Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Newpark Resources First Quarter 2023 Earnings Conference Call [Operator Instructions]. And as a reminder, this conference is being recorded.

And it is now my pleasure to introduce to you Ken Dennard. Thank you, Ken, you may begin.

Ken Dennard

Thank you, operator, and good morning, everyone. us review Newpark first joining and conference you to webcast quarter appreciate for Resources the call We XXXX results. company Chief Gregg the Newpark's from in are call Participating Matthew President and Chief Executive Piontek, and Officer; Financial Officer. today's Lanigan,

a for will details first Q&A. and remarks, results on before outlook the commentary provide my the high-level Following opening quarter near-term management financial of the call

yesterday's call the items a also turn replay over at call, be today's to replay how XXXX, XX, release. through. I a website housekeeping until that I available webcast Before few be by information to be run There'll of company's in reported on on will available is have access May and a the telephonically There'll newpark.com. included

information the speaks today, call replay that of note information only therefore, advised this of on X, listening May transcript no that reported as time of may accurate you're time-sensitive and XXXX, reading. any or be as longer Please

the comments the meaning In within this laws. federal United States may the statements made securities call during addition, forward-looking of contain by management conference

statements reflect management. current These forward-looking views the of

certain and materially various reports statements those the and risks, cause differ could company's those expressed current X-K results, on Form uncertainties encouraged of report understand However, annual risks, on performance The to XX-Q achievements on in reports contingencies actual the listener management. Form made or read and by the contingencies. is uncertainties from to to quarterly XX-K, Form

non-GAAP include The comments also today financial measures. certain may

Newpark can be in most website. Additional the details which quarterly GAAP the reconciliation earnings directly measures comparable on release, included the to and found are

Newpark's over Lanigan. Mr. Matthew Matthew? and like And to now I'd CEO, behind with turn President the call that to me,

Matthew Lanigan

Good morning, everyone.

key by the the continued initiatives. against XXXX solid stated our momentum marked from quarter both financially first and performance, quarter, fourth Our

of was EBITDA, in revenue, our Solutions performance strength $XX level million validating highlighted generating $XX in our history QX revenue our market robustness the strongest in by of business for the financial demand. the offering with and Our Industrial million

Industrial development segment our solidify and of utilities markets The the industrial transition. we with end Newpark energy and and to leader revenues, XX% of the as in a sustainable technologies are our supporting services pleased contributed nearly progress

was history EMEA revenue continued Canadian the capital. strongest business, the QX in performance Fluids, with in to highlighted the in our solid returns region our invested in improve quarter Within along on and ongoing progress efforts by our

reduction further outstanding As expected, strong we flow shareholders of and shares which our generation saw return capital via the X% the both a of contributed in quarter. a from of repurchase cash businesses, to of to debt the

million Industrial Systems Consolidated in contributed including $XXX revenues divestitures, were $XXX million the business while QX the the Fluid million. first $XX quarter, following from

specifics EPS Adjusted few will $XX adjusted a the more EBITDA million sequentially moments. share. XX% for of and improved the cover in diluted Gregg per $X.XX was results financial to quarter

hand to an before on to the our However, update February in I laid I call the our provide over call. him, out key I against wanted priorities progress

strong growth Fluids our meaningful our forward the and and business. of Solutions the reduce to We in opportunity the pleased business progress cost while months, made complexity are steps organize monetize we've Industrial to investments continuing recent performance within our reposition company to taking and around with

most the made drive possible our global in business, be been for of and operating by first footprint. more XXXX discussed a is efficiency efforts aspect operational every Systems priority XXXX of improvements As our have to spent capital-light overhead cost optimization February, recent across reductions reshaping our cost that agile Fluid and division months were focused to divestitures. on our primarily in Having

to years to Chip business layers corporate support Systems simplify within office On like note, weeks our who and to recent management efforts. as enabled my Chip and instrumental processes intended Chief of the We last company. that and recently Newpark as every We Earle, organizations. sincere our Compliance for him governance a served success cost I'd have these implemented wish several forward. our particularly and the left General was decision changes leave thanks Counsel part succession X in activities, in Chip reduce that and building to for Officer Fluid extend reduction the the strong going

