Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Newpark Resources Third Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, October 31, 2014. I would know like to turn the conference over to Ken Dennard. Please go ahead, sir.

Thanks, Yolanda, and good morning, everyone. We appreciate you joining us for Newpark Resources's conference call today to review 2014 third quarter results. And also, I would like to welcome our Internet participants listening to the call simulcast over the web. Before I turn the call over to management, I have the normal housekeeping details to run through. For those of you who did not receive an email of the earnings release yesterday afternoon and would like to be added to our distribution list, please call our offices at Dennard Lascar, and that number is (713) 529-6600, and provide us your contact information, or you can e-mail me your address. There will also be a replay of today's call. That will be available by webcast at the company's website, which is www.newpark.com. There's also a recorded replay available by phone, which will be available until November 14, and all of the access information is in yesterday's press release. Please note that the information reported on this call speaks only as of today, October 31, 2014, and then -- therefore, you are advised that time-sensitive information may be no longer accurate as of the time of any replay listening or transcript read. In addition, the comments made by management today of Newpark during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities laws. These forward-looking statements reflect the current views of the management of Newpark. However, various risks, uncertainties and contingencies could cause Newpark's actual results, performance or achievements to differ materially from those expressed in the statements made by management. The listeners are encouraged to read the company's annual report on 10-K -- on Form 10-K, its quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies. And now with that behind me, I'd like to turn the call over to Newpark's President and CEO, Mr. Paul Howes. Paul?

Thank you, Ken, and good morning to everyone. We would like to thank you for joining us today for our third quarter 2014 conference call. With me today are Bruce Smith, President of our Drilling Fluids business; and Gregg Piontek, our Chief Financial Officer. Following my remarks, Bruce will provide an update on our fluids business, and Gregg will discuss the mats business as well as the consolidated financial results for the third quarter. I will then conclude with a discussion of our market outlook before opening the call for Q&A. Now, turning our attention to the third quarter. We were very pleased to achieve record revenue in operating income for the third quarter. Total consolidated revenues were $297 million in the quarter with net income of $23.5 million or $0.25 per diluted share. The $297 million in revenue represents a 9% sequential increase and 11% year-over-year improvement. The $0.25 per share also compares favorable to $0.21 in the second quarter and $0.16 from continuing operations in the third quarter of last year. The record performance in the quarter was driven by strength in both operating segments. Fluids business had a record $251 million in revenues and sustained margins at 11%, reflecting market share gains and the benefits of our ongoing efforts to improve margins, including the impact of our industry-leading technologies. Evolution continues to gain traction, achieving worldwide revenues of $68 million despite the anticipated drop-off that occurred during the third quarter in the EMEA region, which we highlighted on last quarter's call. North American revenues from Evolution increased 20% sequentially, where we're seeing continued market penetration across several regions. With no comparable product in the North American market, we believe this suite of Evolution systems is becoming the industry standard for water-based technology. In the International Fluids market,…

Thank you, Paul. Good morning, everyone. In the third quarter, fluids systems generated total revenues of $251 million, a record for our company, which was up 4% from the second quarter and up 8% year-over-year. The quarter benefited from strong performance from North America, including the seasonal recovery in Canada. Looking at the quarter by region. The revenues from the U.S. were up 8% sequentially to $162 million, which compares favorably to the 3% sequential increase in the U.S. rig count and 1% sequential increase in well count. We saw strengthening across nearly all regions of the U.S., while demand for wholesale barite remains strong in the quarter. On a year-over-year basis, U.S. revenues were up 5%, fully recovering the lost market share from 2 key customers that we've discussed in previous quarters. In Canada, we achieved a record third quarter with revenues of $22 million. Similar to the trend noted last quarter, Canada's revenues are more than double the levels achieved in the prior third quarter, largely attributable to market share gains. As we anticipated last quarter after posting record revenues in Q2, our EMEA region declined sequentially to $40 million. Although I'd highlight that this most recent quarter now stands as the second strongest quarter for this region. As we highlighted previously, the second quarter benefited from elevated product revenues of 2 Evolution wells, which experienced lost circulation. As Paul noted, revenues in the third quarter included a $6 million contribution from the new contracts in the Black Sea, Kuwait and India. On a year-over-year basis, EMEA revenues were up 15%, largely attributable to the new contracts. In Brazil, revenues were down 26% sequentially and 25% year-over-year to $20 million. As we highlighted last quarter, Q2 benefited from the completion of the Total deepwater well, along with elevated…

