UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20192020
or 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-02960
nr-20200630_g1.jpg 
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
Delaware72-1123385
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
9320 Lakeside Boulevard,Suite 100
The Woodlands,Texas77381
(Address of principal executive offices)(Zip Code)
(281) (281) 362-6800
(Registrant’s telephone number, including area code)
 Not Applicable    
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueNRNew York Stock Exchange
Rights to Purchase Series D Junior Participating Preferred StockN/ANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑      No ☐  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑      No ☐  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐☑
Emerging growth company☐




If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐     No ☑      
As of October 28, 2019,July 31, 2020, a total of 89,713,69290,650,353 shares of common stock, $0.01 par value per share, were outstanding.



NEWPARK RESOURCES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE AND NINESIX MONTHS ENDED
SEPTEMBERJUNE 30, 20192020



2
ITEM 1.
2
2
3
4
5
6
7
ITEM 2.
1916
ITEM 3.
3230
ITEM 4.
3230
3331
ITEM 1.
3331
ITEM 1A.
3331
ITEM 2.
3331
ITEM 3.
3331
ITEM 4.
3331
ITEM 5.
3331
ITEM 6.
3432
3533

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. We also may provide oral or written forward-looking statements in other materials we release to the public. Words such as “will,” “may,” “could,” “would,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them. These forward-looking statements reflect the current views of our management;management as of the filing date of this Quarterly Report on Form 10-Q and include statements regarding the impact of the COVID-19 pandemic; however, various risks, uncertainties, contingencies, and other factors, some of which are beyond our control, are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those expressed in, or implied by, these statements.
We assume no obligation to update, amend, or clarify publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by securities laws. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur.
For further information regarding these and other factors, risks, and uncertainties that could cause actual results to differ, we refer you to the risk factors set forth in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.2019, and in Part II Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020 and this Quarterly Report on Form 10-Q.
1

PART I FINANCIAL INFORMATION
PART I  FINANCIAL INFORMATION
ITEM 1.Financial Statements
ITEM 1. Financial Statements
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands, except share data)September 30, 2019 December 31, 2018(In thousands, except share data)June 30, 2020December 31, 2019
ASSETS   ASSETS  
Cash and cash equivalents$53,673
 $56,118
Cash and cash equivalents$42,942  $48,672  
Receivables, net236,637
 254,394
Receivables, net139,627  216,714  
Inventories183,443
 196,896
Inventories177,973  196,897  
Prepaid expenses and other current assets18,703
 15,904
Prepaid expenses and other current assets20,657  16,526  
Total current assets492,456
 523,312
Total current assets381,199  478,809  
   
Property, plant and equipment, net316,498
 316,293
Property, plant and equipment, net297,234  310,409  
Operating lease assets29,697
 —
Operating lease assets33,524  32,009  
Goodwill43,760
 43,832
Goodwill42,094  42,332  
Other intangible assets, net22,306
 25,160
Other intangible assets, net26,907  29,677  
Deferred tax assets4,471
 4,516
Deferred tax assets3,047  3,600  
Other assets3,423
 2,741
Other assets3,040  3,243  
Total assets$912,611
 $915,854
Total assets$787,045  $900,079  
   
LIABILITIES AND STOCKHOLDERS’ EQUITY   LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current debt$5,003
 $2,522
Current debt$10,519  $6,335  
Accounts payable77,743
 90,607
Accounts payable52,364  79,777  
Accrued liabilities43,858
 48,797
Accrued liabilities33,261  42,750  
Total current liabilities126,604
 141,926
Total current liabilities96,144  128,862  
   
Long-term debt, less current portion157,355
 159,225
Long-term debt, less current portion125,291  153,538  
Noncurrent operating lease liabilities24,336
 —
Noncurrent operating lease liabilities27,392  26,946  
Deferred tax liabilities36,692
 37,486
Deferred tax liabilities21,875  34,247  
Other noncurrent liabilities7,993
 7,536
Other noncurrent liabilities8,906  7,841  
Total liabilities352,980
 346,173
Total liabilities279,608  351,434  
   
Commitments and contingencies (Note 10)


 


Commitments and contingencies (Note 9)Commitments and contingencies (Note 9)
   
Common stock, $0.01 par value (200,000,000 shares authorized and 106,696,719 and 106,362,991 shares issued, respectively)1,067
 1,064
Common stock, $0.01 par value (200,000,000 shares authorized and 107,429,802 and 106,696,719 shares issued, respectively)Common stock, $0.01 par value (200,000,000 shares authorized and 107,429,802 and 106,696,719 shares issued, respectively)1,074  1,067  
Paid-in capital618,632
 617,276
Paid-in capital623,269  620,626  
Accumulated other comprehensive loss(71,770) (67,673)Accumulated other comprehensive loss(73,308) (67,947) 
Retained earnings151,303
 148,802
Retained earnings93,292  134,119  
Treasury stock, at cost (17,003,058 and 15,530,952 shares, respectively)(139,601) (129,788)
Treasury stock, at cost (16,784,471 and 16,958,418 shares, respectively)Treasury stock, at cost (16,784,471 and 16,958,418 shares, respectively)(136,890) (139,220) 
Total stockholders’ equity559,631
 569,681
Total stockholders’ equity507,437  548,645  
Total liabilities and stockholders’ equity$912,611
 $915,854
Total liabilities and stockholders’ equity$787,045  $900,079  
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

2

Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended
September 30,		 Nine Months Ended
September 30,		 Three Months Ended
June 30,		Six Months Ended
June 30,
(In thousands, except per share data)2019 2018 2019 2018(In thousands, except per share data)2020201920202019
Revenues$202,763
 $235,329
 $630,648
 $698,884
Revenues$101,946  $216,412  $266,496  $427,885  
Cost of revenues169,429
 194,730
 522,338
 569,665
Cost of revenues112,290  177,933  258,374  352,909  
Selling, general and administrative expenses27,017
 29,820
 85,796
 85,482
Selling, general and administrative expenses20,937  28,037  45,633  58,779  
Other operating (income) loss, net29
 725
 (367) 702
Operating income6,288
 10,054
 22,881
 43,035
Other operating income, netOther operating income, net(742) (472) (1,086) (396) 
Operating income (loss)Operating income (loss)(30,539) 10,914  (36,425) 16,593  
       
Foreign currency exchange (gain) loss828
 (89) 756
 594
Foreign currency exchange (gain) loss781  990  2,763  (72) 
Interest expense, net3,628
 3,668
 10,807
 10,659
Interest expense, net2,912  3,523  6,113  7,179  
Income before income taxes1,832
 6,475
 11,318
 31,782
Gain on extinguishment of debtGain on extinguishment of debt(1,334) —  (419) —  
Income (loss) before income taxesIncome (loss) before income taxes(32,898) 6,401  (44,882) 9,486  
       
Provision for income taxes3,273
 2,831
 7,171
 10,070
Provision (benefit) for income taxesProvision (benefit) for income taxes(6,654) 2,095  (6,490) 3,898  
Net income (loss)$(1,441) $3,644
 $4,147
 $21,712
Net income (loss)$(26,244) $4,306  $(38,392) $5,588  
       
Net income (loss) per common share - basic:$(0.02) $0.04
 $0.05
 $0.24
Net income (loss) per common share - basic:$(0.29) $0.05  $(0.43) $0.06  
Net income (loss) per common share - diluted:$(0.02) $0.04
 $0.05
 $0.23
Net income (loss) per common share - diluted:$(0.29) $0.05  $(0.43) $0.06  
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

3

Newpark Resources, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

Three Months Ended
September 30,		 Nine Months Ended
September 30,		 Three Months Ended
June 30,		Six Months Ended
June 30,
(In thousands)2019 2018 2019 2018(In thousands)2020201920202019
       
Net income (loss)$(1,441) $3,644
 $4,147
 $21,712
Net income (loss)$(26,244) $4,306  $(38,392) $5,588  
       
Foreign currency translation adjustments (net of tax benefit of $713, $0, $604, $987)(3,897) (1,670) (4,097) (11,548)
Foreign currency translation adjustments (net of tax benefit (expense) of $326, $(179), $598, $(109))Foreign currency translation adjustments (net of tax benefit (expense) of $326, $(179), $598, $(109))2,132  1,721  (5,361) (200) 
       
Comprehensive income (loss)$(5,338) $1,974
 $50
 $10,164
Comprehensive income (loss)$(24,112) $6,027  $(43,753) $5,388  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

4

Newpark Resources, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

(In thousands)Common Stock Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Total(In thousands)Common StockPaid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTreasury StockTotal
Balance at June 30, 2019$1,067
 $618,626
 $(67,873) $153,395
 $(139,086) $566,129
Balance at March 31, 2020Balance at March 31, 2020$1,067  $622,115  $(75,440) $120,501  $(137,884) $530,359  
Net loss—
 —
 —
 (1,441) —
 (1,441)Net loss—  —  —  (26,244) —  (26,244) 
Employee stock options, restricted stock and employee stock purchase planEmployee stock options, restricted stock and employee stock purchase plan7  (331) —  (965) 994  (295) 
Stock-based compensation expenseStock-based compensation expense—  1,485  —  —  —  1,485  
Foreign currency translation, net of taxForeign currency translation, net of tax—  —  2,132  —  —  2,132  
Balance at June 30, 2020Balance at June 30, 2020$1,074  $623,269  $(73,308) $93,292  $(136,890) $507,437  
Balance at March 31, 2019Balance at March 31, 2019$1,064  $622,554  $(69,594) $150,084  $(134,320) $569,788  
Net incomeNet income—  —  —  4,306  —  4,306  
Employee stock options, restricted stock and employee stock purchase plan—
 (2,495) —
 (651) 2,979
 (167)Employee stock options, restricted stock and employee stock purchase plan3  (5,833) —  (995) 5,758  (1,067) 
Stock-based compensation expense—
 2,501
 —
 —
 —
 2,501
Stock-based compensation expense—  1,905  —  —  —  1,905  
Treasury shares purchased at cost—
 —
 —
 —
 (3,494) (3,494)Treasury shares purchased at cost—  —  —  —  (10,524) (10,524) 
Foreign currency translation, net of tax—
 —
 (3,897) —
 —
 (3,897)Foreign currency translation, net of tax—  —  1,721  —  —  1,721  
Balance at September 30, 2019$1,067
 $618,632
 $(71,770) $151,303
 $(139,601) $559,631
Balance at June 30, 2019Balance at June 30, 2019$1,067  $618,626  $(67,873) $153,395  $(139,086) $566,129  
           
Balance at June 30, 2018$1,061
 $611,667
 $(63,097) $134,589
 $(129,497) $554,723
Net income—
 —
 —
 3,644
 —
 3,644
Balance at December 31, 2019Balance at December 31, 2019$1,067  $620,626  $(67,947) $134,119  $(139,220) $548,645  
Cumulative effect of accounting changeCumulative effect of accounting change—  —  —  (735) —  (735) 
Net lossNet loss—  —  —  (38,392) —  (38,392) 
Employee stock options, restricted stock and employee stock purchase plan2
 35
 —
 —
 (232) (195)Employee stock options, restricted stock and employee stock purchase plan7  (434) —  (1,700) 2,330  203  
Stock-based compensation expense—
 3,649
 —
 —
 —
 3,649
Stock-based compensation expense—  3,077  —  —  —  3,077  
Foreign currency translation, net of tax—
 —
 (1,670) —
 —
 (1,670)Foreign currency translation, net of tax—  —  (5,361) —  —  (5,361) 
Balance at September 30, 2018$1,063
 $615,351
 $(64,767) $138,233
 $(129,729) $560,151
Balance at June 30, 2020Balance at June 30, 2020$1,074  $623,269  $(73,308) $93,292  $(136,890) $507,437  
           
Balance at December 31, 2018$1,064
 $617,276
 $(67,673) $148,802
 $(129,788) $569,681
Balance at December 31, 2018$1,064  $617,276  $(67,673) $148,802  $(129,788) $569,681  
Net income—
 —
 —
 4,147
 —
 4,147
Net income—  —  —  5,588  —  5,588  
Employee stock options, restricted stock and employee stock purchase plan3
 (8,019) —
 (1,646) 9,218
 (444)Employee stock options, restricted stock and employee stock purchase plan3  (5,524) —  (995) 6,239  (277) 
Stock-based compensation expense—
 9,375
 —
 —
 —
 9,375
Stock-based compensation expense—  6,874  —  —  —  6,874  
Treasury shares purchased at cost—
 —
 —
 —
 (19,031) (19,031)Treasury shares purchased at cost—  —  —  —  (15,537) (15,537) 
Foreign currency translation, net of tax—
 —
 (4,097) —
 —
 (4,097)Foreign currency translation, net of tax—  —  (200) —  —  (200) 
Balance at September 30, 2019$1,067
 $618,632
 $(71,770) $151,303
 $(139,601) $559,631
           
Balance at December 31, 2017$1,046
 $603,849
 $(53,219) $123,375
 $(127,571) $547,480
Cumulative effect of accounting changes—
 —
 —
 (6,764) —
 (6,764)
Net income—
 —
 —
 21,712
 —
 21,712
Employee stock options, restricted stock and employee stock purchase plan17
 3,005
 —
 (90) (2,158) 774
Stock-based compensation expense—
 8,497
 —
 —
 —
 8,497
Foreign currency translation, net of tax—
 —
 (11,548) —
 —
 (11,548)
Balance at September 30, 2018$1,063
 $615,351
 $(64,767) $138,233
 $(129,729) $560,151
Balance at June 30, 2019Balance at June 30, 2019$1,067  $618,626  $(67,873) $153,395  $(139,086) $566,129  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