as In process which profitability. closing to in well addition, to of entities several nonoperational chemicals and down in our we subscale business, also winding throughout U.S. a unable the have down recently stimulation the region. we're path shut down And was operations demonstrate Chile EMEA as

in While with cost next cost million translate benefits roughly quarters. date optimization efforts few realized to $X ongoing, to being the savings actions the recurring company-wide annual our are over

strategic Looking continue level end at actions portfolio as will simplify we closer business and a markets, streamline also to ahead, key divisional overheads to and monetize further to both move corporate our to continuing our evaluate work value-enhancing decision-making we to businesses in options. our decisive and our underperforming take while investments

to world-class simplifying structure the in services and We ensuring which cost critical and operates can businesses products acceptable reflect environment to that strongly continue agile generate support deliver believe our Newpark our to is increasingly that returns.

to is specialty investment of capital focus the on rental growth and services our priority second business. Our

million sector. of that To primarily utility to fleet in the rental our nearly our pleased I'm support growth in in the highlight this first the Industrial quarter, point, we expand to in $X invested Solutions

mat, also fully efficiency in DURA-BASE further XXX We costs reduction weight without therefore, with XX% carbon format and a which our offers DURA-BASE of nearly series and transportation emissions production performance. new driving our impacting mat product began associated and integrates existing

to we innovator in matting having as heavy-duty the the composite this market. the As industry months, are rental the product again on we lightest weight roll new for our product once into excited showcase Newpark fleet coming

segment showing Solutions growing full revenues million, year improvement XX-month XXXX focus XX% results, from with Our at an revenues. the is on trailing reflects which Industrial QX tangible $XXX now the

to capital the for Industrial deliver from year, start EBITDA in upper teens strong adjusted rate our utilities priority. we the our $XX that to and can infrastructure resource million, solid full growth XX% to XXXX, continued are margins. into With a XX-month increased operating results. confident a while markets maintaining XXXX line highest Solutions top a our critical Funding expansion Trailing remains year Industrial Solutions improvement and mid-

finally, priority a excess And a reduce balance commitment generation and value to to debt to strong is using return shareholders. and our our cash maintaining sheet third our

cash. During a the first generated million while free cash quarter, flow $X down assets of the retained Mexico million Gulf we of last generated of $XX year's divestitures wind of further from

that Our over have the quarter, QX past that while million X.X usage in in we QX we X.X we've share XX% our repurchased million in shares leverage the shares now shares of first with repurchased net our additional stands million to addition outstanding and months, in million to reduction the EBITDA. also balanced X million shares X.X $XX was April. of activity, I'd like below debt cash the turn in the adjusted X highlight the in and purchased $XX Including of repurchases. repurchased

We believe for that growth represents shareholders our our returning value via creation. and the shareholder Solutions meaningful a while our reduction combination funding to opportunity Industrial plans, value debt share long-term of balancing repurchase program

to to of the quarter. more call hand specifics on I'd for like Gregg? over provide now financials the to the Gregg And the color

Gregg Piontek

and for morning, good segment everyone. consolidated and update quarter results with before the financial the specifics Matthew, I'll the of near-term an on Thanks, providing start outlook. our

presence reflecting was by continued our utility infrastructure the our quarter first strong the Solutions, on, from and Industrial touched highlighted performance expanding success, penetrating multibillion-dollar in market. Matthew As

segment's expected, the following first Solutions sequentially, strongest of pulled modestly million, grew the history. revenues $XX first with strong the revenues results, posting seasonally revenue Industrial XX% our As QX quarter back quarter in total year-over-year, but business

demand from both The activity. impacting first quarter rental robust utility the once infrastructure from direct service and again and benefited projects, sales

sales project during to QX contributed million sales quarter our the improvement the utility fleet revenues result demand rental million service year-over-year reflects sector a product the the quarter. by combination The volume in improved $XX stronger and first Following in investments pulled pricing quarterly the as exceptionally back increased first stability expansion strong QX the somewhat driven volumes. a in of following from activity, and of Product robust $XX revenues has XXXX. XX%

industrial quarters, Solutions segment's revenues, margin. we've trailing continuing $XXX a of within improve revenue, expand on, EBITDA, as adjusted our adjusted Notably, we of generated XX% the million profit generation for to and million touched $XXX presence of quarterly And cash $XX As million seen four utilities and markets. the stability Matthew including the the revenue from Industrial of delivered EBITDA sector. utility

