Greetings and welcome to the Newpark Resources First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Dennard with Dennard Lascar, Investor Relations. Thank you, Ken. You may begin.

Thank you, operator and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review first quarter 2022 results. Participating from the company in today's call are Matthew Lanigan, Newpark's President and Chief Executive Officer; and Gregg Piontek, Chief Financial Officer. Following my remarks, management will provide a high-level commentary on the financial details of the first quarter results and near-term outlook before opening the call for Q&A. Before I turn the call over to management, I have a few housekeeping items to cover. There will be a replay of today's call it will be available via webcast on the company's website at newpark.com. There will also be a recorded replay telephonically until May 18, 2022, and that information on how to access is in yesterday's press release. Please note that the information reported on this call speaks only as of today, May 4, 2022, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. In addition, the comments made by management 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 Newpark's management; 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 listener is encouraged to read the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies. The comments made today may also include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP financial measures are included in the quarterly press release, which can be found on Newpark's website. And now with that behind me, I'd like to turn the call over to Newpark's President and CEO, Mr. Matthew Lanigan. Matthew?

Good morning, everyone. We are very encouraged by our performance in the first quarter, which reflects improving market rentals across both of our business segments, as well as the impact from our continued execution on our key strategic priorities. In our Industrial Solutions business, the rental and service market continues to strengthen as we posted another quarter of double-digit sequential and year-over-year growth in our targeted non-oilfield markets. This strong start to the year positions us well to build upon the 10% cumulative annual growth rate we've delivered since 2018, reflecting our customers' acknowledgment of our unique product and service offering in the multi-billion dollar access market. With respect to product sales, despite the expected pull back in Q1 volumes and the shift of some sales into Q2, inquiry activity remains robust, as we look to build upon the record levels of revenues achieved in 2021. As we highlighted in the past, the energy transition is expected to require significant investment to upgrade the aging power transmission network and connect renewable generation sources to the grid. This demand underpins utility industry projections of more than $25 billion of annual capital investment in the coming years, roughly 10% of which reflects the size and access component providing meaningful addressable market scale and demand for our products and services. In our Fluids business, the appalling events unfolding in the Ukraine are driving a significant shift in the geopolitical landscape, highlighting the importance of energy security in both North America and Europe. In the wake of recent events, we are seeing a renewed desire within several markets to increase activity levels, to help ensure reliable energy supply in the coming years, as they bridge to renewable sources over the longer term. While customers in these markets are in the early stages of evaluating…

Thanks, Matthew and good morning, everyone. I'll begin by covering the specifics of the segment and consolidated financial results for the quarter, before providing an update on our near-term outlook. Our Industrial Solutions segment posted first quarter revenues of $35 million and operating income of $5.5 million, which includes a $900,000 operating loss from the wind down of our industrial blending operations. The shifting of some Q1 direct sales orders into April pushed first quarter revenue and operating income results for the segment toward the lower end of the range discussed on our February call. Total direct sales came in at $4 million for the first quarter, reflecting an $18 million sequential decline from the seasonally strong fourth quarter. Rental and service revenues improved 8% sequentially to $31 million in line with our expectations, particularly noteworthy R&S revenues from power transmission and other industrial markets increased by 17% sequentially benefiting from the December acquisition, which expanded our presence in the Northeast as well as the ramp up of large scale projects in the South. Revenues from E&P customers declined modestly as we focused our assets and resources to supporting the industrial market opportunities. Comparing to the first quarter of last year, rental and service revenues increased $2 million or 8% while direct sales activity declined by $16 million, as Q1 of last year benefited from pent-up demand following COVID related shutdowns in 2020. Our Industrial Blending operation, which was shut down in Q1 of 2022 contributed $5 million of revenues in Q1 of last year. Operating income for the Industrial Solutions segment declined by $8 million a year-over-year, primarily driven by the impact of the $18 million revenue decline, along with the previously discussed pricing mix associated with large scale projects and the first quarter 2022 loss attributable to the…

Thanks, Greg. As we framed up, we are pleased with our progress in Q1 and anticipate another step forward in Q2, including improved EBITDA and cash generation, as we continue to execute on our transformation plans and build upon our profitability. But despite the solid progress made, we recognize that remains more to be done. As I reflect on our progress in the Fluids business, I don't want to understate the importance of the accomplishments of our team. Over the past two years, we have taken significant actions to reshape this business while also enhancing our position as a recognized leader in fluids globally. Our service quality and commitment to environmentally responsible products continues to differentiate us, as we posted six consecutive quarters of double-digit revenue growth. Looking ahead, we remain committed to transforming this business into a capital-light model capable of generating consistent cash flow through cycle. At the same time, we will continue to evaluate the financial return profile of our portfolio and take necessary actions to strengthen our Fluids business and enhance value for our employees and shareholders. Meanwhile, our Industrial Solutions segment has been the primary driver of historical Newpark cash generation, including $60 million of EBITDA in 2021. In addition to being the primary source of cash generation today, we see this segment providing significant expansion opportunity for Newpark, particularly benefiting from the tailwinds of energy transition and the ESG benefits associated with the expanding opportunity for plastics recycling. We believe that leveraging our capabilities and investing in these growth opportunities, we will continue to transform Newpark. In the near term, we remain focused on the completion of our announced divestitures, which we believe will create meaningful liquidity that can be redeployed to create enhanced value for our shareholders, including share repurchases as well as investments into high returning growth opportunities. And with that, I'd like to close by thanking our shareholders for investing in us and thanking our employees for their hard work and their continued focus on safety. We'll now take your questions. Operator?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] We have a question from Matt Dhane from Tieton Capital Management. Please go ahead.

Great. That's Matt Dane from Tieton Capital Management. Wanted to ask, what type of RFP activity, are you seeing around International Fluids contracts here recently and have you want anything of substance that you'd like to discuss as well?

Yes. Thanks. Thanks, Matt. Look, I think, rather than getting into specifics at this point, which may not be appropriate. I think it's fair to say, from an RFP point of view, we're seeing the typical RFP flow and we're encouraged by -- we're encouraged by how those processes are moving forward. I think in terms of what we said in a commentary, particularly around energy security. I think those discussions while encouraging as sort of pre-RFP at this stage. And I would just add to that, you know that I think we're -- where you see the particular focus not unlike what you're seeing and just the broader headlines in the news, it's really the European community and areas around there where they really evaluating their energy security and you're seeing additional planning.

Great. Thank you, both.

Thank you. That concludes our question-and-answer session. I would like to turn the floor back to management for closing comments.

All right. Thank you once again for joining us on the call and for your interest in Newpark and we look forward to talking to you again next quarter.

Ladies and gentlemen, that concludes this conference. Thank you for joining us. You may now disconnect your lines.