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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.

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.

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Newpark Resources Reports Third Quarter 2019 Results

Newpark Resources Reports Third Quarter 2019 Results

October 30, 2019 at 4:15 PM EDT
Company announces international contract awards and Fluids acquisition

THE WOODLANDS, Texas, Oct. 30, 2019 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) ("Newpark" or the "Company") today announced results for its third quarter ended September 30, 2019. Total revenues for the third quarter of 2019 were $202.8 million compared to $216.4 million for the second quarter of 2019 and $235.3 million for the third quarter of 2018. Net loss for the third quarter of 2019 was $1.4 million, or ($0.02) per share, compared to net income of $4.3 million, or $0.05 per diluted share, for the second quarter of 2019, and $3.6 million, or $0.04 per diluted share, for the third quarter of 2018.

As a result of a decline in anticipated earnings in the U.S. for the full year 2019, the third quarter 2019 provision for income taxes includes a $2.0 million ($0.02 per share) charge, primarily reflecting the impact of an increase in the projected full year 2019 tax rate.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "Although volatility in the U.S. land market provided headwinds to our third quarter results for both segments, I'm very pleased to highlight that we are continuing to make meaningful progress in the penetration of targeted growth markets, which is critical to driving longer term growth and stability. Additionally, we continued to generate positive free cash flow in the third quarter, carefully balancing the execution of our strategic growth efforts, while taking appropriate actions to navigate the challenging market environment on U.S. land.

"During the third quarter, the Mats and Integrated Services segment revenues improved 14% sequentially, benefitting primarily from the anticipated rebound in mat sales and modest growth from energy infrastructure rental and service projects. The segment's operating margin was 20% for the third quarter, as the impact of the higher revenue level was offset by changes in revenue mix and the timing of certain expenses.  We continue to see success in the U.S. energy infrastructure market, with an expanding schedule of mats rental projects in the utility transmission space.

"Our Fluids Systems business was successful in securing three international tender awards during the quarter, expanding our relationship with global operators," added Howes. "These include a new three-year contract for combined drilling and completion fluids with ENI to support their offshore drilling campaign in Cyprus and a two-year contract with PTT Exploration and Production in Algeria. Both of these contracts are expected to begin in the first half of 2020 and combined, generate additional revenues of $15-$20 million per year. In addition, we were awarded a new five-year contract with OMV Petrom, which extends our on-going work providing drilling and completion fluids to this customer in Romania.

"Third quarter Fluids Systems segment revenues declined 12% sequentially, primarily reflecting softness across most U.S. land markets. Meanwhile, although our schedule of projects in the Gulf of Mexico continues to grow, revenues from this market declined $5 million sequentially, reflecting the impact from the timing of customer projects. Internationally, our Fluids Systems revenues decreased 8% sequentially, driven primarily by the Sonatrach contract transition in Algeria. With the rapid decline in revenues within certain U.S. regions in the quarter, the Fluids Systems operating margin pulled back to 4% for the third quarter, compared to 7% in the second quarter.

"Subsequent to the end of the third quarter, we completed the acquisition of Cleansorb Limited, a leading global provider of specialty reservoir chemistry based in the United Kingdom, for cash consideration of $19 million," said Howes. "Established in 1994, Cleansorb has become a recognized leader in innovative and proven completion fluids technology, supporting several of Newpark's international contracts, and also currently supplying key products into Saudi Arabia. This acquisition serves as another meaningful step in building out our fluids technology portfolio.

 "Looking forward, we will continue to prudently balance the implementation of our strategic growth objectives in both segments while focusing on the goals of generating positive free cash flow and strengthening our balance sheet during these volatile market cycles," concluded Howes.

Segment Results

The Mats and Integrated Services segment generated revenues of $50.2 million for the third quarter of 2019 compared to $43.9 million for the second quarter of 2019 and $54.4 million for the third quarter of 2018. Segment operating income was $10.0 million for the third quarter of 2019 compared to $9.3 million for the second quarter of 2019 and $12.9 million for the third quarter of 2018.

The Fluids Systems segment generated revenues of $152.5 million for the third quarter of 2019 compared to $172.5 million for the second quarter of 2019 and $181.0 million for the third quarter of 2018. Segment operating income was $5.9 million for the third quarter of 2019 compared to $12.2 million for the second quarter of 2019 and $8.3 million for the third quarter of 2018.

