NPK International Inc (NPKI) 2016 Q2 法說會逐字稿

Greetings and welcome to the Newpark Resources second-quarter earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Brian Feldott, Director of Investor Relations. Thank you, please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review our second-quarter 2016 results.

With me today are Paul Howes, our President and Chief Executive Officer; Bruce Smith, President of our Fluids Systems business; and Gregg Piontek, our Chief Financial Officer. Following my remarks, Paul will provide a high-level commentary on the second quarter, Bruce will provide an update on our Fluids business, and Gregg will discuss the Mats business as well as the consolidated financial results for the second quarter. Paul will then conclude the discussion before opening the call for Q&A.

Before I turn over the call, I have a few housekeeping items to cover. There will be a replay of today's call, and it will be available by webcast on our website at newpark.com. There will also be a recorded replay available by phone, which will be available until August 12, 2016, and that information is included in yesterday's release.

Please note that the information reported on this call speaks only as of today, July 29, 2016, and therefore, you're advised that time-sensitive information may no longer be accurate as of the time of the replay.

In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities Laws. These forward-looking statements reflect the current views of Newpark's management. However, various risks, uncertainties, and contingencies could cause our actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener is encouraged to read our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K to understand certain of those risks, uncertainties, and contingencies.

And now with that said, I would like to turn the call over to our President and CEO, Mr. Paul Howes.

Thank you, Brian, and good morning to everyone.

Consistent with our expectations discussed in April, the second quarter proved to be challenging for our industry in North America. With US rig count down 23% from last quarter, along with the impact of spring breakup in Canada. Yet, despite the continuing sharp decline in the North American drilling activity, I'm pleased to report that consolidated revenues were up slightly on a sequential basis, benefiting from strong performance in our international fluids business, and the continued penetration of non-exploration markets in our Mats business.

The performance in the second quarter is meaningful to us, as it serves to further validate our long-term strategy for both of our segments. In Fluids, we've long been focused on diversifying our revenue streams, and penetrating the IOCs and NOCs around the world. Here in the past 18 months, as the commodity cycle has decimated the North American market, we're seeing the benefit from our unwavering focus on our long-term strategy.

Our EMEA region is continuing to grow, benefiting from our expansion in the Middle East. And despite the declines in global customer spending, IOCs and NOC activity has remained more resilient, contributing approximately half of our global Fluids revenue in the quarter, including the benefit from the record-setting ultra-deepwater well in Uruguay.

In the Mats segment, with new leadership in place, we are accelerating our efforts to penetrate new markets to further offset the current weakness in North American exploration activity. In addition to the near-term benefits, these new market opportunities position us to grow beyond historical levels when the exploration markets recover.

At the same time, we continue to take prudent steps to protect our balance sheet. Cash on hand increased to $93 million in the quarter, bringing our net debt down to $78 million. During the quarter, we also transitioned to a new asset-based lending facility, which provides us with added liquidity through the cycle, and also helps to address the convert maturity in October 2017.

With that, let me now turn the call over to Bruce Smith, who will review the performance of our Fluids business. Bruce?

Thank you, Paul. Good morning, everyone.

In the second quarter, the Fluids Systems segment generated total revenues of $96 million, reflecting a 3% decrease from the first quarter and a 31% decrease year over year. In the US, revenues were $31 million, down 18% sequentially, comparing favorably to the 23% decline in average rig count over this period. On a year-over-year basis, US revenues were down 59% compared to the 53% reduction in rig count, reflecting declines in customer spending intensity and pricing softness, partially offset by improvements in market share.

Revenues in Canada followed the typical seasonal pattern for spring breakup. Following the strong first quarter, revenues from Canada declined 83% to $2 million in the second quarter compared to a 72% decrease in rig count. On a year-over-year basis, revenues were down $5 million, as the Canadian market continues to run well below prior-year levels.

As Paul highlighted, our EMEA region posted a strong second quarter, with revenues of $44 million, up $6 million sequentially, reflecting a 16% increase. The second-quarter improvement is primarily attributable to increased activity in Kuwait, along with the benefit of elevated product sales in other markets. On a year-over-year basis, revenues from the EMEA region were up 7%, despite the completion of our deepwater Black Sea contract and the headwinds of currency translation. The revenue growth over last year was driven by market share gains in Algeria and Kuwait, as well as our entry into the Republic of Congo.

