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 ~~June 30, 2020~~March 31, 2021

☐ 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

Newpark Resources, Inc.

(Exact name of registrant as specified in its charter)


Delaware			72-1123385
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

9320 Lakeside Boulevard,	Suite 100
The Woodlands,	Texas	77381
(Address of principal executive offices)			(Zip Code)

(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NR	New York Stock Exchange
Rights to Purchase Series D Junior Participating Preferred Stock	N/A	New 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 ~~July 31, 2020,~~May 3, 2021, a total of ~~90,650,353~~90,960,314 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 SIX~~ MONTHS ENDED

~~JUNE 30, 2020~~MARCH 31, 2021


PART I	FINANCIAL INFORMATION	2
ITEM 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1614
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3025
ITEM 4.	Controls and Procedures	3025
PART II	OTHER INFORMATION	3126
ITEM 1.	Legal Proceedings	3126
ITEM 1A.	Risk Factors	3126
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3126
ITEM 3.	Defaults Upon Senior Securities	3126
ITEM 4.	Mine Safety Disclosures	3126
ITEM 5.	Other Information	3126
ITEM 6.	Exhibits	3227
	Signatures	3328

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 as of the filing date of this Quarterly Report on Form ~~10-Q and include statements regarding the impact of the COVID-19 pandemic;~~10-Q; 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, ~~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.~~2020.

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)	(In thousands, except share data)	June 30, 2020		December 31, 2019		(In thousands, except share data)	March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	42,942	$	48,672	Cash and cash equivalents	$	34,156	$	24,197
Receivables, net	Receivables, net	139,627		216,714		Receivables, net	133,240		141,045
Inventories	Inventories	177,973		196,897		Inventories	139,913		147,857
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20,657		16,526		Prepaid expenses and other current assets	13,307		15,081
Total current assets	Total current assets	381,199		478,809		Total current assets	320,616		328,180

Property, plant and equipment, net	Property, plant and equipment, net	297,234		310,409		Property, plant and equipment, net	274,972		277,696
Operating lease assets	Operating lease assets	33,524		32,009		Operating lease assets	30,332		30,969
Goodwill	Goodwill	42,094		42,332		Goodwill	42,477		42,444
Other intangible assets, net	Other intangible assets, net	26,907		29,677		Other intangible assets, net	24,527		25,428
Deferred tax assets	Deferred tax assets	3,047		3,600		Deferred tax assets	2,074		1,706
Other assets	Other assets	3,040		3,243		Other assets	2,613		2,769
Total assets	Total assets	$	787,045	$	900,079	Total assets	$	697,611	$	709,192

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt	Current debt	$	10,519	$	6,335	Current debt	$	55,242	$	67,472
Accounts payable	Accounts payable	52,364		79,777		Accounts payable	60,637		49,252
Accrued liabilities	Accrued liabilities	33,261		42,750		Accrued liabilities	35,188		36,934
Total current liabilities	Total current liabilities	96,144		128,862		Total current liabilities	151,067		153,658

Long-term debt, less current portion	Long-term debt, less current portion	125,291		153,538		Long-term debt, less current portion	17,000		19,690
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	27,392		26,946		Noncurrent operating lease liabilities	24,347		25,068
Deferred tax liabilities	Deferred tax liabilities	21,875		34,247		Deferred tax liabilities	14,769		13,368
Other noncurrent liabilities	Other noncurrent liabilities	8,906		7,841		Other noncurrent liabilities	9,506		9,376
Total liabilities	Total liabilities	279,608		351,434		Total liabilities	216,689		221,160

Commitments and contingencies (Note 9)
Commitments and contingencies (Note 8)						Commitments and contingencies (Note 8)	0		0

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
Common stock, $0.01 par value (200,000,000 shares authorized and 107,735,307 and 107,587,786 shares issued, respectively)						Common stock, $0.01 par value (200,000,000 shares authorized and 107,735,307 and 107,587,786 shares issued, respectively)	1,077		1,076
Paid-in capital	Paid-in capital	623,269		620,626		Paid-in capital	628,552		627,031
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(73,308)		(67,947)		Accumulated other comprehensive loss	(57,456)		(54,172)
Retained earnings	Retained earnings	93,292		134,119		Retained earnings	45,554		50,937
Treasury stock, at cost (16,784,471 and 16,958,418 shares, respectively)		(136,890)		(139,220)
Treasury stock, at cost (16,777,632 and 16,781,150 shares, respectively)						Treasury stock, at cost (16,777,632 and 16,781,150 shares, respectively)	(136,805)		(136,840)
Total stockholders’ equity	Total stockholders’ equity	507,437		548,645		Total stockholders’ equity	480,922		488,032
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	787,045	$	900,079	Total liabilities and stockholders’ equity	$	697,611	$	709,192

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


		Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended March 31,
(In thousands, except per share data)	(In thousands, except per share data)	2020		2019		2020		2019		(In thousands, except per share data)	2021		2020
Revenues	Revenues	$	101,946	$	216,412	$	266,496	$	427,885	Revenues	$	141,172	$	164,550
Cost of revenues	Cost of revenues	112,290		177,933		258,374		352,909		Cost of revenues	119,991		146,084
Selling, general and administrative expenses	Selling, general and administrative expenses	20,937		28,037		45,633		58,779		Selling, general and administrative expenses	20,911		24,696
Other operating income, net		(742)		(472)		(1,086)		(396)
Other operating income										Other operating income	(274)		(344)
Operating income (loss)	Operating income (loss)	(30,539)		10,914		(36,425)		16,593		Operating income (loss)	544		(5,886)

Foreign currency exchange (gain) loss	Foreign currency exchange (gain) loss	781		990		2,763		(72)		Foreign currency exchange (gain) loss	(332)		1,982
Interest expense, net	Interest expense, net	2,912		3,523		6,113		7,179		Interest expense, net	2,408		3,201
Gain on extinguishment of debt		(1,334)		—		(419)		—
Income (loss) before income taxes		(32,898)		6,401		(44,882)		9,486
Loss on extinguishment of debt										Loss on extinguishment of debt	790		915
Loss before income taxes										Loss before income taxes	(2,322)		(11,984)

Provision (benefit) for income taxes		(6,654)		2,095		(6,490)		3,898
Net income (loss)		$	(26,244)	$	4,306	$	(38,392)	$	5,588
Provision for income taxes										Provision for income taxes	3,040		164
Net loss										Net loss	$	(5,362)	$	(12,148)

Net income (loss) per common share - basic:		$	(0.29)	$	0.05	$	(0.43)	$	0.06
Net income (loss) per common share - diluted:		$	(0.29)	$	0.05	$	(0.43)	$	0.06
Net loss per common share - basic:										Net loss per common share - basic:	$	(0.06)	$	(0.14)
Net loss per common share - diluted:										Net loss per common share - diluted:	$	(0.06)	$	(0.14)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

Three Months Ended
June 30, Six Months Ended
June 30,
(In thousands) 2020 2019 2020 2019
Net income (loss) $ (26,244) $ 4,306 $ (38,392) $ 5,588
Foreign currency translation adjustments (net of tax benefit (expense) of $326, $(179), $598, $(109)) 2,132 1,721 (5,361) (200)
Comprehensive income (loss) $ (24,112) $ 6,027 $ (43,753) $ 5,388


	Three Months Ended March 31,
(In thousands)		2021		2020

Net loss		$	(5,362)	$	(12,148)

Foreign currency translation adjustments (net of tax benefit of $276 and $272)		(3,284)		(7,493)

Comprehensive loss		$	(8,646)	$	(19,641)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


(In thousands)	(In thousands)	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total		(In thousands)	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total
Balance at March 31, 2020		$	1,067	$	622,115	$	(75,440)	$	120,501	$	(137,884)	$	530,359
Net loss		—		—		—		(26,244)		—		(26,244)
Employee stock options, restricted stock and employee stock purchase plan		7		(331)		—		(965)		994		(295)
Stock-based compensation expense		—		1,485		—		—		—		1,485
Foreign currency translation, net of tax		—		—		2,132		—		—		2,132
Balance at June 30, 2020		$	1,074	$	623,269	$	(73,308)	$	93,292	$	(136,890)	$	507,437

Balance at March 31, 2019		$	1,064	$	622,554	$	(69,594)	$	150,084	$	(134,320)	$	569,788
Net income		—		—		—		4,306		—		4,306
Employee stock options, restricted stock and employee stock purchase plan		3		(5,833)		—		(995)		5,758		(1,067)
Stock-based compensation expense		—		1,905		—		—		—		1,905
Treasury shares purchased at cost		—		—		—		—		(10,524)		(10,524)
Foreign currency translation, net of tax		—		—		1,721		—		—		1,721
Balance at June 30, 2019		$	1,067	$	618,626	$	(67,873)	$	153,395	$	(139,086)	$	566,129

Balance at December 31, 2019	Balance at December 31, 2019	$	1,067	$	620,626	$	(67,947)	$	134,119	$	(139,220)	$	548,645	Balance at December 31, 2019	$	1,067	$	620,626	$	(67,947)	$	134,119	$	(139,220)	$	548,645
Cumulative effect of accounting change	Cumulative effect of accounting change	—		—		—		(735)		—		(735)		Cumulative effect of accounting change	—		—		—		(735)		—		(735)
Net loss	Net loss	—		—		—		(38,392)		—		(38,392)		Net loss	—		—		—		(12,148)		—		(12,148)
Employee stock options, restricted stock and employee stock purchase plan	Employee stock options, restricted stock and employee stock purchase plan	7		(434)		—		(1,700)		2,330		203		Employee stock options, restricted stock and employee stock purchase plan	—		(103)		—		(735)		1,336		498
Stock-based compensation expense	Stock-based compensation expense	—		3,077		—		—		—		3,077		Stock-based compensation expense	—		1,592		—		—		—		1,592
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		(5,361)		—		—		(5,361)		Foreign currency translation, net of tax	—		—		(7,493)		—		—		(7,493)
Balance at June 30, 2020		$	1,074	$	623,269	$	(73,308)	$	93,292	$	(136,890)	$	507,437
Balance at March 31, 2020														Balance at March 31, 2020	$	1,067	$	622,115	$	(75,440)	$	120,501	$	(137,884)	$	530,359

