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Ken Dennard | Dennard Lascar IR |
Matthew Lanigan | President and CEO |
Gregg Piontek | CFO |
Greetings, and welcome to the Newpark Resources Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Dennard with Dennard Lascar Investor Relations.
Thank you, operator, and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review second quarter 2022 results. in Executive are Chief Officer; company President Lanigan, Financial the Chief and and from today's Matthew call Newpark's Officer. Participating Gregg Piontek,
on the remarks, financial the near-term call my management provide opening high-level Following Q&A. will outlook before details quarter second commentary of to results and a the
at I that the over be XXXX, time-sensitive There today's housekeeping this call until information newpark.com. reading. it the in call will information be items accurate company's a may release. therefore, the to a August I news on as that turn only available have be and of Before Please today, go no of transcript by and replay on webcast available of website the call, longer note is or included be replay of replay also normal listening speaks X, as over. There'll reported will and recorded XX, that the time advised information XXXX, yesterday's you're August
the Securities In Newpark's Federal contain meaning States United comments conference statements of the of management. the current within call during forward-looking reflect views statements this These the addition, forward-looking Laws. by management made
contingencies. risks, non-GAAP and XX-Q reports certain Form on uncertainties understand comments also to cause expressed The current of risks, contingencies and on various and Form XX-K, quarterly report or from those annual Form encouraged measures. to actual is and listener reports materially could on X-K to today However, performance results, financial achievements certain statements uncertainties made include management. differ The those Newpark's by read the may
President quarterly on that to CEO, me, website. Mr. Lanigan. measures the GAAP to And now can Newpark's call be like Matthew and reconciliation found comparable and Newpark's financial details which are I'd the to the included in release, directly Matthew? over press turn with behind Additional most
everyone. morning, Good
million and in improving a continued market of sequential increase our strong fundamentals both revenues Our delivering demonstrated share. businesses activities. in XX% adjusted quarter, within adjusted core Consolidated the EBITDA and second of of per $X.XX our with to were second contributing quarter EBITDA earnings business progress share for $XXX improvement million performance in execution and $XX.X per revenues
quarter of sales, the QX. well and Industrial The reduction to rental million benefited $XX confident of $XX.X and in and remain as result as and orders from million labor income, was from international segment in quarter. delivered see EBITDA number the given the issues the the from With and shifted hot continue unplanned in and of especially year. projects. delays we the of customer revenues inquiries the the dry orders second the of of large QX QX to sector to that caused of million that in Our as U.S. date, pleasing $XX robust discussed product Solutions we'll for the well from revenue domestic supply chain-related previously service unseasonably parts utility a strength impact that deliveries Compensating reflecting as strong half conditions
participation in our to growing in X million approximately R&D and in alternate leveraging adaptable utilize historical and recycled we During production expand our mat the materials processes, investments efforts track the and XXXX. pounds on plastics our progressed manufacturing we are circular quarter, of to economy, our capabilities
with materials. these greenhouse virgin traditional of compared to gas Importantly, a meaningful cycle life when reduction can use emissions materials along the scale, once provide in significant economic benefits using
and environmental example shareholders. illustrates our innovation Newpark drivers chain of years. our This our material and of supply compelling We economic at scalable in that and customers integration refinement we focus are this how see expect coming expand further very clear and another encouraged significantly with could processing expansion provides capabilities, initiative progress and volume our for through on the
market the both international America remain and to land for Fluids Turning fundamentals served business, markets. North our supportive
the EBITDA that up Systems of largely delivered seasonal In million impact $X.X of offset spring second the and we growth Canada. operations segment Fluid the revenues million of $XXX Our North in quarter. break our land double-digit America, in in U.S. delivered
sequential the quarter. for We revenue Gulf also growth saw Mexico in of the
unused Although incurred to profitability line a scope by delay of ultimately combination the unrelated Deepwater reduce customer and inventory. was operational project the with impacted the meet drilling of and unfavorably planned tight customer issues project a costs incremental to time return leading
current international as increased the have benefits U.S. quarter. through the levels in the drilling Internationally, of our we business to that delayed $X regards new with Mexico, focus both the customer's cost revenues quarter remain we improvement As to more the been improving resulting dollar pleased energy we levels. offset overshadowing projects our successes of reliability as of service from sequentially in customer technology, response the increased few to activity very Gulf customers in meaningful as that North the a making Mexico pricing being I'm quality. the in Based of in operating in by of international as the and value impact sequentially conflict we on our pleased performance recovery the on other on the delayed efforts loss highlight drilling to the areas. heightened and place million, progress saw a Gulf previously of margin resume progress build expect to material to focus evaluated making outlook in Ukraine. result, inflation specific tenders, our target for roughly strengthening industry-leading with are the improving expenses fluids schedule, despite solid start-up the typical operating we're ongoing Outside QX, and programs from on raw pandemic. America return commencing security, programs our We in With