Our Latin America region posted revenues of $17 million in the second quarter, doubling first-quarter revenues. The second-quarter results included an $11 million revenue contribution from the ultra-deepwater project in Uruguay, which was successfully completed late in the quarter. The $10 million sequential increase from the Uruguay project was partially offset by a $2 million decline in Brazil, as Petrobras activity continues to soften.

On a year-over-year basis, Latin America revenues are up $5 million or 37%, primarily reflecting the contribution from Uruguay, offset by a $6 million decline in Brazil. Given the further deterioration in activity and outlook in Brazil, we are continuing to take measures to rightsize our cost structure in this region.

In the Asia-Pacific region, second-quarter revenues were $2 million, flat with the first quarter, as customer activity levels remain extremely soft in the weak commodity price environment. On a year-over-year basis, the Asia-Pacific region declined $3 million. As noted in the press release, we recorded $7 million this quarter for asset impairments related to the ongoing weakness and outlook for growing activity in this region.

The second quarter also included $1 million of charges for employee separation costs and inventory write-downs. Adjusting for these charges and the Asia-Pacific impairment, the segment results improved to a $3.6 million operating loss in the second quarter. The sequential improvement reflects the benefit of cost actions in North America, and stronger margins in the international business.

On the technology front, revenues from our family of Evolution systems continue to have a place in the market, although at levels consistent with the overall revenue decline. Evolution revenues came in at $10 million in the second quarter, including $8 million in North America. Despite the extremely soft market conditions, it's worth noting that our Evolution technology continues to maintain a meaningful margin premium.

Turning to our near-term outlook, we expect to see a further softening in revenues, driven primarily by the completion of the ultra-deepwater project in Uruguay. We anticipate this reduction will be somewhat offset by a modest improvement in North American revenues, which should trend closely to the overall rig count. The EMEA region is also expected to be modestly softer, due in part to the strong product sales in the second quarter that are not anticipated to recur. In terms of operating margins, we believe the third quarter will soften modestly from the normalized Q2 level, as the declines in the international business will be partially offset by improvements in North America.

While 2016 continues to be challenging to navigate, the progress towards our long-term Fluids strategy is providing a clear benefit. In the past two years, we have won meaningful long-term contracts with NOCs in Algeria and Kuwait, which has expanded our market share and helped drive revenue growth in the EMEA region despite the sharp declines in global E&P spending.

In addition, we're continually building our resume with key IOCs. The project in Uruguay adds to our expanding deepwater resume, and the recent startup with Shell in Albania adds another valuable IOC to our customer base.

We look forward to further expanding our IOC market share in the Gulf of Mexico, as we're nearing completion of our facility expansion. This, along with our new manufacturing and distribution facility in Conroe, will provide us premier capabilities in the market.

With that, I'll now turn the call over to our CFO, Gregg Piontek.

Thank you, Bruce, and good morning, everyone. I'll begin by discussing our Mats business, before finishing with our consolidated results.

The Mats business reported second-quarter revenues of $19 million, up 21% from the first quarter, but down 18% year over year. Sequentially, the revenue increase is primarily attributable to a $4 million increase in Mats sales.

Rental and service revenues came in at $15 million for the second quarter, relatively in line with the first quarter. Revenues from oilfield markets continued to trend with the overall activity levels, declining by approximately 20% sequentially.

As we've discussed previously, given the extreme weakness in the North American E&P markets, our primary focus has been on the penetration of new markets. We've continued to make meaningful progress toward this objective during the second quarter, with gains in these markets offsetting the oilfield weakness.

Overall, non-exploration markets contributed nearly 75% of total segment revenues in the second quarter, including $10 million, or roughly two-thirds of our total rental and service revenues, and $4 million of international Mats sales. At the same time, it's worth noting that while the exploration markets remain extremely soft, we've continued to maintain our market presence in all regions, which preserves our ability to capitalize on the eventual market recovery.

I'd also like to highlight that we've continued with selective deployments of the Defender spill containment system. During the first half of the year, we've deployed the system at six sites, and customer feedback regarding system performance has been very favorable.

