nr-20230331

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 March 31, 2023

☐ 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

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 May 1, 2023, a total of 85,083,920 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 MONTHS ENDED

MARCH 31, 2023


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	15
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	26
ITEM 4.	Controls and Procedures	26
PART II	OTHER INFORMATION	27
ITEM 1.	Legal Proceedings	27
ITEM 1A.	Risk Factors	27
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
ITEM 3.	Defaults Upon Senior Securities	28
ITEM 4.	Mine Safety Disclosures	28
ITEM 5.	Other Information	28
ITEM 6.	Exhibits	29
	Signatures	30

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; 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, 2022.

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)	March 31, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	23,618	$	23,182
Receivables, net of allowance of $5,000 and $4,817, respectively	212,694		242,247
Inventories	149,989		149,571
Prepaid expenses and other current assets	9,962		10,966
Total current assets	396,263		425,966

Property, plant and equipment, net	194,626		193,099
Operating lease assets	22,605		23,769
Goodwill	47,174		47,110
Other intangible assets, net	19,471		20,215
Deferred tax assets	2,402		2,275
Other assets	2,330		2,441
Total assets	$	684,871	$	714,875

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt	$	23,158	$	22,438
Accounts payable	92,600		93,633
Accrued liabilities	37,763		46,871
Total current liabilities	153,521		162,942

Long-term debt, less current portion	78,041		91,677
Noncurrent operating lease liabilities	18,859		19,816
Deferred tax liabilities	7,692		8,121
Other noncurrent liabilities	9,529		9,291
Total liabilities	267,642		291,847

Commitments and contingencies (Note 8)

Common stock, $0.01 par value (200,000,000 shares authorized and 111,456,999 and 111,451,999 shares issued, respectively)	1,115		1,115
Paid-in capital	643,004		641,266
Accumulated other comprehensive loss	(65,187)		(67,186)
Retained earnings	8,109		2,489
Treasury stock, at cost (25,129,909 and 21,751,232 shares, respectively)	(169,812)		(154,656)
Total stockholders’ equity	417,229		423,028
Total liabilities and stockholders’ equity	$	684,871	$	714,875

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended March 31,
(In thousands, except per share data)		2023		2022
Revenues		$	200,030	$	176,438
Cost of revenues		164,738		150,988
Selling, general and administrative expenses		25,410		24,433
Other operating (income) loss, net		(261)		50
Operating income		10,143		967

Foreign currency exchange loss		319		64
Interest expense, net		2,089		1,206
Income (loss) before income taxes		7,735		(303)

Provision (benefit) for income taxes		2,115		(2,824)
Net income		$	5,620	$	2,521

Net income per common share - basic:		$	0.06	$	0.03
Net income per common share - diluted:		$	0.06	$	0.03

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended March 31,
(In thousands)		2023		2022

Net income		$	5,620	$	2,521
Foreign currency translation adjustments (net of tax benefit of $10 and $99)		1,999		(1,228)
Comprehensive income		$	7,619	$	1,293

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


(In thousands)	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total
Balance at December 31, 2021	$	1,093	$	634,929	$	(61,480)	$	24,345	$	(136,501)	$	462,386
Net income	—		—		—		2,521		—		2,521
Employee stock options, restricted stock and employee stock purchase plan	—		—		—		—		(4)		(4)
Stock-based compensation expense	—		1,468		—		—		—		1,468
Foreign currency translation, net of tax	—		—		(1,228)		—		—		(1,228)
Balance at March 31, 2022	$	1,093	$	636,397	$	(62,708)	$	26,866	$	(136,505)	$	465,143

Balance at December 31, 2022	$	1,115	$	641,266	$	(67,186)	$	2,489	$	(154,656)	$	423,028
Net income	—		—		—		5,620		—		5,620
Employee stock options, restricted stock and employee stock purchase plan	—		—		—		—		(7)		(7)
Stock-based compensation expense	—		1,738		—		—		—		1,738
Treasury shares purchased at cost	—		—		—		—		(15,149)		(15,149)
Foreign currency translation, net of tax	—		—		1,999		—		—		1,999
Balance at March 31, 2023	$	1,115	$	643,004	$	(65,187)	$	8,109	$	(169,812)	$	417,229

