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NEWPARK RESOURCES INC - Quarter Report: 2021 September (Form 10-Q)


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 September 30, 2021
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-02960
nr-20210930_g1.jpg 
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
Delaware72-1123385
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
9320 Lakeside Boulevard,Suite 100 
The Woodlands,Texas77381
(Address of principal executive offices)(Zip Code)
 
(281) 362-6800
(Registrant’s telephone number, including area code)
 Not Applicable    
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueNRNew York Stock Exchange
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 filerAccelerated filer
Non-accelerated filerSmaller 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 November 1, 2021, a total of 92,257,408 shares of common stock, $0.01 par value per share, were outstanding.



NEWPARK RESOURCES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2021

 
 
 
 
 
 
 

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 this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q for the period ended June 30, 2021, and our Annual Report on Form 10-K for the year ended December 31, 2020.
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PART I     FINANCIAL INFORMATION
ITEM 1.    Financial Statements
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)September 30, 2021December 31, 2020
ASSETS  
Cash and cash equivalents$31,242 $24,197 
Receivables, net163,309 141,045 
Inventories148,194 147,857 
Prepaid expenses and other current assets17,124 15,081 
Total current assets359,869 328,180 
Property, plant and equipment, net262,856 277,696 
Operating lease assets27,352 30,969 
Goodwill42,393 42,444 
Other intangible assets, net22,511 25,428 
Deferred tax assets3,864 1,706 
Other assets2,267 2,769 
Total assets$721,112 $709,192 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current debt$21,875 $67,472 
Accounts payable73,567 49,252 
Accrued liabilities40,736 36,934 
Total current liabilities136,178 153,658 
Long-term debt, less current portion71,869 19,690 
Noncurrent operating lease liabilities22,505 25,068 
Deferred tax liabilities15,102 13,368 
Other noncurrent liabilities9,745 9,376 
Total liabilities255,399 221,160 
Commitments and contingencies (Note 9)
Common stock, $0.01 par value (200,000,000 shares authorized and 109,233,315 and 107,587,786 shares issued, respectively)
1,092 1,076 
Paid-in capital632,569 627,031 
Accumulated other comprehensive loss(59,486)(54,172)
Retained earnings28,026 50,937 
Treasury stock, at cost (16,976,680 and 16,781,150 shares, respectively)
(136,488)(136,840)
Total stockholders’ equity465,713 488,032 
Total liabilities and stockholders’ equity$721,112 $709,192 
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except per share data)2021202020212020
Revenues$151,797 $96,424 $435,218 $362,920 
Cost of revenues132,273 99,301 376,370 357,675 
Selling, general and administrative expenses23,864 20,597 67,755 66,230 
Other operating (income) loss, net1,723 (820)(141)(1,906)
Impairments— 3,038 — 3,038 
Operating loss(6,063)(25,692)(8,766)(62,117)
Foreign currency exchange (gain) loss25 580 (83)3,343 
Interest expense, net2,176 2,411 6,748 8,524 
(Gain) loss on extinguishment of debt210 — 1,000 (419)
Loss before income taxes(8,474)(28,683)(16,431)(73,565)
Provision (benefit) for income taxes2,011 (4,813)5,414 (11,303)
Net loss$(10,485)$(23,870)$(21,845)$(62,262)
Net loss per common share - basic:$(0.11)$(0.26)$(0.24)$(0.69)
Net loss per common share - diluted:$(0.11)$(0.26)$(0.24)$(0.69)
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
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Newpark Resources, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands)2021202020212020
Net loss$(10,485)$(23,870)$(21,845)$(62,262)
Foreign currency translation adjustments (net of tax benefit (expense) of $222, $(330), $408, $268)
(2,700)3,461 (5,314)(1,900)
Comprehensive loss$(13,185)$(20,409)$(27,159)$(64,162)

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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Newpark Resources, Inc.
Condensed Consolidated Statements of Stockholders Equity
(Unaudited)
(In thousands)Common StockPaid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTreasury StockTotal
Balance at June 30, 2021$1,090 $629,833 $(56,786)$38,510 $(136,403)$476,244 
Net loss— — — (10,485)— (10,485)
Employee stock options, restricted stock and employee stock purchase plan288 — (85)206 
Stock-based compensation expense— 2,448 — — — 2,448 
Foreign currency translation, net of tax— — (2,700)— — (2,700)
Balance at September 30, 2021$1,092 $632,569 $(59,486)$28,026 $(136,488)$465,713 
Balance at June 30, 2020$1,074 $623,269 $(73,308)$93,292 $(136,890)$507,437 
Net loss— — — (23,870)— (23,870)
Employee stock options, restricted stock and employee stock purchase plan267 — — (6)263 
Stock-based compensation expense— 1,792 — — — 1,792 
Foreign currency translation, net of tax— — 3,461 — — 3,461 
Balance at September 30, 2020$1,076 $625,328 $(69,847)$69,422 $(136,896)$489,083 
Balance at December 31, 2020$1,076 $627,031 $(54,172)$50,937 $(136,840)$488,032 
Net loss— — — (21,845)— (21,845)
Employee stock options, restricted stock and employee stock purchase plan16 (183)— (1,066)352 (881)
Stock-based compensation expense— 5,721 — — — 5,721 
Foreign currency translation, net of tax— — (5,314)— — (5,314)
Balance at September 30, 2021$1,092 $632,569 $(59,486)$28,026 $(136,488)$465,713 
Balance at December 31, 2019$1,067 $620,626 $(67,947)$134,119 $(139,220)$548,645 
Cumulative effect of accounting change— — — (735)— (735)
Net loss— — — (62,262)— (62,262)
Employee stock options, restricted stock and employee stock purchase plan(167)— (1,700)2,324 466 
Stock-based compensation expense— 4,869 — — — 4,869 
Foreign currency translation, net of tax— — (1,900)— — (1,900)
Balance at September 30, 2020$1,076 $625,328 $(69,847)$69,422 $(136,896)$489,083 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