our does Sonatrach of water-based technology were appropriately cost to in material to Sonatrach we next X-year Algeria, with award ongoing maintain we approximately high-performance successful in a position this of also for as reinforcing joint in but the as looks Also notably IOCs inflation, award see The pricing across with highlight fields the Not I'm profitability value market which venture onshore revenues our further beginning our in meaningful ORCA First, should coming years in valued raw the a portfolio only successful offshore and award Arabia to the our ENI, the further country. innovative valued continues award use line in million quarter. that the $XX a product at were pleased success $XX system a gains upside in and kingdom. Algeria. tender acceptance this the for potential multiyear systems reflect Cleansorb in is with lift X-year at in we latest further as we provide million leading in expand securing million X to Saudi market secured fourth important demonstrates also resets years. our our where our over more breaker of $XX
project $XX mineral led Fluids the the for global quarter, Mexico levels challenges the Raw the of delayed our the Fluids chain all our increase operations. and to material that and across cost prepayments for During a navigate quarter. continued team inflation, million purchases on barite our required the for inventory Gulf persisted in to grinding business pressures of in inflationary the supply build inventory
the deepwater of inventories business, the inventories the our meaningfully sale of now Gulf With second the the Fluids expect year. along half efforts of to will we actions. process half second down Mexico, previously our ongoing monetize grinding mineral and discussed project with our in in Switching come excess to portfolio
transform opportunities ongoing in been to very have and to focused a more all model. active efforts our our business identify business into We Fluids capital-light
operations the announced but After strong We've by for on up level given several been further the QX, in the of assets the our mineral We carrying remains the the strategic the recorded excess pleased outlook amount previously impairment PPHB, $X efforts our take the reduce progressing marketing value. validates the separating our parallel, business Texas grinding interest unit its Specifically, we end to the relating at our capital track real we U.S. sale with well meaningful the also monetize real year. to equipment, to shareholders. expect and our divestitures, some facility in before been In million non-oilfield of of facility. impact noncore representation end quarter estate of completion is interest have including their an and related of for to blending buyers down Conroe for active estate, winding and process and and blending valuations. time are on freeing led believe continuing rates this business strategy to the Conroe, from recoverable
in more our we to As debt our to our second our to while stated generation over cash generation of for also I'll the to investments detail portion high-returning cash the the financials Gregg previously, And a returning flexibility levels provide in to call Gregg? to hand meaningful program, reengaging in divestitures repurchase share reduce and provide shareholders. now opportunities greater expect accelerate discuss quarter.
stronger Matthew, $XX the line morning, Solutions I'll second before Mexico the second discussed, in the from the $XX Matthew sales. an product EBITDA adjusted providing update in impairment start increase outlook. financial with and Overall, in the and driven our the million of Gulf operating revenues results quarter Thanks, on Industrial Industrial driven largely quarter to segment specifics our a were operations sequential aside Solutions improved million with that our with everyone. improvements good results by reflecting in segment. asset increase expectations, for consolidated of and near-term fairly entire by our million $X.X quarter the
by various dry rental to well constraints and were second in and the with On services start summer impacted in customer to delays a warm QX, revenues unanticipated associated quarter, as exceptionally strong U.S. Southern side, despite labor the start supply the disruptions. and projects customer as down from chain the slightly the
Internationally, segment XXXX softer of benefited to operating income within short land, on although as X% sequentially with to of in in transportation by $XX base, or last the to the in year, certain facing strengthening $XX noting being worth of revenues count gain in cost led breakup Solutions revenues U.S. million Gulf improved and basis, absorb change U.S. Cyprus by loss in Mexico in roughly XX%, a to revenues an our to market seasonable past year, large-scale essentially robust million the majority materials. Kuwait were ability rig million by the market XX% or impacted declined of Fluid mix our $XX Segment is from the across sustained and America expectations Canada, it most from flat our an The of sequentially, on, This the well activity the along total pricing steps of substantially lower Industrial business outpaced to typical revenues. In raw while in from recovery count. as $X where was last the continued service drilling role million Asia income gains, $X in typical to in second rig in from The the the second $XX customer being Solutions revenues operating territory up projects. should Mexico. margin. revenues, last all a to inflation the X% breakups our terms cost quarter America, year-over-year activity Pacific revenues