Newpark Resources Reports Third Quarter 2021 Results
Third quarter 2021 operating results include the impact of
"Our Industrial Solutions business performance continues to demonstrate the value of our diversification efforts, as we expand our presence in the power transmission and other industrial end-markets. While the third quarter was impacted by the typical seasonal slowdown in T&D rental project activity, this seasonal lull was largely offset by a
Howes continued, "In the Fluids Systems segment, revenues improved 11% sequentially, primarily driven by strength in
"With the improvement in revenues and timing of customer activities within the quarter, we used
Segment Results
The Fluids Systems segment generated revenues of
The Industrial Solutions segment generated revenues of
Conference Call
Newpark has scheduled a conference call to discuss third quarter of 2021 results and its near-term operational outlook, which will be broadcast live over the Internet, on
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
Contacts: |
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Senior Vice President and Chief Financial Officer |
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281-362-6800 |
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Condensed Consolidated Statements of Operations |
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(Unaudited) |
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Three Months Ended |
Nine Months Ended |
||||||||||||||||||
(In thousands, except per share data) |
September |
|
|
|
|
||||||||||||||
Revenues |
$ |
151,797 |
$ |
142,249 |
$ |
96,424 |
$ |
435,218 |
$ |
362,920 |
|||||||||
Cost of revenues |
132,273 |
124,106 |
99,301 |
376,370 |
357,675 |
||||||||||||||
Selling, general and administrative expenses |
23,864 |
22,980 |
20,597 |
67,755 |
66,230 |
||||||||||||||
Other operating (income) loss, net |
1,723 |
(1,590) |
(820) |
(141) |
(1,906) |
||||||||||||||
Impairments |
— |
— |
3,038 |
— |
3,038 |
||||||||||||||
Operating loss |
(6,063) |
(3,247) |
(25,692) |
(8,766) |
(62,117) |
||||||||||||||
Foreign currency exchange (gain) loss |
25 |
224 |
580 |
(83) |
3,343 |
||||||||||||||
Interest expense, net |
2,176 |
2,164 |
2,411 |
6,748 |
8,524 |
||||||||||||||
(Gain) loss on extinguishment of debt |
210 |
— |
— |
1,000 |
(419) |
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Loss before income taxes |
(8,474) |
(5,635) |
(28,683) |
(16,431) |
(73,565) |
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Provision (benefit) for income taxes |
2,011 |
363 |
(4,813) |
5,414 |
(11,303) |
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Net loss |
$ |
(10,485) |
$ |
(5,998) |
$ |
(23,870) |
$ |
(21,845) |
$ |
(62,262) |
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Calculation of EPS: |
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Net loss - basic and diluted |
$ |
(10,485) |
$ |
(5,998) |
$ |
(23,870) |
$ |
(21,845) |
$ |
(62,262) |
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Weighted average common shares outstanding - |
91,932 |
91,145 |
90,535 |
91,264 |
90,056 |
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Dilutive effect of stock options and restricted |
— |
— |
— |
— |
— |
||||||||||||||
Dilutive effect of Convertible Notes |
— |
— |
— |
— |
— |
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Weighted average common shares outstanding - |
91,932 |
91,145 |
90,535 |
91,264 |
90,056 |
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Net loss per common share - basic: |
$ |
(0.11) |
$ |
(0.07) |
$ |
(0.26) |
$ |
(0.24) |
$ |
(0.69) |
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Net loss per common share - diluted: |
$ |
(0.11) |
$ |
(0.07) |
$ |
(0.26) |
$ |
(0.24) |
$ |
(0.69) |
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Operating Segment Results |
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(Unaudited) |
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Three Months Ended |
Nine Months Ended |
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(In thousands) |
|
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|
|
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Revenues |
|||||||||||||||||||
Fluids Systems |
$ |
107,955 |
$ |
97,093 |
$ |
67,711 |
$ |
292,897 |
$ |
275,178 |
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Industrial Solutions |
43,842 |
45,156 |
28,713 |
142,321 |
87,742 |
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Total revenues |
$ |
151,797 |
$ |
142,249 |
$ |
96,424 |
$ |
435,218 |
$ |
362,920 |
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Operating income (loss) |
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Fluids Systems (1) |
$ |
(6,646) |
$ |
(6,531) |
$ |
(18,957) |
$ |
(19,944) |
$ |
(46,284) |
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Industrial Solutions (2) |
8,103 |
10,143 |
(139) |
31,376 |
3,928 |
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Corporate office |
(7,520) |
(6,859) |
(6,596) |
(20,198) |
(19,761) |
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Total operating loss |
$ |
(6,063) |
$ |
(3,247) |
$ |
(25,692) |
$ |
(8,766) |
$ |
(62,117) |