Conference Call

Newpark has scheduled a conference call to discuss third quarter 2019 results and its near-term operational outlook, which will be broadcast live over the Internet, on Thursday, October 31, 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 November 14, 2019 and may be accessed by dialing 201-612-7415 and using pass code 13695526#. 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 other than statements of historical facts 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 that our expectations will prove to be correct 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, 2018, as well as others, could cause actual plans or 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; our international operations; our ability to attract, retain and develop qualified leaders, key employees and skilled personnel; the availability of raw materials; our cost and continued availability of borrowed funds, including noncompliance with debt covenants; operating hazards present in the oil and natural gas industry and substantial liability claims, including catastrophic well incidents; our ability to execute our business strategy and make successful business acquisitions and capital investments; our market competition; our contracts that can be terminated or downsized by our customers without penalty; our product offering expansion; our compliance with legal and regulatory matters, including environmental regulations; our legal compliance; material weaknesses in our internal control over financial reporting; the inherent limitations of insurance coverage; income taxes; the potential impairments of goodwill and long-lived intangible assets; technological developments in our industry; severe weather and seasonality; cybersecurity breaches or business system disruptions; and fluctuations in the market value of our publicly traded securities. We assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities laws. 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.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended


Nine Months Ended

(In thousands, except per share data)

September
30,
2019


June
30,
2019


September
30,
2018


September
30,
2019


September
30,
2018

Revenues

$

202,763



$

216,412



$

235,329



$

630,648



$

698,884


Cost of revenues

169,429



177,933



194,730



522,338



569,665


Selling, general and administrative expenses

27,017



28,037



29,820



85,796



85,482


Other operating (income) loss, net

29



(472)



725



(367)



702


Operating income

6,288



10,914



10,054



22,881



43,035












Foreign currency exchange (gain) loss

828



990



(89)



756



594


Interest expense, net

3,628



3,523



3,668



10,807



10,659


Income before income taxes

1,832



6,401



6,475



11,318



31,782












Provision for income taxes

3,273



2,095



2,831



7,171



10,070


Net income (loss)

$

(1,441)



$

4,306



$

3,644



$

4,147



$

21,712












Calculation of EPS:










Net income (loss) - basic and diluted

$

(1,441)



$

4,306



$

3,644



$

4,147



$

21,712












Weighted average common shares outstanding - basic

89,675



89,806



90,526



89,863



89,779


Dilutive effect of stock options and restricted stock awards



1,900



2,151



1,676



2,535


Dilutive effect of 2021 Convertible Notes





905





727


Weighted average common shares outstanding - diluted

89,675



91,706



93,582



91,539



93,041












Net income (loss) per common share - basic:

$

(0.02)



$

0.05



$

0.04



$

0.05



$

0.24


Net income (loss) per common share - diluted:

$

(0.02)



$

0.05



$

0.04



$

0.05



$

0.23




 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)



Three Months Ended


Nine Months Ended

(In thousands)

September
30,
 2019


June
30,
2019


September
30,
2018


September
30,
2019


September
30,
2018

Revenues










Fluids systems

$

152,547



$

172,544



$

180,970



$

485,744



$

538,087


Mats and integrated services

50,216



43,868



54,359



144,904



160,797


Total revenues

$

202,763



$

216,412



$

235,329



$

630,648



$

698,884












Operating income (loss) (1)










Fluids systems

$

5,893



$

12,184



$

8,288



$

21,951



$

32,092


Mats and integrated services

10,049



9,276



12,925



32,863



39,864


Corporate office

(9,654)



(10,546)



(11,159)



(31,933)



(28,921)


Total operating income

$

6,288



$

10,914



$

10,054



$

22,881



$

43,035












Segment operating margin










Fluids systems

3.9

%


7.1

%


4.6

%


4.5

%


6.0

%

Mats and integrated services

20.0

%


21.1

%


23.8

%


22.7

%


24.8

%



(1)

Fluids Systems and Corporate office operating income (loss) for the nine months ended September 30, 2019 includes charges of $1.7 million and $3.4 million, respectively, related to the modification of the Company's retirement policy and severance costs. Fluids Systems operating income for the three months and nine months ended September 30, 2018 includes a total of $2.5 million of charges associated with severance costs related to workforce reductions in connection with the completion of the contract with Petrobras in Brazil, the Kenedy, Texas facility fire, and expenses related to the conversion of a drilling fluids facility into a completion fluids facility. Corporate office operating loss for the three months and nine months ended September 30, 2018 includes a charge of $1.8 million associated with the retirement and transition of our former Senior Vice President, General Counsel and Chief Administrative Officer.

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)

September 30,
2019


December 31,
2018

ASSETS




Cash and cash equivalents

$

53,673



$

56,118


Receivables, net

236,637



254,394


Inventories

183,443



196,896


Prepaid expenses and other current assets

18,703



15,904


Total current assets

492,456



523,312






Property, plant and equipment, net

316,498



316,293


Operating lease assets

29,697




Goodwill

43,760



43,832


Other intangible assets, net

22,306



25,160


Deferred tax assets

4,471



4,516


Other assets

3,423



2,741


Total assets

$

912,611



$

915,854






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

5,003



$

2,522


Accounts payable

77,743



90,607


Accrued liabilities

43,858



48,797


Total current liabilities

126,604



141,926






Long-term debt, less current portion

157,355



159,225


Noncurrent operating lease liabilities

24,336




Deferred tax liabilities

36,692



37,486


Other noncurrent liabilities

7,993



7,536


Total liabilities

352,980



346,173






Common stock, $0.01 par value (200,000,000 shares authorized and 106,696,719 and 106,362,991 shares issued, respectively)

1,067



1,064


Paid-in capital

618,632



617,276


Accumulated other comprehensive loss

(71,770)



(67,673)


Retained earnings

151,303



148,802


Treasury stock, at cost (17,003,058 and 15,530,952 shares, respectively)

(139,601)



(129,788)


Total stockholders' equity

559,631



569,681


Total liabilities and stockholders' equity

$

912,611



$

915,854


 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Nine Months Ended September 30,

(In thousands)

2019


2018

Cash flows from operating activities:




Net income

$

4,147



$

21,712


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




Depreciation and amortization

34,891



34,346


Stock-based compensation expense

9,375



8,497


Provision for deferred income taxes

(787)



(2,149)


Net provision for doubtful accounts

1,044



2,708


Gain on sale of assets

(5,779)



(552)


Amortization of original issue discount and debt issuance costs

4,589



4,075


Change in assets and liabilities:




(Increase) decrease in receivables

17,065



(16,531)


(Increase) decrease in inventories

11,873



(34,829)


Increase in other assets

(3,621)



(1,476)


Increase (decrease) in accounts payable

(11,806)



7,106


Decrease in accrued liabilities and other

(7,805)



(2,791)


Net cash provided by operating activities

53,186



20,116






Cash flows from investing activities:




Capital expenditures

(35,803)



(32,814)


Proceeds from sale of property, plant and equipment

7,116



1,477


Refund of proceeds from sale of a business



(13,974)


Business acquisitions, net of cash acquired



(249)


Net cash used in investing activities

(28,687)



(45,560)






Cash flows from financing activities:




Borrowings on lines of credit

237,093



275,801


Payments on lines of credit

(242,263)



(254,116)


Debt issuance costs

(1,214)



(149)


Proceeds from employee stock plans

1,236



3,813


Purchases of treasury stock

(21,678)



(3,811)


  Other financing activities

1,336



2,140


Net cash provided by (used in) financing activities

(25,490)



23,678






Effect of exchange rate changes on cash

(1,526)



(3,798)






Net decrease in cash, cash equivalents, and restricted cash

(2,517)



(5,564)


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

64,266



65,460


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

$

61,749



$

59,896



 

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, Free Cash Flow, 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 liquidity with that of other companies in our industry. Management uses these measures to evaluate our operating performance, liquidity and capital structure. In addition, 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.

