Participants

Gregg Piontek; Chief Financial Officer, Senior Vice President; Newpark Resources Inc

Matthew Lanigan; President, Chief Executive Officer, Director; Newpark Resources Inc

Aaron Spychalla; Analyst; Craig-Hallum Capital Group LLC

Amit Dayal

Gerry Sweeney; Analyst; Roth Capital Partners, LLC.

Min Cho; Analyst; B. Riley Securities, Inc.

Bill Dezellem; Analyst; Tieton Capital Management LLC

Presentation

Operator

Good morning. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newpark Resources First Quarter 2024 earnings conference call. Today's call is being recorded and will be available for replay beginning at 12.30 PM. Eastern Standard Time.
The recording can be accessed by dialing 807 two three six zero six two for domestic or four zero two two two zero two six six five for international. All lines are currently muted and after the prepared remarks, there will be a live question and answer session.
If you'd like to ask a question during the Q&A segment, please press star one on your telephone keypad. If your question has been answered. You may remove yourself from the queue at any time by pressing star two. We do ask that you please pick up your handset for optimum sound quality. It is now my pleasure to turn the floor over to Greg DonTech, Chief Financial Officer of Newpark Resources. Please go ahead.

Gregg Piontek

Thank you, operator. I'd like to welcome everyone to the Newpark Resources, First Quarter 2024 conference call. Joining me today is Matthew Lanigan, our President and Chief Executive Officer.
Before handing over to Matthew, I'd like to highlight that today's discussion contains forward-looking statements regarding future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC, except as required by law, we undertake no obligation to update our forward-looking statements.
Our comments on today's call may also include certain non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website. There will be a replay of today's call, and it will be available by webcast within the Investor Relations section of our website at newpark.com. Please note that the information disclosed in today's call is current as of May 3, 2024.
At the conclusion of our prepared remarks, we will open the line for questions.
And with that, I would like to turn the call over to our President and CEO, Matthew Lanigan.

Matthew Lanigan

Thank you, Greg, and welcome to everyone joining us on today's call.
Our Q1 performance was a solid start to the year.
One highlighted by both sequential and year-over-year growth in adjusted EBITDA. Industrial Solutions project activity levels accelerated as the first quarter progressed, positioning us for a strong second quarter, consistent with our expectations coming into 2024.
At a strategic level, we continued to advance our multiyear business transformation plan during the first quarter, investing in the growth of our Industrial Solutions business, which remains the central driver of our long-term value creation strategy for those new to our story, we've spent the last three years positioning Newpark to become a leading pure-play specialty rental business, servicing the global worksite access market operating the nation's largest fleet of the Dura-Base competent matting system.
Along with our adjacent services, we provide customers with a reliable, all-weather load-bearing work surface that allows their critical infrastructure construction projects to be undertaken safely and efficiently. In 2023, nearly 60% of our Industrial Solutions revenues were the customers within the electrical utility infrastructure market positioning Newpark as a leading beneficiary of an ongoing multiyear investment cycle, focused on the expansion hardening and resilience of our electric grid with multi-billion dollar government programs focused on improving the nation's electricity infrastructure.
Combined with the onshoring of several industry segments and growth in our data centers, we see a significant and sustained investment cycle in the electrical grid to support these programs, creating long-term demand for our website access solutions. Through our unique vertically integrated model we design, manufacture, rent, sell and service, our zero-based competent managed solutions, our rental fleet and world-class manufacturing capabilities allow us to respond quickly to the needs of our customers, making us a responsive and reliable partner for the varying needs of the industries and customers we serve with a service life of around 12 to 15 years.
We believe the Dura-Base system offers a safer, longer-lasting replacement to traditional wooden mats, which currently represent an estimated 75% to 80% of the US. market. Continued penetration of traditional timber applications represents a significant opportunity for our business beyond the U.S. markets with over 25 years of setting the standard for composite matting help us continue to support critical infrastructure projects and our strategic partners around the world.
As your base matter fully recyclable, not only allowing us to responsibly play a role in the growing secular plastics discussion, but also creating superior unit economics whereby an end-of-life and that can be reground and reprocess back into a new unit that can be placed into an additional 12 to 15-year service loss at significantly improved economics compared to its initial manufacturing cycle. It's an exciting time for our business, and we're looking forward to building upon the progress we've made so far.
With that overview, let's take a deeper look at our first quarter performance on a consolidated basis, first quarter adjusted EBITDA increased 31% sequentially and was up modestly versus the prior year period. We also delivered both sequential and year-over-year growth in adjusted EBITDA margin in both our Industrial Solutions and fluid system businesses during the quarter primarily driven by a combination of more favorable sales mix and operating cost leverage within our Industrial Solutions segment.
Following a subdued start to the year, demand conditions accelerated as we moved through the first quarter, putting us on pace for a stronger Q2 performance. Notably the first quarter rental and service revenues from the utility sector improved on both the sequential and year-over-year basis, which was offset by declines in revenues from pipelines and oil and gas sectors.
Industrial Solutions adjusted EBITDA margin increased 150 basis points versus the prior year to 36.8% in the first quarter as volume and improved operating leverage offset lower blended pricing. As we've stated on prior calls, we continue to pursue an increased number of larger scale, longer-duration infrastructure projects. The longer term projects can create a more stable base of revenue and enhanced return on investments, but also tend to carry a pricing structure below that of shorter-term rental projects.
In support of our growth strategy, we're actively building out our U.S. commercial sales teams, expanding coverage in targeted Midwest and West Coast markets, while also continuing our investments in rental fleet expansion. During the first quarter, we invested $12 million in the growth of our matting fleet, given the strengthening customer demand drivers are referred to earlier. While this capital investment led to an anticipated negative free cash generation in the first quarter. We see a return to positive free cash in the second quarter and for full year 2024.
Within our Fluids segment, our first quarter performance benefited from a combination of strong international demand, along with improved pricing and continued cost actions, which together contributed to around 120 basis points of adjusted EBITDA margin expansion year over year.
Our segment revenues from international operations increased 19% versus the prior year, supported by strong growth from our Eastern Hemisphere and Canadian operations.
With that, I'll turn the call over to Greg for his prepared remarks.