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In thousands)	2023		2022
Cash flows from operating activities:
Net income	$	5,620	$	2,521
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	7,895		10,452
Stock-based compensation expense	1,738		1,468
Provision for deferred income taxes	(726)		(5,202)
Credit loss expense	272		185
Gain on sale of assets	(554)		(1,606)
Amortization of original issue discount and debt issuance costs	138		178
Change in assets and liabilities:
Decrease in receivables	27,287		5,795
Increase in inventories	(3,870)		(14,812)
Decrease in other assets	1,098		17
Increase (decrease) in accounts payable	(1,233)		11,246
Decrease in accrued liabilities and other	(8,221)		(7,452)
Net cash provided by operating activities	29,444		2,790

Cash flows from investing activities:
Capital expenditures	(6,972)		(7,621)
Proceeds from divestitures	7,153		—
Proceeds from sale of property, plant and equipment	740		575
Net cash provided by (used in) investing activities	921		(7,046)

Cash flows from financing activities:
Borrowings on lines of credit	76,447		69,188
Payments on lines of credit	(90,212)		(65,202)
Purchases of treasury stock	(15,006)		(4)
Other financing activities	(1,499)		(2,711)
Net cash provided by (used in) financing activities	(30,270)		1,271

Effect of exchange rate changes on cash	375		(376)

Net increase (decrease) in cash, cash equivalents, and restricted cash	470		(3,361)
Cash, cash equivalents, and restricted cash at beginning of period	25,061		29,489
Cash, cash equivalents, and restricted cash at end of period	$	25,531	$	26,128

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 environmentally-sensitive products, as well as rentals and services to customers across multiple industries. The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we collectively refer to as the “Company,” “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, 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, 2022. Our fiscal year end is December 31 and our first quarter represents the three-month period ended March 31. The results of operations for the first quarter of 2023 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 March 31, 2023 and our results of operations and cash flows for the first quarter of 2023 and 2022. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 2022 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, 2022.

We currently operate our business through two reportable segments: Fluids Systems and Industrial Solutions. In addition, we had a third reportable segment, Industrial Blending, which was exited in 2022. We have reflected these three reportable segments for all periods presented in this Quarterly Report on Form 10-Q.

•Our Fluids Systems segment provides customized drilling and completion fluids products and related technical services 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.

In the fourth quarter of 2022, we exited two of our Fluids Systems business units, including our U.S.-based mineral grinding business as well as our Gulf of Mexico fluids operations (see Note 10 for additional information).

•Our Industrial Solutions segment provides temporary worksite access solutions, including the rental of our recyclable composite matting systems, along with related site construction and services to customers in various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and Europe. We also manufacture and sell our recyclable composite mats to customers around the world, with power transmission being the primary end-market.

•Our Industrial Blending segment began operations in 2020 and supported industrial end-markets, including the production of disinfectants and industrial cleaning products. We completed the wind down of the Industrial Blending business in the first quarter of 2022, and we completed the sale of the industrial blending assets in the fourth quarter of 2022.

Note 2 – Earnings Per Share

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


	First Quarter
(In thousands, except per share data)		2023		2022
Numerator
Net income - basic and diluted		$	5,620	$	2,521

Denominator
Weighted average common shares outstanding - basic		88,573		92,118
Dilutive effect of stock options and restricted stock awards		1,997		1,821
Weighted average common shares outstanding - diluted		90,570		93,939

Net income per common share
Basic		$	0.06	$	0.03
Diluted		$	0.06	$	0.03

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


	First Quarter
(In thousands)		2023	2022
Stock options and restricted stock awards		737	1,867

Note 3 – Repurchase Program

In February 2023, our Board of Directors approved certain changes to our repurchase program and increased the total authorization available to $50.0 million. Our repurchase program authorizes us to purchase outstanding shares of our common stock in the open market or as otherwise determined by management, subject to certain limitations under the Amended ABL Facility (as defined in Note 6) and other factors. The repurchase program has no specific term. Repurchases are expected to be funded from borrowings under our Amended ABL Facility, operating cash flows, and available cash on hand. 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 March 31, 2023, we had $35.1 million remaining under the program.