EBITDA and EBITDA Margin

The following tables reconcile the Company's net income (loss) or segment operating income calculated in accordance with GAAP to the non-GAAP financial measure of EBITDA:

Consolidated

Three Months Ended


Nine Months Ended

(In thousands)

September 30,
2019


June 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018

Net income (loss) (GAAP) (1)

$

(1,441)



$

4,306



$

3,644



$

4,147



$

21,712


Interest expense, net

3,628



3,523



3,668



10,807



10,659


Provision for income taxes

3,273



2,095



2,831



7,171



10,070


Depreciation and amortization

11,821



11,632



11,591



34,891



34,346


EBITDA (non-GAAP) (1)

$

17,281



$

21,556



$

21,734



$

57,016



$

76,787



(1)

Net income and EBITDA for the nine months ended September 30, 2019 include charges of $5.1 million related to the modification of the Company's retirement policy and severance costs. Net income and EBITDA for the three months and nine months ended September 30, 2018 include a corporate office charge of $1.8 million associated with the retirement of our former Senior Vice President, General Counsel and Chief Administrative Officer, as well as a total of $2.5 million of charges associated with severance costs related to workforce reductions in connection with the completion of the contract with Petrobras in Brazil, the Kenedy, Texas facility fire, and expenses related to the conversion of a drilling fluids facility into a completion fluids facility.



Fluids Systems

Three Months Ended


Nine Months Ended

(In thousands)

September 30,
2019


June 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018

Operating income (GAAP) (1)

$

5,893



$

12,184



$

8,288



$

21,951



$

32,092


Depreciation and amortization

5,234



5,201



5,178



15,511



15,785


EBITDA (non-GAAP) (1)

11,127



17,385



13,466



37,462



47,877


Revenues

152,547



172,544



180,970



485,744



538,087


Operating Margin (GAAP)

3.9

%


7.1

%


4.6

%


4.5

%


6.0

%

EBITDA Margin (non-GAAP)

7.3

%


10.1

%


7.4

%


7.7

%


8.9

%



(1)

Operating income for the nine months ended September 30, 2019 includes charges of $1.7 million related to the modification of the Company's retirement policy and severance costs. Operating income and EBITDA for the three months and nine months ended September 30, 2018 include a total of $2.5 million of charges associated with severance costs related to workforce reductions in connection with the completion of the contract with Petrobras in Brazil, the Kenedy, Texas facility fire, and expenses related to the conversion of a drilling fluids facility into a completion fluids facility.

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)


Mats and Integrated Services

Three Months Ended


Nine Months Ended

(In thousands)

September 30,
2019


June 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018

Operating income (GAAP)

$

10,049



$

9,276



$

12,925



$

32,863



$

39,864


Depreciation and amortization

5,484



5,409



5,427



16,258



15,788


EBITDA (non-GAAP)

15,533



14,685



18,352



49,121



55,652


Revenues

50,216



43,868



54,359



144,904



160,797


Operating Margin (GAAP)

20.0

%


21.1

%


23.8

%


22.7

%


24.8

%

EBITDA Margin (non-GAAP)

30.9

%


33.5

%


33.8

%


33.9

%


34.6

%

Free Cash Flow

The following table reconciles the Company's net cash provided by (used in) operating activities calculated in accordance with GAAP to the non-GAAP financial measure of the Company's free cash flow:

Consolidated

Three Months Ended


Nine Months Ended

(In thousands)

September 30,
2019


June 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018

Net cash provided by (used in) operating activities (GAAP)

$

18,946



$

31,971



$

(571)



$

53,186



$

20,116


Capital expenditures

(11,937)



(6,399)



(8,356)



(35,803)



(32,814)


Proceeds from sale of property, plant and equipment

1,408



3,937



557



7,116



1,477


Free Cash Flow (non-GAAP)

$

8,417



$

29,509



$

(8,370)



$

24,499



$

(11,221)


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)

September 30,
2019


December 31,
2018

Current debt

$

5,003



$

2,522


Long-term debt, less current portion

157,355



159,225


Total Debt

162,358



161,747


Total stockholders' equity

559,631



569,681


Total Capital

$

721,989



$

731,428






Ratio of Total Debt to Capital

22.5

%


22.1

%





Total Debt

$

162,358



$

161,747


Less: cash and cash equivalents

(53,673)



(56,118)


Net Debt

108,685



105,629


Total stockholders' equity

559,631



569,681


Total Capital, Net of Cash

$

668,316



$

675,310






Ratio of Net Debt to Capital

16.3

%


15.6

%

 

Contacts:

Gregg Piontek


Senior Vice President & 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-third-quarter-2019-results-300948422.html

SOURCE Newpark Resources, Inc.