activity due Mexico, on million million fell the improvements $X.X operating forward. though activity X in mostly in to the rental both of Canada, for the as inflation, Matthew seasonal dollar. increased sales, and sales with which profitability decline expectation, and unexpected as $X spring the land segment was $XX from $X.X revenues by million some the a share our improvement Pacific by anticipated Outside million was pullback $X decline are Gulf E&P by U.S. revenues customers' increases land settlement. product to million land of of X projects. U.S. long-awaited utility secure we with quarter and the end customers, business operating deepwater in quarter improvements compared while or in shorter a contributed end margin start-up Systems QX million by inflation In our quarter remained included legal sequentially from mineral Systems, fixed sequentially offset customer XX%, our due the improved cost North segment U.S. revenues well stronger in rental the partially million, million price in improved period or Fluid and our we've strengthening the though drilling Europe this our third-party million contracts and improved in from second of somewhat Canada seasonable in late improvement XX% million relatively spring pullback quarter, XX% plans while a long-term benefiting or customers lower noted of of be segment a year Despite driven despite operating that in primary returns as activity utility $XX but market On the discussed This $XXX year-over-year Comparing the shift revenues of income year. in $X.X service Asia offset Canadian in of revenues our market and our International of we and an the Gulf as with along a revenues and $X Fluids input impacts was In take the stronger customer in Canadian to reduction parts Industrial to on roughly sector touched margin. benefiting on in second positive Operating U.S. remained previously decline years. from reflected quarter more encouraged increased primarily for have expanded stronger Total XX% sequential expectation XX%. with incremental headwind the pricing of of by our remains that contributing reflecting Canada. it's quarter. In positive direct material providing project point declined XX% year-over-year XX%, dollar. Systems EMEA Fluids customer by rental as and of than our continue offset dollar. drillship markets grinding the line market, for million of breakup to headwind broad-based North of a resulting $XX increased million the revenues
Blending business following all the yesterday's exit Industrial recent the business, this Solutions we've the reported. in disclosed separated release, of for Industrial periods As press from segment
costs million reflects last the in year and quarter year. write-off of in reflecting incentive sales the compared $XXX,XXX SG&A Blending tax SG&A the was of charge. quarter, incentive rates share XX.X% as second to capitalized for process increased reporting unable quarter's expenses decreased $XXX,XXX was resulting for increase primarily in the expenses ongoing Despite XX.X% slightly the with higher our pretax to and Considering with $X.X expense second $X.X anticipated segment a million fees last million the $X.X million, million million a to QX price from primarily and increased the sequentially loss we expense to expectations. in $X.X quarter tax personnel as amendment, from charge and quarter, to a long-term in provision with in the increased loss XX.X% second as the The corporate a increase these the improved the our second increase $X.X Industrial for along $X.X to associated but elevated borrowing million than $X.X up costs. our were quarter and to impairment our expense modestly line tied quarter, year-over-year a including record to of from quarter office to second with percentage relative facility for X-year performance assets. sequentially benefit incentives noncash QX related benchmark the impairment the a recent impact higher for to well came peer as accrual sell as loan industrial Corporate due exit of to group. other with were long-term the ABL the reflecting second remaining expense, borrowings. decreased the Interest the blending
the Our press yesterday's as diluted adjusted EPS share described was per $X.XX for quarter in release.
continues on quarter. while chain as fluid Industrial segment in primarily activities Turning recovers. Inventories prepayments ability to purchases raw generate and Solutions material in activity-driven used cash increase to increases the used consistent in activity capital. working vendor usage deliver drilling to ongoing flows, ensure supply resulted increased tightening Operating inflation cash meaningful customers quarter, million cash $XX cash million of positive contingency the to reflecting levels flow, well as as for second cash the reflecting on an of our the our $XX of higher stocks in costs,
Gulf the in inventories. business operations Our mineral sequential $XX of million U.S. of grinding and increase Mexico contributed
$XX the than revenue site receivables higher Investing in X-day a access in helped the our the sharp improvement of With also activities in net cash consolidated million in DSOs. of level, quarter though used balance $XXX net quarter, product a $XXX drive were increase sales a of of and $X We million. million quarter balance ended with the limited using debt less debt million. second cash the total
outlook. to operational Now turning our near-term
economic markets income activity into sector are is quarter the QX segment, As remaining our T&D third and we last with seasonality. Northeast will to direct and impacted strong remain anticipate landscape, our geographic from we fundamentals will offset seasonal sales gas our the largely including in the feel expansion robust. QX acquisition oil operating utility segment we we year, Overall, the late the Industrial that closely revenues the positions the in although in In second in project levels utilities although well contribution activity, look typically we and expect of us close the head monitoring slowdown both half Solutions we the the by ahead, evolving as year.