Balance at December 31, 2018		$	1,064	$	617,276	$	(67,673)	$	148,802	$	(129,788)	$	569,681
Net income		—		—		—		5,588		—		5,588
Balance at December 31, 2020														Balance at December 31, 2020	$	1,076	$	627,031	$	(54,172)	$	50,937	$	(136,840)	$	488,032
Net loss														Net loss	—		—		—		(5,362)		—		(5,362)
Employee stock options, restricted stock and employee stock purchase plan	Employee stock options, restricted stock and employee stock purchase plan	3		(5,524)		—		(995)		6,239		(277)		Employee stock options, restricted stock and employee stock purchase plan	1		242		—		(21)		35		257
Stock-based compensation expense	Stock-based compensation expense	—		6,874		—		—		—		6,874		Stock-based compensation expense	—		1,279		—		—		—		1,279
Treasury shares purchased at cost		—		—		—		—		(15,537)		(15,537)
Foreign currency translation, net of tax	Foreign currency translation, net of tax	—		—		(200)		—		—		(200)		Foreign currency translation, net of tax	—		—		(3,284)		—		—		(3,284)
Balance at June 30, 2019		$	1,067	$	618,626	$	(67,873)	$	153,395	$	(139,086)	$	566,129
Balance at March 31, 2021														Balance at March 31, 2021	$	1,077	$	628,552	$	(57,456)	$	45,554	$	(136,805)	$	480,922

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Six Months Ended June 30,							Three Months Ended March 31,
(In thousands)	(In thousands)	2020		2019		(In thousands)	2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	(38,392)	$	5,588
Adjustments to reconcile net income (loss) to net cash provided by operations:
Inventory impairments		8,996		—
Net loss						Net loss	$	(5,362)	$	(12,148)
Adjustments to reconcile net loss to net cash provided by operations:						Adjustments to reconcile net loss to net cash provided by operations:
Depreciation and amortization	Depreciation and amortization	22,915		23,070		Depreciation and amortization	10,830		11,453
Stock-based compensation expense	Stock-based compensation expense	3,077		6,874		Stock-based compensation expense	1,279		1,592
Provision for deferred income taxes	Provision for deferred income taxes	(11,418)		(1,514)		Provision for deferred income taxes	1,569		(2,801)
Credit loss expense	Credit loss expense	726		789		Credit loss expense	50		20
Gain on sale of assets	Gain on sale of assets	(2,163)		(5,128)		Gain on sale of assets	(3,283)		(1,033)
Gain on extinguishment of debt		(419)		—
Loss on extinguishment of debt						Loss on extinguishment of debt	790		915
Amortization of original issue discount and debt issuance costs	Amortization of original issue discount and debt issuance costs	2,801		2,973		Amortization of original issue discount and debt issuance costs	1,082		1,573
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Decrease in receivables	Decrease in receivables	66,510		6,583		Decrease in receivables	2,414		10,652
Decrease in inventories	Decrease in inventories	7,512		3,868		Decrease in inventories	6,694		5,466
Increase in other assets		(5,294)		(5,058)
(Increase) decrease in other assets						(Increase) decrease in other assets	1,275		(644)
Increase (decrease) in accounts payable	Increase (decrease) in accounts payable	(26,577)		6,207		Increase (decrease) in accounts payable	11,437		(9,842)
Decrease in accrued liabilities and other	Decrease in accrued liabilities and other	(3,261)		(10,012)		Decrease in accrued liabilities and other	(1,002)		(815)
Net cash provided by operating activities	Net cash provided by operating activities	25,013		34,240		Net cash provided by operating activities	27,773		4,388

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(10,655)		(23,866)		Capital expenditures	(8,649)		(6,649)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	7,963		5,708		Proceeds from sale of property, plant and equipment	8,027		3,673
Net cash used in investing activities	Net cash used in investing activities	(2,692)		(18,158)		Net cash used in investing activities	(622)		(2,976)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings on lines of credit	Borrowings on lines of credit	117,068		135,952		Borrowings on lines of credit	51,922		74,909
Payments on lines of credit	Payments on lines of credit	(116,207)		(141,317)		Payments on lines of credit	(56,922)		(58,948)
Purchases of Convertible Notes	Purchases of Convertible Notes	(29,124)		—		Purchases of Convertible Notes	(18,107)		(13,775)
Proceeds from term loan						Proceeds from term loan	8,258		0
Debt issuance costs	Debt issuance costs	—		(917)		Debt issuance costs	(196)		0
Proceeds from employee stock plans		—		1,090
Purchases of treasury stock	Purchases of treasury stock	(326)		(17,365)		Purchases of treasury stock	(6)		(32)
Other financing activities	Other financing activities	2,480		2,758		Other financing activities	(1,561)		(1,218)
Net cash used in financing activities		(26,109)		(19,799)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	(16,612)		936

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(2,713)		(125)		Effect of exchange rate changes on cash	(882)		(2,576)

Net decrease in cash, cash equivalents, and restricted cash		(6,501)		(3,842)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	9,657		(228)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	56,863		64,266		Cash, cash equivalents, and restricted cash at beginning of period	30,348		56,863
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	50,362	$	60,424	Cash, cash equivalents, and restricted cash at end of period	$	40,005	$	56,635

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

NEWPARK RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Significant Accounting Policies

Newpark Resources, Inc. is a geographically diversified supplier providing products, as well as rentals and services. 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, ~~2019.~~2020. Our fiscal year end is December 31 and our ~~second~~first quarter represents the ~~three month~~three-month period ended ~~June 30, and our first half represents the six month period ended June 30.~~March 31. The results of operations for the ~~second~~first quarter ~~and first half~~ of ~~2020~~2021 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 ~~June 30, 2020,~~March 31, 2021 and our results of operations ~~for the second quarter~~ and ~~first half of 2020 and 2019, and our~~ cash flows for the first ~~half~~quarter of ~~2020~~2021 and ~~2019.~~2020. All adjustments are of a normal recurring nature. Our balance sheet at December 31, ~~2019~~2020 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, ~~2019.~~2020.

We operate our business through 2 reportable segments: Fluids Systems and Industrial Solutions. Our Fluids Systems segment provides customized drilling, completion, and stimulation fluids solutions to oil and natural gas exploration and production (“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. Our Industrial Solutions segment includes our Site and Access Solutions business (historically reported as the Mats and Integrated Services segment), along with our Industrial Blending operations. Site and Access Solutions provides composite matting system rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including electrical utilities, E&P, pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and Europe. We also sell our manufactured composite mats to customers around the world, with electrical utilities being the primary end-market. Our Industrial Blending operations began in 2020, leveraging our chemical blending capacity and technical expertise to enter targeted industrial end-markets.

New Accounting Pronouncements

Standards Adopted in ~~2020~~

~~Credit Losses.~~ In 2016, the Financial Accounting Standards Board (“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, 2019 Impact of Adoption of New Credit Losses Guidance Balance at January 1, 2020
Receivables, net $ 216,714 $ (959) $ 215,755
Deferred tax assets 3,600 59 3,659
Deferred tax liabilities 34,247 (165) 34,082
Retained earnings 134,119 (735) 133,384

~~Standards Not Yet Adopted~~2021

Income Taxes: Simplifying the Accounting for Income Taxes. In December 2019, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued new guidance ~~which is~~ intended to simplify various aspects related to accounting for income taxes. We adopted this new guidance as of January 1, 2021. The adoption of this new guidance had no material impact on our financial statements or related disclosures.

Standards Not Yet Adopted

Debt: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued new guidance which is intended to simplify the accounting for convertible instruments. This guidance iswill be effective for us in the first quarter of 2022. As our existing convertible instrument matures in December 2021, ~~with early~~we do not expect the adoption ~~permitted. We are currently evaluating the~~of this guidance to have a material impact ~~of the new guidance~~ on our consolidated financial statements ~~and~~or related disclosures.

Note 2 – Earnings Per Share

The following table presents the reconciliation of the numerator and denominator for calculating net ~~income (loss)~~loss per share:


		Second Quarter						First Half					First Quarter
(In thousands, except per share data)	(In thousands, except per share data)	2020		2019		2020		2019		(In thousands, except per share data)	2021		2020
Numerator	Numerator									Numerator
Net income (loss) - basic and diluted		$	(26,244)	$	4,306	$	(38,392)	$	5,588
Net loss - basic and diluted										Net loss - basic and diluted	$	(5,362)	$	(12,148)

Denominator	Denominator									Denominator
Weighted average common shares outstanding - basic	Weighted average common shares outstanding - basic	89,981		89,806		89,813		89,958		Weighted average common shares outstanding - basic	90,701		89,645
Dilutive effect of stock options and restricted stock awards	Dilutive effect of stock options and restricted stock awards	—		1,900		—		2,082		Dilutive effect of stock options and restricted stock awards	0		0
Dilutive effect of Convertible Notes	Dilutive effect of Convertible Notes	—		—		—		—		Dilutive effect of Convertible Notes	0		0
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	89,981		91,706		89,813		92,040		Weighted average common shares outstanding - diluted	90,701		89,645

Net income (loss) per common share
Net loss per common share										Net loss per common share
Basic	Basic	$	(0.29)	$	0.05	$	(0.43)	$	0.06	Basic	$	(0.06)	$	(0.14)
Diluted	Diluted	$	(0.29)	$	0.05	$	(0.43)	$	0.06	Diluted	$	(0.06)	$	(0.14)

We excluded the following weighted-average potential shares from the calculations of diluted net ~~income (loss)~~loss per share during the applicable periods because their inclusion would have been anti-dilutive:


		Second Quarter			First Half			First Quarter
(In thousands)	(In thousands)	2020	2019	2020	2019	(In thousands)	2021	2020
Stock options and restricted stock awards	Stock options and restricted stock awards	5,067	1,707	4,951	1,710	Stock options and restricted stock awards	5,299	4,835

For the ~~second~~first quarter of 2021 and ~~first half of~~ 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 these periods. The Convertible Notes (as defined in Note 7)6) 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 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 Convertible Notes as further described in Note 7.6. 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, would be assumed to be settled with shares of common stock for purposes of computing diluted net income per share.