Gregg Piontek

Thanks, Matthew, and good morning, everyone. I'll begin my remarks with a summary of our consolidated and segment level results for the first quarter, followed by an update on our outlook for 2024. Our first quarter was highlighted by a 31% sequential improvement in adjusted EBITDA, driven by strong profitability within our Industrial Solutions segment and the international fluids business units.
Consolidated first quarter revenues improved 1% sequentially, generally in line with our expectations shared on our previous quarterly call. Industrial Solutions segment revenue was $49 million in the first quarter, down 12% on a year-over-year basis, due primarily to the timing of product sales, but up 5% on a sequential basis. This result was generally in line with our expectations as we anticipate customer activity and project timing to ramp up through the year.
Total rental and service revenues were $35 million for the first quarter, down slightly on both a sequential and year-over-year basis. As Matthew touched on, rental project activity steadily improved through the first quarter, leading to a 5% sequential improvement in rental revenues. Though our mix of less service-intensive projects led to a sequential decline in service revenue first quarter rental fleet utilization improved modestly on a sequential basis, though our Q1 exit rate was meaningfully stronger than the full quarter average, which positions us for a strong sequential improvement into Q2.
By industry. The utility sector contributed nearly 60% of rental and service revenues for the quarter, delivering growth on both a year-over-year and sequential basis, while oil and gas pipeline and other industries declined. First quarter product sales were $14 million, a meaningful sequential improvement, though below prior year levels due to project timing issues. Our rental and service revenues contributed more than 70% of our first quarter segment revenues in line with the 2023 mix of rental and service VERSUS product sale revenue. Industrial Solutions' profitability was strong in the first quarter with the segment delivering a 36.8% adjusted EBITDA margin, up 150 basis points from last year, due primarily to a more favorable mix and operating leverage.
Fluid Systems segment generated revenues of $120 million in the first quarter with our international business units delivering solid growth on both a year-over-year and sequential basis, our Eastern Hemisphere region contributed $68 million or 57% of our total Fluids Systems revenues in Q1.
The first quarter results reflected improvement of 8% sequentially and 24% year over year with a year-over-year improvement driven by broad-based improvements from several markets. Within Europe, the Middle East and Asia Pacific. Revenues from Canada increased 1% sequentially to $21 million in the first quarter, which reflects a 10% year over year improvement.
Our US operations contributed $30 million of revenues in the first quarter, reflecting a 17% sequential and 56% year-over-year decline year over year. And sequential declines are primarily driven by a combination of the continued softening of the US market activity and lower market share as well as a notable decline in the average revenue contribution from the rig service.
With the effects of the US market softness, we are maintaining our focus on pricing and expense discipline, along with balance sheet efficiency. Fluid segment adjusted EBITDA margin improved 120 basis points year over year to 7.2% in the first quarter, benefiting from the higher revenue from our international business and continued cost efforts in the US.
Sg&a expenses were $24.3 million in the first quarter, including $7.9 million of corporate office expense. The first quarter of 2024 includes $2.3 million related to the fluid sale process. While first quarter of 2023 included nearly $1 million for strategic planning activities despite the elevated project expenses in 2024.
Total SG&A is down $1.1 million year over year, primarily reflecting the effects of cost rationalization efforts in the U.S. fluids and corporate office. Interest expense was $1.8 million in the first quarter, down modestly on both a sequential and year-over-year basis, primarily reflecting the effects of lower overall debt balances.
Tax expense was $2.8 million in the first quarter, reflecting an effective tax rate of 28%, which includes a favorable impact from previously unbenefited US NOL carryforwards. Adjusted EPS was $0.10 per diluted share in the first quarter compared to $0.04 in the fourth quarter and $0.09 in the first quarter of last year.
