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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 Second Quarter 2017 Results

Newpark Resources Reports Second Quarter 2017 Results

July 27, 2017 at 4:17 PM EDT
Company reports revenues of $183 million, net income of $0.02 per share

THE WOODLANDS, Texas, July 27, 2017 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its second quarter ended June 30, 2017.  Total revenues for the second quarter of 2017 were $183.0 million compared to $158.7 million in the first quarter of 2017 and $115.3 million in the second quarter of 2016.  Net income for the second quarter of 2017 was $1.6 million, or $0.02 per diluted share, compared to a net loss of $1.0 million, or $0.01 per share, in the first quarter of 2017, and a net loss of $13.9 million, or $0.17 per share, in the second quarter of 2016. Second quarter 2016 results included net charges of $0.11 per share associated with asset impairments, the termination of our previous revolving credit facility and charges associated with workforce reductions.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "Building upon the positive momentum from the first quarter, I'm pleased to report another period of strong sequential gains in both segments. The Mats segment had an exceptionally strong second quarter, posting the highest revenue and operating income level in two years, benefiting from our diversification strategy.  The sequential revenue gains were driven by broad-based improvements across targeted market sectors, including the impact of a few large utilities transmission and distribution projects in the Gulf Coast region.  The quarter further benefited from weather events, where our scale and rapid service response uniquely positioned us to support our customers following a string of storms that impacted areas within Texas and Louisiana.  With the meaningful lift in demand, rental and service revenues increased to $25 million in the quarter.  The surge in rental demand also provided a meaningful lift in segment operating margin, which came in at 35% for the second quarter.

"In Fluids, revenue gains were once again led by our U.S. operations, where revenues improved sequentially by 34% and outperformed the market rig count gains for the third consecutive quarter.  The strong U.S. performance more than offset the anticipated seasonal impact of Spring break-up in Canada, resulting in a 12% increase in total North America fluids revenues.  Internationally, fluids revenues also increased by 8%, benefiting from a rebound in activity in North Africa and Eastern Europe," added Howes.  "With the stronger revenue contribution from the U.S. and EMEA regions, the Fluids segment profitability remained relatively stable despite the sharp seasonal decline in Canada, posting a 4% operating margin."  

2017 Convertible Notes Update

In preparation for the October 2017 maturity of convertible notes, the restricted cash balance (reported within prepaid expenses and other current assets) increased by $30 million during the second quarter of 2017, reflecting funds that have been placed in an escrow account in advance of the scheduled maturity.  As a result of this as well as meeting other administrative requirements, the Company has satisfied the conditions to avoid the accelerated maturity date of its Asset-Based Loan ("ABL") Facility.  Accordingly, the maturity date of the ABL Facility remains March 6, 2020.   

Segment Results

The Fluids Systems segment generated revenues of $150.6 million in the second quarter of 2017 compared to $136.1 million in the first quarter of 2017 and $96.2 million in the second quarter of 2016. Segment operating income was $5.9 million in the second quarter of 2017, compared to $6.4 million of income in the first quarter of 2017 and an $11.9 million loss in the second quarter of 2016.  Segment results for the second quarter of 2016 included a total of $8.3 million of charges, including impairments of intangible and other long-lived assets in the Asia Pacific region, as well as costs associated with workforce reductions and the impairment of inventory in North America.

The Mats and Integrated Services segment generated revenues of $32.4 million in the second quarter of 2017 compared to $22.6 million in the first quarter of 2017 and $19.2 million in the second quarter of 2016. Segment operating income was $11.4 million in the second quarter of 2017, compared to $6.4 million in the first quarter of 2017, and $4.0 million in the second quarter of 2016.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss second quarter 2017 results, which will be broadcast live over the Internet, on Friday, July 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 August 11, 2017 and may be accessed by dialing (201) 612-7415 and using pass code 13663806#. 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:

Gregg Piontek


Vice President and Chief Financial Officer


Newpark Resources, Inc.


gpiontek@newpark.com


281-362-6800

 

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)






Three Months Ended


Six Months Ended

(In thousands, except per share data)

June 30,
 2017


March 31,
 2017


June 30,
 2016


June 30,
 2017


June 30,
 2016

Revenues

$

183,020



$

158,691



$

115,315



$

341,711



$

229,859


Cost of revenues

148,431



129,590



102,803



278,021



214,376


Selling, general and administrative expenses

26,630



25,397



21,435



52,027



44,927


Other operating income, net

(9)



(42)



(713)



(51)



(2,409)


Impairments and other charges





6,925





6,925


Operating income (loss)

7,968



3,746



(15,135)



11,714



(33,960)












Foreign currency exchange (gain) loss

534



392



(746)



926



(1,201)


Interest expense, net

3,441



3,218



3,022



6,659



5,103


Gain on extinguishment of debt









(1,894)