Note 3 – ~~Capital Stock and~~ Repurchase Program

Our ~~securities~~ repurchase program remains available for repurchases of any combination of our common stock and ~~our~~ 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)6). 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,~~March 31, 2021, we had ~~$51.9~~$33.8 million remaining under the program.

During the first ~~half~~quarter of ~~2020,~~2021, we repurchased ~~$33.1~~$18.3 million of our Convertible Notes in the open market under the repurchase program for a total cost of ~~$29.1~~$18.1 million. ~~There were 0~~During the first quarter of 2020, we repurchased $14.5 million of our Convertible Notes ~~repurchased~~in the open market under the repurchase program ~~during 2019.~~for a total cost of $13.8 million.

There were 0 shares of common stock repurchased under the repurchase program during the first ~~half~~quarter of ~~2020. During the first half of 2019, we repurchased an aggregate of 2,047,014 shares of our common stock under the program for a total cost of $15.5 million.~~

~~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 close of business on June 12,~~or 2020. Each Right entitles the registered holder to purchase from us one one-thousandth of a share of Series 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 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 2020, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved equity-based compensation to executive officers and other key employees consisting of ~~2,474,377~~ ~~restricted stock units which will primarily vest in equal installments over a~~ ~~three~~-year period. At June 30, 2020, 1,375,975 shares remained available for award under the 2015 Employee Equity Incentive Plan (“2015 Plan”). In addition, non-employee directors received a grant of 156,886 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 $2.06 per share for both the restricted stock units and restricted stock awards.

Also during the second quarter of 2020, the Compensation Committee approved the issuance of performance-based cash awards to certain executive officers with a target amount of $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 May 2, 2020 and ends May 31, 2023, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, 2023 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.

Note 54 – Receivables

Receivables consisted of the following:


(In thousands)	(In thousands)	June 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Trade receivables:	Trade receivables:					Trade receivables:
Gross trade receivables	Gross trade receivables	$	130,914	$	207,554	Gross trade receivables	$	126,499	$	133,717
Allowance for credit losses	Allowance for credit losses	(6,755)		(6,007)		Allowance for credit losses	(4,718)		(5,024)
Net trade receivables	Net trade receivables	124,159		201,547		Net trade receivables	121,781		128,693
Income tax receivables	Income tax receivables	6,170		7,393		Income tax receivables	5,976		6,545
Other receivables	Other receivables	9,298		7,774		Other receivables	5,483		5,807
Total receivables, net	Total receivables, net	$	139,627	$	216,714	Total receivables, net	$	133,240	$	141,045

Other receivables included ~~$7.8~~$4.8 million and ~~$6.2~~$4.4 million for value added, goods and service taxes related to foreign jurisdictions as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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.2020.

Changes in our allowance for credit losses were as follows:


		First Half							First Quarter
(In thousands)	(In thousands)	2020		2019		(In thousands)	2021		2020
Balance at beginning of period	Balance at beginning of period	$	6,007	$	10,034	Balance at beginning of period	$	5,024	$	6,007
Cumulative effect of accounting change	Cumulative effect of accounting change	959		—		Cumulative effect of accounting change	0		959
Credit loss expense	Credit loss expense	726		789		Credit loss expense	50		20
Write-offs, net of recoveries	Write-offs, net of recoveries	(937)		(1,350)		Write-offs, net of recoveries	(356)		(845)
Balance at end of period	Balance at end of period	$	6,755	$	9,473	Balance at end of period	$	4,718	$	6,141

Note 65 – Inventories

Inventories consisted of the following:


(In thousands)	(In thousands)	June 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Raw materials:	Raw materials:					Raw materials:
Fluids systems	Fluids systems	$	118,684	$	141,314	Fluids systems	$	99,223	$	98,974
Mats and integrated services		3,982		5,049
Industrial Solutions						Industrial Solutions	6,490		6,315
Total raw materials	Total raw materials	122,666		146,363		Total raw materials	105,713		105,289
Blended fluids systems components	Blended fluids systems components	35,042		39,542		Blended fluids systems components	30,415		31,744
Finished goods - mats	Finished goods - mats	20,265		10,992		Finished goods - mats	3,785		10,824
Total inventories	Total inventories	$	177,973	$	196,897	Total inventories	$	139,913	$	147,857

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~~Industrial Solutions segment consists primarily of resins, chemicals, and other materials used to manufacture composite mats and cleaning products, 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.

109

Note 76 – Financing Arrangements and Fair Value of Financial Instruments

Financing arrangements consisted of the following:


		June 30, 2020										December 31, 2019											March 31, 2021				December 31, 2020
(In thousands)	(In thousands)	Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt		(In thousands)	Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt
Convertible Notes	Convertible Notes	$	66,912	$	(6,275)	$	60,637	$	100,000	$	(12,291)	$	87,709	Convertible Notes	$	48,567	$	(2,273)	$	46,294	$	66,912	$	(4,221)	$	62,691
ABL Facility	ABL Facility	64,000		—		64,000		65,000		—		65,000		ABL Facility	11,000		0		11,000		19,100		0		19,100
Term loan														Term loan	7,750		(189)		7,561		0		0		0
Other debt	Other debt	11,173		—		11,173		7,164		—		7,164		Other debt	7,387		0		7,387		5,371		0		5,371
Total debt	Total debt	142,085		(6,275)		135,810		172,164		(12,291)		159,873		Total debt	74,704		(2,462)		72,242		91,383		(4,221)		87,162
Less: Current portion	Less: Current portion	(10,519)		—		(10,519)		(6,335)		—		(6,335)		Less: Current portion	(57,515)		2,273		(55,242)		(71,693)		4,221		(67,472)
Long-term debt	Long-term debt	$	131,566	$	(6,275)	$	125,291	$	165,829	$	(12,291)	$	153,538	Long-term debt	$	17,189	$	(189)	$	17,000	$	19,690	$	0	$	19,690

Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“Convertible Notes”) that mature on December 1, 2021, of which ~~$66.9~~$48.6 million principal amount was outstanding at ~~June 30, 2020.~~March 31, 2021. 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 (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 ~~July 31, 2020,~~May 3, 2021, 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 ~~June 30, 2020,~~March 31, 2021, the carrying amount of the debt component was ~~$60.6~~$46.3 million, which is net of the unamortized debt discount and debt issuance costs of ~~$6.3~~$2.3 million. Including the impact of the unamortized debt discount and debt issuance costs, the effective interest rate on the notes is approximately 11.3%.

During the first ~~half~~quarter of ~~2020,~~2021, we repurchased ~~$33.1~~$18.3 million of our Convertible Notes in the open market for a total cost of ~~$29.1~~$18.1 million, and recognized a net ~~gain~~loss of ~~$0.4~~$0.8 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~~was amended 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 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 ~~June 30, 2020,~~March 31, 2021, our total availability under the ABL Facility was ~~$132.9~~$88.3 million, of which ~~$64.0~~$11.0 million was drawn, resulting in remaining availability of ~~$68.9~~$77.2 million.

1110

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 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 Convertible Notes at their maturity. The ABL Facility requires ~~compliance with~~ a minimum consolidated fixed charge coverage ratio of 1.25 to 1.0 calculated based on the trailing twelve-month period ended June 30, 2021 and ~~minimum~~remaining unused availability of at least $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes.

Borrowing availability under the ABL Facility is calculated based on eligible U.S. 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 of 1.5 to 1.0 and ~~a minimum level~~at least $1.0 million of operating income for the ~~Mats~~Site and ~~Integrated Services segment.~~Access Solutions business, each calculated based on a trailing twelve-month period.

As of May 3, 2021, our total availability under the ABL Facility was $82.6 million, of which $16.0 million was drawn, resulting in remaining availability of $66.5 million. This availability under the ABL Facility excludes $24.2 million related to eligible rental mats as we failed to satisfy the required minimum consolidated fixed charge coverage ratio, as measured on the trailing twelve-month period ended March 31, 2021. We expect to satisfy the minimum consolidated fixed charge coverage ratio as required to include eligible rental mats in the borrowing availability under the ABL Facility following the second quarter of 2021 and expect to satisfy the June 30, 2021 ABL Facility requirements to be able to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes prior to September 1, 2021.

Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate 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 ~~June 30, 2020,~~March 31, 2021, the applicable margin for borrowings under our ABL Facility was ~~150~~200 basis points with respect to LIBOR borrowings and 50100 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was ~~1.7%~~2.1% at ~~June 30, 2020.~~March 31, 2021. 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 ~~June 30, 2020,~~March 31, 2021, 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 minimum consolidated fixed charge coverage ratio of 1.0 to 1.0 calculated based on a trailing twelve-month period 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. In February 2021, a U.K. subsidiary entered a £6.0 million (approximately $8.3 million) term loan facility that matures in February 2024, the proceeds of which were used to pay down the ABL Facility. The term loan bears interest at a rate of LIBOR plus a margin of 3.4% per year, payable in quarterly installments of £375,000 plus interest beginning March 2021 and a £1.5 million payment due at maturity. We had $7.8 million outstanding under this arrangement at March 31, 2021.

