Newpark Resources Reports First Quarter 2018 Results
Newpark Resources Reports First Quarter 2018 Results
Company reports revenues of $227 million, earnings of $0.08 per diluted share and provides an update on deployment of Kronos(TM) technology
THE WOODLANDS, Texas, April 26, 2018 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2018. Total revenues for the first quarter of 2018 were $227.3 million compared to $204.4 million in the fourth quarter of 2017 and $158.7 million in the first quarter of 2017. Income from continuing operations for the first quarter of 2018 was $7.2 million, or $0.08 per diluted share, compared to $7.9 million, or $0.09 per diluted share, in the fourth quarter of 2017, and a loss from continuing operations of $(1.0) million, or $(0.01) per share, in the first quarter of 2017.
Paul Howes, Newpark's President and Chief Executive Officer, stated, "We're very pleased to report another solid quarter for both segments, posting consolidated revenues of $227 million and operating income of $14 million in the first quarter. In Fluids, first quarter revenues were $177 million, reflecting our highest quarterly revenue achieved since 2014. The 9% sequential growth in revenues was largely driven by the seasonal strength in Canada, which contributed $9 million of sequential revenue growth, while our U.S. business tracked fairly in-line with market activity levels. Internationally, despite the anticipated pull-back in Brazil, revenues increased by 5%, benefitting from strength in Romania and Kuwait, as well as the start-up of the Woodside project in offshore Australia.
"Meanwhile, following the successful deployment of our Kronos system with an independent operator in the Gulf of Mexico in the first quarter, I'm pleased to report that the system is now being utilized by two additional customers, including the Woodside Greater Enfield project in offshore Australia, as well as our first full deepwater well in the Gulf of Mexico with an IOC," added Howes.
"In the Mats business, the integration of the Well Service Group and Utility Access Solutions with our legacy rental and service business is producing solid results. The mats segment generated revenues of $50 million in the first quarter, reflecting a fairly balanced revenue mix between exploration and non-exploration markets," added Howes. "Revenues from mat sales came in at $10 million for the quarter, and we are optimistic going forward about the strengthening demand that we are seeing across end-markets."
Fluids Systems International Contract Update
In Algeria, Newpark currently provides drilling fluids and related services to Sonatrach under Lot 1 and Lot 3 of a three-year contract awarded in 2015 ("2015 Contract"). Work under this contract began in the second quarter of 2015 and is expected to be completed by the fourth quarter of 2018. During the first quarter of 2018, Sonatrach initiated a new tender ("2018 Tender"), for a three-year term succeeding the 2015 Contract. For the 2018 Tender, Sonatrach adopted a change in its procurement process, limiting the number of Lots that could be awarded to major service providers. As a consequence, we expect any new award under the 2018 Tender will result in lower revenues from Sonatrach. Based upon preliminary communication regarding the tender process, the Company currently expects that revenue from Sonatrach under the 2018 Tender will approximate $125 million over the three-year term, which would result in a reduction of approximately $25 million per year as compared to the recent activity levels. The awards under the 2018 Tender are anticipated to be finalized in the second quarter of 2018, although there are no assurances that the Company will receive a new contract. The impact of the new award could begin as early as the fourth quarter of 2018, as work transitions from the 2015 Contract to the final contract awarded under the 2018 Tender.
Segment Results
The Fluids Systems segment generated revenues of $177.4 million in the first quarter of 2018 compared to $162.4 million in the fourth quarter of 2017 and $136.1 million in the first quarter of 2017. Segment operating income was $10.5 million in the first quarter of 2018, compared to $7.4 million in the fourth quarter of 2017 and $6.4 million in the first quarter of 2017.
The Mats and Integrated Services segment generated revenues of $49.9 million in the first quarter of 2018 compared to $42.0 million in the fourth quarter of 2017 and $22.6 million in the first quarter of 2017. Segment operating income was $12.1 million in the first quarter of 2018, compared to $11.7 million in the fourth quarter of 2017 and $6.4 million in the first quarter of 2017.
Conference Call
Newpark has scheduled a conference call to discuss first quarter 2018 results and near-term operational outlook, which will be broadcast live over the Internet, on Friday, April 27, 2018 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 May 11, 2018 and may be accessed by dialing 201-612-7415 and using pass code 13677953#. 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, 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, 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, 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 and the refinement of provisional estimates, 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.
Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
------------------
(In thousands, except per share
data) March 31, December 31, March 31,
2018 2017 2017
--- ---- ---- ----
Revenues $227,293 $204,389 $158,691
Cost of revenues 186,455 165,291 129,590
Selling, general and
administrative expenses 26,954 29,541 25,397
Other operating (income) loss,
net 46 (283) (42)
Operating income 13,838 9,840 3,746
Foreign currency exchange loss 225 951 392
Interest expense, net 3,300 3,028 3,218
Income from continuing
operations before income taxes 10,313 5,861 136
Provision (benefit) for income
taxes 3,091 (2,056) 1,119
----- ------ -----
Income (loss) from continuing
operations 7,222 7,917 (983)
Loss from disposal of
discontinued operations, net of
tax - (17,367) -
---
Net income (loss) $7,222 $(9,450) $(983)
====== ======= =====
Calculation of EPS:
-------------------
Income (loss) from continuing
operations -basic and diluted $7,222 $7,917 $(983)
Weighted average common shares
outstanding -basic 89,094 87,414 84,153
Dilutive effect of stock options
and restricted stock awards 2,637 2,580 -
Dilutive effect of 2021
Convertible Notes - - -
Weighted average common shares
outstanding -diluted 91,731 89,994 84,153
------ ------ ------
Income (loss) per common share -
diluted:
Income (loss) from continuing
operations $0.08 $0.09 $(0.01)
Loss from discontinued
operations - (0.20) -
---
Net income (loss) $0.08 $(0.11) $(0.01)
===== ====== ======
Newpark Resources, Inc.
Operating Segment Results
(Unaudited)
Three Months Ended
------------------
(In thousands)
March 31, December 31, March 31,
2018 2017 2017
--- ---- ---- ----
Revenues
Fluids systems $177,379 $162,404 $136,050
Mats and
integrated
services 49,914 41,985 22,641
------ ------ ------
Total revenues $227,293 $204,389 $158,691
======== ======== ========
Operating income (loss)
Fluids systems $10,477 $7,435 $6,352
Mats and
integrated
services 12,086 11,729 6,402
Corporate office (8,725) (9,324) (9,008)
------ ------ ------
Operating income $13,838 $9,840 $3,746
======= ====== ======
Segment operating margin
Fluids systems 5.9% 4.6% 4.7%
Mats and
integrated
services 24.2% 27.9% 28.3%
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share
data) March 31, December 31,
2018 2017
--- ---- ----
ASSETS
Cash and cash equivalents $59,938 $56,352
Receivables, net 267,179 265,866
Inventories 189,109 165,336
Prepaid expenses and other
current assets 16,502 17,483
------ ------
Total current assets 532,728 505,037
Property, plant and
equipment, net 315,552 315,320
Goodwill 44,397 43,620
Other intangible assets,
net 28,906 30,004
Deferred tax assets 3,389 4,753
Other assets 3,752 3,982
----- -----
Total assets $928,724 $902,716
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt $1,391 $1,518
Accounts payable 107,601 88,648
Accrued liabilities 38,880 68,248
------ ------
Total current liabilities 147,872 158,414
Long-term debt, less
current portion 185,635 158,957
Deferred tax liabilities 36,978 31,580
Other noncurrent
liabilities 8,024 6,285
----- -----
Total liabilities 378,509 355,236
Common stock, $0.01 par
value, 200,000,000 shares
authorized and 104,635,290
and 104,571,839 shares
issued, respectively 1,046 1,046
Paid-in capital 606,491 603,849
Accumulated other
comprehensive loss (53,885) (53,219)
Retained earnings 123,743 123,375
Treasury stock, at cost;
15,318,800 and 15,366,504
shares, respectively (127,180) (127,571)
-------- --------
Total stockholders' equity 550,215 547,480
------- -------
Total liabilities and
stockholders' equity $928,724 $902,716
======== ========
Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
----------------------------
(In thousands) 2018 2017
------------- ---- ----
Cash flows from operating
activities:
Net income
(loss) $7,222 $(983)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operations:
Depreciation
and
amortization 11,271 9,387
Stock-based
compensation
expense 2,289 2,836
Provision for
deferred
income taxes 381 (2,545)
Net provision
for doubtful
accounts 341 666
Gain on sale
of assets (383) (847)
Amortization
of original
issue
discount and
debt issuance
costs 1,309 1,330
Change in assets and
liabilities:
Increase in
receivables (5,928) (23,019)
Increase in
inventories (17,841) (829)
Decrease in
other assets 129 521
Increase
(decrease) in
accounts
payable 18,511 (1,692)
Increase
(decrease) in
accrued
liabilities
and other (17,168) 3,731
------- -----
Net cash
provided by
(used in)
operating
activities 133 (11,444)
Cash flows from investing
activities:
Capital
expenditures (10,696) (7,291)
Refund of
proceeds from
sale of a
business (13,974) -
Proceeds from
sale of
property,
plant and
equipment 575 288
Net cash used
in investing
activities (24,095) (7,003)
Cash flows from financing
activities:
Borrowings on
lines of
credit 107,156 -
Payments on
lines of
credit (81,224) -
Debt issuance
costs - (157)
Proceeds from
employee
stock plans 353 211
Purchases of
treasury
stock (42) (48)
Other
financing
activities (545) (371)
---- ----
Net cash
provided by
(used in)
financing
activities 25,698 (365)
Effect of
exchange rate
changes on
cash 812 846
--- ---
Net increase
(decrease) in
cash, cash
equivalents,
and
restricted
cash 2,548 (17,966)
Cash, cash
equivalents,
and
restricted
cash at
beginning of
period 65,460 95,299
------ ------
Cash, cash
equivalents,
and
restricted
cash at end
of period $68,008 $77,333
======= =======
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
(In
thousands) March 31, March 31,
2018 2017
December 31,
2017
--- ----
Net
income
(loss)
(GAAP) $7,222 $(9,450) $(983)
Loss
from
disposal
of
discontinued
operations,
net
of
tax - 17,367 -
Interest
expense,
net 3,300 3,028 3,218
Provision
(benefit)
for
income
taxes 3,091 (2,056) 1,119
Depreciation
and
amortization 11,271 10,759 9,387
EBITDA
(non-
GAAP) $24,884 $19,648 $12,741
======= ======= =======
Fluids Systems Three Months Ended
(In thousands) March 31, March 31,
2018 2017
December 31,
2017
--- ----
Operating income
(GAAP) $10,477 $7,435 $6,352
Depreciation and
amortization 5,290 5,344 5,168
EBITDA (non-GAAP) 15,767 12,779 11,520
Revenues 177,379 162,404 136,050
-------
Operating Margin
(GAAP) 5.9% 4.6% 4.7%
=== === ===
EBITDA Margin (non-
GAAP) 8.9% 7.9% 8.5%
=== === ===
Mats and Integrated
Services Three Months Ended
(In thousands) March 31, March 31,
2018 2017
December 31,
2017
--- ----
Operating income
(GAAP) $12,086 $11,729 $6,402
Depreciation and
amortization 5,114 4,578 3,480
EBITDA (non-GAAP) 17,200 16,307 9,882
Revenues 49,914 41,985 22,641
------ ------ ------
Operating Margin
(GAAP) 24.2% 27.9% 28.3%
==== ==== ====
EBITDA Margin (non-
GAAP) 34.5% 38.8% 43.6%
==== ==== ====
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
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) March 31, 2018 December 31, 2017
------------- -------------- -----------------
Current debt $1,391 $1,518
Long-term
debt, less
current
portion 185,635 158,957
------- -------
Total Debt 187,026 160,475
Total
stockholders'
equity 550,215 547,480
-------
Total Capital $737,241 $707,955
======== ========
Ratio of Total
Debt to
Capital 25.4% 22.7%
==== ====
Total Debt $187,026 $160,475
Less: cash and
cash
equivalents (59,938) (56,352)
-------
Net Debt 127,088 104,123
Total
stockholders'
equity 550,215 547,480
-------
Total Capital,
Net of Cash $677,303 $651,603
======== ========
Ratio of Net
Debt to
Capital 18.8% 16.0%
==== ====
Contacts: Gregg Piontek
Senior Vice President and Chief Financial Officer
Newpark Resources, Inc.
gpiontek@newpark.com
281-362-6800
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SOURCE Newpark Resources, Inc.