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Segment operating margin |
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Fluids Systems |
(6.2) |
% |
(6.7) |
% |
(28.0) |
% |
(6.8) |
% |
(16.8) |
% |
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Industrial Solutions |
18.5 |
% |
22.5 |
% |
(0.5) |
% |
22.0 |
% |
4.5 |
% |
(1) |
Fluids Systems operating loss for the three months ended |
(2) |
Industrial Solutions operating income for the three months ended |
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Condensed Consolidated Balance Sheets |
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(Unaudited) |
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(In thousands, except share data) |
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ASSETS |
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Cash and cash equivalents |
$ |
31,242 |
$ |
24,197 |
|||
Receivables, net |
163,309 |
141,045 |
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Inventories |
148,194 |
147,857 |
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Prepaid expenses and other current assets |
17,124 |
15,081 |
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Total current assets |
359,869 |
328,180 |
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Property, plant and equipment, net |
262,856 |
277,696 |
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Operating lease assets |
27,352 |
30,969 |
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42,393 |
42,444 |
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Other intangible assets, net |
22,511 |
25,428 |
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Deferred tax assets |
3,864 |
1,706 |
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Other assets |
2,267 |
2,769 |
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Total assets |
$ |
721,112 |
$ |
709,192 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current debt |
$ |
21,875 |
$ |
67,472 |
|||
Accounts payable |
73,567 |
49,252 |
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Accrued liabilities |
40,736 |
36,934 |
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Total current liabilities |
136,178 |
153,658 |
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Long-term debt, less current portion |
71,869 |
19,690 |
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Noncurrent operating lease liabilities |
22,505 |
25,068 |
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Deferred tax liabilities |
15,102 |
13,368 |
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Other noncurrent liabilities |
9,745 |
9,376 |
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Total liabilities |
255,399 |
221,160 |
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Common stock, |
1,092 |
1,076 |
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Paid-in capital |
632,569 |
627,031 |
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Accumulated other comprehensive loss |
(59,486) |
(54,172) |
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Retained earnings |
28,026 |
50,937 |
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|
(136,488) |
(136,840) |
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Total stockholders' equity |
465,713 |
488,032 |
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Total liabilities and stockholders' equity |
$ |
721,112 |
$ |
709,192 |
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Condensed Consolidated Statements of Cash Flows |
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(Unaudited) |
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Nine Months Ended September |
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(In thousands) |
2021 |
2020 |
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Cash flows from operating activities: |
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Net loss |
$ |
(21,845) |
$ |
(62,262) |
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Adjustments to reconcile net loss to net cash provided by operations: |
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Impairments and other non-cash charges |
— |
13,024 |
|||||
Depreciation and amortization |
32,009 |
34,186 |
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Stock-based compensation expense |
5,721 |
4,869 |
|||||
Provision for deferred income taxes |
282 |
(19,023) |
|||||
Credit loss expense |
426 |
1,304 |
|||||
Gain on sale of assets |
(6,863) |
(2,916) |
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Gain on insurance recovery |
(849) |
— |
|||||
(Gain) loss on extinguishment of debt |
1,000 |
(419) |
|||||
Amortization of original issue discount and debt issuance costs |
3,062 |
3,962 |
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Change in assets and liabilities: |
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(Increase) decrease in receivables |
(26,382) |
77,004 |
|||||
(Increase) decrease in inventories |
(2,536) |
26,566 |
|||||
Increase in other assets |
(2,535) |
(2,912) |
|||||
Increase (decrease) in accounts payable |
25,292 |
(34,606) |
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Increase in accrued liabilities and other |
6,888 |
1,516 |
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Net cash provided by operating activities |
13,670 |
40,293 |
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Cash flows from investing activities: |
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Capital expenditures |
(19,103) |
(14,609) |
|||||
Proceeds from sale of property, plant and equipment |
11,730 |
10,497 |
|||||
Proceeds from insurance property claim |
85 |
— |
|||||
Net cash used in investing activities |
(7,288) |
(4,112) |
|||||
Cash flows from financing activities: |
|||||||
Borrowings on lines of credit |
166,012 |
147,987 |
|||||
Payments on lines of credit |
(150,132) |
(180,440) |
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Purchases of Convertible Notes |
(28,137) |
(29,124) |
|||||
Proceeds from term loan |
8,258 |
— |
|||||
Proceeds from financing obligation |
8,004 |
— |
|||||
Debt issuance costs |
(295) |
— |
|||||
Purchases of treasury stock |
(1,435) |
(332) |
|||||
Other financing activities |
(458) |
1,029 |
|||||
Net cash provided by (used in) financing activities |
1,817 |
(60,880) |
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Effect of exchange rate changes on cash |
(1,349) |
(1,810) |
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Net increase (decrease) in cash, cash equivalents, and restricted cash |
6,850 |
(26,509) |
|||||
Cash, cash equivalents, and restricted cash at beginning of period |
30,348 |
56,863 |
|||||
Cash, cash equivalents, and restricted cash at end of period |
$ |
37,198 |
$ |
30,354 |
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
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 (loss) calculated in accordance with GAAP to the non-GAAP financial measure of EBITDA:
Consolidated |
Three Months Ended |
Nine Months Ended |
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(In thousands) |
|
|
|
|
|
||||||||||||||
Net loss (GAAP) (1) |
$ |
(10,485) |
$ |
(5,998) |
$ |
(23,870) |
$ |
(21,845) |
$ |
(62,262) |
|||||||||
Interest expense, net |
2,176 |
2,164 |
2,411 |
6,748 |
8,524 |
||||||||||||||
Provision (benefit) for income taxes |
2,011 |
363 |
(4,813) |
5,414 |
(11,303) |
||||||||||||||
Depreciation and amortization |
10,516 |
10,663 |
11,271 |
32,009 |
34,186 |
||||||||||||||
EBITDA (non-GAAP) (1) |
$ |
4,218 |
$ |
7,192 |
$ |
(15,001) |
$ |
22,326 |
$ |
(30,855) |
(1) |
Net loss and EBITDA for the three months ended |
|
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Non-GAAP Reconciliations (Continued) |
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(Unaudited) |
|||||||||||||||||||
Fluids Systems |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||
(In thousands) |
|
|
|
|
|
||||||||||||||
Operating loss (GAAP) (1) |
$ |
(6,646) |
$ |
(6,531) |
$ |
(18,957) |
$ |
(19,944) |
$ |
(46,284) |
|||||||||
Depreciation and amortization |
4,421 |
4,537 |
5,227 |
13,585 |
15,686 |
||||||||||||||
EBITDA (non-GAAP) (1) |
(2,225) |
(1,994) |
(13,730) |
(6,359) |
(30,598) |
||||||||||||||
Revenues |
107,955 |
97,093 |
67,711 |
292,897 |
275,178 |
||||||||||||||
Operating Margin (GAAP) |
(6.2) |
% |
(6.7) |
% |
(28.0) |
% |
(6.8) |
% |
(16.8) |
% |
|||||||||
EBITDA Margin (non-GAAP) |
(2.1) |
% |
(2.1) |
% |
(20.3) |
% |
(2.2) |
% |
(11.1) |
% |
(1) |
Operating loss and EBITDA for the three months ended |
Industrial Solutions |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||
(In thousands) |
|
|
|
|
|
||||||||||||||
Operating income (loss) (GAAP) (1) |
$ |
8,103 |
$ |
10,143 |
$ |
(139) |
$ |
31,376 |
$ |
3,928 |
|||||||||
Depreciation and amortization |
4,993 |
5,040 |
4,916 |
15,169 |
15,241 |
||||||||||||||
EBITDA (non-GAAP) (1) |
13,096 |
15,183 |
4,777 |
46,545 |
19,169 |
||||||||||||||
Revenues |
43,842 |
45,156 |
28,713 |
142,321 |
87,742 |
||||||||||||||
Operating Margin (GAAP) |
18.5 |
% |
22.5 |
% |
(0.5) |
% |
22.0 |
% |
4.5 |
% |
|||||||||
EBITDA Margin (non-GAAP) |
29.9 |
% |
33.6 |
% |
16.6 |
% |
32.7 |
% |
21.8 |
% |
(1) |
Operating income and EBITDA for the three months ended |
Non-GAAP Reconciliations (Continued)
(Unaudited)
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) |
|
|
|
|
|
||||||||||||||
Net cash provided by (used in) operating |
$ |
(12,167) |
$ |
(1,936) |
$ |
15,280 |
$ |
13,670 |
$ |
40,293 |
|||||||||
Capital expenditures |
(8,626) |
(1,828) |
(3,954) |
(19,103) |
(14,609) |
||||||||||||||
Proceeds from sale of property, plant and |
2,522 |
1,181 |
2,534 |
11,730 |
10,497 |
||||||||||||||
Free Cash Flow (non-GAAP) |
$ |
(18,271) |
$ |
(2,583) |
$ |
13,860 |
$ |
6,297 |
$ |
36,181 |
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) |
|
|
|||||
Current debt |
$ |
21,875 |
$ |
67,472 |
|||
Long-term debt, less current portion |
71,869 |
19,690 |
|||||
Total Debt |
93,744 |
87,162 |
|||||
Total stockholders' equity |
465,713 |
488,032 |
|||||
Total Capital |
$ |
559,457 |
$ |
575,194 |
|||
|
16.8 |
% |
15.2 |
% |
|||
Total Debt |
$ |
93,744 |
$ |
87,162 |
|||
Less: cash and cash equivalents |
(31,242) |
(24,197) |
|||||
Net Debt |
62,502 |
62,965 |
|||||
Total stockholders' equity |
465,713 |
488,032 |
|||||
Total Capital, Net of Cash |
$ |
528,215 |
$ |
550,997 |
|||
|
11.8 |
% |
11.4 |
% |
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