Newpark Resources Reports Second Quarter 2017 Results
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, March 31, June 30, June 30, June 30,
2017 2017 2016 2017 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, March 31, June 30, June 30, June 30,
2017 2017 2016 2017 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, March 31, June 30, June 30, June 30,
2017 2017 2016 2017 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, March 31, June 30, June 30, June 30,
2017 2017 2016 2017 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, March 31, June 30, June 30, June 30,
2017 2017 2016 2017 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.