Operating cash flow was $12 million for the first quarter, including the effects of our annual employee incentive program payouts. While $13 million was used to fund our net CapEx Substantially, all of which was directed toward the Industrial Solutions matting fleet expansion as we seek to capitalize on the growth opportunities and strengthening demand conditions we ended the first quarter with total debt of $77 million and cash of $38 million, resulting in net debt of $40 million, 8.5 times net leverage ratio Let's now turn to our business outlook.
As before, we remain highly constructive on the multiyear demand outlook for both businesses. Within Industrial Solutions, we continue to see strong fundamentals for utilities and critical infrastructure spending, which remains our largest customer market.
Our full year 2024 expectation for the Industrial Solutions segment remains unchanged. We continue to forecast 2020 for Industrial Solutions revenues in the $230 million to $240 million range, with segment adjusted EBITDA in a range of $80 million to $85 million and segment CapEx of $30 million to 35 million.
In terms of near-term outlook, we've seen a strong start to the second quarter, both in rental project and product sales activity and combined with our current pipeline and quoting levels. We anticipate industrial solutions to deliver total year-over-year revenue growth of 15% to 20% in Q2.
In Fluid Systems, while the US market outlook remains somewhat challenged our Eastern Hemisphere and Canada business units, which contributed 75% of the segment's revenue in Q1, continued to perform at a high level.
Overall, we expect Q2 Fluid Systems revenues to be 15% to 20% lower on a year-over-year basis, primarily reflecting lower activity in the US. At the lower level, we expect segment adjusted EBITDA margins in the low to mid-single digits as the effects of the lower volume are largely offset by improved pricing and the effects of overhead reductions in the US.
In terms of capital allocation priorities, our view remains relatively unchanged as we continue to prioritize investments into the organic growth of our rental fleet. We expect our 2024 net capital investments will remain dependent upon our projected rental revenue growth rates.
Beyond our continued organic investments in Industrial Solutions, we expect our free cash flow generation this year will be primarily used to build liquidity for inorganic growth opportunities we'll work through to return of capital to shareholders through our programmatic share repurchase program following the completion of our fluid strategic review process.
And with that, I'd like to turn the call back over to Matthew for his concluding remarks.

Matthew Lanigan

Thanks, Greg. As we look at the remainder of 2024, our priorities are clear. First, we will continue to execute our plans to become a leading pure-play specialty rental business, serving the global worksite access market as we build upon our leading position with the German competent managed system at an organic level. We intend to continue prioritizing capital investment in the growth of our rental fleet, which historically has generated cash returns in excess of 25% during the first quarter 95% of our total CapEx was directed towards the Industrial Solutions segment.
Second, we will continue to drive further efficiency improvements across all corners of the organization, positioning us to realize improved operating leverage during the first quarter of 2024, we continued to take actions to streamline our overhead structure across both segments and the corporate office, generating approximately $3 million in annual cost savings.
Finally, we remain committed to a returns-focused capital allocation strategy that includes a combination of internal investment, inorganic growth and return of capital to shareholders in February we increased our remaining share repurchase authorization to $50 million to support our return of capital program. While the first quarter included annual employee incentive program payouts and investments in rental fleet the reduced free cash flow generation. We expect to be free cash flow positive for the duration of 2024, positioning us to advance our capital allocation priorities.
Turning briefly to our fluids business strategic review. We continue to work diligently to evaluate alternatives, and we remain focused on having a process substantially completed by midyear 2024.
In closing, I want to thank our shareholders for their ongoing support and employees for their dedication to the business, including their commitment to safety and compliance and our customers for their ongoing partnership. And with that we'll open the call for questions.

