NR - Earnings call transcript Q2 2024 | NPK International Inc.

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Operator

Good morning. My name is Jim, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newpark Resources Second Quarter 2024 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to Gregg Piontek, Chief Financial Officer of Newpark Resources.

Greggg Piontek

Joining me today is Matthew Lanigan, our President and Chief Executive Officer.

Matthew, statements to financial regarding to discussion that expectations. over forward-looking contains future handing I'd highlight like today's Before business and forward-looking described in Actual projected periodic reports risks significantly differ the our uncertainties, statements SEC. with today's and risks results various due the from including filed to may in those law, no required obligation Except our update by as to we undertake forward-looking statements.

today's may financial non-GAAP also measures. certain Our include call comments on

release, is in which directly most be Additional conclusion of At be line details to and the at like XXXX. and our turn GAAP our current of section our within measures for corporate quarterly are X, to I'd it Investor to newpark.com. webcast earnings will be call of note of today's our and the on website as questions. comparable the Please included August will open a can the financial found the that remarks, will There information today's prepared by Relations CEO, reconciliation over we website. disclosed that, available Matthew replay call, the Lanigan. President With call our on

Matthew Lanigan

invest quarter in we business, to laser-focused creation central multiyear Solutions transformation basis, second Industrial EBITDA business XX% the in of continue the the a revenues our our quarter We've on long-term product a driver results improvement sales including a contribution the business, X% Solutions as of remained value remains quarter. in plan pleasing exceptionally during were and growth sequential million Our strategy. which second our Industrial in with consolidated of strong an underpinned improvement our by on revenue adjusted very from $XX record

focused With segments demand access and in of and multibillion-dollar on regards the calls, that growth process, the sales significant on diligence creating industry worked in aging the data our several our infrastructure onshoring to sustained separation stated to electrical we has an electricity and for provide entire investment aspects programs, solutions. fluid on with grid will a support government prior all As with these organization eye combined improving worksite completion. planning AI long-term centers we've the of nation's believe programs the on midyear cycle and tirelessly

business extending both at pace a date. very the the EBITDA our international target Fluids returns, to than of contributing revenues a on continues the XX% our line and time more While record the level, process beyond operate segment's in year strong natural business and for are global complexities of

sequentially achieving XX% resolution review increased performance. a While take impacting On the prior period. XX% quarter at goal to our to a that With to committed our a EBITDA second second strategic look process deeper to and third our work timing year diligently adjusted in let's continue expectations, overview, basis, versus remain we this the quarter. consolidated quarter achieve and

we We hopeful an Industrial was Service Solutions segment. also strong pulled saw also during quarter, to and permitting and EBITDA delivered Solutions quarter, rental quarter quarter revenues margin largely year-over-year efforts, expansion year-over-year number QX. Industrial that the in revenues, impacted adjusted delays. in product mix XX% from of revenues the project project consolidated segment, somewhat and in be due increase fleet XX.X% quarter, of strong for in margin benefits a second rental our revenues, EBITDA representing by issues the small the Benefiting quarter. the sales a the and Solutions quarter-over-quarter rental our delivered Industrial improvement. Within by the will key XX% the delays sequential although back are project again impacted resolved a we both and million XX% in by of of adjusted sequential The our year-over-year X% performance delivered in led $XX growth reflecting

targeted continued also fully of coverage sales key resourcing with progress commercial national our forward. force the a accounts in to on sales build-out quarter, models team our effectiveness sales the focus booked and growth We moving

the growth our focused the that expansion, Systems with continued discussed over million on quarter fleet, the line our we our The our U.K. of During years. a majority quarter performance strength critical on of invested infrastructure in matting we further expectations call. second second in several $X generally fleet the in segment project where with activity see spend quarter, Fluids first was

flow, reducing the $XX achieved call X.X by prepared our cash Gregg efficiencies includes to from The second to remarks. over working turns $XX EBITDA. capital for of Fluid leverage million of quarter adjusted that, With net management, than more which was his also further highlighted free in million turn Systems I'll

Greggg Piontek

of consolidated a second on our of for segment update by followed for begin with the quarter, outlook and the remainder our results level summary I'll XXXX. an

improvement robust reflecting operators, infrastructure $XX quarter, highlighted demand revenue continued EBITDA. in second utility including a contributed Our matting segment, in and quarter. sales, revenues XX% Industrial timber in the cash improvement flow record on Solutions the a and second Free second to product rental traditional second DURA-BASE of Total within for revenues sequential Solutions quarter was The through also with year-over-year our a fleet second both was adjusted sequential the in those contributing projects. a product mat segment to was from by contributions strong Product our shift sequential million with million consolidated reflecting $XX were composite $XX the of growth revenues the a improvement. in quarter million X% for and from quarter revenues sales solid wood Industrial service and XX% XX% quarterly sales segments. majority in

sequentially dates reflecting year-over-year XX% gains, fleet projects service projects the planned rental resulting but growth a year-over-year, from delayed. to and start have the a the to quarter, projects, improved start Benefiting and intensity revenue we served on lower rental on offset the multiple revenues. rental sequential or QX, rental decline X% and service as relief basis other rental While improved X% earlier-than-expected in in through been utilization second quarter large-scale off strong sequential modestly a expected while trailed from progressed X%