During the first quarter of 2023, we repurchased an aggregate of 3.4 million shares of our common stock under the repurchase program for a total cost of $15.1 million, inclusive of commissions and excise taxes. There were no shares of common stock repurchased under the repurchase program during the first quarter of 2022.

In April 2023, we repurchased an additional 1.2 million shares of our common stock under the repurchase program for a total cost of $5.0 million. As of May 2, 2023, we had $30.1 million remaining under the program.

Note 4 – Receivables

Receivables consisted of the following:


(In thousands)	March 31, 2023		December 31, 2022
Trade receivables:
Gross trade receivables	$	202,107	$	227,762
Allowance for credit losses	(5,000)		(4,817)
Net trade receivables	197,107		222,945
Income tax receivables	2,231		2,697
Other receivables	13,356		16,605
Total receivables, net	$	212,694	$	242,247

Other receivables included $8.0 million and $10.8 million related to our divestitures (as described in Note 10) as of March 31, 2023 and December 31, 2022, respectively. Other receivables also included $3.9 million and $3.5 million for value added, goods and service taxes related to foreign jurisdictions as of March 31, 2023 and December 31, 2022, respectively.

Changes in our allowance for credit losses were as follows:


	First Quarter
(In thousands)	2023		2022
Balance at beginning of period	$	4,817	$	4,587
Credit loss expense	272		185
Write-offs, net of recoveries	(89)		(316)
Balance at end of period	$	5,000	$	4,456

Note 5 – Inventories

Inventories consisted of the following:


(In thousands)	March 31, 2023		December 31, 2022
Raw materials:
Fluids Systems	$	114,122	$	110,623
Industrial Solutions	4,678		3,966
Total raw materials	118,800		114,589
Blended fluids systems components	24,962		29,244
Finished goods - mats	6,227		5,738
Total inventories	$	149,989	$	149,571

Raw materials for the Fluids Systems segment consist primarily of chemicals and other additives that are consumed in the production of our fluids systems. Raw materials for the Industrial Solutions segment consist primarily of resins, chemicals, and other materials used to manufacture composite mats, as well as materials that are consumed in providing ground protection and other services to our customers. Our blended fluids systems components consist of base fluids systems that have been either mixed internally at our blending facilities or purchased from third-party vendors. These base fluids systems require raw materials to be added, as needed to meet specified customer requirements.

Note 6 – Financing Arrangements and Fair Value of Financial Instruments

Financing arrangements consisted of the following:


	March 31, 2023						December 31, 2022
(In thousands)	Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs		Total Debt
Amended ABL Facility	$	65,400	$	—	$	65,400	$	80,300	$	—	$	80,300
U.K. term loan	6,908		(86)		6,822		7,201		(99)		7,102
Financing obligation	2,764		(27)		2,737		3,437		(35)		3,402
Other debt	26,240		—		26,240		23,311		—		23,311
Total debt	101,312		(113)		101,199		114,249		(134)		114,115
Less: current portion	(23,158)		—		(23,158)		(22,438)		—		(22,438)
Long-term debt	$	78,154	$	(113)	$	78,041	$	91,811	$	(134)	$	91,677

Asset-Based Loan Facility. In October 2017, we entered into a U.S. asset-based revolving credit agreement, which was amended in March 2019 and amended and restated in May 2022 (the “Amended ABL Facility”). The Amended ABL Facility provides financing of up to $175.0 million available for borrowings (inclusive of letters of credit), which can be increased up to $250.0 million, subject to certain conditions. The Amended ABL Facility has a five-year term expiring May 2027, is based on a Bloomberg Short-Term Bank Yield Index (“BSBY”) pricing grid, and includes a mechanism to incorporate a sustainability-linked pricing framework with the consent of the required lenders (as defined in the Amended ABL Facility).

As of March 31, 2023, our total borrowing availability under the Amended ABL Facility was $154.3 million, of which $65.4 million was drawn and $3.3 million was used for outstanding letters of credit, resulting in remaining availability of $85.6 million.

