Brian Feldott - Director of IR Paul Howes - President and CEO Bruce Smith - EVP and President of Fluids Systems & Engineering Gregg Piontek - CFO and VP.

Jonathan Sisto - Credit Suisse George O'Leary - Tudor, Pickering, Holt & Company Mike Harrison - First Analysis Neal Dingmann - SunTrust Marc Bianchi - Cowen Stephen Gengaro - Stern Agee Doug Dyer - Heartland Advisors Marc Bianchi - Cowen.

Greeting and welcome to the Newpark Resources Fourth 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.

I would know like to turn the conference over to Brian Feldott, Director of Investor Relations. Thank you. Please go ahead..

Thank year, Brenda, and good morning, everyone. We appreciate you joining us for the Newpark Resources' conference call and webcast to review our fourth quarter and full year 2014 results.

With me today are Paul Howes, our President and Chief Executive Officer; Bruce Smith, President of our Fluids Systems business; Gregg Piontek, our Chief Financial Officer. Before I turn over the call, I have a few housekeeping items to cover. There will be a replay of today's call. And it will be available by webcast on our Web site at www.newpark.com.

There will also be a recorded replay available by phone, which will be available until February 27, 2015 and that information is included in yesterday's release.

Please note that the information reported on this call speaks only as of today, February 13, 2015, and therefore, you are advised that time-sensitive information may be no longer be accurate as of the time of the replay.

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 our actual results, performance or achievements to differ materially from those expressed in the statements made by management.

The listeners encouraged to read our Annual Report on Form 10-K quarterly reports on Form 10-Q and quarterly reports on Form 8-K to understand certain of those risks, uncertainties and contingencies. And now with that said, I'd like to turn the call over to our President and CEO, Mr. Paul Howes..

Thank you, Brian and good morning to everyone. We’d like to thank you for joining us today for our fourth quarter 2014 conference call. 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 fourth quarter.

I will then conclude with a discussion of our outlook related to 2015 market before opening the call for Q&A. But before I cover the fourth quarter, I'd like to begin by addressing our key accomplishments in 2014. We’re extremely proud to announce today for the full year 2014 records for total revenues, EBITDA and operating income.

Consolidated revenues in 2014 exceeded 1.1 billion for the year representing a 7% increase over prior year driven by record revenue in both the Fluids and mat businesses. Our record performance is a direct result of our continued focus on three of our key strategic drivers, technology leadership, international growth and outstanding customer service.

Our technology leadership in 2014 continued in both of our businesses in drilling fluids, our Evolution family of water based products reached record revenues of 251 million more than doubling prior year levels, also we continue to expand the technology internationally from EMEA to Asia Pacific and most recently in China.

From our perspective, the Evolution family n technology is being recognized around the world for a its ability to drive operating efficiency or working in harder with the environment. In our mats business, customers continue to recognize the value of our technology resulting in record rental revenues and profitability of our DURA-BASE product line.

Our new manufacturing facility is nearing completion and when fully operational will double our existing capacity. We’ve also made meaningful progress in our efforts to expand beyond our historical E&P markets entering the North American pipeline market as well as the utility infrastructure market both in North America and Europe.

And most recently, we formerly alliance the DURA-BASE defender spill containment system which tank our technology to an entirely new level of performance, also we recently broke ground our technology center which will provide new R&D capabilities to model enhance the performance of products in the field.

Our international growth strategy continue with another record year generating international revenues of 290 million with the majority of this year’s growth coming from new contracts in the Black Sea, India, Kuwait and the mass expansion into the UJ. Within the Fluid segment, international revenues now represent nearly 30% of our segments revenues.

We expect this to provide a greater level stability heading into a challenging 2015.

International revenues have now increased to a eight consecutive years and we expect to see this growth continue in 2015 and we start work on the recently announced $350 million contract to provide drilling fluids and related services to Sonatrach's natural gas drilling activities.

And lastly very proudly announce that we’ve won 17 Energy Point Research first place awards for best in--class service for the most recent annual customer satisfaction survey. To me, this is direct reflection of the commitment that our employees bring to work every day.

The 2014, Newpark has again taken the top award, first place in total customer satisfaction for all oilfield services an award we have now won for the past three consecutive years. With that I’ll now turn my intention to the fourth quarter.

