segment.

Third Quarter First Nine Months
(In thousands) 2020 2019 2020 2019
Inventory write-downs $ 990 $ 0 $ 9,986 $ 0
Severance costs 189 284 3,288 1,152
Property, plant and equipment impairments 3,038 0 3,038 0
Facility exit costs and other 286 0 1,086 0
Total Fluids Systems impairments and other charges $ 4,503 $ 284 $ 17,398 $ 1,152

We also made the decision in late 2019 to wind down our Brazil operations. At September 30, 2020, we had $11.8 million of accumulated translation losses related to our subsidiary in Brazil. As such, we will reclassify these losses and recognize a charge to income at such time when we have substantially liquidated our subsidiary in Brazil.

As of September 30, 2020, our consolidated balance sheet includes $42.2 million of goodwill, all of which relates to the Mats and Integrated Services segment. Goodwill and other indefinite-lived intangible assets are tested for impairment annually as of November 1, or more frequently, if indicators of impairment exists. In March 2020, primarily as a result of the collapse in oil prices and the expected declines in the U.S. land E&P markets, along with a significant decline in the quoted market prices of our common stock, we considered these developments to be a potential indicator of impairment that required us to complete an interim goodwill impairment evaluation. As such, in March 2020, we estimated the fair value of our Mats and Integrated Services reporting unit based on our current forecasts and expectations for market conditions and determined that even though the estimated fair value had decreased, the fair value remained substantially in excess of its net carrying value, and therefore, no impairment was required. During the second quarter and third quarter of 2020, we determined that there were no further indicators of events or changes in circumstances that would more likely than not reduce the fair value below its carrying amount.

As of September 30, 2020, our consolidated balance sheet also includes $287.3 million of property, plant and equipment, net, and $25.6 million of finite-lived intangible assets, net, which combined includes $159.6 million in the Fluids Systems segment and $143.6 million in the Mats and Integrated Services segment. We review property, plant and equipment, finite-lived intangible assets and certain other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We assess recoverability based on expected undiscounted future net cash flows. Due to the changes in market conditions, we have reviewed these assets for impairment during the first nine months of 2020 and determined that the estimated undiscounted cash flows exceeded the carrying value, and therefore, no impairment was required. Fluids Systems segment includes a $3.0 million impairment charge for the first nine months of 2020, attributable to the abandonment of certain property, plant and equipment.


	Third Quarter				First Nine Months
(In thousands)	2021		2020		2021		2020
Fourchon, Louisiana hurricane-related costs	$	2,596	$	—	$	2,596	$	—
Facility exit and other costs	1,691		286		1,691		1,086
Severance costs	564		189		1,177		3,288
Kenedy, Texas facility fire insurance settlement	(849)		—		(849)		—
Inventory write-downs	—		990		—		9,986
Property, plant and equipment impairments	—		3,038		—		3,038
Total Fluids Systems impairments and other charges	$	4,002	$	4,503	$	4,615	$	17,398

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report as well as our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Our third quarter represents the three-month period ended September 30 and our first nine months represents the nine-month period ended September 30. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”

Overview

We are a geographically diversified supplier providing products, as well as rentals and ~~services.~~services to customers across multiple industries. We operate our business through two reportable segments: Fluids Systems, which primarily serves ~~the~~ oil and natural gas exploration and production (“E&P”) ~~industry,~~customers, and ~~Mats and Integrated Services,~~Industrial Solutions, which serves ~~a variety of industries,~~various markets including ~~electrical~~power transmission, ~~& distribution,~~ E&P, pipeline, renewable energy, petrochemical, construction and ~~construction~~other industries.

Our ~~operating results, particularly~~long-term strategy includes key foundational elements that are intended to enhance long-term shareholder value creation:

•End-market diversification – To help reduce our dependency on customers in the volatile E&P industry, improve the stability in cash flow generation and returns on invested capital, and provide growth opportunities into new markets, we have focused our efforts over the past several years on diversifying our presence outside of our historical E&P customer base. These efforts have been primarily focused within our Site and Access Solutions business, where we have prioritized growth in power transmission, pipeline, renewable energy, and construction markets. In the first nine months of 2021, our Industrial Solutions segment generated $142 million of revenues, including approximately $117 million from power transmission and other industrial markets. The continued diversification of our revenues, including end-markets that are likely to benefit from ongoing energy transition efforts around the world, such as power transmission, renewable energy, and geothermal, remains a strategic priority going forward, and we anticipate that our capital investments will primarily focus on industrial end-market expansion.

•Provide products that enhance environmental sustainability – Our Company has a long history of providing environmentally-friendly technologies to our customers. In the Industrial Solutions segment, we believe the lightweight design of our fully recyclable DURA-BASE® matting system provides a distinct environmental advantage for our customers as compared to alternative wood mat products in the market, by eliminating deforestation required to produce wood mat products while also reducing CO2 emissions associated with product transportation. In our Fluids Systems segment, ~~depend~~our family of high-performance water-based fluids systems, which we market as Evolution® and DeepDrill® systems, are designed to enhance drilling performance while also providing a variety of environmental benefits relative to traditional oil-based fluids. Our Fluids Systems segment has also developed a water-based fluids system for geothermal applications that we market as TerraThermTM. The continued advancement of technology that provides our customers with economic benefits, while also enhancing their environmental and safety programs, remains a priority for our research and development efforts.

Our Fluids Systems operating results remain dependent on oil and natural gas drilling activity levels in the markets we serve and the nature of the drilling operations (including the depth and whether the wells are drilled vertically or horizontally), which governs the revenue potential of each well. Drilling activity levels, in turn, depend on a variety of factors, including oil and natural gas commodity pricing, inventory levels, product demand, and regulatory restrictions. Oil and natural gas prices and activity are cyclical and volatile, and this market volatility has a significant impact on our operating results.

While our revenue potential is driven by a number of factors including those described above, rig count data remains the most widely accepted indicator of drilling activity. Average North American rig count data for the third quarter and first nine months of ~~2020~~2021 as compared to the same periods of ~~2019~~2020 is as follows:


		Third Quarter		2020 vs 2019				Third Quarter		2021 vs 2020
		2020	2019	Count	%			2021	2020	Count	%
U.S. Rig Count	U.S. Rig Count	254	920	(666)	(72)	%	U.S. Rig Count	496	254	242	95	%
Canada Rig Count	Canada Rig Count	47	132	(85)	(64)	%	Canada Rig Count	151	47	104	221	%
North America Rig Count	North America Rig Count	301	1,052	(751)	(71)	%	North America Rig Count	647	301	346	115	%

		First Nine Months		2020 vs 2019				First Nine Months		2021 vs 2020
		2020	2019	Count	%			2021	2020	Count	%
U.S. Rig Count	U.S. Rig Count	477	984	(507)	(52)	%	U.S. Rig Count	445	477	(32)	(7)	%
Canada Rig Count	Canada Rig Count	89	132	(43)	(33)	%	Canada Rig Count	120	89	31	35	%
North America Rig Count	North America Rig Count	566	1,116	(550)	(49)	%	North America Rig Count	565	566	(1)	—	%

Source: Baker Hughes Company

~~During 2019, U.S. rig count steadily declined, exiting the year at 805 active rigs, a 26% decline from the end of 2018.~~ During March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic. As a result, ~~average~~ U.S. rig count declined significantly beginning in ~~the second quarter of~~late March 2020 ~~declined 50% from the first quarter of 2020 and further declined another 35% in the third quarter of 2020 from the average level in the second quarter of 2020. After~~before reaching a low of 244 in mid-August 2020. Oil prices have since rebounded and currently are at multi-year highs, while the average U.S. rig count has ~~since~~gradually increased over the past year, resulting in a 95% year-over-year third quarter improvement in U.S. rig count, though still 7% below prior year for the first nine months. We anticipate that market activity will continue to ~~296~~improve from current levels, although the ongoing impacts of the COVID-19 variants, an uncertain economic environment, including widespread supply chain disruptions, as well as enacted and proposed legislative changes in the U.S. impacting the oil and natural gas industry, make the timing and pace of ~~October 30, 2020.~~recovery difficult to predict. The Canada rig count reflects ~~both the current weakness in oil prices as well as~~ normal seasonality for this market, with the highest rig count levels generally observed in the first quarter of each year, prior to ~~Spring~~spring break-up. We anticipate that market activity will continue to modestly improve from current levels, although the ongoing impacts of the COVID-19 pandemic and an uncertain economic environment that will likely persist through the remainder of 2020 and into 2021 make the timing and pace of recovery difficult to predict.

