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Newpark Resources Reports First Quarter 2017 Results

Newpark Resources Reports First Quarter 2017 Results

April 27, 2017 at 4:15 PM EDT
Consolidated revenues increase 16% sequentially; Fluids segment returns to profitability

THE WOODLANDS, Texas, April 27, 2017 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2017.  Total revenues for the first quarter of 2017 were $158.7 million compared to $137.1 million in the fourth quarter of 2016 and $114.5 million in the first quarter of 2016.  Net loss for the first quarter of 2017 was $1.0 million, or $0.01 per share, compared to a net loss of $0.1 million, or break-even on a per share basis, in the fourth quarter of 2016, and a net loss of $13.3 million, or $0.16 per share, in the first quarter of 2016.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "I'm pleased to report that after two very challenging years, 2017 is off to a much improved start.  Consolidated revenues improved by $22 million sequentially, resulting in our strongest revenue quarter in nearly two years.  The incremental margins were also very strong, as operating income improved by $12 million sequentially and returned to positive territory. In Fluids, revenue gains were led by our North America region, where revenues improved by 43% and again outperformed the increase in overall rig count.  Internationally, Fluids revenues remained relatively flat as a modest decline in the Eastern Hemisphere was largely offset by improvements in Latin America.  With the stronger revenue contribution and a favorable sales mix, the Fluids segment returned to profitability in the first quarter, posting a 5% operating margin. 

"In the Mats segment, we continue to see the benefits of our efforts to diversify beyond our traditional E&P markets.  Rental and service revenues improved by $4 million, benefiting from broad-based improvements in rental demand across end-user markets and geographical regions. This improvement helped offset the anticipated decline in mat sales, following the exceptionally strong fourth quarter," added Howes.  "With a stronger sales mix in the quarter, including the elevated rental revenues, the segment operating margin improved to 28%."

Segment Results

The Fluids Systems segment generated revenues of $136.1 million in the first quarter of 2017 compared to $111.6 million in the fourth quarter of 2016 and $98.7 million in the first quarter of 2016. Segment operating income was $6.4 million in the first quarter of 2017, compared to a $7.5 million loss in the fourth quarter of 2016 and a $15.2 million loss in the first quarter of 2016.

The Mats and Integrated Services segment generated revenues of $22.6 million in the first quarter of 2017 compared to $25.5 million in the fourth quarter of 2016 and $15.9 million in the first quarter of 2016. Segment operating income was $6.4 million in the first quarter of 2017, compared to $6.1 million in the fourth quarter of 2016, and $3.7 million in the first quarter of 2016.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss first quarter 2017 results, which will be broadcast live over the Internet, on Friday, April 28, 2017 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (412) 902-0030 and ask for the Newpark conference call at least 10 minutes prior to the start time, or access it live over the Internet at www.newpark.com. For those who cannot listen to the live call, a replay will be available through May 12, 2017 and may be accessed by dialing (201) 612-7415 and using pass code 13657300#. Also, an archive of the webcast will be available shortly after the call at www.newpark.com for 90 days.

Newpark Resources, Inc. is a worldwide provider of value-added drilling fluids systems and composite matting systems used in oilfield and other commercial markets. For more information, visit our website at www.newpark.com.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act that are based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including Newpark's strategy for growth, product development, market position, expected expenditures and future financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Newpark, particularly its Annual Report on Form 10-K for the year ended December 31, 2016, as well as others, could cause results to differ materially from those expressed in, or implied by, these statements. These risk factors include, but are not limited to, risks related to the worldwide oil and natural gas industry, our customer concentration and reliance on the U.S. exploration and production market, risks related to our international operations, the cost and continued availability of borrowed funds including noncompliance with debt covenants, operating hazards present in the oil and natural gas industry, our ability to execute our business strategy and make successful business acquisitions and capital investments, the availability of raw materials and skilled personnel, our market competition, compliance with legal and regulatory matters, including environmental regulations, the availability of insurance and the risks and limitations of our insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, risks related to severe weather, particularly in the U.S. Gulf Coast, cybersecurity breaches or business system disruptions and risks related to the fluctuations in the market value of our common stock. Newpark's filings with the Securities and Exchange Commission can be obtained at no charge at www.sec.gov, as well as through our website at www.newpark.com.

Contacts:

Brian Feldott


Director, Investor Relations


Newpark Resources, Inc.


bfeldott@newpark.com


281-362-6800

 

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)




Three Months Ended

(In thousands, except per share data)


March 31,
2017


December 31,
2016


March 31,
2016

Revenues


$

158,691



$

137,083



$

114,544


Cost of revenues


129,590



124,167



111,573


Selling, general and administrative expenses


25,397



21,810



23,492


Other operating income, net


(42)



(516)



(1,696)


Impairments and other charges




(180)




Operating income (loss)


3,746



(8,198)



(18,825)









Foreign currency exchange (gain) loss


392



(270)



(455)


Interest expense, net


3,218



2,636



2,081


(Gain) loss on extinguishment of debt




279



(1,894)


Income (loss) from operations before income taxes


136



(10,843)



