Newpark Resources Reports Third Quarter 2024 Results

Newpark Resources, Inc. (NYSE:NR) ("Newpark" or the "Company") today announced results for the third quarter ended September 30, 2024.

On September 13, 2024, the Company completed the sale of its equity interests in substantially all of the Company's Fluids Systems segment. The results of the Fluids Systems segment are reported in discontinued operations for all periods.

THIRD QUARTER 2024 RESULTS

• Revenue of $44.2 million
• Operating income from continuing operations of $1.2 million
• Income from continuing operations of $14.9 million, which includes a $14.6 million tax benefit; Adjusted Income from Continuing Operations of $0.3 million
• Adjusted EBITDA from Continuing Operations of $7.5 million
• Adjusted EBITDA Margin from Continuing Operations of 17.0%
• $70 million of initial cash proceeds from the sale of Fluids Systems; net deferred consideration and note receivable of $18 million as of September 30, 2024
• Total cash of $43 million and debt of $14 million as of September 30, 2024

MANAGEMENT COMMENTARY

"Our third quarter performance was impacted by a combination of certain key customers shifting their priorities from scheduled transmission projects to renewable generation projects, unfavorable weather conditions, and an extended unplanned maintenance event at our Louisiana manufacturing facility," stated Matthew Lanigan, President and CEO of Newpark. "In total, the seasonal pullback in rental revenues and six-weeks of facility maintenance impacted third quarter Adjusted EBITDA by nearly $5 million," continued Lanigan. "The facility has been operating at normal production levels since the start of the fourth quarter.

"Following the more pronounced seasonal effects, customer activity rebounded sharply as we exited the third quarter," continued Lanigan. "October set a new monthly record for rental volume, putting us on pace for very strong fourth quarter rental revenues.

"Our disciplined, return-driven approach to capital allocation remains central to our value creation thesis," stated Lanigan. "We intend to prioritize organic investment in rental fleet, while returning capital to shareholders through our programmatic share repurchase program. With the Fluids divestiture completed, we have begun simplifying our business structure and streamlining our support structure around a core site access solutions offering and expect to remain opportunistic acquirors of complementary assets that further enhance our customer value proposition, expand our addressable market, and further support our strategic focus on profitable growth.

"We remain highly constructive on both the near and longer-term outlook for our business," continued Lanigan. "Entering 2025, our entire organization is solely focused on the significant market opportunity we see in site access solutions. From multi-billion-dollar investment programs focused on high-grading the United States' aging electricity grid, to the exponential growth in advanced computing data centers, our platform is uniquely equipped to support next-generation investments in our nation's infrastructure."

BUSINESS UPDATE

Newpark is engaged in a multi-year business transformation plan designed to drive organic commercial growth within targeted, higher-margin product and rental markets; improve asset optimization and organizational efficiency; and pursue a capital allocation strategy that prioritizes investments in opportunities with superior return profiles, together with a programmatic return of capital program.

The third quarter of 2024 was highlighted by the following:

• Completed Fluids Systems sale. On September 13, 2024, we completed the sale of the equity interests in substantially all of the Company's Fluids Systems segment to SCF Partners, a leading private equity firm serving the global energy industry. The sale marks an important strategic milestone for our Company as we focus on growing our scale as a leading, pure-play specialty rental and services business in the global worksite access and critical infrastructure markets.
• Strong balance sheet management. We ended the third quarter of 2024 with total cash of $43 million, total debt of $14 million, and available liquidity under our ABL credit facility of $56 million. Additionally, we have $18 million of net deferred consideration and note receivable from the Fluids Systems sale as of September 30, 2024.
• Summer seasonality in Industrial Solutions segment, but momentum heading into Q4. Industrial Solutions revenue from specialty rental and services decreased to $32 million for the third quarter of 2024, driven by higher summer seasonality impacts as compared to historical experience, caused by key customers shifting their priorities from scheduled transmission projects to renewable generation projects and exceptionally hot and dry weather, particularly in the southern U.S. Revenues from product sales decreased to $12 million for the third quarter of 2024, reflecting typical quarterly fluctuations in order and delivery timing. Following the more pronounced seasonal slowdown in customer projects in the third quarter of 2024, we expect revenues to meaningfully improve in the fourth quarter of 2024, benefiting from higher customer rental project activity and product sales.
• Robust return of capital program. In February 2024, the Board of Directors increased the authorization for repurchases of common stock up to $50.0 million. No share repurchases were made in the first nine months of 2024, due to trading blackout restrictions associated with the Fluids Systems sale process that was completed in September 2024.