Outside of North America land markets, drilling activity is generally more stable as this drilling activity ~~in many countries~~ is based on longer-term economic projections and multi-year drilling programs, which ~~tends to reduce~~typically reduces the impact of short-term changes in commodity prices on overall drilling activity. However, operations in several countries in the EMEA region experienced activity disruptions and project delays beginning in March 2020 and continuing ~~through the third quarter of 2020,~~in 2021, driven by government-imposed restrictions on movements of personnel, quarantines of staffing, and logistical limitations as a result of the COVID-19 pandemic. We ~~currently~~ expect these disruptions and project delays will continue to impact international activity levels in the near-term, and while there has been a general improvement in customer activity as we have progressed through ~~the remainder of 2020 before beginning to gradually recover in early~~ 2021, ~~although~~ the impact from the duration and magnitude of the ongoing health pandemic and related government responses are very difficult to predict.

In response to ~~these~~the 2020 market changes and reduced demand for our products and services as a result of the decline in oil prices and the COVID-19 pandemic, we ~~initiated~~took a number of actions ~~late in the first quarter of 2020 and continuing throughout~~during 2020 aimed at conserving cash and protecting our liquidity, ~~including:~~

•~~The~~which included the implementation of cost reduction programs, including workforce reductions, employee furloughs, the suspension of the Company’s matching contributions to its U.S. defined contribution plan, and temporary salary reductions effective April 1, 2020 for a significant portion of U.S. employees, including ~~a 15% cut to the salaries paid to~~ executive officers ~~(with a further 10% cut for the CEO effective August 12, 2020)~~ and the annual cash retainers paid to all non-employee members of the Board of ~~Directors;~~

•~~The initiation~~Directors. We recognized $18.0 million of ~~additional actions to further reduce the operational footprint of the Fluids Systems business in U.S. land, to better align our cost structure with the lower market activity levels; and~~

•~~The elimination of all non-critical capital investments.~~

~~As part of the cost reduction programs, we have reduced our global employee base by approximately 620 (28%) in~~charges during the first nine months of ~~2020.~~

~~For the first nine months of~~ 2020 ~~we recognized $18.0 million of total charges primarily~~ for inventory write-downs, severance costs, fixed asset impairments, and facility exit ~~costs, with $17.4~~costs. Beginning in the second quarter of 2021, we restored salaries to pre-reduction levels for a portion of our non-executive U.S. employees and reinstituted the Company matching contribution for our U.S. defined contribution plan. Beginning in the third quarter of 2021, we restored salaries to pre-reduction levels for the remaining non-executive U.S. employees and our executive officers as well as the annual cash retainers paid to all non-employee members of the Board of Directors. We recognized total charges of $4.6 million during the first nine months of 2021, including $4.0 million in the third quarter of 2021, primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems ~~segment~~operating base, facility exit, and ~~$0.6 million~~severance costs.

With ongoing support from outside financial and other advisors, we have continuously reviewed our portfolio during this oil and natural gas market downturn. These reviews have focused on evaluating changes in the ~~Corporate office. The $17.4 million of Fluids Systems charges includes $10.0 million~~outlook for ~~inventory write-downs, $3.3 million~~our served markets and customer priorities, while identifying opportunities for value-creating options in ~~severance costs, $3.0 million~~our portfolio, as well as placing investment emphasis in ~~fixed asset impairments,~~markets where we generate strong returns and ~~$1.1 million in facility exit costs~~where we see greater long-term viability and ~~other.~~

stability. While we have taken certain actions to reduce our workforce and cost structure, our business contains high levels of fixed costs,

including significant facility and personnel ~~expenses.~~expense. We continue to evaluate under-performing areas ~~as well as opportunities~~of our business, including the U.S. and Gulf of Mexico oil and natural gas markets, which necessitates consideration of broader structural changes to ~~further enable a more efficient and scalable cost structure.~~transform this business for the new market realities. In the absence of a longer-term increase in activity levels, we may incur future charges related to ~~further cost reduction~~these efforts or potential asset impairments, which may negatively impact our future results.

Segment Overview

Fluids Systems – Our Fluids Systems segment, which generated ~~76%~~67% of consolidated revenues for the first nine months of ~~2020,~~2021, provides ~~customized~~ drilling, completion, and stimulation fluids ~~solutions~~products and related technical services to ~~E&P~~ customers for oil, natural gas, and geothermal projects primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific and Latin America. ~~International~~Despite the continuing effects of COVID-19 impacting international customer activity, expansion outside of North America, including the penetration of international oil companies (“IOCs”) and national oil companies (“NOCs”), isremains a key element of our Fluids Systems strategy, which has historically helped to stabilize segment revenues while North American oil and natural gas exploration activities have fluctuated significantly. Revenues from IOC and NOC customers represented approximately ~~43%~~29% of Fluids Systems segment revenues for the first nine months of ~~2020~~2021 compared to approximately ~~31% for the first nine months of 2019.~~

In addition to our international expansion efforts, we have also expanded our presence in the deepwater Gulf of Mexico, capitalizing on our capabilities, infrastructure, and strong market position, as well as through product line extensions into adjacent product offerings, including completion fluids. Revenues for drilling and completion fluids from offshore Gulf of Mexico increased to $37 million43% for the first nine months of 2020, ~~compared~~with the decrease primarily due to ~~$32 million for the first nine months of 2019.~~

~~In response to the increasing market demand for cleaning products following the COVID-19 pandemic, we began leveraging our chemical blending capacity~~COVID-related activity disruptions and ~~technical expertise to begin producing disinfectants~~project delays, as well as changes in customer drilling and ~~industrial cleaning products~~completion activity levels in the ~~second quarter~~Gulf of ~~2020. After initial production start-up~~Mexico. Consistent with our strategy, during 2021, we secured multi-year tender awards in ~~the second quarter~~Bahrain and Thailand, both of ~~2020, revenues from these products tripled~~which began in the third quarter of ~~2020 to nearly $3 million. Following the third quarter 2020 installation of required packaging equipment for these products, we plan to continue to ramp up production over the next several months.~~2021.

Industrial Solutions – Our ~~Mats and Integrated Services~~Industrial Solutions segment, which generated ~~24%~~33% of consolidated revenues for the first nine months of ~~2020,~~2021, provides engineered composite ~~mat~~matting system rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including ~~electrical~~power transmission, ~~& distribution,~~ E&P, pipeline, renewable energy, petrochemical, construction and ~~construction~~other industries, ~~across North America~~primarily in the United States and Europe. We also sell our manufactured composite mats to customers around the ~~world.~~world, with power transmission being the primary end-market. In addition, we began leveraging our chemical blending capacity and technical expertise into industrial blending operations, and in response to the increasing market demand for cleaning products resulting from the COVID-19 pandemic, began producing disinfectants and industrial cleaning products in 2020. The scale-up of production was completed by the end of the third quarter of 2020, which effectively repositioned our chemical blending operation located in Conroe, Texas to support industrial end-markets. Beginning prospectively in the fourth quarter of 2020, the assets and operating results associated with these industrial blending operations are included in the Industrial Solutions segment, while the historical results from earlier in 2020, which were immaterial, are included in the Fluids Systems segment.

The expansion of our rental and service activities in ~~utility infrastructure~~power transmission and other ~~non-E&P~~industrial markets remains a strategic priority for us due to ~~the magnitude of this market growth opportunity,~~such markets’ relative stability compared to E&P, as well as the ~~market’s relative stability compared to E&P. The Mats and Integrated Services segment rental and service revenues~~magnitude of growth opportunity in these markets, including the potential positive impact from ~~non-E&P markets was approximately $45 million for~~ the first nine months of 2020 compared to approximately $50 million for the first nine months of 2019. Product sales revenues largely reflect sales to utility customers and other non-E&P markets, and typically fluctuate based on the timing of customer orders. Including product sales, total revenues from non-E&P markets represented approximately 66% of total segment revenues for the first nine months of 2020 compared to approximately 47% of total segment revenues for the first nine months of 2019.energy transition. During ~~the first nine months of~~ 2020, our business was impacted by the COVID-19 pandemic, as customers delayed ~~sales orders~~purchases and ~~project timing~~planned projects citing COVID-related market uncertainty, permitting delays, and logistical restrictions. ~~As a result, we reduced our mat production levels during~~The Industrial Solutions segment rental and service revenues from power transmission and other industrial markets increased to approximately $64 million for the ~~third quarter~~first nine months of 2021, compared to approximately $45 million for the first nine months of 2020. Product sales revenues largely reflect sales to power transmission customers and other industrial markets, and typically fluctuate based on the timing of customer orders. Total segment revenues from power transmission and other industrial markets were $117 million (82% of segment revenues) for the first nine months of 2021, more than doubling the $58 million (66% of segment revenues) generated in the first nine months of 2020, ~~and~~benefiting from the market recovery, including some level of pent-up demand associated with COVID-related project delays in 2020, particularly in the power transmission sector. We expect ~~to continue to do so for~~customer activity, particularly in the ~~remainder~~power transmission sector, will remain robust in the coming years, driven in part by the impacts of the ~~year to reduce current inventory levels, which negatively impacts our results due to~~energy transition and the ~~high level of fixed costs~~increasing investment in our manufacturing operations. We currently expect that increased activity for both rental projects and product sales remains highly dependent on our customers gaining confidence in the broader economic recovery. While customer quoting activity has improved from the lull seen during the second quarter of 2020, the ongoing impact of these uncertainties, permitting delays, and logistical restrictions are difficult to predict.grid reliance initiatives.