5


Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended September 30,
(In thousands)20212020
Cash flows from operating activities:  
Net loss$(21,845)$(62,262)
Adjustments to reconcile net loss to net cash provided by operations:  
Impairments and other non-cash charges— 13,024 
Depreciation and amortization32,009 34,186 
Stock-based compensation expense5,721 4,869 
Provision for deferred income taxes282 (19,023)
Credit loss expense426 1,304 
Gain on sale of assets(6,863)(2,916)
Gain on insurance recovery(849)— 
(Gain) loss on extinguishment of debt1,000 (419)
Amortization of original issue discount and debt issuance costs3,062 3,962 
Change in assets and liabilities: 
(Increase) decrease in receivables(26,382)77,004 
(Increase) decrease in inventories(2,536)26,566 
Increase in other assets(2,535)(2,912)
Increase (decrease) in accounts payable25,292 (34,606)
Increase in accrued liabilities and other6,888 1,516 
Net cash provided by operating activities13,670 40,293 
Cash flows from investing activities:  
Capital expenditures(19,103)(14,609)
Proceeds from sale of property, plant and equipment11,730 10,497 
Proceeds from insurance property claim85 — 
Net cash used in investing activities(7,288)(4,112)
Cash flows from financing activities:  
Borrowings on lines of credit166,012 147,987 
Payments on lines of credit(150,132)(180,440)
Purchases of Convertible Notes(28,137)(29,124)
Proceeds from term loan8,258 — 
Proceeds from financing obligation8,004 — 
Debt issuance costs(295)— 
Purchases of treasury stock(1,435)(332)
Other financing activities(458)1,029 
Net cash provided by (used in) financing activities1,817 (60,880)
Effect of exchange rate changes on cash(1,349)(1,810)
Net increase (decrease) in cash, cash equivalents, and restricted cash6,850 (26,509)
Cash, cash equivalents, and restricted cash at beginning of period30,348 56,863 
Cash, cash equivalents, and restricted cash at end of period$37,198 $30,354 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
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NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Significant Accounting Policies
Newpark Resources, Inc. is a geographically diversified supplier providing products, as well as rentals and services 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 “we,” “our,” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. Our fiscal year end is December 31, our third quarter represents the three-month period ended September 30, and our first nine months represents the nine-month period ended September 30. The results of operations for the third quarter and first nine months of 2021 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise noted, all currency amounts are stated in U.S. dollars.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of September 30, 2021, our results of operations for the third quarter and first nine months of 2021 and 2020, and our cash flows for the first nine months of 2021 and 2020. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 2020 is derived from the audited consolidated financial statements at that date.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2020.
We operate our business through two reportable segments: Fluids Systems and Industrial Solutions. Our Fluids Systems segment primarily provides customized drilling, completion, and stimulation fluids solutions to oil and natural gas exploration and production (“E&P”) customers primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific and Latin America. Our Industrial Solutions segment includes our Site and Access Solutions business (historically reported as the Mats and Integrated Services segment), along with our Industrial Blending operations. Site and Access Solutions provides composite matting system rentals utilized for temporary worksite access, along with related site construction and services to customers in various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries, primarily in the United States and Europe. We also sell our manufactured composite mats to customers around the world, with power transmission being the primary end-market. Our Industrial Blending operations began in 2020, leveraging our chemical blending capacity and technical expertise to enter targeted industrial end-markets.
New Accounting Pronouncements
Standards Adopted in 2021
Income Taxes: Simplifying the Accounting for Income Taxes. In December 2019, the Financial Accounting Standards Board (“FASB”) issued new guidance intended to simplify various aspects related to accounting for income taxes. We adopted this new guidance as of January 1, 2021. The adoption of this new guidance had no material impact on our financial statements or related disclosures.
Standards Not Yet Adopted
Debt: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued new guidance which is intended to simplify the accounting for convertible instruments. This guidance will be effective for us in the first quarter of 2022. As our existing convertible instrument matures in December 2021, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements or related disclosures.
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Note 2 – Earnings Per Share
The following table presents the reconciliation of the numerator and denominator for calculating net loss per share:
 Third QuarterFirst Nine Months
(In thousands, except per share data)2021202020212020
Numerator 
Net loss - basic and diluted$(10,485)$(23,870)$(21,845)$(62,262)
Denominator
Weighted average common shares outstanding - basic91,932 90,535 91,264 90,056 
Dilutive effect of stock options and restricted stock awards— — — — 
Dilutive effect of Convertible Notes — — — — 
Weighted average common shares outstanding - diluted91,932 90,535 91,264 90,056 
Net loss per common share
Basic$(0.11)$(0.26)$(0.24)$(0.69)
Diluted$(0.11)$(0.26)$(0.24)$(0.69)
We excluded the following weighted-average potential shares from the calculations of diluted net loss per share during the applicable periods because their inclusion would have been anti-dilutive:
 Third QuarterFirst Nine Months
(In thousands)2021202020212020
Stock options and restricted stock awards5,954 5,608 5,708 5,172 
For the third quarter and first nine months of 2021 and 2020, we excluded all potentially dilutive stock options and restricted stock awards in calculating diluted earnings per share as the effect was anti-dilutive due to the net loss incurred for these periods. The Convertible Notes (as defined in Note 7) only impact the calculation of diluted net income per share in periods that the average price of our common stock, as calculated in accordance with the terms of the indenture governing the Convertible Notes, exceeds the conversion price of $9.33 per share. If converted, we will settle the principal amount of the notes in cash and as a result, only the amounts payable in excess of the principal amount of the notes, if any, would be assumed to be settled with shares of common stock for purposes of computing diluted net income per share.

8


Note 3 – Repurchase Program
Our repurchase program remains available for repurchases of any combination of our common stock and Convertible Notes. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility (as defined in Note 7). As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, 2021, we had $23.8 million remaining under the program.
During the first nine months of 2021, we repurchased $28.3 million of our Convertible Notes in the open market under the repurchase program for a total cost of $28.1 million. During the first nine months of 2020, we repurchased $33.1 million of our Convertible Notes in the open market under the repurchase program for a total cost of $29.1 million.
There were no shares of common stock repurchased under the repurchase program during the first nine months of 2021 or 2020.

Note 4 – Stock-Based and Other Long-Term Incentive Compensation
During the second quarter of 2021, our stockholders approved an amendment to the 2015 Employee Equity Incentive Plan (“2015 Plan”) to increase the number of shares authorized for issuance under the 2015 Plan from 12,300,000 to 14,300,000 shares, and also approved an amendment to the 2014 Non-Employee Directors’ Restricted Stock Plan (“2014 Director Plan”) to increase the number of shares authorized for issuance under the 2014 Director Plan from 1,000,000 to 1,200,000 shares.
During the second quarter of 2021, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved equity-based compensation to executive officers and other key employees consisting of 2,659,177 restricted stock units, which will vest in equal installments over a three-year period. In addition, non-employee directors received a grant of 210,367 restricted stock awards, which will vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant date. The weighted average grant-date fair value was $3.28 per share for both the restricted stock units and restricted stock awards. During the third quarter of 2021, the Compensation Committee approved additional equity-based compensation to certain executive officers and other key employees consisting of 200,000 restricted stock units, which will vest in equal installments over a three-year period. The weighted average grant-date fair value was $2.09 per share for these restricted stock units. At September 30, 2021, 1,623,607 shares remained available for award under the 2015 Plan and 146,527 shares remained available for award under the 2014 Director Plan.
Also during the second quarter of 2021, the Compensation Committee approved the issuance of performance-based cash awards to certain executive officers with a target value of $3.0 million. The performance-based cash awards will be settled based on the relative ranking of our total shareholder return (“TSR”) as compared to the TSR of our designated peer group over a three-year performance period. The performance period began May 2, 2021 and ends May 31, 2024, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, 2024 and the cash payout for each executive ranging from 0% to 200% of target. The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte-Carlo valuation model with changes in fair value recognized in the consolidated statements of operations. During the third quarter of 2021, the Compensation Committee approved the issuance of $1.4 million of time-based cash awards to certain executive officers and other key employees, which will vest in full on September 1, 2023.

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Note 5 – Receivables
Receivables consisted of the following:
(In thousands)September 30, 2021December 31, 2020
Trade receivables:
Gross trade receivables$155,464 $133,717 
Allowance for credit losses(4,859)(5,024)
Net trade receivables150,605 128,693 
Income tax receivables5,806 6,545 
Other receivables6,898 5,807 
Total receivables, net$163,309 $141,045 
Other receivables included $5.1 million and $4.4 million for value added, goods and service taxes related to foreign jurisdictions as of September 30, 2021 and December 31, 2020, respectively.
We adopted the new accounting guidance for credit losses as of January 1, 2020.
Changes in our allowance for credit losses were as follows:
First Nine Months
(In thousands)20212020
Balance at beginning of period$5,024 $6,007 
Cumulative effect of accounting change— 959 
Credit loss expense426 1,304 
Write-offs, net of recoveries(591)(2,517)
Balance at end of period$4,859 $5,753 