Thank you, Bruce, and good morning, everyone. I'll begin by discussing the results of our mats business before finishing with our consolidated results. The mats business reported record third quarter revenues of $46 million, up 47% sequentially and up 30% year-over-year. Revenues from mat rentals and services were up $14 million sequentially, which included a nearly $10 million contribution from a large site preparation project in the Gulf Coast region. Mat rental activity also increased in the quarter as we continued to expand our mat rental fleet. As Paul mentioned, most of the growth in rentals this quarter has come from the utility and pipeline industries as we look to expand beyond our traditional E&P markets. As we've noted through the last several quarters, we've been continuing to allocate our mat production to meet the strong rental demand, and as result, mat sales have remained low, although our third quarter mat sales increased sequentially to $5 million. However, even with the sequential increase, third quarter mat sales remained well below prior year levels. Due to the continued strength in rental demand and the resulting high level of utilization being achieved with our rental fleet, mat segment operating margin remained strong, achieving a record operating income of $20.5 million in the third quarter, up 50% from the second quarter and 34% year-over-year. The 44.9% operating margin in the third quarter compares with 43.9% last quarter and 43.7% a year ago. Looking ahead to the fourth quarter for mats, we do expect to see revenues pull back somewhat, driven primarily by the significant contribution from the site preparation work in the third quarter. Also, as we expand our rental activities in the new markets, it's important to highlight that some of these markets may have more seasonality than we've experienced historically. We…

Thanks, Gregg. We are very pleased with a record quarter as we continue to focus our efforts on the execution of our long-term strategy. In the Fluids business, I'm particularly pleased with several recent accomplishments, including: the record revenues for the segment led by strength in the North America and EMEA regions; the continued market penetration of Evolution, achieving another quarterly revenue record, and now representing more than 25% of our Fluids segment; the continuing strength in operating margins, and we now posted back-to-back quarters above 11% and returning to the double-digit mark year-to-date; and our continued success in winning new contracts in the international arena. And while we are pleased with the progress of our Fluids business on many fronts, you will recognize that there is still work to be done. The situation in Brazil is a concern, driven by the challenges of Petrobras and the low level of IOC activity. As we've highlighted, we've recently taken additional actions, and we're continuing to monitor the situation. In our mats business, we are extremely pleased with the continued success, posting a record revenue quarter despite having only a modest level of mat sales in the period. As we prepare for the new plant capacity to come on line in early 2015, our team is making meaningful progress in our efforts to expand into other industries, which provide an opportunity, both to accelerate top line growth and diversify rental revenue base. Also, as I highlighted last quarter, we're continuing to test our latest refinements to our spill containment system, and we will formally launch this technology next month. However, much like the initial rollout of Evolution, commercialization of our spill containment system will be very methodical over the next year to ensure its success. And finally, I'd like to comment on our lookout, given the recent decline in oil prices. At this point, our customers are still in the process of developing their 2015 capital budgets, and it's unclear what effect commodity pricing will have on spending plans and activity levels for next year. If the market changes near term, we will adjust accordingly. But at this time, we are not seeing any impact on current activity levels. With that, we'll now turn -- take your questions. Operator?

[Operator Instructions] Our first question will come from Jim Rollyson with Raymond James. James M. Rollyson - Raymond James & Associates, Inc., Research Division: Paul, on the Fourchon expansion -- probably not really surprising that you're going forward with it, but part of the plan, if I recall, was as a get that up and running, you're going to pursue more deepwater work, I think, initially with the idea being -- taking customers that are putting in incremental rigs into the Gulf of Mexico to start with, rather than having to fight for just market share. In light of oil prices coming down and whatever impact that may be, I'm just curious if that's still the plan or how you thought about pursuing that.