Third Quarter of ~~2020~~2021 Compared to Third Quarter of ~~2019~~2020

Consolidated Results of Operations

Summarized results of operations for the third quarter of ~~2020~~2021 compared to the third quarter of ~~2019~~2020 are as follows:

Third Quarter 2020 vs 2019
(In thousands) 2020 2019 $ %
Revenues $ 96,424 $ 202,763 $ (106,339) (52) %
Cost of revenues 99,301 169,429 (70,128) (41) %
Selling, general and administrative expenses 20,597 27,017 (6,420) (24) %
Other operating income, net (820) 29 (849) NM
Impairments 3,038 — 3,038 NM
Operating income (loss) (25,692) 6,288 (31,980) NM
Foreign currency exchange loss 580 828 (248) (30) %
Interest expense, net 2,411 3,628 (1,217) (34) %
Income (loss) before income taxes (28,683) 1,832 (30,515) NM
Provision (benefit) for income taxes (4,813) 3,273 (8,086) NM
Net income (loss) $ (23,870) $ (1,441) $ (22,429) NM


	Third Quarter				2021 vs 2020
(In thousands)	2021		2020		$		%
Revenues	$	151,797	$	96,424	$	55,373	57	%
Cost of revenues	132,273		99,301		32,972		33	%
Selling, general and administrative expenses	23,864		20,597		3,267		16	%
Other operating (income) loss, net	1,723		(820)		2,543		NM
Impairments	—		3,038		(3,038)		NM
Operating loss	(6,063)		(25,692)		19,629		76	%

Foreign currency exchange loss	25		580		(555)		(96)	%
Interest expense, net	2,176		2,411		(235)		(10)	%
Loss on extinguishment of debt	210		—		210		NM
Loss before income taxes	(8,474)		(28,683)		20,209		70	%

Provision (benefit) for income taxes	2,011		(4,813)		6,824		NM
Net loss	$	(10,485)	$	(23,870)	$	13,385	(56)	%

Revenues

Revenues ~~decreased 52%~~increased 57% to $151.8 million for the third quarter of 2021, compared to $96.4 million for the third quarter of ~~2020, compared to $202.8~~2020. This $55.4 million ~~for the third quarter of 2019. This $106.3 million decrease~~increase includes a ~~$86.1~~$42.2 million ~~(56%~~ (62%) ~~decrease~~increase in revenues in North America, comprised of a ~~$63.9~~$28.3 million ~~decrease~~increase in the Fluids Systems segment and a ~~$22.2~~$13.9 million ~~decrease~~increase in the ~~Mats and Integrated Services~~Industrial Solutions segment. Revenues from our North America operations ~~decreased~~increased primarily due to the ~~71% reduction~~115% increase in North America rig ~~count.~~count, which favorably impacted our Fluids Systems segment, as well as a recovery of activity in the power transmission sector, which favorably impacted our Industrial Solutions segment. Revenues from our international operations ~~decreased~~increased by ~~$20.3~~$13.2 million ~~(41%~~ (46%), ~~primarily driven~~but continues to be unfavorably impacted by activity disruptions and project delays resulting from the COVID-19 ~~pandemic in our EMEA region.~~pandemic. Additional information regarding the change in revenues is provided within the operating segment results below.

Cost of revenues

Cost of revenues ~~decreased 41%~~increased 33% to $132.3 million for the third quarter of 2021, compared to $99.3 million for the third quarter of ~~2020, compared to $169.4 million for the third quarter of 2019. This $70.1 million decrease was primarily driven by the 52% decrease in revenues described above.~~2020. The Fluids Systems segment cost of revenues for the third quarter of 2021 includes $2.0 million of charges primarily related to facility exit and severance costs, and the third quarter of 2020 ~~includes a total of~~included $1.1 million of charges related to inventory write-downs and severance costs. The increase in cost of revenues was primarily driven by the 57% increase in revenues described above.

Selling, general and administrative expenses

Selling, general and administrative expenses ~~decreased $6.4~~increased $3.3 million to $23.9 million for the third quarter of 2021, compared to $20.6 million for the third quarter of ~~2020, compared to $27.0 million for the third quarter of 2019.~~2020. This ~~decrease~~increase was primarily driven by ~~lower personnel costs, lower~~higher performance-based incentive and stock-based compensation expense, as well as the restoration of certain U.S. salary and ~~lower spending related to~~retirement benefits, partially offset by a reduction in legal matters. In addition, the third quarter of 2019 includes higher professional fees related to the October 2019 acquisition of Cleansorb Limited ("Cleansorb") and our long-term strategic planning project.costs. Selling, general and administrative expenses as a percentage of revenues was 15.7% for the third quarter of 2021 compared to 21.4% for the third quarter of 2020 ~~compared~~.

Other operating (income) loss, net

In August 2021, Hurricane Ida caused damage to ~~13.3%~~our Fourchon, Louisiana Fluids Systems operating base. While this event is covered by our property and business interruption insurance programs, these programs contain self-insured retentions, which remain our financial obligations, resulting in $2.6 million of charges for the third quarter of ~~2019~~.2021. Additional costs for property-related repairs, cleanup and other costs that may be incurred beyond the initial estimates are expected to be substantially recoverable under our property insurance policy. As of September 30, 2021, the claims related to the hurricane under our property and business interruption insurance programs have not been finalized.

The third quarter of 2021 also includes a $0.8 million gain related to the final insurance settlement associated with the July 2018 fire at our Kenedy, Texas drilling fluids facility. Other operating (income) loss, net, also includes gains on sales of assets.

Impairments

Fluids Systems segment ~~includes~~included a $3.0 million impairment charge ~~for~~in the third quarter of 2020, attributable to the abandonment of certain property, plant and equipment.

Foreign currency exchange

Foreign currency exchange ~~was a $0.6 million loss for the third quarter of 2020 compared to a $0.8 million loss for the third quarter of 2019, and~~ reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.

Interest expense, net

Interest expense was$2.2 million for the third quarter of 2021 compared to $2.4 million for the third quarter of ~~2020 compared to $3.6 million for the third quarter of 2019.~~2020. Interest expense for the third quarter of 2021 and 2020 ~~and 2019~~ includes ~~$1.2~~$1.0 million and ~~$1.6~~$1.2 million, respectively, in non-cash amortization of original issue discount and debt issuance costs. The decrease in interest expense is primarily due to lower debt ~~balances as well as a decrease~~balances.

Loss on extinguishment of debt

In the third quarter of 2021, we repurchased $10.0 million of our Convertible Notes in ~~interest rates on~~ the ~~ABL Facility.~~open market for $10.0 million. The $0.2 million loss for the third quarter of 2021 reflects the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.

Provision (benefit) for income taxes

The provision for income taxes was $2.0 million for the third quarter of 2021, despite reporting a pretax loss for the period, primarily reflecting the impact of the geographic composition of our pretax loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses as they may not be realized. The benefit for income taxes was $4.8 million for the third quarter of 2020, ~~reflecting an effective tax benefit rate of 17%. This result primarily reflects the impact of the geographic composition of our pretax loss,~~ where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations. The provision for income taxes was $3.3 million for the third quarter of 2019 and included a $2.0 million charge, primarily reflecting the impact of an increase in the projected full year 2019 tax rate resulting from a decline in projected U.S. earnings for 2019.

