Greetings, and welcome to the Newpark Resources Second Quarter Earnings Conference Call. [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, operator, and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review second 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 second quarter results and near-term outlook before opening the call to Q&A. Before I turn over the call, I have the normal housekeeping items to go over. There'll be a replay of today's call and it will be available by webcast on the company's website at newpark.com. There will also be a recorded replay available until August 17, 2022, and that information is included in yesterday's news release. Please note that the information reported on this call speaks only as of today, August 3, 2022, and therefore, you're advised that time-sensitive information may no longer be accurate as of the time of replay listening or transcript reading. In addition, the comments made by management during this conference call 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 and 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 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. Our second quarter performance demonstrated progress in both of our businesses with strong execution and improving market fundamentals contributing to a 10% sequential increase in revenues and continued improvement in EBITDA within our core business activities. Consolidated revenues were $194 million for the second quarter, delivering adjusted EBITDA of $13.3 million and adjusted earnings per share of $0.01 per share. Our Industrial Solutions segment delivered $49 million of revenues and $15.1 million of EBITDA in the quarter. The result was especially pleasing given the unseasonably hot and dry conditions in large parts of the U.S. as well as customer labor and supply chain-related issues that caused unplanned delays to a number of domestic and international projects. Compensating for the reduction in rental and service income, the quarter benefited from $19 million of revenue from product sales, reflecting strong orders from the utility sector as well as the impact of previously discussed deliveries that shifted from Q1 to Q2. With Q3 orders and robust inquiries to date, we remain confident that we'll see the strength continue in the second half of the year. During the quarter, we progressed our efforts to expand our participation in the growing circular plastics economy, leveraging our historical investments and R&D capabilities and adaptable manufacturing processes, we are on track to utilize approximately 1 million pounds of recycled and alternate materials in our mat production in 2022. Importantly, once scale, the use of these materials can provide meaningful economic benefits along with a significant reduction in life cycle greenhouse gas emissions when compared to using traditional virgin materials. We are very encouraged with our progress and expect that through further refinement and expansion of our supply chain integration and material processing capabilities, we could see this volume expand significantly in the coming years.…

Thanks, Matthew, and good morning, everyone. I'll start with the specifics of the segment and consolidated financial results for the quarter before providing an update on our near-term outlook. Overall, aside from the Gulf of Mexico operations and the asset impairment that Matthew discussed, our second quarter operating results were fairly in line with our expectations, reflecting a $1.6 million increase in adjusted EBITDA largely driven by improvements in our Industrial Solutions segment. Industrial Solutions revenues improved to $49 million in the second quarter with the entire $13 million sequential increase driven by stronger product sales. On the rental and services side, despite a strong start to the second quarter, revenues were down slightly from Q1, impacted by the exceptionally dry and warm start to the summer in the Southern U.S. as well as unanticipated delays in customer projects associated with various customer labor constraints and supply chain disruptions. In terms of revenues by end market, the utility sector remains our primary customer base, contributing the majority of rental and service revenues and substantially all of our direct sales, while E&P customers contributed roughly 20% of segment revenues in the quarter. The Industrial Solutions operating income was $9.8 million for the second quarter, reflecting a 20% operating margin. The operating margin was on the lower end of our expectation, impacted by the softer rental activity late in the quarter as well as cost inflation on both transportation and materials. Comparing to the second quarter of last year, Industrial Solutions revenues were up $6 million or 13%, with stronger product sales being somewhat offset by an 8% year-over-year decline in rental and service revenues. This year-over-year decline was primarily driven by the previously discussed shift in customer pricing mix as we've expanded our role within large-scale utility projects. Segment operating income…

Thanks, Gregg. Q2 results demonstrated progress in the execution of our 3 key strategic priorities. Our Fluids team delivered double-digit revenue growth in the U.S. and won a number of key contract awards that position the business well for the second half and beyond. While the business is approaching the highest levels of working capital efficiency, it has seen in several years, the persistent raw material cost inflation is impacting their cash generation and all efforts are focused on passing through the necessary pricing actions to expand margins and achieve acceptable value for our products and services. Our successes domestically and the renewal of some key international contracts in the second half will work to help achieve this goal. Importantly, the value that our Fluids team brings to our customers is continuing to be recognized across the industry. During the quarter, we were once again recognized by Energy Point Research and Kimberlite Oilfield research in their annual customer satisfaction surveys demonstrating that we are clearly setting the standard for service quality and customer value in the fluids space. As we continue to reshape our Fluids business, our divestitures remain a key priority to reduce our capital burden, and we are committed to taking actions on every aspect of our operations that do not show a pathway to acceptable returns. The key area of focus in the near term will be on our deepwater Gulf of Mexico investments, where we have been unable to generate a consistent acceptable return. As a result, we're exploring a range of options to optimize our capital deployment in this market, which includes more than $25 million in net working capital. We see this as another step in driving a capital-light and agile business model for our fluids business. Our Industrial business continues to perform well…

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.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.