Note 6 – Inventories
Inventories consisted of the following:
(In thousands)September 30, 2021December 31, 2020
Raw materials:  
Fluids Systems$110,522 $98,974 
Industrial Solutions4,864 6,315 
Total raw materials115,386 105,289 
Blended fluids systems components26,906 31,744 
Finished goods - mats5,902 10,824 
Total inventories$148,194 $147,857 
Raw materials for the Fluids Systems segment consists primarily of barite, chemicals, and other additives that are consumed in the production of our fluids systems. Raw materials for the Industrial Solutions segment consists primarily of resins, chemicals, and other materials used to manufacture composite mats and cleaning products, as well as materials that are consumed in providing spill containment and other services to our customers. Our blended fluids systems components consist of base 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.
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Note 7 – Financing Arrangements and Fair Value of Financial Instruments
Financing arrangements consisted of the following:
September 30, 2021December 31, 2020
(In thousands)Principal AmountUnamortized Discount and Debt Issuance CostsTotal DebtPrincipal AmountUnamortized Discount and Debt Issuance CostsTotal Debt
Convertible Notes$38,567 $(464)$38,103 $66,912 $(4,221)$62,691 
ABL Facility24,100 — 24,100 19,100 — 19,100 
Term loan6,569 (130)6,439 — — — 
Financing obligation7,953 (91)7,862 — — — 
Other debt17,240 — 17,240 5,371 — 5,371 
Total debt94,429 (685)93,744 91,383 (4,221)87,162 
Less: Current portion(21,875)— (21,875)(71,693)4,221 (67,472)
Long-term debt$72,554 $(685)$71,869 $19,690 $— $19,690 
Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“Convertible Notes”) that mature on December 1, 2021, of which $38.6 million principal amount was outstanding at September 30, 2021. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.
Until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time. If any notes are converted, we will settle the converted notes at the maturity date with a combination of cash and shares of common stock in accordance with the terms of the indenture governing the Convertible Notes. The conversion rate is 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date. As of November 1, 2021, no holders have converted their notes. The Convertible Notes are classified as long-term debt in the September 30, 2021 balance sheet as we intend to settle the notes at maturity utilizing borrowings under our ABL Facility.
In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of September 30, 2021, the carrying amount of the debt component was $38.1 million, which is net of the unamortized debt discount and debt issuance costs of $0.5 million. Including the impact of the unamortized debt discount and debt issuance costs, the effective interest rate on the notes is approximately 11.3%.
During the first nine months of 2021, we repurchased $28.3 million of our Convertible Notes in the open market for a total cost of $28.1 million, and recognized a net loss of $1.0 million reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement, which was amended in October 2017 and March 2019 (as amended, the “ABL Facility”). The ABL Facility provides financing of up to $200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of $275.0 million, subject to certain conditions. The ABL Facility terminates in March 2024. As of September 30, 2021, our total availability under the ABL Facility was $106.2 million, of which $24.1 million was drawn, $39.3 million was reserved for settlement of the Convertible Notes, and $1.1 million was used for outstanding letters of credit, resulting in remaining availability of $41.7 million.
Borrowing availability under the ABL Facility is calculated based on eligible U.S. accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation also includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio of 1.5 to 1.0 and at least $1.0 million of operating income for the Site and Access Solutions business, each calculated based on a trailing twelve-month period.
Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime
11


rate of Bank of America, N.A. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50 to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL Facility. As of September 30, 2021, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was 1.65% at September 30, 2021. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of September 30, 2021, the applicable commitment fee was 37.5 basis points.
The ABL Facility is a senior secured obligation, secured by first liens on substantially all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires a minimum consolidated fixed charge coverage ratio of 1.0 to 1.0 calculated based on a trailing twelve-month period if availability under the ABL Facility falls below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.
Other Debt. In 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 an $8.0 million financing obligation outstanding under these arrangements at September 30, 2021.
In February 2021, a U.K. subsidiary entered a £6.0 million (approximately $8.3 million) term loan facility that matures in February 2024, the proceeds of which were used to pay down the ABL Facility. The term loan bears interest at a rate of LIBOR plus a margin of 3.4% per year, payable in quarterly installments of £375,000 plus interest beginning March 2021 and a £1.5 million payment due at maturity. We had $6.6 million outstanding under this arrangement at September 30, 2021.
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 $12.6 million and $3.5 million outstanding under these arrangements at September 30, 2021 and December 31, 2020, respectively.
In addition, at September 30, 2021, we had $43.1 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $6.0 million in restricted cash.
Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our Convertible Notes, approximated their fair values at September 30, 2021 and December 31, 2020. The estimated fair value of our Convertible Notes was $38.6 million at September 30, 2021 and $61.1 million at December 31, 2020, based on quoted market prices at these respective dates.

Note 8 – Income Taxes
The provision for income taxes was $5.4 million for the first nine months of 2021, despite reporting a pretax loss for the period, primarily reflecting the impact of the geographic composition of our pretax loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses as they may not be realized. The benefit for income taxes was $11.3 million for the first nine months of 2020, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations.

Note 9 – 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.

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Note 10 – Supplemental Disclosures to the Statements of Cash Flows
Supplemental disclosures to the statements of cash flows are presented below:
First Nine Months
(In thousands)20212020
Cash paid for:  
Income taxes (net of refunds)$5,765 $4,733 
Interest$3,414 $4,160 
Cash, cash equivalents, and restricted cash in the consolidated statements of cash flows consisted of the following:
(In thousands)September 30, 2021December 31, 2020
Cash and cash equivalents$31,242 $24,197 
Restricted cash (included in prepaid expenses and other current assets)5,956 6,151 
Cash, cash equivalents, and restricted cash$37,198 $30,348 


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Note 11 – Segment Data
Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers):
 Third QuarterFirst Nine Months
(In thousands)2021202020212020
Revenues
Fluids Systems$107,955 $67,711 $292,897 $275,178 
Industrial Solutions43,842 28,713 142,321 87,742 
Total revenues$151,797 $96,424 $435,218 $362,920 
Operating income (loss)
Fluids Systems$(6,646)$(18,957)$(19,944)$(46,284)
Industrial Solutions8,103 (139)31,376 3,928 
Corporate office(7,520)(6,596)(20,198)(19,761)
Total operating loss$(6,063)$(25,692)$(8,766)$(62,117)
    The following table presents further disaggregated revenues for the Fluids Systems segment:
Third QuarterFirst Nine Months
(In thousands)2021202020212020
United States$56,783 $40,314 $161,237 $156,644 
Canada13,781 1,961 31,400 18,287 
Total North America70,564 42,275 192,637 174,931 
EMEA32,380 23,207 90,801 91,380 
Other5,011 2,229 9,459 8,867 
Total International37,391 25,436 100,260 100,247 
Total Fluids Systems revenues$107,955 $67,711 $292,897 $275,178 
The following table presents further disaggregated revenues for the Industrial Solutions segment:
Third QuarterFirst Nine Months
(In thousands)2021202020212020
Product sales revenues$14,240 $5,917 $44,459 $15,243 
Rental revenues15,343 9,327 51,655 31,999 
Service revenues12,393 13,469 37,919 40,500 
Industrial blending revenues (1)
1,866 — 8,288 — 
Total Industrial Solutions revenues$43,842 $28,713 $142,321 $87,742 
(1) Industrial blending operations began in the second quarter of 2020. Results for the industrial blending component are presented in Industrial Solutions beginning in the fourth quarter of 2020. Results prior to the fourth quarter of 2020 were reported in Fluids Systems and not adjusted as they were not material.
In March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic, which led to a rapid decline in customer activity in the E&P industry. In response to these market changes, we initiated workforce reductions and other cost reduction programs late in the first quarter of 2020 and continued these actions throughout 2020.
As part of the cost reduction programs, we reduced our global employee base by approximately 620 (28%) in the first nine months of 2020. As a result of these workforce reductions, our operating results for the third quarter of 2020 included $0.4 million of total severance costs ($0.2 million in Fluids Systems and $0.2 million in the corporate office), with $0.1 million in cost of revenues and $0.3 million in selling, general and administrative expenses. Our operating results for the first nine
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months of 2020 included $3.9 million of total severance costs ($3.3 million in Fluids Systems and $0.6 million in the corporate office), with $2.6 million in cost of revenues and $1.3 million in selling, general and administrative expenses. These costs were substantially paid as of September 30, 2020.
We recognized $4.7 million of total charges for the impairment of certain fixed assets and other non-cash charges in the third quarter of 2020, with $4.5 million in the Fluids Systems segment and $0.2 million in the corporate office. We recognized $18.0 million of total charges for inventory write-downs, severance costs, fixed asset impairments, and facility exit costs in the first nine months of 2020, with $17.4 million in the Fluids Systems segment and $0.6 million in the corporate office.
In August 2021, Hurricane Ida negatively impacted our Gulf of Mexico operations, including damage to certain inventory, equipment and warehouse facilities, at our Fourchon, Louisiana Fluids Systems operating base. While this event is covered by our property and business interruption insurance programs, these programs contain self-insured retentions, which remain our financial obligations. During the third quarter of 2021, our Fluids Systems segment incurred hurricane-related costs of $2.6 million, substantially all of which is our self-insured retention under our property insurance policy representing preliminary estimates for property damage and initial costs incurred for property-related repairs, cleanup and other costs. This $2.6 million charge is recognized in other operating (income) loss, net, for the third quarter of 2021. Additional costs for property-related repairs, cleanup and other costs that may be incurred beyond the initial estimates are expected to be substantially recoverable under our property insurance policy. As of September 30, 2021, the claims related to the hurricane under our property and business interruption insurance programs have not been finalized.
Fluids Systems operating results for the third quarter and first nine months of 2021 also includes $1.7 million of charges related to facility exit and other costs included in cost of revenues, as well as a $0.8 million gain included in other operating (income) loss, net, related to the final insurance settlement associated with the July 2018 fire at our Kenedy, Texas drilling fluids facility. Industrial Solutions operating results for the first nine months of 2021 includes a $1.0 million gain in other operating (income) loss, net, related to a legal settlement.
See below for details of charges in the Fluids Systems segment.
Third QuarterFirst Nine Months
(In thousands)2021202020212020
Fourchon, Louisiana hurricane-related costs$2,596 $— $2,596 $— 
Facility exit and other costs1,691 286 1,691 1,086 
Severance costs564 189 1,177 3,288 
Kenedy, Texas facility fire insurance settlement(849)— (849)— 
Inventory write-downs— 990 — 9,986 
Property, plant and equipment impairments— 3,038 — 3,038 
Total Fluids Systems impairments and other charges$4,002 $4,503 $4,615 $17,398 
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ITEM 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2020. Our third quarter represents the three-month period ended September 30 and our first nine months represents the nine-month period ended September 30. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”
Overview
We are a geographically diversified supplier providing products, as well as rentals and services to customers across multiple industries. We operate our business through two reportable segments: Fluids Systems, which primarily serves oil and natural gas exploration and production (“E&P”) customers, and Industrial Solutions, which serves various markets including power transmission, E&P, pipeline, renewable energy, petrochemical, construction and other industries.
Our long-term strategy includes key foundational elements that are intended to enhance long-term shareholder value creation:
End-market diversification – To help reduce our dependency on customers in the volatile E&P industry, improve the stability in cash flow generation and returns on invested capital, and provide growth opportunities into new markets, we have focused our efforts over the past several years on diversifying our presence outside of our historical E&P customer base. These efforts have been primarily focused within our Site and Access Solutions business, where we have prioritized growth in power transmission, pipeline, renewable energy, and construction markets. In the first nine months of 2021, our Industrial Solutions segment generated $142 million of revenues, including approximately $117 million from power transmission and other industrial markets. The continued diversification of our revenues, including end-markets that are likely to benefit from ongoing energy transition efforts around the world, such as power transmission, renewable energy, and geothermal, remains a strategic priority going forward, and we anticipate that our capital investments will primarily focus on industrial end-market expansion.
Provide products that enhance environmental sustainability – Our Company has a long history of providing environmentally-friendly technologies to our customers. In the Industrial Solutions segment, we believe the lightweight design of our fully recyclable DURA-BASE® matting system provides a distinct environmental advantage for our customers as compared to alternative wood mat products in the market, by eliminating deforestation required to produce wood mat products while also reducing CO2 emissions associated with product transportation. In our Fluids Systems segment, our family of high-performance water-based fluids systems, which we market as Evolution® and DeepDrill® systems, are designed to enhance drilling performance while also providing a variety of environmental benefits relative to traditional oil-based fluids. Our Fluids Systems segment has also developed a water-based fluids system for geothermal applications that we market as TerraThermTM. The continued advancement of technology that provides our customers with economic benefits, while also enhancing their environmental and safety programs, remains a priority for our research and development efforts.
Our Fluids Systems operating results remain dependent on oil and natural gas drilling activity levels in the markets we serve and the nature of the drilling operations (including the depth and whether the wells are drilled vertically or horizontally), which governs the revenue potential of each well. Drilling activity levels, in turn, depend on a variety of factors, including oil and natural gas commodity pricing, inventory levels, product demand, and regulatory restrictions. Oil and natural gas prices and activity are cyclical and volatile, and this market volatility has a significant impact on our operating results.