Solutions first the utility the rental sales sector XXXX, increase XXXX. prior up declined the contributed of a product segment By to XX% X% rental roughly half X/X revenues a of half the our industry, including Industrial increase of and revenues nearly the revenues, XX%. rental majority XX% and from revenues, For have while both by the year, the Industrial including versus flat, in while other relatively segment product sales of second revenues delivering utility and are The first half and is prior margin, Comparing service service and first quarter in XXXX, the of the of XX% quarter. substantial in higher lower effects fairly of XXXX. pipeline line and quarter declined. oil of in EBITDA adjusted Systems profitability with gas with the Fluids was quarter second from services, million and segment strong reflecting the of Solutions generated industries second a sector rental service XX% revenues offset in $XXX revenue

Hemisphere Fluid region delivered another near-record contributing Systems Eastern our XX% QX. Our quarter, total in or $XX revenues million of

Revenues and the our Notably, line with trend the last seasonality XX% of quarter demonstrates with highest last quarter, Canada from XX% improvement in The year. second Canada prior $XX reflecting from quarter revenues the in fairly the performance year. to was second the sustained decreased a breakup. sequentially a second both of posted of second business, quarter QX near-record spring million of reflecting by this revenue quarter

international quarter, in expenses U.S. and all primarily decline $X.X quarter million of Our ended reflecting of to incentive our Tax than the the elevated quarter, includes second was elevated the year-over-year our the capital, Systems on in the the last compared these quarter XXXX is activity, was derived office. $XX decline within fund operations U.S. related million in ratio. market the contribution Interest and revenues second tax efforts SG&A million, somewhat quarter, The in reflecting year-over-year from charge $XX decline includes we decline. second U.S. of revenue $XX.X with offset second as office net used second favorable margin million Solutions EBITDA continued costs which of the $X.XX quarter $XX of Matthew was million of a XX%, expense, levels, year-over-year year-over-year $X.X second quarter $XX Operating EPS cash diluted long-term with share driven division working adjusted previously the opportunities sequential year. U.S. price overhead. prior share fluid the offset carryforwards. business. in total on million modestly substantially expansion was the sequential in from of cost cash sale, of net XX% business but an in and in by the with margin net with from $X.XX quarter, performance-based million long-term improvement million SG&A continued in We primarily and million more driven year-over-year and an reductions improvements of including with a expense second market revenue SG&A million first quarter, effective capitalize X.X% corporate The expenses by second debt the $XX associated U.S. the segment combination including unbenefited down quarter in the $XX a that and were the substantially second directed NOL to effects the rate $X.X matting from international by flow cost $X.XX the programs Fluids Fluids the a efforts net and impact the the average the company's was which and a Industrial the second somewhat in reflecting is loss growth overall rationalization $X per lower to by share driven Fluid toward to linked contributed in mentioned. rigs CapEx, of expense in debt serviced. million quarter and of in X% increase line corporate the comparison million, while debt Adjusted year-over-year was balances. credit fleet resulting to of the seek and the business in year-over-year lower benefits quarter quarter, in was basis, effect sequential for $X.X second softness a X.Xx by leverage lower our fluids

outlook. business to Let's the now turn

for and remain we remains we highly which the customer critical on strong long-term Solutions, Within market. fundamentals multiyear for constructive infrastructure continue to outlook demand see businesses. our before, largest both As Industrial spending, utilities

Our Solutions unchanged. Industrial full year for XXXX expectations the segment remained

continue revenues million-$XXX of segment forecast million EBITDA the XXXX with $XXX CapEx million to range million-$XX million-$XX in of range segment million. in a and $XX adjusted Industrial $XX We Solutions of

our the as project power extreme heat see softest third from is activity, bidding to rental robust transmission which service and we continue quarter the reduce quarter some touched Further, our projects. to on grid certain Matthew maintenance project revenue other the we perspective typically associated a see with provides on utility uncertainty and projects issues, While demand on loan as near-term typically delays on, are permitting associated timing. continuing

profitability year-over-year total modest to contribution, lower QX stronger with QX segment reflect Canada seasonal In offset modest We an in reflect point service and and we U.S. we intensity. Systems, growth, along to the improvement rental results. rebound, expect the including service expect expect a Sequentially, a market QX revenues by with rental Fluid in somewhat benefit inflection revenues total share to within with QX from line more

of investments priorities, capital into prioritize relatively allocation rental of our remains fleet. our unchanged view terms growth to we as the organic In continue

net We revenue remain growth will view our the opportunities. XXXX rental investments longer-term on half upon dependent expect second capital