5

Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended September 30, Six Months Ended June 30,
(In thousands)2019 2018(In thousands)20202019
Cash flows from operating activities:   Cash flows from operating activities:  
Net income$4,147
 $21,712
Adjustments to reconcile net income to net cash provided by operations:   
Net income (loss)Net income (loss)$(38,392) $5,588  
Adjustments to reconcile net income (loss) to net cash provided by operations:Adjustments to reconcile net income (loss) to net cash provided by operations:  
Inventory impairmentsInventory impairments8,996  —  
Depreciation and amortization34,891
 34,346
Depreciation and amortization22,915  23,070  
Stock-based compensation expense9,375
 8,497
Stock-based compensation expense3,077  6,874  
Provision for deferred income taxes(787) (2,149)Provision for deferred income taxes(11,418) (1,514) 
Net provision for doubtful accounts1,044
 2,708
Credit loss expenseCredit loss expense726  789  
Gain on sale of assets(5,779) (552)Gain on sale of assets(2,163) (5,128) 
Gain on extinguishment of debtGain on extinguishment of debt(419) —  
Amortization of original issue discount and debt issuance costs4,589
 4,075
Amortization of original issue discount and debt issuance costs2,801  2,973  
Change in assets and liabilities:   Change in assets and liabilities: 
(Increase) decrease in receivables17,065
 (16,531)
(Increase) decrease in inventories11,873
 (34,829)
Decrease in receivablesDecrease in receivables66,510  6,583  
Decrease in inventoriesDecrease in inventories7,512  3,868  
Increase in other assets(3,621) (1,476)Increase in other assets(5,294) (5,058) 
Increase (decrease) in accounts payable(11,806) 7,106
Increase (decrease) in accounts payable(26,577) 6,207  
Decrease in accrued liabilities and other(7,805) (2,791)Decrease in accrued liabilities and other(3,261) (10,012) 
Net cash provided by operating activities53,186
 20,116
Net cash provided by operating activities25,013  34,240  
   
Cash flows from investing activities:   Cash flows from investing activities:  
Capital expenditures(35,803) (32,814)Capital expenditures(10,655) (23,866) 
Proceeds from sale of property, plant and equipment7,116
 1,477
Proceeds from sale of property, plant and equipment7,963  5,708  
Refund of proceeds from sale of a business—
 (13,974)
Business acquisitions, net of cash acquired—
 (249)
Net cash used in investing activities(28,687) (45,560)Net cash used in investing activities(2,692) (18,158) 
   
Cash flows from financing activities:   Cash flows from financing activities:  
Borrowings on lines of credit237,093
 275,801
Borrowings on lines of credit117,068  135,952  
Payments on lines of credit(242,263) (254,116)Payments on lines of credit(116,207) (141,317) 
Purchases of Convertible NotesPurchases of Convertible Notes(29,124) —  
Debt issuance costs(1,214) (149)Debt issuance costs—  (917) 
Proceeds from employee stock plans1,236
 3,813
Proceeds from employee stock plans—  1,090  
Purchases of treasury stock(21,678) (3,811)Purchases of treasury stock(326) (17,365) 
Other financing activities1,336
 2,140
Other financing activities2,480  2,758  
Net cash provided by (used in) financing activities(25,490) 23,678
Net cash used in financing activitiesNet cash used in financing activities(26,109) (19,799) 
   
Effect of exchange rate changes on cash(1,526) (3,798)Effect of exchange rate changes on cash(2,713) (125) 
   
Net decrease in cash, cash equivalents, and restricted cash(2,517) (5,564)Net decrease in cash, cash equivalents, and restricted cash(6,501) (3,842) 
Cash, cash equivalents, and restricted cash at beginning of period64,266
 65,460
Cash, cash equivalents, and restricted cash at beginning of period56,863  64,266  
Cash, cash equivalents, and restricted cash at end of period$61,749
 $59,896
Cash, cash equivalents, and restricted cash at end of period$50,362  $60,424  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

6

NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we collectively refer to as “we,” “our,” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.2019. Our fiscal year end is December 31, our thirdsecond quarter represents the three-monththree month period ended SeptemberJune 30, and our first nine monthshalf represents the nine-monthsix month period ended SeptemberJune 30. The results of operations for the thirdsecond quarter and first nine monthshalf of 20192020 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise noted, all currency amounts are stated in U.S. dollars.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of SeptemberJune 30, 2019,2020, our results of operations for the thirdsecond quarter and first nine monthshalf of 20192020 and 2018,2019, and our cash flows for the first nine monthshalf of 20192020 and 2018.2019. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 20182019 is derived from the audited consolidated financial statements at that date.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.
New Accounting Pronouncements
Standards Adopted in 20192020
Leases.Credit Losses. In February 2016, the Financial Accounting Standards Board (“FASB”) amended the guidance related to the accounting for leases. The new guidance provides principles for the recognition, measurement, presentation, and disclosure of leases and requires lessees to recognize both assets and liabilities arising from finance and operating leases. The classification as either a finance or operating lease will determine whether lease expense is recognized based on an effective interest method basis or on a straight-line basis over the term of the lease, respectively.
We adopted this new guidance as of January 1, 2019 using the modified retrospective transition method and recorded approximately $28 million of operating lease assets and liabilities as of January 1, 2019, with no cumulative effect adjustment to retained earnings. The new guidance had no impact on our consolidated statements of operations or cash flows. Results for reporting periods beginning after December 31, 2018 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance.
As permitted under the transition guidance within the new standard, we elected to carry forward the historical lease identification and classification for existing leases upon adoption. We have also made an accounting policy election to not recognize leases with an initial term of 12 months or less in the consolidated balance sheets. See Note 8 for additional required disclosures.
Standards Not Yet Adopted
Credit Losses. In June 2016, the FASB issued new guidance which requires financial assets measured at amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected. The new guidance requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, which will generally result in the earlier recognition of allowances for losses. Under previous guidance, reserves for uncollectible accounts receivable were determined on a specific identification basis when we believed that the required payment of specific amounts owed to us was not probable. Under the new guidance, our allowance for credit losses reflects losses that are expected over the contractual life of the asset, and takes into account historical loss experience, current and future economic conditions, and reasonable and supportable forecasts.
We adopted this new guidance as of January 1, 2020 using the modified retrospective transition method, and recorded a net reduction of $0.7 million to opening retained earnings to reflect the cumulative effect of adoption. Results for reporting periods beginning after December 31, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance. See Note 5 for additional required disclosures.
The cumulative effect of the changes made to our consolidated balance sheet for the adoption of the new accounting guidance for credit losses were as follows:

(In thousands)Balance at December 31, 2019Impact of Adoption of New Credit Losses GuidanceBalance at January 1, 2020
Receivables, net$216,714  $(959) $215,755  
Deferred tax assets3,600  59  3,659  
Deferred tax liabilities34,247  (165) 34,082  
Retained earnings134,119  (735) 133,384  
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Standards Not Yet Adopted
Income Taxes: Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued new guidance which is intended to simplify various aspects related to accounting for income taxes. This guidance is effective for us in the first quarter of 20202021 with early adoption permitted and will be applied using a modified retrospective transition method through a cumulative-effect adjustment, if any, to retained earnings as of the date of adoption. As part of our assessment work to date, we have formed an implementation work team and conducted a preliminary analysis of the new guidance. Based on our current financial assets measured at amortized cost basis, we anticipate the new guidance may require us to reflect additional credit loss expense; however, we have not yet completed an estimation of such amount and wepermitted. We are stillcurrently evaluating the overall impact of the new guidance on our consolidated financial statements and related disclosures.


Note 2 – Earnings Per Share
The following table presents the reconciliation of the numerator and denominator for calculating net income (loss) per share:
 Third Quarter First Nine Months
(In thousands, except per share data)2019 2018 2019 2018
Numerator       
Net income (loss) - basic and diluted$(1,441) $3,644
 $4,147
 $21,712
        
Denominator       
Weighted average common shares outstanding - basic89,675
 90,526
 89,863
 89,779
Dilutive effect of stock options and restricted stock awards—
 2,151
 1,676
 2,535
Dilutive effect of 2021 Convertible Notes—
 905
 —
 727
Weighted average common shares outstanding - diluted89,675
 93,582
 91,539
 93,041
        
Net income (loss) per common share       
Basic$(0.02) $0.04
 $0.05
 $0.24
Diluted$(0.02) $0.04
 $0.05
 $0.23

 Second QuarterFirst Half
(In thousands, except per share data)2020201920202019
Numerator 
Net income (loss) - basic and diluted$(26,244) $4,306  $(38,392) $5,588  
Denominator
Weighted average common shares outstanding - basic89,981  89,806  89,813  89,958  
Dilutive effect of stock options and restricted stock awards—  1,900  —  2,082  
Dilutive effect of Convertible Notes—  —  —  —  
Weighted average common shares outstanding - diluted89,981  91,706  89,813  92,040  
Net income (loss) per common share
Basic$(0.29) $0.05  $(0.43) $0.06  
Diluted$(0.29) $0.05  $(0.43) $0.06  
We excluded the following weighted-average potential shares from the calculations of diluted net income (loss) per share during the applicable periods because their inclusion would have been anti-dilutive:
 Third Quarter First Nine Months
(In thousands)2019 2018 2019 2018
Stock options and restricted stock awards4,989
 735
 1,812
 1,184

 Second QuarterFirst Half
(In thousands)2020201920202019
Stock options and restricted stock awards5,067  1,707  4,951  1,710  
For the thirdsecond quarter and first half of 2019,2020, we excluded all potentially dilutive stock options and restricted stock awards in calculating diluted earnings per share as the effect was anti-dilutive due to the net loss incurred for this period.these periods. The 2021 Convertible Notes (as defined in Note 7) only impact the calculation of diluted net income per share in periods that the average price of our common stock, as calculated in accordance with the terms of the indenture governing the 2021 Convertible Notes, exceeds the conversion price of $9.33 per share. We have the option to pay cash, issue shares of common stock, or any combination thereof for the aggregate amount due upon conversion of the 2021 Convertible Notes as further described in Note 7. If converted, we currently intend to settle the principal amount of the notes in cash and as a result, only the amounts payable in excess of the principal amount of the notes, if any, arewould be assumed to be settled with shares of common stock for purposes of computing diluted net income per share.


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Note 3 – Capital Stock and Repurchase Program
In November 2018, our Board of Directors authorized changes to our existingOur securities repurchase program. The authorization increased the amount under the repurchase program to $100 million,remains available for repurchases of any combination of our common stock and our 2021 Convertible Notes. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility (as defined in Note 7). As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of June 30, 2020, we had $51.9 million remaining under the program.
During the first nine monthshalf of 2020, we repurchased $33.1 million of our Convertible Notes in the open market under the repurchase program for a total cost of $29.1 million. There were 0 Convertible Notes repurchased under the program during 2019.
There were 0 shares of common stock repurchased under the repurchase program during the first half of 2020. During the first half of 2019, we repurchased an aggregate of 2,537,8332,047,014 shares of our common stock under our Board authorized repurchasethe program for a total cost of $19.0$15.5 million. There were 0 shares repurchased under
On May 27, 2020, our Board of Directors adopted a limited duration stockholder rights agreement which expires on May 1, 2021, whereby a dividend distribution of 1 right (each, a “Right”) for each outstanding share of our common stock was paid to holders of record as of the program duringclose of business on June 12, 2020. Each Right entitles the first nine monthsregistered holder to purchase from us one one-thousandth of 2018. Asa share of September 30, 2019, we had $81.0 million remaining underSeries D Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $12.00, subject to adjustment. Subject to certain exceptions, if a person or group acquires more than 10% of our outstanding common stock, the program.Rights will become exercisable for common stock having a value equal to two times the purchase price.

Note 4 – Stock-Based and Other Long-Term Incentive Compensation
During the second quarter of 2019, our stockholders approved an amendment to the 2015 Employee Equity Incentive Plan (“2015 Plan”) to increase the number of shares authorized for issuance under the 2015 Plan from 9,800,000 to 12,300,000 shares and remove the fungible share counting provision.
During the second quarter of 2019,2020, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved equity-based compensation to executive officers and other key employees consisting of 1,135,216 shares of2,474,377 restricted stock units which will primarily vest in equal installments over a three-yearthree-year period. At SeptemberJune 30, 2019, 3,341,0072020, 1,375,975 shares remained available for award under the 2015 Plan.Employee Equity Incentive Plan (“2015 Plan”). In addition, non-employee directors received a grant of 104,900 shares of156,886 restricted stock awards which will vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant date. The weighted average grant-date fair value was $7.34$2.06 per share for both the restricted stock units and restricted stock awards.
Also during the second quarter of 2019,2020, the Compensation Committee approved the issuance of cash-settledperformance-based cash awards to certain executive officers consisting ofwith a target amount of $2.3 million of performance-based cash awards.$2.6 million. The performance-based cash awards will be settled based on the relative ranking of our total shareholder return (“TSR”) as compared to the TSR of our designated peer group over a three-year performance period. The performance period began June 1, 2019May 2, 2020 and ends May 31, 2022,2023, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, 20222023 and the cash payout for each executive ranging from 0% to 200% of target. The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte-Carlo valuation model with changes in fair value recognized in the consolidated statements of operations.
In February 2019, the Compensation Committee modified our retirement policy applicable to cash and equity awards granted to include our Chief Executive Officer and those officers who report to our Chief Executive Officer, whom were previously excluded from the retirement policy. In addition, the Compensation Committee also modified the retirement policy for certain vested stock options that remain outstanding to extend the exercise period available following the qualifying retirement of eligible employees. As a result of these modifications, we recognized a pretax charge of approximately $4.0 million in the first quarter of 2019. This charge primarily reflects the acceleration of expense, as well as the incremental value associated with modifications to extend the exercise period of outstanding options, for previously-granted awards for retirement eligible executive officers.