Operating Segment Results

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):

Third Quarter 2020 vs 2019
(In thousands) 2020 2019 $ %
Revenues
Fluids systems $ 67,711 $ 152,547 $ (84,836) (56) %
Mats and integrated services 28,713 50,216 (21,503) (43) %
Total revenues $ 96,424 $ 202,763 $ (106,339) (52) %
Operating income (loss)
Fluids systems $ (18,957) $ 5,893 $ (24,850)
Mats and integrated services (139) 10,049 (10,188)
Corporate office (6,596) (9,654) 3,058
Total operating income (loss) $ (25,692) $ 6,288 $ (31,980)
Segment operating margin
Fluids systems (28.0) % 3.9 %
Mats and integrated services (0.5) % 20.0 %


	Third Quarter						2021 vs 2020
(In thousands)	2021			2020			$		%
Revenues
Fluids Systems	$	107,955		$	67,711		$	40,244	59	%
Industrial Solutions	43,842			28,713			15,129		53	%
Total revenues	$	151,797		$	96,424		$	55,373	57	%

Operating income (loss)
Fluids Systems	$	(6,646)		$	(18,957)		$	12,311
Industrial Solutions	8,103			(139)			8,242
Corporate office	(7,520)			(6,596)			(924)
Total operating loss	$	(6,063)		$	(25,692)		$	19,629

Segment operating margin
Fluids Systems	(6.2)		%	(28.0)		%
Industrial Solutions	18.5		%	(0.5)		%

Fluids Systems

Revenues

Total revenues for this segment consisted of the following:


		Third Quarter				2020 vs 2019					Third Quarter				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
United States	United States	$	40,314	$	98,140	$	(57,826)	(59)	%	United States	$	56,783	$	40,314	$	16,469	41	%
Canada	Canada	1,961		8,029		(6,068)		(76)	%	Canada	13,781		1,961		11,820		603	%
Total North America	Total North America	42,275		106,169		(63,894)		(60)	%	Total North America	70,564		42,275		28,289		67	%

EMEA	EMEA	23,207		41,126		(17,919)		(44)	%	EMEA	32,380		23,207		9,173		40	%
Other	Other	2,229		5,252		(3,023)		(58)	%	Other	5,011		2,229		2,782		125	%
Total International	Total International	25,436		46,378		(20,942)		(45)	%	Total International	37,391		25,436		11,955		47	%

Total Fluids Systems revenues	Total Fluids Systems revenues	$	67,711	$	152,547	$	(84,836)	(56)	%	Total Fluids Systems revenues	$	107,955	$	67,711	$	40,244	59	%

North America revenues ~~decreased 60%~~increased 67% to $70.6 million for the third quarter of 2021, compared to $42.3 million for the third quarter of ~~2020, compared~~2020. This increase was primarily attributable to ~~$106.2~~the increase in North America rig count, including a $20.2 million increase from U.S. land markets and a $11.8 million increase in Canada, partially offset by a $1.1 million decrease from offshore Gulf of Mexico driven primarily by changes in customer drilling and completion activity levels, including the impact from Hurricane Ida. For the third quarter of 2021, U.S. revenues include $51.1 million from land markets and $5.7 million from offshore Gulf of Mexico.

Internationally, revenues increased 47% to $37.4 million for the third quarter of 2019. This decrease was primarily attributable to a $57.8 million decrease from U.S. land markets driven by the 72% decline in U.S. rig count partially offset by an increase in market share. Revenues from offshore Gulf of Mexico decreased $2.4 million, as our expanding market share was more than offset by activity disruptions in 2020 resulting from elevated hurricane activity. For the third quarter of 2020, U.S. revenues included $30.3 million from land markets and $7.4 million from offshore Gulf of Mexico.

~~Internationally, revenues decreased 45%~~2021, compared to $25.4 million for the third quarter of ~~2020, compared to $46.4 million for the third quarter of 2019.~~2020. The ~~decrease in EMEA~~increase was primarily driven by lower activity primarily attributable to COVID-19 disruptions and the impact of lower oil prices in Algeria, Romania, and various other countries. The decrease in other international was primarily attributable to lowerhigher activity in ~~Australia.~~Europe, North Africa, and Asia Pacific regions. However, despite these improvements, customer activity levels in several key markets continue to be impacted by the COVID-19 pandemic.

Operating ~~income (loss)~~loss

The Fluids Systems segment incurred an operating loss of ~~$19.0~~$6.6 million for the third quarter of ~~2020,~~2021, reflecting a ~~$24.9~~$12.3 million ~~change~~improvement from the ~~$5.9~~$19.0 million operating loss incurred in the third quarter of 2020. The Fluids Systems segment operating ~~income generated~~loss for the third quarter of ~~2019.~~2021 includes $4.0 million of charges primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems operating base, facility exit, and severance costs, and the operating loss for the third quarter of 2020 included $4.5 million of charges primarily related to the impairment of certain fixed assets and other non-cash charges. The ~~decrease~~remaining improvement in the operating ~~income~~loss includes a ~~$14.0~~$8.4 million ~~decline~~benefit from North ~~American~~America operations and a ~~$6.4~~$3.5 million ~~decline~~benefit from international operations, which are primarily attributable to the changes in revenues described above ~~partially offset by~~along with the benefit of cost reduction ~~programs. The Fluids Systems operating loss for the third quarter of 2020 also includes $4.5 million of charges primarily for the impairment of certain fixed assets and other non-cash charges.~~programs implemented during 2020.

During the fourth quarter of 2019, we made the decision to wind down our Brazil operations. We may incur operating losses and asset write-downs as we wind down these operations. In addition, at September 30, 2020, we had $11.8 million of accumulated translation losses related to our subsidiary in Brazil, that are reflected in accumulated other comprehensive loss in stockholders’ equity. Accounting guidance requires that we reclassify these accumulated translation losses and recognize a charge to income at such time when we have substantially liquidated the assets of our subsidiary in Brazil.

~~Mats and Integrated Services~~Industrial Solutions

Revenues

Total revenues for this segment consisted of the following:


		Third Quarter				2020 vs 2019					Third Quarter				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
Product sales revenues										Product sales revenues	$	14,240	$	5,917	$	8,323	141	%
Rental and service revenues	Rental and service revenues	$	22,796	$	35,630	$	(12,834)	(36)	%	Rental and service revenues	27,736		22,796		4,940		22	%
Product sales revenues		5,917		14,586		(8,669)		(59)	%
Total Mats and Integrated Services revenues		$	28,713	$	50,216	$	(21,503)	(43)	%
Industrial blending revenues										Industrial blending revenues	1,866		—		1,866		NM
Total Industrial Solutions revenues										Total Industrial Solutions revenues	$	43,842	$	28,713	$	15,129	53	%

~~Rental and service revenues decreased $12.8 million (36%) to $22.8 million for~~In the third quarter of 2020, ~~which includes a $12.0 million decrease from E&P customers, primarily resulting from lower U.S.~~customer activity ~~caused~~across most end-markets was unfavorably impacted by the ~~decline in oil~~COVID-19 pandemic and natural gas prices. In addition, revenues from non-E&P customers decreased $0.8 million as our continued expansion into non-E&P markets, including increased demand to support repairs of hurricane-damaged utility infrastructure along the ~~U.S. Gulf Coast region, was more than offset by the impact of~~related operational restrictions and market uncertainty, causing delays in purchases and project execution. As a result of the COVID-19 impact and our expanding customer ~~project timing resulting from COVID-related~~base in the power transmission market, ~~uncertainty, permitting delays, and logistical restrictions. Revenues~~revenues from product sales, which typically fluctuate based on the timing of mat orders from customers, ~~was negatively impacted in~~increased $8.3 million from the third quarter of ~~2020~~2020. In addition, rental and service revenues increased $4.9 million as ~~certain~~delayed purchases and projects resumed, including a $3.0 million increase from power transmission and other industrial markets, as well as a $1.9 million increase from the E&P market. The increase from industrial customers ~~delayed orders due to~~reflects our continued expansion into these markets, both in the ~~uncertainty related to the COVID-19 pandemic.~~U.S. and U.K.

Operating income (loss)

The ~~Mats and Integrated Services~~Industrial Solutions segment ~~incurred~~generated operating income of $8.1 million for the third quarter of 2021 compared to an operating loss of $0.1 million for the third quarter of 2020, ~~compared to operating income of $10.0 million for~~ the ~~third quarter of 2019, the decrease~~increase being primarily attributable to the ~~change~~changes in revenues as described above.

Corporate Office

Corporate office expenses ~~decreased $3.1~~increased $0.9 million to $7.5 million for the third quarter of 2021, compared to $6.6 million for the third quarter of ~~2020, compared to $9.7 million for the third quarter of 2019.~~2020. This ~~decrease~~increase was primarily driven by ~~reduced personnel costs~~higher performance-based incentive and ~~lower spending related to legal matters,~~stock-based compensation expense, as well as ~~higher professional fees incurred~~the restoration of certain U.S. salary and retirement benefits, partially offset by the benefit of cost reduction programs implemented in ~~the third quarter of 2019 related to the Cleansorb acquisition and our long-term strategic planning project.~~2020.

