Safe Harbor Statement

This website may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

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.

Newpark Resources, Inc. undertakes no obligations to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Okay to Continue

Newpark Resources Reports Fourth Quarter 2018 Results

Newpark Resources Reports Fourth Quarter 2018 Results

February 7, 2019 at 4:15 PM EST
Mats and Integrated Services posts record quarter; Fluids Systems receives new award in Kuwait

THE WOODLANDS, Texas, Feb. 7, 2019 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its fourth quarter ended December 31, 2018. Total revenues for the fourth quarter of 2018 were $247.7 million compared to $235.3 million for the third quarter of 2018 and $204.4 million for the fourth quarter of 2017. Income from continuing operations for the fourth quarter of 2018 was $10.6 million, or $0.11 per diluted share, compared to $3.6 million, or $0.04 per diluted share, for the third quarter of 2018, and $7.9 million, or $0.09 per diluted share, for the fourth quarter of 2017. Fourth quarter 2018 results include the impact of the following:

  • $2.0 million of pre-tax charges in the U.S. Fluids Systems business ($1.6 million after-tax) consisting primarily of severance and related charges associated with cost optimization efforts;
  • $0.5 million of non-capitalizable expenses in the U.S. Fluids Systems business ($0.4 million after-tax) related to the continuation of the completion fluids facility conversion in the Port of Fourchon. With the conclusion of Phase I of this project, the facility is now operational, enabling us to provide both drilling and completion fluids to the deepwater Gulf of Mexico market.

Combined, the impact of the above items resulted in a $2.5 million reduction in operating income for the quarter and a $2.0 million reduction in income from continuing operations ($0.02 per diluted share).

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We're extremely pleased with the performance of our Mats segment in the quarter, and in Fluids, we are seeing meaningful progress in the execution of our long-term strategy, which we believe is setting the course for improvements going forward.

"The Mats & Integrated Services segment achieved a quarterly record of $70 million in revenues in the fourth quarter. The strong fourth quarter results benefited from elevated year-end demand from the utility sector, which contributed to a quarterly record of $24 million of revenues from direct sales. In addition, we experienced strong rental and service demand across industries, benefiting in part from heavy rainfalls in the southern U.S., which contributed to a quarterly record of $46 million of revenues from rental and services," added Howes. "With the exceptionally strong top line performance, segment operating margin improved to 30%.

"In Fluids Systems, fourth quarter revenues for the segment came in at $178 million, a 2% sequential decrease, driven primarily by the slowdown in Canada and a delay in the start of projects in the deepwater Gulf of Mexico, as planned projects were pushed from the fourth quarter to the first quarter. Internationally, revenues were relatively in-line sequentially, as the anticipated declines in Kuwait, Albania, and Brazil were substantially offset by broad-based improvements across other markets," added Howes. "Despite the modestly softer Fluids Systems revenues, segment operating income remained in line with the prior quarter. As highlighted, the fourth quarter included the impact of $2.5 million of charges, primarily attributable to severance and other charges related to our ongoing cost optimization efforts.

"Benefiting from the stronger operational performance and reductions in working capital, we generated $43 million of cash from operating activities in the fourth quarter, which facilitated a $27 million reduction in outstanding debt in the quarter," concluded Howes.

Fluids Systems International Contract Award

Following a recent tender process with Kuwait Oil Company, the Company has received notification of two new contract awards to provide drilling and completion fluids, along with related services, covering a five-year term. The initial revenue value of the combined awards is approximately $165 million and expands the Company's presence to include a second base of operations in Northern Kuwait. The awards remain subject to contract execution, which is expected to be completed in the first quarter of 2019.

Segment Results

The Fluids Systems segment generated revenues of $177.7 million for the fourth quarter of 2018 compared to $181.0 million for the third quarter of 2018 and $162.4 million for the fourth quarter of 2017. Segment operating income was $8.2 million for the fourth quarter of 2018 compared to $8.3 million for the third quarter of 2018 and $7.4 million for the fourth quarter of 2017. Operating income for the fourth quarter of 2018 includes $2.0 million of charges, consisting primarily of severance and related costs and $0.5 million of non-capitalizable expenses related to the conversion of a drilling fluids facility into a completion fluids facility.