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Note 5 – Receivables
Receivables consisted of the following:
(In thousands)September 30, 2019 December 31, 2018
Trade receivables:   
Gross trade receivables$226,670
 $248,176
Allowance for doubtful accounts(8,548) (10,034)
Net trade receivables218,122
 238,142
Income tax receivables11,286
 9,027
Other receivables7,229
 7,225
Total receivables, net$236,637
 $254,394

(In thousands)June 30, 2020December 31, 2019
Trade receivables:
Gross trade receivables$130,914  $207,554  
Allowance for credit losses(6,755) (6,007) 
Net trade receivables124,159  201,547  
Income tax receivables6,170  7,393  
Other receivables9,298  7,774  
Total receivables, net$139,627  $216,714  
Other receivables included $5.9$7.8 million and $6.3$6.2 million for value added, goods and service taxes related to foreign jurisdictions as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.
We adopted the new accounting guidance for credit losses as of January 1, 2020 (see Note 1 for additional information). To measure expected credit losses, we evaluate our receivables on a collective basis for assets that share similar risk characteristics. Our allowance for credit losses reflects losses that are expected over the contractual life of the asset, and takes into account historical loss experience, current and future economic conditions, and reasonable and supportable forecasts.
Changes in our allowance for credit losses were as follows:
First Half
(In thousands)20202019
Balance at beginning of period$6,007  $10,034  
Cumulative effect of accounting change959  —  
Credit loss expense726  789  
Write-offs, net of recoveries(937) (1,350) 
Balance at end of period$6,755  $9,473  


Note 6 – Inventories
Inventories consisted of the following:
(In thousands)September 30, 2019 December 31, 2018
Raw materials:   
Fluids systems$132,508
 $148,737
Mats and integrated services5,622
 1,485
Total raw materials138,130
 150,222
Blended fluids systems components36,648
 38,088
Finished goods - mats8,665
 8,586
Total inventories$183,443
 $196,896

(In thousands)June 30, 2020December 31, 2019
Raw materials:  
Fluids systems$118,684  $141,314  
Mats and integrated services3,982  5,049  
Total raw materials122,666  146,363  
Blended fluids systems components35,042  39,542  
Finished goods - mats20,265  10,992  
Total inventories$177,973  $196,897  
Raw materials for the Fluids Systems segment consists primarily of barite, chemicals, and other additives that are consumed in the production of our fluids systems. Raw materials for the Mats and Integrated Services segment consists primarily of resins, chemicals, and other materials used to manufacture composite mats, as well as materials that are consumed in providing spill containment and other services to our customers. Our blended fluids systems components consist of base fluid systems that have been either mixed internally at our blending facilities or purchased from third-party vendors. These base fluid systems require raw materials to be added, as needed to meet specified customer requirements.
Fluids Systems segment cost of revenues includes a total of $9.0 million of charges for the first half of 2020 for inventory write-downs, primarily attributable to the reduction in carrying values of certain inventory to their net realizable value.
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Note 7 – Financing Arrangements and Fair Value of Financial Instruments
Financing arrangements consisted of the following:

September 30, 2019 December 31, 2018
(In thousands)Principal Amount Unamortized Discount and Debt Issuance Costs Total Debt Principal Amount Unamortized Discount and Debt Issuance Costs Total Debt
2021 Convertible Notes$100,000
 $(13,707) $86,293
 $100,000
 $(17,752) $82,248
ABL Facility70,200
 —
 70,200
 76,300
 —
 76,300
Other debt5,865
 —
 5,865
 3,199
 —
 3,199
Total debt176,065
 (13,707) 162,358
 179,499
 (17,752) 161,747
Less: Current portion(5,003) —
 (5,003) (2,522) —
 (2,522)
Long-term debt$171,062
 $(13,707) $157,355
 $176,977
 $(17,752) $159,225



June 30, 2020December 31, 2019
(In thousands)Principal AmountUnamortized Discount and Debt Issuance CostsTotal DebtPrincipal AmountUnamortized Discount and Debt Issuance CostsTotal Debt
Convertible Notes$66,912  $(6,275) $60,637  $100,000  $(12,291) $87,709  
ABL Facility64,000  —  64,000  65,000  —  65,000  
Other debt11,173  —  11,173  7,164  —  7,164  
Total debt142,085  (6,275) 135,810  172,164  (12,291) 159,873  
Less: Current portion(10,519) —  (10,519) (6,335) —  (6,335) 
Long-term debt$131,566  $(6,275) $125,291  $165,829  $(12,291) $153,538  
2021 Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“2021 Convertible Notes”) that mature on December 1, 2021, unless earlier converted by the holders pursuant to the terms of the notes.which $66.9 million principal amount was outstanding at June 30, 2020. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.
Holders may convert the notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2021, only under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on March 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (regardless of whether consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the notes in effect on each applicable trading day;
•during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the conversion rate on each such trading day; or
•upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.
On or after June 1, 2021 until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time, regardless of whether any of the foregoing conditions have been satisfied. As of October 28, 2019,July 31, 2020, the notes were not convertible.
The notes are convertible into, at our election, cash, shares of common stock, or a combination of both, subject to satisfaction of specified conditions and during specified periods, as described above. If converted, we currently intend to pay cash for the principal amount of the notes converted. The conversion rate is 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date.
In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of SeptemberJune 30, 2019,2020, the carrying amount of the debt component was $86.3$60.6 million, which is net of the unamortized debt discount and debt issuance costs of $12.3 million and $1.4 million, respectively.$6.3 million. Including the impact of the unamortized debt discount and related deferred debt issuance costs, the effective interest rate on the notes is approximately 11.3%.
During the first half of 2020, we repurchased $33.1 million of our Convertible Notes in the open market for a total cost of $29.1 million, and recognized a net gain of $0.4 million reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement which replaced our previous credit agreement. In October 2017, we entered into an Amended and Restated Credit Agreement and in March 2019, we entered into a First Amendment to Amended and Restated Credit Agreement (as amended, the “ABL Facility”). The March 2019 amendment increased the amount available for borrowings, reduced applicable borrowing rates, and extended the term. The ABL Facility provides financing of up to $200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of $275.0 million, subject to certain conditions. As of SeptemberJune 30, 2019,2020, our total availability under the ABL Facility was $171.0$132.9 million, of which $70.2$64.0 million was drawn, resulting in remaining availability of $100.8$68.9 million.
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The ABL Facility terminates in March 2024; however, the ABL Facility has a springing maturity date that will accelerate the maturity of the ABL Facility to September 1, 2021 if, prior to such date, the 2021 Convertible Notes have not been repurchased, redeemed, refinanced, exchanged or otherwise satisfied in full or we have not escrowed an amount of funds, that together with the amount that we establish as a reserve against our borrowing capacity, is sufficient for the future settlement of the 2021 Convertible Notes at their maturity. The ABL Facility requires compliance with a minimum fixed charge coverage ratio and minimum unused availability of $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the 2021 Convertible Notes.
Borrowing availability under the ABL Facility is calculated based on eligible accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation also includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio and a minimum level of operating income for the Mats and Integrated Services segment.
Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate plus an applicable margin based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime rate of Bank of America, N.A. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50


to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL Facility. As of SeptemberJune 30, 2019,2020, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was 3.8%1.7% at SeptemberJune 30, 2019.2020. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of SeptemberJune 30, 2019,2020, the applicable commitment fee was 37.5 basis points.
The ABL Facility is a senior secured obligation, secured by first liens on substantially all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires compliance with a fixed charge coverage ratio if availability under the ABL Facility falls below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.
Other Debt. OurCertain of our foreign subsidiaries in Italy, India, and Canada maintain local credit arrangements consisting primarily of lines of credit or overdraft facilities which are generally renewed on an annual basis. We utilize local financing arrangements in our foreign operations in order to provide short-term local liquidity needs. We had $2.0$6.9 million and $1.1$4.8 million outstanding under these arrangements at SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.
At SeptemberIn addition, at June 30, 2019,2020, we had $13.1 million in outstanding letters of credit and performance bonds, for which the letters of credit are collateralized by $6.1 million in restricted cash. We also have a performance bond issued and outstanding of $6.0 million related to the appeals process for an ongoing income tax audit for our Mexico subsidiary. Additionally, our foreign operations had $33.0$52.1 million in outstanding letters of credit, performance bonds, and other guarantees primarily issued under a credit arrangement in Italy as well asfor which certain of the letters of credit that are collateralized by $2.0$7.4 million in restricted cash.
Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our 2021 Convertible Notes, approximated their fair values at SeptemberJune 30, 20192020 and December 31, 2018.2019. The estimated fair value of our 2021 Convertible Notes was $106.2$59.2 million at SeptemberJune 30, 20192020 and $120.9$101.4 million at December 31, 2018,2019, based on quoted market prices at these respective dates.


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Note 8 – LeasesIncome Taxes
We lease certain office space, manufacturing facilities, warehouses, land, and equipment. Our leases have remaining terms ranging from 1 to 10 years with various extension and termination options. We consider these options in determining the lease term used to establish our operating lease assets and liabilities. Lease agreements with lease and non-lease components are accountedThe benefit for as a single lease component. Leases with an initial term of 12 months or less are not recorded in the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
Leases consisted of the following:
(In thousands)Balance Sheet ClassificationSeptember 30, 2019
Assets:  
OperatingOperating lease assets$29,697
FinanceProperty, plant and equipment, net1,215
Total lease assets $30,912
Liabilities:  
Current:  
OperatingAccrued liabilities$6,093
FinanceCurrent debt271
Noncurrent:  
OperatingNoncurrent operating lease liabilities$24,336
FinanceLong-term debt, less current portion862
Total lease liabilities $31,562

Total operating lease expenses were $7.4 million for the third quarter of 2019, of which $4.9 million related to short-term leases and $2.5 million related to leases recognized in the balance sheet. Total operating lease expenses were $21.8income taxes was $6.5 million for the first nine monthshalf of 2019,2020, reflecting an effective tax benefit rate of which $14.3 million14%. This result primarily reflects the impact of the geographic composition of our pretax loss, where the tax benefit from losses in the U.S was partially offset by the tax expense related to short-term leases and $7.5 million related to leases recognized in the balance sheet. Total operating lease expenses approximate cash paid during each period. Amortization and interest for finance leases are not material. Operating lease expenses and amortization of leased assets for finance leases are included in either cost of revenues or selling, general and administrative expenses. Interest for finance leases is included in interest expense, net.
The maturity of lease liabilities as of September 30, 2019 is as follows:
(In thousands)Operating Leases Finance Leases Total
2019 (remainder of year)$2,017
 $89
 $2,106
20206,777
 312
 7,089
20215,500
 312
 5,812
20224,254
 312
 4,566
20233,196
 211
 3,407
Thereafter14,526
 —
 14,526
Total lease payments36,270
 1,236
 37,506
Less: Interest5,841
 103
 5,944
Present value of lease liabilities$30,429
 $1,133
 $31,562

During the third quarter and first nine months of 2019, we entered into $3.8 million and $6.7 million, respectively, of new operating lease liabilities in exchange for leased assets.


Lease Term and Discount RateSeptember 30, 2019
Weighted-average remaining lease term (years)
Operating leases7.4
Finance leases3.9
Weighted-average discount rate
Operating leases4.6%
Finance leases4.5%

As previously disclosed inearnings from our 2018 Annual Report on Form 10-K and under the previous lease accounting guidance, future minimum payments under non-cancelable operating leases at December 31, 2018, with initial or remaining terms in excess of one year are included in the table below. Future minimum payments under capital leases were not significant.
(In thousands) 
2019$9,112
20205,707
20214,630
20223,816
20233,144
Thereafter4,507
 $30,916




Note 9 – Income Taxes
international operations. The provision for income taxes was $7.2$3.9 million for the first nine monthshalf of 2019, reflecting an effective tax rate of 63%, compared to $10.1 million41%.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in March 2020 in the United States. The CARES Act contains several tax provisions, including additional carryback opportunities for net operating losses, temporary increases in the first nine monthsinterest deductibility threshold, and the acceleration of 2018, reflecting an effectiverefunds for any remaining alternative minimum tax rate of 32%. The effective tax rate for(“AMT”) carryforwards. While there was no material impact from the first nine months of 2019 was negatively impacted by the decreaseCARES Act in U.S. earnings, as well as non-deductible expenses, relative to the amount of pre-tax income. The effective tax rate for the first nine months of 2018 also included a $1.7 million net benefit related to the U.S. Tax Cuts and Jobs Act ("Tax Act") as well as $0.8 million in excess tax benefits related to the vesting of certain stock-based compensation awards during the period. Theour provision for income taxes was $3.3 million for the third quarterfirst half of 2019. As a result of a decline in anticipated earnings in2020, we are continuing to evaluate the U.S. for the full year 2019, the third quarter 2019 provision for income taxes includes a $2.0 million charge, primarily reflecting the impact of an increase in the projected full year 2019 tax rate.
We file income tax returns in the United States and several non-U.S. jurisdictions and are subject to examination in the various jurisdictions in which we file. Following an audit in 2015, the treasury authority in Mexico issued a tax assessment (inclusive of interest and penalties) in the amount of 60 million pesos (approximately $3.3 million) to our Mexico subsidiary, primarily in connection with the export of mats from Mexico in 2010. The mats that are the subject of this assessment were owned by a U.S. subsidiary and leased to our Mexico subsidiary for matting projects in the Mexican market. In 2010, we made the decision to move these mats out of Mexico to markets with higher demand. The Mexican treasury authority determined the exportprovisions of the mats was the equivalent of a sale and assessed taxes on the gross declared value of the exported mats to our Mexico subsidiary. We retained outside legal counsel and filed administrative appeals with the treasury authority, but we were notified in April 2018 that the last administrative appeal had been rejected.CARES Act. In response,addition, we filed an appeal in the Mexican Federal Tax Courtamendment to our 2018 U.S. federal income tax return in the second quarter of 2018, which required that we post2020 and received a bondrefund of $0.7 million for AMT carryforwards in July 2020.
The CARES Act also permits most companies to defer paying their portion of certain applicable payroll taxes from the date the CARES Act was signed into law through December 31, 2020. The deferred amount will be due in two equal installments on December 31, 2021 and December 31, 2022. The deferred amount of the assessedapplicable payroll taxes (plus additional interest). In the fourth quarter of 2018, the Mexican Federal Tax Court issued a favorable judgment nullifying in full the tax assessment which was subsequently appealed by the treasury authority in Mexico. Following a judgment by the Mexican Court of Appeals, the Mexican Federal Tax Court, in the third quarter of 2019, confirmed the full nullification of the tax assessment based on a due process violation and recognized the treasury authority's right to cure the due process violation by starting a new tax audit. The treasury authority in Mexico is appealing the latest judgment from the Mexican Federal Tax Court. Although the tax appeals process has not concluded, we believe our tax position is properly reported in accordance with applicable tax laws and regulations in Mexico and intend to vigorously defend our position through the tax appeals process.$1.3 million at June 30, 2020.
We are also under examination by various tax authorities in other countries, and certain foreign jurisdictions have challenged the amounts of taxes due for certain tax periods. These audits are in various stages of completion. We fully cooperate with all audits, but defend existing positions vigorously. We evaluate the potential exposure associated with various filing positions and record a liability for uncertain tax positions as circumstances warrant. Although we believe all tax positions are reasonable and properly reported in accordance with applicable tax laws and regulations in effect during the periods involved, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals.