First Nine Months of ~~2020~~2021 Compared to First Nine Months of ~~2019~~2020

Consolidated Results of Operations

Summarized results of operations for the first nine months of ~~2020~~2021 compared to the first nine months of ~~2019~~2020 are as follows:

First Nine Months 2020 vs 2019
(In thousands) 2020 2019 $ %
Revenues $ 362,920 $ 630,648 $ (267,728) (42) %
Cost of revenues 357,675 522,338 (164,663) (32) %
Selling, general and administrative expenses 66,230 85,796 (19,566) (23) %
Other operating income, net (1,906) (367) (1,539) NM
Impairments 3,038 — 3,038 NM
Operating income (loss) (62,117) 22,881 (84,998) NM
Foreign currency exchange loss 3,343 756 2,587 NM
Interest expense, net 8,524 10,807 (2,283) (21) %
Gain on extinguishment of debt (419) — (419) NM
Income (loss) before income taxes (73,565) 11,318 (84,883) NM
Provision (benefit) for income taxes (11,303) 7,171 (18,474) NM
Net income (loss) $ (62,262) $ 4,147 $ (66,409) NM


	First Nine Months				2021 vs 2020
(In thousands)	2021		2020		$		%
Revenues	$	435,218	$	362,920	$	72,298	20	%
Cost of revenues	376,370		357,675		18,695		5	%
Selling, general and administrative expenses	67,755		66,230		1,525		2	%
Other operating income, net	(141)		(1,906)		1,765		NM
Impairments	—		3,038		(3,038)		NM
Operating loss	(8,766)		(62,117)		53,351		86	%

Foreign currency exchange (gain) loss	(83)		3,343		(3,426)		NM
Interest expense, net	6,748		8,524		(1,776)		(21)	%
(Gain) loss on extinguishment of debt	1,000		(419)		1,419		NM
Loss before income taxes	(16,431)		(73,565)		57,134		78	%

Provision (benefit) for income taxes	5,414		(11,303)		16,717		NM
Net loss	$	(21,845)	$	(62,262)	$	40,417	65	%

Revenues

Revenues ~~decreased 42%~~increased 20% to $435.2 million for the first nine months of 2021, compared to $362.9 million for the first nine months of ~~2020, compared to $630.6~~2020. This $72.3 million ~~for the first nine months of 2019. This $267.7 million decrease~~increase includes a ~~$228.4~~$65.7 million ~~(47%~~(26%) ~~decrease~~increase in revenues in North America, comprised of a ~~$169.7~~$48.0 million ~~decrease~~increase in the Industrial Solutions segment and a $17.7 million increase in the Fluids Systems ~~segment and a $58.7 million decrease in the Mats and Integrated Services~~ segment. Revenues from our North America operations ~~decreased~~increased primarily due to the ~~49% reduction~~significant growth in power transmission and other industrial markets, which impacts our Industrial Solutions segment, as well as the improvement in North America rig ~~count.~~count, which favorably impacted our Fluids Systems segment. Revenues from our international operations ~~decreased by $39.3 million (26%), primarily driven by~~were relatively flat, as COVID-19 disruptions have unfavorably impacted customer activity ~~disruptions and project delays resulting from the COVID-19 pandemic as well as lower oil prices~~levels in ~~our EMEA region.~~substantially all key markets. Additional information regarding the change in revenues is provided within the operating segment results below.

Cost of revenues

Cost of revenues ~~decreased 32%~~increased 5% to $376.4 million for the first nine months of 2021, compared to $357.7 million for the first nine months of ~~2020, compared to $522.3 million for the first nine months of 2019. This $164.7 million decrease was primarily driven by the 42% decrease in revenues described above.~~2020. The Fluids Systems segment cost of revenues for the first nine months of 2021 includes $2.3 million of charges primarily related to facility exit and severance costs, and the first nine months of 2020 ~~includes~~included a total of $13.4 million of charges related to inventory write-downs, severance costs, and facility exit costs. The remaining increase was primarily driven by the 20% increase in revenues described above, partially offset by the benefit of cost reduction programs implemented in 2020.

Selling, general and administrative expenses

Selling, general and administrative expenses ~~decreased $19.6~~increased $1.5 million to $67.8 million for the first nine months of 2021, compared to $66.2 million for the first nine months of 2020, compared to $85.8 million for the first nine months of 2019. The first nine months of 2019 included a $4.0 million charge for stock-based compensation expense associated with the February 2019 retirement policy modification and $3.7 million in professional fees related to our long-term strategic planning project and the Cleansorb acquisition. The remaining decrease of $11.9 million2020. This increase was primarily driven by higher performance-based incentive and stock-based compensation expense, partially offset by reduced personnel costs ~~and lower spending related to legal matters~~ in the first nine months of ~~2020.~~2021, including the benefit of cost reduction programs implemented in 2020, as well as lower severance charges and legal costs. Selling, general and administrative expenses as a percentage of revenues was 15.6% for the first nine months of 2021 compared to 18.2% for the first nine months of 2020 ~~compared~~.

Other operating income, net

In August 2021, Hurricane Ida caused damage to ~~13.6%~~our Fourchon, Louisiana Fluids Systems operating base. While this event is covered by our property and business interruption insurance programs, these programs contain self-insured retentions, which remain our financial obligations, resulting in $2.6 million of charges for the first nine months of ~~2019~~2021. The first nine months of 2021 also includes a $0.8 million gain related to the final insurance settlement associated with the July 2018 fire at

our Kenedy, Texas drilling fluids facility, and a $1.0 million gain related to a legal settlement in the Industrial Solutions segment. Other operating income also includes gains on sales of assets.

Impairments

Fluids Systems segment includes a $3.0 million impairment charge for the first nine months of 2020, attributable to the abandonment of certain property, plant and equipment.

Foreign currency exchange

Foreign currency exchange was a $0.1 million gain for the first nine months of 2021 compared to a $3.3 million loss for the first nine months of 2020, ~~compared to a $0.8 million loss for the first nine months of 2019,~~ and reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.

Interest expense, net

Interest expense was $6.7 million for the first nine months of 2021 compared to $8.5 million for the first nine months of ~~2020 compared to $10.8 million for the first nine months of 2019.~~2020. Interest expense for the first nine months of 2021 and 2020 ~~and 2019~~ includes ~~$4.0~~$3.1 million and ~~$4.6~~$4.0 million, respectively, in non-cash amortization of original issue discount and debt issuance costs. The decrease in interest expense is primarily due to lower debt ~~balances as well as a decrease in interest rates on the ABL Facility.~~balances.

~~Gain~~(Gain) loss on extinguishment of debt

In the first nine months of 2021 and 2020, we repurchased $28.3 million and $33.1 million, respectively, of our Convertible Notes in the open market for $28.1 million and $29.1 million, respectively. The $1.0 million loss and $0.4 million gain for the first nine months of 2021 and 2020, respectively, reflects the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance ~~costs, related to the repurchase of $33.1 million of our Convertible Notes in the open market for $29.1 million.~~costs.

Provision (benefit) for income taxes

Operating Segment Results

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):

First Nine Months 2020 vs 2019
(In thousands) 2020 2019 $ %
Revenues
Fluids systems $ 275,178 $ 485,744 $ (210,566) (43) %
Mats and integrated services 87,742 144,904 (57,162) (39) %
Total revenues $ 362,920 $ 630,648 $ (267,728) (42) %
Operating income (loss)
Fluids systems $ (46,284) $ 21,951 $ (68,235)
Mats and integrated services 3,928 32,863 (28,935)
Corporate office (19,761) (31,933) 12,172
Total operating income (loss) $ (62,117) $ 22,881 $ (84,998)
Segment operating margin
Fluids systems (16.8) % 4.5 %
Mats and integrated services 4.5 % 22.7 %


	First Nine Months						2021 vs 2020
(In thousands)	2021			2020			$		%
Revenues
Fluids Systems	$	292,897		$	275,178		$	17,719	6	%
Industrial Solutions	142,321			87,742			54,579		62	%
Total revenues	$	435,218		$	362,920		$	72,298	20	%

Operating income (loss)
Fluids Systems	$	(19,944)		$	(46,284)		$	26,340
Industrial Solutions	31,376			3,928			27,448
Corporate office	(20,198)			(19,761)			(437)
Total operating loss	$	(8,766)		$	(62,117)		$	53,351

Segment operating margin
Fluids Systems	(6.8)		%	(16.8)		%
Industrial Solutions	22.0		%	4.5		%