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While our revenue potential is driven by a number of factors including those described above, rig count data remains the most widely accepted indicator of drilling activity. Average North American rig count data for the third quarter and first nine months of 2021 as compared to the same periods of 2020 is as follows:
 Third Quarter2021 vs 2020
 20212020Count%
U.S. Rig Count496 254 242 95 %
Canada Rig Count151 47 104 221 %
North America Rig Count647 301 346 115 %
First Nine Months2021 vs 2020
20212020Count%
U.S. Rig Count445 477 (32)(7)%
Canada Rig Count120 89 31 35 %
North America Rig Count565 566 (1)— %
_______________________________________________________
Source: Baker Hughes Company
During March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic. As a result, U.S. rig count declined significantly beginning in late March 2020 before reaching a low of 244 in mid-August 2020. Oil prices have since rebounded and currently are at multi-year highs, while the average U.S. rig count has gradually increased over the past year, resulting in a 95% year-over-year third quarter improvement in U.S. rig count, though still 7% below prior year for the first nine months. We anticipate that market activity will continue to improve from current levels, although the ongoing impacts of the COVID-19 variants, an uncertain economic environment, including widespread supply chain disruptions, as well as enacted and proposed legislative changes in the U.S. impacting the oil and natural gas industry, make the timing and pace of recovery difficult to predict. The Canada rig count reflects normal seasonality for this market, with the highest rig count levels generally observed in the first quarter of each year, prior to spring break-up.
Outside of North America land markets, drilling activity is generally more stable as this drilling activity is based on longer-term economic projections and multi-year drilling programs, which typically reduces the impact of short-term changes in commodity prices on overall drilling activity. However, operations in several countries in the EMEA region experienced activity disruptions and project delays beginning in March 2020 and continuing in 2021, driven by government-imposed restrictions on movements of personnel, quarantines of staffing, and logistical limitations as a result of the COVID-19 pandemic. We expect these disruptions and project delays will continue to impact international activity levels in the near-term, and while there has been a general improvement in customer activity as we have progressed through 2021, the impact from the duration and magnitude of the ongoing health pandemic and related government responses are very difficult to predict.
In response to the 2020 market changes and reduced demand for our products and services as a result of the decline in oil prices and the COVID-19 pandemic, we took a number of actions during 2020 aimed at conserving cash and protecting our liquidity, which included the implementation of cost reduction programs, including workforce reductions, employee furloughs, the suspension of the Company’s matching contributions to its U.S. defined contribution plan, and temporary salary reductions effective April 1, 2020 for a significant portion of U.S. employees, including executive officers and the annual cash retainers paid to all non-employee members of the Board of Directors. We recognized $18.0 million of charges during the first nine months of 2020 for inventory write-downs, severance costs, fixed asset impairments, and facility exit costs. Beginning in the second quarter of 2021, we restored salaries to pre-reduction levels for a portion of our non-executive U.S. employees and reinstituted the Company matching contribution for our U.S. defined contribution plan. Beginning in the third quarter of 2021, we restored salaries to pre-reduction levels for the remaining non-executive U.S. employees and our executive officers as well as the annual cash retainers paid to all non-employee members of the Board of Directors. We recognized total charges of $4.6 million during the first nine months of 2021, including $4.0 million in the third quarter of 2021, primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems operating base, facility exit, and severance costs.
With ongoing support from outside financial and other advisors, we have continuously reviewed our portfolio during this oil and natural gas market downturn. These reviews have focused on evaluating changes in the outlook for our served markets and customer priorities, while identifying opportunities for value-creating options in our portfolio, as well as placing investment emphasis in markets where we generate strong returns and where we see greater long-term viability and stability. While we have taken certain actions to reduce our workforce and cost structure, our business contains high levels of fixed costs,
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including significant facility and personnel expense. We continue to evaluate under-performing areas of our business, including the U.S. and Gulf of Mexico oil and natural gas markets, which necessitates consideration of broader structural changes to transform this business for the new market realities. In the absence of a longer-term increase in activity levels, we may incur future charges related to these efforts or potential asset impairments, which may negatively impact our future results.
Segment Overview
Fluids Systems – Our Fluids Systems segment, which generated 67% of consolidated revenues for the first nine months of 2021, provides drilling, completion, and stimulation fluids products and related technical services to customers for oil, natural gas, and geothermal projects primarily in North America and Europe, the Middle East and Africa (“EMEA”), as well as certain countries in Asia Pacific and Latin America. Despite the continuing effects of COVID-19 impacting international customer activity, expansion outside of North America, including the penetration of international oil companies (“IOCs”) and national oil companies (“NOCs”), remains a key element of our Fluids Systems strategy, which has historically helped to stabilize segment revenues while North American oil and natural gas exploration activities have fluctuated significantly. Revenues from IOC and NOC customers represented approximately 29% of Fluids Systems segment revenues for the first nine months of 2021 compared to approximately 43% for the first nine months of 2020, with the decrease primarily due to COVID-related activity disruptions and project delays, as well as changes in customer drilling and completion activity levels in the Gulf of Mexico. Consistent with our strategy, during 2021, we secured multi-year tender awards in Bahrain and Thailand, both of which began in the third quarter of 2021.
Industrial Solutions – Our Industrial Solutions segment, which generated 33% of consolidated revenues for the first nine months of 2021, provides engineered composite matting system rentals utilized for temporary worksite access, 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 sell our manufactured composite mats to customers around the world, with power transmission being the primary end-market. In addition, we began leveraging our chemical blending capacity and technical expertise into industrial blending operations, and in response to the increasing market demand for cleaning products resulting from the COVID-19 pandemic, began producing disinfectants and industrial cleaning products in 2020. The scale-up of production was completed by the end of the third quarter of 2020, which effectively repositioned our chemical blending operation located in Conroe, Texas to support industrial end-markets. Beginning prospectively in the fourth quarter of 2020, the assets and operating results associated with these industrial blending operations are included in the Industrial Solutions segment, while the historical results from earlier in 2020, which were immaterial, are included in the Fluids Systems segment.
The expansion of our rental and service activities in power transmission and other industrial markets remains a strategic priority for us due to such markets’ relative stability compared to E&P, as well as the magnitude of growth opportunity in these markets, including the potential positive impact from the energy transition. During 2020, our business was impacted by the COVID-19 pandemic, as customers delayed purchases and planned projects citing COVID-related market uncertainty, permitting delays, and logistical restrictions. The Industrial Solutions segment rental and service revenues from power transmission and other industrial markets increased to approximately $64 million for the first nine months of 2021, compared to approximately $45 million for the first nine months of 2020. Product sales revenues largely reflect sales to power transmission customers and other industrial markets, and typically fluctuate based on the timing of customer orders. Total segment revenues from power transmission and other industrial markets were $117 million (82% of segment revenues) for the first nine months of 2021, more than doubling the $58 million (66% of segment revenues) generated in the first nine months of 2020, benefiting from the market recovery, including some level of pent-up demand associated with COVID-related project delays in 2020, particularly in the power transmission sector. We expect customer activity, particularly in the power transmission sector, will remain robust in the coming years, driven in part by the impacts of the energy transition and the increasing investment in grid reliance initiatives.