Note 109 – Commitments and Contingencies
In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state, and local levels. While the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possibleexpect that aany loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, has been incurred that is expected towill have a material adverse impact on our consolidated financial statements.
Kenedy, Texas Drilling Fluids Facility Fire
In July 2018, a fire occurred at our Kenedy, Texas drilling fluids facility, destroying the distribution warehouse, including inventory and surrounding equipment. In addition, nearby residences and businesses were evacuated as part of the response to the fire. In order to avoid any customer service disruptions, we implemented contingency plans to supply products from alternate facilities in the area and region. During the third quarter of 2018 and subsequently,Subsequently, we have received petitions seeking payment for alleged bodily injuries, property damage, and punitive damages claimed to have been incurred as a result of the fire and the subsequent efforts we undertook to remediate any potential smoke damage. As of SeptemberJune 30, 2019,2020, there are open claims remaining with 38 plaintiffs seeking a total of approximately $1.5 million. While no trial date has been set for the matter at this time, we2 plaintiffs. We have been advised by our insurer that these claims are insured under our general liability insurance program. While this event and related claims are covered by our property, business interruption, and general liability insurance programs, these programs contain self-insured retentions, which remain our financial obligations.
During 2018, we incurred fire-related costs of $4.8 million, which included $1.9 million for inventory and property, plant and equipment, $2.1 million in property-related cleanup and other costs, and $0.8 million relating to our self-insured retention for third-party claims. Based on the provisions of our insurance policies and initial insurance claims filed, we estimated $4.0 million in expected insurance recoveries and recognized a charge of $0.8 million in other operating (income) loss, net, in the third quarter of 2018. The insurance receivable balance included in other receivables was $0.3 million as of September 30, 2019, and $0.6 million as of December 31, 2018.programs. As of SeptemberJune 30, 2019,2020, the claims related to the fire under our property, business interruption, and general liability insurance programs have not been finalized.
Note 1110 – Supplemental Disclosures to the Statements of Cash Flows
Supplemental disclosures to the statements of cash flows are presented below:
 First Nine Months
(In thousands)2019 2018
Cash paid for:   
Income taxes (net of refunds)$10,095
 $11,899
Interest$5,702
 $5,507

First Half
(In thousands)20202019
Cash paid for:  
Income taxes (net of refunds)$4,081  $5,927  
Interest$3,572  $4,705  
Cash, cash equivalents, and restricted cash in the consolidated statements of cash flows consisted of the following:
(In thousands)June 30, 2020December 31, 2019
Cash and cash equivalents$42,942  $48,672  
Restricted cash (included in prepaid expenses and other current assets)7,420  8,191  
Cash, cash equivalents, and restricted cash$50,362  $56,863  
(In thousands)September 30, 2019 December 31, 2018
Cash and cash equivalents$53,673
 $56,118
Restricted cash (included in other current assets)8,076
 8,148
Cash, cash equivalents, and restricted cash$61,749
 $64,266



13

Note 1211 – Segment Data
Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers):
 Third Quarter First Nine Months
(In thousands)2019 2018 2019 2018
Revenues       
Fluids systems$152,547
 $180,970
 $485,744
 $538,087
Mats and integrated services50,216
 54,359
 144,904
 160,797
Total revenues$202,763
 $235,329
 $630,648
 $698,884
        
Operating income (loss)       
Fluids systems$5,893
 $8,288
 $21,951
 $32,092
Mats and integrated services10,049
 12,925
 32,863
 39,864
Corporate office(9,654) (11,159) (31,933) (28,921)
Total operating income$6,288
 $10,054
 $22,881
 $43,035

 Second QuarterFirst Half
(In thousands)2020201920202019
Revenues
Fluids systems$74,662  $172,544  $207,467  $333,197  
Mats and integrated services27,284  43,868  59,029  94,688  
Total revenues$101,946  $216,412  $266,496  $427,885  
Operating income (loss)
Fluids systems$(25,059) $12,184  $(27,327) $16,058  
Mats and integrated services1,005  9,276  4,067  22,814  
Corporate office(6,485) (10,546) (13,165) (22,279) 
Total operating income (loss)$(30,539) $10,914  $(36,425) $16,593  
The following table presents further disaggregated revenues for the Fluids Systems segment:
 Third Quarter First Nine Months
(In thousands)2019 2018 2019 2018
United States$98,140
 $106,992
 $318,353
 $303,794
Canada8,029
 16,960
 26,283
 51,317
Total North America106,169
 123,952
 344,636
 355,111
        
EMEA41,126
 46,614
 123,346
 147,595
Asia Pacific3,986
 4,064
 13,649
 12,224
Latin America1,266
 6,340
 4,113
 23,157
Total International46,378
 57,018
 141,108
 182,976
        
Total Fluids Systems revenues$152,547
 $180,970
 $485,744
 $538,087

Second QuarterFirst Half
(In thousands)2020201920202019
United States$42,670  $117,154  $116,330  $220,213  
Canada3,066  4,988  16,326  18,254  
Total North America45,736  122,142  132,656  238,467  
EMEA26,036  44,455  68,173  82,220  
Other2,890  5,947  6,638  12,510  
Total International28,926  50,402  74,811  94,730  
Total Fluids Systems revenues$74,662  $172,544  $207,467  $333,197  
The following table presents further disaggregated revenues for the Mats and Integrated Services segment:
Second QuarterFirst Half
(In thousands)2020201920202019
Service revenues$12,930  $19,909  $27,031  $41,059  
Rental revenues9,170  17,675  22,672  39,255  
Product sales revenues5,184  6,284  9,326  14,374  
Total Mats and Integrated Services revenues$27,284  $43,868  $59,029  $94,688  
 Third Quarter First Nine Months
(In thousands)2019 2018 2019 2018
Service revenues$18,930
 $22,989
 $59,989
 $68,740
Rental revenues16,700
 19,911
 55,955
 59,661
Product sales revenues14,586
 11,459
 28,960
 32,396
Total Mats and Integrated Services revenues$50,216
 $54,359
 $144,904
 $160,797



Note 13 – Subsequent Event
In October 2019, we completedDuring March 2020, oil prices collapsed due to geopolitical events along with the acquisitionworldwide effects of Cleansorb Limited (“Cleansorb”),the COVID-19 pandemic, which led to a U.K. based provider of specialty chemicals forrapid decline in customer activity in the oil and natural gas industry,exploration and production (“E&P”) industry. As of June 30, 2020, the U.S. active rig count was 265, reflecting a 66% decline from the first quarter 2020 average level. In response to the deteriorating U.S. land oil and natural gas market, we initiated certain headcount reductions and other cost reduction programs late in the first quarter of 2020, and continued these actions in the second quarter of 2020.
As part of the cost reduction programs, we have reduced our global employee base by approximately 550 (25%) in the first half of 2020. As a result of these workforce reductions, our operating results for the second quarter of 2020 include $2.8 million of total severance costs ($2.6 million in Fluids Systems and $0.2 million in our Corporate office), with $2.0 million in cost of revenues and $0.8 million in selling, general and administrative expenses. Our operating results for the first half of 2020 include $3.5 million of total severance costs ($3.1 million in Fluids Systems and $0.4 million in our Corporate office), with $2.4 million in cost of revenues and $1.1 million in selling, general and administrative expenses. These costs have been substantially paid as of June 30, 2020.
14

We recognized $11.9 million of total charges for inventory write-downs, severance costs, and facility exit costs in the second quarter of 2020, with $11.7 million in the Fluids Systems segment and $0.2 million in the Corporate office. We recognized $13.3 million of total charges for inventory write-downs, severance costs, and facility exit costs in the first half of 2020, with $12.9 million in the Fluids Systems segment and $0.4 million in the Corporate office. See below for details of charges in the Fluids Systems segment.
Second QuarterFirst Half
(In thousands)2020201920202019
Inventory write-downs$8,269  $—  $8,996  $—  
Severance costs2,593  333  3,099  868  
Facility exit costs800  —  800  —  
Total Fluids Systems impairments and other charges$11,662  $333  $12,895  $868  

We also made the decision in late 2019 to wind down our Brazil operations. At June 30, 2020, we had $11.8 million of accumulated translation losses related to our subsidiary in Brazil. As such, we will reclassify these losses and recognize a charge to income at such time when we have substantially liquidated our subsidiary in Brazil.
As of June 30, 2020, our consolidated balance sheet includes $42.1 million of goodwill, all of which relates to the Mats and Integrated Services segment. Goodwill and other indefinite-lived intangible assets are tested for impairment annually as of November 1, or more frequently, if indicators of impairment exists. In March 2020, primarily as a result of the collapse in oil prices and the expected declines in the U.S. land E&P markets, along with a significant decline in the quoted market prices of our common stock, we considered these developments to be a potential indicator of impairment that required us to complete an interim goodwill impairment evaluation. As such, in March 2020, we estimated the fair value of our Mats and Integrated Services reporting unit based on our current forecasts and expectations for market conditions and determined that even though the estimated fair value had decreased, the fair value remained substantially in excess of its net carrying value, and therefore, no impairment was required. During the second quarter of 2020, we determined that there were no further expandsindicators of events or changes in circumstances that would more likely than not reduce the fair value below its carrying amount.
As of June 30, 2020, our fluids technology portfolioconsolidated balance sheet also includes $297.2 million of property, plant and capabilities. The purchase priceequipment, net, and $26.4 million of finite-lived intangible assets, net, which combined includes $167.0 million in the Fluids Systems segment and $145.8 million in the Mats and Integrated Services segment. We review property, plant and equipment, finite-lived intangible assets and certain other assets for this acquisitionimpairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We assess recoverability based on expected undiscounted future net cash flows. Due to the changes in market conditions, we have reviewed these assets for impairment during the first half of 2020 and determined that the estimated undiscounted cash flows exceeded the carrying value, and therefore, no impairment was $18.7 million, net of cash acquired, and was funded with borrowings under the ABL Facility.


required.

15

ITEM 2.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2018.2019. Our thirdsecond quarter represents the three-monththree month period ended SeptemberJune 30 and our first nine monthshalf represents the nine-monthsix month period ended SeptemberJune 30. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”
Overview
We are a geographically diversified supplier providing products, as well as rentals and servicesservices. We operate our business through two reportable segments: Fluids Systems, which primarily toserves the oil and natural gas exploration and production (“E&P”) industry. We operate our business through two reportable segments: Fluids Systemsindustry, and Mats and Integrated Services. In addition to the E&P industry, our Mats and Integrated Services, segmentwhich serves a variety of industries, including theE&P, electrical transmission & distribution, pipeline, solar,renewable energy, petrochemical, and construction industries.
Our operating results, particularly for the Fluids Systems segment, depend to a large extent, on oil and natural gas drilling activity levels in the markets we serve and particularly for the Fluids Systems segment, the nature of the drilling operations (including the depth and whether the wells are drilled vertically or horizontally), which governs the revenue potential of each well. Drilling activity levels, in turn, depend on a variety of factors, including oil and natural gas commodity pricing, inventory levels, product demand, and regulatory restrictions. Oil and natural gas prices and activity are cyclical and volatile, and this market volatility has a significant impact on our operating results.
While our revenue potential is driven by a number of factors including those described above, rig count data remains the most widely accepted indicator of drilling activity. Average North American rig count data for the thirdsecond quarter and first nine monthshalf of 20192020 as compared to the same periods of 20182019 is as follows:
 Third Quarter 2019 vs 2018
 2019 2018 Count %
U.S. Rig Count920
 1,051
 (131) (12)%
Canada Rig Count132
 209
 (77) (37)%
North America Rig Count1,052
 1,260
 (208) (17)%
First Nine Months 2019 vs 2018 Second Quarter2020 vs 2019
2019 2018 Count % 20202019Count%
U.S. Rig Count984
 1,019
 (35) (3)%U.S. Rig Count392  989  (597) (60)%
Canada Rig Count132
 195
 (63) (32)%Canada Rig Count25  82  (57) (70)%
North America Rig Count1,116
 1,214
 (98) (8)%North America Rig Count417  1,071  (654) (61)%
First Half2020 vs 2019
20202019Count%
U.S. Rig CountU.S. Rig Count588  1,016  (428) (42)%
Canada Rig CountCanada Rig Count110  132  (22) (17)%
North America Rig CountNorth America Rig Count698  1,148  (450) (39)%