Question and Answer Session

Operator

Thank you.
At this time, if you'd like to ask a question, please press the star and one on your telephone keypad. Now you may remove yourself from the queue at any time by pressing star two. And once again, that is star and one if you'd like to ask a question before just a moment to allow questions to queue. And we do have our first question from I'll answer Charlie with Craig.

Aaron Spychalla

Yes, good morning, Matthew and Greg. Thanks for taking the questions. First for me, you've kind of talked about the pipeline growth mid to high 10s last quarter in industrial. Can you just give us an update there, especially considering the additions to the fleet in the first quarter? And then just any changes you're seeing in the market competitively on within composites or would just given lumber prices or really seems like we're starting to see this transition away from wood towards towards composites.
You kind of talked about 75%, 80% of the market being wood today.

Matthew Lanigan

Hey, thanks, Yaron. It's Matthew.
I'll take that one.
Look in terms of pipeline, we still see robust growth in the pipeline. That hasn't been material change quarter on quarter. In terms of the growth we've seen there, what we are seeing is that pipeline representing a more forward-looking view of projects, stop duration.
If you look back historically, roughly 50% plus of our pipeline was starting and the projects within the quarter, they were quoted. We're seeing that now push out the quarter or a quarter or so into the future, which is positive for us. It gives us a better line of sight to the future quarter.
But other than that, quoting activity remains robust, which I think is supported by the views in the market of a stronger second half to the year and continued further reinforcement of CapEx plans from utility. So all looking positive there on the competitive side, I mean, I'm not a lot to the report is different there. I think I think there's still, you know, a timing, I believe, in supply and demand as we look forward.
Interesting to note that some of the some of the participants in the market who have large positions in timber fleets and now calling out that they're looking to build competitive fleets. So I think you I think your your inference there is accurate that that people are seeing the value advantage of the Campos of match in terms of unit economics and lifetime advantages.So we're encouraged by those signals as well.

Aaron Spychalla

Great.
Todd, thanks for the color there.
And then maybe second, you've had good progress on the cost reduction and efficiency efforts. I think you called out $3 million of annual savings. So it looks like we're around kind of mid 20s for those corporate costs, adjusting for some things.
Just kind of talk about the progress towards that kind of high 10s target and kind of time line to get there

Matthew Lanigan

The drag if you carve out the transaction related to the sale process related costs that we had mentioned here, you're really running now in that, call it a '22, '23 range in terms of cash expense at the corporate level on, you know, and as we had talked about in the past, well, while we're continuing to look at you're always looking for ways to continue to streamline your organization. I think the more meaningful shift is really post and completing the strategic review of fluids. That's really been you have the greater ability to to adjust your cost structure.

Aaron Spychalla

All right.
Understood.
Thanks for the color, how we'll turn it over here.

Operator

And our next question comes from Amit Dayal with H.C. Wainwright.

Amit Dayal

Thank you, guys. So with respect to the cadence for the rest of the year, you indicated year-over-year improvements in 2Q. So from that point onwards, again, sort of sequential improvements or maybe any lumpiness in the next few quarters?
Yes.

Matthew Lanigan

I'll attempt that time frame.
Yes. As far as visibility goes, we're continuing to see good growth in the pipeline, which would suggest continued growth throughout the year. We do call out every year that depending on how dry the summer months off and the laws on the grid during the summer months, that can slow activity on the rental and service side. And then typically, we've seen a stronger Q4 fall on the direct sales side. We're not seeing anything that causes us to think that those longer-term trends have changed BAM. And just based on the strength of our pipeline build here, we feel comfortable the rest of the year is building quite nicely.

Amit Dayal

Okay.
And then you highlighted, you know, home maybe pursuing longer-term rental contracts and those could come with slightly lower margins, how much lower would those margins be relative your Reno legacy rental business.