Certain of our other foreign subsidiaries 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 ~~$6.9~~$6.5 million and ~~$4.8~~$3.5 million outstanding under these arrangements at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

In addition, at ~~June 30, 2020,~~March 31, 2021, we had ~~$52.1~~$50.2 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by ~~$7.4~~$5.8 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 Convertible Notes, approximated their fair values at ~~June 30, 2020~~March 31, 2021 and

December 31, ~~2019.~~2020. The estimated fair value of our Convertible Notes was ~~$59.2~~$48.1 million at ~~June 30, 2020~~March 31, 2021 and ~~$101.4~~$61.1 million at December 31, ~~2019,~~2020, based on quoted market prices at these respective dates.

Note 87 – Income Taxes

The ~~benefit~~provision for income taxes was ~~$6.5~~$3.0 million for the first ~~half~~quarter of ~~2020,~~2021, despite reporting a pretax loss for the period, primarily reflecting ~~an effective tax benefit rate of 14%. This result primarily reflects~~ the impact of the geographic composition of our pretax ~~loss, where~~loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses inas they may not be realized. The provision for income taxes was $0.2 million for the ~~U.S was partially offset by~~first quarter of 2020, where the tax expense related to earnings from our international ~~operations. The provision for income taxes was $3.9 million for~~operations is only partially offset by the ~~first half of 2019, reflecting an effective tax rate of 41%.~~

~~The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in March 2020~~benefit from losses in the United States. The CARES Act contains several tax provisions, including additional carryback opportunities for net operating losses, temporary increases in the interest deductibility threshold, and the acceleration of refunds for any remaining alternative minimum tax (“AMT”) carryforwards. While there was no material impact from the CARES Act in our provision for income taxes for the first half of 2020, we are continuing to evaluate the provisions of the CARES Act. In addition, we filed an amendment to our 2018 U.S. ~~federal income tax return in the second quarter of 2020 and received a refund 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 applicable payroll taxes was $1.3 million at June 30, 2020.

Note 98 – 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 expect that any loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, will 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. Subsequently, we 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 June 30, 2020, there are open claims remaining with 2 plaintiffs. We have been advised by our insurer that these claims are insured under our insurance programs. As of June 30, 2020, the claims related to the fire under our property, business interruption, and general liability insurance programs have not been finalized.

Note 109 – Supplemental Disclosures to the Statements of Cash Flows

Supplemental disclosures to the statements of cash flows are presented below:


		First Half							First Quarter
(In thousands)	(In thousands)	2020		2019		(In thousands)	2021		2020
Cash paid for:	Cash paid for:					Cash paid for:
Income taxes (net of refunds)	Income taxes (net of refunds)	$	4,081	$	5,927	Income taxes (net of refunds)	$	1,810	$	1,888
Interest	Interest	$	3,572	$	4,705	Interest	$	889	$	991

Cash, cash equivalents, and restricted cash in the consolidated statements of cash flows consisted of the following:


(In thousands)	(In thousands)	June 30, 2020		December 31, 2019		(In thousands)	March 31, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	42,942	$	48,672	Cash and cash equivalents	$	34,156	$	24,197
Restricted cash (included in prepaid expenses and other current assets)	Restricted cash (included in prepaid expenses and other current assets)	7,420		8,191		Restricted cash (included in prepaid expenses and other current assets)	5,849		6,151
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	50,362	$	56,863	Cash, cash equivalents, and restricted cash	$	40,005	$	30,348

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Note 1110 – Segment Data

Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers):


		Second Quarter						First Half					First Quarter
(In thousands)	(In thousands)	2020		2019		2020		2019		(In thousands)	2021		2020
Revenues	Revenues									Revenues
Fluids systems	Fluids systems	$	74,662	$	172,544	$	207,467	$	333,197	Fluids systems	$	87,849	$	132,805
Mats and integrated services		27,284		43,868		59,029		94,688
Industrial solutions										Industrial solutions	53,323		31,745
Total revenues	Total revenues	$	101,946	$	216,412	$	266,496	$	427,885	Total revenues	$	141,172	$	164,550

Operating income (loss)	Operating income (loss)									Operating income (loss)
Fluids systems	Fluids systems	$	(25,059)	$	12,184	$	(27,327)	$	16,058	Fluids systems	$	(6,767)	$	(2,268)
Mats and integrated services		1,005		9,276		4,067		22,814
Industrial solutions										Industrial solutions	13,130		3,062
Corporate office	Corporate office	(6,485)		(10,546)		(13,165)		(22,279)		Corporate office	(5,819)		(6,680)
Total operating income (loss)	Total operating income (loss)	$	(30,539)	$	10,914	$	(36,425)	$	16,593	Total operating income (loss)	$	544	$	(5,886)

The following table presents further disaggregated revenues for the Fluids Systems segment:


		Second Quarter						First Half							First Quarter
(In thousands)	(In thousands)	2020		2019		2020		2019		(In thousands)	2021		2020
United States	United States	$	42,670	$	117,154	$	116,330	$	220,213	United States	$	47,670	$	73,660
Canada	Canada	3,066		4,988		16,326		18,254		Canada	12,663		13,260
Total North America	Total North America	45,736		122,142		132,656		238,467		Total North America	60,333		86,920

EMEA	EMEA	26,036		44,455		68,173		82,220		EMEA	25,459		42,137
Other	Other	2,890		5,947		6,638		12,510		Other	2,057		3,748
Total International	Total International	28,926		50,402		74,811		94,730		Total International	27,516		45,885

Total Fluids Systems revenues	Total Fluids Systems revenues	$	74,662	$	172,544	$	207,467	$	333,197	Total Fluids Systems revenues	$	87,849	$	132,805

The following table presents further disaggregated revenues for the ~~Mats and Integrated Services~~Industrial Solutions segment:


		Second Quarter						First Half							First Quarter
(In thousands)	(In thousands)	2020		2019		2020		2019		(In thousands)	2021		2020
Product sales revenues										Product sales revenues	$	20,037	$	4,142
Rental revenues										Rental revenues	17,079		13,502
Service revenues	Service revenues	$	12,930	$	19,909	$	27,031	$	41,059	Service revenues	11,654		14,101
Rental revenues		9,170		17,675		22,672		39,255
Product sales revenues		5,184		6,284		9,326		14,374
Total Mats and Integrated Services revenues		$	27,284	$	43,868	$	59,029	$	94,688
Industrial blending revenues (1)										Industrial blending revenues (1)	4,553		0
Total Industrial Solutions revenues										Total Industrial Solutions revenues	$	53,323	$	31,745

~~During March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic, which led to a rapid decline in customer activity~~(1) Industrial blending operations began in the ~~oil and natural gas exploration and production (“E&P”) industry. As~~second quarter of ~~June 30, 2020,~~2020. Results for the ~~U.S. active rig count was 265, reflecting a 66% decline from~~industrial blending component are presented in Industrial Solutions beginning in the ~~first~~fourth quarter ~~2020 average level. In response~~of 2020. Results prior to the ~~deteriorating U.S. land oil~~fourth quarter of 2020 were reported in Fluids Systems and ~~natural gas market, we initiated certain headcount reductions~~not adjusted as they were not material.

We recognized $1.4 million of charges for inventory write-downs and ~~other cost reduction programs late~~severance costs 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.

~~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~~$1.2 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 Quarter First Half
(In thousands) 2020 2019 2020 2019
Inventory write-downs $ 8,269 $ — $ 8,996 $ —
Severance costs 2,593 333 3,099 868
Facility exit costs 800 — 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 indicators 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 consolidated balance sheet also includes $297.2 million of property, plant and equipment, 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 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.

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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, ~~2019.~~2020. Our ~~second~~first quarter represents the ~~three month~~three-month period ended ~~June 30 and our first half represents the six month period ended June 30.~~March 31. 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 services. We operate our business through two reportable segments: Fluids Systems, which primarily serves ~~the~~ oil and natural gas exploration and production (“("E~~&P”~~&P") ~~industry,~~customers, and ~~Mats and Integrated Services,~~Industrial Solutions, which serves ~~a variety of industries,~~various markets including electrical utilities, E&P, ~~electrical transmission & distribution,~~ pipeline, renewable energy, petrochemical, construction and ~~construction~~other industries.

Our ~~operating results, particularly~~long-term strategy includes key foundational elements that are intended to enhance long-term shareholder value creation:

•End-market diversification – To help reduce our dependency on customers in the volatile E&P industry, improve the stability in cash flow generation and returns on invested capital, and provide growth opportunities into new markets, we have focused our efforts over the past several years on diversifying our presence outside of our historical E&P customer base. These efforts have been primarily focused within our Site and Access Solutions business, where we have prioritized growth in electrical utilities, pipeline, renewable energy, and construction markets. In the first quarter of 2021, our Industrial Solutions segment generated $53 million of revenues, including approximately $45 million from electrical utilities and other non-E&P markets. The continued diversification of our revenues, including end-markets that are likely to benefit from ongoing energy transition efforts around the world, such as electrical utilities, renewable energy, and geothermal, remains a strategic priority going forward, and we anticipate that our capital investments will primarily focus on industrial end-market expansion.