Source: Baker Hughes Company
During 2019, U.S. rig counts steadily declined, exiting the year at 805 active rigs, a 26% decline from the end of 2018. During March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic. As a result, average U.S. rig counts in the second quarter of 2020 declined 50% from the first quarter of 2020 average level. The pace of decline in the U.S. land market rig count has decreased in recent weeks, with the U.S. active rig count at 251 as of July 31, 2020. The Canada active rig count reflects both the current weakness in oil prices as well as normal seasonality for this market, with the highest rig count levels generally observed in the first quarter of each year, prior to Spring break-up. We anticipate that market activity may begin to improve from current levels through the remainder of 2020, although the ongoing impacts of the COVID-19 pandemic and an uncertain economic environment that will likely persist through the remainder of 2020 make the timing and pace of recovery difficult to predict.
Outside of North America, drilling activity is generally more stable as drilling activity in many countries is based on longer-term economic projections and multi-year drilling programs, which tends to reduce the impact of short-term changes in commodity prices on overall drilling activity. However, operations in several countries in the EMEA region experienced activity disruptions and project delays beginning in March 2020 which continued throughout the second quarter of 2020, driven by government-imposed restrictions on movements of personnel, quarantines of staffing, and logistical limitations as a result of the COVID-19 pandemic. We currently expect these disruptions and project delays will continue to impact international activity levels into the fourth quarter of 2020 before beginning to gradually recover late in 2020 and into early 2021, although the
Segment Overview
16

Our Fluids Systems segment, which generated 77%impact from the duration and magnitude of consolidated revenues for the first nine months of 2019, provides customized fluids solutionsongoing health pandemic and related government responses are very difficult to E&P customers globally, operating through four geographic regions: North America, Europe,predict.
In response to the Middle East and Africa (“EMEA”), Asia Pacific, and Latin America. International expansion, including the penetration of international oil companies (“IOCs”) and national oil companies (“NOCs”), is a key element of our Fluids Systems strategy, which has historically helped to stabilize segment revenues as North Americandeteriorating U.S. land oil and natural gas exploration activities have fluctuated significantly. Revenues from IOCmarket and NOC customers represent approximately one-thirdreduced demand for our products and services as a result of Fluids Systems segment revenues for the first nine monthsdecline in oil prices and the COVID-19 pandemic, we initiated a number of 2019 and 2018. Significant international contract awards with recent developments include:
In Kuwait, we provide drilling and completion fluids and related services for land operations under a multi-year contract with Kuwait Oil Company (“KOC”), which began in 2014. Following a tender process with KOC, we have received two new contract awards to provide drilling and completion fluids, along with related services, covering a five-year term which beganactions late in the first quarter of 2019. 2020 aimed at conserving cash and protecting our liquidity, and continued these actions in the second quarter of 2020, including:
•The initial revenue valueimplementation of cost reduction programs, including workforce reductions, employee furloughs, the suspension of the combined awards is


approximately $165 millionCompany’s matching contributions to its U.S. defined contribution plan, and expands our presence to includetemporary salary reductions effective April 1, 2020 for a second basesignificant portion of operations in Northern Kuwait. The transitionU.S. employees, including a 15% cut to the new contracts resulted in recent fluctuations in revenues, with first nine months of 2019 revenues reflecting a $5 million decline fromsalaries paid to executive officers and the first nine months of 2018. However, based on the customer plans currently in place, we expect the revenue levelsannual cash retainers paid to all non-employee members of the new awardsBoard of Directors;
•The initiation of additional actions to increase and eventually surpassfurther reduce the levels achieved on the previous contract.
In Algeria, we provide drilling and completion fluids and related services to Sonatrach under a multi-year contract. Work under Lot 1 and Lot 3 of a three-year contract awarded in 2015 (“2015 Contract”) was completed in the fourth quarter of 2018. During 2018, Sonatrach initiated a new tender (“2018 Tender”), for a three-year term succeeding the 2015 Contract. For the 2018 Tender, Sonatrach adopted a change in its procurement process, limiting the number of Lots that could be awarded to major service providers, which consequently reduced the potential revenueoperational footprint of the 2018 Tender as comparedFluids Systems business in U.S. land, to the 2015 Contract. Based upon the new contract awarded under the 2018 Tender, we expect that revenue from Sonatrach will be approximately $125 million over the three-year term, which would resultbetter align our cost structure with expected declines in a reductionmarket activity levels; and
•The elimination of approximately $25 million per year as compared to the prior activity levels. Consequently, with the transition to the new contract that began in late 2018, first nine months of 2019 revenues reflect a $17 million decline from the first nine months of 2018.all non-critical capital investments.
In Australia, we provided drilling and completion fluids and related services under a contract with Baker Hughes Company, asAs part of its integrated service offering in support of the Greater Enfield project in offshore Western Australia. Work under this contract began in the first quarter of 2018 and was substantially completed in the third quarter of 2019.
In Brazil,cost reduction programs, we provided drilling fluids and related services under a multi-year contract with Petrobras for both onshore and offshore locations. Work under this contract beganhave reduced our global employee base by approximately 550 (25%) in the first half of 20092020.
We recognized $13.3 million of charges for inventory write-downs, severance costs, and concluded in December 2018. For the first nine months of 2018, our Brazilian subsidiary generated revenues of $19 million, substantially all of which related to the Petrobras contract. Despite the completion of the Petrobras contract, we are maintaining infrastructure in the Brazilian market to support our efforts to penetrate the offshore IOC market.
Our Fluids Systems business was also successful in securing three international tender awards during the third quarter of 2019. These include a new three-year contract for combined drilling and completion fluids with ENI to support their offshore drilling campaign in Cyprus and a two-year contract with PTT Exploration and Production in Algeria. Both of these contracts are expected to beginfacility exit costs in the first half of 2020, and combined, generate additional revenues of $15with $12.9 million to $20 million per year. In addition, we were awarded a new five-year contract with OMV Petrom, which extends our on-going work providing drilling and completion fluids to this customer in Romania. While we expect the total revenue under the new OMV Petrom contract to be relatively in-line with the current contract, annual revenues may fluctuate with changes in the customer’s drilling program.
In addition to our international expansion efforts, we are also expanding our presence in North America, capitalizing on our capabilities, infrastructure, and strong market position in the North American land drilling fluids markets to expand our drilling fluids presence within the deepwater Gulf of Mexico, as well as our presence in adjacent product offerings, including completion fluids and stimulation chemicals. To support this effort, we have incurred start-up costs, including costs associated with additional personnel and facility-related expenses, and have made additional capital investments. Revenues from the deepwater Gulf of Mexico increased to $27 million for the first nine months of 2019 compared to $8 million for the first nine months of 2018.
In October 2019, we completed the acquisition of Cleansorb Limited (“Cleansorb”), a U.K. based provider of specialty chemicals for the oil and natural gas industry, which further expands our fluids technology portfolio and capabilities. The purchase price for this acquisition was $18.7 million, net of cash acquired.
Our Mats and Integrated Services segment, which generated 23% of consolidated revenues for the first nine months of 2019, provides composite mat rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including E&P, electrical transmission & distribution, pipeline, solar, petrochemical, and construction industries across North America and Europe. We also sell composite mats to customers around the world. The expansion of our rental and service activities into non-E&P markets represents a strategic priority for us due to the magnitude of this market growth opportunity, as well as the market’s relative stability compared to E&P. The Mats and Integrated Services segment rental and service revenues from non-E&P markets increased to approximately $50 million for the first nine months of 2019 compared to approximately $45 million for the first nine months of 2018. Product sales revenues largely reflect sales to non-E&P and international E&P markets, and typically fluctuate based on the timing of customer orders.



Third Quarter of 2019 Compared to Third Quarter of 2018
Consolidated Results of Operations
Summarized results of operations for the third quarter of 2019 compared to the third quarter of 2018 are as follows:
 Third Quarter 2019 vs 2018
(In thousands)2019 2018 $ %
Revenues$202,763
 $235,329
 $(32,566) (14)%
Cost of revenues169,429
 194,730
 (25,301) (13)%
Selling, general and administrative expenses27,017
 29,820
 (2,803) (9)%
Other operating loss, net29
 725
 (696) (96)%
Operating income6,288
 10,054
 (3,766) (37)%
        
Foreign currency exchange (gain) loss828
 (89) 917
 NM
Interest expense, net3,628
 3,668
 (40) (1)%
Income before income taxes1,832
 6,475
 (4,643) (72)%
        
Provision for income taxes3,273
 2,831
 442
 16 %
Net income (loss)$(1,441) $3,644
 $(5,085) NM
Revenues
Revenues decreased 14% to $202.8 million for the third quarter of 2019, compared to $235.3 million for the third quarter of 2018. This $32.6 million decrease includes a $20.8 million (12%) decrease in revenues in North America, comprised of a $17.8 million decrease in the Fluids Systems segment and $3.0$0.4 million decrease in the Mats and Integrated Services segment. Revenues from our international operations decreased by $11.8Corporate office. The $12.9 million (19%), primarily driven by transitions in key contracts in our EMEA and Latin America regions, as described above. Additional information regarding the change in revenues is provided within the operating segment results below.
Cost of revenues
Cost of revenues decreased 13% to $169.4Fluids Systems charges includes $9.0 million for the third quarter of 2019, compared to $194.7inventory write-downs, $3.1 million for the third quarter of 2018. This $25.3 million decrease was primarily driven by the 14% decrease in revenues described above.
Selling, generalseverance costs, and administrative expenses
Selling, general and administrative expenses decreased $2.8 million to $27.0 million for the third quarter of 2019, compared to $29.8 million for the third quarter of 2018. The third quarter of 2018 included a corporate office charge of $1.8 million associated with the retirement and transition of our former Senior Vice President, General Counsel and Chief Administrative Officer. The remaining decrease was primarily driven by lower performance-based incentive compensation partially offset by higher professional fees primarily related to the Cleansorb acquisition and our long-term strategic planning project. Selling, general and administrative expenses as a percentage of revenues was 13.3% for the third quarter of 2019 compared to 12.7% for the third quarter of 2018.
Other operating loss, net
Other operating loss for the third quarter of 2018 primarily relates to the July 2018 fire at our Kenedy, Texas drilling fluids facility (see Note 10 for additional information).
Foreign currency exchange
Foreign currency exchange was a $0.8 million loss for the third quarter of 2019 compared to a $0.1 million gain for the third quarter of 2018,in facility closures and reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.


Interest expense, net
Interest expense was $3.6 million for the third quarter of 2019 compared to $3.7 million for the third quarter of 2018. Interest expense for the third quarter of 2019 and 2018 includes $1.6 million and $1.4 million, respectively, in noncash amortization of original issue discount and debt issuancerelated exit costs.
Provision for income taxes
The provision for income taxes was $3.3 million for the third quarter of 2019 compared to $2.8 million for the third quarter of 2018. As a result of a decline in anticipated earnings in the U.S. for the full year 2019, the third quarter 2019 provision for income taxes includes a $2.0 million charge, primarily reflecting the impact of an increase in the projected full year 2019 tax rate. The provision for income taxes for the third quarter of 2018 included a $0.6 million net benefit primarily related to finalizing our 2017 income tax returns in the U.S. and certain foreign tax jurisdictions, including revisions associated with the U.S. Tax Cuts and Jobs Act ("Tax Act").


Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):
 Third Quarter 2019 vs 2018
(In thousands)2019 2018 $ %
Revenues       
Fluids systems$152,547
 $180,970
 $(28,423) (16)%
Mats and integrated services50,216
 54,359
 (4,143) (8)%
Total revenues$202,763
 $235,329
 $(32,566) (14)%
        
Operating income (loss)       
Fluids systems$5,893
 $8,288
 $(2,395)  
Mats and integrated services10,049
 12,925
 (2,876)  
Corporate office(9,654) (11,159) 1,505
  
Total operating income$6,288
 $10,054
 $(3,766)  
        
Segment operating margin       
Fluids systems3.9% 4.6%    
Mats and integrated services20.0% 23.8%    
Fluids Systems
Revenues
Total revenues for this segment consisted of the following:
 Third Quarter 2019 vs 2018
(In thousands)2019 2018 $ %
United States$98,140
 $106,992
 $(8,852) (8)%
Canada8,029
 16,960
 (8,931) (53)%
Total North America106,169
 123,952
 (17,783) (14)%
        
EMEA41,126
 46,614
 (5,488) (12)%
Asia Pacific3,986
 4,064
 (78) (2)%
Latin America1,266
 6,340
 (5,074) (80)%
Total International46,378
 57,018
 (10,640) (19)%
        
Total Fluids Systems revenues$152,547
 $180,970
 $(28,423) (16)%
North America revenues decreased 14% to $106.2 million for the third quarter of 2019 compared to $124.0 million for the third quarter of 2018. This decrease was primarily attributable to lower customer drilling activity in North America land markets, as reflected by the 17% decline in average rig count. This decrease was partially offset by market share gains in the offshore Gulf of Mexico market, as well as an increase in footage drilled per rig due to improvements in customer drilling efficiency in the U.S. land markets.
Internationally, revenues decreased 19% to $46.4 million for the third quarter of 2019 compared to $57.0 million for the third quarter of 2018. This decrease was primarily attributable to declines related to the contract transitions described above in Algeria and Brazil.