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Third Quarter of 2021 Compared to Third Quarter of 2020
Consolidated Results of Operations
Summarized results of operations for the third quarter of 2021 compared to the third quarter of 2020 are as follows:
 Third Quarter2021 vs 2020
(In thousands)20212020$%
Revenues$151,797 $96,424 $55,373 57 %
Cost of revenues132,273 99,301 32,972 33 %
Selling, general and administrative expenses23,864 20,597 3,267 16 %
Other operating (income) loss, net1,723 (820)2,543 NM
Impairments— 3,038 (3,038)NM
Operating loss(6,063)(25,692)19,629 76 %
Foreign currency exchange loss25 580 (555)(96)%
Interest expense, net2,176 2,411 (235)(10)%
Loss on extinguishment of debt210 — 210 NM
Loss before income taxes(8,474)(28,683)20,209 70 %
Provision (benefit) for income taxes2,011 (4,813)6,824 NM
Net loss$(10,485)$(23,870)$13,385 (56)%
Revenues
Revenues increased 57% to $151.8 million for the third quarter of 2021, compared to $96.4 million for the third quarter of 2020. This $55.4 million increase includes a $42.2 million (62%) increase in revenues in North America, comprised of a $28.3 million increase in the Fluids Systems segment and a $13.9 million increase in the Industrial Solutions segment. Revenues from our North America operations increased primarily due to the 115% increase in North America rig count, which favorably impacted our Fluids Systems segment, as well as a recovery of activity in the power transmission sector, which favorably impacted our Industrial Solutions segment. Revenues from our international operations increased by $13.2 million (46%), but continues to be unfavorably impacted by activity disruptions and project delays resulting from the COVID-19 pandemic. Additional information regarding the change in revenues is provided within the operating segment results below.
Cost of revenues
Cost of revenues increased 33% to $132.3 million for the third quarter of 2021, compared to $99.3 million for the third quarter of 2020. The Fluids Systems segment cost of revenues for the third quarter of 2021 includes $2.0 million of charges primarily related to facility exit and severance costs, and the third quarter of 2020 included $1.1 million of charges related to inventory write-downs and severance costs. The increase in cost of revenues was primarily driven by the 57% increase in revenues described above.
Selling, general and administrative expenses
Selling, general and administrative expenses increased $3.3 million to $23.9 million for the third quarter of 2021, compared to $20.6 million for the third quarter of 2020. This increase was primarily driven by higher performance-based incentive and stock-based compensation expense, as well as the restoration of certain U.S. salary and retirement benefits, partially offset by a reduction in legal costs. Selling, general and administrative expenses as a percentage of revenues was 15.7% for the third quarter of 2021 compared to 21.4% for the third quarter of 2020.

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Other operating (income) loss, net
In August 2021, Hurricane Ida caused damage to our Fourchon, Louisiana Fluids Systems operating base. While this event is covered by our property and business interruption insurance programs, these programs contain self-insured retentions, which remain our financial obligations, resulting in $2.6 million of charges for the third quarter of 2021. Additional costs for property-related repairs, cleanup and other costs that may be incurred beyond the initial estimates are expected to be substantially recoverable under our property insurance policy. As of September 30, 2021, the claims related to the hurricane under our property and business interruption insurance programs have not been finalized.
The third quarter of 2021 also includes a $0.8 million gain related to the final insurance settlement associated with the July 2018 fire at our Kenedy, Texas drilling fluids facility. Other operating (income) loss, net, also includes gains on sales of assets.
Impairments
Fluids Systems segment included a $3.0 million impairment charge in the third quarter of 2020, attributable to the abandonment of certain property, plant and equipment.
Foreign currency exchange
Foreign currency exchange reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.
Interest expense, net
Interest expense was $2.2 million for the third quarter of 2021 compared to $2.4 million for the third quarter of 2020. Interest expense for the third quarter of 2021 and 2020 includes $1.0 million and $1.2 million, respectively, in non-cash amortization of original issue discount and debt issuance costs. The decrease in interest expense is primarily due to lower debt balances.
Loss on extinguishment of debt
In the third quarter of 2021, we repurchased $10.0 million of our Convertible Notes in the open market for $10.0 million. The $0.2 million loss for the third quarter of 2021 reflects the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Provision (benefit) for income taxes
The provision for income taxes was $2.0 million for the third quarter of 2021, despite reporting a pretax loss for the period, primarily reflecting the impact of the geographic composition of our pretax loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses as they may not be realized. The benefit for income taxes was $4.8 million for the third quarter of 2020, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations.