Gregg Piontek

As Greg, you know, I guess the way I would frame that is, you know, I wouldn't think it would be a large driver in terms of bringing your overall pricing down again, you got to look at these projects in terms of their overall profitability. Longer term, gives you greater visibility, gives you more stability, allows you to manage your fleet to a higher utilization.
So net-net, you're generating a solid return on investments, has the shorter term projects, but the pricing profile is just, you know, can be lower and it's really a function of size and length of project is what drives that difference.

Amit Dayal

Okay. Understood.
Uhm-hmm.
Then I guess just the last one, maybe you touched on a little bit already this corporate overheads with savings on that side? And is there any further room or are we done with those types of cuts for now?

Gregg Piontek

I would generally say we're I would not expect meaningful movement in the cost structure in the near term. Like I said, we're always looking to do for opportunities to streamline. But again, the more meaningful change in our overall structure really comes following completion of our strategic review of fluids.

Amit Dayal

Understood.
That's all I think, assumes.
Thank you.

Operator

And our next question comes from Gerry Sweeney with Roth Capital.

Gerry Sweeney

A metric and Greg, thanks for taking my call this morning.
Thank you.
And question on the Midwest West and building out your sales in those areas.
Just curious a couple little questions.
Your how big of an opportunity is versus I know I think you're a little bit bigger, especially South East. How does sort of that zone compared to the Southeast? And then how long would it take to get have a big enough presence there that we start to see some some dollars coming through in a meaningful way?

Gregg Piontek

Yes, Jerry, I think you know, the way we look at that market is there's no reason it couldn't be as substantial as say, in our Texas market or something like that based on the infrastructure requirements there. So sort of a reasonably meaningful pace. The sales cycle really depends on project timing and our ability to to get in there and penetrate some customers that we haven't traditionally serviced. But our anticipation would be that within within 12 months, we should see that operating at a fairly efficient level.
So the great thing about this business is we get in there with sales. First, we start to build the relationships, then we start to move the assets into those markets. So we're not committing a large amount of capital a year and waiting for it to be productive. We can we can flex that in as the activity levels dictate there.
Anything you wouldn't you'd like?

Matthew Lanigan

Yes, I was just going to add, I think you can look at the examples of what were of our previous expansion when we went into the East Coast in the Southeast and the Mid-Atlantic regions. And as we built that out that was kind of a 12 to 18 months sort of process to ramp those up.

Gerry Sweeney

And I was going to say would acquisitions be an opportunity in that area, especially to speed up the process or gain a little bit more scale?

Gregg Piontek

Yes, Jerry, we've always kind of said that we would evaluate those markets. I want to on an acceleration basis, if it's having somebody somebody in there that already has the relationships and and has the appropriate safety culture and operational efficiency that we look for. We'd obviously consider that as well as doing it organically ourselves.

Gerry Sweeney

Got it. One more question.
This is government spending, i.e. Stimulus. We're working with a bunch of companies that are seeing a lot of stimulus spending, but a lot of the commentary from them is, hey, we're at the back end as the dollars have to flow through projects, proved, et cetera. Some of them, most of them are just seeing some a little bit of dollars today and expectations are it's going to speed up '25, '26.
Are you guys in the same boat or or are you seeing a little bit more spending earlier, yellow,

Gregg Piontek

where in the same, Vijay, I think from the outset, we were sort of saying '25 of the year with those funds would start to flow through in a way that would be impactful to us. And I still think that is our view at this point.

Gerry Sweeney

Okay.
That's what I assume.
Well, I appreciate it.
Upfront.
Thanks, Derek.

Operator

And our next question comes from Min Cho with B. Riley Securities.

Min Cho

Good morning.
I'm on for Alex Regal this morning on Great quarter on tender are just moving my questions have been answered, but I have a quick one regarding your from the rental revenue maybe break down in the U.S. versus U.K. I know that you have a strong business in the UK. Can you talk a little bit about any difference in that demand dynamics there?

Gregg Piontek

Yes, let me I'll start with the mix for first of all. Overall, when you look at our our rental and service split is roughly 90% US, 10% UK comp.
In terms of the demand dynamics, yes, like you said, the demand, I think primarily the market in the US is the electrical utility spend in the UK. We tend to also get more rail. If you look at High Speed two and some other large infrastructure projects going on there. They are consumers of of access. So the only real difference we see there's the industry service, but both you know here and in the UK, the thematic of infrastructure investment and improvement. And I both have strong and we're looking forward to that sort of supporting the business for years to come.
In terms of the the CapEx that we mentioned just wanted to point out that that is supporting both growth in the U.S. and also the UK.