Fluids Systems

Revenues

Total revenues for this segment consisted of the following:


		First Nine Months				2020 vs 2019					First Nine Months				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
United States	United States	$	156,644	$	318,353	$	(161,709)	(51)	%	United States	$	161,237	$	156,644	$	4,593	3	%
Canada	Canada	18,287		26,283		(7,996)		(30)	%	Canada	31,400		18,287		13,113		72	%
Total North America	Total North America	174,931		344,636		(169,705)		(49)	%	Total North America	192,637		174,931		17,706		10	%

EMEA	EMEA	91,380		123,346		(31,966)		(26)	%	EMEA	90,801		91,380		(579)		(1)	%
Other	Other	8,867		17,762		(8,895)		(50)	%	Other	9,459		8,867		592		7	%
Total International	Total International	100,247		141,108		(40,861)		(29)	%	Total International	100,260		100,247		13		—	%

Total Fluids Systems revenues	Total Fluids Systems revenues	$	275,178	$	485,744	$	(210,566)	(43)	%	Total Fluids Systems revenues	$	292,897	$	275,178	$	17,719	6	%

North America ~~revenues decreased 49%~~revenues increased 10% to $192.6 million for the first nine months of 2021, compared to $174.9 million for the first nine months of ~~2020, compared to $344.6 million for the first nine months of 2019.~~2020. This ~~decrease~~increase was primarily attributable to a ~~$169.5~~$22.2 million ~~decrease~~increase from U.S. land markets driven primarily by an increase in market share despite the ~~52%~~7% decline in U.S. rig count, partially offset by a ~~$5.0~~$14.3 million ~~increase~~decrease from offshore Gulf of Mexico driven primarily by changes in customer drilling and completion activity levels. In addition, Canada increased $13.1 million driven primarily by the ~~completion fluids product line extension.~~35% increase in Canada rig count and an increase in market share. For the first nine months of ~~2020,~~2021, U.S. revenues ~~included $116.4~~include $139.9 million from land markets and ~~$36.9~~$21.3 million from offshore Gulf of Mexico.

Internationally, revenues ~~decreased 29% to $100.2 million~~were flat for the first nine months of ~~2020,~~2021 compared to ~~$141.1 million for~~ the first nine months of ~~2019. The decrease in EMEA was driven by lower activity primarily attributable to~~2020, as COVID-19 disruptions ~~and~~have continued to impact customer activity levels in substantially all key markets, with the most significant impact of lower oil prices in Algeria, Romania, and various other countries, partially offset by increases in Tunisia, Italy, and Kuwait, as well as the October 2019 acquisition of Cleansorb. The decrease in other international was primarily attributable to lower activity in Australia, including the completion of the Baker Hughes Greater Enfield project in the ~~third quarter of 2019.~~Middle East and North Africa.

Operating ~~income (loss)~~loss

The Fluids Systems segment incurred an operating loss of ~~$46.3~~$19.9 million for the first nine months of ~~2020,~~2021, reflecting a ~~$68.2~~$26.3 million ~~change~~improvement from the ~~$22.0~~$46.3 million operating loss incurred in the first nine months of 2020. The Fluids Systems segment operating ~~income generated~~loss for the first nine months of ~~2019. The decrease in~~2021 includes $4.6 million of charges primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems operating ~~income includes a $41.5 million decline from North American operations~~base, facility exit, and a $11.1 million decline from international operations, which are primarily attributable to the changes in revenues described above, partially offset by the benefit of cost reduction programs. The Fluids Systemsseverance costs, and operating loss for the first nine months of 2020 ~~also includes~~included $17.4 million of charges ~~primarily~~ related to inventory write-downs, severance costs, fixed asset impairments, and facility exit ~~costs, whereas~~costs. The remaining improvement in the ~~first nine months of 2019 included $1.8~~operating loss includes a $14.0 million ~~of charges related to severance costs~~benefit from North America operations partially offset by a $0.4 million decline from international operations, reflecting the changes in revenues described above and the ~~February 2019 retirement policy modification.~~benefit of cost reduction programs implemented during 2020.

~~Mats and Integrated Services~~Industrial Solutions

Revenues

Total revenues for this segment consisted of the following:


		First Nine Months				2020 vs 2019					First Nine Months				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
Product sales revenues										Product sales revenues	$	44,459	$	15,243	$	29,216	192	%
Rental and service revenues	Rental and service revenues	$	72,499	$	115,944	$	(43,445)	(37)	%	Rental and service revenues	89,574		72,499		17,075		24	%
Product sales revenues		15,243		28,960		(13,717)		(47)	%
Total Mats and Integrated Services revenues		$	87,742	$	144,904	$	(57,162)	(39)	%
Industrial blending revenues										Industrial blending revenues	8,288		—		8,288		NM
Total Industrial Solutions revenues										Total Industrial Solutions revenues	$	142,321	$	87,742	$	54,579	62	%

~~Rental and service revenues decreased $43.4 million (37%) to $72.5 million for~~In the first nine months of 2020, ~~which includes a $38.4 million decrease from E&P customers, primarily resulting from lower U.S.~~customer activity ~~caused~~across most end-markets was unfavorably impacted by the ~~decline in oil~~COVID-19 pandemic and ~~natural gas prices. In addition, revenues from non-E&P customers decreased $5.0 million as our continued expansion into non-E&P markets was more than offset by~~ the ~~impact of~~related operational restrictions and market uncertainty, causing delays in ~~customer~~purchases and project ~~timing resulting from COVID-related market uncertainty, permitting delays, and logistical restrictions. Revenues~~execution. As a result, revenues from product sales, which typically fluctuate based on the timing of mat orders from customers, ~~was negatively impacted in~~improved $29.2 million from the first nine months of 2020, ~~as certain customers delayed orders due to the market uncertainty related to~~including a favorable impact from pent-up demand following the COVID-19 ~~pandemic.~~pandemic as well as our expanding power transmission customer base.

Rental and service revenues increased $17.1 million as delayed purchases and projects resumed, including a $19.1 million increase from power transmission and other industrial markets, which was partially offset by a $2.0 million decrease from the E&P market. The increase from industrial customers reflects our continued expansion into these markets, both in the U.S. and U.K., including an approximately 44% increase in revenues from the power transmission sector. The revenue decrease from E&P customers primarily resulted from the lower U.S. drilling activity, along with our focus on supporting the more stable power transmission and other industrial markets.

Operating income

The ~~Mats and Integrated Services~~Industrial Solutions segment generated operating income of $31.4 million for the first nine months of 2021 compared to $3.9 million for the first nine months of 2020, ~~compared~~the increase being primarily attributable to ~~$32.9~~the changes in revenues as described above. In addition, the Industrial Solutions operating results for the first nine months of 2021 includes a $1.0 million gain in other operating income related to a legal settlement.

Corporate Office

Corporate office expenses increased $0.4 million to $20.2 million for the first nine months of ~~2019, the decrease being primarily attributable to the change in revenues as described above.~~

~~Corporate Office~~

~~Corporate office expenses decreased $12.2 million~~2021, compared to $19.8 million for the first nine months of ~~2020, compared to $31.9 million for the first nine months of 2019. The first nine months of 2019 included a $3.4 million charge for~~2020. This increase was primarily driven by higher performance-based incentive and stock-based compensation expense, ~~associated with~~as well as the ~~February 2019~~restoration of certain U.S. salary and retirement ~~policy modification and $3.7 million~~benefits, partially offset by the benefit of cost reduction programs implemented in professional fees related to our long-term strategic planning project and the Cleansorb acquisition. The remaining decrease of $5.1 million is primarily driven by reduced personnel costs and lower spending related to legal matters in the first nine months of 2020.

Liquidity and Capital Resources

Net cash provided by operating activities was $13.7 million for the first nine months of 2021 compared to $40.3 million for the first nine months of ~~2020 compared to $53.2 million for the first nine months of 2019.~~2020. During the first nine months of ~~2020,~~2021, net loss adjusted for non-cash items ~~used~~provided cash of ~~$27.3~~$12.9 million, while changes in working capital provided cash of ~~$67.6~~$0.7 million.

Net cash used in investing activities was ~~$4.1~~$7.3 million for the first nine months of ~~2020,~~2021, including capital expenditures of ~~$14.6 million. Capital~~$19.1 million, partially offset by $11.7 million in proceeds from the sale of assets. The majority of the proceeds from the sale of assets reflect used mats from our rental fleet, which are part of the commercial offering of our Site and Access Solutions business. Nearly all of our capital expenditures during the first nine months of ~~2020 included $7.6~~2021 were directed to supporting our Industrial Solutions segment, including $13.4 million ~~for the Mats and Integrated Services segment, including~~of investments in the mat rental fleet, ~~as well as new products,~~replacing mats sold from the fleet and ~~$5.5 million for~~supporting our strategic growth in the ~~Fluids Systems segment.~~power transmission sector.