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Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):
Third Quarter2021 vs 2020
(In thousands)20212020$%
Revenues  
Fluids Systems$107,955 $67,711 $40,244 59 %
Industrial Solutions43,842 28,713 15,129 53 %
Total revenues$151,797 $96,424 $55,373 57 %
Operating income (loss)  
Fluids Systems$(6,646)$(18,957)$12,311 
Industrial Solutions8,103 (139)8,242 
Corporate office(7,520)(6,596)(924)
Total operating loss$(6,063)$(25,692)$19,629 
Segment operating margin
Fluids Systems(6.2)%(28.0)%
Industrial Solutions18.5 %(0.5)%
Fluids Systems
Revenues
Total revenues for this segment consisted of the following:
 Third Quarter2021 vs 2020
(In thousands)20212020$%
United States$56,783 $40,314 $16,469 41 %
Canada13,781 1,961 11,820 603 %
Total North America70,564 42,275 28,289 67 %
EMEA32,380 23,207 9,173 40 %
Other5,011 2,229 2,782 125 %
Total International37,391 25,436 11,955 47 %
Total Fluids Systems revenues$107,955 $67,711 $40,244 59 %
North America revenues increased 67% to $70.6 million for the third quarter of 2021, compared to $42.3 million for the third quarter of 2020. This increase was primarily attributable to the increase in North America rig count, including a $20.2 million increase from U.S. land markets and a $11.8 million increase in Canada, partially offset by a $1.1 million decrease from offshore Gulf of Mexico driven primarily by changes in customer drilling and completion activity levels, including the impact from Hurricane Ida. For the third quarter of 2021, U.S. revenues include $51.1 million from land markets and $5.7 million from offshore Gulf of Mexico.
Internationally, revenues increased 47% to $37.4 million for the third quarter of 2021, compared to $25.4 million for the third quarter of 2020. The increase was primarily driven by higher activity in Europe, North Africa, and Asia Pacific regions. However, despite these improvements, customer activity levels in several key markets continue to be impacted by the COVID-19 pandemic.
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Operating loss
The Fluids Systems segment incurred an operating loss of $6.6 million for the third quarter of 2021, reflecting a $12.3 million improvement from the $19.0 million operating loss incurred in the third quarter of 2020. The Fluids Systems segment operating loss for the third quarter of 2021 includes $4.0 million of charges primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems operating base, facility exit, and severance costs, and the operating loss for the third quarter of 2020 included $4.5 million of charges primarily related to the impairment of certain fixed assets and other non-cash charges. The remaining improvement in the operating loss includes a $8.4 million benefit from North America operations and a $3.5 million benefit from international operations, which are primarily attributable to the changes in revenues described above along with the benefit of cost reduction programs implemented during 2020.
Industrial Solutions
Revenues
Total revenues for this segment consisted of the following:
 Third Quarter2021 vs 2020
(In thousands)20212020$%
Product sales revenues$14,240 $5,917 $8,323 141 %
Rental and service revenues27,736 22,796 4,940 22 %
Industrial blending revenues1,866 — 1,866 NM
Total Industrial Solutions revenues$43,842 $28,713 $15,129 53 %
In the third quarter of 2020, customer activity across most end-markets was unfavorably impacted by the COVID-19 pandemic and the related operational restrictions and market uncertainty, causing delays in purchases and project execution. As a result of the COVID-19 impact and our expanding customer base in the power transmission market, revenues from product sales, which typically fluctuate based on the timing of mat orders from customers, increased $8.3 million from the third quarter of 2020. In addition, rental and service revenues increased $4.9 million as delayed purchases and projects resumed, including a $3.0 million increase from power transmission and other industrial markets, as well as a $1.9 million increase from the E&P market. The increase from industrial customers reflects our continued expansion into these markets, both in the U.S. and U.K.
Operating income (loss)
The Industrial Solutions segment generated operating income of $8.1 million for the third quarter of 2021 compared to an operating loss of $0.1 million for the third quarter of 2020, the increase being primarily attributable to the changes in revenues as described above.
Corporate Office
Corporate office expenses increased $0.9 million to $7.5 million for the third quarter of 2021, compared to $6.6 million for the third quarter of 2020. This increase was primarily driven by higher performance-based incentive and stock-based compensation expense, as well as the restoration of certain U.S. salary and retirement benefits, partially offset by the benefit of cost reduction programs implemented in 2020.    
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First Nine Months of 2021 Compared to First Nine Months of 2020
Consolidated Results of Operations
Summarized results of operations for the first nine months of 2021 compared to the first nine months of 2020 are as follows:
 First Nine Months2021 vs 2020
(In thousands)20212020$%
Revenues$435,218 $362,920 $72,298 20 %
Cost of revenues376,370 357,675 18,695 %
Selling, general and administrative expenses67,755 66,230 1,525 %
Other operating income, net(141)(1,906)1,765 NM
Impairments— 3,038 (3,038)NM
Operating loss(8,766)(62,117)53,351 86 %
Foreign currency exchange (gain) loss(83)3,343 (3,426)NM
Interest expense, net6,748 8,524 (1,776)(21)%
(Gain) loss on extinguishment of debt1,000 (419)1,419 NM
Loss before income taxes(16,431)(73,565)57,134 78 %
Provision (benefit) for income taxes5,414 (11,303)16,717 NM
Net loss$(21,845)$(62,262)$40,417 65 %
Revenues
Revenues increased 20% to $435.2 million for the first nine months of 2021, compared to $362.9 million for the first nine months of 2020. This $72.3 million increase includes a $65.7 million (26%) increase in revenues in North America, comprised of a $48.0 million increase in the Industrial Solutions segment and a $17.7 million increase in the Fluids Systems segment. Revenues from our North America operations increased primarily due to the significant growth in power transmission and other industrial markets, which impacts our Industrial Solutions segment, as well as the improvement in North America rig count, which favorably impacted our Fluids Systems segment. Revenues from our international operations were relatively flat, as COVID-19 disruptions have unfavorably impacted customer activity levels in substantially all key markets. Additional information regarding the change in revenues is provided within the operating segment results below.
Cost of revenues
Cost of revenues increased 5% to $376.4 million for the first nine months of 2021, compared to $357.7 million for the first nine months of 2020. The Fluids Systems segment cost of revenues for the first nine months of 2021 includes $2.3 million of charges primarily related to facility exit and severance costs, and the first nine months of 2020 included a total of $13.4 million of charges related to inventory write-downs, severance costs, and facility exit costs. The remaining increase was primarily driven by the 20% increase in revenues described above, partially offset by the benefit of cost reduction programs implemented in 2020.
Selling, general and administrative expenses
Selling, general and administrative expenses increased $1.5 million to $67.8 million for the first nine months of 2021, compared to $66.2 million for the first nine months of 2020. This increase was primarily driven by higher performance-based incentive and stock-based compensation expense, partially offset by reduced personnel costs in the first nine months of 2021, including the benefit of cost reduction programs implemented in 2020, as well as lower severance charges and legal costs. Selling, general and administrative expenses as a percentage of revenues was 15.6% for the first nine months of 2021 compared to 18.2% for the first nine months of 2020.
Other operating income, net
In August 2021, Hurricane Ida caused damage to our Fourchon, Louisiana Fluids Systems operating base. While this event is covered by our property and business interruption insurance programs, these programs contain self-insured retentions, which remain our financial obligations, resulting in $2.6 million of charges for the first nine months of 2021. The first nine months of 2021 also includes a $0.8 million gain related to the final insurance settlement associated with the July 2018 fire at
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our Kenedy, Texas drilling fluids facility, and a $1.0 million gain related to a legal settlement in the Industrial Solutions segment. Other operating income also includes gains on sales of assets.
Impairments
Fluids Systems segment includes a $3.0 million impairment charge for the first nine months of 2020, attributable to the abandonment of certain property, plant and equipment.
Foreign currency exchange
Foreign currency exchange was a $0.1 million gain for the first nine months of 2021 compared to a $3.3 million loss for the first nine months of 2020, and reflects the impact of currency translation on assets and liabilities (including intercompany balances) that are denominated in currencies other than functional currencies.
Interest expense, net
Interest expense was $6.7 million for the first nine months of 2021 compared to $8.5 million for the first nine months of 2020. Interest expense for the first nine months of 2021 and 2020 includes $3.1 million and $4.0 million, respectively, in non-cash amortization of original issue discount and debt issuance costs. The decrease in interest expense is primarily due to lower debt balances.
(Gain) loss on extinguishment of debt
In the first nine months of 2021 and 2020, we repurchased $28.3 million and $33.1 million, respectively, of our Convertible Notes in the open market for $28.1 million and $29.1 million, respectively. The $1.0 million loss and $0.4 million gain for the first nine months of 2021 and 2020, respectively, reflects the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Provision (benefit) for income taxes
The provision for income taxes was $5.4 million for the first nine months of 2021, despite reporting a pretax loss for the period, primarily reflecting the impact of the geographic composition of our pretax loss. The tax expense primarily relates to earnings from our international operations since we are currently unable to recognize the tax benefit from our U.S. losses as they may not be realized. The benefit for income taxes was $11.3 million for the first nine months of 2020, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations.