Min Cho

Excellent also ran the SG&A a little bit higher than we had expected. You expect this to be a pretty good run rate on a quarterly basis for the rest of the year.

Gregg Piontek

And I think when you look at the quarter, again, I think it's important that you do look at the transaction, the sale process and lead items that we had called out as well as the severance. But on adjusting for that yes, I think that that is that underlying growth, our run rate is a fairly accurate ratios are excellent.

Min Cho

And then finally, you had mentioned some targeting these larger projects. Do you have anything in backlog yet? Or if you just talk about the progress that you're making on those types of projects so far?

Gregg Piontek

Yes.
Thanks, Matt. As you know, we have as we look at our forward pipeline, we are seeing a distribution shift towards larger projects that we are seeing that start to flow through. And if we would if we would describe that as backlog than we are seeing a build in that backlog, we are in those larger projects.
So we feel like that focus is working for us.

Min Cho

Perfect.
All right, great. Thank you.
Thanks.

Operator

And our next question comes from Bill Dezellem with Tieton Capital.

Bill Dezellem

Thank you. Actually like to follow up on that last question in the pipeline as new projects are becoming larger and ask why what is what has led to that? Is that a function of what's happening in the market or is that of your own your own emphasis on those projects?

Gregg Piontek

Yes, Bill, I think it's a little bit about one of the one of the things the way we're coming into the T&D space. You know, traditionally from our oil and gas markets. There was some concern that we would have the fleet capacity to service some of these larger projects over time.
And we're as we've invested in fleet and we've demonstrated our ability to service and meet the varying needs of those project types. I think we have one more confidence with the with the project owners that we can execute and meet their needs.
But moving forward, as we continue to invest in our fleet, we we see that being even more so. So I think there's a little bit of high that the projects are out there. And B, we continue to demonstrate that we can service them safely and efficiently and meet all the requirements of our customers, which is up, which is helping pull through more volume in that space.
And obviously the more you penetrate base, it just improves your visibility improves your stability in your overall rental service operations.

Bill Dezellem

That is that is helpful. And then continuing on the Industrial Solutions segment. What's led to this strength exiting the first quarter? Is it as simple as project timing? Or is there something BIGGER that's that's taking place there.

Gregg Piontek

I think in out in the first bid there, Bill, it's really just the projects getting underway.
So I'd like to say there was more magic than that but it really is just the way these things have timed out

Bill Dezellem

that is really giving you the opportunity to take credit for Magic and you're just going to attract that aside again, I think you know,

Matthew Lanigan

I think this goes back to why we continually emphasize the focus on the full year and TTM again, you do have these project timings resulted in quarter to quarter sort of swings, but they do balance out over the over the year.
So.

Bill Dezellem

Great, thank you. And then a couple of questions relative to the fluids business, please our books still going out on the fluids business or those out and now we're in the next stages of the process.

Gregg Piontek

Yes, Bill, I think it's probably safer for us to to kind of leave that one and just trying to revert to the script that we put forward, which is with we're moving forward in the process and an optimistic about a conclusion in that first half.

Bill Dezellem

Okay.
And then would you please discuss the swing factors with the fluids operating income that led to it being up, but I think three plus million on a $24 million revenue decline?

Matthew Lanigan

Yes, you know, overall and it is more than anything. It's you've got the mix shift. And we've always talked about the profitability of the business here on international versus the US, which is historically the international has been a stronger performer.
So you have that mix shift as well as well.
We also had the benefit of the pricing we had talked over the past year of the impact that we've had with some of the inflation which we were unable to push through contracts. We had to wait for contract renewals that's continuing to come through to drive U.S. strengthening in the overall pricing.
And then the last factor there is also on the US side with the US being a much tougher market landscape, continuing to take cost out to offset some of the deterioration. So you put all those things together and ultimately, it's leading to a more profitable business than what it was a year ago.

Bill Dezellem

Great.
Thank you both for the time and congratulations on a real solid quarter.
Okay.

Operator

And we have reached our allotted time for our question and answer session today. I will now turn the call back over to the management team for closing remarks share.

Matthew Lanigan

That concludes our call today. Should you have any questions or requests, please reach out to us using our e-mail at investors at newpark.com, and we look forward to talking to you again next quarter.
Thank you.

Operator

This does conclude today's program. Thank you for your participation.