Net cash ~~used in~~provided by financing activities was ~~$60.9~~$1.8 million for the first nine months of ~~2020,~~2021, which primarily includes ~~$29.1~~$15.9 million of net borrowings on our foreign lines of credit and ABL Facility, $8.1 million of net proceeds from a U.K. term loan facility, and $7.9 million of net proceeds from a sale-leaseback transaction accounted for as financing arrangement, partially offset by $28.1 million in repurchases of our Convertible ~~Notes and a net repayment of $35.1 million on our ABL Facility (as defined below).~~Notes.

Substantially all of our ~~$24.0~~$31.2 million of cash on hand at September 30, ~~2020~~2021 resides in our international subsidiaries. Subject to maintaining sufficient cash requirements to support the strategic objectives of these international subsidiaries and complying with applicable exchange or cash controls, we expect to continue to repatriate excess cash from these international ~~subsidiaries, subject to exchange or cash controls and the cash requirements to support the strategic objectives of these international~~ subsidiaries. ~~In addition, we may continue to purchase our Convertible Notes under our existing repurchase program from time to time.~~

Our revenues and operating results in 2020 have been negatively impacted by the decrease in demand for our products and services following the decline in the price of oil as well as the COVID-19 pandemic and related economic shutdowns around the world. We have taken a number of actions aimed at conserving cash and protecting our liquidity, including workforce and salary reductions, elimination of all non-critical capital expenditures, as well as actions to reduce our operational footprint to match current and anticipated activity levels by operating region. We currently expect capital expenditures to remain limited for the foreseeable future. We anticipate that revenues will begin to increase in the fourth quarter of 2020 as market activity improves from current levels, although the ongoing impacts of the COVID-19 pandemic and an uncertain economic environment that will likely persist through the remainder of 2020 and into early 2021 make the timing and pace of recovery difficult to predict. We anticipate that our near-term working capital requirements to support the revenue growth will largely be offset by the benefit from our on-going efforts to reduce inventory levels and international receivables, which remain elevated from historical levels. As we progress through 2021, we anticipate that future working capital requirements for our operations will generally fluctuate directionally with revenues. We expect capital expenditures in the near term to remain fairly limited, focusing on industrial end-market expansion opportunities. We intend to repay the Convertible Notes at maturity in December 2021 with borrowings under the ABL Facility.

Availability under our ABL Facility also provides additional liquidity as discussed further below. Total availability under the ABL Facility will fluctuate directionally based on the level of eligible U.S. accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet. As of November 3, 2020, our total availability under the ABL Facility was $112.3 million, of which $29.0 million was drawn, resulting in remaining availability of $83.3 million. As of November 3, 2020, our total availability under the ABL Facility included $25.3 million from eligible rental mats. As discussed further below, in November 2020, we will no longer satisfy a financial covenant required for the composite mats to be included in the borrowing availability under the ABL Facility, and therefore, the adjusted total availability under the ABL Facility would be reduced by such amount. Based on our current projections of operating results through the first half of 2021, we currently anticipate satisfying the financial covenants required such that the eligible rental mats would again be included in the borrowing availability under the ABL Facility following the second quarter of 2021.

~~Considering the above, we~~We expect our available cash on-hand, cash generated by operations, and ~~remaining~~the expected availability under our ABL Facility to be adequate to fund our current operations during the next 12 ~~months.~~months and the repayment of the 2021 Convertible Notes. We also continue to evaluate ~~other~~additional sources of ~~additional~~ liquidity to support our longer-term ~~liquidity options, which include possible financing or alternative arrangements secured by certain assets in the U.S. or our international operations.~~needs.

Our capitalization is as follows:


(In thousands)	September 30, 2021			December 31, 2020
Convertible Notes	$	38,567		$	66,912
ABL Facility	24,100			19,100
Other debt	31,762			5,371
Unamortized discount and debt issuance costs	(685)			(4,221)
Total debt	$	93,744		$	87,162

Stockholders’ equity	465,713			488,032
Total capitalization	$	559,457		$	575,194

Total debt to capitalization	16.8		%	15.2		%

~~Our capitalization is as follows:~~

(In thousands) September 30, 2020 December 31, 2019
Convertible Notes $ 66,912 $ 100,000
ABL Facility 29,900 65,000
Other debt 10,805 7,164
Unamortized discount and debt issuance costs (5,262) (12,291)
Total debt $ 102,355 $ 159,873
Stockholder's equity 489,083 548,645
Total capitalization $ 591,438 $ 708,518
Total debt to capitalization 17.3 % 22.6 %

~~Holders may convert the notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2021, only under the following circumstances:~~

•during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the conversion rate on each such trading day; or

•~~upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.~~

In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of September 30, 2021, the carrying amount of the debt component was $38.1 million, which is net of the unamortized debt discount and debt issuance costs of $0.5 million. Including the impact of the unamortized debt discount and debt issuance costs, the effective interest rate on the notes is approximately 11.3%.

The ABL Facility terminates in March ~~2024; however,~~2024. As of September 30, 2021, our total availability under the ABL Facility ~~has a springing maturity date that will accelerate the maturity~~was $106.2 million, of the ABL Facility to September 1, 2021 if, prior to such date, the Convertible Notes have not been repurchased, redeemed, refinanced, exchanged or otherwise satisfied in full or we have not escrowed an amount of funds, that together with the amount that we establish as a reserve against our borrowing capacity, is sufficientwhich $24.1 million was drawn, $39.3 million was reserved for ~~the future~~ settlement of the Convertible Notes, ~~at their maturity. The ABL Facility requires compliance with a minimum consolidated fixed charge coverage ratio~~and $1.1 million was used for outstanding letters of ~~1.25 to 1.0 calculated based on the trailing twelve-month period ended June 30, 2021 and~~credit, resulting in remaining ~~unused~~ availability of ~~at least $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes.~~

$41.7 million.

As noted above, we will not satisfy the minimum consolidated fixed charge coverage ratio that is required to continue including eligible rental mats in the borrowing availability under the ABL Facility after the filing of our quarterly compliance certificate under the ABL Facility for the third quarter of 2020 in November 2020. While this does not represent a default, it would reduce the borrowing availability under the ABL Facility noted above as of November 3, 2020 by $25.3 million. We anticipate regaining compliance with the minimum consolidated fixed charge coverage ratio as required to include eligible rental mats in the borrowing availability under the ABL Facility following the second quarter of 2021. As such, we currently believe that we will be able to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes prior to September 1, 2021. If we are unable to regain compliance with the minimum consolidated fixed charge coverage ratio following the second quarter of 2021, we would further evaluate options, which may include a waiver or amendment to our ABL Facility. Any waiver or amendment to the ABL Facility, if required, may increase the cost of our borrowings and impose additional limitations over certain types of activities, and we can give no assurance that we will be able to obtain such amendment or waiver on favorable terms or at all.

Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime rate of Bank of America, N.A. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50 to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL Facility. As of September 30, ~~2020,~~2021, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was ~~1.9%~~1.65% at September 30, ~~2020. In November 2020, the applicable margins for borrowings under the ABL Facility will increase 50 basis points based on the consolidated fixed charge coverage ratio.~~2021. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of September 30, ~~2020,~~2021, the applicable commitment fee was 37.5 basis points.

The ABL Facility is a senior secured obligation, secured by first liens on substantially all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires ~~compliance with~~ a minimum consolidated fixed charge coverage ratio of 1.0 to 1.0 calculated based on a trailing twelve-month period if availability under the ABL Facility falls ~~below $22.5 million. Based on our current projections, we do not anticipate availability under the ABL Facility falling~~ below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.

Other Debt. In August 2021, we completed sale-leaseback transactions related to certain vehicles and other equipment for net proceeds of approximately $7.9 million. The transactions have been accounted for as financing arrangements as they did not qualify for sale accounting. As a result, the vehicles and other equipment continue to be reflected on our balance sheet in property, plant and equipment, net. The financing arrangements have a weighted average annual interest rate of 5.4% and are payable in monthly installments with varying maturities through October 2025. We had an $8.0 million financing obligation outstanding under these arrangements at September 30, 2021.

Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our Convertible Notes, approximated their fair values at September 30, 2021 and December 31, 2020. The estimated fair value of our Convertible Notes was $38.6 million at September 30, 2021 and $61.1 million at December 31, 2020, based on quoted market prices at these respective dates.