Yes. Certainly short term, there may be some impact in the deepwater, but again, our investment, really, is for the longer term. And so as you know, that likely, this plant won't come on line until the end of '15. We still expect, as you look into the mid-'16 and beyond, that there will still be increased activity, so that we will be able to pick up some of those incremental rigs coming in. James M. Rollyson - Raymond James & Associates, Inc., Research Division: Okay. And as a follow-up on the mats side, when you start looking -- you got your new facility coming in first quarter next year, you already sounds like starting to work on non-oilfield related opportunities for mats. Can you give us a little color on where you're seeing the opportunities, things like this -- projects are there others -- those out there? And maybe what the margin opportunity looks like outside of the oilfield business?

Yes. In terms of -- as we've said, utility and pipelines was kind of the energy space. Where we're seeing activity is kind of the upper Midwest, North American region. And in terms of margin outlook or pricing, we could see some softness in some of those other markets. But currently, we're seeing pretty strong margins. But we do expect to see a little seasonality in some of those new segments, specifically that -- as you move into the winter time frame, some of that activity starts to slow.

Yes. I think that's important to highlight is when you do have that work while the pricing is favorable, when you weigh it over the longer term, you also have to build in the seasonality aspects and how that will fluctuate your utilization, to some extent.

We'll take our next question from Jonathan Sisto from Crédit Suisse. Jonathan Sisto - Crédit Suisse AG, Research Division: I wanted to inquire about the efforts that Phil and his team have made on U.S. lands. Obviously, good sequential improvement, and U.S. revenue kind of outpacing the rig count. Paul, is there any sort of color you could elaborate on there?

I think in all of the U.S. and North America, things went very well in the quarter. There were upticks in almost every area. The Evolution was particularly strong across all regions. But really, the pleasing one with Evolution, I guess, would be up in the Marcellus, where we have some initial successes now, and we have a base to build upon there. So that was very positive. The mix changed slightly from Q2 to Q3, so the revenue uptick was there. The incremental margin, it changed slightly. Although Evolution was strong, the mix and the other products were slightly reduced from Q2 record levels. But all in all, all areas in North America enjoyed a good uptick in business. Jonathan Sisto - Crédit Suisse AG, Research Division: Okay. And just as a follow-up, Paul, the big IOC you're working for in the Black Sea, were you able to elongate that contract?

There's been no change to the contract terms with our Black Sea customer.

And they had -- the contract is for a series of the wells, but it's subject to their drilling plans, so.

Yes, no change to the contract structure.

Our next question will come from Mike Harrison with First Analysis.

Just -- was wondering, you mentioned the time line for this Fourchon facility upgrade. Is there a specking process that goes with that? Or can you kind of be working to bid out work as you're doing construction on that facility, and then kind of coincide with -- once it's ready, get up and running, you're selling stuff? And also, how many wells will you be able to serve once you have that facility up and running?

Well, we're up and running currently in Fourchon, so we do have the facility that allows us to function now. We're in the process of really specking everything out now and getting ready to construct the new facility, close by the existing facility. And in the meantime, of course, while that's being built, we're not going to be sitting idle. We'll be out certainly promoting upcoming capabilities, our current capabilities and our current performance in deepwater, which we do have. And when the new facilities are finally complete, we're not quite sure yet. Depends on the types of rates, the types of wells and the size of the wells, but we should be able to double or triple very quickly the amount of rigs that we currently have in deepwater and then build from there.

All right. And I think last quarter you said that barite contributed about $7 million to your year-over-year growth, a pretty nice incremental margin. Was the Q3 performance pretty similar to Q2? And maybe if you could talk about what's driving that, and why is it or is it not sustainable?

Yes. The Q3 performance was a little bit stronger than Q2, very similar, I would say. And really, I mean, when you look at that, as you know, Mike, we sell barite to third-party independent fluids companies that do not have the capacity for it. So in this environment, where you we see a very robust drilling environment, that's when we see the strong demand for it. And so that's really what's driving it. Obviously, if activity changes, you would expect that barite piece to be impacted.

Okay. And then, Gregg, in terms of the FX gain or loss, any rules of thumb we can use for how that affects the P&L? I guess, I'm just trying to understand, is it a balance sheet thing, such that if the rates stay the same on December 31 as they were on September 30, that FX line is 0?

