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These forward-looking statements reflect the current views of the management of Newpark Resources, Inc.; however, various risks, uncertainties and contingencies could cause actual operating results to differ materially from those in the forward-looking statements.

These risks, uncertainties and contingencies are detailed in filings with the Securities and Exchange Commission made by the company, including, without limitation, its quarterly report on Form 10-Q and its annual report on Form 10-K.

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Newpark Resources Reports Fourth Quarter 2015 Results

Newpark Resources Reports Fourth Quarter 2015 Results

February 11, 2016 at 4:15 PM EST
Fourth quarter results include $0.89 per share impact from asset impairments and other charges

THE WOODLANDS, Texas, Feb. 11, 2016 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its fourth quarter and year ended December 31, 2015.  Total revenues for the fourth quarter of 2015 were $150.6 million compared to $154.2 million in the third quarter and $306.2 million in the fourth quarter of 2014.  Net loss for the fourth quarter of 2015 was $83.1 million, or $1.00 per share, compared to a net loss of $4.5 million, or $0.05 per share, in the third quarter, and net income of $23.4 million, or $0.25 per diluted share, in the fourth quarter of 2014.  Fourth quarter 2015 results included the impact of the following charges:

  • $75.5 million of pre-tax charges ($66.9 million after-tax) in the Fluids Systems segment, associated with the impairment of goodwill and other assets.
  • $8.0 million of pre-tax charges ($5.2 million after-tax) associated with workforce reductions (predominately in North America) and a provision for the anticipated resolution of pending wage & hour litigation, including related expenses.
  • $1.6 million charge to provision for income taxes, resulting from management's decision to carry back 2015 U.S. tax losses to prior years and seek a refund of approximately $29 million of previously-paid taxes. The charge reflects the impact of tax deductions previously taken, which will now be eliminated by the tax refund request.

As set forth in the attached Non-GAAP Earnings Reconciliation, excluding these charges, the fourth quarter of 2015 loss from continuing operations was $9.4 million, or $0.11 per share.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "While we are encouraged by the continuing strength in cash flow, the challenging market environment again provided a strong headwind to fourth quarter results, particularly for our Fluids business.  With the further softening in commodity prices and North American drilling activity over the past few months, our North American Fluids revenues declined 10% from third quarter levels. Meanwhile, our international Fluids revenues remained relatively in-line with the prior quarter and our expectations, with revenue contributions from the new contract in the Republic of Congo serving to offset Petrobras' continued activity declines in Brazil. 

"In the Mats segment, revenues increased 33% sequentially, despite a further softening of activity in the weak commodity price environment.  Substantially all of the sequential revenue increase was attributable to stronger mat sales into the North American utility infrastructure segment, as we accelerate our efforts to penetrate non-exploration markets.  Rental and service revenues remained relatively flat sequentially, as the further softening in the Northeast U.S. and other oilfield markets was offset by growth in utility infrastructure and other non-exploration markets.

"In light of the continued softening and near-term uncertainty in the North American market, we're continually evaluating our cost structure, seeking to right size the organization to the current market reality, while at the same time, seeking to protect the organizational capabilities that are critical to capitalizing on the opportunities for long-term growth," added Howes.  "Fortunately, while we expect the North American market to be even more challenging in the first half of 2016, we continue to benefit from our strong balance sheet position, including $107 million of cash on-hand and continuing positive cash flow, which allows us to focus on developing new market opportunities in both segments, while preserving our organizational capabilities for the eventual recovery in drilling activity."

SEGMENT RESULTS

The Fluids Systems segment generated revenues of $130.1 million in the fourth quarter of 2015 compared to $138.8 million in the third quarter and $261.0 million in the fourth quarter of 2014.  Segment operating loss was $83.6 million in the fourth quarter of 2015, compared to a $1.2 million operating loss in the third quarter and operating income of $24.5 million in the fourth quarter of 2014.  The segment results for the fourth quarter of 2015 included a $75.5 million charge associated with goodwill and other asset impairments and a $1.9 million charge associated with workforce reductions.

The Mats and Integrated Services segment generated revenues of $20.5 million in the fourth quarter of 2015, compared to $15.4 million in the third quarter and $45.1 million in the fourth quarter of 2014.  Segment operating income was $2.9 million in the fourth quarter of 2015, which included a $0.3 million charge associated with workforce reductions, compared to an operating loss of $0.1 million in the third quarter and operating income of $23.0 million in the fourth quarter of 2014. 

INTERNATIONAL FLUIDS CONTRACT AWARD

The Company announced that it has been awarded a two year contract by Shell to provide drilling fluids and related services for onshore drilling activity in Albania.  Work under this contract is expected to begin in the second half of 2016.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss fourth quarter 2015 results, which will be broadcast live over the Internet, on Friday, February 12, 2016 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 February 26, 2016 and may be accessed by dialing (201) 612-7415 and using pass code 13628198#.  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 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, 2014, 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, our customer concentration and cyclical nature of our industry, operating hazards inherent  in the oil and natural gas industry, our international operations, the cost and continued availability of borrowed funds, our ability to execute our business strategy and make successful business acquisitions and capital investments, the availability of raw materials and skilled personnel, the impact of restrictions on offshore drilling activity, our market competition, legal and regulatory matters, including environmental regulations, inherent limitations in insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, and the impact of severe weather, particularly in the U.S. Gulf Coast.  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.