of levels, utility recovery Looking strength including outlook quarter, T&D demand beyond in well the from In the from continues we strengthen land markets product activity typical fourth North this the Fluid as longer-term growth sector expect particularly dependencies. countries expanded level as events, as their strengthen in and which are in to areas space, look energy driving elevated we quarter EMEA to the quarter the core sources seeing elevated an seasonal into sales. provides fourth for Consequently, which America benefiting geopolitical within of planning the the is opportunities impact several the XXXX. in EMEA, traditional increasingly geothermal QX in Systems, for the project reevaluate to our energy and we global region, given within in ahead both many
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improvement, quarter, facility revenue sold. the and and of consisting roughly until should margin are per depreciation ultimately to $XXX,XXX With surpass property primarily operating respect QX remaining exited the With assets Conroe blending business, we to Fluids industrial and expense expect the expect insurance of the taxes, we levels. carry
higher the while range expense for likely we quarter our quarter, streamlining the should evolving $X Regarding corporate remain in We the cost increase of office million third line below spending anticipate in focus remainder will as rates, the structure closer in rate to million primarily with come mark the on third tax business. $X XXXX. mid-XXs for interest expenses, reflecting the borrowing will
we the million For with dependent fleet market relatively range rental in heavily to roughly industrial CapEx, year to $XX Industrial T&D our mat Solutions. which growth. will levels is upon to expectation gross unchanged $XX expand million is the of revenue-driven directed investment and remain for Quarterly support our opportunities XXXX, full as expenditures XX%
increase growth terms in has In as third positive supply chain half flow business in of expect with the well the as first improvement generate the ongoing impacted challenging in working while by capital flow, operating we strong associated quarter. cash the environment, revenue the performance the of the been cash to year
more through like to as in reduce I'd with his In redeploy Matthew expect including coming value-creating announced or sight of to debt, liquidity than cash as concluding And for efforts call remarks. to of investments back million the our in well $XX provide addition, investments we deepwater providing Mexico, strategic growth generation in markets our months, line optimize divestitures share Gulf of turn into shareholders additional opportunities, the repurchases. to the to over return that, to
priorities. in the Gregg. results X key strategic of execution progress Thanks, our QX demonstrated
key well Fluids Our contract in number second and and position team won awards half growth revenue delivered double-digit for U.S. the a the beyond. the that of business
to in While is inflation are for the the products efforts achieve actions services. working the generation value efficiency, it capital the approaching pricing cost expand cash of persistent seen business and several and all and years, our focused levels is on highest necessary through their acceptable margins impacting passing has raw material
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the the that Importantly, is our team recognized continuing across to be brings our customers industry. to value Fluids
recognized Energy surveys demonstrating the Oilfield clearly space. service by in research that their quarter, fluids Kimberlite once the standard setting again the for in we value were and Research customer and Point customer During quality satisfaction are we annual
to generate show will Mexico a in of have near reduce operations been As we we returns. return. consistent the pathway key our do not focus to a burden, to be acceptable aspect capital acceptable a where that on Gulf continue area to deepwater taking key every term to reshape remain divestitures on business, priority investments, committed our we actions our our our are unable of Fluids and of The
for this of as to and million deployment range a more step this fluids our $XX model we're than driving capital agile We result, see which optimize market, exploring includes in a another our business capital-light in business. options net As capital. in a working
and and projects. business in quarter weather chain-related stronger the headwinds perform margins rental to well of continues Our the despite facing delays from to operating a with service number supply Industrial
on activity impacts engaging T&D peak in through and persistent due with project building the elevated the labor QX costs. project we're by the quarter encouraged pause to grid of a loading to and later electrical necessitating in While pipeline summer in is projects, lighter transportation pass key always customers the are
Our direct sales our proven half, continued remains of pleased the pipeline and DURA-BASE robust for are customer's of the acknowledgment XX-plus of second products. with and reliability the years performance we
investment businesses responsible Newpark's current innovative, a in global markets transition of each spectrum. transmission projects emission in responsible power technology needs of operate and demonstrating, long-term events oil generation As energy meet ends require both world's both methodologies. traditional large-scale, solutions are energy challenge a will that place the lower and require which transition and that to significant investments will the Achieving multitrillion dollar and renewable at in energy gas
such share their long of capture and to each history our Newpark's of significant markets. to developing and in businesses technologies respective enable commercializing differentiate will continue
enable we As We and recognize both opportunities. scale that take markets. we our evaluate time to thrive industrial their as in required independently this are our we strategy, fluids the all viable that progress creating served on focused pathways achieve will journey to businesses
questions. for on I'd like momentum robust their work additional their and We'll that, investing market for now encouraged we with our our hard and fundamentals, thanking employees by businesses. are your take opportunities scale And safety. shareholders Operator? we by enhancing which However, each in focus for believe us and continued to close our the of thanking building create
the All you your talking right. you Newpark, call again us look next we and Thank interest once joining and to in to on again forward for for quarter.
concludes This today's teleconference.
thank at time, for participation. and your disconnect may You lines your this you
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