•Provide products that enhance environmental sustainability – Our Company has a long history of providing environmentally-friendly technologies to our customers. In the Industrial Solutions segment, we believe the lightweight design of our fully recyclable DURA-BASE® matting system provides a distinct environmental advantage for our customers as compared to alternative wood mat products in the market, by eliminating deforestation required to produce wood mat products while also reducing CO2 emissions associated with product transportation. In our Fluids Systems segment, ~~depend~~our family of high-performance water-based fluids systems, which we market as Evolution® and DeepDrill® systems, are designed to enhance drilling performance while also providing a variety of environmental benefits relative to traditional oil-based fluids. The continued advancement of technology that provides our customers with economic benefits, while also enhancing their environmental and safety programs, remains a priority for our research and development efforts.

Our Fluids Systems operating results remain dependent on oil and natural gas drilling activity levels in the markets we serve and 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 Fluids Systems 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 ~~second~~first quarter ~~and first half~~ of ~~2020~~2021 as compared to the ~~same periods~~first quarter of ~~2019~~2020 is as follows:


		Second Quarter			2020 vs 2019					First Quarter			2021 vs 2020
		2020	2019	Count	%			2021	2020	Count	%
U.S. Rig Count	U.S. Rig Count	392	989	(597)	(60)	%	U.S. Rig Count	390	785	(395)	(50)	%
Canada Rig Count	Canada Rig Count	25	82	(57)	(70)	%	Canada Rig Count	138	196	(58)	(30)	%
North America Rig Count	North America Rig Count	417	1,071	(654)	(61)	%	North America Rig Count	528	981	(453)	(46)	%

		First Half			2020 vs 2019
		2020	2019	Count	%
U.S. Rig Count		588	1,016	(428)	(42)	%
Canada Rig Count		110	132	(22)	(17)	%
North America Rig Count		698	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, U.S. rig count declined significantly beginning in late March 2020 before reaching a low of 244 in mid-August 2020. The average U.S. rig ~~counts~~count increased 27% sequentially in ~~the second quarter of 2020 declined 50% from~~ the first quarter of ~~2020 average level. The~~2021 and was 440 as of April 30, 2021. We anticipate that market activity will continue to improve from current levels, although the ongoing impacts of the COVID-19 pandemic and an uncertain economic environment make the timing and pace of ~~decline in the U.S. land market~~recovery difficult to predict. The Canada rig count ~~has decreased in recent weeks, with the U.S. active rig count at 251~~was 51 as of ~~July 31, 2020. The Canada active rig count reflects both~~April 30, 2021, largely reflecting 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 land markets, drilling activity is generally more stable as this drilling activity ~~in many countries~~ is based on longer-term economic projections and multi-year drilling programs, which ~~tends to reduce~~typically reduces 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,~~and continuing into 2021, 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~~in the ~~fourth quarter of 2020 before beginning to gradually recover late~~near-term, and while we anticipate a general improvement in ~~2020 and into early~~customer activity as we progress through 2021, ~~although~~ the

impact from the duration and magnitude of the ongoing health pandemic and related government responses are very difficult to predict.

In response to the ~~deteriorating U.S. land oil and natural gas~~2020 market changes and reduced demand for our products and services as a result of the decline in oil prices and the COVID-19 pandemic, we ~~initiated~~took a number of actions ~~late in the first quarter of~~during 2020 aimed at conserving cash and protecting our liquidity, ~~and continued these actions in~~which included the ~~second quarter of 2020, including:~~

•~~The~~ implementation of cost reduction programs, including workforce reductions, employee furloughs, the suspension of the Company’s matching contributions to its U.S. defined contribution plan, and temporary salary reductions effective April 1, 2020 for a significant portion of U.S. ~~employees,~~employees. We recognized total charges of $29.2 million in 2020, including ~~a 15% cut to the salaries paid to executive officers and the annual cash retainers paid to all non-employee members of the Board of Directors;~~

•The initiation of additional actions to further reduce the operational footprint of the Fluids Systems business in U.S. land, to better align our cost structure with expected declines in market activity levels; and

•~~The elimination of all non-critical capital investments.~~

~~As part of the cost reduction programs, we have reduced our global employee base by approximately 550 (25%) in~~$1.4 million during the first ~~half~~quarter of ~~2020.~~

~~We recognized $13.3 million of charges~~2020 for inventory write-downs and 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. The $12.9 million of Fluids Systems charges includes $9.0 million for inventory write-downs, $3.1 million in severance costs, and $0.8 million in facility closures and related exit costs.

charges. While we have taken certain actions to reduce our workforce and cost structure, our business contains high levels of fixed costs, including significant facility and personnel ~~expenses.~~expense. Beginning in the second quarter of 2021, we restored salaries to pre-reduction levels for a portion of our non-executive U.S. employees and reinstituted the Company matching contribution for our U.S. defined contribution plan. We continue to evaluate under-performing areas within the Fluids Systems segment 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

Fluids Systems - Our Fluids Systems segment, which generated ~~78%~~62% of consolidated revenues for the first ~~half~~quarter of ~~2020,~~2021, provides ~~customized~~ drilling, completion, and stimulation fluids ~~solutions~~products and related technical services to ~~E&P~~ customers for oil, natural gas, and geothermal projects primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific and Latin America. ~~International~~Despite the continuing effects of COVID-19 impacting international customer activity, expansion outside of North America, including the penetration of international oil companies (“IOCs”) and national oil companies (“NOCs”), isremains 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%~~31% of Fluids Systems segment revenues for the first ~~half~~quarter of ~~2020~~2021 compared to ~~approximately 29%~~38% 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 halfquarter of 2020, ~~compared~~with the decrease primarily due to ~~$22 million for the first half of 2019.~~COVID-related activity disruptions and project delays.

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.

Industrial Solutions - Our ~~Mats and Integrated Services~~Industrial Solutions segment, which generated ~~22%~~38% of consolidated revenues for the first ~~half~~quarter of ~~2020,~~2021, provides engineered composite ~~mat~~matting system rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including electrical utilities, E&P, ~~electrical transmission & distribution,~~ pipeline, renewable energy, petrochemical, construction and ~~construction~~other industries, ~~across North America~~primarily in the United States and Europe. We also sell our manufactured composite mats to customers around the ~~world.~~

world, with electrical utilities being the primary end-market. In addition, we began leveraging our chemical blending capacity and technical expertise into industrial blending operations, and in response

1715

to the increasing market demand for cleaning products resulting from the COVID-19 pandemic, began producing disinfectants and industrial cleaning products in 2020. The scale-up of production was completed by the end of the third quarter of 2020, which effectively repositioned our chemical blending operation located in Conroe, Texas to support industrial end-markets. Beginning prospectively in the fourth quarter of 2020, the assets and operating results associated with these industrial blending operations are included in the Industrial Solutions segment, while the historical results from earlier in 2020, which were immaterial, are included in the Fluids Systems segment.

The expansion of our rental and service activities in electrical utilities and other non-E&P markets remains a strategic priority for us due to the market’s relative stability compared to E&P, as well as the magnitude of this market growth opportunity, including the potential positive impact from the energy transition. During 2020, our business was impacted by the COVID-19 pandemic, as ~~well as the market’s relative stability compared to E&P.~~customers delayed purchases and planned projects citing COVID-related market uncertainty, permitting delays, and logistical restrictions. The ~~Mats and Integrated Services~~Industrial Solutions segment rental and service revenues from non-E&P markets ~~was~~increased to approximately ~~$29~~$20 million for the first ~~half~~quarter of ~~2020~~2021, compared to approximately ~~$33~~$15 million for the first ~~half~~quarter of ~~2019.~~2020. Product sales revenues largely reflect sales to ~~utility~~electrical utilities customers and other non-E&P markets, and typically fluctuate based on the timing of customer orders. ~~Including product sales, total~~Total segment revenues from non-E&P markets ~~represented approximately 64%~~were $45 million (84% of ~~total~~ segment ~~revenues~~revenues) for the first ~~half~~quarter of 2021, more than doubling the $19 million (60% of segment revenues) generated in the first quarter of 2020, ~~compared to approximately 45% of total segment revenues for~~benefiting from pent-up demand associated with COVID-related project delays in 2020 along with a broader market recovery, particularly in the ~~first half of 2019. During~~electrical utilities sector. While we expect customer activity, particularly in the ~~first half of 2020, our business was impacted by~~electrical utilities sector, will remain robust as we progress through 2021, 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 activitydemand for both rental projects and product sales remains ~~highly~~ dependent on our customers ~~gaining~~continuing confidence in the broader economic recovery. While customer quoting activity has improved from the lull seen during the second quarter of 2020, the ongoing impact of these uncertainties, permitting delays, and logistical restrictions are difficult to predict.