(18,557)









Provision (benefit) for income taxes


1,119



(10,786)



(5,257)


Net loss


$

(983)



$

(57)



$

(13,300)









Calculation of EPS:







Basic - net loss


$

(983)



$

(57)



$

(13,300)


Assumed conversions of Convertible Notes due 2017







Diluted - adjusted net loss


$

(983)



$

(57)



$

(13,300)









Basic - weighted average common shares outstanding


84,153



84,066



83,258


Dilutive effect of stock options and restricted stock awards







Dilutive effect of Convertible Notes due 2017







Dilutive effect of Convertible Notes due 2021







Diluted - weighted average common shares outstanding


84,153



84,066



83,258









Loss per common share - basic:


$

(0.01)



$



$

(0.16)


Loss per common share - diluted:


$

(0.01)



$



$

(0.16)


 

Note: For all periods presented, we excluded all potentially dilutive stock options and restricted stock as well as the assumed conversion of the Convertible Notes in calculating diluted earnings per share as the effect was anti-dilutive due to the net losses incurred for these periods.

 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)



Three Months Ended

(In thousands)

March 31,
2017


December 31,
2016


March 31,
2016

Revenues






Fluids systems

$

136,050



$

111,560



$

98,651


Mats and integrated services

22,641



25,523



15,893


Total revenues

$

158,691



$

137,083



$

114,544








Operating income (loss)






Fluids systems

$

6,352



$

(7,505)



$

(15,207)


Mats and integrated services

6,402



6,134



3,736


Corporate office

(9,008)



(6,827)



(7,354)


Operating income (loss)

$

3,746



$

(8,198)



$

(18,825)








Segment operating margin






Fluids systems

4.7

%


(6.7)

%


(15.4)

%

Mats and integrated services

28.3

%


24.0

%


23.5

%

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)

March 31, 2017


December 31, 2016

ASSETS




Cash and cash equivalents

$

69,876



$

87,878


Receivables, net

238,158



214,307


Inventories

145,384



143,612


Prepaid expenses and other current assets

16,765



17,143


Total current assets

470,183



462,940






Property, plant and equipment, net

301,167



303,654


Goodwill

20,051



19,995


Other intangible assets, net

5,452



6,067


Deferred tax assets

1,837



1,747


Other assets

3,568



3,780


Total assets

$

802,258



$

798,183






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

83,086



$

83,368


Accounts payable

62,536



65,281


Accrued liabilities

34,357



31,152


Total current liabilities

179,979



179,801






Long-term debt, less current portion

73,936



72,900


Deferred tax liabilities

36,323



38,743


Other noncurrent liabilities

6,627



6,196


Total liabilities

296,865



297,640






Common stock, $0.01 par value, 200,000,000 shares authorized and 99,876,940 and 99,843,094 shares issued, respectively

999



998


Paid-in capital

562,004



558,966


Accumulated other comprehensive loss

(60,653)



(63,208)


Retained earnings

128,704



129,873


Treasury stock, at cost; 15,110,843 and 15,162,050 shares, respectively

(125,661)



(126,086)


Total stockholders' equity

505,393



500,543


Total liabilities and stockholders' equity

$

802,258



$

798,183


 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Three Months Ended March 31,

(In thousands)

2017


2016

Cash flows from operating activities:




Net loss

$

(983)



$

(13,300)


Adjustments to reconcile net loss to net cash used in operations:




Depreciation and amortization

9,387



9,573


Stock-based compensation expense

2,836



2,974


Provision for deferred income taxes

(2,545)



(36)


Net provision for doubtful accounts

666



528


Gain on sale of assets

(847)



(1,271)


Gain on extinguishment of debt



(1,894)


Amortization of original issue discount and debt issuance costs

1,330



286


Change in assets and liabilities:




(Increase) decrease in receivables

(23,019)



27,606


(Increase) decrease in inventories

(829)



10,630


Decrease in other assets

521



1,381


Decrease in accounts payable

(1,692)



(20,028)


Increase (decrease) in accrued liabilities and other

3,731



(19,349)


Net cash used in operating activities

(11,444)



(2,900)






Cash flows from investing activities:




Capital expenditures

(7,291)



(13,418)


Increase in restricted cash

(46)




Proceeds from sale of property, plant and equipment

288



1,450


Net cash used in investing activities

(7,049)



(11,968)






Cash flows from financing activities:




Borrowings on lines of credit



2,479


Payments on lines of credit



(4,851)


Purchase of Convertible Notes due 2017



(9,206)


Debt issuance costs

(157)




Other financing activities

(371)



(3)


Proceeds from employee stock plans

211




Purchases of treasury stock

(48)




Net cash used in financing activities

(365)



(11,581)






Effect of exchange rate changes on cash

856



1,845






Net decrease in cash and cash equivalents

(18,002)



(24,604)


Cash and cash equivalents at beginning of year

87,878



107,138


Cash and cash equivalents at end of period

$

69,876



$

82,534


 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/newpark-resources-reports-first-quarter-2017-results-300447542.html

SOURCE Newpark Resources, Inc.