Income (loss) from operations before income taxes

3,993



136



(17,411)



4,129



(35,968)












Provision (benefit) for income taxes

2,361



1,119



(3,507)



3,480



(8,764)


Net income (loss)

$

1,632



$

(983)



$

(13,904)



$

649



$

(27,204)












Calculation of EPS:










Basic - net income (loss)

$

1,632



$

(983)



$

(13,904)



$

649



$

(27,204)


Assumed conversions of Convertible Notes due 2017










Diluted - adjusted net income (loss)

$

1,632



$

(983)



$

(13,904)



$

649



$

(27,204)












Basic - weighted average common shares outstanding

84,653



84,153



83,457



84,404



83,358


Dilutive effect of stock options and restricted stock awards

2,662







2,695




Dilutive effect of Convertible Notes due 2017










Dilutive effect of Convertible Notes due 2021










Diluted - weighted average common shares outstanding

87,315



84,153



83,457



87,099



83,358












Income (loss) per common share - basic:

$

0.02



$

(0.01)



$

(0.17)



$

0.01



$

(0.33)


Income (loss) per common share - diluted:

$

0.02



$

(0.01)



$

(0.17)



$

0.01



$

(0.33)



Note: For all periods presented, we excluded the assumed conversion of the Convertible Notes in calculating diluted earnings per share as the effect was anti-dilutive.

 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)






Three Months Ended


Six Months Ended

(In thousands)

June 30,
 2017


March 31,
 2017


June 30,
 2016


June 30,
 2017


June 30,
 2016

Revenues










Fluids systems

$

150,623



$

136,050



$

96,153



$

286,673



$

194,804


Mats and integrated services

32,397



22,641



19,162



55,038



35,055


Total revenues

$

183,020



$

158,691



$

115,315



$

341,711



$

229,859












Operating income (loss)










Fluids systems (1)

$

5,863



$

6,352



$

(11,924)



$

12,215



$

(27,131)


Mats and integrated services

11,419



6,402



3,989



17,821



7,725


Corporate office

(9,314)



(9,008)



(7,200)



(18,322)



(14,554)


Operating income (loss)

$

7,968



$

3,746



$

(15,135)



$

11,714



$

(33,960)












Segment operating margin










Fluids systems

3.9

%


4.7

%


(12.4)

%


4.3

%


(13.9)

%

Mats and integrated services

35.2

%


28.3

%


20.8

%


32.4

%


22.0

%



(1)

Second quarter 2016 and first half 2016 operating results included $7.6 million of charges associated with asset impairments primarily in the Asia pacific region.  In addition, second quarter and first half 2016 operating results included $0.7 million and $3.9 million of charges associated with workforce reductions, respectively.

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)





(In thousands, except share data)

June 30, 2017


December 31, 2016

ASSETS




Cash and cash equivalents

$

68,237



$

87,878


Receivables, net

230,193



214,307


Inventories

156,947



143,612


Prepaid expenses and other current assets

50,010



17,143


Total current assets

505,387



462,940






Property, plant and equipment, net

304,129



303,654


Goodwill

20,238



19,995


Other intangible assets, net

4,892



6,067


Deferred tax assets

2,388



1,747


Other assets

3,434



3,780


Total assets

$

840,468



$

798,183






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

85,879



$

83,368


Accounts payable

82,302



65,281


Accrued liabilities

39,863



31,152


Total current liabilities

208,044



179,801






Long-term debt, less current portion

75,107



72,900


Deferred tax liabilities

36,070



38,743


Other noncurrent liabilities

6,943



6,196


Total liabilities

326,164



297,640






Common stock, $0.01 par value, 200,000,000 shares authorized and 100,881,208 and 99,843,094 shares issued, respectively

1,009



998


Paid-in capital

565,568



558,966


Accumulated other comprehensive loss

(55,384)



(63,208)


Retained earnings

130,285



129,873


Treasury stock, at cost; 15,321,316 and 15,162,050 shares, respectively

(127,174)



(126,086)


Total stockholders' equity

514,304



500,543


Total liabilities and stockholders' equity

$

840,468



$

798,183


 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)




Six Months Ended June 30,

(In thousands)

2017


2016

Cash flows from operating activities:




Net income (loss)

$

649



$

(27,204)


Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:




Impairments and other non-cash charges



8,617


Depreciation and amortization

19,244



19,201


Stock-based compensation expense

5,874



5,613


Provision for deferred income taxes

(3,672)



546


Net provision for doubtful accounts

1,412



1,582


Gain on sale of assets

(1,266)



(1,841)


Gain on extinguishment of debt



(1,894)


Amortization of original issue discount and debt issuance costs

2,679



796


Change in assets and liabilities:




(Increase) decrease in receivables

(48,612)



18,006


(Increase) decrease in inventories

(10,500)