Operating income
The Fluids Systems segment generated operating income of $5.9 million for the third quarter of 2019 compared to operating income of $8.3 million for the third quarter of 2018. Operating expenses for the third quarter of 2018 included a total of $2.5 million of charges associated with severance costs related to workforce reductions in connection with the completion of the contract with Petrobras in Brazil, the Kenedy, Texas facility fire, and expenses related to the conversion of a drilling fluids facility into a completion fluids facility. Excluding these charges, the decrease in operating income includes a $3.3 million decline from North American operations and a $1.6 million decline from international operations. This decline in operating income is primarily attributable to the decreases in revenues described above.
While we have taken certain actions to reduce our workforce and cost structure, as activity levels have declined, our business contains high levels of fixed costs, including significant facility and personnel expenses. We continue to evaluate under-performing areas as well as opportunities to further enable a more efficient and scalable cost structure. In the absence of a longer-term increase in activity levels, we may incur future charges related to further cost reduction efforts or potential asset impairments, which may negatively impact our future results.
Segment Overview
Our Fluids Systems segment, which generated 78% of consolidated revenues for the first half of 2020, provides customized drilling, completion, and stimulation fluids solutions to E&P customers primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific and Latin America. International expansion, including the penetration of international oil companies (“IOCs”) and national oil companies (“NOCs”), is a key element of our Fluids Systems strategy, which has historically helped to stabilize segment revenues while North American oil and natural gas exploration activities have fluctuated significantly. Revenues from IOC and NOC customers represented approximately 44% of Fluids Systems segment revenues for the first half of 2020 compared to approximately 29% for the first half of 2019.
In addition to our international expansion efforts, we have also expanded our presence in the deepwater Gulf of Mexico, capitalizing on our capabilities, infrastructure, and strong market position, as well as through product line extensions into adjacent product offerings, including completion fluids. Revenues for drilling and completion fluids from offshore Gulf of Mexico increased to $30 million for the first half of 2020 compared to $22 million for the first half of 2019.
In response to the increasing market demand for cleaning products following the COVID-19 pandemic, we began leveraging our chemical blending capacity and technical expertise to begin producing a variety of disinfectants and cleaning products in the second quarter of 2020. While not significant, we began supplying our first customer order in the second quarter and continue to work with several other potential customers with plans to ramp up production over the next several months.
Our Mats and Integrated Services
Revenues
Total segment, which generated 22% of consolidated revenues for this segment consistedthe first half of 2020, provides composite mat rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including E&P, electrical transmission & distribution, pipeline, renewable energy, petrochemical, and construction industries across North America and Europe. We also sell composite mats to customers around the following:world.

17

 Third Quarter 2019 vs 2018
(In thousands)2019 2018 $ %
Rental and service revenues$35,630
 $42,900
 $(7,270) (17)%
Product sales revenues14,586
 11,459
 3,127
 27 %
Total Mats and Integrated Services revenues$50,216
 $54,359
 $(4,143) (8)%
Rental and service revenues decreased $7.3 million to $35.6 million for the third quarterThe expansion of 2019 compared to $42.9 million for the third quarter of 2018, primarily due to a decrease in revenues from E&P customers of approximately 35%, resulting from lower exploration activity and weakness in commodity prices. This decline was partially offset by an increase of approximately 22% in non-E&Pour rental and service revenues. Product sales revenues were $14.6 millionactivities in non-E&P markets remains a strategic priority for us due to the third quartermagnitude of 2019this market growth opportunity, as well as the market’s relative stability compared to $11.5 million for the third quarter of 2018. Revenues from product sales have typically fluctuated based on the timing of mat orders from customers.
Operating income
E&P. The Mats and Integrated Services segment generated operating income of $10.0rental and service revenues from non-E&P markets was approximately $29 million for the third quarterfirst half of 20192020 compared to $12.9approximately $33 million for the thirdfirst half of 2019. Product sales revenues largely reflect sales to utility customers and other non-E&P markets, and typically fluctuate based on the timing of customer orders. Including product sales, total revenues from non-E&P markets represented approximately 64% of total segment revenues for the first half of 2020 compared to approximately 45% of total segment revenues for the first half of 2019. During the first half of 2020, our business was impacted by the COVID-19 pandemic, as customers delayed sales orders and project timing citing COVID-related market uncertainty, permitting delays, and logistical restrictions. As a result, we are reducing our mat production levels for the remainder of 2020 to reduce current inventory levels, which may negatively impact our future results due to the high level of fixed costs in our manufacturing operations. We currently expect that increased activity for both rental projects and product sales remains highly dependent on our customers gaining confidence in the broader economic recovery. While customer quoting activity has improved from the lull seen during the second quarter of 2018, primarily attributable2020, the ongoing impact of these uncertainties, permitting delays, and logistical restrictions are difficult to the change in revenues as described above.predict.
Corporate Office
Corporate office expenses decreased $1.5 million to $9.7 million for the third quarter of 2019 compared to $11.2 million for the third quarter of 2018. This decrease was primarily driven by a $1.8 million charge in the third quarter of 2018 associated with the retirement and transition of our former Senior Vice President, General Counsel and Chief Administrative Officer, as well as lower performance-based incentive compensation for the third quarter of 2019, partially offset by higher professional fees primarily related to the Cleansorb acquisition and our long-term strategic planning project.
18



First Nine MonthsSecond Quarter of 20192020 Compared to First Nine MonthsSecond Quarter of 20182019
Consolidated Results of Operations
Summarized results of operations for the first nine monthssecond quarter of 20192020 compared to the first nine monthssecond quarter of 20182019 are as follows:
First Nine Months 2019 vs 2018 Second Quarter2020 vs 2019
(In thousands)2019 2018 $ %(In thousands)20202019$%
Revenues$630,648
 $698,884
 $(68,236) (10)%Revenues$101,946  $216,412  $(114,466) (53)%
Cost of revenues522,338
 569,665
 (47,327) (8)%Cost of revenues112,290  177,933  (65,643) (37)%
Selling, general and administrative expenses85,796
 85,482
 314
 — %Selling, general and administrative expenses20,937  28,037  (7,100) (25)%
Other operating (income) loss, net(367) 702
 (1,069) NM
Operating income22,881
 43,035
 (20,154) (47)%
Other operating income, netOther operating income, net(742) (472) (270) 57 %
Operating income (loss)Operating income (loss)(30,539) 10,914  (41,453) NM
       
Foreign currency exchange loss756
 594
 162
 27 %Foreign currency exchange loss781  990  (209) (21)%
Interest expense, net10,807
 10,659
 148
 1 %Interest expense, net2,912  3,523  (611) (17)%
Income before income taxes11,318
 31,782
 (20,464) (64)%
Gain on extinguishment of debtGain on extinguishment of debt(1,334) —  (1,334) NM
Income (loss) before income taxesIncome (loss) before income taxes(32,898) 6,401  (39,299) NM
       
Provision for income taxes7,171
 10,070
 (2,899) (29)%
Net income$4,147
 $21,712
 $(17,565) (81)%
Provision (benefit) for income taxesProvision (benefit) for income taxes(6,654) 2,095  (8,749) NM
Net income (loss)Net income (loss)$(26,244) $4,306  $(30,550) NM
Revenues
Revenues decreased 10%53% to $630.6$101.9 million for the first nine monthssecond quarter of 2019,2020, compared to $698.9$216.4 million for the first nine monthssecond quarter of 2018.2019. This $68.2$114.5 million decrease includes a $23.1$93.3 million (5%(57%) decrease in revenues in North America, comprised of a $12.6$76.4 million decrease in the Fluids Systems segment and a $16.9 million decrease in the Mats and Integrated Services segment and a $10.5 million decreasesegment. Revenues from our North America operations decreased primarily due to the 61% reduction in the Fluids Systems segment.North America rig count. Revenues from our international operations decreased by $45.1$21.2 million (23%(40%), primarily driven by transitions in key contractsactivity disruptions and project delays related to the COVID-19 pandemic in our EMEA and Latin America regions, as described above.region. Additional information regarding the change in revenues is provided within the operating segment results below.
Cost of revenues
Cost of revenues decreased 8%37% to $522.3$112.3 million for the first nine monthssecond quarter of 2019,2020, compared to $569.7$177.9 million for the first nine monthssecond quarter of 2018.2019. This $47.3$65.6 million decrease was primarily driven by the 10%53% decrease in revenues described above. In addition,Fluids Systems segment cost of revenues for the first nine monthssecond quarter of 2018 included $1.12020 includes $11.1 million inof charges related to inventory write-downs, severance costs, in Brazil.and facility exit costs. See the operating segment results below for information regarding our ongoing cost reduction actions.
Selling, general and administrative expenses
Selling, general and administrative expenses increased $0.3decreased $7.1 million to $85.8$20.9 million for the first nine monthssecond quarter of 2019,2020, compared to $85.5$28.0 million for the first nine monthssecond quarter of 2018.2019. This increasedecrease was primarily driven by $4.0lower personnel costs, lower stock-based compensation expense, and lower spending related to legal matters, partially offset by $0.8 million in charges associated withseverance costs incurred in the Februarysecond quarter of 2020. In addition, the second quarter of 2019 retirement policy modification, as discussed in Note 4, a $3.1includes $2.0 million increase in professional fees primarilyincurred related to updating our long-term strategic planning project and the Cleansorb acquisition, as well as higher personnel costs, partially offset by lower performance-based incentive compensation. In addition, the first nine months of 2018 included a corporate office charge of $1.8 million associated with the retirement and transition of our former Senior Vice President, General Counsel and Chief Administrative Officer.plan. Selling, general and administrative expenses as a percentage of revenues was 13.6%20.5% for the first nine monthssecond quarter of 20192020 compared to 12.2%13.0% for the first nine monthssecond quarter of 20182019.
Other operating (income) loss, net
Other operating loss for the first nine months of 2018 primarily relates to the July 2018 fire at our Kenedy, Texas drilling fluids facility (see Note 10 for additional information).


Foreign currency exchange
Foreign currency exchange was a $0.8 million loss for the first nine monthssecond quarter of 20192020 compared to a $0.6$1.0 million loss for the first nine monthssecond quarter of 2018,2019, and reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.
19

Interest expense, net
Interest expense was $10.8$2.9 million for the first nine monthssecond quarter of 20192020 compared to $10.7$3.5 million for the first nine monthssecond quarter of 2018.2019. Interest expense for the first nine monthssecond quarter of 2020 and 2019 and 2018 includes $4.6$1.2 million and $4.1$1.5 million, respectively, in noncashnon-cash amortization of original issue discount and debt issuance costs.
Gain on extinguishment of debt
The $1.3 million gain for the second quarter of 2020 reflects the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs, related to the repurchase of $18.6 million of our Convertible Notes in the open market for $15.3 million.
Provision (benefit) for income taxes
The benefit for income taxes was $6.7 million for the second quarter of 2020, reflecting an effective tax benefit rate of 20%. This result primarily reflects the impact of the geographic composition of our pretax loss, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations. The provision for income taxes was $7.2$2.1 million for the first nine monthssecond quarter of 2019, reflecting an effective tax rate of 63%, compared to $10.1 million for the first nine months of 2018, reflecting an effective tax rate of 32%33%. The effective tax rate for the first nine months of 2019 was negatively impacted by the decrease in U.S. earnings, as well as non-deductible expenses, relative to the amount of pre-tax income. The effective tax rate for the first nine months of 2018 also included a $1.7 million net benefit related to the Tax Act as well as $0.8 million in excess tax benefits related to the vesting of certain stock-based compensation awards during the period.


20

Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):
First Nine Months 2019 vs 2018Second Quarter2020 vs 2019
(In thousands)2019 2018 $ %(In thousands)20202019$%
Revenues       Revenues  
Fluids systems$485,744
 $538,087
 $(52,343) (10)%Fluids systems$74,662  $172,544  $(97,882) (57)%
Mats and integrated services144,904
 160,797
 (15,893) (10)%Mats and integrated services27,284  43,868  (16,584) (38)%
Total revenues$630,648
 $698,884
 $(68,236) (10)%Total revenues$101,946  $216,412  $(114,466) (53)%
       
Operating income (loss)       Operating income (loss)  
Fluids systems$21,951
 $32,092
 $(10,141)  Fluids systems$(25,059) $12,184  $(37,243) 
Mats and integrated services32,863
 39,864
 (7,001)  Mats and integrated services1,005  9,276  (8,271) 
Corporate office(31,933) (28,921) (3,012)  Corporate office(6,485) (10,546) 4,061  
Total operating income$22,881
 $43,035
 $(20,154)  
Total operating income (loss)Total operating income (loss)$(30,539) $10,914  $(41,453) 
       
Segment operating margin       Segment operating margin
Fluids systems4.5% 6.0%    Fluids systems(33.6)%7.1 %
Mats and integrated services22.7% 24.8%    Mats and integrated services3.7 %21.1 %
Fluids Systems
Revenues
Total revenues for this segment consisted of the following:
First Nine Months 2019 vs 2018 Second Quarter2020 vs 2019
(In thousands)2019 2018 $ %(In thousands)20202019$%
United States$318,353
 $303,794
 $14,559
 5 %United States$42,670  $117,154  $(74,484) (64)%
Canada26,283
 51,317
 (25,034) (49)%Canada3,066  4,988  (1,922) (39)%
Total North America344,636
 355,111
 (10,475) (3)%Total North America45,736  122,142  (76,406) (63)%
       
EMEA123,346
 147,595
 (24,249) (16)%EMEA26,036  44,455  (18,419) (41)%
Asia Pacific13,649
 12,224
 1,425
 12 %
Latin America4,113
 23,157
 (19,044) (82)%
OtherOther2,890  5,947  (3,057) (51)%
Total International141,108
 182,976
 (41,868) (23)%Total International28,926  50,402  (21,476) (43)%
       
Total Fluids Systems revenues$485,744
 $538,087
 $(52,343) (10)%Total Fluids Systems revenues$74,662  $172,544  $(97,882) (57)%
North America revenues decreased 3%63% to $344.6$45.7 million for the first nine monthssecond quarter of 20192020, compared to $355.1$122.1 million for the first nine monthssecond quarter of 2018.2019. This decrease was primarily attributable to lower customer drilling activity in Canada, as reflecteda $73.1 million decrease from U.S. land markets driven by the 32%60% decline in the average rig count. Despite the 3% decline in the United States averageU.S. rig count, revenues increased in the U.S. primarily related to market share gains in theas well as a $2.2 million decrease from offshore Gulf of Mexico market, as well as an increase in footage drilled per rig due to improvements in customer drilling efficiency inMexico. For the second quarter of 2020, U.S. revenues included $28.0 million from land markets.markets and $13.9 million from offshore Gulf of Mexico.
Internationally, revenues decreased 23%43% to $141.1$28.9 million for the first nine monthssecond quarter of 20192020, compared to $183.0$50.4 million for the first nine monthssecond quarter of 2018. This2019. The decrease in EMEA was driven by lower activity primarily attributable to COVID-19 disruptions and the impact of lower oil prices in Algeria, Romania, and various other countries, partially offset by a $2.5 million increase in the Middle East, including the impact from the October 2019 acquisition of Cleansorb Limited. The decrease in other international was primarily attributable to declines related to the contract transitions described abovecompletion of the Baker Hughes Greater Enfield project in Brazil, Algeria, and KuwaitAustralia, as well as lower drilling activity in Romania, largely attributable to lower commodity prices.Chile.

