Newpark Resources Inc. Common Stock

What's Changed

New risk factors post-Fluids Systems sale: transition service challenges, management distraction, indemnification costs, operational setbacks, and reliance on Industrial Solutions' performance.

Breakdown

ITEM 1A. Risk Factors

There have been no material changes during the period ended ~~June~~September 30, 2024 to our Risk Factors as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

, other than the risk factors listed below and to the extent our Risk Factors as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 are impacted by the Sale Transaction.

Risks Related to our Recently Completed Sale of the Fluids Systems Business

On September 13, 2024, we completed the sale of the equity interests in one of our subsidiaries which held substantially all of the Companys Fluids Systems segment. We are subject to a number of risks associated with the sale of the Fluids Systems business, including risks associated with (i) our requirement to provide certain transition services in connection with the Sale Transaction and any issues, delays or complications in completing such services, including the incurrence of unanticipated costs to complete such services, (ii) the diversion of managements attention away from the operations of our retained business; and (iii) any required payments of indemnification obligations under the Sale Transaction agreement for retained liabilities.

As a result of the Sale Transaction, we may incur or experience various adverse effects, including but not limited to (i) greater costs or realize fewer benefits than anticipated under the Sale Transaction agreement, (ii) operational or commercial difficulties segregating the divested assets from our retained assets, (iii) disputes with the Purchaser regarding the nature and sufficiency of the transition services we provide, (iv) higher vendor costs due to reduced economies of scale or other similar dis-synergies, (v) modified, terminated or scaled back relationships with our existing customers or difficulty in attracting prospective customers, (vi) loss or difficulty in retaining employees due to concerns over future job security or responsibilities, or (vii) losses or increased inefficiencies from stranded or underutilized assets. Any of these risks could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

The Fluids Systems business generated approximately 72% of total combined company revenue for the year ended December 31, 2023, and approximately 76% of total combined company revenue for the year ended December 31, 2022. Accordingly, our future financial results will differ materially from our previous results since our future financial results are dependent solely on our Industrial Solutions business. Any downturn in our Industrial Solutions business could have a material adverse effect on our future financial condition, results of operations, and cash flows. There can be no guarantee that the sale of the Fluids Systems business will result in stronger long-term financial and operational results for our remaining business.