We’re very pleased to post another record quarter with consolidated revenues coming in at 306 million in the fourth quarter, reflecting a 3% sequential increase and a 24% year-over-year improvement.

Fourth quarter net income also remain strong coming at a $0.25 per diluted share to continuing operations consistent with the $0.25 per share in the third quarter and a substantial improvement over $0.11 per share in the fourth quarter of last year.

The fourth quarter results were driven by continued strength in both operating segments, for fluid divisional center record was 261 million revenues and excluding the charges in Brazil sustained double-digit margins in the quarter.

In our international fluid market, we’re continuing to see benefit from our recent contract start-up from the Black Sea, Kuwait and India which contributed a combine 9 million of revenue to the quarter.

Our mats business also posted a record fourth quarter with revenues of 45 million in an operating margin of 50%, which reflects record quarterly earnings in our highest operating margin in this business similar to three years.

In summary, the fourth quarter was a strong finish to a very successful year which positions us well to take on the challenges of 2015. With that, let me now turn the call over to Bruce Smith, who will review the performance of our Fluids business.

Bruce?.

Thank you, Paul and good morning, everyone. In the fourth quarter Fluid Systems generated total revenues of 261 million, a record for our segment and reflecting a 4% increase from the third quarter and 23% increase year-over-year. Looking at cover by region, the revenues from the U.S.

were up 6% sequentially to 172 million, which compares favorably to both the sequential U.S. rig count and well count changes which were essentially flat. The majority of the sequential increase was driven by an unusually high volume of oil-based mud product sales due to loss circulation events.

However due to low margin profile of this commodity product the higher sales provided only a modest impact to income. Wholesale barite also remained strong in the quarter although we saw modest sequential decline. On a year-over-year basis U.S.

revenues were up 26% which also compares favorably to the year-over-year rig count and well count which increased 9% and 5% respectively. Our Canadian operation continue to perform at a high level generating revenues of 26 million in the fourth quarter which reflects in the increase of 17% sequentially and 81% year-over-year.

Both the sequential and year-over-year increases significantly outpaced the overall market activity reflecting our continued gains in market share. Our EMEA region continued to perform well in the fourth quarter, generating revenues of 41 million.

Excluding the impact of exchange rate the region was up nearly 10% sequentially benefiting from increases North Africa, Romania and India. However this increase was partially offset by the strengthening U.S. dollar with currency rates having a 2 million negative impact on revenues in the quarter.

On a year-over-year basis EMEA revenues were up 44% largely attributable to higher activities in North Africa along with the contributions of the new contracts that started in 2014. In Latin America revenues were down 23% sequentially and 47% year-over-year to 15 million.

Our Latin America revenues were also negatively impacted by the strengthened U.S. dollar which accounted for almost half of this region’s sequential revenue decline. The remaining revenue decline predominantly reflects the expected reductions in product sales to Petrobras as we discussed on last quarter’s call.

In the Asia Pacific region revenues were down 12% sequentially to 6 million with the majority of the decline driven by the strengthening U.S. dollar. On a year-over-year basis the Asia Pacific region declined 21% primarily reflecting the impact of lower drilling activity in New Zealand.

On the technology front our family of Evolution systems continues to perform well, generating 58 million of revenues in the fourth quarter consistent with the prior quarter. The regional breakdown also remain similar to the prior quarter including 63 million in North America, 2 million in the EMEA region, and 3 million in Asia Pacific.

With strong fourth quarter performance our total Evolution system revenues for the full year 2014 came in at 251 million reflecting year-over-year growth of more than 100%.

Operating income for the Fluids segment came in at 24.5 million in the fourth quarter, reflecting an operation margin of 9.4% which is down from 11% in the third quarter but up significant rate from the 7.1% a year-ago.

The fourth quarter was negatively impacted by approximately 1.5 million of charges in Brazil related to cost associated with fourth quarter workforce reductions and the impairment of certain indirect tax assets. Adjusting for these charges the Fluids operating margin in the quarter came in at the 10% level.

The margin decline of roughly 100 basis points from the third quarter was driven primarily by product mix in the U.S. business. With regard to our near-term outlook, we expect North America to be the most challenging market U.S. rig counts already up 25% from fourth quarter level.