21

Operating income (loss)
The Fluids Systems segment generatedincurred an operating incomeloss of $22.0$25.1 million for the first nine monthssecond quarter of 2019 compared to2020, reflecting a $37.2 million change from the $12.2 million of operating income of $32.1 milliongenerated for the first nine monthssecond quarter of 2018. Operating income for the first nine months of 2019 includes $1.7 million of charges related to severance costs and the February 2019 retirement policy modification. Operating expenses for the first nine months of 2018 included a total of $2.5 million of charges associated with severance costs related to workforce reductions in connection with the completion of the contract with Petrobras in Brazil, the Kenedy, Texas facility fire, and expenses related to the conversion of a drilling fluids facility into a completion fluids facility. Excluding these charges, the2019. The decrease in operating income includes a $9.5$18.2 million decline from North American operations and a $7.6 million decline from international operations, and a $1.4 million decline from North America operations, which includes a decline in Canada partially offset by an increase from U.S. operations. These changes in operating income are primarily attributable to the changes in revenues described above. The Fluids Systems operating loss for the second quarter of 2020 also includes $11.7 million of charges related to inventory write-downs, severance costs, and facility exit costs, whereas the second quarter of 2019 included $0.3 million of charges related to severance costs.
During the fourth quarter of 2019, we made the decision to wind down our Brazil operations. We may incur operating losses and asset write-downs as we wind down these operations. In addition, at June 30, 2020, we had $11.8 million of accumulated translation losses related to our subsidiary in Brazil, that are reflected in accumulated other comprehensive loss in stockholders’ equity. Accounting guidance requires that we reclassify these accumulated translation losses and recognize a charge to income at such time when we have substantially liquidated the assets of our subsidiary in Brazil.
Mats and Integrated Services
Revenues
Total revenues for this segment consisted of the following:
First Nine Months 2019 vs 2018 Second Quarter2020 vs 2019
(In thousands)2019 2018 $ %(In thousands)20202019$%
Rental and service revenues$115,944
 $128,401
 $(12,457) (10)%Rental and service revenues$22,100  $37,584  $(15,484) (41)%
Product sales revenues28,960
 32,396
 (3,436) (11)%Product sales revenues5,184  6,284  (1,100) (18)%
Total Mats and Integrated Services revenues$144,904
 $160,797
 $(15,893) (10)%Total Mats and Integrated Services revenues$27,284  $43,868  $(16,584) (38)%
Rental and service revenues decreased $12.5$15.5 million (41%) to $115.9$22.1 million for the first nine monthssecond quarter of 2019 compared to $128.42020, which includes a $12.5 million for the first nine months of 2018, primarily due to a decrease in revenues from E&P customers, of approximately 20%,primarily resulting from lower explorationU.S. activity caused by the decline in oil and weakness in commoditynatural gas prices. This decline was partially offset by an increase of approximately 10% inIn addition, revenues from non-E&P rentalcustomers decreased $3.0 million as customers delayed project timing citing COVID-related market uncertainty, permitting delays, and service revenues. Product sales revenues were $29.0 million for the first nine months of 2019 compared to $32.4 million for the first nine months of 2018.logistical restrictions. Revenues from product sales, havewhich typically fluctuatedfluctuate based on the timing of mat orders from customers.customers, was negatively impacted in the second quarter of 2020 as certain customers delayed orders due to the uncertainty related to the COVID-19 pandemic.
Operating income
The Mats and Integrated Services segment generated operating income of $32.9$1.0 million for the first nine monthssecond quarter of 20192020 compared to $39.9$9.3 million for the first nine monthssecond quarter of 2018,2019, the decrease being primarily attributable to the change in revenues as described above.
Corporate Office
Corporate office expenses increased $3.0decreased $4.1 million to $31.9$6.5 million for the second quarter of 2020, compared to $10.5 million for the second quarter of 2019. This decrease was primarily driven by reduced personnel costs, as well as $2.0 million in professional fees incurred in the second quarter of 2019 related to updating our long-term strategic plan.
22

First Half of 2020 Compared to First Half of 2019
Consolidated Results of Operations
Summarized results of operations for the first half of 2020 compared to the first half of 2019 are as follows:
 First Half2020 vs 2019
(In thousands)20202019$%
Revenues$266,496  $427,885  $(161,389) (38)%
Cost of revenues258,374  352,909  (94,535) (27)%
Selling, general and administrative expenses45,633  58,779  (13,146) (22)%
Other operating income, net(1,086) (396) (690) NM
Operating income (loss)(36,425) 16,593  (53,018) NM
Foreign currency exchange (gain) loss2,763  (72) 2,835  NM
Interest expense, net6,113  7,179  (1,066) (15)%
Gain on extinguishment of debt(419) —  (419) NM
Income (loss) before income taxes(44,882) 9,486  (54,368) NM
Provision (benefit) for income taxes(6,490) 3,898  (10,388) NM
Net income (loss)$(38,392) $5,588  $(43,980) NM
Revenues
Revenues decreased 38% to $266.5 million for the first nine monthshalf of 20192020, compared to $28.9$427.9 million for the first nine monthshalf of 2018.2019. This increase$161.4 million decrease includes a $142.4 million (43%) decrease in revenues in North America, comprised of a $105.8 million decrease in the Fluids Systems segment and a $36.6 million decrease in the Mats and Integrated Services segment. Revenues from our North America operations decreased primarily due to the 39% reduction in North America rig count. Revenues from our international operations decreased by $19.0 million (19%), primarily driven by activity disruptions and project delays related to the COVID-19 pandemic as well as lower oil prices in our EMEA region. Additional information regarding the change in revenues is provided within the operating segment results below.
Cost of revenues
Cost of revenues decreased 27% to $258.4 million for the first half of 2020, compared to $352.9 million for the first half of 2019. This $94.5 million decrease was primarily driven by $3.4the 38% decrease in revenues described above. Fluids Systems segment cost of revenues for the first half of 2020 includes a total of $12.2 million inof charges related to inventory write-downs, severance costs, and facility exit costs. See the operating segment results below for information regarding our ongoing cost reduction actions.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased $13.1 million to $45.6 million for the first half of 2020, compared to $58.8 million for the first half of 2019. The first half of 2019 included a $4.0 million charge for stock-based compensation expense associated with the February 2019 retirement policy modification as discussed in Note 4. The remaining change primarily reflects a $3.1and $2.0 million increase in professional fees primarily related to updating our long-term strategic planning projectplan. The remaining decrease of $7.1 million was primarily driven by reduced personnel costs and lower spending related to legal matters in the first half of 2020. Selling, general and administrative expenses as a percentage of revenues was 17.1% for the first half of 2020 compared to 13.7% for the first half of 2019.
Foreign currency exchange
Foreign currency exchange was a $2.8 million loss for the first half of 2020 compared to a $0.1 million gain for the first half of 2019, and reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.
23

Interest expense, net
Interest expense was $6.1 million for the first half of 2020 compared to $7.2 million for the first half of 2019. Interest expense for the first half of 2020 and 2019 includes $2.8 million and $3.0 million, respectively, in non-cash amortization of original issue discount and debt issuance costs.
Gain on extinguishment of debt
The $0.4 million gain for the first half of 2020 reflects the difference in the amount paid and the Cleansorb acquisition,net carrying value of the extinguished debt, including original issue discount and debt issuance costs, related to the repurchase of $33.1 million of our Convertible Notes in the open market for $29.1 million.
Provision (benefit) for income taxes
The benefit for income taxes was $6.5 million for the first half of 2020, reflecting an effective tax benefit rate of 14%. This result primarily reflects the impact of the geographic composition of our pretax loss, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations. The provision for income taxes was $3.9 million for the first half of 2019, reflecting an effective tax rate of 41%.

24

Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):
First Half2020 vs 2019
(In thousands)20202019$%
Revenues  
Fluids systems$207,467  $333,197  $(125,730) (38)%
Mats and integrated services59,029  94,688  (35,659) (38)%
Total revenues$266,496  $427,885  $(161,389) (38)%
Operating income (loss)  
Fluids systems$(27,327) $16,058  $(43,385) 
Mats and integrated services4,067  22,814  (18,747) 
Corporate office(13,165) (22,279) 9,114  
Total operating income (loss)$(36,425) $16,593  $(53,018) 
Segment operating margin
Fluids systems(13.2)%4.8 %
Mats and integrated services6.9 %24.1 %
Fluids Systems
Revenues
Total revenues for this segment consisted of the following:
 First Half2020 vs 2019
(In thousands)20202019$%
United States$116,330  $220,213  $(103,883) (47)%
Canada16,326  18,254  (1,928) (11)%
Total North America132,656  238,467  (105,811) (44)%
EMEA68,173  82,220  (14,047) (17)%
Other6,638  12,510  (5,872) (47)%
Total International74,811  94,730  (19,919) (21)%
Total Fluids Systems revenues$207,467  $333,197  $(125,730) (38)%
North America revenues decreased 44% to $132.7 million for the first half of 2020, compared to $238.5 million for the first half of 2019. This decrease was primarily attributable a $111.8 million decrease from U.S. land markets driven by the 42% decline in U.S. rig count, partially offset by a $7.4 million increase from offshore Gulf of Mexico driven primarily by the completion fluids product line extension. For the first half of 2020, U.S. revenues included $86.0 million from land markets and $29.5 million from offshore Gulf of Mexico.
Internationally, revenues decreased 21% to $74.8 million for the first half of 2020, compared to $94.7 million for the first half of 2019. The decrease in EMEA was driven by lower performance-based incentive compensation.activity primarily attributable to COVID-19 disruptions and the impact of lower oil prices in Algeria, Romania, and various other countries, partially offset by increases in Kuwait, Tunisia, and Italy, as well as the October 2019 acquisition of Cleansorb Limited. The decrease in other international was primarily attributable to the completion of the Baker Hughes Greater Enfield project in Australia.
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Operating income (loss)
The Fluids Systems segment incurred an operating loss of $27.3 million for the first half of 2020, reflecting a $43.4 million change from the $16.1 million of operating income generated for the first half of 2019. The decrease in operating income includes a $26.7 million decline from North American operations and a $5.2 million decline from international operations, which are primarily attributable to the changes in revenues described above. The Fluids Systems operating loss for the first half of 2020 also includes $12.9 million of charges related to inventory write-downs, severance costs, and facility exit costs, whereas the first half of 2019 included $1.4 million of charges related to severance costs and the February 2019 retirement policy modification.
Mats and Integrated Services
Revenues
Total revenues for this segment consisted of the following:
 First Half2020 vs 2019
(In thousands)20202019$%
Rental and service revenues$49,703  $80,314  $(30,611) (38)%
Product sales revenues9,326  14,374  (5,048) (35)%
Total Mats and Integrated Services revenues$59,029  $94,688  $(35,659) (38)%
Rental and service revenues decreased $30.6 million (38%) to $49.7 million for the first half of 2020, which includes a $26.4 million decrease from E&P customers, primarily resulting from lower U.S. activity caused by the decline in oil and natural gas prices. In addition, revenues from non-E&P customers decreased $4.2 million as customers delayed project timing citing COVID-related market uncertainty, permitting delays, and logistical restrictions. Revenues from product sales, which typically fluctuate based on the timing of mat orders from customers, was negatively impacted in the first nine monthshalf of 20182020 as certain customers delayed orders due to the market uncertainty related to the COVID-19 pandemic.
Operating income
The Mats and Integrated Services segment generated operating income of $4.1 million for the first half of 2020 compared to $22.8 million for the first half of 2019, the decrease being primarily attributable to the change in revenues as described above.
Corporate Office
Corporate office expenses decreased $9.1 million to $13.2 million for the first half of 2020, compared to $22.3 million for the first half of 2019. The first half of 2019 included a $1.8$3.4 million charge for stock-based compensation expense associated with the February 2019 retirement policy modification and transition$2.0 million in professional fees related to updating our long-term strategic plan. The remaining decrease of our former Senior Vice President, General Counsel$3.7 million is primarily driven by reduced personnel costs and Chief Administrative Officer.
lower spending related to legal matters in the first half of 2020.