18,981


Increase in other assets

(2,773)



(3,000)


Increase (decrease) in accounts payable

15,590



(20,720)


Increase in accrued liabilities and other

43,685



1,143


Net cash provided by operating activities

22,310



19,826






Cash flows from investing activities:




Capital expenditures

(16,644)



(26,652)


Increase in restricted cash

(29,765)



(22)


Proceeds from sale of property, plant and equipment

1,222



2,553


Net cash used in investing activities

(45,187)



(24,121)






Cash flows from financing activities:




Borrowings on lines of credit



4,268


Payments on lines of credit



(5,034)


Purchase of Convertible Notes due 2017



(9,206)


Debt issuance costs

(335)



(1,707)


Other financing activities

2,333



2,170


Proceeds from employee stock plans

1,517



4


Purchases of treasury stock

(2,382)



(1,093)


Net cash provided by (used in) financing activities

1,133



(10,598)






Effect of exchange rate changes on cash

2,103



903






Net decrease in cash and cash equivalents

(19,641)



(13,990)


Cash and cash equivalents at beginning of year

87,878



107,138


Cash and cash equivalents at end of period

$

68,237



$

93,148


 

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


Six Months Ended

(In thousands)

June 30,
2017


March 31,
2017


June 30,
2016


June 30,
2017


June 30,
2016

Net income (loss) (GAAP) (1)

$

1,632



$

(983)



$

(13,904)



$

649



$

(27,204)


Interest expense, net

3,441



3,218



3,022



6,659



5,103


Provision (benefit) for income taxes

2,361



1,119



(3,507)



3,480



(8,764)


Depreciation and amortization

9,857



9,387



9,628



19,244



19,201


EBITDA (non-GAAP) (1)

17,291



12,741



(4,761)



30,032



(11,664)




(1)

Second quarter 2016 and first half 2016 net loss and EBITDA included $7.6 million of charges associated with asset impairments primarily in the Asia pacific region. In addition, second quarter and first half 2016 net loss and EBITDA included $0.9 million and $4.3 million of charges associated with workforce reductions, respectively.

 

Fluids Systems

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2017


March 31,
2017


June 30,
2016


June 30,
2017


June 30,
2016

Operating income (loss) (GAAP) (2)

$

5,863



$

6,352



$

(11,924)



$

12,215



$

(27,131)


Depreciation and amortization

5,513



5,168



5,293



10,681



10,583


EBITDA (non-GAAP) (2)

11,376



11,520



(6,631)



22,896



(16,548)


Revenues

150,623



136,050



96,153



286,673



194,804


Operating Margin (GAAP)

3.9

%


4.7

%


(12.4)

%


4.3

%


(13.9)

%

EBITDA Margin (non-GAAP)

7.6

%


8.5

%


(6.9)

%


8.0

%


(8.5)

%



(2)

Second quarter 2016 and first half 2016 operating loss and EBITDA included $7.6 million of charges associated with asset impairments primarily in the Asia pacific region.  In addition, second quarter and first half 2016 operating loss and EBITDA included $0.7 million and $3.9 million of charges associated with workforce reductions, respectively.

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)





Mats and integrated services

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2017


March 31,
2017


June 30,
2016


June 30,
2017


June 30,
2016

Operating income (loss) (GAAP)

$

11,419



$

6,402



$

3,989



$

17,821



$

7,725


Depreciation and amortization

3,534



3,480



3,585



7,013



7,136


EBITDA (non-GAAP)

14,953



9,882



7,574



24,834



14,861


Revenues

32,397



22,641



19,162



55,038



35,055


Operating Margin (GAAP)

35.2

%


28.3

%


20.8

%


32.4

%


22.0

%

EBITDA Margin (non-GAAP)

46.2

%


43.6

%


39.5

%


45.1

%


42.4

%






















 

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)

June 30, 2017


December 31, 2016

Current debt

$

85,879



$

83,368


Long-term debt, less current portion

75,107



72,900


Total Debt

160,986



156,268


Total stockholders' equity

514,304



500,543


Total Capital

$

675,290



$

656,811






Ratio of Total Debt to Capital

23.8

%


23.8

%









Total Debt

$

160,986



$

156,268


Less: cash and cash equivalents

(68,237)



(87,878)


Less: specific restricted cash (1)

(30,100)




Net Debt

62,649



68,390


Total stockholders' equity

514,304



500,543


Total Capital, Net of Cash

$

576,953



$

568,933






Ratio of Net Debt to Capital

10.9

%


12.0

%



(1)

Restricted cash included in prepaid expenses and other current assets related to settlement of Convertible Notes due 2017

 

View original content:http://www.prnewswire.com/news-releases/newpark-resources-reports-second-quarter-2017-results-300495615.html

SOURCE Newpark Resources, Inc.