In addition to the rapid decline in activity which is also impacting our wholesale barite sales we expect to see some pricing erosion as operators continue to seek pricing concessions from all of the service vendors.

In light of the lower activity we have reduced our North American workforce by approximately 10% since the beginning of the year reflecting a combination of contract and full time employees. We are continuing to closely monitor activity levels in each region moving quickly to adjust our cost structure to match reduced activity levels.

Outside of North America overseeing some isolated impacts from the recent decline in oil price, we expect activities to hold up better consistent with our experience in past cycles. In EMEA region we expect our business to remain fairly stable in the first quarter although the recent surge in the U.S.

dollar continues to provide negative pressure on revenues. In Brazil there is really no change to our approach particularly with respect to Petrobras. Consistent with our recent actions we remain committed to taking the necessary steps to reduce the volatility of this business and our exposure of Petrobras.

In the Asia Pacific region we don’t expect any meaningful change in revenues in the near-term. And finally as Paul mentioned I am very pleased to highlight our recently announced three year 350 million Sonatrach which represents the launch of all the Newpark’s history.

After maximum annualized value this award reflects an increase of approximately 165% over our 2014 revenues with Sonatrach. The transition to the new contact is expected to occur in the second quarter with revenues beginning to ramp up throughout the second half of 2015.

And while we expect this award to contribute to incremental growth in the EMEA region in 2015 we don’t expect to achieve the full run rate of this contract until early 2016. With that I'll now turn the call over to our CFO, Gregg Piontek..

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 fourth quarter revenues of $45 million, down slightly from the record $46 million of revenues in the third quarter and up 29% year-over-year.

Revenues from mat rentals and services were down $9 million sequentially, reflecting the expected reductions from the large site preparation project in the Gulf Coast region during the third quarter. Mat rental activity remained relatively stable for the quarter.

As we mentioned, last quarter we are continuing to focus on expanding our rental activities outside the E&P industry including our entry into the utility and pipeline markets.

During the fourth quarter, approximately $7 million of our rental and services revenues were derive from non-exploration customers including the impact of our UK operations acquired last year. Regionally the Northeast which includes activities in the Marcellus and Utica continue to represent roughly half of our total rental and service revenues.

The sequential decline in rental and services revenues was largely offset by the expected rebound in mat sales which increased by $8 million to $13 million for fourth quarter. However, even with the sequential increase fourth quarter mat sales remain $2 million below prior year levels.

Due to the continued strength in rental demand and the revenue mix shift for the lower margin site preparation work to higher margin mat sales. The Mat segment achieved a record operating income of $23 million in the fourth quarter, up 12% from the third quarter and 51% year-over-year.

The 50.9% operating margin in the fourth quarter compares with 44.9% last quarter and 43.7% the year ago.

Looking ahead to the first quarter for mat, we expect to see a pullback in Q1 as compared to Q4, while our mat rental activities are more heavily leveraged to natural gas drilling; we are experiencing significant pricing pressures across all E&P market which reserve to reduce both revenues and operating margins.

Mat sales are also expected to decline in the level achieved in the fourth quarter. With the impact of the weaker activity levels and pricing pressure combined with the added cost associated with our Q1 plant start-up, we expect our first quarter operating margins to be moderately lower than historical levels.

Now moving on to our consolidated results, for the fourth quarter of 2014, we reported total revenues of $306 million, up 3% sequentially and 24% year-over-year. SG&A cost were $30.4 million, up 6% sequentially and up 26% year-over-year.

The sequential increase in SG&A is primarily attributable to the increased revenues along with higher performance based incentives.

Corporate office expenses were flat to the prior quarter at $8.9 million, although the fourth quarter included about 500,000 in legal cost associated with the wage and hour litigation which we described in our prior quarter Form 10-Q.

Consolidated operating income was $38.6 million in the fourth quarter, representing a 2% decline sequentially and a 73% increase from the fourth quarter of 2013. Foreign currency exchange was a $600,000 loss in the fourth quarter, reflecting the impact of the continued strengthening in the U.S.

dollar against the functional currencies of our foreign operations. The fourth quarter 2014 effective tax rate was 34%, consistent with the full year tax rate. Income from continuing operations in the fourth quarter was $23.4 million or $0.25 per diluted share, compared to $0.25 in the previous quarter and $0.11 in the fourth quarter of last year.