FINANCIAL PERFORMANCE

In the third quarter of 2024, Newpark generated income from continuing operations of $14.9 million, or $0.17 per diluted share, on total revenue of $44.2 million, compared to income from continuing operations of $2.7 million, or $0.03 per diluted share, on total revenue of $57.3 million, in the prior year period. Income from continuing operations for the third quarter of 2024 includes an income tax benefit of $14.6 million primarily reflecting the release of valuation allowances on U.S. net operating losses and other tax credit carryforwards following the sale of the Fluids Systems business. The Company reported Adjusted EBITDA from Continuing Operations of $7.5 million in the third quarter 2024, or 17.0% of total revenue, compared to $12.0 million, or 21.0% of total revenue, in the third quarter 2023.

Industrial Solutions segment operating income was $7.3 million in the third quarter of 2024, compared to $14.3 million in the prior year period. Corporate office expenses were $6.1 million in the third quarter 2024, compared to $8.1 million in the prior year period.

BALANCE SHEET AND LIQUIDITY

As of September 30, 2024, Newpark had total cash of $43 million, total debt of $14 million, and available liquidity under our U.S. ABL credit facility of $56 million. Additionally, we have $18 million of net deferred consideration and note receivable from the Fluids Systems sale as of September 30, 2024.

Newpark generated $3 million of operating cash flow in the third quarter 2024, which includes $6 million usage associated with an increase in net working capital within the Fluids Systems business. Capital investments used $8 million, net, primarily funding the expansion of the mat rental fleet to support the October 2024 surge in rental demand. The Company also used $36 million of cash to reduce debt.

FINANCIAL GUIDANCE

The following forward-looking guidance reflects the Company's current expectations and beliefs as of November 7, 2024 and is subject to change. The following statements apply only as of the date of this disclosure and are expressly qualified in their entirety by the cautionary statements included elsewhere in this document.

For the full year 2024, Newpark currently anticipates the following:

• Industrial Solutions segment revenue in a range of $217 million to $223 million
• Industrial Solutions segment Adjusted EBITDA in a range of $77 million to $81 million
• Total Industrial Solutions capital expenditures in a range of $33 million to $35 million

THIRD QUARTER 2024 RESULTS CONFERENCE CALL

A conference call will be held Friday, November 8, 2024 at 9:30 a.m. ET to review the Company's financial results and conduct a question-and-answer session.

A webcast of the conference call will be available in the Investor Relations section of the Company's website at www.newpark.com. Individuals can also participate by teleconference dial-in. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.

To participate in the live teleconference:

To listen to a replay of the teleconference, which subsequently will be available through November 15, 2024:

ABOUT NEWPARK RESOURCES

Newpark Resources, Inc. is a site access solutions company that manufactures, sells, and rents industry-leading sustainable composite matting products, along with a full suite of services, including planning, logistics, and remediation. As a geographically diversified company, we deliver superior quality and reliability across critical infrastructure markets, including electrical transmission & distribution, oil and gas exploration, pipeline, renewable energy, petrochemical, construction, and other industries. For more information, visit our website at www.newpark.com.

FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements other than statements of historical facts are forward-looking statements. 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 statements are not guarantees that our expectations will prove to be correct and involve a number of risks, uncertainties, and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Newpark, particularly its Annual Report on Form 10-K, and its Quarterly Reports on Form 10-Q, as well as others, could cause actual plans or results to differ materially from those expressed in, or implied by, these statements. These risk factors include, but are not limited to, risks related to our focus on growth of our Industrial Solutions business; the expected benefits from the recently completed sale of our Fluids Systems business; economic and market conditions that may impact our customers' future spending; the ongoing conflicts in Europe and the Middle East; operating hazards present in the industries in which our customers operate; our contracts that can be terminated or downsized by our customers without penalty; our product offering and market expansion; our ability to attract, retain, and develop qualified leaders, key employees, and skilled personnel; expanding our services in the utilities sector, which may require unionized labor; the price and availability of raw materials; inflation; capital investments and any future business acquisitions; market competition; technological developments and intellectual property; severe weather, natural disasters, and seasonality; public health crises, epidemics, and pandemics; our cost and continued availability of borrowed funds, including noncompliance with debt covenants; environmental laws and regulations; legal compliance; the inherent limitations of insurance coverage; income taxes; cybersecurity incidents or business system disruptions; activist stockholders that may attempt to effect changes at our Company or acquire control over our Company; share repurchases; and our amended and restated bylaws, which could limit our stockholders' ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or other employees. We assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities laws. Newpark's filings with the Securities and Exchange Commission can be obtained at no charge at www.sec.gov, as well as through our website at www.newpark.com.

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