 

Newpark Resources, Inc.








Consolidated Statements of Operations















(Unaudited)


Three Months Ended


Twelve Months Ended

(In thousands, except per share data)


December 31,


September 30,


December 31,


December 31,


December 31,


2015


2015


2014


2015


2014












Revenues


$        150,587


$        154,170


$        306,162


$        676,865


$     1,118,416












Cost of revenues


141,941


138,283


237,067


599,013


876,999












Selling, general and administrative expenses


25,232


25,859


30,390


101,032


112,648

Other operating (income) loss, net


(649)


(709)


114


(2,426)


(1,827)

Impairments and other charges 


78,345


-


-


78,345


-












Operating income (loss)


(94,282)


(9,263)


38,591


(99,099)


130,596












Foreign currency exchange (gain) loss


(374)


3,236


638


4,016


108

Interest expense, net


2,503


2,129


2,360


9,111


10,431












Income (loss) from continuing operations before income taxes


(96,411)


(14,628)


35,593


(112,226)


120,057

Provision for income taxes


(13,315)


(10,157)


12,147


(21,398)


41,048

Income (loss) from continuing operations 


(83,096)


(4,471)


23,446


(90,828)


79,009

Income from discontinued operations, net of tax 


-


-


-


-


1,152

Gain from disposal of discontinued operations, net of tax


-


-


-


-


22,117












Net income (loss)


$        (83,096)


$          (4,471)


$          23,446


$        (90,828)


$        102,278























Income (loss) per common share -basic:











Income (loss) from continuing operations


$            (1.00)


$            (0.05)


$              0.29


$            (1.10)


$              0.95

Income from discontinued operations


-


-


-


-


0.28

Net income (loss)


$            (1.00)


$            (0.05)


$              0.29


$            (1.10)


$              1.23












Income (loss) per common share -diluted:











Income (loss) from continuing operations


$            (1.00)


$            (0.05)


$              0.25


$            (1.10)


$              0.84

Income from discontinued operations


-


-


-


-


0.23

Net income (loss)


$            (1.00)


$            (0.05)


$              0.25


$            (1.10)


$              1.07












Calculation of Diluted EPS:











Income (loss) from continuing operations


$        (83,096)


$          (4,471)


$          23,446


$        (90,828)


$          79,009

Assumed conversion of Senior Notes 


-


-


1,283


-


5,091

Adjusted (loss) income from continuing operations


$        (83,096)


$          (4,471)


$          24,729


$        (90,828)


$          84,100












Weighted average number of common shares outstanding-basic


83,072


82,990


82,225


82,722


82,999

Add:  Dilutive effect of  stock options and restricted stock awards


-


-


1,492


-


1,733

          Dilutive effect of Senior Notes 


-


-


15,682


-


15,682












Diluted weighted average number of common shares outstanding


83,072


82,990


99,399


82,722


100,414












Diluted (loss) income from continuing operations per common share


$            (1.00)


$            (0.05)


$              0.25


$            (1.10)


$              0.84













Note: For the third quarter, fourth quarter, and full year 2015, we excluded all potentially dilutive stock options and restricted stock as well as the assumed conversion of the Senior Notes in calculating diluted earnings per share due to the net losses incurred for these periods as the effect was anti-dilutive.

 

Newpark Resources, Inc.







Operating Segment Results























(Unaudited)


Three Months Ended




December 31,


September 30,


December 31,

(In thousands)


2015


2015


2014









Revenues








Fluids systems 


$        130,125


$        138,765


$        261,029


Mats and integrated services


20,462


15,405


45,133


Total revenues


$        150,587


$        154,170


$        306,162









Operating income (loss) 








Fluids systems (1)


$         (83,599)


$          (1,246)


$          24,533


Mats and integrated services (2)


2,875


(128)


22,959


Corporate office (3)


(13,558)


(7,889)


(8,901)


Total operating income (loss)


$         (94,282)


$          (9,263)


$          38,591









Segment operating margin








Fluids systems 


(64.2%)


(0.9%)


9.4%


Mats and integrated services


14.1%


(0.8%)


50.9%










(1)  Fourth quarter 2015 results include a $75.5 million charge associated with goodwill and other asset impairments and a $1.9 million charge associated with workforce reductions.

(2)  Fourth quarter 2015 results include a $0.3 million charge associated with workforce reductions.

(3) Fourth quarter 2015 results include a $5.8 million charge associated with workforce reductions and a provision for resolution of pending wage & hour litigation, including related expenses.

 

Newpark Resources, Inc.