1816

~~Second~~First Quarter of ~~2020~~2021 Compared to ~~Second~~First Quarter of ~~2019~~2020

Consolidated Results of Operations

Summarized results of operations for the ~~second~~first quarter of 2021 compared to the first quarter of 2020 ~~compared to the second quarter of 2019~~ are as follows:


		Second Quarter						2020 vs 2019							First Quarter				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
Revenues	Revenues	$	101,946	$	216,412	$	(114,466)	(53)	%	Revenues	$	141,172	$	164,550	$	(23,378)	(14)	%
Cost of revenues	Cost of revenues	112,290		177,933		(65,643)		(37)	%	Cost of revenues	119,991		146,084		(26,093)		(18)	%
Selling, general and administrative expenses	Selling, general and administrative expenses	20,937		28,037		(7,100)		(25)	%	Selling, general and administrative expenses	20,911		24,696		(3,785)		(15)	%
Other operating income, net		(742)		(472)		(270)		57	%
Other operating income										Other operating income	(274)		(344)		70		NM
Operating income (loss)	Operating income (loss)	(30,539)		10,914		(41,453)		NM		Operating income (loss)	544		(5,886)		6,430		NM

Foreign currency exchange loss		781		990		(209)		(21)	%
Foreign currency exchange (gain) loss										Foreign currency exchange (gain) loss	(332)		1,982		(2,314)		NM
Interest expense, net	Interest expense, net	2,912		3,523		(611)		(17)	%	Interest expense, net	2,408		3,201		(793)		(25)	%
Gain on extinguishment of debt		(1,334)		—		(1,334)		NM
Income (loss) before income taxes		(32,898)		6,401		(39,299)		NM
Loss on extinguishment of debt										Loss on extinguishment of debt	790		915		(125)		NM
Loss before income taxes										Loss before income taxes	(2,322)		(11,984)		9,662		81	%

Provision (benefit) for income taxes		(6,654)		2,095		(8,749)		NM
Net income (loss)		$	(26,244)	$	4,306	$	(30,550)	NM
Provision for income taxes										Provision for income taxes	3,040		164		2,876		NM
Net loss										Net loss	$	(5,362)	$	(12,148)	$	6,786	(56)	%

Revenues

Revenues decreased ~~53%~~14% to ~~$101.9~~$141.2 million for the ~~second~~first quarter of ~~2020,~~2021, compared to ~~$216.4~~$164.6 million for the ~~second~~first quarter of ~~2019.~~2020. This ~~$114.5~~$23.4 million decrease includes a ~~$93.3~~$8.2 million ~~(57%~~(7%) decrease in revenues in North America, comprised of a ~~$76.4~~$26.6 million decrease in the Fluids Systems segment ~~and a $16.9~~partially offset by an $18.4 million ~~decrease~~increase in the ~~Mats and Integrated Services~~Industrial Solutions segment. Revenues from our North America operations decreased primarily due to the ~~61%~~46% reduction in North ~~America~~American rig ~~count.~~count partially offset by the significant growth in non-E&P markets. Revenues from our international operations decreased by ~~$21.2~~$15.2 million ~~(40%~~(31%), primarily driven by activity disruptions and project delays ~~related to~~resulting from the COVID-19 ~~pandemic in our EMEA region.~~pandemic. Additional information regarding the change in revenues is provided within the operating segment results below.

Cost of revenues

Cost of revenues decreased ~~37%~~18% to ~~$112.3~~$120.0 million for the ~~second~~first quarter of ~~2020,~~2021, compared to ~~$177.9~~$146.1 million for the ~~second~~first quarter of ~~2019.~~2020. This ~~$65.6~~$26.1 million decrease was primarily driven by the ~~53%~~14% decrease in revenues described above. Fluids Systems segment cost of revenues for the second quarter of 2020 includes $11.1 million of 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 ~~$7.1~~$3.8 million to $20.9 million for the ~~second~~first quarter of ~~2020,~~2021, compared to ~~$28.0~~$24.7 million for the ~~second~~first quarter of ~~2019.~~2020. This decrease was primarily driven by ~~lower~~reduced personnel costs, ~~lower stock-based compensation expense, and lower spending related to legal matters, partially offset by $0.8 million~~including the benefit of cost reduction programs implemented in ~~severance costs incurred in the second quarter of~~ 2020. ~~In addition, the second quarter of 2019 includes $2.0 million in professional fees incurred related to updating our long-term strategic plan.~~ Selling, general and administrative expenses as a percentage of revenues was ~~20.5%~~14.8% for the ~~second~~first quarter of ~~2020~~2021 compared to ~~13.0%~~15.0% for the ~~second~~first quarter of ~~2019~~2020.

Foreign currency exchange

Foreign currency exchange was a ~~$0.8~~$0.3 million gain for the first quarter of 2021 compared to a $2.0 million loss for the ~~second~~first quarter of 2020, ~~compared to a $1.0 million loss for the second quarter 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.

1917

Interest expense, net

Interest expense was ~~$2.9~~$2.4 million for the ~~second~~first quarter of ~~2020~~2021 compared to ~~$3.5~~$3.2 million for the ~~second~~first quarter of ~~2019.~~2020. Interest expense for the ~~second~~first quarter of 2021 and 2020 ~~and 2019~~ includes ~~$1.2~~$1.1 million and ~~$1.5~~$1.6 million, respectively, in non-cash amortization of original issue discount and debt issuance costs. The decrease in interest expense is primarily due to lower debt balances.

~~Gain~~Loss on extinguishment of debt

In the first quarter of 2021 and 2020, we repurchased $18.3 million and $14.5 million, respectively, of our Convertible Notes in the open market for $18.1 million and $13.8 million, respectively. The ~~$1.3~~$0.8 million ~~gain~~loss and $0.9 million loss for the ~~second~~first quarter of 2021 and 2020, respectively, 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.~~costs.

Provision ~~(benefit)~~ for income taxes

The ~~benefit~~provision for income taxes was ~~$6.7~~$3.0 million for the ~~second~~first quarter of ~~2020,~~2021, despite reporting a pretax loss for the period, primarily reflecting ~~an effective tax benefit rate of 20%. This result primarily reflects~~ the impact of the geographic composition of our pretax ~~loss, where~~loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses inas they may not be realized. The provision for income taxes was $0.2 million for the ~~U.S was partially offset by~~first quarter of 2020, where the tax expense related to earnings from our international ~~operations. The provision for income taxes was $2.1 million for~~operations is only partially offset by the ~~second quarter of 2019, reflecting an effective tax rate of 33%.~~benefit from losses in the U.S.

2018

Operating Segment Results

Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):


		Second Quarter								2020 vs 2019									First Quarter				2021 vs 2020
(In thousands)	(In thousands)	2020			2019			$		%		(In thousands)	2021			2020			$		%
Revenues	Revenues											Revenues
Fluids systems	Fluids systems	$	74,662		$	172,544		$	(97,882)	(57)	%	Fluids systems	$	87,849		$	132,805		$	(44,956)	(34)	%
Mats and integrated services		27,284			43,868			(16,584)		(38)	%
Industrial solutions												Industrial solutions	53,323			31,745			21,578		68	%
Total revenues	Total revenues	$	101,946		$	216,412		$	(114,466)	(53)	%	Total revenues	$	141,172		$	164,550		$	(23,378)	(14)	%

Operating income (loss)	Operating income (loss)											Operating income (loss)
Fluids systems	Fluids systems	$	(25,059)		$	12,184		$	(37,243)			Fluids systems	$	(6,767)		$	(2,268)		$	(4,499)
Mats and integrated services		1,005			9,276			(8,271)
Industrial solutions												Industrial solutions	13,130			3,062			10,068
Corporate office	Corporate office	(6,485)			(10,546)			4,061				Corporate office	(5,819)			(6,680)			861
Total operating income (loss)	Total operating income (loss)	$	(30,539)		$	10,914		$	(41,453)			Total operating income (loss)	$	544		$	(5,886)		$	6,430

Segment operating margin	Segment operating margin											Segment operating margin
Fluids systems	Fluids systems	(33.6)		%	7.1		%					Fluids systems	(7.7)		%	(1.7)		%
Mats and integrated services		3.7		%	21.1		%
Industrial solutions												Industrial solutions	24.6		%	9.6		%

Fluids Systems

Revenues

Total revenues for this segment consisted of the following:


		Second Quarter						2020 vs 2019							First Quarter				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
United States	United States	$	42,670	$	117,154	$	(74,484)	(64)	%	United States	$	47,670	$	73,660	$	(25,990)	(35)	%
Canada	Canada	3,066		4,988		(1,922)		(39)	%	Canada	12,663		13,260		(597)		(5)	%
Total North America	Total North America	45,736		122,142		(76,406)		(63)	%	Total North America	60,333		86,920		(26,587)		(31)	%

EMEA	EMEA	26,036		44,455		(18,419)		(41)	%	EMEA	25,459		42,137		(16,678)		(40)	%
Other	Other	2,890		5,947		(3,057)		(51)	%	Other	2,057		3,748		(1,691)		(45)	%
Total International	Total International	28,926		50,402		(21,476)		(43)	%	Total International	27,516		45,885		(18,369)		(40)	%

Total Fluids Systems revenues	Total Fluids Systems revenues	$	74,662	$	172,544	$	(97,882)	(57)	%	Total Fluids Systems revenues	$	87,849	$	132,805	$	(44,956)	(34)	%

North America revenues decreased ~~63%~~31% to ~~$45.7~~$60.3 million for the ~~second~~first quarter of ~~2020,~~2021, compared to ~~$122.1~~$86.9 million for the ~~second~~first quarter of ~~2019.~~2020. This decrease was primarily attributable to a ~~$73.1~~$19.1 million decrease from U.S. land markets driven by the ~~60%~~50% decline in U.S. rig count partially offset by an increase in market share, as well as a ~~$2.2~~$6.9 million decrease from offshore Gulf of ~~Mexico.~~Mexico driven primarily by changes in customer drilling and completion activity levels. For the ~~second~~first quarter of ~~2020,~~2021, U.S. revenues included ~~$28.0~~$39.0 million from land markets and ~~$13.9~~$8.7 million from offshore Gulf of Mexico.

Internationally, revenues decreased ~~43%~~40% to ~~$28.9~~$27.5 million for the ~~second~~first quarter of ~~2020,~~2021, compared to ~~$50.4~~$45.9 million for the ~~second~~first quarter of ~~2019.~~2020. 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 the completion of the Baker Hughes Greater Enfield project in Australia, as well as lower activity in Chile.impacting substantially all key markets.

