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Please note that the information reported on the call today speaks only as of today, July 27, 2012, and therefore, you are advised that time-sensitive information may be no longer accurate as of the time of any replay listening. In addition, the comments made by management today of Newpark during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities laws. These forward-looking statements reflect the current views of management of Newpark. However, various risks, uncertainties and contingencies could cause Newpark's actual results, performance or achievements to differ materially from those expressed in the statements made by management. Listeners are encouraged to read the company's annual report on Form 10-K, its quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies.And now, with all of that behind us, I'd like to turn the call over to Newpark's President and CEO, Mr. Paul Howes. Paul? Paul L. Howes Thank you, Ken. Good morning to everyone. We'd like to thank you for joining us today for our second quarter 2012 conference call. With me today are Bruce Smith, President of our Drilling Fluids business; and Gregg Piontek, our Chief Financial Officer. Following my opening remarks, Bruce will provide an update on our Fluids business, and Gregg will discuss the Mats and Environmental Service businesses, as well as the consolidated financial results of the quarter. I will then conclude with a discussion of our market outlook before opening the call for Q&A. Now turning our attention to the second quarter. We are pleased with the improvement in profitability from our U.S. Fluids business, which was up considerably from a very difficult first quarter. While revenues were flat sequentially, our U.S. operating income improved by more than $5 million from the first quarter. As we stated in the first quarter call, the decline in profitability was attributable to several factors including: increased barite cost and delays in passing these through to customers; the reduction in third-party barite sales; weakness in our completion services and equipment rental business in the Mid-Continent region; cost inefficiencies associated with the accelerated transition from dry gas to liquid regions; and support costs associated with our ERP system implementation.
In the second quarter, meaningful progress was made on all fronts, contributing to the $5.6 million sequential improvement in operating income. While our performance strengthened in the U.S. Fluids business, these gains were offset by declines in other regions, including: spring break-up in Canada, where we saw a sequential revenue decline of $11 million; delays in North Africa due to the timing of customer projects; and the transition to a new contract with Sonatrach in Algeria resulted in an additional $5 million sequential revenue decline. In addition, operating expenses increased in North Africa in preparation for the ramp-up in activity associated with new contracts. The combined effect of these items decreased our second quarter revenues by about $16 million and net income by about $0.04 per share.Our Evolution system continues to see strong results in key U.S. markets. Evolution sales are $27 million in the second quarter, up from $23 million in the first quarter and $18 million in the second quarter of last year. We're seeing an increased level of interest in our technologies as inquiries about Evolution have broadened beyond the usual independent drillers to include the major international oil companies. In addition, we expect to see Evolution used for the first time outside North America by the end of the year, which whould represent a significant step as we look to introduce this technology into the international markets. Read the rest of this transcript for free on seekingalpha.com