Critical Accounting Estimates and Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ~~of America,~~(“U.S. GAAP”), which requires usmanagement to make estimates and assumptions that affect the reported amounts and ~~disclosures.~~disclosure. Significant estimates used in preparing our ~~condensed~~ consolidated financial statements include estimated cash flows and fair values used for impairments of long-lived assets, including goodwill and other intangibles, and valuation allowances for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The

combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.

In addition, we review property, plant and equipment, finite-lived intangible assets and certain other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We assess recoverability based on expected undiscounted future net cash flows. Due to the changes in market conditions, we have reviewed these assets for impairment during the first nine months of 2020 and determined that the estimated undiscounted cash flows exceeded the carrying value, and therefore, no impairment was required. Fluids Systems segment includes a $3.0 million impairment charge for the first nine months of 2020, attributable to the abandonment of certain property, plant and equipment.

For additional discussion of our critical accounting estimates and policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Our critical accounting estimates and policies have not materially changed since December 31, ~~2019.~~2020.

3029

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. A discussion of our primary market risk exposure in financial instruments is presented below.

Interest Rate Risk

At September 30, ~~2020,~~2021, we had total principal amounts outstanding under financing arrangements of ~~$107.6~~$94.4 million, including ~~$66.9~~$38.6 million of borrowings under our Convertible Notes which bear interest at a fixed rate of 4.0% ~~and $29.9~~, as well as $24.1 million of borrowings under our ABL ~~Facility. Borrowings~~Facility and $6.6 million of borrowings under ~~our ABL Facility~~a U.K. term loan which are subject to a variable interest ~~rate~~rates as determined by the ~~ABL Facility.~~respective debt agreements. The weighted average interest rate at September 30, ~~2020~~2021 for the ABL Facility and the U.K. term loan was ~~1.9%.~~1.7% and 3.4%, respectively. Based on the balance of variable rate debt at September 30, ~~2020,~~2021, a 100 basis-point increase in short-term interest rates would have increased annual pre-tax interest expense by $0.3 million.

Foreign Currency Risk

Our principal foreign operations are conducted in certain areas of EMEA, Canada, Asia Pacific, and Latin America. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate including European euros, Kuwaiti dinar, Algerian dinar, Romanian new leu, Canadian dollars, British pounds, and Australian ~~dollars, and Brazilian reais.~~dollars. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2020,~~2021, the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting during the quarter ended September 30, ~~2020~~2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3130

PART II OTHER INFORMATION

ITEM 1. Legal Proceedings

~~None.~~In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state, and local levels. While the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not expect that any loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, will have a material adverse impact on our consolidated financial statements.

ITEM 1A. Risk Factors

~~There have been no material~~Set forth below are changes toduring the period ended September 30, 2021 in our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2019, except as discussed~~2020 and updated in ~~Part II, Item 1A of~~ our Quarterly Report on Form 10-Q for the three months ended ~~March 31, 2020.~~June 30, 2021.

Risks Related to the Price and Availability of Raw Materials

Our ability to provide products and services to our customers is dependent upon our ability to obtain raw materials necessary to operate our business. Certain of the raw materials essential to our business are sourced globally and require various freight services to transport the materials to our jobsites. These services may be impacted by current supply chain disruptions and, particularly during times of high demand, may cause delays in the arrival of or otherwise constrain our supply of raw materials. These constraints could have a material adverse effect on our business and consolidated results of operations. In addition, price increases imposed by our vendors for raw materials used in our business and the inability to pass these increases through to our customers could have a material adverse effect on our business and results of operations.

Our Industrial Solutions business is highly dependent on the availability of high-density polyethylene (“HDPE”), which is the primary raw material used in the manufacture of our composite mats. The cost of HDPE can vary significantly based on the energy costs of the producers of HDPE, demand for this material, and the capacity or operations of the plants used to make HDPE. Should the cost of HDPE increase, we may not be able to increase our customer pricing to cover our costs, which could result in a reduction in future profitability.

In addition, our Fluids Systems business is highly dependent on the availability of barite, which is a naturally occurring mineral that constitutes a significant portion of our fluids systems. We currently secure the majority of our barite ore from foreign sources, primarily China and India. The availability and cost of barite ore is dependent on factors beyond our control, including transportation, political priorities, U.S. tariffs, and government-imposed export fees in the exporting countries, as well as the impact of weather and natural disasters. The future supply of barite ore from existing sources may be inadequate to meet the market demand, particularly during periods of increasing world-wide demand, which could ultimately restrict industry activity or our ability to meet our customers’ needs.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

a)Not applicable

b)Not applicable

c)The following table details our repurchases of shares of our common stock for the three months ended September 30, ~~2020:~~2021:

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions)
July 2020 1,217 $ 2.11 — $ 51.9
August 2020 — $ — — $ 51.9
September 2020 — $ — — $ 51.9
Total 1,217 —


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions)
July 2021	12,175	$	2.93	—	$	33.8
August 2021	8,257	$	2.42	—	$	23.8
September 2021	450	$	2.61	—	$	23.8
Total	20,882			—

During the three months ended September 30, 2021, we purchased an aggregate of 20,882 shares surrendered in lieu of taxes under vesting of restricted shares.

In November 2018, our Board of Directors authorized changes to our securities repurchase program. These changes increased the authorized amount under the repurchase program to $100.0 million, available for repurchases of any combination of our common stock and our Convertible Notes.

Our repurchase program authorizes us to purchase ~~our~~ outstanding shares of our common stock or Convertible Notes in the open market or as otherwise determined by management, subject to certain limitations under the ABL Facility and other factors. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility. As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, ~~2020,~~2021, we had ~~$51.9~~$23.8 million remaining under the program.

~~There were no~~During the three months ended September 30, 2021, we repurchased $10.0 million of our Convertible Notes ~~and~~in the open market under the repurchase program for a total cost of $10.0 million. There were no shares of common stock repurchased under the repurchase program during the three months ended September 30, ~~2020.~~

~~During the three months ended September 30, 2020, we purchased an aggregate of 1,217 shares surrendered in lieu of taxes under vesting of restricted shares.~~

2021.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

The information concerning mine safety violations and other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

The exhibits listed are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


~~3.1~~			Amended and Restated Bylaws of Newpark Resources, Inc., dated August 12, 2020, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 14, 2020 (SEC File No. 001-02960).
†10.1			Amendment to ~~Amended and Restated~~ Employment Agreement dated ~~as of~~ August ~~12, 2020~~17, 2021, between Newpark Resources, Inc. and ~~Paul L. Howes,~~Matthew Lanigan , incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August ~~14, 2020~~23 , 2021 (SEC File No. 001-02960).
†*10.2			Retirement and Restrictive Covenant Agreement and General Release dated August 17, 2021, between Newpark Resources, Inc. ~~U.S. Executive Severance Plan.~~and Paul L. Howes, incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on August 23, 2021 (SEC File No. 001-02960)
†10.3			Form of Cash Retention Award Agreement dated August 17, 2021, incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on August 23, 2021 (SEC File No. 001-02960)
*31.1			Certification of Paul L. Howes pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2			Certification of Gregg S. Piontek pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
**32.1			Certification of Paul L. Howes pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**32.2			Certification of Gregg S. Piontek pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*95.1			Reporting requirements under the Mine Safety and Health Administration
*101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*101.SCH			Inline XBRL Schema Document
*101.CAL			Inline XBRL Calculation Linkbase Document
*101.DEF			Inline XBRL Definition Linkbase Document
*101.LAB			Inline XBRL Label Linkbase Document
*101.PRE			Inline XBRL Presentation Linkbase Document
*104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

† Management compensation plan or agreement.

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November ~~4, 2020~~3, 2021


NEWPARK RESOURCES, INC.
(Registrant)

By:			/s/ Paul L. Howes
			Paul L. Howes ~~President and~~ Chief Executive Officer (Principal Executive Officer)


By:			/s/ Gregg S. Piontek
			Gregg S. Piontek Senior Vice President and Chief Financial Officer (Principal Financial Officer)


By:			/s/ Douglas L. White
			Douglas L. White Vice President, Chief Accounting Officer and Treasurer (Principal Accounting Officer)


(In thousands)	Balance at December 31, 2019		Impact of Adoption of New Credit Losses Guidance		Balance at January 1, 2020
Receivables, net	$	216,714	$	(959)	$	215,755
Deferred tax assets	3,600		59		3,659
Deferred tax liabilities	34,247		(165)		34,082
Retained earnings	134,119		(735)		133,384