I mean, in real simple terms, that's it. I mean, when you look back at the U.S. dollar versus the majority of the currencies over the past few quarters, it's been a bit of a swing back and forth. I mean, the latest one being in late September, where we saw a very strong surge, and that impacts your valuations of a variety of things on your balance sheet. So yes, that -- I mean, that's really the key to it. But over the longer term, I think it's important highlight -- when you take a step back, while you see quarter-to-quarter fluctuations, when you look at it over the term of a year, it usually it balances out to a pretty small amount.

And our next question will come from George O'Leary. Tudor, Pickering, Holt & Company. George O'Leary - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Are you guys seeing any -- just curious here. Are you guys seeing any impacts around lower oil prices in discussions with your customers? Or has the tone of those conversations essentially remain unchanged in the face of lower oil prices?

I'll take that one. In terms of the Drilling Fluid customer base, currently, we are not seeing any pullback in activity levels at all. Obviously, everyone's discussing the low oil price and where it might go, but at this point, we're not seeing any pullback. George O'Leary - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Great. And then, as you look out -- nice contract win with ENI, you look out the deepwater opportunities. Where the -- geographically, where are the best opportunities as you sit there today? Where are you guys actively kind of trying to go out and win awards? Is that more in the same regions you're -- you've won work early? Or any new markets you're trying to break into?

Well, of course, you just mentioned the EMEA region, which is significant, but right here in our own doorstep, in the Gulf of Mexico, is a huge market that we are planning to play in. And so a great deal of focus will be given to that.

Now to Neal Dingmann with SunTrust.

Say, Paul, I just have this sort of a general question on the Evolution and general fluid growth. Is it fair to say, I guess, just based on your comments and looking at the press review, their earnings last few quarters, that Evolution is having better growth internationally or offshore versus the U.S. onshore? I'm just wondering how you think this compares to your general fluid growth when you compare the U.S. onshore versus offshore and international.

I think, certainly, in Q2, there was a high level of international Evolution growth. But as was called out in that call and subsequently today, we were drilling in an area of known loss circulation, which added to the revenue base there. A significant growth has come in North America, and that seems to be continuing. All of the shale plays that we play in around our company are going well. So quarter-over-quarter, we had a 20% growth in Evolution revenue within the North American markets, so it's very bouyant here.

Got it, got it. And then just turning -- lastly, just turning into the mats. It certainly seems to me that -- and Gregg -- maybe for Gregg, correct me if I'm wrong, and maybe I'll work [ph] previously, a little more cautious about upcoming mats margins, in that they've held in maybe a little bit better than you are at onetime thinking. I'm wondering if this, in fact, has changed. And if so, is it really because of what -- you guys have done, certainly, a lot of improvements there, the manufacturing facilities, new customers, a lot of things that you mentioned. So I'm wondering if just your confidence now on margins has gone back up a little bit, and if so, why has -- why really has that changed.

Yes. When you look at our commentary earlier this year and kind of how it's progressed, I mean, really, what's driving the strength in margins is the demand continues to be very strong, which translates to very high levels of utilization. And so when you're running at kind of a max practical utilization, it enables you to continue. And that's where our confidence has come from in terms of our ability to maintain 40 and above even as we're adding some costs into the plant. Now obviously, the new markets also that we had mentioned, that also helped things here in the third quarter. But if we see utilization pull back, that's where we'll see that margin impact, whether it'd be in our traditional E&P markets or in these new markets, where as we said, we're expecting these to have a little more seasonality element to them.

We'll hear next from Tristan Richardson with D. A. Davidson. Tristan Richardson - D.A. Davidson & Co., Research Division: Just on the Conroe facility, can you just talk a little bit about what additional opportunities that gives you or further penetration into existing markets? Or can you just talk just a little bit about that expansion?

That expansion, really, is focused on supporting the growth of our various technologies. The Evolution, in particular, as we've discussed, is growing quite rapidly, and we'll be rolling out other new technologies as we go forward, but only on that level of support and that level of quality and commitment, so it's really designed to support our planned technology growth. Tristan Richardson - D.A. Davidson & Co., Research Division: Okay. That's helpful. And then in terms of -- you've talked a little bit about these 2 expansions. A lot of those dollars will likely be spent next year. I guess, looking ahead at '15, would you expect that CapEx could be as high as it has been in '14? Or you likely expect a slight drop off, just given maybe some of these investments comp's down?