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Operating Segment Results
Summarized financial information for our reportable segments is shown in the following table (net of inter-segment transfers):
First Nine Months2021 vs 2020
(In thousands)20212020$%
Revenues  
Fluids Systems$292,897 $275,178 $17,719 %
Industrial Solutions142,321 87,742 54,579 62 %
Total revenues$435,218 $362,920 $72,298 20 %
Operating income (loss)  
Fluids Systems$(19,944)$(46,284)$26,340 
Industrial Solutions31,376 3,928 27,448 
Corporate office(20,198)(19,761)(437)
Total operating loss$(8,766)$(62,117)$53,351 
Segment operating margin
Fluids Systems(6.8)%(16.8)%
Industrial Solutions22.0 %4.5 %
Fluids Systems
Revenues
Total revenues for this segment consisted of the following:
 First Nine Months2021 vs 2020
(In thousands)20212020$%
United States$161,237 $156,644 $4,593 %
Canada31,400 18,287 13,113 72 %
Total North America192,637 174,931 17,706 10 %
EMEA90,801 91,380 (579)(1)%
Other9,459 8,867 592 %
Total International100,260 100,247 13 — %
Total Fluids Systems revenues$292,897 $275,178 $17,719 %
North America revenues increased 10% to $192.6 million for the first nine months of 2021, compared to $174.9 million for the first nine months of 2020. This increase was primarily attributable to a $22.2 million increase from U.S. land markets driven primarily by an increase in market share despite the 7% decline in U.S. rig count, partially offset by a $14.3 million decrease from offshore Gulf of Mexico driven primarily by changes in customer drilling and completion activity levels. In addition, Canada increased $13.1 million driven primarily by the 35% increase in Canada rig count and an increase in market share. For the first nine months of 2021, U.S. revenues include $139.9 million from land markets and $21.3 million from offshore Gulf of Mexico.
Internationally, revenues were flat for the first nine months of 2021 compared to the first nine months of 2020, as COVID-19 disruptions have continued to impact customer activity levels in substantially all key markets, with the most significant impact in the Middle East and North Africa.
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Operating loss
The Fluids Systems segment incurred an operating loss of $19.9 million for the first nine months of 2021, reflecting a $26.3 million improvement from the $46.3 million operating loss incurred in the first nine months of 2020. The Fluids Systems segment operating loss for the first nine months of 2021 includes $4.6 million of charges primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems operating base, facility exit, and severance costs, and operating loss for the first nine months of 2020 included $17.4 million of charges related to inventory write-downs, severance costs, fixed asset impairments, and facility exit costs. The remaining improvement in the operating loss includes a $14.0 million benefit from North America operations partially offset by a $0.4 million decline from international operations, reflecting the changes in revenues described above and the benefit of cost reduction programs implemented during 2020.
Industrial Solutions
Revenues
Total revenues for this segment consisted of the following:
 First Nine Months2021 vs 2020
(In thousands)20212020$%
Product sales revenues$44,459 $15,243 $29,216 192 %
Rental and service revenues89,574 72,499 17,075 24 %
Industrial blending revenues8,288 — 8,288 NM
Total Industrial Solutions revenues$142,321 $87,742 $54,579 62 %
In the first nine months of 2020, customer activity across most end-markets was unfavorably impacted by the COVID-19 pandemic and the related operational restrictions and market uncertainty, causing delays in purchases and project execution. As a result, revenues from product sales, which typically fluctuate based on the timing of mat orders from customers, improved $29.2 million from the first nine months of 2020, including a favorable impact from pent-up demand following the COVID-19 pandemic as well as our expanding power transmission customer base.
Rental and service revenues increased $17.1 million as delayed purchases and projects resumed, including a $19.1 million increase from power transmission and other industrial markets, which was partially offset by a $2.0 million decrease from the E&P market. The increase from industrial customers reflects our continued expansion into these markets, both in the U.S. and U.K., including an approximately 44% increase in revenues from the power transmission sector. The revenue decrease from E&P customers primarily resulted from the lower U.S. drilling activity, along with our focus on supporting the more stable power transmission and other industrial markets.
Operating income
The Industrial Solutions segment generated operating income of $31.4 million for the first nine months of 2021 compared to $3.9 million for the first nine months of 2020, the increase being primarily attributable to the changes in revenues as described above. In addition, the Industrial Solutions operating results for the first nine months of 2021 includes a $1.0 million gain in other operating income related to a legal settlement.
Corporate Office
Corporate office expenses increased $0.4 million to $20.2 million for the first nine months of 2021, compared to $19.8 million for the first nine months of 2020. This increase was primarily driven by higher performance-based incentive and stock-based compensation expense, as well as the restoration of certain U.S. salary and retirement benefits, partially offset by the benefit of cost reduction programs implemented in 2020.
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Liquidity and Capital Resources
Net cash provided by operating activities was $13.7 million for the first nine months of 2021 compared to $40.3 million for the first nine months of 2020. During the first nine months of 2021, net loss adjusted for non-cash items provided cash of $12.9 million, while changes in working capital provided cash of $0.7 million.
Net cash used in investing activities was $7.3 million for the first nine months of 2021, including capital expenditures of $19.1 million, partially offset by $11.7 million in proceeds from the sale of assets. The majority of the proceeds from the sale of assets reflect used mats from our rental fleet, which are part of the commercial offering of our Site and Access Solutions business. Nearly all of our capital expenditures during the first nine months of 2021 were directed to supporting our Industrial Solutions segment, including $13.4 million of investments in the mat rental fleet, replacing mats sold from the fleet and supporting our strategic growth in the power transmission sector.
Net cash provided by financing activities was $1.8 million for the first nine months of 2021, which primarily includes $15.9 million of net borrowings on our foreign lines of credit and ABL Facility, $8.1 million of net proceeds from a U.K. term loan facility, and $7.9 million of net proceeds from a sale-leaseback transaction accounted for as financing arrangement, partially offset by $28.1 million in repurchases of our Convertible Notes.
Substantially all of our $31.2 million of cash on hand at September 30, 2021 resides in our international subsidiaries. Subject to maintaining sufficient cash requirements to support the strategic objectives of these international subsidiaries and complying with applicable exchange or cash controls, we expect to continue to repatriate excess cash from these international subsidiaries. We anticipate that future working capital requirements for our operations will generally fluctuate directionally with revenues. We expect capital expenditures in the near term to remain fairly limited, focusing on industrial end-market expansion opportunities. We intend to repay the Convertible Notes at maturity in December 2021 with borrowings under the ABL Facility.
Availability under our ABL Facility also provides additional liquidity as discussed further below. Total availability under the ABL Facility will fluctuate directionally based on the level of eligible U.S. accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet. We expect our available cash on-hand, cash generated by operations, and the expected availability under our ABL Facility to be adequate to fund our current operations during the next 12 months and the repayment of the 2021 Convertible Notes. We also continue to evaluate additional sources of liquidity to support our longer-term needs.
Our capitalization is as follows:
(In thousands)September 30, 2021December 31, 2020
Convertible Notes$38,567 $66,912 
ABL Facility24,100 19,100 
Other debt31,762 5,371 
Unamortized discount and debt issuance costs(685)(4,221)
Total debt$93,744 $87,162 
Stockholders’ equity465,713 488,032 
Total capitalization$559,457 $575,194 
Total debt to capitalization16.8 %15.2 %