Consolidated Balance Sheets














(Unaudited)












December 31, 


December 31, 


(In thousands, except share data)


2015


2014










ASSETS







Cash and cash equivalents


$         107,138


$           85,052



Receivables, net


206,364


318,600



Inventories


163,657


196,556



Prepaid expenses and other current assets


29,219


12,615




Total current assets


506,378


612,823











Property, plant and equipment, net 


307,632


283,361



Goodwill


19,009


91,893



Other intangible assets, net 


11,051


15,666



Deferred tax assets


1,821


1,857



Other assets


3,002


2,072




Total assets


$         848,893


$      1,007,672










LIABILITIES AND STOCKHOLDERS' EQUITY







Short-term debt


$             7,382


$           11,648



Accounts payable


72,211


108,242



Accrued liabilities


45,835


52,835




Total current liabilities


125,428


172,725











Long-term debt, less current portion


171,211


170,462



Deferred tax liabilities


26,368


27,787



Other noncurrent liabilities


5,627


11,240




Total liabilities


328,634


382,214











Commitments and contingencies















Common stock, $0.01 par value, 200,000,000 shares authorized and 99,377,391 and 99,204,318 shares issued, respectively


994


992



Paid-in capital


533,746


521,228



Accumulated other comprehensive loss


(58,276)


(31,992)



Retained earnings 


171,788


262,616



Treasury stock, at cost; 15,302,345 and 15,210,233 shares, respectively 

(127,993)


(127,386)




Total stockholders' equity


520,259


625,458



Total liabilities and stockholders' equity


$         848,893


$      1,007,672










 

Newpark Resources, Inc.





Consolidated Statements of Cash Flows










(Unaudited)


Twelve Months Ended  December 31,

(In thousands)


2015


2014

Cash flows from operating activities:





Net income (loss)


$           (90,828)


$           102,278

Adjustments to reconcile net income to net cash provided by operations:





Impairments and other non-cash charges


75,508


-

Depreciation and amortization


43,917


42,030

Stock-based compensation expense


14,202


12,304

Provision for deferred income taxes


(503)


(2,328)

Net provision for doubtful accounts


1,886


1,252

Gain on sale of a business


-


(33,974)

Gain on sale of assets


(1,364)


(1,369)

Excess tax benefit from stock-based compensation


(204)


(1,278)

Change in assets and liabilities:





 (Increase) decrease in receivables


122,399


(53,494)

 (Increase) decrease in inventories


21,309


(14,136)

 (Increase) decrease in other assets


1,191


(546)

Increase (decrease) in accounts payable


(31,974)


23,606

Increase (decrease) in accrued liabilities and other


(34,022)


14,828

Net cash provided by operating activities


121,517


89,173






Cash flows from investing activities:





Capital expenditures


(69,404)


(106,973)

Increase in restricted cash


(17,485)


-

Proceeds from sale of property, plant and equipment


2,523


3,205

Proceeds from sale of a business


-


89,766

Net cash used in investing activities


(84,366)


(14,002)






Cash flows from financing activities:





Borrowings on lines of credit


11,036


62,164

Payments on lines of credit


(12,544)


(62,445)

Debt issuance costs


(2,023)


-

Other financing activities


(1,673)


(467)

Proceeds from employee stock plans


553


3,442

Purchases of treasury stock


(2,283)


(53,130)

Excess tax benefit from stock-based compensation


204


1,278

Net cash used in financing activities


(6,730)


(49,158)






Effect of exchange rate changes on cash


(8,335)


(6,801)






Net increase in cash and cash equivalents


22,086


19,212

Cash and cash equivalents at beginning of year


85,052


65,840






Cash and cash equivalents at end of year


$           107,138


$             85,052

 

Newpark Resources, Inc.





Non-GAAP Earnings Reconciliation





Continuing Operations











The table below presents measures not derived in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Non-GAAP measures of financial performance exclude items that the Company believes are infrequent or not indicative of operating performance.  Non-GAAP financials measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.  The Company believes these non-GAAP financial measures are helpful for an understanding of the Company's operations, and management uses them in comparing the historical results to current results and measuring operating earnings trends.













(Unaudited)


Quarter Ended December 31, 2015

(In thousands, except per share data)


Pretax

Tax

Net







Loss from continuing operations - GAAP


$       (96,411)

$      (13,315)

$      (83,096)







Adjustments:






Impairment of goodwill and other assets


75,508

8,642

66,866








Charges associated with workforce reductions and provision for the anticipated resolution of pending wage & hour litigation, including related expenses


7,969

2,789

5,180








Charge for impact of tax deductions previously taken, which are eliminated by carryback of 2015 U.S. tax losses 



(1,605)

1,605







Total adjustments


83,477

9,826

73,651







Loss from continuing operations - Non-GAAP


$       (12,934)

$        (3,489)

$       (9,445)













Diluted shares outstanding




83,072







Loss from continuing operations per common share (diluted):






Loss from continuing operations per common share - GAAP




$        (1.00)


Impact of adjustments




0.89


Loss from continuing operations per common share - Non-GAAP




$        (0.11)

 

Contacts:

Brian Feldott


Director, Investor Relations


Newpark Resources, Inc.


bfeldott@newpark.com


281-362-6800

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/newpark-resources-reports-fourth-quarter-2015-results-300218988.html

SOURCE Newpark Resources, Inc.