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Liquidity and Capital Resources
Net cash provided by operating activities was $53.2$25.0 million for the first nine monthshalf of 20192020 compared to $20.1$34.2 million for the first nine monthshalf of 2018.2019. During the first nine monthshalf of 2019,2020, net income adjusted for non-cash items providedused cash of $47.5$13.9 million, while changes in working capital provided cash of $5.7$38.9 million.
Net cash used in investing activities was $28.7$2.7 million for the first nine monthshalf of 2019,2020, including capital expenditures of $35.8$10.7 million. Capital expenditures during the first nine monthshalf of 20192020 included $20.1$4.9 million for the Mats and Integrated Services segment, including investments in the mat rental fleet as well as new products, and $13.0$4.3 million for the Fluids Systems segment.
Net cash used in financing activities was $25.5$26.1 million for the first nine monthshalf of 2019,2020, which includes $19.0$29.1 million in share purchases underrepurchases of our repurchase programConvertible Notes and a net paymentrepayment of $6.1$1.0 million on our ABL Facility (as defined below).
AsOur revenues and operating results in 2020 have been negatively impacted by the decrease in demand for our products and services from the decrease in the price of September 30, 2019, we hadand demand for oil as well as the COVID-19 pandemic and related economic shutdowns around the world. We have taken a number of actions aimed at conserving cash on handand protecting our liquidity, including workforce and salary reductions, elimination of $53.7 million, substantially all of which resides withinnon-critical capital expenditures, as well as actions to reduce our international subsidiaries. Following the enactment of the Tax Act in 2018, we began repatriating excess cash from certain of our international subsidiariesoperational footprint to match current and we intendanticipated activity levels by operating region. We currently expect total 2020 capital expenditures to continue repatriating excess cash from these international subsidiaries, subject to cash requirements to support the strategic objectives of these international subsidiaries. In October 2019, we repatriatedbe approximately $15 million from our international subsidiaries, which was used to repay borrowings under the ABL Facility.
In October 2019, we completed the acquisition of Cleansorb, a U.K. based provider of specialty chemicals for the oil and natural gas industry, which further expands our fluids technology portfolio and capabilities. The purchase price for this acquisition was $18.7 million, net of cash acquired, and was funded with borrowings under the ABL Facility.
million. We anticipate that future working capital requirements for our operations will fluctuate directionally with revenues. In addition,As such, we expect total 2019anticipate that our near-term working capital expendituresrequirements will decrease primarily from our on-going efforts to be approximately $40.0 millionreduce inventory levels as well as reductions in international receivables that have been negatively impacted by payment delays due to $45.0 million.disruptions from the COVID-19 pandemic. Availability under our ABL Facility also provides additional liquidity as discussed further below. Total availability under the ABL Facility will fluctuate directionally based on the level of eligible accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet. As of August 3, 2020, our total availability under the ABL Facility was $113.3 million, of which $60.8 million was drawn, resulting in remaining availability of $52.5 million.
While substantially all our $42.9 million of cash on hand at June 30, 2020 resides in our international subsidiaries, we expect to continue to repatriate excess cash from these international subsidiaries, subject to exchange or cash controls and the cash requirements to support the strategic objectives of these international subsidiaries. We expect our available cash on-hand, cash generated by operations, including reductions in working capital, and remaining availability under our ABL Facility to be adequate to fund current operations during the next 12 months. We continue to evaluate access to capital and other sources of additional liquidity to support our longer-term liquidity options. In addition, we may continue to purchase our common stock or Convertible Notes under our existing repurchase program from time to time.
Our capitalization is as follows:
(In thousands)September 30, 2019 December 31, 2018(In thousands)June 30, 2020December 31, 2019
2021 Convertible Notes$100,000
 $100,000
Convertible NotesConvertible Notes$66,912  $100,000  
ABL Facility70,200
 76,300
ABL Facility64,000  65,000  
Other debt5,865
 3,199
Other debt11,173  7,164  
Unamortized discount and debt issuance costs(13,707) (17,752)Unamortized discount and debt issuance costs(6,275) (12,291) 
Total debt$162,358
 $161,747
Total debt$135,810  $159,873  
   
Stockholder's equity559,631
 569,681
Stockholder's equity507,437  548,645  
Total capitalization$721,989
 $731,428
Total capitalization$643,247  $708,518  
   
Total debt to capitalization22.5% 22.1%Total debt to capitalization21.1 %22.6 %
2021 Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“2021 Convertible Notes”) that mature on December 1, 2021, unless earlier converted by the holders pursuant to the terms of the notes.which $66.9 million principal amount was outstanding at June 30, 2020. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.
Holders may convert the notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2021, only under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on March 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (regardless of whether consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the notes in effect on each applicable trading day;
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•during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the conversion rate on each such trading day; or


•upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.
On or after June 1, 2021 until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time, regardless of whether any of the foregoing conditions have been satisfied. As of October 28, 2019,July 31, 2020, the notes were not convertible.
The notes are convertible into, at our election, cash, shares of common stock, or a combination of both, subject to satisfaction of specified conditions and during specified periods, as described above. If converted, we currently intend to pay cash for the principal amount of the notes converted. The conversion rate is 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date.
During the first half of 2020, we repurchased $33.1 million of our Convertible Notes in the open market for a total cost of $29.1 million, and recognized a net gain of $0.4 million reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement which replaced our previous credit agreement. In October 2017, we entered into an Amended and Restated Credit Agreement and in March 2019, we entered into a First Amendment to Amended and Restated Credit Agreement (as amended, the “ABL Facility”). The March 2019 amendment increased the amount available for borrowings, reduced applicable borrowing rates, and extended the term. The ABL Facility provides financing of up to $200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of $275.0 million, subject to certain conditions. As of SeptemberJune 30, 2019,2020, our total availability under the ABL Facility was $171.0$132.9 million, of which $70.2$64.0 million was drawn, resulting in remaining availability of $100.8$68.9 million.
The ABL Facility terminates in March 2024; however, the ABL Facility has a springing maturity date that will accelerate the maturity of the ABL Facility to September 1, 2021 if, prior to such date, the 2021 Convertible Notes have not been repurchased, redeemed, refinanced, exchanged or otherwise satisfied in full or we have not escrowed an amount of funds, that together with the amount that we establish as a reserve against our borrowing capacity, is sufficient for the future settlement of the 2021 Convertible Notes at their maturity. The ABL Facility requires compliance with a minimum fixed charge coverage ratio and minimum unused availability of $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the 2021 Convertible Notes.
Borrowing availability under the ABL Facility is calculated based on eligible accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation also includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio and a minimum level of operating income for the Mats and Integrated Services segment. As of August 3, 2020, our total availability under the ABL Facility included $25.4 million from eligible rental mats. We may not be able to maintain the minimum consolidated fixed charge coverage ratio beginning in the fourth quarter of 2020 that is required to continue including eligible rental mats in the borrowing availability under the ABL Facility. While this does not represent a default, it would reduce the borrowing availability under the ABL Facility. As such, we have initiated discussions with our lead bank in an effort to explore our options, which may include a waiver or amendment to our ABL Facility. Any waiver or amendment to the ABL Facility, if required, may increase the cost of our borrowings and impose additional limitations over certain types of activities, and we can give no assurance that we will be able to obtain such amendment or waiver on favorable terms or at all.
Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate plus an applicable margin based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime rate of Bank of America, N.A. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50 to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL Facility. As of SeptemberJune 30, 2019,2020, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was 3.8%1.7% at SeptemberJune 30, 2019.2020. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of SeptemberJune 30, 2019,2020, the applicable commitment fee was 37.5 basis points.
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The ABL Facility is a senior secured obligation, secured by first liens on substantially all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires compliance with a fixed charge coverage ratio if availability under the ABL Facility falls below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.
Other Debt. OurCertain of our foreign subsidiaries in Italy, India, and Canada maintain local credit arrangements consisting primarily of lines of credit or overdraft facilities which are generally renewed on an annual basis. We utilize local financing arrangements in our foreign operations in order to provide short-term local liquidity needs. We had $2.0$6.9 million and $1.1$4.8 million outstanding under these arrangements at SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.


At SeptemberIn addition, at June 30, 2019,2020, we had $13.1 million in outstanding letters of credit and performance bonds, for which the letters of credit are collateralized by $6.1 million in restricted cash. We also have a performance bond issued and outstanding of $6.0 million related to the appeals process for an ongoing income tax audit for our Mexico subsidiary. Additionally, our foreign operations had $33.0$52.1 million in outstanding letters of credit, performance bonds, and other guarantees primarily issued under a credit arrangement in Italy as well asfor which certain of the letters of credit that are collateralized by $2.0$7.4 million in restricted cash.

Critical Accounting Estimates and Policies
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires us to make estimates and assumptions that affect the reported amounts and disclosures. Significant estimates used in preparing our condensed consolidated financial statements include the following: allowances for doubtful accounts, reserves for self-insured retention under insurance programs, estimated performance and values associated with employee incentive programs, fair values used for impairments of long-lived assets, including goodwill and other intangibles, and valuation allowances for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.
As of June 30, 2020, our consolidated balance sheet includes $42.1 million of goodwill, all of which relates to the Mats and Integrated Services segment. Goodwill and other indefinite-lived intangible assets are tested for impairment annually as of November 1, or more frequently, if indicators of impairment exists. In March 2020, primarily as a result of the collapse in oil prices and the expected declines in the U.S. land E&P markets, along with a significant decline in the quoted market prices of our common stock, we considered these developments to be a potential indicator of impairment that required us to complete an interim goodwill impairment evaluation. As such, in March 2020, we estimated the fair value of our Mats and Integrated Services reporting unit based on our current forecasts and expectations for market conditions and determined that even though the estimated fair value had decreased, the fair value remained substantially in excess of its net carrying value, and therefore, no impairment was required. During the second quarter of 2020, we determined that there were no further indicators of events or changes in circumstances that would more likely than not reduce the fair value below its carrying amount.
In addition, we review property, plant and equipment, finite-lived intangible assets and certain other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We assess recoverability based on expected undiscounted future net cash flows. Due to the changes in market conditions, we have reviewed these assets for impairment during the first half of 2020 and determined that the estimated undiscounted cash flows exceeded the carrying value, and therefore, no impairment was required.
For additional discussion of our critical accounting estimates and policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018.2019. Our critical accounting estimates and policies have not materially changed since December 31, 2018.
2019.

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ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. A discussion of our primary market risk exposure in financial instruments is presented below.
Interest Rate Risk
At SeptemberJune 30, 2019,2020, we had total principal amounts outstanding under financing arrangements of $176.1$142.1 million, including $100.0$66.9 million of borrowings under our 2021 Convertible Notes which bear interest at a fixed rate of 4.0% and $70.2$64.0 million of borrowings under our ABL Facility. Borrowings under our ABL Facility are subject to a variable interest rate as determined by the ABL Facility. The weighted average interest rate at SeptemberJune 30, 20192020 for the ABL Facility was 3.8%1.7%. Based on the balance of variable rate debt at SeptemberJune 30, 2019,2020, a 100 basis-point increase in short-term interest rates would have increased annual pre-tax interest expense by $0.7$0.6 million.
Foreign Currency Risk
Our principal foreign operations are conducted in certain areas of EMEA, Canada, Asia Pacific, and Latin America, and Canada.America. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate including European euros, Algerian dinar, Romanian new leu, Canadian dollars, British pounds, Australian dollars, and Brazilian reais. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies.

ITEM 4.Controls and Procedures
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2019,2020, the end of the period covered by this quarterly report.
Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the quarter ended SeptemberJune 30, 20192020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II     OTHER INFORMATION
PART II      OTHER INFORMATION
ITEM 1.Legal Proceedings
ITEM 1. Legal Proceedings
None.

ITEM 1A.Risk Factors
ITEM 1A. Risk Factors
There have been no material changes during the period ended September 30, 2019 into our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10‑K10-K for the year ended December 31, 2018.2019, except as discussed in Part II, Item 1A of our Quarterly Report on Form 10-Q for the three months ended March 31, 2020.

ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
a)Not applicable
b)Not applicable
c)
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
a)Not applicable
b)Not applicable
c)The following table details our repurchases of shares of our common stock for the three months ended September 30, 2019:
PeriodTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions)
July 2019114,376
 $7.12
 —
 $84.5
August 2019490,819
 $7.10
 490,819
 $81.0
September 2019—
 $—
 —
 $81.0
Total605,195
 $7.10
 490,819
  
During the three months ended SeptemberJune 30, 2019, we purchased an aggregate of 114,376 shares surrendered in lieu of taxes under vesting of restricted shares.2020:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions)
April 2020—  $—  —  $67.2  
May 2020—  $—  —  $55.5  
June 2020142,715  $2.08  —  $51.9  
Total142,715  —   
In November 2018, our Board of Directors authorized changes to our existing securities repurchase program. The authorizationThese changes increased the authorized amount under the repurchase program to $100.0 million, available for repurchases of any combination of our common stock and our 2021 Convertible Notes.
Our repurchase program authorizes us to purchase our outstanding shares of common stock or 2021 Convertible Notes in the open market or as otherwise determined by management, subject to certain limitations under the ABL Facility and other factors. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility. As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of June 30, 2020, we had $51.9 million remaining under the program.
During the three months ended SeptemberJune 30, 2019,2020, we repurchased an aggregate of 490,819 shares$18.6 million of our common stockConvertible Notes in the open market under our Board authorizedthe repurchase program for a total cost of $3.5$15.3 million. There were no shares of common stock repurchased under the repurchase program during the three months ended June 30, 2020.
In addition, during the three months ended June 30, 2020, we purchased an aggregate of 142,715 shares surrendered in lieu of taxes under vesting of restricted shares.

ITEM 3.Defaults Upon Senior Securities
ITEM 3. Defaults Upon Senior Securities
None.

ITEM 4.Mine Safety Disclosures
ITEM 4. Mine Safety Disclosures
The information concerning mine safety violations and other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference.

ITEM 5.Other Information
ITEM 5. Other Information
None.
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ITEM 6.Exhibits
ITEM 6. Exhibits
The exhibits listed are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
†*10.13.1
4.1
†10.1
†10.2
†10.3
*31.1†10.4
†10.5
†*10.6
†*10.7
*31.1
*31.2
**32.1
**32.2
*95.1
*101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*101.SCHInline XBRL Schema Document
*101.CALInline XBRL Calculation Linkbase Document
*101.DEFInline XBRL Definition Linkbase Document
*101.LABInline XBRL Label Linkbase Document
*101.PREInline XBRL Presentation Linkbase Document
*104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†     Management compensation plan or agreement.
*     Filed herewith.
**   Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date: October 31, 2019August 4, 2020
  
NEWPARK RESOURCES, INC.
(Registrant)
By:/s/ Paul L. Howes
Paul L. Howes

President and Chief Executive Officer

(Principal Executive Officer)
 
By:/s/ Gregg S. Piontek
Gregg S. Piontek

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)
 
By:/s/ Douglas L. White
Douglas L. White

Vice President, Corporate Controller and Chief Accounting Officer
and Treasurer
(Principal Accounting Officer)

35
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