Now let me discuss our balance sheet and liquidity position. During the fourth quarter, operating activities provided net cash of $66 million. We used $22 million to fund capital expenditures with $13 million spent on the Mat segment, as we continued construction activities under manufacturing facility as well as the expansion of our mat rental fleet.

In addition, we borrowed $4 million under our foreign lines of credit. During the fourth quarter, there were no share repurchases under our outstanding authorization. As of the end of the fourth quarter, borrowings under foreign lines of credit were $11 million, and there were no borrowings under our U.S. revolving credit facility.

We ended the fourth quarter with cash of $85 million and a total debt balance of $184 million, resulting in a total debt-to-capitalization ratio of 22.7% and a net debt-to-capitalization ratio of 13.7%.

Looking ahead of 2015, while our share repurchase program remains an important element of our capital allocation strategy, we expect to take a cautious toward additional share repurchases in the near-term at least until there is greater stability in the North American market.

We currently expect our 2015 capital expenditures to be in a range of $70 million to $90 million, which includes approximately $40 million to $50 million on four key strategic projects.

The completion of our mat manufacturing capacity expansion and technology center, the [indiscernible] Louisiana deepwater shore based expansion which is expected to be completed in early 2016, our blending facility and distribution center project which is expected to be completed by the end of 2015 and the investment in additional solid control equipment necessary to support the expanded work in Algeria.

Looking beyond these strategic projects, we expect to slow our overall capital spending levels in 2015. That said, requirements investments into the expansion of the mat rental fleet will remain dependent on demand levels, as well as our strategic decisions around further expansion into new rental market.

As we've done historically, we’ll continue to closely monitor demand levels for rental mat and adjust our investments accordingly. Also I would like to highlight that we expect the current pullback in North America to contribute to strong near-term operating cash flows through working capital reductions.

We are entering 2015 with $450 million invested in working capital with receivables and an inventory representing the largest components. As activity declined we expect to see reductions in working capital with reductions in receivables providing the most immediate cash flow benefit.

And now I would like to turn the call back over to Paul for his concluding remarks. .

Thanks Gregg. We are very pleased with another strong quarter highlighted by record revenues in the Fluids business and record profitability in the mats business. Furthermore with a strong finish we achieved company record for both revenue and profitability for the full year 2014.

And while we are pleased with the progress we’ve made over the past year we are now focused on navigating through a challenging landscape in 2015 particularly in North America.

While our team has run through these cycles before and know the actions required to successfully navigate through the volatility, it’s also important to highlight that we are aiming the current cycle as a very different company. Heading to 2015 we have a very strong liquidity position.

As experienced in past cycles [previous] declines and to generate strong operating cash flow through the associated reductions in working capital. This strong cash profile affords us the opportunity to continue the execution of our long-term growth strategy.

As Greg mentioned we plan to continue to find our long-term capital investment related to our deepwater facility, our water-based blending plant with our Mat Technology Center.

We will take a cautious approach with other discretionary uses of cash including capital investments and share repurchases while aligning operating expenses to match activity levels. Over the past year our Drilling Fluids business has continued to gain market share led by our differentiated technology and expanding international footprint.

As we have done in previous cycles we plan to closely monitor North American activity levels to ensure that we can take swift actions to efficiently manage through the changing landscape. That said we are balancing our short-term needs with an effort to protect our organization and strengthen our capabilities for the long-term.

Internationally as Bruce mentioned we expect 2015 to be a year of growth in the EMEA region. As we said in the past our international expansion efforts are critical to driving greater stability in our revenue stream serving to offset some of the North American volatility.

In the mats business with our added manufacturing capacity coming online there is no question of the near-term impact for the expansion will be somewhat needed by the current weakness in North American drilling.

Given this weakness we intend to intensify our focus on the development of non-E&P market opportunities both in North America and internationally. And finally I would close by recognizing the contribution of our dedicated employees around the world and making 2014 a record year for Newpark.