Beyond through opportunities liquidity year cash this build generation for capital for be expect in free Matthew of over repurchase primarily will to like to investments With growth his remarks. the or fleet, back program our turn that, our we to process. of the our fluid growth shareholders through organic concluding return programmatic completion upon a flow share call sales continued I'd inorganic rental the used to

Matthew Lanigan

priorities for XXXX Our remain unchanged.

more revenue specialty leading expansion to First density value presence of business and base. deliver through growing help is our while the pure-play to exploring organic customer our our opportunities increase grow our rental execution inorganic plans of with us

all work continue closure the bring across will improved to improvements to we of operating Second, also us in quarters further the third realize diligently leverage. quarter positioning to the fluids to organization, while process driving efficiency

leverage and capital a modest that to to and our committed inorganic returns-focused combination net shareholders remain to of strategy fluids well upon we growth priorities. completion of capital with additional allocation liquidity the investment, Finally, includes the internal return advance of a process, are our we allocation anticipated capital X.Xx positioned a

our program, capital thank share our shareholders repurchase and million return we dedication following which the fluids commitment our including on ongoing to sales that, support for to In partnership. their questions. for to and of their customers open We their I authorization business, With process. our want employees remaining have to the call ongoing the for closing, for compliance completion expect their $XX of resume our support, safety to the we'll

Operator

[Operator Craig-Hallum. at Instructions] from We'll hear Spychalla first Aaron

Aaron Spychalla

for an I talk a that record just this one First projects how sales. all-time can about little you dynamic me, more sustainable quarters know that? obviously moving you balanced large talk Was but be lumpy the on about are product in side, bit forward. had and could or two be just product a little Can

Matthew Lanigan

purely of in large The move during Encouraged traditionally to couple individual answer the composite just there, question. that fleet. customer customer timber I think a concentrated sustainability positive Gregg terms itself. mat is sign itself to to than on, a ways of as customer the sale the which in which operated Look, actual quarter, speaks the has by order that touched a was very more

Aaron Spychalla

Then reform. there? maybe it in Congress to Or permitting just second, is some a maybe permitting change how about is I landscape, Then you any talk impact chain. supply pretty state? might little talked bit looking Are steady know still improvement you about implement political the things? that any seeing

Matthew Lanigan

are time to we're projects think continuing have out falling portfolio There's calling the only specific Look, are almost projects go permitting. elongating delays is the that our close really, back that last for Aaron. slightly two trend we What seen, Yes. continues. have related few We're been into is or we point with to commentary. quarters, delayed I if really the That from with just that this one in year-over-year. commencement post-COVID at that

We of I our point build. build-out at our think on to our with pipeline resources. is in what we're time continues this positive touched commercial

helping more slightly. putting that in we're some build which of the we're more while lines pipeline the market, to them continue we're activity elongating think look seeing, the I is quoting the seeing, be activity more time the to

the as we're political from time. far that any to point goes, this early As in at It's impact situation still not seeing tell.

continue it just see out. and we'll that to think how plays watch I

Operator

will come question Dayal next Our Wainwright. Amit from H.C. at

Amit Dayal

in within rental component on looks clarify rental like be Could you us, services not clear dynamic the The segment. this I'm year pressure. segment will for under decline the please? the

Matthew Lanigan

say it's I wouldn't under pressure.

here through year, of the necessarily the projects back playing last revenue handful we there thesis incremental high could undertook They would. quite of what's we were I out were go pull them out think component their way were a there. is or didn't of get if rental heavy service contribution revenue. that the it that you work to very with in in service we element the ratio hoped to That had

As the we we really that have that taking that market that. looked what forward, we work aren't at moving want. started find to deprioritize margins We've on

being is that looking a up not service projects actually what of revenue year-over-year, followed we intensity. in is service like revenue drop-off large Part deliberate. one-off You're seeing call which

doing rental just where we're you're of partners help not of I to footprint, the we're they're is revenue. focused fleet under rather here, up our of pressure. timber cases, We're expand revenues there out as there composite those picking and where growing and the to utilizing is revenue service play being thing from service seeing think on some conversion the high really we contribution in other market on rental that our than service our rental The the is grow Amit, that

performing historically. I it traditional much been has mix, think pretty service the you it's at our service, we're as rental when look where

Amit Dayal

you're to Flow or this Systems a completed? transaction thing in respect the million is quarterly that until expenses With on sale recurring is onetime going related be to $X.X working the to this is

Greggg Piontek

et lot think lawyers, advisers, you're the of is, cetera. bankers, through support I a and in that this, to that tax place process way characterize when various you Yes, obviously, have consultants a going there's like