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Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“Convertible Notes”) that mature on December 1, 2021, of which $38.6 million principal amount was outstanding at September 30, 2021. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.
Until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time. If any notes are converted, we will settle the converted notes at the maturity date with a combination of cash and shares of common stock in accordance with the terms of the indenture governing the Convertible Notes. The conversion rate is 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date. As of November 1, 2021, no holders have converted their notes. The Convertible Notes are classified as long-term debt in the September 30, 2021 balance sheet as we intend to settle the notes at maturity utilizing borrowings under our ABL Facility.
In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of September 30, 2021, the carrying amount of the debt component was $38.1 million, which is net of the unamortized debt discount and debt issuance costs of $0.5 million. Including the impact of the unamortized debt discount and debt issuance costs, the effective interest rate on the notes is approximately 11.3%.
During the first nine months of 2021, we repurchased $28.3 million of our Convertible Notes in the open market for a total cost of $28.1 million, and recognized a net loss of $1.0 million reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement, which was amended in October 2017 and March 2019 (as amended, the “ABL Facility”). The ABL Facility provides financing of up to $200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of $275.0 million, subject to certain conditions. The ABL Facility terminates in March 2024. As of September 30, 2021, our total availability under the ABL Facility was $106.2 million, of which $24.1 million was drawn, $39.3 million was reserved for settlement of the Convertible Notes, and $1.1 million was used for outstanding letters of credit, resulting in remaining availability of $41.7 million.
Borrowing availability under the ABL Facility is calculated based on eligible U.S. accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation also includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio of 1.5 to 1.0 and at least $1.0 million of operating income for the Site and Access Solutions business, each calculated based on a trailing twelve-month period.
Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime rate of Bank of America, N.A. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50 to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL Facility. As of September 30, 2021, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was 1.65% at September 30, 2021. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of September 30, 2021, the applicable commitment fee was 37.5 basis points.
The ABL Facility is a senior secured obligation, secured by first liens on substantially all of our U.S. tangible and intangible assets, and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments. The ABL Facility also requires a minimum consolidated fixed charge coverage ratio of 1.0 to 1.0 calculated based on a trailing twelve-month period if availability under the ABL Facility falls below $22.5 million. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events, and certain change of control events.
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Other Debt. 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 an $8.0 million financing obligation outstanding under these arrangements at September 30, 2021.
In February 2021, a U.K. subsidiary entered a £6.0 million (approximately $8.3 million) term loan facility that matures in February 2024, the proceeds of which were used to pay down the ABL Facility. The term loan bears interest at a rate of LIBOR plus a margin of 3.4% per year, payable in quarterly installments of £375,000 plus interest beginning March 2021 and a £1.5 million payment due at maturity. We had $6.6 million outstanding under this arrangement at September 30, 2021.
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 $12.6 million and $3.5 million outstanding under these arrangements at September 30, 2021 and December 31, 2020, respectively.
In addition, at September 30, 2021, we had $43.1 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $6.0 million in restricted cash.
Our financial instruments include cash and cash equivalents, receivables, payables, and debt. We believe the carrying values of these instruments, with the exception of our Convertible Notes, approximated their fair values at September 30, 2021 and December 31, 2020. The estimated fair value of our Convertible Notes was $38.6 million at September 30, 2021 and $61.1 million at December 31, 2020, based on quoted market prices at these respective dates.

Critical Accounting Estimates and Policies
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosure. Significant estimates used in preparing our consolidated financial statements include estimated cash flows and fair values used for impairments of long-lived assets, including goodwill and other intangibles, and valuation allowances for deferred tax assets. Our estimates are based on historical experience and on our future expectations that we believe to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material.
For additional discussion of our critical accounting estimates and policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2020. Our critical accounting estimates and policies have not materially changed since December 31, 2020.
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ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. A discussion of our primary market risk exposure in financial instruments is presented below.
Interest Rate Risk
At September 30, 2021, we had total principal amounts outstanding under financing arrangements of $94.4 million, including $38.6 million of borrowings under our Convertible Notes which bear interest at a fixed rate of 4.0%, as well as $24.1 million of borrowings under our ABL Facility and $6.6 million of borrowings under a U.K. term loan which are subject to variable interest rates as determined by the respective debt agreements. The weighted average interest rate at September 30, 2021 for the ABL Facility and the U.K. term loan was 1.7% and 3.4%, respectively. Based on the balance of variable rate debt at September 30, 2021, a 100 basis-point increase in short-term interest rates would have increased annual pre-tax interest expense by $0.3 million.
Foreign Currency Risk
Our principal foreign operations are conducted in certain areas of EMEA, Canada, Asia Pacific, and Latin America. We have foreign currency exchange risks associated with these operations, which are conducted principally in the foreign currency of the jurisdictions in which we operate including European euros, Kuwaiti dinar, Algerian dinar, Romanian new leu, Canadian dollars, British pounds, and Australian dollars. Historically, we have not used off-balance sheet financial hedging instruments to manage foreign currency risks when we enter into a transaction denominated in a currency other than our local currencies.

ITEM 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021, the end of the period covered by this quarterly report.
Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the quarter ended September 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
30


PART II         OTHER INFORMATION
ITEM 1.    Legal Proceedings
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.
ITEM 1A.    Risk Factors
Set forth below are changes during the period ended September 30, 2021 in our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 and updated in our Quarterly Report on Form 10-Q for the three months ended June 30, 2021.
Risks Related to the Price and Availability of Raw Materials
Our ability to provide products and services to our customers is dependent upon our ability to obtain raw materials necessary to operate our business. Certain of the raw materials essential to our business are sourced globally and require various freight services to transport the materials to our jobsites. These services may be impacted by current supply chain disruptions and, particularly during times of high demand, may cause delays in the arrival of or otherwise constrain our supply of raw materials. These constraints could have a material adverse effect on our business and consolidated results of operations. In addition, price increases imposed by our vendors for raw materials used in our business and the inability to pass these increases through to our customers could have a material adverse effect on our business and results of operations.
Our Industrial Solutions business is highly dependent on the availability of high-density polyethylene (“HDPE”), which is the primary raw material used in the manufacture of our composite mats. The cost of HDPE can vary significantly based on the energy costs of the producers of HDPE, demand for this material, and the capacity or operations of the plants used to make HDPE. Should the cost of HDPE increase, we may not be able to increase our customer pricing to cover our costs, which could result in a reduction in future profitability.
In addition, our Fluids Systems business is highly dependent on the availability of barite, which is a naturally occurring mineral that constitutes a significant portion of our fluids systems. We currently secure the majority of our barite ore from foreign sources, primarily China and India. The availability and cost of barite ore is dependent on factors beyond our control, including transportation, political priorities, U.S. tariffs, and government-imposed export fees in the exporting countries, as well as the impact of weather and natural disasters. The future supply of barite ore from existing sources may be inadequate to meet the market demand, particularly during periods of increasing world-wide demand, which could ultimately restrict industry activity or our ability to meet our customers’ needs.

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds
a)Not applicable
b)Not applicable
c)The following table details our repurchases of shares of our common stock for the three months ended September 30, 2021:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs ($ in Millions)
July 202112,175 $2.93 — $33.8 
August 20218,257 $2.42 — $23.8 
September 2021450 $2.61 — $23.8 
Total20,882 —  
During the three months ended September 30, 2021, we purchased an aggregate of 20,882 shares surrendered in lieu of taxes under vesting of restricted shares.
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In November 2018, our Board of Directors authorized changes to our securities repurchase program. These changes increased the authorized amount under the repurchase program to $100.0 million, available for repurchases of any combination of our common stock and our Convertible Notes.
Our repurchase program authorizes us to purchase outstanding shares of our common stock or Convertible Notes in the open market or as otherwise determined by management, subject to certain limitations under the ABL Facility and other factors. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility. As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, 2021, we had $23.8 million remaining under the program.
During the three months ended September 30, 2021, we repurchased $10.0 million of our Convertible Notes in the open market under the repurchase program for a total cost of $10.0 million. There were no shares of common stock repurchased under the repurchase program during the three months ended September 30, 2021.

ITEM 3.    Defaults Upon Senior Securities
None.
ITEM 4.    Mine Safety Disclosures
The information concerning mine safety violations and other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference.
ITEM 5.    Other Information
None.
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ITEM 6.    Exhibits
The exhibits listed are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
†10.1
†10.2
†10.3
*31.1
*31.2
**32.1
**32.2
*95.1
*101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*101.SCHInline XBRL Schema Document
*101.CALInline XBRL Calculation Linkbase Document
*101.DEFInline XBRL Definition Linkbase Document
*101.LABInline XBRL Label Linkbase Document
*101.PREInline XBRL Presentation Linkbase Document
*104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†     Management compensation plan or agreement.
*     Filed herewith.
**   Furnished herewith.
33


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date: November 3, 2021
  
NEWPARK RESOURCES, INC.
(Registrant)
  
By:/s/ Paul L. Howes
 Paul L. Howes
Chief Executive Officer
(Principal Executive Officer)
 
By:/s/ Gregg S. Piontek
 Gregg S. Piontek
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
 
By:/s/ Douglas L. White
 Douglas L. White
Vice President, Chief Accounting Officer and Treasurer
(Principal Accounting Officer)

34