Without the commitment and tireless efforts of employees none of these accomplishments would be possible. With that we will now take your questions.

Operator?.

[Operator Instructions]. Our first question comes from the line of Jonathan Sisto with Credit Suisse. Please go ahead with your question. .

Wanted to focusing on the Fluids business if I could, so this might be a question for you Paul and Bruce. We have gone through earnings season we are hearing about these E&P form ladders that are going out their suppliers.

Bruce you mentioned pricing pressure just trying to get a better sense of what kind of pricing pressure degree of magnitude you are speaking of for maybe for 2015?.

Certainly those pricing pressure are happening now. To your point, there are some [lever] circulating from certain customers looking at the cost reductions for them price reductions for us.

But to give that some framework we've also had recently from a major customer [lever] inviting us to come in and talk about how we might be able to help drive their efficiency. So not all customers are going then the path of pricing reductions, however pricing pressure there, we are dealing with it.

A part of our push during this period of course will be to try and develop our evolution technology, try to focus on those customers that value serves and value efficiency drive. So that will be our focus going forward. .

I think it’s little bit early right now to say how hard the pricing is, but we are certainly getting all the form letters as Bruce talked about. But clearly I think that opportunity in this kind of environment customers too are looking to drive down their total cost.

And I think that’s one thing unique about the company is that our technology can really reduce their total operating spend. So really trying to double down on those kind of customers that appreciate the value of the technology..

In your level of expertise is this down cycle that we look to be going into as severe as say the ’08, ’09 cycle and would that maybe -- is that maybe -- as the operators get more conscious of cost already going to focus more in on the lower margin products?.

Well there is certainly going to be -- we try to break our customers up in to different segment. There is certainly some customers that will just buy the cheapest product and then there are others that are looking to drive the total cost down. Is it as steep as ’08, '09? Yet to be determined I think.

Certainly the trends in the last couple of weeks on the rig count reduction pretend to imply that, but I wouldn’t want to project at this point that it would be as deep as ’09..

Thank you. And our next question comes from the line of George O'Leary with Tudor, Pickering, Holt & Company. Please proceed with your question..

Good morning, guys.

Just trying to get a sense around kind of what levers you had to pull on the cost cut front as we move into this North American kind of rig count roll environment and what leverage you may have already begun to pull as we moved into the beginning of the first quarter?.

We certainly begun reducing headcount and total flat somewhat decline of the market, there was also a bit of a lag time between market declines, rate declines and how quickly we can react to it, but as we see in the clients coming and as we talk with our customers and get a better understanding of what projects they are going forward with, what they are cancelling, we’re taking actions [indiscernible] at that point..

Yes, a couple of things to add to that, one of the challenges is always when you are going through a declining market is you also have to make some calls on how long -- how long they will be down and based on that you make some decisions on the cost to cut.

And what I would say is then turning to the other side of the business, the mat side of the business, there it's a different animal because as everyone knows we have the new plant coming online and growth plans into other markets obviously with the suppressed oil and gas market really is more of a slowing of the ramp up or holding your cost structure where it is rather than a cutting more like you have on the other side..

And then just give me your presence on the fluid side in the Permian and we've certainly been surprised by the magnitude of the rig count cut in that basin in particular, just curious to hear your thoughts on that market in particular with respect to the Fluids business and what you're seeing today with kind of the rapid decrease in rig count?.

I think fair to say that all we [play] are the ones that are most dramatically affected at the moment so that would be Permian that would be the Bakken and so on.

But [indiscernible] areas like the Mid Continent region and like our East Texas region and like our Northeast region that are holding up better, [indiscernible] place, I think your assessment is correct, those [indiscernible] are more affected currently..

Thank you. And our next question comes from the line of Mike Harrison with First Analysis. Please proceed with your questions..

Hi, good morning. Just looking for a little bit more clarification, you mentioned a 10% headcount reduction.

Was that in Fluids overall or is that just in North America Fluids?.

That was the North America Fluid and in fact internationally and specifically in EMEA region with the new contracts, we're actually having personnel this time..

And then on the Evolution side, it seems like maybe the times there, the rapid improvements in sales have kind of slowed and I am wondering -- are we seeing a plateauing there just based on the market activity, have you guys pulled back on your marketing efforts in trying to grow that in some new geographies and what are you seeing on pricing specific to Evolution right now?.