Comparing to the second quarter of last year, total segment revenues declined by $4 million, including an $8 million decrease in exploration, rental and services, partially offset by gains in non-oilfield rentals and Mats sales. The segment operating margin came in at 21% for the second quarter, compared to 24% last quarter. As highlighted in April, the first-quarter operating margin benefited from a gain on sale of used Mats.

Turning to our near-term outlook, while our visibility is always a bit challenging in this business, particularly for Mats sales, the third-quarter rental and service activities are currently shaping up to be similar to the second quarter. Regarding Mats sales, we continue to see a meaningful level of opportunities. That said, the timing of the project is very difficult to predict. At this point, we expect third-quarter Mats sales activity to be softer than the second quarter, bringing total third-quarter segment revenues back toward the mid-teens range, with operating margins also in the teens.

Now moving on to our consolidated results, for the second quarter of 2016 we reported total revenues of $115 million, up slightly sequentially but down 30% year over year. SG&A costs were $21.4 million, down 9% sequentially and 11% year over year. Both the sequential and year-over-year decreases are primarily attributable to cost-reduction efforts.

Corporate office expenses were $7.2 million in the second quarter, compared to $7.4 million in the first quarter and $8 million in the prior year. Consolidated operating loss was $15.1 million in the second quarter, compared to $18.8 million in the first quarter and $1.7 million in the second quarter of last year, including the charges outlined in the non-GAAP earnings reconciliation in yesterday's press release.

Foreign currency exchange netted to a $700,000 gain in the second quarter, up slightly from both the first quarter and the second quarter of last year. The second-quarter interest expense netted to $3 million, which included a $1.1 million charge for the write-off of deferred financing costs associated with the termination and replacement of our revolving credit facility. Adjusting for this item, the second-quarter interest expense was down modestly from the $2.1 million in the first quarter and $2.2 million in the second quarter of last year.

The provision for income taxes for the second quarter of 2016 was a $3.5 million benefit, reflecting an effective tax rate of roughly 20%. The second-quarter provision was unfavorably impacted by pre-tax losses in Australia, including the $6.9 million of impairment charges for which the recording of a tax benefit is not permitted.

Net loss for the second quarter was $13.9 million or $0.17 per share. As noted in the non-GAAP earnings reconciliation in yesterday's press release, these adjustments accounted for $0.11 of the second-quarter loss. On an adjusted non-GAAP basis, the second quarter of 2016 net loss was $0.06 per share compared to a loss of $0.15 per share in the pervious quarter and $0.02 per share in the second quarter of last year.

Now let me discuss our balance sheet and liquidity. During the second quarter, operating activities provided cash of $23 million. Working capital reductions benefited from the recovery of US taxes and the continuing efforts to rightsize inventory.

These benefits were somewhat offset by a $10 million increase in receivables, largely associated with the Uruguay project. We used $12 million to fund investing activities, substantially all of which was spent on facility and infrastructure projects in the US and Uruguay.

As of the end of the quarter, total borrowings were $171 million, including $161 million of convertible bonds that mature in Q4 of next year. No borrowings are currently outstanding under our credit facility.

We ended the second quarter with cash of $93 million, resulting in a total debt-to-capitalization ratio of 25.5% and a net debt-to-capitalization ratio of 13.4%. For the full-year 2016, we continue to expect capital expenditures to be in the mid to upper $30 million range, with roughly $10 million of CapEx expected in the back half of the year.

The majority of second-half spending requirement is related to the completion of the deepwater shore-base project. With our major capital projects now largely behind us, we expect the ongoing maintenance capital requirements to be limited for the foreseeable future, which we expect to benefit our cash follow in the eventual recovery of the industry.

Now I'd like to turn the call back over to Paul for his concluding remarks.

Thanks, Gregg.

2016 remains challenging for our industry, however, we continue to stay the course in our efforts to execute on key elements of our long-term strategy. Our balance sheet remains strong, with cash on hand of $93 million and a net debt position of $78 million, and meaningful opportunities for further working capital improvements ahead of us, including inventory reductions and an additional refund of US taxes next year. And as we mentioned, we also have borrowing capacity under our credit facility which remains untapped.

As much of the discussion remains focused on the industry's cycle and near-term outlook, I don't want to lose sight of our significant accomplishments towards our long-term strategy. In Fluids, we are nearing completion of our Fourchon shore base, which will provide enhanced capabilities to the industry, enabling us to drive further operational efficiencies for our customers in the deepwater Gulf of Mexico.