In our while differentiated a Fluid working where fourth Systems, support key following the generating longer monetizing divestitures our streamline the our continuing no that strengthening completion markets value within our business of the offering, on sufficient clear in in previously to announced capital areas demonstrate customers Fluids pathway remains and focus returns. to position quarter,

from Fluid of from million the The wind the generated of or X% capital net assets our reduced margin. adjusted $XXX by we quarter, of first and $XX segment $X.X largely employed Systems quarter the the business the EBITDA adjusted a first million, down EBITDA revenues remaining in Fluids divestitures. million in During ongoing

of Excluding were of strong effects losses land the elevated America a downhole from as the growth the the seasonal North in Canada. Excalibar in operations quarter in X% including by decreased revenues prior projects U.S., divestiture, sequentially on partially declines number offset

in international offset as in in operations a was EMEA its sequential region, the quarter which of Chile on the our markets revenue basis posted than X% from of wind improvement improved down history. Revenues by more effect strongest our

prior activities ongoing quarter, down from reflecting operating the lower segment in effect in quarter first was revenue primarily The U.S. X.X% the from of X.X%, land. margin

has the Notably, sales in a largely effects weaker QX mix. quarter, international were though in past product pricing by improved the offset

the net XX% employed. primarily consisting As capital, and segment's of the capital of Fluids represents $XXX working net the which nearly the first of of of quarter, business end million inventory has roughly receivables,

$X a levels, the planning quarter effects by primarily reflective reduced increased first second declined million project. largely and in throughout on increase reflecting strategic half of SG&A an sequentially, the activities organizational and XXXX. of nearly expenses driven borrowing debt basis, on increased design both the of sharp year-over-year Interest of rate XXXX spending year-over-year, expense but sequential

effective in and improved Adjusted the XX% stronger the reflecting $X.XX Tax expense both $X.X outstanding. tax decline shares EPS in our the quarter, share first was per XX% net sequentially to the reflecting in rate. quarter, income adjusted million a diluted

cash divestitures transformation. a to of sector. of million of operating flow majority $X Free including had solid business of our fund in and ongoing the while supports we of capital reflecting the flow million, flow, the the $XX cash using which the vast a fleet our investments, terms for recent rental $XX to was the In start benefits million, expansion quarter cash utility year,

just outstanding impact on, count As our now XX% million Reflecting we million the million of additional stands repurchases. generation the down in debt quarters touched purchases, share the Matthew share used $XX from full outstanding quarter a reduction million, in XX at to shares ago. two April fund the cash of and our $XX share XX

to turning Industrial by We infrastructure operational encouraged Now for growth. strong expect which our fundamentals provide a the utility multiyear will for spending, remain our near-term outlook. we tailwind Solutions

EMEA we while prices for by near seeing and gas demonstrate Fluids, the continue term, America certain structure, lower our monetize and natural the North markets we longer-term footprint the key mid- basins markets, an sufficient the U.S. focus return. effects ability capital our of to the and that in are in as outlook rightsize For working on to are encouraged cost a generate the we impacting

we rental from quarter infrastructure revenues utility recent second the Solutions, to benefiting sequentially, several As specifically the service we of for and at look start-up projects. Industrial improve expect

modest Industrial strength and as second to continue Solutions our sales We last improvements see the in direct in year-over-year opportunity the quarter both to show revenues year. EBITDA expect Overall, pipeline. segment compared of will also we

benefiting For continuing is from breakup seasonal revenues discipline. spring contribution ongoing of the Canada reflecting are pull typical softness and in focus lower to price which on and back the impacted International relatively activity. XX% to remain strength customer stable, the sequentially, Fluids, revenues both in expect market by effect we expected U.S., roughly a our from

an the prior begin With reduction we any charges. expect operating impact digits than while sequentially, from will in our margin respect cost see operating improve efforts, and of revenues to offset lower these low single to in to margins, margins resulting the likely the ongoing see more benefits to EMEA we additional benefits restructuring