The Mats and Integrated Services segment generated revenues of $69.9 million for the fourth quarter of 2018 compared to $54.4 million for the third quarter of 2018 and $42.0 million for the fourth quarter of 2017. Segment operating income was $20.7 million for the fourth quarter of 2018 compared to $12.9 million for the third quarter of 2018 and $11.7 million for the fourth quarter of 2017.

Conference Call

Newpark has scheduled a conference call to discuss fourth quarter 2018 results and its near-term operational outlook, which will be broadcast live over the Internet, on Friday, February 8, 2019 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 Resources 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 22, 2019 and may be accessed by dialing 201-612-7415 and using pass code 13686231#. 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 fluids and chemistry solutions in the oilfield, and engineered worksite and access solutions used in various 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 of 1995, as amended. 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. 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 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, 2017, 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, our ability to replace existing contracts, 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 or the impact of tariffs on the cost of such raw materials, the availability of skilled personnel, our market competition, our ability to expand our product and service offerings and enter new customer markets with our existing products, compliance with legal and regulatory matters, including environmental regulations, the availability of insurance and the risks and limitations of our insurance coverage, the ongoing impact of the U.S. Tax Cuts and Jobs Act, 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. 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 news release might not occur.

 

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)




Three Months Ended


Twelve Months Ended

(In thousands, except per share data)


December
31,
 2018


September
30,
 2018


December
31,
 2017


December
31,
 2018


December
31,
 2017

Revenues


$

247,664



$

235,329



$

204,389



$

946,548



$

747,763


Cost of revenues


197,310



194,730



165,291



766,975



607,899


Selling, general and administrative expenses


29,645



29,820



29,541



115,127



108,838


Other operating (income) loss, net


186



725



(283)



888



(410)


Operating income


20,523



10,054



9,840



63,558



31,436













Foreign currency exchange (gain) loss


822



(89)



951



1,416



2,051


Interest expense, net


4,205



3,668



3,028



14,864



13,273


Income from continuing operations before income taxes


15,496



6,475



5,861



47,278



16,112













Provision (benefit) for income taxes


4,927



2,831



(2,056)



14,997



4,893


Income from continuing operations


10,569



3,644



7,917



32,281



11,219













Loss from disposal of discontinued operations, net of tax






(17,367)





(17,367)


Net income (loss)


$

10,569



$

3,644



$

(9,450)



$

32,281



$

(6,148)
























Calculation of EPS:











Income from continuing operations - basic and diluted


$

10,569



$

3,644



$

7,917



$

32,281



$

11,219













Weighted average common shares outstanding - basic


90,640



90,526



87,414



89,996



85,421


Dilutive effect of stock options and restricted stock awards


1,938



2,151



2,580



2,385



2,554


Dilutive effect of 2021 Convertible Notes




905





544




Weighted average common shares outstanding - diluted


92,578



93,582



89,994



92,925



87,975













Income per common share - diluted:











Income from continuing operations


$

0.11



$

0.04



$

0.09



$

0.35



$

0.13


Loss from discontinued operations






(0.20)





(0.20)


Net income (loss)


$

0.11



$

0.04



$

(0.11)



$

0.35



$

(0.07)


 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)




Three Months Ended


Twelve Months Ended

(In thousands)


December
31,
 2018


September
30,
 2018


December
31,
 2017


December
31,
 2018


December
31,
 2017

Revenues











Fluids systems


$

177,726



$

180,970



$

162,404



$

715,813



$

615,803


Mats and integrated services


69,938



54,359



41,985



230,735



131,960


Total revenues


$

247,664



$

235,329



$

204,389



$

946,548



$

747,763













Operating income (loss)











Fluids systems


$

8,245



$

8,288



$

7,435



$

40,337



$

27,580


Mats and integrated services


20,740



12,925



11,729



60,604



40,491


Corporate office


(8,462)



(11,159)



(9,324)



(37,383)



(36,635)


Operating income


$

20,523



$

10,054



$

9,840



$

63,558



$

31,436













Segment operating margin











Fluids systems


4.6

%


4.6

%


4.6

%


5.6

%


4.5

%

Mats and integrated services


29.7

%


23.8

%


27.9

%


26.3

%


30.7

%

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)