2119

Operating income (loss)

The Fluids Systems segment incurred an operating loss of ~~$25.1~~$6.8 million for the ~~second~~first quarter of ~~2020,~~2021, reflecting a ~~$37.2~~$4.5 million ~~change~~increase from the ~~$12.2~~$2.3 million operating loss incurred in the first quarter of 2020. The Fluids Systems operating loss for 2020 also included $1.2 million of ~~operating income generated for the second quarter of 2019.~~charges related to inventory write-downs and severance costs. The ~~decrease~~increase in operating ~~income~~loss includes a ~~$18.2~~$5.0 million decline from international operations and a $0.7 million decline from North ~~American operations and a $7.6 million decline from international~~America operations, which are primarily attributable to the changes in revenues described ~~above. The Fluids Systems operating loss for~~above, partially offset by the ~~second quarter~~benefit 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.cost reduction programs implemented in 2020.

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~~Industrial Solutions

Revenues

Total revenues for this segment consisted of the following:


		Second Quarter						2020 vs 2019							First Quarter				2021 vs 2020
(In thousands)	(In thousands)	2020		2019		$		%		(In thousands)	2021		2020		$		%
Product sales revenues										Product sales revenues	$	20,037	$	4,142	$	15,895	384	%
Rental and service revenues	Rental and service revenues	$	22,100	$	37,584	$	(15,484)	(41)	%	Rental and service revenues	28,733		27,603		1,130		4	%
Product sales revenues		5,184		6,284		(1,100)		(18)	%
Total Mats and Integrated Services revenues		$	27,284	$	43,868	$	(16,584)	(38)	%
Industrial blending revenues										Industrial blending revenues	4,553		—		4,553		NM
Total Industrial Solutions revenues										Total Industrial Solutions revenues	$	53,323	$	31,745	$	21,578	68	%

Rental and service revenues decreased $15.5 million (41%) to $22.1 million for the second quarter of 2020, which includes a $12.5 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 $3.0 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~~favorably impacted in the ~~second~~first quarter of 2021 by pent-up demand following the COVID-19 pandemic, while the first quarter of 2020 ~~as certain~~was negatively impacted by customers ~~delayed orders~~delaying purchases due to the ~~uncertainty related~~COVID-19 pandemic and market uncertainty. Rental and service revenues increased $1.1 million to $28.7 million for the ~~COVID-19 pandemic.~~first quarter of 2021, which includes a $4.7 million increase from non-E&P customers partially offset by a $3.6 million decrease from E&P customers. The increase from non-E&P customers reflects our continued expansion into these markets, including an approximately 35% increase in revenues from the electrical utilities sector. The revenue decrease from E&P customers primarily resulted from the lower U.S. drilling activity, along with our focus on supporting the more stable non-E&P customer end-markets.

Operating income

The ~~Mats and Integrated Services~~Industrial Solutions segment generated operating income of ~~$1.0~~$13.1 million for the ~~second~~first quarter of 2021 compared to $3.1 million for the first quarter of 2020, ~~compared to $9.3 million for~~ the ~~second quarter of 2019, the decrease~~increase being primarily attributable to the change in revenues as described above.

Corporate Office

Corporate office expenses decreased ~~$4.1~~$0.9 million to ~~$6.5~~$5.8 million for the ~~second~~first quarter of ~~2020,~~2021, compared to ~~$10.5~~$6.7 million for the ~~second~~first quarter of ~~2019.~~2020. This decrease was primarily driven by ~~reduced~~lower 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.~~

~~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 Half 2020 vs 2019
(In thousands) 2020 2019 $ %
Revenues $ 266,496 $ 427,885 $ (161,389) (38) %
Cost of revenues 258,374 352,909 (94,535) (27) %
Selling, general and administrative expenses 45,633 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) loss 2,763 (72) 2,835 NM
Interest expense, net 6,113 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 half of 2020, compared to $427.9 million for the first half of 2019. This $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 the 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 of 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 and $2.0 million in professional fees related to updating our long-term strategic plan. 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~~quarter of ~~2020. Selling, general and administrative expenses as a percentage~~2021, including the benefit of ~~revenues was 17.1% for the first half of 2020 compared to 13.7% for the first half of 2019~~.cost reduction programs implemented in 2020.

~~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.

~~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 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%.

2420

~~Operating Segment Results~~

~~Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):~~

First Half 2020 vs 2019
(In thousands) 2020 2019 $ %
Revenues
Fluids systems $ 207,467 $ 333,197 $ (125,730) (38) %
Mats and integrated services 59,029 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 services 4,067 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 services 6.9 % 24.1 %

~~Fluids Systems~~

~~Revenues~~

~~Total revenues for this segment consisted of the following:~~

First Half 2020 vs 2019
(In thousands) 2020 2019 $ %
United States $ 116,330 $ 220,213 $ (103,883) (47) %
Canada 16,326 18,254 (1,928) (11) %
Total North America 132,656 238,467 (105,811) (44) %
EMEA 68,173 82,220 (14,047) (17) %
Other 6,638 12,510 (5,872) (47) %
Total International 74,811 94,730 (19,919) (21) %
Total Fluids Systems revenues $ 207,467 $ 333,197 $ (125,730) (38) %

~~North America revenues~~ ~~decrease~~d ~~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 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.

~~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 Half 2020 vs 2019
(In thousands) 2020 2019 $ %
Rental and service revenues $ 49,703 $ 80,314 $ (30,611) (38) %
Product sales revenues 9,326 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 half of 2020 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 $3.4 million charge for stock-based compensation expense associated with the February 2019 retirement policy modification and $2.0 million in professional fees related to updating our long-term strategic plan. The remaining decrease of $3.7 million is primarily driven by reduced personnel costs and lower spending related to legal matters in the first half of 2020.

Liquidity and Capital Resources

Net cash provided by operating activities was ~~$25.0~~$27.8 million for the first ~~half~~quarter of ~~2020~~2021 compared to ~~$34.2~~$4.4 million for the first ~~half~~quarter of ~~2019.~~2020. During the first ~~half~~quarter of ~~2020,~~2021, net ~~income~~loss adjusted for non-cash items ~~used~~provided cash of ~~$13.9~~$7.0 million, while changes in working capital provided cash of ~~$38.9~~$20.8 million.

Net cash used in investing activities was ~~$2.7~~$0.6 million for the first ~~half~~quarter of ~~2020,~~2021, including capital expenditures of ~~$10.7 million. Capital~~$8.6 million, substantially offset by $8.0 million in proceeds from the sale of assets. The majority of the proceeds from the sale of assets reflect used mats from our rental fleet, which are part of the commercial offering of our Site and Access Solutions business. Nearly all of our capital expenditures during the first ~~half~~quarter of ~~2020 included $4.9~~2021 were directed to supporting our Industrial Solutions segment, including $6.9 million ~~for the Mats and Integrated Services segment, including~~of investments in the mat rental fleet, ~~as well as new products, and $4.3 million for~~primarily supporting the ~~Fluids Systems segment.~~increasing demand from the electrical utilities sector.

Net cash used in financing activities was ~~$26.1~~$16.6 million for the first ~~half~~quarter of ~~2020,~~2021, which primarily includes ~~$29.1~~$18.1 million in repurchases of our Convertible Notes and a net repayment of ~~$1.0~~$8.1 million on our ABL Facility, ~~(as defined below).~~partially offset by $8.1 million of net proceeds from a U.K. term loan facility.

~~Our revenues~~Substantially all our $34.2 million of cash on hand at March 31, 2021 resides in our international subsidiaries. Subject to maintaining sufficient cash requirements to support the strategic objectives of these international subsidiaries and ~~operating results in 2020 have been negatively impacted by the decrease in demand for our products and services~~complying with applicable exchange or cash controls, we expect to continue to repatriate excess cash from ~~the decrease~~these international subsidiaries. As we progress through 2021, we anticipate that working capital will likely increase in the price of and 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 and protecting our liquidity, including workforce and salary reductions, elimination of all non-critical capital expenditures, as well as actions to reduce our operational footprint to match current and anticipated activity levels by operating region. We currently expect total 2020 capital expenditures to be approximately $15 million. We anticipate thatnear term with future working capital requirements for our operations ~~will fluctuate~~generally fluctuating directionally with revenues. ~~As such,~~We expect capital expenditures in the near term to focus on industrial end-market expansion opportunities that provide stable cash flow generation. In addition, we ~~anticipate that~~may continue to purchase our ~~near-term working capital requirements will decrease primarily from~~Convertible Notes under our ~~on-going efforts~~existing repurchase program prior to ~~reduce inventory levels as well as reductions in international receivables that have been negatively impacted by payment delays due to disruptions from~~ the ~~COVID-19 pandemic.~~ December 2021 maturity.

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 U.S. accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet. As of ~~August~~May 3,~~, 2020,~~ 2021, our total availability under the ABL Facility was $~~113.3~~$82.6 million, of which $~~60.8~~$16.0 million was drawn, resulting in remaining availability of $~~52.5~~$66.5 million.

~~While substantially all~~ This availability under the ABL Facility excludes $24.2 million related to eligible rental mats as we failed to satisfy the required minimum consolidated fixed charge coverage ratio, as measured on the trailing twelve-month period ended March 31, 2021. Based on our ~~$42.9 million~~current projections of ~~cash on hand at June 30, 2020 resides in our international subsidiaries,~~operating results through the first half of 2021, we expect to ~~continue to repatriate excess cash from these international subsidiaries, subject to exchange or cash controls and~~satisfy the ~~cash requirements to support~~financial covenants required such that the ~~strategic objectives~~eligible rental mats would again be included in the borrowing availability under the ABL Facility following the second quarter of ~~these international subsidiaries.~~ 2021.