Corporate planning QX prior expense to modestly restructuring is charges to strategic any as expected we up our improve projects. in wrap

effects we and planning cost beyond spending from corporate savings decrease to Looking million strategic date. actions the annual further $X executed expect roughly completion our the will office QX, work of of of reflecting

modestly reduce As tax we expect we our below while fairly to to reduce continue expense debt, rate XX%, likely remain effective line the interest with in will QX.

working generation, from cash solid on EBITDA Fluids capital, well as quarter, reductions primarily free business, improving strong continue expect flow We we as the returns. meaningful to generation in in as in our primarily second the anticipated benefiting focus maintain the

and cash reduce generation growth our our second be Industrial further investments used Solutions. to our expect debt in will primarily quarter We fund

call Matthew And with the I'd remarks. turn that, concluding to over like back to for his

Matthew Lanigan

Thanks, growth in Gregg. I'm record the first Industrial Solutions the Canada. in quarterly quarter as month while XX our we in trailing another of posted business region revenue in proud performance the execution EMEA delivered Fluids solid in revenue and double-digit

We continue the transformation for progress of and and Fluids And into also we more improved cash business to our delivered strong free see capital-light in agile, value flow simplified a our shareholders. business.

execution did we each to committed and remain against stated progress of and XXXX, in transformation. our priorities making business Just for are like we the our XXXX of strategy

our this of today, business invested for market markets a fundamentals and double-digit profit come. where our growth support years also rate annual is primary that industrial in we business will strong few the the critical the infrastructure Solutions believe driver capital represent the and within our majority expect will for to quarters, we Industrial utility next

to committed gas expansion capital our exposure remain division, and presence oil positioning markets. further and while end We a prioritizing scaled rental company Newpark and specialty into services reducing in infrastructure as this within our

and been continue the industry markets. conventional financial technology recognized service consistently which oil both of a to in business, gas leader plan performance strengthening our geothermal Fluids and We and by has as the

We our returns which, financial returns clear not as a to that investment evaluate continuing requirements sheet, meaningful in our Optimizing to deployed the growth of areas profitability industrial in that thoughtfully options. strengthen our free and business us flexibility in to Fluids to we to of continue on to will our each balance in with have remain the this as by that generate cash performance we steps able turn, our division. meeting reshape believe portfolio we the segment seek and do capital be strategic take a will more improve of while priority will plans division, provide consistent flow execute improving pathway

I'm employees and year about and in by us optimistic for to safety. dedicated enormously thanking I like thanking s for our our ahead. proud shareholders I'd and remain units compliance work continued their of their that, business and our our and staff, And with close focus on investing the hard

your now questions. take We'll Operator?

Operator

from question. with first Capital. line you, sir. Thank [Operator comes with Dezellem Instructions]. Please of the the proceed And question Tieton your Bill

Bill Dezellem

you. Thank

mats you that improved your that remainder for if out start, see me had and said opening remarks. I think you of business. And pricing that experiencing quarter, Let you I discuss you for year? pricing could, reference playing the mats. Last dynamic that with made this to you're the in again the the Would how here

Gregg Piontek

Gregg. Sure, Bill. It's

of dynamic kind pricing the half year. went past we've the steadily back over as the improve seen of So year, through the we

that that's kind of in think a demand you robust I really the marketplace. reflection of dynamics the have

had was some at particularly QX, in utilization, high prices it - benefited. had very that terms work was call-out that noted we higher strong extremely As of quarter was in an that

pull of somewhat here modestly expected. very into was kind that went QX, we as see much back we which what did We

we at going think today at I as look stable. it you and as look see it it you fairly forward,

Bill Dezellem

becomes be anything that And with have a to up can innovation, that really the expansion mats efficiencies you you pricing is business any there of anticipate either that larger? we or will that with margin should move would with as further? do Or service function

Matthew Lanigan

that putting down what on Yes, more Bill, going the working on this is the of the we're projects pricing, Matthew. Look, think the a overall in specifics contracts we're or issue are. geographically to mix-related product and of I particular terms of where it's be