This is Gregg, let me take a part of that, the pricing I’ll defer to Bruce, but I mean in terms of that plateauing, I think you got to take a step back and look at the progression that we’ve had on the Evolution growth over the initial introduction mat in 2010 and you look at the growth and it has not been a steady growth curve, it's been spike, plateau, spike, plateau, spike, plateau, so having a flat quarter-over-quarter isn’t particularly concerning definitely not backing off in terms of our marketing efforts on it..

Yes and just to comment, I would probably refer back to the 100% growth year-over-year, we continue to see traction on Evolution and with respect to international rollout as I mentioned in my read in that we have now moved into China with a technology which is a new country for us as well..

On the pricing question that you have, certainly there is pressure on Evolution as well as with everything else but that differentiated technology is certainly holding up to that pricing pressure much better than conventional systems..

Thank you. And our next question comes from the line of Neal Dingmann with SunTrust. Please proceed with your questions..

Good morning, guys.

Positive quarter so far, just one question for you Bruce obviously activity still seems quite good on the fluids side, I was just kind of wondering about bidding activity, how that ’14 and talks about market share, you certainly have done a great job holding that based on Sonatrach and some of these others should be even potentially think about even maybe increase in market share.

.

Yes, internationally bidding activity continues to be out there, there is a lot of tenders available. Kind of an ongoing process that you see on an annual basis, a little bit of slowing maybe on international tenders and then obviously here domestically it’s all MSAs. .

And on the activity level in the North American side, I mean you really looking further and the rig count is a good indicator of the direction. .

Okay, that’s right, thanks Gregg.

And then just one follow-up on the mat segment for Gregg, just wondering obviously margins were phenomenal again or even higher, your thoughts I know you said they are may come down a little bit, is that's just product mix regardless rental sales or how should we sort of think about the product mix for the next spending for the remainder of this year?.

We touched on this a little bit earlier, but obviously with the weakness that we have in the exploration side were pretty greater efforts into these other areas. That said again back to this pricing pressure that you are facing, we are seeing pricing pressure across the board.

So we definitely expect that to have a meaningful impact here in the upcoming quarters, certainly when you are coming from such a strong margin profile as we are you would expect to see a little greater impact to that.

So that’s why we expect that our margins here will come back to that -- call that low 40 range where we have been, and I know while we talked about it many times about the dropping into the 30s I think we feel that it’s highly likely that we will see a free handle on our margins here in 2015.

It’s really more of a question of when and which quarter does that happen. .

Thank you. And our next question comes from the line of Marc Bianchi with Cowen. Please proceed with your questions. .

Hi, I was hoping to talk about the Fluids pricing just a little bit. We are hearing prices for other service lines down in the 15% 20% range.

Maybe you could give us some historical perspective for Fluids during the downturn in terms of what kicked the trough pricing was? And maybe any insight as to what you’ve seen thus far, I know it’s going to be hard to say for the first quarter what we'll see but maybe so far in the first quarter what you seen?.

I will contact on that but in terms of the pricing pressure here in the Fluids side of things, as we experienced in the past well, yes, we will see how we start out with that request for 20% reduction. When you have a business that’s running around the 10% mark you don’t have 20% to give and that’s really where that discussion starts on it.

So you do see some pricing pressure that comes in but it’s a much smaller impact than that. .

Okay, thanks Gregg.

Could you guys say how much prices have come down so far this quarter?.

Yes, I guess the way I would describe it is really more so been getting into the specifics of the pricing here, because there is a lot of variables in this mix here.

You really take a step back and you look at the business as a whole and kind of the expectations in the overall margin profile and I guess I would start with the historical experience on incremental decrementals in the business.

And historically we have seen incremental decrementals in that 25% to 30% range as activity levels change and there is obviously there is the volume there are the cost adjustments pricing, it all works into that.

In periods of dramatic change such as what we are seeing now, you obviously have a little bit of a lag issue as Bruce commented on about taking your cost out. So maybe when in periods of a deeper decline you will see that decremental margin be more on the hide side maybe in that 30s range on it.