And standing behind this investment is our recently completed fluids manufacturing and distribution facility in Conroe, Texas, which became operational earlier this year. This facility sets a new standard for the manufacturing of drilling fluid products and additives, deploying state-of-the-art instrumentation and controls to enhance the consistency and quality of our products used on land and offshore in the Gulf of Mexico. This facility has the capacity to support significant growth once the industry recovers, producing both our Evolution and Kronos product lines.

Meanwhile, we continue to make strides on our efforts to penetrate key international and national oil companies. As I mentioned, IOCs and NOCs contribute about half of our Fluid revenues in the quarter, including the world record-setting ultra-deepwater well in Uruguay.

As IOCs and NOCs search for companies and products that bring unique value, it's clear that Newpark is rising to the top of that list for drilling fluids. Even as our large competitors appear to be commoditizing the space, we continue to hear from our customers that they value our innovation and focus on driving improvements in their operating efficiency.

In our Mats business, we continue to make progress in our efforts to diversify into new markets, and our DURA-BASE matting system is gaining traction in the power transmission market. As we have discussed previously, it is critical that we continue to expand our product offering.

One such advancement I'd like to highlight is the equipotential zone grounding system. Our customers that perform maintenance on high-voltage transmission lines frequently need to create equipotential zones to provide fault protection arising from induced currents at nearby active power lines. We have developed a new system that provides our customers with the ability to quickly and efficiently assemble an equipotential zone.

And I am pleased to tell you that, since the beginning of the year, we've been awarded two US patents related to this technology. This is just one example of how we are creating unique value for both our customers and our shareholders.

In summary, even in these challenging times, Newpark is not standing still. We continue to balance short-term challenges with the execution of our long-term strategy. We are uniquely positioned with new manufacturing capabilities and new products to capture more than our fair share of the market when the oil and gas industry recovers.

We will emerge a stronger and more agile Company. And to that point, I'd like to thank all of the employees of the Company for their hard work and continuing dedication during these difficult times.

I would like to focus on one particular achievement by our employees that I am extremely proud of -- our safety record. Our employees' commitment to safety is reflected in incident rates that were well below industry averages before this downturn began some 18 months ago. And despite being asked to do more with less as the markets contracted, our focus on safety has never wavered.

In fact, our safety record has actually continued to improve, and is now at a record level for the Company. This is an outstanding accomplishment, and I wanted to make sure our employees know how much we appreciate their efforts to keep themselves and their coworkers safe. I would also note that our safety statistics are available for review on our website at newpark.com.

With that, we'll now take your questions. Operator?

(Operator Instructions)

Marshall Adkins, Raymond James.

Morning, guys.

Great job, particularly on the international Fluids side. So I just want to delve into that. Obviously the Uruguay thing goes away, but it seems like you got some things going on there that will maintain some sustainability in that business ex the Uruguay thing.

Could you touch -- first of all, is that right? And second of all, could you give us a little more color on what those things are that should give us confidence that the international Fluids side holds up over the next year or two?

Yes, thank you, Marshall. This is Bruce, I'll take that one. You're correct in your assumption that the international market will continue to be a strong piece of our business going forward.

In general, we've entered new countries quite regularly in that region like Kuwait, the Congo, more recently in Oman, although that hasn't really began to play fully yet. And we expect to see more opportunities going forward to build on that country entry program, so our EMEA region we expect to stay fairly strong going forward.

Okay. And I guess specifically, that's Kuwait, Algeria, anything else that we should be watching?

The Congo, we hope Congo will come back a little bit. Initially, the Congo was due to be a slightly larger than it is currently, but the pullback due to the current pricing of the commodities. But we expect that will pick up going forward. So Kuwait, Algeria, Congo, Oman would be -- .

And the other one too, Bruce, that I would comment on is obviously although we don't expect the Albanian revenues to be significant, that is a major milestone for us with our first contract with Shell Oil. Our hope is that we'll be able to leverage that, continue to leverage that in the international markets.

The other thing I would add just to put a little more color on it is, that if you look at that international market, I think your most stable revenue streams are the NOCs. So you hit the key ones, Algeria and Kuwait has been most stable in terms of the overall activity.