I Beyond spot you're think on. that,

efficiencies. of transportation introduce to Obviously, transportation a to more be from going fleet, the we into weight I as in lighter term, longer mat we're think that. efficiency going the it's get lift

it's But project going I the and be efficiency. terms related that think operational come when you pricing, will level of think from of more then rest to in

Bill Dezellem

out that called Would world? slower a think of the dynamics that then I part that revenues. in And Great. you're through That's seeing mat and you talk the the helpful. U.K. was you with that bit the

Gregg Piontek

the been contributor. actually QX, has U.K. QX, stable been QX relatively into few pretty The a Look quarters. Yes. it's consistent and over past at

mid Now of the of single talking U.K. the business. that is We're that the a digits fairly revenue small to terms comes from of percentage piece in upper

Bill Dezellem

in can queue Got you go more it. And you'll hit couple allow. I'll or back I the either got I've a questions with, that if

Gregg Piontek

Keep going.

Ken Dennard

Keep going.

Bill Dezellem

Okay.

that tie So back to to you referenced that? you the Or business, Fluids that that businesses down the there Does chemical exited exit stimulation more and you facility Chile? is the closing costs. something the had

Gregg Piontek

do of the QX lion's facility For the the Mexico that went have divestiture actually cost in But wind piece a cetera. such kind first you it That's the here related. the we of chemical, the of along organizational that most incurred stimulation was Gulf quarter, down with changes, the part, transaction. of and just et that severance following share certain follow-on of

Bill Dezellem

you. Thank Okay.

And Chile? so not stimulation exit the lot of there chemicals to or either - cost a was

Gregg Piontek

Correct.

Bill Dezellem

right. also I Would a the through Thank then organization. please? efforts reference talk Fluids you. you that that, flatten All And think there's to to

Matthew Lanigan

Yes. Sure, address Bill. one. I'll that

the layers, global acceptable more efficiencies of to and we're eliminating that efficiency. where and decision-making returns to drive looking of customers, potential that of I looking a out oversight and moving think kind of the of some as divisions the between in being seeing with there the lines, we've business them regionally we're really to are things stimulation on layers kind think of starting exiting, that structure level that's than to the of pathway to closer product terms overhead playing the corporate and not we're manage now we one business look a added of way here at kind at

Gregg Piontek

operation, look not that just the you that corporate overall as - business, organizing effect, because streamlining division at you're kind level, only a the really, as knock-on the has at but then And of the overhead well simplifying Yes. differently.

Bill Dezellem

believe helpful. costs, larger some that consulting some there were consultants, on corporate came then that we which included have amounts you outcomes seen were expenses That's past, meaningful that. when reasonably spend I the all reasonably And In the meaningful. from

Would too efforts? what not towards those please but the too and on consulting mean, us dollars opposed, you would what walk are through you that to - much I of early, disclose be driving not you're and spent would that have kind being outcomes you with I

Matthew Lanigan

right. Yes. Thanks, you're I think Bill. Yes,

you If every our kind looked you and done years, And in roughly, go have look history, to back it refresh if at we sort since of of haven't X 'XX. we strategy. revalidate that

took that on decision to at do we So the the will quarter. every first look further it growth dollar looking was really I just opportunities say another side of the What spent was in business. at of here industrial kind the is

Part and of existing of streams revenue additional part assumptions, core and looking adjacencies, for at revalidating looking of rental of service beyond the our that some it on the it add may we how business. competencies the business strategic exploration really side

go So say strategic to lock much longer-term you're plans. to as what call, detail to as we into into our right. on to work not that fair it's we're continue going was going this too but that to I'm this distill growth

Bill Dezellem

still hearing finally, done that as you. as much are you here We'll in timing, we costs, more will essentially forward will more not there how dollars more the be to look terms are be later. that of after restructuring go second in quarter? et And Thank Or anticipating Great. this? there much cetera? Maybe then to about