We expect our available cash on-hand, cash generated by operations, ~~including reductions in working capital,~~ and ~~remaining~~the expected availability under our ABL Facility to be adequate to fund our current operations during the next 12 ~~months.~~months and the repurchase or repayment of the 2021 Convertible Notes. We also 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~~options, which include possible financing or alternative arrangements secured by certain assets in the U.S. or our ~~common stock or Convertible Notes under our existing repurchase program from time to time.~~international operations.

Our capitalization is as follows:


(In thousands)	(In thousands)	June 30, 2020			December 31, 2019			(In thousands)	March 31, 2021			December 31, 2020
Convertible Notes	Convertible Notes	$	66,912		$	100,000		Convertible Notes	$	48,567		$	66,912
ABL Facility	ABL Facility	64,000			65,000			ABL Facility	11,000			19,100
Other debt	Other debt	11,173			7,164			Other debt	15,137			5,371
Unamortized discount and debt issuance costs	Unamortized discount and debt issuance costs	(6,275)			(12,291)			Unamortized discount and debt issuance costs	(2,462)			(4,221)
Total debt	Total debt	$	135,810		$	159,873		Total debt	$	72,242		$	87,162

Stockholder's equity	Stockholder's equity	507,437			548,645			Stockholder's equity	480,922			488,032
Total capitalization	Total capitalization	$	643,247		$	708,518		Total capitalization	$	553,164		$	575,194

Total debt to capitalization	Total debt to capitalization	21.1		%	22.6		%	Total debt to capitalization	13.1		%	15.2		%

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:

•upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.

Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement, which ~~replaced our previous credit agreement. In~~was amended 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 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 June 30, 2020, our total availability under the ABL Facility was $132.9 million, of which $64.0 million was drawn, resulting in remaining availability of $68.9 million.~~

Borrowing availability under the ABL Facility is calculated based on eligible U.S. 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 of 1.5 to 1.0 and ~~a minimum level~~at least $1.0 million of operating income for the ~~Mats~~Site and ~~Integrated Services segment.~~ Access Solutions business, each calculated based on a trailing twelve-month period.

As ~~of August 3, 2020, our total availability under the ABL Facility included $25.4 million from eligible rental mats. We may~~noted above, we do not ~~be able to maintain~~currently satisfy the minimum consolidated fixed charge coverage ratio ~~beginning in the fourth quarter of 2020~~ that is required to ~~continue including~~include eligible rental mats in the borrowing availability under the ABL Facility. ~~While this does not represent a default, it would reduce~~We expect to satisfy the minimum consolidated fixed charge coverage ratio as required to include eligible rental mats in the borrowing availability under the ABL ~~Facility. As such,~~Facility following the second quarter of 2021 and expect to satisfy the June 30, 2021 ABL Facility requirements to be able to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes prior to September 1, 2021. If we ~~have initiated discussions with our lead bank in an effort~~are unable to ~~explore our~~satisfy the minimum consolidated fixed charge coverage ratios following the second quarter of 2021, we would further evaluate options, which may include a waiver or amendment to our ABL Facility. Any waiver or amendment to the ABL Facility, if required, ~~may~~would be expected to increase the cost of our borrowings and may 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.

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 minimum consolidated fixed charge coverage ratio of 1.0 to 1.0 calculated based on a trailing twelve-month period if availability under the ABL Facility falls below $22.5 million. Based on our current projections, we do not expect availability under the ABL Facility to fall 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.

Critical Accounting Estimates and Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ~~of America,~~(“U.S. GAAP”), which requires usmanagement to make estimates and assumptions that affect the reported amounts and ~~disclosures.~~disclosure. Significant estimates used in preparing our ~~condensed~~ consolidated financial statements include estimated cash flows and 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.

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, ~~2019.~~2020. Our critical accounting estimates and policies have not materially changed since December 31, ~~2019.~~2020.

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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 ~~June 30, 2020,~~March 31, 2021, we had total principal amounts outstanding under financing arrangements of ~~$142.1~~$74.7 million, including ~~$66.9~~$48.6 million of borrowings under our Convertible Notes which bear interest at a fixed rate of 4.0% ~~and $64.0~~, as well as $11.0 million of borrowings under our ABL ~~Facility. Borrowings~~Facility and $7.8 million of borrowings under ~~our ABL Facility~~a U.K. term loan which are subject to a variable interest ~~rate~~rates as determined by the ~~ABL Facility.~~respective debt agreements. The weighted average interest rate at ~~June 30, 2020~~March 31, 2021 for the ABL Facility and the U.K. term loan was ~~1.7%.~~2.1% and 3.4%, respectively. Based on the balance of variable rate debt at ~~June 30, 2020,~~March 31, 2021, a 100 basis-point increase in short-term interest rates would have increased annual pre-tax interest expense by ~~$0.6~~$0.2 million.

Foreign Currency Risk

Our principal foreign operations are conducted in certain areas of EMEA, Canada, Asia Pacific, and Latin 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, Kuwaiti dinar, Algerian dinar, Romanian new leu, Canadian dollars, British pounds, and Australian ~~dollars, and Brazilian reais.~~dollars. 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

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 ~~June 30, 2020,~~March 31, 2021, 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 ~~June 30, 2020~~March 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1A. Risk Factors

There have been no material changes toduring the period ended March 31, 2021 in our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~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)The following table details our repurchases of shares of our common stock for the three months ended ~~June 30, 2020:~~March 31, 2021:

Period Total 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)
April 2020 — $ — — $ 67.2
May 2020 — $ — — $ 55.5
June 2020 142,715 $ 2.08 — $ 51.9
Total 142,715 —


Period	Total 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)
January 2021	—	$	—	—	$	51.9
February 2021	—	$	—	—	$	39.1
March 2021	1,482	$	3.92	—	$	33.8
Total	1,482			—

During the three months ended March 31, 2021, we purchased an aggregate of 1,482 shares surrendered in lieu of taxes under vesting of restricted shares.

In November 2018, our Board of Directors authorized changes to our securities repurchase program. These 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 Convertible Notes.

Our repurchase program authorizes us to purchase ~~our~~ outstanding shares of our common stock or 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,~~March 31, 2021, we had ~~$51.9~~$33.8 million remaining under the program.

During the three months ended ~~June 30, 2020,~~March 31, 2021, we repurchased ~~$18.6~~$18.3 million of our Convertible Notes in the open market under the repurchase program for a total cost of ~~$15.3~~$18.1 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.~~March 31, 2021.

ITEM 3. Defaults Upon Senior Securities

None.

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

None.

3126

ITEM 6. Exhibits

The exhibits listed are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


~~3.1~~			~~Certificate of Designation, Preferences, and Rights of Series D Junior Participating Preferred Stock of the Company, incorporated by reference to Exhibit~~ 3 ~~.1 to the Company's Current Report on Form 8-K filed on~~ ~~May 28, 2020 (SEC File No. 001-02960).~~
~~4.1~~			~~Rights Agreement dated as of May 27, 2020, by and between the Company and Broadridge Corporate Issuer Solutions, Inc., as rights agent, which includes as Exhibit B the Form of Rights Certificate, incorporated by reference to Exhibit~~ 4 ~~.1 to the Company's Current Report on Form 8-K filed on May 28, 2020 (SEC File No. 001-02960).~~
~~†10.1~~			Amendment to Amended and Restated Employment Agreement dated as of April 6, 2020, between Newpark Resources, Inc. and Paul L. Howes, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 8, 2020 (SEC File No. 001-02960).
~~†10.2~~			Amendment to Employment Agreement and Change of Control Agreement dated as of April 6, 2020 between Newpark Resources, Inc. and Gregg S. Piontek, incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on April 8, 2020 (SEC File No. 001-02960).
~~†10.3~~			Amendment to Employment Agreement and Change in Control Agreement dated April 6, 2020 between Newpark Resources, Inc. and David Paterson, incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on April 8, 2020 (SEC File No. 001-02960).
~~†10.4~~			Amendment to Employment Agreement and Change in Control Agreement dated April 6, 2020 between Newpark Resources, Inc. and E. Chipman Earle, incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on April 8, 2020 (SEC File No. 001-02960).
~~†10.5~~			Amendment to Employment Agreement and Change in Control Agreement dated April 6, 2020 between Newpark Resources, Inc. and Matthew Lanigan, incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed on April 8, 2020 (SEC File No. 001-02960).
~~†*10.6~~			~~Form of Non-Employee Director Cash Award Agreement~~
~~†*10.7~~			~~Newpark Resources, Inc. Retirement Policy for U.S. Employees, as amended, Approved and Adopted April 6, 2015, amended as of May 20, 2020.~~
*31.1			Certification of Paul L. Howes pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2			Certification of Gregg S. Piontek pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
**32.1			Certification of Paul L. Howes pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**32.2			Certification of Gregg S. Piontek pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*95.1			Reporting requirements under the Mine Safety and Health Administration
*101.INS			XBRL 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.SCH			Inline XBRL Schema Document
*101.CAL			Inline XBRL Calculation Linkbase Document
*101.DEF			Inline XBRL Definition Linkbase Document
*101.LAB			Inline XBRL Label Linkbase Document
*101.PRE			Inline XBRL Presentation Linkbase Document
*104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~† Management compensation plan or agreement.~~

* Filed herewith.

** Furnished herewith.

3227

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: ~~August 4, 2020~~May 5, 2021


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, Chief Accounting Officer and Treasurer (Principal Accounting Officer)

3328


(In thousands)	Balance at December 31, 2019		Impact of Adoption of New Credit Losses Guidance		Balance at January 1, 2020
Receivables, net	$	216,714	$	(959)	$	215,755
Deferred tax assets	3,600		59		3,659
Deferred tax liabilities	34,247		(165)		34,082
Retained earnings	134,119		(735)		133,384