IOCs, a little less, more dependent on the commodity prices. And then the other thing to also remind ourselves of is even those that are continuing to drill with the weakness in the commodity price, there is that continual theme of pricing pressure and that creates a little bit of uncertainties.

Perfect. That's helpful.

All right, shifting gears over to the Mats. What really stood out this quarter seems to be the non-E&P stuff, I think you mentioned 75% all in. Tell us what's going on there. Is this still utility customers. Give us some geographic context to think about what's going on there? And the last one is, how does pricing there compared to the E&P side?

Yes, Marshall, I'll take that to begin with, and then Gregg will add a couple comments. In terms of the segment, it's this power transmission segment that we're running our Mats into. We have been able to start some early deployments of our equal potential zone technology for them as well. Geographies, mostly in the South Central upper Midwest in terms of where we're playing. And then the other one in terms of pricing, generally pricing in the utility sector has been lower than the historical levels that we had in oil and gas.

Yes the important thing there too, remind folks of on the pricing side is while the pricing tends to be lower in these markets, you have different lengths on these projects which help benefit your utilization to get to somewhat of an offset. You're not talking about 45-day projects. You're talking about many, many months. And therefore, that helps provide some offset.

The other thing that I would mention in terms of the geography is, as Paul mentioned, we're seeing this really throughout the Midwest and South Central within the US is where a lot of the work is focused. We also have our presence in the UK, and are building on the acquisition that we did a few years ago there and expanding off of that beach head into mainland Europe has also been a key piece of this.

Very much hitting the same types of markets. And then lastly just touching on the sales here that we have had in the quarter, those were into non-E&P and that was -- those were in the international markets and for a large pipeline project was the primary contributor.

All right. Great job. Thank you.

Thanks, Marshall.

Neal Dingmann, SunTrust.

Morning. Say, maybe a question, Paul, or for Bruce. Just, again, based on Marshall's again, talking about some of those ultradeep and just both internationally when I look onshore and offshore international, Bruce. Just wondering what pricing power you see?

It certainly appears, obviously, given the softness in the US, you've been able to get some great pricing international. So I guess my question is, is that pretty broad spread, Bruce, internationally both offshore and onshore and then geographically?

Well let me just take it first, then I'll pass it off to Bruce. Certainly in the international market there is less competition. And as you're working offshore, it's certainly more challenging from a technical perspective.

But the one thing to remember too about our international margins is that those are typically longer-term contracts. Where we've got an opportunity to really drive operating efficiency, and keep our costs at a minimal level. So a little bit different than the North American market.

Bruce, any other comments you want to add to that?

Just one or two probably. The bump that we certainly saw during the Uruguay project is indicative of what we might expect in deepwater work in other parts of the world. The Gulf of Mexico is one that we're focusing on now, obviously, and it shows really why we're focusing on that part of the deepwater market.

Great color. And then just lastly, on Evolution, just your thoughts today. Given the continued challenging market in the US, is that again like the normal Fluids more of a focus internationally? Maybe just any, Paul, any comments you can say just on Evolution. Again, I still think obviously having a water base, to me, it's just got to gain traction, it's just a matter of when. But I'd love to hear your comments.

Well Evolution is still playing very well, although in line with the reduced revenues in North America, for example. But it's still playing well. And part of that, that's part of the reason that we're picking up market share a little bit in North America, is because we have that technology that's driving operational efficiency.

We've also focused on our service quality in North America, while others have been pulling back somewhat, we've continued to focus on that. Our service quality is improving and we are reaping the benefits of that. Some of the smaller companies too in North America have disappeared just due to the state of the industry here, which helps again. And one large competitor recently has announced that they're pulling back from that market. So we see many opportunities to keep that market share drive going with technology and with service.

One other technology I might just mentioned briefly, is our Kronos line which is now our deepwater offering. And currently our Kronos line is going through some approval processes with key deepwater customers. So as our facility is now nearing completion and as our Kronos technology is now nearing approvals with key customers, we expect some initial revenues in deepwater to come in the fourth quarter of this year.

It should be interesting to watch that play out. Thanks, Bruce, thanks.

Joe Gibney, Capital One.

Thanks, good morning. Gregg, just a quick question on the elevated product sales in the EMEA. Just trying to understand how much that was in the quarter, and the expectation on drop off there just to calibrate into 3Q would be helpful.