Yes. While -- I'll caveat if I'll say we're currently in our process of doing our planning for next year. So it's not yet real clear. With the 2 large projects that we just announced, you would expect next year to be kind of in a similar range. Now the -- I think the real wildcard in next year is mat rentals. And the extent that you have growth in mat rentals, that's going to drive the additional capital investment requirements.

We'll take our next question from Joe Gibney with Capital One.

Just a quick question around Brazil. You referenced some further headcount reductions there, sort of constant recalibration to what Petrobras is doing in their mix of work. Just 2 questions. Does it -- are you holding above breakeven from an operating income standpoint, when I think about Brazil? And then just curious if you've had any progress on pursuing the removal of the sort of 0 margin solid control past your portion of that contract.

I'll take the first part of that. In terms of the margin performance in the business, currently, we did operate at a small loss during the third quarter against the declining revenue. And the recent round in cuts, again, was trying to match your cost structure to the revenue levels. And as we had talked about on past calls, the objective here is to get the thing at least to a breakeven level, where it's not causing any problems and then looking longer term that -- toward when the IOC activities do pick up and being sure that you have that presence there to participate in that.

We are still working with Petrobras on numerous things. One being to try and segregate our third-party solid control subcontract as a direct contract with Petrobras. That's proceeding. Petrobras moves slowly on these things, but we are actively involved in dealing with that now, and it's moving forward.

Our next question comes from Marc Bianchi with Cowen.

I was hoping to just getting to a little bit more on the fluids outlook. If I just sort of take what you've offered in terms of the outlook for the regions, assuming a little decline in EMEA, a little bit lower work with Petrobras, it kind of looks like maybe revenues could be down $10 million sequentially in that segment. I guess, first question, is that kind of in the ballpark? Or should we be thinking materially higher than that? And then the second question is, you mentioned that you expect to keep double-digit margins for the year depending on how severe of a decline in revenues that is. I would think that there should be some hefty detrimentals with that. Could you kind of talk about how you have confidence that, that won't be the case?

All right. Well, in terms of the fourth quarter revenue expectation, I don't think you're -- as you've laid it out, I don't think that's way off base. I would say that, you look at a couple of key moving pieces here in Brazil, like we had mentioned, we're expecting that to be out of decline. And the main uncertainty is the U.S. in the North America. We touched on, "Okay, we're starting the quarter off at similar levels, but how much of a seasonal slowdown do we have around the holiday season, as we typically have seen some dropoff?" So that's real -- the real question there. And then in terms of maintaining the margin levels, I guess, just kind of going back to the commentary from the beginning, it was -- we've achieved the 11% plus mark now in the past 2 quarters. And as we look at it, through the remainder of the year, our objective is to remain at that double-digit range. So I think it's fair to say that if top line comes on, there is some pull-through effect, but we obviously are focused on maintaining double digits.

The final question will come from Bill Dezellem with Tieton Capital Management.

Would you spend a little more time discussing your Conroe plant, and what you're going to be accomplishing there? And then just a pinpoint question, would you please repeat the size of the Gulf of Mexico site preparation revenue?

Sure. The site preparation project, that was just under $10 million of revenue contribution in the quarter.

And the real high level, the new plant in Conroe, as you know, Evolution technology has been growing, and we expect that technology to continue to grow in the coming years. So we need to expand our capacity. But at the same time, we also want to enhance and improve the quality of the system. So investing in new assets, improving process control is a key element of that. We also make some of the ingredients and some of the technology that would go in the deepwater as well. That also plays into the Gulf of Mexico Fourchon investment longer term as well. So those are the key 2 objectives.

And what is the percentage increase in your capacity that, that will represent?

Significant. It's large. It's large.

That will conclude today's question-and-answer session. I will now turn the call back to management for any additional or closing remarks.

We would like to thank you, once again, for joining us on this call and for your interest in Newpark Resources. We look forward to talking to you again at the conclusion of our fourth quarter. Thank you.

Ladies and gentlemen, this concludes Newpark Resources Third Quarter Earnings Conference Call. If you'd like to listen to a replay of today's conference, please dial (719) 457-0820 beginning today, October 31, 2014 at 12:00 p.m. and ending November 14, 2014 at 12:00 p.m. The conference center would like to thank you for your participation. You may now disconnect.