December 31,
 2018


December 31,
 2017

ASSETS




Cash and cash equivalents

$

56,118



$

56,352


Receivables, net

254,394



265,866


Inventories

196,896



165,336


Prepaid expenses and other current assets

15,904



17,483


Total current assets

523,312



505,037






Property, plant and equipment, net

316,293



315,320


Goodwill

43,832



43,620


Other intangible assets, net

25,160



30,004


Deferred tax assets

4,516



4,753


Other assets

2,741



3,982


Total assets

$

915,854



$

902,716






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

2,522



$

1,518


Accounts payable

90,607



88,648


Accrued liabilities

48,797



68,248


Total current liabilities

141,926



158,414






Long-term debt, less current portion

159,225



158,957


Deferred tax liabilities

37,486



31,580


Other noncurrent liabilities

7,536



6,285


Total liabilities

346,173



355,236






Common stock, $0.01 par value (200,000,000 shares authorized and 106,362,991 and 104,571,839 shares issued, respectively)

1,064



1,046


Paid-in capital

617,276



603,849


Accumulated other comprehensive loss

(67,673)



(53,219)


Retained earnings

148,802



123,375


Treasury stock, at cost (15,530,952 and 15,366,504 shares, respectively)

(129,788)



(127,571)


Total stockholders' equity

569,681



547,480


Total liabilities and stockholders' equity

$

915,854



$

902,716


 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Twelve Months Ended December 31,

(In thousands)

2018


2017

Cash flows from operating activities:




Net income

$

32,281



$

(6,148)


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




Depreciation and amortization

45,899



39,757


Stock-based compensation expense

10,361



10,843


Provision for deferred income taxes

236



(10,350)


Net provision for doubtful accounts

2,849



1,481


Loss on sale of a business



21,983


Gain on sale of assets

(1,821)



(5,478)


Gain on insurance recovery

(606)




Amortization of original issue discount and debt issuance costs

5,510



5,345


Change in assets and liabilities:




(Increase) decrease in receivables

(7,388)



(73,722)


(Increase) decrease in inventories

(30,352)



(15,097)


(Increase) decrease in other assets

1,055



986


Increase (decrease) in accounts payable

2,449



14,153


Increase (decrease) in accrued liabilities and other

2,930



54,628


Net cash provided by operating activities

63,403



38,381






Cash flows from investing activities:




Capital expenditures

(45,141)



(31,371)


Refund of proceeds from sale of a business

(13,974)




Proceeds from sale of property, plant and equipment

2,612



7,747


Proceeds from insurance property claim

1,000




Business acquisitions, net of cash acquired

(249)



(44,750)


Net cash used in investing activities

(55,752)



(68,374)






Cash flows from financing activities:




Borrowings on lines of credit

347,613



176,267


Payments on lines of credit

(352,582)



(93,700)


Payment on 2017 Convertible Notes



(83,252)


Debt issuance costs

(149)



(955)


Proceeds from employee stock plans

3,874



2,424


Purchases of treasury stock

(3,870)



(3,239)


  Other financing activities

601



165


Net cash used in financing activities

(4,513)



(2,290)






Effect of exchange rate changes on cash

(4,332)



2,444






Net decrease in cash, cash equivalents, and restricted cash

(1,194)



(29,839)


Cash, cash equivalents, and restricted cash at beginning of period

65,460



95,299


Cash, cash equivalents, and restricted cash at end of period

$

64,266



$

65,460



Newpark Resources, Inc.
Non-GAAP Reconciliations
(Unaudited)

To help understand the Company's financial performance, the Company has supplemented its financial results that it provides in accordance with generally accepted accounting principles ("GAAP") with non-GAAP financial measures. Such financial measures include earnings before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA Margin, Net Debt and the Ratio of Net Debt to Capital.

We believe these non-GAAP financial measures are frequently used by investors, securities analysts and other parties in the evaluation of our performance and/or that of other companies in our industry. In addition, management uses these measures to evaluate operating performance, and our incentive compensation plan measures performance based on our consolidated EBITDA, along with other factors. The methods we use to produce these non-GAAP financial measures may differ from methods used by other companies. These measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP.