Borrowing availability under the Amended ABL Facility is calculated based on eligible U.S. accounts receivable, inventory and composite mats included in the rental fleet, net of reserves and subject to limits on certain of the assets included in the borrowing base calculation. To the extent pledged by the borrowers, the borrowing base calculation also includes the amount of eligible pledged cash. The administrative agent may establish reserves in accordance with the Amended ABL Facility, in part based on appraisals of the asset base, and other limits in its discretion, which could reduce the amounts otherwise available under the Amended ABL Facility.

Under the terms of the Amended ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) the BSBY rate (subject to a floor of zero) or (2) the base rate (subject to a floor of zero), equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) BSBY for a one-month interest period plus 1.00%, plus, in each case, an applicable margin per annum. The applicable margin ranges from 1.50% to 2.00% per annum for BSBY borrowings, and 0.50% to 1.00% per annum for base rate borrowings, based on the consolidated leverage ratio (as defined in the Amended ABL Facility) as of the last day of the most recent fiscal quarter. We are also required to pay a commitment fee equal to (i) 0.375% per annum at any time the average daily unused portion of the commitments is greater than 50% and (ii) 0.25% per annum at any time the average daily unused portion of the commitments is less than 50%.

As of March 31, 2023, the applicable margin for borrowings under the Amended ABL Facility was 1.50% with respect to BSBY borrowings and 0.50% with respect to base rate borrowings. As of March 31, 2023, the weighted average interest rate for the Amended ABL Facility was 6.2% and the applicable commitment fee on the unused portion of the Amended ABL Facility was 0.375% per annum.

The Amended ABL Facility is a senior secured obligation of the Company and certain of our U.S. subsidiaries constituting borrowers thereunder, secured by a first priority lien on substantially all of the personal property and certain real property of the borrowers, including a first priority lien on certain equity interests of direct or indirect domestic subsidiaries of the borrowers and certain equity interests issued by certain foreign subsidiaries of the borrowers.

The Amended ABL Facility contains customary representations, warranties and covenants that, among other things, and subject to certain specified circumstances and exceptions, restrict or limit the ability of the borrowers and certain of their subsidiaries to incur indebtedness (including guarantees), grant liens, make investments, pay dividends or distributions with respect to capital stock and make other restricted payments, make prepayments on certain indebtedness, engage in mergers or other fundamental changes, dispose of property, and change the nature of their business.

The Amended ABL Facility requires compliance with the following financial covenants: (i) a minimum fixed charge coverage ratio of 1.00 to 1.00 for the most recently completed four fiscal quarters and (ii) while a leverage covenant trigger

period (as defined in the Amended ABL Facility) is in effect, a maximum consolidated leverage ratio of 4.00 to 1.00 as of the last day of the most recently completed fiscal quarter.

The Amended ABL Facility includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control.

Other Debt. In April 2022, a U.K. subsidiary entered a £7.0 million term loan and a £2.0 million revolving credit facility. Both the term loan and revolving credit facility mature in April 2025 and bear interest at a rate of Sterling Overnight Index Average plus a margin of 3.25% per year. As of March 31, 2023, the interest rate for the U.K. facilities was 7.4%. The term loan is payable in quarterly installments of £350,000 plus interest beginning June 2022 and a £2.8 million payment due at maturity. We had $8.9 million outstanding under these arrangements at March 31, 2023.

In August 2021, we completed sale-leaseback transactions related to certain vehicles and other equipment for net proceeds of approximately $7.9 million. The transactions have been accounted for as financing arrangements as they did not qualify for sale accounting. As a result, the vehicles and other equipment continue to be reflected on our balance sheet in property, plant and equipment, net. The financing arrangements have a weighted average annual interest rate of 5.4% and are payable in monthly installments with varying maturities through October 2025. We had $2.8 million in financing obligations outstanding under these arrangements at March 31, 2023.

Certain of our 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 $16.7 million and $14.3 million outstanding under these arrangements at March 31, 2023 and December 31, 2022, respectively.

In addition, at March 31, 2023, we had $41.3 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $1.9 million in restricted cash.

Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments approximated their fair values at March 31, 2023 and December 31, 2022.