Gregg Piontek

knockdown that's effort step at a changes each the to will say is were us that take but function of say overall one as and -- ongoing Matthew had business another evolves in will I is is simplify. to answer. that front you And you described. that completed, and we look how opportunity simplifies, your it had structure. I the is effects as And of that we what big that overhead to Yes, pieces the - think an a it I tough

continue it we're lower. do evaluate firm to when rate, a SG&A that of of at But as run business and kind get necessarily we we'll a when it is. I our have at simply an look or number XX-plus that XX%, you that just how I the percentage target evolves, call look end overall don't that's date

Bill Dezellem

going push That's further of I a kind that. to am on Okay. helpful. little

have like or ROI? outside on further for a familiar with. those more a on that, Chile, to focused not between? a opportunities haven't been to really are So us particularly maybe few the solid was and far region business that that Are of those example, Or streamline line that I was may now path a don't that have there opportunities that

Gregg Piontek

there at hurdles look would Look, more to is it markets. reach But challenging where I think I when this, economic subscale opportunity. the - we say are find you particularly

generating the a small I great think was in annually. It of of revenues $X is that. it relatively Chile example million of area a market, was

do we large a so And internationally. footprint have

are are a those number of that pretty small. There markets

you like don't that, necessarily talking doesn't And something the sufficient footprint, does pathway so that addressing you're to and have your of and you and corporate effect okay, change remove in market more steps those knock-on return it markets that one overheads about now your the but your take have oversight. you a the picture, shrink generating clear

sure if of that's looking not we're at I'm it. but that's how helpful, kind So

Bill Dezellem

Understood.

anyhow. understood think I

that, simplify domino then you small organization saying actions then the free take there like markets. to what some then opportunity So a if effect be you're to of up up more that those further could would the were from is that,

Gregg Piontek

think that's I Yes, fair.

Ken Dennard

Great. Thank you both our allowing questions.

Ken Dennard

This Ken. Bill. questions, Great is

in Fluids the the the favorable the that improvement Gregg, was due strong to one, you pricing It we quarter of here's call, business. well the demand prior in and always utility industrial get through. said As e-mails as sectors during your EMA came and as much Matthew, to markets experienced

question combine hold is we levels? at fundamentals seeing least do the or sustainable to expect those. you you utilities how electric the in And spending in the markets to those elevated improving -- are Just current space? continue expect Do is, at infrastructure

Matthew Lanigan

EMEA in in continuing gas I'll oil start and the the to the on Look, be -- encouraged region. with Yes. the I first, fundamentals, one, think the we're first

and back inflation we've worked of through getting kind contracts of on repricing saw the those a hard lot we the that we needed that the think year. expansion of issues margin off last I supply chain

off encouraging. of being demand sort of that which and a the we kind So there, sustained, with stable back that of see is

it on with kind stable then come, Jobs the which et spend the side, with as more to very And cetera, on a think before historical that call. of being infrastructure on that in utility the We giving also sustained years touched to in touched for I Act, and we've space stimulus then that. see investment I think we the

Ken Dennard

Great.

about did that sustainability? - so you get So second one with the the there

Matthew Lanigan

Yes.

Ken Dennard

additions back. Okay. Oh, guys? Bill's Any other for you

Let's open the call back Bill. to

Bill Dezellem

have last question. 'XX and CapEx you about was full are cash I about or million thinking this that somewhere I just CapEx flow on one basis? a additional in year, $XX think year free neighborhood, Relative thinking year to how

Gregg Piontek

would a in I 'XX that terms Overall, overall like say 'XX lot looks CapEx. of the

Industrial As business. you was CapEx of the see our XX% in in QX's Solutions results,

will in in seen what see years, recent vast Solutions I majority that and be that expect growth. you'll spend to the similar Industrial would of we've So supporting

Bill Dezellem

Thank Congratulations a quarter. Great. again on you. great

Gregg Piontek

Thank you.

Ken Dennard

Thanks, Bill. it. Appreciate

Operator

further And back would hand Piontek At for to to this like are no I there closing comments. time, the over Gregg call questions.

Gregg Piontek

your speaking again with us joining to and for Newpark, interest next in again look we quarter. and Thanks right. for forward All you

Operator

today's participation. does teleconference. you thank for This conclude gentlemen, your and Ladies

a You your may rest of the have day. lines. disconnect great And

NPK International (NPKI) 3 May 232023 Q1 Earnings call transcript