Consolidated

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017

Net income (loss) (GAAP) (1)

$

10,569



$

3,644



$

(9,450)



$

32,281



$

(6,148)


Loss from disposal of discontinued operations, net of tax





17,367





17,367


Interest expense, net

4,205



3,668



3,028



14,864



13,273


Provision (benefit) for income taxes

4,927



2,831



(2,056)



14,997



4,893


Depreciation and amortization

11,553



11,591



10,759



45,899



39,757


EBITDA (non-GAAP) (1)

$

31,254



$

21,734



$

19,648



$

108,041



$

69,142




(1)

Net income and EBITDA for the three months ended December 31, 2018 include $2.0 million of charges, consisting primarily of severance costs and $0.5 million of non-capitalizable expenses related to the conversion of a drilling fluids facility into a completion fluids facility. Net income and EBITDA for the three months ended September 30, 2018 include a corporate office charge of $1.8 million related to the retirement and transition of our Senior Vice President, General Counsel and Chief Administrative Officer, $1.1 million of charges in Brazil primarily related to severance costs associated with our planned workforce reductions in the fourth quarter of 2018 in connection with the scheduled completion of the current contract with Petrobras, $0.8 million of charges related to the July 2018 fire at our Kenedy, Texas drilling fluids facility, and $0.6 million of non-capitalizable expenses related to the conversion of a drilling fluids facility into a completion fluids facility. The impact of these items to net income and EBITDA was $6.8 million for the twelve months ended December 31, 2018.

 

Fluids Systems

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017

Operating income (GAAP) (1)

$

8,245



$

8,288



$

7,435



$

40,337



$

27,580


Depreciation and amortization

5,137



5,178



5,344



20,922



21,566


EBITDA (non-GAAP) (1)

13,382



13,466



12,779



61,259



49,146


Revenues

177,726



180,970



162,404



715,813



615,803


Operating Margin (GAAP)

4.6

%


4.6

%


4.6

%


5.6

%


4.5

%

EBITDA Margin (non-GAAP)

7.5

%


7.4

%


7.9

%


8.6

%


8.0

%



(1)

Operating income and EBITDA for the three months ended December 31, 2018 include $2.0 million of charges, consisting primarily of severance costs and $0.5 million of non-capitalizable expenses related to the conversion of a drilling fluids facility into a completion fluids facility. Operating income and EBITDA for the three months ended September 30, 2018 include $1.1 million of charges in Brazil primarily related to severance costs associated with our planned workforce reductions in the fourth quarter of 2018 in connection with the scheduled completion of the current contract with Petrobras, $0.8 million of charges associated with the July 2018 fire at our Kenedy, Texas drilling fluids facility, and $0.6 million of non-capitalizable expenses related to the conversion of a drilling fluids facility into a completion fluids facility. The impact of these items to operating income and EBITDA was $4.9 million for the twelve months ended December 31, 2018.

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)


Mats and Integrated Services

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2018


September 30,
2018


December 31,
2017


December 31,
2018


December 31,
2017

Operating income (GAAP)

$

20,740



$

12,925



$

11,729



$

60,604



$

40,491


Depreciation and amortization

5,533



5,427



4,578



21,321



14,991


EBITDA (non-GAAP)

26,273



18,352



16,307



81,925



55,482


Revenues

69,938



54,359



41,985



230,735



131,960


Operating Margin (GAAP)

29.7

%


23.8

%


27.9

%


26.3

%


30.7

%

EBITDA Margin (non-GAAP)

37.6

%


33.8

%


38.8

%


35.5

%


42.0

%

 

Ratio of Net Debt to Capital

The following table reconciles the Company's ratio of total debt to capital calculated in accordance with GAAP to the non-GAAP financial measure of the Company's ratio of net debt to capital:

(In thousands)

December 31, 2018


December 31, 2017

Current debt

$

2,522



$

1,518


Long-term debt, less current portion

159,225



158,957


Total Debt

161,747



160,475


Total stockholders' equity

569,681



547,480


Total Capital

$

731,428



$

707,955






Ratio of Total Debt to Capital

22.1

%


22.7

%









Total Debt

$

161,747



$

160,475


Less: cash and cash equivalents

(56,118)



(56,352)


Net Debt

105,629



104,123


Total stockholders' equity

569,681



547,480


Total Capital, Net of Cash

$

675,310



$

651,603






Ratio of Net Debt to Capital

15.6

%


16.0

%

 


Contacts:

Gregg Piontek
Senior Vice President and Chief Financial Officer
Newpark Resources, Inc.
gpiontek@newpark.com  
281-362-6800


 

Cision View original content:http://www.prnewswire.com/news-releases/newpark-resources-reports-fourth-quarter-2018-results-300791921.html

SOURCE Newpark Resources, Inc.