Note 7 – Income Taxes

The provision for income taxes was $2.1 million for the first quarter of 2023, reflecting an effective tax rate of 27%. The 2023 provision for income taxes was favorably impacted by the benefit associated with a partial valuation allowance release to recognize a portion of previously unbenefited net operating losses. The benefit for income taxes was $2.8 million for the first quarter of 2022, which includes an income tax benefit of $3.1 million related to the restructuring of certain subsidiary legal entities within Europe, as the undistributed earnings for an international subsidiary are no longer subject to certain taxes upon future distribution.

Note 8 – 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.

Note 9 – Supplemental Disclosures to the Statements of Cash Flows

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


	First Quarter
(In thousands)	2023		2022
Cash paid for:
Income taxes (net of refunds)	$	2,261	$	3,268
Interest	$	1,998	$	998

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


(In thousands)	March 31, 2023		December 31, 2022
Cash and cash equivalents	$	23,618	$	23,182
Restricted cash (included in prepaid expenses and other current assets)	1,913		1,879
Cash, cash equivalents, and restricted cash	$	25,531	$	25,061

Note 10 – Segment Data

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


	First Quarter
(In thousands)	2023		2022
Revenues
Fluids Systems	$	144,174	$	141,014
Industrial Solutions	55,856		35,424
Industrial Blending	—		—
Total revenues	$	200,030	$	176,438

Operating income (loss)
Fluids Systems	$	3,466	$	3,374
Industrial Solutions	14,483		6,358
Industrial Blending	—		(886)
Corporate office	(7,806)		(7,879)
Total operating income	$	10,143	$	967

We regularly review our global portfolio of business activities. These reviews focus on evaluating changes in the outlook for our served markets and customer priorities, while identifying opportunities for value-creating options in our portfolio, and placing investment emphasis in markets where we generate strong returns and where we see greater long-term viability and stability. As part of this review, we completed certain actions in 2022, including the sale of our Excalibar U.S. mineral grinding business (“Excalibar”), the exit of our Industrial Blending operations, and the exit of our Gulf of Mexico fluids operations.

Summarized operating results of our now exited Excalibar business and Gulf of Mexico operations, both included in the Fluids Systems segment historical results, are shown in the following table:


	First Quarter
(In thousands)	2023		2022
Revenues
Excalibar	$	—	$	14,346
Gulf of Mexico	—		2,694
Total revenues	$	—	$	17,040

Operating income (loss)
Excalibar	$	(77)	$	833
Gulf of Mexico	(2,311)		(2,617)
Total operating income (loss)	$	(2,388)	$	(1,784)

Summarized net assets remaining from the business units exited in 2022 are shown in the following table:


(In thousands)	March 31, 2023		December 31, 2022
Receivables, net	$	9,391	$	27,798
Inventories	1,409		5,805
Accounts payable	(575)		(2,060)
Accrued liabilities	—		(311)
Total net assets	$	10,225	$	31,232

The net assets remaining as of March 31, 2023 primarily reflect remaining Gulf of Mexico working capital, the majority of which we expect to realize in the second quarter of 2023.

In the first quarter of 2023, we completed our customer contract in Chile and are currently in the process of winding down our in-country operations. At March 31, 2023, we had $3 million of net assets and $0.5 million of accumulated translation losses related to our subsidiary in Chile. As we monetize these assets in 2023, we will reclassify the translation losses and recognize a charge to income at such time when we have substantially liquidated our subsidiary in Chile. In addition, we made the decision in the first quarter of 2023 to exit the stimulation chemicals product line reported in our Fluids Systems segment. We anticipate liquidating the related inventory of approximately $3 million during 2023.

In addition, the operating results for the Fluids Systems segment includes $1.0 million and $0.1 million in severance costs for the first quarter of 2023 and 2022, respectively.

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


	First Quarter
(In thousands)	2023		2022
United States	$	68,898	$	70,843
Canada	19,365		22,235
Total North America	88,263		93,078

EMEA	52,577		44,175
Other	3,334		3,761
Total International	55,911		47,936

Total Fluids Systems revenues	$	144,174	$	141,014

The following table presents further disaggregated revenues for the Industrial Solutions segment:


	First Quarter
(In thousands)	2023	2022
Product sales revenues	$

SEC Form 10-Q filed by Newpark Resources Inc.