But then as you take the cost out then it normalizes back to that in the 20s that we have seen historically. .

Thank you. And our next question comes from the line of Stephen Gengaro with Stern Agee. Please proceed with your question. .

Thank you good morning guys. Just two things, one -- I was actually going to follow-up on that question about decremental margins and I would assume higher early in the year and then flattening out and that sounds like where you are targeting. So any further comments on that is helpful.

But second when we think about the split, and I think you said about 30% now of the business is international, can you give us a sense for relative profitability of the two areas assuming that international probably holds up better here near-term?.

That’s correct. And well I will take your two pieces, first of all I think you got it right in terms of that decremental maybe a little steeper decline in that North American market initially and then as you right size your organization and get those costs out then it comes back to that more typical level.

In terms of the comparable margins between the regions, the international piece has historically been a higher margin than the overall Fluids segment combined. So -- and we expect that area to continue. So that does have a favorable impact as you are shifting your mix as with having a greater international component..

So would that suggest that as you serve the ’08, ’09 timeframe as a guideline, you should do a bit better this time because you have a larger international presence?.

Absolutely, yes, we’re -- it's a much different situation today than it was back then in terms of our international components.

And if you look back at 2008 to 2009, the international business was actually relatively flat year-over-year and as we talked about particularly with the new contracts products in 2014 for which we will see a full year benefit in 2015 as well as the Sonatrach contract that’s coming online later in the year, we’re expecting to see growth out of that region in the double-digit percentage range, north of the 10% mark.

So, we’ll actually have a growing EMEA region this time round..

Thank you. [Operator Instructions]. Our next question comes from the line of Doug Dyer with Heartland Advisors. Please proceed with your questions..

Good morning everyone.

You talked about maybe working down the accounts receivable a bit, it looks like it hasn’t grown substantially over the last year, but how much do you think you can bring that down to and still operate the business the way you want to?.

Well, perfectly the business has -- we’ve got vehicles overall that are on the 90-day mark and you’d expect that to remain relatively stable.

The improvements that we’ve made recently, we have been bringing down our DSOs through internal efforts over the past few years, actually and that's part of what’s contributed to the improvement that we’ve seen here this year, but with a stable DSO assumption here through 2015 you just look at the pullback in the North American activity, that obviously will generate a fair amount of cash flow..

And just looking at the inventory, what’s -- if you were to break that down into some buckets, what’s in inventory please?.

Yes, well the biggest component of your inventory is your fluid systems piece, actually the mat piece has very little inventory that we maintain.

The other piece which in the fluid business is the [indiscernible] component and because those are long lead items that one tends to be a bit lumpy from time-to-time and we’ll get large shipments in and we will have larger quantities on hand that we run down.

So, inventory you can’t expect will come down at the same rate as maybe receivables that you are holding DSOs, your days of inventory will go up when you are seeing reductions, but you -- nonetheless, you are able to get reductions across the board in that area..

Thank you. And our next question comes from the line of Marc Bianchi with Cowen. Please go ahead with your questions..

Hi, thanks for squeezing me back in; can you -- what was the loss circulation in the fourth quarter that was entirely in the US correct?.

That is correct. It was actually several different projects that had some wild circulation where there was higher than usual oil base month assumption..

So excluding that impact would you’ve been flat sequentially?.

Pretty close to flat sequentially when you exclude that component, yes..

And then just and related with Brazil and everything that’s going on with Petrobas, how does that impact the wind down there for you guys and then, can you give us some commentary about how you conduct business there, there is some concern with other companies that were with Petrobas about the use of agents and any kind of concerns about corruption.

Can you just sort of discuss how Newpark conducts business?.

Yes, with Petrobas we haven’t changed our approach with Petrobas at all. We’ve been walking down our relationship if you like and trying to become less dependent on them and nothing that’s currently happening is changing that approach, we’ll continue with that approach.

In terms of the way we conduct business there, that’s normal, business as we conduct in the U.S. We don’t do anything different..

As we do anywhere in the world and any problems that Petrobas has had with corruption is certainly has not involved Newpark..

Thank you. And it seems that we have no further questions this time. I like to turn the floor back over to management for closing remarks..

I like to thank you ones 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 the first quarter. Thank you very much..

Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation..