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

Marshall Adkins - Raymond James Jim Wicklund - Credit Suisse Neal Dingmann - SunTrust Robinson Humphrey George O'Leary - Tudor, Pickering, Holt. Stephen Gengaro - Stern Agee Marc Bianchi - Cowen and Company Joe Gibney - Capital One Doug Dyer - Heartland Advisors Bill Dezellman - Titan Capital Management.

Greeting and welcome to the Newpark Resources First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A 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, sir, you may begin..

Thank year, Donna, and good morning, everyone. We appreciate you joining us for the Newpark Resources' conference call and webcast to review our first quarter 2015 results. With me today are Paul Howes, our President and Chief Executive Officer; Bruce Smith, President of our Fluids Systems business; and 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 website at www.newpark.com. There will also be a recorded replay available by phone, which will be available until May 15, 2015 and that information is included in yesterday's release.

Please note that the information reported on this call speaks only as of today, May 01, 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 current 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 first quarter 2015 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 first quarter.

I will then conclude with a discussion of our outlook before opening the call for Q&A. First quarter 2015 proved to be extremely, challenging both for our industry and Newpark as we witnessed one of the most severe rig count declines in over a decade, surpassing the rate of decline experienced in early 2009.

While the declines came much faster than most expected we are continuing to follow the play what that we discussed in last quarter’s call taking swift action to reduce cost while maintaining our focus on our long term growth strategy.

As the rig reductions accelerated throughout the first quarter we took significant actions to right size the North American organization. In total, we’ve eliminated nearly all contract positions and reduced our full time employees in North America by 25% with a majority of the reductions coming out of the Fluid segment.

Most of these actions were taken towards the end of the first quarter so the benefit will not be realized until the second quarter. For the first quarter, consolidated revenues were $208 million reflecting decline of 32% sequentially and 14% year-over-year.

First quarter net income was $0.01 per diluted share from continuing operations down from $0.25 per share in the fourth quarter and $0.13 per share in the first quarter of last year. As highlighted in our press release the first quarter was negatively impacted by $0.04 of charges related to workforce reductions and currency exchange losses.

Despite the steep decline in North American activity and the charges taken in the period, we are pleased to remain profitable for the first quarter. I’d also like to highlight our cash generation has remained strong as cash flow from operations totaled $32 million in the quarter. As I mentioned the pace and the magnitude of the U.S.

rig count decline is worst than 2009 with the activity down more than 50% from the peak in Q4. In comparing our consolidated results for this quarter to early 2009, it highlights a significant change in our business over that time. Most notably, I’d like to highlight the performance of our mass integrated services segment.

In 2009, the industry downturn forced us to take drastic actions and the mass units generated a significant operating loss. In 2015, we are facing much different dynamics in this business as our matting technologies have gained acceptance in new markets and new geographies.

And despite the challenging North American drilling environment our mass system [ph] has maintained operating margins above the 40% mark. In Fluids, we are realizing the benefits of our strategy to expand international business.

Today, our international Fluids revenues are roughly twice the levels of 2009 and similar tour experience in the last downturn our international activities are proven to be more stable than North America.

And while we’d always like to be further down the path in the execution of a long term strategy, events such as in current North American volatility serve to validate that we are on the right course. Now the key difference for Newpark today is the strength of our balance sheet.

We ended the first quarter with over $90 million in cash on hand and no borrowings outstanding on our U.S. revolving credit facility.

And despite the challenging credit environment in our industry we further enhanced our balance sheet flexibility during the first quarter increasing the size or credit facility from 125 million to 200 million and extending the term while at the same time holding firm and borrowing rates in improving our flexibility over uses of cash.

With a strong balance sheet we have the ability not only to maintain our focus on our long term strategy while managing through the current volatility but also to position the company for the eventual market recovery.

To that point, we have continued strategic investments in both of our businesses from a new mass technology center to our Fluids blending plant. With that, let me now turn the call over to Bruce Smith who will review the performance of the Fluids business.

Bruce?.

Thanks Paul, good morning. In the first quarter Fluid Systems generated total revenues of 172 million, reflecting a 34 % decrease from the fourth quarter and 19% year-over-year. Looking at quarter by region, the revenues from the U.S. were down 43% sequentially to 98 million, compared to the 27% rig count decline over this period.

In addition to the impact of the 27% rig count decline, the sequential revenue comparison in the U.S.

was further impacted by several other factors including an unusually high volume of oil-based mud product sales in the previous quarter as discussed in our February call modest pricing erosion at disproportionate decline in Fluid systems additive sales as customers slowed the purchases and walked through their inventories of the rig side ahead of laying down rigs and a decline in the wholesale day right sales to third party drilling Fluids customers including the loss of sales into Canada driven by the strength of the U.S.

dollar. On a year-over-year basis U.S. revenues were down 21% in line with the 21% reduction in rig count. Revenues in Canada were also impacted by the reductions in drilling activity, the early spring break up and the strength in U.S.

dollar generating $18 million in the first quarter which reflects a decrease of 31% sequentially and 17% year-over-year.\ Activities outside of North America held up much better in the quarter although the strength in the U.S. dollar continues to be a headwind.

Our EMEA region posted revenues of $36 million compared to $41 million in the fourth quarter and $35 million in the first quarter of last year. Changes in the currency exchange rates cost a $3 million decline in revenues compared to the fourth quarter and a $7 million decline compared to the first quarter of last year.

Excluding the impact of currency rates revenues from the EMEA region were roughly down 5% from the prior quarter but up 25% from the prior year.

The sequential decline is primarily due to reduced activity under the Cairn contract in India while the year-over-year increase is largely attributable to an $8 million from new contracts that started up in 2014 along with higher activities in North Africa.

Our Latin America region posted revenues of $14 million in the first quarter than 12% sequentially and 38% year-over-year. Similar to EMEA our Latin America revenues were negatively impacted by the strengthening U.S. dollar with currency accounting for the majority of this regions sequential revenue decline.

I’d like to highlight that due to our continuing efforts to right size our Brazilian business unit this region generated a small operating profit in the first quarter. In the Asia Pacific region, first quarter revenues were $6 million and 6% sequentially with substantially the entire decline driven by the strengthening U.S. dollar.

On a year-over-year basis the Asia Pacific region declined 27% primarily reflecting the stronger U.S. dollar along with reduced drilling activity in New Zealand.

On the technology front like others in the industry have reported we have experienced a change in customer decision making in the current environment with operators tending to favor low cost product offerings for rather than value technology.

With this headwinds revenues from our family of evolution systems declined to 31 million in the first quarter. Regionally evolution revenues were $27 million in North America, $2 million in the EMEA region and $2 million in Asia Pacific.

As the rig count stabilize we would expect this trend to moderate with customers becoming receptive again to value added technology.

With the decline in revenues and unusually weak sales mix and the natural lag in realizing the impact of cost reductions the Fluids segment had a 1.7 million operating loss in the first quarter which includes approximately 2.6 million in charges related to our workforce reductions along with 600,000 for the impairment of receivables.

Adjusting for these charges the Fluid system segment was slightly above breakeven for the quarter. As we highlighted on the February call in periods of sharp activity declines our operating margins were negatively impacted by the natural lag between activity declines and the timing of associated workforce reductions.

The quarter was further impacted by an unusually weak sales mix including not only lower evolution sales but also by a higher percentage of low margin base Fluid and day right sales as customers walk through the Fluid system added of inventories which carry a higher margin.

With regard to near term outlook we expect North America will continue to be the most challenging market with U.S. rig counts already off more than 30% from the average first quarter level. In April, our U.S. revenues have tracked approximately 15% below the Q1 level reflecting a favorable comparison to the 30% industry rig count decline.

We also expect Canada to experience the typical seasonal trough during breakout. As Paul highlighted, we have reduced our North American workforce by more than 35% since the beginning of the year reflecting a combination of contract positions and full time employees.

We continue to closely monitor activity levels in each region and are prepared to take further actions as warranted. Outside of North America we expect activities to remain stable aside from the impact of fluctuations in the U.S. dollar exchange rate. Kuwait has been a bright spot as activities have ramped up ahead of our original expectation.

Also, the transition to the new Sonatrach contract in Algeria is currently underway although we don’t expect to see any meaningful increase in revenue until the back half of the year.

In terms of operating income we expect to see modest sequential improvement in the second quarter and the positive impact from our reduction actions and improved sales mix to be partially offset by the lower revenues in North America. 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 first quarter revenues of $37 million, down 19% from the fourth quarter but up 16% year-over-year.

The lower revenues were relatively in line with our expectations discussed on February’s call. Mat sales declined by $3 million from the prior quarter but remained $3 million above the first quarter of last year. Rental and service revenues declined $6 million from the prior quarter but improved $2 million from the first quarter of last year.

The sequential decline was attributable to lower activity levels combined with pricing compression in our E&P markets. Outside of E&P activity levels remained stable with non-exploration customers contributing approximately 25% of rental and service revenues in the first quarter.

On a year-over-year basis segment revenues improved by $5 million including a $3 million increase in mat sales and a $2 million increase in non exploration rental revenues while the contribution from E&P activities remained relatively flat.

Operating income for the mat segment was $15.6 million in the first quarter down 32% from the fourth quarter but up 17% year-over-year and despite the significant pricing compression we achieved a 42.8% operating margin in the first quarter down from the 50.9% last quarter but in line with the 42.6% operating margin a year ago.

Looking ahead to the second quarter for mats while there is still an elevated level of uncertainty regarding drilling activity and pricing stability we expect total segment revenues to remain relatively stable with the Q1 level.

We expect the weakness in the drilling and completion activity will be somewhat offset by gains in our non-exploration markets. With the weakness in the exploration markets as well as the added cost associated with our new manufacturing facility we expect to see a modest reduction in operating margins from Q1 levels likely hitting the high 30s.

Now moving onto our consolidated results, for the first quarter of 2015 we reported total revenues of $208 million down 32% sequentially and 14% year-over-year. SG&A cost were $26 million down 15% sequentially but up 2% year-over-year.

The sequential decrease in SG&A is primarily attributable to the decline in revenues along with lower performance based incentives. Corporate office expenses were $7.8 million in the first quarter down $1.1 million from the prior quarter primarily driven by lower incentives.

First quarter spending included about $600,000 in legal cost associated with outstanding litigation including the wage in our litigation matters described in our year-end Form 10-K.

Consolidated operating income was $6.1 million in the first quarter down substantially from the $38.6 million in the fourth quarter and $20.8 million in the first quarter of last year. Foreign currency exchange was $1.6 million loss in the first quarter largely reflecting the impact of the continued strengthening of the U.S.

dollar against the functional currencies of our foreign operations, most notably Brazil. The revaluation of the U.S. dollar denominated balances due from our Brazilian subsidiary resulted in a large currency exchange loss in Brazil.

Further, due to the fact that the currency losses caused a pre-tax loss in Brazil for which we are not permitted to recognize the tax benefit this resulted in an unusually high 57% effective tax rate for the first quarter of 2015.

Going forward, currency fluctuations now withstanding we expect our tax rates to return to levels consistent with prior year. Income from continuing operations for the first quarter was $1 million or $0.01 per diluted share compared to $0.25 in the previous quarter and $0.13 in the first quarter of last year.

As noted in yesterday’s press release diluted earnings per share for the first quarter of 2015 excluded the impact of the assumed conversion of our senior convertible notes.

Specifically since their impact would have increased their diluted earnings per share for the first quarter, accounting rules required us to exclude this from the first quarter calculation leaving diluted EPS at the $0.01 for the period.

In addition as highlighted in the release the severance charges and unfavorable foreign currency loss combined to reduce our reported earnings by $0.04 per diluted share. Now let me discuss our balance sheet and liquidity position.

During the first quarter, operating activities provided net cash of $32 million including $15 million from reductions in working capital. We used $19 million to fund capital expenditures with $ 11million spent on the mat segment as we continued construction activities on our manufacturing facility as well as expansion for mat rental fleet.

In addition changes and exchange rates resulted in a $5 million reduction in the value of cash held in our foreign subsidiary. As of the end of the first quarter, borrowings and under our foreign lines of credit were $10 million and there were no borrowings outstanding under our U.S. revolving credit facility.

We ended the first quarter with cash of $92 million and a total to debt balance of $182 million resulting in a total debt to capitalization ratio of 22.9% and a net debt to capitalization ratio of 12.9%.

For the full year 2015 our capital expenditure expectation has modestly declined with CapEx now expected to be in the range of $65 million to $80 million with the majority of the spending focused on the four key strategic growth projects outlined on last quarter’s call.

We expect near term cash flow to remain strong benefitting from working capital reductions. Most notably we ended the first quarter with an elevated days sales outstanding level driven by the natural lag between the decline in revenue and the ultimate collection of receivables.

We expect that as revenues stabilize our DSOs will return to recent historical levels. And now I’d like to turn the call back over to Paul for his concluding remarks..

Thank Gregg. While Q1 certainly has been a challenging quarter we moved quickly to right size the organization with the current activity levels. As we continue to evaluate the changing landscape particularly in North America where we are also not losing sight of our long term goals.

And with our strong balance sheet we are continuing to fund our growth strategy including our Fluids blending plant, the new mass technology center and our Deep Water Gulf of Mexico facility.

Consistent with our guidance last quarter we will continue to take a cautious approach of other discretionary uses of cash in North America while aligning operating expenses to match activity levels. That said, we’ve also elected to carry little extra cost through the cycle protecting and strengthening our core capabilities.

One example of this is within our mass business where we are adding to our organization in the areas of sales business development and technology our capabilities that are critical to the accelerating the growth of the business and further diversifying our revenue stream into non E&P markets.

I would also like to mention that we are currently in the initial stages of starting up our mass manufacturing plant. As we ramp up the plant over the next several quarters we will look to take down our existing plant for some long overdue maintenance.

In our international business we remain confident in our approach and believe that we will see continued year-over-year growth in our largest region EMEA borrowing any major currency fluctuation. As we stated in the past it’s our belief that international operations will help offset some of the North American volatility.

And although we have seen the price of oil rebound recently we have to be prepared for prolonged periods of low activities levels in North America. With our continued investment in new assets and our strong balance sheet it’s our belief that we are positioning new part to emerge in the current cycle a stronger company.

In closing, I’d like to thank all of our employees for the dedication and commitment through the cycle. With that, we’ll now take your questions.

Operator?.

[Operator Instructions]. Our first question today is coming from Marshall Adkins of Raymond James. Please proceed with your question..

Hi, thanks for all the commentary.

Could you give us a little more color though on the deterioration [ph] of Fluids business? And specifically I’m looking for how much do you think was activity driven versus pricing driven also address kind of share issues, share issues in that sub sector?.

All right, this is Gregg I’ll take that person before I hand it over to Bruce. But in terms of bridging the gap and it’s really the 43% decline in revenues against the 27% rig obviously the 27% rig count is the biggest piece of it.

We did have a little bit of a unusual sales, unusually high oil based mud sales that we talked about last quarter that was probably 3% or 4% of it.

Pricing was roughly another 5% of it and we saw a kind of mid single digit pricing compression and then the majority of the rest relates this anomaly that we talked about in terms of the additives inventories as the purchasing slowed down in advance of laying down rigs there right it’s kind of a little piece of it..

But you catch that back when when the thing does or early stabilize right?.

That’s exactly correct. I mean that is an anomaly that you see as they do have levels of inventories on hand when it’s coming down things slow but as they ramp, as they flattened it normalizes as things ramp up you see a little bit of a tail wind..

And Marshall to your point about market share what we’ve seen in April is that we’re taking back some market share..

Okay, so does that imply maybe loss a little bit on the downturn and you are going to recapture or just overall you think you come out of this better off than you entered?.

Bruce you can comment on that and then I’ll add to it..

I think initially we lost quickly initially in terms of market share, but as the quarter went on and now unto April we certainly gained that and more back, so from a market share perspective we are a little better..

And what really drives that to some degree is your customer mix, right. If we have to take that into account that like counting the majority then obviously you got a sharing issue and then we start working in fact on another account so and that we have been successful doing in April..

Last question from me, I think I heard you mention that in that this area you expected modest sequential improvement. Is that due to improving activity or stabilization of pricing with a little monetary gains, help me understand how you are going to get a sequential improvement.

I guess most people looking Q2 as the bottom and then a pickup in Q3, it sounds like in this sector you’re looking for a modest improvement in Q2.

Did I hear that correctly?.

Yes. That’s correct. So you have a few factors that our going in our favor, one that cost reduction action that we had taken in the first quarter, obviously we start to see the benefit of that in the second quarter. We have the anomaly of the weak mix that we had in Q1, that kind of revises itself, so that’s another tailwind.

But then – that’s largely offset by the fact the revenue which has not hit bottom, though the revenues will be lower in Q2 from Q1. So, you put all that together and really we see a modest improvement over what we had and our objective is to maintain this above – of above our breakeven through the trough..

Good to hear guys. Thank you..

Thank you, Marshall..

Thank you. Our next question is coming from Jim Wicklund of Credit Suisse. Please proceed with your questions..

Good morning, guys..

Good morning, Jim..

We have long said that in the down cycle prices all that matters and value doesn’t.

Your evolution revenues, can you talk a little bit about the difference in margins and evolution and when does the market really start caring about value again, I know, it’s a pat answer to say, eventually they always will but you’re market penetration was getting better and this strikes me a little bit of a setback, can you talk about your views and strategy on evolution to the next year or two?.

Jim, this is Bruce. I’ll take the list of part of that. You’re right, when there’s a significant decline in a market, the first reaction is always price. And there comes a point very quickly and a rapid decline when service companies can’t go any low and there’s still a need for more efficiencies.

So at that point the focus very much comes back to value added a propositions. We haven’t loss the focus on evolution at this current time. We’re still talking to all our customers about evolution. We’re still promoting the value of evolution, so that hasn’t change, and we’ll continue to do that..

And Jim this is Paul. One thing that during this first quarter we still maintain the significantly higher margins within the evolution product line as well, so we didn’t see the compression there on our margins and evolution. And as you say, at some they will get back to buying the value added technology.

I think our challenge is we’ve got to do a better job of selling the technology to our customers in terms of the total cost savings and that’s what evolutions really about driving your total AFE [ph] cost down and we’re starting to get a little more attraction in that discussion at this time..

Okay. Thank you on that. My follow-up if I could, if you lose money in Brazil again and you can’t claim the tax benefit then your tax rate would be high again and you said that your tax rate would normalized down to about last year’s levels.

Can you explain to me what’s happening in Brazil that allows that to happen as Brazil is going to get better?.

Yes. The point there was that the loss in Brazil, Brazil was actually profitable in the period. The loss was caused by the currency fluctuation..

Right..

And so that was a point of currency rates notwithstanding, fluctuation notwithstanding. We expect our tax rate to get back to the normal level now. Obviously, if its swung in the other direction that provides a little better tax rate, if we continue to have the hit from currency exchange that would go the other way..

Okay. So, we can just look at the dollar versus the real for the first quarter and do a calculation on that, right..

Absolutely..

Thanks. I appreciate it..

Thanks, Jim..

Thank you. Our next question is coming from Neal Dingmann of SunTrust Robinson Humphrey. Please proceed with your question..

Morning, guys. And this question would be more for Bruce. Bruce, obviously look like to me or maybe in for Paul, that your international on the fluid side despite obviously being weaken North America lot of fluids other than obviously Jim comment about Brazil.

Your other areas international on fluids continue to maintain quite a good pace and I’m wondering I guess going forward would you guys think about entering new markets internationally to try to maybe offset some of this North American volatility or is there more market share that you can penetrate in existing international.

I’m just wondering Paul between you and Bruce right now when you’re looking at International market what kind of opportunity do you see and how do you see it?.

Yes. This is Bruce. In the international market we’re seeing slight weaknesses in some of the regions, but we have certain strong areas that will more than offset those weaknesses. So, we still feel that the international market will be better this year than it was last year.

To answer your other question, yes, there are areas that we still have to go into and I’m still looking to go into. We are working on several of those now, but I don’t want call them out at this time, but there are opportunities for us in existing areas and in new areas and we’re going to hopefully take advantage of both of those..

And Neal, what I would comment on is that we really haven’t seen any slowdown in the opportunities that are been presented to us in the international market, mostly in EMEA region..

That make sense, okay, and then just lastly, you mentioned in the press release here about that part of that they hit in the U.S.

was a lower wholesale barite sales, just wondering again what can you do in that business or you just – is that business you will just scale back or what can you do in that area to try to sort of right that ship?.

Really, you had upon it, we scale back for now, all the customers that they have are in the same position and then the same market as the rest of us in North America, so we scale back for now..

Okay. Thanks guys. All the best..

Thanks, Neal..

Thank you. Our next question is coming from George O'Leary of Tudor, Pickering, Holt. Please proceed with your question..

Good morning, guys..

Good morning, George..

So, on the pricing side you said pricing down on the fluids business kind of mid single-digit, is that really driven by your competitors lower their prices or you more just getting kind of direct negotiations with your customers asking for pricing relief on your fluids products.

And then just generally how would say competitors behavior is or has been in this downturn?.

I would say, it’s a combination of competitors and direct initiation by customers, so it’s a blend of both. We’ve have the modest pricing erosion in the first quarter, but as of this moment in time we’re not seeing any further pricing erosion at this time..

Okay. That’s helpful color. And then, on the cost cutting front, it sounds like you guys have done a lot of the heavy lifting there already, what left for you to do there, is it really just supply chain driven, is that something that kicks in over a longer duration rather than what we’re going to see from the headcount reductions in Q2.

And then, are there any sort of beyond efficiencies that you guys can gain via logistics, just sort of what are the other cost cutting opportunities that you have?.

This is Bruce. Yes. Our supplier chain group obviously have been very active during this period. As we are being forced down and priced by our customers we are also dealing with our suppliers and trying to get better agreements and relationships and pricing from them and that’s being successful up to this point.

They are probably still headcount reductions to come but that will be in the regional basis based upon need and probably quite small from this point going forward..

Yes. The one thing I’d like to comment on obviously, we having been buying a lot of raw materials and inventory and so the real benefit from our supply chain we’ll kick in until we start purchasing more raw materials and that starting to move forward as we speak..

Okay. And maybe just one more if I could and thanks for the color on that.

On the mat side, very impressive margins, Q1, I know it depth a little quarter-on-quarter but what’s your confidence level that you can assuming you achieve the flat revenue that you’re desiring for the rest of the year that you can keep mat margins in around that 40% level?.

Yes. I’ve mentioned and I think we touch on this on last quarter’s call. I think over 2015 we definitely expect them to be drifting into the 30s and actually as we’re looking at Q2, it’s likely that that will happen this quarter. We are seeing some level of stabilization in the environment.

But part of the challenge here with entering new market is your adding cost, you’re building fleet and those opportunities don’t necessarily come through immediately, so you have some timing issues and that’s going to create some natural volatility in the margins on a quarter-to-quarter basis..

Thank you. We’ll move on to our next question from Stephen Gengaro of Stern Agee. Please proceed with your question..

Thank you, guys. Good morning..

Good morning..

When I look at the fluids side, the decremental margins are actually not so bad, right, I mean, you lost I think 34%, 35% revenue and your decrementals were pretty good.

You’re talking in the next quarter about a similar type of revenue decline and slightly higher margins, am I reading that right?.

That’s accurate. We are expecting the revenues that continue to come down but again because of the all the cost actions that we’ve taken more stable on the operating income line..

But the revenue decline not at the same pace..

Not at the same pace, correct..

Okay.

And then as we look ahead with a lower cost structure, when I look sort about your history, the decremental margins we can certainly take a look and see what they’ve said, but would this suggest maybe you start to get better margin progression coming out of this because of some of the cost saving initiatives you’re putting in place now?.

I think that’s correct assumption, absolutely..

Okay. And then just one final, when we look at and this came up a little bit in the call as far as competition and with some of the larger players with fluids businesses are doing in this type of market. How do you fight that and call [ph] back shares.

There are customers are not maybe as willing to pay for technology as they are in a stronger market? And I guess into that, that I mean, the things we hear and read is that people love products, I’m just kind of curious how you walk up through that?.

Couple of different questions, the one again on customers buying value on technology again initially they kind of get into what we call a spreadsheet mentality just looking at unit costs but again start to transition into more value in terms of driving synergy.

And how we’ve been wining for a long period of time is around service quality, we’re doing exceptional job of serving the customers.

The third question you ask is around the large competitor, so I would to say to some degree we haven’t really seen it quite yet, but there is some confusion in that large customer base because of the announced merger between Baker and Halliburton and we are starting to see some customers asking about Newpark coming in and helping with them so..

Thank you. Our next question is coming from Marc Bianchi of Cowen and Company. Please proceed with your questions..

Hi, good morning..

Good morning..

Good morning..

Just to start at a point of clarification on the outlook for the fluids profitability, is the sequential margin improvement in second quarter is this starting point first quarter excluding the onetime cost for workforce or you saying the profit up even after adding back that headwind that occurred in 1Q?.

The comparison that I was referring to was actually the as reported number, so the small loss and so as I had stated our objective here for Q2 is trying to keep this above breakeven as the revenue hits the trough..

Okay. Thanks for that Gregg.

The Cairn contract in India, the follow-up that was mentioned there was that something that was expected in, can you maybe update us on the other contracts, the larger international contracts you have and sort of the revenue visibility that you have over the next few quarters, is there anything sort of schedule to roll off and where things maybe more visible than others?.

The Cairn contract, we still active with Cairn, they’ve certainly reduced their activity level for now based upon their oil price, but we expect as the oil price come back that the activity will come back.

I mentioned a little Kuwait was running out a little ahead of we’d hope that would be, so that’s a very positive development and the large contract that we gained in Algeria, although it would be back half of the year as it ramps up it will be a significant addition to our international business..

Okay. Thanks for that. Just one more on the mat side.

You mention some offset from non-exploration sales supporting the business and I assume that when you say non-exploration that’s non-energy, can you just help us with some more color on that and maybe discuss the mix that you have between energy and non-energy within that business and how you see that playing out over the next few quarters?.

Yes. I would probably characterize it under the energy umbrella, its pipeline construction, power transmission, maintenance, those types of projects..

Yes.

So the separation is really not tied to the bid and the drilling activity?.

Or rig count..

Thank you. Our next question is coming from Joe Gibney of Capital One. Please proceed with your questions..

Thanks. Good morning, guys.

Just one quick clarification, Gregg, I apologize if I missed it but did you quantify the annual savings from a dollar perspective that you’re going to be achieving from the headcount reductions for North American Fluids?.

No, we did not..

Okay.