Overall, the product sales there was probably a couple million contributor to the EMEA region, so not a huge piece of it overall. But the nature of those sales that also helped provide a margin boost as well, so it helped the profitability and that's some of where we see a little bit of the drop off there, as well.

Okay. And if we were able to isolate 2Q ex-Uruguay in terms of baseline operating margin, where were we on an exit rate there? Just trying, again, think about the slight step down that you are indicating for 3Q.

Yes, I guess the way I would characterize that is while we definitely don't want to get into the specifics of region by region profitability, we don't disclose that. I'd bring you back to our general discussion that we've always had about the incremental margins. I would say that the Uruguay project is not out of the fairway in terms of what we had typically seen in terms of incremental margins associated with revenue.

Okay, that's fine. And the last one is for Paul and Bruce, just on Fushan. Now that you're nearing completion, could you maybe remind us of how thoughts on the cadence of that facility as it ramps up as we try to think about you entering that market a little bit more meaningfully and getting some share?

Yes, what we're trying to do is take a staged approach. So part of the facility we've been going through an operational startup, and we'll actually be shipping some small quantities out. So we'll be ramping it up over the next 3 to 4 months. But it will be fully operational in the fourth quarter.

Okay. I appreciate it. Thank you.

Thank you.

Bill Desilim, Titan Capital.

Thank you. I'd actually like to follow up on the Kronos commentary. And what are you hearing from customers about the deepwater opportunities that they would like to bring you into? Really trying to scale the magnitude of the initial interest, please.

Yes well certainly, us entering the market, the bar for us is quite low at the moment because we're just entering. So we are attacking really all the customers that exist in the market currently. Kronos, we've taken a completely different approach to developing that to solving the issues that deepwater operators are concerned about.

We've been presenting all of those things over the past few months, and longer term actually in some of the elements. We're getting very good feedback from the customers that currently are operating in deepwater that they feel another player could add some value, and that's, I think, where we and Kronos would tend to come into that market.

At a little bit different level, what we're hearing from a lot of our large customers that play in deepwater is that they believe drilling fluids is a value added product that can help drive operating efficiency. And what I said in my prepared comments is it appears that a lot of the large integrated service companies are trying to commoditize that space, and that's really not what the large IOCs are looking for.

They're looking for value differentiation and things that help them drive operating efficiency. We believe Kronos will do that.

Thank you. And so the Uruguay well, was that using Kronos?

It used some Kronos components, but did not use the full Kronos system.

Okay, great. Thank you. And then I actually do have a couple other questions please.

First of all, Mat competitors, are you seeing them either go away or exit some of the markets that you all are continuing to maintain a presence in? And then at this point in the cycle circling back to Evolution, is there a change in the operator's interest, given that we seem to be at somewhat trough levels of activity?

All right, Bill, let me take a shot at that first and then I'll ask Gregg to comment after me. On the Mats in terms of competition, let me break that up into -- if you look at the oil and gas segment, yes, certainly there's some competition there has have falling to the wayside as it's been a difficult market to navigate.

However, as we move into the power transmission market, there are new competitors, different competitors there that compete with wood Mats, very similar to what we competed against in the oil and gas industry. So in the oil and gas sector, certainly seeing competitors disappearing, but we're going after new competitors in the power transmission and pipeline segment. And then on the Evolution question, could you come back to us on that question again, Bill?

Yes, just given this point in the cycle, are you seeing a change in operator's interest in Evolution? And the essence of the question is coming from the early in the downturn operators were only interested in cost in a broad sense, and so pushed Evolution a little bit to the side as they did with other higher value technologies. Now that we're in the trough, are you seeing any change in the mindset towards Evolution?

The answer is yes. I think we're seeing that customers are recognizing now that the pricing element is now finished. They still have a need for operational efficiency. So the technology begins to play again and we're seeing signs of that coming back now.

Great, thanks to all of you.

Thank you.

That concludes our question-and-answer session. I'd like to turn the floor back over to management.

We'd like to thank you once again for joining us on the call, and for your interest in Newpark Resources. We look for to talking to you again next quarter. Goodbye, everyone.

Ladies and gentlemen, thanks for your participation. This does conclude today's teleconference. You may connect your lines, and have a wonderful day.