I cost of resolution continuation get say would the fair that think until to the we of it process. a the we have is

Amit Dayal

has the this Are much with potentially drivers to you to allocating CapEx spent? number rental up for macro visibility given $XX that the toward business? respect have even that Of you million-$XX of positive been how business, million looking the

Greggg Piontek

really talked First about within and to that half the you in QX, close the terms of supporting was of We mat entering some spent more I did it all, we going been also business first our the is CapEx think, CapEx, QX, strong Industrial elevated of that some the in that fleet U.K. we is of $XX fleet. adding of what's volumes get front-loaded have utilization in that of to million and had the Solutions million, $XX over into had

In Obviously, and longer-term the terms we view million-$XX $XX the of we longer-term this and range. will CapEx the on spend, as adjust we're million evaluate holding our it. to mid- continue with accordingly see

Operator

with Alex Rygiel Instructions] Riley. [Operator B.

Alexander Rygiel

A couple of here. questions

to as gain the months how to general versus sales First, versus growth it do share wood you about think net gains. share XX growth versus in next relates market market mat conversion mats, over

Matthew Lanigan

how is us or take those to that us product. exactly industry is X%, from timber we beyond sales. competitive macro the at anything share X% taking trying looked with the focus a out to look at primary but the that at if and on as number anything our market a keep X%-XX% we're spend CapEx that on share. pace a between growing with growth long-term perspective, we're we pace with over We keeping is taking sales, that's from We keeps it traditional that at look being pass share pieces at market from it. our for and timber the Hard Obviously, trend. level,

Greggg Piontek

little sales. a that changes shift with of wouldn't back lot that quarter longer-term mix service rental do product Obviously, the bit product know is this I I shift that and XX% real to on say sales our the data point versus and expectations. we're see bucks would we being a we've between a revenues. the I trend would here that, a about talked go it that the here expectation the about that a seeing norm. think

Alexander Rygiel

can you today? Then is us for capital quantify fluids the working within what the business

Greggg Piontek

capital the at end second the $XXX quarter. is of about Working million

Alexander Rygiel

a not across you're all? delayed. far get projects see? little the changed delays over XXXX view bit you last if How it although or on Then seeing months, at three your the is the improved utility space some based upon Has

Matthew Lanigan

seeing I do industry that we've Again, the on commentary want projects out going number we predicted. are delays a call that be When delays like that now. year. right there of across it's projects to looks a time the feel it starting delayed. are heavy as I that at focus is solid a got to we're look on are 'XX,

having either around In terms we're with of we're in. to participate activity expectations our being dialogue forward some quoting customers asked or

robust. remains 'XX on view Our

Operator

hear at Instructions] [Operator Dezellem Capital. from We'll Bill Tieton

William Dezellem

Did of customer we understand or sales million wood roughly historically sale that was correctly that mats. primarily $XX the mat one has to used

Matthew Lanigan

Bill. correct, That's

William Dezellem

Then that if on margins fluid may, congratulations. the revenue the very margins. increase I That's you was to those generally shift, drop? operating How let me it counterintuitive and

Greggg Piontek

Which you off margins both on comparison year-over-year. the say increased we and sequential margins are because the when the

than were have decline the seasonality will on say that your do in help had that cost Year-over-year, fact I do continued some you offsets Canada because more that's volume. there, the kicking side you have, overall ongoing comparison, what U.S. typical on past margins. international in of actions margin Now that is the in improved. of overall sequential pricing about Canada do Also that I had things the the you and here the talked that offset effect flowing had on you it's your we that driver the have of guess, biggest anything. our through The the

William Dezellem

that pricing additional would there Is anticipate? you action

Matthew Lanigan

I specific Bill, don't that time, some your any there's actions, repricing market. at obviously, of to in know the point you're work

from what to that of pricing, contracts going we we're would the calling see forward. Eastern on not up, rigs contribution better roll think profile I more them to now had suggest that are is to some to continue and that a we're that new the bolster seeing seeing more we that's should those on significant as more rolling to Hemisphere be moving contracts. shift I'm going but margin been

William Dezellem

I that the looking I say to operating versus was margin X.X% we number ago. at factors, extraneous year at be looking was to of is The X.X% margin. suspect ought that a to thing that really GAAP that the the adjusted due

Greggg Piontek

as costs year, you exit the specifically the impairments and had of Mexico Last exits the Sim of cam the Gulf some well from of continuation in as Australia facility

Operator

audience to additional any have our I'd this back it to further closing like We time. leadership at our or no from questions remarks. team turn for

Greggg Piontek

forward any today. All quarter. hosting joining investors@newpark.com, call to questions right. to for Thank Thanks again Should and you via requests, you reach please e-mail or you. out on we the have us us again at next look

Operator

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

may disconnect You now your lines.

NPK International (NPKI) 6 Aug 242024 Q2 Earnings call transcript