And then on the mat side, just I want to clarify that last comment for little bit further just the expansion on non-oil and gas mix utility pipeline et cetera 25% of the mix and what it takes time for to the tentacles then, I understand, what sort of reasonable assumption for what maybe -- what that mix could be into 2016 and how aggressive do you want to be from a sales perspective and what a reasonable expectation I think for growing outside of your base oil and gas business?.

Yes. In terms of what we expect in terms of that ratio split in 2016 really premature to kind of give you any guidance at this time. I would say those I mentioned in my script that we are adding new resources, sales management business development managers to go after those segments. So, there will be a little of lag.

We certainly anticipate to have some more revenue in the back end of the year, but we’ll wait and see what 2016 brings..

All right. Fair enough guys. Thanks..

Thank you. Our next question is coming from Doug Dyer of Heartland Advisors. Please proceed with your question..

Good morning.

I see that the receivables came in quite a bit which was to be expected, so I’d know if you anticipate further receivable collection to help build up the cash little bit and at the same time there some of that go out if you’re starting to build up some of your early inventories you just stated?.

Yes. I touch on this a little bit my commentary, the DSOs did jump by something close to 20 days and that’s a natural lag, so it quantify the impact and that’s roughly $40 million of AR that reflect. So we definitely expect to see that DSO now continue to come down as the revenue stabilize out and ultimately getting back to our more typical levels.

Inventory on the other hand, there will be some benefits that come from reducing your inventories but that one is a little more challenging just because of the logistics of managing various warehouses and basis..

Yes. We would expect our cash balances to continue to build as we move through the second quarter..

Okay. And just a question on the mat side, I know the goal had been to build up the rental fleet and have a smaller amount that is actually sold.

How do you foresee that mix of sales versus rentals progressing in this type of lower price environment or does it actually stay the same?.

Well, I mean longer term and I go back to our previous comments about our long-term vision and the reason for the plant expansion et cetera and it is our desire to continue to build out that rental business and largely building out this business outside of the E&P space, so over the long term you’d expect that to become a bigger piece of it.

The bigger question as we touching a little earlier is the timing of how that build flows..

Thank you. Our next question is coming from Bill Dezellman of Titan Capital Management. Please proceed with your question..

Thank you. A couple of questions. A follow-up on Q1 cost reductions.

You said you had not quantified, then will you quantify what those cost savings are please?.

We’re not prepared to do that at this time..

Yes. I’m sure you can appreciate as we’re looking at what still a rapidly moving environment with the top line there is just a lot of moving pieces to it..

I thought we would at least provide you the opportunity moving to?.

Well, thank you Bill..

My pleasure.

Moving to another question please, you’d mentioned that the April decline in your business was roughly half of the rate of the rig count decline and you talked around the edges of that issue, but I just want to ask point-blank why is it you believe that your business is doing that much better than the rig count?.

It really comes back to the – that anomaly that we had talked about within the first quarter of the purchasing behavior changing, so you take a step back, when you look at our current run rate versus where we were in Q4 at the peak levels, our revenues are tracking very closer to the rig count obviously we had an underperformance of Q1, in Q1 for a variety of reasons but we’re seeing that issue now reverse here in Q2, when it comes back more to that long term picture..

And ultimately we are seeing market share gains as a result of that..

And I want to take this one step further.

I think that you touched on this a little bit, but are you finding that the operators are now more interested in looking at technology or they still focused on lowest price what’s this spreadsheet show period ended discussion?.

It’s truly mix. We have certain customers that are beginning to get back focus now on these value added technologies and we have some that are still in the pricing, the low pricing mode. So it’s a blend of both. But we are obviously are focusing on those that are they are looking all those answers..

And that’s really to give Bruce some credit in his sales organization North America. What they been doing is really prioritizing the accounts and the ones that are starting to move towards the valued added technology that takes down their total cost, reduces the cost of AFE, that’s where we prioritizing our sales organization..

Thank you. That concludes the Q&A portion of today’s call. I would like to turn it back to management for final 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 fourth quarter..

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